[ 2016-02-23 ]

Shares in Standard Chartered plunge after bank reports $1.5bn loss
Shares in Standard Chartered plunged by as much as
11pc after the bank reported its first annual loss
since 1989.

The Asia-focused bank has been pumelled by the
economic downtown in many Asian economies,
declining commodity markets and its own expensive
internal restructurings.

The bank's bosses will get no bonus for the year,
shareholders will get no dividend, and the
long-term incentives offered to executives in
previous years will not pay out.

It made a $1.5bn (£1.1bn) pre-tax loss in the
year to the end of December, compared with a
$5.2bn profit in 2014, weighed down by hefty
restructuring charges and loan impairments.

Impairment losses on bad loans almost doubled to
$4bn, while regulatory costs increased by 40pc to
$1bn. The bank levy in the UK – which taxes a
bank’s global balance sheet – increased by a
fifth to $440m.

The bank attributed a 15pc slide in operating
income to a combination of falling commodity
prices, lower levels of business activity, the
declining value of many emerging market currencies
against the US dollar and its own efforts to sell
businesses and other assets.

Chief executive Bill Winters, who joined the bank
last year, said the global economy was a major
factor in Standard Chartered’s problems.

“The economic and geo-political backdrop for the
group clearly deteriorated over 2015 and has not
improved into 2016. Chinese equity markets have
been increasingly volatile, impacting sentiment
around the world, and commodity markets have
plumbed new lows,” he said.



Former JP Morgan executive Bill Winters was
brought in last year to turn around Standard
Chartered

“This combination of headwinds has had an impact
on our performance, in particular in the second
half of last year.

“However, the weakness in our performance in
2015 is also partly the result of deliberate
management actions. We have accelerated the
necessary repositioning of our main businesses,
tightened risk tolerances, reduced and liquidated
risk concentrations, and restructured our
organisation, including a significant reduction in
staff numbers.”

The chief executive said those changes hurt the
bottom line in 2015, but should help the bank make
improved returns on equity in the coming years.

Cost cutting led to $600m of savings, the bank
said, while it plans to shave another $2.3bn off
its overheads in the coming years.

Standard Chartered cut 6,800 staff in 2015 as part
of its plan to ditch 15,000 jobs by 2018.

The bank's target is to make a return on equity of
8pc by 2018, and 10pc by 2020.

Source - UK Telegraph

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