HSBC expects to deliver mid-teens RoTE ‘or better’ for 2025

The company said, “We expect to deliver a mid-teens or better RoTE for 2025, excluding notable items. This reflects sustained momentum in the earnings of our four businesses into the third quarter and the positive progress we are making in our strategic execution. Our guidance reflects a seasonally lower RoTE in the fourth quarter, which includes historically lower client activity in Wealth and certain cost items specific to the fourth quarter. It also includes a higher level of capital having announced our intention not to initiate share buy-backs temporarily in the context of our proposal to privatise Hang Seng Bank. We maintain confidence in our ability to deliver our mid-teens RoTE target, excluding notable items for 2026 and 2027. We now expect banking NII of $43B or better in 2025, reflecting increased confidence in the near-term trajectory for policy rates in key markets, including in Hong Kong and the UK. We continue to expect ECL charges as a percentage of average gross loans to be around 40bps in 2025. Target basis operating expense growth in 2025 compared with 2024 remains at approximately 3%, including the impact of simplification-related saves associated with our announced reorganisation. While demand for lending remained muted in 9M25, we continue to expect mid-single digit percentage growth for year-on-year customer lending balances over the medium to long term. We continue to expect double-digit percentage average annual growth in fee and other income in Wealth over the medium term. We maintain our medium-term CET1 capital ratio target range of 14%-14.5%. The expected day one capital impact of the proposed transaction to privatise Hang Seng Bank is a net reduction of approximately 125 basis points, which would arise following the approval of the relevant resolutions by the requisite majority at each of the Hang Seng Bank Court Meeting and the Hang Seng Bank General Meeting. Having announced our intention not to initiate share buy-backs temporarily, we expect CET1 capital to increase prior to completion of the transaction, and while we may fall below our CET1 capital target range on incurring the expected day one capital impact, we expect to restore our CET1 capital ratio to within our target range through a combination of organic capital generation and the impact of not initiating share buy-backs. A decision to recommence buy-backs will be subject to our normal buy-back considerations and process on a quarterly basis. We maintain our dividend payout ratio target basis of 50% for 2025, excluding material notable items and related impacts.”