HSBC, the banking giant chaired by Scot Douglas Flint, has hiked its provisions for payment protection insurance mis-selling by £290 million, but reported a strong increase in underlying profits thanks to a rebound at its investment banking arm.

The move takes HSBC's total compensation pool for PPI claims to £745m and follows similar moves by the likes of Royal Bank of Scotland, Lloyds Banking Group and Barclays after a "significant rise in the volume of claims" in the first quarter of 2012.

Chief executive Stuart Gulliver said HSBC sold fewer PPI policies, and stopped selling them earlier than its rivals.

However, he noted: "I think our percentage pay-out will be similar."

He added to the criticism of claims management companies voiced by other banks and said false claims were creating an "administrative hassle".

Mr Gulliver said filing claims is a "zero cost option" for such companies. He also said he expected the number of claims to "drop away" in the coming months.

Shares in HSBC fell 6.5p or 1.2% despite beating market expectations with an underlying first-quarter profit of $6.8bn (£4.2bn), up 25% on a year ago, as markets were spooked by fears of a renewed eurozone crisis.

HSBC's pre-tax profit was down 11.9% at $4.3bn due to movements in the value of the company's debt.

HSBC's global banking and markets business gave the group a major fillip after pulling in revenues of £5.8bn during the quarter.

This was 12.7% ahead of the same period last year and 49.8% more than the last quarter of 2012 when the eurozone crisis weighed on the investment banking sector.

HSBC enjoyed double digit revenue gains in Asia and Latin America during the quarter.

But this was clouded by a 62% jump to $600m in bad debts in Latin America, largely due to issues in Brazil which has experienced volatile economic growth in recent months.

HSBC's European business saw a $98m year-on-year fall in pre-tax profit to $1bn as high revenues were more than offset by rising expenses, including pay in its investment banking arm and bad debt charges.

Revenues on the corporate lending side of the business were up due to higher lending, notably to small and medium-sized British companies.

The bank said loan impairment charges in the UK had fallen as it focused on higher quality lending in its retail bank.

HSBC said it was making good progress with its strategic revamp and had shed 14,000 jobs since last year. Mr Gulliver said he did not expect the eurozone to break up.

He said that even if Greece quit, the rest of the currency bloc could stay together.

Despite the French and Greek election results, which have been interpreted as revolts against Government cuts, Mr Gulliver said the UK Government should not change tack.