StanChart shares thumped, despite bumper rise in pre-tax profits
Better-than-expected 78pc rise overshadowed by higher expenses
Standard Chartered shares dropped 6 per cent in London in early trading on Wednesday, despite the bank reporting a 78 per cent jump in underlying pre-tax profits for the third quarter.
Hong Kong’s third currency-issuing bank earned pre-tax underlying profits of US$814 million, beating the US$809 million average estimates of analysts polled by Thomson Reuters.
The increase was primarily down to a sharp fall in the amount of cash Standard Chartered set aside to cover impaired loans.
The bank’s income for the quarter was 4 per cent higher than the same period, but expenses rose by a similar amount. Analysts were generally unimpressed by the figures.
Anil Agarwal, head of financial research for Asia ex Japan at Morgan Stanley, who has an underweight rating on the stock, described the performance in a research note as “fairly weak all round”.
The bank’s “third quarter profit and loss trends were OK, but likely not good enough for bulls”, wrote Joseph Dickerson and Kapilan Pillai, banking analysts at Jefferies, who have an underperform rating on the stock.
