StanChart gets a third of its income from Hong Kong © Bloomberg

Hong Kong hurricanes — meteorological or political — can leave residents walking against the wind. Standard Chartered has beaten expectations with third-quarter results. Chief executive Bill Winters, heeding complaints over his pension from investors, plans to take a pay cut. But storms of protest on Hong Kong streets may hamper the Asia-focused bank.

StanChart gets a third of its income from Hong Kong, whose economy is expected to weaken this year. Fewer wealthy mainlanders are visiting the city this year. That means lower sales of savings and insurance products. Creditor petitions for bankruptcy have risen by almost a fifth.

Earnings are likely to take a hit in the coming quarters. Credit impairment charges have already more than doubled. Restructuring costs swelled over 16 times to $123m. StanChart’s common equity tier one capital ratio slipped a percentage point from the same period last year to 13.5 per cent.

Comparison between Standard Chartered and HSBC on the following measures: Price to forward book value ratio, common equity tier one ratio, net interest margin

It must be frustrating for Mr Winters, who is attempting a turnround. Underlying profits before tax rose 16 per cent to $1.2bn, driven by Greater China and North Asia. Income from corporate clients rose 13 per cent and private banking by 14 per cent.

Shares have climbed more than 30 per cent in the past year. But a price to tangible book ratio of 0.5 times, according to S&P Global, leaves them at a steep discount to HSBC. This is despite a 7.5 per cent return on tangible equity that is in line with that of HSBC and comparable net income margins.

HSBC has scrapped its 11 per cent ROTE target. Mr Winters is sticking to his goal of 10 per cent in 2021. It will be a stretch. The figure was just 8.6 per cent for the first nine months.

Investment costs are set to increase in the fourth quarter. Weakness from Hong Kong will show up, with a delay. There is little in emerging markets to offset downside risks from Hong Kong. What weather forecasters call a “prevailing pressure system” is bearing down on the shares.

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