Standard Chartered sees profits balloon to £1.4bn

• Asia-focused lender Standard Chartered benefited from higher interest rates
• The London-listed lender has seen its share price rise over 28% in the last year 

Standard Chartered enjoyed an upturn in profits in its first quarter, as higher interest rates and increased trading levels boosted the group’s bottom line.

The emerging markets-focused lender saw its first quarter pre-tax profit rise by 21 per cent to $1.81billion (£1.41billion), against $1.49billion at the same point a year ago and beating analyst forecasts of around $1.43billion. 

Chief Executive Bill Winters said he now expects the group’s income to increase by around 10 per cent this year, at the top end of a previously guided range.

Underlying profit before tax came in at $1.7billion during the period, up 25 per cent, as net interest income rose by 18 per cent. 

The latest underlying pre-tax profit figure represent the bank’s largest single-quarter profit since the beginning of 2014.

  Mr Winters saw his total pay package rise 16 per cent to $5.5million for 2022, thanks to a $2.5million bonus that rose in line with profits. 

The lender has been trying to shore up support among its investors after First Abu Dhabi Bank said in January it was considereing a takeover bid for the London-listed group, but eventually decided to opt out.  

Rising interest rates boosted lending income, while its financial markets trading division saw high levels of trading from customers amid volatile markets.

Over the quarter, the bank’s bad debt provision was $26million, against $198million during the same period a year ago. 

The group said customer deposit levels were ‘stable’, at $462billion since 31 December 2022.

But, the bank’s expenses rose by 5 per cent amid higher inflation and hiring staff for strategic initiatives such as a push in China. 

Credit impairment, a source of concern for bank investors in recent years as the global economy cools and runaway inflation pressures businesses, remained low at $26million against $198million the prior year.

The lender said it saw signs of stabilisation in China’s embattled commercial real estate market, with no increase in credit impairment from the previous quarter as economic re-opening and support measures began to have an impact.

The firm’s pre-tax profit from Asia rose by 63 per cent over the period, while Europe and the American swung to an $18million loss. 

Income from all wealth management operations came in broadly flat, but showed shoots of growth in Hong Kong and China.  

Winters, said: ‘We have delivered another strong set of results in the first quarter of 2023, with income up 13 per cent year-on-year and underlying profit before tax up 25 per cent. 

‘Business performance continues to improve across our markets and products and has been achieved in what continues to be an uncertain environment.’

He added: ‘We remain optimistic about our continued strong performance and now expect 2023 income to grow around 10 per cent, the top end of our range, and remain confident in the delivery of all of our financial targets, including our return on tangible equity targets.’

He said Standard Chartered was ‘highly liquid and strongly capitalised’, adding that ‘recent banking stress’ seen in some some other quarters of the sector had not had a knock-on effect on customer deposits.  

The group said income across its corporate cash management business tripled due to ‘strong pricing discipline and passthrough rate management’.

Retail banking income surged by 53 per cent, bolstered by deposit income which also tripled to $771million.

Standard Chartered shares rose today and were up 0.1 per cent or 0.65p to 621.25p this morning, having risen over 28 per cent in the last year.  

The robust earnings echoed resilience at US banks which reported results earlier this month, as the sector weathered a global confidence crisis following the collapse of Silicon Valley Bank and Credit Suisse Group AG. 

On Tuesday, rival UBS said it would gird itself for the ‘hard’ task of swallowing stricken Credit Suisse, which registered $68.49billion worth of asset outflows in the first quarter.