ii view: Standard Chartered remains committed to self-help

Management at this Asian bank continues to spin many plates at the same time. We assess prospects. 

Full-year results to 31 December

• Operating income down 0.4% to $14.71 billion
• Credit impairments down 89% to $263 million
• Pre-tax profit up 55% to $3.89 billion
• Final dividend unchanged at 9 US cents per share
• Total dividend for the year up 33% to 12 cents per share
• New $750 million share buy-back programme
• Capital cushion or CET1 of 14.1%, down from 14.6% in Q3 

Chief executive Bill Winters said:

"We have committed today to a set of far-reaching actions, to deliver a return on tangible equity of 10 per cent by 2024.  Our refreshed strategy has proved resilient and delivered our return to growth in the second half of 2021. We remain fully focused on driving continued business momentum in 2022, together with substantial shareholder returns"

ii round-up:

Headquartered in the UK, Standard Chartered (LSE:STAN) operates across 50 plus countries, primarily in Asia, Africa, the Middle East. 

Employing more than 80,000 people, its customers and profits are concentrated in the Asia Pacific region.

For a round-up of these latest results, please click here.

ii view:

Standard Chartered services include corporate and institutional banking, private banking, financial markets, and corporate finance. Its strategic priorities are focused on streamlining operations, embracing digitisation, and investing to accelerate growth. During the year, the FTSE 100 index constituent also laid out a sustainability commitment, setting a path to achieve net zero carbon operational emissions by 2050.

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For investors, the bank’s exposure to China and a misfiring property market are not to be overlooked. Uncertainty from the ongoing pandemic, particularly in China, remain, while relations between the West and China are not what they were only a few years ago. 

That said, its management’s focus on improving group performance and returns comes at a time when rising interest rates are expected to prove broadly beneficial across the banking industry, potentially generating two tailwinds. A commitment to increasing its Return on Tangible Equity (ROTE) to 10% by 2024 from a current 6% underlines management determination, while Asian economies are expected to prove likely global powerhouses over coming years. In all, and with management’s self-help progress still evident, shares of Standard Chartered look to remain worthy of continued long-term support.  

Positives: 

• Pursuing a transformation plan
• Executing a new $750 million share buyback programme

Negatives:

• Exposure to the politically volatile Hong Kong
• Expenses up 2% year-over-year

The average rating of stock market analysts:

Buy