Standard Chartered Bank's 2017 profit jumps; shares up close to 3 percent

Key Points
  • The London-headquartered bank reported underlying pre-tax profit of 3.01 billion in 2017— beating estimates by Reuters.
  • The bank also proposed a full-year dividend of 11 cents per share, after it stopped doing so in 2016.
  • Its Hong Kong-listed shares jumped close to 3 percent when trading resumed after a lunch break.
Will Standard Chartered pay a 'symbolic' dividend?
Will Standard Chartered pay a 'symbolic' dividend?

Standard Chartered Bank said Tuesday its 2017 underlying pre-tax profit jumped to $3.01 billion — handily beating estimates thanks to rising interest rates and efforts to streamline operations.

The latest full-year underlying profit by the bank was 175 percent higher than the $1.093 billion posted one year ago in 2016, and better than the $2.978 billion average projection by analysts in a Reuters poll.

Stanchart also proposed a full-year dividend of 11 cents, after it stopped doing so in 2016.

"The trebling of underlying profits, a strong capital position and emerging regulatory clarity allows us to resume paying dividends," Bill Winters, Stanchart's group chief executive, said in a statement accompanying the earnings announcement.

The group chairman, Jose Vinals, said in the same statement that the board "understands the importance of the ordinary dividend to shareholders and intends to increase the full year dividend per share over time."

The bank's Hong Kong-listed shares traded 2.7 percent higher at 1:05 p.m. HK/SIN following the release of Stanchart's latest earnings report.

Core growth an important benchmark for international banks
Core growth an important benchmark for international banks

Investors had been expecting the bank to resume paying dividends given its better business prospects in 2017.

"I think the company can afford at least a symbolic dividend payout ratio of something like 10 U.S. cents per share," Ronald Wan, non-executive chairman at Partners Financial Holdings, told CNBC before the release of the bank's latest earnings.

"I think a lot of investors are running out of patience. If we are to continue our investments in Standard Chartered, it has to do something about its dividend policy ... If Standard Chartered cannot resume its dividend policy, a lot of investors would shift to other major banks," Wan added.

HSBC is often seen as Stanchart's closest rival as both are banks based in the U.K. but conduct much of their business internationally, with a heavy focus on Asia.

HSBC, the largest bank in Europe by assets, announced last week a 141.4 percent jump in reported pre-tax profit to $17.17 billion in the year 2017. Its reported revenue for the year was $51.4 billion, up 7 percent from the previous year.