HSBC Chases U.K. Middle-Market Lending After 15% Jump

Middle-market lending at HSBC's U.K. arm rose 15% year over year, and the bank has added roughly 500 customers in that segment since the end of 2024 — about 8% of its existing base — as executives laid out a growth plan built on digital investment and lending discipline rather than market-share grabs.

The figures came from David Lindberg, CEO of HSBC UK Bank, who spoke at an investor breakfast alongside Jon Bingham, HSBC's group financial controller. Together they sketched a franchise that is growing selectively, spending on platforms, and absorbing a tax hit without changing course.

Where is the growth coming from?

The U.K. operating segment reported a 21.4% return on tangible equity and a 41% cost-to-income ratio, Lindberg said. U.K. revenue and customer loans each grew 7% year over year.

Within commercial banking, middle-market companies are the priority. HSBC ranks second in the U.K. middle market and fourth among smaller businesses, according to Lindberg. The ranking matters less than the trajectory: new customer numbers in the business banking segment rose 23% from a year earlier, helped by onboarding improvements, pricing and marketing.

The onboarding change is stark. HSBC shortened onboarding times for most business banking customers to 24 hours, down from an average of about 30 days. A month-long wait became a single day.

Lindberg said corporate customers were borrowing to invest in artificial intelligence, automation, digitization and acquisitions. He described the corporate loan book as healthy, while noting that agriculture and homebuilding in London and the southeast had faced some pressures.

In retail, where HSBC's market share has slipped in recent years, the bank is investing in its app and customer service rather than pursuing growth at any price.

"We're trying to grow value and we're not chasing market share," Lindberg said. He added that HSBC would weigh mortgage lending opportunities against corporate lending based on margins and available balance sheet capacity.

The plain takeaway: HSBC wants profitable growth, not growth for its own sake.

What is happening with deposits and margins?

Deposit competition increased during the third quarter, Bingham told the breakfast. The bank holds about half a trillion dollars in deposits across its U.K. franchise and does not need to chase deposits to fund current growth, he said.

The margin picture remains steady. HSBC's U.K. margin was broadly stable at the half year, rising to 2.66% from 2.62%. Overall lending was growing at 7%, while commercial lending was growing at 13% and typically carried higher margins, Bingham said. That mix shift could offset some of the deposit-related pressure.

Bingham said he expected the U.K. cost-to-income ratio to remain relatively static over the medium term, as efficiency gains fund investment. Excluding notable items, the ratio was closer to 38%.

What is the bank building?

HSBC is investing in three areas: its retail app, its business banking platform and its mortgage systems. The mortgage piece is the most concrete. A move to a common mortgage platform would increase capacity and lower costs, Lindberg said, and customers would soon be able to receive mortgage approval in 15 minutes.

That is a commitment with a clock on it. Fifteen-minute approvals would put HSBC's mortgage process among the fastest in the U.K. market, funded by the efficiency gains Bingham expects to keep the cost-to-income ratio flat.

How much will the tax changes cost?

Bingham addressed the effect of U.K. tax and the banking surcharge on HSBC directly. He cited an ongoing annual impact of around $300 million and a one-off impact of about $100 million in 2026 from revaluing deferred tax liabilities.

The one-off lands next year. The recurring drag continues indefinitely, absorbed within a franchise that returned 21.4% on tangible equity in its U.K. segment.

The backdrop

HSBC Holdings plc (NYSE:HSBC) is a global banking and financial services company serving individuals, businesses, institutions and governments. Its services span personal and commercial banking, wealth management, private banking, and corporate and investment banking. Products include deposit accounts, lending, payments, trade finance, foreign exchange and investment services, with an international network supporting cross-border banking needs.

The company traces its origins to the Hongkong and Shanghai Banking Corporation, founded in 1865 to finance trade in Asia.

The takeaway for finance chiefs watching from the corporate side: a bank with half a trillion dollars in U.K. deposits, growing commercial lending at 13%, and onboarding new business customers in 24 hours is signaling appetite for mid-sized borrowers — on its own pricing terms.