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SINGAPORE (Reuters) -Standard Chartered reported a 40% increase in quarterly profit as higher interest rates boosted the emerging markets-focused bank’s income and gave it ammunition to upgrade its revenue outlook.
The bank expects income to grow 13% this year instead of a previously forecast 10%.
“We remain confident in the delivery of our 2024 financial targets,” CEO Bill Winters said in a statement on Wednesday.
The profit growth and improved guidance from the London-headquartered bank showed how rising interest rates are lifting banks’ profits, even as the global economy struggles amid volatile energy costs and the impact of the Russia-Ukraine war.
The lender, which earns most of its revenue in Asia, said statutory pre-tax profit rose to $1.39 billion in the three months to Sept. 30 from $996 million a year earlier and versus the $1.05 billion average estimate of 14 analysts, as compiled by the bank.
StanChart, present in 59 markets with 85,000 staff, mainly relies on capturing trade flows between its key markets of Asia, Africa and the Middle East but it lacks the heft of larger rivals in commercial banking and investment banking.
Winters, who took charge seven years ago, has tried to restore growth while building a portfolio of digital assets in recent years, after repairing the bank’s balance sheet and slashing thousands of jobs early in his tenure.
Still, the company’s share price has shed about 45% during his reign, though it has risen about 24% so far this year and outperformed peers.
“Our performance this year has been strong, and the pace of economic recovery in many of our footprint markets is encouraging, notwithstanding increasing recessionary pressures in certain Western markets,” Winters said.
Central banks around the world have been tightening monetary policy this year to contain mounting inflation.
Rising rates traditionally buoy bank profits as they can make more from lending than the sums they pay to savers, but the current picture is clouded by the threat of an economic downturn that could cause hefty losses for lenders.
StanChart’s statutory credit impairment charges more than doubled to $227 million from a year earlier, reflecting weakness in key economies. The charges includes $130 million for exposure to China commercial real estates, among others.
