StanChart shares soar after it hikes full-year targets and trounces profit estimates

By Selena Li and Lawrence White

HONG KONG/LONDON, Oct 28 (Reuters) - Standard Chartered (StanChart) on Wednesday hiked its full-year growth and profitability targets after third-quarter income handily beat estimates, sending its shares 8% higher.

Like many of its European peers, StanChart was able to extend a recent strong run, with pretax profit surging 27% to $2.25 billion in the quarter, ahead of a consensus estimate for a 12% rise.

Its wealth division clocked up a third straight record quarter, as market volatility in the wake of the Iran war drove clients to seek new products. StanChart's global markets division also put in a robust performance on the back of heavy trading in foreign exchange and commodities products.

The Asia, Africa and Middle East-focused bank now forecasts operating income will grow more than 7% this year, up from previous guidance of 5-7%.

It also boosted its return on tangible equity target, a key performance gauge, to above 14% for this year from an earlier forecast of exceeding 12%.

The surge for StanChart's Hong Kong-listed shares contrasted sharply with the thumbs-down investors gave HSBC a day earlier, disappointed over revenue undershooting estimates and slower growth for its wealth business.

That said, the returns target trails HSBC's expected 17%.

"We've definitely got more to go, and we're going to keep on pushing for it," Manus Costello, the bank's chief financial officer, told Reuters in an interview.

ASSESSING IMPACT OF EQUITY MARKET SWINGS

The earnings update from StanChart underscores how European banks this year have largely shrugged off concerns about the business impact of the Middle East conflict, which is disrupting trade, driving inflation and increasing geopolitical tensions.

StanChart's global markets trading business reported income surged 21%, while its wealth division saw income climb 26%.

Costello said the bank is assessing the impact of recent swings in equity markets on wealth clients, but he added that the division continued to see steady growth.

"Caveat, of course, that could change in future," he said.

StanChart's fee-based revenue, less sensitive to rate changes, surged 19% to $2.81 billion in the quarter from a year earlier, ahead of an average estimate of $2.68 billion. 

In May, it became one of the first big banks globally to unveil an AI-driven aggressive workforce reduction plan — cutting nearly 8,000 jobs over five years. European peer Barclays announced last week it would slash around 5,000 roles as part of an AI overhaul.

(Reporting by Selena Li in Hong Kong and Lawrence White in London; Editing by Edwina Gibbs)