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StanChart: no dividend, yet

The emerging markets-focused banking group has reduced its loan impairments and improved its capital position
August 4, 2017

Investors may have been disappointed with Standard Chartered's (STAN) decision not to resume dividend payments at the half-year stage, but the emerging markets-focused banking group is making some progress. Though risk-weighted assets were up $4.7bn (£3.58bn) from end-2016, they are down $19bn year on year. A substantial reduction in loan impairment charges across its three core businesses delivered the real kicker to pre-tax profit. Underlying charges were down by almost half year on year to $583m.

IC TIP: Hold at 783.6p

Retail banking underlying operating income was up 3 per cent thanks to strong wealth management business and higher deposits in its largest market, Greater China and Northern Asia. This offset the exit from Thailand and the Philippines. Customer lending was up 3 per cent to $98.5bn, predominately driven by growth in mortgages in South Korea, Singapore and Hong Kong. Encouragingly, commercial banking returned to profitability due to lower loan impairments and operating costs.

Following the wind-down of private equity arm Principal Finance, income was up slightly at the corporate and institutional banking business. Transaction banking income benefited from stronger margins in cash management and custody. However, financial markets income was 13 per cent lower, as lower volatility led to compression in spreads across a range of products.       

Analysts at Investec expect adjusted net tangible assets of 1,202.6¢ at 31 December 2017, up from 1,163.9¢ in 2016.

STANDARD CHARTERED (STAN)  
ORD PRICE:783.6pMARKET VALUE:£25.8bn
TOUCH:783.6-783.7p12-MONTH HIGH:860pLOW: 581p
DIVIDEND YIELD:nilPE RATIO:1141
NET ASSET VALUE:1551¢LEVERAGE:14.1
Half-year to 30 JunTotal operating income ($bn)Pre-tax profit ($bn)Earnings per share (¢)Dividend per share (¢)
20167.060.9614.1nil
20177.221.7529.5nil
% change+2+82+109-
Ex-div:na   
Payment:na   
£1=$1.31