Standard Chartered back to paying dividends

HONG KONG • Banking giant Standard Chartered yesterday announced a return of dividends for shareholders after a two-year hiatus as it reported a surge in annual profits following restructuring and cutbacks.

The Asia-focused lender said it would pay out a full-year dividend of 11 US cents per share, citing "improving financial performance and strong capital".

It also said pre-tax profit jumped 175 per cent on-year to US$3.01 billion (S$4 billion) last year.

Standard Chartered swung back to profit in 2016, a year after scoring its first annual loss for more than a quarter of a century as it struggled to cope with the effect of bad debts and misconduct fines.

Chief executive Bill Winters described the performance as "steady rather than spectacular" but said it had improved significantly.

He replaced former CEO Peter Sands in 2015 after shareholder calls for a boardroom cull in response to profit warnings.

The London-based bank announced 15,000 job cuts around the world that year and said it would exit or restructure US$100 billion of assets to refocus on affluent retail clients.

CATCH-22 SITUATION

Because they cannot find growth, they cut more cost. And if they cut more cost, they have less resources to find growth as well.

MR JACKSON WONG, from Huarong International Securities.

Mr Winters said the bank was ahead of plans to remove "inefficient cost".

He added that it had focused investment in areas including business in China and Africa.

But analysts said the bank still had a way to go in its turnaround.

The results fell just short of Bloomberg analysts' expectations - they had forecast US$3.1 billion in pre-tax profit.

Mr Jackson Wong of Huarong International Securities said the bank needed to find a new focus for growth, rather than concentrating on cutbacks, adding that HSBC was in a similar position after missing some profit forecasts last week.

"They don't have a core way to grow their business. Because they cannot find growth, they cut more cost. And if they cut more cost, they have less resources to find growth as well," he added.

However, he said Standard Chartered's dividend payout would keep investors happy.

"Obviously, from the business environment standpoint, they are in a much better shape than last year."

Regulatory costs of US$1.3 billion were 15 per cent higher year-on-year, the bank said, attributing it to newly introduced programmes.

Chairman Jose Vinals said improving the bank's response to financial crime was a "critical journey".

In August 2014, Standard Chartered was hit by US regulators with a US$300 million fine and restrictions on its dollar-clearing business for failing to detect possible money-laundering.

It paid US$667 million in 2012 to settle charges that it had violated US sanctions by handling thousands of financial transactions involving Iran, Myanmar, Libya and Sudan.

AGENCE FRANCE-PRESSE

A version of this article appeared in the print edition of The Straits Times on February 28, 2018, with the headline 'StanChart back to paying dividends'. Print Edition | Subscribe