Standard Chartered reported strong Q3 earnings on Tuesday with income up 7% YoY to $3.8bn and statutory pre-tax profit more than doubling to $996mn from $435mn a year earlier, beating analyst estimates of $942mn. Credit impairment costs reduced massively to $107mn from $353mn in Q3 2020. Net interest margins were largely stable at 1.23%, up 1bp over Q2 with a 7bp benefit from an IFRS9 interest income adjustment. On the balance sheet front, total assets grew 8% YoY to $817bn. While the Asia-focused lender has a $4.2bn exposure to China commercial real estate (including Hong Kong), mainland exposure is only about $800mn with no direct exposure to developers that breach all the ‘three red-lines’. CET1 ratio stood at 14.3% ex a 34bp software relief that will cease from 2022, up 20bp QoQ. In terms of guidance, the bank said that it expects income to grow 5-7% in FY2022 and credit impairment to remain at low levels in Q4 ex the impact of unforeseen events.
StanChart’s 4.75% Perp callable in 2031 has been trending lower from ~103 levels in mid-September to currently trade at 98.59 yielding 4.94%.
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