Standard Chartered has reported an underlying profit before tax of $0.8 billion for the full-year, 2015, down 84 per cent year-on-year.
The bank also reported a loss before tax of $1.5 billion after restructuring charges of $1.8 billion.
In its 2015 financial performance report, Standard Chartered said its operating income was $15.4 billion, down 15 per cent year-on-year, impacted by: lower exchange rates against the US dollar, business exits, disposals and de-risking; lower commodity prices, and mark to market valuations; and lower levels of business activity.
In the report, Standard Chartered also provided an update on the comprehensive programme of management actions designed to improve shareholders’ returns, as outlined in November.
Group Chief Executive, Bill Winters, is quoted as saying: “While 2015 performance was poor, the actions we took on capital throughout last year and in particular in December have positioned us strongly for the current macro environment.”
“We have a balance sheet that is resilient and we are in the right markets. We have identified our risk issues, and we are dealing with them assertively. We are making good progress on executing our strategy, creating a bank that will generate improved financial performance over time following from our improved cost efficiency, tightened risk controls, and focus on our many core advantages,” Mr Winters added.
Below is the rest of the report summary:
Comprehensive programme of management actions
• We are making good progress executing the strategy
• Management Team established, including new Chief Risk Officer (Mark Smith) and Head of Corporate & Institutional Banking (Simon Cooper)
• Delivered annualised cost efficiencies of $0.6 billion in 2015; further $2.3 billion targeted over next 3 years
• Global headcount reduced by c. 7,000 roles during 2015 (to c. 84,000). Further 2,000 in progress
• Made early progress in restructuring more than $100 billion Risk Weighted Assets
• Good progress exiting $20 billion portfolio of assets beyond our risk tolerance
• Reduced concentrations, improved coverage and better quality assets in BAU loan book
• Commenced multi-year investment programme of $1 billion in Retail Banking, Private Banking and Wealth, Africa, renminbi
2015 financial peformance summary
• Underlying profit before tax of $0.8 billion, down 84 per cent year-on-year
• Reported loss before tax of $1.5 billion after restructuring charges of $1.8 billion
• Operating income of $15.4 billion, down 15 per cent year-on-year, impacted by:
o lower exchange rates against the US dollar
o business exits, disposals and de-risking
o lower commodity prices, and mark to market valuations
o lower levels of business activity
• Underlying operating costs of $9.0 billion, down 7 per cent excluding the bank levy and regulatory costs
• Underlying loan impairment of $4.0 billion was up 87 per cent:
o Around 40 per cent related to a number of exposures beyond our tightened risk tolerance
o The balance was mainly driven by falling commodity prices and deterioration in financial markets in India
• The Group is strongly capitalised with a highly liquid balance sheet
o Common Equity Tier 1 (CET1) of 12.6 per cent (2014: 10.7 per cent)
• As previously announced, there is no final dividend; total dividend for 2015 is 13.7 US cents
Summary and outlook
• Broad range of challenges and uncertainties remain, notably China and commodities
• Strong balance sheet means we can weather continued macro uncertainty
• We have taken actions to reposition the group to achieve improved returns for shareholders
• Given the current market conditions and the early stage of implementation of the strategy, we expect the financial performance of the Group to remain subdued during 2016
Annual report and accounts
Today the company has also published the annual report and accounts, which can be accessed on the website here. This discloses:
• 2015 Group annual incentives down 22 per cent to $855 million (£560 million)
• No 2015 annual incentive for Executive Directors
• All LTIP awards granted to Executive Directors in 2013 lapse in full, given performance conditions have not been met
• New LTIP to incentivise Directors to deliver the new strategy and grow shareholder returns, subject to approval at this year’s AGM.
