13th Nov 2014 12:02
LONDON (Alliance News) - Standard Chartered PLC Thursday issued a firm response to concerns that the FTSE 100 bank may need to do a rights issue to raise capital, saying that it has been managing the balance sheet proactively and has the ability to accrete capital while funding growth and meeting regulatory requirements.
Standard Chartered, which focuses on Asia, Africa and the Middle East, has come to the end of its annual investor trip, during which it has faced questions as to how it will get back on track after a year marked by profit warnings and trouble with regulators in the US, where it was fined USD300 million in August over anti-money laundering failures.
With the share price down by about 30% in the year to date, Chief Executive Peter Sands told journalists he isn't putting a timeframe on its goals of delivering returns above the cost of capital and to restore sustainable profitable growth.
The CEO responded strongly to questions about Standard Chartered's balance sheet strength, echoing slides that were uploaded to the bank's website to coincide with the final day of the investor trip, which this year took place in Hong Kong.
"We have been managing the bank to be capital accretive on an underlying basis to absorb any regulatory increments that come our way," Sands told journalists, alluding to the trend of increasingly strict financial requirements that have come the sector's way in the wake of the financial crisis.
According to the slides, Standard Chartered is confident about its "highly liquid" balance sheet, which was also described as "well capitalised with an efficient funding structure and low leverage".
Sands declined to comment on the potential impact of possible fines from regulators in the future.
Standard Chartered had a leverage ratio of 4.8% at the end of the first half. According to the slides, there is scope for that to be strengthened through issuance of Additional Tier 1 capital. Its common equity tier 1 ratio was 10.5% at the end of the same period and the bank said it intends to continue to operate with a "prudent" buffer over regulatory requirements.
The bank did not disclose its leverage ratio or CET1 ratio on October 28, when it reported a 16% fall in third-quarter pretax profit and cautioned that it expects underlying profits in the second half to be lower than the same period last year, citing a range of issues including loan impairments and higher regulatory costs.
Sands declined to comment on the potential impact of possible fines from regulators in the future on the bank's financial strength.
Sands was also questioned about his own future, which has drawn scrutiny in the wake of the company's profit deterioration after 10 years of growth. The CEO said he's committed to executing the bank's recovery plan.
Standard Chartered shares were up 1.0% at 955.30 pence on Thursday.
By Samuel Agini; [email protected]; @samuelagini
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