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MarketScreener Homepage  >  Equities  >  London Stock Exchange  >  Standard Chartered PLC    STAN   GB0004082847


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StanChart warns profit goal pushed back as pandemic bites

10/29/2020 | 04:45am EST
FILE PHOTO: People pass by the logo of Standard Chartered plc at the SIBOS banking and financial conference in Toronto

HONG KONG/LONDON (Reuters) - Standard Chartered posted a smaller-than-expected 40% slide in third-quarter profit as it lowered loan loss expectations linked to the coronavirus pandemic, but warned it would take longer to hit a key profitability target.

Underscoring its improved near-term performance, StanChart said it may resume dividend payments when it releases full-year results in February.

The bank reported credit impairment charges of $358 million for the three months ended Sept. 30, well below the preceding quarter's $611 million and a consensus estimate of $614 million.

Despite the better-than-expected quarterly performance, the bank's shares fell more than 5% in London as investors took note of the lender's cautious outlook and its acknowledgement that the pandemic has pushed back its profit goals.

The bank, which had previously targeted a return on tangible equity (ROTE) of 10% by 2021, said in February the goal would take longer and on Thursday gave a clearer picture still of how the pandemic had hit efforts to improve profits.

"I would say directionally COVID has probably put us back a couple of years," Chief Financial Officer Andy Halford told reporters.

StanChart said the results reinforced its view that credit impairments would be lower in the second half of the year than the first, as lenders worldwide report loan losses stabilising.

The key question now facing analysts and investors is whether various government support measures such as emergency loans and furlough schemes have genuinely mitigated losses, or merely pushed them back into next year.


"Given the extreme economic pressures relating to the persistence of COVID-19, partially addressed through the efficacy of government support measures, it is not possible to reliably predict the quantum or timing of future impairments," StanChart said.

Lower provisions helped it report an underlying pretax profit for the third quarter of $745 million, above the $502 million average of analysts' forecasts compiled by the bank.

StanChart, which is focused on Asia, Africa and the Middle East, also struck a positive note when forecasting client demand, saying it expected improvement next year on the back of a faster-than-expected economic recovery in key markets including China and India.

"Lower interest rates continue to impact income but we remain well-positioned to meet our financial targets, albeit with some delay," Chief Executive Bill Winters said in the earnings statement.

StanChart said last month it would merge several businesses and cut its number of senior executives.

Both StanChart and rival HSBC, whose shares have nearly halved in value this year, are also grappling with political uncertainty in Hong Kong, a key market for both.

StanChart said it was focusing on generating more fee-based income, particularly from financial markets and wealth management businesses, where it was seeing increased client demand, to offset the impact of low interest rate.

(Reporting by Sumeet Chatterjee and Lawrence White Editing by Edwina Gibbs)

By Sumeet Chatterjee and Lawrence White

© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
DOW JONES AFRICA TITANS 50 INDEX -1.06% 501.92 Delayed Quote.-5.57%
HSBC HOLDINGS PLC 1.76% 404.85 Delayed Quote.-31.60%
S&P AFRICA 40 INDEX -0.87% 162.67 Delayed Quote.-5.02%
STANDARD CHARTERED PLC 0.54% 463.7 Delayed Quote.-34.91%
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Financials (USD)
Sales 2020 14 877 M - -
Net income 2020 786 M - -
Net Debt 2020 - - -
P/E ratio 2020 24,4x
Yield 2020 1,59%
Capitalization 19 434 M 19 455 M -
Capi. / Sales 2020 1,31x
Capi. / Sales 2021 1,31x
Nbr of Employees 82 494
Free-Float 93,9%
Duration : Period :
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Technical analysis trends STANDARD CHARTERED PLC
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus OUTPERFORM
Number of Analysts 23
Average target price 6,45 $
Last Close Price 6,17 $
Spread / Highest target 40,9%
Spread / Average Target 4,54%
Spread / Lowest Target -25,9%
EPS Revisions
William Thomas Winters Group Chief Executive Officer & Executive Director
José Viñals Group Chairman
David Whiteing Group Chief Operating Officer
Andrew Nigel Halford Group Chief Financial Officer & Executive Director
Michael Gorriz Group Chief Information Officer
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