HSBC HOLDINGS(HK:00005) Ge Long Hui·2025-10-27 07:38Core Viewpoint - HSBC Holdings is set to provision $1.1 billion in the third quarter of this year due to a ruling by the Luxembourg court regarding the Herald Fund SPC case, which is linked to the Bernard Madoff Ponzi scheme [1] Group 1: Financial Impact - The $1.1 billion provision is classified as a significant special item and will not affect the adjusted Return on Tangible Equity (ROTE) or dividends [1] - The provision is expected to impact the Common Equity Tier 1 (CET1) ratio by approximately 15 basis points [1] - Market consensus estimates for HSBC's impairment charges in the third quarter of 2025 are $1.3 billion and $1 billion from JPMorgan and the broader market, respectively [1] Group 2: Market Reaction - The additional $1.1 billion provision is not anticipated by the market, leading to expectations of a negative stock price reaction [1] - JPMorgan maintains an "Overweight" rating on HSBC with a target price of HKD 122, but expresses a preference for Standard Chartered over HSBC due to the uncertainties surrounding this provision [1]