Standard Chartered's Result Slightly Below Expectation, USD 750 Million Buyback Announced

Standard Chartered’s fiscal 2021 was solid but came in below our forecasts on a USD 300 million impairment on its investment in China Bohai Bank. Underlying profit before tax for the full year was up 61% to USD 3.90 billion, compared with our USD 4.28 billion forecast. Along with the full-year result, management provided a strategic update and announced an expected USD 750 million share buyback. Increasing operational efficiency, acceleration in optimising risk-weighted assets within the corporate and institution banking division, and continued focus in affluent and mass markets in consumer and private banking are expected to lift return to tangible equity to 10% by 2024. The latter guidance is more explicit in the timing in reaching the 10%, and earlier guidance of return on tangible equity, or ROTE, of greater than 7% by fiscal 2023. There is no change in our view that the focus should be on positive trajectory in improving profitability, though the tailwind of a positive interest rate environment should see the bank actually reach its target by fiscal 2024.