StanChart in $1bn buyback as profits rise, but trims income forecast

23rd Feb 2024 07:02

(Sharecast News) - Shares in Standard Chartered on Friday soared after the Asia-focused bank unveiled a new $1bn buyback, increased dividend and higher annual profits, but reined in guidance on income for the current year.

The bank reported an 18% rise in pre-tax profit to $5.1bn and lifted its full-year dividend 50% to 27 cents a share, well above estimates of 23.7 cents. Shares in the lender were up more than 8% in London.

However, it also forecast income growth at the upper end of 5-7% this year, down from the previous estimate of 8-10% given last October. The lender reported a 13% rise in income in 2023 on a constant currency basis.

Looking ahead, the lender said it would aim to increase return on tangible equity from the current level of 10% to 12% by 2026.

StanChart also booked an extra $150m impairment from its stake in Chinese lender Bohai Bank in the final quarter, taking the total write-down to $850m in another example of the fragile state of the property sector in China.

Shareholders were not the only ones to benefit from the bank's performance, chief executive Bill Winters saw his pay rise 22% to £7.8m.

AJ Bell investment director Russ Mould said China "remains a thorn in the side of the business for now".

"Medium-term returns targets are ahead of where the consensus is sitting so if these can be delivered they could help lift the company's valuation. However, its focus on developing economies brings with it a level of unpredictability which may get in the way of these aspirations," he added.

Reporting by Frank Prenesti for Sharecast.com