Standard Chartered PLC profits plunge despite lower bad debt provision

() reported a 61% reduction in third-quarter profits as low interest rates continued to squeeze its income.

The Asia-focused lender again reduced the amount that its bad loan impairments were increased, with a US$353mln provision that compared to US$611mln in the second quarter and around US$1bn in the first.

As forewarned, income shrank 12% to US$3.5bn as interest rate headwinds contributed to net interest margin (NIM) contracting to 1.23%, down from 1.61% a year ago and 1.28% in the second quarter.

Statutory profit before tax of US$0.4bn, which included US$231m goodwill impairment in UAE and Indonesia, compared to US$0.9bn a year before.

On the plus side for margins, the FTSE 100 bank said it improved its liability mix and pricing and average NIM is expected to stabilise slightly lower over the next two quarters.

Furthermore, StanChart said its wealth management business was continuing to recover and financial markets were another source of strength.

The capital position continued to strengthen, with the CET1 ratio closing the quarter at 14.4%, up one basis point over three months.

Chief executive Bill Winters said costs were being controlled and that while lower interest rates impact income “we remain well-positioned to meet our financial targets, albeit with some delay”.

“We are further streamlining our organisation to sharpen focus on our retail business, more effectively leverage our unique network, and drive efficiencies.”