HSBC, the largest bank in Europe, surpassed profit forecasts for the third quarter on Tuesday as its net interest income increased, alongside strong performance from its wealth management sector.
The bank reported a profit before tax of $7.3 billion for the quarter ending in September, which is a nearly 14% decrease from the previous year, primarily due to increased operating costs, including significant legal provisions totaling $1.4 billion.
Below are HSBC’s second-quarter 2025 results compared to consensus projections compiled by the bank.
- Profit before tax: $7.3 billion vs. $5.98 billion
- Revenue: $17.8 billion vs. $17.05 billion
HSBC anticipates a banking NII of at least $43 billion in 2025, citing increasing confidence in the short-term outlook for policy rates in key markets like the United Kingdom and Hong Kong. It also expects double-digit percentage average annual growth in fee and other income from its wealth segment over the medium term.
In the third quarter, HSBC’s net interest income increased by 15% from the previous year to reach $8.8 billion, while income from its wealth division surged 30% year on year to $2.68 billion during the reported quarter.
“Our commitment to implementing our strategy is evident in our results this quarter, even amidst the legal provisions for past issues,” stated Georges Elhedery, CEO of HSBC Group.
The lender’s operating expenses rose by 24%, as it allocated provisions including $1.1 billion for potential payouts relating to claims associated with the Bernard Madoff investment fraud case.
The Madoff case originated from a 2009 lawsuit by Herald Fund SPC against HSBC’s Luxembourg division, which sought the recovery of securities and cash reportedly lost in the fraud.
The court dismissed HSBC’s appeal regarding the restitution of securities but accepted its challenge involving the cash component. HSBC announced plans to pursue a further appeal in the Luxembourg Court of Appeal and, should that fail, it will contest the final amount in subsequent proceedings.
The bank indicated on Monday that the $1.1 billion provision will reduce its Common Equity Tier 1, or CET1, capital ratio by about 15 basis points. The CET1 ratio is a crucial measure of a bank’s financial robustness.
Earlier this month, HSBC revealed intentions to take its subsidiary Hang Seng Bank private, with a valuation exceeding HK$290 billion ($37 billion).
Elhedery remarked that this transaction highlights HSBC’s faith in Hong Kong’s status as a “premier global financial hub.” Hang Seng’s non-performing loan ratio rose to 6.69% in the first half of 2025 due to ongoing pressures in the property market.
In Hong Kong, HSBC shares rose by 1.3% at last check.
—CNBC’s Lim Hui Jie contributed to this article.
