The outlook for the banks remains "highly challenging", HSBC says
HSBC has warned that conditions in financial markets are at their toughest "for several decades" after suffering a 28% fall in half-year profits.
Europe's largest bank saw profits drop by $3.9bn to $10.2bn (£5.2bn) in the first six months of the year, as its North American arm made a $2.8bn loss.
The firm announced $3.7bn in fresh credit writedowns.
HSBC has been among the banks worst hit by the credit crunch, whose financial toll has run into the many billions.
It has already announced write-downs in the value of its assets - linked to the slump in the US housing market - of more than $15bn.
HSBC shares closed down 1.1%, despite the bank stressing that it would increase its shareholders' dividend by 6%.
HSBC said its performance had been "resilient" given the prevailing market turbulence.
Some of HSBC's success is an accident of its birth. It is massively strong in the still-buoyant economies of China, Hong Kong, Asia and the Far East
The BBC's business editor Robert Peston said that HSBC's £5.2bn half-year profit would be higher than the profits of all the other major British banks combined.
This, our correspondent said, not only reflected the bank's strength in fast-growing Asian markets but also its cautious approach to lending.
HSBC saw profits rise in Europe, Asia-Pacific and Latin America in the first six months, but problems in the US weighed heavily on its balance sheet.
Of Europe's top banks, HSBC has among the heaviest exposure to the troubled US housing and credit markets.
Its US personal financial services arm made a $2.2bn loss over the period while US credit writedowns totalled $6.8bn in the first six months, 85% more than a year earlier.
HSBC is taking steps to minimise its US losses by curtailing future loans for vehicle financing, downsizing its branch network and cutting other costs.
"The US remains a difficult market, with rising unemployment and falling house prices," the company said.
HSBC's overall credit write-downs so far this year have now risen to $10bn, compared with $6.3bn in the same period last year.
However, it stressed that the level of credit losses was 8% lower in the past six months than the second half of 2007.
Unlike many other British banks, HSBC has not been forced to ask its shareholders for extra cash to bolster its balance sheet.
However, the firm said it had not been "immune" from the liquidity and credit crisis afflicting the global banking sector.
It said the outlook for the banking sector remained "highly challenging" and said changes in industry lending practices and financial regulation were needed.
"It is clear that growth models in our industry based on high and increasing leverage will no longer be sustainable," said chairman Stephen Green.
"It is also clear that complexity in financial services and the recent consequences of failed risk management need to be addressed.
"Ultimately the real economy will recover from the crisis although it may get worse before it gets better. Financial markets will not, and should not, return to the status quo ante."
Analysts said HSBC shares had performed better than their rivals because of its geographic diversity, but that its results were unlikely to give a significant boost to the banking sector.
"These results are something of a mixed bag, with some further hefty writedowns continuing to negate the progress being made in certain parts of HSBC's global portfolio," said Richard Hunter, from Hargreaves Lansdown stockbrokers.