Standard Chartered’s pre-tax profits rose 18 per cent year on year in the first quarter, beating analyst estimates, as the UK lender wound down its provisions for bad loans made during the coronavirus pandemic.
The emerging markets-focused bank was the latest lender to benefit from an improving global economic outlook a year on from the start of the Covid-19 outbreak.
Its profit of $1.4bn was higher than the $985m forecast by analysts, the bank said on Thursday. However, operating income was down 9 per cent year on year to $3.9bn, in line with expectations.
The bank took a $20m credit impairment charge, down $936m from the first quarter of last year. It cancelled $35m in reserves set aside for potential loan losses, far less than its larger rival HSBC, which announced the release of $400m of provisions this week.
StanChart chief executive Bill Winters said the economic recovery from Covid-19 had led to improved transaction volumes and profitability. “This was particularly the case in our financial markets and in wealth management, which had its best-ever quarter,” he said. “Despite low interest rates, we expect our underlying momentum to lead to income growth in the second half of 2021.”
The lender’s global footprint has put it in the middle of geopolitical tensions between the US, UK and China. Relations worsened last year after Beijing’s imposition of a sweeping national security law on Hong Kong.
In February, Winters said he hoped US president Joe Biden would re-engage with China and end “tit for tat” escalations in trade, but there has been little evidence of reconciliation.
StanChart has struggled to balance its commercial dependence on China with its mission statement: “here for good”. It has also come under pressure from its board and investors to better define its positions on human rights and environmental issues.
This week, HSBC reported a 79 per cent increase in net profit for the quarter to $5.8bn, significantly higher than the $3.3bn forecast by analysts.
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