LONDON: Standard Chartered took an extra US$107m charge to cover losses from the sale of US$20bn of assets it no longer wants, but said it was making good progress in getting rid of the loans.
New CEO Bill Winters in January put the risky loans in a "liquidation portfolio" to be sold or closed. It reduced the portfolio by 5% in the first quarter, leaving it with gross loans of US$7.5bn, or US$19bn on a risk-weighted basis.
Winters said some of the loans had been sold or were in the process of being sold, either individually or in parcels.
"It's a complicated process, each one of these deals is a substantially negotiated transaction," he told reporters on Tuesday as the bank reported first-quarter earnings. "We're on track, we're making good progress, but most of it is yet to come."
The bank has put up for sale at least US$4.4bn of assets in Asia, including US$1.4bn of distressed loans to Indian companies, and wants to dispose of more loans from Africa and the Middle East, according to recent reports.
Andy Halford, finance director, said the bank was using a variety of options, including auctions, direct negotiations on individual loans, and discussions to sell portfolios of loans.
"There's a whole variety of activities going on ... we expect in the next 18 months or so to be substantially through that process," Halford said.
The extra provisions for losses from the liquidation portfolio were part of a further US$123m charge the bank took in the first quarter, adding to a US$1.8bn charge last year. The bank expects to incur US$3bn of restructuring charges by the end of this year.
The bank said it had further reduced its loans to the commodities industry. Its loans to oil, resources and other commodities traders and companies stood at US$37bn at the end of March, down 8% from December 31 and down 40% from US$62bn in mid-2013.
Standard Chartered bounced back into profit in the first three months of 2016, helped by a sharp fall in losses from bad loans. That sparked optimism that Winters' turnaround plan is on track, and shares in the bank rallied more than 10% in early trading.
First-quarter pre-tax profit was US$589m, a sharp turnaround from the US$4.05bn loss in the preceding quarter as it took hefty restructuring and impairment charges. The bank is trying to wipe its slate clean after a troubled few years amid concerns about its exposure to commodities customers and others in slowing Asian economies.
Revenues in its corporate and institutional unit were US$1.85bn, down 27% from a year earlier but similar to the previous quarter. Financial markets revenue was US$733m, down 19% on the year but up 30% from the fourth quarter, helped by robust FX and rates activity.
Winters hailed the improved results, but said economic and markets conditions remain difficult. He echoed recent comments from US bank chiefs, saying the start of the year was particularly bad but market conditions improved in March.
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