HSBC profits slide 26% as tariff uncertainty puts brakes on investment

Yahoo

2 days ago

HSBC has cautioned over the impact of Donald Trump's tariffs with policy uncertainty prompting businesses to 'pause' investment plans, as the banking giant revealed sliding profits.
The group also revealed that it was about halfway through its efforts to save 1.5 billion US dollars' (£1.1 billion) worth of yearly costs.
It reported a pre-tax profit of 15.8 billion US dollars (£11.8 billion) for the first six months of 2025 – about 26% lower than the same period a year ago.
The decline was driven by a 2.1 billion US dollar (£1.6 billion) charge to cover losses related to its stake in the Chinese Bank of Communications, as well as costs linked to exiting its businesses in Canada and Argentina.
HSBC said the impact of higher tariffs would be 'relatively modest' on its revenues – but that the 'broader macroeconomic deterioration' could mean it misses some financial targets.
It also cautioned that demand for lending is expected to remain 'muted' during 2025 amid the more uncertain global trade environment.
Georges Elhedery, HSBC's chief executive, explained that some of its customers had 'paused a lot of their investments during this uncertainty – many of them pause, or are in 'wait and see' mode to see where we will land.
'So there are expectations that some of this pause of investments may resume once the uncertainty clears out.
'It will be ambitious to believe things will move on very immediately in H2 (the second half of 2025), but we continue to believe that in the course of the next few years, that growth will resume.'
He added that the bank was 'encouraged' by recent trade agreements, with the UK striking deals with the US, the EU, and India.
Meanwhile, Mr Elhedery has spearheaded an overhaul of the banking giant's structure, hoping to make it simpler and less costly to run.
On Tuesday, HSBC said it had made 700 million US dollars' (£524 million) worth of cost savings – nearly half the 1.5 billion dollars (£1.1 billion) in annual savings it is targeting by 2027.
Cost-cutting has seen the bank cut senior jobs across the business, focusing on 'de-duplication' – meaning stripping out roles that are deemed to have very similar responsibilities to others.
Mr Elhedery said the savings target includes 'around 8% of our payroll expenses'.
He added that the bank was not specifying how many roles it planned to cut, but said the focus on reducing duplication at senior level meant it expects 'headcount reduction to be less than the 8% overall payroll reduction' it was targeting.
Mr Elhedery added: 'We're making positive progress in becoming a simple, more agile, focused organisation built on our core strengths.
'We continue to navigate this period of economic uncertainty and market volatility from a position of strength, putting the changing needs of our customers at the heart of everything we do.'
HSBC shares fell by more than 4% on Wednesday morning.