FINANCIALS: StanChart: Positives On Credit Outweigh Buyback. Spread Positive.

Standard Chartered (STANLN: A3/BBB+/A) paint a positive overall picture with credit quality better than expected, revenues improving, guidance upped and good cost control. A new buyback is in here, but we feel relief over China and CRE exposures should outweigh that buyback, from a credit perspective. Spreads have done little over the last month so there appears some room to tighten today, in our view.

• Credit stats: loan losses beat expectations (c.12bp vs. c.40bp expected) driven by write-back from certain sovereign upgrades. Excluding these, results look closer to consensus. NPLs are 6bp better across the quarter which is a nominal 15% beat. CET1 is also better by around 60bp (at 14.6%). So, positive across the board.
• Revenues are slightly ahead of consensus, driven by NII, with costs also slightly better. Underlying pre-tax is 13% ahead, largely on that loan loss beat.
• A new share buyback (USD1.5bn, 4%, or 0.6pp, of CET1 capital) has been announced. Income guidance is upgraded (to above 7% in FY24, from top of 5-7% range), consensus is already at 9%, so tough to see that moving much from here.

Conf call is 0800 (London time) at: https://edge.media-server.com/mmc/p/qw8pcuur/