StanChart profits increase 18% thanks to Covid economic recovery

Standard Chartered’s pre-tax profits rose 18% year-on-year in the first quarter, beating analyst estimates, as the UK lender cut its bad debt provisions incurred during the coronavirus pandemic.

The emerging market-focused bank was the latest lender to benefit from a improving global economic outlook one year after the start of the Covid-19 epidemic.

Its profit of $ 1.4 billion was higher than the $ 985 million forecast by analysts, 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 big rival HSBC, which announced the $ 400 million release of provisions this week.

StanChart CEO Bill Winters 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.”

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 far-reaching national security law on Hong Kong.

In February, Winters said he hoped US President Joe Biden would re-engage with China and end the escalation in trade, but he little evidence of reconciliation.

StanChart has struggled to balance its trade dependence on China with its mission statement: “here for good.” It has also been pressured by its board of directors and investors to better define its positions on human rights and environmental issues.

This week, HSBC announced a 79% increase in net income for the quarter to $ 5.8 billion, significantly higher than the $ 3.3 billion forecast by analysts.

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