Set against the hefty restructuring costs and bad loans that took a chunk out of Standard Chartered ’s (STAN) bottom line last year, the banking group tipped back into the black during the first half. Loan impairments on ongoing business reduced by more than a quarter on the preceding six months to $1.1bn. This was primarily due to lower losses across all regions for commercial banking, yet corporate and institutional impairments crept up from $535m to $606m as worsening commodities-related debt continued to haunt the emerging markets-facing bank.
Management continued its focus on diversifying the bank’s income stream and reducing its risk-weighted assets. The group made progress in increasing the returns on these assets within its corporate and institutional banking business, achieving a rate of 0.3 per cent from a negative 0.4 per cent return in the preceding six months. However, operating income was down a fifth year-on-year, as tough market conditions and commodity exposure reduced earnings from transaction banking and financial markets.
Growth in demand from China, Hong Kong and the UAE meant the commercial loan book was up 7 per cent. Meanwhile retail banking underlying income declined 7 per cent, driven by lower unsecured asset balances and a decline in wealth management.
Analysts at JP Morgan Cazenove expect net asset value per share of 1,234¢ at December 2016, up from 1,223¢ the previous year.
STANDARD CHARTERED (STAN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 616.7p | MARKET VALUE: | £ 20.2bn | |
| TOUCH: | 616.5-616.7p | 12-MONTH HIGH: | 965p | LOW: 373p |
| DIVIDEND YIELD: | NIL | PE RATIO: | na | |
| NET ASSET VALUE: | 1,478¢ | LEVERAGE RATIO: | 15 | |
| Half-year to 30 Jun | Total operating income ($bn) | Pre-tax profit ($bn) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2015 | 6.52 | -3.62 | -145 | 13.7 |
| 2016 | 6.94 | 0.89 | 12 | nil |
| % change | +6 | - | - | - |
Ex-div:na Payment:na £1=$1.312 | ||||
