StanChart Reinstates Payments, But Falling Income Signals Future Challenges


  • First-half profit up 57% to $ 2.55 billion
  • Bank to pay out about $ 350 million to shareholders
  • Income is falling, showing a long-term challenge of low interest rates
  • London stocks rise 1.2%

HONG KONG / LONDON, Aug 3 (Reuters) – Standard Chartered PLC (STAN.L) reported a 57% higher-than-expected jump in first-half profits and $ 350 million in payments to shareholders, but a decline in income showed the long term struggle ahead for the bank.

StanChart announced a $ 250 million share buyback and resumption of interim dividend payments worth 3 cents per share, or $ 94 million in total, joining other banks in rewarding shareholders after the removal of one-year regulatory restrictions on payments last month.

However, its income fell 5% due to low interest rates, which the bank hopes to hit a low, and due to declining income from its cash cow transaction banking business.

After spending the first years since his appointment in 2015 fixing StanChart’s failing balance sheet and cutting costs, CEO Bill Winters has attempted in recent years to restore growth.

The results of these efforts have been mixed, as the bank’s latest report asserts.

The bank focused on Asia, Africa and the Middle East seeks to capitalize on the growth of trade between these regions, as well as develop profitable activities such as wealth management to offset lower key rates in the world.

StanChart’s pre-tax profit reached $ 2.55 billion in January-June, from $ 1.63 billion in the same period last year, the London-based bank said, slightly above the average of analysts’ forecasts.

“We believe we will soon be back on the same performance trajectory we were on before the pandemic set us back,” Winters said.

The bank hopes to increase its annual revenue by around 5% to 7% from 2022, he said, without providing a timeline.

“Its strong position in the trade finance market gives the bank a degree of economic sensitivity that may not always be welcome, but is a useful tailwind when economies reopen as they are now,” said said Nicholas Hyett, equity analyst at Hargreaves Lansdown.

The bank’s shares rose 1.2% in London, among the top 10 performers on the FTSE benchmark (.FTSE), after its Hong Kong-listed shares fell 1%.

FUTURE PAYMENTS

StanChart delivered a record performance in its wealth management division, with revenues up 23% to $ 1.2 billion, driven by strong product sales through its new digital channels.

His profit was also boosted by a release of $ 67 million that he had set aside to cover a potential increase in bad debts due to the pandemic, after taking an additional charge of $ 20 million over the three first months of the year.

However, StanChart published less than rival HSBC (HSBA.L), which has enjoyed a greater presence in markets like Britain which have recovered faster than elsewhere thanks to high vaccination rates. Read more

StanChart’s earnings rebound was also lower than its peers on Wall Street and UK rivals HSBC and Barclays, as revenues from its core cash management and trading businesses fell.

Costs rose 8%, mostly due to rising bankers’ salaries as StanChart, like its rivals, increased bonuses for trying to retain key personnel as bank profits rebound.

“We are ready to make buyouts, but only if there are no better ways to deploy this capital,” CFO Andy Halford told analysts, saying the bank would consider targeted acquisitions in the markets. keys.

The bank also defined three areas where it said it would use its influence to help solve global societal issues, namely climate change, women’s rights and access to credit for small businesses, and “give more people the chance to participate in the global economy”.

StanChart said he would set long-term and short-term goals and that it would not be “philanthropy” but business investment.

Reporting by Lawrence White in London and Alun John in Hong Kong; Editing by Muralikumar Anantharaman

Our Standards: Thomson Reuters Trust Principles.


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