Standard Chartered beat expectations in the first quarter as rising interest rates once again boosted the bank but it confirmed there had been not contact with First Abu Dhabi Bank.
The emerging markets-focused lender reported a pretax profit of $1.8bn, rising 25 per cent year on year and beating market expectations of a $1.4bn profit.
The increase came as higher interest rates continued to benefit the bank. Its net interest margin widened to 1.63 per cent helping interest income climb 18 per cent.
Both the bank’s corporate and consumer divisions recorded significant income growth although its venture capital arm slumped to a $103m loss.
The underlying profit figures were the bank’s best since 2014. Chief executive Bill Winters said: “Business performance continues to improve across our markets and products and has been achieved in what continues to be an uncertain environment.”
The bank said that its deposit base remained “strong and stable” following the collapse of Silicon Valley Bank (SVB).
Chief financial officer Andy Halford said “we’ve actually had a really stable period for deposits which have been stable throughout the quarter.” He also said the bank’s liquidity coverage ratio of 161 per cent was “the highest print we’ve had for a long period of time.”
Halford suggested that the volatility in the banking sector, and particularly the collapse of Credit Suisse, could create opportunities for Standard Chartered and it “will not be shy of seeking to grab them.”
Relatively low impairment costs also boosted the lender. Standard Chartered set aside $26m in credit impairments, down $172m year-on-year with the bank releasing funds which had been set aside to cope with sovereign exposures and Chinese commercial real estate.
The outlook looks bright with the bank guiding for 10 per cent income growth, at the top of its previously guided range. Over the full year it expects a net interest margin of around 170bps which will rise to 175bps in 2024. The bank also plans to return $5bn to shareholders by 2024.
The bank makes the lion’s share of its profit in Asia and Halford noted “China reopening is clearly helpful”.
“I think we are encouraged as we move into the second, third and fourth quarters that this (China reopening) is a momentum that is picking up and is heading in the right direction.
The bank has been a target of takeover talks in recent months with First Abu Dhabi Bank confirming in January it had been interested in acquiring the bank.
However, Halford confirmed there had been “no contact at all” with either First Abu Dhabi or any other suitor.