Five years ago was a great time to buy HSBC (LSE: HSBA) shares. They’re up 230% since then, with dividends on top. Unfortunately, that’s no help to investors considering the FTSE 100 bank today.
All that matters now is where its shares go over the next five, 10 or 15 years. Past performance is easy to judge. Future performance is a little trickier, but there are pointers.
We can look at the share price trajectory, for example, and that’s definitely slowed. The price is still up an impressive 41% over 12 months, but it’s slipped almost 5% in the past month.
The price-to-earnings (P/E) ratio has climbed to around 15.7, higher than for much of the past five years, when it’s averaged around nine. That suggests the shares are getting pricey. Its price-to-book ratio, which compares the share price with the value of its net assets, is also elevated at around 1.7. That’s up from just 0.6 in 2023.
Let’s take a look at the profits
Profits before tax have been climbing nicely.
- 2025 – $29.9bn
- 2024 – $32.3bn
- 2023 – $30.3bn
- 2022 – $17.5bn
- 2021 – £18.9bn
The 2025 retreat largely reflected one-off charges and impairments, but still beat consensus forecasts. The jump in profits from 2023 onwards reflected higher central bank interest rates, which helped banks to boost their net interest margins, the difference between what they charge borrowers and pay savers.
HSBC reported first-half profits before tax of $19.5bn this year, up 23% on the same period in 2025. Its full-year 2026 profit forecast ranges from $36.5bn to $38.5bn. Even the lower figure would represent strong growth, although the shares could still fall if investors were hoping for the higher one.
The forward P/E ratio is around 11.7, reflecting those upbeat profit expectations, and makes HSBC look pretty decent value to me.
Don’t forget the divided income
As a result of that share price growth, the trailing dividend yield has fallen to 3.5%, but the forecast yield is 4.47% for 2026, rising to 5.06% in 2027. Those look encouraging numbers to me.
So what do the experts say? The consensus 12-month share price target is 1,577p, which if it came true is a modest 11% above today’s 1,422p. Citigroup is more optimistic, with a 1,640p target, citing stronger-than-expected wealth management fees and resilient net interest margins.
There are risks. HSBC remains exposed to commercial property in Hong Kong and mainland China, where weakness could trigger further loan losses. A slowdown in China could also hit business confidence and borrowing demand. And if interest rates fall faster than expected, banks could see their lending margins squeezed. A wider stock market sell-off would hurt.
The short-term can always bring volatility, but the long-term outlook for HSBC shares seems positive to me. Just don’t expect the price to rise another 230% in the next five years.
With a long-term view, I still think HSBC shares are well worth considering. I certainly won’t be selling mine. Instead, I’m considering increasing my stake. And there are other top UK stocks on my hit list today…
Should you invest £5,000 in HSBC Holdings right now?
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Harvey Jones owns shares in HSBC.
