Despite recent setbacks, Standard Chartered was on an upward trend before China-related issues emerged.
Shares of the UK-based banking giant Standard Chartered PLC (LON: STAN) fell as much as 17% during early trading, causing a temporary halt in trading and the stock was down about 10% as of 11:15 a.m. London time. At the time of writing, the stock is valued at GBX 643.60.
The turmoil in markets reflected concerns among investors who had once pinned their hopes on the bank’s China strategy.
Standard Chartered’s Q3 2023 profit crisis
it was a sudden decline aggravated While the bank reported a pre-tax profit of $633 million for the third quarter, a 54% decline from the same period last year. The major contributor to this decline was the bank’s decision to cut the value of its investment in China Bohai Bank by $697 million.
Additionally, Standard Chartered announced a credit impairment charge of $294 million, which included a $186 million charge related to the Chinese commercial real estate sector. These developments raised concerns about the bank’s condition, but Standard Bank’s chief financial officer, Andy Halford, provided a different view.
Halford acknowledged challenges in China’s commercial real estate sector, but remained optimistic about China’s future, noting that the country’s GDP is projected to grow about 5% within the next two to three years. He attributed China’s slow recovery after Covid to such a large population mobilization after a significant event, and stressed that many countries would envy this level of development.
China’s economic recovery
China’s economic recovery has indeed been a matter of concern, but there are also signs of hope. While the bank’s performance was hit by credit loss provisions, Richard Hunter, head of markets at Interactive Investor, said that, on an underlying basis, the performance is less worrying.
“China has been both a boon and a curse for Standard, with the country’s faltering economic recovery weighing on these results,” Hunter said. He noted that impairment provisions had significantly impacted earnings, but underlined that Standard Chartered had sufficient capital to meet these challenges.
Despite recent setbacks, Standard Chartered was on an upward trend before China-related issues emerged. The bank’s shares have risen 29% in the past year, a sharp contrast to the struggles faced by many of its UK competitors.
This recent episode is a reminder of the complexities of trading in the Chinese market and the potential risks involved. However, the bank’s resilience and positive outlook for China’s future growth provide hope that Standard Chartered can weather the storm and regain its footing in the Asian financial landscape.
Standard Chartered’s journey in China is a testament to the opportunities and challenges presented by one of the world’s most dynamic and expanding economies.
Benjamin Godfrey is a blockchain enthusiast and journalist who loves writing about real-life applications of blockchain technology and innovations to promote general acceptance and worldwide integration of the emerging technology. His desire to educate people about cryptocurrencies drives his contributions to well-known blockchain media and sites.
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