* Q1 pretax profit $8.4 bln vs analyst forecast of $8.1 bln
* Bad debts charge halve; costs fall 10 percent
* Analysts say HSBC could raise cost savings target
* HSBC to update investors on strategy on May 15
* Shares up 3 pct to highest for nearly 2 months
By Steve Slater
LONDON, May 7 (Reuters) - HSBC aims to keep thepressure on costs after first-quarter earnings nearly doubleddue to the bank's three-year efficiency drive and a halving inbad debts charges.
The jump in profits reinforces HSBC's position as one of thestrongest global banks after the financial crisis partly as aresult of a radical overhaul to simplify its sprawling structureand improve profitability.
Its strong focus on Asia, which generated around two-thirdsof profit in the first quarter, has also helped offset a harshbusiness environment, particularly in the euro zone.
Europe's largest bank moved faster and more aggressivelythan many of its peers to cut costs after the crisis. And itwill continue to wield the knife - with a further 6,000 job cutsexpected this year from businesses already put up for sale, ontop of 40,000 already culled. HSBC has closed or sold more than50 businesses since 2011.
"We're moving into calmer waters but there are stillchallenges ahead," Chief Executive Stuart Gulliver toldreporters on a conference call.
Gulliver declined to say whether he would announce anyadditional cost savings at a strategy update for investors onMay 15. But he said: "Clearly you can expect us to continue tofocus on our cost base."
The CEO said HSBC still expected the euro zone economy tocontract during 2013 and that UK economic growth remained muted.
Across Europe, HSBC's smaller rivals are playing catch-upwith cost cuts to help offset rising bad debts and weak loandemand. French banks Societe Generale and CreditAgricole on Tuesday said they would keep making cutsto cope with a weak domestic economy.
In Germany, the cost of thousands of job cuts contributed toa net first-quarter loss at Commerzbank, which warnedthat earnings would be under pressure this year as loan-lossprovisions rise.
In contrast, HSBC posted a pretax profit of $8.4 billion, upfrom $4.3 billion a year ago and above the average forecast of$8.1 billion from analysts polled by the company.
"We see these results as an endorsement of the strength ofthe franchise and its ability to generate earnings even in asluggish macro environment," said Chirantan Barua, analyst atBernstein. He said HSBC's strong capital position and capitalgeneration meant it could increase its dividend by at least 30percent this year.
COSTS
HSBC shares rose more than 3.3 percent to 737.4 pence, theirhighest level since mid-March, helping to drive the Europeanbenchmark nearly three percent higher.
A $1.1 billion gain from disposals aided HSBC earnings asdid a halving of bad debt provisions to $1.2 billion - itslowest quarterly level since before the financial crisis.
The bad debt charge fell across all regions and inparticular in the United States, where HSBC is winding down itsconsumer business. The U.S. consumer book saw a decline inloan-loss provisions of $430 million to $544 million.
Costs in the first quarter were down 10 percent from a yearago and the bank is now saving $4 billion a year on anannualised basis, above the top end of its own target range of$3.5 billion.
HSBC wants to get costs below 52 percent of income by theend of the year from just over 53 percent on an underlying basiscurrently. Analysts say the bank should be able to raise itscost savings target by $1 billion a year.
The bank's investment banking division posted a 16.5 percentincrease in first-quarter pretax profit from a year ago, helpedby a strong performance at its equities division.
This mirrors strong results from Europe's other majorinvestment banks such as Deutsche Bank, Barclays, UBS and Credit Suisse.
HSBC Holdings (HSBA)