Tuesday, April 20, 2021
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StanChart announces $254m share buyback and resumes dividend

Standard Chartered has announced a $254m share buyback scheme and said it would resume paying a dividend, despite slipping to a loss in the fourth quarter as the coronavirus pandemic hit its performance.

The Asia-focused, UK-based bank reported a $449m loss in the last three months of 2020. StanChart’s annual profits before tax dropped 57 per cent, falling short of analysts’ estimates provided by the bank, to $1.6bn. Credit impairment charges more than doubled during the year to $2.3bn.

“We remain strong and profitable, although returns in 2020 were clearly impacted by higher provisions, reduced economic activity and low interest rates, in each case the result of Covid-19,” said Bill Winters, chief executive, in a statement announcing the results on Thursday.

The lender said it would issue a dividend of $0.09 per share, becoming the latest large British bank to resume payouts since the Bank of England partially lifted a ban on dividends in December. HSBC earlier this week said it would return $0.15 per share to investors.

The bank said it expected overall income in 2021 to be flat compared to last year, due to the impact of global interest rate cuts. It forecast that income growth would return to 5 to 7 per cent from 2022.

StanChart will resume cost-cutting measures that it had paused during the pandemic. It is expected to cut several hundred of its 85,000 employees around the world, mostly focused on junior positions, in the next few months.

Hong Kong generated the bulk of its operating income in the period, followed by Singapore, India, South Korea and mainland China. The bank made profits before tax of $2.8bn in Asia during the year.

StanChart has fared slightly better than some of its UK and European rivals during the pandemic as a result of its focus on Asia and Africa. However, its shares have fallen nearly a third over the past year. They dropped 2.6 per cent in Hong Kong trading following the results announcement.

Like its London-based rival HSBC, StanChart has been navigating an increasingly fraught relationship between the US, UK and China. Relations worsened last year after Beijing’s imposition of a controversial national security law on Hong Kong. The lender has publicly supported the law, which bars banks from complying with foreign sanctions. 

“As an international bank with a unique emerging market footprint straddling the east and the west, we have always had to deal with political turbulence, both within and between our markets,” said Winters in the results announcement.

“This was unusually visible in 2020 but we are hopeful that a spirit of engagement will help avoid further escalation. We will comply with all laws that affect us and our clients and hope for a more diplomatic and multilateral solution to the world’s challenges.”

StanChart said that political and pandemic-related challenges in Hong Kong had impacted its financial performance in 2020 but that it wanted to strengthen its market position in the territory.

It also said it would continue to expand its wealth management division, particularly in mainland China and Hong Kong, to capitalise on “the rising wealth of its population, the increasing sophistication and internationalisation of Chinese businesses and the increased use of the renminbi internationally”.

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