|Bid||701.20 x 0|
|Ask||701.60 x 0|
|Day's Range||687.60 - 703.60|
|52 Week Range||570.70 - 742.60|
|Beta (3Y Monthly)||1.47|
|PE Ratio (TTM)||38.64|
|Earnings Date||Jul 29, 2019 - Aug 2, 2019|
|Forward Dividend & Yield||0.17 (2.41%)|
|1y Target Est||8.78|
A third day of violence and traffic disruptions by protesters in Hong Kong led 250 bank branches to close Wednesday " the most in the city's history except during severe typhoons.One in five branches of the 18 major banks, including all three note-issuing banks in the city " HSBC, Standard Chartered Bank and Bank of China (Hong Kong) " shut their doors for the day.The troubling sign in one of Asia's most important financial hubs occurred as protesters used bricks to smash the glass facade of the branch of the Bank of Communications (Hong Kong) on Pedder Street in Central. The crowd, including some people in suits, clapped when the glass broke.The closed bank outlets represented about 19 per cent of all 1,300 branches in the city, based on banks contacted by the South China Morning Post and information posted on bank websites."In view of special traffic conditions, some bank branches in various districts in Hong Kong are closed today and services are suspended," said a statement of The Hong Kong Association of Banks, which apologised to customers."Should customers need branch services today, they are recommended to call the bank hotlines or visit the websites to check the availability of the branch services."Protesters have smashed the glass window of a Bank of Communications branch with rocks in Central. HongKongProtestsVideo: SCMP/Chris Lau pic.twitter.com/4eMYmd4Ixs" SCMP Hong Kong (@SCMPHongKong) November 13, 2019ATMs and online banking services remained available.It was the second time in three months that a massive number of bank branches closed due to protests. On August 5, 230 bank branches closed either for part or all of the day due to a protest-related strike and demonstrations that also brought traffic to a standstill. Live: Bank vandalised during lunchtime protest in Hong Kong's business districtMany MTR stations and roads were shut on Wednesday as anti-government protesters tried to paralyse traffic for the third straight day. They attacked trains and blocked major roads in Mong Kok, Yuen Long and Fanling. Shopping malls, such as Festival Walk, faced substantial damage on Tuesday night.Hang Seng Bank, a subsidiary of HSBC, closed the most branches among all banks, shutting down 77 branches or outlets on Wednesday morning, including those in the city's five universities and 15 inside MTR stations, according to its website. The bank's spokeswoman said 23 branches would reopen in the afternoon. Hong Kong protests: It's a woeful time to be in hotels as vacancy soarsHSBC, the largest bank in Hong Kong and Europe, did not disclose how many branches it had closed, but provided a list showing about 36 branches and premium centres remained open. The bank has about 100 branches and outlets in the city, meaning about 64 branches shut their doors on Wednesday.China Citic Bank closed 17 branches on Wednesday, Chong Hing Bank closed seven branches, Bank of East Asia shut down 10 branches including four in the universities where the protesters have vandalised campuses in recent days, according to a spokesperson of these lenders in response to the Post's enquiries.Standard Chartered and China Construction Bank (Asia) each closed 14 branches, according to the website of HKAB. Beijing's top office in Hong Kong urges stronger crackdownThe website also showed OCBC Wing Hang Bank shut down nine branches, Dah Sing Bank closed eight branches, DBS Bank closed five branches, and ICBC Asia shut down six branches.Bank of China (Hong Kong), which has been targeted by protesters because of its mainland background, did not disclose how many branches closed on Wednesday. Its website showed it closed three branches on November 4. The bank did not reply to a Post inquiry on Wednesday.Other closures included: Bank of Communications (Hong Kong) (two branches), Chiyu Banking Corporation (one branch), Citibank (three branches), CMB Wing Lung (three branches), Fubon Bank Hong Kong (two branches), Public Bank (Hong Kong) (one branch).George Lau, a retail store supervisor in Sai Wan Ho, said the closing of his bank branch was a pain."I wanted to cash in a cheque from Standard Chartered Bank to pay for the services fee for a delivery company. However, the bank's nearby branch was closed today so I could not get the money from the branch. It is inconvenient," Lau said.This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2019 South China Morning Post Publishers Ltd. All rights reserved. Copyright (c) 2019. South China Morning Post Publishers Ltd. All rights reserved.
Moody's Investors Service ("Moody's") has completed a periodic review of the ratings of Standard Chartered Bank AG and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future.
(Bloomberg) -- India’s rupee declined the most in Asia and sovereign bonds dropped after Moody’s Investors Services lowered the nation’s rating outlook to negative citing growth concerns.The reduction comes at a time when investors have been skeptical about the government meeting its budget targets amid a slowdown in tax revenues and September’s surprise $20 billion tax giveaway for companies.The rupee fell as much as 0.5% to the weakest in three weeks and stocks gave up their early resilience to Moody’s warning in the red in the final hour of the session, thanks to profit-booking after the benchmark index’s recent record closing spree.A change in the rating outlook is the first step toward a downgrade, the action is no reason to exit the nation’s assets, economists and analysts said. Moody’s confirmed what is well known in the markets, and investors saw the move as a catch up, rather than a warning on the nation’s credit rating, as the agency rates India a notch higher than its peers Fitch Ratings and S&P Global Ratings.“Most participants were aware of the issues” cited by Moody’s, Kanika Pasricha, a Mumbai-based economist at Standard Chartered Plc, wrote in a research note. “Moody’s rates India one notch higher than Fitch and S&P, and the market probably saw this coming.”The yield on benchmark 10-year bonds rose five basis points, the most in a month, to 6.56%. The S&P BSE Sensex index of shares fell 0.8% at the close after rising as much as 0.2% earlier.“Investors have been aware of the decline in consumption and the economic slowdown cited by Moody’s for the past few quarters,” said Dharmesh Kant, head of research at Indianivesh Securities Ltd. “The rating processes are based on historic data, so it always comes with a lag, but the market is likely to take it in stride.”Indian assets have got a boost in recent weeks from strong overseas inflows. That’s after better-than-expected earnings in the September quarter stoked optimism that companies have weathered the worst of an economic slowdown following a series of government stimulus measures and five back-to-back rate cuts so far this year.Foreigners have bought stocks worth $501 million in November, after pumping in more than $2 billion in October, and have been buyers of sovereign debt for nine straight sessions.Going StrongThe Sensex still capped its fourth weekly gain in five as better-than-expected company earnings attracted investors. Twenty-six of the 41 Nifty 50 firms that have posted earnings so far this season have beaten or matched the average analyst estimate.“The index had climbed to a record high in the previous session and investors expected a small decline in stocks,” said Jitendra Panda, chief executive officer at Peerless Securities Ltd. “It is more of profit-booking rather than jitters due to the Moody’s.”Not everyone expects the change in outlook to raise overseas borrowing costs for local companies. Indian firms may raise another $20 billion via offshore debt in the six months through March after seeking $25 billion in the six months ended September, Care Ratings said in a note Thursday.“I don’t expect it to lead to any significant rise in borrowing costs as Moody’s is currently rating India a notch higher than Fitch Ratings and S&P Global Ratings,” which still hold the nation’s outlook at stable, said Ajeet Choudhary, executive director for fixed income at J.P. Morgan Private Bank in Asia. “I expect minor correction of 5-10bps in spreads for India IG papers.”\--With assistance from Rahul Satija, Abhishek Vishnoi, Manish Modi, Denise Wee, Ronojoy Mazumdar and Nupur Acharya.To contact the reporters on this story: Subhadip Sircar in Mumbai at email@example.com;Kartik Goyal in Mumbai at firstname.lastname@example.orgTo contact the editors responsible for this story: Tan Hwee Ann at email@example.com, Ravil Shirodkar, Shikhar BalwaniFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.Standard Chartered Plc halved the pension money the bank hands to Chief Executive Officer Bill Winters after months of pressure from investors.The Asia-focused lender cut the retirement allowance for Winters and Chief Financial Officer Andy Halford from 20% of their annual salary to 10%, according to a statement Friday, putting the figure in line with benefits offered to other employees.More than a third of the London-based bank’s shareholders failed to support its pay policy at a vote in May. British firms are being pressed to make their pension policies more egalitarian, with the U.K. Corporate Governance Code recommending that awards for top employees stay close to those for rank-and-file staff.Most of the bank’s investors “wish to see the concerns of other shareholders in relation to pension allowances resolved,” while supporting the overall pay package for executive directors, the bank said.Winters’ pension allowance will fall 50% from 474,000 pounds ($607,336) a year to 237,000 pounds from the start of next year. Halford’s allowance will fall from 294,000 pounds to 147,000 pounds. The reduction will result in an 8% cut to the duo’s fixed pay.Standard Chartered said it had consulted with investors representing about 60% of its shares. “At these meetings, we listened to the range of views and concerns,” the bank said.The bank’s stock is down about 30% since Winters took over four years ago and began grappling with issues ranging from a bloated cost base to government probes. His efforts have helped the bank put the worst behind it, and its shares have rallied 20% in 2019.The rebound didn’t prevent Winters from being the target of a campaign by Glass, Lewis & Co., a proxy adviser that researches corporate governance and advises institutional investors how to vote. As the battle became more acrimonious, Winters called the criticism of his pension arrangements “immature and unhelpful.”Investors including Schroders Plc and Aberdeen Standard Investments, both among the bank’s 20 biggest shareholders, welcomed Standard Chartered’s announcement.“We are pleased that the company has listened to shareholders, and are very supportive of this move,” said Daniel Veazey, head of corporate governance analysts at Schroders.(Adds background and analyst reaction from 7th paragraph.)To contact the reporter on this story: Harry Wilson in London at firstname.lastname@example.orgTo contact the editors responsible for this story: Ambereen Choudhury at email@example.com, Keith Campbell, Marion DakersFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
The emerging markets-focused bank said Bill Winters, chief executive, had agreed to halve his pension allowance from next year, taking it from £474,000 to £237,000. Andy Halford, the lender’s chief financial officer, will also see a 50 per cent cut, taking his allowance from £294,000 to £147,000. last month that Mr Winters was planning to accept the voluntary pay cut.
Standard Chartered joined some of its British rivals in cutting its chief executive's pension allowance on Friday after protests from shareholders, putting pressure on other banks such as Lloyds to follow suit. British banks have faced mounting criticism from investors for awarding their top executives more favourable pension arrangements than the rest of their employees. Standard Chartered said its CEO Bill Winters and Chief Financial Officer Andy Halford had agreed to have their pension allowances cut to 10% from 20% of their salary from January, putting them in line with the rest of its workforce in Britain.
If you want to compound wealth in the stock market, you can do so by buying an index fund. But one can do better than...
A narrow focus on growth, regardless of its true cost and consequences, is leading to climate catastrophe, a loss of trust in institutions and a lack of faith in the future. The private sector is a critical part of solving these problems. Businesses are already working closely with the UN to help build a more stable and equitable future, based on the Sustainable Development Goals.
Hong Kong's three largest banks are lowering their prime rates for the first time in 11 years to support local businesses. The cuts are likely to renew pressure on their margins at an awkward time, as the city's economy shrank deeper than expected and slipped into its first technical recession in a decade.HSBC, Standard Chartered Bank and Bank of China (Hong Kong), the city's three currency issuers, will all cut their best lending rate by 12.5 basis points, taking their cues from a quarter-point cut in base lending rate by the local monetary authority.The best rate at HSBC and Bank of China will stand at 5 per cent, while the rate at Standard Chartered will drop to 5.25 per cent, according to announcements on Thursday. Savings rate on US dollar and local currency deposits will be slashed to 0.001 per cent, putting the city a whisker's width from zero interest rate.That leaves little room for any of the big banks to further ease rates without hurting their books in one of their better-performing markets, analysts said. While Hong Kong and Greater China provide the biggest source of income, growth in the region has tapered amid the onslaught of US-China trade war. China's economy grew at the slowest pace on record last quarter, while Hong Kong has slipped into a technical recession amid anti-government protests."The best lending rate has never fallen below 5 per cent, as banks have to maintain a margin spread with their savings rate," said Kenny Ng Lai-yin, an equity strategist at Everbright Sun Hung Kai. In addition, traditional lenders will face heightened competition in the coming months from eight virtual banks approved by the authorities, he said.The Hong Kong Monetary Authority (HKMA), the city's de facto central bank, lowered its benchmark rate for the third time in as many months on Thursday in lockstep with another round of policy easing by the US Federal Reserve. All three of Hong Kong's large banks kept their rates unchanged through the monetary authority's policy easing in August and September.Hong Kong eases monetary policy as economy heads into recessionAt 5 per cent, the best lending rate in Hong Kong now matches the trough during 2008 financial crisis, regarded as a key threshold for lenders to sustain their profitability in the city, according to Everbright and VC Asset Management.Trimming their best lending rates below that threshold "would be hard for [the banks] to make any profit," said VC's managing director Louis Tse Ming-kwong.Profit at HSBC slumped 24 per cent last quarter, the most since 2016, amid an erosion in net interest margins. The UK lender had US$308 billion in loans outstanding in Hong Kong last quarter, or 64 per cent of its customer lending in Asia.Greater China and North Asia contributed 40 per cent of operating income at Standard Chartered last quarter, while lending in Hong Kong "moderated" during the three months. Hong Kong's traditional lenders may need to offer higher interest rates to prevent their customers shifting deposits to virtual banks, Ng said."This could cut down their margins and make it harder for them to further cut their best rates," he said. Hong Kong home prices in four-month losing streak as protests intensifiedHSBC, which traces its root to Hong Kong and Shanghai nearly two centuries ago, said it can shoulder any impact on its profitability as part of its social responsibility to support local businesses."The rate cut level may be small, but it could still be able to lift the burden of the companies and stimulate private consumption," George Leung, an adviser to HSBC in Asia-Pacific, said in a briefing. Hong Kong's economy shrank more than expected by 3.2 per cent in the third quarter from the preceding three months, according advance estimates published by the statistics office on Thursday. Five months of street protests have dented retail sales and tourism, while declines in home prices accelerated through September, a separate report showed.Investors responded to the rate cuts with mixed reaction. HSBC's shares rose 0.4 per cent in Hong Kong, while Bank of China (Hong Kong) fell 0.4 per cent. Standard Chartered's shares fell by as much as 2.8 per cent in London trading after the rate cuts were announced.Notwithstanding that, lower borrowing costs can help homeowners save about HK$256 per month, based on a HK$4 million 30-year loan priced at prime rate minus 2.75 per cent, according to an HSBC mortgage calculation tool. That works out to HK$92,254 of interest savings over the loan tenure.For depositors, they could earn HK$1 a year on HK$100,000 placed with the bank. With a savings rate near zero, HSBC has possibly made its last reduction, Leung said. "It is close to zero and there is no way to cut it any further," he added. "We have no intention to go for a negative interest rate."This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2019 South China Morning Post Publishers Ltd. All rights reserved. Copyright (c) 2019. South China Morning Post Publishers Ltd. All rights reserved.
(Bloomberg) -- HSBC Holdings Plc lowered its Hong Kong prime lending rate for the first time in 11 years, underscoring the economic challenges facing the financial hub.The London-based bank cut its best lending rate by 12.5 basis points to 5% in Hong Kong. The city’s government is set to release data Thursday that’s expected to show the local economy entered a technical recession in the third quarter, with retail and tourism sectors battered by almost five months of anti-government protests.Standard Chartered Plc, another major lender in the city, soon followed HSBC’s announcement, reducing its best lending rate by 12.5 basis points to 5.25%.HSBC’s cut, to take effect Nov. 1, will likely help the Hong Kong economy and companies, George Leung, the bank’s Asia-Pacific adviser, said at a briefing. There’s not much more room for banks in the city to lower further, and the reduction will probably be the last this year, he said.The move comes after the Hong Kong Monetary Authority cut its benchmark interest rate Thursday, in line with the city’s currency peg to the dollar following the U.S. Federal Reserve’s reduction in borrowing costs. The HKMA lowered its base rate to 2.00% from 2.25%, hours after the Fed’s quarter-point cut, according to the institution’s page on Bloomberg. As the Hong Kong dollar is linked to the greenback, the territory essentially imports U.S. monetary policy.“Looking ahead, we expect there’s still downward pressure on the U.S. rate,” Leung said. “This is likely to make the operating environment for banks like HSBC more challenging in the future, but we hope that it will bring some relief to our customers and maybe a little bit of sunshine to the gloomy economic outlook.”The Hong Kong government has laid out policy support including boosting loans to small businesses and cutting banks’ capital buffers to mitigate an economic downturn through the months-long unrest. It also announced plans this month to help first-time homebuyers break into the world’s least-affordable property market.“It is hard to say whether the Hong Kong interbank rates may follow the U.S. rate,” HKMA Chief Executive Eddie Yue had said at a briefing earlier Thursday. “However, the U.S. rate cut does reflect the downward pressure on the global economy, to which Hong Kong is not immune.”(Updates with Standard Chartered’s interest rate cut in third paragraph.)To contact Bloomberg News staff for this story: Jeffrey Black in Hong Kong at firstname.lastname@example.org;Enda Curran in hong kong at email@example.com;Alfred Liu in Hong Kong at firstname.lastname@example.orgTo contact the editors responsible for this story: Jeffrey Black at email@example.com, ;Jun Luo at firstname.lastname@example.org, David ScheerFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- There may be protests, wafts of tear gas and the occasional burning Starbucks along the street, but inside Hong Kong’s biggest financial firms the outlook for business is surprisingly status quo.That was the takeaway this week as two banking giants in Hong Kong -- HSBC Holdings Plc and Standard Chartered Plc -- posted quarterly results that showed business there held up despite civil unrest. Now, one of the top experts on the financial hub is weighing in with his evaluation: Don’t expect the city to lose any stature among global markets.“It would take a huge structural change,” for Hong Kong to cede its position as a financial center, K.C. Chan, the city’s former secretary for financial services and the treasury, said in an interview. “That’s not what I see today. The reason Hong Kong’s financial markets are doing so well is because they have been serving China’s economy. Has this changed? No.”Demonstrations led by pro-democracy activists have indeed disrupted local commerce and discouraged tourism, tipping the city toward a technical recession. Then there are more dire predictions: The unrest could prompt investors to move their wealth to rival hubs such as Singapore or lead major financial firms to rethink their presence in town.But the votes of confidence by Chan and executives atop major banks in recent days underscored Hong Kong’s unique position as China’s gateway to international markets. The city’s regulatory framework and laws, the argument goes, make it the indispensable venue for companies in the world’s second-largest economy to tap capital from abroad.That, in turn, has generated wealth in the city, drawing legions of private bankers and money managers to tend it.“If you have your liquidity here in Hong Kong, you won’t just move your money to Singapore in a flick,” Chan said.Contingency PlansFew global companies have tied their fortunes as much to Hong Kong as London-based HSBC. When the firm posted third-quarter results Monday, it described operations in Asia as resilient. Adjusted pretax profit from Hong Kong, the bank noted, climbed 1% in the quarter to $3 billion.Still, HSBC took a $90 million credit charge because of the dimming outlook for the local economy, where small- and medium-sized businesses in particular are suffering. And on Thursday it lowered its best lending rate in the city for the first time in more than a decade, a move that the lender said should help the local economy and companies.Some ultra-wealthy clients are drawing contingency plans for parking cash elsewhere, the company said, but very little has actually moved. Across the city, there hasn’t been significant capital outflow, Hong Kong Monetary Authority Chief Executive Eddie Yue added at a briefing on Thursday.Standard Chartered said it earned more in Hong Kong, too.“Business is actually continuing to perform pretty well,” Chief Financial Officer Andy Halford told Bloomberg Television on Wednesday, referring to the city. “Maybe not growing quite as much as it’d have done previously, but absolutely still growing.”Some clients, he acknowledged, have explored whether to set up additional accounts elsewhere. For now, the number of people doing it isn’t large, he said. And even if they shift money, the bank can just serve them from other locations.To be sure, the situation is much starker for local banks, especially those catering to the residents and small businesses. Declines in home prices, office rents and the retail sector threaten to increase credit costs. Potential capital outflow and the monetary authority’s intervention could squeeze net interest margins.A stress test performed by analysts at JPMorgan Chase & Co. estimated lenders such as Hang Seng Bank Co. and Bank of East Asia Ltd. could see earnings slump 24% to 45% next year and 39% to 67% in 2021.Others suggest things will snap back to normal.“If you look back in history there have ebbs and flows in Hong Kong and it has a proven track record of resiliently coming through difficult situations,” Standard Chartered’s Halford said. “It is a very vibrant economy. It has got a huge reputation. Our hope and our belief is that over a period of time it will plow through this.”(Updates with HSBC’s lowering of lending rate in ninth paragraph.)To contact the reporter on this story: Alfred Liu in Hong Kong at email@example.comTo contact the editors responsible for this story: Jun Luo at firstname.lastname@example.org, David ScheerFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Standard Chartered Plc is showing strength where HSBC Holdings Plc cited weakness.The lender generated 19% more revenue in Europe and the Americas in the third quarter -- regions HSBC flagged as disappointing this week as it vowed an overhaul. Standard Chartered’s results there, combined with a 2% increase in revenue from Greater China and North Asia, sent adjusted pretax profit up 16%, defying analysts’ predictions for a slight decline.The figures are a sign the London-based bank has put the worst behind it four years after Chief Executive Officer Bill Winters took over to tackle issues ranging from a bloated cost base to government probes. The company said it’s sticking to a target to boost return on tangible equity to 10% by 2021, even as it faces “growing headwinds” from geopolitical tensions, slowing economic growth and lower interest rates.“Our strategy of the last few years has progressively created a stronger and more resilient business,” Winters said in a statement announcing results Wednesday. “The continuing execution of that strategy remains our priority, enabling us to face the more challenging external environment confidently.”In London the shares were up as much as 2.8% in morning trading. The increase mirrored the rise on the Hong Kong market.“Management are executing on cost control and financial markets revenues are providing a tailwind to slowing transaction banking,” wrote analysts at Jefferies International Ltd. in London in a client note. “But, as with HSBC and others, the question remains whether or not investors wish to reward banks with a rising contribution from financial markets.”Altogether, Standard Chartered said revenue climbed 7% while costs were little changed from a year earlier. Adjusted pretax profit was $1.24 billion, beating the consensus analyst estimate compiled by the company for profit to slip to $1.06 billion.In Europe and the Americas, the company pointed to growth across treasury, corporate finance and financial markets businesses. HSBC had flagged declines in revenue in Europe and North America, calling its performance there “not acceptable.”The Asia-focused firm said revenue also rose in Hong Kong. Prolonged protests in the city, Standard Chartered’s largest single market, have weighed on the local economy.Like HSBC, Standard Chartered said it had seen wealthy clients in Hong Kong exploring opening accounts outside of the Chinese territory. Speaking in an interview with Bloomberg Television, the bank’s Chief Financial Officer Andy Halford said a “number of clients” were looking to set up additional accounts, but added the bank had yet to see significant outflows of money from Hong Kong.“It’s not big time, but it is a number of clients that are looking to do that,” he said.The bank also predicted costs will be higher in this year’s second half than in the first, as it plows money into growing business. Speaking on a call with reporters, Halford said that achieving the bank’s target of a 10% return on tangible equity by 2021 was becoming harder as expectations grow for interest rate cuts, but insisted the aim was “not out of sight at this point in time.”The firm has been investing billions of dollars in technology as part of a digital strategy unveiled earlier this year. The lender won one of Hong Kong’s first licenses to open a virtual bank and opened online-only banks across Africa to attract new customers. Client adoption of digital channels “continued to improve,” the company said Wednesday.(Adds London share performance in 5th and comments from CFO media call in 12th paragraph.)\--With assistance from Nejra Cehic.To contact the reporters on this story: Harry Wilson in London at email@example.com;Alfred Liu in Hong Kong at firstname.lastname@example.orgTo contact the editors responsible for this story: Ambereen Choudhury at email@example.com, ;Jun Luo at firstname.lastname@example.org, Marion DakersFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Standard Chartered, one of three lenders authorised to issue currency in Hong Kong, surprised the market with a third-quarter profit that topped estimates, as strong growth in its investment banking and private banking puts its financial performance in stark contrast to bigger rival HSBC.The London-based bank reported a net profit of US$772 million in the three months ended September 30, compared with US$752 million in the same quarter last year. The banking group, which generates the bulk of its income in emerging markets, achieved a profit of US$1.11 billion on a statutory pre-tax basis, exceeding consensus estimate of US$1 billion of 11 analysts compiled by the bank.The report card shows efforts by chief executive Bill Winters since 2015 by reining in costs are yielding results, putting the lender on course for its fourth year of rising profitability. It also provides a differing performance of its city rival amid the worst political crisis since the 1997 handover. Earnings at HSBC slumped 24 per cent in the same quarter on weaker retail banking and global markets operations."Our strategy of the last few years has progressively created a stronger and more resilient business," Winters said in a statement accompanying the results. "The continuing execution of that strategy remains our priority, enabling us to face the more challenging external environment confidently."Global banks have been on guard against new challenges posed by sliding global interest rates and slower growth in major economies following a bruising US-China trade war and political stalemate over Britain's exit from the European Union. In Hong Kong, the single biggest source of revenue for Standard Chartered, a government report on Thursday is expected to show the local economy has slipped into a technical recession last quarter.On an underlying basis, an important measure for the UK lender, profit before tax rose 16 per cent to US$1.24 billion in the period, compared with US$1.07 billion in the third quarter of 2018. Hong Kong's banks call for order as city's protests continueStandard Chartered's shares rose 2 per cent to HK$70.70 at the close of trading in Hong Kong on Wednesday. The stock has rallied 17 per cent this year on US dollar terms through Tuesday, versus a 6.9 per cent drop in HSBC shares, according to Bloomberg.Standard Chartered said operating income rose 7 per cent to US$3.98 billion in the latest quarter, led by gains in corporate and institutional banking business and private banking units. Net interest income increased 9 per cent to US$2.39 billion, it added.Since joining the bank in 2015, Winters has flattened its management and cut thousands of jobs to restructure its business. The lender returned to a profit in 2017 after two years of losses amid its restructuring. Standard Chartered CEO 'absolutely' pleased with bank's turnaroundOn Monday, HSBC reported the biggest quarterly slide in its profit since 2016 amid headwinds in parts of its business. Even so, markets in Asia have held up well in the quarter and its Hong Kong operations were profitable despite months of civil unrest. Hong Kong's economy could contract in 2019, chief executive Carrie Lam Cheng Yuet-ngor said on Tuesday.Standard Chartered's business in the city was "more resilient" that some would expect, with income posting a 2 per cent gain, chief financial officer Andy Halford said in a conference call with journalists. "The quantum of lending now compared with this time last year is higher...albeit it has been a little more moderated than the last quarter. Nonetheless, those sort of key metrics are in a good space." added.The bank is avoiding taking a "knee-jerk reaction" in terms of cutting costs in Hong Kong, while keeping a close eye on its loan portfolio most affected by the protests such as retail.He also said the company's virtual bank in Hong Kong is expected to begin operations next year. The Hong Kong Monetary Authority said last month some of the city's new virtual banks could have a "soft launch" of some services before the end of this year."Most people out there are hoping, by the half year, one would see some activity whether it be us or others," Halford said.This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2019 South China Morning Post Publishers Ltd. All rights reserved. Copyright (c) 2019. South China Morning Post Publishers Ltd. All rights reserved.
(Bloomberg) -- A joint venture between Saudi Aramco, Air Products & Chemicals Inc. and ACWA Power is in talks with banks to raise about $6 billion in debt, people with knowledge of the matter said.The entity will use the funding to buy gasification and power facilities as well as associated utilities from Aramco, the people said, asking not to be identified because discussions are private. The assets will be transferred to the venture once the projects starts up.Standard Chartered Plc and Banque Saudi Fransi are advising on the talks with local and international lenders, they said. Standard Chartered, Banque Saudi Fransi and Aramco declined to comment.The $8-billion venture, announced in August 2018, has a 25-year contract to own and operate the project for a fixed monthly fee and will serve Aramco’s Jazan refinery and terminal on Saudi Arabia’s Red Sea coast. Air Products will own at least 55% of the business, with Aramco and ACWA Power holding the rest.Saudi Arabia is seeking to transform its oil-dependent economy by developing new industries, and is pushing into petrochemicals as a way to earn more from its energy deposits. The joint venture is expected to increase efficiency, facilitate foreign direct investment and private sector involvement.To contact the reporters on this story: Archana Narayanan in Dubai at email@example.com;Matthew Martin in Dubai at firstname.lastname@example.orgTo contact the editors responsible for this story: Stefania Bianchi at email@example.com, Vernon WesselsFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- Bill Winters, the target of the biggest shareholder mutiny at a large British bank in five years, is taking the fight back to his detractors.The Standard Chartered Plc chief executive officer looks in no mood to throw in the towel on his promise to achieve a double-digit return on tangible equity by 2021. In a world that’s slipping back into low growth, slow inflation and rock-bottom interest rates, that had started to appear a chimera. Noel Quinn, Winters’ counterpart at bigger rival HSBC Holdings Plc, this week abandoned a similar 11%-plus target after missing its goal by 4.6 percentage points.StanChart, by contrast, posted a 16% jump in third-quarter adjusted pretax profit to $1.24 billion that defied analysts’ expectations of a small decline and pushed return on tangible equity to 8.9%. That’s a 1.6 percentage point increase from a year earlier. Things could still go south. Winters, who’s been facing an investor revolt over his pay, acknowledged “growing headwinds from the combination of continuing geopolitical tensions and expectations of declining near-term global growth and interest rates."Operating income from trade financing has slipped this year. And that’s not the only risk. As with HSBC, which took a $90 million charge for Hong Kong this week, the former British colony is StanChart's single-biggest profit engine. StanChart’s fortunes, though, aren’t as tightly tied to the protest-hit city. By risk-weighted assets, Southeast and South Asia are as important to the specialist emerging markets lender as Greater China and North Asia. Besides, StanChart is rapidly expanding the footprint of its digital bank in Africa. Investors are excited by the mobile-banking push, which coupled with cost cuts and a share buyback, has propelled StanChart shares close to 30% higher in London over the past year, compared with a near 8% decline in HSBC stock in the same period. However, the bank’s net interest margin, which had perked up to 1.62% in the June quarter, has since declined to 1.56%.For Winters to swim against the tide of low interest rates could mean lending to more risky customers. That could, in the medium term, jeopardize the boost to shareholder returns from a long and painful fix to the bank’s credit culture. With impairment charges almost 60% higher in the September quarter from the previous three months, lunging for risk may not be a great option even in the short run.Capital could be another stumbling block. The common equity Tier 1 ratio is down to 13.5%, from 14.5% a year ago. For all its troubles, HSBC has managed to keep this figure above its goal of 14%. If StanChart doubles down on the $1 billion buyback it announced in April to further juice shareholder returns, it could start running thin on resources for future growth. That wouldn’t be very wise, especially since operating income from private banking, which uses little capital, has been flat this year. Not only will Africa require more investment, StanChart also has to open a new virtual bank in Hong Kong next year.Quinn at HSBC has embarked on a full-blown remodeling of the bank. Winters, by comparison, seems to be on a surer footing. StanChart’s cost-to-income ratio is falling steadily. Growth in cash management isn’t only helping compensate for flagging trade finance, it’s also giving the bank access to sticky corporate deposits.A recent Financial Times report suggests the StanChart boss might voluntarily accept a pay cut. A peace offering to investors might be a good idea, though on this evidence Winters can argue that he’s earning his keep. To contact the authors of this story: Andy Mukherjee at firstname.lastname@example.orgNisha Gopalan at email@example.comTo contact the editor responsible for this story: Matthew Brooker at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andy Mukherjee is a Bloomberg Opinion columnist covering industrial companies and financial services. He previously was a columnist for Reuters Breakingviews. He has also worked for the Straits Times, ET NOW and Bloomberg News.Nisha Gopalan is a Bloomberg Opinion columnist covering deals and banking. She previously worked for the Wall Street Journal and Dow Jones as an editor and a reporter.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
The bank’s pretax underlying profit was $1.24 billion in constant currency terms, compared with $1.07 billion over the same period last year, the lender said in a stock exchange filing on Wednesday.
HONG KONG/LONDON (Reuters) - Standard Chartered flagged risks on Wednesday to its key returns target citing slowing global economic growth, trade tensions and protests in its biggest market of Hong Kong, after posting a forecast-beating 16% growth in quarterly profit. The first of those in 2015-2018 under Chief Executive Bill Winters focused on repairing a balance sheet ravaged by ill-advised lending in Asia, improving the bank's internal controls, reducing costs, and shedding unwanted businesses. StanChart's pretax profit for the three months ended Sept. 30 rose to $1.24 billion from $1.07 billion in the same period a year ago, above the $1 billion average of analysts' forecasts compiled by the bank.
As the first earnings reports from the oil and gas sector trickle in, several companies have managed to surprise analysts by producing unexpectedly positive numbers
(Bloomberg) -- China’s third-quarter slowdown continued into October, with only a few signs of stabilization evident amid the weakest pace of expansion in almost thirty years.Bloomberg Economics’ gauge aggregating the earliest available indicators from financial markets and businesses showed the economy cooling for a sixth month, with indicators for trade, factory prices, iron ore and copper all worsening.Easing tensions with the U.S. in September and October are too recent to have any effect on trade, which continues to worsen on slowing global demand and the effects of the tariff war. South Korean exports in the first 20 days of October, a leading indicator for intra-Asian trade and for the tech cycle, dropped almost 20%, extending their decline to 10 months.Factory prices dropped faster than in September, according to Bloomberg’s producer price tracker, which was at the lowest since mid-2016. The tracker is a leading indicator for the official price data, which is due early next month, and shows that there will be no immediate improvement to the price declines which hurt both company profits and their ability to repay debt.Solid signs of stabilization remain elusive. Sales managers were the most confident they’ve been in 19 months, though sub-indices including market growth and staffing indicate still-weak activity, according to World Economics, which compiles the data. Data for small and medium-sized companies did show signs of improvement in October, according to Standard Chartered Plc.“Sub-indices for ‘current performance,’ ‘expectations,’ and ‘credit conditions’ rose during the month, increasing the likelihood of a tepid recovery in the fourth quarter on continued counter-cyclical policy measures,” Economists Lan Shen and Ding Shuang from Standard Chartered wrote in a note. “Domestic demand recovered slightly, driven largely by a strong performance in the construction and manufacturing sectors,” although external trade remains a major headwind, they wrote.Stock prices also rebounded in the month, with a strong recovery in real-estate stocks, on the back of resurgent investment into the property sector. Iron ore prices dropped as supply increased.“Higher tariffs and trade war uncertainties may continue to hurt corporate earnings and manufacturing sector investment,” UBS Economist Tao Wang wrote in a recent note. “We expect policy support to strengthen in 2020 but with less monetary easing. We see more financing for infrastructure investment, support for SMEs and social safety net, and further structural reforms and opening up of the domestic market.”Note on Early Indicators constructionBloomberg Economics generates the overall activity reading by aggregating the three-month weighted average of the monthly changes of eight indicators, which are based on business surveys or market prices.Major onshore stocks - CSI 300 index of A-share stocks listed in Shanghai or ShenzhenKey property stocks - All the constituents of CSI 300 Index that are in the real-estate industryIron ore prices - Spot price of iron ore for shipment to Qingdao portCopper prices - Spot price for refined copper in Shanghai marketSouth Korean exports - South Korean exports in the first 20 days of each monthFactory inflation tracker - Bloomberg Economics created tracker for Chinese producer pricesSmall and medium-sized business confidence - Survey of companies conducted by Standard Chartered BankSales manager sentiment - Survey of sales managers in Chinese companies by World Economics Ltd.\--With assistance from Miao Han.To contact Bloomberg News staff for this story: James Mayger in Beijing at email@example.comTo contact the editors responsible for this story: Jeffrey Black at firstname.lastname@example.org, James MaygerFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- HSBC Holdings Plc will need more than a nip and a tuck if it’s to ease Chairman Mark Tucker’s envy of his JPMorgan Chase & Co. counterpart Jamie Dimon.Tucker told managers recently that more than 30% of HSBC’s capital was generating returns of less than 1% and singled out the American bank as a template to emulate. At roughly $2.75 trillion in total assets, the rivals are similar in size. Yet under Chairman and CEO Dimon, JPMorgan ekes out 1.3% on assets while Europe’s largest lender routinely struggles to garner even half as much.The latest period was no different, as HSBC’s third-quarter results painfully demonstrated. Adjusted third-quarter pretax profit, which excludes one-time items, fell a worse-than-expected 12% to $5.3 billion. HSBC abandoned a target for return on tangible equity of more than 11% in 2020, even as it credited operations in Asia for withstanding challenges in the region.Part of the slump is cyclical. Net interest margins so far in 2019 have averaged 1.59%, eight basis points lower than the same time last year. A weaker global economy and falling interest rates have reversed the good times for Hong Kong and Singapore banks.Still, HSBC has some unique problems. Chief among them is that it has too much capital deployed in Europe, where the bank’s cost-to-income ratio is more than 100%. Only a quarter of HSBC's loans are in the U.K., but the country is a source of as much as 35% of its nonperforming loans, according to Daniel Tabbush, a bank analyst who writes for the research website Smartkarma.Shrinking in Europe, where returns significantly lag behind Asia, will allow for a much-awaited pivot to Asian markets outside of Hong Kong and China. With its corporate network, the London-based bank competes well in financing trade links between the region and the rest of the world. HSBC is the region’s top lender to companies, ahead of Citigroup Inc. and Standard Chartered Plc, according to Gaurav Arora, head of Asia for Greenwich Associates. It’s also the top bank in Asia for trade finance and cash management.Those strengths haven’t translated to heft in investment banking. It may be just as well. Margins in that business have been under relentless pressure since the global financial crisis, while the rise of passive investing has crimped equity-trading fees. Income from corporate banking is a lot stickier, provided Tucker and acting Chief Executive Officer Noel Quinn can expand the franchise beyond Hong Kong, which accounts for almost 60% of pretax profit.With property prices holding up amid anti-government protests and sporadic violence, the lucrative Hong Kong mortgage business is still providing the bulk of HSBC's overall lending growth. Wealth management revenue and insurance sales in the city are both starting to look weak, though. Loan quality is also starting to slip. While Brexit-related uncertainty in the U.K. didn't lead to any changes in loan-loss allowances in the third quarter, Hong Kong’s deteriorating economic outlook resulted in a $90 million charge.Excessive reliance on the China market may backfire, too. HSBC was left out of a key rate-setting mechanism in August even as StanChart and Citi were included. The bank was reportedly punished for offering up evidence that led to the arrest of the CFO of national champion Huawei Technologies Co. in Canada. HSBC stock dropped 2% in Hong Kong after the results, bringing its decline this year to 6.9%. The benchmark Hang Seng Index has gained more than 4%.Efficiency remains the key to addressing Tucker’s JPMorgan envy. HSBC’s cost-to-income ratio of 61% compares with the New York-based bank’s 56%. The British bank still has plenty of flab to attack, particularly in its European and investment-banking operations.With Quinn promising to “rebalance our capital away from low-return businesses,” investors will expect deep cuts in coming months. If the interim CEO is serious about making his role permanent after replacing John Flint, who lasted just 18 months in the job, he’ll have to act fast.Cosmetic surgery won’t please anybody. To contact the authors of this story: Nisha Gopalan at email@example.comAndy Mukherjee at firstname.lastname@example.orgTo contact the editor responsible for this story: Matthew Brooker at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Nisha Gopalan is a Bloomberg Opinion columnist covering deals and banking. She previously worked for the Wall Street Journal and Dow Jones as an editor and a reporter.Andy Mukherjee is a Bloomberg Opinion columnist covering industrial companies and financial services. He previously was a columnist for Reuters Breakingviews. He has also worked for the Straits Times, ET NOW and Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg) -- Dubai’s biggest bank hired Patrick Sullivan from Standard Chartered Plc as its group chief financial officer.Sullivan will assume the role from January 1, replacing Surya Subramanian who will leave Emirates NBD PJSC after about nine years. Sullivan is group financial controller at Standard Chartered, according to a spokesman for the Dubai-based bank.Subramanian, also a former Standard Chartered banker, will return to Singapore to pursue family interests, Emirates NBD said in April.Emirates NBD on Monday reported 63% jump in nine-month net profit to 12.5 billion dirhams ($3.4 billion), helped by a one-time gain from a stake sale in its card payments processing unit. The bank is seeking to raise 6.45 billion dirhams from a rights share offering as it expands abroad and courts more foreign ownership for its stock.(Recasts lead, adds detail.)To contact the reporter on this story: Arif Sharif in Dubai at firstname.lastname@example.orgTo contact the editors responsible for this story: Stefania Bianchi at email@example.com, Shaji MathewFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.