What Standard Chartered’s unexpected results mean for jobs in Asia
Is Standard Chartered now becoming a more stable and profitable place to work? Perhaps so. Third quarter results from Stan Chart, which makes about 67% of its income from Asia, have been hailed as proof that CEO Bill Winter’s turnaround strategy is starting to bear fruit.
The bank’s underlying pretax profits defied analysts’ expectations of a fall and rose 16% year-on-year in Q3, following about four years of cuts to jobs and other costs at Stan Chart. But while the firm says it’s still on target to deliver its strategy of boosting return on tangible equity to 10% by 2021, its Q3 report warns of “growing headwinds” from geopolitical tensions, slowing economic growth and lower interest rates.
If you work for Stan Chart in Singapore or Hong Kong (or if you want to), you will likely want to be in a team that is best placed to avoid these potential headwinds. Stan Chart’s Q3 report provides some clues as to where the best jobs are at the Asia-focused bank.
Financial markets
It’s been a good quarter to be a trader at Standard Chartered. The bank shuttered its equities business back in 2015, but it continues to trade in FX, rates, commodities and other products. Revenues across all markets products grew by a substantial 25% year-on-year in the third quarter (to $789m) as the bank benefited from market volatility, and increased hedging and investment activity by clients.
The above growth in markets products helped boost income by 13% within Stan Chart’s corporate and institutional banking (CIB) division. But the unit’s strong performance was also driven by a 5% third-quarter rise in cash management operating income to $606m. Cash management’s performance was even more impressive for the first nine months of 2019 – operating income rose 10% and dominated overall revenues for transaction banking products within CIB. While Stan Chart is a minnow in Asian capital markets and M&A, it’s a top-three player in transaction banking, according to research firm Coalition.
Private banking
Stan Chart’s private bank is comparatively small, ranking as the 12th largest in Asia by assets under management in 2018. That year Stan Chart came only 18th for AUM per relationship manager – its average RM managed $197.1m, according to Asian Private Banker. This year, however, there are some positive signs. Although private banking revenues are still substantially smaller than those from CIB, retail banking, and commercial banking, they were up 14% in Q3. Stan Chart has taken on several private bankers this year, including Hong Kong-based veteran Joseph Tam (but it has also lost senior bankers in Asia).
Technology
There isn’t much flesh on the bones within Stan Chart’s earnings report about technology. But if you’re working in a tech or digital banking job at the firm, you can take comfort from the fact that “key client digital adoption measures continued to improve” in Q3. Stan Chart spent $1.6bn on tech last year, up from $900m in 2015, but investment into its legacy systems flatlined, according to its 2018 annual report. It’s now much better to be in a ‘strategic’ or ‘systems enhancement’ job (i.e. emerging technology) – costs in these two categories trebled over the three years. In 2019, Stan Chart has been recruiting technologists into its new virtual bank in Hong Kong, which is launching in the next few months.
Hong Kong
It looks unlikely that Stan Chart will be cutting back its Hong Kong headcount any time soon. The bank said revenue increased in Hong Kong, its largest single market, despite ongoing protests in the city that are sending the local economy into recession. Chief financial officer Andy Halford told Bloomberg that a “number of” wealthy Hong Kong clients are looking to open additional accounts overseas, but the bank has yet to see large outflows of money from Hong Kong. Overall operating income in North Asia inched up 2% year-on-year to $1.6bn in Q3, and North Asia remains the bank’s largest region, substantially ahead of Asean and South Asia ($1bn), despite 13% revenue growth in the latter.
Image credit: danielvfung, Getty
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