HONG KONG/LONDON, Oct 28 (Reuters) - HSBC Holdings ( HSBC )

reported a 14% decline in third-quarter pretax profit

on Tuesday, hurt by a $1.1 billion charge after losing part of

an appeal in a long-running lawsuit tied to Bernard Madoff's

Ponzi scheme, history's biggest-ever such fraud.

But the bank also upgraded its income forecast for the year,

reflecting optimism about policy rates in key markets such as

Hong Kong and Britain, saying it now expects to make $43 billion

in net interest income in 2025, up from a forecast of around $42

billion as of June.

"The intent with which we are executing our strategy is

reflected in our performance this quarter, despite taking legal

provisions related to historical matters," Chief Executive

Georges Elhedery said in a statement.

HSBC ( HSBC ) posted a pretax profit of $7.3 billion for the

third quarter. Before the surprise news of the provision on

Monday, expectations were for a pretax profit of $7.66 billion,

according to a consensus estimate from analysts compiled by the

bank.

In addition to the Madoff provision, the bank also

logged an additional $300 million in legal charges relating to

certain historical trading activities in HSBC Bank plc.