StanChart lifts profit outlook, sets new $1b share buyback

HONG KONG, July 28 (Reuters): Standard Chartered PLC upgraded its annual profit forecast on Friday and set a new $1 billion share buyback after a strong first-half performance, as rising rates and a record financial markets business propelled the lender's margins.
StanChart, which earns most of its revenue in Asia, said statutory pretax profit for the first six months of the year surged 20 per cent to $3.32 billion, beating the $3.18 billion average of 16 analyst estimates compiled by the bank.
The lender upgraded its guidance for income growth in 2023 to a 12 per cent-14 per cent range from 10 per cent previously.
Investors were cheered by the results, with StanChart's London shares up 5.6 per cent early on Friday. Its Hong Kong shares rose 3.6 per cent.
"We are mindful of the external macroeconomic headwinds and recent challenges in the banking sector; however, our balance sheet is robust, and we have the right strategy, business model and ambition to deliver our targets," CEO Bill Winters said in a statement.
StanChart's robust results showed how global market conditions are playing to the emerging markets-focused lender's strengths.
Rising interest rates are lifting lending income at its transaction banking business, which handles cash and payments for big companies, while its focus on trading over dealmaking in investment banking helps it avoid a slump in corporate mergers and fundraising.
Analysts at Jefferies hailed the set of numbers which exceeded expectations in most areas, with revenues beating the consensus forecasts and second quarter credit costs from loan losses coming in lower than expected at $146 million versus estimates of $260 million.
The bank said income growth outpaced increases in costs, despite inflation pushing up the latter, driving a 3 percentage point improvement to its cost-income ratio to 61 per cent for the first half.
StanChart, which set out five strategic goals one and half years ago, is ahead of schedule on them, Winters said in a call with media.
The London-headquartered bank's transaction banking income shot up by 92 per cent to $2.86 billion, with cash management income up 166 per cent, benefiting from a favorable interest rate environment.