StanChart profit falls 57% as Covid-19 inflates bad loans

[HONG KONG] Standard Chartered (StanChart) on Thursday posted a 57 per cent fall in annual profit, missing analyst estimates, on higher credit impairments due to the Covid-19 pandemic.

StanChart, which earns the bulk of its revenue in Asia, posted a pretax profit of US$1.61 billion. That compared with US$3.71 billion in 2019 and the US$1.85 billion average of analyst forecasts compiled by the bank.

Credit impairments last year more than doubled compared with a year earlier to US$2.3 billion because of the pandemic, the bank said, but noted the majority of these took place in the first half of the year.

The London-headquartered lender said it would return capital to investors via a 9 cents per share dividend and US$254 million buyback, with the total payout being the maximum permitted under temporary 'guardrails' set by the Bank of England.

The central bank last year told Britain's largest lenders to suspend dividend payments and share buybacks for 2020 to help them maintain capital buffers against an expected hit to loan books from the pandemic.

"Having now resumed it, we expect to be able to increase the full-year dividend per share over time as we execute our strategy and progress towards a 10 per cent return on tangible equity," Jose Vinals, Standard Chartered's chairman, said in the exchange filing.

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The bank said its return on tangible equity, a key profit metric, would climb from 3 per cent to 7 per cent by 2023.

It also said overall income in 2021 is likely to be similar to 2020's because of the impact of global interest rate cuts.

REUTERS