StanChart H1 revenue expected up on wholesale-banking boom
Updated: 2009-08-01 08:10
By Joey Kwok(HK Edition)
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HONG KONG: Standard Chartered Bank (StanChart), a leading Asia-focused lender in the UK, is expected to report growth in its first-half revenues and underlying profits, benefiting from the strong performance in its wholesale-banking business, analysts said on Friday.
StandChart, which makes two-thirds of its revenue from Asia, will post its mid-year results on Tuesday (August 4). Analysts and securities houses predict the good credit-quality environment and expected economic recovery in Asia will give a boost to its earnings in 2009.
JP Morgan said in its research report that Standard Chartered is likely to report pretax earnings of $2.4 billion in the first half, mainly driven by the robust performance in the wholesale-banking business and the relative stable credit environment in the second half of 2008.
JP Morgan, together with Credit Suisse, CLSA and Nomura, all rated StandChart as "buy", with a target share price ranging from HK$165 to HK$221. They believe the improved credit environment as well as net fee income will help increase the bank's return on equity ratio.
Robin Tsui, analyst from Taifook Securities, said the bank's first-half net profits this year will be better than a year earlier, while he estimated the earnings in 2009 to jump by 3 to 5 percent.
"The strong consumer demand in trade finance products will help improve Standard Chartered's wholesale banking business in the first half," Tsui said.
He added the bank's loan impairment this year is expected to drop 30 percent to $925 million from $1.32 billion in 2008, while securities house Nomura expects the wholesale-banking revenue to jump 26 percent to $2.6 billion in the first half.
Due to the impact of the global financial crisis, many cash-strapped international banks based in Europe or the US curtailed investments in Asia.
However, Standard Chartered said they remain confident about operations in the emerging markets, as the bank grasps this opportunity to increase its market share in Asia.
Taifook's Tsui expects the UK lender may double its branches on the mainland to almost 100 in the next one or two years, while the Greater China region, including Hong Kong, Taiwan and the mainland, will likely be the major income driver of the bank.
"Compared with HSBC, Standard Chartered has been concentrating its business more in Asia, where the economy has shown a faster growth," he said, "Standard Chartered is relatively more risk-conservative."
President of BMI Funds Management Patrick Shum said Standard Chartered's focus in emerging markets has put it in a better position to weather the impact of the financial turmoil.
Shares in Standard Chartered rose 3.97 percent, or HK$7.0, to finish at HK$183.5. Shares in HSBC, meanwhile, finished 4.61 percent higher, or HK$3.4, at HK$77.1.
(HK Edition 08/01/2009 page2)