StanChart raises income forecast, adds US$1 billion buyback
STANDARD Chartered raised its forecasts for income growth for 2023 and doubled down on share buybacks as rising interest rates propelled earnings.
The bank reported a 27 per cent rise in adjusted pretax profit for second quarter to US$1.6 billion, according to a statement. The results exceeded the US$1.39 billion Bloomberg-compiled analyst estimate.
The lender said income will increase in the 12 per cent to 14 per cent range for 2023, up from 10 per cent, and announced a new US$1 billion buyback programme. Its profits were boosted by a strong performance in transaction banking amid rising rates and trading.
Rate hikes have been a general boon for the banking industry. In April, Standard Chartered reported its largest quarterly profit since the first quarter of 2014 as rising interest rates boosted its bottom line. The lender also benefitted from an economic rebound in Asia as the region’s markets exited from Covid lockdowns.
“We remain strongly profitable, highly liquid, and well capitalised,” chief executive officer Bill Winters said in a statement.
The lender also said it expects return on tangible equity to be 10 per cent for the full year, an improvement from “approaching 10 per cent” guidance previously, reflecting its “confidence” in the business.
Investors in the emerging markets-focused bank were given a strong hint on its performance last month by Saleem Razvi, chief financial officer of Standard Chartered in Asia, who said at a Goldman Sachs Group conference that the bank’s financial markets unit, which incorporates its trading operations, would be up from the same period last year. Razvi had also forecast an increase in income from the lender’s wealth management unit.
Despite the growth, Standard Chartered has remained focused on keeping a lid on costs. The bank plans to cut costs by more than US$1 billion through 2024 and in June embarked on selected layoffs of staff in Singapore, London and Hong Kong. Bloomberg Intelligence analysts said this month that delivering on costs was key to the bank meeting its target of a 10 per cent return on tangible equity this year.
Attention focused on the bank at the start of the year after Bloomberg reported that First Abu Dhabi Bank PJSC had explored a potential bid for the company. FAB said in February it had considered an offer, but was not currently doing so meaning it could not make a takeover approach for six months, except under certain circumstances. This period expires next month. BLOOMBERG
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