Bloomberg News reports that the bank said earlier this week it had $7.3bn of loans to oil refineries at the end of June, a 24% increase since the end of 2015. While Standard Chartered cited the industry’s “broadly steady” profit margins for the period, some of the world’s biggest oil producers have since reported that this metric has tumbled amid a glut of gasoline.
Investors cheered the bank's drop in loan impairment charges Wednesday as a signal that it has moved past the worst of credit issues that peaked last year when Standard Chartered posted more provisions against bad loans than HSBC, a bank four times its size. The increase in refiner lending shows risks remain even as Chief Executive Officer Bill Winters shrinks the bank’s overall commodities exposure.
“I’m not sure it’s the area where most investors would like to see them growing at the moment,” said Joseph Dickerson, an analyst in London with Jefferies Group who has an underperform rating on the shares. “Hopefully they’re getting paid for the risk.”
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