StanChart’s Pre-Tax Profits Beat Estimates
Despite a 12 percent drop in pre-tax profits to $1.2 billion, Standard Chartered still beat analyst estimates of $828 million by a sizeable margin.
Credit impairments surged ten-fold compared to last year to reach $962 million. In anticipation of further coronavirus headwinds, the bank has also upped its bad loan reserves by nearly $1 billion.
Operating income rose 13 percent to $4.3 billion driven primarily by strong performance from the bank’s markets business. Net interest income fell 4.2 percent to $1.8 billion due to margin compression – net margin interest decreased 14 bps to 1.52 percent.
The bank posted $517 million of net profits in the first quarter, a 37 percent decline compared to $818 million in the same prod last year due in significant part to a $249 million goodwill impairment in India.
Coronavirus Headwinds
In recent times, Standard Chartered has been reportedly exposed to a series of lending troubles that could total $600 million in bad loans. Troubled borrowers reportedly involved include UAE healthcare chain NMC Health, state-owned Land and Agricultural Development Bank of South Africa, and Singapore oil trader Hin Leong.
«We expect a gradual recovery from the Covid-19 pandemic, with major contraction in economic growth rates across most of the world in the second quarter, before the global economy moves out of recession in the latter part of 2020, most likely led and driven by markets in our footprint,» Standard Chartered said in an exchange filing.
