 "Stanard Chartered Bank, Standard Chartered")
Standard Chartered PLC beat forecasts on Thursday with a 5.5 per cent rise in its first-quarter pretax profit, as the income boost from higher interest rates and a robust performance from its markets trading business offset a surge in credit losses.
The bank, which makes the bulk of its revenue and profits in Asia, saw profit at its investment banking unit climb 13 per cent in the quarter.
Crucially, the bank grew fee-based revenues from markets and wealth management in particular, a key target for it and rivals as interest rates worldwide peak and cap the boost they have recently received from lending-based income.
StanChart's shares, a focus for CEO Bill Winters, jumped more than 6 per cent in Hong Kong on Thursday after the results to their highest level in nearly seven months, while the main local index was trading 2.5 per cent higher.
The strong performance across its business lines while keeping costs under control should help StanChart shares burst out of their longstanding malaise, Joe Dickerson, analyst at Jefferies in London, said.
StanChart posted a pretax profit of $1.91 billion in the January-March quarter, compared with $1.81 billion a year earlier and the $1.39 billion average of 13 analyst estimates compiled by the bank.
"We delivered a strong set of results in the first quarter of 2024, with double-digit growth in income and positive operational leverage," Winters said in an earnings statement.
More From This Section
"We remain confident in the delivery of our financial targets and are maintaining our full year 2024 guidance." But the lender's credit impairments worsened in 2024, with a $165 million writedown in the first three months, compared to $20 million a year earlier.
The bulk of the credit impairment was accounted for by the bank's wealth and retail banking division, as the unit was hit by "mortgage headwinds" in Hong Kong and South Korea, StanChart said.
The British bank has made provisions worth $1.2 billion in total in relation to the China commercial real estate sector, it said. Its total credit exposure to the sector was now at $2.4 billion, down $200 million from the preceding quarter.
StanChart had taken a total of $850 million in writedowns in the previous quarters on its stake in China's Bohai Bank , which like its peers suffered from a slowing Chinese economy and the deepening crisis in the property sector.
Chinese authorities have been ramping up measures over the last few months to prop up the troubled sector, but analysts say many of the policies are piecemeal in nature or have only limited, short-term impact.
StanChart said that it remained cautious on the sector as residential sales volumes continue to decline this year.
KOREA PROVISIONS
The lender said its profit from joint ventures in the first quarter slipped to $6 million from $18 million as profit at Bohai Bank fell.
StanChart also said it booked a $100 million provision for expected compensation fees for customers in South Korea who bought certain equity-linked securities which ended up causing them a loss.
Regulators in the country have advised that banks in the country who sold such products should reimburse customers.
StanChart's results come just days after its bigger, crosstown rival HSBC, which also makes the bulk of its profits in Asia, announced the stepping down of its CEO Noel Quinn and quarterly profit that was slightly ahead of forecasts.
StanChart's Winters has held the top job since 2015 and is one of the longest-serving chief executives in UK banking.
In March, the bank unveiled a management reshuffle that saw the departure of its corporate and investment banking head, Simon Cooper, who had been seen by some investors as a potential successor to Winters.
"We have taken action to create a simpler and more efficient organisation with changes to our group management structure," Winters said.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
