Standard Chartered Expands Share Buyback Programme

The London headquartered Standard Chartered Plc on Tuesday announced that it was expanding its multi-billion-dollar share buyback programme after the bank reported a rise in pre-tax profits driven by its wealth business.

The bank will repurchase a record $1.5 billion as it looks to return a total of $5 billion to shareholders by 2026. Common equity tier 1 (CET1) ratio 14.6% was above 13%-14% target range and the $1.5 billion share buyback is expected to reduce CET1 ratio by approximately 60bps.

Beating analyst estimates of $1.6 billion, Standard Chartered reported second quarter pre-tax profit of $1.83 billion. The bank also raised its outlook for income growth, and is now expecting operating income to rise more than 7% in 2024. Operating income from wealth solutions jumped 25%, thanks to net new sales and affluent new to bank customers.

The bank’s CEO Bill Winters said that they produced a strong set of results for the first half of the year, demonstrating the value of the bank’s franchise as a cross-border corporate and investment bank and a leading wealth manager for affluent clients.

“This led to a 20% growth in underlying profit before tax. 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 $1.5 billion. This brings our total shareholder distributions announced since full-year 2023 results to $2.7 billion,” Winters added.

Standard Chartered has also taken up a fresh cost-cutting program – Fit For Growth – to save the bank about $1.5 billion over the next three years. The plan incorporates more than 200 individual initiatives within the company that are aimed at trimming annual expenses by anything between a few hundred thousand and millions of dollars.

The operating expenses in the second quarter of 2024 slid due lower investment spending. The bank has pledged to cap annual costs at $12 billion in 2026 against a base of $11.1 billion last year.

Around 50% of the “Fit For Growth” projects identified are in execution, or ready to start, with the plan to have them all in execution by the end of this year, the Standard Chartered said.

The operating income up 6% to $4.8 billion, up 7% at constant currency (CCY) while the Net interest income (NII) was up 6% at CCY to $2.6 billion, primarily due to the short-term hedge roll-off and benefit from treasury optimisation activities and the Non NII was up 9% at ccy to $2.2 billion.

The global banking was up 11% at CCY, driven by pipeline execution and higher origination and distribution volumes. The global markets were down 7% at CCY with non-repeat of strong prior year episodic income in Macro Trading.

Balance Sheet

Loans and advances to customers of $276 billion were down $8 billion or 3% since 31 March 2024 from run-off of Treasury balances and FX translation was up $1 billion and customer deposits of $468 billion, up $9 billion or 2% since 31 March 2024.