HSBC said on Tuesday that first-quarter profits dropped nearly 30 percent owing to higher-than-expected credit losses and inflation but the Asia-focused lending giant remained upbeat about its outlook.

The London-based bank announced pre-tax profits of $4.2 billion for January-March, down 28 percent on-year but beating estimates, while reporting revenue declined four percent to $12.5 billion.

"While profits were down on last year's first quarter due to market impacts on wealth revenue and a more normalised level of ECL (expected credit losses), higher lending across all businesses and regions, and good business growth in personal banking, insurance and trade finance bode well for future quarters," chief executive Noel Quinn said in a statement.

The lender reported an ECL of $600 million, compared with a release of $400 million from the same period last year.

The bank said it continued to expect "mid single-digit percentage" growth this year for revenue and lending respectively.

Tuesday's results were published against the backdrop of Russia's invasion of Ukraine, which the bank said was exacerbating inflationary pressures and contributing to higher ECL charges for the quarter.

"The repercussions from the Russia-Ukraine war, alongside the economic impacts that continue to result from Covid-19, have pushed up the prices of a broad range of commodities, with the resulting increase in inflation creating further challenges for monetary authorities and our customers," the bank said.

Quinn said the "vast majority" of HSBC business in Russia serves multinational corporate clients headquartered in other countries, and the bank was implementing sanctions put in place by the United Kingdom and other governments.

But the bank forecast its operation in Russia may become "untenable" if subject to further restrictions.

HSBC has embarked on a multi-year strategic pivot to Asia and the Middle East, and on Tuesday it noted that while coronavirus restrictions were lifting across much of the globe, key markets such as China and Hong Kong remained committed to zero-Covid controls.

"China's government-imposed lockdown restrictions in major Chinese cities have impacted China's economy, Asia tourism and global supply chains adversely," the bank said.

China is struggling to deal with skyrocketing case counts in multiple cities and has locked down its finance hub Shanghai for the past month.

Meanwhile, Hong Kong -- HSBC's largest market -- has entered its third year of strict coronavirus controls that have isolated it from the rest of the world and hit businesses hard.

The bank noted that the financial services sector in Hong Kong has remained strong.

HSBC's restructuring effort to lead the market in Asia wealth management had earlier included a programme to invest $6 billion in Hong Kong, China and Singapore and to hire more than 5,000 wealth advisors.

The lender has slashed 35,000 jobs and sold its retail operations in the United States and France.

In February, the bank announced a boon to investors in the form of a $1.0 billion share buyback, adding to a $2.0 billion buyback announced last year.

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