While warning that it was too early to estimate the total financial impact of the global coronavirus epidemic, Standard Chartered has confirmed that it would miss its financial targets for the current year.
It is unlikely that the income growth targets of between 5 per cent and 7 per cent for 2020, as had been set by the bank, would be reached by it for the entire year, said the Asia-focused bank, and added that this was because of the coronavirus outbreak – also officially known as Covid-19, has affected some of its very crucial markets which included Hong Kong, mainland China and Singapore.
The London headquartered bank was struggling to make a correct assessment of the impact of the outbreak, said the bank’s chief executive, Bill Winters.
“We have had a good start to 2020 but we recognize there are some substantial headwinds that are mounting. And most obvious is the coronavirus, which is playing itself out in ways that none of us as yet fully understand [in terms of] how exactly this will progress,” he said.
“Had we not had the combination of substantially lower interest rates, substantially slower levels of economic activity and then the uncertainty around the virus, today we would not be talking about delaying the achievement of our financial targets,” he added.
The news resulted in a fall of 4.6 per cent in the stocks of the company which marked the lowest level for the stocks since November 2018.
Earlier this month, relief measures to borrowers in affected areas were started to be offered by the bank that is not focused on Asia, the Middle East and Africa. Such offers included interest-only mortgage payments for a period of up to six months.
In case of borrowers starting to fall behind or default on payments because of factors such as temporary closure of business due to the virus outbreak, banks risk a rise in the percentage of their bad loans. HSBC said last week that the coronavirus impact could result in its taking a charge of up to $600m because Hong Kong is one of its largest markets.
However no guidance on the amount of money that the bank could be forced to set aside for the coronavirus outbreak was provided by Standard Chartered’s chief financial officer, Andy Halford.
“We expect March will be affected more by the coronavirus. The question is how long it goes on. How many countries it impacts is clearly a question which most of us, I think, find quite difficult to answer with clarity at this point in time, so we’ve not put a number on it,” Halford said.
These comments were made by the bank’s top executives while it reported its full-year results that showed a rise of 46 per cent year on year in its pre-tax profit at $3.7bn.
(Adapted from TheGuardian.com)