Standard Chartered profits rise 40% on back of global interest rate increases
Standard Chartered’s third-quarter profits came in higher than expected due to rising interest rates, with Singapore’s contribution to the bank’s bottom line surpassing that of Hong Kong, which has struggled to recover from pandemic restrictions.
The bank reported pre-tax profit of $1.4bn in the third quarter, up 40 per cent from a year earlier on a constant currency basis and beating analyst estimates of $1.1bn, as interest rate rises in the lender’s main markets drove net interest income to more than $2bn.
“We have posted a strong set of results in the third quarter,” said Bill Winters, the bank’s chief executive. “We remain confident in the delivery of our 2024 financial targets.”
StanChart makes the majority of its revenue in Asia, where it posted pre-tax profit of about $1bn, 75 per cent of the total and up 19 per cent from a year ago, Beneath that headline figure were several shifts, including a change in the bank’s primary profit contributor within the region.
The pre-tax profit of $345mn in Singapore outstripped a contribution of $324mn from Hong Kong, typically the bank’s largest market. Income from wealth management in Hong Kong fell 15 per cent year on year due to an economic slump.
StanChart was also forced to take total credit impairment charges of $227mn, overshooting estimates by about $20mn and up about $120mn from a year earlier.
About $130mn in impairments came from the bank’s exposure to mainland China’s real estate market, where a liquidity crisis has driven several of the country’s biggest developers to default on debt repayment obligations. The bank also took a $96mn charge related to sovereign ratings downgrades for Ghana and Pakistan.
Separately, lower profit at China Bohai Bank resulted in profit from StanChart’s associates and joint ventures falling $30mn in the third quarter to just $16mn.
The London-based bank reported that its common equity tier one ratio, a measure of balance sheet strength, edged down 0.2 percentage points from the previous quarter to 13.7 per cent but remained within the target range.
