StanChart CEO closes in on ROE goal in turnaround sign

London

STANDARD Chartered Plc's Bill Winters is closing in on his return on equity target after three years of struggling to transform the lender.

Bolstered by retail banking and wealth management in Hong Kong, Standard Chartered earlier on Wednesday posted its highest revenue so far under the chief executive's leadership, while limiting cost increases. The result suggests Mr Winters, 56, may finally have some momentum behind his turnaround plan, building on a reinstatement of the dividend and a return to profit in 2017.

"We are determined to pass that milestone as soon as we can in a safe and sustainable manner," Mr Winters said in a statement, citing the 8 per cent ROE target as achievable in the "medium term". The firm reported a 7.6 per cent underlying ROE for the first quarter, up from 6.3 per cent a year earlier, a stock exchange filing in Hong Kong showed.

Revenue grew fastest in Greater China and North Asia, accounting for 40 per cent of the total.

In 2016 Standard Chartered set targets for an 8 per cent ROE by the end of this year, rising to 10 per cent by 2020. However, the target is still below the bank's cost of equity, which is about 11 per cent.

Key numbers in the firm's earning statements: Operating income rose 7 per cent to US$3.9 billion in the first quarter, nearly matching analysts' estimates, led by transaction banking and mortgages. That compared with the average US$3.95 billion estimate of four analysts surveyed by Bloomberg News.

Statutory pre-tax profit rose 20 per cent to US$1.2 billion, close to analysts' expectations. Loan impairments were US$191 million, at a similar level to the same period last year. Costs rose 3.8 per cent to US$2.5 billion.

Standard Chartered lost US$5 billion of revenue between 2012 and 2016 after a binge of high-risk emerging-market lending left it saddled it with billions of dollars of bad loans, money-losing businesses and misconduct penalties.

Mr Winters has cut thousands of jobs, raised capital to shore up the balance sheet, and overhauled the compliance systems.

Still, the firm remains dogged by misconduct issues, having recently been fined for transferring client assets to help dodge tax transparency rules and placing its head of compliance on leave after allegations of harassment, Bloomberg News reported last week. BLOOMBERG