HSBC’s third-quarter profit drops 14%, beats estimates

HSBC, Europe’s largest lender, beat third-quarter profit expectations on Tuesday as the bank’s net interest income rose and the performance of its asset segment was also strong.

The bank’s pre-tax profit for the three months ended September was $7.3 billion, down nearly 14% from the previous year due to higher operating expenses from key items, including regulatory provisions of $1.4 billion.

Here are HSBC’s second quarter 2025 results compared to consensus forecasts compiled by bank.

• Profit before tax: $5.98 billion versus $7.3 billion
• Revenues: $17.8 billion – $17.05 billion

The lender expects banking net income to be $43 billion or more in 2025, citing increased confidence in the short-term path of policy rates in key markets such as the United Kingdom and Hong Kong. In the medium term, it forecasts double-digit average annual growth in wages and other income from the wealth division.

The provisions include $1.1 billion for potential settlement on claims related to the Bernard Madoff investment fraud case.

The Madoff case stems from a 2009 lawsuit filed by Herald Fund SPC against the Luxembourg arm of HSBC, seeking the return of securities and cash allegedly lost in the fraud.

The court rejected the HSBC unit’s objection regarding the securities return request, but accepted its objection regarding the cash portion.

HSBC said it plans to lodge a fresh appeal with the Luxembourg Court of Appeal and, if this fails, it will challenge the final amount in further proceedings.

““The purpose in which we execute our strategy is reflected in our performance in this quarter, despite the legal provisions regarding historical matters,” said HSBC Group CEO Georges Elhedery.

HSBC’s net interest income in the third quarter rose 15% year over year to $8.8 billion, according to the earnings release.

The $1.1 billion provision will reduce the Common Equity Tier 1, or CET1, capital ratio by about 15 basis points, the bank said on Monday. CET1 ratio is an important indicator of a bank’s financial strength.

Earlier this month, HSBC announced plans to privatize subsidiary Hang Seng Bank at a value of over HK$290 billion ($37 billion).

Elhedery said the deal underlined HSBC’s confidence in Hong Kong’s role as a “leading global financial centre”. Hang Seng’s non-performing loan ratio increased to 6.69% in the first half of 2025 due to ongoing stress in the real estate sector.

HSBC shares in Hong Kong rose 1.47% following the earnings release.

—CNBC’s Lim Hui Jie contributed to this report.