StanChart CEO cuts div­i­dend

The Pak Banker - - FRONT PAGE -

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.

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