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StanChart's profit tops estimates after trading windfall

Bloomberg • 3 min read
StanChart's profit tops estimates after trading windfall
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Standard Chartered Plc posted first-quarter earnings that topped estimates after its traders collected a windfall from tumultuous credit and commodities markets. 

The company’s shares surged more than 5% in Hong Kong. The lender said operating income from its credit trading business rose 38% in the first quarter, while its macro trading business benefited from a 12% gain in revenue. 

“Business performance was strong and broad-based across our segments, products and markets in what continues to be an uncertain environment,” CEO Bill Winters said in the statement.

The better-than-expected trading performance helped adjusted pretax profit at the London-headquartered lender jump about 25% in the three months through March from a year earlier to US$2.1 billion, according to a statement Thursday. That beat the US$1.55 billion estimate compiled in a Bloomberg survey. 

The results were also buoyed by the company’s wealth solutions unit, where operating income jumped 21% from a year ago, amid a rise in new money and customers. 

In an attempt to boost shareholder returns and breathe life into a lacklustre stock, Winters has embarked on a management revamp in recent months. In March, Standard Chartered announced that Simon Cooper, head of corporate, commercial and institutional banking, would depart while his division would be renamed corporate and investment banking.

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As part of the changes, the bank is stripping out layers of regional reporting lines in the division, which the company said should help speed up decision making and make managers more accountable for the performance of their businesses.

Winters has also announced a series of share buybacks in the past. 

The stock was 5.3% higher in Hong Kong as of 1:13 p.m. Despite this year’s rally, the stock remains more than 30% lower than when Winters took the helm at the British lender in June 2015. He has become increasingly vocal about the poor performance of Standard Chartered shares and described them as “crap” in February as the lender reported its full-year results for 2023.

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The same month, the bank said its new “Fit for Growth” program will save about US$1.5 billion in expenses over the next three years, but also add a similar amount to costs for the permanent organizational changes.

The lender said it has identified over 200 projects that it will seek to execute under the program. 

The results included a US$234 million gain after Standard Chartered revalued foreign exchange positions in Egypt and made an accounting adjustment for hyperinflationary conditions in Ghana.

Standard Chartered said the commodities trading business benefited from higher metals and energy prices.

The company recorded a US$55 million restructuring charge in the quarter tied to its actions to improve productivity, including by making staffers redundant.

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