Standard Chartered's Loss Narrows -- Update
24 February 2017 - 10:29PM
Dow Jones News
By Margot Patrick
LONDON-- Standard Chartered PLC said its troubled principal
finance unit toted up a $650 million loss last year, weighing on
the bank's efforts to improve returns.
Standard Chartered's net loss for 2016 narrowed to $478 million
from $2.36 billion in 2015, but revenue and profit figures fell
short of analysts' expectations and the stock fell 5%.
The emerging-markets focused bank said it sharply marked down
its private equity stakes in companies in Africa, Asia and India,
as it prepares to exit from the principal finance business in the
next couple of years. It said its risk committee reviewed processes
and controls in the unit last year, amid the losses and probes by
U.S. and other authorities into alleged bribery at a portfolio
company, power plant builder Maxpower Group Pte. Ltd.
Standard Chartered said the unit will be stripped out of its
underlying results going forward, with any gains or losses treated
as restructuring costs.
The principal finance unit manages around $5 billion for
Standard Chartered and external investors. The bank's exposure is
around $2 billion.
Standard Chartered's smaller full-year loss was the result of a
near-halving in bad loans across its businesses. But revenue
dropped by 11% to $13.8 billion from $15.4 billion. Standard
Chartered blamed the fall on a range of factors including negative
revenue in principal finance, dollar strength against emerging
market currencies and lower client activity.
Fourth-quarter revenue was $3.53 billion, up from $3.26 billion
in the fourth quarter of 2015. The bank said significant further
improvement is needed.
Chief Executive Bill Winters said the bank is on a stronger
foundation after cutting costs and selling around a dozen
businesses since he started as CEO in June 2015. He said the bank
will look at strategic options this year for its Indonesia
business, currently run through two banks. Standard Chartered
operates under its own name in the country and holds a 44.6% stake
in PT Bank Permata. Mr. Winters said the bank is fully committed to
Indonesia but wants to operate through a single entity there.
He said shifts in global trade and potential U.S. protectionist
policies posed a threat to the bank, but also opportunity as trade
flows realign.
"If the U.S. for whatever reasons or through whatever political
process makes itself a less desirable trading partner, there are
other countries that will want to fill that gap," Mr. Winters told
reporters.
Write to Margot Patrick at margot.patrick@wsj.com
(END) Dow Jones Newswires
February 24, 2017 06:14 ET (11:14 GMT)
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