Standard Chartered third-quarter profit doubles, beat market forecasts

November 3, 2021: -On Tuesday, Standard Chartered reported a stronger-than-expected quarterly pretax profit on lower credit impairment charges, as the emerging markets-focused lender rode a recovery in pandemic-hit markets.

Statutory pre-tax profit for the bank, earning most of its revenue in Asia, increased to $996 million in July-September, from $435 million a year earlier and more than the $942 million average estimates of 16 analysts as compiled by the bank.

The London-headquartered bank, focused on Asia, Africa, and the Middle East, reported credit impairment charges of $107 million versus $353 million a year.

StanChart said that it expects credit impairment to remain at low levels in the fourth quarter but that it remains vigilant in an uneven recovery.

CEO Bill Winters, taking charge in 2015, has tried to restore growth while creating a portfolio of digital assets in the previous years after repairing the bank’s balance sheet and slashing thousands of jobs in his early years.

Still, StanChart’s London-listed shares have underperformed rivals since then and are nearly 8% this year versus an 18% rise for HSBC and 37% surge for Barclays.

StanChart’s quarterly results were supported by a solid financial markets trading business performance, where income rose 11% year on year.

StanChart said it had $4.2 billion in exposure to China’s real estate sector. China Evergrande Group is with a $300 billion debt pile and stoking worries of further defaults and contagion risks.

“We continue to monitor the potential second-order impacts of recent developments,” StanChart said.

Like giant rival HSBC, StanChart has betting on the world’s second-largest economy to help drive its growth amid sluggish prospects in western markets.

The previous month, HSBC beat quarterly estimates and announced a $2 billion share buyback.

Winters faces a challenge to convince investors of StanChart’s prospects as, according to Refinitiv data, the bank is trading at 0.44 times book value for 2022 versus 0.62 times for HSBC and 0.55 for Barclays.