The Standard Chartered Plc logo is displayed atop the Standard Chartered Wealth Management Centre in Hong Kong, Feb 16, 2019. (ANTHONY KWAN / BLOOMBERG)

HONG KONG / LONDON - Standard Chartered on Thursday restored its dividend and reaffirmed its long-term profit goals, in a show of confidence about its ability to recover from the impact of the COVID-19 pandemic even as its annual profit more than halved.

StanChart, noted however, that overall income in 2021 is likely to be similar to 2020’s because of the impact of global interest rate cuts for the first half of this year.

StanChart’s Hong Kong listed shares fell as much as 1.9 percent after the results were published

The London-headquartered lender, which earns the bulk of its revenue in Asia, said it would return capital to investors via a 9 cents per share dividend and US$254 million buyback, with the total payout being the maximum permitted under temporary ‘guardrails’ set by the Bank of England.

The central bank last year told Britain’s largest lenders to suspend dividend payments and share buybacks for 2020 to help them maintain capital buffers against an expected hit to loan books from the pandemic.

“Having now resumed it, we expect to be able to increase the full-year dividend per share over time as we execute our strategy and progress towards a 10 percent return on tangible equity,” Jose Vinals, Standard Chartered’s chairman, said in the exchange filing.

The bank also said its return on tangible equity, a key profit metric, would climb from 3 percent to 7 percent by 2023.

StanChart’s Hong Kong listed shares fell as much as 1.9 percent after the results were published.

READ MORE: StanChart chairman sees China as force driving global recovery

HIGHER BAD LOANS

StanChart posted a 57 percent fall in annual profit for 2020, missing analyst estimates, on higher credit impairments due to the COVID-19 pandemic.

Its pretax profit was US$1.61 billion, compared with US$3.71 billion in 2019 and the US$1.85 billion average of analyst forecasts compiled by the bank.

Credit impairments last year more than doubled compared with a year earlier to US$2.3 billion because of the pandemic, the bank said, but noted that two thirds of these charges were taken in the first half of the year.

ALSO READ: HK's dollar peg is 'unassailable', says StanChart CEO

However, in common with US and European peers, StanChart saw strong performance from its investment bank, as pandemic-related market volatility in 2020 drove frenzied trading.

Income in its financial markets division rose 18 percent, driven by a 53 percent increase in income from trading interest rate-related products.