Standard Chartered (LSE:STAN) delivered a robust quarterly performance, beating profit expectations by a wide margin as strong non-interest income helped counterbalance margin compression.
The bank reported a 23% upside in pre-tax profit compared to market forecasts—17% on an adjusted basis excluding a $93 million one-off gain from its Solv India deal. Total revenue came in 4% above analyst estimates, supported largely by gains in non-interest income. Meanwhile, operating expenses rose 2% above expectations.
A key highlight of the quarter was the low level of credit losses, aided by a $44 million release in provisions within the Corporate & Institutional Banking unit. In a move welcomed by shareholders, Standard Chartered announced a $1.3 billion share repurchase program, slightly surpassing the expected $1.25 billion.
Tangible net asset value per share increased 16% year-over-year, reflecting earnings growth and share count reduction. The bank’s Common Equity Tier 1 (CET1) capital ratio was 14.3%, 10 basis points above consensus and up 50 basis points from the previous quarter.
Revised full-year revenue guidance now targets growth at the lower end of the 5–7% range, improving from previous projections that fell short of that band. Even at the lower bound, this implies a revenue beat of roughly $227 million versus consensus for the full year.
Net interest income (NII) is forecast to decline slightly on a year-over-year basis, with a 2% drop expected. The bank’s net interest margin fell to 198 basis points, down 14 basis points from Q1 and 5 basis points lower than the same period last year. NII missed estimates by 2% and declined 3% sequentially due to interest rate impacts and lower deposit pass-through.
In contrast, non-interest income surged 8% sequentially and 33% compared to the prior year, exceeding expectations by 16%. Stripping out the Solv India impact, it still grew 22% year-over-year and topped consensus by 6%. Strong performance in the Global Markets business—up 44% year-over-year, driven by a 52% increase in macro trading—was a major contributor. Wealth Solutions also performed well, with 20% growth from the same period last year.
Operating costs rose 6% compared to the previous year, reflecting business expansion, inflationary pressures, FX effects, and higher deposit insurance expenses. The cost-to-income ratio climbed to 55%, up a percentage point from the prior quarter.
Credit impairments were lower than expected, totaling $117 million—53% below consensus and 47% less than Q1. The cost of risk was calculated at 16 basis points, though the bank continues to guide for 30–35 basis points over the 2025–2026 horizon.
Standard Chartered’s affluent banking division attracted $16 billion in net new assets during the quarter. The Hong Kong dollar now accounts for 30% of the bank’s interest rate sensitivity following a surge in deposits.
Looking ahead, management reaffirmed its target of keeping 2026 costs below $12.3 billion, assuming constant currency levels.
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