By Selena Li and Lawrence White
HONG KONG/LONDON, April 30 (Reuters) – Standard Chartered on Thursday posted a better-than-expected 17% gain in pretax profit on growth in its capital markets and wealth businesses, but logged a $190 million charge on expected losses from the impact of the Iran conflict.
The upbeat results, which propelled StanChart’s Hong Kong-listed shares 4% higher, highlight how European banks have so far been able to shrug off the direct impact of the war on their businesses.
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 a consensus estimate of $2.14 billion compiled by the bank.
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.
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.
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.
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.
Singapore-based DBS also reported on Thursday, saying that stress tests showed its credit portfolio remained sound for now.
Some other banks have been more downbeat. National Australia Bank, the country’s biggest business lender, said this month that it expects impairment charges to double to A$706 million ($503 million) in the first half due to the Iran war.
(Reporting by Selena Li in Hong Kong and Lawrence White in London; Editing by Edwina Gibbs)
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