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    STAN   GB0004082847

STANDARD CHARTERED PLC

(STAN)
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Standard Chartered : 1Q 2021 - Results (29 April 2021, PDF)

04/29/2021 | 12:35am EDT

Standard Chartered PLC

1Q'21 Results

29 April 2021

Registered in England under company No. 966425

Registered Office: 1 Basinghall Avenue, London, EC2V 5DD, UK

Standard Chartered PLC - first quarter 2021 results

Table of contents

Performance highlights

1

Statement of results

2

Group Chief Financial Officer's review

3

Supplementary financial information

11

Underlying versus statutory results reconciliations

24

Risk review

30

Capital review

35

Financial statements

40

Other supplementary financial information

45

Forward-looking statements

This document may contain 'forward-looking statements' that are based on current expectations or beliefs, as well as assumptions about future events. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements often use words such as 'may', 'could', 'will', 'expect', 'intend', 'estimate', 'anticipate', 'believe', 'plan', 'seek', 'continue' or other words of similar meaning.

By their very nature, forward-looking statements are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results, and the Group's plans and objectives, to differ materially from those expressed or implied in the forward-looking statements. Recipients should not place reliance on, and are cautioned about relying on, any forward-looking statements. There are several factors which could cause actual results to differ materially from those expressed or implied in forward looking statements. The factors that could cause actual results to differ materially from those described in the forward-looking statements include (but are not limited to) changes in global, political, economic, business, competitive, market and regulatory forces or conditions, future exchange and interest rates, changes in tax rates, future business combinations or dispositions and other factors specific to the Group. Any forward-looking statement contained in this document is based on past or current trends and/or activities of the Group and should not be taken as a representation that such trends or activities will continue in the future.

No statement in this document is intended to be a profit forecast or to imply that the earnings of the Group for the current year or future years will necessarily match or exceed the historical or published earnings of the Group. Each forward-looking statement speaks only as of the date of the particular statement. Except as required by any applicable laws or regulations, the Group expressly disclaims any obligation to revise or update any forward-looking statement contained within this document, regardless of whether those statements are affected as a result of new information, future events or otherwise.

Please refer to the Group's 2020 Annual Report for a discussion of certain risks and factors that could cause actual results, and the Group's plans and objectives, to differ materially from those expressed or implied in the forward-looking statements.

Nothing in this document shall constitute, in any jurisdiction, an offer or solicitation to sell or purchase any securities or other financial instruments, nor shall it constitute a recommendation or advice in respect of any securities or other financial instruments or any other matter.

Unless another currency is specified, the word 'dollar' or symbol '$' in this document means US dollar and the word 'cent' or symbol 'c' means one-hundredth of one US dollar.

The information within this report is unaudited.

Unless the context requires, within this document, 'China' refers to the People's Republic of China and, for the purposes of this document only, excludes Hong Kong Special Administrative Region (Hong Kong), Macau Special Administrative Region (Macau) and Taiwan. 'Korea' or 'South Korea' refers to the Republic of Korea. Asia includes Australia, Bangladesh, Brunei, Cambodia, Mainland China, Hong Kong, India, Indonesia, Japan, Korea, Laos, Macau, Malaysia, Myanmar, Nepal, Philippines, Singapore, Sri Lanka, Taiwan, Thailand and Vietnam; Africa & Middle East (AME) includes Angola, Bahrain, Botswana, Cameroon, Cote d'Ivoire, Egypt, The Gambia, Ghana, Iraq, Jordan, Kenya, Lebanon, Mauritius, Nigeria, Oman, Pakistan, Qatar, Saudi Arabia, Sierra Leone, South Africa, Tanzania, the United Arab Emirates (UAE), Uganda, Zambia and Zimbabwe; and Europe & Americas (EA) includes Argentina, Brazil, Colombia, Falkland Islands, France, Germany, Ireland, Jersey, Poland, Sweden, Turkey, the UK and the US.

Within the tables in this report, blank spaces indicate that the number is not disclosed, dashes indicate that the number is zero and nm stands for not meaningful.

Standard Chartered PLC is incorporated in England and Wales with limited liability. Standard Chartered PLC is headquartered in London. The Group's head office provides guidance on governance and regulatory standards. Standard Chartered PLC stock codes are: HKSE 02888 and LSE STAN.LN.

Standard Chartered PLC

1Q'21 Results

Standard Chartered PLC - first quarter 2021 results

All figures are presented on an underlying basis and comparisons are made to 2020 on a reported currency basis, unless otherwise stated. A reconciliation of restructuring and other items excluded from underlying results is set out on pages 24-29.

Bill Winters, Group Chief Executive, said:

"Our first quarter performance was strong. Economic recovery advanced in many of our markets leading to improved transaction volumes and profitability. This was particularly the case in our Financial Markets and in Wealth Management, which had its best ever quarter. Our areas of strategic focus including efforts to lead with a differentiated sustainability offering are growing well. Despite low interest rates, we expect our underlying momentum to lead to income growth in the second half of 2021."

Update on strategic priorities

  • Network: continued growth in digitally initiated transactions, up 3%pts in 1Q'21 to 44%
  • Affluent: added over 400,000 new clients in the last 12 months, with two-thirds migrating from Mass Retail
  • Mass Retail: Mox client base in Hong Kong increased 50% year-to-date to 100,000 clients
  • Sustainability: launched market-first sustainable trade finance proposition

Selected information concerning 1Q'21 financial performance

  • Income 9% lower at $3.9bn, down 3% at constant currency (ccy) and excluding a $305m reduction in DVA
    • Net interest margin (NIM) has broadly stabilised at 122bps, down 2bps QoQ but flat excluding 4Q'20 one-off interest credit
    • Other income grew 4% excluding DVA
    • Wealth Management, Financial Markets and balance sheet growth nearly offset $380m NII headwind from 30bps YoY drop in NIM
  • Expenses increased 6% to $2.5bn; up 4% at ccy
    • Mainly impact of performance-related pay normalisation, with underlying efficiencies funding higher investment
  • Credit impairment of $20m, down $936m YoY; down $354m QoQ
    • Stage 1 and 2: $35m net release, includes $14m overlay release. Total Stage 1 and 2 overlay now $339m
    • Stage 3: $55m down $450m YoY and $269m QoQ with no significant new exposures in 1Q'21
    • High-riskassets: reduced for the third consecutive quarter in 1Q'21, down $1.1bn in the quarter and broadly stable YoY
  • Underlying profit before tax up 18% to $1.4bn; lower impairments and business momentum more than offset impact of lower NIM
    • Statutory profit before tax up 59% to $1.4bn; 1Q'20 included $258m goodwill impairment
    • Return on tangible equity up 220bps to 10.8%
  • Tax charge of $314m: underlying effective tax rate of 22%, down 8%pts due to change in geographic mix and higher profits
  • The Group's balance sheet continues to grow and remains strong, liquid and well diversified
    • Customer loans and advances up 4% or $10bn since 31.12.20; customer accounts up 1%
    • Advances-to-depositratio 62.7% (31.12.20: 61.1%); liquidity coverage ratio 150% (31.12.20: 143%)
  • Risk-weightedassets (RWA) of $277bn up $7.8bn since 31.12.20
    • $6bn credit RWA growth: asset growth partly offset by asset mix, FX and optimisation actions. Market risk RWA up $1bn
  • The Group remains strongly capitalised and highly liquid
    • Common equity tier 1 ratio 14.0% at the top of the 13-14% target range (31.12.20: 14.4%)
    • Profit accretion 40bps offset by 50bps reduction from RWA growth, 10bps reduction from $255m share buy-back and interim ordinary dividend accrual
  • Earnings per share increased 8.1 cents or 32% to 33.5 cents

Outlook

We believe that some of our larger markets will continue to drive the global economy out of recession over the coming quarters. While the scale of the US fiscal stimulus and speed of vaccine roll-out have significantly lifted global economic prospects, we still expect the recovery to be volatile and uneven.

This positive backdrop reinforces our confidence in our previous guidance for FY'21, in particular:

  • With the net interest margin having broadly stabilised, we expect income to start growing again in 2H'21 compared to 2H'20. Income is expected to be similar in FY'21 to that achieved in FY'20 at constant currency and to return to our medium-term guidance of 5-7% growth from FY'22
  • We still expect FY'21 expenses to increase slightly compared to FY'20, as we continue to invest in our digital capabilities, but should remain below $10 billion at constant currency
  • We now expect impairment charges to reduce significantly year-on-year in FY'21 with the loan loss rate likely to be in or below our 35- 40 basis point medium-term guidance range

Standard Chartered PLC

1

1Q'21 Results

Statement of results

1Q'21

1Q'20

Change¹

$million

$million

%

Underlying performance

Operating income

3,929

4,327

(9)

Operating expenses

(2,494)

(2,358)

(6)

Credit impairment

(20)

(956)

98

Other impairment

(16)

154

(110)

Profit from associates and joint ventures

47

55

(15)

Profit before taxation

1,446

1,222

18

Profit/(loss) attributable to ordinary shareholders²

1,053

810

30

Return on ordinary shareholders' tangible equity (%)

10.8

8.6

220bps

Cost to income ratio (%)

63.5

54.5

(900)bps

Statutory performance

Operating income

3,939

4,335

(9)

Operating expenses

(2,528)

(2,368)

(7)

Credit impairment

(17)

(962)

98

Goodwill impairment

-

(258)

100

Other impairment

(28)

92

(130)

Profit from associates and joint ventures

47

47

-

Profit before taxation

1,413

886

59

Taxation

(314)

(369)

15

Profit for the period

1,099

517

113

Profit/(loss) attributable to parent company shareholders

1,092

510

114

Profit/(loss) attributable to ordinary shareholders2

1,027

477

115

Return on ordinary shareholders' tangible equity (%)

10.6

5.1

550bps

Cost to income ratio (%)

64.2

54.6

(960)bps

Balance sheet and capital

Total assets

804,903

764,916

5

Total equity

52,275

50,004

5

Average tangible equity attributable to ordinary shareholders2

39,464

37,927

4

Loans and advances to customers

292,084

271,234

8

Customer accounts

441,684

422,192

5

Risk weighted assets

276,670

272,653

1

Total capital

58,531

53,458

9

Total capital (%)

21.2

19.6

160bps

Common Equity Tier 1

38,711

36,467

6

Common Equity Tier 1 ratio (%)

14.0

13.4

60bps

Net Interest Margin (%) (adjusted)

1.22

1.52

(30)bps

Advances-to-deposits ratio (%)3

62.7

61.9

0.8

Liquidity coverage ratio (%)

150

142

8

UK leverage ratio (%)

5.1

4.9

20bps

Information per ordinary share

Cents

Cents

Cents

Earnings per share - underlying4

33.5

25.4

8.1

- statutory4

32.6

15.0

17.7

Net asset value per share5

1,433

1,357

76

Tangible net asset value per share5

1,270

1,201

69

Number of ordinary shares at period end (millions)

3,118

3,147

(1)

  1. Variance is better/(worse) other than assets, liabilities and risk-weighted assets
  2. Profit/(loss) attributable to ordinary shareholders is after the deduction of dividends payable to the holders of non-cumulative redeemable preference shares and Additional Tier 1 securities classified as equity
  3. When calculating this ratio, total loans and advances to customers excludes reverse repurchase agreements and other similar secured lending, excludes approved balances held with central banks, confirmed as repayable at the point of stress and includes loans and advances to customers held at fair value through profit and loss. Total customer accounts includes customer accounts held at fair value through profit or loss
  4. Represents the underlying or statutory earnings divided by the basic weighted average number of shares
  5. Calculated on period end net asset value, tangible net asset value and number of shares

Standard Chartered PLC

2

1Q'21 Results

Group Chief Financial Officer's review

The Group delivered a strong performance in the first quarter of 2021

Summary of financial performance

Constant

Constant

1Q'21

1Q'20

Change

currency

4Q'20

Change

currency

change¹

change¹

$million

$million

%

%

$million

%

%

Net interest income

1,662

1,842

(10)

(11)

1,760

(6)

(7)

Other income

2,267

2,485

(9)

(9)

1,439

58

57

Underlying operating income

3,929

4,327

(9)

(10)

3,199

23

22

Other operating expenses

(2,494)

(2,358)

(6)

(4)

(2,618)

5

6

UK bank levy

-

-

nm³

nm³

(331)

100

100

Underlying operating expenses

(2,494)

(2,358)

(6)

(4)

(2,949)

15

16

Underlying operating profit before impairment and taxation

1,435

1,969

(27)

(27)

250

nm³

nm³

Credit impairment

(20)

(956)

98

98

(374)

95

95

Other impairment

(16)

154

(110)

(110)

(82)

80

80

Profit from associates and joint ventures

47

55

(15)

(15)

14

nm³

nm³

Underlying profit/(loss) before taxation

1,446

1,222

18

19

(192)

nm³

nm³

Restructuring

(33)

(92)

64

65

(248)

87

87

Goodwill impairment

-

(258)

100

100

-

nm³

nm³

Other items

-

14

(100)

(100)

(9)

100

100

Statutory profit/(loss) before taxation

1,413

886

59

61

(449)

nm³

nm³

Taxation

(314)

(369)

15

15

(27)

nm³

nm³

Profit/(loss) for the period

1,099

517

113

116

(476)

nm³

nm³

Net interest margin (%)2

1.22

1.52

(30)

1.24

(2)

Underlying return on tangible equity (%)2

10.8

8.6

220

(4.3)

1,510

Underlying earnings per share (cents)

33.5

25.4

32

(13.5)

nm³

Statutory return on tangible equity (%)2

10.6

5.1

550

(6.2)

1,680

Statutory earnings per share (cents)

32.6

15.0

117

(19.4)

nm³

  1. Comparisons presented on the basis of the current period's transactional currency rate, ensuring like-for-like currency rates between the two periods
  2. Change is the basis points (bps) difference between the two periods rather than the percentage change
  3. Not meaningful

The Group delivered a strong performance in the first quarter of 2021 with underlying profit before tax improving 18 per cent. Positive business momentum, very low credit impairment charges and operating cost efficiencies more than offset the impact of lower interest rates, a $305 million reduction in the debit valuation adjustment (DVA) and increased investment. Income declined 3 per cent excluding DVA and on a constant currency basis, with a record performance in Wealth Management as well as 4 per cent growth in Loans and Advances to Customers in the quarter nearly offsetting the impact of a 30 basis point decline in net interest margin. Expenses increased 4 per cent at constant currency mainly due to the normalisation of performance-related pay accruals, with underlying cost efficiencies funding an increase in investments. Credit impairment charges were exceptionally low reflecting the improving economic backdrop. The Group remains well capitalised and highly liquid with a CET1 ratio of 14.0 per cent - at the top end of the 13 to 14 per cent target range - an advances-to-deposits ratio of 62.7 per cent and a liquidity coverage ratio of 150 per cent.

All commentary that follows is on an underlying basis and comparisons are made to the equivalent period in 2020 on a reported currency basis, unless otherwise stated.

  • Operating income declined 9 per cent and was down 3 per cent on a constant currency basis and excluding a $305 million reduction in DVA. The impact of lower interest rates was partially offset by balance sheet growth and strong performances in Wealth Management and Financial Markets, excluding the reduction in DVA
  • Net interest income decreased 10 per cent with a 9 per cent increase in average interest earning assets more than offset by a 20 per cent (30 basis points) decline in net interest margin
  • Other income decreased 9 per cent, but was up 4 per cent excluding the negative impact of movements in DVA, with a particularly strong performance in Wealth Management partially offset by lower Treasury realisation gains
  • Operating expenses were up 6 per cent and up 4 per cent on a constant currency basis, with performance-related pay accruals normalising and increased investment into transformational digital initiatives. The cost-to-income ratio excluding DVA increased 5 percentage points to 63 per cent, due to the impact of the significantly lower interest rate environment on net interest income

Standard Chartered PLC

3

1Q'21 Results

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

Standard Chartered plc published this content on 29 April 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 29 April 2021 04:34:05 UTC.


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Financials (USD)
Sales 2021 15 128 M - -
Net income 2021 2 015 M - -
Net Debt 2021 - - -
P/E ratio 2021 10,6x
Yield 2021 2,81%
Capitalization 21 060 M 21 055 M -
Capi. / Sales 2021 1,39x
Capi. / Sales 2022 1,33x
Nbr of Employees 82 084
Free-Float 93,6%
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Technical analysis trends STANDARD CHARTERED PLC
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TrendsBearishBullishBullish
Income Statement Evolution
Consensus
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Mean consensus OUTPERFORM
Number of Analysts 22
Average target price 7,89 $
Last Close Price 6,77 $
Spread / Highest target 50,2%
Spread / Average Target 16,6%
Spread / Lowest Target -15,4%
EPS Revisions
Managers and Directors
NameTitle
William Thomas Winters Group Chief Executive Officer & Executive Director
Andrew Nigel Halford Group Chief Financial Officer & Executive Director
JosÚ Vi˝als Group Chairman
Michael Gorriz Group Chief Information Officer
David Whiteing Group Chief Operating Officer
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