HSBC has launched a $1bn share buyback program following a massive surge in second-quarter profits that far exceeded forecasts. The global bank, based in the UK, reported a pre-tax profit of $10.1bn for the quarter, a significant increase of 60% from $6.3bn recorded in the same period the previous year. This performance highlights the company's strong financial health and has prompted it to reward shareholders with the buyback, which will be completed ahead of its third-quarter report. CEO Georges Elhedery stated in a statement that "HSBC is becoming the stronger bank we set out to build. We are executing our strategic priorities with pace, precision and discipline." Profit attributable to shareholders rose around 27% to $14.6 billion in the six months to June, from $11.5 billion a year earlier. Pre-tax profit increased 23% to $19.5 billion.
Revenue for HSBC rose 11% to reach $37.7bn during the quarter, driven in part by a boost in net interest income. This income climbed 8% to $18.2bn, thanks to the bank's strategic shift to re-invest lower-yielding hedges at the current higher market interest rates. This approach, known as structural hedging, helped widen the net interest margin to 1.61%, up four basis points compared to the prior quarter. The move is a key part of the bank's efforts to enhance profitability from lending activities. The strong results were partly offset by expected credit losses of $2.4 billion, $400 million higher than in the first half of 2025.
Stable fee income, which is less affected by interest rate fluctuations, increased by nearly 10% to $7.3bn. This gain was fueled by a standout performance in the wealth division, where income reached $5.5bn, a 20% jump from the previous year. This area is a major focus for chief executive Georges Elhedery, who is pushing to develop more consistent and dependable sources of revenue. As part of its commitment to shareholders, HSBC aims to complete the $1bn buyback before its third-quarter update. The move comes after the bank paused buy-backs for three quarters as it rebuilt capital following the privatisation of Hang Seng Bank.
Elhedery has also ramped up the cost-cutting target for 2026, raising the goal to $2bn from an initial projection of $1.5bn. Importantly, the bank believes it can meet the higher target within the original restructuring budget of $1.8bn. This reflects confidence in the efficiency of the ongoing transformations and the potential for continued financial improvements. The bank said it incurred $400 million of losses linked to a fraud involving a British financial sponsor and $200 million relating to Hong Kong's commercial property sector.
Since Elhedery became CEO more than two years ago, one of his main initiatives has been restructuring the bank's operations. A major part of this strategy includes separating the business into two regions—eastern markets covering Asia-Pacific and the Middle East, and western markets in the Americas and Europe. As part of this effort, the total number of staff has decreased by 2,559, now standing at 206,161. Earlier this year, City AM revealed plans to cut several investment bankers, with reports later confirming that those let go at vice-president level and above did not receive bonuses. HSBC has announced 15 business or market exits since last year, including the sale of a $25.3 billion Australian home loan portfolio to Blackstone and a $2.1 billion Singapore insurance business to Germany's Allianz. It also announced the sale of its retail banking business in Egypt.