Profits Rise At Standard Chartered, Wealth Results Slip

Tom Burroughes

16 February 2023

today reported a profit, attributable to ordinary shareholders, of $2.999 billion in 2022, rising 12 per cent from a year before. On a pre-tax basis, profit rose 13 per cent to $4.762 billion, the UK-listed group said in a statement.

Credit impairment widened to $838 million in 2022, versus an impairment of $263 million in 2021; operating costs rose to $10.74 billion, rising 4 per cent, while operating income rose 10 per cent to $16.255 billion.

Wealth management operating income in Q4 2022 was $359 million, down from $466 million a year earlier. Income was hit because clients took risk off the table amid volatile market conditions, depressing transaction volumes. There was also a hit caused by Covid-19 restrictions last year in some regions, particularly North Asia, consequently some branches shut down, cutting face-to-face sales. (Standard Chartered, while a UK-based bank, earns the bulk of its revenue in Asia, Africa and the Indian sub-continent.)

Secured lending in wealth management fell by a third as a result of client deleveraging, the bank continued. Net new sales remained positive, albeit at a lower level than in 2021.

Standard Chartered said consumer, private and business banking profit increased 30 per cent year-on-year in 2022, to $1.596 billion, which was 35 per cent higher on a constant currency basis. Income grew 10 per cent on a constant currency basis with increased deposit income partly offset by subdued Wealth Management and the impact of the Best Lending Rate cap on Hong Kong mortgage income. On a constant currency basis, expenses grew 3 per cent and impairments decreased by $10 million.

The lender's cost/income ratio stood at 65.5 per cent at the end of 2022.

Overall, the bank said results across its business were positive.

“We are also announcing a new $1 billion share buy-back, and a final dividend of 14 cents per share, taking total shareholder distributions announced since the start of 2022 to $2.8 billion, more than half the three-year $5 billion target we set ourselves by 2024,” Bill Winters, group CEO, said. “We continue to make significant progress against the five strategic actions outlined last year, and we remain confident in the delivery of our financial targets. We are upgrading our expectations, and are now targeting a return on tangible equity approaching 10 per cent in 2023, to exceed 11 per cent in 2024, and to continue to grow thereafter."

The lender said it had a Common Equity Tier 1 ratio – a standard international measure of a bank’s financial buffer – of 14 per cent, little changed from a year before.

“The board is very clear that any capital not required for growth will be distributed to shareholders. We have increased the total dividend by 50 per cent to 18 cents per share and have announced a new share buy-back of $1 billion, starting imminently. This will take total capital, including dividends, announced since the start of 2022, to $2.8 billion, which is well over halfway towards our target,” Dr José Viñals, the bank’s chairman, said.