Standard Chartered shares are plunging after the bank posted a surprise full-year loss
Standard Chartered reported a surprise pretax loss of $1.5 billion (£1.1 billion), missing analysts' expectations of a $1.4 billion profit.
Bad loans rocketed to $4 billion, up 87% on the year. Standard Chartered does 90% of its business in Asia and reports in US dollars, and so was also hit by Asian currency devaluations.
Here's what that did to the bank's shares:
- Underlying profit before tax of $0.8 billion, down 84%, "reflecting challenging market conditions and strategic management actions."
- Underlying operating income of $15.4 billion, down 15%.
- One-quarter of the decline resulted from "lower exchange rates against the US dollar."
- One-quarter resulted from "business exits, disposals, and de-risking."
- One-quarter related to lower commodity prices.
- One-quarter related to lower levels of business activity.
- Underlying loan impairment of $4.0 billion, up 87%.
The bank is going through a root and branch restructuring, which costs a lot of money. Last year CEO Bill Winters said Standard Chartered would raise around $5.1 billion and slash around 15,000 jobs in a bid to shore up its balance sheet amid the slowdowns in China and emerging markets generally.
The bank took restructuring charges of $1.8 billion, which is within the $3 billion budget indicated in November 2015, "covering redundancy costs, impairments and a goodwill write down."
Winters said in the earnings statement: "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."