UAE is StanChart’s worst performing major market for Q3

Third quarter (Q3) pre-tax loss grows to $39 mn

ABU DHABI/October 31-2020: UAE has become the worst performing major market for Standard Chartered Bank (SCB) for the third quarter (Q3) ending September 30, 2020, having closed the quarter with a pre-tax loss of $39 million.

UK is the only other major market for the bank that has closed the third quarter with a loss (before taxation), which was at $15 million. At the same time, Hong Kong proved to be the best performing market for the bank this time with a pre-tax profit of $332 million for the said period.

While China reported $143 million pre-tax profit, Singapore operations turned in $127 million and India $95 million as pre-tax profit for the quarter under review.

High cost-to-income ratio

The ratios provided by the bank show that cost to income ratio for UAE operations was 75.2 per cent, whereas that of UK (operations) was much higher at 90.6 per cent, which may be viewed as unsustainable.

The third-quarter profit for the global operations of StandChart slid 40 per cent on higher credit impairment resulting from the coronavirus pandemic and lower interest rates.

The pre-tax profit logged by the bank was $745 million for the three months ended September 30, down from $1.24 billion a year ago.

The bank said in a statement that charges relating to goodwill impairment, restructuring and other items increased $177 million to $310 million, primarily relating to $231 million of goodwill impairment in UAE ($204 million) and Indonesia ($27 million) due to a lower GDP growth outlook.

Q3, 2019 profit

A year ago, UAE (operations) had reported a pre-tax profit of $49 million for Q3 ending September 30, 2019, whereas, the bank closed the second quarter (Q2) of the current year with a pre-tax loss of $12 million.

While the bank earned an operating income of $137 million for Q3, FY20, the operating profit was $34 million, but the blow came in the form of large credit impairment to the tune of $75 million landing the UAE operations in a much bigger loss than that in the immediate previous quarter.

The bank had an asset base in the UAE to the tune of $21.94 billion, whereas the asset base of the biggest major market of Standard Chartered, Hong Kong, was at $167.97 billion.

 

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