Standard Chartered Stumbles: Standard Chartered saw a dramatic 17% drop in its shares in London, prompting a trading halt. The bank reported a substantial decline in profits, largely attributed to its exposure to China’s banking and real estate sectors. The pre-tax profit for the third quarter tumbled by 33%, significantly below analysts’ expectations. The bank’s substantial losses in China, where it has focused much of its expansion, underline the challenges it faces in a slowing Chinese economy and mounting loan losses.
This is further exacerbated by the deepening crisis in China’s property market, with high-profile debt defaults and a lack of state support. While domestic Chinese banks have struggled with squeezed margins, foreign banks like Standard Chartered are now feeling the impact as sentiment worsens and the government pushes for lower mortgage rates.
The bank’s investment in China Bohai Bank took a $700 million hit, reflecting the struggling performance of the lender and the challenging economic environment. China Bohai Bank reported a significant drop in net interest income and an overall profit decline.
While these setbacks have rattled investors and defied expectations for a clean set of Q3 numbers, there is a silver lining in the bank’s underlying business performance, which remains robust, excluding impairment charges.
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The bank’s focus on rate-sensitive businesses has yielded positive results, with income from transaction banking and cash management services surging by 42%. Retail products have also seen strong income growth, supported by a 50% increase in deposit product income.
However, the financial markets trading division witnessed an 8% decline in income due to reduced market volatility, leading to decreased client interest in products related to interest rates, commodities, and foreign exchange.
Standard Chartered expresses confidence in achieving its return-on-tangible-equity targets for 2023 and 2024, set at 10% and 11%, respectively, although it has downgraded some other performance forecasts for the year.
The bank’s substantial exposure to China’s economic challenges underscores the risks and uncertainties faced by international financial institutions operating in a complex and evolving global landscape. As China’s property market crisis deepens, Standard Chartered’s strategic decisions and performance will continue to be closely monitored by investors and industry experts.
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Shares of Standard Chartered (UK:STAN) took a hit following the bank’s report of a significant decline in quarterly profit. The report also shed light on the challenges faced by China’s real estate and banking industries.
Shares of StanChart dropped by 12% in London on Thursday, causing a brief halt in trading. The bank reported an unexpected 33% decrease in profits, which was attributed to a significant loss of nearly $1 billion from its investments in China’s real estate and banking industries.
The London-listed stock took a hit, closing 12% lower after the U.K.-based bank reported a pre-tax profit of $633 million for Q3, marking a 54% drop from the previous year. The bank’s investment in China Bohai Bank was devalued by $697 million, contributing to the disappointing result.
What is Standard Chartered net worth?
A company’s value is often measured by its market capitalization, which is calculated by multiplying the current stock price by the number of outstanding shares. As of January 08, 2024, Standard Chartered’s net worth is $22.18B.