Standard Chartered (LON:STAN) share price has plummeted despite pre-tax profits beating expectations. Underlying profit before tax was $814 million for the quarter, up 78% year-on-year and above analyst expectations of $809 million, as well as their CET1 ratio reported as 13.6%, above their target range.
This improvement in profitability was largely driven by loan impairment falling significantly compared to last year, down 42%, to $348 million.
The UK lender noted that whilst the global economy is recovering, albeit it slowly, competition is becoming stronger with asset margins remaining under pressure.
Expenses for the quarter has also risen by 4% to $2.5 billion as the business accelerated investment and strengthened controls and processes. In contrast to this Standard Chartered expected full year non-regulatory operating expenses were expected to be flat year-on-year.
Income also rose 4% year-on-year and 5% for the year-to-date. Income increases were driven by better performances in liability-led businesses including Transaction Banking and Wealth Management, partly offset by lower income from Corporate Finance, Credit Cards and Personal Loans and the impact of lower market volatility on income in Financial Markets.
Commenting on the third quarter performance, Bill Winters, Group Chief Executive, said: “We have doubled profits compared to the same period last year as we continue to make progress in realising the potential of the Group. We are transitioning our businesses to deliver higher quality income to improve sustainable returns. This process and the continued investments to support it are reflected in the results and will deliver greater long term value to our shareholders.”
In order to temper any worries the firm also said that they “have made further progress executing our strategy with substantial improvements in both underlying and statutory profit before tax in the third quarter and year-to-date,” and that they were “investing to enhance the Group’s controls, efficiency and income potential and remain focused on improving the rate of growth in quality to further improve returns”.
Standard Chartered has seen their share price slump 5.6% to 709p at the time of writing.