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Standard Chartered PLC on Thursday reported a sharp drop in profit in the third quarter, taking a hit from its exposure to Chinese banking and real estate, but the firm backed its annual targets. The Asia-focused lender said operating income rose 4.5% to $4.52 billion from $4.33 billion a year before. However, pretax profit dropped 54% to $633 million from $1.39 billion, well below the $1.44 pencilled in by analysts, according to company-compiled consensus. Shares in StanChart dropped 6.8% to HK$62.85 each in Hong Kong on Thursday afternoon. The bottom-line hit came as credit impairments increased to $292 million from UD227 million, which included further charges related to the Chinese commercial real estate sector. The firm also booked an impairment of around $700 million related to the reduction in the carrying value of its holding in China Bohai Bank. This reflected ‘subdued earnings and a challenging macroeconomic outlook’ at Bohai, StanChart said. On an underlying basis, pretax profit slipped slightly to $1.32 billion from $1.35 billion. This undershot the $1.44 billion figure expected by company-compiled analyst consensus. At the end of September, StanChart’s CET1 ratio was 13.9%, up compared to 13.7% a year before, but down from 14.0% at the end of June. In the third quarter, the cost-to-income ratio rose to 63.5% from 62.3% a year prior. Looking ahead to all of 2023, StanChart reiterated that it expects income to increase by 12% to 14% at constant currency. It also still expects net interest margin to average about 170 basis points over the full year, and to achieve a return on tangible equity of 10%. ‘Wealth Management has continued its recovery with double digit income growth and the Financial Markets performance has been resilient against a strong comparator period. We remain highly liquid, and well capitalised, with a CET1 ratio towards the top of our target range and confident in the delivery of our 2023 financial targets,’ said Chief Executive Officer Bill Winters. Copyright 2023 Alliance News Ltd. All Rights Reserved.
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