Standard Chartered PLC is to hand back US$750 million through a share buyback as the Asia-focused lender becomes more upbeat that earnings growth would return amid rising interest rates.
Adjusted pretax profits for last year rose 55 percent to US$3.9 billion, missing a company-compiled estimate of US$4.3 billion, a statement from the London-based lender said yesterday.
The bank painted an optimistic outlook as it pointed to further potential rate hikes by major central banks and joins others in boosting shareholder payouts after COVID-19 pandemic-related restrictions expired last year.
Photo: Bloomberg
“We have committed today to a set of far-reaching actions, to deliver a return on tangible equity of 10 percent by 2024,” Standard Chartered CEO Bill Winters said in the statement.
The bank is also planning to invest US$300 million in China to drive profits in the world’s second-largest economy.
Low rates have hit the industry’s margins for years, with an internal Standard Chartered calculation concluding that the low-rate environment had cost the company about US$1.5 billion in lost profits.
Last year, Standard Chartered announced a US$250 million buyback and a US$0.09 dividend that underwhelmed investors. Expectations had been building the bank would rectify this at its full-year results, with analysts at Jefferies International Ltd going so far as predicting a US$1.7 billion buyback based on the amount of excess capital they said the lender would have on hand.
Standard Chartered last year warned of increasing staff costs on the back of higher performance-related pay, exacerbated by intense competition among banks.
Speaking last month, Winters said the lender was having to look for savings across its business to keep a lid on expenses as the lender is forced to pay up for “pricey talent.”
A drop in impairments also helped earnings. They declined to US$263 million last year from US$2.3 billion in 2020, when bad debt spiked during the COVID-19 pandemic.
In June, Winters is to celebrate his seventh anniversary as CEO. In the past 12 months he has attempted to refocus investor attention on the investments made by the bank in digital projects, such as its Hong Kong virtual bank and its online banks in Africa.
Like rival HSBC Holdings PLC, Standard Chartered is targeting the growth of its Asian wealth business as a source of future profits.
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