Standard Chartered’s pre-tax profits rose 18% year-on-year in the first quarter as the UK lender reduced its provisions for bad debts incurred during the coronavirus pandemic.
The emerging-market-focused bank beat analysts’ estimates, becoming the latest lender to benefit from an improving global economic outlook a year after the start of the Covid-19 epidemic.
StanChart’s $ 1.4 billion profit was higher than analysts’ forecast of $ 985 million, the bank said Thursday. However, operating profit fell 9 percent year on year to $ 3.9 billion, in line with expectations.
The bank took on a credit impairment charge of $ 20 million, down $ 936 million from the first quarter of last year. It wrote off $ 35 million in reserves set aside for possible loan losses, far less than its biggest rival HSBC, which announced the release of $ 400 million in reserves this week.
Bill Winters, chief executive, said the economic recovery from Covid-19 has led to improved transaction volumes and profitability. “This was particularly the case in our financial markets and in wealth management, which had its best quarter in its history,” he said. “Despite low interest rates, we expect our underlying momentum to drive revenue growth in the second half of 2021.”
Income from StanChart’s wealth management business rose 21% on strong sales of foreign exchange and equity products, the bank said.
Its Hong Kong-listed shares rose 2.4% after the results were announced.
The lender’s global footprint has placed it in the midst of geopolitical tensions between the US, UK and China. Relations deteriorated last year after Beijing imposed a sweeping national security law in Hong Kong following pro-democracy protests in 2019.
Winters said in February that he hoped US President Joe Biden would re-engage with China and end the “tit for tat” trade escalation, but there is little evidence of reconciliation.
StanChart has struggled to balance its trade dependence on China with its “be here for good” mission statement. It has also been pressured by its board of directors and investors to better define its positions on human rights and environmental issues.
HSBC announced a 79% increase in net income for the quarter to $ 5.8 billion this week, significantly higher than the $ 3.3 billion forecast by analysts.