Standard Chartered third-quarter profit beats estimates in stark contrast to HSBC woes

Standard Chartered, one of three lenders authorised to issue currency in Hong Kong, surprised the market with a third-quarter profit that topped estimates, as strong growth in its investment banking and private banking puts its financial performance in stark contrast to bigger rival HSBC.

The London-based bank reported a net profit of US$772 million in the three months ended September 30, compared with US$752 million in the same quarter last year. The banking group, which generates the bulk of its income in emerging markets, achieved a profit of US$1.11 billion on a statutory pre-tax basis, exceeding consensus estimate of US$1 billion of 11 analysts compiled by the bank.

The report card shows efforts by chief executive Bill Winters since 2015 by reining in costs are yielding results, putting the lender on course for its fourth year of rising profitability. It also provides a differing performance of its city rival amid the worst political crisis since the 1997 handover. Earnings at HSBC slumped 24 per cent in the same quarter on weaker retail banking and global markets operations.

“Our strategy of the last few years has progressively created a stronger and more resilient business,” Winters said in a statement accompanying the results. “The continuing execution of that strategy remains our priority, enabling us to face the more challenging external environment confidently.”

Global banks have been on guard against new challenges posed by sliding global interest rates and slower growth in major economies following a bruising US-China trade war and political stalemate over Britain’s exit from the European Union. In Hong Kong, the single biggest source of revenue for Standard Chartered, a government report on Thursday is expected to show the local economy has slipped into a technical recession last quarter.