Standard Chartered PLC (LON:STAN) shares jumped on Tuesday as it unveiled plans for an up to $1bn (£773.2mln) buy-back of shares, its first in at least 20 years, as it posted a 10% increase in first-quarter profit.
The FTSE 100-listed lender said its underlying pre-tax profit rose to US$1.38bn in the January-March period, up from US$1.26bn a year earlier.
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The emerging markets-focused lender also took a “further and final charge” of US$186mln in the first quarter of 2019, in addition to a US$900mln provision made in 2018, after last month agreeing a US$1bn settlement over Iran sanctions violations after 2007.
Standard Chartered said it had received regulatory approval to start buying back shares worth up to US$1bn, adding that it was now able to manage its capital position “more dynamically”.
Bill Winters, Standard Chartered’s CEO said: “We will maintain our strategic investment programme and start to buy back US$1bn of our shares, reflecting our confidence in our ability to execute the strategy and create long-term shareholder value.”
With full-year 2018 results in February, Winters unveiled ambitious plans to double return on tangible equity and dividends in three years by cutting US$700mln in costs and boosting income.
Encouraging signs for sentiment
In a note to clients, analysts at RBC Capital pointed out: “As well as a good set of results the company announced a $1bn buyback scheme, which should be taken positively even though to some extent it was expected by the market.
“The company noted that the global macro-economic outlook remains uncertain but there were encouraging signs of improvement in sentiment towards the end of the first quarter.”
RBC retained an ‘underperform’ rating and 580p target price on Standard Charterted shares which in early morning trading were 4% higher at 697.60p.
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