HONG KONG/LONDON (REUTERS) - Standard Chartered's first-quarter profit tumbled 12 per cent on increased credit impairment and provisions for future loan losses as the coronavirus crisis hammered its borrowers, even as it expects an economic recovery later this year.
The emerging markets-focussed lender's more positive tone contrasts with other European lenders that have posted earnings so far, saying it was seeing encouraging signs in China that the recovery could be yet more rapid than that.
As a British-based lender focused on Asia, Africa and the Middle East, StanChart's profit slump, however, showed how the pandemic is hitting businesses worldwide as governments freeze their economies to slow the virus' spread.
Pretax profit for January-March was US$1.22 billion (S$1.73 billion), versus US$1.38 billion in the same period a year earlier, the London-headquartered bank said in a stock exchange filing.
The bank's reported profit was boosted by a US$358 million increase in its debt valuation adjustment, an accounting measure related to changes in the value of debt it has issued and which can often rise as perception of the lender's strength falls.
The StanChart announcement came a day after bigger cross-town rival HSBC Holdings said its first-quarter profit nearly halved as bad loan provisions jumped to US$3 billion.
StanChart raised its expected credit loss provisions to US$6.2 billion in the quarter from US$5.8 billion at the end of December last year, while credit impairment during the quarter rose to US$956 million from US$78 million a year earlier.