Standard Chartered Records 46% jump in profit to $3.7bn but warns of 2020 Coronavirus hit

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All figures are presented on an underlying basis and comparisons are made to the full-year 2018 on a reported currency basis unless otherwise stated

DUBAI, United Arab Emirates, February 27, 2020,/ Standard Chartered PLC (the Group) today releases its results for the year and quarter ended 31 December 2019. All figures are presented on an underlying basis and comparisons are made to the full-year 2018 on a reported currency basis unless otherwise stated. A reconciliation of restructuring and other items that have been excluded from underlying results is set out on page 59 of the Annual Report.

“Discipline on the things we control and a sharp focus on where we are differentiated enabled us to grow underlying profit 8% and improve earnings per share by 23% in 2019, despite an increasingly challenging external environment. We are in the right markets guided by the right strategy and united through our purpose to drive commerce and prosperity. I am confident that we have set ourselves up for lasting success.”

Bill Winters, Group Chief Executive

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Progress in 2019 on strategic priorities

  • Deliver our network: income from corporate and institutional clients using our international network grew 6%
  • Grow our affluent business: income from Premium, Priority and Private Banking clients increased 6%
  • Optimise low-returning markets: aggregate profit before tax in India, Indonesia, Korea and UAE improved 10%
  • Improve productivity: income per full-time employee increased 5%; Hong Kong liquidity hub is delivering benefits
  • Transform and disrupt with digital: beta-testing virtual bank in Hong Kong; digital banks in nine African markets
  • Drive sustainability: taking bold and ambitious actions to lead the way on global sustainability issues

Progress in 2019 on the financial framework

  • Return on tangible equity up 130bps to 6.4%
    • Underlying profit before tax up 8% to $4.2bn
    • Statutory profit before tax up 46% to $3.7bn

Standard Chartered Records 46% jump in profit to $3.7bn but warns of 2020 Coronavirus hit - Brand Spur

  • Income up 2% to $15.3bn; up 4% on a constant currency basis
    • Up 5% at constant currency excluding $(177)m movement in Debit Valuation Adjustment (DVA)
    • 4Q’19 income flat YoY; up 1% at constant currency and up 4% excluding $(118)m movement in DVA
    • 4Q’19 momentum continued into January 2020
  • Costs (excluding the UK bank levy) down 1% at $10.1bn; up 1% on a constant currency basis
    • Positive income-to-cost jaws of 3%; cost-to-income ratio (excluding UK bank levy) improved 2% to 66%
  • Capital
    • Common equity tier 1 ratio remains within 13-14% target range at 13.8%: up 28bps since 3Q’19
    • Proposed $0.5bn share buy-back will reduce the CET1 ratio by ~20bps o Proposed final ordinary dividend per share of 20c will result in a full-year dividend of 27c, up 29%
    • Risk-weighted assets of $264bn up $6bn or 2%; down $5bn since 3Q’19 Other financial highlights in 2019

Other financial highlights in 2019

  • Pre-provision operating profit up 8% to $4.9bn
  • Earnings per share up 14c or 23% to 75.7c
  • Asset quality remains stable; credit impairment up $166m remains at a historically low level:
    • Stage 1 and 2 impairment increase of $275m including the impact of deteriorating macroeconomic variable
    • Stage 3 impairment reduction of $109m: stage 3 loans down 50bps to 2.7% of the total, the lowest level since 2014
  • Average interest-earning assets up 4% to $495bn; gross yield up 16bps to 3.34%
  • Average interest-bearing liabilities up 3% to $445bn; rate paid up 27bps to 1.92%
  • Net interest margin down 7bps to 1.62%
Read Also:  The CBN's move against abuse of FX: Our thoughts
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Outlook

The underlying momentum in the fourth quarter of 2019 continued in the opening weeks of 2020 but lower interest rates, slower global economic growth, a softer Hong Kong economy and the impact of the recent novel coronavirus outbreak will likely result in income growth in 2020 below our medium-term 5-7% target range. These headwinds are expected to be transitory, but we now believe it will take longer to achieve our RoTE target of 10% than we previously envisaged.

We have improved our RoTE every year since 2015 and we are focused on doing so again in 2020 through a combination of positive income-to-cost jaws and continued discipline on returning surplus capital to shareholders. The Board has authorised the purchase and cancellation of up to $0.5bn worth of shares starting shortly and will review the potential for making a further capital return upon the completion of the Permata sale.

Starting shortly and will review the potential for making a further capital return upon the completion of the Permata sale.

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Africa & Middle East Performance:

  • Underlying operating profit before taxation of $684 million was 29 per cent higher with lower expenses and improved credit impairment partially offset by a 2 per cent decrease in income
  • Underlying operating income of $2,562 million was down 2 per cent but up 3 per cent on a constant currency basis, with a good performance in our Financial Markets business across the region.
  • Middle East, North Africa and Pakistan were flat, and Africa was down 3 per cent
  • Strong performances in Financial Markets and Corporate Finance were offset by margin compression in Retail Banking and lower Wealth Management in the UAE
  • Loans and advances to customers were up 5 per cent and customer accounts were down 2 per cent

Commenting on the results, Sunil Kaushal, Regional CEO, Africa and the Middle East said“I’m proud to say that 2019 was a strong year for the Bank. For Africa and the Middle East, we were well-positioned for growth moving into the year and this is clearly illustrated in our results. Our strong performance demonstrates the transformation of Africa and the Middle East franchise despite a challenging macroeconomic backdrop across the region.”

“Our results are driven by an outstanding performance by our Global Banking business, particularly in Corporate Finance which had a strong first quarter in 2019 closing out marquee deals, and our Debt Capital Markets business also had a strong year overall. The distinct competitive advantage of our network capabilities and strong product offering allowed us to connect to our clients across Africa and the Middle East and grow key corridors into the region. Our focus on accelerating our digital agenda and the transformation of our Retail Banking business proved successful as well. We launched eight digital banks across key markets in sub-Saharan Africa in less than a year, digitised our wealth management offering for the digital bank platform, and grew accounts by over 150,000.”

“We have had a good start to the business in 2020 and the underlying business excluding large deals continues to be resilient. As we move forward, the region is focused on executing swiftly against the strategy to drive growth and we are determined to support our clients achieve prosperity.”

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Standard Chartered Records 46% jump in profit to $3.7bn but warns of 2020 Coronavirus hit - Brand SpurStandard Chartered Records 46% jump in profit to $3.7bn but warns of 2020 Coronavirus hit - Brand Spur
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Standard Chartered Records 46% jump in profit to $3.7bn but warns of 2020 Coronavirus hit - Brand SpurStandard Chartered Records 46% jump in profit to $3.7bn but warns of 2020 Coronavirus hit - Brand Spur

Latest News

Asia Pacific Rayon Raises US$300m from National and International Affiliated Banks to Expand Production Capacity

  • Continued capital expenditure aims to boost production and support the recovery of Indonesian economy
  • Loan agreements aligned with Indonesian Government's strategy to drive investment growth in 2021
  • APR is a member of the RGE group of companies


JAKARTA, INDONESIA - Media OutReach - 12 April 2021 - Asia Pacific Rayon (APR), the largest integrated rayon fiber producer in Indonesia, today announced that it has secured a syndicated loan facility of Rp 4.5 trillion (US$300 million) with national and international affiliated banks. The funding will be used to support continued capital investment in the company's production facilities at Pangkalan Kerinci, Riau Province, Sumatra.

APR is vertically integrated through its supply chain, from renewable fiber plantations to high-value textile development. It commenced operations in 2019 and was formally inaugurated by President Jokowi Widodo in February 2020. APR plans to increase its production capacity over the coming year to capture the strong growth potential of viscose staple fiber (VSF), strengthening its market position in Indonesia and in export markets across the region. APR is a member of the RGE group of companies. Founded by Sukanto Tanoto, RGE manages a group of resource-based manufacturing companies with global operations.

The syndicated loan participating banks are PT Bank Rakyat Indonesia (Persero) Tbk, PT Bank Central Asia Tbk, PT Bank Pan Indonesia Tbk, PT Bank Pembangunan Daerah Jawa Barat, PT Bank Woori Saudara Indonesia 1906 Tbk and PT Bank KEB Hana Indonesia

The joint mandated lead arrangers and bookrunners for the syndicated loan are PT Bank Rakyat Indonesia (Persero) Tbk, PT Bank Central Asia Tbk, and PT BANK Pan Indonesia Tbk.

Basrie Kamba, Director, Asia Pacific Rayon, said: "This funding will be used to support continued investment in our operations in Kerinci. Rayon fiber, or viscose, is a textile raw material derived from sustainably managed plantations. As rayon is both renewable and biodegradable, it supports the trend towards sustainable fashion in Indonesia and in other markets around the world."

APR's planned expansion is aligned with the Indonesian Government's strategy to increase investment and boost employment to support the recovery of the country's economy and address the continued impact of the COVID-19 pandemic. Following the passing into law of the Omnibus Bill in October last year to streamline investment and stimulate job creation, President Widodo said last month that investment would be the key factor in achieving 5% economic growth in 2021.

"This loan facility and our continued investment in our operations are evidence of the growth potential of the viscose rayon sector in Indonesia and around the world. We are committed to supporting the Indonesian Government's efforts to improve the investment climate in export-oriented manufacturing industries, and its efforts to create upstream jobs in plantations and the processing of raw materials, and downstream opportunities in textile factories and related businesses," said Basrie.

Hari Setiawan, Executive Vice President of PT Bank Rakyat Indonesia (Persero) Tbk said : "As Representative of JMLAB and all lenders, I hope this collaboration will be useful to support the growth and development of PT Asia Pacific Rayon in increasing production and operations and also supporting the recovery of Indonesia's export growth."

"Support from BCA and other Banks reflect our confidence in APR, and as our contribution to promote a sustainable and environment friendly industry. We hope this cooperation will tighten our relationship as well," said Susiana Santoso, Executive Vice President of PT Bank Central Asia Tbk.


About Asia Pacific Rayon

Asia Pacific Rayon is the first fully integrated viscose rayon producer in Asia. Located in Pangkalan Kerinci, Riau, the company uses the latest production technology to produce high-quality rayon to meet textile needs. APR is committed to becoming a leading viscose rayon producer with the principles of sustainability, transparency and operational efficiency, serves the interests of the community and the country, and provides value to customers. APR is part of the RGE (Royal Golden Eagle) group of resource-based manufacturing companies. Sustainability is fundamental to APR. The APR Sustainability Policy, updated in September 2020, include additional commitments on pulp sourcing and clean manufacturing.


About RGE

RGE Pte Ltd manages a group of resource-based manufacturing companies with global operations. Our work ranges from the upstream, comprising sustainable resource development and harvesting, to downstream, where our companies create diverse value-added products for the global market. Our commitment to sustainable development underpins our operations, as we strive towards what is good for the community, good for the country, good for climate, good for customer, and good for company. RGE was founded in 1973. The assets held by RGE companies today exceed US$20 billion. With more than 60,000 employees, we have operations in Indonesia, China, Brazil, Spain and Canada and continue to expand to engage newer markets and communities. www.rgei.com

Standard Chartered Records 46% jump in profit to $3.7bn but warns of 2020 Coronavirus hit - Brand Spur
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- Advertisement -Standard Chartered Records 46% jump in profit to $3.7bn but warns of 2020 Coronavirus hit - Brand SpurStandard Chartered Records 46% jump in profit to $3.7bn but warns of 2020 Coronavirus hit - Brand Spur