HSBC offered further hope for the battered banking sector as it said pre-tax profits were “well ahead” in the first three months of the year.

The bank said that while bad debt charges were higher than a year earlier, they were lower than the previous quarter and slightly below levels expected in the US – a key market given its exposure to sub-prime lending.

HSBC – which has so far avoided turning to the Government for rescue funds – saw record results in its investment banking business.

It hailed a “resilient” first quarter, confirming that steps taken by governments to ease the financial crisis had begun to work, but offered a cautious outlook amid continued recession pressure.

HSBC reported more hefty bad debt charges at its struggling US consumer lending business HSBC Finance – at $3.9bn (£2.6bn) – although this was lower than it expected.

Its strength in other areas, such as Asia and commercial and investment banking, helped revenues recover from the previous quarter, according to a spokesman.

But its profits received a one-off boost from rising values of its own corporate debt as bond markets improved, with pre-tax profits coming in lower than a year earlier with this stripped out.

It also posted further writedowns on investments and assets, with another $900 (£595.6bn) hit from the first quarter.

HSBC said it was too early to see any “green shoots” in terms of an economic recovery, despite an increase in consumer confidence.

Chief executive Michael Geoghegan said: “There may be some spring bounce, but the reality is that people are concerned about employment and are not yet sure if they want to make financial commitments.”

While the finance industry is past the worst of the crisis, there may be further restructuring in the commercial banking sector, according to the bank’s boss.

HSBC’s update follows similar results from rivals such as Barclays and Asian-facing Standard Chartered, which have signalled better conditions thanks to strong investment and commercial banking.

As with Barclays and Standard, HSBC has also avoided the need to tap into state funding, although the group instead made a cash-call to shareholders for £12.5bn to shore up its balance sheet – the largest rights issue in UK corporate history.