Standard Chartered profits drop 84%

The bank reported a pre-tax drop of $1.52 billion for 2015, compared with a pre-tax revenue of $4.24 billion the previous year, and it validated it would not pay a final dividend for the current year. Shares have since plummeted by around 9 per cent in the early hours of trading.

The bank’s underlying loan impairment almost doubled after soaring 87 percent to 4.0 billion – the highest in its history according to Bloomberg.

During 2015, operating income fell 15 per cent to $15.43 billion even as impairment losses on loans and advances and other credit risk provisions surged to over $4 billion from $2.14 billion a year ago.

The bank has also started its program to deliver an additional $2.3bn in the next three years.

Bill Winters, CEO of the London based bank has labelled the performance over the past year as “poor”. The company said it is in talks about its presence in Indonesia and would skip paying executives their annual incentives for 2015.

Standard Chartered’s problems began to emerge in 2012, when after a decade of rising profits the lender was hit by United States regulatory fines and the start of a prolonged downturn in emerging markets and commodity prices on which much of its fortunes depend.

Investec Securities said recently that, on 0.5 times 2015-17 tangible net asset value, Standard Chartered remains “optically cheap”.

In Tuesday’s statement Winters said the bank would “continue to cooperate fully with the USA authorities and the Financial Conduct Authority in their ongoing investigations”.

The bank said the macro-economic environment in India has been challenging due to slow reforms, high indebtedness in some sectors and a lower-than-expected refinancing appetite of local banks, which has resulted in exposure to stressed corporates getting further impacted.

Standard Chartered announced in November that it was refocusing on “affluent retail clients” rather than corporate and institutional banking businesses and would exit or restructure $100 billion of assets.

The bank cut 7,000 jobs a year ago, or 8% of staff, which contributed to US$1.8bn of restructuring charges and took nearly US$1bn of charges against the planned liquidation of US$20bn of loans it considers too risky. The shares rose 5.2 per cent on Monday, narrowing their drop this year to 23 per cent. Winters has been shrinking the lender’s balance sheet after rapid growth under Sands, who was replaced last year after eight years as CEO.