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HSBC (LSE: HSBA) shares have had a blistering few years. Over the last five, they’re up 221%, making them the sixth-best performing FTSE 100 stock over that period.
All the big banks have done well, but HSBC‘s beaten the lot. NatWest comes closest, up 164% over five years, while Barclays and Lloyds are both up around 113%.
Those are impressive figures, especially with generous dividends on top. Reinvested, HSBC’s payouts take the five-year total return to roughly 250%.
Why FTSE 100 banks have soared
Higher interest rates have helped all the banks by boosting net interest margins, the difference between what they earn on loans and pay on deposits. HSBC has also benefited from its global reach, particularly its dominant Hong Kong franchise and exposure to Asian wealth, trade and investment flows.
In 2025, Hong Kong generated $15.9bn in revenue. The bank’s international operations give it opportunities beyond the UK, although this does tie its fortunes to China’s stumbling economy and global geopolitics.
On 3 August, HSBC shares hit an all-time high of 1,597p after a particularly strong three-year run. They’ve since retreated to around 1,360p, a fall of almost 15%.
What’s wrong with the stock?
HSBC isn’t alone. Britain’s big banks have slipped as investors worry about stubborn inflation, rising bond yields, the economic outlook and the possibility of new UK windfall taxes. After such a strong run, some investors may simply be taking profits.
Higher bond yields also offer an alternative to shares for income seekers, potentially making dividend-paying banks less attractive. And if higher borrowing costs squeeze households and businesses, bad loans could rise just as banks face weaker demand for credit.
HSBC has its own risks. China remains vulnerable to property-sector weakness, debt problems and stress in its less transparent shadow-banking system. Any deterioration could hurt borrowers and damage confidence. HSBC’s exposure to Hong Kong and mainland China is a strength, but it cuts both ways.
The bank reported profit before tax of $29.9bn in 2025, down from $32.4bn in 2024. This dip was largely down to one-off items. First-half 2026 profit before tax then jumped 23% to $19.5bn, this time boosted by favourable one-off effects. The underlying performance was more modestly positive.
Bargain or value trap?
At 1,360p, HSBC trades on a trailing price-to-earnings ratio of 15.1. So I wouldn’t call them a screaming bargain. The forecast P/E of 11.2 looks more appealing.
The forecast dividend yield is around 4.63% this year, potentially rising to 5.25% in 2027. As ever, dividends aren’t guaranteed. After pausing share buybacks following its Hang Seng Bank privatisation announcement, HSBC has announced a return with a planned programme of up to $1bn.
I think HSBC is worth considering for long-term income and growth, although I wouldn’t expect the stellar returns of recent years to continue. Profits, buybacks and reinvested dividends should still handsomely reward investors over time.
This FTSE 100 growth stock has also slipped 25% in recent months. It may also be worth considering today…
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Harvey Jones owns shares in HSBC, Lloyds and NatWest.
This story originally appeared on Motley Fool
