Standard Chartered said annual profits more than halved on bad loan impairments due to the coronavirus pandemic, as it resumed dividend payments and announced a share buyback.
The Asia-focused bank said pre-tax profits fell 57% to $1.61bn, below the $1.85bn average of bank-compiled analyst forecasts. Credit impairments more than doubled to $2.3bn from $900m a year ago.
StanChart declared a 9 cents-per-share dividend and said it would return a further $254m to shareholders via a buyback, the total payout being the maximum permitted under temporary limits set out by the Bank of England last year to protect bank balance sheets.
Net interest margin, the difference between savings and loan rates, fell 31 basis points to 1.31%.
“Improving prospects for Covid-19 vaccines should enable the global economy to transition back to growth through 2021, with pre-pandemic growth rates re-emerging in most of our markets from 2022,” StanChart said.
“We believe that our decision to continue investing in the transformation of our business throughout the crisis will enable us to disproportionately benefit from that recovery over time, not least because it will most likely be led by large markets in Asia where we generate two-thirds of our income.”
StanChart said overall income in 2021 was expected to be similar to 2020 at constant currency given the impact of global interest rate cuts last year, adding that first-half income would be lower than last year.
“Our performance in the opening weeks of this year gives us the confidence that we are on the right track with strong performances in our less interest rate-sensitive financial markets and wealth management businesses.”
The bank said it expected income to return to 5-7% growth per annum from 2022.
“We expect pressure on credit impairments to reduce this year compared with 2020,” StanChart said.
