HSBC Holdings reported a 26 percent fall in first-half pretax profit on Wednesday, weighed down by a US$2.1 billion hit from its stake in Bank of Communications.

The US$15.8 billion profit for the first six months of this year, versus US$21.6 billion a year earlier, missed analysts' expectations. First-half revenue fell nine percent to US$34.1 billion.

The result compared with the US$16.5 billion average of broker profit estimates compiled by HSBC.

The sharper-than-expected drop in HSBC's earnings showed the challenge ahead for CEO Georges Elhedery, as the bank racked up losses in China where it has increasingly pinned its plans for growth in recent years after shrinking in Western markets.

Expected credit losses grew by US$900 million compared to the first half of last year to US$1.9 billion, the bank said, partly due to its exposure to Hong Kong's commercial real estate sector.

HSBC also said the impact of US President Donald Trump's trade tariffs could cause it to miss its profitability target of a mid-teens return on tangible equity in future years, in a scenario where the economy deteriorates and central banks slash policy rates.

The group announced a new share buyback worth up to US$3 billion, on top of a US$3 billion buyback programme announced earlier this year. (Reuters)