Standard Chartered 2022 profit jumps 28% amid higher interest rates

London-listed lender unveils $1bn share buyback programme

A Standard Chartered branch in Hong Kong. Operating income for 2022 climbed 11 per cent to $16.3 billion. Bloomberg

The emerging markets-focused Standard Chartered reported a 28 per cent jump in its 2022 pretax profit as operating income rose amid higher global interest rates.

The London-listed bank’s profit before taxation for the 12-month period to the end of December rose to $4.3 billion, it said on Thursday. Operating income for the period climbed 11 per cent to $16.3 billion.

In the Middle East, the bank's underlying profit before tax rose 4 per cent to $819 million as operating income jumped 7 per cent to $2.6 billion, driven by growth in transaction banking, financial markets and retail.

“As we forge ahead to drive future growth, we are excited about the scale of opportunities across the region," said Sunil Kaushal, Standard Chartered's regional chief executive for Africa and Middle East.

"Despite ongoing challenges, the GCC markets are expecting to outpace global growth on the back of oil recovery, increased government spending and bilateral trade negotiations."

Saudi Arabia and the UAE, the Arab world's two largest economies rebounded strongly from the coronavirus pandemic amid higher oil prices and government initiatives.

The International Monetary Fund expects Saudi Arabia's economy to grow 2.6 per cent this year and by 3.4 per cent in 2024.

The UAE's economy is projected to grow 3.9 per cent in 2023, according to the UAE Central Bank.

Standard Chartered also announced a new $1 billion share buyback programme that would start imminently.

in 2022, Standard Chartered continued to make good progress "executing its strategy and delivered a strong financial performance", said group chairman Jose Vinals.

“The external environment we faced was mixed. The war in Ukraine created significant uncertainty in Europe and other key markets. However, the global economy remained resilient, with the recent relaxation of Covid-19 restrictions in China providing more grounds for optimism in 2023.”

Last month, the International Monetary Fund said better economic data in the third quarter of last year, the easing of inflation and the reopening of China point to resilience in the global economy, prompting it to marginally raise its growth forecast for 2023.

The fund raised its global economic growth estimate for this year by 0.2 percentage points to 2.9 per cent from its October forecast, a slowdown from the 3.4 per cent expansion in 2022 and below the historical average of 3.8 per cent over the 2000-2019 period.

The global economy is projected to rebound to 3.1 per cent in 2024, the IMF said in its World Economic Outlook report.

The bank's financial markets trading business reported record income, up 21 per cent with strong growth in institutional clients throughout 2022. However, the wealth management business reported a 17 per cent drop in income as wealthy individual customers became more risk averse.

China's economic slowdown also hit the bank's loan books, as it recorded a $582 million impairment, taking the lender's overall impairment to a higher-than-expected $838 million.

However, the lender, which makes most of its profit in Asia is optimistic about the rebound of key Asian economies.

China reopened its economy after enforcing strict movement restrictions for many months to stem the spread of the pandemic.

“Our markets are some of the world’s most dynamic places, with a growth potential that significantly outstrips more established economies,” Mr Vinals said.

“Asia is likely to be the fastest-growing region in the world, and the significant reopening of the Chinese economy from Covid-19 restrictions is likely to materially boost demand and growth.

“This, together with India and Asean’s high rates of economic expansion and continued dynamism in commodity-exporting countries in our footprint, gives us plenty of reasons for optimism.”

He added the company has increased the total dividend by 50 per cent to 18 cents per share and announced a new share buy-back of $1 billion, “starting imminently”.

“This will take total capital, including dividends, announced since the start of 2022, to $2.8 billion, which is well over halfway towards our target,” Mr Vinals said.

Total assets fell 1 per cent annually to $820 billion, while loans and advances to customers increased 4 per cent to $310.6 billion. Profit attributable to company shareholders in 2022 rose 27 per cent to about $3 billion.

Last week, First Abu Dhabi Bank, the UAE's biggest lender, denied media speculation that it is considering a takeover bid for Standard Chartered. FAB revealed last month that it evaluated making an offer but abandoned the move which, if successful, would have put it among the top 10 banks globally by market value.

Standard Chartered has upgraded its expectations and is now targeting a return on tangible equity — a key profitability metric — of 10 per cent this year and 11 per cent in 2024, it said.