Standard Chartered has announced a 40% surge in quarterly profit, propelled by increased interest rates that bolstered the bank’s income, allowing for a revision of its revenue outlook. The bank now anticipates a 13% growth in income for the year, up from the previously forecasted 10%. Despite global economic challenges, such as volatile energy costs and the Russia-Ukraine war, the bank’s profit growth and upgraded guidance highlight the positive impact of rising interest rates on bank profits.

CEO Bill Winters expressed confidence in achieving the 2024 financial targets, emphasizing the bank’s resilience. The London-based institution, with a significant revenue focus in Asia, reported a rise in statutory pre-tax profit to $1.39 billion for the three months ending Sept. 30, surpassing the $996 million from the previous year and beating the average estimate of $1.05 billion by 14 analysts.

Standard Chartered, operating in 59 markets with 85,000 staff, primarily engages in trade flows between key regions like Asia, Africa, and the Middle East. While the bank faces competition from larger counterparts in commercial and investment banking, its strategic initiatives under Winters, including digital asset portfolio development, have contributed to growth. Despite a share price decline of approximately 45% during Winters’ tenure, the bank has seen a 24% increase this year, outperforming industry peers.

Winters, leading the bank for seven years, has focused on restoring growth and strengthening the balance sheet, even amid job cuts. Despite a positive outlook, the bank’s credit impairment charges more than doubled to $227 million, reflecting economic weaknesses in key markets. This includes a $130 million exposure to China’s commercial real estate sector. The overall economic recovery in the bank’s footprint markets appears promising, although concerns about recessionary pressures in certain Western markets persist.

The current global trend of central banks tightening monetary policy to address inflation further complicates the outlook. While rising interest rates traditionally benefit banks by increasing profits from lending, the potential threat of an economic downturn introduces uncertainties that could lead to significant losses for lenders.