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Standard Chartered announces US$1 billion buyback as profit beats

Bloomberg • 3 min read
Standard Chartered announces US$1 billion buyback as profit beats
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Standard Chartered pledged to hand back more money to shareholders as it outlined efforts to improve returns and reduce complexity at the emerging markets-focused lender.

Reporting fourth-quarter profits that beat analyst estimates, the London-headquartered bank said it would kick off a fresh US$1 billion buyback. The firm said a new “Fit for Growth” program will save about US$1.5 billion in expenses over next three years, but also add a similar amount to costs for the permanent organizational changes.

CEO Bill Winters, who joined the group almost nine years ago, has been looking for ways to bolster returns for investors and galvanize the stock, which has sunk more than 20% in the past year. 

“I am acutely aware of the underperformance of our share price in recent months, which I believe does not reflect the progress we are making,” Chairman Jose Vinals said in the statement. “Both the Board and the Management Team are absolutely focused on delivering sustained, long-term value for our shareholders.”

The lender reported fourth-quarter adjusted pretax profit rose 63% to US$1.06 billion, beating an estimate of US$989.6 million. It declared a final dividend of 21 cents a share, raising the full-year payout by 50%. Standard Chartered unveiled new guidance, targeting a 12% return on tangible equity in 2026 and a 5% to 7% rise in operating income for 2024 to 2026.

Despite its exposure to some of the world’s fastest-growing markets in Asia, Africa and the Middle East, Standard Chartered shares have performed poorly in recent months and are 40% below the level they were when Winters joined the bank in June 2015.

See also: HSBC cuts a dozen investment bankers in Asia on deals slump

The bank is weighing restructuring its institutional banking arm, the unit that houses the firm’s investment bankers and traders, Bloomberg News reported earlier. Options include separating its investment bank from its corporate and commercial banking operations, according to people familiar with the matter. The move could lead to job cuts and is one of several possibilities being weighed with no final decisions made yet, the people said, asking not to be identified discussing matters still under consideration.

StanChart logged a profit decline in the third quarter, hit by charges related to investments in China. Bigger rival HSBC Holdings earlier in the week took a hit to profits as it made impairments on investments in China, which is being dogged by weak confidence and a prolonged crisis in its real estate market. 

StanChart saw heavy selloff in its shares when it announced its third-quarter earnings as investors reacted to news of fresh charges against Chinese real estate and a US$700 million impairment on its stake in China Bohai Bank. The stock tumbled more than 12% on Oct. 26, its biggest loss since August 2012. 

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