Standard Chartered reported a 5.5% increase in its first-quarter pretax profit, surpassing analyst estimates. The bank’s pretax profit for the quarter was $1.91 billion, compared to $1.81 billion the previous year. CEO Bill Winters expressed confidence in the bank’s financial targets for the year, citing double-digit growth in income and positive operational leverage. However, credit impairments worsened in 2024, with a $165 million writedown in the first quarter, compared to just $20 million the year before. The bank had previously taken $850 million in writedowns on its stake in China’s Bohai Bank, which was impacted by the slowing Chinese economy and the property sector crisis.
Standard Chartered primarily generates revenue in Asia, and its profit from joint ventures in the first quarter decreased from $18 million to $6 million. This decline was attributed to profit losses at Bohai Bank in China. The bank’s struggles in China were further highlighted by the $850 million in writedowns it had taken on its stake in Bohai Bank in previous quarters. Despite these challenges, the bank remains optimistic about meeting its financial targets for the full year 2024. StanChart’s strong first-quarter results were driven by higher interest rates, which boosted earnings at the emerging markets-focused lender.
In a bid to bolster its performance in China, Standard Chartered recently announced plans to launch a new digital banking platform in the country. The platform aims to attract younger digital-savvy customers and enhance the bank’s digital offerings. This move reflects the bank’s strategic focus on expanding its presence in key markets, particularly in Asia where it generates the majority of its revenues. By investing in digital banking capabilities, Standard Chartered hopes to stay ahead of the competition and capture a larger share of the growing digital banking market in China.
Standard Chartered’s efforts to navigate the challenging economic conditions in China have been further complicated by the deepening crisis in the country’s property sector. The bank’s exposure to the property market through its investments in Chinese banks has raised concerns about potential loan defaults and credit risks. In response to these challenges, Standard Chartered has been closely monitoring its credit impairments and taking proactive measures to manage its risk exposure in China. The bank’s decision to write down a total of $850 million on its stake in Bohai Bank underscores the impact of the economic headwinds facing the Chinese banking sector.
Despite the difficulties in China, Standard Chartered remains committed to its growth strategy in Asia and is focused on leveraging its expertise and network in the region. The bank continues to invest in digital banking and other innovative solutions to enhance its competitive position and drive growth in key markets. With a strong first-quarter performance and a clear strategy in place, Standard Chartered is well positioned to navigate the challenges in the evolving global financial landscape and deliver sustainable long-term value for its shareholders.
