StanChart to Buy Back Shares, Pay Dividend as Profit Jumps

(Bloomberg) -- Standard Chartered Plc 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 $1.24 billion, ahead of analyst estimates. Boosting Standard Chartered was a release of loan provisions, compared with a $611 million 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 Plc said on Monday that it’s speeding up its payout plans.

Standard Chartered will buy back $250 million in shares and pay an interim 3 cents a share dividend. Operating expenses were higher than expected on performance-related pay and higher digital investment spend.

Standard Chartered shares were up 2% at 8:27 a.m. in London.

Strongest Region

Asia was the bank’s strongest region, with profit up 75% to $1.01 billion, countering declines in Europe and the Americas.

The beat followed last week’s gloomy IMF 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,” Chief Executive Officer Bill Winters said in a Bloomberg Television interview. “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.

Standard Chartered’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%.

Standard Chartered has been among the worst performers this year in the Bloomberg Europe Banks and Financial Services Index. The bank has dropped 6% while the gauge has soared 21%.

Other highlights:

• Sees expenses for 2021 below $10B
• Credit impairment to remain low for rest of year
• Sees increasing full-year dividend over time
• Sees return to 5-7% growth from 2022

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