By Selena Li and Lawrence White
HONG KONG/LONDON (Reuters) – Standard Chartered (OTC:SCBFF)’s quarterly profit more than doubled from a year ago, topping analyst estimates, as it recovered from China-related impairments while wealth and markets businesses bolstered the emerging-market focused lender’s revenue. StanChart, which earns most of its revenue in Asia, third-quarter pretax profit reached $1.72 billion, above the $1.49 billion average of 17 analyst estimates compiled by the bank.
The profit compared with $633 million a year earlier, when StanChart took a nearly $1 billion combined hit from its exposure to China’s real estate and banking sectors.
StanChart also upgraded its performance outlook on the back of its strong results. Income this year will now grow by around 10%, it said, up from a previous estimate of towards 7%. The lender also said it plans to return at least $8 billion to shareholders over 2024-2026, up from $5 billion.
StanChart, which is focused on Asia, Africa and the Middle East, is doubling down on boosting its non interest rate income streams as central banks cut rates, squeezing banking margins.
The London-headquartered bank did not announce a fresh share buyback for the quarter, unlike rival HSBC.
Hong Kong shares of StanChart rose 2.3% after the results on Wednesday, as it joined European peers in making robust progress on sustaining profits even as rates fall.
HSBC reported a 10% quarterly year-on-year profit increase on Tuesday, sending its shares to an at least six-year high as investors turned bullish on its outlook.
WEALTH DOUBLE-DOWN
Income from StanChart’s wealth solutions unit jumped 32% to $694 million, logging the highest growth rate among the lender’s main businesses.
The bank is “doubling investment” in its wealth management business, Group CEO Bill Winters said in a statement.
StanChart said it would fund investment in its wealth business by cutting more of its mass retail business, following rival HSBC which in recent years has slashed its retail banking business in Western markets such as the U.S., Canada and France to focus on more lucrative areas where it has scale.
StanChart said it is exploring the opportunity to sell “all or part of a small number of businesses” which no longer make strategic sense.
The lender has been selectively exiting wealth market that does not fall within its strategy. In India, it is offloading its personal loan business to local peer Kotak Mahindra Bank.
Winters said in the statement the bank will continue to “reshape” its mass retail business to focus on future affluent and international clients.
Its global markets business reported 16% growth – the second largest growth across main businesses – in the July-September period from a year ago, to $840 million.
The London-headquartered bank, which has not been competing with its Wall Street and European investment banking rivals on large deals, has in recent months launched a reorganisation in corporate and investment banking to boost competitiveness.
“In our CIB business, we are taking actions to focus on larger global clients who rely on our unique cross-border capabilities,” Winters said.
StanChart created a new banking team within its CIB division last month aimed at boosting cross-border business, Reuters has reported. The bank also folded its industries coverage team into its dedicated mergers and acquisitions advisory team in August.