Second-quarter income rose 3% to $5.7bn, or 8% excluding the Solv India gain booked a year ago. Growth was driven by strength in Wealth Solutions, Global Banking and Global Markets, while net interest income rose 7%.
Profit before tax rose 2% to $2.3bn ($2.1bn expected). Credit quality remained resilient, with impairments of $150mn ($239mn expected).
The group's CET1 ratio, a key capital measure, was 14.2% at the end of the period (13-14% target range). The bank announced a fresh $1bn buyback and increased its interim dividend by 66% to 20.4 cents per share.
Full-year guidance was upgraded, with income growth now expected to be around the middle of the 5-7% range (previously at the lower end). Net interest income is expected to grow at a low single-digit percentage rate (previously flat).
The shares rose 4.6% in early trading.
Our view
Standard Chartered carried its strong start into the second quarter, delivering a clean profit beat as Wealth Solutions, Global Banking and Global Markets drove broad-based income growth. Costs and impairments were both better than expected, while upgraded guidance and a fresh $1bn buyback point to growing confidence in the outlook.
Medium-term targets remain unchanged, with the bank aiming for stronger returns, better efficiency and sustained income growth through to 2028 and beyond. The headline goals look broadly achievable rather than wildly ambitious and sit comfortably with the existing analyst consensus.
Standard operates a sprawling business, both geographically and across its product range. This offers diversification, but it comes at a cost. The only market where it is a clear leader is Hong Kong, with the bank playing second fiddle to larger names across much of Asia, Africa and Europe.
Middle East exposure remains a risk, with some increase in loans showing signs of potential stress during the quarter. However, additional provisions were modest and existing overlays provide some protection, with no material deterioration showing up in credit quality so far.
Lower rates remain a potential headwind, particularly in Hong Kong, but the picture has improved. Management now expects net interest income to grow at a low single-digit rate this year, while stronger fee-based income is making the group less reliant on interest rates to drive growth.
Institutional banking in areas like trade finance, cash management and trading makes up the bulk of the operation. In retail banking, the focus is heavily skewed towards more affluent customers, where higher growth is on offer.
These are likely to remain the key growth engines. Standard has spent several years investing in Global Markets and Wealth Solutions to build income streams that are less dependent on interest rates. These businesses also use less capital, supporting further buybacks when conditions allow, although shareholder returns are never guaranteed.
The balance sheet is in good shape, with the CET1 ratio above the target range before the latest buyback. Asian wealth management remains an attractive growth opportunity, and another strong quarter adds confidence that the strategy is gaining traction.
That said, Standard still needs to show it can deliver consistently across the cycle. With the shares trading above their longer-term average valuation, we think other names in the sector offer a better balance of risk and potential reward.
Environmental, social and governance (ESG) risk
The financials sector is medium-risk in terms of ESG. Product governance is the largest risk for most companies, especially those in the US and Europe with enhanced regulatory scrutiny. Data privacy and security are also an increasingly important risk for banks and diversified financial firms. Business ethics, ESG integration and labour relations are also worth monitoring.
According to Sustainalytics, Standard Chartered’s management of material ESG issues is strong.
Standard’s strong programs and policies are offset by involvement in multiple controversies, reducing its management score. However, the bank has improved disclosure in areas like data privacy, security, and product governance. It introduced external cybersecurity assessments designed by the Bank of England and Prudential Regulation Authority, and has management in place to ensure responsible product offerings. Improvement areas include lack of transparency in gender pay, high employee turnover, and poor integration of ESG into asset management.
Standard Chartered key facts
All ratios are sourced from LSEG Datastream, based on previous day’s closing values. Please remember yields are variable and not a reliable indicator of future income. Keep in mind key figures shouldn’t be looked at on their own – it’s important to understand the big picture.
This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by LSEG. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.
This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment.