HSBC Holdings Plc raised its profitability outlook for 2025 even as quarterly earnings slid after it had to set aside $1.1 billion to cover litigation by investors who lost money in Bernard Madoff’s fraud.

Pretax profit for the third-quarter fell 14 percent to $7.3 billion as litigation expenses blunted rising earnings from its key wealth management business, according to a statement on Tuesday.

Still, revenue for the period topped estimates. As a result, HSBC now expects to deliver a “mid-teens or better” return on tangible equity for the year as well as higher-than-previously expected net interest income.

“We have shown that we are making progress in creating a simple, more agile and growing HSBC,” Chief Financial Officer Pam Kaur said on a conference call with journalists. “The positive progress we are making gives us confidence in our ability to upgrade our targets.”

HSBC shares rose 2.7 percent in London, the biggest intraday advance in four months.

The London-headquartered bank has just gone through the biggest overhaul in at least a decade that saw its investment banking operations retreat from the Americas and Europe in favor of Asia and the Middle East. The revamp has also resulted in thousands of job cuts, the departure of many top executives and streamlining of layers of management.

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The latest numbers come a day after HSBC said it would book a provision to cover litigation by investors who lost money in the Madoff cases dating back years. It’s also the first earnings after Elhedery unveiled a $14 billion plan to buy out minority shareholders in subsidiary Hang Seng Bank — a deal that strengthens HSBC’s focus on Hong Kong, its largest individual market and one of its biggest sources of profits.

In addition to the Madoff charge, HSBC also booked a $300 million litigation provision to resolve a French probe into contentious trades allegedly designed to escape levies on dividend payments, which it said “is at an advanced stage.” The lender also set aside $1 billion to cover expected credit losses, including $100 million for a single client in the Middle East.

“There are a number of headwinds facing HSBC currently. Falling rates, muted loan growth, elevated CRE impairments, Madoff litigation,” Benjamin Toms, an analyst at RBC Capital Markets said in a note to clients. “It is difficult at the moment to see the wood from the trees.”

Hong Kong business

HSBC’s Hong Kong business grew profits before tax by 11 percent to $2.5 billion in the quarter, driven by higher client activity across its wealth business.

Since becoming CEO about a year ago, Elhedery has also struck a noticeably bullish tone on Hong Kong as a financial center, predicting that the Hong Kong will surpass Switzerland by the end of the decade to become the world’s largest cross-border wealth hub.

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With the acquisition of Hang Seng, he is doubling down on that bet as the city recovers from the pandemic-era lockdowns and sees a resurgence in stock listings and dealmaking, much of it driven by firms based in Chinese mainland.

His move also comes with risks. Though the city accounts for almost a third of HSBC’s profit, it has lately come under focus in the geopolitical conflict between Washington and Beijing.

HSBC on Tuesday also warned that the city’s commercial property sector continues to face “downward pressure” and has so far this year posted about $700 million of charges related to the commercial real estate sector, up from just $100 million in the year-earlier period.

Even after Hang Seng, the lender remains open to further acquisition opportunities, Kaur said. HSBC laid out four criteria any potential deal has to meet for executives to consider it: it must be aligned to the firm’s strategy, it should add scale to the firm’s existing offerings, executives have to be confident that any integration process won’t be a distraction and it has to generate more value than a share buyback.

“We will continue to invest in the UK both organically and — if there’s the right opportunity which has all the four criteria met that we’ve set for acquisition — then of course, we’ll be open to that as well,” Kaur said. “We will do this as part of our normal ongoing business.”