HSBC Profit Jumps 38% as Strategic Priorities Gain Traction

HSBC’s profit after tax increased by 38% year-over-year to $7.6 billion in the third quarter of 2026, signaling sustained momentum despite a complex global economic landscape. The rise in profitability was primarily attributed to a net favorable impact from notable items—specifically, the non-recurrence of legal provisions in the prior year—as well as growth in revenue, particularly from banking net interest income (NII) and reduced expected credit losses.

Revenue for the quarter climbed to $18.6 billion, a 5% increase compared to 3Q25, fueled by banking NII and increased fee income in both corporate and institutional banking and wealth management divisions. Net interest income itself grew by 6% to $9.3 billion, benefiting from deposit balance growth and reinvestment in the structural hedge at higher yields. Importantly, the bank maintained a stable net interest margin of 1.57%. A reduction in stage 3 charges related to Hong Kong commercial real estate and the UK also contributed to a 17% decrease in expected credit losses to $0.8 billion.

HSBC’s annualized return on average tangible equity (RoTE) reached 17.7% in 3Q26, a substantial increase from 12.3% in the same period last year. Excluding notable items, RoTE rose to 18.2%, a 1.6 percentage point improvement. The bank’s CET1 capital ratio stood at 13.9%, a slight decrease from the end of June, reflecting increased risk-weighted assets and the impact of share buybacks. Customer lending balances increased by $6.7 billion on a constant currency basis, driven by growth in the UK, Hong Kong, and participation in the India Foreign Currency Non-Resident Deposit scheme.

These results underscore HSBC’s ongoing strategic execution and its ability to capitalize on opportunities amidst global uncertainty. The bank's focus on simplifying its operations and investing in growth areas appears to be yielding positive results, as evidenced by the improved profitability ratios and increased RoTE. The favorable impact of reversing prior legal provisions, however, played a significant role in the reported profit increase, and the underlying strength of the business is also demonstrated by constant currency profit before tax increasing by $0.9bn compared with 3Q25.