HSBC's Profit Shrinks Due to Legal Provisions

HSBC to Book Madoff-Linked Provision After Court Ruling

A pair of legal provisions led London-based HSBC’s profit to fall in the third quarter of this year.

HSBC’s pre-tax profit for the third quarter of 2025 was $7.3 billion, according to the bank’s financial results, which was $1.2 billion lower compared to the same period in 2024.

Revenue rose 5 percent to $17.8 billion with growth in wealth income and net interest income offsetting a decrease in income from global FX, debt and equity markets within the corporate and institutional banking segment.

Operating expenses increased 24 percent to $10.1 billion, most notably due to legal provisions of $1.1 billion from a Luxembourg court ruling linked to the Bernard Madoff investment fraud and $300 million relating to historical trading activities in HSBC Bank plc. Expected credit losses were stable at $1 billion.

In the first nine months of the year, pre-tax profit fell $6.9 billion to $23.1 billion, which included a non-recurring gain of $3.6 billion from the bank’s disposal of its Canada and Argentina business last year as well as a $2.1 billion impairment loss from associate Bank of Communications this year.

Targets Expected to be Achieved

Moving forward, the bank expects to deliver a return on tangible equity (RoTE) in the mid-teens or higher for 2025, excluding notable items, with net interest income of $43 billion or above. Target basis operating expense growth compared to the previous year remains at around 3 percent.

In the longer term, the bank said it remains confident in achieving its mid-teens RoTE target for 2026 and 2027, excluding notable items. In the medium term, it expects double-digit percentage average annual growth in fee and other income in wealth and a CET1 capital ratio target range of 14-15 percent.

«We are becoming a simple, more agile, focused bank, built on our core strengths. The intent with which we are executing our strategy is reflected in our performance this quarter, despite taking legal provisions related to historical matters,» commented HSBC group CEO Georges Elhedery.