StanChart Third Quarter Profit Doubles as Bad Debt Declines and Trade Finance Explodes
- Third Quarter Pre-Tax Profit Rises to $ 996 Million from $ 435 Million
- Global income increases 7% to $ 3.8 billion
- Books reduce credit impairment charges
- The share is up 0.2% in Hong Kong
- London stocks are trading at lower multiples of their peers
SINGAPORE / LONDON, Nov 2 (Reuters) – Standard Chartered (STAN.L) took advantage of a recovery in pandemic-affected markets to post higher than expected profit before tax for the third quarter on Tuesday, helped by charges weaker credit levels and growth in trade finance.
The bank’s statutory profit before tax, which makes most of its revenue in Asia, jumped to $ 996 million in July-September, from $ 435 million a year earlier and better than the average estimate of 942 million of 16 analysts’ dollars compiled by the bank.
The pace comes amid a push from CEO Bill Winters, who took the helm in 2015, to restore growth while building a portfolio of digital assets in recent years, after repairing the bank’s balance sheet and cut thousands of jobs in its early years.
Still, StanChart’s London-listed stocks have underperformed their rivals since then and are up 8% this year compared to an 18% increase for HSBC (HSBA.L) and 37% for Barclays (BARC.L). .
Its shares in Hong Kong edged up 0.2%.
The London-based bank’s overall quarterly income rose 7% to $ 3.8 billion from the previous year.
StanChart, which bases its business on capturing trade flows between its core markets in Asia, Africa and the Middle East, said trading revenues rose 13%, reaching their highest level since early 2018.
The bank has suffered more than most of its rivals in recent years from rising geopolitical tensions, especially between the United States and China, which have held back global trade flows.
StanChart reported third-quarter credit impairment charges of $ 107 million from $ 353 million a year earlier and said it expected them to remain at low levels in the fourth quarter.
The bank said it has $ 4.2 billion in exposure to the Chinese real estate sector, where the China Evergrande Group (3333.HK) is grappling with $ 300 billion in debt and is fueling concerns over further payment defaults and contagion risks. Read more
“We continue to monitor the potential second-order impacts of recent developments,” said StanChart, indicating an aggregate exposure of $ 18.5 billion to commercial real estate, a fraction of total loans and advances from its group customers. of $ 302 billion.
Like its biggest rival HSBC (HSBA.L), StanChart has bet on the world’s second-largest economy to help boost growth amid bleak prospects in Western markets.
Last month, HSBC beat quarterly estimates and announced a $ 2 billion share buyback. Read more
Winters is struggling to convince investors of StanChart’s outlook because, according to data from Refinitiv, the bank is trading at 0.44 times book value for 2022 compared to 0.62 times for HSBC and 0.55 for Barclays.
He is by far the longest-serving CEO of a major UK bank. The shocking departure of Barclays CEO Jes Staley on Monday means HSBC, Lloyds (LLOY.L) and NatWest have all seen top changes over the past two years. Read more
Reporting by Anshuman Daga in Singapore and Lawrence White in London; Editing by Himani Sarkar
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