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Shares in Standard Chartered rose on Thursday after the bank reported better than expected first-quarter results on the back of higher interest rates and growth in its wealth and banking business.
Reported pre-tax profit in the first quarter increased 6 per cent year on year to $1.9bn, beating analysts’ expectations of $1.4bn, the London-based company said on Thursday.
“We delivered a strong set of results in the first quarter of 2024, with double-digit growth in income and positive operational leverage,” said chief executive Bill Winters. “Business performance was strong and broad-based across our segments, products and markets in what continues to be an uncertain environment.”
Its Hong Kong-listed shares closed 6 per cent higher after the bank published its results, the largest quarterly profit in 10 years, while its London-listed stock rose more than 6 per cent.
The lender, which makes most of its profits in Asia, particularly Hong Kong and Singapore, also made $234mn from a revaluation of currency positions in Egypt and hyperinflation in Ghana.
“We are undoubtedly . . . and clearly in a solidly ‘higher for longer’ environment,” Diego De Giorgi, chief financial officer at StanChart, told reporters. “It will be helping margins, but that effect would be somewhat offset potentially by reduced demand for credit.”
De Giorgi added: “But we see the rates completely consistent with our guidance to achieve our results for 2024.”
Winters has been under pressure to demonstrate to shareholders that the bank is cutting costs and simplifying its structure. StanChart’s Hong Kong-listed shares are up 16.8 per cent over the past year, though they have still fallen more than 40 per cent since Winters took over in June 2015.
The chief, who complained that the bank’s stock price was “crap” in February, has started overhauling management in recent months.
In March, the head of StanChart’s investment bank Simon Cooper left the group, with his role taken over by trading boss Roberto Hoornweg in Dubai and Singapore-based Sunil Kaushal, head of Africa and the Middle East. The bank said several senior roles would be removed in order to cut costs and complexity.
The bank is also searching for its next chair when José Viñals steps down, sounding out UK political heavyweights Sir Charles Roxburgh and Sir Sajid Javid as potential candidates.
The lender conducted a share buyback worth $646mn as of May 1, according to an exchange filing, part of the bank’s $1bn buyback programme announced in February.
It booked a credit impairment of $176mn in the first three months of the year, mainly in the wealth and retail banking division. The bank took another $10mn credit loss impairment on its Chinese commercial real estate portfolio for the quarter, the result of a property crisis that began three years ago, though other parts of the portfolio offset the loss.
StanChart said it was reducing its exposure to the Chinese real estate portfolio to $2.4bn as of March, down 40 per cent from the end of 2021, when the collapse of developer Evergrande triggered turmoil in the industry.
The bank said its remaining China portfolio, excluding the property sector, remained “resilient” and that it was adding exposure to sectors including clean tech, electric vehicles and advanced manufacturing.
Winters said he was confident about the bank’s exposure to China and other emerging markets.
“The nature of our market footprint is unique, that from time to time, it’s a challenge as well,” he said, “while there’s always some downside risk with the upside opportunities, I’m going to give us pretty high marks for having managed the risk and capitalise on the opportunities”.
