By Steve Slater and Clara Ferreira-Marques

LONDON (Reuters) - Britain's top two banks, HSBC and Barclays, signaled bad debts may be past their peak, with HSBC declaring on Tuesday the first improvement for three years in losses on U.S. consumer credit.

Strong investment banking underpinned profits for both banks, although Barclays shares dipped on concern its unit will be unable to sustain its growth and costs are rising.

Losses on bad debts have soared for banks around the world this year as unemployment rises and economies slow, replacing writedowns on toxic assets as the main worry, and few banks have yet voiced confidence they are through the worst.

HSBC Holdings Plc Chief Executive Michael Geoghegan said "the biggest jolt has now passed through the global economy" and predicted a two-speed recovery, driven by emerging markets.

"We're quietly confident but we have to be careful (about) where the world economy is going," he told reporters.

Barclays Plc reported a third-quarter pretax profit of 1.56 billion pounds ($2.6 billion), down from 2.8 billion a year ago, largely due to losses on the value of its own debt and other one-off items. Excluding those, profit in the first nine months of the year more than doubled to 4.4 billion.

HSBC, Europe's biggest bank, said underlying third-quarter profits were "significantly ahead" of a year ago, though it gave no figures in its trading statement.

It was boosted by an improvement at its troubled U.S. consumer finance business, which it is running down. Bad debts there dipped to about $3 billion from $3.4 billion in the second quarter, their first fall since the start of 2006.