Standard Chartered Q1 2020 profits before tax drop by 12% year-over-year to $1.2bn for the quarter to end March. But lower than forecast provisions result in the bank beating analyst forecasts.
Specifically, provisions for credit losses rise more than tenfold from the year ago quarter to $956m.
Around one-quarter of the provisions, some $245m, relate to just two clients.
On the other hand, the Standard Chartered Q1 2020 results flag up a number of positive metrics.
For example, pre-provision operating profit is up by 41% to $2.0bn. In addition, income rises by 13% to $4.3bn and by 15% on a constant currency basis. Moreover, costs drop by 2% to $2.4bn. The drop in costs contributes to a more than 8 percentage point drop y-o-y in the cost-income ratio to 54.5%.
But ongoing margin pressure results in a 2 basis points drop in the net interest margin from the previous quarter to 1.52%. Year-over-year the NIM is down by 14 basis points.
Standard Chartered Q1 2020 and COVID-19
To date, Standard Chartered has imposed no redundancies as a result of COVID-19. Around 86% of the bank’s branches remain open. Customer relief measures include loan principal payment moratoriums and fee waivers for extensions. StanChart is also offering late fee waivers and payment holidays for credit card and personal loan customers.
In addition, the bank is rolling out a $50m fund to help those in its markets affected by the pandemic.
Looking ahead, Standard Chartered forecasts a gradual recovery from the pandemic with the global economy moving out of recession in late 2020.
In particular, StanChart is upbeat about the prospects for early recovery from the pandemic in its China operations. In fiscal 2019, StanChart generated 80% of its profits in Greater China and North Asia, ASEAN and South Asia regions.