Standard Chartered Hikes Targets For 2022 And Will Begin Share Buyback While Its Full-Year Profit Doubles

StanChart Hikes Targets For 2022 And Will Begin Share Buyback While Its Full-Year Profit Doubles
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Despite full-year earnings falling short of estimates, Standard Chartered raised its core profitability targets and offered higher dividends to shareholders on Thursday, as it counts on inflation-fighting rate hikes throughout the world to stimulate lending.

After taking over in 2015, CEO Bill Winters rebuilt StanChart’s balance sheet and cut hundreds of jobs, but he has recently been under pressure to accelerate growth and lift the bank’s sagging share price. The bank’s stock on the London Stock Exchange is almost 45% lower than it was when Winters took over as CEO.

On a broadly lower market, StanChart’s Hong Kong shares plummeted as much as 3.3%, the worst daily percentage drop since late November, as 2021 profits fell short of forecasts and investors digested a growth strategy based on rate hikes and cost-cutting.

Indications of how hiking of interest rates by central banks would benefit lenders while they struggle to improve their underlying performance were available as an early hint from the report from StanChart – which is a bank that is focused on emerging markets, as it was the first major British lender to announce annual results.

Also Read: Standard Chartered Chooses Starling Bank Tech for Product Launch.

StanChart, which generates the majority of its business in Asia, said its statutory pre-tax profit doubled to $3.3 billion in calendar 2021 from $1.6 billion in 2020 but fell short of the lender’s $3.8 billion average analyst projection.

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

As regulators prepare to switch off years of cheap funding to combat inflationary pressures, the London-based bank anticipates income to expand by an additional 3% every year.

According to the bank, this will enable it to move forward with a goal of achieving double-digit returns to 2024 from a previously undefined timeframe.

StanChart announced an additional $300 million investment in China as it fights with bigger rival HSBC for a larger piece of the banking market in the world’s second-largest economy.

A $300 million writedown on the value of its investment in China’s Bohai Bank was taken by StanChart, in addition to a $95 million ‘management overlay’ against additional potential real estate costs.

It also announced a $750 million share repurchase program that will begin soon, as well as a 12 cents per share dividend for 2021, up a third from 2020.

Credit impairment costs of $263 million, compared to $2.3 billion a year ago, were announced by the bank, which makes its money by harnessing trade movements between Asia, Africa, and the Middle East.

It announced that it will cut $500 million in expenses from its consumer banking segment as part of a $1.3 billion cost-cutting initiative aimed at enhancing overall returns.

Also Read: Standard Chartered’s first green trade finance facility begin in the UAE

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