On Thursday, Standard Chartered reported a 28% increase in annual pretax profit as global interest rate hikes boosted its lending revenue. The company also announced a new $1 billion share buyback program.

StanChart’s performance, like that of its international competitors, benefited from ruthless central bank interest rate increases intended to fight inflation. These increases allowed lenders to charge more after a decade of near-zero rates.

The bank with a focus on Asia, Africa, and the Middle East, which has been mentioned in connection with First Abu Dhabi Bank (FAB) takeover rumors, announced that its most recent share buyback program would soon begin. Following the announcements, its stock in Hong Kong increased 3.5%.

“We are upgrading our expectations, and are now targeting a return on tangible equity approaching 10% in 2023, to exceed 11% in 2024, and to continue to grow thereafter,” Chief Executive Bill Winters said in a statement.

StanChart, a company with headquarters in London, had set a 10% goal for 2024. For banks, return on equity is a crucial indicator of profitability.

Shares of StanChart have increased as a result of fresh takeover rumors, despite FAB dismissing media reports that it was considering a bid.

StanChart shares are still about 25% below where they were in June 2015, when Winters took over, while shares of rival HSBC Holdings are flat and the benchmark FTSE index has increased by about 15%.

After previously acknowledging that it had once worked on a potential bid for the bank, FAB, the largest lender in the United Arab Emirates, said last week that it was not currently evaluating an offer for the bank.

StanChart reported statutory pretax profit of $4.3 billion for 2022, with the majority of its revenue coming from Asia. This was less than the $4.73 billion average analyst forecast the bank had compiled, but it was higher than the $3.35 billion it earned in 2021.

On Wednesday, Barclays announced a 14% drop in full-year pretax profit as a result of, among other things, rising costs and a decline in deal fees. Results from HSBC are released the following week.

Although StanChart’s results were superior to some of its competitors, inconsistent performance from important business lines highlighted the work that Winters, the longest-serving CEO of a significant European bank, still needs to do.

As markets became more volatile due to accelerating inflation and Russia’s invasion of Ukraine, institutional clients engaged in frenetic activity throughout 2022, leading to StanChart’s financial markets trading business reporting record income, up 21%.

However, the wealth management industry reported a 17% decline in revenue as high net worth individuals became less risk-tolerant and COVID-19 regulations limited face-to-face sales of investment products in China and other markets.

The bank’s loan books were also affected by the slowdown in China’s economy, as it recorded an impairment of $582 million due to anticipated bad debts in the nation’s troubled real estate market, bringing the lender’s overall impairment to a higher-than-anticipated $838 million.

As a result of “industry challenges,” StanChart also suffered a $308 million loss on its investment in China Bohai Bank.

(Adapted from ChannelNewsAsia.com)