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Banking giant HSBC has reported a 14% drop in profits for the first quarter following "extreme levels of volatility" in financial markets at the start of the year.

Profit before tax came in at $6.1bn (£4.17bn) for the three months to March, down from $7.1bn a year ago.

However, analysts had expected a far steeper fall in profits.

HSBC chief executive Stuart Gulliver said the bank had been "resilient in tough market conditions".

Adjusted pre-tax profits, including currency effects and one-off items, fell 18% to $5.4bn (£3.7bn).

Job cuts

HSBC cut almost a thousand jobs worldwide in the quarter, leaving it with 254,212 full-time staff across 71 countries and territories.

Mr Gulliver said the bank was confident of hitting its $5bn (£3.5bn) cost-cutting target by the end of 2017.

Independent banking analyst Frances Coppola said it was "likely there will be more job cuts" at HSBC following the fall in profits.

But she said the results "could have been worse" after financial markets were highly volatile in January and February.

Challenging

In the final three months of 2015, HSBC had reported a loss of $858m, but lower compliance and UK bank levy costs helped it to return to profit in the latest quarter.

HSBC's adjusted revenue for the first quarter amounted to $13.9bn, a 4% drop from the same time last year.

The bank also said the development of its Asian business was gaining momentum, "despite a challenging environment with key increases in market share in debt capital markets, China M&A and syndicated lending".

HSBC has had its headquarters in the UK since 1993, but the financial institution makes most of its money overseas, and Asia accounts for the majority of its profit.

The bank's shares are listed in London, Paris, New York and Hong Kong. In London, HSBC's shares were up 1% in early trading.

Image copyright Reuters Image caption HSBC says it is taking market share in Asia, including through operations run from its Shanghai offices

Dividend

Ahead of the results, analysts had warned HSBC might signal an end to its highly-valued progressive dividend, which delivers ever-increasing payouts.

However, HSBC maintained the progressive target and left its dividend unchanged from the same period last year at $0.10 (£0.07).

The bank also announced that the $5.2bn sale of its Brazil unit to banking giant Banco Bradesco received preliminary approval from competition regulators.

Volatility

Swiss bank UBS also reported a sharp drop in income for the first quarter of the year, with pre-tax profit falling 64% year-on-year to 978m Swiss francs ($1.03bn; £689m).

UBS pointed to "substantial volatility" as one of the main reasons for the fall, along with wider economic and geopolitical uncertainty.

However, French bank BNP Paribas reported a 3.4% rise in first-quarter pre-tax income to €2.6bn (£2bn).