S&P Upgrades Standard Chartered Outlook to Positive on Profit and Risk Gains

S&P Global Ratings has revised its outlook on Standard Chartered PLC (LON:STAN) to positive from stable, signaling a potential credit rating upgrade within the next two years. The ratings agency affirmed the banking group's 'BBB+' long-term and 'A-2' short-term issuer credit ratings, attributing the improved outlook to a successful strategic transformation that has strengthened profitability and de-risked its balance sheet.

Rationale for the Revision

The positive outlook reflects S&P's view that Standard Chartered has effectively transitioned to a lower-risk operating model with higher-quality assets. This shift is evidenced by a significant improvement in the bank's financial performance and risk metrics.

Key factors cited by the ratings agency include:

• Profitability Growth: The group’s return on average common equity more than doubled, increasing to 11.3% in 2025 from 5.1% in 2021.
• Improved Asset Quality: The average credit loss rate fell sharply to approximately 0.2% over the 2021-2025 period, a stark contrast to the roughly 1.0% rate recorded between 2014 and 2018.

S&P noted that these developments have enhanced the bank's resilience and earnings capacity. Management is targeting a return on tangible equity of at least 15% by 2028, up from about 12% in 2025.

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Future Prospects and Capital Position

According to S&P, the positive outlook indicates at least a one-in-three chance that it will raise its assessment of Standard Chartered's stand-alone credit profile to 'a' from 'a-' over the next 12 to 24 months. The agency projects the bank's return on average common equity will improve to about 14% by 2028.

While the bank's Common Equity Tier 1 (CET1) ratio declined to 13.4% as of March 2026 from 14.1% at the end of 2025, S&P attributed this to growth in risk-weighted assets and share buybacks. The agency forecasts the group’s risk-adjusted capital ratio will remain stable at 9.0%-9.5% for the next two years.

Affirmed Ratings

Alongside the outlook revision for the parent company, S&P affirmed the 'A+/A-1' long- and short-term issuer credit ratings for its key operating subsidiaries, including the U.K.-based Standard Chartered Bank and Germany-based Standard Chartered Bank AG, both with stable outlooks. All issue ratings on the group's outstanding debt instruments were also affirmed.