Banking giant HSBC said today that profits had fallen by more than half during the first six months of the year.
The 51 per cent drop in pre-tax profits to 5 billion US dollars (£2.98 billion) came after its bad debt charges soared 39 per cent to 13.9 billion US dollars (£8.3 billion).
The figures came on the same day rival Barclays pushed up profits 8 per cent to £2.98 billion for the same period.
Despite the fall in profits, HSBC said results were better than it expected at the start of the year in an "unprecedented" economic climate.
Chairman Stephen Green said it was likely that "we have passed, or are about to pass" the bottom of the cycle in financial markets, but he also warned: "The timing, shape and scale of any recovery in the wider economy remains highly uncertain."
HSBC's US consumer lending business in the US - which has been devastated by the credit crunch and is being wound down by the bank - posted a 2.9 billion US dollar pre-tax (£1.7 billion) loss for the period.
But it added that bad debts were rising at a slower rate than expected after efforts in previous years to cut down on higher risk loans.
HSBC spent 15 billion dollars (£8.9 billion) on the Household business in the US back in 2003 - but the operation slumped to a 15.2 billion dollar loss (£9 billion) in the second half of 2008 as the group wrote down the value of the operation.
But the company also benefited from record investment banking profits of 6.3 billion US dollars (£3.75 billion) during the first half of the year - more than double the level of 2008.
HSBC has also made a push into the UK mortgage market to grab market share as rivals tighten up lending or withdraw altogether.
The bank committed £15 billion for new mortgage lending in the UK, of which £6.7 billion was lent during the first half of the year.
HSBC was one of the first major players to come back into the market to support first-time buyers and its estimated share of new lending has more than doubled to 9.7 per cent.