Standard Chartered to focus on wealth business, sell units after upbeat earnings

Net profit for the three months to September came in at US$931 million under international accounting rules, beating forecasts of US$886 million.

The London-based bank, which generates much of its income in Asia, reported US$1.7 billion in pre-tax profit, exceeding the US$1.5 billion forecast by analysts. Operating income, which is similar to revenue in US accounting terms, rose 11 per cent to US$4.9 billion.

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“We have delivered a strong performance in the third quarter driven by a record quarter in wealth solutions and strong growth in our global markets business,” CEO Bill Winters said in a statement to the Hong Kong stock exchange on Wednesday.

“We are doubling investments in our consistently fast-growing and high-returning wealth management business, and we will continue to reshape our mass retail business to focus on developing our pipeline of future affluent and international banking clients.”

Standard Chartered CEO Bill Winters said the bank had a record quarter in its wealth solutions unit and strong growth in the global markets business. Photo: Xiaomei Chen alt=Standard Chartered CEO Bill Winters said the bank had a record quarter in its wealth solutions unit and strong growth in the global markets business. Photo: Xiaomei Chen>

Operating income for the bank’s wealth solutions business rose 32 per cent to US$694 million, supported by continued strong momentum and an increase in affluent new clients. Global markets’ operating income rose 16 per cent to US$840 million.

Standard Chartered said it plans to invest around US$1.5 billion over five years, double its previously planned investments, to bolster its wealth management business. It plans to increase its headcount of relationship managers and investment advisers, and enhance its wealth solutions, cross-border and digital capabilities.

“We have decided to step up our planned investment into this business to accelerate income growth and returns,” the bank said.

The bank also said it could sell part or all of its “smaller businesses where the strategic rationale is not sufficiently compelling”, adding that a sale will take place in the next 18 to 24 months. It did not give any details.

The second area of focus will be its corporate and investment banking segment, which includes cross-border transactions in Asia, Africa and the Middle East. It plans to consolidate its client base and reduce the number of clients whose needs do not match its strengths.

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Winters said the bank would increase its shareholder distribution – dividends and buy-backs – target to at least US$8 billion from US$5 billion from 2024 to 2026.

In July, Standard Chartered said it would buy back US$1.5 billion of shares and pay an interim dividend of 9 US cents per share following its second-quarter earnings.

Standard Chartered shares jumped 3.1 per cent in the afternoon to HK$90.85 after the earnings report was released during the lunch break.

Net interest income increased by 9 per cent to US$2.6 billion.

The net interest margin, an important measure of lending profitability, rose to 1.95 per cent in the third quarter, from 1.63 per cent a year earlier. It increased by 24 basis points from 1.71 per cent in the second quarter.

Underlying pre-tax profit in the corporate and investment banking segment rose 9 per cent to US$1.4 billion.

Standard Chartered took credit impairment charges of US$178 million during the quarter, an increase of 39 per cent from a year earlier. This included a US$177 million charge in its wealth and retail banking business, which was higher than normal because of a US$21 million overlay relating to the bank’s Korea e-commerce platforms.

On Tuesday, rival HSBC’s CEO, Georges Elhedery, announced a US$3 billion stock buy-back after the city’s biggest currency-issuing bank delivered results that beat market estimates, buoyed by growth in its wealth and personal banking divisions.

HSBC’s net profit rose 9 per cent to US$6.13 billion under international accounting rules for the quarter ended September 30, beating market forecasts to grow for the first time in four quarters. Total revenue increased by 5 per cent to US$17.21 billion.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP’s Facebook and Twitter pages. Copyright © 2024 South China Morning Post Publishers Ltd. All rights reserved.

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