HSBC Q3 Profit Falls 14% on $1.4B Legal Provisions, Revenue Growth Amid Challenges

HSBC reported a 14% decline in third-quarter pretax profit for 2025, down to $7.3 billion, primarily due to $1.4 billion in legal provisions related to a Luxembourg court ruling connected to the Bernard Madoff fraud case and other historical trading matters. Despite a 5% increase in revenue driven by growth in net interest income and wealth management, operating expenses rose 24%, impacting overall profitability. The bank's net profit fell to $4.58 billion, missing analyst expectations, with stable expected credit losses of $1 billion including charges related to commercial real estate. HSBC's CEO Georges Elhedery emphasized the bank's ongoing strategy to become simpler, more agile, and focused, reaffirming confidence in achieving mid-teens return on tangible equity targets for the coming years. The bank also announced plans to appeal the Luxembourg court ruling and expects to maintain a Common Equity Tier 1 (CET1) capital ratio between 14-15%. Overall, HSBC remains optimistic about net interest income growth and fee income expansion despite the financial headwinds from legal and credit-related charges.