StanChart raises forecasts, unveils US$1 billion buyback as profit jumps 28%
STANDARD Chartered Bank (StanChart) raised a key performance metric and announced a new US$1 billion share buyback on Thursday (Feb 16) after posting a 28 per cent rise in annual pre-tax profit, as global interest-rate hikes boosted its lending revenue.
StanChart’s performance, like that of its global peers, was aided by aggressive central bank interest-rate hikes aimed at combating inflation, which in turn allowed lenders to charge more after a decade of near-zero rates.
The lender said its latest share buyback would start imminently.
StanChart also upgraded its performance forecast, saying it was now expecting to achieve a return on tangible equity – a key profitability metric – of 10 per cent this year and 11 per cent in 2024. It had previously targeted 10 per cent for 2024.
The Asia, Africa and Middle East-focused bank reported statutory pre-tax profit of US$4.3 billion for 2022. That came below the US$4.73 billion average of analyst forecasts compiled by the bank, but beat the US$3.35 billion it made in 2021.
StanChart’s reported earnings came amid a burst of renewed takeover speculation; this was sparked by First Abu Dhabi Bank PJSC’s rejection of media reports that it was eyeing a bid for the London-based lender. The takeover chatter has boosted StanChart’s shares.
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Last week, First Abu Dhabi, the United Arab Emirates’ biggest lender, said it was not evaluating an offer for the bank, having previously acknowledged it had at one time worked on a potential bid.
StanChart’s business lines showed a mixed performance, highlighting the work that chief executive Bill Winters, the longest-running chief of a major European bank, has to do to get the lender firing on all cylinders.
The bank’s financial markets trading business reported a record income, up by 21 per cent. This came as accelerating inflation and Russia’s invasion of Ukraine made for volatile markets, driving frenzied activity by institutional clients throughout 2022.
But its wealth management business reported a 17 per cent drop in income, as wealthy individual customers became more risk-averse and Covid-19 restrictions curbed face-to-face sales of investment products in China and other markets.
StanChart also took a higher-than-expected US$838 million credit impairment for rising bad loans, as accelerating inflation and slowing economies in major markets pressured borrowers’ ability to repay loans.
The impairments included US$582 million for expected bad loans in China’s troubled real estate market. REUTERS
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