Standard Chartered surpasses forecasts with 5.5% rise in Q1 pretax profit

Standard Chartered quarterly profit: Standard Chartered PLC has exceeded expectations on Thursday with a 5.5 per cent increase in its first-quarter pretax profit, leveraging the income boost from higher interest rates and a robust performance from its markets trading business to offset a surge in credit losses.

The bank, which predominantly generates revenue and profits in Asia, witnessed a 13 per cent climb in profit at its investment banking unit during the quarter. Crucially, it achieved growth in fee-based revenues from markets and wealth management, aligning with its strategic objectives amidst a global backdrop of peaking interest rates.

Standard Chartered's shares surged more than 6 per cent in Hong Kong following the announcement, reaching their highest level in nearly seven months. The bank's strong performance across business lines, coupled with prudent cost management, is expected to provide a much-needed boost to its shares, according to Joe Dickerson, an analyst at Jefferies in London.

The bank reported a pretax profit of $1.91 billion for the January-March quarter, surpassing both the $1.81 billion recorded a year earlier and the $1.39 billion average of 13 analyst estimates compiled by the bank.

"We delivered a strong set of results in the first quarter of 2024, with double-digit growth in income and positive operational leverage," remarked CEO Bill Winters in an earnings statement. "We remain confident in the delivery of our financial targets and are maintaining our full year 2024 guidance."

However, the bank experienced a worsening of credit impairments in 2024, with a $165 million writedown in the first three months compared to $20 million a year earlier. The bulk of these impairments stemmed from the bank's wealth and retail banking division, primarily due to "mortgage headwinds" in Hong Kong and South Korea.

Standard Chartered also made provisions totaling $1.2 billion related to the China commercial real estate sector. Despite a decline in total credit exposure to the sector, the bank remains cautious amidst declining residential sales volumes.

Additionally, the bank booked a $100 million provision for expected compensation fees for customers in South Korea who incurred losses from certain equity-linked securities. Regulators in South Korea have advised banks to reimburse customers who purchased such products.

The release of Standard Chartered's results follows closely on the heels of its competitor HSBC (HSBA.L), which recently announced the departure of its CEO Noel Quinn. Standard Chartered's CEO, Bill Winters, who has held the position since 2015, remains one of the longest-serving chief executives in UK banking.

In March, Standard Chartered unveiled a management reshuffle, including the departure of its corporate and investment banking head, Simon Cooper, signaling strategic adjustments within the organisation.

(With Reuters inputs.)