StanChart: Good Figures Underpinning Recent Spread Performance

Standard Chartered (STANLN: A3/BBB+/A) results are ahead of expectations on positive revenues and better credit losses than expected. NPLs are lower. There’s little to see consensus upgrade much but equity holders are likely to be relieved today. Spreads have already performed well YTD and these results underpin that.

• Key credit metrics: CET1 is marginally behind expectations (13.6%, cons: 13.9%) but loan losses are 23% lower than expected (at 23bp of lending) even with a notional USD10m of China CRE provisioning (offset by releases elsewhere in the corporate bank). This appears c.50% covered by provisions now. Non-performers are 3% lower than Dec-23 (at 2.42% of loans, from 2.47%).
• Overall performance: Revenues are up 20% and 10.6% above consensus but include some exceptionals (USD234m – EGP and Ghana). Ex-these, it’s 5.6% above consensus but, positively, NII is 2.6% above consensus. Costs are 1% better, meaning pre-tax income is nearly a third better, underlying.
• Outlook: guidance is being maintained but it’s notable that, though there’s little overall upgrade, NII expectations are c.USD9.8bn against guidance of 10.0-10.25bn

Conf call is 0800 (London time) at: https://edge.media-server.com/mmc/p/5c7vdyii/