When you think about safe and balanced investments in Hong Kong, HSBC Holdings is the first bank that comes to mind. Locally, it’s nicknamed 大笨象 (“Big Elephant”). It’s a metaphor reflecting the bank’s stability, size and reliable performance.
Since 2020, shares of HSBC have gained almost 190%, with a current 5.4% dividend yield.
Despite the hottest AI stocks, ETFs and cryptocurrency promising sky-high returns, HSBC has been a steady performer.
In fact, since its restructuring a couple years ago, the bank has taken on a new direction.
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Here’s 7 big insights you need to know before buying this dividend payer.
1. HSBC isn’t just a Hong Kong story — It’s a global powerhouse
At HK$1.6 trillion market cap, this is Hong Kong’s biggest bank. More crucially, HSBC is one of the world’s biggest banks with ~US$3 trillion in assets. That’s massive.
Today, it has operations in more than 60 countries, employing over 210,000 people around the world.
HSBC’s dominance in Hong Kong is unrivaled. Like Singapore’s DBS Group, HSBC’s ATMs are located at almost every corner of Hong Kong’s MTR station. Its franchise is deeply woven in the fabric of Hong Kong’s financial system.
HSBC’s presence goes beyond Hong Kong. In fact, HSBC’s operations span across the UK, mainland China, SEA and the US.
It is expanding fast into wealth management, focusing on affluent customers in fast-growing markets.
What this means is simple: diversification. When Hong Kong faces a slowdown on political tension, the bank can manage risks by riding on the strength of other regions. That worldwide safety net is a big reason why investors see HSBC as reliable and resilient.
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2. HSBC is a potential dividend grower
But you see, ask any investor in Hong Kong why they own HSBC, and you’ll hear one word: dividends. In 2025, HSBC is expected to pay dividends well over HK$5.00 per share. That’s a solid payout, which translates to ~5% dividend yield. Not too bad.
Unlike many banks, HSBC also pays a quarterly dividend, which offers consistent income for long-term investors.
More importantly, and unlike Singapore REITs, HSBC maintains a healthy dividend payout ratio of less than 70%. This means for every dollar of profits HSBC makes, it gets to reinvest at least a third of profits back into the business and rewards the rest of its profits for shareholders.
A “win-win” for the bank and its shareholders.
Credit: aastocks.com
The thing is, HSBC has been through tough years, during the COVID-19 pandemic when payouts were temporarily paused. That was the first time since 1940s HSBC was unable to pay a dividend.
However, by 2021, dividends resumed.
And what’s interesting is over the last couple of years, HSBC dividend payouts have improved, giving investors confidence this is one of the most dependable dividend payers in Asia.
3. HSBC has a strong deposit franchise
Look, HSBC is the market leader for deposits. It has over US$1.7 trillion of deposits, commanding the top market share in the financial market deposits. In fact, in the UK, it’s also ranked in the top three banks by deposit market share.
This way, it doesn’t have to borrow debt from other banks to grow its business.
A large deposit base lowers funding coasts and allows it to more attractively price its loans.
Credit: HSBC’s 1H2025 financial presentation slides
4. HSBC has plenty of profit firepower
Here’s the other thing. HSBC’s loans-to-deposits are very conservative at 57%. For every dollar of deposits it holds, HSBC lends out only US$0.57. That’s half of its entire deposits.
This means two things. First, it doesn’t have to worry about overextending its loans and not worry about defaulted loans.
Next, this also means HSBC has plenty of firepower to lend more of its dollars to both customers and corporations.
Most of HSBC’s loans are in mortgages, which makes it very stable especially in an island city dominated by properties.
5. Headwinds remain, but profits are healthy
During its latest financial results, HSBC’s net profits fell 30% to US$12.4 billion, as compared to the year before. This was mainly due to its impairment losses from its associate Bank of Communications.
However, its return on equity (ROE), a key measure for banks, stands at ~14.7%, which reflects a healthy capital-efficiency of the bank.
Credit: HSBC’s 1H2025 financial report
So far, the bank is also pushing for US$1.5 billion in cost savings to protect margins as growth slows.
Rising costs and a stabilizing interest rate environment mean profit growth will rely more on efficiency than on tailwinds from higher rates.
6. HSBC is exiting unprofitable markets — big driver for dividends
HSBC’s restructuring journey started in 2019. The bank exited unprofitable markets, sold its French retail banking arm, reduced staff and shifted resources to Asia.
Now, under its new CEO, Georges Elhedery, HSBC has doubled down on this strategy:
- It’s pulling back from slower, Western markets,
- It’s scaling up in Asia and the Middle East
- Like Singapore banks, HSBC is focusing heavily on wealth management.
So far, results are showing. Shares have continued to climb, its business is more efficient than before. This makes it a positive sign for the long-term dividend investor.
7. What I’m concerned — key risks
HSBC operates in both eastern and western markets. Political tensions can sometimes make life tricky for the bank.
What’s more, banks face digital disruption, where fintech players move fast.
If HSBC can’t keep pace, it could potentially lose market share.
Lastly, falling interest rates can hurt HSBC’s net interest margins, which measure the bank’s profitability. This could lower earnings.
My final thoughts
At one point, HSBC shares were in the bargain bin. Since its restructuring and commitment to focus on its core segments, there’s a recovery in its shares performance.
While recent financial results haven’t been the most healthy, HSBC still shows signs of strong capital-efficiency, a growing dividend payout and a strong deposit franchise in Hong Kong.
Just a correction. HSBC has exited U.S. market.
Hey Dr L,
Thank you for pointing out, indeed.
Cheers,
Willie