Standard Chartered (LSE:STAN) reported fourth-quarter results that fell short of market expectations as increased costs and weaker market-related income offset continued strength in wealth management and deposit growth, sending the bank’s shares lower.
The Asia-focused lender posted underlying pre-tax profit of $1.24 billion for the three months to 31 December, below the $1.38 billion consensus estimate compiled by Bloomberg. Despite the miss, profit still rose 18% year-on-year from $1.05 billion. Operating income remained broadly stable at $4.85 billion compared with $4.83 billion in the same period a year earlier.
Analysts at Jefferies attributed much of the shortfall to weaker episodic income within the Financial Markets division, estimating that deal timing and market-related inventory effects reduced income by roughly $150 million versus expectations. This softer performance partly offset solid growth in wealth solutions and global banking activities.
Net interest income declined 1% year-on-year to approximately $2.95 billion, reflecting margin pressure from lower interest rates. The bank reported a net interest margin of 209 basis points, up 15 basis points quarter-on-quarter but 11 basis points lower than a year earlier. Jefferies noted that net interest income nevertheless exceeded its forecasts, supported by higher HIBOR rates, improved CASA pass-through and favourable treasury income timing. Deposits increased 12% year-on-year, exceeding consensus expectations by $14.7 billion.
Operating expenses rose 5% to $3.43 billion, driven by ongoing investment spending, transformation initiatives and higher performance-related compensation. The figure also included $121 million linked to regulatory changes. Excluding this item, Jefferies estimated costs rose 4% year-on-year and 12% quarter-on-quarter, with the cost-to-income ratio reaching 71%, up 13 percentage points from the previous quarter.
Credit impairment charges increased to $145 million from $130 million a year earlier, mainly reflecting retail provisions. Analysts estimated the quarter’s cost of risk at roughly 20 basis points, while noting reduced retail impairments following portfolio optimisation measures.
Chief executive Bill Winters said the group continued to benefit from structural growth trends across its Asia, Africa and Middle East markets and had begun 2026 on a solid footing. Wealth performance remained steady, with investment product income rising 22% year-on-year and new money inflows of $10 billion, broadly unchanged from the prior year.
The bank ended the quarter with a common equity tier 1 ratio of 14.1%, in line with expectations and 10 basis points lower sequentially. Tangible net asset value per share increased 12% year-on-year to 1,730 cents. Standard Chartered also announced a $1.5 billion share buyback programme, exceeding consensus expectations of $1.39 billion.
For the full year, underlying pre-tax profit rose 18% to $7.9 billion from $6.8 billion, while return on tangible equity improved to 14.7% from 11.7%. The board proposed a final dividend of 49 cents per share, bringing the total annual payout to 61 cents — a 65% increase year-on-year.
Looking ahead, the bank has shifted its reporting and guidance to a reported basis. For 2026, it expects net interest income to remain broadly flat at constant currency, with reported revenue toward the lower end of a 5–7% growth range. Reported costs are forecast to be broadly unchanged year-on-year, while management targets a reported return on tangible equity above 12%, equivalent to roughly 13.5% on an underlying basis according to Jefferies. The bank added that trading in the first quarter has started strongly across corporate and investment banking as well as wealth management, with analysts viewing the 2026 outlook as modestly ahead of consensus expectations.
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