StanChart Flags Flat Annual Income Despite Strong Q3 Profit; Shares Drop

3 weeks ago 20

LONDON—Standard Chartered forecast level income for the afloat twelvemonth amid “uneven” economical betterment from the pandemic, adjacent arsenic it turned successful a stronger-than-expected quarterly pre-tax profit, sending its shares little connected Tuesday.

CEO Bill Winters, who has won plaudits from investors for repairing the equilibrium expanse and slashing thousands of jobs since taking the apical occupation successful 2015, has been nether unit successful caller years to boost maturation and enactment up the bank’s shares.

Under the erstwhile JPMorgan banker, the Asia-focused StanChart has built a portfolio of integer banking platforms and invested heavy successful technology, but its shares person inactive underperformed its peers.

Ahead of the results, shares of the emerging-markets lender had risen conscionable 8 percent this twelvemonth successful London, versus an 18 percent emergence for larger rival HSBC and a 37 percent surge for Barclays. On Tuesday, StanChart shares fell 5 percent successful aboriginal trade.

“The economical betterment from the COVID-19 pandemic has continued to beryllium uneven and punctuated by supply-chain disruption,” London-headquartered StanChart said successful its results statement.

Q3 Pretax Profit Doubles

Statutory pretax nett for the slope jumped to $996 cardinal successful July–September, from $435 cardinal a twelvemonth earlier, aided by little recognition charges. That bushed an mean estimation of $942 cardinal of 16 analysts arsenic compiled by the bank.

It reported recognition impairment charges of $107 cardinal versus $353 cardinal a twelvemonth earlier and expects these to stay astatine debased levels successful the 4th quarter.

Overall quarterly income for the lender roseate 7 percent to $3.8 cardinal from a twelvemonth earlier. It reiterated its people to instrumentality to a 5–7 percent income maturation from adjacent year.

Last month, HSBC bushed quarterly estimates and announced a $2 cardinal stock buyback.

The HSBC office  Hong Kong The HSBC office is lit up astatine the Central Financial District successful Hong Kong, connected Nov. 3, 2015. (Bobby Yip/Reuters)

StanChart, which bases its concern connected capturing commercialized flows betwixt its cardinal markets of Asia, Africa, and the Middle East, said commercialized income roseate 13 percent to the highest since aboriginal 2018.

But analysts accidental that StanChart, which has a beingness successful 59 markets and employs 85,000 staff, lacks the heft of larger, much well-capitalized rivals successful commercialized banking adjacent arsenic it remains a tiny subordinate successful the lucrative concern banking business.

The bank’s underwhelming show implicit the past decennary has made it a sore concern for Singapore authorities capitalist Temasek Holdings, which has been StanChart’s largest shareholder since 2006 and presently has a astir 17 percent stake.

China Real Estate Exposure

The slope said it had $4.2 cardinal successful vulnerability to China’s existent property sector, wherever China Evergrande Group is grappling with a $300 cardinal indebtedness heap and stoking worries of further defaults and contagion risks.

“We proceed to show the imaginable 2nd bid impacts of caller developments,” StanChart said, stating an wide vulnerability of $18.5 cardinal to commercialized existent estate, a fraction of its full radical customers loans and advances of $302 billion.

Like HSBC, StanChart has been betting connected the world’s second-largest system to assistance thrust its maturation amid sluggish prospects successful Western markets.

Winters faces a situation to person investors of StanChart’s prospects arsenic the slope is trading astatine a little aggregate than peers. It trades astatine 0.44 times publication worth for 2022 versus 0.62 times for HSBC and 0.55 for Barclays, Refinitiv information shows.

Winters is by acold the longest-serving CEO astatine a large British-based bank. The daze departure of Barclays CEO Jes Staley connected Monday means it on with HSBC, Lloyds, and NatWest person each seen alteration astatine the apical successful the past 2 years.

By Anshuman Daga and Lawrence White



More articles from this author