HSBC Reports Net Income of GBP 18.3B for 2025
Reports net income GBP 18.3B vs. GBP 17.1B last year. Statutory profit before tax of GBP 6.7B benefitting from higher total income, partially offset by higher operating expenses and a higher impairment charge. Return on tangible equity of 12.9%, or 14.8% excluding a charge for motor finance commission arrangements in the third quarter. Fourth quarter return on tangible equity of 15.7%. Underlying net interest income of GBP 13.6B, up 6% compared to 2024. This reflects a banking net interest margin of 3.06%, up 11 basis points year-on-year, alongside higher average interest-earning banking assets of GBP 462.9B. Strong capital generation of 147 basis points, or 178 basis points excluding the third quarter charge for motor finance. Pro forma CET1 ratio of 13.2% after increased ordinary dividend and announced share buyback. "In 2025, we entered the second phase of our five year strategy and continued to deliver for customers, shareholders and wider stakeholders. As our strategic transformation accelerates into 2026, we remain guided by our purpose of Helping Britain Prosper in driving positive change in areas where we can have impact at scale and create value. The Group demonstrated sustained strength in financial performance in 2025, including in the final quarter, with continued balance sheet and income growth, as well as strong cost discipline and credit performance. This performance enables total shareholder distributions of c.GBP 3.9B for the year. Looking ahead to 2026 and the culmination of the five year strategy we set out in 2022, our continued business momentum and strategic delivery enable us to upgrade guidance. The sustained strength in performance means we are well positioned for 2026 and beyond. Having entered this year on a positive trajectory, I look forward to sharing more detail on the next stage of the Group's strategy, beyond the current plan, in July," said CEO Charlie Nunn.
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Lloyds Banking Reports Q4 2025 Earnings Highlights
- Earnings Beat: Lloyds Banking reported a Q4 2025 GAAP EPS of 2.20p, exceeding expectations by 0.20p, indicating sustained profitability despite slight revenue shortfall.
- Revenue Growth: The fourth quarter revenue reached £5.12 billion, an 8.7% year-over-year increase, although it missed expectations by £10 million, reflecting the company's robust market performance.
- Dividend and Buyback Plan: The Board recommended a final ordinary dividend of 2.43p per share, totaling 3.65p for 2025, a 15% increase, while announcing a share buyback program of up to £1.75 billion, showcasing strong capital position.
- 2026 Guidance: For 2026, the Group expects underlying net interest income of approximately £14.9 billion, a cost:income ratio below 50%, and an asset quality ratio of around 25 basis points, demonstrating confidence in future financial performance.
Lloyds Banking Group Shares Undervalued by 37.4%
- Stock Performance: Lloyds Banking Group's shares recently closed at £1.02, reflecting a 72.7% increase over the past year, yet a 4.8% decline over the last 30 days indicates a contradiction between short-term volatility and long-term growth.
- Valuation Analysis: The Excess Returns model estimates Lloyds' intrinsic value at approximately £1.63 per share, suggesting a 37.4% undervaluation compared to the current price, indicating that the market may not fully reflect its profit potential.
- P/E Ratio Comparison: With a P/E ratio of 17.27x, significantly above the banking industry average of 11.13x, this suggests that the market holds optimistic expectations for Lloyds' future growth, but it may also imply that the current share price is overvalued.
- Investor Sentiment: Simply Wall St assigns Lloyds a valuation score of 2 out of 6, reflecting a cautious market outlook on its future performance, prompting investors to be aware of potential risks and opportunities.
