Standard Chartered announced a $1 billion share buyback program on Friday, concurrent with Chief Executive Officer Bill Winters’ assertion that the bank’s current share price does not adequately reflect its intrinsic value.
The United Kingdom-based financial institution reported statutory pre-tax profits of $1.1 billion for the final quarter of 2023, aligning with market analysts’ projections.
Furthermore, its full-year figure surged by 19% to reach $5.1 billion.
According to a Financial Times report, Winters emphasized the bank’s commitment to its shareholders, outlining a plan to distribute at least $5 billion to them within the next three years.
Dividend of 21 cents per share
Additionally, he expressed the intention to implement measures aimed at consistently enhancing returns. As part of this strategy, the bank declared a dividend of 21 cents per share.
- “Our share price reflects little of our optimism about prospects and seems heavily influenced by . . . downside concerns,” said Winters.
The bank, which trades below its net asset value, has been under pressure to boost its share price performance and return cash to investors.
StanChart’s shares have fallen 32% since Winters took the helm in June 2015.
- “The concerns are real, and we take them seriously,” Winters said, adding that “the value of our franchise will become increasingly clear to the broader market”.
Cost-saving plan
The bank unveiled a cost-saving plan which it said would save around $1.5 billion in expenses over the next three years.
Winters voiced confidence about the outlook for Asia despite the bank having taken impairment charges on the value of its stake in China Bohai Bank, a mainland lender.
It reported a $153 million charge on its Bohai stake in the fourth quarter, in addition to a $700 million charge in October.
The bank also reported $282 million in impairments related to Chinese commercial real estate for 2023, accounting for more than half of its total credit impairments for the year.
The bank’s profits in Asia, its biggest market, rose 18% year-on-year in the fourth quarter to $928 million.
It reported a $229 million quarterly loss in Europe and the Americas, where it lost $56 million in the same period a year earlier.
- “Asia is likely to be the fastest-growing region continuing to drive global growth, expanding by 4.9%,” he said. He added, however, that “a sluggish housing market in China” posed a risk.
Winters’ total pay package for the year rose to £7.8 million, up 22% from last year, largely because of payouts from a long-term incentive plan.
The lender’s Ventures unit, which it launched in 2018 with a plan to invest in fintech businesses, made a loss of $133 million in the fourth quarter, compared with a $127 million loss a year earlier.
The unit reported an $85 million charge which it said was partly down to higher bankruptcy-related write-offs in Mox, its digital bank.
Targets for 2026
The bank’s return on tangible equity, a key measure of profitability, was 10.1% for 2023, up two percentage points from a year earlier and beating analysts’ expectations of 9.55. StanChart said it was targeting an increase of 12% by 2026.
StanChart’s wealth management unit, which has been a priority for the lender’s growth plans, increased revenues to $412 million in the fourth quarter, up 15% from the previous year.
Net interest income rose 6% to $2.4 billion for the fourth quarter, in line with analysts’ forecasts, as the bank benefited from higher interest rates. The bank said it expected the figure to rise in 2024.
