Standard Chartered Plc bank branch in Hong Kong
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Standard Chartered on Wednesday raised its 2024 income forecast as the company posted third-quarter profits that beat expectations, driven by record performance in its wealth management business.
Here are StanChart's results for the quarter compared to LSEG SmartEstimate, which is weighted to analyst forecasts that are consistently more accurate:
- Profit before taxes: $1.81 billion versus $1.59 billion
- Net interest income: $2.6 billion versus $2.57 billion
The lender, which generates most of its revenue in Asia, reported a 37% rise in pre-tax profit from $1.32 billion a year ago.
Net interest margin, a measure of lending profitability, rose to 1.95%, compared to 1.63% a year ago.
According to CEO Bill Winters, StanChart is “doubling down on investment” in its “fast-growing and high-yield” wealth management division and will continue to transform its mass retail business to prioritize affluent and international customers.
The London-based lender also raised its 2024 earnings forecast on Wednesday, with operating profit expected to rise towards 10% in 2024. In July, the bank raised its operating profit forecast to over 7% from 5% to 7%.
The company's shares rose 2.61% in afternoon trading in Hong Kong.
Following its second-quarter earnings report, StanChart announced its largest-ever stock buyback in July of $1.5 billion. No further buybacks were announced in Wednesday's press release.
A day earlier, Asia-focused rival bank HSBC announced another $3 billion share buyback after reporting third-quarter profit that beat analysts' estimates on robust revenue growth.
StanChart's profitability has been improved in recent years by higher interest rates. But as this era comes to an end, banks may face lower profitability due to falling interest rates.
The bank said in its earnings report that lower interest rates impacted customer loan pricing, causing gross returns to fall 10 basis points compared to the previous quarter.
Operating costs rose 3% to $2.9 billion in the quarter due to inflation and business expansion efforts, although efficiency savings offset some of the costs.
StanChart said it was also considering selling all or parts of a number of businesses where “the strategic rationale is not compelling enough.”
In its half-year report, the investment bank said it had rapidly implemented a cost-cutting initiative called Fit For Growth that aims to save about $1.5 billion in spending over the next three years. The bank had identified over 200 projects where savings could be made.
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