Standard Chartered eyes recovery in China as profits tumble 12 per cent
The coronavirus crisis has pushed Standard Chartered’s pre-tax profits down 12 per cent, but the lender is eyeing signs of recovery in China.
However, the lender pointed to “encouraging early signs” of recovery in China. Investors welcomed the optimism with Standard Chartered’s London-listed shares up 3.6 per cent.
“We expect a gradual recovery from the Covid-19 pandemic… before the global economy moves out of recession in the latter part of 2020,” Standard Chartered said.
“The pace at which individual markets recover will be heavily dependent on the efficacy of government stimulus initiatives and policies to ease restrictions, as well as the resilience of the Covid-19 virus itself.”
The bank’s pre-tax profits in the first quarter fell from $1.38bn to $1.22bn. Operating income rose 13 per cent year-on-year to $4.3bn, topping analysts’ expectations.
The lender increased its expected credit losses by more than 1,100 per cent to $956m from £78m in the same period last year.
Standard Chartered said it is targeting costs of below $10bn for the full year, through reducing staff bonuses, pausing new hiring and cutting discretionary spending. The lender cancelled its 2019 dividend following pressure from the Financial Conduct Authority (FCA). It will also suspended its interim dividend as part of measures to preserve cash.
Standard Chartered’s optimism contrasts with other European lenders that have posted earnings so far. HSBC’s first-quarter profit nearly halved after reporting a $2.4bn jump in credit losses as a result of the pandemic on Tuesday.
Barclays profit fell £600m in the first quarter. The bank booked an impairment charge of £2.1bn, which it said reflected its “initial estimates of the impact of the pandemic”.