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HSBC It reported a pre-tax profit of US$7.3 billion (£5.5 billion) in the third quarter – down US$1.2 billion (£898 million) from the same period 12 months earlier.
The announcement comes a day after the banking giant revealed it would set aside US$1.1 billion (£826 million) following a court ruling related to a long-running lawsuit brought by investors who lost money in Bernard Madoff’s investment fraud.
British The lender said the decline in profits compared to 2024 “reflects an increase in operating expenses” during the third quarter that included legal provisions of US$1.4 billion (£1.04 billion), much of which was related to the Madoff lawsuit.
Profit after tax also fell by US$1.2 billion (£898 million) to US$5.5 billion (£4.1 billion) in the third quarter.
Group chief executive Georges Elhedary said the bank was “completely focused on helping its customers cope with the new economic realities”.
He said: “We are becoming a simpler, more agile, focused bank, building on our core strengths. Despite taking legal provisions relating to historical matters, the intent with which we are executing our strategy is reflected in our performance this quarter.”
The provision to set aside money for Madoff investors came after the bank lost part of an appeal luxembourg Court’s decision last Friday.
It follows a case brought by Herald Fund SPC, which sued HSBC Securities Services Luxembourg (HSSL) in 2009, claiming losses from cash and securities linked to Madoff. ponzi schemeWhich was one of the biggest financial scams in history.
Last week, the Luxembourg Court of Cassation rejected HSSL’s appeal on Herald’s securities restitution claim, but upheld its appeal in relation to the cash restitution claim.
HSSL is now planning to file a second appeal before the Luxembourg Court of Appeal to contest the amount to be paid.
Madoff, who died in prison in 2021, admitted defrauding thousands of investors of approximately US$65 billion (£48.8 billion) in 2009.
Various HSBC companies were named as defendants in lawsuits arising from the Madoff fraud scandal.
Herald Fund SPC is a European fund that invested money in the Madoff investment fund, for which HSBC’s Luxembourg securities arm, HSSL, was the custodian.