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Standard Chartered Cuts Bonuses, Boosts Dividend


Standard Chartered Plc, Britain’s second-largest lender by market value, cut bonuses by 7 percent and boosted its dividend after it was fined $667 million for U.S. sanctions violations. The shares rose.

The bank will pay a final dividend of 56.77 cents a share, bringing the total for the year to 84 cents, 11 percent more than in 2011, the London-based lender said in a statement today. Pretax profit rose to $6.88 billion from $6.78 billion in 2011, beating the $6.84 billion estimate of 23 analysts surveyed by Bloomberg and marking the firm’s 10th consecutive year of record profit. Revenue advanced 8 percent to $19.1 billion.

Chief Executive Officer Peter Sands, 51, is trying to attain revenue growth of at least 10 percent, while keeping expenses under control as it hires and adds branches in China and Africa. The bank, which gets most of its profit from Asia, last year reached a settlement with U.S. regulators over allegations the bank violated U.S. sanctions with Iran.

The “amount paid in bonuses is less than the amount paid to our shareholders by way of a dividend, less than corporate taxation and well under half of the retained earnings,” Sands said in today’s statement. “We have started the year with very good momentum and an exceptionally strong balance sheet.”

The lender was in August accused by Benjamin Lawsky, head of the New York Department of Financial Services, of helping Iran launder about $250 billion in violation of federal laws, keeping false records and handling lucrative wire transfers for Iranian clients.

Bonuses Cut

Sands told reporters on a call today that the firm reduced the bonus pool to $1.43 billion from $1.54 billion. Bonuses for Sands and Finance Director Richard Meddings fell 10 percent to $3.15 million and $2.16 million respectively.

Standard Chartered rose as much as 4.1 percent and was up almost 3 percent at 1,832.5 pence at 9:35 a.m. in London, valuing the bank at about 44 billion pounds ($67 billion). The stock is up 16.5 percent this year, making it the best performer among Britain’s five biggest lenders.

Standard Chartered, whose origins date to 19th century British colonial rule in Africa and India, earns more than three quarters of its profit from corporate banking. Operating profit at the division, led by Michael Rees, declined 1.5 percent to $5.14 billion after the fine. Revenue at the division increased 8.6 percent to $11.78 billion. Profit from consumer banking, run by Steve Bertamini, climbed 7.8 percent last year to $1.78 billion, the lender said today.

“Consumer was a little bit better than we expected and wholesale a little bit worse,” said Gary Greenwood, a banking analyst at Shore Capital Ltd. who rates the lender a buy. “The outlooks statement looks pretty confident — they talk about very good momentum into the new year and how they’re taking market share.”

Operating Costs

Operating costs for the bank rose to $10.9 billion from $9.9 billion.

London-based competitor HSBC Holdings Plc yesterday said full-year profit declined after it paid a record penalty for compliance failures and said costs rose for a third year, missing its target. Pretax profit for 2012 dropped 5.6 percent to $20.65 billion.

Lloyds Banking Group Plc and Royal Bank of Scotland Group Plc, Britain’s two biggest government-owned banks, posted net losses for the year last week as they set aside a combined 2.9 billion pounds related wrongly sold loan insurance and interest- rate-hedging products. Barclays Plc posted its first loss in two decades last month and set aside an additional 1 billion pounds to compensate clients.

(Source: Bloomberg)