Standard Chartered shares were halted to regulate volatility in very early trade on Thursday after the Asia-focused bank released a disappointing Q3 trading update.
Shares of Standard Chartered were down around 10% at the time of writing on Thursday.
Following Barclays and Lloyds’ updates this week, Standard Chartered said net interest margins (NIMs) fell in the last quarter. This is a trend across London-listed banks and marks the end of the uplift enjoyed by the higher interest rate environment.
However, Standard Chartered is facing a perfect storm of contracting NIMs, rising operational costs, and increased provisions for bad debts.
Operational expenses rose to $2.87bn in the third quarter, an 8% increase on a constant currency basis compared to the same period last year. At the same time, operating income rose only 6% to $4.52bn.
Costs rising faster than income are never taken unfavourably by markets. Compounding the concern, the bank said net interest margins slipped to 1.67% in Q3, down 4 basis points from the prior quarter.
Standard Chartered’s exposure to China saw the bank increase provisions for bad debts related to the Chinese property sector to $292m.
Disruption in the Chinese economy meant the bank’s banking activities experienced lower profitability as group profit for the period sank 87% to $139m.