- Q4 earnings exceed estimates
- Strategy ‘firing on all cylinders’
- Strong start to 2025
Standard Chartered (STAN) topped the FTSE 100 in early dealings, the shares climbing 5% to a five-year high of £11.96 after the Asia, Africa and Middle East-focused bank delivered forecast-beating fourth-quarter earnings.
In a show of confidence, the lender also launched a further US$1.5 billion buyback, bigger than the $1.1 billion consensus was calling for, as CEO Bill Winters insisted his charge is firing on all cylinders.
WEALTH EFFECT
Standard Chartered’s adjusted pre-tax profits of $1.5 billion for the quarter to 31 December 2024 exceeded the $1.02 billion analysts were looking for, albeit reported pre-tax profit missed estimates after software intangible write-offs.
Revenues for the full year exceeded expectations across the board, with underlying pre-provision profits around 10% ahead of consensus, driven by record growth in its Wealth Solutions business and a robust performance from the Global Markets division.
Shares in Standard Chartered, which have almost doubled over the past year, were lifted by news of a strong start to 2025.
And the bank also reiterated medium-term guidance for 5% to 7% operating income growth – it is currently tracking towards the upper end of this range - and for underlying return on tangible equity (RoTE) approaching 13% by 2026.
FIRING ON ALL CYLINDERS
‘We produced a strong set of results in 2024,’ commented Winters.
‘Our strategy of combining differentiated cross-border capabilities for corporate and institutional clients with leading wealth management expertise for affluent clients is firing on all cylinders, driving an increase in return on tangible equity to 11.7%.’
He added: ‘We delivered record income of $19.7 billion, including a very strong performance in Wealth Solutions, up 29%, and double-digit growth in Global Markets and Global Banking, and momentum has continued into 2025.’
Standard Chartered proposed a 33% hike in the final dividend to 28 cents per share, taking the total dividend for 2024 up 37% to 37 cents.
The bank will ‘imminently’ begin an additional $1.5 billion buyback, above the $1.1 billion analysts were looking for.
Since its 2023 results, Standard Chartered has distributed a total of $4.9 billion to shareholders, bringing the bank closer to its three-year cumulative distribution target of at least $8 billion.
GROWTH TO GO AFTER
AJ Bell investment director Russ Mould observed that Standard Chartered is ‘a very different animal from most of its UK-listed banking peers, operating exclusively in much less mature markets in Africa and Asia. This gives the company plenty of growth to go after, something which is particularly evident right now in its Asian wealth management arm.’
Mould added: ‘The lower-than-expected headline profit is due to a software impairment, and given this is a non-cash item it is not all that surprising that the market has been prepared to overlook it.
‘The company’s work to achieve efficiencies in the business is paying off with income rising much more quickly than costs. With all these positive pointers, there may be some surprise that the company has left forward guidance unchanged.
‘And yet a dose of conservatism may now pay off down the line if it allows the company to outmatch current expectations in the future.’
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (James Crux) and the editor (Martin Gamble) own shares in AJ Bell.
