Standard Chartered PLC unveiled $1 billion share buyback programme alongside 18 per cent surge in profit, a move aimed at rewarding shareholders amid tempered growth forecasts that may raise concerns among investors regarding global banks' exposure to China.

Reporting a statutory pre-tax profit of $5.09 billion for 2023, in line with market expectations, the Asia-focused lender also declared a significant jump in dividends while announcing the share buyback initiative.

Despite the positive earnings report, the bank presented restrained growth projections, indicating an expected income growth range of 5-7 per cent for 2024, lower than the previous estimate of 8-10 per cent issued last October. In 2023, the bank witnessed a 13 per cent increase in income in constant currency terms.

Standard Chartered also revised its targets for return on tangible equity, aiming for a steady increase from the current 10 per cent to 12 per cent by 2026, abandoning its prior forecast of reaching 11 per cent this year.

The bank attributed an $850 million impairment primarily to its stake in Chinese lender Bohai Bank, marking the second time it has devalued the unit due to mounting bad loans amidst China's economic slowdown.

The challenges faced by Standard Chartered in expanding its presence in China were underscored by a $150 million write down of its Bohai Bank stake, bringing its value down to $700 million from $1.5 billion at the start of the year. Additionally, the bank made a $282 million provision for expected loan losses related to China's troubled real estate sector, bringing total provisions for such exposure to $1.2 billion over the last three years.

The recent struggles in China's banking sector were highlighted by HSBC Holdings, which reported a substantial $3 billion charge on its Chinese bank stake, contributing to a decline in its shares despite posting record annual profits.

CEO Bill Winters expressed the bank's commitment to returning at least $5 billion to shareholders over the next three years, underscoring the prioritization of investor rewards amid a challenging operating environment.

Despite the buoyant investor payouts, Standard Chartered's muted performance outlook aligns with similar trends observed among European peers, including Barclays, Deutsche Bank, and HSBC, as they prioritise shareholder returns over expansive growth strategies.

Group Chairman José Vinals acknowledged the persisting uncertainties, citing geopolitical risks and ongoing conflicts such as the war between Ukraine and Russia, which continue to cast a shadow over global economic prospects as the bank navigates through 2024.

(With Reuters inputs)