Standard Chartered slumps as Q3 profit misses expectations

Asia-focused Standard Chartered slumped after the bank swung to a third-quarter profit, but the numbers missed analysts’ expectations.

In the quarter ended 30 September, underlying pre-tax profit came in at $458m from a $139m loss in the same period a year ago, but this was below the $520m analysts had pencilled in.

The bank’s chief executive Bill Winters said himself that income and profit levels were not up to scratch.

Winters said: “We have made progress executing the strategic actions announced a year ago. We now have a stronger balance sheet, reduced concentrations and are becoming more efficient, but income and profit levels are not yet acceptable. Putting our clients' needs back at the heart of everything will improve our performance.”

The bank said operating income in the quarter came in at $3.47bn, down from $3.68bn and loan impairment was $596m, down 5% quarter-on-quarter but still “elevated”.

The group’s common equity tier one capital ratio – a key gauge of financial strength – nudged down to 13% from 13.1%.

StanChart also said confirmed on Tuesday that the Hong Kong Securities and Futures Commission intends to take action in relation to the bank’s role as a joint sponsor of an initial public offering listed on the HK Stock Exchange in 2009.

Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: “The Standard Chartered turnaround story seems to be struggling. Costs and loan impairments are both falling, while the liquidation portfolio, essentially the bad bank, is being rapidly wound down. That’s all good news, but unfortunately it’s not being accompanied by a stronger performance in the remaining ‘core’ businesses.

“Standard Charted is certainly in a healthier position than it was a year ago, but it’s also smaller, and is delivering pretty close to zero growth. Not what investors expect when investing in emerging markets.”

At 1137 BST, the shares were down 5% to 676.10p.