Standard Chartered unveiled a $1bn share buyback on Friday as chief executive Bill Winters said the bank’s struggling share price does not reflect its value.
The UK-based lender said statutory pre-tax profits for the final three months of 2023 rose to $1.1bn, in line with analysts’ expectations. The figure for the full year was up 19 per cent to $5.1bn.
Winters said the emerging markets-focused bank aims to return at least $5bn to shareholders over the next three years and would take “action to deliver sustainably higher returns”. The bank also announced a 21 cents per share dividend.
“Our share price reflects little of our optimism about prospects and seems heavily influenced by . . . downside concerns,” said Winters.
The bank, which trades below its net asset value, has been under pressure to boost its share price performance and return cash to investors. StanChart’s shares have fallen 32 per cent since Winters took the helm in June 2015.
“The concerns are real, and we take them seriously,” Winters said, adding that “the value of our franchise will become increasingly clear to the broader market”.
The bank unveiled a cost-saving plan which it said would save around $1.5bn of expenses over the next three years.
Winters voiced confidence about the outlook for Asia despite the bank having taken impairment charges on the value of its stake in China Bohai Bank, a mainland lender.
It reported a $153mn charge on its Bohai stake in the fourth quarter, in addition to a $700mn charge in October. The bank also reported $282mn in impairments related to Chinese commercial real estate for 2023, accounting for more than half of its total credit impairments for the year.
The bank’s profits in Asia, its biggest market, rose 18 per cent year-on-year in the fourth quarter to $928mn. It reported a $229mn quarterly loss in Europe and the Americas, where it lost $56mn in the same period a year earlier.
“Asia is likely to be the fastest-growing region continuing to drive global growth, expanding by 4.9 per cent,” he said. He added, however, that “a sluggish housing market in China” posed a risk.
Winters’ total pay package for the year rose to £7.8mn, up 22 per cent from last year, largely because of payouts from a long-term incentive plan.
The lender’s Ventures unit, which it launched in 2018 with a plan to invest in fintech businesses, made a loss of $133mn in the fourth quarter, compared with a $127mn loss a year earlier. The unit reported an $85mn charge which it said was partly down to higher bankruptcy-related write-offs in Mox, its digital bank.
The bank’s return on tangible equity, a key measure of profitability, was 10.1 per cent for 2023, up two percentage points from a year earlier and beating analysts’ expectations of 9.5 per cent. StanChart said it was targeting an increase to 12 per cent by 2026.
StanChart’s wealth management unit, which has been a priority for the lender’s growth plans, increased revenues to $412mn in the fourth quarter, up 15 per cent from the previous year.
Net interest income rose 6 per cent to $2.4bn for the fourth quarter, in line with analysts’ forecasts, as the bank benefited from higher interest rates. The bank said it expected the figure to rise in 2024.
