Profits Rise At Standard Chartered's Group, Private Bank

Tom Burroughes

28 February 2020

Hong Kong/London-listed yesterday reported an 8 per cent year-on-year rise in underlying pre-tax profit, standing at $4.2 billion, while statutory pre-tax profit rose by 46 per cent, standing at $3.7 billion. The bank said that the coronavirus outbreak and slower economic growth will drag on its ability to hit its return on a tangible equity target of 10 per cent.

Income rose by 2 per cent, at $15.3 billion, when measured on a constant currency basis, the bank said in a statement. Costs fell by 1 per cent during 2019 to $10.1 billion.

The bank said it had a Common Equity Tier 1 ratio – a measure of capital strength - of 13.8 per cent, widening from the third quarter of 2019.

“The underlying momentum in the fourth quarter of 2019 continued in the opening weeks of 2020 but lower interest rates, slower global economic growth, a softer Hong Kong economy and the impact of the recent novel coronavirus outbreak will likely result in income growth in 2020 below our medium-term 5-7 per cent target range,” the bank said.

“These headwinds are expected to be transitory, but we now believe it will take longer to achieve our RoTE target of 10 per cent than we previously envisaged,” it said.

“We are in the right markets guided by the right strategy and united through our purpose to drive commerce and prosperity,” Bill Winters, group chief executive, said.

Private banking results
Standard Chartered’s private bank logged pre-tax underlying profit of $94 million, bouncing back from a $14 million loss in 2018, it said. Private banking operating income was $577 million, against $516 million in 2018. The underlying profit figure was helped by a net $31 million release in credit impairment and improvement in top-line growth.

“2019 has been a turnaround year for the Private Bank – our multi-year transformation has delivered a strong financial performance and we are the fastest growing segment globally. What has been especially encouraging is that our clients have acknowledged the progress we have made, particularly in terms of our investment performance, quality of bankers and quality of advice,” Didier von Daeniken, global head of private banking and wealth management, said.

The private bank had a cost/income ratio of 89.1 per cent at the end of 2019. Underlying return on equity was 7.3 per cent.

Total private banking assets under management rose by $8 billion, equal to 14 per cent on a year earlier, driven by $2.6 billion of net new money.