StanChart shares plummet on almost $1 billion hit from China exposure

stanchart-shares-plummet-on-almost-$1-billion-hit-from-china-exposure
StanChart shares plummet on almost $1 billion hit from China exposure

Standard Chartered shares in London fell by as much as 17% before trading was temporarily halted. This drop came after the bank announced a profit slump due to a nearly $1 billion hit from its exposure to China’s real estate and banking sectors. The bank’s pre-tax profit for the third quarter dropped 33%, worse than analyst estimates, as it booked a $700 million impairment from its stake in China Bohai Bank and a $186 million charge from Chinese commercial real estate. Standard Chartered shares were down 9% by 0713 GMT, on track for their largest one-day fall since Feb. 24 last year. The bank’s July-September statutory pre-tax profit was $633 million, compared to $996 million a year earlier and the average of 16 analyst estimates compiled by the bank. The significant loss in China highlights the challenge Standard Chartered faces in improving returns in the world’s second-largest economy amid slowing growth and increasing loan losses. Despite government easing measures, China’s economic fragility persists, particularly in its property market. Domestic banking peers have reported squeezed margins, while foreign banks with smaller exposure have also been affected. Standard Chartered attributed the hit on its stake in China Bohai to lower forecast interest rates and decreased lending margins reported in the Chinese bank’s half-year results. China Bohai experienced a 17.8% fall in net interest income in the first half of the year, leading to an overall profit decline. Standard Chartered’s exposure to Chinese real estate totaled $2.7 billion, down $200 million from the previous quarter. The slump in valuation could potentially renew takeover interest in the bank. StanChart expressed confidence in meeting its return-on-tangible-equity targets for this year and 2024 but downgraded some other performance forecasts for the year. Despite the profit slump, the bank’s underlying business performance remained solid, excluding impairment charges. Net interest margin is now expected to “approach” 1.7 percentage points, and rate-sensitive businesses saw a boost in income. However, income in the financial markets trading division fell 8% due to reduced market volatility.

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Hi, I'm Alex Perez, an experienced writer with a focus on lifestyle and culture news. From food and fashion to travel and entertainment, I love exploring the latest trends and sharing my insights with readers. I also have a strong interest in world news and business, and enjoy covering breaking stories and events.

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