Hong Kong company reporting season

Standard Chartered results ‘not yet where they need to be,’ says CEO

The bank will not issue a dividend and posts a pre-tax loss in the fourth quarter

PUBLISHED : Friday, 24 February, 2017, 8:40pm
UPDATED : Friday, 24 February, 2017, 10:59pm

Standard Chartered said on Friday that it would not be issuing a dividend this year, and announced pre-tax profits that failed to meet analysts’ expectations.

The news drove its share price down 5 per cent in early trading in London, and capped a disappointing results season for Hong Kong’s larger banks.

Our financial returns are not yet where they need to be
Bill Winters, global CEO, Standard Chartered

Standard Chartered announced a pre-tax loss of US$359 million for the fourth quarter of 2016, albeit one that was 58 per cent smaller than the loss it posted in the same period a year earlier.

“Our financial returns are not yet where they need to be,” said Bill Winters, Standard Chartered’s global chief executive, in a statement to the Hong Kong and London stock exchanges.

For 2016 as a whole, Standard Chartered posted statutory pre-tax profits of US$409 million, turning around the previous year’s loss of US$1.5 billion.

A poll of eight analysts by Bloomberg had predicted pre-tax profits of US$1.33 billion, but even once one-off items were removed, the bank still only posted pre-tax profits of US$1.1 billion.

“Standard Chartered didn’t resume the dividend which will be taken as disappointing,” wrote Bernstein analyst Chirantan Barua in a note to clients.

“We understand how important dividends are to shareholders,” said Standard Chartered chief executive for Greater China and north Asia, Benjamin Hung Pi Cheng, in a press conference in Hong Kong. “In 2016, we have made a lot of progress. However, considering dividends, we believe that the current level of earnings and returns are not at the level they need to be.”

Hung added that regulatory and economic uncertainties were additional reasons why the bank chose not to pay a dividend this year.

Hong Kong remained the largest contributor to Standard Chartered Group both by income and profits. Nonetheless, underlying pre-tax profits from Hong Kong fell by 14 per cent, year on year, to US$1.11 billion. Standard Chartered Bank (Hong Kong)’s underlying pre-tax profits were approximately US$18 million more than Standard Chartered Group’s overall profits.

May Tan, the bank’s Hong Kong chief executive will retire on March 1, to be replaced by Mary Huen, currently its regional head of retail banking, Greater China and north Asia

Both Standard Chartered Group senior officials and those in Hong Kong included concerns about threats to globalisation and free trade in their outlook for 2017.

“I am concerned about rising levels of trade protectionism and anti-globalisation. From my standpoint that cannot be good for world growth,” said Hung.

“Notwithstanding that, it is worth noting that in the past decade the dependence of China on trade with OECD countries, if anything, has been on the decline, while China’s trade partnership with the rest of Asia is on the up,” he said, referring to the Organisation for Economic Co-operation and Development. “We are fundamentally in the business of facilitating trade, and this could be an offset should anti-globalisation moves occur, though we hope they won’t.”

On Tuesday, HSBC, Hong Kong’s largest lender, announced a fall in pre-tax profits of 62 per cent, while last Friday, Bank of East Asia, Hong Kong’s largest family-owned lender posted a decline in pre-tax profits of 32 per cent.