Standard Chartered Holds Line on Dividend Payments -- WSJ
03 August 2017 - 5:02PM
Dow Jones News
Bank decision to keep dividend suspended led to drop, despite
improved profit
By Margot Patrick
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (August 3, 2017).
LONDON -- Standard Chartered PLC, a laggard among banks
restructuring since the financial crisis, said it still sees too
many uncertainties to start paying dividends again.
The Asia-focused bank's shares fell 5.5% despite improved
second-quarter profit, after executives said the bank still has a
long way to go to improve returns.
The bank is in the throes of a multiyear cleanup after years of
rampant growth fizzled out three years ago. Chief Executive Bill
Winters has been unloading bad assets and resetting the bank's
culture since joining two years ago, but has said it would still
take years to get Standard Chartered's return on equity to
acceptable levels.
Underlying return on equity in the first half was 5.2%, the bank
said Wednesday. Mr. Winters said the target continues to be to get
it above 8% by 2020, lower than targets from rivals who started
their post-financial crisis restructurings years earlier.
Parts of Standard Chartered were shaky when Mr. Winters took
over from a former management team led by Peter Sands. In November
2015, he laid out a plan to cut jobs and relationships with
unprofitable clients, and reduce costs. Standard Chartered's
balance sheet ballooned in the 2000s as cheap credit from banks
helped lift Asian economies.
Mr. Winters said Wednesday the economic health of its markets is
mixed, and that there are still question marks on regulatory and
accounting rules that could force banks to hold more capital.
Holding off on dividends for now "is the cautious thing to do," he
said, but the board will watch how the second half goes.
Standard Chartered's earnings largely met analyst expectations.
Revenue in the second quarter was $3.61 billion, up from $3.47
billion in first-half 2016. Net profit for the first half climbed
to $971 million from $465 million a year earlier.
The bank has fallen out of favor with investors, with its shares
trading at lower valuations than peers because of the continuing
restructuring. Mr. Winters said the bank has done much of the heavy
lifting to get back on track, but that the "external environment is
still weighing on our full potential."
Standard Chartered shares were flat in London before the
announcement, then slumped when the bank said dividends won't
restart yet. It started reducing, then suspended dividends in
2015.
It has large retail banks in Asia, and services domestic,
regional and multinational companies in trade finance and cash
management, among other parts of its still-sprawling
operations.
Write to Margot Patrick at margot.patrick@wsj.com
(END) Dow Jones Newswires
August 03, 2017 02:47 ET (06:47 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
Standard Chartered (LSE:STAN)
Historical Stock Chart
From Apr 2024 to May 2024
Standard Chartered (LSE:STAN)
Historical Stock Chart
From May 2023 to May 2024