StanChart profit rises 28%, raises staff salaries by average 6.6%

SINGAPORE – Standard Chartered Bank raised a key performance metric and announced a new US$1 billion (S$1.3 billion) share buyback on Thursday after posting a 28 per cent rise in annual pre-tax profit as global interest rate hikes boosted its lending revenue.

StanChart’s performance, like those of its global peers, was aided by aggressive central bank interest rate hikes aimed at combating inflation, which, in turn, allowed lenders to charge more after a decade of near-zero rates.

The bank, which has been the subject of takeover speculation linked with First Abu Dhabi Bank (FAB), said its latest share buyback exercise would start imminently. Its shares rose 3.5 per cent in Hong Kong after the announcement.

“We are upgrading our expectations and are now targeting a return on tangible equity approaching 10 per cent in 2023, to exceed 11 per cent in 2024, and to continue to grow thereafter,” StanChart chief executive Bill Winters said in a statement.

London-headquartered StanChart, which has a focus on Asia, Africa and the Middle East, previously targeted 10 per cent for 2024. Return on equity is a key profitability metric for banks.

StanChart’s shares have received a boost on renewed takeover speculation, with FAB batting away media reports that it was currently eyeing a bid.

Still, StanChart shares are about 25 per cent below the levels when Mr Winters took charge in June 2015, whereas shares of peer HSBC Holdings are flat and the benchmark FTSE index has risen about 15 per cent.

FAB, the United Arab Emirates’ biggest lender, last week said it was not currently evaluating an offer for the bank, having previously acknowledged that it had at one time worked on a potential bid.

Tough task ahead

StanChart, which makes most of its profit in Asia, reported a statutory pre-tax profit of US$4.3 billion for 2022. This compares with the US$4.73 billion average of analyst forecasts compiled by the bank and the US$3.35 billion it made in 2021.

On Wednesday, Barclays reported a 14 per cent fall in full-year pre-tax profit as earnings were pole-axed by surging costs and a collapse in deal fees, among other factors. HSBC posts results next week.

While StanChart’s results were better than those of some rivals, mixed performance from key business lines highlighted the work that Mr Winters, the longest-running chief of a major European bank, has yet to do.

StanChart’s financial markets trading business reported record income, up 21 per cent, as accelerating inflation and Russia’s invasion of Ukraine made for volatile markets, driving frenzied activity by institutional clients throughout 2022.

The wealth management business, however, reported a 17 per cent drop in income as wealthy individual customers became more risk averse and Covid-19 restrictions curbed face-to-face sales of investment products in China and other markets.

StanChart also took a US$308 million hit on its investment in China Bohai Bank, which it attributed to “industry challenges”.

Staff salaries raised

The bank on Thursday said it boosted its annual bonus pool by 16 per cent to US$1.59 billion.

It also said it was lifting staff salaries by an average of 6.6 per cent, with senior management taking a lesser 3.4 per cent increase, as it tries to help employees manage the impact of rising inflation worldwide.

Mr Winters saw his total pay package rise to £5.5 million (S$8.8 million), up from £4.7 million the year before, as the bank’s improving results meant he hit performance-related bonus metrics.

REUTERS