HSBC interim results 2026: profit rises 23% as $1 billion buyback returns

HSBC delivered a stronger first half in 2026, combining higher income, improving efficiency and loan growth with a return to share buybacks.

Reported profit before tax rose 23% to $19.5 billion, while revenue increased 11% to $37.7 billion. The bank also raised its 2026 banking net interest income guidance from around $46 billion to at least $46 billion.

There is an important wrinkle. Comparisons benefited from costly items recorded in the previous year, including losses linked to HSBC's investment in Bank of Communications, known as BoCom. Even after stripping out notable items and currency movements, however, underlying profit still moved higher.

For investors following HSBC Holdings PLC, the combination of operating momentum and renewed capital returns is encouraging. Higher expected credit losses and a lower capital ratio provide the counterweight.

HSBC's key first-half figures

Metric	First half 2026	First half 2025	Change
Revenue	$37.7 billion	$34.1 billion	Up 11%
Profit before tax	$19.5 billion	$15.8 billion	Up 23%
Profit after tax	$15.3 billion	$12.4 billion	Up 23%
Basic earnings per share	$0.85	$0.65	Up 31%
Net interest margin	1.61%	1.57%	Up 4 basis points
Annualised RoTE	18.2%	14.7%	Up 3.5 percentage points
Cost efficiency ratio	46.2%	49.9%	Improved
Expected credit losses	$2.4 billion	$1.9 billion	Up $0.4 billion

Return on average tangible equity, or RoTE, measures profit relative to shareholders' tangible capital. HSBC reported annualised RoTE of 18.2%, increasing to 19.1% when notable items were excluded.

That supports management's confidence in its target of at least 17% RoTE for 2026, 2027 and 2028, excluding notable items.

Income growth looks broad enough to matter

The quality of revenue growth is one of the more attractive features of these results.

Banking net interest income, which reflects income from core banking activities while excluding certain trading-book and insurance funding effects, increased by $1.6 billion to $22.9 billion. Deposit growth and the reinvestment of HSBC's structural hedge at higher yields helped offset pressure from lower market interest rates.

The structural hedge is a portfolio designed to reduce earnings volatility from customer deposits that pay little or no interest. As older investments mature and are reinvested at higher yields, this can support income.

Fee and other income also grew, particularly in Wealth and Wholesale Transaction Banking. Wealth income increased 18% on a constant currency basis, supported by HSBC's Asian operations and higher customer activity.

This matters because it reduces the reliance on interest rates alone. A bank with stronger fee income has more ways to grow if rate conditions become less helpful.

Reported profit needs some context

The headline 23% profit increase flatters the underlying comparison.

HSBC said the movement included a $2.2 billion net favourable year-on-year impact from notable items. The first half of 2025 included $2.1 billion of dilution and impairment losses connected with BoCom, alongside $0.6 billion of restructuring costs.

The latest period was not free from exceptional charges. HSBC recorded $0.3 billion of disposal losses associated with the planned sale of its Malta business, $0.3 billion of restructuring costs and $0.2 billion of currency reserve recycling losses following the sale of its UK life insurance business.

On a constant currency basis and excluding notable items, profit before tax increased by $1.1 billion to $20.4 billion. That is a more useful indication of underlying progress than the reported growth rate.

Lending and deposits are growing

Customer lending increased by $34 billion from the end of 2025, or $40 billion on a constant currency basis. HSBC reported growth across every business segment, with particular strength in Hong Kong.

Customer accounts rose by $41 billion on a reported basis and by $56 billion at constant currency. Growth was led by Corporate and Institutional Banking, partly offset by balances reclassified as held for sale.

Growing both loans and deposits suggests that HSBC's core franchise remains active. It also gives the bank a larger base from which to earn interest and fees, although investors should always consider that faster lending can bring additional credit risk.

Credit losses are the clearest concern

Expected credit losses, or ECL, increased by $0.4 billion to $2.4 billion. These are charges taken to reflect loans and other exposures that may not be repaid in full.

The first-half charge included a $0.4 billion fraud-related secondary securitisation exposure involving a UK financial sponsor. HSBC also recorded $0.2 billion relating to Hong Kong commercial property and allowances for uncertainty caused by the continuing conflict in the Middle East.

Annualised ECL represented 0.47% of average customer loans, up from 0.42% a year earlier. HSBC continues to expect a full-year charge of around 45 basis points, compared with its medium-term planning range of 30 to 40 basis points.

That tells investors that near-term credit conditions remain less favourable than HSBC would normally plan for.

Costs rose, but efficiency improved

Operating expenses increased 2% to $17.4 billion as HSBC invested in technology and absorbed inflation. Simplification savings and lower restructuring charges partly offset those pressures.

Crucially, revenue grew considerably faster than costs. The cost efficiency ratio improved from 49.9% to 46.2%, meaning HSBC spent less to generate each dollar of revenue.

Management remains on track for approximately 1% target-basis expense growth in 2026. It did note that continued strong business performance could lead to additional performance-related pay, modestly increasing cost growth.

Dividend and buyback resume shareholder returns

The board approved a second interim dividend of $0.10 per share, payable on 25 September 2026. That takes dividends declared in respect of the first half to $0.20 per share, unchanged year on year.

HSBC also intends to launch a share buyback of up to $1 billion, expected to finish by the third-quarter results. Buybacks reduce the share count and can increase each remaining shareholder's proportionate ownership, although the eventual benefit depends on the price paid.

The bank had paused buybacks following the Hang Seng Bank privatisation announcement. Their resumption suggests management is becoming more comfortable with its capital position.

Even so, the common equity tier 1 capital ratio fell from 14.9% at the end of 2025 to 14.1%. This core measure of financial resilience was affected by the Hang Seng Bank privatisation, dividends and higher risk-weighted assets.

The ratio remains inside HSBC's medium-term target range of 14% to 14.5%, but it is close to the bottom of that range. That may limit the scope for substantially larger near-term buybacks unless capital generation remains strong.

Upgraded guidance strengthens the outlook

HSBC now expects at least $46 billion of banking net interest income in 2026, compared with its previous guidance of around $46 billion. The wording represents an upgrade, albeit a measured one.

The group also reiterated its targets for annual revenue growth through 2028 and a 50% dividend payout ratio on its target basis.

These commitments remain dependent on interest rates, foreign exchange movements, customer behaviour and the wider economic environment. HSBC explicitly described the outlook as volatile and uncertain.

What HSBC investors should watch next

The first-half numbers show genuine underlying progress beneath the favourable comparison. Revenue is growing across interest and fee income, costs are being controlled relative to income, and customer balances are expanding.

The $1 billion buyback and maintained dividend add to the attraction, while the upgraded banking income guidance suggests momentum has carried into management's expectations for the full year.

The main tests are whether credit losses remain near guidance and whether HSBC can rebuild capital while funding dividends, investment and buybacks. The 14.1% CET1 ratio leaves less room for disappointment than the profit figures alone might suggest.

Market reaction to the announcement was not disclosed. Investors can review the original company announcement for the complete interim report and accounting disclosures.