StanChart Beats Profit Estimates as Loan Losses Ease

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Standard Chartered Plc posted better-than-estimated earnings as loan losses eased and key Asian markets rebounded, saying it has ample room to fund growth and dividends next year.

Adjusted pretax profit slid 40% in the third quarter to $745 million, topping a $502 million estimate from analysts, the bank said in a statement. Credit impairments eased for a second quarter and were $353 million in the period, almost half as low as estimated.

Earnings from the firm’s investment banking operations tracked the volatility-driven surge that has buoyed Wall Street and its profits in Asia were steady from a year earlier. It’s the third straight quarter where the London-based, emerging-market focused bank has surpassed analysts’ estimates.

“Our transformation is allowing us to weather the macroeconomic storm in good shape,” Chief Executive Officer Bill Winters said in the statement. “Our Wealth Management and Financial Markets businesses have good momentum, we are controlling costs to fund innovation, and we believe we are well provided against credit impairment.”

Other key Figures3q 20203q 2019
Adj Operating Income$3.52b$3.98b
Net Income$161m$772m
CET114.4%13.5%

Like its bigger rival HSBC Holdings Plc, StanChart signaled it would seek to resume paying money back to shareholders pending approval from U.K. regulators. The lender also said credit costs will likely be lower in the second half of this year than in the first six months of 2020.

“We have ample capital headroom to fund both growth and dividends in 2021,” it said in an investor presentation.

The bank’s financial markets unit reported a 4% gain in operating income in the quarter. Its businesses in China and the rest of Asia held steady, while profits plunged for its units in Africa, Europe, the Middle East and the Americas.

Asian economies’ success in containing the virus has enabled daily life and business activity to return toward normal at a pace that may be months away in Western countries.

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