HSBC holdings (LSE: HSBA) shares jumped more than 5% in morning trading Wednesday (25 February), meaning they’ve now more than trebled over the past five years. The driver? Another cracking set of full-year results.
The bank did actually report slightly lower profit before tax than the previous year. It’s down by $2.4bn to $29.9bn. But that’s mostly due to a number of one-off losses and impairments, partly through restructuring and streamlining costs, amounting to $4.9bn. And it’s better than analysts had been expecting.
HSBC reported a storming return on tangible equity (RoTE) of 17.2%, excluding one-offs. And the bank expects RoTE to hit at least 17% over the 2026 to 2028 period, with continuing annual revenue growth. But the big question is: are HSBC shares still good value?
“Decisive action and swift execution”
CEO Georges Elhedery characterised HSBC’s activity in the year as being all about decisive action and rapid execution. He told us: “Each of our four businesses performed well and we have strong momentum across the bank.“
There’s one immediate standout for me. Net interest income increased in 2025, by $2.1bn to $34.8bn. That marks the difference between what a bank pays out to savers and receives from borrowers. And in times when inflation is falling and central banks are cutting rates, it usually suffers a squeeze. It’s something to keep an eye on in 2026 and the years ahead.
The board announced a full-year dividend of 75 cents (approximately 55.5p) per share. And that means a 4.3% dividend yield on the HSBC share price at the previous close.
A valuation check
Diluted earnings per share of $1.20 (88.9p) put HSBC shares on a trailing price-to-earnings (P/E) ratio of over 15 now. Is that maybe a rich bank valuation at the moment, with global economies still looking fragile? My instinct suggests it’s at least fully valued. And renewed international trade and tariff uncertainty only reinforces the thought.
Admittedly, analysts see the P/E dropping to 11 based on 2026 forecasts, and 10.5 the year after. And there has to be a good chance of earnings predictions being upgraded now we’ve seen such a strong 2025. But HSBC is still at the top end of FTSE 100 bank valuations.
At Lloyds Banking Group, for example, we have P/E forecasts below nine by 2027. But HSBC’s higher valuation might make sense. It’s not exposed to the same single-country risk. And many investors will see China-region growth, which largely drives HSBC, as having a brighter outlook.
What should investors do now?
I really like the banking sector, and I’ve long seen HSBC as a good long-term investment candidate. And I think I still do. I’m just a bit wary now of the potential for competition in international banking — of the kind that UK-focused Lloyds doesn’t face.
I also fear a number of current shareholders could look at their paper profits — and decide to turn them into actual cash by selling. But for a long-term outlook, I reckon HSBC shares will probably still be worth considering.
