HSBC Holdings Plc, Europe's biggest bank, said its first-half profit halved from a year ago to $5 billion as it was hit by rising bad debts in the United States, Europe and Asia.

HSBC on Monday reported a pretax profit for the six months to the end of June of $5.02 billion, down from $10.2 billion a year earlier but just ahead of an average forecast of $4.9 billion from 11 analysts polled by Reuters.

HSBC shares were up 4.4 percent at 632 pence by 4:50 a.m. EDT, while shares in Barclays Plc which also posted half-year figures were up 6.3 percent.

Loan impairments and other credit risk provisions reached $13.93 billion in the first half, up $3.9 billion from the year before.

The bank was cautiously optimistic on economic prospects but said the outlook remained uncertain.

It may be that we have passed, or are about to pass, the bottom of the cycle in the financial markets, Chairman Stephen Green said in a statement. Nontheless, the timing, shape and scale of any recovery in the wider economy remains highly uncertain.

Profits were underpinned by record investment banking earnings, with HSBC'S Global Banking and Markets profits jumping to $6.3 billion from $2.7 billion a year ago.

But the personal financial services arm made a $1.25 billion loss as bad debts took their toll, compared with a $2.3 billion profit a year ago.

The bank's Tier 1 capital ratio improved to 10.1 percent at the end of June, up from 8.3 percent at the end of December and a proforma figure of 9.8 percent, including proceeds from its rights issue.

Impairments in the United States were $7.3 billion in the first half, up from $4 billion a year ago but down from $8.8 billion in the previous six months. It said it was satisfied with the progress of the run-off of its U.S. consumer finance business.

(Reporting by Steve Slater)

Investment HSBC Barclays