Standard Chartered announces milestone share buyback

Standard Chartered has unveiled plans for a one billion US dollar (£771 million) share buyback in the first such move for at least 20 years, as it posted a 10% rise in quarterly profits.

The Asia-focused bank saw shares lift more than 5% after announcing the buyback, which marks a milestone in its turnaround strategy after suffering a flagging stock price for several years.

It came as the group reported underlying pre-tax profits of 1.4 billion US dollars (£1.1 billion) for the three months to the end of March, up from 1.3 billion US dollars (£1 billion) a year earlier.

Statutory pre-tax profits lifted 5% to 1.2 billion US dollars (£925 million).

Investors have been hoping for a share price boost, having endured a 42% fall in the stock since Bill Winters took over as chief executive in 2015 as he has battled scandals and tried to recover from years of over-aggressive growth.

The group confirmed in its quarterly update that it had taken a further and final 186 million US dollar (£143 million) charge, in addition to 900 million US dollars (£694 million) of provisions in 2018 for settlements.

This follows news of its 1.1 billion US dollar (£848 million) settlement earlier this month to resolve a long-running probe into sanctions violations in the US.

It agreed to pay 947 million US dollars (£730 million) to US agencies and £102 million to Britain’s Financial Conduct Authority (FCA) – the second largest penalty for an anti-money laundering breach in the history of the FCA.

Mr Winters said: “The resolution of our legacy conduct and control issues means we can now manage our capital position more dynamically.

“We will maintain our strategic investment programme and start to buy back one billion US dollars of our shares, reflecting our confidence in our ability to execute the strategy and create long-term shareholder value.”

But the results showed revenues fell 2% in the first quarter to 3.8 billion US dollars (£2.9 billion) as it saw “less buoyant” conditions compared with a year earlier.

Russ Mould, investment director at AJ Bell, said: “Today’s update could be a tentative step on the road to rehabilitation for the emerging markets bank as it looks to put legacy issues behind it under chief executive Bill Winters.

“Winters has been fire-fighting for nearly all of his four-year tenure thanks to this series of historic and live problems.

“Investors will be hoping the first quarter update is an indication of what he can do when he is able to focus on the day job.”