 "StanChart surges on surprise drop in impairments")
Standard Chartered Plc shares surged after the bank reported a surprise first-quarter decline in loan impairments and capital increased more than some analysts estimated.
Pretax adjusted profit fell 64 per cent to $539 million, from $1.5 billion a year earlier, the London-based bank said in a statement Tuesday. Losses on bad loans fell 1 per cent to $471 million in the quarter, well short of the $1 billion estimated by Raul Sinha, an analyst at JPMorgan Chase & Co.
Chief Executive Officer Bill Winters, 54, brought in a new management team and is seeking to restructure or exit $100 billion of risky assets to turn around the Asia-focused lender, which had its first annual loss since 1989 last year. Revenue dropped 24 per cent in the quarter to $3.35 billion, as income from every business unit declined.
''Things aren't great at Standard Chartered so far in 2016, but they're a lot better than they were at the end of last year," said Steve Clayton, head of equity research at Hargreaves Lansdown. "Investors duly let out a sigh of relief and pushed the share price up."
The stock climbed 10 per cent to 573.8 pence at 11:22 a.m. in London, the highest price this year. The bank had traded at about 50 per cent of its book value after plummeting 39 per cent in 2015.
Capital Increase
Standard Chartered said its common equity Tier 1 capital ratio, a measure of financial strength, rose to 13.1 per cent from 12.6 per cent at the end of last year. The capital increase was better than expected and the "key highlight" of the quarter, JPMorgan's Sinha, who has an overweight rating on the stock, wrote in a note to investors.
The loan impairments were the lowest in two years, and the bank reiterated its target of taking $3 billion in restructuring charges by the end of this year, $1.9 billion of which it has already recognized. The bank said it's still aiming for an 8 per cent return on equity by 2018.
Pretax adjusted profit fell 64 per cent to $539 million, from $1.5 billion a year earlier, the London-based bank said in a statement Tuesday. Losses on bad loans fell 1 per cent to $471 million in the quarter, well short of the $1 billion estimated by Raul Sinha, an analyst at JPMorgan Chase & Co.
Read more from our special coverage on "STANDARD CHARTERED"
Chief Executive Officer Bill Winters, 54, brought in a new management team and is seeking to restructure or exit $100 billion of risky assets to turn around the Asia-focused lender, which had its first annual loss since 1989 last year. Revenue dropped 24 per cent in the quarter to $3.35 billion, as income from every business unit declined.
''Things aren't great at Standard Chartered so far in 2016, but they're a lot better than they were at the end of last year," said Steve Clayton, head of equity research at Hargreaves Lansdown. "Investors duly let out a sigh of relief and pushed the share price up."
The stock climbed 10 per cent to 573.8 pence at 11:22 a.m. in London, the highest price this year. The bank had traded at about 50 per cent of its book value after plummeting 39 per cent in 2015.
Capital Increase
Standard Chartered said its common equity Tier 1 capital ratio, a measure of financial strength, rose to 13.1 per cent from 12.6 per cent at the end of last year. The capital increase was better than expected and the "key highlight" of the quarter, JPMorgan's Sinha, who has an overweight rating on the stock, wrote in a note to investors.
The loan impairments were the lowest in two years, and the bank reiterated its target of taking $3 billion in restructuring charges by the end of this year, $1.9 billion of which it has already recognized. The bank said it's still aiming for an 8 per cent return on equity by 2018.