StanChart Q1 profit doubles to $1 billion as bad loans fall

Lawrence White

* Profit bounces to $1 billion

* Loan impairments fall 58 percent

* Shares up 3 pct, investors eye return of dividend

(Updates shares, adds analyst reaction)

LONDON, April 26 (Reuters) - Standard Chartered

almost doubled its profit in the first three months of the year

after a sharp fall in losses from bad loans, raising the

prospect of the Asia-focused bank resuming dividend payments.

StanChart said it made a pre-tax profit of $1 billion, up

from $589 million in the same period a year ago. The bank booked

a $198 million pound loan impairment charge, much less than the

roughly $500 million expected by analysts.

StanChart is attempting to show investors it can return to

growth after a sweeping restructuring under Chief Executive Bill

Winters succeeded in cutting costs but at the expense of much

lower revenues.

"This is an encouraging first quarter but we are not getting

carried away," Chief Financial Officer Andy Halford told

reporters on a conference call.

StanChart's shares rose as much as 4 percent in London

before settling up 3 percent by 0915 GMT on Wednesday following

the results announcement, the best performing stock in the

European STOXX index of major bank shares.

The bank's shares have risen 13 percent in the year to date,

with analysts saying it is among the best positioned of its

peers to benefit from increasing U.S. interest rates and

stronger trade flows in Asia, where it has most of its business.


Standard Chartered's core capital ratio rose to 13.8

percent, making StanChart one of the best-capitalised major

Europe-based banks and increasing the prospects of a return to

dividend paying after it dropped payouts for 2016 due to

restructuring costs.

CFO Halford said the bank's board is aware of the appetite

from shareholders for a resumption in dividends, but said the

bank must first ensure its recovery can be sustained and that

StanChart can meet changing regulatory capital demands.

"Shareholders want confidence when dividends resume that

there will be an enduring flow," he told reporters.

Analysts sounded a note of caution following the results,

noting that while the bank's falling bad loan costs were

impressive it is still struggling to grow its revenues.

"Revenue performance was flattered by lower quality

sources," said Joseph Dickerson, analyst at Jefferies in London.

The bulk of the bank's improved revenues in the first

quarter came from 'asset-liability management'- fine-tuning of

the bank's debts and investments rather than sustainable fresh

income from customers.

(Editing by Rachel Armstrong and Keith Weir)