HSBC's decision to give up trying to be the world's local bank has, ironically, enabled it to report higher underlying pre-tax profit globally, with the exception of Latin America. Results for the first six months of 2013 revealed the outline of a slimmed-down HSBC after two-and-a-half years of cost-cutting aimed at reducing overheads from 55 per cent to 48 per cent of revenues. Chief executive Stuart Gulliver says the plan remains on track, with sustainable cost savings of more than US$4 billion following 46,000 job cuts and the bank's exit from 54 non-core businesses that failed profitability and cost-efficiency tests.

HSBC reported first-half pre-tax profits of US$14.1 billion, up 10 per cent on the same period a year ago but short of the US$14.6 billion market consensus. Perhaps the market expected too much, given that disposals are bound to weaken the profit outlook. Net profit is up 23 per cent to US$10 billion and analysts forecast robust growth in earnings per share. But that could depend on factors outside HSBC's direct control - interest rates and a slowdown in emerging markets. The bank's large deposit base means that near-zero interest rates are a drag on its revenue. And the bank's operations are vulnerable to a slowdown in China which would weigh on regional growth.

The challenge now, with most asset disposals already in the pipeline or complete, is to generate growth amid a lacklustre global climate. HSBC's own economists have already cut their growth prediction for China to 7.4 per cent, and that for Hong Kong from 4.7 to 2.5 per cent. The bank's operations will come under pressure if China's growth slows any further.