By Steve Slater and Lionel Laurent
LONDON/PARIS (Reuters) - HSBC is expected to almost double first quarter profits to about $8 billion on Tuesday helped by a fall in costs and bad debts and showing the benefits of a three-year restructuring that is nearly complete.
The results will keep HSBC as one of the most profitable and most strongly capitalized banks in the world although Europe's biggest bank still has more to do on costs.
HSBC, like many of its rivals in Europe and the United States, has had to cut back to recover from the financial crisis and cope with the harsher business environment and tighter regulation that has followed it.
The bank acted sooner more aggressively than many of its peers, some of which are only now making cuts.
The bank's Chief Executive Stuart Gulliver has already slashed $3.5 billion in annual expenses - 38,000 jobs have gone. The CEO has struck 52 deals to shed businesses that deliver low profits or lack scale but is struggling to get costs to below a target of 52 percent of income.
HSBC's complexity, its unprofitability in many countries and a negative impact on income from low interest rates mean Gulliver is likely to fall short of his cost/income target by the end of this year.
He is due to update investors on strategy on May 15, which is likely to include another $1 billion in savings.
Costs in the latest quarter are expected to drop to $9.6 billion, from $10.4 billion a year ago, analysts forecast.
HSBC is expected to report a pretax profit of $8.1 billion for the three months to the end of March, according to the consensus forecast of 14 analysts provided by the company.
The latest quarter will benefit from more than $1 billion of gains from a reclassification of its stake in Industrial Bank in China and other exceptional items, analysts estimate.
EURO ZONE BANK TROUBLES
Cost-cutting and restructuring will also be the focus at a trio of euro zone banks - France's Societe Generale and Credit Agricole and Germany's Commerzbank - that also report first quarter results on Tuesday.
Unlike HSBC, which has offset weakness in Europe with strong growth in Asia, these banks are likely to show the impact of the euro zone crisis more sharply.
SocGen and Credit Agricole, France's second and third biggest banks, are expected to post profit falls, partly as a result of record unemployment and weak growth in their home market.
SocGen's first quarter net profit is expected to drop 7.8 percent to 675 million euros ($885.36 million), according to the mean estimate of analyst forecasts compiled by Thomson Reuters I/B/E/S. Revenues are seen falling 16.8 percent to 5.26 billion.
Credit Agricole is expected to post a one-third fall in earnings to 674.6 million euros, according to Thomson Reuters I/B/E/S. Revenues are seen down 28 percent to 3.9 billion euros.
In Germany, Commerzbank has already said it continued to lose money in the first quarter due to restructuring charges linked to job cuts. Analysts estimate Germany's second biggest bank's loss at 125 million euros.
More details are expected on the bank's planned 2.5 billion euro capital increase to repay some of its state bailout. This could take place in mid-May and follows rival Deutsche Bank's 3 billion euros share sale last week.
($1 = 0.7624 euros)
(Reporting by Steve Slater in London, Lionel Laurent in Paris and Arno Schuetze on Frankfurt. Editing by Jane Merriman)