How Standard Chartered CEO Bill Winters Is Shaking Things Up
Standard Chartered CEO Bill Winters has announced a stellar set of third-quarter results, reporting a pretax profit of US$1.72bn (£1.3bn) between July and September, beating analysts’ forecasts of US$1.49bn (£1.1bn).
The third quarter’s US$1.7bn pretax profit is nearly triple the US$633m reported during the same period last year.
Standard Chartered’s share price has gained 37% this year, not bad for a share price which even its chief executive called “crap” in February.
The lender’s share price is now just trading below its level when Winters became CEO in June 2015.
The bank said its income would grow by towards 10% in 2024, up from a prior estimate of above 7%. It now plans to pay out at least US$8bn (£6.1bn) in shareholder dividends between now and 2026, up from US$5bn (£3.8bn) previously announced.
Focusing on wealth management
On the back of these results, Standard Chartered said it will also double investment in its wealth management arm. The lender will spend US$1.5bn (£1.2bn) over five years on relationship managers and investment advisers.
Despite being headquartered in London, Standard Chartered makes nearly all of its revenue in Asia, the Middle East and Africa. It has hubs in Hong Kong and Singapore.
Last year, the bank was hit by losses tied to China’s commercial real estate crisis and exited markets in sub-Saharan Africa and Jordan, as part of efforts to streamline its global operations.
Accelerating investment plans
Bill Winters, group CEO of Standard Chartered, said in a LinkedIn post: “Our performance this quarter further reinforces our growth story and shows the progress we have made in executing on our strategy. We are now doubling down on this by further sharpening our focus on serving the complex needs of larger global clients who rely on our unique cross-border capabilities, and accelerating investment plans in our fast-growing and high-returning wealth management business for affluent clients.
“As a result of the strong performance in both our businesses, we’ve upgraded our guidance on operating income to generate growth towards 10% in 2024. Underlining the confidence in our outlook, we are targeting a RoTE approaching 13% in 2026 and are looking to increase our distribution to shareholders to at least US$8 billion by 2026.
“The confidence we have in the strategic performance of our business and the tremendous opportunities that lie ahead remains stronger than ever. A huge thank you to our colleagues for their continued support and dedication in delivering for our clients.”
How is CEO Bill Winters turning Standard Chartered around?
Much of Winters’ tenure has been spent de-risking the bank’s balance sheet after it took on billions in bad loans following the financial crisis.
Cutting costs
Winters, the longest-serving CEO of a major UK bank after taking the reins in June 2015, announced a plan in February to cut US$1.5bn of costs over three years by simplifying its structure and automating more processes.
Dialling down retail banking
Like HSBC, which in recent years has pulled out of retail banking in the US and France, Standard Chartered is scaling down its retail banking operations.
Making divestments
The lender is exploring whether to sell all or part of a small number of businesses that do not fit in with its new strategy. These divestments will happen over the next 18 to 24 months.
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