StanChart CEO unveils cost-cutting plans amid attempt to boost profitability

Bill Winters said that after three years of cleaning up Standard Chartered, his focus was raising return on equity to 10 per cent by 2021, double last year’s level

Bill Winters, chief executive officer of Standard Chartered Plc, pauses during a Bloomberg Television interview in London, U.K., on Tuesday, Feb. 26, 2019. Winters announced plans to reduce costs and indicated he'll restructure operations in markets including India and South Korea as part of a long-awaited plan to turn around the lender. Photographer: Simon Dawson/Bloomberg
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Standard Chartered chief executive Bill Winters announced plans to reduce costs and improve profitability, as he tries to move the company beyond a period marked by a weak balance sheet and a series of regulatory penalties.

The bank aims to cut $700 million in costs as part of a new three-year plan that the emerging markets focused-lender hopes will soothe investor concerns over its lacklustre returns. On Tuesday, Mr Winters said that after three years of cleaning up Standard Chartered, his focus was raising return on equity to 10 per cent by 2021, double last year’s level.

“I feel like we’re through the really hard restructuring that we needed to do to get the bank clean,” he said. “But we know we have to take the next step to complete our journey to a 10 per cent-plus return.”

Investors welcomed the news, with the Hong Kong-listed shares trading up 2.3 per cent at 3.33pm local time. The reaction will be a boost to Mr Winters, who has been trying to show that he can revive longer-term earnings growth, although success will in part depend on how well he restructures operations in four countries across Asia and the Middle East.

Other targets announced by the bank include an income growth target of 5 to 7 per cent, focusing on controlling risk.

Earlier, Standard Chartered said underlying pre-tax profit in 2018 was up 28 per cent to $3.86 billion, compared with a $3.98bn consensus forecast compiled by the bank. Full-year underlying operating income rose 5 per cent to $14.97bn, compared with forecasts of $15.02bn.

Its private banking unit reported an underlying pretax loss of $14m in 2018, compared with a loss of $1m in the previous year.

Standard Chartered plans to “eliminate residual drags on returns from low-returning markets” including India, South Korea and Indonesia, it said. Mr Winters did not provide many details about his plan for those markets, but said that it could include partnering with technology and e-commerce firms for retail banking.

The joint venture investment in Indonesia's PT Bank Permata is no longer considered core, the bank said, signalling Mr Winters may be getting ready to dispose of the stake.

The lender said last week that it will take a $900m charge for the fourth quarter to cover potential US and UK penalties, including a $133m fine from the British financial regulator related to its financial crime controls. The US Justice Department extended a long-running agreement with Standard Chartered over allegations that the bank illegally processed transactions on behalf of Iran, giving the lender another three months under an outside monitor in December.