HSBC's Q4 Earnings on Deck: What's in Store for the Stock?

HSBC Holdings HSBC is scheduled to announce fourth-quarter and full-year 2025 results on Feb. 25, before market open. The company’s quarterly revenues and earnings are expected to have increased on a year-over-year basis.

In the last reported quarter, HSBC’s results were hurt by higher expected credit losses, other credit impairment charges and a jump in expenses. However, an increase in total revenues acted as a tailwind.

The company boasts an impressive earnings surprise history. Its earnings surpassed the consensus estimate in each of the trailing four quarters, with the average beat being 13.55%.
 

HSBC Holdings plc Price and EPS Surprise

HSBC Holdings plc price-eps-surprise | HSBC Holdings plc Quote

Major Factors Likely to Influence HSBC’s Q4 Results

Investment Banking (“IB”) Revenues: Global mergers and acquisitions (M&As) in the fourth quarter jumped solidly from the lows witnessed in April and May following President Donald Trump’s announcement of Liberation Day tariff plans. Companies quickly adapted to the rapidly changing geopolitical and macroeconomic scenarios, leading to a rise in M&A volume. This, along with the easing of the buyer-seller valuation gap, lower capital costs and a focus on scale and AI integration, supported the surge in deal-making activities. Advisory fee growth is likely to have been strong for HSBC.

The IPO market’s performance was impressive, with an increase in both the number of IPOs and the amount of capital raised. Several factors, including moderating inflation, lower rates and the AI boom, drove the rise. Global bond issuance volume was robust. HSBC is expected to have witnessed decent growth in equity and debt underwriting fees.

Trading Revenues: Client activity and market volatility were solid in the fourth quarter. The longest U.S. government shutdown in history, a dip in consumer sentiment, easing monetary policy and a dominant AI-theme drove client activity. Volatility was high in equity markets and other asset classes, including commodities, bonds and foreign exchange.

Owing to solid volatility and higher client activity, HSBC’s trading business performance is expected to have been robust.

Interest Income: In the fourth quarter, central banks across the globe exhibited a mixed approach to interest rate adjustments, with the majority of them keeping the rates steady. This reflected divergent perspectives on the economic outlook, with some central banks prioritizing inflation control, while others focused on potential economic downturn. These are likely to have resulted in the stabilization of funding costs for HSBC and a modest rise in loan demand.
 
HSBC’s interest income is anticipated to have improved slightly in the to-be-reported quarter. For 2025, management expects banking net interest income of $43 billion or better.

Expenses: Over the past several years, HSBC has been able to control expenses. However, overall costs are expected to have been high in the to-be-reported quarter, given the company’s focus on growing market share in the U.K. and Asia, as well as strengthening digital capabilities globally.
 
HSBC’s organizational overhaul plan is likely to have resulted in a further increase in expenses. Operating expenses are expected to rise 3% in 2025 on a target basis.

What the Zacks Model Unveils for HSBC

Our quantitative model does not conclusively predict an earnings beat for HSBC. This is because it lacks the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better.

Earnings ESP: The Earnings ESP for HSBC is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Q4 Earnings and Sales Estimates for HSBC

The consensus estimate for the company’s earnings for the to-be-reported quarter is pegged at $1.68 per share, which has remained unchanged in the past seven days. This indicates growth of 15.9% from the year-ago quarter.

The consensus estimate for sales is pegged at $16.76 billion, implying a roughly 45% surge.

Performance of HSBC’s Peers

Barclays BCS reported fourth-quarter 2025 net income attributable to ordinary equity holders of £1.19 billion ($1.63 billion), up 23.8% from the prior-year quarter.

An increase in revenues and a strong balance sheet supported Barclays’ results. A decrease in credit impairment charges was also encouraging. However, BCS recorded higher operating expenses in the quarter.

UBS Group AG UBS reported a fourth-quarter 2025 net profit attributable to shareholders of $1.19 billion compared with $770 million in the prior-year quarter.

UBS’ results were driven by the strong performances of the Global Wealth Management, Asset Management and Investment Bank divisions. However, the decline in total assets was concerning.

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This article originally published on Zacks Investment Research (zacks.com).

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