StanChart to hit return target early on robust wealth growth

By Selena Li and Lawrence White

HONG KONG/LONDON (Reuters) -Standard Chartered (StanChart) said it would hit a key profitability target a year earlier than expected, after posting better-than-expected third-quarter earnings as its strategy to shift to fee-generating business paid off. 

The London-headquartered bank reported on Thursday a pretax profit for the third quarter of $1.77 billion, up 3% from a year earlier and ahead of the $1.52 billion analyst consensus, due to revenue from its wealth and global banking businesses.

The bank's earnings update demonstrated progress in CEO Bill Winters' strategy for the Asia and Africa-focused lender to invest in wealth management and restructure its advisory business to win more deals.

Standard Chartered shares rose 1.3% in London, among the best-performing stocks in the benchmark FTSE 100 index, which dipped 0.3%.

StanChart shares have risen 53% this year, outpacing a 37% gain for rival HSBC, which reported on Tuesday a hefty drop in profit due to $1.4 billion in legal charges.

"Standard Chartered is no longer just treading water in emerging markets," said Neil Shah, an executive director at investment research firm Edison Group, "it is showing that a focused strategy and a bit of discipline can turn global complexity into consistent returns."

U.S.-CHINA "LONG GAME", CLIENTS BACK IN DEALMAKING

Global clients who were on the fence during the second quarter have started to make more consequential decisions in the third quarter and boosted the bank's worldwide revenue, StanChart Chief Financial Officer Diego De Giorgi said during an earnings call on Thursday.

The bank's capital markets and advisory fee income grew 33% during the period, as a rebound in corporate confidence drove increased mergers and acquisitions this year, despite tariffs and economic uncertainty. 

"Anything that reduces policy uncertainty around the world is to be welcomed because it improves business confidence, and it improves investors' confidence in general," De Giorgi said, referring to U.S. President Donald Trump's meeting with Chinese President Xi Jinping.

"Good news on the day. But this is going to be a long game," he added.

WEALTH IN FOCUS, OUTLOOK LIFT

StanChart's results showed strong performance across its businesses, particularly in wealth management, and suggested the bank will likely upgrade its medium-term targets for 2026 and beyond when it reports full-year results in February, Jefferies analyst Joe Dickerson said.

It now expects income growth this year to be at the top end of its 5% to 7% guidance range, whereas in July it had forecast results around the bottom end. 

That means it will reach its goal of a 13% return on tangible equity, a key profitability metric, in 2025 rather than an earlier forecast of 2026.

Its wealth management income shot up by 27% in the third quarter, with inflows and the number of new accounts rising on demand for wealth advice amid market volatility.

StanChart has said it will target $200 billion in new assets and double-digit growth in income from its wealth business over the next five years as part of its wider strategy to shift to higher-fee-earning businesses.

(Reporting by Selena Li in Hong Kong and Lawrence White in London; Editing by Jamie Freed)