17th Feb 2022 06:41
(Alliance News) - Despite doubled annual profit and a bolstered payout, Standard Chartered PLC on Thursday undershot analyst expectations on both.
The London-based emerging markets lender reported pretax profit for 2021 of USD3.35 billion, more than doubled from USD1.61 billion a year prior, but missing analyst expectations of USD3.84 billion by 13%.
Net interest income slipped 0.7% to USD6.80 billion from USD6.85 billion, beating the USD6.78 billion analyst consensus, as low interest rates scuppered growth.
Adjusted net interest margin narrowed to 1.21% from 1.31%.
"The decline in the net interest margin was as a result of the low interest rate environment and is equivalent to USD700 million of lost income," Chief Financial Officer Andy Halford noted.
Operating income edged 0.3% lower to USD14.70 billion from USD14.75 billion.
Diluted earnings per share multiplied to 60.4 US cents from 10.3 cents.
Chief Executive Bill Winters said: "Our performance in the second half of 2021, and into this year, gives us confidence that we are on track to achieve our strategic and financial objectives. We saw a return to income growth, which we believe signals the start of a sustainable recovery, and we finished the year with good business momentum in Financial Markets, Trade and Wealth Management. Good cost discipline allowed us to generate positive income-to-cost jaws in the second half of the year."
StanChart ended 2021 with a CET 1 ratio of 14.1%, edging down closer to the company's minimum target of around 14.0% for 2021. Its CET 1 ratio eased from 14.6% at the end of September, and was down from 14.4% at the end of 2020. Analysts had forecast a CET 1 ratio of 14.3%.
StanChart completely missed analyst forecasts for dividends, having proposed a final dividend of 9 US cents per share, compared to the 16.8 cents chalked in by analysts. This matched 2020's final dividend, when 9 cents was the maximum allowed under regulatory guidance at the time.
This brought StanChart's total annual payout to 12 cents, up 33% on the prior year's 9 cents.
StanChart additionally noted that an imminent USD750 million share buyback programme is expected to reduce its CET 1 ratio by around 30 base points.
"The board is committed to operating within the 13% to 14% CET 1 ratio range, and we are very clear that capital not needed to fund growth will be returned to shareholders," StanChart said.
Credit impairments of USD254 million were booked in the year, narrowed sharply from USD2.33 billion the year before, but still some way off the USD156 million expected from analysts.
Loans & advancements to customers increased 6.0% to USD298.47 billion from USD281.70 billion, while customer accounts grew by 8.0% to USD474.57 billion from USD439.34 billion.
"While the pandemic brought about considerable challenges and, as a result, the turnaround is taking longer than previously anticipated, it is clear to us that the refreshed strategic priorities we set out at the start of 2021 are right. Our ambition of delivering 10% return on tangible equity remains as resolute as ever and we are working to accelerate its achievement by 2024," Chair Jose Vinals said.
By Greg Roxburgh; [email protected]
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