Standard Chartered income down but business volumes remain strong
(1 May 2015 – Asia) Standard Chartered is on track to continue it’s cost-cutting and de-risk measures while building capital even as trading conditions remain challenging.
Group chief executive Peter Sands said; “We are on schedule to deliver a Common Equity Tier 1 ratio of between 11 percent and 12 percent and sustainable cost saves in excess of US$400 million (A$500.6 million) in 2015.
“Underlying business volumes generally remain strong.
“We remain confident in the strength of our franchise, the opportunities in our markets and in our ability to build returns to an attractive level in the medium term.”
First quarter income to 31 March was down by 1 percent on a constant currency basis.
Headline income of US$4.4 billion was down 4 percent, 1 percent of which was the result of business exits.
Operating expenses, excluding increased regulatory costs, were tightly managed and reduced by 3 percent.
However, continued significant investment in improving conduct and compliance systems and processes mean overall operating expenses increased 1 percent.
We remain on track to deliver in excess of US$400 million in sustainable productivity improvements in 2015.
Loan impairment of US$476 million was lower than in the previous two quarters, although US$211 million up on the equivalent quarter of last year.
Excluding the benefit of business disposals, loan impairment from Retail Clients was down 14 percent year on year, benefitting from actions taken to de-risk the portfolio.
Loan impairment from Corporate and Institutional Clients, while down on the previous two quarters, remains elevated.
As a result, Group operating profit in the quarter of US$1.5 billion was down 22 percent year on year.
Customer loans and advances increased by 2 percent in the first quarter, although were down 1 percent excluding the impact of short tenor IPO financing over the quarter end.
Group customer deposits were down 3 percent compared to the end of 2014 driven by management action to reduce higher cost surplus deposits.
Income from Corporate and Institutional Clients in the first quarter was US$2.5 billion, down 5 percent.
This reflects actions taken to reduce low returning Risk Weighted Assets, lower levels of Corporate Finance activity, and timing differences in Principal Finance.
Income from Commercial Clients of US$259 million was down 17 percent year-on-year, the result of lower client demand for FX hedging products, portfolio de-risking and business exits.
Income from Private Banking Clients was up slightly on a continuing operations basis but down 4 percent year on year to US$ 152 million following the exit of Standard Chartered’s operations in Geneva.
Income from Retail Clients of US$1.5 billion was up 2 percent.
The benefit in Wealth Management from the Prudential Bancassurance partnership and a continuing shift towards Priority Clients offset the impact of portfolio de-risking decisions.
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