StanChart falls after forecast flat annual revenue despite strong September result

FILE PHOTO: A Standard Chartered logo at their main branch in Hong Kong, China, August 1, 2017. REUTERS / Bobby Yip

By Anshuman Daga and Lawrence White

SINGAPORE / LONDON, Nov 2 (Reuters) – International bank Standard Chartered announced on Tuesday that it expects full-year revenue to remain flat amid an “uneven” economic recovery, even after a quarterly profit before tax. higher than expected, which did not prevent its shares from falling on Tuesday.

The bank’s chief executive, Bill Winters, who has earned applause from investors for repairing the bank’s balance sheet and cutting thousands of jobs since he took office in 2015, has been under pressure in recent years to boost growth and propping up the bank’s actions.

Under former JPMorgan banker StanChart, focused on Asian markets, he has built a portfolio of digital banking platforms and invested heavily in technology, but his shares continue to underperform its peers.

Before the results, the London-listed emerging markets bank’s shares had risen just 8% this year, compared with an 18% rise for its larger rival, HSBC, and a 37% rise for Barclays. On Tuesday, StanChart shares fell 5% in early trading of the session.

“The economic recovery from the COVID-19 pandemic has continued to be uneven and marked by supply chain disruption,” London-based StanChart said in its findings statement.


The bank’s profit before tax soared to $ 996 million in the July-September period, up from $ 435 million a year earlier, thanks to lower credit charges. This figure exceeded the average estimate of $ 942 million from 16 analysts compiled by the bank.

Credit impairment charges were $ 107 million, down from $ 353 million a year earlier, and are expected to remain low in the fourth quarter.

The bank’s global quarterly revenue increased 7% to $ 3.8 billion from a year earlier. The bank reiterated its goal of returning to 5-7% revenue growth from next year.

Last month, HSBC beat quarterly estimates and announced a $ 2 billion share buyback.

StanChart, which bases its business on capturing trade flows between its key markets in Asia, Africa and the Middle East, said business revenue increased 13% to the highest since early 2018.

But analysts say StanChart, which has a presence in 59 markets and employs 85,000 people, lacks the weight of larger, better-capitalized rivals in commercial banking, even as it remains a small player in the lucrative investment banking business. .

The bank’s disappointing results over the past decade have made it a painful investment for Singaporean state investor Temasek Holdings, which has been StanChart’s largest shareholder since 2006 and currently holds a nearly 17% stake.


The bank said it has a $ 4.2 billion exposure to China’s real estate sector, where the China Evergrande Group is grappling with a $ 300 billion mountain of debt that fuels fears of further defaults and contagion risks.

“We continue to monitor the possible repercussions of the latest events,” said StanChart, which declared a global exposure of $ 18.5 billion to commercial real estate, a fraction of the group’s total loans and advances to clients of $ 302 billion. .

Like HSBC, StanChart has relied on the world’s second largest economy to fuel its growth amid the bleak prospects for Western markets.

Winters faces the challenge of convincing investors of StanChart’s prospects, as the bank trades at a lower multiple than its peers. It is trading at 0.44 times book value for 2022, compared to 0.62 times for HSBC and 0.55 for Barclays, according to Refinitiv data.

(Reports by Anshuman Daga in Singapore and Lawrence White in London; edited by Himani Sarkar; translated by Darío Fernández)

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