The results sent shares in the lender down by more than 4% in early trading on Wednesday.

Operating expenses climbed 10% to $8.9bn (c. £6.7bn), driven by severance costs linked to chief executive Georges Elhedery’s strategy to simplify the bank’s global operations. HSBC also recorded a $2.1bn (c. £1.6bn) impairment on its stake in China’s Bank of Communications, following a similar $3bn (c. £2.3bn) charge last year.

The bank is contending with a prolonged property slump in Hong Kong and mainland China, and set aside $1.1bn (c. £830 million) for potential bad loans, higher than the $954m (c. £716m) analysts expected. This included a $0.4bn (c. £300m) charge related to Hong Kong’s commercial real estate sector. Furthermore, HSBC warned that French and Swiss authorities were investigating its Swiss private bank for alleged historic money laundering offences, noting the potential impact “could be significant”.

Despite the headwinds, Mr Elhedery said the bank was “well-positioned for further growth” and progressing “at pace” with its overhaul, remaining on track to deliver $1.5bn in annualised cost savings by 2027.

There were bright spots in the bank’s performance. Revenues from its wealth management business climbed 19% in the first half of the year. In the UK, revenues rose 7% quarter-on-quarter to $3.2bn (c. £2.4bn), with Mr Elhedery praising the Labour government’s “pace” in delivering new trade agreements.

HSBC announced a new share buyback programme of up to $3bn (c. £2.3bn) and a second interim dividend of 10 cents per share. The bank is also continuing its search for a new chair to replace Sir Mark Tucker, with Brendan Nelson set to take over on an interim basis from 1 October.

Russ Mould, investment director at AJ Bell, commented: “HSBC has once again missed earnings expectations, this time dragged down by a $2.1 billion charge on its stake in a Chinese lender. It has also stomached extra costs linked to restructuring efforts as relatively new chief executive Georges Elhedery wields the axe across the business.

“The result means it has now fallen short on earnings expectations for five out of the past six quarters.

“The banking group was already exiting certain regions when Elhedery took over, and he’s now tightening the screws and focusing on areas where he thinks HSBC will do best.

“Once declaring itself ‘the world’s local bank’, HSBC has recognised that it cannot be a giant on a global basis. Instead, it is now concentrating more on Asia and the Middle East.

“While there is logic to this strategy, repositioning HSBC is not a simple task given its size and scale. There are also challenges in its priority regions such as property market weakness in Hong Kong and mainland China. It means investors must continue to brace themselves for setbacks in its results well into 2026.”