HSBC continues to target mid-teens RoTE 2025-2027

The company said, “We operate in a global environment characterised by constant change and uncertainty, creating volatility in both economic forecasts and financial markets. The Group is well positioned to manage the impacts of these challenges and is focused on delivering the best outcomes for our customers. We continue to target a mid-teens RoTE in each of the three years from 2025 to 2027 excluding notable items. We also continue to expect banking NII of around $42B in 2025 based on our latest modelling, recognising the favourable impacts of foreign exchange rates and the adverse effect of the fall in the Hong Kong Interbank Offered Rate, particularly during 2Q25. The Group is well positioned to manage the changes and uncertainties prevalent within the global environment in which we operate, including in relation to tariffs. We have modelled a disruptive tariff scenario that includes significant reductions in policy rates, together with broader macroeconomic deterioration. While we would expect the direct impact from tariffs to have a relatively modest impact on our revenue, the broader macroeconomic deterioration may see RoTE excluding notable items fall outside of our mid-teens targeted range in future years.We now expect ECL charges as a percentage of average gross loans to be around 40bps in 2025. This reflects continuing challenging market conditions in the Hong Kong CRE sector. The Group remains on track to deliver on our cost target. Our growth in target basis operating expenses in 2025 compared with 2024 remains approximately 3%. Our cost target includes the impact of simplification-related saves associated with our announced reorganisation. We continue to expect demand for lending to remain muted during 2025. However, over the medium to long term we expect mid-single digit percentage growth for year-on-year customer lending balances. We continue to expect double-digit percentage average annual growth in fee and other income in Wealth over the medium term. We intend to manage the CET1 capital ratio within our medium-term target range of 14% to 14.5%, with a dividend payout ratio target basis of 50% for 2025, excluding material notable items and related impacts.”