Standard Chartered on Thursday unveiled a $750m share buyback, lifted profit targets and pledged higher investment in China, despite annual results missing estimates.
The Asia-focused bank said pre-tax profit doubled to $3.3bn in 2021, but missed the $3.8bn forecast by its own compiled average of 16 analysts.
In the three months to December 31, the lender reported a pre-tax loss of $208m, missing a consensus estimate of a $288m profit, but it narrower than a $449m loss in 2020.
The London-based bank said it expected revenue to grow by an extra 3% a year and targeted a return on equity of 10% by 2024.
StanChart said it would invest a further $300m in China as it eyes a larger share of the banking business there. It also took a $300m writedown on the value of its investment in China’s Bohai Bank, and a $95m ‘management overlay’ against further expected charges in the real estate sector.
Credit impairment charges fell to $263m from $2.3bn a year earlier.
“Confidence in our overall asset quality and earnings trajectory allows us to return significant capital to shareholders,” said chief executive Bill Winters.
“We saw a return to income growth, which we believe signals the start of a sustainable recovery, and we finished the year with good business momentum in financial markets, trade and wealth management.”
StanChart took a more upbeat view on higher global interest rates as central banks tighten monetary policy to fight surging inflation. Banking shares have surged in recent weeks as investors bet on a raft of rate rises.
Winters said tumbling interest rates over the past two years, as central banks tried to jump-start economies hit hard by the coronavirus pandemic, had cut its net interest income by more than $2bn.
“With the interest-rate cycle showing signs of turning, and given our positive gearing to US-dollar rates, we should recover this lost income,” he said.
