Standard Chartered unveils a $1 billion buyback program after a 28% surge in annual profits
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Standard Chartered recently reported a significant increase in its annual pretax profits. The bank saw a 28% increase, caused by the global interest rate hikes, which are believed to have boosted its lending revenue. This key performance metric led the bank to start a $1 billion share buyback program, according to its announcement made earlier today, February 16th.
Standard Charted is not the only one to see a positive performance. Plenty of its global peers saw the same thanks to aggressive central bank interest rate hikes meant to combat inflation. Along the way, they allowed lenders to charge more after previously spending a decade with near-zero rates.
The bank added that its new share buyback program would start imminently. The announcement seemingly added an additional rise in its shares, which went up by 3.5% in Hong Kong after the statement.
Bill Winters, the bank’s CEO, stated that the expectations are being upgraded right now and that the bank is targeting a return on tangible equity approaching 10% in 2023, followed by returns of over 11% in 2024. After that, the bank expects to see an even greater increase moving forward.
Standard Charted sees excellent performance
Standard Charted is a bank headquartered in London, England, but its focus has been on Asia, Africa, and the Middle East. Recently, it has even been the subject of takeover speculation tied to FAB (First Abu Dhabi Bank). Before the new development, the bank’s target for 2024 was only a 10% return on equity, which is its key profitability metric.
The renewal in takeover speculation has also brought a boost to the bank’s shares, while FAB was batting away reports that it is considering making a bid. The bank admitted that it was working on a bid at one time, but those plans were canceled, and for the moment, the bank is not currently planning on making an offer.
However, even with this recent share boost, Standard Charted shares are still 25% lower than back in June 2015, when Winters first took charge. Meanwhile, shares of competitors like HSBC Holdings remain flat, while the benchmark FTSE index actually saw a 15% surge.
Even so, StanChart remains better than some of its rivals. Despite that, however, there has been mixed performance from some of the key business lines of the bank. This clearly indicates that Winters has a lot of work left to do. Apart from that, however, the bank’s financial markets trading business hit a new record income, up 21%, likely caused by growing inflation and Russia’s invasion of Ukraine, both of which made the market highly volatile.
