HSBC shares drop 7% as customers chase higher-rate products

HSBC Holdings saw its shares fall as much as 7% on Tuesday after the banking giant disclosed that customers are increasingly shifting to higher-rate products. The trend signals mounting pressure on the lender's net interest margin, a key measure of profitability, as deposit costs rise. Investors reacted swiftly, marking one of the steepest single-day declines for the stock in recent months. The move highlights a broader challenge facing global banks: retaining customer deposits without eroding earnings. HSBC, one of the world's largest banks by assets, is particularly exposed due to its vast retail and commercial deposit base across Asia and Europe. As central banks keep interest rates elevated, savers are actively seeking better returns, forcing banks to offer more competitive rates or risk deposit outflows. This dynamic could squeeze margins further in coming quarters. For HSBC, the shift underscores the delicate balance between growth and profitability in a high-rate environment. The bank's next earnings report will be closely watched for signs of margin stabilization or further erosion.