SINGAPORE – Standard Chartered reported on Tuesday (Nov 2) a stronger-than-expected quarterly pre-tax profit on lower credit impairment charges, as the emerging markets-focused lender rode a recovery in pandemic-hit markets.
Statutory pretax profit for the bank, which earns most of its revenue in Asia, jumped to US$996 million (S$1.34 billion) in July-September, from US$435 million a year earlier and better than the US$942 million average estimate of 16 analysts as compiled by the bank.
The London-headquartered bank, which is focussed on Asia, Africa and the Middle East, reported credit impairment charges of US$107 million versus US$353 million a year earlier.
StanChart said in a statement that it expects credit impairment to remain at low levels in the fourth quarter but that it remains vigilant in an uneven recovery.
CEO Bill Winters, who took charge in 2015, has tried to restore growth while creating a portfolio of digital assets in the last few years, after repairing the bank’s balance sheet and slashing thousands of jobs in his early years.
Still, StanChart’s London-listed shares have underperformed rivals since then, and are up 8 per cent this year versus a 18 per cent rise for HSBC and 37 per cent surge for Barclays.
StanChart’s quarterly results were supported by a strong performance in its financial markets trading business, where income rose 11 per cent year on year.
StanChart said it had US$4.2 billion in exposure to China’s real estate sector, where China Evergrande Group is grappling with a US$300 billion debt pile and stoking worries of further defaults and contagion risks.
“We continue to monitor the potential second order impacts of recent developments,” StanChart said.
Like larger rival HSBC, StanChart has been betting on the world’s second-largest economy to help drive its growth amid sluggish prospects in western markets.
Last month, HSBC beat quarterly estimates and announced a $2 billion share buyback.
Mr Winters faces a challenge to convince investors of StanChart’s prospects as, according to Refinitiv data, the bank trades at 0.44 times book value for 2022 versus 0.62 times for HSBC and 0.55 for Barclays.