Standard Chartered on Friday (Feb 23) reported 2023 pre-tax profit rose 18 per cent, in line with forecasts, and rewarded shareholders with a US$1 billion share buyback and a jump in dividend.

StanChart, which earns most of its revenue in Asia, said statutory pretax profit for 2023 reached US$5.09 billion, in line with US$5.1 billion from 15 analyst estimates compiled by the bank.

The bank took a US$850 million impairment mainly from its stake in Chinese lender Bohai Bank, its second time writing down the value of the unit as the lender was hit by increasing bad loans as growth in the world’s second-largest economy sputtered.

The hefty loss in China, a core target for StanChart’s strategy, underlines the challenge it faces to expand in the country as policymakers struggle to arrest a deepening property crisis and weak consumer confidence.

A fresh US$150 million writedown of its stake in Bohai Bank, following a US$700 million hit earlier this year, reduced its value to US$700 million from US$1.5 billion at the start of the year.

StanChart said banking industry challenges and the uncertainty swirling around the property market were to blame for the decline in the stake’s current value.

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The London-headquartered lender also announced a final dividend of US$560 million or 21 US cents per share, resulting in a 50 per cent increase of full year dividend payout to 27 US cents, greater than a consensus view of 23.7 US cents.

CEO Bill Winters said in a release that the bank targets to return at least US$5 billion over the next three years.

The bank set out restrained new guidance on its future performance, saying it expected income to grow 5-7 per cent between 2024 and 2026, as against 10 per cent growth in 2023.

The lender said it would aim to increase return on tangible equity, a key profitability metric, ‘steadily’ from the current level of 10 per cent to 12 per cent by 2026.

“The ‘last mile’ of inflation may prove stickier than expected, and geopolitical risks abound,” Group chairman José Vinals said in the release.

“As we begin 2024, the war between Ukraine and Russia continues, increasing uncertainty for nations in Europe and elsewhere.” REUTERS