Standard Chartered’s second-quarter profit beats estimates on gains in Asia, transaction banking businesses
- Pre-tax profit was US$1.52 billion in the second quarter, beating a consensus estimate of US$1.37 billion
- Standard Chartered’s Asia business posted a 39 per cent increase in pre-tax profit in the quarter
The London-based bank, which generates much of its pre-tax profit in Asia, reported US$1.52 billion in pre-tax profit, ahead of the US$1.37 billion expected by analysts.
“We have much further that we can go. What I’m most encouraged by, after a strong first half like this, is when I see the underlying potential of this business. What I think I can safely say is we’ve just scratched the surface,” Standard Chartered CEO Bill Winters said on a call with journalists on Friday. “Extremely encouraged by what we’ve been able to do so far, but it just opens up a whole window of opportunities for us.”
02:31
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Shares of Standard Chartered rose 3.9 per cent to close at HK$74.50 in Hong Kong on Friday.
Standard Chartered said it planned to buy back an additional US$1 billion in shares and would pay an interim dividend of 6 US cents a share.
The bank’s operating income, similar to revenue in US accounting terms, rose 16 per cent to US$4.57 billion in the second quarter. Net interest income increased by 7 per cent to US$1.98 billion.
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Standard Chartered’s Asia business, including its single largest market Hong Kong, made a pre-tax profit of US$1.3 billion, 39 per cent above the US$936 million it reported a year earlier.
The prior-year quarter included credit impairments for potential soured loans of US$66 million, including provisions related to its China commercial real estate portfolio.
Winters said the larger part of the bank’s China business is “decoupled” from the near-term domestic economic challenges as the nation’s recovery has slowed.
“Our China business is not a proxy for China’s economic performance. Instead, our focus is on the flows that drive from longer term structural opportunities,” Winters said on a call with analysts.
“This includes the further deepening of China’s financial markets, greater use of [the yuan] as a global trade reserve and payment currency, increasing client flows in and out of China across our network and, lastly, the flow of mainland wealth from China into the global economy.
“These trends were evident in the first half of the year, with total China onshore and offshore income up over 30 per cent year on year.”
Standard Chartered’s net interest margin, an important measure of lending profitability, rose to 1.71 per cent in the quarter, up from 1.35 per cent a year earlier. It increased eight basis points from 1.63 per cent in the first quarter.
On Friday, Standard Chartered also updated its financial guidance, saying it now expects its revenue to increase by 12 per cent to 14 per cent for full-year 2023, up from its prior expectations of a 10 per cent increase.
Operating income rose by 77 per cent to US$1.46 billion in its transaction banking business, including a more-than-double jump in its cash management operations, and increased by 11 per cent to US$1.39 billion in its financial markets business.
Wealth management reported a 9 per cent increase in operating income to US$495 million, reversing five quarters of year-on-year declines.
The bank’s corporate, commercial and institutional banking segment reported a 75 per cent gain in underlying pre-tax profit to US$1.43 billion, while its consumer, private and business banking segment saw its underlying pre-tax profit double to US$696 million.
Its SC Ventures business reported an underlying pre-tax loss of US$55 million, compared with US$74 million in the prior-year period. The venture’s segment includes its majority-owned virtual banks, Mox in Hong Kong and Trust in Singapore.
