Strengthening capital levels and an improvement in the return on equity – up 150 basis points to 6.7 per cent – led Standard Chartered's (STAN) management to recommence dividend payments at the half-year mark, thereby complementing the full-year reinstatement. The mood music would also have been helped by news that loan impairments had been halved, thereby boosting underlying pre-tax profit by almost a quarter to $2.4bn (£1.8bn).
However, despite reporting a rise in income within management’s guidance range of between 5 and 7 per cent, operating costs rose by a greater proportion, meaning the cost-to-income ratio increased by 90 basis points to 66.9 per cent. That reflected increased investment in strategic initiatives, although it looks to be a temporary effect, as management guided towards flat operating costs for the second half.
Retail banking led the way in terms of income growth, which was up 9 per to $2.6bn, with a stronger performance in China and North Asia offsetting a marginal decline in Africa and the Middle East. At the corporate institutional business, higher income and lower impairments meant underlying pre-tax profit was up more than two-thirds to $1.1bn. Loans and advances for that business also rose 14 per cent, with investment grade clients representing 65 per cent of customers, up from 57 per cent last year.
Analysts at Shore Capital expect adjusted net tangible assets of 1,236¢ at the end of December 2018, up from 1,225¢ in 2017.
| STANDARD CHARTERED (STAN) | ||||
| ORD PRICE: | 686.7p | MARKET VALUE: | £22.7bn | |
| TOUCH: | 686.6-687p | 12-MONTH HIGH: | 864p | LOW: 664p |
| DIVIDEND YIELD: | 1.9% | PE RATIO: | 26 | |
| NET ASSET VALUE: | 1,548p | LEVERAGE: | 14.8 | |
| Half-year to 30 Jun | Total operating income ($bn) | Pre-tax profit ($bn) | Earnings per share (¢) | Dividend per share (¢) |
| 2017 | 7.22 | 1.75 | 29.5 | nil |
| 2018 | 7.63 | 2.35 | 40.7 | 6 |
| % change | +6 | +34 | +38 | - |
| Ex-div: | 9 Aug | |||
| Payment: | 22 Oct | |||
| £1=$1.32 | ||||
