HSBC announces $3 billion share buyback after second-quarter profit misses estimates

• Europe's largest lender HSBC missed second-quarter profit and revenue expectations.
• It reported profit before tax for the three months ended in June of $6.3 billion.
• Operating expenses rose by 10% compared to the same period a year ago.

Europe's largest lender HSBC on Wednesday missed second-quarter profit expectations, mostly on account of impairment charges related to a Chinese bank and loss of income from businesses it disposed in the first half of 2024.

HSBC, which reported profit before tax for the three months ended June of $6.3 billion — down 29% from a year ago — announced a share buyback of $3 billion.

Here are HSBC's second-quarter 2025 results compared with consensus estimates compiled by the bank.

• Profit before tax:$6.3 billion vs. $6.99 billion
• Revenue:$16.5 billion vs. $16.67 billion

Operating expenses rose by 10% compared to the same period a year ago, and were largely owed to restructuring and other related costs as well as from increased spending and investment in technology, the bank said.

Hong Kong-listed shares of HSBC declined 2.71%.

HSBC Group CEO Georges Elhedery flagged “structural challenges” to the global economy that have caused uncertainty and market volatility, citing “broad-based tariffs” and “fiscal vulnerabilities.”

“This is complicating the inflation and interest rate outlook creating greater uncertainty. Even before tariffs take effect, trade disruptions are reshaping the economic landscape,” Elhedery said.

The bank said it was “well-positioned” to manage the uncertainty, including tariffs, although its return on tangible equity — a measure of generating profits — could be hit.

“While we would expect the direct impact from tariffs to have a relatively modest impact on our revenue, the broader macroeconomic deterioration may see RoTE excluding notable items fall outside of our mid-teens targeted range in future years,” the bank's statement read.

HSBC warned that demand for lending would remain muted for the rest of the year, while forecasting further growth in its wealth division.

“We continue to expect double-digit percentage average annual growth in fee and other income in Wealth over the medium term,” the bank said.

HSBC is planning to terminate several employees in its equities team in its Germany office, as part of a broader effort to scale back its investment banking operations outside of Asia and the Middle East, Bloomberg reported last week.

The move aligns with Elhedery's push to revamp the investment bank. Last October, HSBC announced a restructuring plan to split its operations into four divisions, creating separate “Eastern markets” and “Western markets” sectors. HSBC has said the reorganization will cut costs by about $300 million this year.

In January, the lender announced that it will shut down its M&A business and parts of its equities operations in Europe and the Americas.

“It [HSBC] needs to make sure that shareholders in Asia remain on board with the strategic direction CEO Georges Elhedery is taking centered on simplification and intensive cost-cutting, but without a radical overhaul of the entire business model,” Morningstar's senior analyst Michael Makdad told CNBC.

The immediate challenge for the group is finding a replacement for HSBC's Group Chairman Mark Tucker, he added. Tucker will step in September this year.