StanChart shares hit nine-year high on raised buyback plans
STANDARD Chartered unveiled plans to return at least US$8 billion to investors in the coming years as it reported better-than-estimated third-quarter earnings from its wealth and trading businesses.
The new plans for shareholder payouts are up from StanChart’s previous commitment to return at least US$5 billion to shareholders by 2026. The company also said it is now aiming to improve its return on tangible equity to 13 per cent by that time, up from a previous target of 12 per cent.
“What gives us the confidence is the strength of our businesses across all areas,” chief financial officer Diego De Giorgi said. “It is a business that is firing on all cylinders.”
Shares of StanChart climbed as much as 3.4 per cent, touching their highest level in nine years and making the bank the best performer in the FTSE 100 Index on Wednesday (Oct 30).
The London-headquartered bank said adjusted pretax profit rose 37 per cent to US$1.81 billion in the quarter, beating the US$1.48 billion Bloomberg-compiled analyst estimate. Overall results were helped by net inflows of billions of dollars of new money in the wealth business.
The company is now planning to double its investment in the wealth business in the coming years, sinking US$1.5 billion into the division and increasing the number of relationship managers it has across its ranks by 50 per cent, according to a presentation.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
De Giorgi described the bank’s wealth unit as a “gem” and said the company is planning to hire more staffers in financial centers such as Hong Kong, Singapore, and Dubai as it looks to expand those relationship management teams.
“We are winning,” De Giorgi said on a conference call with reporters. “Look at the flows that we are experiencing, it’s very clear that we are gaining market share in the markets where we operate.”
Cost-cutting efforts
As part of an effort to trim costs, StanChart said it’s “exploring the opportunity to sell all or part of a small number of businesses where the strategic rationale is not sufficiently compelling” and expects these actions to take effect over the next two years. De Giorgi declined to comment on what businesses the company is considering disposing of as part of the new program.
StanChart is also reviewing relationships with clients that have just one lending relationship with the bank in order to prioritise higher-returning customers.
StanChart and its rivals have benefited from China’s recent rollout of stimulus, which the country has said is centered around lifting domestic demand and hitting the nation’s annual growth goal. Officials in recent weeks have unleashed their boldest economic stimulus since the pandemic, with a package that included rate cuts, more cash for banks and housing sector support, measures including a push to steady local government debt have been seen as more focused on mitigating risks than stimulating growth.
That’s what gave some analysts pause about Wednesday’s results.
“We remain cautious on Asian banks,” Ed Firth, an analyst at Keefe Bruyette & Woods, said in a note to clients. “China stimulus has clearly provided short term excitement, but it is tough to see that this addresses fundamental structural and geopolitical challenges facing the region.” BLOOMBERG
Share with us your feedback on BT's products and services
