Standard Chartered 2023 profit jumps 18%, beating market estimates

Standard Chartered, one of Hong Kong’s three currency-issuing banks, reported an 18 per cent jump in profit, beating street estimates due to higher interest margins, while impairment charges on account of its exposure to the China property market weighed.

The emerging-markets focused lender made a net profit of US$3.47billion in 2023, or US$1.08 per share, against a profit of US$2.95 billion posted a year ago. This is better than analysts’ estimate of US$3.34 billion.

The lender announced a new share buy-back of US$1 billion and said it had paid 27 US cents as dividend in the full year in 2023, compared with 18 US cents per share a year ago.

The London-based bank, which generates much of its revenues from Asia, reported US$5.09 billion in statutory pre-tax profit for 2023, up 19 per cent from US$4.28 billion in 2022, missing the US$5.39 billion estimate made by analysts in a Bloomberg poll.

“We produced strong results in 2023, continuing to demonstrate the value of our franchise and delivering our financial objective of a 10 per cent return on tangible equity for the year,” chief executive Bill Winters said in a statement.

“We will continue to actively manage the Group’s capital position with a target to return at least US$5 billion over the next three years.”

Standard Chartered provided US$1.2 billion in total, in relation to credit impairment charges related to its exposure in China’s commercial real estate sector, over the last three years.

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The earnings of another note-issuing bank, HSBC, and Hong Kong’s oldest family-run bank, Bank of East Asia, both have been hurt by bad-debt provisions related to China’s property sector.

For the fourth quarter alone, Standard Chartered reported that its underlying pre-tax profit rose 74 per cent to US$1.1 billion.

Shares of Standard Chartered rose 0.4 per cent to close the morning session at HK$60.5 in Hong Kong on Friday, ahead of the earnings announcement.

Pre-tax profit among Hong Kong’s retail banks increased by 62 per cent on aggregate last year, compared with 19 per cent in 2022 when Hong Kong’s business activities were still hobbled by anti-pandemic controls, according to data provided by the Hong Kong Monetary Authority (HKMA).

Higher interest rates, following successive increases by the Federal Reserve and HKMA since March 2022, helped widen net interest margins, while a general recovery in business activity fanned demand for banking services and wealth management products, HKMA deputy CEO Arthur Yuen Kwok-hang said last month about the banking sector’s financial performance.