(Bloomberg) -- Standard Chartered Plc expanded its multi-billion dollar share buyback program as the bank reported a rise in pretax profits driven by its wealth business.
The London-headquartered lender said in a statement Tuesday that it will repurchase a record $1.5 billion as it looks to return at least $5 billion to shareholders by 2026. Shares of the bank surged as much as 6.2% on Tuesday.
It reported second quarter pretax profit of $1.83 billion, beating analyst estimates of $1.6 billion. The lender raised its outlook for income growth, and is now expecting operating income to rise more than 7% in 2024.
“We are pursuing the strategy, it’s working quite well, earnings are strong,” Chief Executive Officer Bill Winters said in an interview with Bloomberg Television. “Especially given where our stock price is, which is not as high as we think it should be, we will buy back as many shares as we can with surplus capital.”
Standard Chartered’s shares rose 4.8% at 8:19 a.m. in London, making the company’s stock the day’s best performer in the FTSE 100 Index. The shares have advanced 9% this year, outpacing the 7% gain in the benchmark.
Operating income from wealth solutions jumped 25% in the second quarter, thanks to net new sales and affluent new to bank customers. The company is planning to continue to add new wealth managers as it benefits from increased client activity overseas, Winters said.
Standard Chartered is in the midst of a fresh cost-cutting program called “Fit For Growth” that aims to save the bank about $1.5 billion over the next three years. The plan incorporates more than 200 individual initiatives within the company that are aimed at trimming annual expenses by anything from a few hundred thousand to millions of dollars.
Operating expenses in the second quarter slid due to lower investment spending. The bank has pledged to cap annual costs at $12 billion in 2026 against a base of $11.1 billion last year.
Around 50% of the “Fit For Growth” projects identified are “in execution,” or ready to start, with the plan to have them all in execution by the end of this year, the lender said.
The bank has already embarked on a revamp of the management in its corporate and investment banking arm that includes stripping out layers of regional management in an effort to speed up decision making and make managers more accountable for the performance of their businesses.
For Winters, the shake up comes in his 10th year as boss of the emerging markets-focused bank, a tenure that makes him the longest-serving CEO of any major UK-based lender. Winters has in the past played down talks of him leaving the bank any time soon, telling reporters three years ago that “the job is not yet done.”
“You live it from day to day,” Winters said, adding that he hopes to stay at Standard Chartered through at least 2026. “All the actions I’m taking today are with a medium- to long-term view.”
--With assistance from Lizzy Burden.
(Updates with share performance in the second and fifth paragraphs.)
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