StanChart CEO Bill Winters’ love-hate relationship with trade wars, conflict

STANDARD Chartered chief executive Bill Winters has a lot on his mind; understandably so.

On top of ongoing conflicts in Europe and the Middle East, there is also rising trade tension between the US and China that looks poised to escalate with Donald Trump’s second term in the White House.

“I wake up every morning a little bit afraid to look at my phone and see what has happened overnight, and I go to bed at night a little bit afraid of what might happen overnight,” Winters told The Business Times in an exclusive interview.

Amid the uncertainties, StanChart is determined to maintain its strong capital position and liquid balance sheet.

“Things could go wrong, and we want to make sure that if things go wrong, we can sail through it, because it’s through those periods that the greatest opportunities are created,” he said.

While there is plenty to give pause for thought before and after he goes to bed, Winters added: “The rest of the day is nothing but good news.”

Stellar quarter

For its latest third quarter ended September, the London-headquartered bank reported pre-tax profit that more than doubled to US$1.7 billion, from US$633 million the year before. This trounced the US$1.5 billion average of 17 analyst estimates compiled by the bank.

This was bolstered by the absence of US$697 million in goodwill and other impairment incurred in Q3 last year relating to the group’s investment in its associate China Bohai Bank.

Underlying profit before tax – excluding certain one-off items – climbed 37 per cent to US$1.8 billion, from US$1.3 billion previously.

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Profit for the period surged to US$1.2 billion, from US$139 million the year prior.

Operating income rose 9 per cent to US$5 billion, led by a 33 per cent increase in non-net interest income to US$3.5 billion.

The increase was partially offset by a 23 per cent decline in net interest income to US$1.5 billion.

Net interest margin expanded 32 basis points to 1.95 per cent in the quarter.

The improvements in Q3 were led by a 32 per cent jump in StanChart’s wealth solutions business to US$694 million, on the back of broad-based growth across products, and supported by continued strong momentum in leading indicators of net new sales and affluent new-to-bank clients.

Meanwhile, its global markets segment rose 17 per cent to US$840 million, with strong performance in flow income and episodic income.

Thriving in uncertainty

The way Winters sees it, a little bit of tension and volatility could be good for business.

“Tensions have been rising steadily over the last six, seven years, and our business has done better and better and better,” he said. “A bit of stress and strain in the system is good, because it gives us more chances to add some value to our clients...

“My takeaway from that is that we actually thrive in an environment of uncertainty, because our job is to connect people with each other and to navigate around the obstacles that life throws up,” he added.

While there is the risk that geopolitical tensions could boil over – and upend businesses and trade – Winters believes it is unlikely to happen.

“If there’s one thing we’ve seen with Trump, it is that he prefers to avoid real conflict. He talks about conflict a lot, but he rarely does anything,” Winters said. “And I don’t think China has an intention to escalate this conflict.”

“I don’t think there’s anything (in particular) that feels very risky at the moment, but any of those things could go the wrong direction,” he added.