The private banking arm of British banking group Standard Chartered has widened its loss in Q4 2020.
The group too suffered market jitters, reporting a loss in Q4 and annual profit falling by more than half driven by higher impairments.
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Despite this, the bank resumed its dividend and launched a $254m share buyback programme.
Key metrics in private banking
The unit, which offers investment, credit and wealth planning products for HNWIs, reported a statutory loss before taxation of $18m in the three-month-period ending December 2020. A year ago, the loss was $9m.
Underlying pre-tax loss at the unit broadened to $11m from $3m.
Operating income dropped of $111m was 12% lower than the previous year. Operating expenses dipped 3% to $123m from $127m.
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By GlobalDataThe unit’s underlying pre-tax profit in FY20 was $62m, down 34% from $94m in FY19.
The bank’ private banking services can be accessed from Hong Kong, Singapore, London, Jersey, Dubai and India.
Group performance
The banking group reported statutory pre-tax loss of $449m in Q4 2020, versus a profit of $194m a year ago.
Underlying pre-tax loss in the quarter to December 2020 was $192m, compared to a profit of $325m in the prior year.
Underlying operating income dropped 11% to $3.2bn from $3.6bn over the period, while underlying operating expenses remained almost flat at $2.95bn.
The group’s statutory profit before taxation increased 57% to $1.61bn in 2020 from $3.71bn in 2019.
Credit impairments surged to $2.29bn in 2020 from $906m in the prior year, though the bank said that bulk of the charges were booked in the first half of 2020.
However, the bank said that it will pay a dividend of 9 cents per share. Standard Chartered, along with other major UK lenders, were restricted from distributing dividends by the Bank of England (BoE) to preserve adequate capital to navigate the pandemic. The regulator also put a temporary ban on share buybacks and cash bonuses for executives.
Last year, the BoE said that banks can resume paying dividends after carrying out two stress tests of banks’ capital positions. The tests revealed that the banks are resilient to a wide range of economic scenarios.
Standard Chartered group CEO Bill Winters said: “We are weathering the health crisis and geopolitical tensions very well, our strategic transformation continues to progress and our outlook is bright.
“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.”
