Shares in Asia-focused bank Standard Chartered (LSE: STAN) are atop the FTSE 100 leaderboard today, after it released an interim management statement for the quarter to 31 March. With trading conditions remaining challenging, Standard Chartered’s operating profit before tax fell from $1.5bn in the first quarter of last year to $539m in the same quarter of the current year. That’s a decline of around 64% and according to the bank was caused by depressed commodity prices, volatility in Chinese markets, weak emerging market sentiment and concerns surrounding interest rate and other policy actions.

Good progress

Despite such a large fall in profitability, investors seem to be somewhat upbeat about Standard Chartered’s outlook. That’s largely because it is making good progress on its strategic objectives in terms of managing costs, implementing an ambitious investment programme, reducing risk and maintaining a well-capitalised and liquid balance sheet.

In terms of changes being made to the bank’s structure, Standard Chartered remains confident about total costs for restructuring amounting to $3bn before the end of 2016. And with its loan impairment of $471m down from the level in the fourth quarter of the previous year, and regulatory costs of $243m in-line with those of the same quarter from last year, Standard Chartered’s long term outlook could be on the up thanks to improved risk management and compliance procedures that  are being introduced.

With Standard Chartered’s management team seemingly doing a sound job of improving the bank’s financial performance and financial strength, investors may be wondering whether now is a good time to buy it for the long term. Certainly, Standard Chartered remains some way off full-health and it is likely to take years rather than months before it returns to being so. However, it has upbeat forecasts and an appealing valuation which indicate that a wide margin of safety is on offer. This could lead to high levels of profitability for investors in the bank in the coming years.

A long-term star?

For example, Standard Chartered is expected to increase its pretax profit from £950m in the current year to just under £1.9bn in the 2017 financial year. That’s a rise of over 100% and could be enough to significantly improve investor sentiment. Certainly, all forecasts are potentially subject to downgrades, but with Standard Chartered trading on a price to earnings growth (PEG) ratio of only 0.1, it appears to have a wide margin of safety so that even if profits disappoint somewhat, its shares could still beat the wider index.

Despite today’s share price rise of over 10%, shares in Standard Chartered have still lagged the FTSE 100 by 33% over the last year. Looking ahead, such a level of underperformance seems to be rather unlikely because the bank appears to have a sound strategy through which to navigate the difficult trading conditions which it faces. As such, for investors who can live with above average volatility, Standard Chartered could prove to be a stellar long term buy.

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Peter Stephens owns shares of Standard Chartered. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.