Standard Chartered PLC (LON:STAN) today released its Interim Management Statement for the period ended 30 September 2018. All figures are presented on an underlying basis and unless otherwise stated comparisons are made to the equivalent nine-month period in 2017.
Commenting on the performance, Bill Winters, Standard Chartered Chief Executive, said:
“The results for the first nine months of the year reflect our focus on significantly improving profitability, balance sheet quality, conduct and financial returns. Income growth year-on-year was slightly lower in the third quarter impacted by Africa and the Middle East and we remain alert to broader geopolitical uncertainties that have affected sentiment in some of our markets. But growth fundamentals remain solid across our markets and we are cautiously optimistic on global economic growth.”
Strategic execution and outlook
· Further progress on strategic and financial priorities
o Profit up 25% driven by broad-based income growth and ongoing risk discipline
o Organic capital generation and enhanced risk management has further increased the Group’s resilience
o RoE improved a further 150bps to 6.6% and RoTE a further 180bps to 7.5%
· Structural trends shaping economies in the Group’s footprint remain intact, but uncertainty has increased
o The macroeconomic environment continues to be supported by solid growth fundamentals
o Escalating trade tension and other macroeconomic factors are affecting sentiment in emerging markets
o Income from Wealth Management was 8% higher on a YTD basis but in Q3 was down 5% YoY
o The Group remains cautiously optimistic on global economic growth
· Having made substantial progress executing the transformation plan laid out in 2015, the Group will announce at its FY 2018 results the areas of focus that will deliver higher returns over the next three years
Financial performance highlights
· Underlying profit before tax of $3.4bn was up $0.7bn or 25% reflecting focus on improving returns
o Statutory profit before tax also $3.4bn included restructuring and other items of $17m
· Operating income of $11.4bn grew 5% on both a reported and constant currency basis (ccy)
o All client segments grew between 5-8% with particular strength in the GCNA region up 11%
o Net interest income grew 10% and NIM increased 5bps
o Q3 income was up 4% YoY and down 1% QoQ primarily impacted by the AME region
· Operating expenses of $7.6bn were 5% higher YoY (4% ccy)
o Q3 operating expenses were up 1% YoY (flat ccy) and down 5% QoQ
o Operating expenses in H2 18 ex-UK bank levy still expected to be similar to H1 18
· Asset quality improved YoY and was stable during Q3
o Credit impairment of $408m reduced 56%
o The Group remains vigilant given geopolitical and macroeconomic uncertainties
Balance sheet and capital movements since 30 June 2018
· Loans and advances to customers were down 2% (1% ccy) to $251bn
o Impacted by a reduction in corporate overdraft balances in Hong Kong as well as lower IPO activity
· Customer accounts were down 3% (2% ccy) to $371bn
o Driven by lower corporate non-operating account balances including in Financial Markets
· The CET1 ratio of 14.5% was up 28bps due mainly to profits in the period and lower RWAs
