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Company Reports $37.7B Revenue, 23% Increase in Pre-Tax Profit

Reports revenue $37.7B vs. $34.1B last year. The company said, "Profit before tax increased by $3.7bn or 23% to $19.5bn compared with 1H25. The increase primarily reflected a year-on-year net favourable impact of $2.2bn from notable items. The increase also reflected growth in banking net interest income and higher fee and other income, primarily in Wealth and Wholesale Transaction Banking. This was partly offset by higher expected credit losses and other credit impairment charges, and a planned increase in operating expenses. Profit after tax of $15.3bn was $2.9bn or 23% higher compared with 1H25. In 1H26, notable items included disposal losses of $0.3bn recognised on classification to held for sale associated with the planned sale of our business in Malta, restructuring costs associated with our organisational simplification of $0.3bn, 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 1H25, notable items included dilution and impairment losses of $2.1bn related to our associate Bank of Communications and restructuring costs associated with our organisational simplification of $0.6bn. Constant currency profit before tax excluding notable items increased by $1.1bn to $20.4bn compared with 1H25. Revenue increased by $3.6bn or 11% to $37.7bn compared with 1H25, including a year-on-year net favourable impact of notable items of $0.8bn and the favourable impact of foreign currency translation differences of $0.7bn. The remaining increase reflected higher banking NII, and strong growth in Wealth fee and other income in our International Wealth and Premier Banking and Hong Kong business segments, supported by higher customer activity. The increase also included a one-off property asset disposal gain of $0.2bn. Constant currency revenue excluding notable items rose by $2.0bn to $38.2bn compared with 1H25. Net interest income increased by $1.4bn compared with 1H25, primarily driven by deposit balance growth and the benefit of reinvestment of our structural hedge at higher yields. There was also a favourable impact from foreign currency translation differences of $0.4bn, partly offset by the impact of an adverse $0.1bn one-off item. The impact of lower market interest rates on the funding deployed to the trading book was broadly offset by higher trading balances. Banking NII, which excludes the funding costs associated with the trading book and insurance NII, increased by $1.6bn to $22.9bn. Net interest margin of 1.61% was 4 basis points higher compared with 1H25, mainly due to the impact from foreign currency translation differences and the benefit of our structural hedge, partly offset by lower market interest rates...Common equity tier 1 capital ratio of 14.1% decreased by 0.8 percentage points compared with 31 December 2025, reflecting the impact of the privatisation of Hang Seng Bank, dividends and an increase in risk-weighted assets, partly offset by regulatory profit."

Company Expects Banking NII of At Least $46 Billion in 2026

The company said, "In respect of 2026, We now expect banking NII of at least $46bn in 2026, reflecting a continued favourable interest rate outlook, while recognising the outlook remains volatile and uncertain. We had previously provided banking NII guidance of around $46bn for 2026. We continue to expect an ECL charge as a percentage of average gross customer loans to be around 45bps for 2026, reflecting ongoing uncertainty in the outlook. Over the medium term, we retain our planning range of 30-40bps. The Group remains on track to deliver year-on-year growth in operating expenses of approximately 1% in 2026 on a target basis. Should strong business performance continue, we may consider additional performance-related pay which would increase 2026 target basis cost growth modestly. 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% to 14.5%."