Standard Chartered Plc delivers strong Q3 performance, profit before tax up 41%

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Standard Chartered PLC (LON:STAN) has announced its results for the third quarter ended 30 September 2024.

Bill Winters, Standard Chartered Chief Executive, said:

“We have delivered a strong performance in the third quarter with profit before tax up 41%, driven by a record quarter in Wealth Solutions and strong growth in our Global Markets business.

We are doubling investment in our consistently fast-growing and high-returning wealth management business, and we will continue to reshape our mass retail business to focus on developing our pipeline of future affluent and international banking clients. In our CIB business, we are taking actions to focus on larger global clients who rely on our unique cross-border capabilities.

These actions will further simplify our business and help us to generate higher quality growth and improve our RoTE over the medium term. We are increasing both our 2026 RoTE target from 12% to approaching 13%, and our shareholder distribution target from at least $5bn to at least $8bn from 2024 to 2026.”

Selected information on Q3’24 financial performance with comparisons to Q3’23 unless otherwise stated

• Operating income up 11% to $4.9bn, up 12% at constant currency (ccy)

– Net interest income (NII) up 9% at ccy to $2.6bn, partly due to the short-term hedge roll-off; Non NII up 15% at ccy to $2.3bn

– Wealth Solutions up 32% at ccy, with broad-based growth across products and supported by continued strong momentum in leading indicators of net new sales and affluent new to bank clients

– Global Markets up 16% at ccy, with strong performance in flow income and episodic income

• Operating expenses up 3% to $2.9bn, up 2% at ccy driven by inflation and business growth, partly offset by efficiency saves

• Credit impairment charge of $178m includes $177m from Wealth & Retail Banking (WRB) which was up quarter-on-quarter primarily due to a $21m overlay relating to Korea eCommerce platform, and a $10m net recovery in Corporate & Investment Banking (CIB)

– High risk assets of $8.3bn broadly flat quarter-on-quarter

– Loan-loss rate (LLR) of 21bps, down 16bps on prior year and up 9bps on prior quarter

• Underlying profit before tax of $1.8bn, up 41% at ccy; reported profit before tax of $1.7bn, up 180% at ccy

• Balance sheet remains strong, liquid and well diversified

– Loans and advances to customers of $287bn, up $11bn or 4% since 30.6.24; down $1bn on an underlying basis with continued growth in CIB offset by mortgage headwinds in WRB

– Customer deposits of $478bn, up $10bn or 2% since 30.6.24; growth in WRB Term Deposits

• Risk-weighted assets (RWA) of $249bn, up $7bn or 3% since 30.6.24; market risk up $3bn and $3bn from FX and others

• The Group remains strongly capitalised:

– Common equity tier 1 ratio 14.2% (30.6.24: 14.6%), above 13-14% target range, post the 62bps full impact of the $1.5 billion share buyback announced in July 2024

• Tangible net asset value per share of $15.09, up 65 cents since 30.6.24

• Return on Tangible Equity (RoTE) of 10.8%, up 4%pts

Taking further actions to deliver sustainably higher returns

• Double investment in wealth management for affluent clients:

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– We are already a leading wealth manager across Asia, Africa and the Middle East, with a distinctive, fast-growing and high-returning international affluent franchise. We have decided to step up our planned investment into this business to accelerate income growth and returns

– In WRB, we will invest around $1.5bn over five years in relationship managers and investment advisers, wealth solutions, and enhanced advisory, cross-border and digital capabilities. This represents a doubling of investment relative to our prior plans

– The incremental investment will be funded by reshaping our mass retail business to focus on building a strong pipeline of future affluent and international banking clients

– The impact of this reshaping will vary across our network. We will continue to review single-product lending relationships and portfolios which no longer meet our strategic objectives, in order to prioritise higher growth and higher-returning assets

– We are exploring the opportunity to sell all or part of a small number of businesses where the strategic rationale is not sufficiently compelling, enabling us to focus our resources on the cross-border needs of our CIB and affluent WRB clients

– We expect these actions to take effect over the next 18-24 months

– We are confident that our increased investment and greater concentration will help us to outperform the market in terms of asset gathering and income growth over the medium term, enabling us to sustain double-digit income growth in Wealth Solutions

• Sharpen focus on cross-border needs of corporate and investment banking clients:

– In CIB, we will continue to sharpen our focus on serving the cross-border needs of our larger global corporate and financial institution clients who require transaction and securities services, financing, risk management and sector advisory expertise across Asia, Africa and the Middle East

– This will include concentrating our efforts on serving the complex needs of fewer client groups where we have the most distinctive offering, and we will reduce the number of clients whose needs do not play directly to our strengths

– We are targeting to increase income from financial institution clients to around 60 per cent of CIB over the medium-term, and to increase the percentage of cross-border (network) income to around 70 per cent

• Our leading sustainability business will continue to be an integral part of our client offering across both CIB and WRB, and for the Group as a whole