Standard Chartered H1 profits slump; says outlook cautious on weak GDP

First-half profits at Standard Chartered slumped to $893m from $2.1bn as income fell on the back of weaker growth in key markets and a group restructuring.

Shareholders will not receive a dividend and the company warned that economies had slowed even further this year and the outlook was more cautious.

Underlying pre-tax profits fell to $994m from $1.8bn, while operating income fell 20% to $6.8bn. There was also a 34% improvement on bad loans to $1.1bn.

“GDP growth rates in key markets like Hong Kong, Singapore and the US are lower, global trade growth has stalled, and expectations for US dollar interest are that they will remain lower and for longer. The impact on global growth of the UK's decision to leave the European Union adds uncertainty,” the bank said.

It added that growth in its markets is slow and global trade volumes down.

“Although our performance has substantially improved, income growth remains muted and returns are weak,” Standard said.

“As a result it is likely to take longer than we had hoped to reach these levels of return on equity. We believe many of these external challenges are cyclical rather than structural and remain confident that the actions we set out in November last year will eventually allow us to generate returns in excess of our cost of capital.”

There was also a swipe from chief executive Bill Winters at regulators looking to make sure banks shore up their capital base to avoid a repeat of the 2008 financial crisis that sent the global economy into recession.

Winters said the eventual outcome of regulatory reforms to finalise banks' capital requirements “is unclear”.

“Some regulators have repeatedly asserted the intention not to significantly increase the level of required capital across the banking industry, but this is not always supported by the tone and content of consultation papers,” he said.