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HSBC (LSE: HSBA) shares have had a blistering few years. Over the past 5, they’re up 221%, making them the sixth-best performing FTSE 100 inventory over that interval.
All the massive banks have carried out properly, however HSBC‘s crushed the lot. NatWest comes closest, up 164% over 5 years, whereas Barclays and Lloyds are each up round 113%.
These are spectacular figures, particularly with beneficiant dividends on prime. Reinvested, HSBC’s payouts take the five-year whole return to roughly 250%.
Why FTSE 100 banks have soared
Larger rates of interest have helped all of the banks by boosting web curiosity margins, the distinction between what they earn on loans and pay on deposits. HSBC has additionally benefited from its international attain, significantly its dominant Hong Kong franchise and publicity to Asian wealth, commerce and funding flows.
In 2025, Hong Kong generated $15.9bn in income. The financial institution’s worldwide operations give it alternatives past the UK, though this does tie its fortunes to China’s stumbling financial system and international geopolitics.
On 3 August, HSBC shares hit an all-time excessive of 1,597p after a very sturdy three-year run. They’ve since retreated to round 1,360p, a fall of just about 15%.
What’s improper with the inventory?
HSBC isn’t alone. Britain’s large banks have slipped as traders fear about cussed inflation, rising bond yields, the financial outlook and the opportunity of new UK windfall taxes. After such a robust run, some traders might merely be taking earnings.
Larger bond yields additionally supply a substitute for shares for revenue seekers, doubtlessly making dividend-paying banks much less enticing. And if greater borrowing prices squeeze households and companies, unhealthy loans may rise simply as banks face weaker demand for credit score.
HSBC has its personal dangers. China stays weak to property-sector weak spot, debt issues and stress in its much less clear shadow-banking system. Any deterioration may harm debtors and harm confidence. HSBC’s publicity to Hong Kong and mainland China is a power, however it cuts each methods.
The financial institution reported revenue earlier than tax of $29.9bn in 2025, down from $32.4bn in 2024. This dip was largely all the way down to one-off objects. First-half 2026 revenue earlier than tax then jumped 23% to $19.5bn, this time boosted by beneficial one-off results. The underlying efficiency was extra modestly constructive.
Discount or worth lure?
At 1,360p, HSBC trades on a trailing price-to-earnings ratio of 15.1. So I wouldn’t name them a screaming discount. The forecast P/E of 11.2 appears to be like extra interesting.
The forecast dividend yield is round 4.63% this 12 months, doubtlessly rising to five.25% in 2027. As ever, dividends aren’t assured. After pausing share buybacks following its Cling Seng Financial institution privatisation announcement, HSBC has introduced a return with a deliberate programme of as much as $1bn.
I believe HSBC is value contemplating for long-term revenue and development, though I wouldn’t count on the stellar returns of latest years to proceed. Earnings, buybacks and reinvested dividends ought to nonetheless handsomely reward traders over time.
This FTSE 100 development inventory has additionally slipped 25% in latest months. It might even be value contemplating at this time…
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Harvey Jones owns shares in HSBC, Lloyds and NatWest.
