Standard Chartered Suffers from Bad Loans and Low Interest Rates
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As a result of lower interest income and credit value adjustments, the British bank Standard Chartered had to accept a slump in profits last year. As the financial institution, which is strongly focused on Asia, announced, the adjusted pre-tax profit plummeted by 40 per cent to 2.51 billion US dollars. In contrast, Standard Chartered plc's operating profit of $14.77 billion was just 3 per cent lower than in 2019, with net interest income down 11 per cent to $6.88 billion. In the current year, the financial institution expects revenues to remain at last year's level in view of the persistently low interest rate environment.
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After a weak start to the week, the Swiss stock market ended trading on Wednesday with significant gains. The SMI gained 1.1 per cent to 10,728 points. Among the 20 SMI stocks, there were 19 price gainers and 1 price loser. 50.06 (previously: 44.7) million shares were traded. The SMI went up almost across the board. The big exception was Alcon (-1.0%). The ophthalmology group had presented figures for the fourth quarter. Sales were better than expected, according to analysts at Berenberg. However, margins were somewhat weaker. In addition, the group had not given an outlook for 2021. As on the previous day, financials did well. The sector benefited from rising bond yields. Swiss Re advanced 2.6 per cent and was the day's winner. UBS and Credit Suisse each rose 2.2 per cent. Sika advanced 2.4 per cent. The share was recently supported by positive analyst comments. The shares of the two pharmaceutical giants Novartis and Roche rose by 1.3 and 0.9 per cent respectively. Meanwhile, the share of the index heavyweight Nestle, which is considered defensive, struggled. The share closed with a meagre plus of 0.1 per cent.
European equity markets rallied on Wednesday, supported by Federal Reserve Chairman Jerome Powell's remarks and a series of quarterly corporate publications. The Stoxx Europe 600 Index gained 0.5% to 413.2 points. In Paris, the CAC 40 and SBF 120 rose 0.3%. In Frankfurt, the DAX 30 gained 0.8% and the FTSE 100 in London rose 0.5%. Fnac Darty (+9.6%) unveiled an "ambitious" new strategic plan Tuesday evening on the occasion of the publication of its 2020 results, according to Invest Securities analysts. Solvay (+5.8%) on Wednesday raised its savings target to 2024 and announced plans for further asset disposals, after recording record free cash flow in 2020 despite the disruption caused by the health crisis to its activities. The British bank Lloyds Banking Group (+0.3% in London) saw its pre-tax profit almost halved in the fourth quarter and resumed dividend payments for the 2020 financial year. British telecommunications operator Vodafone (-3.4% in London) plans to list its European telecommunications tower company Vantage Towers on the Frankfurt Stock Exchange by the end of March. Vodafone said the offer would consist solely of the sale of existing shares held by the parent company. A significant minority stake will be floated on the stock exchange.
GameStop's share price more than doubled (+103%) following the announcement of the resignation of the company's chief financial officer. The share's listing was suspended several times at the end of the trading session due to its particularly strong volume growth. Icon PLC, an Irish outsourced drug and medical device development group, announced Wednesday that it has reached an agreement to acquire PRA Health Sciences (+19%) in a cash and share deal valued at around $12 billion. Oil stocks benefited from the rise in crude oil prices. Occidental Petroleum jumped by 8.1%. Exxon Mobil (+3%) reached an agreement to sell most of its upstream assets when it is not the operator in the British North Sea to HitecVision for more than $1 billion. The Food and Drug Administration (FDA) considers that Johnson & Johnson's vaccine (+1.3%) against Covid-19 has a favourable safety profile and is 66.1% effective in preventing moderate to severe forms of the disease. No coronavirus-related deaths have been observed in a study conducted in several countries on 44,000 people, the regulator said, which should rapidly license the vaccine. Distributor Lowe's (-3.7%) lost ground despite sharply improved results in the fourth quarter. The group also indicated that it expects demand to remain sustained in its markets in 2021.
The stock exchanges in East Asia show a clear recovery from their previous day's losses on Thursday. The Nikkei 225 index rises by 1.5 per cent to 30,118 points. In Shanghai, prices are up by an average of 0.9 per cent. In Hong Kong, the Hang Seng Index gains 1.9 per cent. On the Seoul stock exchange, the Kospi moves up 3.1 per cent after three days of partly heavy losses, after the South Korean central bank left its key interest rate unchanged.
After exceeding the 1.4% threshold in the session, the yield on the 10-year US Treasury bond limited its rise in reaction to renewed statements by Jerome Powell, who again stated that the central bank would maintain a very accommodating monetary policy to accompany the economic recovery. The yield stood at 1.388% Wednesday evening, up 2.5 basis points after hitting a high of 1.42% earlier in the day.
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