Standard Chartered gets boost where HSBC flagged setbacks

LONDON: Standard Chartered Plc is showing strength where HSBC Holdings Plc cited weakness.

The lender generated 19% more revenue in Europe and the Americas in the third quarter – regions HSBC flagged as disappointing this week as it vowed an overhaul. Standard Chartered’s results there, combined with a 2% increase in revenue from Greater China and North Asia, sent adjusted pre-tax profit up 16%, defying analysts’ predictions for a slight decline.

The figures are a sign the London-based bank has put the worst behind it four years after chief executive officer Bill Winters took over to tackle issues ranging from a bloated cost base to government probes. The company said it’s sticking to a target to boost return on tangible equity to 10% by 2021, even as it faces “growing headwinds” from geopolitical tensions, slowing economic growth and lower interest rates.

“Our strategy of the last few years has progressively created a stronger and more resilient business,” Winters said in a statement announcing results yesterday. “The continuing execution of that strategy remains our priority, enabling us to face the more challenging external environment confidently.”

The shares rose 2.6% at 3:13 pm in Hong Kong.

“Management are executing on cost control and financial market revenues are providing a tailwind to slowing transaction banking,” wrote analysts at Jefferies International Ltd in London in a client note. “But, as with HSBC and others, the question remains whether or not investors wish to reward banks with a rising contribution from financial markets.”

Altogether, Standard Chartered said revenue climbed 7% while costs were little changed from a year earlier. Adjusted pre-tax profit was Us$1.24bil, beating the consensus analyst estimate compiled by the company for profit to slip to Us$1.06bil.

In Europe and the Americas, the company pointed to growth across treasury, corporate finance and financial market businesses. HSBC had flagged declines in revenue in Europe and North America, calling its performance there “not acceptable”.

Notably, Standard Chartered said revenue also rose in Hong Kong. Prolonged protests in the city, Standard Chartered’s largest single market, have weighed on the local economy.

Like HSBC, Standard Chartered said it had seen wealthy clients in Hong Kong exploring opening accounts outside of the Chinese territory.

Speaking in an interview with Bloomberg Television, the bank’s chief financial officer Andy Halford said a “number of clients” were looking to set up additional accounts, but added the bank had yet to see significant outflows of money from Hong Kong.

“Yes, there are some clients looking at whether setting up another account, in another country might be a good thing to do,” he said. “It’s not big time, but it is a number of clients that are looking to do that.”