StanChart announces $500 million buyout as rising rates boost first-half profit

The Standard Chartered Bank logo is seen at its head office in London, Britain July 26, 2022. REUTERS/Peter Nicholls

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SINGAPORE, July 29 (Reuters) – Standard Chartered (STAN.L) said on Friday first-half pre-tax profit rose 19%, above market expectations, as the emerging-markets-focused lender benefited from rising interest rates and given an optimistic outlook. .

Statutory pre-tax profit for the lender, which derives most of its revenue from Asia, rose to $2.8 billion in the first half. That was above $2.35 billion in the same period a year earlier, as well as the $2.48 billion average of analyst forecasts compiled by the bank.

The strong performance highlighted how some banks are benefiting from significantly higher interest rates, although a weakened macroeconomic environment in the US and Europe appears to be a major risk.

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The London-headquartered lender also increased payouts to shareholders, with an increased interim dividend of $119 million, or 4 cents per share, and announced a $500 million share buyback.

He said earnings were boosted by his focus on eastern markets, rather than the United States and Europe where interest rate hikes to combat spiraling inflation threaten the economy. economic growth.

“Looking ahead, as recession risks increase in the West, we are seeing the early stages of a post-pandemic recovery in many markets in which we operate, which underpins our growth outlook,” said general manager Bill Winters in the results. statement.

StanChart, which focuses on Asia, Africa and the Middle East, said it was on track to deliver a 10% return on tangible equity, a key measure of earnings, by 2024, if not sooner.

Analysts have warned that asset impairment charges and rising costs could weigh heavily on the performance of London-listed StanChart and its larger counterpart HSBC (HSBA.L).

StanChart said its profits in Asia were hit by a $351 million credit write-down, mostly due to losses in China’s struggling commercial real estate sector and turmoil in Sri Lanka.

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Reporting by Anshuman Daga and Lawrence White; Editing by Kenneth Maxwell

Our standards: The Thomson Reuters Trust Principles.

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