The HSBC Holdings (LSE: HSBA) share price dropped as much as 5% in early trading this morning (30 July) on the back of first-half results.
The bank posted a 29% decline in pre-tax profit in the second quarter, to $6.3bn. That’s less than the $7bn expected by analysts. For the half, we saw a 27% fall to $15.8bn. A $2.1bn impairment charge on HSBC’s stake in China’s Bank of Communications, following a $3bn charge last year, didn’t help.
The disappointing results were softened by the announcement of a new share buyback of up to $3bn. The shares recovered some of their early loss, down 2.8% at the time of writing.
Vying for top spot
HSBC briefly became the most valuable company on the whole FTSE 100 earlier this month. But AstraZeneca has since taken the crown back, boosted by its own H1 figures.
The bank, focused on Asia, has still had a cracking run. We’re looking at a 40% share price rise in the past 12 months. And shareholders are sitting on a 172% gain over five years. That’s not including dividends, at 10c per share for the latest quarter. The forecast suggests a 5.2% yield for the full year.
The key question is, does this poor quarter mean a long-term impact to HSBC’s future prospects? We can’t know, but I don’t think so.
We’re in a period of considerable uncertainty, with the outcome for US-China trade still far from settled. But it does look like this profit fall really could be a one-off. Saying that, what the Chinese government might do with the Bank of Communications is one of the risks to watch out for.
How does it compare?
On valuation, UK investors will be comparing HSBC with the other banks listed on the FTSE 100. Here’s how they stack up in terms of price-to-earnings (P/E) and dividend yield forecasts. I’ve based it on a late-morning share price snapshot.
| Bank | Market cap | Share price | P/E 2025 | P/E 2026 | Dividend |
| HSBC Holdings | £165bn | 943p | 7.6 | 6.9 | 5.2% |
| Barclays | £52bn | 371p | 9.0 | 7.4 | 2.3% |
| Lloyds Banking Group | £47bn | 79p | 11.9 | 8.5 | 4.2% |
| NatWest Group | £42bn | 525p | 8.9 | 8.1 | 4.8% |
| Standard Chartered | £32bn | 1,371p | 8.1 | 5.5 | 2.1% |
So, even after those dramatic share price rises of the past 12 months and over five years, HSBC still looks like the cheapest FTSE 100 bank stock on those two fundamental measures.
Does that alone make it a buy now? No. And it does face risks that the others don’t. I think my current biggest fear is over HSBC’s exposure to China’s real estate market. It’s been booming, it’s been busting, and who knows where it will go in the mid term?
Passive income
For the long term though, I can only see the China-centric economy growing in the decades ahead. I do think HSBC could face a bit of share price volatility for the rest of this year and possibly beyond. But should passive income investors consider it to hold for 10 years or more? I reckon they could do worse.
