"Based on the facts currently known, it is not practicable at this time for HSBC to predict the resolution of this matter, including the timing or any possible impact on HSBC, which could be significant."
HSBC confirmed a $2.5bn share buyback following the sale of its Brazilian arm but still reported a 29% fall in H1 profits to $9.7bn, reflecting a $3.5bn fall in revenue.
HSBC's quarterly pre-tax profit fell by 45% from $6.57bn to $3.61bn year-on-year.
Adjusted profits show a more moderate decline in profits by 14%, from £12.6 billion down to £10.8 billion. Adjusted operating expenses fell by 4%. However total revenues fell by 4.5% while loan impairments doubled.
The Bank's total personal lending grew by $2.6bn compared with 31 December 2015, which it attributed to mortgage balances increasing by $3.0bn, mainly in the UK which increased by $1.7bn.
Discussing litigation risks, HSBC said it has "received requests for information from various regulatory and law enforcement authorities around the world concerning persons and entities believed to be linked to Mossack Fonseca & Co., a service provider of personal investment companies".
In the interim results, HSBC said: "Based on the facts currently known, it is not practicable at this time for HSBC to predict the resolution of this matter, including the timing or any possible impact on HSBC, which could be significant."
Laith Khalaf, Senior Analyst at Hargreaves Lansdown, commented: "The problem for HSBC is its revenues fell faster than it could cut costs, resulting in negative jaws in banking parlance, which combined with an increase in bad loans led to falling profits.
"Litigation remains a key risk for the banking sector, and HSBC’s report on the legal proceedings facing the bank reads like a barely trimmed down version of War and Peace. This includes a section on the Panama Papers which states HSBC does not know at present what, if anything, the impact on the bank will be, but warns it could be significant."
