HSBC Holdings reported a second-quarter pretax profit of $10.1 billion, beating analyst expectations, and announced a fresh share buyback of up to $1 billion as Europe’s largest bank continues to benefit from higher net interest income and robust wealth management fees.

The London-headquartered lender said Tuesday that pretax profit for the three months through June rose 60% from a year earlier, helped by a net favorable impact of $2.6 billion from notable items, including a one-off gain of $1.3 billion. Revenue climbed 16% to $19.1 billion, also exceeding consensus estimates compiled by the bank.

“HSBC is becoming the stronger bank we set out to build. We are executing our strategic priorities with pace, precision and discipline,” CEO Georges Elhedery said in a statement.

The results cap a strong earnings season for Europe’s big banks, which have extended a more than two-year-long recovery thanks to a surge in trading activity and resilient interest income despite dips in central bank rates.

For the first half of 2026, HSBC’s pretax profit rose 23% to $19.5 billion, ahead of the $18.9 billion analysts had forecast. Profit attributable to shareholders increased about 27% to $14.6 billion from $11.5 billion a year earlier.

Buyback Resumes After Hang Seng Pause

HSBC said it would repurchase up to $1 billion of its shares, marking a resumption of buybacks after a pause announced in October 2025. The bank had halted repurchases to accommodate its roughly $14 billion deal to take Hang Seng Bank private.

“We also intend to initiate a share buy-back of up to $1 billion, which we expect to complete by our third quarter 2026 results announcement,” the bank said in a filing.

The board also approved a second interim dividend of $0.10 per share, following a $0.10 payout in May.

HSBC’s Hong Kong-listed shares gained 0.8% to HK$169.5 after the earnings release, hitting a new high, though they later pared gains to trade 0.7% lower at HK$167.10. The stock has touched record highs in recent weeks, rebounding from a June slump triggered by Beijing’s clampdown on cross-border capital flows, which had stoked investor concerns over potential friction in its wealth management unit.

Wealth Business Drives Growth

Wealth revenue in the first half grew 18% from a year earlier, backed by strong growth from Asian markets. However, wealth inflows slowed to $25 billion in the second quarter, down from $39 billion in the first three months but flat compared with a year ago.

Elhedery has placed HSBC’s wealth unit at the center of the bank’s transformation strategy, frequently highlighting Hong Kong’s growing importance as a regional wealth management hub.

Downplaying the impact of China’s crackdown, rival Standard Chartered CEO Bill Winters told Bloomberg Television that the bank had seen “no discernible change” in business flows. Standard Chartered also reported better-than-estimated second-quarter profit and a record first-half performance last week, driven by its expanding wealth business, allowing the lender to announce a new $1 billion share buyback.

Still, Beijing’s actions have stoked fears that wealth growth could falter if citizens face greater restrictions when moving money offshore. Bloomberg Intelligence analysts estimate that, under a worst-case scenario, new money inflows could plunge as much as 30% in 2026.

Restructuring Accelerates

Since taking the helm, Elhedery has accelerated an overhaul of Europe’s largest bank through asset sales and operational simplification, including slashing the number of members in the operating committee and managing director positions.

HSBC now expects its restructuring effort to yield $2 billion in total cost savings, up from an earlier target of $1.5 billion. The lender has exited 15 non-strategic businesses since 2025 and announced three sales in the past days, including a deal to sell its Singapore insurance unit to Allianz for S$2.7 billion ($2.1 billion).

“We are doing a review at pace of those activities that are either low returning or non-strategic and we expect to be able to reach our target profile and our target geographical footprint relatively shortly,” Elhedery said.

Credit Losses and Guidance

Good news was partly offset by expected credit losses of $2.4 billion in the first half, $400 million higher than a year earlier. The bank reported provisions of $1.1 billion in the second quarter, including charges related to Hong Kong’s commercial real estate sector.

HSBC also said it lost $400 million in a fraud case involving a British financial sponsor, and $200 million in Hong Kong’s commercial property sector.

The bank raised its guidance for banking net interest income for 2026, saying it now expects at least $46 billion, up from a previous target of hitting that level. It maintained its targeted return on tangible equity of 17%; annualized RoTE in the reported quarter, excluding items, was 19.1%.

Elhedery said the lender will consider boosting its bonus pool for bankers if strong performance continues.

“Should we continue to see this momentum carry forward into the second half, then we would certainly consider to reward our colleagues for their increased performance by adjusting the variable pay pool upwards,” he said during a call discussing the second-quarter earnings.

MetricQ2 2026Q2 2025ChangePretax profit$10.1B$6.3B+60%Revenue$19.1B$16.5B+16%Net interest income$9.29B$8.52B+9%Operating expenses—2%

Note: Q2 2025 figures are derived from reported year-on-year changes.

The results underscore the payoff of HSBC’s Asian focus, where an overhaul targeting wealth and cross-border banking drove fee income growth alongside a favorable rate backdrop. The bank’s net interest income rose 9% in the second quarter to $9.29 billion, while operating expenses fell 2% owing to lower restructuring costs.