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HSBC’s pre-tax profits for the first half of the year jumped 23% to $19.5bn, driven by favourable interest rates and double-digit profit growth in its international and Hong Kong businesses.
So what? Bumper profits at the UK’s biggest bank have sharply increased the odds of John Healey reaching for a windfall tax on banks in his first budget as chancellor on 28 October. But HSBC’s pivot back to Asia limits how much value that can capture and gives the FTSE-listed lender leverage if it threatens to relocate.
We’ve been there before. In 2010 HSBC launched a review of its headquarters after George Osborne introduced a bank levy to raise £6bn. In 2015 the lender’s former chair, Douglas Flint, floated the possibility it might relocate due to “uncertainty” caused by David Cameron’s decision to hold an EU referendum. Neither threat materialised.
There’s no suggestion, at this point, that HSBC will try the same trick again. That said, it’s not called the Hongkong and Shanghai Banking Corporation for nothing.
Crazy Rich Asians. On Tuesday, HSBC launched a £1bn share buyback – the first since it announced a $14bn deal to take Hang Seng bank private last October. On certain metrics, chief executive Georges Elhedery’s doubling down on Asian business appears to be going well:
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$64bn. Net new money attracted since the beginning of the year, of which $57bn (89%) was booked in Asia.
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640,000. Number of clients onboarded by Hang Seng in the first half of this year.
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70. Number of initial public offerings in Asia for which the bank is in line to be an underwriter, 40 of them in Hong Kong.
Investment banking fees were relatively flat compared to the first half of 2025, but HSBC noted that growth in Asian dealmaking was offsetting a “wind-down of M&A and ECM in the UK, Europe and the US”. Recently announced deals include the Hong Kong floats of Club Med, the holiday resort chain, and Linkerbot, a Beijing-based robotic hand developer.
HSBC has more work to do if it wants a bigger slice of HK’s booming IPO market. The bank ranked 34th for managing IPOs in Asia (excluding Japan) this year, according to data compiled by Bloomberg. A decade earlier, in 2014, it ranked fifth.
East vs west. Geopolitics remains a risk for western banks flirting with China. Last year US lawmakers castigated JP Morgan and Bank of America for their roles in the mega-listing of Chinese battery maker CATL, calling it a “front for military expansionism”.
Elhedery’s Asia-focused turnaround strategy also has an Achilles heel. In June the bank’s shares dipped after Beijing announced new restrictions on cross-border capital flows. The FT reports today that Chinese authorities have stepped up scrutiny of overseas capital gains and investments of the country’s wealthy. Requests to HSBC to freeze accounts or collaborate with investigators may rankle some of the bank’s wealthy new clients. The bank’s share price was trading 3% down at the open.
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Will Healey try to tax? The chancellor’s talk of “profiteering” by food and fuel retailers has met fierce opposition. Bank profits, bloated from high interest rates, may prove an easier target. A replication of the 38% windfall tax on energy profits could raise £19bn according to campaign group Positive Money. Less radical options include:
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Raising the 3% surcharge on bank profits (paid on top of corporation tax) to 8% – the rate it was set to before April 2023;
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Increasing the ‘bank levy’ on UK-based equities and liabilities on their balance sheets; or
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Designing a new windfall tax directly targeted at ‘excess’ interest paid to commercial banks on their reserves at the Bank of England.
What’s more… HSBC says it will consider boosting its bonus pool to more than $3.9bn if strong performance continues.
Photograh by Bob Henry/UCG/Universal Images Group via Getty Images
UCG/Universal Images Group via G