StanChart CEO cuts dividend
Standard Chartered Plc Chief Executive Officer Bill Winters cut the dividend by half and signaled the bank won't need to raise capital immediately as he grapples with dwindling profit. The shares rose.
The interim dividend was reduced to 14.4 cents per share as adjusted pretax profit fell 44 percent to $1.8 billion from a year earlier, the London-based bank said in a statement.
The annual payout may be cut by a similar extent, which could save the lender about $1 billion, Finance Director Andy Halford said.
Winters, 53, took over from Peter Sands after two years of declining earnings and a slump in shares. With a rout in commodity prices pushing up bad loans in India and China and rising compliance costs weighing on earnings, some analysts had forecast a capital gap of as much as $10 billion. The CEO said Wednesday the bank probably won't raise capital this year.
"The capital call never came," Chirantan Barua, a London-based analyst at Sanford C. Bernstein with an outperform ont the stock, said in a note to clients.
Cutting the dividend "is a great move and minimizes the probability of a capital raise north of $5 billion in the months to come."
The shares rose 3.2 percent to 982.8 pence at 12:19 p.m. in London. They swung between gains and losses in earlier trading, gaining as much as 6.5 percent, the most since June 10. Winters, a former co-head of JPMorgan Chase & Co.'s investment bank, said the lender has "some very real challenges, but they are fixable," adding he is "happy" to have taken the job despite the scale of the task ahead.
"If we decide we need capital for the long-term benefit of the group, we will raise capital," he said in the statement. "If we decide we don't need it, we won't."
The bank will decide whether to tap investors after the Bank of England publishes the results of its annual stress test in December, Winters said on a call with reporters. The second round of tests this year will enhance scrutiny of firms' developing markets and commodities exposure.