Standard Chartered profit jumps 17%, books US$190 million charge on Iran war

[HONG KONG/LONDON] Standard Chartered said on Thursday (Apr 30) that first-quarter pretax profit climbed a better-than-expected 17 per cent on growth in its capital markets and wealth businesses, but it did log a US$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.

StanChart, which earns most of its revenue in Asia, Africa and the Middle East, reported pretax profit for the quarter of US$2.45 billion. That compares with US$2.10 billion a year earlier and the US$2.14 billion average of 15 analyst estimates compiled by the bank.

It saw income for its wealth business surge 32 per cent in January to March, thanks to heavy demand among customers for investment products. Income for its global banking business climbed 19 per cent 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.

Total credit costs for the quarter were US$290 million.

The US$190 million charge related to the Iran war compares with a similar US$204 million one announced by Lloyds Banking Group and US$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”, said Manus Costello, the bank’s global head of investor relations.

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.

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Singapore-based DBS also reported on Thursday, saying that stress tests showed its credit portfolio remained sound for now. REUTERS