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Standard Chartered’s pre-tax profits rose 18% year-over-year during the first quarter, beating analysts ’estimates as the UK lender liquidated its provisions for bad loans during the coronavirus pandemic.
The emerging market-focused bank was the last lender to benefit from one improve the global economic outlook a year after the onset of the Covid-19 outbreak.
Its $ 1.4 billion profit was higher than the $ 985 million predicted by analysts, the bank said Thursday. However, operating income fell 9% year-on-year to $ 3.9 billion, in line with expectations.
The bank charged a $ 20 million credit impairment charge, down $ 936 million from the first quarter of last year. It canceled $ 35 million in reserves for possible loan losses, far less than its biggest rival HSBC, which announced the launch of $ 400 million of provisions this week.
Chief executive of StanChart Bill Winters said Covid-19’s economic recovery had led to improved transaction volumes and profitability. “This was particularly the case in our financial markets and wealth management, which had the best quarter in history,” he said. “Despite low interest rates, we expect our underlying momentum to lead to revenue growth in the second half of 2021.”
The lender’s global footprint has placed it amid geopolitical tensions between the United States, the United Kingdom and China. Relations worsened last year after the imposition of Beijing on extensive national security law in Hong Kong.
In February, Winters said he hoped U.S. President Joe Biden would re-engage with China and end “tit for tat” trade escalations, but there have been few proofs of reconciliation.
StanChart has struggled to balance its trade dependence on China with its mission statement: “here forever.” It has also come under pressure from its board and investors to better define its human rights and environmental positions.
This week, HSBC reported a 79% increase in net income for the quarter to $ 5.8 billion, significantly higher than the $ 3.3 billion forecast by analysts.
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