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Enoch Yiu

HSBC, the largest banking group in Europe and Hong Kong by assets, expects provisions for bad debt to keep rising this year amid challenges in Hong Kong’s commercial real estate market and potential fallouts from trade tariffs and swings in global interest rates.
The UK lender, whose Asian base is in Hong Kong, and its subsidiary Hang Seng Bank, made a combined US$500 million in provisions on offices and retail properties in Hong Kong in the first half, according to its results published on Wednesday. That was five times the amount a year earlier.
“We are seeing continued challenges in some of the office commercial real estate in Hong Kong,” CEO Georges Elhedery said during an online media briefing after the announcement. “That is mainly due to an oversupply, resulting in downward pressure on rentals and capital values.”
The lender expects charges related to credit losses in 2025 to rise to 40 basis points as a percentage of average gross loans – the top end of the 30 to 40 basis point range it predicted in April. The spread was 36 basis points in 2024 and 32 basis points in 2023, according to its exchange filings.

“During the short term, some of our borrowers are facing challenges and we are here to support them,” Elhedery said. “We are encouraged by the additional government actions that have been taken to limit land supply, which will ultimately support this market in the medium term.”
The bank booked US$1.9 billion in credit losses in the first six months, almost twice from a year ago, according to its latest quarterly report card. Besides loans related to Hong Kong’s office and retail properties, provisions were also made for uncertainties related to high tariffs and interest rate swings, Elhedery said.
Meanwhile, the lender said it would set aside US$3 billion to repurchase its own shares over the next three months, matching the spending in the year-earlier period, according to its stock exchange filing on Wednesday. It will pay a dividend of 10 US cents per share, the same as in the preceding quarter.
The group reported a 29 per cent slide in pre-tax profit in the second quarter to US$6.33 billion from a year earlier, citing slimmer lending margins and a higher-than-expected one-off loss of US$2.1 billion related to its diluted stake in Bank of Communications. The mainland’s sixth-largest lender made a special share issue to the central government in April, reducing HSBC’s stake to 16 per cent from 19.03 per cent.
The dilution and impairment losses were larger than the US$1.2 billion to US$1.6 billion range it estimated in April. The second quarter pre-tax profit trailed a market consensus of US$6.99 billion among analysts tracking the stock, according to Bloomberg data.
For the first half, HSBC reported a 26 per cent drop in pre-tax profit to US$15.8 billion from a year earlier. Net profit decreased 30 per cent to US$11.5 billion, or 65 US cents per share, trailing a consensus forecast of US$11.9 billion compiled by the bank. Pre-tax profit and revenue grew by about 5 per cent without one-off “notable items”.


HSBC’s shares, which fell 0.4 per cent before the announcement, slumped after the earnings report, losing 3.8 per cent to HK$96.95 in Hong Kong on Wednesday. Still, they have risen 41 per cent since Elhedery took the reins from Noel Quinn on September 2 last year.
HSBC was confident it would reach its net interest income projection of US$42 billion this year and other mid-teens return targets in the coming years because of the strong growth in its wealth management business in Hong Kong, Asia and the Middle East, the CEO said.
The bank would keep pursuing cost-cutting measures. It has also ordered all managing directors to return to the office at least four days a week from October 1, a necessary move to ensure faster decision-making, better training and nurturing of talent, he added.

HSBC is reaping the benefits of its focus on the global wealth management business, which continues to be a major growth engine. Fee and other income from the business increased 22 per cent in the first half from a year earlier, while net new invested assets reached US$22 billion with Asia delivering half of the sum.
The insurance business led with a 36 per cent growth in the first half, while investment distribution jumped 24 per cent, private banking gained 12 per cent and asset management expanded 9 per cent.
“This is the sixth quarter consecutively that we exhibit double digit revenue growth,” Elhedery said. “We continue to expect double-digit percentage average annual growth in fee and other income in wealth over the medium term.”


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Business

HSBC's CEO continues cost-cutting measures and orders all managing directors to work from office for at least four days a week from October 1


HSBC's CEO continues cost-cutting measures and orders all managing directors to work from office for at least four days a week from October 1.


HSBC

Hang Seng Bank

Bank of Communications

Georges Elhedery

HSBC expects higher credit losses from Hong Kong property market, tariff-induced pain

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}HSBC's CEO continues cost-cutting measures and orders all managing directors to work from office for at least four days a week from October 1

HSBC's CEO continues cost-cutting measures and orders all managing directors to work from office for at least four days a week from October 1