Standard Chartered Rewards Shareholders Despite Underwhelming Growth

Standard Chartered PLC delivers an 18% rise in pre-tax profit for 2023, meeting expectations, and announces a $1 billion share buyback and increased dividends, rewarding shareholders.

Strategic Shift in Profitability Targets:

Despite profit growth, the bank presents cautious growth forecasts for 2024, expecting income to grow between 5-7%, lower than previous estimates, raising concerns among investors about prospects.

Standard Chartered aims to steadily increase returns on tangible equity to 12% by 2026, abandoning previous forecasts and emphasizing a longer-term profitability strategy.

Impairment Charges from Chinese Investments:

The bank records an $850 million impairment, primarily from its stake in Chinese lender Bohai Bank, reflecting challenges in China’s banking sector amidst rising bad loans and economic slowdown.

Standard Chartered faces hurdles in expanding its presence in China, highlighted by substantial losses in Chinese investments and provisions for expected loan losses in the real estate sector.

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Impact of China’s Property Market Crisis:

The decline in the value of investments in Chinese banks, coupled with provisions for loan losses related to the property market crisis, underscores the significant challenges posed by China’s economic conditions.

The banking industry faces mounting bad loans and uncertainty in China’s property market, exemplified by HSBC Holdings’ recent $3 billion charge on its stake in a Chinese bank.

Differential Growth in China’s Onshore and Offshore Markets:

Standard Chartered reports slower growth in China’s onshore income compared to robust growth in offshore-related income, reflecting divergent trends within the Chinese market.