Standard Chartered PLC said its first-quarter operating profit declined “slightly” as wholesale-banking revenue fell, pushing down shares of the UK’s second-largest bank by market value.
Revenue climbed from a year earlier as an increase in consumer banking income offset a “mid-single-digit” decrease in wholesale, or corporate banking, the London-based company said in a statement yesterday, without giving specific figures. The shares fell 6.2 percent to ￡15.94 in London at 9:06am in London trading.
Standard Chartered’s wholesale unit, which contributes most of the bank’s profit, includes trade finance, lending to companies and some investment-banking services.
Full-year revenue may increase by 8 percent, short of the bank’s annual target of 10 percent, finance director Richard Meddings told reporters on a conference call as growth in Hong Kong and Africa was eroded by weaker income in South Korea and Singapore.
Standard Chartered, which gets most of its profit from Asia, last year reached a US$667 million settlement with US regulators who said it violated sanctions with Iran.
“Last year, we produced revenue growth of 8 percent and we’ll see, it may be that we’ll be more likely to be at that level” for this year, Meddings said. “But at this stage, I’d like to see May and June before we give proscriptive guidance.”
The bank is “confident” of meeting the full-year pretax profit consensus estimate of analysts of US$8.2 billion, Meddings said. The bank will keep a tight grip on costs after hiring 560 people, Meddings said.
“Stanchart will surely grow this year, but it remains to be seen whether they can achieve their double-digit targets,” said Sandy Mehta, chief executive officer of Value Investment Principals Ltd in Hong Kong. “The year is off to a slow start so some catch-up will be required.”
“The issue facing all of the strong global banks, such as Standard Chartered, is how to make more money in poor-to-middling economic times,” said Hong Kong-based Mizuho Securities Asia Ltd analyst Jim Antos, who has a buy recommendation on the shares.
Antos said the lender “is a very liquid bank, and this gives Standard Chartered limited ways to invest that excess liquidity and earn a decent return.”
HSBC Holdings PLC, the other UK bank that gets most of its earnings in Asia, on Tuesday posted a bigger-than-estimated increase in first-quarter profit after provisions for bad loans shrank.
Pretax profit increased to US$8.43 billion from US$4.32 billion a year earlier, the London-based bank said in a statement.
That beat the US$8.04 billion average estimate of nine analysts surveyed by Bloomberg.
Bad loan charges declined 51 percent to US$1.17 billion, HSBC said.