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July 31, 2018updated 02 Aug 2018 4:40am

Standard Chartered H1: turnaround continues but results a mixed bag

By Douglas Blakey

Standard Chartered has posted a 34% rise in profit before tax to $2.35bn for the six months to end June.

The positives first.

  • Standard Chartered H1 operating income of $7.6bn was up 6% and in line with medium-term guidance of 5-7% CAGR;
  • Net interest income increased 10% and the net interest margin improved 4 basis points to 1.59%;
  • Credit impairment of $293m was 50% lower year-on-year and 53% lower half-on-half;
  • Interim dividend resumed at $0.06 per share reflecting improved financial performance and strong capital.

Bill Winters, CEO said:“The Group performed steadily in the first half with encouraging progress on several fronts. Income from key areas of focus continues to grow strongly. We are investing in exciting new initiatives, and our strengthened risk discipline is paying off.

“Our return on equity improved to 6.7% as a result, reinforcing our confidence that we will exceed 8% in the medium term and underpinning the Board’s decision to resume the interim dividend”

Standard Chartered H1:  private banking loss

Less positive metrics included a loss at Standard Chartered’s private banking unit of $5m against a loss of $1m in the prior period, with income growth offset by higher expenses.

Standard Chartered’s private banking cost-income ratio is an eye-wateringly high 101%. The cost-income ratio at its retail banking unit also remains too high at 72%; the group cost-income ratio was 67% in the first half.

More than 60,000 new retail banking accounts were opened digitally in the first half of 2018.

Standard Chartered H1:  digital banking highlights

  • digitally active customers in the first half rose to 47% up from 40% at the end of 2016;
  • Standard Chartered is now partnering with more than 50 third parties, including Ant Financial for cross-border payments and PayKey for any-app access in Korea, and
  • The successful launch of the first digital-only bank in Côte d’Ivoire with plans to roll out across other markets including Nigeria, Kenya, Ghana as well as the Middle East and South Asia.

 

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