London, May 13, 2026, 11:02 BST
- HSBC is up about 0.4% in London, but the share price has faded from its opening high. The chart says buyers like the rate story; they are not ignoring credit risk.
- Higher-for-longer rates are helping the bank’s lending-margin income, but last week’s $400 million fraud-linked charge still sits in the price.
- Peer banks are also firmer, so this is partly a sector bounce, not only an HSBC story. Barclays and Lloyds were higher in London, and Standard Chartered also rose.
HSBC Holdings traded at about 1,324p late Wednesday morning in London, up roughly 0.4%, after opening at 1,335p and reaching 1,338.2p. That early pop and quick fade matters. The market is not chasing the stock blindly; it is testing whether last week’s earnings scare was a one-off or the start of a broader credit problem.
The main support is rates. HSBC’s first-quarter update raised banking net interest income guidance to around $46 billion. Net interest income, or NII, is the spread a bank earns between what it charges borrowers and what it pays depositors. When rates stay higher for longer, that spread can hold up, especially at deposit-rich banks like HSBC.
That is why today’s move is tied to the rate market, not just to bank-specific news. Polymarket prices no change at the Bank of England’s June meeting at 84%, with a 25-basis-point increase at 17% and cuts below 1%; one basis point is one-hundredth of a percentage point. Fed cut expectations have also hardened: Polymarket puts zero Fed cuts in 2026 at 70%, while Kalshi’s economics page shows “exactly 0 cuts” as the leading Fed-rate-cut outcome at about 69%. Polymarket
That Fed angle matters more for HSBC than it does for a purely domestic UK lender. Hong Kong is one of HSBC’s core profit centres, and the Hong Kong dollar trades under a linked exchange-rate system against the U.S. dollar, with HKMA mechanisms that transmit U.S.-rate pressure into Hong Kong money markets. So U.S. rate-cut odds feed into the HSBC story through both dollar funding and Hong Kong lending economics.
Management leaned into that message on the earnings call. Group CFO Pam Kaur said HSBC was “upgrading our full-year Banking NII guidance to around $46 billion,” while also warning that the “economic landscape remains complex.” The tone was not defensive, but it was not clean either. HSBC lifted expected credit-loss guidance to about 45 basis points after the quarter included Middle East-related provisions and a fraud-linked UK exposure. HSBC
The bull case is simple: HSBC is earning strong returns while rates stay high, wealth activity is growing, and the full ownership of Hang Seng Bank gives it more control in its most important Asian market. The bear case is just as clear: expected credit losses, meaning money set aside for exposures that may not be repaid, rose to $1.3 billion, and Reuters reported that the surprise $400 million loss was linked to the collapse of Market Financial Solutions. HSBC also said it had $111 billion of private-markets-related exposure, including $22 billion tied to private credit, which is why investors are not treating the issue as harmless.
Peers sharpen the read. Barclays had its own MFS-related impairment in the quarter, while Lloyds is more exposed to the UK household and mortgage cycle, and Standard Chartered gives investors a cleaner comparison for Asia and wealth. Citi analysts, cited by Reuters, noted HSBC’s wealth revenue growth of 18% lagged Standard Chartered’s 32%, which is not fatal, but it cuts against the idea that HSBC owns the whole Asian wealth-growth trade.
The Hong Kong line was steadier. HSBC’s Hong Kong-listed shares closed higher Wednesday after falling Tuesday, and the bank has been telling investors that its $13.7 billion Hang Seng Bank privatisation is a milestone for the group. But it also pushed capital lower in the quarter, and Kaur said future buybacks will be decided quarterly. That keeps one shareholder-friendly lever under review rather than locked in.
Fresh funding news adds another layer, though it is not the main equity driver. HSBC issued dollar senior unsecured notes in two $2.25 billion tranches due 2030 and 2034, and also issued €3.5 billion of euro-denominated senior notes. Senior unsecured debt is plain bank funding that ranks above equity but has no collateral behind it. The point for shareholders is not that HSBC can raise money — that is expected — but that term funding costs still sit in a higher-rate world.
There is also a governance overhang that traders may not price minute by minute. HSBC hosted a private meeting with major UK banks on climate-risk disclosures as regulators and investors push lenders to reflect flood, wildfire and transition risks more clearly in financial reporting. That is not why the stock is up today. It is why the market keeps asking whether future credit models are still too backward-looking.
The near-term setup is therefore mixed, not muddy. HSBC is being helped by the same force that can later hurt borrowers: higher rates. The stock can keep catching bids while NII guidance looks firm and rate-cut odds fade, but the next leg higher probably needs evidence that the MFS hit was contained, wealth growth is not falling behind Standard Chartered, and capital returns can restart without straining the balance sheet.
