StanChart third-quarter profit slides, but beats estimates on improving loan loss outlook

In this news, we discuss the StanChart third-quarter profit slides, but beats estimates on improving loan loss outlook.

HONG KONG / LONDON (Reuters) – Standard Chartered STAN.L posted a 40% drop in quarterly profit weaker than expected as the lender lowered its expectations for loan losses linked to the coronavirus pandemic, also saying that customer demand will likely increase next year.

Credit impairment charges were $ 358 million for the quarter ended September 30, up 27% from the same period last year, but well below $ 611 million in the previous quarter and a consensus estimate of $ 614 million.

StanChart said the results reinforced his view that credit write-downs will be lower in the second half of the year than the first, with lenders around the world reporting a stabilization in loan losses.

The key question now for analysts and investors is whether the various government support measures, such as emergency loans and holiday programs, have truly mitigated the losses, or have simply pushed them back. next year.

“Given the extreme economic pressures associated with the persistence of COVID-19, partially addressed through the effectiveness of government support measures, it is not possible to reliably predict the quantum or timing of future alterations.” , StanChart said.

The decline in provisions helped it post underlying pre-tax profit of $ 745 million, above the average of $ 502 million analysts’ forecasts compiled by the bank.

“Lower interest rates continue to impact revenues, but we remain well positioned to meet our financial goals, albeit with some delay,” CEO Bill Winters said in an income statement .

Hong Kong-listed StanChart’s 2888.HK shares fell 1% after the results, underperforming the market as a whole.

The pandemic has created a perfect storm for many global banks, pushing them to cut costs and restructure further as bad loans rise, lines of credit are squeezed and interest rates are at their lowest or highest level. even become negative.

StanChart, which focuses on Asia, Africa and the Middle East, announced last month that it would merge several companies and reduce its number of senior executives.

StanChart and rival HSBC HSBA.L, whose shares have almost halved this year, also grapple with political uncertainty in Hong Kong – a key market for both.

Reporting by Sumeet Chatterjee and Lawrence White; Edited by Edwina Gibbs

Original © Thomson Reuters

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