26th Oct 2022 09:23
(Alliance News) - Standard Chartered PLC on Wednesday recorded a substantial increase in profit as it benefitted from rising interest rates across the world.
In the three months that ended September 30, Standard Chartered recorded a 40% increase in pretax profit to USD1.39 billion from USD996 million a year before. On an underlying basis, profit rose 32% to USD1.42 billion from USD1.08 billion.
The Asian-focused bank's income rose 15% to USD4.33 billion from USD3.76 billion a year before. In constant currency terms, it recorded a 22% increase.
Standard Chartered's largest segment - Corporate, Commercial & Institutional Banking - recorded a 23% increase in operating income to USD2.75 billion from USD2.23 billion last year. This increase was primarily due to strong performance across Transaction Banking, supported by higher interest rates and strong Macro Trading income in Financial Markets.
Return on tangible equity in the division increased to 18% from 11%.
The Consumer, Private & Business Banking segment increased to USD1.60 billion from USD1.43 billion last year. The division saw higher income in Retail due to volume growth across most of its products, in addition to interest rate benefits within Deposits. However, this was partially offset by Wealth Management, which continues to face headwinds due to "market volatility".
Return on tangible equity in the division increased to 19% from 11%.
Standard Chartered's cost-to-income ratio in the third quarter, including the bank levy, was 62.3%, down from 70.3% a year before. Excluding the bank levy, which is a UK tax surcharge, the ratio was 61.6%, down from 68.9%.
Return on tangible equity was up to 10.5% from 6.4% last year.
The lender increased its credit impairment to USD227 million from USD108 million last year.
Standard Chartered said its performance has been strong and that the "pace of economic recovery" in many of its footprint markets is "encouraging". Despite increasing recessionary pressures in western markets, the company expects income to grow around 13%, in line with year-to-date growth.
The bank expects its credit impairment to be slightly above the year-to-date annualised loan-loss rate of 18 basis points.
Standard Chartered expects net interest margin progression to average around 165 basis points in 2023, which combined with continued strong business momentum and positive jaws ratio, means it "remains on-track" to deliver its 10% return on target equity target in 2024, if not earlier. The jaws ratio measures the extent to which income growth exceeds expenses growth.
Chief Executive Officer Bill Winters said: "We have posted a strong set of results in the third quarter, with income up 22% on a normalised basis and profit before tax up 35% year-on-year. We also continue to make significant progress against the five strategic actions outlined in February, including the completion of the USD500m share buy-back announced at the 2Q'22 results, taking total shareholder distributions announced this year to USD1.4bn. We remain confident in the delivery of our 2024 financial targets."
Shares in Standard Chartered were 0.8% lower at 550.00 pence each in London on Wednesday morning.
By Chris Dorrell; [email protected]
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