British-based, Asia-focused lender Standard Chartered reported a 6% increase in pre-tax profits in the first quarter of 2022 as growth in trading income and transaction banking helped offset markets still battling the coronavirus.
The bank expects income growth this year to slightly exceed an earlier forecast of 5-7%.
StanChart’s Hong Kong-listed shares jumped 10% to their highest level since early March following the earnings report, compared with a 0.6% rise in the broader market.
But the bank’s China business in particular suffered branch closures amid ongoing virus restrictions, which drove an 18% decline in wealth management income compared with the same period a year ago.
Statutory pre-tax profit for the bank increased to $1.49 billion in January-March, from $1.4 billion a year earlier. This compared with the $1 billion average estimate of 16 analysts as compiled by the bank.
“We are on track to deliver a 10% return on tangible equity by 2024, if not earlier,” group chief executive Bill Winters said in the results statement on Thursday.
While it was bullish on its returns prospects, StanChart hinted that tougher times may lie ahead as the Ukraine war threatens to puncture any projected recovery from the Covid-19 pandemic.
StanChart took a $107 million charge due to the ratings downgrade of Sri Lanka, and a further $160 million charge on its exposure to China’s troubled real estate sector.
The bank’s trading business reported income up 32%, with its macro trading unit reporting a record quarter as the bank benefited from volatility in energy prices.
Winters, who took charge in mid-2015, has tried to restore growth while creating a portfolio of digital assets in the last few years, after repairing the bank’s balance sheet and slashing thousands of jobs in his early years.
But the company’s share price has halved during his time at the helm.
- Reuters, with additional editing by George Russell