Proactive Investors - Standard Chartered PLC (LON:STAN) upgraded expectations for return on equity and launched a new US$1bn buy-back as it delivered full-year results and said it expects the reopening of China to support further growth.
“We are upgrading our expectations, and are now targeting a return on tangible equity approaching 10% in 2023, to exceed 11% in 2024, and to continue to grow thereafter,” said chief executive Bill Winters.
Shareholders will also receive a final dividend of 14 cents per share resulting in a 50% increase to the full-year dividend to 18 cents. The buy-back will start “imminently” and knock around 40 basis points (bps) off the CETI ratio, the bank said.
The Asia-focused bank reported full-year statutory operating income of US$16.32bn, up 11% from US$14.70bn a year ago while pre-tax profits rose by 28% to US$4.29bn from US$3.35bn.
On an underlying basis pre-tax profits rose 13% to US$4.76bn from US$4.20bn.
Net interest income rose 18% at constant currency, representing around half of total income growth, boosted by a 21% advance in financial markets, although wealth management saw a 17% decline reflecting risk-averse customer sentiment and the impact of COVID-19 restrictions.
Return on tangible equity of 8.0% was up 120bps year-on-year and net interest margin rose 20bps year-on-year to 1.41%, with rising interest rates partially offset by hedges and product mix changes.
But credit impairment charges of US$838mln were up US$575mln year-on-year, reflecting a US$582mln charge for Chinese commercial real estate exposure and a US$283mln charge for sovereign downgrades relating to Pakistan, Ghana and Sri Lanka.
Other charges included a US$308mln impairment charge relating to the investment in China Bohai Bank.
Standard Chartered said it remains strongly capitalised with the CET 1 ratio at 14.0%, at the top of the 13-14% target range and little changed from a year ago (14.1%).
Winters said the dividend payments and share buy-back take “total shareholder distributions announced since the start of 2022 to US$2.8bn, more than half the three-year US$5bn target we set ourselves by 2024.”
Looking ahead, the bank said income is forecast to grow in the 8-10% range and that full-year average net interest margins of around 175bps in 2023 and above 180bps in 2024 are expected.