StanChart posts better-than-expected Q1 profit, unveils share buyback
Asia-focused lender StanChart posted a 10% jump in adjusted pre-tax profits to reach $1.38bn, beating the $1.1bn anticipated by analysts at UBS and unveiled a $1.0bn share repurchase programme.
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Operating income over the reporting period was 1.5% higher at $3.81bn, even as operating expenses slipped by 2% to $2.4bn.
The results came alongside a Tier 1 Capital ratio of 13.9% marking a 30 basis point drop quarter-on-quarter as higher risk weighted assets and a $186m charge linked to the recent settlement with US and UK regulators over Iran sanctions violations offset organic capital generation, with the charge for that fine subtracting seven basis points from the CET1 figure.
StanChart's target for CET1 is to maintain a range between 13-14%.
Management said the share repurchases might reduce its CET1 ratio by 35 basis points during the following quarter.
On the outlook, the company said the global macroeconomic backdrop remained uncertain, although there were "encouraging" signs of improvement towards the end of the reporting period.
Commenting on the lender's results, analysts at RBC described them as "good" and although the share buyback had to some extent been anticipated "it should be taken positively", they said.
For their part, analysts at JP Morgan highlighted the fact that management had not changed its guidance for 2% growth in the lender's risk weighted assets.
That implied further capital build and potential for future capital returns, analysts at the investment bank said, pegging the likely quantum of the latter at about 30% of StanChart's market capitalisation.
JP Morgan also took the chance to reiterate its 'overweight' stance on the shares, singling them out as their 'top pick' as well.
As of 0859 BST, shares of StanChart were 4.3% higher to 698.20p.
-- More to follow --