2025-10-28 04:00Financial Performance - The pre-tax profit on a reported basis for Q3 2025 was $7.3 billion, a decrease of $1.2 billion compared to Q3 2024, primarily due to increased operating expenses including a legal provision of $1.4 billion[5]. - Total revenue for Q3 2025 increased by $0.8 billion to $17.8 billion, a growth of 5% supported by increased customer activity in wealth management[5]. - Operating expenses for Q3 2025 were $10.1 billion, an increase of $1.9 billion or 24% compared to Q3 2024, driven by notable items including a legal provision of $1.4 billion[5]. - The company reported a net profit of $17,944 million for the nine months ended September 30, 2025, a decrease of 26.2% from $24,414 million in the same period of 2024[31]. - The company reported a pre-tax profit of $30,032 million for the nine months ended September 30, 2025, an increase from $28,000 million in the same period of 2024[173]. Net Interest Income - The net interest income for Q3 2025 was $8.8 billion, an increase of $1.1 billion or 15% compared to Q3 2024, reflecting growth in deposits and structural hedging benefits[5]. - Net interest income was $25.6 billion, an increase of $1.1 billion, despite a $1.5 billion adverse impact from the sale of Argentine and Canadian businesses[8]. - The bank's net interest income for the first nine months of 2025 was $32.362 billion, a decrease of $0.4 billion or 1% compared to the same period in 2024, primarily due to the sale of operations in Argentina and Canada, which accounted for a $1.6 billion reduction[61]. - The net interest margin remained stable at 1.57% for both the nine months ended September 30, 2025, and 2024[17]. Operating Expenses - Operating expenses rose by $2.7 billion to $27.1 billion, an increase of 11%, primarily due to significant items including legal provisions and restructuring costs[8]. - Operating expenses for Q3 2025 increased by 24% to $10,076 million from $8,143 million in Q3 2024[33]. - The company’s operating expenses included a $1,400 million legal provision, which significantly impacted the overall expense increase[43]. Expected Credit Losses - Expected credit losses for Q3 2025 were $1 billion, unchanged from Q3 2024, with provisions related to wholesale business risks[5]. - Expected credit losses increased by $900 million to $2.9 billion, with a significant portion attributed to increased provisions related to Hong Kong commercial real estate[8]. - Expected credit losses for the first nine months of 2025 were $2.95 billion, up from $1.99 billion in the same period of 2024, indicating a significant increase of about 48%[132]. Capital Ratios - The common equity tier 1 capital ratio was 14.5%, a decrease of 0.1 percentage points from Q2 2025, primarily due to a reduction in common equity tier 1 capital[5]. - The common equity tier 1 capital ratio mid-term target range is maintained at 14% to 14.5%, with anticipated capital impacts from the proposed privatization of Hang Seng Bank[8]. Dividends and Share Buybacks - The board approved a dividend of $0.10 per share for Q3 2025, and a $3 billion share buyback was completed on October 24, 2025[5]. - The dividend payout ratio target for 2025 is maintained at 50%, excluding significant items and related impacts[8]. Wealth Management - Wealth management assets under management reached $15 trillion as of September 30, 2025, representing a 13% increase year-over-year, with net new investment assets of $73 billion in the first nine months of 2025[16]. - Wealth management revenue increased by $1.44 billion or 25%, reflecting strong performance in the segment[46]. Strategic Transactions - HSBC announced a conditional proposal to privatize Hang Seng Bank, which is expected to result in a capital impact of approximately 125 basis points upon completion[12]. - The group plans to reallocate approximately $1.5 billion from non-strategic business activities to areas with significant competitive advantages and value-added returns[13]. - The company recognized a $1 billion impairment loss on its investment in the joint venture after conducting a value impairment test[134]. Market Conditions and Outlook - The Federal Reserve's target interest rate is currently set between 4% and 4.25%, with expectations for further rate cuts by the end of the year[182]. - The company anticipates moderate growth in its main markets in 2026, influenced by trade and tariff policies[181].