StanChart share price up 10% on profit rebound

LONDON • Standard Chartered posted stronger-than-expected results for the first quarter and said restructuring costs were in line with its plans, lifting its shares by 10 per cent yesterday.

Chief executive Bill Winters said the results, including a bumper statutory profit that was more than double the previous quarter's, reflected "good progress on our strategic objectives".

Investors responded positively to the emerging markets-focused bank's pre-tax profit of US$589 million (S$798 million), against a loss of US$4.05 billion in the final quarter of 2015, driving its shares up 10.2 per cent to 573.5 pence by 5pm Singapore time.

The positive results mark a welcome rebound for StanChart shareholders after the bank reported its first full-year annual loss in 26 years in 2015, hit by hefty restructuring costs and weak commodity prices.

StanChart is the first of the major Britain-based banks to report first-quarter earnings, with investors braced for one of the worst collective set of results since the financial crisis.

The London-based bank said its first-quarter income was down 24 per cent to US$3.3 billion on the first quarter of 2015, but it was broadly stable compared to the fourth quarter last year.

"We are taking action to improve recent income trends, costs remained under tight control, and the balance sheet remained strong," the bank said in its statement. "Given the ongoing challenging market conditions and the early implementation of our strategy, we expect group performance to remain subdued in 2016."

Total operating expenses were down 10 per cent year-on-year to US$2.2 billion and the bank said it remained on budget with a sweeping restructuring plan across its Asian, African and European business.

Mr Winters, a former JPMorgan investment banker, announced plans to axe 15,000 jobs and raised US$5.1 billion in capital last November in a bid to cut costs and bolster reserves.

The bank is seeking to sell at least US$4.4 billion of assets in Asia, including US$1.4 billion of distressed loans to Indian companies. It also wants to dispose of more loans from Africa and the Middle East, people familiar with the matter said this month.

"The first stage of Bill Winters' strategy - to address StanChart's problems with risk controls, asset quality and capital - has made significant progress in our view," JPMorgan analyst Raul Sinha said before the results were published.

"Management is now likely to turn its focus to asset disposals and narrowing the performance gap to peers."

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A version of this article appeared in the print edition of The Straits Times on April 27, 2016, with the headline 'StanChart share price up 10% on profit rebound'. Print Edition | Subscribe