StanChart shares fall after return to profit without dividend

[LONDON] Standard Chartered shares fell by 3 per cent on Friday as the lender returned to profit but held off on paying a dividend as it grapples with costs from chief executive Bill Winters's restructuring program.

StanChart made a statutory pretax profit of US$409 million for 2016, a year after reporting its first loss in more than a quarter century on rising costs and bad loans.

The bank said it would not pay a dividend for 2016, however, as its restructuring is still ongoing and it faces regulatory uncertainty, chief financial officer Andy Halford told reporters on a conference call.

The result beat the US$366 million expected by analysts, Thomson Reuters data showed.

"Our financial returns are not yet where they need to be and do not reflect the Group's earnings potential," CEO Winters said in the statement.

The bank's shares fell 3 per cent in London by 0907 GMT.

Since taking the helm in June 2015, Mr Winters has axed more than 15,000 jobs, closed the bank's stock trading business and overhauled its management team as he seeks to restore a slimmed-down StanChart to growing profitability.

Mr Winters last November branded the bank's income and profit levels unacceptable as the emerging markets-focused bank missed out on bumper trading profits reaped by rivals more focused on the United States and Europe.

Despite the muted profit growth, the lender increased its staff bonus pool by 5 per cent to reflect growth in its underlying profits, while rival banks have mostly cut payouts this year.

StanChart reported a US$215 million loss from its stake in Indonesian lender PT Bank Permata Tbk, on rising bad loans and restructuring costs.

StanChart is seeking to reduce its interests in the South-east Asian country to a single entity to comply with regulations, either by merging its branch with Permata or selling its stake in the local lender.

Indonesian tycoon Tahir last month expressed interest in buying all of Permata, starting with StanChart's stake.

REUTERS