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Standard Chartered raises the revenue outlook in the midst of the trade blessing

Standard Chartered Plc expects revenues to increase more this year than previously forecast after beating estimates in the first quarter as trading revenues rose.

The underlying profit before tax rose 4% to $ 1.5 billion during the period, topping a company-compiled analyst estimate of $ 1.09 billion, the London-based bank said in a statement on Thursday. Income growth for the whole of 2022 is expected to “slightly exceed” the previously projected range of 5% to 7%, it says.

“Our performance in the first quarter was strong despite the volatile macro environment,” CEO Bill Winters said in the statement. “We are on track to deliver a 10% return on tangible equity in 2024, if not earlier.”

The bank is leaving seven countries in Africa and the Middle East to focus on faster-growing markets in these regions. The lender is also betting on China, where it will spend $ 300 million to expand, particularly in asset management. However, the country’s recent shutdowns have made it more difficult to do business. In Hong Kong, an increase in Covid cases forced it to close branches, hurting the sale of asset management products.

The lender has marked a credit decline of $ 200 million during the period, including $ 160 million related to Chinese commercial real estate. Wealth management revenues fell 17%, while Hong Kong fell 26%.

On the other hand, rising interest rates are expected to increase revenues as large economies enter a tightening cycle to curb inflation. The bank has previously said that low interest rates cost it about $ 1.5 billion in lost profits.

Income in the financial markets increased 32%, strengthened by the commodity business. The rise from commodities, foreign exchange and exchange rates largely mimics its major rivals on Wall Street. Goldman Sachs Group Inc. and Morgan Stanley posted unexpected increases in trading turnover recently, while Citigroup Inc. and JPMorgan Chase & Co. also exceeded analysts’ expectations. The banks’ top executives mentioned the turbulent geopolitical and macroeconomic picture when outlining their features.

Costs remain in focus at Standard Chartered, where Winters last year warned he would be looking for savings across the company to help cope with escalating staff costs.

The bank said operating costs are expected to be slightly higher than the previously projected $ 10.7 billion “as a consequence of the impact of expectations of higher income growth on performance-related pay.”

Winters will celebrate his seventh anniversary as CEO in June and shows no sign of ending his tenure at the bank after leading to a radical restructuring of its activities. Despite these efforts, Standard Chartered’s share price remains at about half the level it was when he joined in mid-2015.

© 2022 Bloomberg

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