Standard Chartered reported first-quarter profit that beat estimates as it weighs the impact of US President Donald Trump's trade war.
Adjusted pretax profit for the quarter through March hit US$2.28 billion ($2.98 billion), largely driven by the bank's wealth and financial markets units, which exceeded the US$2.15 billion consensus estimate compiled by Bloomberg.
The lender stuck to a plan to return at least US$8 billion to shareholders from 2024 to 2026. Its wealth business performed strongly, luring US$13 billion of affluent net new money, up 22% and benefiting from strong international flows. Trading income was boosted by higher market volatility.
"The subsequent imposition of trade tariffs has increased global economic and geopolitical complexity, and we remain watchful of the external environment," CEO Bill Winters said in the earnings statement. "But our ability to help clients manage their business and wealth across borders in times of volatility reinforces our confidence that we can continue to improve returns."
London-based Standard Chartered makes most of its money in Asia, the Middle East, and Africa where it provides a mix of institutional, commercial and retail banking services. However, US trade policies have roiled global markets and upset international supply chains.
Risks
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Though the uptick in trading volumes has been good for its business, the bank has warned it was concerned that the continued uncertainty was causing some clients to begin to pare risk.
Speaking at an industry conference in March, CFO Diego De Giorgi said that while flows in the bank's financial markets arm had been strong, there were signs of customers "moving a little bit towards the sidelines."
The lender said its corporate and institutional banking income with potential exposure to US tariffs is "limited", with US corporates representing about 7% of the total income for 2024.
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Still, the so-called "non-linearity" impact rose by US$23 million during the quarter, reflecting an increased probability weighting for global and geopolitical trade tensions given the "heightened uncertainty around trade tariffs".
Standard Chartered shares had started the year on a bright note, trading above the level they had been when Winters first joined the bank a decade ago, only to fall sharply in the days leading up to and following Trump's "Liberation Day" tariff announcements. The stock has since recovered to above the GBP10.41 ($18.10) set on Winters' first day as CEO and is currently up about 11% for the year.
The bank is in the middle of a cost reduction program it calls "Fit for Growth." Standard Chartered has said the initiative will cost US$1.5 billion, with the larger part of the expenses due to come through this year as it looks to make its operations more efficient. It posted a restructuring charge of US$73 million related to the program in the first quarter.
