Georges Elhedery, group chief executive officer, said: "We continued to make positive progress in creating a simple, more agile, growing HSBC. Each of our four businesses contributed to firm-wide revenue growth and each delivered an annualised RoTE in excess of 17%, excluding notable items. In periods of greater uncertainty, customers turn to us more as their trusted partner to navigate complexity with the financial strength, stability and expertise they know they can rely on. We remain confident in achieving the targets we set out in February 2026."

Financial performance in 1Q26

• Reported profit before tax of $9.4bn decreased by $0.1bn compared with 1Q25. The decrease reflected higher expected credit losses and other credit impairment charges ('ECL') in 1Q26, an adverse impact from notable items and a rise in operating expenses. This was partly offset by revenue growth from strong Wealth fee and other income, as well as higher banking net interest income ('banking NII'). Profit after tax of $7.4bn was $0.2bn lower than in 1Q25.
• In 1Q26, notable items included a disposal loss on classification to held for sale of $0.3bn associated with the planned sale of our business in Malta and losses of $0.2bn from the recycling of foreign currency translation reserves following the completion of the sale of our UK life insurance business. In 1Q25, notable items included $0.1bn of fair value losses on American Depositary Receipts ('ADRs') received as part of the sale consideration for our business in Argentina.
• Constant currency profit before tax excluding notable items was $10.1bn, broadly stable compared with 1Q25. Revenue growth, driven by a strong performance in Wealth and higher banking NII, was broadly offset by higher ECL and operating expense growth.
• Annualised return on average tangible equity ('RoTE') in 1Q26 was 17.3%, compared with 17.9% in 1Q25. Excluding notable items, annualised RoTE in 1Q26 was 18.7%, a rise of 0.3 percentage points compared with 1Q25.
• Revenue increased by $1.0bn or 6% to $18.6bn compared with 1Q25. The increase primarily reflected strong growth in Wealth fees and other income in our International Wealth and Premier Banking ('IWPB') and Hong Kong business segments, supported by higher customer activity. The increase also included a one-off property asset disposal gain of $0.2bn and growth in banking NII. This was partly offset by the year-on-year impact of notable items, mainly related to business disposals. Constant currency revenue excluding notable items rose by $0.7bn to $19.1bn.
• Net interest income ('NII') of $8.9bn increased by $0.6bn or 8% compared with 1Q25, including an adverse $0.1bn one-off item in 1Q26. The increase was mainly driven by deposit balance growth, the benefit of reinvestment of our structural hedge at higher yields and the impact of lower market interest rates on the funding deployed to the trading book, partly offset by higher trading balances. Banking NII, which excludes the funding costs associated with the trading book, which were stable, increased by $0.7bn to $11.3bn.
• Net interest margin ('NIM') of 1.60% was 1 basis points ('bps') higher compared with 1Q25. NIM was 4bps lower compared with 4Q25, primarily reflecting the impact of a one-off item in 1Q26.
• ECL of $1.3bn were $0.4bn higher compared with 1Q25. The charge in 1Q26 primarily reflected a $0.4bn fraud-related, secondary, securitisation exposure with a financial sponsor in the UK in our Corporate and Institutional Banking ('CIB') business, as well as a $0.3bn increase in allowances to reflect heightened uncertainty and a deterioration in the forward economic outlook due to the onset of the conflict in the Middle East on 28 February 2026. ECL in 1Q25 included charges related to geopolitical tensions and higher trade tariffs.
• Operating expenses of $8.7bn were $0.6bn or 8% higher compared with 1Q25. The increase reflected the phasing of the performance-related pay accrual relative to 1Q25, the impacts of inflation, higher planned spend and investment in technology and an adverse impact from foreign currency translation differences of $0.4bn. These increases were partly mitigated by cost reductions from our organisational simplification. Target basis operating expenses rose by $0.3bn or 3%, including a higher performance-related pay accrual.
• Customer lending balances increased by $13.6bn compared with 4Q25, including adverse foreign currency translation differences. On a constant currency basis, lending balances increased by $20.1bn, with growth across all of our business segments.
• Customer accounts decreased by $5.1bn compared with 4Q25, including adverse foreign currency translation differences. On a constant currency basis, customer accounts increased by $9.2bn, primarily driven by balance growth in CIB in Asia, notably in Hong Kong. Deposit growth was partly offset by the classification of deposits from the planned sale of our business in Malta to 'liabilities of disposal groups held for sale'.
• Common equity tier 1 ('CET1') capital ratio of 14.0% decreased by 0.9 percentage points compared with 4Q25, reflecting the impact of the privatisation of Hang Seng Bank, dividends and an increase in risk-weighted assets ('RWAs'), partly offset by regulatory profit.
• The Board has approved a first interim dividend for 2026 of $0.10 per share.

Outlook

• We retain all of the group financial targets we announced at our full year 2025 annual results in February 2026, including a RoTE of 17% or better for 2026, 2027 and 2028, excluding notable items.
• The macroeconomic outlook is facing heightened uncertainty, creating volatility in both economic forecasts and financial markets resulting in both tailwinds and headwinds. The group is well-positioned to manage the impacts of these challenges through our high-quality revenue streams, conservative approach to credit risk and strong deposit franchise. Supporting our clients through this volatile period is a top priority.
• We now expect banking NII of around $46bn in 2026, reflecting an improved interest rate outlook, while recognising the outlook remains volatile and uncertain. We had previously provided banking NII guidance of at least $45bn for 2026.
• We now expect an ECL charge as a percentage of average gross loans to be around 45bps (including held for sale loan balances) for 2026, reflecting ongoing uncertainty in the outlook. Our previous ECL guidance for 2026 was around 40bps of average gross loans (including held for sale loan balances). Over the medium term, we retain our planning range of 30–40bps.
• We retain our commitment to group-wide cost discipline. We continue to target growth in target basis operating expenses of approximately 1% compared with 2025. Our target basis operating expenses measure excludes notable items and includes the impact of simplification-related saves associated with our announced strategic reorganisation.
• We intend to continue to manage the CET1 capital ratio within our medium-term target range of 14%–14.5%. A decision to recommence buy-backs will be subject to our normal buy-back considerations and process on a quarterly basis.
• The group is well positioned to manage the changes and uncertainties prevalent within the global environment in which we operate, including in relation to the conflict in the Middle East. As part of our periodic internal stress testing, we have modelled a range of integrated downside stress scenarios of increasing severity and duration, which include higher oil prices, rising inflation, a material slowdown in GDP, rising unemployment and market disruption. Under these scenarios, we could expect a mid-to-high single digit percentage adverse impact on profit before tax, which if unmitigated, could bring RoTE excluding notable items below our 17% or better target in 2026.

Reshaping the group for growth

On 26 January 2026, we completed our privatisation of Hang Seng Bank, following shareholder and Court approval. Hang Seng Bank is now a wholly-owned subsidiary of the HSBC group and Hang Seng Bank shares have been withdrawn from the Hong Kong Stock Exchange. Through the privatisation of Hang Seng Bank, we expect to realise $0.5bn in pre-tax revenue and cost synergies across both our brands in Hong Kong by the end of 2028. We expect to incur associated restructuring costs of $0.6bn, of which one-off income statement impacts would be reported as material notable items. We also have an ambition to generate further revenue and cost opportunities of around $0.4bn by the end of 2028 across both our brands in Hong Kong.

At our 2024 full-year results we announced measures to simplify the group, and we have committed to deliver an annualised reduction of around $1.5bn in our cost base, expected by the end of 2026 from our organisational simplification programme.

We remain on track to have taken actions to deliver our $1.5bn annualised cost reduction by the end of June 2026, which is six months earlier than planned. To date, we have identified and actioned annualised cost savings of approximately $1.4bn, which resulted in a reduction of around $0.6bn in operating expenses in the income statement in 2025 and a $0.3bn reduction in 1Q26. In 1Q26 we incurred $0.1bn in restructuring and other related costs, primarily related to severance, taking the total charge to date to $1.2bn.

We are also focused on opportunities where we have a clear competitive advantage and accretive returns, and we aim to redeploy approximately $1.8bn of additional costs saved from non-strategic activities into these areas over the medium term. This includes the additional $0.3bn of costs saved from the synergies generated from our privatisation of Hang Seng Bank.

During the first quarter of 2026, we completed the sales of our UK life insurance business and our business in South Africa. In addition, we reclassified to held for sale the assets and liabilities related to the planned sale of our business in Malta. On 30 April 2026, we completed the sale of our retail banking business in Sri Lanka.

On 4 May 2026, we entered into a binding agreement to sell our retail banking business in Indonesia. The proposed transaction remains subject to regulatory approval and is expected to complete in the first half of 2027. Targeted strategic reviews of our retail businesses in Australia and Egypt and HSBC Life Singapore remain underway on which no decisions have been made. Our CIB businesses in these markets, as well as in Indonesia, are unaffected.

From 1 January 2026, we have updated our definition of Wealth balances to exclude Asset Management third-party distribution assets. On this new basis, Wealth balances as at 31 March 2026 across all of our business segments were $1.6tn, broadly stable compared with 31 December 2025. Within this we have attracted net new money ('NNM') in 1Q26 of $39bn, with $34bn booked in Asia. This compared with NNM in 1Q25 of $23bn, with $19bn booked in Asia.

Transaction banking continues to perform well as we leverage our network and capabilities to capture opportunities from changing trade and capital flows. In 1Q26, fee and other income in Wholesale Transaction Banking rose by 2% compared with 1Q25, reflecting increases in Securities Services, Global Trade Solutions ('GTS') and Global Payment Solutions ('GPS').

Re-disseminated by The Asian Banker