HSBC (HSBA) announced a new $1bn (£740mn) buyback – the first since a pause last October – after profits surged in the second quarter.

Pre-tax profit was up 60 per cent to $10.1bn in the three months to 30 June compared with the same period last year following a 7 per cent rise in group revenue to $19bn.

Banking net interest income (NII) rose by 7 per cent to $11.6bn, while the margin ticked up by four basis points to 1.61 per cent. A 21 per cent rise in wealth fees to $2.8bn helped the performance, as did a 7 per cent improvement in wholesale transaction banking fees to $3bn.

Management nudged up its banking NII guidance for the full year to “at least” $46bn. It stuck with guidance for a return on tangible equity of at least 17 per cent in each year between 2026 and 2028.

HSBA:LSE

HSBC Holdings PLC

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The bank had paused buybacks due to the capital implications of its buyout of Hang Seng Bank’s remaining minority interests. The $13.7bn transaction, which privatised Hang Seng, completed in January.

As a result, HSBC’s common equity tier 1 (CET1) ratio was down by 0.8 percentage points from December to 14.1 per cent. But that was back in line with its medium-term target range of 14 to 14.5 per cent.

Elsewhere, the bank upgraded its cost-saving target from $1.5bn to $2bn under chief executive Georges Elhedery’s restructuring programme. At the half-year mark, $1.7bn of annualised savings had been recorded. Looking ahead, the cost impact is unclear from what management described as “accelerating initiatives to support future growth”.

Expected credit losses (ECL) of $1.1bn in the second quarter were flat year on year. Management still expects an ECL charge of 45 basis points for 2026.

It has been a busy couple of weeks for M&A. HSBC announced on 24 July that it had agreed to sell its life and health insurance business in Singapore to Allianz for $2.1bn. That was followed at the end of the month by the news that Blackstone would buy the bank’s $25bn Australian home loans and personal loans portfolio. HSBC has since announced the disposal of its small Egyptian retail banking operations, and is conducting a strategic review of its retail and domestic SME businesses in Turkey.

HSBC trades on two times price/tangible book value for FY2027, which makes it the most expensive among the London-listed banks. Much to like, but with the shares up more than 70 per cent over the past year, it remains sensible to wait for a cheaper entry point. Hold.

Last IC view: Hold, 1,364p, 25 Feb 2026

HSBC (HSBA)    ORD PRICE:1,567pMARKET VALUE:£269bnTOUCH:1,566.6-1,566.8p12-MONTH HIGH:1,610pLOW: 920pDIVIDEND YIELD:3.6%PE RATIO:15NET ASSET VALUE:1,144ȼLEVERAGE:19Half-year to 30 JunNet operating income ($bn)Pre-tax profit ($bn)Earnings per share (ȼ)Dividend per share (ȼ)202532.215.865.020.0202635.419.585.020.0% change+10+23+31-Ex-div:13 AugPayment:25 Sep £1=$1.34