Standard Chartered profit rises 4% as interest income offsets impairment charges

Standard Chartered PLC’s first-quarter profit edged up 4% on the back of recovering interest income and improved cost efficiency, even as the bank sharply increased credit impairment charges to reflect risk of the Chinese real estate sector and the impact of the Russian-Ukrainian war.

STAN from Standard Chartered,
+10.78%
the decision to increase credit write-downs was in line with that of its counterpart HSBC Holdings PLC HSBA,
+1.85%,
which earlier this week also made large provisions in the first quarter to worsen loans in Russia and China.

The Asia-focused bank on Thursday posted pretax underlying profit of $1.50 billion, compared with $1.45 billion for the same period in 2021.

First-quarter operating profit rose 9% to $4.29 billion, extending a recovery since the bank resumed revenue growth in late 2021 for the first time since 2019.

Growth was driven by a rebound in net interest income as global central banks began raising interest rates earlier this year. Net interest income increased 8% to $1.79 billion. Stanchart’s net interest margin increased 0.07 percentage points to 1.29%.

Credit write-downs in the quarter were $200 million, up from $20 million in the same period a year earlier. The lender increased its charges on its exposure to the commercial real estate sector in China.

The bank remains “attentive to the challenging external environment, including the continued impact of Covid-19 on key markets, idiosyncratic pressures in China’s commercial real estate sector, commodity price volatility and the impact of the Russian-Ukrainian military conflict,” he said.

The bank said revenue growth in 2022 should “slightly exceed” the previously guided range of 5% to 7%. “We are on track to deliver a 10% return on tangible equity by 2024, if not sooner,” he said.

Write to Yifan Wang at [email protected]

Corrections & Amplifications

This story was corrected at 05:37 GMT. The original incorrectly stated that the bank maintained previous guidelines.

The bank said revenue growth in 2022 should “slightly exceed” the previously guided range of 5% to 7%. “Standard Chartered’s first quarter profit increased; Credit impairment charges jumped,” at 0453 GMT, the bank erroneously said that it had maintained previous guidance.