Standard Chartered posted a higher-than-expected quarterly pre-tax profit on fewer loan impairment costs on Tuesday, as the developing markets-focused lender benefited from a recovery in pandemic-affected areas.
Statutory pretax profit for the bank, which generates the majority of its business in Asia, increased to $996 million in July-September from $435 million the previous year, above the $942 million average expectation of 16 analysts gathered by the bank.
The London-based bank, which focuses on Asia, Africa, and the Middle East, posted credit impairment costs of $107 million, down from $353 million the previous year.
In a statement, StanChart stated that it anticipates credit impairment to stay modest in the fourth quarter, but that it would remain attentive in the face of an uneven recovery.
After fixing the bank’s balance sheet and laying off thousands of employees in his early years, CEO Bill Winters has attempted to restore growth while building a portfolio of digital assets in recent years.
Nonetheless, StanChart’s London-listed shares have underperformed competitors since then, rising 8% this year versus 18% for HSBC and 37% for Barclays (BARC.L).
StanChart’s quarterly earnings were bolstered by a solid performance in its financial markets trading sector, where revenue increased 11 percent year on year.
StanChart reported $4.2 billion in exposure to China’s real estate industry, where China Evergrande Group (3333.HK) is dealing with a $300 billion debt load, raising concerns about additional defaults and contagion risks.
“We continue to monitor the potential second order impacts of recent developments,” StanChart said.
StanChart, like its larger rival HSBC, has been counting on the world’s second-largest economy to help drive its development in the face of poor prospects in Western markets.
HSBC exceeded quarterly projections last month and planned a $2 billion share repurchase. more info
Winters will have to work hard to persuade investors of StanChart’s prospects, since the bank trades at 0.44 times book value for 2022, compared to 0.62 times for HSBC and 0.55 times for Barclays, according to Refinitiv data.
(Adapted from Businesstimes.com.sg)