Surging bad loans hurt StanChart

Business | Avery Chen 26 Feb 2021

Standard Chartered (2888) said pre-tax profit fell 57 percent US$1.61 billion (HK$12.56 billion) for 2020, missing expectations and dragged down by surging bad loan provisions, while restoring dividend payments and its share buyback program.

The lender declared a final dividend of 9 US cents and a US$254 million share buyback, which is the maximum level set by UK regulators - 0.2 percent of risk-weighted assets as of December 31, 2020.

That shows the Britain lender's confidence in revenue recovery as it expects income to return to 5 to 7 percent per year from 2022, said Benjamin Hung Pi-cheng, chief executive, Asia.

The bank did not set a payout ratio target, Hung said.

Standard Chartered expects overall income in 2021 to be similar to that of 2020, with first-half income expected to be lower than last year, given the impact of global interest rate cuts a year ago. The 2021 net interest margin is projected to stabilize at marginally below 1.24 percent in the fourth quarter last year.

Meanwhile, rival HSBC (0005) said it will invest more than US$3.5 billion in the next five years in its wealth and personal banking business in Asia, hiring over 5,000 people in the region.

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