StanChart profit swells a surprise 21% on soaring interest rates

HONG KONG - Standard Chartered (StanChart) on Wednesday said its first-quarter pre-tax profit jumped 21 per cent, beating analyst estimates, as rising interest rates boosted its bottom line.

Chief executive Bill Winters said he now expects income to grow around 10 per cent in 2023, at the top end of a previously guided range.

The earnings update showed how rising central bank rates have boosted revenue, as StanChart charged borrowers more interest while not passing all increases through to depositors.

The bank, which earns most of its revenue in Asia, said statutory pre-tax profit for the January-March period reached US$1.81 billion (S$2.42 billion).

This compares with US$1.49 billion a year earlier and the US$1.43 billion average estimate of 14 analysts as compiled by the bank.

It was StanChart’s largest single-quarter profit since the start of 2014, as rising interest rates boosted lending income and the bank’s financial markets division saw frenzied trading from customers amid volatile markets.

The bank said income in its corporate cash management business tripled, thanks to “strong pricing discipline and pass-through rate management”.

Retail banking income rose 53 per cent, propelled by deposit income, which tripled to US$771 million.

The update was not entirely positive for shareholders, as expenses rose 5 per cent. This was because of inflation and hiring for strategic initiatives such as a push in China.

Credit impairment, a source of worry for bank investors in recent years as the global economy cools and runaway inflation pressures businesses, remained low at just US$26 million for the quarter, down from US$198 million a year earlier.

StanChart said it saw signs of stabilisation in China’s troubled commercial real estate market, with no increase in credit impairment from the previous quarter as economic reopening and support measures began to have an impact. REUTERS