HSBC has announced an ambitious new target for its return on tangible equity, aiming for 17% or better through 2028. This update comes as the bank rewards its staff with a decade-high $3.9bn bonus pool, following annual results that exceeded the expectations of the financial community. The bank’s leadership believes the institution is now properly “built for a fast-changing world” after years of intense restructuring.
The 2025 pre-tax profit of $29.9bn was achieved despite a challenging environment, particularly in the Chinese market. A $2.1bn write-down on its stake in the Bank of Communications highlighted the ongoing impact of the Chinese real estate downturn. However, the bank’s broader performance was strong enough to support a total dividend of 75 cents per share for the year.
CEO Georges Elhedery, whose own pay rose to £14.4m, emphasized that the bank’s period of radical change is coming to an end. By reorganizing into east-west divisions and cutting senior management roles, the bank has significantly simplified its operations. These moves have been well-received by the market, with the bank’s share price seeing consistent gains over the last eighteen months.
Strategic moves, such as the $13.7bn deal to take Hang Seng Bank private, are expected to bear fruit in the coming years. HSBC projects that this integration will generate substantial revenue synergies by 2028, although it will require some initial restructuring costs. The bank is positioning itself to be a more streamlined competitor on the global stage.
Despite the positive outlook, analysts are watching the bank’s 2026 projections closely. With only a 1% increase in costs forecasted, there are questions about how the bank will fund necessary investments in AI technology. Nevertheless, the current results suggest that HSBC has emerged from its overhaul as a much more profitable and efficient organization.