HSBC’s Q2 results ‘solid’ despite BoCom loss and Hang Seng’s weak profits

Hang Seng Bank reported higher-than-expected credit losses on Hong Kong real estate.

HSBC’s second quarter financial results are in line with return on tangible equity (ROTE) guidance despite the loss of Bank of Communications (BoCom) but Hang Seng Bank’s weak profits still casted its shadow.

Shares of the megabank fell 4% in Hong Kong and London, which Morningstar attributed to the weak profits of its subsidiary Hang Seng Bank.

Hang Seng Bank reported higher-than-expected credit losses on Hong Kong real estate. Higher provisions were partly offset by writebacks in the United Kingdom.

Group-level annualized credit costs in HSBC were just 44 basis points of loans, exceeding the bank’s 30-40 basis point guidance, Morningstar noted.

“Severance and other upfront costs mean a meaningful improvement in the cost/income ratio is unlikely before 2026,” said Morningstar Equity Analyst Note on 31 July 2025.

HSBC also suffered a $2.1b noncash loss on Bank of Communications– $1.1b from dilution due to government capital injections, and $1b in impairments.

“Excluding the one-off, noncash Bocom losses, we view HSBC’s overall performance as solid and within expectations,” Morningstar said.