StanChart profit jumps 17%, books $190 million charge on Iran war
Standard Chartered’s First-Quarter Results and Impact of Iran Conflict
By Selena Li and Lawrence White
Strong Profit Growth Amid Geopolitical Tensions
HONG KONG/LONDON, April 30 (Reuters) - Standard Chartered said on Thursday that first-quarter pretax profit climbed a better-than-expected 17% on growth in its capital markets and wealth businesses, but it did log a $190 million charge on expected losses from the impact of the Iran conflict.
The upbeat results highlight how European banks have so far been able to shrug off the direct impact of the war on their businesses.
Regional Revenue Performance
StanChart, which earns most of its revenue in Asia, Africa and the Middle East, reported pretax profit for the quarter of $2.45 billion. That compares with $2.10 billion a year earlier and the $2.14 billion average of 15 analyst estimates compiled by the bank.
Wealth and Global Banking Business Growth
It saw income for its wealth business surge 32% in January-March, thanks to heavy demand among customers for investment products. Income for its global banking business climbed 19% on increased capital markets activity, particularly bond issuance by corporate customers.
"Despite ongoing geopolitical tensions and global economic uncertainty, our advantaged market presence and disciplined risk management give us confidence in our ability to perform," Chief Executive Bill Winters said in a statement.
Credit Costs and Charges Related to Iran Conflict
Total credit costs for the quarter were $290 million.
The $190 million charge related to the Iran war compares with a similar $204 million one announced by Lloyds Banking Group and $90 million by Deutsche Bank on Wednesday.
Bank’s Cautious Position and Scenario Planning
The rising quarterly charge is a reflection of the bank’s cautious position after scenario planning, “rather than any underlying significant deterioration in credit,” Manus Costello, the bank's global head of investor relations, told Reuters.
Exposure of Global Banks to Middle East Conflict
StanChart and HSBC, which have both bet on the Middle East's increasing trade with Asia and other markets to fuel their growth, are two of the global banks most exposed to the war with Iran, according to company data and sector analysts.
Other Banks’ Responses
Singapore-based DBS also reported on Thursday, saying that stress tests showed its credit portfolio remained sound for now.
(Reporting by Selena Li in Hong Kong and Lawrence White in London; Editing by Edwina Gibbs)
