LONDON (ShareCast) - (Sharecast News) - Standard Chartered posted a drop in third-quarter pre-tax profit on Thursday as it took a hit from its exposure to the Chinese property and banking sectors.
In the three months to the end of September, pre-tax profit fell to $633m from $1.4bn a year earlier. Analysts were expecting pre-tax profit of $1.44bn.

The bank said credit impairment charges in the quarter were $294m, up $62m on the same period a year earlier, and $186m of which related to the Chinese commercial real estate sector.

In addition, StanChart said it reduced the carrying value of its investment in China Bohai Bank by $697m. This reflected subdued earnings and a challenging macroeconomic outlook, it said.

The bank highlighted a Common Equity Tier 1 ratio of 13.9%, versus 1% at the end of June and towards the top end of its target range of 13% to 14%.

Chief executive Bill Winters said: "We have continued to make strong progress in the third quarter against the five strategic actions outlined last year, delivering a solid set of results.

"Wealth management has continued its recovery with double digit income growth and the financial markets performance has been resilient against a strong comparator period. We remain highly liquid, and well capitalised, with a CET1 ratio towards the top of our target range and confident in the delivery of our 2023 financial targets, including a return on tangible equity of 10%."

At 0815 BST, the shares were down 9.9% at 643.20p.

Richard Hunter, head of markets at Interactive Investor, said: "China remains both a blessing and a curse for Standard, with the country's faltering economic recovery weighing heavily on these results.

"The currently parlous state of developments in China are an inevitable concern, although Standard is adequately capitalised to withstand such challenges.

"Indeed, in the medium and longer-term the Chinese economy should provide some significant opportunities, and in a region where the bank has a well-established and trusted presence. Despite any disappointment which this latest update has delivered, the market consensus of the shares as a cautious buy encapsulates both current challenges and future prospects."

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