Standard Chartered’s pre-tax profit rose 18 percent year-on-year in the first quarter, as the UK lender reduced its bad loan provisions during the coronavirus pandemic.
The emerging-markets bank beat analyst estimates to become the newest lender to capitalize on the improving global economic outlook from the start of the Covid-19 outbreak a year later.
StanChart’s profit of $ 1.4 billion was higher than the $ 985 million forecast by analysts, the bank said Thursday. Operating income declined 9 percent year over year to $ 3.9 billion, in line with expectations.
The bank recognized a credit impairment charge of $ 20 million, down $ 936 million from last year’s first quarter. It canceled $ 35 million in reserves set aside for potential credit losses, far less than its larger rival HSBC, which announced the release of $ 400 million in provisions this week.
Bill Winters, CEO, said Covid-19’s economic recovery has led to improved transaction volumes and profitability. “This was especially true in our financial markets and asset management, which had its best quarter ever,” he said. “Despite low interest rates, we expect our underlying momentum to lead to income growth in the second half of 2021.”
StanChart’s wealth management business grew 21 percent due to strong sales of foreign exchange and equity products, the bank said.
Hong Kong-listed stocks rose by as much as 2.4 percent after the results were announced.
The lender’s global footprint has placed him in the middle of the geopolitical tensions between the US, UK and China. Relations deteriorated last year after Beijing imposed a sweeping national security law on Hong Kong following pro-democracy protests in 2019.
Winters said in February that he hoped Joe Biden, the US president, would work with China again and end trade escalations, but there is little evidence of reconciliation.
StanChart is struggling to balance its commercial dependence on China with its mission to be “here forever”. It has also come under pressure from management and investors to better define its positions on human rights and environmental issues.
HSBC this week reported a 79 percent increase in net profit for the quarter to $ 5.8 billion, significantly higher than analysts’ forecast of $ 3.3 billion.