Standard Chartered beats estimates with 23% pre-tax profit jump

Investing.com -- Standard Chartered (LON:STAN) reported a 23% pre-tax profit beat in its latest quarterly results, with strong performance in non-interest income offsetting pressure on margins.

The bank’s pre-tax profit exceeded consensus estimates by 23%, or 17% when adjusted for a $93 million gain from the Solv India transaction. Revenue came in 4% above expectations, driven primarily by non-interest income, while costs were 2% higher.

Credit costs were notably low during the quarter, reflecting a $44 million release in the Corporate & Institutional Banking (CIB) division. The bank announced a share buyback program of $1.3 billion, slightly above the $1.25 billion market estimate.

Tangible net asset value per share increased 16% year-over-year, reflecting both earnings growth and a reduction in share count. The Common Equity Tier 1 (CET1) ratio came in 10 basis points better than expected at 14.3%, up 50 basis points quarter-over-quarter.

Standard Chartered updated its full-year revenue guidance, now expecting growth to be around the bottom of the 5-7% range, an improvement from previous guidance that had projected below this range. At the bottom end, this guidance exceeds consensus by approximately $227 million for the fiscal year.

Net interest income (NII) is expected to decline by a low single-digit percentage year-over-year, with consensus currently projecting a 2% decrease.

The bank’s net interest margin was 198 basis points, down 14 basis points quarter-over-quarter and 5 basis points year-over-year. NII came in 2% below consensus and 3% lower quarter-over-quarter, primarily due to margin compression from interest rates and lower deposit pass-through.

Non-interest income increased 8% quarter-over-quarter and 33% year-over-year, coming in 16% above consensus. Excluding the Solv India gain, non-interest income was up 22% year-over-year and 6% above consensus expectations.

Global markets was a key driver of year-over-year growth, up 44%, with particularly strong performance in macro trading, which increased 52%. Wealth Solutions also contributed to the outperformance, growing 20% year-over-year.

Operating expenses rose 6% year-over-year, driven by business growth, deposit insurance costs, inflation, and foreign exchange movements. The cost-to-income ratio stood at 55%, up 1 percentage point quarter-over-quarter.

Credit charges for the quarter were $117 million, 53% below consensus and 47% lower quarter-over-quarter. The bank calculated a cost of risk of 16 basis points, while maintaining its through-the-cycle guidance of 30-35 basis points for 2025 and 2026.

The bank’s affluent segment reported net new money of $16 billion in the second quarter, while the Hong Kong dollar now represents 30% of the bank’s rate sensitivity following strong deposit inflows.

Standard Chartered maintained its 2026 cost guidance of less than $12.3 billion at constant currency.

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