In an earnings call, Standard Chartered PLC (STAN.L) announced robust performance for the entire year of 2023, achieving double-digit Return on Tangible Equity (RoTE) for the first time in approximately a decade. The bank recorded a 13% growth in revenue and demonstrated a disciplined approach to cost control, resulting in a 240 basis points improvement in returns.
Focused on financial markets and asset management, Standard Chartered experienced significant growth in these areas, adding over 0.25 million new affluent customers and $29 billion in net new funds. The bank also disclosed plans to provide shareholders with at least $5 billion in capital returns by 2026 and aims to increase its RoTE to 12% by the same year.
Key Takeaways:
- RoTE reached double digits for the first time since 2014, driven by a 13% growth in revenue.
- Asset management and financial markets are strategically positioned for future revenue growth.
- Over 0.25 million new affluent customers and $29 billion in net new funds in asset management.
- The bank targets at least $5 billion in capital returns to shareholders by 2026.
- Plans to increase RoTE to 12% by 2026 through revenue growth, cost discipline, and transformation.
Company Outlook:
- A stable increase in RoTE from 10% to 12% is targeted by 2026.
- Net interest income is expected to increase to $10 billion to $10.25 billion in 2024.
- Focus on simplifying, standardizing, and digitizing operations for significant cost savings.
- Identifying growth opportunities in Asia and the Middle East through sustainable finance and digital banking initiatives.
Bear Highlights:
- A 62% decline in mortgage revenues due to a pullback in new lending.
- A 2% decrease in financial markets revenue.
- Treasury reported a loss, mainly due to hedging positions in a high-interest rate environment.
Bull Highlights:
- Pre-tax underlying operating profit increased by 27%, reaching $5.7 billion.
- Adjusted net interest income increased by 23%.
- Asset management income increased by 10%, and cross-border business income increased by 31%.
Missed Points:
- The company faced challenges in mass retail customer growth.
Q&A Highlights:
- Confidence in achieving growth targets by focusing on ASEAN markets and China.
- The targeted $1.5 billion in cost savings will be gradually phased below the threshold over three years.
- Expectations for credit growth in Corporate, Commercial, and Institutional Banking (CCIB).
- The transition from time deposits (TD) to Current Account and Savings Account (CASA) will be gradual, with a significant portion of TDs being short-term.
- Focus on sustainable finance products with an accelerated capital pace and activities related to Environmental, Social, and Governance (ESG).
Standard Chartered has outlined a clear strategy for future growth, emphasizing the importance of digital banking initiatives, sustainable finance, and shareholder returns. The management trusts in the ability to manage credit risk and gain market share in key growth areas. With a solid set of strategic goals and disciplined cost management, Standard Chartered is poised to sustain its success in the coming years.
source: tr.investing.com / prepared by Melisa Beğiç