HSBC Profit Falls 29% on China Impairments, Hong Kong Credit Losses

HSBC, Europe's largest bank, reported a 26 percent drop in first-half pretax profit to $15.8 billion, missing analyst expectations due to a $2.1 billion impairment charge related to its stake in China's Bank of Communications and mounting credit losses tied to Hong Kong's commercial real estate sector. The bank's expected credit losses nearly doubled to $1.9 billion, with $500 million attributed directly to Hong Kong property woes, while operating expenses rose due to restructuring, technology investments, and organizational simplification efforts. Despite these challenges, HSBC's wealth management division showed strong performance, with revenue growth supported by higher customer activity and a 13.2 percent increase in its premier banking segment. CEO Georges Elhedery emphasized ongoing progress in simplifying the organization and managing economic uncertainty, although he warned that US President Donald Trump's trade tariffs and broader economic disruptions could impact future profitability and loan demand. HSBC announced a $3 billion share buyback on top of an earlier $3 billion program, aiming to return value to shareholders amid volatile market conditions. The bank projects continued wealth division growth and remains focused on cost reduction strategies to navigate structural economic challenges.