HSBC’s first quarter profits fell 20 per cent from a year ago to $6.8 billion as revenue dipped at its investment bank, while last year’s earnings were swelled by asset sales.

HSBC, which is Europe’s biggest bank but makes most of its profits in Asia, said it had continued to experience “muted customer activity” in April.

Most investment banks have seen income drop in the first quarter after a grim start to the year for bond and interest rate trading, and HSBC said profits at its global banking and markets arm fell by a fifth from a year ago. But it said it won market share in several areas, including equity and debt capital markets and advisory.

Chief executive Stuart Gulliver has said he is in the second phase of a turnaround aimed at making his bank less complex, more nimble and efficient and able to deliver better returns and dividends for shareholders.

HSBC’s cost-efficiency ratio was 55.7 per cent in the first quarter, close to its target of mid-50s, but its return on equity slipped to 11.7 per cent, below its 12-15 per cent target.

HSBC said it cut operating costs by 2 per cent to $8.8 billion in the first quarter but, excluding one-off items, expenses rose 2 per cent.

The bank has axed more than 40,000 jobs and sold or closed 60 businesses over the past three years to cut costs, but said it added 1,100 jobs in the first quarter, mainly due to beefing up compliance and adding staff where it sees growth potential.

HSBC reported a pre-tax profit of $6.8 billion, down from $8.4 billion a year ago but just above the average forecast of $6.6 billion from 13 analysts polled by the company.

Underlying profits, stripping out gains from disposals and movement in the value of its own debt, was $6.6 billion, down 13 per cent from a year ago.