Standard Chartered saw profits jump 20% in the first quarter after logging further growth across its Asia division and reporting strong progress towards major cost-cutting targets.
The emerging markets-focused bank said bottom line pre-tax profits surged to 1.2 billion US dollars (£879 million) over three months to March 31, up from 990 million US dollars (£725 million) a year earlier.
Those figures included 70 million US dollars (£51 million) in restructuring charges related to its principal finance unit and were against a 7% rise in operating income to 3.9 billion US dollars (£2.8 billion).
Standard Chartered logged the highest income growth in Greater China and North Asia, up 13% at 1.6 billion US dollars, while its European and American business only grew 1% to 441 million Us dollars.
This encouraging start to the year shows that we are firmly on the path laid out in February that will take us above an 8% return on equity in the medium termBill Winters, group chief executive
It comes as the London-headquartered bank moves closer to its four-year cost cutting target of 2.9 billion US dollars, having already reached 95% of its goal.
The bank told markets on Wednesday that the lender was now on track to “exceed” that target by the end of 2018.
Group chief executive Bill Winters said: “This encouraging start to the year shows that we are firmly on the path laid out in February that will take us above an 8% return on equity in the medium term.
“We are determined to pass that milestone as soon as we can in a safe and sustainable manner, while continuing to improve our service to our new and existing clients.”
Going forward, Standard Chartered said it was “alert to continued geopolitical risks” but said it was now “more resilient” and focused on improving service and competitiveness.
The bank’s strong results prompted profit-taking by investors, sending Standard Chartered shares down about 1.5% in midday trading.
Nicholas Hyett, an equity analyst at Hargreaves Lansdown, said: “For some time we’ve been worried that Standard Chartered’s recovery was being driven by cost savings rather than income growth.
“Well that’s not an accusation you can level this time round.”
He noted that income growth was near the top end of targets and that cost discipline in recent years meant that income was “dropping straight through to profits”.
“The fact Standard Chartered had reported double digit income growth in the first few weeks of the quarter might leave some disappointed by these numbers, but we still feel they mark an important turning point,” he said.
“The recovery is widespread and the bank’s medium term target for a return on equity of 8% or higher is within touching distance.”