LONDON: Standard Chartered said it had no plans to tap shareholders for cash despite reporting a 25 percent slide in annual pretax profit on the back of soaring bad loans.
The Asia-focused bank said on Wednesday it was eschewing "knee-jerk actions" and vowed to cut costs and shrink its loan book in an effort to quell concerns about its capital strength, throwing down the gauntlet to incoming chief Bill Winters.
The bank is braced for a strategic revamp when the former investment banker takes over as chief executive in June, with many expecting him to launch a multi-billion pound rights issue to reboot capital after a prolonged slump in profits.
"It's the million-dollar question: has Bill Winters signed up for these targets?" said Mike Trippitt, analyst at brokerage Numis Securities.
"You can't sit there waiting for the cavalry to arrive and you've got to get on and run the business ... but he (Winters) is going to go through business unit by business unit and decide which ones to keep, what to grow and what to sell."
The bank's shares were up more than 5 percent in morning trade to their highest since October.
The stock has risen 11 percent since Winters' appointment last week, part of an investor-led purge of top brass including veteran CEO Peter Sands, three non-executive directors and the bank's head of Asia, Jaspal Bindra.
Chairman John Peace will also step down amid disquiet at management's failure to deal quickly with the bank's problems.
A decade-long run of record profits came to a screeching halt in 2013 as Asia's credit binge turned sour. Underlying pretax profit came in at $5.2 billion (3.4 billion pounds) for 2014 after loan impairments jumped by a third, mainly due to problems in China, India and among commodities firms.
NO SIGN OF DETERIORATION
Loan impairments at the bank's corporate and institutional clients more than doubled to $991 million. StanChart said it was premature to call the peak on bad debts but said it had seen no sign of deterioration this year.
The bank said it had cut its bonus pool 9 percent to 667 million pounds. It said none of the directors who were at the bank all year will get a bonus for last year, although that did not include Finance Director Andy Halford, who joined in July.
Outgoing Chief Executive Peter Sands described 2014 as a perfect storm of falling commodity prices, persistent low interest rates and negative sentiment towards emerging markets.
He said the bank was now targeting a return on equity, a key measure of profitability, above 10 percent, lower than the mid-teens percentage the bank had previously sought.
Sands, who more than doubled the size of the bank since taking over the helm in 2006, said in his last annual results the bank would aim to save $1.8 billion from 2015 to 2017, making small disposals and cutting between $25 billion and $30 billion in risk-weighted assets from its balance sheet.
The bank said it was on track to save $600 million in headline costs this year, beyond its target of $400 million.
"2014 was clearly disappointing," Sands said. "I am confident the way we are reshaping the bank will get us back to a trajectory of profitable, sustainable growth."
But Winters is expected to take a harder line on the bank's costs and sprawling structure, which have been likened to a collection of fiefdoms.
"I suspect that Winters will want to be reasonably unfettered when he starts, so I cannot see the targets of an outgoing CEO being binding," one top-20 investor said.- Reuters
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