UK-based banking giant HSBC said Monday that its net profit in the first half of the year dropped to $9.7 billion (7.2 billion euros).

The profit after tax was 5.4 percent lower than in the same period a year ago when Europe's biggest lender earned $10.2 billion.

Underlying revenue fell 4 percent to $31.3 billion in the first half of the year, the bank said, while operating expenses rose 2 percent to $18.2 billion.

HSBC Chairman Douglas Flint attributed the decline in both profit and revenue to one-off gains made last year, which could not be recreated, and an adverse market environment for the lender's investment banking.

"In the first half of 2014, against a backdrop of continuing low interest rates and reduced financial market volumes, HSBC produced a suitably well-balanced financial performance," Flint said in a statement.

Flint also said that "residual concerns" over the recovery in the bank's main markets persisted. Moreover, there were "heightened geopolitical tensions," meaning Russia's conflict with Ukraine and the war in Iraq, which would cause HSBC not to "expand risk appetite to offset the effect of lower revenues."

Reduced risk taking at HSBC in the first half of 2014 resulted in a 12 percent drop in the pre-tax profit of its investment division to $5 billion.

At the same time, a savings program launched by HSBC Chief Executive Stuart Gulliver in 2011 appeared to be having an effect for the first time.

Gulliver has slashed more than 40,000 jobs and has sold or closed around 60 businesses. The cost-cutting is expected to reap HSBC between $2 billion and $3 billion over the next two years.

Following the results, HSBC's share price was up 0.33 percent to 631.4 pence on London's benchmark FTSE 100 index Monday morning.

uhe/cjc (AFP, AP, Reuters)