Idea of the Week: Standard Chartered Delivers Another Record Year — Bonds up to 7% Still Attractive?

Highlights:

• Standard Chartered Group reported strong 2025 and 1Q2026 results, with non-interest income becoming the key growth driver amid easing rates. The “Fit for Growth” cost optimisation programme continues to deliver tangible savings, with more significant benefits expected from 2027 onwards.

• Asset quality remains solid and provisions are adequate overall. Supported by its strong Asian deposit base and investment-grade credit rating, the bank maintains good liquidity and funding strength.

• Multiple bonds issued by Standard Chartered are available on iFAST, suitable for investors with varying risk appetites.

Strong Profit Growth Driven by Non-Interest Income

In 2025, Standard Chartered Group (abbreviated as “Standard Chartered” hereafter) recorded operating income of approximately USD20.9 billion, up 6% year-on-year. Net interest income grew only 1% to USD11.2 billion as the net interest margin narrowed slightly from 2.06% to 2.03% under the global rate-cutting cycle (See Chart 1). The bank mitigated part of the pressure through active optimisation of its loan and deposit mix. In 1Q2026, net interest income still rose 1% year-on-year to USD2.87 billion, showing resilience.

Chart 1: Standard Chartered’s Net Interest Income

In contrast, non-interest income performed strongly, rising 13% to USD9.7 billion in 2025, with double-digit growth across wealth solutions, global banking and global markets (see Chart 2). The momentum continued in 1Q2026, with non-interest income up 16% year-on-year to USD3.03 billion — wealth management grew 32%, global banking 19% — and record net inflows of USD18 billion.

Chart 2: Standard Chartered’s Non-Interest Income

On the cost side, the three-year “Fit for Growth” programme launched in 2024 is simplifying processes and accelerating digitalisation, targeting cumulative savings of around USD1.5 billion by end-2026. Although 2025 included one-off restructuring (USD320 million) and programme execution costs, underlying operating expenses rose only 4%. In 1Q2026, costs increased just 1% year-on-year to USD3.14 billion, supporting a modest improvement in its cost-to-income ratio. Management expects clearer cost benefits from 2027.

Credit impairment charges rose to USD680 million in 2025 mainly due to normalisation rather than asset quality deterioration. In 1Q2026, charges stood at USD296 million, partly reflecting management overlays for Middle East tensions that were partially offset by recoveries. Overall, asset quality showed no material weakening.

As a result, 2025 net profit grew 26% year-on-year to USD5.1 billion (see Chart 3). 1Q2026 net profit rose 24% to USD1.66 billion.

Chart 3: Standard Chartered’s Profit Structure

Management guides for full-year 2026 operating income growth of 5-7%, with non-interest income expected to continue delivering high-single to double-digit growth.

Solid Asset Quality and Adequate Provisions

Standard Chartered’s asset quality remains stable, with the non-performing loan ratio at around 1.95% — milder than one to two years ago (see Chart 4).

Chart 4: Standard Chartered’s Non-Performing Loan Ratio

Exposure to the Middle East accounts for only about 6% of the group, over 90% in global banking, and more than 75% investment-grade. The largest single market is the UAE (roughly half), with the rest spread across Saudi Arabia, Qatar, Bahrain and Egypt.

The additional provisions taken in 1Q2026 for Middle East risks reflect potential second-round effects and early-warning migrations. While prolonged geopolitical tensions could require further precautionary buffers and exert short-term pressure on earnings, the bank’s prudent provisioning policy and stable loan quality keep credit risk well contained.

Strong Capital, Liquidity and Funding Position

At end-March 2026, the CET1 ratio stood at 13.4% (after the USD1.5 billion share buyback executed in 1Q), still comfortably above the 10.3% regulatory minimum and within the 13-14% management target (see Chart 5).

Chart 5: Standard Chartered’s CET1 Ratio

Liquidity remains robust, with LCR at 157% and NSFR at 138%, both well above 100%. The loan-to-deposit ratio of around 51% highlights ample high-quality liquid assets to weather short-term shocks. This strong balance sheet reduces refinancing risk and helps stabilise credit spreads for bond investors.

Bond Investment

Combining solid earnings momentum, resilient credit fundamentals and strong liquidity, Standard Chartered’s bonds are suitable for investors seeking steady income and capital preservation.

The bank carries investment-grade ratings of BBB+/A (S&P/Fitch). As a G-SIB, all its bonds include loss-absorption features. Repayment priority is: senior unsecured > Tier 2 > AT1. Senior unsecured bonds suit conservative income seekers, while Tier 2 offers higher yields for those comfortable with subordination.

Several senior unsecured and Tier 2 bonds are available on our platform. The senior unsecured “STANLN 5.400% 12Aug2036 Corp (USD)” is live on Bondsupermart Live with a net yield to next call of around 5.4%, supporting real-time small-lot trading. Other maturities from 1 to 10 years in USD and HKD are also offered (see Table 1).

Table 1: Selected Standard Chartered Senior Unsecured and Tier 2 Bonds

Bond	Seniority	Currency	Tenor / Years to Next Call	Net Yield to Next Call
STANLN 4.299% 13Jan2030 Corp (USD)	Senior Unsecured	USD	3.7 / 2.7	4.40%
STANLN 5.005% 15Oct2030 Corp (USD)	Senior Unsecured	USD	4.4 / 3.4	4.50%
STANLN 6.296% 06Jul2034 Corp (USD)	Senior Unsecured	USD	8.2 / 7.2	5.10%
STANLN 5.400% 12Aug2036 Corp (USD)	Senior Unsecured	USD	10.3 / 9.3	5.40%
STANLN 4.250% 05Mar2029 Corp (HKD)	Senior Unsecured	HKD	2.8 / 1.8	3.00%
STANLN 3.265% 18Feb2036 Corp (USD)	Tier 2	USD	9.8 / 4.5	5.00%
Source: iFAST Data as of 13 May 2026

For higher-risk-tolerant investors seeking elevated returns, AT1 perpetuals currently offer yields up to about 7% (see Table 2), though they rank lowest in the capital structure, carry call and coupon-reset features, and allow coupon cancellation without default.

Table 2: Selected Standard Chartered Additional Tier 1 Bonds

Bond	Seniority	Tenor / Years to Next Call	Net Current Yield	Net Yield to Next Call
STANLN 4.300% Perpetual Corp (USD)	AT1	Perpetual / 2.3	4.3%	5.50%
STANLN 7.875% Perpetual Corp (USD)	AT1	Perpetual / 3.8	7.3%	5.80%
STANLN 7.625% Perpetual Corp (USD)	AT1	Perpetual / 5.7	7.1%	6.20%
Source: iFAST Data as of 13 May 2026

Related Risks

Global economic slowdown, rising geopolitical tensions and trade policy uncertainty could pressure cross-border businesses, loan performance and capital flows.

In addition, the loss-absorption mechanisms in Standard Chartered bonds mean UK regulators could write down or convert them to equity if the bank is deemed in distress.

Conclusion

Standard Chartered Group reported strong 2025 and 1Q2026 results, with non-interest income becoming the key growth driver amid easing rates. The “Fit for Growth” cost optimisation programme continues to deliver tangible savings, with more significant benefits expected from 2027 onwards.

Asset quality remains solid and provisions are adequate overall. Supported by its strong Asian deposit base and investment-grade credit rating, the bank maintains good liquidity and funding strength.

Multiple bonds issued by Standard Chartered are available on iFAST, suitable for investors with varying risk appetites.

Declaration: For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) holds positions in STANLN 5.400% 12Aug2036 Corp (USD)  . The analyst who produced this report holds NIL positions in the abovementioned securities. This research report was prepared with the assistance of artificial intelligence (AI) tools. iFAST Financial Pte Ltd does not rely exclusively on AI for content generation; the content of this report – including all investment theses, ratings, price targets and conclusions – has been independently reviewed and verified by the research analyst(s) to ensure accuracy and professional integrity.