StanChart resumes dividend as profits climb on global recovery

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Standard Chartered has become the latest European lender to record a surge in profits and resume paying a dividend amid an improving economic outlook in the second year of the coronavirus pandemic.

The emerging markets-focused bank made pre-tax profits of $1.15bn in the second quarter, up 55 per cent on the same period last year and beating consensus analyst estimates of $1.1bn.

Profits were down compared with the first three months of the year, however, when the bank made $1.41bn. For the first half of the year, Standard Chartered reported pre-tax profits of $2.56bn, a 57 per cent jump from the same period in 2020.

StanChart also announced a $250m share buyback and said it would pay an interim dividend of 3 cents per share, totalling $94m. The decision followed similar moves by its larger rival HSBC this week, which resumed paying an interim dividend of 7 cents per share after profits surged from $1.1bn to more than $5.1bn.

Bill Winters, StanChart group chief executive, said he was “encouraged” by the performance despite an “uneven” recovery from Covid-19 in the company’s biggest markets of Asia, the Middle East and Africa.

“We believe that we will soon be back on the same performance trajectory that we were on before the pandemic set us back,” he said.

“Our first half of 2021 was one of recovery, albeit an uneven one,” Winters added. “Across the major markets of our footprint . . . the timeline to full economic recovery and social opening will be longer as country vaccination programmes vary, leading to lower confidence in some parts of Asia relative to the West at the moment.”

StanChart’s results were improved by a record first half for its wealth management business, in which income grew 23 per cent. It also cancelled $47m of loan loss provisions that had been set aside to buffer the effects of the coronavirus crisis. That was far less than at HSBC, which announced the release of a further $300m of the reserves this week.

The bank made the bulk of its income in Asia, which recorded $2.2bn of pre-tax profits — almost 90 per cent of the total — in the first half of the year.

It said global costs rose by 8 per cent to $5.1bn in the first half, mainly because of larger bonuses that were paid to retain crucial staff when profits rebounded this year.