Standard Chartered’s profit growth driven by wealth management

Rapid growth at Standard Chartered’s “gem” of a wealth management business boosted quarterly profits at the emerging markets-focused bank and prompted it to lift its target for investor returns by $3 billion.
Shares in the FTSE 100-listed lender climbed 26p, or 3 per cent, to 902p after its pre-tax profits in the three months to the end of September climbed to $1.7 billion, surpassing the $1.5 billion expected by City analysts and well above the $633 million it reported a year earlier, when it took a hit on its Chinese exposure.
It was buoyed by a record performance at its wealth solutions unit, where revenues surged by 32 per cent to $694 million. Another bright spot was its global markets division, where income increased by 17 per cent to $840 million.
In another fillip to shareholders, the better-than-expected figures led the bank to upgrade its guidance for its future financial performance, with the lender now planning to hand back at least $8 billion to its shareholders by 2026, having previously pencilled in $5 billion of returns. It also lifted its guidance for adjusted income growth this year to “towards” 10 per cent, up from the more than 7 per cent it predicted in July.
Bill Winters, chief executive, said it was a “strong performance”.
It cements a turnaround at the bank and alleviates the pressure on Winters, 63, who had conceded in February that Standard Chartered’s share price was “crap”. The stock has gained 37 per cent so far this year, approaching the 984¼p level at which the shares stood when Winters, a former JPMorgan banker, became boss in June 2015.
The lender was created 55 years ago from a merger of Chartered Bank of India, Australia and China and Standard Bank of British South Africa. It is headquartered in London but its sprawling operations focus on the fast-growing economies of Asia, Africa and the Middle East.
Investors were exasperated by lacklustre returns from the group when Winters took charge more than nine years ago. He cut thousands of jobs to assuage shareholder frustration but the share price continued to languish and left it vulnerable to a takeover, something First Abu Dhabi Bank explored early last year. However, strong results in recent months, including forecast-beating half-year profits in July, have galvanised its shares, as has a fresh round of cost-cutting announced in February to save $1.5 billion over three years.
Bosses now plan to capitalise on the demand for its wealth services, with Standard Chartered announcing on Wednesday that it would invest $1.5 billion in this area over five years to grow the unit, partly by hiring more relationship managers and investment advisers in Singapore, Hong Kong and Dubai.
Diego De Giorgi, finance chief, called the wealth business the lender’s “gem”. It plans to fund this investment by “reshaping” its mass retail division, which is likely to include cutting some single-product-lending relationships and portfolios. It will also look at offloading a “small number” of non-core businesses.
While Standard Chartered is a big player in the Middle East, De Giorgi, 54, said it had “very little exposure” either in terms of employees or lending to the areas currently riven by conflict in the region.