Standard Chartered earnings up 10 per cent in first quarter

UPDATE: Buyback approved as pretax profit for StanChart grows to $1.38 billion from $1.26 billion a year ago

Standard Chartered Hong Kong offices. The bank had a good first quarter. Reuters

Standard Chartered posted on Tuesday a 10 per cent rise in its first-quarter profit helped by a surge in corporate banking income and a drop in expenses, and announced an up to $1 billion share buyback programme.

Pretax profit for StanChart, which focuses on Asia, Africa and the Middle East, grew to $1.38 billion from $1.26bn a year ago, the London-headquartered bank said in a stock exchange filing.

StanChart announced this month a $1bn settlement with the United States to bring to a close a long-running probe into whether the bank continued to violate sanctions after 2007, when it said it would no longer do business with Iran.

The buyback, its first in 20 years, comes after StanChart CEO Bill Winters unveiled in February ambitious plans to double return on tangible equity and dividends in three years by cutting $700 million in costs and boosting income.

Mr Winters won plaudits from investors for his initial three-year plan that began in June 2015 when he focused on revamping the risk culture, slashing costs and purging bad loans that had accumulated in a post-2008 period of over-aggressive growth.

The bank said on Tuesday in its quarterly earnings filing that it had received regulatory approval to start buying back shares worth up to $1bn, and that StanChart was now able to manage its capital position "more dynamically".

"We will maintain our strategic investment programme and start to buy back $1 billion of our shares, reflecting our confidence in our ability to execute the strategy and create long-term shareholder value," Mr Winters said.

Last month, sources said the bank was planning a sale process for its loss-making private equity unit.

The lender sent so-called teaser documents on Standard Chartered Private Equity to gauge interest from potential suitors, including other buyout firms in Asia, said the sources. More detailed information about the unit, which manages about $3.5bn in assets, is expected to be distributed to interested parties in the next few weeks, one source said.

The private equity unit was initially profitable but its fortunes started to turn in late 2015, partly because of the plunge in the price of oil. Former SCPE head Joseph Stevens left the bank in 2016 after failing to conclude a buyout deal, and Standard Chartered decided to seek an exit from most of the business by 2018.

There is a possibility that current management of SCPE, headed by Nainesh Jaisingh, will partner with other companies to buy the assets, said the people.