Standard Chartered takes optimistic view on bad loan charges in second half, beats analysts estimates

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Standard Chartered increased its reserves for credit impairments to US$1.6 billion in the first half of the year as coronavirus pandemic hit borrowers

‘No one will miss a pay cheque in 2020,’ says CEO Bill Winters, as employees losing their jobs as part of the revamp will be paid through the end of the year

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Signage is illuminated at a Standard Chartered branch in Hong Kong. Photo: Bloomberg

Chad Bray

Published: 12:39pm, 30 Jul 2020Updated: 11:40pm, 30 Jul 2020

Standard Chartered beat analyst expectations in the second quarter and offered a bullish outlook on the size of further credit impairments this year after it set aside nearly US$1.6 billion for bad loans in the first half as the coronavirus pandemic weighed on economies stretching from Hong Kong to the United Kingdom.

The London-based lender, which generates much of its revenue in Asia, however, cautioned income is likely to be lower on a year-on-year basis in the second half of 2020, citing potential headwinds from low interest rates, depressed oil prices and additional waves of infections.

Standard Chartered also confirmed on Thursday that it would make a “small number” of job cuts as part of an ongoing revamp under chief executive Bill Winters, but said it would pay affected employees through the end of the year.

“The benefits of the early stage recovery in some of our markets and our geographic and product diversity are unlikely to be enough to offset the impact of low interest rates and the probability of less buoyant conditions for our financial markets business,” Andy Halford, the Standard Chartered chief financial officer, said in a stock exchange filing.

It is the latest global bank to massively increase its provisions for soured loans this year and foreshadows how big a hit Hong Kong rival HSBC could take when it reports next Monday. HSBC warned in April that its bad loan provisions could reach as much as US$11 billion this year, but the global outlook has worsened since then.