Emerging markets bank Standard Chartered PLC (LON:STAN) posted a 20% increase in first quarter profits on the back of another strong performance in Asia.
Statutory pre-tax profit rose to US$1.2bn in the three months to March 31 from US$990mln a year ago despite a US$70mln restructuring charge related to the exit of the Principal Finance business.
Excluding items, underlying pre-tax profit increased 20% to US$1.3bn from US$1.1bn last year.
Operating income gained 7% to US$3.8bn from US$3.5bn, driven by growth in Greater China and North Asia.
In the group's business segments, the star performers were transaction banking, mortgages, wealth management and deposits with an 18% combined increase in income.
Total income growth was at the top of the bank’s targeted 5-7% medium-term range.
Income growth disappoints
But shares fell 1.5% to 757p as investors were disappointed since the bank said in its full year earnings in February that it had started the year with double-digit income growth.
"The fact Standard Chartered had reported double digit income growth in the first few weeks of the quarter might leave some disappointed by these numbers, but we still feel they mark an important turning point," said Nicholas Hyett, equity analyst at Hargreaves Lansdown.
"The recovery is widespread and the bank’s medium term target for a return on equity of 8% or higher is within touching distance.”
READ: Standard Chartered resumes dividend but swing to full year profit still disappoints
Annualised underlying return on equity rose to 7.6% from 6.3% last year, putting the bank on track to reach its 8% medium-term target.
“We are determined to pass that milestone as soon as we can in a safe and sustainable manner, while continuing to improve our service to our new and existing clients,” said chief executive Bill Winters.
Standard Chartered said macro-economic conditions remain “favourable” but warned geopolitical risks persist.
To protect itself against such risks, the group strengthened its capital position with the common tier equity 1 ratio rising 26 basis points to 13.9% compared to the end of 2017.
“We are alert to continued geopolitical risks but we are now more resilient, and remain focused on improving our service to our clients while becoming more competitive,” the company said.