### HSBC Faces Profit Decline Amid Madoff Lawsuit Fallout HSBC Holdings has reported a significant decline in its pre-tax profits for the third quarter of 2025, primarily due to a substantial legal provision related to the infamous Ponzi scheme orchestrated by Bernard Madoff. The bank's profits fell by **14%**, amounting to **$7.3 billion** compared to **$8.5 billion** in the same quarter last year. This downturn is attributed to a **$1.1 billion** provision set aside for legal costs stemming from the Madoff case, which has had a considerable impact on the bank's financial performance [https://finance.yahoo.com/news/hsbc-profits-third-quarter-madoff-lawsuit-074254754.html]. ### Breakdown of HSBC's Financial Performance 1. **Profit Decline**: - HSBC's pre-tax profits dropped to **$7.3 billion**, a **14%** decrease year-over-year [https://finance.yahoo.com/news/hsbc-profits-slump-14-madoff-090012035.html]. 2. **Legal Provisions**: - The bank allocated **$1.1 billion** for legal costs related to the Madoff lawsuit, which significantly affected its bottom line [https://finance.yahoo.com/news/hsbc-q3-pre-tax-earnings-165800052.html]. 3. **Revenue and Expenses**: - Despite the profit decline, HSBC reported a **3% increase** in overall revenue, reaching **$17.8 billion**, driven by strong wealth management fees and increased deposits [https://disruptionbanking.com/2025/10/28/hsbc-third-quarter-results-marred-by-madoff]. 4. **Operational Challenges**: - The bank faced higher credit losses and increased operating expenses, which further contributed to the profit slump [https://finance.yahoo.com/news/hsbc-q3-pre-tax-earnings-165800052.html]. ### Supporting Data and Financial Metrics - **Pre-Tax Profit**: - Q3 2025: **$7.3 billion** - Q3 2024: **$8.5 billion** - **Legal Provision**: - Madoff-related legal costs: **$1.1 billion** - **Revenue Growth**: - Total revenue for Q3 2025: **$17.8 billion** - Increase in wealth management fees: **30%** - Increase in deposits: **$86 billion** [https://disruptionbanking.com/2025/10/28/hsbc-third-quarter-results-marred-by-madoff]. ### Conclusion: HSBC's Financial Outlook In summary, **HSBC's third-quarter results reflect a challenging financial landscape**, primarily influenced by legal issues related to the Madoff case. The bank's **14% profit decline** is a stark reminder of the ongoing repercussions of past financial misconduct. However, the increase in revenue and wealth management fees indicates that HSBC is still capable of generating growth despite these challenges. 1. **Profit Decline**: 14% drop to $7.3 billion. 2. **Legal Costs**: $1.1 billion provision for Madoff lawsuit. 3. **Revenue Growth**: 3% increase to $17.8 billion. 4. **Operational Challenges**: Higher credit losses and expenses impacting profits. HSBC's ability to navigate these legal challenges while maintaining revenue growth will be crucial for its future performance [https://finance.yahoo.com/news/hsbc-profits-third-quarter-madoff-lawsuit-074254754.html, https://disruptionbanking.com/2025/10/28/hsbc-third-quarter-results-marred-by-madoff].