• April 25, 2017
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Standard Chartered releases Q1 2017 results

Standard Chartered PLC (the Group) releases its Interim Management Statement for the quarter ended 31 March 2017. All figures are presented on an underlying basis unless otherwise stated. Commenting on the first quarter performance, Bill Winters, Group Chief Executive, said:

“We are making good progress improving the performance of the Group. The significantly increased profit before tax results from particularly low loan impairment and our focus on cost control. Competition in our markets remains intense but our investments in the business and focus on our clients is making us more competitive and will enable us to deliver sustainable income growth over time.”

First quarter financial performance highlights

• Income of $3.6 billion was up 8 per cent year-on-year or 4 per cent excluding prior year Principal Finance losses
• Expenses of $2.4 billion were well controlled and consistent with the run-rate seen in 2016 as a whole
• Loan impairment of $198 million was particularly low, down 58 per cent year-on-year
• Profit before tax of $1.0 billion was up 94 per cent year-on-year or 26 per cent excluding Principal Finance
• After restructuring charges of $55 million, statutory profit before tax was $1.0 billion (Q1 2016: $0.5 billion)

Resilient balance sheet and strong capital

• Net loans and advances to customers were up 5 per cent from the end of the year to $270 billion
• Customer accounts were up 5 per cent in the quarter to $398 billion
• The advances-to-deposits ratio was 67.8 per cent at the end of the quarter
• The Group already meets its expected minimum requirement for own funds and eligible liabilities (MREL) for 2022
• Common Equity Tier 1 ratio of 13.8 per cent was up 20 basis points since the end of 2016
• The Group issued $1 billion of Additional Tier 1 capital in January 2017

Summary and outlook

• Higher profit before tax was the result of particularly low loan impairment and good cost control
• Actions are underway to sustainably improve income trends
• Gross cost efficiencies are continuing to create investment capacity
• Overall credit quality remained stable though stresses remain in certain parts of the portfolio
• Competition in our markets remains intense but the Group continues to invest to create opportunities for growth

Income of $3.6 billion was 8 per cent higher year-on-year or 4 per cent higher excluding Principal Finance losses in the first quarter of 2016. Income was up 2 per cent quarter-on-quarter reflecting higher income from Asset and Liability Management partly offset by the timing of Corporate Finance transactions and weaker Foreign Exchange income. Other operating expenses were up 3 per cent year-on-year demonstrating our strong focus on cost control. Regulatory costs were up 27 per cent year-on-year and 2 per cent quarter-on-quarter. The Group is on track to deliver an additional $1.1 billion in planned gross costs efficiencies by the end of 2018 that will fund further investment to create opportunities for growth with clients and to enhance the Group’s controls and compliance infrastructure.

Loan impairment of $198 million was 58 per cent lower than in the same period last year and 71 per cent lower than in the previous quarter. Lower Corporate & Institutional Banking and Commercial Banking loan impairment reflected in part the non-repeat of provisions taken against the diamonds and jewellery sector in the fourth quarter of 2016. Retail Banking loan impairment was lower than the run-rate seen in the second half of 2016. While overall credit quality has improved compared to the same period last year, loan impairments were unusually low and we remain cautious about credit conditions in our markets.

Other impairment of $53 million excludes Principal Finance losses and as a result was lower by $70 million year-onyear and around half the level seen in the fourth quarter of 2016. Profit from associates and joint ventures of $66 million was higher both year-on-year and quarter-on-quarter in part driven by an improvement in the performance of the Group’s joint venture in Indonesia, reflecting actions taken there to stabilise the business. As a result, underlying profit before tax of $1.0 billion was 94 per cent higher year-on-year or 26 per cent higher excluding Principal Finance. Statutory profit before tax of $1.0 billion included restructuring charges of $55 million relating primarily to Principal Finance losses. This takes total restructuring charges since the announcement of our strategic review in November 2015 to $2.8 billion.

Re-disseminated by The Asian Banker