S&P Global Ratings has revised its outlook on HSBC Holdings to positive from stable, while maintaining the group's A- long-term issuer credit rating. The ratings firm also moved the outlooks to positive for several of HSBC's UK entities, including HSBC Bank PLC and HSBC UK Bank PLC, each carrying an A+ rating. S&P left unchanged the outlooks for HSBC's Asia-Pacific units, among them Hongkong Shanghai Bank PLC.
The upgrade of the outlook reflects what S&P described as a successful execution of HSBC's strategic repositioning over the past 18 months. According to the agency, the group simplified its operating structure, exited businesses deemed noncore and pushed for growth in its wealth and commercial banking franchises.
On performance, HSBC reported a statutory return on tangible equity of 17.3% through the first quarter of 2026, a level that exceeds the bank's stated medium-term target of 17%. S&P said it expects the group's adjusted return on tangible equity to exceed 17% in 2027 and to progress toward 18% subsequently.
Credit costs in the quarter were modest on an underlying basis. Expected credit loss charges were about 25 basis points after excluding one-off items. The bank did take manual provisioning action amounting to $200 million against its Middle Eastern loan book to account for credit effects related to the Iran war, and recorded a further $100 million in modeled losses.
HSBC also recorded a material operational hit in the quarter: a $400 million fraud loss in its securitization book. That loss was absorbed within first-quarter preprovision operating income of roughly $9.9 billion.
Balance-sheet and funding metrics remained a focal point for S&P. Groupwide loan-to-deposit ratio for the first quarter stood at 56%, with about 70% of deposits classified as instant access. Common equity Tier 1 capital returned to the lower end of HSBC's target range of 14.0% to 14.5% by quarter-end, even after a roughly 100 basis point reduction related to the January privatization of Hang Seng.
S&P noted that HSBC's regulatory funding metric is materially stronger than those of its global systemically important bank peers. Looking ahead, the agency said it could raise the bank's long-term rating within 12 to 18 months if HSBC continues to show business stability, earnings comparable to the highest rated global banks and sustained balance-sheet metrics. Conversely, S&P warned the outlook could be moved back to stable should operating conditions turn significantly more adverse or if material nonfinancial risks emerge.
Contextual note - The agency's actions focused on group and UK entities while leaving Asia-Pacific outlooks unchanged, reflecting a differentiated view across HSBC's geographic footprint.