HSBC sees 26% profit drop due to tariff uncertainty

In the first half of 2025, HSBC, a major global bank headquartered in the UK, announced a significant decline in its profitability due to the ongoing uncertainty in global trade policies, particularly stemming from tariffs initiated by the Trump administration. The banking giant reported a pre-tax profit of 15.8 billion US dollars, approximately 26% lower than the same period in the previous year. This profit drop resulted in part from a 2.1 billion US dollar charge related to losses from its investment in the Chinese Bank of Communications and costs associated with exiting its businesses in Canada and Argentina. HSBC flagged these changes amidst an environment marked by heightened tariff policies, which it indicated have led businesses to adopt a cautious 'wait and see' approach regarding their investment strategies. Additionally, HSBC's Chief Executive, Georges Elhedery, pointed out that the immediate impact of tariffs on the bank's revenues might be relatively modest. However, the broader implications for the global economy could lead to missed financial targets. The bank has been undergoing a significant restructuring process aimed at achieving anticipated annual savings of 1.5 billion US dollars by 2027. It has already made substantial progress, having saved 700 million US dollars, close to half of its targeted amount. These savings efforts have included cutting senior jobs and focusing on eliminating duplicated roles to streamline operations. Looking ahead, Georges Elhedery expressed optimism about the potential for positive growth once the current period of economic uncertainty settles. He noted that, while immediate recovery in investment activities may not happen swiftly in the latter half of 2025, he expects that growth will resume in the following years as the macroeconomic environment stabilizes. Furthermore, he acknowledged that recent trade agreements between the UK, the US, the EU, and India might serve as favorable developments amid the challenging operational landscape HSBC faces. Overall, the financial and operational challenges posed by tariff policies and international relations have put pressure on HSBC’s investment landscape and profit margins, making cost control and strategic restructuring crucial for its resilience going forward.