Impairments Surge Hits Standard Chartered's Profits

Tom Burroughes

26 February 2021

yesterday reported a 54 per cent slide in the profit attributable to ordinary shareholders of $1.141 billion in 2020, as a 153 per cent surge in credit impairments to $2.294 billion hit the bottom line.

Operating income fell by 3 per cent year-on-year to $14,765 billion last year; operating costs, including a UK bank levy, inched up by 3 per cent to $10.142 billion. The bank’s cost/income ratio widened 50 basis points to 66.4 per cent, the London-listed bank, which earns much of its income outside the UK, said.

Standard Chartered logged a Common Equity Tier 1 ratio – a standard international measure of a lender’s capital buffer – of 14.1 per cent, widening by 60bps from where it stood at the end of 2019.

The bank announced some high-profile boardroom changes. Maria Ramos is joining the board as an independent non-executive director. She brings experience as a chief executive, and significant understanding of the global financial services industry, especially in the Africa region. It also said that Dr Ngozi Okonjo-Iweala, who served Standard Chartered for three years, is leaving its board to take up the role of new Director-General of the World Trade Organisation. Recently, the bank announced that Robert Zoellick is taking over as chair of its International Advisory Council, a panel of experts whose role is to provide insight on global trends. He served as president of the World Bank from 2007 to 2012.

Wealth management, private banking
Wealth management income grew by 5 per cent. Standard Chartered said there was a “particularly strong sales performance” in foreign exchange, equities and structured notes driving income.

A one-off impairment has hit the private banking result, the group said.

“A non-repeat of a prior-year impairment release meant Private Banking profit was down 34 per cent. Central and other items (segment) recorded a loss of $196 million driven by a 32 per cent decline in income, primarily in Treasury, 4 per cent higher expenses from increased investment spend including funding SC Ventures, and a reduction in the group’s share of China Bohai Bank’s profits,” it said.

Bill Winters, group CEO, said: “We remain strong and profitable, although returns in 2020 were clearly impacted by higher provisions, reduced economic activity and low interest rates, in each case the result of COVID-19.”