StanChart re­sumes div­i­dend pay­out as 2017 profit soars

Banks have been strug­gling to lift earn­ings from loans as in­ter­est rates hover at his­toric lows

Arab News - - BUSINESS -

HONG KONG: Stan­dard Char­tered Plc re­sumed its div­i­dend pay­out af­ter un­veil­ing a six-fold jump in an­nual pre­tax profit, in­di­cat­ing the bank was mak­ing progress in its re­turn to rev­enue growth fol­low­ing a painful two-year re­struc­tur­ing.

Pre­tax profit at the emerg­ing mar­kets-fo­cused lender jumped to $2.41 bil­lion in its lat­est fi­nan­cial year, up from $409 mil­lion in 2016, but be­low the $2.7 bil­lion av­er­age of 10 an­a­lysts’ es­ti­mates, ac­cord­ing to Thom­son Reuters data.

Op­er­at­ing in­come, closely watched by in­vestors who want StanChart to de­liver profit from core busi­ness growth rather than lower pro­vi­sions for bad loans, was up nearly 3 per­cent to $14.43 bil­lion, ac­cord­ing to the bank’s state­ment on Tues­day.

The bank said its board rec­om­mended re­sum­ing a div­i­dend on the back of the im­prov­ing fi­nan­cial per­for­mance and strong cap­i­tal. It pro­posed a full year div­i­dend of 11 US cents per or­di­nary share.

StanChart’s Hong Kong shares rose more than 2 per­cent in af­ter­noon trad­ing fol­low­ing the re­sults and the div­i­dend an­nounce­ment, eras­ing their losses ear­lier in the day.

Af­ter com­ing through the fi­nan­cial cri­sis rel­a­tively un­scathed, StanChart ran into trou­ble when global com­mod­ity prices crashed and bad debts started to rise on its books fol­low­ing over-ex­u­ber­ant lend­ing.

In­vestors have been hop­ing that it can re­turn to rev­enue growth af­ter the re­struc­tur­ing un­der chief ex­ec­u­tive Bill Win­ters who has cut more than 15,000 jobs and axed busi­ness lines such as Asian eq­ui­ties.

The bank, which makes the bulk of its rev­enue in Asia, skipped pay­ing div­i­dends for 2016 and for the lat­ter half of 2015, cit­ing an on­go­ing re­struc­tur­ing and reg­u­la­tory un­cer­tainty.

“The Board un­der­stands the im­por­tance of the or­di­nary div­i­dend to share­hold­ers and in­tends to in­crease the full year div­i­dend per share over time,” StanChart’s Chair­man Jose Vi­nals said in the bank’s earn­ings state­ment on Tues­day.

He said the higher div­i­dend in fu­ture would de­pend on the bank’s earn­ings out­look, group and lo­cal reg­u­la­tory cap­i­tal re­quire­ments and op­por­tu­ni­ties to in­vest to grow the busi­ness.

StanChart’s core cap­i­tal ra­tio, an­other closely watched mea­sure of lenders’ fi­nan­cial strength, re­mained un­changed at 13.6 per­cent last year com­pared to 2016, but above the lender’s tar­geted range of 12 per­cent to 13 per­cent.

StanChart is look­ing to drive re­turns by boost­ing lend­ing to key in­dus­trial sec­tors and top clients, in a move that could cut about a dozen in­vest­ment bank­ing jobs as it di­als back in ar­eas such as pri­vate eq­uity, sources told Reuters ear­lier this month.

Some of those jobs will likely be re­de­ployed in other parts of the main cor­po­rate bank­ing unit that it is try­ing to strengthen, given its aim to in­crease lend­ing to top com­pa­nies in its main mar­kets of Asia, Africa and the Mid­dle East.

The main branch of Stan­dard Char­tered in Hong Kong. StanChart’s Hong Kong shares rose more than 2 per­cent in af­ter­noon trad­ing fol­low­ing the re­sults and the div­i­dend an­nounce­ment. (Reuters)

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