Standard Chartered Lifts Outlook After Fee-Led Profit Beat

Standard Chartered raised its full-year income target to the midpoint of its 5%–7% range after a stronger-than-expected first half. Pretax profit for the six months to June rose 9% to $4.78 billion, above a $4.52 billion analyst forecast, driven by growth in wealth and global banking fees. The London-based bank, which earns most of its revenue in Asia and Africa, released the results on Monday. Credit charges linked to the Iran conflict held steady during the period.

Shares climbed after the update. The stock in Hong Kong advanced more than 5% to the highest level in nearly 19 years, supported by a $1 billion share buyback and an interim dividend of 20.4 cents per share. London-listed shares increased 3.4%.

Operating costs remained contained. Expenses rose 2% to $6.3 billion in the first half, below the 6.4% rise expected by analysts. Wealth income grew 38%, led by double-digit gains in investment products as client inflows and new account openings increased during a period of market volatility.

Global and cross-border banking activity strengthened. Revenue from cross-border and corporate banking increased 19% in the first half as large companies used the bank to borrow, issue debt and carry out transactions. Intra-Asia income grew strongly, including a 20% increase in China-to-Hong Kong business and a 45% rise in China-to-ASEAN activity, supported by demand for transaction and markets services, according to finance chief Manus Costello. The Middle East portfolio, which represents 6% of overall exposures, was described as broadly stable. This comes as Eurozone banks tightened credit standards, even as demand for corporate loans edged higher.

Credit quality metrics were steady on the whole. The bank booked an additional $44 million impairment in the second quarter, partly reflecting early stress among petrochemical clients. Management overlays of $190 million were set aside in April to guard against potential future losses.

Regulatory tightening in China on cross-border investments is not expected to materially affect the bank’s Hong Kong wealth hub. Chief Financial Officer Manus Costello noted: “There are some non-compliant flows which they want to tighten up on, and that’s natural,” adding that new client onboarding remained steady through the second quarter and into the third.

Group Chief Executive Bill Winters, in a statement to investors, offered this view: “Clients continue to turn to us to facilitate trade, investment and wealth flows across the world’s most dynamic markets.”