StanChart Q1 profit beats view as it begins recovery from virus hit

* Q1 underlying profit $1.4 bln vs $1.08 bln consensus

* Bank says 2021 credit losses to be lower than expected

* Cash management biz hurt by low rates, wealth management strong

HONG KONG, April 29 (Reuters) - Standard Chartered PLC STAN.L posted on Thursday a higher- than-expected 18% rise in quarterly pre-tax profit, as the emerging markets-focused bank began recovering from the economic hit caused by the coronavirus pandemic.

Pre-tax profit for January-March was $1.4 billion, versus $1.2 billion a year earlier, and compared with an average analyst forecast of $1.08 billion compiled by the British bank.

The improvement was driven by StanChart setting aside less cash to cover bad loans than it had done one year ago, as well as strong performance in its wealth management business.

However, unlike other British-based lenders such as HSBC HSBA.L and Lloyds LLOY.L that reported earlier this week, StanChart released only a small amount of the funds it holds against bad loans.

The lender took a $20 million credit impairment, down a hefty $354 million from the previous quarter.

In common with HSBC, StanChart's results showed how rock-bottom interest rates globally are squeezing banks' profits, with its cash management division - usually a steady earner - seeing income fall 32%.

And unlike U.S. rivals such as JPMorgan JPM.N that booked bumper trading profits in the first quarter, StanChart's financial markets division also saw revenues fall due to fading client demand.

One bright spot for StanChart was its often underperforming wealth management business, which saw a record quarter with income up 21% on strong sales of foreign exchange and equities-related products.

StanChart said it expected income to be similar this year to 2020, and to grow more the following year.

Last year the bank pushed back its long-standing profitability goal of reaching a return on tangible equity of 10%, as it increased charges for bad loans due to the economic damage following the COVID-19 pandemic.
Reporting by Lawrence White in London and Alun John in Hong Kong; Editing by Muralikumar Anantharaman

Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.

All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.

Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.

We are using cookies to give you the best experience on our website. Read more or change your cookie settings.

Risk Warning: Your capital is at risk. Leveraged products may not be suitable for everyone. Please consider our Risk Disclosure.