28th Apr 2015 08:28
LONDON (Alliance News) - Standard Chartered PLC Tuesday reported a 22% drop in first quarter pretax profit, due to pressure on operating income and higher charges for bad loans.
In a statement, the emerging markets bank, which is focused on Asia, Africa and the Middle East, said it made a USD1.47 billion pretax profit in the quarter ended March 31, compared with USD1.88 billion in the corresponding quarter of the prior year. The income statement excludes own credit adjustments.
Operating income fell to USD4.40 billion from USD4.57 billion, while operating expenses edged up to USD2.47 billion from USD2.45 billion.
More importantly, charges for loan impairments increased to USD476 million from USD265 million.
Chief Executive Peter Sands said the bank is on track to attain a common equity tier one ratio of between 11% and 12% in 2015, a key measure of financial strength, as well as to meet a cost-savings target of USD400 million.
"Trading conditions remain challenging and the actions we are taking to de-risk, cut costs and build capital are having an impact on near term performance. However, underlying business volumes generally remain strong. We remain confident in the strength of our franchise, the opportunities in our markets and in our ability to build returns to an attractive level in the medium term," Sands said in a statement.
The bank is awaiting the arrival of Bill Winters, the former JPMorgan Chase & Co executive, who will succeed Sands in June.
Standard Chartered, which fared better than other banks in the global financial crisis of 2007-09, enjoyed the benefits of its exposure to fast-growing emerging market economies for more than ten years until reporting a drop in pretax profit for 2013.
The lender's fortunes have taken a turn for the worse since it was forced to pay USD667 million to US authorities in December 2012 due to failures over US sanctions, while investor sentiment towards the bank's key emerging markets has been rocky amid the US Federal Reserve's gradual withdrawal of its economic stimulus policies.
Standard Chartered shares were down 1.9% at 1,094.00 pence on Tuesday morning.
By Samuel Agini; [email protected]; @samuelagini
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