Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge. When he's not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
Standard Chartered is currently bullish about its chances for earnings, regardless of the coronavirus pandemic. STAN stock is 5% up now.
As more reports come in from several companies around the world, the general outlook is reasonably damp. This is because the coronavirus pandemic has wreaked considerable havoc on the world’s financial markets, with these financial institutions suffering unprecedented losses. British multinational financial services company Standard Chartered Bank (LON: STAN) announced figures for its first quarter, reporting a loss in net profit. However, Standard Chartered stock is on the rise, as it looks to China for quick recovery.
Standard Chartered said its net profit dropped by 12%. According to the bank, the sharp fall is directly from ordinary shareholders’ profit coming in at $810 million. In the same period in 2019, shareholder profits came to $917. In total, Standard Chartered’s pre-tax profits for the quarter came in at $1.2 billion.
Even though figures dropped, the company’s general performance still beat expectations. Analysts predicted that the company wouldn’t pull in more than $828 million. Standard Chartered’s operating income also jumped by 13% year-on-year, to $4.3 billion. This is also higher than the $3.8 billion analysts predicted.
While these figures aren’t too discouraging, Standard Chartered says it expects more credit losses. It has now increased the volume of losses by more than 1,100%, to $956 million. This is up from the $78 million it expected in the first quarter of 2019. It specifies that most of this is directly from two clients in the healthcare and commodities sectors. The bank had extended a credit allowance worth nearly $245 million to Abu Dhabi healthcare chain NMC Health, and Singapore oil and natural gas company, Hin Leong International.
The bank’s common equity tier one ratio fell to 13.4% from 13.9% where it was in the same period last year.
Standard Chartered Recovery, Stock Is Up Now
The company is however bullish on its chance of recovery. According to the report:
“We expect a gradual recovery from the COVID-19 pandemic, with major contraction in economic growth rates across most of the world in the second quarter, before the global economy moves out of recession in the latter part of 2020, most likely led and driven by markets in our footprint.”
Although based in London, Standard Chartered is quite focused on the Asian, African, and Middle Eastern markets. The bank says that it is already “seeing encouraging early signs” of a good chance of recovery, from China.
Even if it doesn’t happen that way, the company is optimistic. It says that it is quite ready to weather the storm if the current “severe dislocation” continues for an extended period.
Standard Chartered (STAN) stock has also climbed on the news. It closed last at £389.90 but rose by nearly 5.50% and is currently trading at £411.30. Its general figures are a bit more disappointing. STAN has lost 42.57% in 2020 and 43.48% in the last 12 months.