Standard Chartered shares jump as profit beats expectations

Standard Chartered wrapped up FTSE 100 bank Q4 updates in fine form on Friday with a profit beat that sent shares sharply higher.

UK banks have had mixed reactions to updates this week, with the balance of profits, outlook, and shareholder returns driving immediate share price moves.

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Standard Chartered shares over 8% at the time of writing on Friday as the company excelled on all three.

STAN’s Q4 underlying profit before tax was $1.1bn, up 74% compared to the same period last year as impairments fell and net interest income rose 6%.

Share buybacks and increased dividends have been a theme across UK banks results over the past week and Standard Chartered did not disappoint.

The group will pay a 27 cent final dividend meaning full year dividends are up 50% on last year. In addition, shareholders will benefit from a fresh $1bn share buyback.

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The icing on the cake for Standard Chartered investors was a very positive outlook. The company said it was targeting an operating income increase of 5%-7% from 2024 to 2026 and saw this at the top end of the 5%-7% range in 2024.

“Standard Chartered’s fourth quarter results benefited from lower impairments like many of its peers. Profit before tax beat expectations largely due to a release of impairments back to profit from one of its divisions. Strip that out and underlying performance was a little weaker than expected, but the focus will be on guidance,” said Matt Britzman, equity analyst, Hargreaves Lansdown.

“The outlook for 2024 is a smidge lower than analysts had priced in but the medium-term guidance out to 2026 shows promising signs. Volume growth, cost cuts and a benefit from the structural hedge are expected to help deliver a return on tangible equity of 12% in 2026 (10% 2023). If delivered, that should provide a material tailwind to the current valuation.

“The China story remains in focus. Standard took another write-down of its investment in the domestic Chinese bank, Bohai, over the quarter – taking the total to $850mn for the year. The stark performance difference between onshore and offshore business in China highlights the challenging domestic environment.”

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