StanChart reports first annual loss since 1989 after hefty restructuring charge
Only wealth management business delivered growth
Standard Chartered Bank reported its first annual loss in 26 years on Tuesday, weighed down by heavy restructuring costs and a global slowdown, and warned of a subdued year ahead and the necessity of more “painful action” to restore growth.
The bank lost US$1.5 billion in 2015 after costs of US$1.8 billion to cover restructuring and redundancies in South Korea and elsewhere. Excluding the charge, the bank reported a pretax profit of US$834 million, an 84 per cent decline from 2014 and below the average analyst estimate of US$896.5 million.
It will still pay shareholders a dividend, but its top directors won’t get a bonus for 2015.
StanChart is the second big bank in as many days to report weak earnings, after HSBC’s 2015 profit came in much lower than expected when it reported on Monday. Both cited tough global business conditions. Local lender Hang Seng Bank, however, reported a big rise in profit last year, although the gains came mostly from the sale of shares in a mainland bank.
“Given the way 2016 has played out so far, it is little surprise that StanChart has been the worst performing UK bank,” said Ian Gordon, head of bank research at Investec. “StanChart’s path back to ‘normalised’ returns is long and deeply uncertain.” Gordon has a sell recommendation on the bank’s shares.
I would be very disappointed if 2016 would be worse than 2015
Only StanChart’s wealth management business delivered growth, with revenue up 2 per cent to US$1.7 billion. In the final three months of last year alone, the bank lost US$3.8 billion, including the charges.