Europe's biggest bank HSBC Holdings said business will remain challenging for much of 2010 and it may not keep its U.S. credit card arm if the problems facing the business intensify.

HSBC said strong revenue trends at its investment bank continued in April and May after a record first quarter, but warned the broader outlook remains unpredictable and will stay tough for a while.

The rest of 2009 and probably much of 2010 will be challenging, Chief Executive Michael Geoghegan said at the bank's annual shareholder meeting on Friday.

HSBC has weathered the crisis better than most rivals thanks to a traditionally strong balance sheet and liquidity, and most of the criticism from about 500 shareholders at the meeting regarded its ill-fated 2003 takeover of U.S. consumer finance company Household and executive pay.

Shareholders backed the bank's remuneration report, although 8.8 percent of investors who voted were against the resolution.

By 10:35 a.m. EDT HSBC shares were down 0.9 percent at 534 pence, underperforming a flat European bank sector.

HSBC said its U.S. credit card business broke even in the first quarter in very adverse conditions, and financial and regulatory headwinds remain.

If those become too strong, and we are not able to leverage this business more fully on a group basis, we may have to rethink it, Geoghegan said.

That decision is unlikely to be made within the next 18 months, Geoghegan told Reuters after the meeting.

About 36 million of HSBC's 100 million credit card customers are in the United States, and any global cards business with less than 100 million risks being sub-scale, he said.

But rising unemployment could hurt and U.S. lawmakers are on Friday expected to pass new limits on credit card interest rates and fees.

HSBC in March announced it would run off most of its troubled consumer finance business, now named HSBC Finance, but would keep cards as a core business line.

NO MAJOR DEALS

HSBC will continue to look at bolt-on deals, but is unlikely to make a major acquisition, said Chairman Stephen Green.

We do not believe we need to make major acquisitions, he said, when asked by an investor if he would look at Morgan Stanley , UBS or UK insurer Prudential
.

Organic expansion would continue to drive growth, and HSBC is likely to have over 100 of its own branches in China by the end of the year, Green said.

HSBC said its financial strength and conservative positioning had helped it to withstand the financial storm and that there were signs of stabilization and returning appetite for risk among investors.

HSBC said two weeks ago its first quarter profits were well ahead of last year, swelled by record results in its investment bank and resilience in Asia.

(Editing by David Cowell)