Standard Chartered Earnings Beat, Downplays Risks from China Property - Update
29 Julho 2022 - 12:05PM
Dow Jones News
By Elaine Yu
HONG KONG-Standard Chartered PLC reported better-than-expected
profit for the second quarter while unveiling a new share buyback
plan aimed at boosting shareholder returns.
The London-headquartered lender on Friday reported an underlying
pretax profit of $1.3 billion, up 7% year-on-year and beating an
estimate of $1.06 billion compiled by the bank.
The results were helped by its Asia-focused position as the bank
benefited from both the Federal Reserve's interest rate increases
and its core markets being more insulated from volatile
macroeconomic conditions in the West. The bank generated 72.5% of
its underlying pretax profit from Asia in the three months-ended
June 30.
Buoyed by a rising interest rates environment, the bank's
net-interest income rose 8% to $3.64 billion for the first six
months of this year and net-interest margin is up 10 basis points
year-on-year during that period.
The bank also said on Friday it will buy back $500 million worth
of shares, on the back of a $750 million buyback program completed
earlier this year. It plans to return more than $5 billion to
shareholders over the next three years.
The results were partly offset by $267 million in credit
impairment over the last two quarters owing to the bank's exposure
to China's real-estate sector and the downgrade of Sri Lanka's
long-term foreign currency sovereign rating. By comparison, the
same period last year saw a net release of $47 million in credit
impairment.
China's property downturn has amplified the asset risks for Hong
Kong's banks that have exposure to the mainland's real-estate
sector, including Standard Chartered's subsidiary in Hong Kong,
Moody's Investors Service said in a report this month. Authorities
in China have moved to quash a revolt among homeowners who have
threatened to renege on mortgages on unfinished properties as the
country faces growing pressure to address its property crisis.
Benjamin Hung, Standard Chartered's Asia Chief Executive
Officer, said in a press conference on Friday the bank hadn't been
affected by the mortgage boycott because its main focus is on
China's large and comparatively wealthy first-tier and second-tier
cities. The bank's $3.7 billion net exposure to the country's
real-estate sector is only a small part of its $64 billion exposure
in China overall, Mr. Hung said.
He said the bank's strategy hinges on China's continued opening
up of its financial and capital markets, rather than its overall
economic growth. "That to me is the far more important driver of
our strategy," he said.
Write to Elaine Yu at elaine.yu@wsj.com
(END) Dow Jones Newswires
July 29, 2022 10:50 ET (14:50 GMT)
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