HSBC reported a 14 per cent drop in third-quarter pre-tax profit on Tuesday, with the banking giant鈥檚 bottom line weighed down by legal provisions related to the late Bernard Madoff鈥檚 huge investment fraud.
The London-headquartered lender revealed the fallout Monday amid a Luxembourg lawsuit brought by Herald Fund dating back to 2009, when Madoff was sentenced to 150 years in prison for running a pyramid-style scheme.
鈥楾he intent with which we are executing our strategy is reflected in our performance this quarter, despite taking legal provisions related to historical matters,鈥� HSBC鈥檚 chief executive Georges Elhedery said in a Hong Kong stock exchange filing Tuesday.
The profit of $7.3 billion 鈥� down 14 per cent from the same quarter last year 鈥� reflected an increase in operating expenses and included legal provisions of $1.4 billion, HSBC said.
Of those, $1.1 billion was recognised in connection with the fraud case of Madoff, while $300 million was related to 鈥榗ertain historical trading activities鈥� under investigation by the French National Financial Prosecutor.
