StanChart brings back dividend as profits jump

London

STANDARD Chartered Plc restored its dividend after a two-year suspension and came close to analysts' forecasts for revenue and profit, suggesting that chief executive officer Bill Winters is gaining ground in getting the bank back on track.

The lender's shares rose as much as 3.3 per cent in Hong Kong after it announced a full-year dividend of 11 US cents per share and said it plans to increase payouts as its performance improves.

The chief executive cited "the significant improvement in underlying profits, a strong capital position and emerging clarity on regulatory capital requirements" as allowing for dividends.

"We are encouraged by our start to 2018," he added in a statement.

Mr Winters, 56, spent his first three years cleaning up the balance sheet and culture of the firm after an explosion of emerging market lending led to billions of dollars of bad loans, money-losing businesses and misconduct penalties.

Now the CEO has to convince investors that he can replace some of the US$5 billion of revenue lost between 2012 and 2016.

Revenue rose 2.6 per cent to US$14.4 billion last year, close to the average US$14.5 billion estimate of 16 analysts surveyed by Bloomberg, and the first year-on-year rise since 2012.

Underlying pretax profit for 2017 almost tripled to US$3.01 billion, close to expectations for US$3.1 billion. Mr Winters cautioned that the bank still has a long way to go.

"We are working hard to establish income growth momentum across all our businesses, and our return on equity continues to fall short of our cost of capital," he said, adding that "this franchise is capable of much more".

The bank's common equity Tier 1 capital ratio, a measure of financial strength, was 13.6 per cent, matching analysts' estimates.

The dividend was below Goldman Sachs Group Inc expectations of 20 US cents per share.

Return on equity rose to 3.5 per cent from 0.3 per cent a year earlier. That is still less than half the 8 per cent that the bank is targeting as an "initial milestone".

Mr Winters suspended the dividend in 2015 alongside a US$5.1 billion capital raise from investors and a programme to cut 15,000 jobs and restructure or exit US$100 billion of risky assets. BLOOMBERG