Higher expenses and flat revenues overshadowed better than expected quarterly profit for Standard Chartered on Wednesday, sending shares in the Asia-focused bank more than 5 percent lower. Pretax profit jumped 78 percent from the third quarter of last year to $814 million, higher than the $809 million average of analysts' estimates, according to Thomson Reuters data.
But the bank's shares looked set for their biggest single-day fall in three months, with analysts saying the profit increase was driven by a drop in provisions for bad loans rather than growing income significantly, as investors had hoped for. Loan impairment charges fell 42 percent year-on-year as the bank avoided heavy losses from private equity and bad loans that hit earnings a year ago.
Rising expenses largely came from reinvestment in the retail banking business and wealth management technology platform as StanChart tries to boost returns, finance director Andy Halford told reporters. Income in StanChart's financial markets business fell around 9 percent year-on-year in the third quarter to $663 million, a more modest decline than at some US and European rivals.