Standard Chartered’s bullish perspective on the year ahead helped their shares higher on Thursday as the group increased their earnings expectations for the year ahead.
“We continue to make significant progress against the five strategic actions outlined last year, and we remain confident in the delivery of our financial targets,” said Bill Winters, Standard Chartered Chief Executive.
“We are upgrading our expectations, and are now targeting a return on tangible equity approaching 10% in 2023, to exceed 11% in 2024, and to continue to grow thereafter.”
The positive outlook was at odds with Barclays‘ clouded perception of growth in 2023 outlined in their results yesterday. Barclays’ outlook was dominated by concerns around the health of the UK economy and UK rate trajectories. This is problem Standard Chartered does not have.
Although both banks enjoyed the higher interest rate environment last year, Standard Chartered are focused on emerging markets and are benefiting from growth in their key markets.
“In many ways Standard Chartered’s 2022 results are similar to those of Barclays, but the shares are getting a much warmer reception because the outlook statement reads much more positively,” says AJ Bell investment director Russ Mould.
“Both banks recorded multi-year highs in profits and dividends last year, even if both were held back by loan losses and other one-off costs, and they have each extended share buyback programmes for this year.”
Standard Chartered are to return $2.8bn in buybacks and dividends back to shareholders.
Seize China opportunity
One of Standard Chartered’s key strategic actions is to ‘Seize China opportunity’. This is an attractive proposition for investors as the world’s second largest economy recovers from a prolonged coronavirus restrictions.
Despite the restrictions, Standard Chartered produced a 10% year-on-year increase in income from on-shore China in 2022. This could well accelerate in the year to come.
Standard Chartered generated $3.7bn of their $4.8bn total group profit before tax in Asia last year.