Standard Chartered lifts income guidance again after beating third-quarter profit forecasts

Standard Chartered on Wednesday upgraded its 2024 income guidance as it posted profits in the third quarter that beat expectations, driven by record performance in its wealth management business. Here are StanChart’s results for the quarter, compared with LSEG SmartEstimate, which is weighted toward forecasts from analysts who are more consistently accurate:

• Pre-tax profit: $1.81 billion vs. $1.59 billion
• Net interest income: $2.6 billion vs. $2.57 billion

The lender, which derives most of its revenue from Asia, saw pre-tax profit jump of 37% from the $1.32 billion posted a year ago. Net interest margin, a measure of lending profitability, rose to to 1.95%, compared to 1.63% a year ago. StanChart is “doubling investment” in its “fast-growing and high-returning” wealth management division, and will keep transforming its mass retail business to prioritize affluent and international clients, according to CEO Bill Winters. The London-headquartered lender also lifted its 2024 income guidance on Wednesday with operating income to increase towards 10% in 2024. In July, the bank had upgraded the operating income projection to more than 7%, from 5% to 7%. Shares of the company jumped 2.61% in Hong Kong afternoon trading. After its second quarter earnings report, StanChart in July announced its largest-ever share buyback of $1.5 billion. It did not announce any additional buyback in its release on Wednesday. A day earlier, Asia-focused rival bank HSBC had announced a fresh $3 billion share buyback as it posted third-quarter earnings that beat analyst estimates on the back of robust revenue growth. StanChart’s profitability has been helped by higher interest rates in recent years. But with that era ending, banks could face lower profitability with falling rates. The bank said in its earnings report that lower interest rates had affected customer loan pricing, causing gross yields to slide 10 basis points from the previous quarter. Operating expenses for the quarter rose 3% to $2.9 billion caused by inflation and business expansion efforts, although efficiency savings did offset some costs. StanChart said it is also considering selling all or parts of a number of businesses where “the strategic rationale is not sufficiently compelling.” In its half-year report, the investment bank said it had been fast implementing a cost-cutting initiative called “Fit For Growth”, that’s designed to save approximately $1.5 billion of expenses over the next three years. The bank had pinpointed over 200 projects where savings could be made.