Standard Chartered Earnings Jump as Bad Loans Decline -- Update

By Margot Patrick 

LONDON-- Standard Chartered PLC said Wednesday its restructuring strategy is paying off, raising expectations the beleaguered bank will start paying dividends again soon.

The Asia-focused bank said first-quarter profit before tax was $990 million, almost double the $500 million the bank made in the first quarter of 2016, mainly because of a sharp drop in bad loans. Revenue rose 8% to $3.6 billion, helping send the bank's shares up 3.9% after the announcement.

Standard Chartered is repositioning its business after overexpansion in the 2000s gave way to rising bad loans and a struggle to keep up with rising regulatory demands. Chief Executive Bill Winters took over in June 2015 and has been shedding assets and business units.

The bank is in the process of shutting down its principal finance business holding private equity stakes in growing companies, following hefty losses in that unit.

Chief Financial Officer Andy Halford said dividend payments will be considered by the board this year after payouts were put on hold in 2016. He said the decision will consider any coming rise in capital requirements from rules still under review by global regulators, as well as the longer-term outlook for profits.

"It is encouraging that we're seeing signs of the bottom line picking up quite significantly," Mr. Halford told analysts.

In the first six weeks of 2017, the bank's shares surged 23% on hopes for stronger global economic growth and rising interest rates this year, then settled back when oil prices fell in March. Gains so far this year are now around 13%.

Standard Chartered is often treated by investors as a proxy for emerging markets and commodities since it is a major lender to commodity producers and has large retail and business banking operations in Hong Kong, Singapore and India.

Its turnaround effort started later than those of rivals who also had to adjust their business models for the new bank rules regime, and some analysts continued to urge caution Wednesday on the outlook for improvements at the bank this year.

"We see evidence of a gentle jog in today's numbers, but any notion of a return to "normal" levels of profitability remains distant," wrote Ian Gordon, a banking analyst at Investec Securities.

Write to Margot Patrick at [e-mail]

(END) Dow Jones Newswires

April 26, 2017 07:00 ET (11:00 GMT)

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