HSBC, Europe's biggest bank, said profits fell in the first quarter after it was hit by a revaluation of its debt.
Reported pre-tax profit for the quarter was down $0.6bn compared with the first quarter of 2011 to $4.3bn.
This included adverse credit spread movements of $2.6bn on the fair value of the bank's debt, the bank said.
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However, underlying profits were up, driven by Retail Banking and Wealth Management, where profits came in at $2.2bn, significantly higher than in the previous year.
This was due to increased revenue and lower loan impairment charges and costs in that division, the bank said.
Loan impairment charges and other credit risk provisions were broadly in line with the first quarter of 2011.
An improvement in North America was offset by higher loan impairment charges in Latin America, particularly Brazil, HSBC said.
However, loan impairment charges reduced significantly compared with the last three months of 2011, mainly in North America and Europe.
HSBC makes 90% of its profits outside the UK and said that revenue rose strongly in its faster-growing regions.
These included Latin America, Hong Kong and Rest of Asia-Pacific, which were up by 7%, 16% and 18%, respectively.
In contrast, European operations saw a $997m loss before tax in the first quarter.
The bank also set aside more money in the UK to service claims for payment protection insurance mis-selling.
It said it had seen significant rise in the volume of claims relating to PPI at the start of the year.
A further provision of $468m was raised in the period compared with a charge of 440m the previous year.
The company is continuing in its programme of divesting non-core assets and said that the number of full time staff it employed had dropped by 14,000 since the first quarter of 2011.
"Markets remain volatile with high levels of debt and regulatory and political uncertainty in developed economies, contrasting with an encouraging outlook in faster-growing markets," said Chief Executive Stuart Gulliver.
"Our performance in April has been satisfactory, and we remain confident that we will deliver on executing our strategy."
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