Commodity prices may have started to recover last year, but for Standard Chartered (STAN) impairments against loans made to the extractive industries continued to be a bugbear during 2016. An increase in bad loans made to clients in commodity-related sectors, including the diamond and jewellery industries, meant that loan impairments for the corporate and institutional bank were almost double what they were in 2015 at $1.4bn (£1.1bn). However, the banking group made good progress in offloading debt in its liquidation portfolio. This pushed down overall loan impairments, tipping the bank back into the black.
Another positive was the $34bn decline in risk-weighted assets (RWAs), meaning more than 80 per cent of RWAs in the liquidation portfolio have been offloaded. This also helped push the bank's core tier one equity ratio up 100 basis points to 13.6 per cent. The bad news for the emerging markets-focused bank was that the strength of the US dollar, plus exiting businesses such as its Thailand retail banking business, weighed on income.
Slowing economic activity in China and North Asia meant income dropped by almost a fifth for the commercial banking business, and also weighed on retail banking and wealth management: though strengthening purchasing manager readings during the final quarter could point to a modest regional recovery.
Analysts at Shore Capital expect adjusted net tangible assets of 1,245¢ per share at December 2017 (end-2016: 1,164¢).
STANDARD CHARTERED (STAN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 725.8p | MARKET VALUE: | £23.8bn | |
| TOUCH: | 725-7-725.8p | 12-MONTH HIGH: | 822p | LOW: 410p |
| DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
| NET ASSET VALUE: | 1351p | LEVERAGE RATIO: | 16.2 | |
| Year to 31 Dec | Total operating income ($bn) | Pre-tax profit ($bn) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 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 |
| 2016 | 14.1 | 0.41 | -14.5 | nil |
| % change | -8 | - | - | - |
Ex-div: na Payment: na *Restated for the impact of the two-for-seven rights issue in Nov 2015 £1=$1.24 | ||||
