Feb. 26, 2019, 4:02 a.m. EST

Standard Chartered profit falls short of forecasts

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By Margot Patrick

Standard Chartered PLC said it would step up its restructuring by cutting another $700 million in costs and pulling back on some activities in markets including India and Indonesia.

The new three-year strategic plan came as the bank reported net profit for 2018 of $618 million, down from $774 million 2017. Revenue of $15 billion was up 5% on $14.3 billion the year before.

Chief Executive Bill Winters has been repairing Standard Chartered's business operations and culture after sharp growth in the 2000s gave way to heavy loan losses earlier this decade. On Tuesday he said progress has been good but that it is time to accelerate improvements.

Mr. Winters said the bank has set a 2021 target for its plan to make returns on tangible equity above 10%, from 5.1% in 2018, and held out the prospect of share buybacks. "We intend to distribute to shareholders surplus capital that is not deployed to fund additional growth," he said in an earnings release.

The bank said it would cut around $9 billion from risk weighted assets by marking its 45% stake in Indonesia's Permata as non core and sees scope for another $9 billion in RWA reduction by 2021. Mr. Winters said the bank needs to improve returns in Indonesia, where it has its own bank too, and in India, Korea and the United Arab Emirates.

That will mean focusing on higher-return business such as wealth management and connecting clients with its international network rather than lower-return mass market retail banking, Mr. Winters said.

He said Standard Chartered won't look to exit those four countries entirely. Having reach into 60 countries is a key reason why multinational companies and other international clients use Standard Chartered, he said.

Last week, the bank said it would take a $900 million charge for penalties it expects to pay over earlier alleged misconduct. The bank has been in talks with U.S. authorities about a settlement over alleged failures in its conduct and controls that allowed clients with Iranian interests to do business with the bank even after it formally cut off such clients in 2007. The authorities are reviewing whether Standard Chartered fully disclosed that business to U.S. authorities before a 2012 settlement around the same issues.

Write to Margot Patrick at margot.patrick@wsj.com

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