February 27, 2018 / 6:09 AM / 2 years ago

StanChart markets revenues slump 31% in Q4

HONG KONG, Feb 27 (IFR) - Standard Chartered’s financial markets revenue slumped 31% last quarter as it suffered from the same difficult trading conditions as bigger rivals. The weak performance limited the bank’s revenue growth last year to a modest 3%.

Asia-focused Standard Chartered said on Tuesday revenues in financial markets fell to US$536m in the fourth quarter from US$779m a year ago.

All parts of the business struggled: rates revenues halved to US$74m, foreign exchange income fell 24% to US$208m, capital structuring halved to US$51m, commodities dropped 34% to US$35m and credit and capital markets revenues sagged 12% to US$85m.

Its corporate finance unit fared better, with revenues rising 16% on the year to US$466m.

Standard Chartered said its turnaround plan is on track in other areas, prompting it to restart paying dividends to shareholders. It will pay out 11 cents per share for 2017 and said it intends to increase that over time.

It also said 2018 had started well and income across the bank was up more than 10% from a year ago.

Chief executive Bill Winters has spent two years slashing exposure to bad loans, restructuring and cutting costs, and said his turnaround is ahead of plan, allowing him to increase investment.

The bank, which gets 85% of its revenues from Asia, Africa and the Middle East, reckons it will benefit from higher economic growth in its markets, including China and Africa.

The bank reported an underlying pretax profit for 2017 of US$3.01bn, up from US$1.09bn in 2016. Operating income rose to US$14.29bn from US$13.81bn.

“Financial performance in 2017 has been steady rather than spectacular, but has significantly improved,” Winters said.

He said the bank was working to establish income growth momentum across all its businesses to improve its return on equity, which was 3.5% last year. Winters is aiming to get that to 8% in the medium term.

The bank wants to grow revenues in its corporate and institutional banking division by 5%–7% a year and attract more clients, and said it had added more than 90 multinational firms from OECD countries last year.

Its financial markets arm continues to struggle, however. Its rivals also had a weak end to the year, which they blamed on a lack of volatility in markets. Fourth quarter revenues in fixed income, currency and commodities trading fell 31% across the big five US banks from the year before.

For the year, revenues in Standard Chartered’s financial markets fell 16% from a year earlier to US$2.54bn. Within that, FX income fell 18%, rates revenue was down 21% and commodities fell 17%, while credit and capital markets revenues were up 3%.

Revenues in corporate finance were flat on the year at US$1.47bn.

CIB’s underlying revenues in 2017 were flat from 2016, and down 3% excluding losses incurred in its principal finance business in 2016. Transaction banking was a bright spot for CIB, with revenues up 15% to US$3.33bn, helping CIB to a US$1.26bn underlying profit for 2017, up from US$435m in 2016. (Reporting by Steve Slater Editing by Vincent Baby)

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