Standard Chartered to double investment in wealth management as profits rise

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Standard Chartered said it would double investment in its wealth management business after pre-tax profits rose in the third quarter.

The UK-based bank reported underlying profits before tax of $1.8bn, up from $1.3bn a year earlier and above analysts’ estimates of $1.6bn. A 32 per cent rise in revenue from the wealth business, which had a record quarter, boosted results.

Its reported pre-tax profits were $1.7bn, up from $633mn a year ago when the figure accounted for a near-$700mn impairment charge on its stake in China Bohai Bank, a mainland lender.

“We have delivered a strong performance,” said chief executive Bill Winters, who has run the bank since 2015.

The emerging markets-focused bank said it would invest about $1.5bn over five years in its wealth business, including hiring more relationship managers and investment advisers to work for affluent clients — twice what it had previously planned to invest in the business.

That will be funded by shifting its mass retail banking business to focus on “building a strong pipeline” of affluent and international clients for the future, it said.

Within its corporate and investment banking operations, StanChart will focus on bigger global clients. “We will reduce the number of clients whose needs do not play directly to our strengths,” the bank said.

StanChart is considering the sale of “a small number of” businesses that are not core to its aim of working for international institutions and wealthy individuals.

The bank is under pressure to cut costs and grow in areas less dependent on interest income, as rates start to fall after a series of rises boosted its profitability in recent years.

StanChart raised its revenue guidance and targets for return on tangible equity, a key measure of profitability, as well as distributions to shareholders. It said it now aimed to return $8bn to shareholders between 2024 and 2026, up from a previous goal of at least $5bn.

Net interest income rose 9 per cent, which the bank said was partly due to hedging. Its closely watched net interest margin, the difference between the interest received on loans and the rate paid for deposits, rose to 2 per cent, up from 1.6 per cent a year ago.

The bank’s underlying return on tangible equity was 10.8 per cent in the quarter, more than the 7 per cent a year earlier and beating analysts’ expectations of 10.3 per cent.

StanChart shares are now just 3 per cent below their level when Winters took the helm in June 2015, having risen 36 per cent since the start of this year.

The bank has been under pressure to boost its stock, since it trades at a discount to book value. In February, Winters lamented the bank’s “crap” share price, saying it did not reflect its true value.