On most key financial and strategic measures, Standard Chartered (STAN) had a strong 2019. Despite a rise in credit impairment and a 1 per cent increase in operating expenses, good momentum in most of the lender’s divisions meant underlying pre-tax profit improved 8 per cent to $4.2bn (£3.3bn).
Capital levels are also robust, with a common equity tier one ratio of 13.8 per cent near the top of the group’s target range. This, together with a 130 basis point rise in StanChart’s underlying return on tangible equity to 6.4 per cent, has sparked another $0.5bn block of share repurchases.
However, management is less confident that this momentum can be maintained, and now expects this year’s income growth to fall short of an ongoing 5 to 7 per cent target range. In turn, reaching a medium-term goal for a 10 per cent return on tangible equity is now likely to take longer than previously expected.
A litany of likely headwinds help to explain why. US interest rates are likely to fall this year and next, Hong Kong is in a full-blown recession, and global economic growth looks set to slow. Throw in the Covid-19 outbreak, and the backdrop could hardly be more challenging.
Consensus forecasts are for earnings of 89¢ per share in 2020, and $1.05 in 2021.
STANDARD CHARTERED (STAN) | ||||
ORD PRICE: | 559p | MARKET VALUE: | £ 18bn | |
TOUCH: | 559-560p | 12-MONTH HIGH: | 743p | LOW: 559p |
DIVIDEND YIELD: | 3.7% | PE RATIO: | 13 | |
NET ASSET VALUE: | 1,573¢ | LEVERAGE | 15.8 |
Year to 31 Dec | Total operating income ($bn) | Pre-tax profit ($bn) | Earnings per share (¢) | Dividend per share (¢) |
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 |
2018 | 14.8 | 2.55 | 18.7 | 21 |
2019 | 15.4 | 3.71 | 57.0 | 27 |
% change | +4 | +46 | +205 | +29 |
Ex-div: | 05 Mar | |||
Payment: | 14 May | |||
£1=$1.29 |