UK Banking Giants Barclays and HSBC Shares Hit Highs Before Latter Pulls Back on Earnings

Barclays (LON:BARC) and HSBC (LON:HSBA) both soared to new year-to-date highs yesterday, before reversing this morning.

Barclays shares reached 375p at this morning's open, only to dip to 370p, while HSBC shares touched 978.79p, before reversing 4.55% this morning to 925.90p.

Barclays' impressive performance is underpinned by a strong first-half 2025, where pretax profits surged by 23% to £5.2 billion ($6.94 billion), exceeding analyst expectations of £4.96 billion.

This growth was largely fueled by exceptional trading revenues, particularly in fixed income and equity trading, which contributed over two-thirds of the investment bank’s £3.3 billion in revenues.

Market volatility driven by geopolitical factors, including US tariff policies, proved to be a boon for Barclays' trading division.

However, not all areas performed equally well, with deal advisory and underwriting activities lagging due to a general slowdown, resulting in a 16% year-on-year decline in banking fees.

In a move signaling confidence in its future prospects, Barclays also announced a £1 billion share buyback program and a half-year dividend of 3 pence per share, distributing a total of £1.4 billion to shareholders in a 21% increase compared to the previous year.

HSBC, on the other hand, is navigating a significant restructuring under CEO Georges Elhedery, with a strategic focus on streamlining operations, reducing costs, and pivoting towards the high-growth markets of Asia and the Middle East.

This transformation involves reorganizing the bank into four global units, exiting investment banking operations in the US, UK, and Europe, and concentrating resources on its most profitable business segments.

The ambitious plan aims to achieve annual cost savings of $1.5 billion by the end of 2025. However, HSBC faces challenges, including deteriorating US-China trade relations and declining global interest rates, which could negatively impact its revenue streams, heavily reliant on net interest income.

The broader market environment has undoubtedly contributed to the positive momentum of both banks. A recent US-EU trade deal has lifted market sentiment overall, benefiting banking stocks in particular.

Today's sharp pullback for HSBC comes on the back of declining profit for the June quarter, despite a $3B share buyback.