Standard Chartered announces $1B buyback after strong profits: Standard Chartered announces $1B buyback after strong profits: Standard Chartered Unveils $1 Billion Buyback Program Amid Stellar Profit Performance
In a strategic move aimed at boosting shareholder value, Standard Chartered Plc has recently declared a robust $1 billion share repurchase program. This announcement comes on the heels of the bank’s stellar fourth-quarter profits, which exceeded analysts’ expectations. The London-based financial institution is taking proactive measures to enhance returns and streamline operations, focusing on its niche in emerging markets.
Standard Chartered Plc has committed to returning more capital to its shareholders while unveiling initiatives to enhance returns and simplify operations at the bank focused on emerging markets. The London-based institution, reporting fourth-quarter profits that exceeded analyst predictions, announced a new $1 billion share buyback. Alongside this, a fresh program titled “Fit for Growth” is expected to generate approximately $1.5 billion in cost savings over the next three years. However, it should be noted that a comparable amount will be allocated to expenses related to permanent organizational changes.
CEO Bill Winters, who has been with the company for nearly nine years, is actively seeking avenues to improve returns for investors and revitalize the stock, which has experienced a decline of over 15% in the past year. In a press conference on Friday, Winters candidly described the share price as “crap” and expressed his determination to alter the market’s perception of the bank.
“We’re not happy with the share price at all,” Winters remarked on Bloomberg Television. The Fit for Growth program is poised to address the market’s perception that it’s challenging to effect change at Standard Chartered.
The adjusted pretax profit for Standard Chartered surged by 63% to $1.06 billion in the final quarter of the year, surpassing the estimated $989.6 million. The bank declared a final dividend of 21 cents per share, resulting in a 50% increase in the full-year payout. The bank also provided new guidance, targeting a 12% return on tangible equity in 2026, along with a growth in operating income ranging from 5% to 7% for the period between 2024 and 2026.
Following these positive announcements, shares experienced an upswing of as much as 10% in London on Friday.
Despite its exposure to rapidly growing markets in Asia, Africa, and the Middle East, Standard Chartered’s shares have faced a downturn in recent months, trading nearly 40% below the levels observed when Winters assumed leadership in June 2015.
There are indications that the bank is contemplating a restructuring of its institutional banking arm, which encompasses investment bankers and traders. Possible options include separating the investment bank from corporate and commercial banking operations, potentially leading to job cuts. No final decisions have been reached yet, with discussions ongoing.
In the third quarter, Standard Chartered reported a profit decline due to charges related to investments in China. CEO Winters acknowledged the material provisions made in this regard, outpacing peers with investments in Chinese banks. The bank aims to navigate challenges and regain investor confidence, particularly in light of the selloff following the third-quarter earnings announcement.
Bloomberg Intelligence emphasizes the significance of Standard Chartered’s plan to keep costs below $12 billion in 2026 and its reduced revenue sensitivity to rate cuts. These factors are deemed critical for maintaining positive operating jaws and achieving the new guidance of a 12% return on tangible equity in the next two years, a figure 200 basis points above consensus. Additionally, the $1 billion buyback and a total return plan of $5 billion by 2026 are viewed as incrementally positive.
Conclusion
Standard Chartered’s announcement of a $1 billion buyback program, coupled with its impressive profit performance and strategic initiatives, marks a significant chapter for the bank. CEO Bill Winters’ commitment to changing the market’s perception and the introduction of the “Fit for Growth” program demonstrate a proactive approach to addressing challenges and positioning the bank for sustained success. As Standard Chartered navigates the dynamic landscape of emerging markets, these strategic moves underscore its determination to deliver value to shareholders and adapt to evolving market conditions. (Standard Chartered announces $1B buyback after strong profits)