Standard Chartered, the Asia-focused British bank, reported a net loss of $35 million in the third quarter of this year, compared to a profit of $964 million in the same period last year. The bank cited charges linked to its exposure in China as the main reason for the poor performance, which caused its share price to plummet.
Despite the loss, Standard Chartered saw a six percent increase in income to $4.4 billion, thanks to rising global interest rates. However, this positive result was overshadowed by charges of nearly $900 million related to the bank’s stake in China Bohai Bank. Standard Chartered stated that China Bohai Bank is facing “subdued” earnings and a “challenging” macroeconomic outlook.
The news of the loss and charges had a significant impact on the bank’s share price, which fell by ten percent to 642 pence, making it the worst performer on London’s stock market. Richard Hunter, the head of markets at Interactive Investor, commented on the situation, saying, “China remains both a blessing and a curse for Standard, with the country’s faltering economic recovery weighing heavily on these results. These provisions have driven a bus through earnings.”
Standard Chartered’s struggles in China highlight the challenges faced by international banks operating in the country. China’s economic recovery has been slower than expected, and the bank’s exposure to the Chinese market has resulted in significant impairments and losses.
Standard Chartered is not the only bank facing difficulties in China. Earlier this year, HSBC announced plans to cut 35,000 jobs globally, mainly due to its exposure to the Chinese market. The ongoing trade war between the United States and China has also had a negative impact on the Chinese economy and has affected the operations of foreign banks in the country.
Standard Chartered’s loss comes at a time when the bank is trying to recover from previous scandals and improve its financial performance. In recent years, the bank has faced hefty fines for violating sanctions and anti-money laundering regulations, as well as allegations of misconduct in its wealth management division.
Despite these challenges, Standard Chartered remains hopeful about its future prospects. The bank has been focusing on expanding its operations in other Asian markets, such as India, where it sees potential for growth. Standard Chartered is also investing in digital technology to improve its services and attract more customers.
As Standard Chartered continues to navigate the complexities of the Chinese market, it remains to be seen how the bank will recover from its recent losses. The challenges posed by China’s economic slowdown and the ongoing trade tensions are likely to persist, making it crucial for the bank to adapt its strategies and find new avenues for growth.
More detail via Malay Mail here… ( Image via Malay Mail )