UK bank Standard Chartered PLC (LON:STAN) beat analyst forecasts with its third quarter profits, but warnings over “under pressure” margins gave investors a fright.
The London-headquartered firm saw underlying pre-tax profits jump 78% to US$814mln (Q3 2016: US$458mln) in the three months ended 30 September, comfortably ahead of the US$809mln estimated by City number crunchers.
The improved profitability was largely down to a 42% fall in loan impairment which came in a US$348mln, which Standard Chartered said reflected better credit quality.
In the third quarter of last year the Liverpool shirt sponsor was hit with heavy losses from private equity and bad loans, something it avoided this time around.
"We have doubled profits compared to the same period last year as we continue to make progress in realising the potential of the group,” said group chief executive Bill Winters.
“We are transitioning our businesses to deliver higher quality income to improve sustainable returns.”
Shares slumped 4.6% to 715.6p immediately after the statement though, with the market picking up on a cautionary tone in Standard’s outlook.
The bank said the global economy is recovering, albeit at a slow pace, but warned that strong competition was keeping asset margins “under pressure”.