LONDON (Bloomberg) — HSBC Holdings Plc’s aggressive bet on Asian markets hasn’t been enough to cushion a slump in Europe.

The emerging-market lender’s second-quarter results met with a lukewarm reception from investors yesterday after adjusted revenue advanced 2 per cent, less than analyst estimates, while costs rose 7 per cent. HSBC is investing in technology upgrades and building its China business, the centrepiece of new chief executive officer John Flint’s strategy.

Flint, promoted in February, plans to grow the global behemoth by expanding in key Asian markets including China, with an investment of $17 billion in the region. The CEO said the London-based bank remains committed to growing revenue faster than costs this year.

“HSBC is struggling to convince that its current restructuring to pivot the group towards Asia is delivering the hoped for pick-up in growth,” said Steve Clayton, a fund manager at Hargreaves Lansdown. “In a world of tit-for-tat sanctions between the global powers, it could become harder for HSBC to benefit from its deep Asian roots.”

HSBC shares fell 0.5 per cent a 11am in London, after rising as much as 1.5 per cent in Hong Kong trading earlier. The stock has slipped 7.2 per cent this year.

Like UK rival Standard Chartered, HSBC has struggled to consistently deliver revenue gains that outpace cost increases — what analysts refer to as positive jaws. Still, Flint expressed optimism that revenue gains will pick up, allowing HSBC to fulfil a promise to deliver positive jaws for the full year.

HSBC executives also said the outlook for Asia remained strong despite mounting concerns around the future for international trade and rising US protectionism.

“It clearly represents the potential for some challenges as we go forward but this is not the first time we’ve been through difficult trading conditions,” finance director Iain Mackay said in an interview with Bloomberg. “We’ve come through the first half of the year where this has been very much in the headlines, and we’ve seen revenue and growth in the balance sheet progress reasonably well.”

HSBC’s net interest margin, a measure of loan profitability, rose three basis points to 1.66 per cent in the first half from the previous six months, led by gains in Asia. The region accounted for two-thirds of adjusted pretax profit in the first half.

Jefferies analysts led by Joseph Dickerson called the revenue growth “paltry”, and said in a note to clients that the stock is “likely to be in a holding pattern until evidence of delivery”.

HSBC has defended the increased investments and costs as necessary to exploit Asia’s growth potential, and that of China in particular. Mackay said costs were “absolutely in line” with where the company expected to be, adding that HSBC is being deliberate about investing in areas where it expects growth.

“We are sitting in a pretty sensible place,” he said.

Pretax profit on an adjusted basis was $6.11 billion, slightly ahead of the $6.05 billion average estimate of analysts surveyed by HSBC. The company announced a second-quarter interim dividend of 10 cents a share.

HSBC’s performance in the second quarter was weighed down by a slump in revenue at its investment bank.

Revenue from stock trading fell 17 per cent to $279 million, compared with the 14 per cent average rise posted by US banks and similar double-digit gains reported by some of HSBC’s biggest European rivals. HSBC’s larger fixed-income trading business fell 12 per cent to $1.3 billion, again in contrast with gains reported by most US banks.