Standard Chartered’s profits have fallen by a third in Q3 following a $900m combined hit from its exposure to real estate and banking sectors in China.

The drop in pre-tax profits of 33% were worse than analysts expected. A year earlier, profits stood at $996m, with analysts predicting an average total of $1.41bn in Q3.

Shares in the Asia-focused UK bank also dropped by 12% earlier today following the third quarter results, before trading was temporarily halted.

Reuters reported that despite having similar exposure to the Chinese real estate and banking sector, Standard Chartered’s rival, HSBC, only saw its shares drop by 2% in comparison.

Furthermore, the group’s underlying profit before tax also dropped by 2% to $1.3bn.

Despite the results, Standard Chartered has said that its balance sheet remains “strong, liquid and well diversified”.

Customer loans and advances currently stand at $281bn, down by $9bn (3%) since the end of June 2023.

Customer deposits have also dropped by 3% in the same period, falling by $17bn to $453bn.

Group chief executive at Standard Chartered, Bill Winters, said: “We have continued to make strong progress in the third quarter against the five strategic actions outlined last year, delivering a solid set of results. Wealth Management has continued its recovery with double digit income growth and the financial markets performance has been resilient against a strong comparator period.

“We remain highly liquid, and well capitalised, with a CET1 ratio towards the top of our target range and confident in the delivery of our 2023 financial targets, including a return on tangible equity of 10%.”

Head of money and markets at Hargreaves Lansdown, Susannah Streeter, added: “[Standard Life’s] exposure to China, where it’s expanded rapidly, is its weakest link, with the real estate sector buckling under a mountain of debt. It’s been forced to write down the value of its assets, in real estate, and its stake in China Bohai Bank, to the tune of $1bn.

“This is a very discordant note for the bank and its hard to see how the music will change much soon, given the property sector’s ongoing woes as the Chinese economy struggles to grow. There may be hopes that the big stimulus plan announced will provide the medicine needed but authorities have been at pains to point out it’s not designed to prop up the troubled property sector.”

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