HSBC Holdings (HSBC Quick QuoteHSBC - Free Report) is scheduled to announce fourth-quarter and full-year 2024 results on Feb. 19, before market open. The company’s quarterly revenues and earnings are expected to have increased on a year-over-year basis.

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In the last reported quarter, HSBC’s results were aided by a decline in expected credit losses and other credit impairment charges (ECL) and higher revenues. However, higher expenses were an undermining factor.

The consensus estimate for the company’s earnings is pegged at $1.41 per share, which has remained unchanged in the past seven days. This indicates a jump of 147.4% from the year-ago quarter’s reported number.

The consensus estimate for sales is pegged at $15.38 billion, implying 18.2% growth.

Key Factors Expected to Influence HSBC’s Q4 Results

Investment Banking (IB) Revenues: Global mergers and acquisitions (M&As) in the fourth quarter of 2024 showed solid improvement after a subdued performance in 2023 and 2022. Both deal value and volume were robust, driven by solid financial performance, decent economic growth globally, buoyant markets and interest rate cuts. Also, the Trump administration's potential easing of regulatory burden on M&As fueled deal-making activities in the United States. Yet, lingering geopolitical issues remained a headwind. Nonetheless, HSBC’s advisory revenues are expected to be positively impacted by IB revenues.

Further, the IPO market saw signs of cautious optimism, given market volatility, geopolitical uncertainties and global monetary easing. The impressive equity market performance drove some solid activity in follow-up equity issuances. Further, bond issuance volume was decent on favorable economic conditions. Corporate spreads were at near historical lows despite seasonally slow volumes in December. Thus, HSBC is expected to have witnessed solid growth in equity and debt underwriting fees.

Hence, growth in IB revenues is expected to have been strong in the quarter.

Trading Revenues: Client activity and market volatility were solid in the fourth quarter. The likelihood of a strong economic expansion, cooling inflation and easing monetary policy across the globe drove client activity.  Further, volatility was high in equity markets and other asset classes, including commodities, bonds and foreign exchange.

Owing to solid volatility and higher client activity, HSBC’s trading business performance is expected to have been impressive.

Interest Income: In the fourth quarter, the Federal Reserve reduced interest rates by 50 basis points (bps) to a range of 4.25-4.5%. Further, the Bank of England reduced interest rates during the quarter by 25 bps to 4.75. Also, the European Union and several Asian countries, including China and Indonesia, implemented rate cuts amid cooling inflation. Hence, these are likely to have resulted in the stabilization of funding costs for HSBC and a decent rise in loan demand.
 
Thus, HSBC’s interest income is anticipated to have improved in the to-be-reported quarter.

Expenses: Over the past several years, HSBC has been able to control expenses. However, overall costs are expected to have been high in the to-be-reported quarter, given the company’s focus on growing market share in the U.K. and Asia, as well as strengthening digital capabilities globally.
 
Further, during the reported quarter, HSBC announced organizational restructuring. This is also likely to have led to an increase in operating expenses.

HSBC’s Outlook for 2024

Management expects banking net interest income (NII) of $43 billion. 

HSBC targets year-over-year operating expense growth of 5%. This includes an increase in staff compensation, higher technology spend and investment for growth and efficiency, partly offset by cost savings actions taken during 2023.

ECL charges, as a percentage of average gross loans, are expected between 30 and 40 basis points.

HSBC expects a return on average tangible equity in the mid-teens, excluding notable items' impacts.

What the Zacks Model Unveils for HSBC

Our quantitative model does not conclusively predict an earnings beat for HSBC. This is because it lacks the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or better.

You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for HSBC is 0.00%.

Zacks Rank: The company currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of HSBC’s Peers

Deutsche Bank (DB Quick QuoteDB - Free Report) reported fourth-quarter 2024 earnings attributable to its shareholders of €106 million ($113 million), down 92% year over year.

Results were negatively impacted by a rise in expenses. However, lower provision for credit losses and a strong capital position were tailwinds for DB.

ICICI Bank Ltd.’s (IBN Quick QuoteIBN - Free Report) net income for the third quarter of fiscal 2025 (ended Dec. 31) was INR117.9 billion ($1.4 billion), up 14.8% from the prior-year quarter.

The results were driven by a rise in NII and non-interest income, and growth in loans and deposits. However, higher operating expenses and provisions were the undermining factors for IBN.