Standard Chartered Plc dropped the most in more than three years after reporting a surprise full-year loss, as revenue missed estimates and loan impairments almost doubled to the highest in the bank’s history.
The stock dropped as much as 12 percent as the London-based bank said its pretax loss was $1.5 billion in 2015, down from profit of $4.2 billion a year earlier. Excluding some one-time items, pretax profit was $834 million. That fell short of the average estimate for a profit $1.37 billion from 20 analysts surveyed by Bloomberg.
Chief Executive Officer Bill Winters, 54, is attempting to unwind the damage caused by predecessor Peter Sands’ revenue-led expansion across emerging markets, which left the bank riddled with bad loans when the commodity market crashed and growth stalled from China to India. Since June, Winters has raised $5.1 billion from investors, scrapped the dividend and announced plans to cut 15,000 jobs to help save $2.9 billion by 2018, while seeking to restructure or exit $100 billion of risky assets.
“While our 2015 financial results were poor, they are set against a backdrop of continuing geo-political and economic headwinds and volatility across many of our markets,” Winters said in the statement. “We expect the financial performance of the group to remain subdued during 2016.”
The stock dropped 6 percent to 410.15 pence at 8:36 a.m. in London, increasing the drop this year to 27 percent. The shares rose 5.2 percent on Monday.
Standard Chartered said its common equity Tier 1 capital ratio, a measure of financial strength, fell to 12.6 percent from 13.1 percent as of Sept. 30. Revenue fell 15 percent to $15.4 billion, falling short of analysts’ estimates of $15.9 billion in a Bloomberg survey. Loan impairments jumped to $4 billion, from $2.1 billion in 2014.
The bank took a $1.8 billion restructuring charge, part of the $3 billion in such charges it flagged in November. The company said it wouldn’t pay annual incentives to executives for 2015 and it is “in discussions” regarding its presence in Indonesia.
Winters has been shrinking the lender’s balance sheet after rapid growth under Sands, who was replaced last year after eight years as CEO. Total assets at the lender, which focuses on Asia, the Middle East and Africa, ballooned to a peak of $726 billion at the end of 2014 from $266 billion in 2006, according to data compiled by Bloomberg.