Standard Chartered's Group Pre-Tax Earnings Rise; Markets Hit Wealth Income

Editorial Staff

27 October 2022

, the UK-listed banking group earning the bulk of its living in Asia, the Middle East and Africa, yesterday reported a 32 per cent year-on-year rise in underlying pre-tax profit for the three months to the end of September, reaching $1.416 billion. On a statutory basis, profits rose 40 per cent on a year earlier.

Income rose by 15 per cent to $4.3 billion in Q3 2022, or up 22 per cent at constant currency rates. Net interest income, on a “normalised” basis, rose 24 per cent.

Shares in the bank were down 5.63 per cent in UK trade yesterday although that might also be driven by a more general malaise in equity market sentiment.

“We…continue to make significant progress against the five strategic actions outlined in February, including the completion of the $500 million share buy-back announced at the 2Q22 results, taking total shareholder distributions announced this year to $1.4 billion. We remain confident in the delivery of our 2024 financial targets,” Bill Winters, group CEO, said.

On the wealth management side, however, income fell 15 per cent on a constant currency basis, or down 19 per cent in a straight comparison, with the bank’s largest market in Hong Kong, suffering a 15 per cent drop in the quarter from a year before.

Wealth management income was hit by weaker equity markets, which reduced transaction volumes. Covid-19 restrictions in major markets, such as Hong Kong, took a toll. Secured lending income fell because clients cut their leverage the bank said.

Costs at the bank rose by 3 per cent on a year ago to $2.7 billon, it said.

The bank logged a net interest margin, up by eight basis points from the previous quarter to 1.43 per cent, aided by rising interest rates, partly offset by product mix change and hedges.

The bank’s Common Equity Tier 1 ratio stood at 13.7 per cent, down a touch from the end of June.

Looking ahead, Standard Chartered said it expected income to grow in 2022 at around 13 per cent, at around the year-to-date rate so far; full-year net interest margin (NIM) is expected to be about 140 basis points. Expenses, excluding the UK bank levy, are expected to be around $10.6 billion. Credit impairments are expected to be “slightly above” the year-to-date annualised loan-loss rate of 18 basis points.