4th Mar 2015 08:40
LONDON (Alliance News) - Standard Chartered PLC Wednesday reported a 31% fall in pretax profit in 2014, hit by lower operating income and an increase in expenses and impairment losses on bad loans, though it set out how it intends to build capital and boost returns over the coming years.
London-listed Standard Chartered, which conducts most of its business in Asia, Africa and the Middle East, said pretax profit fell to USD4.24 billion in 2014 from USD6.06 billion in 2013.
The results were preceded by last week's announcement that Standard Chartered had chosen former JPMorgan Chase executive Bill Winters to succeed Peter Sands as chief executive this summer, while Chairman John Peace is to depart next year. The departures, which were announced as part of a broader board shake-up, came as the feeling that a fresh perspective at the top could help the emerging markets bank to recover following a string of profit warnings and regulatory scuffles in the US.
Finance Director Andrew Halford said Wednesday the group is prioritising "organic capital accretion" by selling assets and exiting some of its businesses. It expects to release between USD25 billion and USD30 billion of risk-weighted assets, which are more capital intensive, in the next two years.
To protect returns, Halford said, the bank is targeting USD1.8 billion of sustainable cost savings over the next three years.
"Combined these represent a significant programme of initiatives that will create a platform from which we can build the returns to an attractive level," Halford said in a statement.
The emerging markets bank said it wants to build capital so that its common equity tier 1 ratio, a measure of financial strength, increases to between 11% and 12% in 2015. Its CET1 ratio was 10.7% at the end of 2014 on an end-point basis and 10.5% on a transitional basis.
It will target a 10% return on equity in the medium term.
The bank's normalised return on ordinary shareholders' equity of 7.8% in 2014, compared with 11.2% in 2013.
Standard Chartered declared a full-year dividend of 86.0 cents per share, flat on the year before.
Standard Chartered shares were up 4.2% at 1,015.50 pence on Wednesday shortly after publishing the results.
By Samuel Agini; [email protected]; @samuelagini
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