Standard Chartered PLC (LON:STAN) surprised the market with an unscheduled trading update today which showed a near doubling in its first-quarter profits as its restructuring strategy starts to pay off.
In an interim management statement, the emerging markets-focused lender reported a pre-tax profit of US$1.0bn for the quarter ended March 31, up 94% year-on-year.
Much of the uplift in profit was a result of large asset write-downs in the company’s Principal Finance business in 2016, excluding which profits rose by 26% year-on-year.
READ: Lack of dividend clouds Standard Chartered's return to profits in 2016
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StanChart said its group income grew by 8% to US$3.6bn, or by 4% excluding Principal Finance.
The bank also benefited from low impairment charges, which were down 58% to US$198mln, but said this was unusually low, and it remains cautious on credit conditions.
Making good progress improving the performance of the group
Bill Winters, StanChart’s group chief executive, said: ”We are making good progress improving the performance of the Group. The significantly increased profit before tax results from particularly low loan impairment and our focus on cost control”.
He added: “Competition in our markets remains intense but our investments in the business and focus on our clients is making us more competitive and will enable us to deliver sustainable income growth over time."
In late morning trading, StanChart shares were strong FTSE 100 gainers, up 2.6%, or 19.1p at 747.2p.
“Emerging market focus could in the long term prove to be an ace in the hole”
Laith Khalaf, senior analyst at Hargreaves Lansdown said: ‘The top and bottom line are moving in the right direction at Standard Chartered, which has benefited from a bit of self-help and some favourable macro-economic tailwinds.
“Costs are being contained, and the bank’s emerging market focus could in the long term prove to be an ace in the hole.”
He added; “By 2030, 73% of the world’s middle class population will be in Standard Chartered’s footprint, compared with 36% in 2009, so the market opportunity is there, if the bank can capitalise on it.”