LONDON -- HSBC Holdings (HSBA -1.89%) (HSBC -0.15%) reported today that underlying profits surged 34% (from $2.58 billion to $6.35 billion) in the first quarter as bad loans fell and business and mortgage borrowing picked up pace.

HSBC, Europe's largest bank by market value, said underlying revenue for the period was up just 5% -- $17.6 billion compared with $16.8 billion in the same quarter last year. Revenue would have been flat if it weren't for a few key one-off events, including the sale of the bank's remaining stake in China's Ping An Insurance (for $600 million) and the favorable movement in the cost of the banks own debt of $500 million.

"While continuing uncertainty in the global economy has created a relatively muted environment for revenue growth, we have increased revenue in key areas including residential mortgages and commercial banking in both our home markets of Hong Kong and the UK, and in our financing and equity capital markets business," chief executive Stuart Gulliver said.

Facing this economic uncertainty, the bank has boosted profits largely by focusing on two key metrics:

First, HSBC is reducing provisions (money set aside to cover loans that default), which fell from $2.09 billion in the first quarter of 2012 to $1.17 billion in the first three months of 2013. Gulliver said this reflected progress in every region, including the U.S.

Also helping boost profits is HSBC's continued focus on cost-cutting.

In April, the bank confirmed plans to eliminate 1,149 jobs in the U.K. as it reduces the number of employees in its wealth-management business who aren't qualified to give advice. This follows 2,200 job cuts in 2012, bringing the total number of job cuts around the world (in the past two years) to 34,500.

Today, HSBC is widely regarded as one of the world's strongest banks because of its healthy Tier 1 capital position, as well as its presence in fast-growing economies in Asia, Latin America, and the Middle East.

Though this presence in Asia should help, perhaps the biggest question facing HSBC shareholders today remains: How will the bank's management grow revenues from here -- and can they do it without writing more bad loans?

Gulliver is due to update investors on the next stage of his strategy at a presentation on May 15.

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