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Standard Chartered underlying profit falls 25%

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Christian Fernsby ▼ | February 27, 2020
Standard Chartered PLC's fourth-quarter profit fell sharply due to flat income, rising expenses and higher credit impairments.
Standard Chartered
Standard Chartered   Pretax underlying profit for the quarter fell 25% to $325 million
Pretax underlying profit for the quarter fell 25% to $325 million, the lender said in a stock exchange filing today.

Topics: Standard Chartered

Operating income was $3.60 billion, up $2 million from a year earlier. Net interest income dropped 6.4% to $1.90 billion due to margin compression, the bank said. Net interest margin fell 0.18 percentage point to 1.54%.

"Lower interest rates, slower global economic growth, a softer Hong Kong economy and the impact of the recent novel coronavirus outbreak will likely result in income growth in 2020 below our medium-term 5-7% target range," the lender said.

While it believes these negative factors will be transitory, Standard Chartered no longer expects to be able to achieve its previous return on tangible equity target of at least 10% by 2021.

The bank plans to soon initiate a buyback for up to $500 million worth of shares. It may also consider further shareholder returns after the completion of its earlier-disclosed disposal of Indonesia's Bank Permata.

"If there are fewer opportunities to effectively deploy surplus capital to fuel incremental high-returning growth then we will have more to return to shareholders," said Bill Winters, chief executive of Standard Chartered.

For the full year of 2019, pretax underlying profit rose 8.0% to $4.17 billion.