Standard Chartered profits jump 20% thanks to turnaround plan

Revenues hit $3.9bn up from $3.5bn in the quarter - the lender's best performance since 2015

London-headquartered lender which generates more than half of its operating income in Asia said it had achieved 95 per cent of its targeted $2.9bn cost-efficiency savings (Reuters)

Internationally-focused British bank Standard Chartered grew profits 20 per cent in the first quarter to $1.26bn (£920m) as years of restructuring began to deliver results.

Revenues hit $3.9bn up from $3.5bn in the last three months of 2017 - Standard Chartered’s best performance since 2015, when chief executive Bill Winters began a four-year turnaround plan.

The London-headquartered lender which generates more than half of its operating income in Asia said it had achieved 95 per cent of its $2.9bn cost-efficiency target with nine months left to go.

Nicholas Hyett, equity analyst at Hargreaves Lansdown said recovery at the bank was now “widespread”.

“For some time we’ve been worried that Standard Chartered’s recovery was being driven by cost savings rather than income growth,” he said.

“Well that’s not an accusation you can level this time round. Income growth is right at the top end of target, and all the cost discipline over recent years means it’s dropping straight through to profits.”

“The fact Standard Chartered had reported double-digit income growth in the first few weeks of the quarter might leave some disappointed by these numbers, but we still feel they mark an important turning point.”

Standard Chartered was fined was fined $4m in March for breaking Singapore's rules on money laundering and terrorism financing.

In recent years, it has also registered big losses from bad debts but tighter decision-making in that area helped drive net impairment on financial assets down 29 percent in the latest quarter.

“This encouraging start to the year shows that we are firmly on the path laid out in February that will take us above an 8 per cent return on equity in the medium term,” Mr Winters said.

“We are determined to pass that milestone as soon as we can in a safe and sustainable manner.”

Standard Chartered has previously said it will look to turn its Frankfurt branch into a full subsidiary to serve clients after the UK leaves the EU.

Mr Winter warned in December that Brexit had already begun to make talented individuals less attracted to the UK, making it harder to find staff.

“London will take hits in the context of Brexit… I think big parts of the euro-denominated corporate banking business will be forced into Europe,” Mr Winters told the BBC.

“It’s possible that through the Brexit negotiations that there is some sort of extended passporting rule but none of us are expecting that quite frankly, or preparing for that,” he added.

Passporting refers to banks’ ability to sell their services across Europe from the UK while only being regulated by authorities here, rather than in each EU member state.

“We have to prepare for the worst… let’s hope for the best, but we’re prepared for the worst,” the chief executive said.