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Standard Chartered Reaches Income Goal With 40% Profit Jump

Industry: Financial Services
Current: Company Performance

Standard Chartered increased its income growth prediction for this year, 2022 from 10% to 13%, sending its Hong Kong-listed shares 5% higher in a competitive market
Despite growing recessionary challenges in several Western countries, Standard Chartered's performance this year, 2022 has been robust, and the speed of economic recovery in many of their footprint areas is optimistic
The performance of Standard Chartered also stood in contrast to that of US banks, who earlier this month, in October 2022, reported lower earnings because of increased provisions for anticipated loan losses and dealmaking being stifled by market volatility

Standard Chartered's Income Increases

The emerging markets-focused bank Standard Chartered (StanChart) saw a 40% increase in third-quarter earnings as rising interest rates increased its income and provided it with the means to update its revenue estimate despite a slowing global economy. When CEO Bill Winters indicated the bank was confident in meeting its financial targets for 2024, StanChart increased its income growth prediction for 2022 from 10% to 13%, sending its Hong Kong-listed shares 5% higher in a competitive market. The figures were released on October 25, 2022, after rival HSBC announced a 42% decline in quarterly profit. There has been a significant increase in the net income of StanChart last year, 2021, compared to the previous few years, according to GlobalData.

Despite growing recessionary challenges in several Western countries, StanChart's performance this year, 2022, has been robust, and the speed of economic recovery in many of their footprint areas is optimistic. The performance of StanChart also stood in contrast to that of US banks, who earlier this month, in October 2022, reported lower earnings because of increased provisions for anticipated loan losses and dealmaking being stifled by market volatility.

The London-based lender's profit rise and improved guidance demonstrated how higher interest rates are increasing certain banks' profitability even as the world economy struggles due to unstable energy prices and the effects of the Russia-Ukraine war. With 85,000 employees and a presence in 59 nations, StanChart primarily relies on capturing trade flows between its primary markets of Asia, Africa, and the Middle East. However, it lacks the financial muscle of more robust commercial and investment banking competitors. StanChart encouraged investors in July 2022 with improved shareholder distributions and a $500 million share repurchase program.

This year, central banks worldwide have tightened monetary policy to combat rising inflation. Rising rates typically increase bank profits because they may lend more money than they pay to savers. However, the current situation is complicated by the possibility of an economic crisis, which could result in significant losses for lenders. In the most recent quarter compared to a year prior, StanChart's statutory credit impairment costs more than doubled to $227 million, highlighting a weakening in important markets. Among other things, the charges include $130 million for exposure to commercial real estate in China.

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