Standard Chartered's operating profit in Middle East and Africa at five-year high

The British lender reported a sharp drop in first-half provisions for loan losses

Standard Chartered's impairment charges in the Middle East and Africa fell to $40m at the end of June 2021, from $370m a year earlier. AFP

Standard Chartered's first-half operating income for the Middle East and Africa grew by more than 400 per cent, a five-year high, amid a “significant” drop in provisions for loan losses.

The operating profit of the London-based bank for the first six months through to the end of June rose to $476 million, from the $91m reported at the end of the same period in 2020, it said on Tuesday.

However, half-yearly net income remained flat while impairment charges fell to $40m at the end of June 2021, from $370m a year earlier.

“This is the result of all the hard work … and the execution of some tough decisions we made to drive efficiencies and reduce risk,” said Sunil Kaushal, the bank's chief executive for the Middle East and Africa.

“This has happened during a period when the backdrop, while improving, remains uncertain and challenging and is a true testament to the resilience of our underlying business.”

The lender, which has expanded its operations in Saudi Arabia, the Arab world's biggest economy, remains “focused on clients”, he said.

It also reported a higher-than-expected 57 per cent increase in first-half profit, which stood at $1.24 billion.

The broader Asia region was the bank’s strongest region, with profit surging 75 per cent to $1.01bn, which helped the lender to offset weakness in Europe and the Americas, where operating profit fell by 5 per cent to $337m.

“We have had fantastic results in Hong Kong and in China,” chief executive Bill Winters said in a Bloomberg Television interview. “The Chinese economy is going gangbusters.”

Mr Winters also said the bank has the flexibility to consider acquisitions in its core markets or unveil further buybacks and bigger dividends.

Wealth management was the strongest business for the group, with income rising by 23 per cent to $1.2bn. The lender also released $67m set aside to cover loan losses due to the pandemic, which helped to boost its half-yearly profit.

Standard Chartered hopes to grow its income annually by about 5 per cent to 7 per cent from 2022 onwards, said Mr Winters.

"We believe that we will soon be back on the same performance trajectory that we were on before the pandemic set us back," he was quoted as saying by Reuters.