LONDON • Standard Chartered halved its dividend and said it would raise capital from investors if needed, as new chief executive Bill Winters outlined plans to revive a bank hit by a 44 per cent slump in first-half profit.
Asia-focused Standard Chartered (StanChart) has had a troubled three years, hurt by a weakening in many of its key emerging markets as well as fines from US regulators for misconduct and strained relations with top shareholders.
Some analysts have said Mr Winters, the former boss of JP Morgan investment bank, needs to raise at least US$5 billion (S$7 billion) to bolster the bank's capital reserves and kick-start a recovery.
StanChart said yesterday that it would halve its first-half dividend to 14.4 cents a share, and expected to cut the full-year payout by a similar amount.
That would save about US$1 billion over the full year, with the first-half cut helping to lift the bank's common tier 1 equity position, a key measure of capital strength, by 80 basis points to 11.5 per cent, reaching its 11-12 per cent goal six months ahead of target.
Mr Winters said he would seek more cash from investors if necessary. "If we conclude the bank needs capital, we will seek that from our shareholders," he said.
Mr Winters, who became CEO in June, said he was reviewing if the bank's capital was strong enough due to a jump in bad debts, a weak earnings outlook and as the Bank of England will this year carry out a tough "stress test" on banks' Asian exposures. He said he would set out his plans at the end of the year. "We will take that body of information and make a decision at the time whether capital is needed," he told reporters.
Mr Winters also said improving return on equity would be his main priority and that 10 per cent would be "a minimum acceptable level", compared with just 5.4 per cent in the first half.
StanChart shares were up 0.2 per cent at 954.2 pence (S$20.61), after jumping more than 5 per cent in early trade. The bank said pretax profit in the first six months of the year dropped to US$1.82 billion and it had "rebased" its dividend to reflect its "current earnings expectation and outlook".
It said it had cut 4,000 staff since the start of the year, or about 5 per cent of its employees, as part of its plan to streamline operations and cut costs, and said there could be further cuts. It is aiming for US$1.8 billion of cost savings by the end of 2018.
Mr Winters has already shaken up the bank's management structure, streamlining its eight geographical regions into four units that will report directly to him.