Trade war tensions between China and US are hitting growth in key markets, says British bank

FTSE 100-listed StanChart is one of the banks most exposed to worsening relations between the US and China, due to its focus on Asia

Standard Chartered has posted a healthy rise in third-quarter profits, but warned that "escalating trade tension" are affecting sentiment in its core emerging markets.

For the three months to the end of September, the Asia-focused bank reported underlying pre-tax profit of $1.1bn (£864m), up 31 per cent from $814m the year before. Operating income came in at $3.72bn, up 4 per cent.

However, the firm warned that tensions linked to a trade war between China and Donald Trump's US are starting to bite.

"Escalating trade tension and other macroeconomic factors impacting equity markets affected retail investor sentiment during the period in some of the group's markets, which slowed the rate of growth in wealth management," Standard Chartered said.

Income from wealth management income in the quarter sipped from $488m to $465m.

FTSE 100-listed Standard Chartered is one of the most exposed to worsening relations between the two superpowers as it books a large chunk of its business in Asia.

The US has imposed tariffs on $250bn worth of Chinese goods, with the Asian power retaliating with $110bn of duties on US goods.

Chief executive Bill Winters chose to focus on the numbers but touched on "geopolitical uncertainties".

"The results for the first nine months of the year reflect our focus on significantly improving profitability, balance sheet quality, conduct and financial returns," he said.

"Income growth year on year was slightly lower in the third quarter, impacted by Africa and the Middle East, and we remain alert to broader geopolitical uncertainties that have affected sentiment in some of our markets."

Nicholas Hyett, equity analyst at Hargreaves Lansdown said: “In the short term these numbers are better than expected, with underlying profits beating market expectations. However, the longer term concern is that Standard Chartered continues to shrink.

“Standard Chartered is lending more profitably, and with fewer defaults, but ultimately banks only make money on what they lend, and loans to customers are shrinking. That’s a touch surprising, since the bank’s emerging market customers are growing quickly and should be crying out for funding.

“The bank’s big strategic advantage is its position in fast growing emerging economies, and its needs to take advantage of that.”

PA