- Earnings ‘beat and raise’
- Interim dividend up 50%
- Buyback exceeds estimates
Investors in London-based, Asia-focused bank Standard Chartered (STAN) were treated to a quadruple helping of good news as half-year earnings beat forecasts, leading the group to raise its full-year guidance, hike the interim dividend by 50% and launch its largest-ever share buyback.
The shares climbed 43p or 6% to 770p, taking their gains for the year to over 16%.
HIGHER SHAREHOLDER RETURNS
For the six months to the end of June, operating income rose 6% to $4.8 billion helped by an increase in the net interest margin, which drove a 6% increase in net interest income, and 27% growth in revenue from its wealth management business thanks to new client additions.
Operating expenses rose just 2% to $2.9 billion while credit impairment (bad loan) charges were $73 million thanks to a release of $66 million of previous provisions.
As a result, underlying pre-tax profit rose 15% to $1.8 billion and reported pre-tax profit rose 5% to $1.6 billion, beating market forecasts of $1.5 billion.
‘We produced a strong set of results for the first half of the year, demonstrating the value of our franchise as a cross-border corporate and investment bank and a leading wealth manager for affluent clients,’ commented chief executive Bill Winters.
He added: ‘We generated double-digit income growth, with positive momentum continuing into the second quarter, and with continued discipline in managing our expenses. Reflecting confidence in our performance and robust capital position, we are upgrading our guidance for income growth, which we now expect to be above 7% in 2024, and we are announcing our largest ever share buyback of $1.5bn. This brings our total shareholder distributions announced since full-year 2023 results to $2.7bn.’
WHAT DID THE EXPERTS SAY?
Jefferies banks analyst Joseph Dickerson said the results showed ‘a solid profit and loss picture with strong growth in wealth revenue and a surprise on net interest income’.
‘Our improving return and share buybacks at a discount to book thesis is playing out with a 9% year-on-year reduction in the share count and 11% growth in tangible net asset value per share and, saving the best for last, a new $1.5bn share buyback programme,’ continued Dickerson.
