Pay Slashed for StanChart Chief Bill Winters Amid Missed Targets, 40% Profit Drop -- Financial News
By Emily Nicolle
Of Financial News
Standard Chartered PLC has announced a dividend and share
buyback scheme amid falling profit, along with a cut to the chief
executive's pay and plans to reduce its office space significantly
in the coming years.
The lender posted a 40% fall in annual underlying pretax profit
for 2020 to $2.5 billion, and forecast that income for 2021 is
likely to be at a similar level. However, it said it would restore
its dividend of 9 cents per share and revealed a $254 million
buyback--the maximum permitted under the Bank of England's
temporary restrictions, after suspending payouts during the
The pay packet for group chief executive Bill Winters fell 29%
to 3.8 million pounds ($5.4 million), which the bank's annual
report said was "directly linked to the group scorecard outcome"
and personal performance. The London-headquartered bank's Chief
Financial Officer Andy Halford's pay similarly dropped 27%.
Like many other financial institutions, Standard Chartered has
struggled to keep profit and revenue high as the global coronavirus
crisis took its toll on businesses and lending income. The salaries
of bank chief executives have also taken a beating, with Barclays
PLC boss Jes Staley receiving a 32% pay cut and Citi's Michael
Corbat dropping 21% last year.
Mr. Winters said the bank is "weathering the health crisis and
geopolitical tensions very well," adding that its outlook is
"We remain strong and profitable, although returns in 2020 were
clearly impacted by higher provisions, reduced economic activity
and low interest rates, in each case the result of Covid-19," he
said in a statement Thursday.
Mr. Halford also told Bloomberg TV that Standard Chartered is
likely to downsize its office footprint by a third in the next
three to four years.
Meanwhile the bank's bonus pool was reduced by 23% to $990
million, with focus primarily being placed on group performance.
The one "notable exception" to this was in its corporate and
institutional banking business, where incentives "were
differentiated" for the financial markets division "to reward
colleagues for the strong performance in 2020."
In a statement attached to the results, the lender said it hopes
a continued focus on its transformation plan will aid its recovery
as the pandemic recedes, as two-thirds of its income is based in
Return on tangible equity, a key profit measure for Standard
Chartered, is expected to rise from 3% in 2020 to at least 7% by
2023. Meanwhile it forecast that income will return to between 5%
and 7% growth per annum from 2022, thanks to strong performances in
its financial markets and wealth management businesses.
"The board's position on capital returns remains essentially the
same as it was before our regulator requested us to withdraw the
recommended 2019 final dividend," said Jose Vinals, Standard
"Having now resumed it, we expect to be able to increase the
full-year dividend per share over time as we execute our strategy
and progress towards a 10% return on tangible equity."
Nicholas Hyett, an equity analyst at Hargreaves Lansdown, said
the bank's results were "full of promise, but not yet
"Standard Chartered's numbers may have disappointed the market
this morning, but compare them to numbers we've seen from more
U.K.-focused rivals and the performance is remarkably strong," he
"The big question for some time has been around Standard
Chartered's ability to grow," Mr. Hyett added. "Combine steady
income growth with Standard Chartered's 10% return on equity target
and a commitment to return surplus capital to shareholders and the
result would be an attractive and growing dividend. That's been the
promise for some years though, and so far it remains just a
(END) Dow Jones Newswires
February 25, 2021 09:23 ET (14:23 GMT)
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