The London-based bank, which generates much of its revenues from Asia, reported US$5.09 billion in statutory pre-tax profit for 2023, up 19 per cent from US$4.28 billion in 2022, missing the US$5.39 billion estimate made by analysts in a Bloomberg poll.

Underlying pre-tax profit in Hong Kong, its single largest market, rose 77 per cent to US$1.85 billion, a strong performance that Standard Chartered CEO Bill Winters said showed the city’s potential.

“From our perspective, Hong Kong’s record income, super growth, outstanding franchise, and huge connector role between mainland China and the rest of the world is what makes Hong Kong the heart of our business,” he said when asked about a recent opinion piece by former Morgan Stanley chief economist Stephen Roach titled “It pains me to say Hong Kong is over”.

“It is a business as strong as it has ever been,” said Winters while adding the internationalisation of the Chinese currency yuan, the development of the Greater Bay Area and the expansion of wealth management businesses will drive the city forward.

“Clearly one of the areas of strength has been the wealth management products in Hong Kong, and also Singapore,” he said.

“The wealth trends in Asia are inexorable. They are very strong and we can look forward to high single digits, low double-digit growth in underlying wealth, and Hong Kong has been and will continue to be at the centre of that. Singapore, of course, is also doing quite well.”

Standard Chartered’s Hong Kong CEO Mary Huen Wai-yi said an expected cut in interest rates this year will help boost loan growth.

“In general, when the interest rate goes lower, demand for loans and wealth management products increases,” she said in a media briefing in Hong Kong on Friday afternoon.

Winters said the bank will continue to actively manage the group’s capital position with a target to return at least US$5 billion to shareholders over the next three years.

Standard Chartered set aside an aggregate US$1.2 billion towards credit impairment charges related to its exposure in China’s commercial real estate sector, over the past three years.

“We are very well provided for it right now,” he said.

In 2023, the situation appeared to be less gloomy with credit impairment charges related to its China commercial real estate business falling to US$282 million from US$582 million in 2022. This reduced the bank’s overall bad debt charges by 37 per cent year on year to US$528 million in 2023.

Standard Chartered weighs revamp of institutional banking arm to boost returns

For the fourth quarter alone, Standard Chartered reported that its underlying pre-tax profit rose 74 per cent to US$1.1 billion.

Shares of Standard Chartered rose 3.7 per cent on Friday to close at HK$62.45 after the result announcement at Friday lunch break, its highest since November.

Standard Chartered’s performance was also hit by an impairment charge related to its investment in China Bohai Bank, which reduced the carrying value of its investment by US$850 million. It is one the founding shareholders of the Tianjin-based joint-stock commercial bank set up in 2006.

Standard Chartered’s Asia business, which provides most of its revenues and profitability, made an underlying pre-tax profit of US$4.74 billion in 2023, an increase of 32 per cent from a year earlier.

The lender’s Africa and Middle East profit rose 90 per cent to US$1.31 billion during the same period under review.

In contrast, the bank’s Europe and America operations reported a loss of US$330 million in 2023, compared with a gain of US$834 million in 2022.

Its net interest margin, an important measure of a bank’s profitability, rose to 1.67 per cent in 2023, from 1.41 per cent a year earlier.

A widened margin helped boost Standard Chartered’s net interest income by 23 per cent to US$9.6 billion. Operating income, the equivalent of revenue in US accounting terms, rose 10 per cent to US$17.4 billion in 2023 at constant currency exchange rate.

Another key unit, the consumer, private banking and wealth management business, saw a 60 per cent profit growth during the year under review. The lender has rolled out a swathe of wealth management centres in recent years to tap the investment demand of the wealthy. Its corporate banking profit also increased 42 per cent last year.

Profits were offset by losses in its new digital banking business. Its SC Ventures business losses widened by 12 per cent year on year to underlying pre-tax loss of US$408 million in 2023. The segment includes majority owned virtual banks, Mox in Hong Kong and Trust in Singapore.