StanChart Q1 profit beats view as it begins recovery from virus hit
Reuters
Published Apr 29, 2021 12:36AM ET
Updated Apr 29, 2021 01:10AM ET
HONG KONG (Reuters) -Standard Chartered PLC posted on Thursday a higher- than-expected 18% rise in quarterly pre-tax profit, as the emerging markets-focused bank began recovering from the economic hit caused by the coronavirus pandemic.
Pre-tax profit for January-March was $1.4 billion, versus $1.2 billion a year earlier, and compared with an average analyst forecast of $1.08 billion compiled by the British bank.
The improvement was driven by StanChart setting aside less cash to cover bad loans than it had done one year ago, as well as strong performance in its wealth management business.
However, unlike other British-based lenders such as HSBC and Lloyds (LON:LLOY) that reported earlier this week, StanChart released only a small amount of the funds it holds against bad loans.
The lender took a $20 million credit impairment, down a hefty $354 million from the previous quarter.
In common with HSBC, StanChart's results showed how rock-bottom interest rates globally are squeezing banks' profits, with its cash management division - usually a steady earner - seeing income fall 32%.
And unlike U.S. rivals such as JPMorgan (NYSE:JPM) that booked bumper trading profits in the first quarter, StanChart's financial markets division also saw revenues fall due to fading client demand.
One bright spot for StanChart was its often underperforming wealth management business, which saw a record quarter with income up 21% on strong sales of foreign exchange and equities-related products.
StanChart said it expected income to be similar this year to 2020, and to grow more the following year.
Last year the bank pushed back its long-standing profitability goal of reaching a return on tangible equity of 10%, as it increased charges for bad loans due to the economic damage following the COVID-19 pandemic.
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Written By: Reuters
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