Standard Chartered Plc put aside $956 million against potential losses as souring loans spike during the coronavirus pandemic, even as a trading boom lifted first-quarter revenue.
The emerging markets-focused lender reported the biggest provisions since 2015 as clients across Asia, Africa and the Middle East got into difficulty because of lockdowns and travel restrictions. That reflects similar warnings from other global banks, which have set aside billions of dollars to deal with the crisis.
“While pressure on credit quality has increased recently, we delivered good underlying income growth of 6% in the first quarter and maintained strong cost discipline,” said Bill Winters, the bank’s chief executive officer, in a statement on Wednesday.
Besides the virus impact, Standard Chartered has also found itself plagued by a string of corporate scandals, Bloomberg reported earlier this month. They include NMC Health Plc, a hospital operator that’s uncovered evidence of fraud, and Hin Leong Trading (Pte.), the Singaporean oil trader under investigation, according to public filings.
The bank said two unidentified clients in unrelated sectors accounted for almost half of its $490 million increase in so-called stage three impairments.
“The markets that were most impacted earlier are those ones in North Asia and we are now seeing that move across into Southeast Asia and particularly now into Europe,” said Chief Financial Officer Andy Halford on Bloomberg Television. “The hope we have is that the North Asia markets will equally be the first one to recover from this, which given that they are our most profitable market.”
First-quarter underlying earnings slid 12% to $1.22 billion, beating consensus estimates. A day earlier, HSBC Holdings Plc posted a 51% slump in earnings as Standard Chartered’s larger rival warned its bad loan provisions could reach $11 billion this year.
Operating income rose 13%, boosted by a jump in trading income amid turbulent markets.
Like other U.K. banks, Standard Chartered has also canceled share buybacks and dividends after demands from regulators. It has agreed to lower the price in a sale of a stake of a bank in Indonesia, further weighing on its prospects for handing cash back to investors.