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Operating Income: $5.4 billion in Q1 2025, a 7% increase year-on-year.
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Profit Before Tax: $2.3 billion, up 12% year-on-year.
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Earnings Per Share: Increased by 19% year-on-year.
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Operating Expenses: Increased by 5% year-on-year.
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Credit Impairment: $219 million in Q1 2025.
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Net Interest Income (NII): Down 5% quarter-on-quarter.
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Non-NII Growth: Up 7% or 18% excluding notable items.
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Wealth Solutions Income: Up 28% in Q1 2025.
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Global Markets Income: Up 14% in Q1 2025.
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Global Banking Income: Up 17% in Q1 2025.
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Transaction Services Income: Down 4% due to rate-driven margin compression.
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Risk-Weighted Assets (RWA): Increased by $7 billion in Q1 2025.
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CET1 Ratio: 13.8% in Q1 2025, a 21 basis points increase quarter-on-quarter.
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Tangible Net Asset Value (TNAV) Per Share: Up $0.20 quarter-on-quarter.
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Wealth & Retail Banking Income: Up 12% to $2.1 billion in Q1 2025.
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Affluent Net New Money: $13 billion in Q1 2025.
Release Date: May 02, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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Standard Chartered PLC (SCBFF) reported a 12% year-on-year increase in income for Q1 2025, excluding notable items.
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Earnings per share rose by 19%, driven by strong performance in Wealth Solutions, Global Markets, and Global Banking.
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The company's network business, which accounts for 60% of CIB income, is highly diversified and resilient.
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The cross-border strategy and affluent business are capturing opportunities in wealth creation across dynamic markets.
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The company has increased its hedging to reduce interest rate sensitivity, with a short-dated balance sheet.
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Operating expenses increased by 5% year-on-year due to inflation and business growth initiatives.
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Credit impairment was $219 million, with a notable charge in the WRB segment.
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Net interest income (NII) was down 5% quarter-on-quarter, with challenges expected in growing NII for 2025.
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The company faces potential risks from geopolitical developments and trade tariffs impacting global growth.
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Market risk-weighted assets increased by $8 billion, although expected to reduce in Q2.
Q: Can you discuss the optimization effects you're seeing in the CIB and how much further optimization do you see? Also, what's the optimal level of market RWAs? A: William Winters, CEO: We're entirely returns-driven, and the increase in market-related RWAs reflects increased activity. Optimization efforts are ongoing, and we don't have a target for optimal market RWAs. We're focused on optimizing returns. Diego Giorgi, CFO: We're nimble in managing market risk-weighted assets, adding or reducing them as needed. Our market business growth sometimes requires RWAs, but we manage it smartly.
Q: If there's a general increase in tariffs globally, do you have any stress scenarios for Standard Chartered's future performance? A: William Winters, CEO: We're monitoring the tariff situation closely. A secular increase in tariffs would impact the economic environment, but we have a strong credit book that protects us in slower growth scenarios. Client activity has been strong, especially in markets and wealth management, indicating resilience.
Q: HSBC mentioned a low-single-digit revenue impact from tariffs. Can you elaborate on your revenue outlook and client activity post-April events? A: William Winters, CEO: We're considering various scenarios, but a secular increase in tariffs would impact the economy and us. Client activity has been strong, especially in markets and wealth management. Diego Giorgi, CFO: We've provided details for you to run sensitivities. Our IFRS 9 assumptions reflect a severe downside scenario, and we aim to look ahead in our numbers.
Q: How do you see loan growth unfolding over the rest of the year? A: Diego Giorgi, CFO: We expect similar growth to Q1's 3% increase in customer loans and advances. Interest rate declines and a lower dollar could boost credit growth, but macroeconomic factors may counteract this. We remain confident in our guidance, but the exact trajectory is uncertain.
Q: Is the potential impact from tariffs more about volume or asset quality? Also, how does network income growth factor into your revenue targets? A: William Winters, CEO: Higher tariffs generally mean a slower economy, impacting volumes more than credit quality. In the medium term, supply chain reconfiguration could drive volumes positively. Diego Giorgi, CFO: Network income has historically grown faster than our overall revenue target. We'll provide more details at our CIB seminar.
Q: Can you elaborate on the global trade and tension scenario and its impact on NII? A: Diego Giorgi, CFO: The scenario involves severe GDP decreases for major regions. Our pass-through rates have been managed assertively, and we continue to monitor them. The volatility in forward curves makes it challenging to predict NII accurately.
Q: How do you view the outlook for deposits and potential RWA procyclicality? A: William Winters, CEO: We're exposed to potential downgrades due to slower growth or tariff outcomes. Our capital approach remains unchanged, and we're comfortable operating within our target range. Diego Giorgi, CFO: Deposits could grow even if loans don't, driven by a flight to safety and strategic management.
Q: What are the reasons behind strong Wealth Management income growth, and can it be sustained? A: William Winters, CEO: Wealth accumulation and diverse investment portfolios drive growth. We've invested heavily in quality, technology, and open architecture, positioning us well to take market share. Geopolitical tensions can be both a headwind and a tailwind, but structural trends favor us.
Q: How should we think about the Fit for Growth restructuring charge and client perspectives amid macro uncertainty? A: William Winters, CEO: Client perspectives have evolved since tariff announcements, with increased focus on US investment and supply chain diversification. Diego Giorgi, CFO: Fit for Growth spending will accelerate, but we're committed to strategic spending and our 2026 expense target.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
