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Standard Chartered has announced it will double its investment in its wealth management business after pre-tax profits rose in the third quarter.
The UK-based bank reported underlying pre-tax profits of $1.8 billion, up from $1.3 billion in the year-ago period and ahead of analysts’ expectations of $1.6 billion. Wealth business revenue rose 32% in a record quarter, boosting results.
Reported pre-tax profit was $1.7 billion, up from $633 million a year earlier, which factored in a nearly $700 million impairment charge on mainland financial institution Bohai Bank of China’s stake.
“We achieved strong results,” said CEO Bill Winters, who has run the bank since 2015.
The emerging markets-focused bank said it would invest about $1.5 billion over five years in its wealth business, including adding more relationship managers and investment advisors for high-net-worth clients. This is double the previous investment plan for the business.
The company said the money would be funded by shifting its mass-market banking business to focus on “building a strong pipeline” of high-net-worth and international customers for the future.
StanChart will focus on larger global clients within its corporate and investment banking business. The bank said it would “reduce the number of customers whose needs do not directly impact our strengths.”
StanChart is considering selling a “few” businesses that are not core to its purpose of working with international organizations and high-net-worth individuals.
In recent years, after a series of rate hikes boosted profitability, interest rates have begun to fall, forcing the bank to cut costs and grow in areas that don’t rely on interest income.
StanChart has raised its earnings outlook and targets for return on tangible equity and dividends to shareholders, key measures of profitability. The company said it now aims to return $8 billion to shareholders from 2024 to 2026, exceeding its previous goal of at least $5 billion.
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Net interest income increased 9%, partly due to hedging effects, the bank said. The closely watched net interest margin (the difference between interest received on loans and interest paid on deposits) rose to 2% from 1.6% a year earlier.
The bank’s return on tangible equity for the quarter was 10.8%, up from 7% in the year-ago period and above analysts’ expectations of 10.3%.
StanChart’s stock is now just 3% below where it was when Winters took over in June 2015, but it’s up 36% this year.
The bank is under pressure to raise its share price as it trades at a discount to book value. In February, Mr. Winters lamented that the bank’s “crappy” stock price did not reflect its true value.
