Standard Chartered has announced a dividend and share buyback scheme amid falling profit, along with plans to cut the chief executive’s pay and reduce its office space significantly in the coming years.
The lender posted a 40% fall in annual underlying pre-tax profit for 2020 to $2.5bn, and forecast that income for 2021 is likely to be at a similar level. However, it said it would restore its dividend of 9 cents per share and revealed a $254m buyback — the maximum permitted under the Bank of England’s temporary restrictions, after suspending payouts during the pandemic.
The pay packet for group chief executive Bill Winters fell 29% to £3.8m, which the bank’s annual report said was “directly linked to the group scorecard outcome” and personal performance. The London-headquartered bank’s chief financial officer Andy Halford’s pay similarly dropped 27%.
Like many other financial institutions, Standard Chartered has struggled to keep profit and revenue high as the global coronavirus crisis took its toll on businesses and lending income.
Winters said the bank is “weathering the health crisis and geopolitical tensions very well”, adding that its outlook is “bright”.
“We remain strong and profitable, although returns in 2020 were clearly impacted by higher provisions, reduced economic activity and low interest rates, in each case the result of Covid-19,” he said in a 25 February statement.
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Halford also told Bloomberg TV that it is likely to downsize its office footprint by a third in the next three to four years.
In a statement attached to the results, the lender said it hopes a continued focus on its transformation plan will aid its recovery as the pandemic recedes, as two-thirds of its income is based in Asia.
Return on tangible equity, a key profit measure for Standard Chartered, is expected to rise from 3% in 2020 to at least 7% by 2023. Meanwhile it forecast that income will return to between 5% and 7% growth per annum from 2022, thanks to strong performances in its financial markets and wealth management businesses.
“The board’s position on capital returns remains essentially the same as it was before our regulator requested us to withdraw the recommended 2019 final dividend,” said Jose Vinals, Standard Chartered’s chairman.
“Having now resumed it, we expect to be able to increase the full-year dividend per share over time as we execute our strategy and progress towards a 10% return on tangible equity.”
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