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StanChart Beats Profit Estimates as Loan Losses Ease
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StanChart Signals Return of Payouts as Loan Losses Ease
(Bloomberg) -- Standard Chartered Plc said loan losses eased and key Asian markets rebounded in the third quarter, while signaling it has ample room to fund growth and dividends next year.Adjusted pretax profit slid 40% to $745 million in the third quarter, topping a $502 million estimate from analysts, the bank said in a statement. Credit impairments eased for a second quarter and were $353 million in the period, almost half as low as estimated.The lender underlined the strength of its balance sheet, the latest bank to call for a return of payouts even as concerns mount about the wider economic outlook. Distributions were halted earlier this year after pressure from regulators.“We have no intention of sitting on excess capital for the sake of it,” Chief Financial Officer Andy Halford said in an interview with Bloomberg Television.The credit-driven beat comes against a backdrop of rising coronavirus infections and tougher lockdowns adding to investor worries about the economic hit from the pandemic. Standard Chartered shares fell 2% in Hong Kong.“Investors remain wary of bank shares and the only reason to buy would be for the dividends,” said Alex Wong, director of asset management at Ample Capital Ltd., noting any payout will likely be kept at low levels. Bank earnings “will continue to be weighed by the economy and low interest rates, and the expectations that the pandemic will last for a while in regions outside Asia will further cloud their outlook.Earnings from the firm’s investment banking operations tracked the volatility-driven surge that has buoyed Wall Street and its profits in Asia were steady from a year earlier. It’s the third straight quarter where the London-based, emerging-market focused bank has surpassed analysts’ estimates.“Our transformation is allowing us to weather the macroeconomic storm in good shape,” Chief Executive Officer Bill Winters said in the statement. “We believe we are well provided against credit impairment.”The lender also said credit costs will likely be lower in the second half of this year than in the first six months of 2020.The bank’s financial markets unit reported a 4% gain in operating income in the quarter. Its businesses in China and the rest of Asia held steady, while profits plunged for its units in Africa, Europe, the Middle East and the Americas.Asian economies’ success in containing the virus has enabled daily life and business activity to return toward normal at a pace that may be months away in Western countries with France and Germany reimposing lockdowns.Like HSBC, Standard Chartered’s business is heavily weighted towards Asia and greater China in particular. With U.S.-China tensions rising in the last year, the geopolitical backdrop for the banks has become increasingly perilous.CFO Halford said the lender was not becoming more uncomfortable operating in China but admitted it was “becoming watchful.”“We still believe that the huge growth potential is in that part of the world over the next decade,” he said. “We will remain very, very committed to the area.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
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StanChart Beats Profit Estimates as Loan Losses Ease
(Bloomberg) -- Standard Chartered Plc posted better-than-estimated earnings as loan losses eased and key Asian markets rebounded, saying it has ample room to fund growth and dividends next year.Adjusted pretax profit slid 40% in the third quarter to $745 million, topping a $502 million estimate from analysts, the bank said in a statement. Credit impairments eased for a second quarter and were $353 million in the period, almost half as low as estimated.Earnings from the firm’s investment banking operations tracked the volatility-driven surge that has buoyed Wall Street and its profits in Asia were steady from a year earlier. It’s the third straight quarter where the London-based, emerging-market focused bank has surpassed analysts’ estimates.“Our transformation is allowing us to weather the macroeconomic storm in good shape,” Chief Executive Officer Bill Winters said in the statement. “Our Wealth Management and Financial Markets businesses have good momentum, we are controlling costs to fund innovation, and we believe we are well provided against credit impairment.”Like its bigger rival HSBC Holdings Plc, StanChart signaled it would seek to resume paying money back to shareholders pending approval from U.K. regulators. The lender also said credit costs will likely be lower in the second half of this year than in the first six months of 2020.“We have ample capital headroom to fund both growth and dividends in 2021,” it said in an investor presentation.The bank’s financial markets unit reported a 4% gain in operating income in the quarter. Its businesses in China and the rest of Asia held steady, while profits plunged for its units in Africa, Europe, the Middle East and the Americas.Asian economies’ success in containing the virus has enabled daily life and business activity to return toward normal at a pace that may be months away in Western countries.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
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