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HSBC chief executive Georges Elhedery has said it is “critical” that the dollar maintains its position as the dominant currency while he outlined the impact of trade tariffs on the bank’s business.

“Trust and confidence in this risk-free asset is paramount,” he said during a call with reporters on Tuesday after HSBC announced its first-quarter results. “We do not see a shift in the position of the US dollar as the trade currency.”

While the “lion’s share” of trade is financed using the dollar, Elhedery said there had been an increase in the use of renminbi, which now accounts for about 7 or 8 per cent of trade finance globally.

The dollar’s status as a global currency has come into question since Donald Trump unveiled a far-reaching tariff regime that has undermined trust in the US currency.

HSBC, which is among the largest US dollar clearing institutions worldwide and sits at the nexus of global trade, is widely expected to be among the businesses impacted by an intensifying trade war between the world’s two largest economies.

“We’ve seen a significant drop in [trade] volumes along the US China corridor in the sectors that have not been given a waiver or a reduction of tariffs”, Elhedery said.

The comments came as HSBC increased its provisions for bad loans and predicted lending would be muted this year, citing uncertainty, market turmoil and a deteriorating economic outlook from higher tariffs and geopolitical tensions.

The UK-based bank raised its expected credit losses by $202mn to $876mn in the first quarter of 2025, slightly higher than analysts’ estimates. The year-on-year increase included $100mn specifically for its exposure to Hong Kong’s commercial property sector.

“Given current levels of uncertainty and market turmoil”, the bank expects global demand for lending to “remain muted during 2025”.

It projected a “low single-digit percentage” impact on its revenues and an additional $500mn in incremental bad loan provisions in a scenario with “significantly higher tariffs”.

The group announced a share buyback of up to $3bn that would begin after its annual meeting on May 2. It declared a first-quarter dividend of $0.10 a share. The bank’s London-listed shares rose 2 per cent on Tuesday morning.

Pre-tax profits fell 25 per cent to $9.5bn in the first three months of the year, beating analyst expectations of $9.1bn compiled by Bloomberg. They were down from $12.7bn a year earlier when it recorded net one-off gains related to the sales of its units in Canada and Argentina.

Earnings from the group’s wealth and premier banking segment increased slightly year on year, driven by a $250mn growth in wealth revenues that the lender credited to increased trading through its brokerage.

HSBC also said it expected its share in Bank of Communications to be diluted from 19 per cent to 16 per cent after the Chinese lender announced a Rmb120bn ($16.5bn) share issuance plan, resulting in a paper loss of up to $1.6bn for HSBC.

Analysts at Barclays labelled the results “positive”, noting stronger than expected performance of the bank’s wealth management division and strong deposit growth in Hong Kong. “Albeit some degree of caution near​-​term given trade tariff uncertainty”, they said on Tuesday.

Since becoming chief executive in September, Elhedery has embarked on a cost-cutting plan that involves $300mn of savings in 2025 and a total $1.5bn cut from its annual cost base by the end of 2026.

Elhedery, on a call with reporters, said ringfencing should be removed or scaled back significantly as British banks amp up pressure on the government to get rid of post-crisis rules they say stifles competition.

“The result of ringfencing is that it has increased costs, created capital inefficiencies and trapped liquidity and therefore exposed businesses in the UK and specifically SMEs to a much higher cost base,” Elhedery said. “It has stifled competition in UK banking,” he added.