Standard Chartered to pay dividend as pre-tax profits soar
Standard Chartered has resumed paying dividends after posting a six-fold jump in annual pre-tax profit, but weaker-than-expected revenue figures dampened any celebration from investors.
A restructuring plan spearheaded by chief executive Bill Winters, who arrived in 2015 and has since cut more than 5,000 jobs and dumped entire business lines including Asian equities, has helped the bank cope with hefty bad debts piled on its books.
Years of over-exuberant lending saw the emerging markets-focused bank, which makes the bulk of its income in Asia, cancel its dividend in 2015 after posting its first loss in a quarter of a century the previous year.
After reporting a $2.41bn (€1.96bn) pre-tax profit for 2017, up from $409m the year before, it proposed to restore a full-year dividend of 11c per ordinary share.
But profit was below the $2.7bn average of 10 analysts’ estimates and the bank also fell short of expectations on income after a weak performance in its financial markets business. The bank’s share price dipped as a result.
Mr Winters said priorities for 2018 centred on fulfilling the potential the bank’s management believes is there but has not yet been fully realised, including by increasing efficiency and investing in innovation and people.
Operating income, closely watched by investors who want StanChart to deliver profit from core business growth rather than lower provisions for bad loans, was up nearly 3% to $14.43bn for the full year.
But Joseph Dickerson, equity analyst at Jefferies, said that underlying profit for the fourth quarter missed expectations by 34%.
London-headquartered StanChart is looking to drive returns by boosting lending to key industrial sectors and top clients. Mr Winters said, yesterday, StanChart needed to establish income growth momentum across all its businesses, which will help it generate income at a new target compound annual growth rate of 5%-7% in the medium term.
The results showed that some of its business lines are still struggling to deliver. Underlying income in the corporate and institutional banking division fell 3% year-on-year, as its financial markets unit suffered from the low global market volatility in 2017 that dampened trading activity and dragged income down by $490m.
StanChart’s private banking division reported a small $1m loss for the year, as costs rose from investments.
