* Pretax Q3 profit $6.1 bln vs $5.2 bln estimate
* Costs from fines and settlements fall by $1.4 bln
* Underlying revenue hurt by China slowdown
* HQ decision may not come until 2016
* Shares dip 1.3 pct (Adds CEO and chairman quotes, China venture, updates shares)
By Lawrence White and Steve Slater
HONG KONG/LONDON, Nov 2 (Reuters) - HSBC profitjumped by a third in the latest quarter as a drop in fines forpast misconduct more than offset the impact of a slowdown inAsia and increased spending on regulatory compliance.
Europe's biggest bank also said on Monday that it will stepup its push into investment banking activity on the Chinesemainland by establishing a majority-owned securities venture inthe country.
Costs related to fines and compensation for customers fellby $1.4 billion in the three months to Sept. 30 from a year ago,marking the bank's progress on conduct issues that have marredrecent quarterly results.
Yet the London-based bank spent $2.2 billion on regulationand compliance in the first nine months of 2015, up 33 percentyear on year, even as the British government looks to take amore accommodative stance towards the industry.
HSBC's underlying revenue fell 4 percent year on year to$15.1 billion compared, with plunging stock markets and slowingeconomic growth hitting its business in Asia, including its HongKong powerhouse.
"HSBC management have done a very good job of trying tocorrect its internal problems, but these results show no bankcan improve revenues if the global economy is against it," saidJim Antos, analyst at Mizuho Securities Asia in Hong Kong.
The bank posted third-quarter profit of $6.1 billion, upfrom $4.6 billion and above the average analyst forecast of $5.2billion. Adjusted profit fell 14 percent to $5.5 billion, takinginto account the lower fines and other one-off items.
HSBC's London shares were down 1.3 percent at 500.8 pence by1210 GMT, underperforming a slightly higher European bank index. The shares are down 18 percent this year -- hurt byconcerns about slowing Asian growth -- compared with a 2 percentrise for the European banking sector.
GOALS PROGRESS
HSBC said there had been "no visible impact" on creditquality in Asia, with losses from bad loans coming in lower thananalysts had expected.
There was mixed news on costs. Expenses were up 2 percentfrom a year ago but down 4 percent from the previous quarter andChief Executive Stuart Gulliver said his plan to squeeze costswas "gaining traction" and further improvement would be seen,including from job cuts.
Gulliver said compliance costs could continue to rise intonext year, however.
"Compliance spending will probably peak in 2016, which iswhen we've rolled out a number of systems solutions that enableus to get economies of scales from systems," he said.
Some investors have criticised the pace of cost-cutting andimprovement in returns as too slow, but Chairman Douglas Flintsaid the board is fully behind Gulliver and his team.
"Management has good traction on delivering against the planthat has been set out, so I don't know why anybody would want tochange horses mid-course of a strategy that was well receivedand which is being delivered against," Flint told reporters whenasked if there was pressure for change.
HSBC set 10 strategic goals in June, including a 25 percentcut to risk-weighted assets, the sale of operations in Turkeyand Brazil and $4.5 billion to $5 billion in cost savings.
The bank said it is nearly 30 percent of the way towardscompleting the reduction in its assets.
The goals also include assessment of whether it should moveits headquarters out of Britain, with Hong Kong viewed as themost likely destination.
HSBC said it had made progress on this but the decisioncould slip beyond its original year-end deadline, echoingcomments made by Gulliver last month.
(Editing by Muralikumar Anantharaman and David Goodman)
HSBC Holdings (HSBA)
