HSBC Profit Jumps 68% to $7.69 Billion, Bank Announces $1 Billion Buyback

HSBC reported net profit of $7.69 billion for the second quarter, up 68% from a year earlier, according to Morningstar. Pretax profit came in at $10.1 billion, beating a company-compiled estimate of $9.5 billion, according to The Business Times. Revenue climbed 11% to $37.7 billion, according to City AM.

HSBC is turning that success into cash for shareholders. The bank plans to buy back up to $1 billion of its own stock, with the repurchase expected to wrap up before third-quarter results land, according to Morningstar.

Why the numbers jumped so much

Part of the surge is a comparison quirk. Last year's second quarter was dragged down by $2.1 billion in losses tied to HSBC's Chinese associate, Bank of Communications, according to Morningstar. Strip that anchor away and this year's results look even better against a weak base.

But the growth is real too. Net interest income rose 8% to $18.2 billion as HSBC reinvested lower-yielding hedges into higher-rate instruments, a strategy called structural hedging, according to City AM. Fee income rose almost 10% to $7.3 billion, driven by a 20% jump in wealth management to $5.5 billion, according to City AM. The Business Times reported the quarter also included $2.6 billion in "notable items" contributing to the beat.

Credit losses came to $1.1 billion, including charges tied to Hong Kong's commercial real estate sector, according to The Business Times. That's a real cost, not a footnote, and it's worth watching if Hong Kong property keeps sliding.

Elhedery's cost-cutting machine

CEO Georges Elhedery has been running a deliberate teardown-and-rebuild since taking over roughly two years ago. He's splitting HSBC into "eastern" and "western" market divisions, one covering Asia-Pacific and the Middle East, the other covering the Americas and Europe, according to City AM.

He's also selling off pieces that don't fit the new strategy. HSBC recently agreed to sell its Egypt retail banking business to Emirates NBD, offloaded a $25 billion Australian home and personal loan portfolio to Blackstone, and sold its Singapore life and health insurance business to Allianz for $2.1 billion, according to Morningstar. The Business Times reports that sale, worth S$2.7 billion locally, is expected to generate a pretax gain of $1.8 billion.

Headcount is dropping too. Total staff fell to 206,161, down 2,559 since the end of 2025, according to City AM. That includes investment banking cuts City AM reported were timed to land on the same day as bonus payouts, a move that generated plenty of internal anger when it was first reported.

Elhedery raised his cost-savings target for the end of 2026 to $2 billion, up from an original $1.5 billion goal that the bank says it already hit at the start of the year, according to City AM. He says HSBC will hit the new target within the original $1.8 billion restructuring budget.

"HSBC is becoming the stronger bank we set out to build," Elhedery said, according to Morningstar. In a separate statement cited by The Business Times, he said the bank is "executing our strategic priorities with pace, precision and discipline."

The buyback pause, explained

This isn't HSBC's first buyback rodeo. The bank paused repurchases for roughly three quarters starting in October 2025 after announcing it would take Hang Seng Bank fully private, a deal valued around $14 billion, according to The Business Times. City AM reported the offer for the 36% stake HSBC didn't already own came to HK$155 per share, valuing that stake at HK$106.1 billion.

With that deal digested, the buyback taps are back on.

China risk

China's crackdown on cross-border capital flows rattled HSBC's stock in June, according to The Business Times, and it's a legitimate concern for anyone betting on HSBC's wealth-management growth story. Bloomberg Intelligence analysts, cited by The Business Times, estimate that under a worst-case scenario, new money inflows into Hong Kong wealth management could fall as much as 30% in 2026 if Beijing tightens further.

That outcome carries real weight given how much of HSBC's fee income growth is tied to wealth management in Hong Kong. Standard Chartered CEO Bill Winters told Bloomberg Television his bank has seen "no discernible change" in business flows so far, according to The Business Times, which is a fair counterpoint. But "no discernible change yet" isn't the same as "no risk."

HSBC shares have hit record highs in recent weeks, recovering fully from the June scare, according to The Business Times. The bank's London market value stands at roughly £274 billion, according to City AM, making it the most valuable company on the FTSE 100.

Standard Chartered, HSBC's crosstown rival, posted its own better-than-expected second-quarter profit on July 29 and announced a matching $1 billion buyback, according to The Business Times. Both London-based giants are now betting heavily on the same Hong Kong wealth story carrying them through whatever Beijing does next. Whether that bet pays off depends on decisions in Beijing that neither bank controls.