PLANS FOR US$1B SHARE BUYBACK

Lender’s first in at least 20 years signals progress in turnaround strategy

STANDARD Chartered Plc (StanChart) unveiled plans for an up to US$1 billion (RM4.14 billion) share buyback, its first such move in at least 20 years as quarterly profit rose 10 per cent, signalling progress in its turnaround strategy.

The bank’s shares rose four per cent yesterday against a 0.5 per cent decline in the STOXX European banks index, as its longsuffering investors interpreted the buyback as a statement of confidence about its prospects of growing returns.

“They are good results, and about time, too. It’s been a long wait,” said Hugh Young, managing director for Asia Pacific at Aberdeen Standard Investments, StanChart’s 15th biggest shareholder.

The share repurchase plan comes after StanChart chief executive officer (CEO) Bill Winters unveiled in February ambitious plans to double return on tangible equity and dividends in three years by cutting US$700

million in costs and boosting income.

Winters won plaudits from investors for his initial three-year plan that began in June 2015 with a focus on revamping the risk culture, slashing costs and purging bad loans that had accumulated in a post-2008 period of over-aggressive growth.

But the CEO then faced a tougher task, as StanChart battled to boost revenue at a time when slowing economic growth in core Asian markets, volatile commodities markets and the impact of the United States fines hammered profits.

The bank’s London shares have fallen 42 per cent since the former JPMorgan banker took over as CEO.

Stanchart said yesterday in its quarterly earnings filing it had received regulatory approval to start buying back shares worth up to US$1 billion.

Pre-tax profit for StanChart, which focuses on Asia, Africa and the Middle East, grew to US$1.38 billion in the January-March period from US$1.26 billion a year ago, it said.