A three year Standard Chartered strategic plan aims to boost its return on equity to more than 10% by 2021.

The current Standard Chartered return on equity remains disappointingly low at 4.6% (2017: 3.5%)

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To fund planned share buybacks, Standard Chartered will raise around $1bn by selling its 45% stake in Indonesian bank Permata.

Ahead of a sale, Standard Chartered is reclassifying its Permata stake as ‘non-core’.

Standard Chartered strategic plan: Korea, UAE, India Indonesia restructuring

As part of the three year Standard Chartered strategic plan the bank is to restructure in four under-performing markets.

The bank “will optimise performance in India, Indonesia, Korea and the UAE, with targeted action plans and strong execution discipline.”

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Full year results for Standard Chartered fall just short of analyst forecasts. Fiscal 2018 pre-tax profits rise by 28% to $3.86bn.

Standard Chartered’s retail banking unit serves over 9 million individuals and SMEs. In fiscal 2018, it reported operating income of $5.04bn, around 34% of total group operating income.

Corporate & Institutional Banking accounts for 46% of group income. Commercial banking and private banking account for 9.3% and 3.5% respectively.

Standard Chartered 2018 highlights

The bank’s retail banking division posts pre-tax profits up 18% to $1.03bn. Digitally active retail banking customers rises to 49.4% in 2018 from 44.7% in 2017.

Retail banking income is up 8% in Greater China & North Asia, and rises 4% in ASEAN & South Asia. On the other hand, retail banking income falls by 6% in Africa & Middle East.

The share of retail banking income from Priority clients increases from 44.8% in 2017 to 47% in 2018. Notably, this is supported by more than 100,000 new-to-bank Priority clients in 2018.

Other digital highlights

In March 2018, Standard Chartered launched its first digital-only bank in Côte d’Ivoire. Customers can open a new account entirely through Standard Chartered’s mobile app.  Standard Chartered expects Côte d’Ivoire bank account take-up – led by digital – to rise rapidly over the next five years.

A digital-only bank is now live in Uganda, Tanzania and Ghana. At the same time, there are plans to roll out in Kenya in the first quarter of 2019.

Less positively, StanChart is taking a $900m charge for fines anticipated relating to legacy misconduct issues.

Specifically, the violations relate to US sanctions laws and regulations.

In addition, the Standard Chartered fines come after a notice from the UK’s Financial Conduct Authority (FCA) and its Regulatory Decisions Committee (RDC). This concerned the group’s historical financial crime controls.

Furthermore, the notice imposes a penalty of more than £102m ($133m).

Bill Winters, Group CEO says:” 2018 was a year in which commerce and prosperity encountered their fair share of challenges. Our Greater China & North Asia and Retail Banking businesses continue to go from strength to strength.

Premium Banking successes

“We continue to improve our services for the emerging affluent. We launched Premium Banking in eight markets in 2018. Priority and Premium customers now make up 56% of our retail banking income, compared to 27% in 2014.”

“We have applied to establish a virtual challenger bank in Hong Kong. And together with Alibaba’s Ant Financial, have launched two real-time, cross-border, blockchain-based payment services for the Hong Kong-Philippines and Malaysia-Pakistan remittance corridors, with plans to do more.”

Notwithstanding the bank’s success in cutting costs and enhancing its digital capabilities, its share price remains under pressure.

Standard Chartered’s share price is down by 25% in the past 12 months.