LONDON (March 4): Standard Chartered, the Asian-focused lender that hired Bill Winters as its chief executive officer last week, posted a 30 percent drop in full-year profit, while saying capital will rise enough to leave the dividend unchanged.
Pretax profit was US$4.2 billion, down from US$6.1 billion a year earlier, the London-based bank said in a statement on Wednesday.
That missed the US$5.6 billion average estimate of 17 analysts in a Bloomberg survey. Standard Chartered held its dividend at 86 US cents a share.
The bank wrote down the value of its Korean business by US$726 million.
Outgoing CEO Peter Sands, who is being replaced by Bill Winters, failed to convince disgruntled investors he was the right person to reverse two years of falling profit amid slower economic growth in Asia.
“We saw intense pressure on margins and volume, a significant uptick in impairment and a sharp increase in regulatory-related cost,” Sands said in the statement.
“Some of the decisions we took in the past look less good now than they did at the time.”
Executive directors on the bank’s board waived their bonuses this year, citing the “disappointing performance” of the company. The bank’s overall bonus pool shrank 9 percent for the year.
Impaired loans rose 32 percent, primarily for corporate clients, the bank said. The Korean business lost US$145 million before tax.
Standard Chartered said its common equity Tier 1 capital ratio, a measure of financial strength, fell to 10.7 percent from 11.2 percent a year earlier.
“We believe that we have identified strong levers to manage capital accretion over time,” Chairman John Peace said in the statement, referring to the decision to maintain the dividend.
While “we are comfortable with our current capital position, the board does want to improve our capital trajectory, so we are taking actions around risk-weighted assets, cost reductions and business disposals.”
Analysts say one of the first moves for Winters, 53, a former joint head of investment banking at JPMorgan Chase, could be to bolster the bank’s balance sheet by raising capital when he takes over in June.
The results mark a final bow for Sands after eight years as chief executive, his last as the longest-serving boss of any major European bank.
Under his tenure, total assets at the lender, which focuses on Asia, the Middle East and Africa, increased to US$690 billion in June from US$266 billion in 2006, according to data compiled by Bloomberg.