Standard Chartered wraps up FTSE 100 Q1 banking updates with a bang

Standard Chartered shares soared on Thursday after the company reported Q1 earnings and wrapped up a fairly upbeat series of updates for the FTSE 100 banks. 

UK investors were saved the best banking update until last as Standard Chartered smashed earnings estimates sending shares 6% higher in early trade.

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Underlying income was $5.2bn compared to $4.7bn analyst estimates and underlying profit before tax came in at $2.2bn vs $1.6bn expected.

Most of the FTSE 100 banks, Lloyds, Natwest, HSBC and Barclays, have beaten earnings estimates. But none to the extent of Standard Chartered.

“Standard Chartered has made a statement,” said Matt Britzman, equity analyst, Hargreaves Lansdown.

“This was as close to a clean sweep of first-quarter results as you can get. Pretty much every major line item was better than markets had expected, even after stripping out some of the one-off items that inflated results. Performance was driven by non-interest income, which accounts for over half of all revenue.

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“This includes areas like wealth management, investment banking, and trading. Traditional banking operations performed more or less as expected.”

Concerns about the health of the Asian economy have dogged Standard Chartered, and today’s update will go a long way to put the doom-mongers back in their place. 

A big plus for investors is the lower-than-expected credit provisions. With the Chinese property crisis far from over, some may have feared STAN’s exposure to the sector could see further impairment. 

“As we’ve seen from peers, credit quality metrics remain resilient. This is especially important for Asian-focused banks like Standard and HSBC, which have both had to write down the value of Chinese assets in past quarters,” Britzman said.

“Commercial real estate exposure in China has also been a cause for concern, so investors will be pleased to see no real uptick in impairments taken here.

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