StanChart resumes dividend as profit recovers
‘The Chinese economy is going gangbusters
Standard Chartered (StanChart) is resuming interim dividends and starting a share buyback after reduced credit losses helped it beat estimates in the second quarter, the latest bank to bolster payouts as the economic outlook improves.
The London-headquartered lender made an underlying pretax profit of $1.24bn, ahead of analyst estimates. Boosting StanChart was a release of loan provisions, compared with a $611m reserve a year ago.
“The recovery from the Covid-19 pandemic is uneven and volatile, though encouragingly the trends we see as we exit the quarter are more positive in our bigger markets,” the bank said in its earnings statement. The lender, whose profit driver continues to be in Asia, is also expecting full-year 2021 income to be in line with that of the previous year.
The bank joins its British peers in unveiling shareholder payouts as global economies start to leave behind the worst impact of the pandemic. HSBC Holdings said on Monday that it’s speeding up its payout plans.
StanChart will buy back $250m in shares and pay an interim 3c a share dividend. Operating expenses were higher than expected on performance-related pay and higher digital investment spend.
The shares were up 2% in London.
Strongest region
Asia was the bank’s strongest region, with profit up 75% to $1.01bn, countering declines in Europe and the Americas.
The beat followed last week’s gloomy International Monetary Fund forecast for Asia, where the bank makes most of its money, amid concerns that uneven access to Covid-19 vaccines could stunt growth in parts of the region.
“We’ve had fantastic results in Hong Kong and in China,” CEO Bill Winters said. “The Chinese economy is going gangbusters.”
Winters also said the bank has the flexibility to consider acquisitions in its core markets or unveil further buybacks and bigger dividends.
StanChart’s wealth management unit posted a 26% jump in operating income for the quarter, while its key financial markets business posted a 3% increase due to a mixed performance from its fixed-income trading activities. Retail slumped 7%.
The bank has been among the worst performers in 2021 in the Bloomberg Europe Banks and Financial Services Index. It has dropped 6% while the gauge has soared 21%.
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