The bank’s wealth management (WM) income fell 17% to US$530m in Q1 22 year-on-year (YoY) as a ‘challenging environment’ offsets record financial markets income.
Standard Chartered Bank (SCB) has reported a decline in wealth management (WM) income with Greater China North Asia ex-Hong Kong taking the hardest hit with a 32% income decline to US$104m. This was followed by Hong Kong SAR, which saw its income slide by 26% to US$176m in the first quarter YoY despite remaining the largest market for the UK bank.
According to Standard Chartered Bank’s Q1 22 earnings report, income generated from the wealth business in Singapore increased by two percent to US$102m. In total, the Asian market contributed to US$382m income, accounting for 72.1% of the entire WM income at SCB.
[The] Wealth Management side probably will take a bit of time to get back into its rhythm - Bill Winters, CEO
Nearly one third of the WM income was generated from bancassurance, which posted a nine percent growth in Q1 22 YoY on the back of ‘strong growth in Singapore,’ while the remaining income from other WM products fell by 26% - mainly managed investments and treasury products.
The overall income decline was attributed to the increasing market volatility, which reduced transaction volumes as well as the impact of Covid 19 restrictions across China, Hong Kong SAR, South Korea and Taiwan, said Bill Winters (pictured), group chief executive.
‘[The] Wealth Management side probably will take a bit of time to get back into its rhythm,’ he said in the results presentation.
Cash management income was five percent higher YoY, supported by the current rising rate environment, whereas the income from the financial market division was up 27% to US$1.6 billion in the first quarter YoY driven by macro trading, which posted a 42% hike of income amounting to US$278m with commodity income more than doubling.
Foreign exchange (FX) and rates income also delivered double-digit growth on the back of increased client flows.
Additionally, income from retail products (deposits and others) was flat on a reported basis and treasury income rose 23% with net interest income more than doubling, ‘benefitting from an increase in hedge balances and an increased return on assets as interest rates increased in several markets’.
Groupwide income climbed nine percent to US$4.2 billion in Q1 22 YoY, which represented ‘a strong performance in a volatile and unpredictable environment’.
‘Whilst recent geopolitical events have strengthened the outlook for rates albeit making the outlook for the pace of economic recovery less predictable,’ stated the bank.
Consequently, the income growth in 2022 is expected to slightly exceed the previous forecast of five to seven percent, and operating expenses are set to be slightly higher than the expected US$10.7 billion as a consequence of the impact of the higher income growth expectations on performance-related pay.
According to SRP data, the UK bank distributed 38 capital-at-risk structured notes in Taiwan year-to-date, which are linked to a total of 20 equity names featuring unspecified share baskets and stocks of Advanced Micro Devices and Nvidia.
Sixteen of them have a tenor of from one to three years while the remaining are less than one year. The issuers are Credit Suisse (18), Société Générale (17) and UBS (three).
Standard Chartered has 11 live tranche products across several markets including the UK) four products /US$25.4m), Malaysia) three products/US$34.5m) and Singapore (four/US$2.5m)
Click here to view Standard Chartered Bank’s Q1 2022 earnings presentation.