HSBC has warned that it expects lending to “remain muted” for the rest of 2025 after posting lower-than-expected profits for the first half of the year.

Profit before tax fell by 5.7 billion US dollars (£4.3 billion) from the first half of 2024 to 15.8 billion dollars (£11.8 billion).

HSBC attributed 3.6 billion dollars (£2.7 billion) of the decline to the sale of its Argentina and Canada operations while the “dilution and impairment losses” of Bank of Communications accounted for 2.1 billion dollars (£1.6 billion).

Profit after tax fell by 30% year on year to 12.4 billion dollars (£9.3 billion).

Constant currency profit before tax excluding notable items increased by 900 million dollars (£674 million) to 18.9 billion dollars (£14.2 billion), with a strong performance in international wealth and premier banking and HSBC’s Hong Kong business segments cited.

Revenue fell by 3.2 billion dollars (£2.4 billion) to 34.1 billion dollars (£25.5 billion), reflecting the disposals of the Canada and Argentina operations.

HSBC said results from the first six months of 2025 “included allowances to reflect heightened uncertainty and a deterioration in the forward economic outlook due to geopolitical tensions and higher trade tariffs”, and “included higher spend and investment in technology”.

A company statement said: “The group is well-positioned to manage the changes and uncertainties prevalent within the global environment in which we operate, including in relation to tariffs.

“We have modelled a disruptive tariff scenario that includes significant reductions in policy rates, together with broader macroeconomic deterioration.

“The group remains on track to deliver on our cost target. Our growth in target basis operating expenses in 2025 compared with 2024 remains approximately 3%.

“Our cost target includes the impact of simplification-related saves associated with our announced reorganisation.

“We continue to expect demand for lending to remain muted during 2025.”

HSBC Group chief executive officer Georges Elhedery said: “We’re making positive progress in becoming a simple, more agile, focused organisation built on our core strengths.

“In the first half, we continued to execute our strategy with discipline and each of our four businesses sustained momentum in their earnings with each growing revenue.

“This gives us confidence in our ability to deliver our targets. We continue to navigate this period of economic uncertainty and market volatility from a position of strength, putting the changing needs of our customers at the heart of everything we do.”

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