It might not shoot the lights out, but Standard Chartered (STAN) has given investors part of what they wanted by reinstating a final dividend. The Asia-focused banking group made solid progress on cleaning up its balance sheet last year. What’s more, the underlying return on equity increased to 3.5 per cent, from just 0.3 per cent in 2016, prompting management to set an 8 per cent medium-term target.
Risk-weighted assets in its liquidation portfolio reduced from $3.8bn (£2.9bn) to just $815m in 2017. Restructuring costs were also down by more than half. Yet it was a reduction in loan impairments of more than half that provided the real boost to pre-tax profits.
Admittedly, income was weaker than consensus expectations of £14.4bn, as lower volatility weighed on the performance of its financial markets products, which meant income for corporate and institutional banking was flat on 2016. The group's retail banking operations put in a better performance, with higher income growth and lower loan impairments boosting underlying pre-tax profits by 14 per cent to $873m. Conversely, its private banking business swung to a $1m underlying loss, as a marginal increase in income failed to offset increased investment in services.
Analysts at Shore Capital expect adjusted net tangible assets of 1,296¢ at 31 December 2018, up from 1,225¢ the same time the previous year.
| STANDARD CHARTERED (STAN) | ||||
| ORD PRICE: | 820.5p | MARKET VALUE: | £27.1bn | |
| TOUCH: | 820.3-820.6p | 12-MONTH HIGH: | 864p | LOW: 679p |
| DIVIDEND YIELD: | 1% | PE RATIO: | 49 | |
| NET ASSET VALUE: | 1411¢ | LEVERAGE: | 14.1 | |
| Year to 31 Dec | Total operating income ($bn) | Pre-tax profit (£bn) | Earnings per share (¢) | Dividend per share (¢) |
| 2013* | 18.8 | 6.06 | 151 | 79.12 |
| 2014 | 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 |
| 2017 | 14.4 | 2.42 | 23.5 | 11 |
| % change | +2 | +489 | - | - |
| Ex-div: | 8 Mar | |||
| Payment: | 17 May | |||
| £1=$1.4 | ||||
