HONG KONG • Standard Chartered chief executive Bill Winters announced plans yesterday to reduce costs and indicated he will restructure operations in markets, including India and South Korea, as part of a long-awaited plan to turn around the lender.
The bank, whose operations span Asia, the Middle East and Africa, is aiming to cut US$700 million (S$945 million) in costs as part of a new three-year plan that the emerging markets-focused lender hopes will soothe investor concerns over its lacklustre returns.
It did not say if the cuts would come from reduced headcount.
Mr Winters has been seeking to convince investors that he can revive longer-term earnings growth and generate an acceptable level of profitability while cutting costs.
He has spent much of his tenure cleaning up the balance sheet and culture of the London-based firm, which had been saddled with bad loans.
Among the targets announced by the bank:
• Return on tangible equity of at least 10 per cent by 2021;
• Income growth target of 5 per cent to 7 per cent, focusing on controlling risk;
• Cost growth expected to remain below the rate of inflation;
• Target Common Equity Tier 1 ratio range of between 13 per cent and 14 per cent;
• Ordinary dividend per share has the potential to double by 2021;
• Plan to distribute to shareholders surplus capital not deployed to fund additional growth.
Earlier, Standard Chartered said underlying pre-tax profit last year was US$3.86 billion, compared with a US$3.98 billion consensus forecast compiled by the bank.
Full-year underlying operating income was US$14.97 billion, said the bank, compared with forecasts of US$15.02 billion.
The firm's private banking unit reported an underlying pre-tax loss of US$14 million last year, compared with a loss of US$1 million in the previous year.
Standard Chartered plans to "eliminate residual drags on returns from low-returning markets", including India, South Korea, the United Arab Emirates and Indonesia, it said.
The lender said last week it is taking a US$900 million charge for the fourth quarter to cover potential US and UK penalties, including a £102 million (S$181 million) fine from the British financial regulator related to its financial crime controls.