In similar fashion to rival banking group HSBC (HSBA), bad loans blew a large hole in Standard Chartered' s (STAN) balance sheet last year. Impairment on bad debts linked to falling commodities prices, as well as a business slowdown in India contributed to the bulk of the $3.2bn impairment on loans to businesses and investment banking clients. Weakness in emerging market currency put a further $700m dent in the group's income.
Management is in the early stages of restructuring around $100bn of the group's risk-weighted assets (RWA), which includes liquidating around $20bn deemed beyond its tightened risk tolerance. This process added a further $1.63bn impairment on assets within the RWA portfolio. Overall, the group's total loan impairments rose 87 per cent to $4bn.
However, the bank's income also took a hammering. Management is now taking a more selective approach: in commercial, small and medium-sized clients are a focus, while in retail, the group is targeting a more affluent customer base.
Prior to these results, analysts at Investec were forecasting net tangible assets of 1,291¢ per share at the end of December 2016, rising to 1,316¢ a year later.
STANDARD CHARTERED (STAN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 386p | MARKET VALUE: | £12.7bn | |
| TOUCH: | 386-386.3p | 12-MONTH HIGH: | 1,108p | LOW: 373p |
| DIVIDEND YIELD: | 2.5% | PE RATIO: | na | |
| NET ASSET VALUE: | 1,470¢ | LEVERAGE RATIO: | 14.6 | |
| Year to 31 Dec | Total operating income ($bn) | Pre-tax profit ($bn) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2011* | 17.6 | 6.78 | 185 | 69.92 |
| 2012* | 19.1 | 6.85 | 184 | 77.28 |
| 2013* | 18.8 | 6.06 | 151 | 79.12 |
| 2014 (restated) | 18.3 | 4.24 | 97.3 | 81.85 |
| 2015 | 15.3 | -1.52 | -91.9 | 13.7 |
| % change | -17 | - | - | -83 |
Ex-div: na Payment: na £1=$1.43 *Restated for the impact of the two-for-seven rights issue in Nov 2015 | ||||
