HSBC Q3 profit slips on legal costs
HSBC Holdings plc reported a third-quarter profit after tax of $5.5 billion, down from $6.7 billion a year earlier, as the bank absorbed $1.4 billion in legal provisions tied to historical matters including its long-running Bernie Madoff litigation.
Pre-tax profit fell to $7.3 billion from $8.5 billion, though revenue climbed 5 per cent to $17.8 billion, supported by stronger wealth management income and higher net interest margins. Excluding one-off charges, HSBC said underlying profit before tax rose 3 per cent to $9.1 billion, with a return on tangible equity of 16.4 per cent.
Georges Elhedery, group chief executive, said the results showed progress towards “a simpler, more agile, focused bank”, and reaffirmed guidance for a mid-teens return on equity for 2025.
The bank’s net interest income rose 15 per cent to $8.8 billion, reflecting solid deposit growth in Hong Kong and the United Kingdom. Total assets reached $3.23 trillion, and the Common Equity Tier 1 capital ratio stood at 14.5 per cent.
For Bermuda shareholders, the board approved a third interim dividend of 10 cents per ordinary share — roughly $1.72 billion in total — to be paid on December 18, with shares on the Bermuda Overseas Branch Register going ex-dividend on November 6.
The group also confirmed ongoing restructuring moves, including the planned sale of operations in Malta, Sri Lanka and Bahrain and a proposal to privatise Hang Seng Bank, which could temporarily trim capital ratios but is expected to support long-term growth.
HSBC Holdings plc said it will take a $1.1 billion provision in its third-quarter results after a Luxembourg court ruled partly against the bank in a long-running lawsuit tied to the Bernie Madoff fraud.
The case stems from a 2009 claim brought by Herald Fund SPC, which sought restitution of securities and cash that passed through HSBC Securities Services Luxembourg before the collapse of Madoff’s Ponzi scheme.
On Friday, the Luxembourg Court of Cassation upheld Herald’s appeal on the securities restitution claim, while granting HSBC’s appeal on the cash element. HSBC said it will pursue a second appeal before the Court of Appeal and, if necessary, contest the amount of any payment in later proceedings.
The bank said the $1.1 billion charge represents about 15 basis points of its core capital ratio, but will not affect its return on tangible equity or dividend guidance for the year.
HSBC cautioned that the final financial impact could vary, depending on the outcome of the appeal and the eventual determination of damages.
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