Standard Chartered Posts Pre-tax Profit; Warns On FY20 Income Growth; Stock Dips

Shares of Standard Chartered Plc (SCBFF.PK,STAC.L,STAN.L) were losing around 4 percent in London trading after the bank warned on fiscal 2020 income growth mainly due to coronavirus impact and a softer Hong Kong economy. This was despite reporting a profit before tax in its fourth quarter, compared to last year’s loss.

For 2020, the company now expects income growth to be below its medium-term target range of 5 percent to 7 percent. The company would also take longer to achieve RoTE target of 10 percent than it previously envisaged. In 2019, RoTE was improved by 130 basis points to 6.4 percent.

The company noted that its largest market, Hong Kong, tipped into recession, driven by a the extended US-China trade dispute, slower economic growth in China as well as local social unrest. Further, the outbreak of the novel coronavirus, called as Covid-19, comes with unpredictable human and economic consequences.

The underlying momentum in the fourth quarter of 2019 continued in the opening weeks of 2020. However, lower interest rates, slower global economic growth, a softer Hong Kong economy and the impact of the coronavirus outbreak are expected to hurt the results.

Standard Chartered also said its Board has authorised the purchase and cancellation of up to $0.5 billion worth of shares starting shortly. It will also review the potential for making a further capital return upon the completion of the Permata sale.

The Board has declared a final ordinary dividend of 20 cents per share, which would result in a full-year dividend for 2019 of 27 cents per share, a 29 percent improvement on 2018.

For the fourth quarter, the bank’s profit before tax was $194 million, compared to last year’s loss of $860 million. On a per share basis, the company’s loss was 3.9 cents, narrower than last year’s loss of 43.3 cents.

Underlying profit before tax was $325 million, compared to $432 million a year ago. Underlying loss per share was 0.4 cents, compared to 5.6 cents a year ago.

Net interest income declined 6 percent to $1.90 billion from $2.03 billion last year. Net interest margin fell to 1.54 percent from 1.72 percent last year.

Underlying operating income was $3.60 billion, same as last year.

In London, Standard Chartered shares were trading at 566.40 pence, down 4.26 percent.

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