StanChart to double down on wealth business and shrink retail as prospects improve

HONG KONG: Standard Chartered has upgraded key performance targets as quarterly profit beat market expectations, saying it will double its wealth business while cutting retail banking in a bid to further boost returns.

StanChart said third-quarter pre-tax profit was $1.72 billion, above the average analyst forecast of $1.49 billion and more than double the $633 million figure a year earlier, when the company took a hit from nearly $1 billion from its exposure to China.

Revenues will now grow by about 10 percent this year, the bank said Wednesday, compared with a previous estimate of closer to 7 percent. The lender also said it plans to return at least $8 billion to shareholders over the 2024-2026 period, up from $5 billion.

The improved performance came as StanChart, like rival HSBC, continues a major restructuring of its business to focus more on affluent individual customers and large cross-border companies that are likely to generate more fees for the bank.

StanChart said it will double investments in its wealth business and invest $1.5 billion over five years in relationship managers and investment advisors.

That will be financed by cutting more of its large-scale retail operations, following HSBC which in recent years has scaled back its private banking operations in Western markets such as the US, Canada and France to focus on more lucrative areas.

StanChart said it is exploring the possibility of selling “all or part of a small number of businesses” that no longer make strategic sense.

The London-headquartered bank, unlike HSBC, has not announced any new share buybacks for the quarter.

Shares of StanChart rose 3.3 percent in Hong Kong after the results, as it joined European peers in making robust progress in maintaining profits even as interest rates fall.

The London lender’s shares are up 31 percent this year, surpassing HSBC, which is up 15 percent. HSBC reported on Tuesday a quarterly profit that was 10 percent higher than a year earlier.

DOUBLING OF WEALTH TURNOVER

StanChart’s wealth solutions division’s revenue rose 32 percent to $694 million, registering the highest growth rate among its core business lines and justifying the bank’s heavy investments in targeting affluent customers.

The lender has selectively exited asset markets that do not fall within its strategy. In India, it is transferring its personal lending business to local Kotak Mahindra Bank.

StanChart will continue to “reshape” its mass retail business to focus on future affluent and international customers, Group CEO Bill Winters said in a statement.

Its global markets business reported growth of 16 percent in the July-September period – the second largest growth among major business units – to $840 million.

The London-headquartered bank, which has failed to compete with Wall Street and European investment banking rivals on big deals, has launched a corporate and investment banking (CIB) reorganization in recent months to boost competitiveness enlarge.

“In our CIB business, we are taking actions to focus on larger, global customers who rely on our unique cross-border capabilities,” Winters said.

StanChart last month created a new banking team within its CIB division aimed at boosting cross-border business, Reuters reports. The bank also merged its sector coverage team into a dedicated mergers and acquisitions advisory team in August.