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Standard Chartered has announced a $1.5bn share buyback, its biggest ever, after second-quarter profits were boosted by its wealth management business.
The UK-based bank on Tuesday reported pre-tax profits of $1.6bn during the quarter, up from $1.5bn a year earlier and above analysts’ estimates of $1.5bn.
Growth was driven partly by the bank’s wealth business, where operating income rose 27 per cent as the bank attracted larger numbers of affluent clients.
The bank’s chief executive Bill Winters said it was a “strong set of results” and that he had “confidence in our performance and robust capital position”.
He added that the results demonstrated “the value of our franchise as a cross-border corporate and investment bank and a leading wealth manager for affluent clients”.
The bank is upgrading its forecast for operating income growth, saying it now expects the figure to rise more than 7 per cent in 2024, up from its previous projection of 5 to 7 per cent.
The emerging markets-focused bank, which makes most of its money in Asia, has been under pressure to improve shareholder returns and previously pledged billions of dollars worth of share buybacks as well as higher dividends. It unveiled a $1bn share buyback in February.
Winters, who has run StanChart since 2015, has sought to cut costs and respond to criticism that the bank is too bureaucratic and spreads itself too thinly across a range of countries, products and clients. He said in February that he took those challenges “to heart”.
Operating expenses rose 4 per cent on a constant currency basis, which the bank said was driven by inflation and business growth.
StanChart’s shares have risen since the start of this year but are down 17 per cent since Winters took the helm.
The bank’s reported return on tangible equity, a key measure of profitability, was 10.4 per cent for the quarter, down from 10.8 per cent a year earlier.
Reported net interest income fell to $1.6bn in the second quarter, from $2bn the same time last year, as the benefit from higher interest rates tailed off.
The bank took total credit impairment charges of $73mn in the second quarter, linked partly to its wealth and retail banking business.
Income in its global markets business fell 7 per cent year on year on a constant currency basis, which the bank said was due to a “strong comparator” from the same time last year.
StanChart has previously been hit by its exposure to mainland China, taking impairment charges relating to commercial property in the country and its stake in China Bohai Bank. It said its exposure to Chinese commercial real estate was now down $200mn to $2.2bn.
In February, Winters lamented the bank’s “crap” share price, saying it did not reflect its true value. On Tuesday, the bank’s Hong Kong-listed shares were trading 4 per cent higher on the earnings news.
StanChart this year unveiled a cost-cutting plan that aims to save about $1.5bn of expenses over the next three years by simplifying systems. It said on Tuesday the programme was “progressing into execution”.
Winters has overhauled the bank’s management in the past year, bringing in former Bank of America executive Diego De Giorgi as chief financial officer in January. He appointed trading boss Roberto Hoornweg and Africa and Middle East head Sunil Kaushal to head its investment banking business, its largest division, after former boss Simon Cooper left the bank in March.
StanChart has sounded out UK political figures Sir Charles Roxburgh and Sir Sajid Javid as potential candidates for its next chair, the Financial Times reported in February. Current chair José Viñals is nearing the end of a nine-year term limit for independent directors.
