Standard Chartered Q3 profit jumps 16%

Standard Chartered posted a 16% jump in third-quarter pre-tax profit on Wednesday despite a challenging environment but cautioned over "growing headwinds".

In the three months to 30 September, underlying pre-tax profit rose to $1.2bn from $1.1bn in the third quarter of last year, while statutory pre-tax profit was up 4% to $1.1bn. Analysts had been expecting underlying pre-tax profit of $1bn.

There was a particularly strong performance in corporate and institutional banking, where operating income increased 13% to $1.9bn, while income in private banking grew 14% to $145m and retail banking income was up 4% at $1.3bn.

Operating income in Greater China and North Asia - which contribute the bulk of income by region - was up 2% during the quarter to $1.6bn, while income in Europe and the Americas rose 19% to $467m.

Chief executive Bill Winters said: "Our strategy of the last few years has progressively created a stronger and more resilient business as evidenced by a 16% increase in underlying profits in the third quarter.

"The continuing execution of that strategy remains our priority, enabling us to face the more challenging external environment confidently, determined to continuously enhance our service to our clients, our performance-oriented culture and our profitability."

The bank said its Common equity tier 1 ratio remains within its 13-14% target range at 13.5%.

"We continue to focus on executing our strategy with the objective of delivering a 10% return on tangible equity by 2021 but there are growing headwinds from the combination of continuing geopolitical tensions and expectations of declining near-term global growth and interest rates," it said.

At 0940 GMT, the shares were up 2.4% at 711.40p.

Shore Capital analyst Gary Greenwood said: "We are pleasantly surprised by the strength of Standard Chartered’s performance during the period. To outperform expectations on revenue in a difficult operating environment is no mean feat. The group also seems to have a strong handle on costs, albeit management notes that investment is expected to increase in Q4 and this period will also include the UK bank levy accrual.

"Despite a cautious outlook, we remain positive on Standard Chartered’s shares reflecting consensus forecasts that still appear too conservative and a somewhat depressed valuation."