Standard Chartered ((GB:STAN)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Standard Chartered’s recent earnings call revealed a generally positive sentiment, underscored by strong performances in Wealth Solutions and Global Banking. These successes have led to an upgrade in income growth guidance and accelerated targets for return on tangible equity. Despite some challenges in net interest income, credit impairment, and transaction services income, the overall outlook remains optimistic as positive indicators outweigh the negatives.
Profit Before Tax Growth
The company reported a 9% growth in profit before tax, driven by a 5% increase in income. This growth highlights the company’s ability to enhance profitability through effective strategies and strong sector performances.
Wealth Solutions and Global Banking Performance
Record quarterly performances in Wealth Solutions and Global Banking have prompted an upgrade in 2025 income growth guidance towards the upper end of the 5% to 7% range. This demonstrates the company’s strength in these sectors and its potential for future growth.
Return on Tangible Equity
Standard Chartered expects to achieve a return on tangible equity of around 13% in 2025, accelerating their previous guidance by a year. This reflects the company’s confidence in its strategic initiatives and operational efficiency.
Operating Income Increase
Operating income increased by 5% to $5.1 billion, supported by strong performances in Wealth Solutions and Global Banking. This growth in operating income is a testament to the company’s robust business model and market positioning.
Strong Affluent Client Growth
The company onboarded 67,000 new-to-bank affluent clients in the quarter, continuing a trend of onboarding over 60,000 clients each quarter. This growth highlights the company’s successful client acquisition strategies and focus on affluent markets.
Net Interest Income Challenges
Net Interest Income (NII) saw only a 1% increase quarter-on-quarter, with expectations of a low single-digit percentage decrease year-on-year in 2025. This indicates challenges in maintaining growth in this area amidst changing market conditions.
Credit Impairment
Credit impairment was reported at $195 million, with an annualized loan loss rate of 24 basis points, including a $25 million overlay for clients with exposure to Hong Kong commercial real estate. This reflects the company’s cautious approach to managing credit risks.
Sovereign Downgrades
High-risk assets increased by approximately $650 million quarter-on-quarter, driven by a sovereign downgrade into early alerts. This highlights the ongoing challenges in managing geopolitical and economic risks.
Transaction Services Income Decline
Transaction Services income declined by 6% due to falling rates and margin compression in payments and liquidity. This decrease points to the challenges faced in adapting to market dynamics.
Forward-Looking Guidance
The company provided a robust forward-looking guidance, highlighting a 9% growth in profit before tax and a 5% increase in income. With record performances in Wealth Solutions and Global Banking, the 2025 income growth guidance has been upgraded to the upper end of the 5% to 7% range. The company also anticipates a 13% return on tangible equity in 2025, surpassing previous projections for 2026. Additionally, risk-weighted assets decreased by $1 billion, and the CET1 ratio improved to 14.2% after accounting for the impact of a $1.3 billion share buyback.
In conclusion, Standard Chartered’s earnings call reflects a positive outlook with strong sector performances and upgraded growth guidance. While challenges in net interest income and credit impairment remain, the company’s strategic focus and robust client growth provide a solid foundation for future success.