Standard Chartered Upgrades Performance Targets

By Selena Li and Lawrence White
HONG KONG/LONDON (Reuters) – Standard Chartered (OTC:SCBFF) has upgraded its key performance targets following a quarterly profit that exceeded market estimates. The bank announced plans to double down on its wealth business while reducing its retail banking segment to enhance returns.

Quarterly Profit Insights

The bank reported a third-quarter pretax profit of $1.72 billion, surpassing the average analyst forecast of $1.49 billion and significantly higher than last year's $633 million profit, which was impacted by a $1 billion loss from its exposure to China.

Financial Outlook

Income growth for the year is now projected to be around 10%, up from a prior estimate of 7%. Standard Chartered also plans to return a minimum of $8 billion to shareholders over the period from 2024 to 2026, an increase from the previously announced $5 billion.

Business Restructuring

This improved performance aligns with Standard Chartered’s strategic restructuring, similar to rival HSBC, focusing on affluent individuals and significant cross-border businesses likely to yield higher fees. The bank will double its investment in the wealth sector, committing $1.5 billion over five years to enhance its team of relationship managers and investment advisers.

To fund this growth, Standard Chartered is cutting back on its mass retail operations, exploring the sale of several non-strategic businesses. Notably, it did not announce a new share buyback this quarter, in contrast to HSBC.

Stock Performance

Following the results, Standard Chartered's shares rose 3.3% in Hong Kong, reflecting a strong performance in profitability despite declining rates. Its shares in London have surged 31% this year, outperforming HSBC's 15% increase. HSBC reported a 10% year-on-year rise in quarterly profits on Tuesday.

Focus on Wealth Business

Revenue from its wealth solutions unit increased by 32% to $694 million, representing the highest growth among its major business divisions and validating the heavy investment in attracting affluent clientele. The bank is strategically exiting wealth markets that do not align with its focus, such as divesting its personal loan business in India to Kotak Mahindra Bank.

Group CEO Bill Winters emphasized the commitment to reshape the mass retail business toward affluent and international clients. The bank's global markets business also experienced a 16% growth to $840 million, marking the second-largest growth across its main units.

In terms of competitiveness within corporate and investment banking (CIB), Standard Chartered has initiated a reorganization to focus on larger global clients, leveraging its cross-border capabilities. A new banking team within the CIB division was established last month to enhance cross-border business, and the industries coverage team was merged with the mergers and acquisitions advisory team in August.