HSBC profits seen up 10 pct as cost cuts pay off

* HSBC Q3 results due at 0815 GMT on Monday

* Pretax profit seen $5.5 bn, up 10 pct on year ago

* Operating costs seen down $1.5 bln on year to $8.8 bn

By Steve Slater

LONDON, Nov 4 (Reuters) - HSBC Holdings is expectedto report a 10 percent rise in quarterly profit on Monday asEurope's biggest bank benefits from cost cuts and the absence ofa big provision to cover a fine last year.

The rise is unlikely to put to rest concerns about HSBC'sgrowth prospects as tougher regulations squeeze profits,investment banking income drops and the threat remains offurther litigation over the bank's past conduct.

HSBC is expected to report a pretax profit of $5.5 billionfor the three months to the end of September, according to theaverage of 13 analysts polled by the bank. That compares to $5billion a year ago, excluding losses from changes in the valueof the bank's own debt.

Operating costs are forecast to fall $1.5 billion from ayear ago to $8.8 billion, as Chief Executive Stuart Gulliver'splan to streamline HSBC and improve profitability pays off. Inthe three years of a revival plan, he has sold or exited 54businesses and cut $4.1 billion in annual costs.

Gulliver has also pledged to instil a more responsibleculture and reduce risk across his bank after it was fined arecord $1.9 billion last year for compliance failings in Mexico.

HSBC set aside $800 million in the third quarter of lastyear to cover the fine, which showed serious flaws in its riskmanagement and left the bank under pressure to improvecompliance and reduce its complexity.

The industry remains under close scrutiny from regulators.

HSBC rivals including Barclays, Deutsche Bank and JPMorgan said last week they wereco-operating with authorities investigating possiblemanipulation of currency markets by a host of major banks.

HSBC said in August it might have to pay $1.6 billion tosettle with a U.S. regulator over allegations it mis-soldmortgage-backed bonds during the housing bubble.

HSBC's profits are expected to rise to nearly $26 billionthis year from $21 billion in 2012, according to the average ofanalysts polled by the company. It made $14.1 billion in thefirst half of the year, up 10 percent from a year before.