Standard Chartered Plc (the Group) has released its results for the year ended December 31, 2018. The result made available to BusinessDay shows operating income of approximately $15billion in 2018 as against $14.3billion in 2017.
The Group reported profit before taxation (PBT) of $3.9billion in the review financial year ended 2018 as against $3.01billion in the corresponding period of 2017.
Underlying profit before tax of $3.9billion was up about 28percent, driven by the Group’s largest segments and regions; while its statutory profit before tax of $2.5billion is stated after provision for regulatory matters and restructuring and other items and was 6percent higher. The Group made a $900million provision in respect of legacy financial crime control matters and FX trading issues.
All figures are presented on an underlying basis and comparisons are made to the equivalent period in 2017. Return on ordinary shareholders equity increased to 4.6percent from 3.5percent in 2017. Basic earnings per share increased 14.2 cents to 61.4 cents. The Board has recommended a final dividend of 15 cents per ordinary share, up 36percent from 11 cents in 2017.
Return on ordinary shareholders tangible equity increased to 5.1percent from 3.9percent; while cost to income ratio declined to 69.9percent from 70.8percent in 2017.
“We have made tremendous progress securing the foundations of the business since 2015, resulting in a third successive year of underlying profit growth. Our refreshed priorities announced today will help realise the true value of the franchise.
“We will measure this not only in monetary terms with double-digit equity returns and significant shareholder distributions targeted by 2021, but also in the positive impact to our clients, stakeholders and communities. We are determined to drive commerce and help our clients achieve prosperity, while doing everything that we can to make the world a cleaner, safer and more sustainable place”, said Bill Winters, Group Chief Executive, Standard Chartered Plc.
“The operating income of $15billion grew 5 percent. The group chief executive linked it to a strong performance in transaction banking, good growth in retail products “and slightly lower growth in wealth management and financial markets more than offset lower income in corporate finance,” the Group Chief Executive said.
The Group’s net interest margin increased to 1.58 percent and remained stable in the fourth quarter. Operating expenses excluding the UK bank levy of $10.1 billion were up 2 percent. Continued discipline on costs has enabled the Group’s significant investment into improving the business with a greater proportion targeted at technology enabled productivity improvements.
“Credit impairment of $740 million was lower by 38 percent reflecting the focus on higher-quality origination within tightened risk tolerances. Other impairment of $148 million related primarily to transport leasing assets. The Group has taken the decision to discontinue its ship leasing business and future profit and losses associated with the related portfolio will be reported as restructuring. Profit from associates and joint ventures of $241 million was 15 percent higher following a return to profitability of the Group’s joint venture in Indonesia,” Winters said.
Andy Halford, Group Chief Financial Officer, Standard Chartered Plc said, “We have made good progress turning around the Group’s financial performance with profits having increased significantly every year since 2015. We are delivering returns that are now much closer to the targets we set out in 2015 and we have clearly defined the actions required to get us above a 10 per cent return on tangible equity by 2021.”
“We have made a solid start to the year, although income is down slightly compared to the equivalent period in 2018 due to strengthening of the US dollar and buoyant conditions last year in Wealth Management and Financial Markets in particular. While sentiment remains more cautious in the near-term, robust fundamentals across our markets mean we remain optimistic about growth in the medium term.
“This franchise is capable of much more. The refreshed strategic priorities we have laid out today will reinforce our positions of strength and differentiation that are driving profitable growth while also addressing underperforming businesses and improving structural efficiency. We are investing significantly more than we were in 2015 and an increased proportion is targeted at technology-enabled productivity improvements. Our balance sheet is fundamentally more resilient and the conduct and culture across the Group has improved markedly”, Halford said.
José Viñals, Group Chairman, Standard Chartered Plc said “The global economy has continued to grow, but geopolitical uncertainties and the spectre of trade protectionism remain. “We are realistic concerning the key issues and risks, but despite this, the opportunities in our markets remain substantial and the work that we have done in recent years in enhancing our capabilities and strengthening our resilience puts us now in a better place to capture them.
“Based on our extraordinary footprint and the talent of our colleagues, I am confident that as we execute our new strategic objectives with discipline and energy we will create long-term value for all our stakeholders and become the best bank we can be,” Viñals said.
