Standard Chartered Share Price Plunged 17.6% on Q3 Profit Slump

The Standard Chartered PLC (LON: STAN) share price plunged 17.6% after its third-quarter earnings results were released. The result showed that the global bank lost almost $1 billion from its exposure to China’s real estate and banking sectors.

The UK-headquartered bank revealed a $700 million impairment charge related to its stake in China Bohai Bank and an additional $186 million associated with its exposure to Chinese commercial real estate.

Investors reacted negatively to the news, as evidenced by the 17.6% decline in Standard Chartere’s share price earlier today, which triggered a halt in trading of the shares. Today’s decline marks the most significant one-day decline since February 24, 2022, when Russia invaded Ukraine. 

Standard Chartered, a U.K.-based bank that primarily generates its revenue from the Asian market, reported a statutory pre-tax profit of $633 million for July-September. This represented a significant drop compared to $996 million in the same period the previous year and fell below the $1.41 billion average estimated by 16 analysts polled by the bank. 

The substantial loss incurred in China, where Standard Chartered has concentrated much of its expansion efforts, highlights its challenges in improving returns while dealing with a slowing economy and increasing loan losses.

Despite various government measures to stimulate economic growth, China's financial stability remains fragile, mainly due to ongoing issues in its property market, such as high-profile debt-repayment defaults and a lack of state support in the sector.

Standard Chartered attributed the impact on its 16% stake in China Bohai, a lender located in the eastern coastal city of Tianjin, to lower projected interest rates and reduced lending margins reported in the Chinese bank's half-year results. 

Standard Chartered's exposure to the Chinese real estate sector amounted to $2.7 billion, a $200 million decrease from the previous quarter. The valuation slump could reignite takeover interest in the bank, as First Abu Dhabi Bank (FAB) had considered but abandoned a bid in January of this year.

Despite the disappointing financial results, Standard Chartered expressed confidence in achieving its return-on-tangible-equity t(RoTE) targets of 10% for the current year and 11% by 2024. 

Standard Chartered (STAN) share price. 

The Standard Chartered (STAN) share price plunged 17.55% to trade at 588.15p from Wednesday’s closing price of 713.30p.