StanChart upgrades forecast, unveils $1 billion buyback after profit jumps 28%

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SINGAPORE/LONDON (Reuters) – Standard Chartered (OTC:SCBFF) raised a key performance metric and announced a new $1 billion share buyback on Thursday after posting a 28% rise in annual pretax profit as global interest rate hikes boosted its lending revenue.

StanChart’s performance, like that of global peers, was aided by aggressive central bank interest rate hikes aimed at combating inflation, which in turn allowed lenders to charge more after a decade of near-zero rates.

It said its latest share buyback would start imminently.

The London-headquartered bank upgraded its performance forecast, saying it now expected to achieve a return on tangible equity – a key profitability metric – of 10% this year and 11% in 2024. It had previously targeted 10% for 2024.

The Asia, Africa and Middle East-focused bank reported statutory pretax profit of $4.3 billion for 2022. That came below the $4.73 billion average of analyst forecasts compiled by the bank but beat the $3.35 billion it made in 2021.

StanChart reported earnings following a burst of renewed takeover speculation after First Abu Dhabi Bank PJSC rejected media reports that it was currently eyeing a bid for StanChart. The takeover chatter has boosted StanChart’s shares.

The United Arab Emirates’ biggest lender last week said it was not currently evaluating an offer for the bank, having previously acknowledged it had at one time worked on a potential bid.

StanChart’s business lines showed a mixed performance, highlighting the work Chief Executive Bill Winters, the longest-running chief of a major European bank, has to do to get the lender firing on all cylinders.

StanChart’s financial markets trading business reported record income, up 21%, as accelerating inflation and Russia’s invasion of Ukraine made for volatile markets, driving frenzied activity by institutional clients throughout 2022.

The wealth management business however reported a 17% drop in income as wealthy individual customers became more risk averse and COVID-19 restrictions curbed face-to-face sales of investment products in China and other markets.

StanChart also took a higher-than-expected $838 million credit impairment for rising bad loans, as accelerating inflation and slowing economies in major markets pressured borrowers’ ability to repay loans. The impairments included $582 million for expected bad loans in China’s troubled real estate market.