Standard Chartered Q3 2023 pretax profit falls by 2% to $1.32bn, missing analyst forecasts. Operating income of $4.4bn is up 6% in the third quarter y-o-y. Highlights include a year-on-year increase in the net interest margin and a strong recovery in the wealth management business.
Consumer, Private & Business Banking (CPBB) profit increases by 38% with income up 17%.
Wealth management, treasury products, credit cards, personal loans income rises
Specifically, wealth management income rises by 18% with strong double-digit growth across bancassurance, up 30%. Treasury Products income is up by 14%. partly offset by lower income from managed investments. There is continued strong growth in net new money, which offset adverse market movements as wealth management AUM remain broadly stable.
Other highlights include credit cards and personal loans income rising by 2%. This reflects growth in balances in both credit cards and personal loans.
Underlying net interest income increased 18% y-o-y. On the other hand, operating expenses increase by 8% to $2.8bn. This reflects the impact of the bank’s continuing investment into business growth initiatives and strategic investments, and higher inflation. This is partly offset by cost efficiency actions.
Other negative metrics include a credit impairment charge of $294m in the quarter, a $62m increase on the third quarter of 2022. The figure is double the amount booked in the prior quarter.
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In addition, Standard Chartered takes a $186m charge on Chinese real estate. It has also booked an impairment of $700m on China Bohai Bank.
Customer loans and advances of $281bn decline by 3% from the prior quarter. Customer deposits of $453bn drop by $17bn or 3% over the same period. The CET1 ratio of 13.9% (prior quarter 14.0%) remains towards the top end of its 13-14% target range.
Standard Chartered 2023 guidance
The bank says that it remains confident in the delivery of its RoTE targets. It forecasts income to increase in the 12-14% range. Full year average net interest margin is forecast to approach 170bps.
The bank’s 2024 guidance remains unchanged. It continues to expect income growth to be in the 8-10% range and remains confident of achieving greater than 11% RoTE.
Bill Winters, Group CEO, said: “We have continued to make strong progress in the third quarter against the five strategic actions outlined last year, delivering a solid set of results. Wealth Management has continued its recovery with double digit income growth. 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, including a return on tangible equity of 10%.”