A 5.5% increase in pretax profit for the first quarter was reported by Standard Chartered PLC which was over the expectations of analysts. The company attributed this improvement to higher interest rates as well as good performance from its markets trading operation, which helped to offset a spike in credit losses.
The bank, which makes most of its money in Asia, recorded a 13% gain in profit for its investment banking division during the quarter.
Most importantly, as global interest rates rise and the recent gain from lending-based income is limited, the bank expanded fee-based revenues from markets, and wealth management in particular. This is a key goal for both the bank and rivals.
The primary local market was up 2.5% on Thursday, while StanChart's shares—a focus for CEO Bill Winters—rose more than 6% in Hong Kong following the results, hitting their highest level in more than seven months.
According to Joe Dickerson, an analyst at Jefferies in London, StanChart's strong performance across all of its business lines and cost reduction should help the company's shares bounce back from their extended decline.
In the January–March quarter, StanChart reported a pretax profit of $1.91 billion, up from $1.81 billion in the previous year and the $1.39 billion average of 13 analyst predictions that the bank polled.
"We delivered a strong set of results in the first quarter of 2024, with double-digit growth in income and positive operational leverage," Winters stated in an earnings release.
"We remain confident in the delivery of our financial targets and are maintaining our full year 2024 guidance."
In 2024, the lender experienced a rise in credit impairments, with a $165 million writedown in the first three months, as opposed to $20 million in the previous year.
The bulk of the credit impairment was attributed to the bank's wealth and retail banking division and was brought on by "mortgage headwinds" in South Korea and Hong Kong, according to StanChart.
It also stated that the British bank has set aside a total of $1.2 billion for China's commercial real estate market. Its whole credit exposure to the sector was $2.4 billion at the end of the quarter, $200 million less than the prior one.
StanChart had written down its interest in China's Bohai Bank by a total of $850 million in the preceding quarters, as the Chinese economy slowed and the property sector's problem deepened.
Chinese authorities have increased steps to support the struggling sector in recent months, but analysts say many of the initiatives are fragmented and have only a short-term impact.
StanChart said it remains worried about the industry as home sales volumes continue to fall this year.
The lender said its first-quarter earnings from joint ventures decreased to $6 million from $18 million as Bohai Bank's profit plummeted.
Additionally, StanChart disclosed that it has recorded a $100 million provision for anticipated compensation payments for South Korean clients who purchased specific equity-linked products and ultimately suffered a loss.
Authorities in the nation have recommended that banks selling these kinds of products refund their clients.
The results of StanChart were released a few days after its larger, cross-town rival HSBC, which also derives the majority of its income from Asia, declared the resignation of CEO Noel Quinn and reported a quarterly profit that was marginally higher than anticipated.
Winters, the CEO of StanChart, has been in charge since 2015 and is among the bankers in the UK with the longest tenure.
Simon Cooper, the head of corporate and investment banking at the bank, left in March as part of a management shake-up that surprised some investors by suggesting he would succeed Winters.
"We have taken action to create a simpler and more efficient organisation with changes to our group management structure," Winters said.
(Source:www.businesstimes.com.sg)
The bank, which makes most of its money in Asia, recorded a 13% gain in profit for its investment banking division during the quarter.
Most importantly, as global interest rates rise and the recent gain from lending-based income is limited, the bank expanded fee-based revenues from markets, and wealth management in particular. This is a key goal for both the bank and rivals.
The primary local market was up 2.5% on Thursday, while StanChart's shares—a focus for CEO Bill Winters—rose more than 6% in Hong Kong following the results, hitting their highest level in more than seven months.
According to Joe Dickerson, an analyst at Jefferies in London, StanChart's strong performance across all of its business lines and cost reduction should help the company's shares bounce back from their extended decline.
In the January–March quarter, StanChart reported a pretax profit of $1.91 billion, up from $1.81 billion in the previous year and the $1.39 billion average of 13 analyst predictions that the bank polled.
"We delivered a strong set of results in the first quarter of 2024, with double-digit growth in income and positive operational leverage," Winters stated in an earnings release.
"We remain confident in the delivery of our financial targets and are maintaining our full year 2024 guidance."
In 2024, the lender experienced a rise in credit impairments, with a $165 million writedown in the first three months, as opposed to $20 million in the previous year.
The bulk of the credit impairment was attributed to the bank's wealth and retail banking division and was brought on by "mortgage headwinds" in South Korea and Hong Kong, according to StanChart.
It also stated that the British bank has set aside a total of $1.2 billion for China's commercial real estate market. Its whole credit exposure to the sector was $2.4 billion at the end of the quarter, $200 million less than the prior one.
StanChart had written down its interest in China's Bohai Bank by a total of $850 million in the preceding quarters, as the Chinese economy slowed and the property sector's problem deepened.
Chinese authorities have increased steps to support the struggling sector in recent months, but analysts say many of the initiatives are fragmented and have only a short-term impact.
StanChart said it remains worried about the industry as home sales volumes continue to fall this year.
The lender said its first-quarter earnings from joint ventures decreased to $6 million from $18 million as Bohai Bank's profit plummeted.
Additionally, StanChart disclosed that it has recorded a $100 million provision for anticipated compensation payments for South Korean clients who purchased specific equity-linked products and ultimately suffered a loss.
Authorities in the nation have recommended that banks selling these kinds of products refund their clients.
The results of StanChart were released a few days after its larger, cross-town rival HSBC, which also derives the majority of its income from Asia, declared the resignation of CEO Noel Quinn and reported a quarterly profit that was marginally higher than anticipated.
Winters, the CEO of StanChart, has been in charge since 2015 and is among the bankers in the UK with the longest tenure.
Simon Cooper, the head of corporate and investment banking at the bank, left in March as part of a management shake-up that surprised some investors by suggesting he would succeed Winters.
"We have taken action to create a simpler and more efficient organisation with changes to our group management structure," Winters said.
(Source:www.businesstimes.com.sg)
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