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Reuters
LONDON
Standard Chartered shares rose as much as 10 percent on Wednesday, hitting a high for the year, after the bank swung back to into the black for the first half of the year with a billion dollar profit.
Cost-cuts, steady income and fewer bad loans in its non-core portfolio helped the Asia-focused bank to report an underlying pretax profit of $994 million for January-June, following a $990 million loss in the second half of last year.
Its performance provided evidence that a sweeping restructuring under Chief Executive Bill Winters has begun to bear fruit.
In the year since he joined the bank, former JPMorgan investment banker Winters has announced plans to axe more than 15,000 jobs, overhauled senior management, closed the bank's stock trading business and raised $5.1 billion in capital as part of efforts to restore profitability.
StanChart's shares had dropped by a third in the two years before Winters joined, hurt by problems including misconduct fines from U.S. regulators, plunging commodity prices and losses from bad lending decisions.
Its shares rose as much as 10.5 percent on Wednesday before giving up some of those gains to trade at 6.7 percent higher by 1110 GMT.
Winters said the bank was halfway through those job cuts and had no plans to row back on the total.
The first-half profits reflected a 13 percent fall in operating costs to $4 billion and stable income of $6.8 billion, despite an uncertain economic outlook.
"We are seeing a management team being rewarded for taking difficult decisions in the short term for the best interests of the business in the long-run," said Ian Tabberer, investment manager at Henderson Global Investors, which owns StanChart shares.
Echoing a similar statement by HSBC earlier on Wednesday, the bank said it would also defer its goal to reach a return on equity target of 8 percent by 2018, citing slowing global growth and lower interest rates.
"Most banks in the world are trading below net asset value ... it's a statement about lack of confidence but also a high level of uncertainty," Winters said on a conference call.
