Reports

Underlying Profits Surge At Standard Chartered

Tom Burroughes, Group Editor, 21 February 2022

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As with a number of other banks, the 2021 results benefited from a fall-off in the amount of expected impairments banks have to provide for as the pandemic situation improved. The lender said it wants to cut costs and boost income to hit its return on tangible equity targets.

Standard Chartered, the UK-listed bank earning the bulk of its revenues in Asia, the Indian subcontinent and Africa, has reported an underlying pre-tax profit of $3.896 billion for 2021, surging by 55 per cent on a year before as large credit impairments of a year ago fell sharply.

Operating income at $14.713 was a touch below the level chalked up in 2020, at $14.765 billion. Operating costs rose a touch to $10.375 billion, a change of 2 per cent on a year before. There were $263 million of credit impairments in 2021, narrowing by 89 per cent on a year earlier, helped by the improving position over COVID-19. 

Consumer, private and business banking (CPBB) statutory profit stood at $836 million, up from $649 million a year earlier. 

The bank’s cost/income ratio widened to 69.8 per cent from 66.4 per cent a year before. Return on ordinary shareholder’s tangible equity doubled, however, to 6 per cent from 3 per cent, Standard Chartered said in a statement last Friday. 

At the end of December 2021, the bank had a Common Equity Tier 1 ratio – a standard measure of a bank’s capital buffer – of 14.1 per cent, a touch narrower than a year before.

Chief executive Bill Winters said that the bank has progressed on a number of fronts but noted that it has not achieved the returns it wants for investors. To accelerate plans to obtain 10 per cent return on tangible equity by 2024, the bank it aiming at a 1.6 per cent improvement in corporate, commercial and institutional banking income on risk-weighted assets, enabled by a $22 billion cut in such risk-weighted assets. It wants to cut costs, including a $500 million business expense reduction programme, and is investing $300 million into China-related businesses to capture that country’s expansion. 

Affluence
Referring to its wealth management arm, the bank said growth of the “Affluent” segment in its markets has continued apace and “remains one of our greatest opportunities. Since 2018, the number of clients has increased by around 400,000 and assets under management are up $52 billion. We see opportunities to accelerate this growth through further digitisation, partnerships and investment,” it said. 

Standard Chartered said wealth management operating income was $2.225 billion last year, up from $1.99 billion a year before. The bank said that the record operating income figure reflected “sustained growth in client numbers and double-digit growth in assets under management.”

There was a particularly strong sales performance in funds, structured notes and wealth lending, the bank said.

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