Standard Chartered registers 32% Y/Y increase in Financial Markets income in Q1 2022
Standard Chartered plc (LON:STAN) today published its financial report for the first quarter of 2022, with Macro Trading seeing a record quarter.
Financial Markets income increased 32% from the year-ago quarter and was up 25% excluding positive movements in DVA. Macro Trading enjoyed a record quarter with Commodity income more than doubling, benefitting particularly from volatility in energy prices.
FX and Rates income also delivered double-digit growth on the back of increased client flows.
Credit Markets income increased 7% with Financing Solutions & Issuance benefitting from strong performance in Project & Export Finance and Leveraged Structured Solutions partly offset by subdued activity in Capital Markets while Credit Trading was down 16%, negatively impacted by widening credit spreads.
Structured Finance income declined 6% due to lower Aviation Finance income, while Financing & Security Services income increased 35% including $94 million of gains on mark-to-market liabilities which are expected to reverse once funding spreads normalise.
The Group delivered a strong performance in the first quarter of 2022, in volatile and challenging market conditions, with underlying profit before tax increasing 5% on a constant currency basis. Income grew 9% on a constant currency basis excluding positive movements in Debit Valuation Adjustment (DVA), with a record performance in Financial Markets, particularly in Macro Trading, partly offset by lower Wealth Management, reflecting less favourable market conditions compared to a record performance last year.
The Group remains well capitalised and highly liquid with a CET1 ratio of 13.9 per cent, at the top end of the 13 to 14 per cent target range, an advances-to-deposits ratio of 60 per cent and a liquidity coverage ratio of 140 per cent.
Operating income increased 9%, or 11% on a constant currency basis. A record Financial Markets performance and an expansion in the net interest margin was partly offset by lower Wealth Management income.
Underlying return on tangible equity increased by 30 basis points to 11.1 per cent due to higher profits and lower tangible equity reflecting shareholder distributions including share buy-backs, and adverse movements in reserves due to movements in interest rates and FX.
Bill Winters, Group Chief Executive, said:
“Our first quarter performance was strong despite the volatile macro environment. Our profit before tax grew 4% year on year, with strong underlying business momentum. I am also pleased by the early progress we have made against the five strategic actions we outlined in February and we are on track to deliver 10% return on tangible equity by 2024, if not earlier.”