HSBC Books $1.1B Madoff Provision, Reports Q3 Profit Drop

HSBC said it will book a $1.1 billion provision in Q3 after Luxembourg’s Court of Cassation partially rejected its appeal in a long‑running Herald Fund SPC lawsuit tied to Bernard Madoff, and the bank said it will pursue further appeals while warning the eventual financial impact could differ materially. The provision is expected to shave roughly 15 basis points off its common equity tier 1 ratio, and shares slipped about 1% after the announcement. The charge helped push pretax profit down 14% to $7.29 billion and profit after tax down 18% to $5.5 billion, while revenue rose about 5% to $17.8 billion, beating estimates largely on strength in wealth and Hong Kong businesses. Net interest income climbed to $8.78 billion and the bank upgraded its 2025 net interest income guidance; pretax profit excluding notable items rose on a constant‑currency basis. HSBC’s board approved a third interim dividend of $0.10 a share, maintained a 50% payout target for 2025 (excluding material notable items), paused buybacks for three quarters, and proposed a $13.6 billion cash offer for the remaining Hang Seng shares. CEO Georges Elhedery said the results demonstrated progress in focusing the bank on its core strengths.