22-02-2025
Standard Chartered PLC (SCBFF) Full Year 2024 Earnings Call Highlights: Record Income and ...
Return on Tangible Equity (RoTE): 11.7%, up 160 basis points year-on-year.
Record Income: $19.7 billion in 2024.
Net Interest Income (NII): $10.4 billion, up 10%.
Non-NII: Up 20%, driven by Wealth Solutions and Global Markets.
Operating Expenses: Up 7% for the year.
Credit Impairment: $557 million, up 5%.
Profit Before Tax: Up 21%.
Full Year Dividend Per Share: Increased by 37%.
Share Buyback: New $1.5 billion announced.
Capital Distributions: Total $4.9 billion since full year 2023 results.
Loan Loss Rate: 19 basis points in 2024.
Underlying Loans and Advances Growth: 4% for the year.
Customer Deposits: Up 1% in 2024.
CET1 Ratio: 14.2% in 2024.
Wealth Solutions Income: Up 36%.
Affluent Net New Money: $44 billion in 2024.
Sustainable Finance Income: $982 million, up 36% year-on-year.
Warning! GuruFocus has detected 4 Warning Sign with SCBFF.
Release Date: February 21, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Standard Chartered PLC (SCBFF) achieved a return on tangible equity of 11.7% in 2024, up 160 basis points year-on-year.
The company reported record income of $19.7 billion, with strong performances in Wealth Solutions and double-digit growth in Global Markets and Banking.
A 37% increase in full-year dividend per share was announced, along with a new $1.5 billion share buyback.
The Fit for Growth program is progressing well, achieving $200 million in annualized savings from executed projects in 2024.
The company is on track to meet its target of at least $8 billion in shareholder distributions by 2026.
Operating expenses increased by 7% in 2024, with credit impairment rising by 5% to $557 million.
A $561 million write-off of software assets was recorded, impacting the company's financials.
Restructuring charges amounted to $441 million, primarily due to organizational transformation actions.
The loan loss rate is expected to normalize towards 30 to 35 basis points, up from 19 basis points in 2024.
There is a headwind of around 1% to NII in 2025 from the WRB transformation actions announced in Q3.
Q: Can you elaborate on the expected revenue growth for 2025, given the strong performance in Q4 2024? A: William Winters, Group CEO, noted that while the company expects to be at the higher end of the 5% to 7% CAGR target for 2023 to 2026, they are not changing their guidance. The strong momentum from Q4 2024 has carried into 2025, and the company is pushing for every bit of upside. However, they remain cautious due to external factors, although they are optimistic about the franchise's position and the supportive environment.
Q: What is the outlook for the bank's return on tangible equity (RoTE) beyond 2026? A: William Winters stated that while the bank is on track to achieve a RoTE approaching 13% by 2026, they do not see 13% as an endpoint. The bank believes it can drive RoTE substantially higher, depending on execution and external conditions. The focus remains on continuing to progress beyond 2026.
Q: How is the bank managing the impact of software write-downs and restructuring charges? A: Diego De Giorgi, Group CFO, explained that the software write-downs related to the documentation of capitalization decisions are complete and have no impact on capital. The restructuring charges are largely cash expenses, with some additional costs expected from market exits and dual occupancy costs. The bank does not guide to a run rate for restructuring but expects some ongoing charges related to strategic actions.
Q: Can you provide more details on the bank's strategy in Africa and its potential for growth? A: William Winters emphasized that Africa is a strong and differentiating market for Standard Chartered. Despite challenges like debt restructurings, the bank consistently generates returns above the cost of these events. The bank's presence in Africa is crucial for multinational clients, including Chinese companies, and supports the bank's broader network strategy. The focus is on leveraging the bank's unique position to capture growth opportunities in Africa.
Q: What is the bank's approach to capital returns, and how does it align with the current CET1 ratio? A: William Winters stated that the bank is comfortable operating within its 13% to 14% CET1 target range and is prepared to drop to the lower end if appropriate. The bank has announced a $1.5 billion share buyback and aims to distribute at least $8 billion to shareholders between 2024 and 2026. The approach to capital returns is dynamic, considering factors like geopolitical uncertainty and the credit cycle.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
