HSBC Holdings plc HSBC and Banco Santander S.A. SAN are two of Europe’s leading multinational banks, with an extensive global footprint. While HSBC is intensifying its pivot toward Asia (seeking to capitalize on the region’s faster economic growth), SAN is reinforcing its position in its core markets across Europe and the Americas, with primary focus on retail and commercial banking.
The key question is: Can HSBC’s Asia-focused growth strategy outperform Santander’s Europe and Americas-centric approach? To find out which stock presents the better investment opportunity, let’s examine the underlying factors driving each bank’s performance.
The Case for HSBC
London-based HSBC is doubling down on its Asia-focused strategy as the core of its long-term growth plan. It aims to become a leading wealth manager for high-net-worth and ultra-high-net-worth clients in Asia, which now accounts for more than half of its operations. In mainland China, HSBC is rapidly expanding its wealth business by launching integrated lifestyle-based wealth centers in key cities, acquiring Citigroup’s retail wealth portfolio, investing in digital capabilities and hiring talent to strengthen its Premier Banking, Private Banking and Asset Management services.
In India, HSBC is aggressively scaling its presence. The bank received approval from the Reserve Bank of India to open 20 new branches, significantly expanding beyond its current footprint of 26 branches in 14 cities. With India’s ultra-high-net-worth population projected to surge 50% by 2028, HSBC is positioning itself to capture this growth through its Global Private Banking platform (launched in 2023), the acquisition of L&T Investment Management (2022) and ongoing enhancements to its Premier Banking offering.
Beyond Asia, HSBC is taking steps to streamline and refocus its global operations. In early 2025, it announced a $1.5 billion cost-saving plan tied to organizational simplification, with estimated upfront charges of $1.8 billion by 2026. The bank is redeploying another $1.5 billion from underperforming or non-core areas into strategic priorities.
As part of its global restructuring, HSBC has exited or divested operations in the United States, Canada, Argentina, Russia, Greece, New Zealand, Armenia and retail banking in France and Mauritius. It is also winding down certain investment banking activities in the U.K., Europe and the United States, and reviewing its operations in markets like Germany, South Africa, Bahrain and Malta to sharpen its focus and improve returns.
Nonetheless, revenue generation at HSBC has been subdued over the past several quarters. While the interest rate environment across the world improved, the financial impact of the challenging macroeconomic backdrop continues to weigh on the company’s top-line growth. Not-so-impressive loan demand and a tough macroeconomic environment in many of its markets are concerning.
The Case for Santander
Santander, one of Spain’s largest lenders, is actively streamlining operations and reallocating resources to strengthen its presence in high-growth markets across Europe and the Americas. In May 2025, it announced the sale of a 49% stake in its Polish banking unit, part of a broader effort to focus on more profitable markets. Following this transaction, Santander expects its CET1 capital ratio to temporarily exceed its 12–13% target, with plans to reinvest strategically and maintain financial discipline.
Approximately €3.2 billion in capital released from the sale will be returned to shareholders through share buybacks, supporting Santander’s €10 billion buyback target for 2025–2026. The redeployment of capital is also expected to be earnings-accretive by 2027–2028, driving growth via a mix of organic expansion, acquisitions and continued shareholder returns. This approach will enhance the bank’s flexibility to scale in key regions, including Western Europe and the Americas.
In the United States, Santander plans to close around 20 retail branches—5% of its network—by August 2025, aligning with a growing customer shift to digital banking. This supports the rapid expansion of Openbank, SAN’s digital banking platform. Openbank, originally launched in 2017, is now Europe’s largest fully digital bank by deposits and operates in several countries, including Spain, Germany and Mexico.
Supporting these initiatives is the One Transformation program, launched in 2014, to drive digitalization, operational efficiency and customer-centric growth. The program has unified the operating model for Retail and Commercial Banking, reduced costs and improved service delivery. These efforts have kept Santander on track to hit its 2025 targets, including €62 billion in revenues and solid growth in fee income.
How Do Estimates Compare for HSBC & SAN?
The Zacks Consensus Estimate for HSBC’s 2025 and 2026 earnings indicates 5.1% and 3% growth, respectively. Over the past month, earnings estimates for 2025 have moved north, while for 2026, it has been revised lower.
Earnings Trend
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On the contrary, analysts are more optimistic about SAN’s prospects. The consensus mark for 2025 and 2026 earnings suggests an increase of 15.7% and 7%, respectively. Also, over the past 30 days, earnings estimates for 2025 and 2026 have been revised upward.
Earnings Trend
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HSBC & SAN: Price Performance, Valuation & Other Comparisons
This year, Santander’s shares have performed extremely well on the bourses compared with HSBC. The SAN stock has soared 76.6% on the NYSE, while HSBC gained 19.6%. Further, the industry has rallied 23.2% in the same time frame.
YTD Price Performance
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Valuation-wise, HSBC is currently trading at a 12-month trailing price/tangible book (P/TB) of 1.06X, higher than its five-year median of 0.75X. The SAN stock, on the other hand, is currently trading at a 12-month trailing P/TB of 1.36X, which is higher than its five-year median of 0.71X. Further, both are trading at a discount to the industry average of 2.29X.
P/TB TTM
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Thus, HSBC is inexpensive compared to Santander.
Additionally, HSBC’s return on equity (ROE) of 12.55% is slightly above SAN’s 12.26%. This reflects HSBC’s efficient use of shareholder funds to generate profits.
ROE
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HSBC or Santander: Which Stock Offers Better Returns?
Santander appears to be the better investment opportunity, given its stronger near-term earnings outlook and superior stock performance. The company’s strategic capital redeployment and digital transformation via Openbank provide strong catalysts for sustained profitability. Furthermore, its year-to-date stock rally demonstrates solid investor confidence relative to HSBC’s modest gain.
Meanwhile, HSBC’s pivot to Asia and high-net-worth wealth management could yield significant long-term gains, especially as India and China’s affluent classes expand. Its disciplined global exit strategy and cost-saving plan may improve returns. Yet, muted revenue growth and weak earnings performance raise near-term concerns. While HSBC trades at a more attractive valuation and has a slightly better ROE, Santander’s higher growth momentum and aggressive capital return strategy make it the better bet now.
At present, HSBC and SAN carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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