STANCHART: Very satisfactory performance in the first half of the year, interest rate cuts expected to drive demand in lending sector
STANCHART had a very satisfactory performance in the first half of the year, with the prospect of achieving the ROTE target for 2026 ahead of schedule. Interest rate cuts have various impacts on banks, although they may lower deposit rates, they can increase loan demand. The group is strengthening its hedging policies in the hope of minimizing the impact of interest rate cuts. Real estate exposure has been reduced by half, with sufficient provisions for non-performing loans. The group plans to return over $5 billion to shareholders within three years. Virtual bank Mox bank has performed well, and new products will be launched in the second half of the year. It is expected that the United States will cut interest rates twice, which will support loan demand
According to the information from the Wise Finance APP, Standard Chartered Group (02888) International Business President Benjamin Hung stated that the group's performance in the first half of the year was very satisfactory, with confidence in various businesses, and there may be a chance to achieve the ROTE target earlier than expected in 2026. He mentioned that interest rate cuts have various impacts on banks. Although interest rate cuts may lower deposit interest rates, they can increase demand for borrowing. Interest rate cuts also enhance investment incentives. The group's overall income distribution is relatively balanced, with about half coming from interest income and the other half from non-interest income. The group has also strengthened its hedging policies, hoping to deploy them before the interest rate cut cycle begins to minimize the impact.
Regarding the property sector, he mentioned that the group's overall property exposure has decreased from $4.1 billion at the end of 2022 to $2.2 billion currently, a reduction of about half. Over 91% of the non-performing loans have been provisioned, believing that the provisioning adequacy ratio is sufficient. In the short term, the property sector may not necessarily experience a strong rebound, as the oversupply needs to be digested. However, he believes that the worst time for the property sector has passed, and the likelihood of making more provisions is not high.
He pointed out that the group aims to return over $5 billion to shareholders within three years. By 2024, $2.7 billion has already been returned, hoping that the momentum will continue. Whether through dividends or buybacks, the group will return the remaining capital to shareholders as soon as possible, hoping to do more in these two aspects.
When asked whether the group's virtual bank Mox bank will maintain its goal of balancing income and expenditure this year, Standard Chartered Group's Hong Kong Chief Executive Mary Huen stated that they are overall satisfied with Mox's performance. The customer base has reached 600,000 people, and within the virtual banking sector, it also has a considerable market share in deposits and lending. She also mentioned that its asset quality is healthy and will actively launch products in the second half of the year. The current goal remains unchanged, but adjustments may be made according to economic cycles if necessary.
Mary Huen pointed out that after a rapid interest rate hike cycle, it is inevitable to see a weakening in loan demand. It is expected that the U.S. will cut interest rates twice this year and four times next year. As the interest rate cut cycle begins, it will have a supportive effect on the overall economy, supporting overall loan demand and risk appetite. It is hoped that loan demand will be better than in the first half of the year.
In addition, Chairman Jose Vinals stated that his term will end in October next year, and there will be announcements regarding the successor in the coming months