A pedestrian walks past a Standard Chartered sign in the Central district of Hong Kong on February 24, 2017. (PHOTO / VCG)
HONG KONG – Standard Chartered cast a vote of confidence in its China business on Friday, saying the central government’s supportive measures will help address short-term challenges in the mainland economy.
The British lender also expressed its confidence in dealing with the impact from mainland property defaults.
“The worst phase for the mainland’s real estate market has passed, with gradual recovery underway, although it will take time for investment confidence to fully regain its footing,” Standard Chartered Asia CEO Benjamin Hung told reporters during the annual results announcement.
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The bank’s exposure to the mainland property market has decreased from $4 billion at the end of 2021 to the current $2.5 billion, with more than half of it being nonperforming loans. Of these nonperforming loans, 88 percent have already been set aside with provisions. While there is a possibility of additional provisions in the future, the amount needed for further provisions will not be great, Hung said.
The bank's Hong Kong company saw a year-on-year growth of 21% in income and 77% in pretax profit
Standard Chartered reported a 10 percent year-on-year increase in its operating income to $17.4 billion for 2023, driven by hiking interest rates in major advanced economies and a decline in property devaluation in the Chinese mainland real estate market. Pretax profit of the company reached $5.7 billion.
The bank announced a final dividend of $560 million, or 21 US cents per share, which would lead to a 50 percent growth of full-year dividend payout to $728 million, or 27 US cents per share.
Its Hong Kong company saw a year-on-year growth of 21 percent in income and 77 percent in pretax profit, with the former reaching $4.2 billion, solidifying its position as the largest contributor to the income of the London-based bank.
Capitalizing on Hong Kong’s role as the “superconnector” between China and the rest of the world, Standard Chartered also continues to be the “superconnector” of the corridor business. The Chinese mainland-Hong Kong corridor, being the top corridor globally, saw a business growth of around 30 percent in 2023.
Standard Chartered Asia CEO Benjamin Hung (middle), Standard Chartered Hong Kong CEO Mary Huen (left), and Standard Chartered Asia CFO Saleem Razvi announce the lender's full year 2023 results on Feb 23, 2024. (LI XIAOYUN / CHINA DAILY
Hung said he’s confident in the long-term development opportunities for Standard Chartered in China, as the timely implementation of an array of support measures by the central government will help address the short-term challenges in the mainland economy.
Looking ahead, Standard Chartered Hong Kong CEO Mary Huen said that interest rates in the United States are currently reaching their peak, and it is expected that the US Federal Reserve may begin to lower them in the second half of the year, but the pace of rate cuts will depend on economic indicators such as inflation.
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Once the rate reduction cycle begins, it will have a positive impact on loan demand, demand for wealth management products and overall investment sentiment, contributing to the group’s noninterest income growth.
Hung said the bank’s net interest income this year will be between $10 billion and $10.25 billion, and as part of its plan, the multinational bank aims to return a minimum of $5 billion to shareholders over the next three years through share buybacks and dividends.
Contact the writer at irisli@chinadailyhk.com