Asian profits rise at Standard Chartered as wealth management outperforms

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Asian profits rise at Standard Chartered as wealth management outperforms

Standard Chartered’s first quarter results provide another sign that the banking sector in Asia is on the road to recovery. Profits were up 18% year-on-year globally to $1,446m, and they rose 21% in Asia to $1,234. Asia accounted for 85% of Stan Chart’s profits.

“Economic recovery advanced in many of our markets leading to improved transaction volumes and profitability,” Bill Winters, Standard Chartered’s CEO, said in a statement. “Despite low interest rates, we expect our underlying momentum to lead to income growth in the second half of 2021,” he added.

The news comes two days after UBS announced a 17% uptick in its Asian profits to $468m. In Credit Suisse’s APAC division, Q1 profits increased 140% to CHF 524m ($576m). US banks break out their regional figures by revenues rather than profits. Morgan Stanley generated $2,369m in Q1 Asian revenues, up 40%, while Goldman Sachs made $2,166m, an increase of 48%. HSBC and Citi were the outliers, with Asian profits flatlining at the former, and Asia revenues falling 7% at the latter.

Stan Chart’s relatively strong Q1 performance was partly led by wealth management, which had its “best quarter ever”, CEO Winters said. Operating income in wealth was up 21%, with a particularly strong performance in FX, equities and structured notes, “supplemented by clients increasingly using digital channels”, according to the bank’s earnings report.

This will be particularly pleasing for Winters. In late February, Stan Chart prioritised wealth management as part of its transformation plans. Stan Chart wants to be among the top three wealth brands in its main markets, which include Hong Kong and Singapore.

Within the financial markets unit, credit traders were the stars of Q1. Operating income rebounded to $132m compared to a $25m loss a year previously. There was also strong growth in structured finance, financing solutions and issuance, and commodities.

Not everyone at Stan Chart enjoyed the opening quarter. Macro trading declined 19% from lower FX and rates income due to reduced client demand and lower trading gains compared to the “exceptional volatility” experienced in Q1 2020. Cash management was one of the worst performers at SCB, with income down 32% because of “significant margin compression due to the low interest rate environment”.

There’s potentially good news for technology jobs at Stan Chart. The bank expects expenses to increase slightly this year as it continues to invest in enhancing its digital capabilities. But on the retail side, the firm plans to halve its global branch network to about 400 branches as part of its cost-control efforts. It will also reduce its office space by about one-third over the next five years. Bloomberg reports that this may include trimming space in the bank’s flagship Singapore office in Marina Bay Financial Tower 1.

Standard Chartered also plans to consider potential acquisitions as rival Citi exits consumer banking in 13 markets in Asia, Europe and the Middle East.

Image: unsplash

Have a confidential story, tip, or comment you’d like to share? Email: smortlock@efinancialcareers.com or Telegram: @simonmortlock. You can also follow me on LinkedIn.

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