Standard Chartered Plc announced a $1 billion share buyback after missing profit estimates as credit impairment dragged down earnings.
Adjusted pretax profits in the fourth quarter rose 21% to $529 million, according to a statement from the London-based lender Thursday. That missed a Bloomberg-compiled analyst estimate of $769.6 million as it took a credit impairment charge of $344 million. The bank also proposed a final dividend of 14 cents a share, for a full-year payout of 18 cents.
Chief Executive Officer Bill Winters is trying to bolster his argument that the bank is better off as an independent firm amid potential takeover interest from the Middle East’s largest bank. Standard Chartered said it was optimistic on income growth for this year and next amid rising interest rates.
“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,” Winters said in the statement.
The bank’s future is under the microscope after First Abu Dhabi Bank PJSC confirmed in January that it had explored a bid for the emerging markets-focused bank. Speaking in Davos last month, Winters said that while the interest from Middle Eastern banks was “quite logical” he added that the lender hadn’t engaged with any potential bidders and didn’t think a deal was likely.
“The thing with Standard Chartered is we are doing very well all by ourselves,” Winters said in a January Bloomberg Television interview. “Everything is on track for us.”
Since taking over as CEO in mid-2015, Winters has led a radical restructuring of the bank. However, the company’s share price remains below the level when he joined the bank eight years ago leading to frustration among some shareholders.
The bank had a net loss of $264 million in the fourth quarter, narrowing from last year, weighed down by credit and goodwill impairments. Net interest income rose 19%. The bank’s macro trading income rose 44%, while its income from its wealth business declined 23% in the quarter.
Though the bank is based in the UK, Standard Chartered makes almost all of its money in Asia, Africa and the Middle East. Its largest single market is Hong Kong, which has seen its economy hurt by the impact of pandemic restrictions that have curtailed business in the Chinese territory.
© 2023 Bloomberg
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