HSBC logos are displayed inside an office tower in Hong Kong

HSBC beat analysts' forecast for its first-quarter profit Tuesday after a strong rebound in its investment banking division.

Europe's biggest bank said underlying profit in the first three months of this year was $6.8 billion, a 25 percent improvement from the same quarter in 2011 and well ahead of Street estimates. On a so-called statutory basis, its bottom line was $4.3 billion owing to an accounting charge the bank was forced to book based on the improving value of its own debt. The $2.6 billion charge essentially represents the theoretical cost of buying that debt back in the open market.

Pre-tax profits at the investment banking unit were $3.08 billion, up 5 percent from the same period last year, from an 11 percent increase in revenues to $5.8 billion.

"We continued to make good progress in implementing our strategy, with 11 transactions to dispose of or close businesses announced since the start of 2012, and we continued to position the business for growth with increased revenues in Hong Kong, Latin America and rest of Asia-Pacific against the previous quarter," Chief Executive Officer Stuart Gulliver said in the statement released with the earnings.

HSBC said it had shed more than 14,000 jobs globally from its peak headcount, including 3,500 since December of last year, in a steep bankwide effort at cost reduction. The plan is part of Gulliver's target of reaching shareholder returns of at least 12 percent and to cut costs below 52 percent of global revenues.

HSBC reported annualised average returns of common equity of 6.4 percent for the first quarter. Its cost efficiency ratio improved to 55.5 percent from 58.7 percent in the first three months of last year.

HSBC shares were trading nearly 1 percent higher from Friday's close after the results, reversing an earlier session decline of 1.8 percent, to change hands at 560.3 pence per share at 0900 GMT.