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StanChart raises goals, to start buyback as full year profit doubles


© Reuters. FILE PHOTO: A logo of Standard Chartered is displayed at its main branch in Hong Kong, China, Aug. 1, 2017. REUTERS/Bobby Yip

By Anshuman Daga and Lawrence White

SINGAPORE/LONDON (Reuters) -Standard Chartered raised its core profitability goals and promised shareholders extra payouts on Thursday, despite full year profit undershooting expectations, as it banks on inflation-battling rate hikes worldwide to boost lending.

CEO Bill Winters, who repaired StanChart’s balance sheet and slashed thousands of jobs after he took charge in 2015, has more recently come under pressure to boost growth and lift the bank’s flagging share price. The bank’s London-listed stock is around 45% below the level when Winters became CEO.

StanChart’s Hong Kong shares fell as much as 3.3%, the biggest daily percentage decline since late November, on a broadly lower market, as 2021 profits missed expectations and investors digested a growth strategy reliant on rate hikes and cost cutting.

The update from the emerging-markets focused lender, the first major British bank to report annual results, gave an early indication of how rising central bank interest rates will help lenders even as they battle to improve underlying performance.

StanChart, which earns most of its revenue in Asia, said its statutory pre-tax profit doubled to $3.3 billion in calendar 2021 from $1.6 billion in 2020, but missed the $3.8 billion average estimate of 16 analysts, as compiled by the lender.

“Confidence in our overall asset quality and earnings trajectory allows us to return significant capital to shareholders,” Bill Winters said in a statement.

The London-headquartered bank expects revenue to grow by an extra 3% per year as it benefits from rising interest rates as policymakers look to turn off years of cheap funding to fight inflationary pressures.

That will help it bring forward a goal of hitting double-digit returns to 2024, from a previously unspecified timeframe, the bank said.

StanChart said it will invest a further $300 million in China as it competes with bigger rival HSBC to grab a bigger share of the banking business in the world’s second-largest economy.

StanChart also took a $300 million writedown on the value of its investment in China’s Bohai Bank, and took a $95 million ‘management overlay’ against further expected charges in the troubled real estate sector.

It announced a $750 million share buyback, starting imminently, and a 12 cents per share dividend for 2021, up a third on 2020.

The bank, which bases its business on capturing trade flows between its key markets of Asia, Africa and the Middle East, reported credit impairment charges of $263 million, versus $2.3 billion a year earlier.

It said it will cut some $500 million in expenses from its consumer banking division as part of the bank’s broader $1.3 billion cost-cutting drive aimed at improving overall returns.

StanChart raises goals, to start buyback as full year profit doubles

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