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Standard Chartered announced a $1bn share buyback on Friday after the bank’s pre-tax profits rose in the fourth quarter of last year.
The UK-based lender said statutory pre-tax profits for the final three months of 2023 reached $1.1bn, in line with analysts’ expectations. The figure for the full year was up 19 per cent to $5.1bn.
Chief executive Bill 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”.
It comes at a time when the bank, which trades below its net asset value, has been under pressure to boost its share price performance and return cash to investors.
Winters struck a defiant tone about the bank’s share price, which is down 32 per cent since he took the helm in June 2015.
“Our share price reflects little of our optimism about prospects and seems heavily influenced by . . . downside concerns”, he said. “The concerns are real, and we take them seriously.”
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 November. The bank makes much of its profit in the region.
“Whilst we expect global growth to stay below potential at 2.9 per cent in 2024, as high interest rates put a drag on consumers as well as investment spending, 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.
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.
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.
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