StanC Q1 Profit Down, But Bank on Stronger Wicket
Mumbai: Standard Chartered’s global profit before tax shrank to $589 million in the three months ended March 2016 from $1.44 billion in March 2015 as income fell. However, the results were better than the $4.05 billion loss the bank reported in the quarter ended December 2015 as provisions for bad loans dropped sharply compared to December.
In an interim management statement posted on the Bombay Stock Exchange (BSE), the London based lender said operating income fell 24% to $3.34 billion from $4.42 billion in the quarter ended March 2015. All four of its business heads, namely, corporate banking, commercial clients, private banking and retail clients reported a lower income. Standard Chartered said depressed commodity prices, volatility in China, weak emerging market sentiment and concerns around interest rates continued to make trading conditions challenging in the first quarter of 2016. However, group CEO Bill Winters said the bank continued to make progress on its strategic objectives.
“We are taking action to improve recent income trends, managing costs tightly, progressing on key investments, making early progress on the exit of the liquidation portfolio and maintaining strong levels of capital and liquidity,” Winters was quoted in the statement.
The bank is in the talks with distressed asset aggregators to sell about $1.5 billion of loans linked to India.
The interim statement released on Tuesday showed that total operating expenses dropped 10% to $2.24 billion down from $2.50 billion in March 2015 and also lower than the $2.96 billion the bank reported in December 2015.
Provisions for bad loans dropped $471 million in March 2016, the lowest in two years down from $476 million a year earlier and sharply lower than the $1.12 billion reported in December 2015.
The results were greeted by the markets as the bank’s stocks rose 10% mainly because of lower provisions and the fact that the core Tier I capital for the bank rose to 13.1% from 12.6% in December.