16th Feb 2023 16:12
(Alliance News) - Standard Chartered PLC's numbers were not too dissimilar to Barclays PLC's annual outturn, AJ Bell analyst Russ Mould commented, though a better outlook helped the Asia-focused lender's stock market performance on Thursday.
Standard Chartered reported pretax profit of USD4.29 billion in 2022, up 28% from USD3.35 billion in 2021, as interest income jumped by nearly 50% to USD15.25 billion from USD10.25 billion.
However, the bank had previously guided for a pretax profit of USD4.73 billion.
"In many ways Standard Chartered’s 2022 results are similar to those of Barclays, but the shares are getting a much warmer reception because the outlook statement reads much more positively," AJ Bell's Mould said.
"Both banks recorded multi-year highs in profits and dividends last year, even if both were held back by loan losses and other one-off costs, and they have each extended share buyback programmes for this year. Each is warning of an increase in loan losses for 2023 as well, but the key difference seems to be that Standard Chartered is much more optimistic on net interest margins on its loan book than Barclays and a result Chief Executive Bill Winters seems more confident that the bank can achieve its key profitability target in 2023, a year earlier than scheduled."
A USD1 billion share buyback announcement also lifted the stock. The announcement "appeased" the city and
"There's a confident signal from management that the shares are undervalued with a USD1billion buyback announced, and that's a large reason the share price has been propped up today, despite the weaker results. The UK's beaten up financial sector is jumping at the chance to reduce their share pools while sentiment is subdued, and there could be more to come," Hargreaves Lansdown analyst Sophie Lund-Yates commented.
Barclays posted weaker annual profit on Wednesday, and investors were spooked by a tough outlook for its investment bank and a smaller-than-expected buyback.
The company's annual profit was hurt by "litigation and conduct" charges amounting to GBP1.60 billion. These amounted to just GBP397 million in 2021. Roughly a billion of 2022's hit stemmed from an over-issue of securities.
For 2022, the London-based bank posted pretax profit of GBP7.01 billion, down 14% from GBP8.19 billion the previous year. Pretax profit fell short of company-compiled consensus of GBP7.20 billion.
In the Corporate & Investment Bank, total income rose 8.4% to GBP13.37 billion in 2022 from GBP12.33 billion. Pretax profit, however, tumbled 23% to GBP4.31 billion from GBP5.63 billion.
Finally, it declared a share buyback of up to GBP500 million, falling short of consensus of GBP675 million, according to Jefferies. Jefferies itself had expected to see a buyback of GBP1.0 billion declared.
By Eric Cunha, Alliance News news editor
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