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StanChart Stock Soars on 2023 Profit Surge, Reveals Buyback

On Friday, Standard Chartered reported a more robust profit in 2023, boosted by increased interest rates, as the bank also revealed a $1 billion share buyback plan.

StanChart stock traded in Hong Kong increased by 3.65% to HK$62.45 per share in the closed session, while its stock operated in London climbed by 6.64% to £645.80 apiece.

However, the bank revised its 2024 income outlook downward and projected modest growth in net interest income, citing concerns about persistent inflation and potential geopolitical instability.

Meanwhile, StanChart reported a 22.00% increase in underlying profit before tax for the year ending December 31, reaching $5.68 billion, as disclosed in a statement to the Hong Kong Stock Exchange.

Moreover, the bank’s underlying net interest income also saw a 20.00% rise, reaching $9.56 billion for the year.

Fueled primarily by an enhanced net interest margin of 1.67% for the year, the robust performance prompted the bank to declare a $1 billion buyback, effective immediately.

However, StanChart anticipates modest growth in its operating income in the upcoming years, projecting an increase ranging between 5.00% and 7.00% from 2024 to 2026.

The bank has forecasted net interest income for the current year, ranging between $10 billion and $10.25 billion in 2024.

Meanwhile, the more cautious outlook reflects warnings similar to those provided by StanChart’s global counterparts, with credit activity slowing under the strain of prolonged higher interest rates.

China’s Grappling Economic Recovery Affects StanChart

Standard Chartered closely monitors China’s economic well-being, considering the bank’s substantial exposure to the region.

Beijing, one of the bank’s major markets, is contending with a significant economic slowdown, which has also exerted substantial pressure on consumer credit.

Meanwhile, the property sector stands on a precarious edge, with global investors closely scrutinizing debt levels. However, it is not all doom and gloom.

According to UBS’s forecasts, the bank’s expected underlying annual profit of $5.4 billion, with $816 million allocated for the final quarter, indicates a resilient performance amid challenges.

The evolving situation in China will undoubtedly impact the bank’s strategic decisions, particularly its stance on dividends and buybacks, as investors eagerly anticipate updates on these crucial financial growth aspects.

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