HONG KONG/LONDON (Reuters) – Standard Chartered STAN.L posted a smaller-than-expected 40% slide in third-quarter profit as it lowered loan loss expectations linked to the coronavirus pandemic, but warned it would take longer to hit a key profitability target.

Underscoring its improved near-term performance, StanChart said it may resume dividend payments when it releases full-year results in February.

The bank reported credit impairment charges of $358 million for the three months ended Sept. 30, well below the preceding quarter’s $611 million and a consensus estimate of $614 million.

Despite the better-than-expected quarterly performance, the bank’s shares fell more than 5% in London as investors took note of the lender’s cautious outlook and its acknowledgement that the pandemic has pushed back its profit goals.

The bank, which had previously targeted a return on tangible equity (ROTE) of 10% by 2021, said in February the goal would take longer and on Thursday gave a clearer picture still of how the pandemic had hit efforts to improve profits.

“I would say directionally COVID has probably put us back a couple of years,” Chief Financial Officer Andy Halford told reporters.

StanChart said the results reinforced its view that credit impairments would be lower in the second half of the year than the first, as lenders worldwide report loan losses stabilising.

The key question now facing analysts and investors is whether various government support measures such as emergency loans and furlough schemes have genuinely mitigated losses, or merely pushed them back into next year.

FUTURE IMPAIRMENTS

“Given the extreme economic pressures relating to the persistence of COVID-19, partially addressed through the efficacy of government support measures, it is not possible to reliably predict the quantum or timing of future impairments,” StanChart said.

Lower provisions helped it report an underlying pretax profit for the third quarter of $745 million, above the $502 million average of analysts’ forecasts compiled by the bank.

StanChart, which is focused on Asia, Africa and the Middle East, also struck a positive note when forecasting client demand, saying it expected improvement next year on the back of a faster-than-expected economic recovery in key markets including China and India.

“Lower interest rates continue to impact income but we remain well-positioned to meet our financial targets, albeit with some delay,” Chief Executive Bill Winters said in the earnings statement.

StanChart said last month it would merge several businesses and cut its number of senior executives.

Both StanChart and rival HSBC HSBA.L, whose shares have nearly halved in value this year, are also grappling with political uncertainty in Hong Kong, a key market for both.

StanChart said it was focusing on generating more fee-based income, particularly from financial markets and wealth management businesses, where it was seeing increased client demand, to offset the impact of low interest rate.