Standard Chartered is likely to hike bonuses for 2021 as its third quarter profit rose 129% to $435m year-on-year, driven by lower provisions for bad debts, and rising income in financial markets and trade.
Operating expenses were up 5%, “reflecting an increase in performance related pay accruals”, according to the bank’s financial results. However, SCB said performance related pay (i.e. bonuses) was “abnormally low” in 2020, so the current rise is coming off a low base.
Still, the increase in accruals suggests that Stan Chart bankers won’t be left disappointed in the next bonus round, as some were when they received their 2020 payments earlier this year. Managing directors took a 34% year-on-year hit to their 2020 bonuses, according to Stan Chart’s 2020 financial results. Average bonuses paid to people below MD were cut by 27% globally.
While bonuses will be based on whole-year performance, the Q3 performance of some teams within the Asia-focused bank hints at where it may focus its bonuses.
CEO Bill Winters singled out the “strong performance in our financial markets and trade businesses and ongoing positive momentum in wealth management”. Financial markets operating income increased 11%, as macro trading, credit markets, and structured finance all registered revenue gains.
Income from trade finance increased 18% “primarily due to double-digit growth in balances”.
Wealth management was down 2%, but that was mainly driven by an accelerated recognition of an annual bancassurance bonus. Excluding this, wealth income rose 3% year-on-year in Q3, with double-digit growth in funds, structured notes and wealth lending. 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. The bank is adding to its headcount of relationship managers in both cities.
Meanwhile, technologists enjoyed a busy quarter at Standard Chartered, with “sustained increased investment into transformational digital initiatives”. Stan Chart also doubled “digital ventures” expenses in the first nine months of the year, referring to SC Ventures, a business unit that builds and invests in disruptive financial technology, including the Hong Kong-based virtual bank Mox.
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