HSBC's quarterly profits have tumbled amid global trade tensions sparked by United States President Donald Trump's sweeping new tariffs, with the banking giant warning of growing risks to the world economy.

The United Kingdom's largest bank reported pre-tax profit fell by $3.2 billion to $9.5 billion in the first quarter of 2025, though this still beat analysts' expectations of $7.8 billion. Revenue dropped 15 percent to $17.6 billion compared to the same period last year.

The results come as businesses worldwide contend with the impact of Trump's recently imposed 10 percent tariffs on goods entering the US, which have rattled global markets and dampened trade activity.

In a stark warning, HSBC revealed it has set aside $900 million for potential bad loans, which is $200 million more than last year, citing "geopolitical tensions and higher trade tariffs". The bank's internal modeling shows an additional $500 million may be needed if trade conditions deteriorate further, reported The Guardian newspaper.

In its report to shareholders , HSBC warned that "risks for the global economy have been heightened by new trade policies announced by the US and potential measures that may be adopted by several countries globally, including in the markets in which the Group operates". The bank added that "this uncertainty poses downside risks to economic growth" and could lead to "weaker global GDP growth."

The bank warned shareholders that "supply chains could come under renewed pressure from a fragmented trade landscape, which could cause inflation to rise again".

Early signs of this disruption are already visible, with scheduled vessel arrivals at the Port of Los Angeles, in the US, down nearly a third compared to last year.

"We've seen a significant drop in volumes along the US-China corridor in the sectors that have not been given a waiver or the reduction of tariffs," said CEO Georges Elhedery, who took the helm in 2024 after replacing Noel Quinn.

Despite the challenges, HSBC maintained its performance targets and announced a new $3 billion share buyback program, where a company purchases its own shares from the market, typically to boost stock value. The bank's shares rose 3.2 percent in Hong Kong and 2.1 percent in London early on Tuesday, reported Reuters.

Bright spots reported by the bank included its Asian wealth management business, which saw customer growth of 29 percent quarter-on-quarter. The bank attracted $22 billion in new invested assets, with $16 billion coming from Asia.

Elhedery, who has been restructuring the bank since taking charge six months ago, remains focused on cost-cutting. The bank aims to deliver $1.5 billion in annual savings by end-2026, mainly through reducing staff costs by 8 percent.