Standard Chartered Shares Plunge After Loss

Shares in Standard Chartered plunged by as much as 11pc after the bank reported its first annual loss since 1989.

The Asia-focused bank has been pummelled by the economic downturn in many Asian economies, declining commodity markets and its own expensive internal restructurings.

The bank's bosses will get no bonus for the year, shareholders will get no dividend, and the long-term incentives offered to executives in previous years will not pay out.

It made a $1.5bn (£1.1bn) pre-tax loss in the year to the end of December, compared with a $5.2bn profit in 2014, weighed down by hefty restructuring charges and loan impairments.

Impairment losses on bad loans almost doubled to $4bn, while regulatory costs increased by 40pc to $1bn. The bank levy in the UK – which taxes a bank’s global balance sheet – increased by a fifth to $440m.

The bank attributed a 15pc slide in operating income to a combination of falling commodity prices, lower levels of business activity, the declining value of many emerging market currencies against the US dollar and its own efforts to sell businessed and other assets.

Chief executive Bill Winters, who joined the bank last year, said the global economy was a major factor in Standard Chartered’s problems.

“The economic and geo-political backdrop for the group clearly deteriorated over 2015 and has not improved into 2016. Chinese equity markets have been increasingly volatile, impacting sentiment around the world, and commodity markets have plumbed new lows,” he said.

 “This combination of headwinds has had an impact on our performance, in particular in the second half of last year.

“However, the weakness in our performance in 2015 is also partly the result of deliberate management actions. We have accelerated the necessary repositioning of our main businesses, tightened risk tolerances, reduced and liquidated risk concentrations, and restructured our organisation, including a significant reduction in staff numbers.”

The chief executive said those changes hurt the bottom line in 2015, but should help the bank make improved returns on equity in the coming years.

Cost cutting led to $600m of savings, the bank said, while it plans to shave another $2.3bn off its overheads in the coming years.

Standard Chartered cut 6,800 staff in 2015 as part of its plan to ditch 15,000 jobs by 2018. 

The bank's target is to make a return on equity of 8pc by 2018, and 10pc by 2020.


February 2016