HSBC Q3 Earnings Hit by Madoff Legal Charge Despite Strong Core Performance

HSBC's third-quarter profits fell 14% to $7.3 billion, weighed down by a $1.1 billion legal provision tied to the Bernard Madoff Ponzi scheme. The charge—stemming from a 2009 lawsuit alleging HSBC Luxembourg failed to protect assets—dented an otherwise robust quarter where net interest income ROSE 15% to $8.8 billion and wealth division revenue jumped 30%.

The bank exceeded analyst expectations despite the legal drag, with profits surpassing the $5.98 billion consensus. Operating expenses surged 24% year-on-year, largely due to the Madoff-related payout and other provisions totaling $1.4 billion. The charge will reduce HSBC's CET1 capital ratio by 15 basis points—a key metric of financial strength.

While a Luxembourg court rejected HSBC's appeal on securities claims, the bank retains the right to contest cash portions of the case. Management plans further appeals, with potential future disputes over the final settlement amount.