“Quite simply…[Standard Chartered] is the most mispriced stock in our coverage universe,” Investec analyst Ian Gordon wrote in a report to clients this morning. “We still believe! Buy.”
Around midday London time, investors appeared to be ignoring this message, as the shares, after briefly rising, were lower by 16p or 1.26% to 1258.5p, 31% below their 12-month high, around a year ago, of 1837.5p.
In the 12 months to the end of December, Standard Chartered said its pre-tax profit fell by 11% to $6.06bn (£3.64bn), and warned that growth would remain slower over the next few years.
A $1bn writedown of its business in South Korea was among the factors contributing to today’s downbeat results.
Bank chairman Sir John Peace said in a statement accompanying the results that although 2013 had been a “challenging year”, and “the overall outcome for the group has not been as good as we would have liked”, a strategy review conducted last year “confirmed that we are in markets with good opportunities for profitable growth”.
“We continue to view Standard Chartered as an exciting growth story over the medium to long term,” he added.
Among the positives highlighted in today's results were an 11% growth in income and a 16% rise in operating profit in the bank's Hong Kong operations, its largest market. The group was also "the No. 2 global underwriter of offshore yuan bonds in 2013", and partnered Agricultural Bank of China in setting up RMB clearing services in London, as the Chinese currency moves to become a force in international finance.
Strategic plan
Last year, Standard Chartered chief executive Peter Sands, who has headed the bank since 2006, said he would close or sell parts of the business that were unprofitable or a poor fit, and otherwise ensure costs were under control. In February, the bank was reported to be looking to sell its Hong Kong consumer finance business, PrimeCredit, as part of this strategic repositioning, although it did not confirm this at the time.
In August, as reported, a deal by Standard Chartered to sell its Cayman Island Trust business to Investors Trust Assurance, subject to regulatory approval, was announced.
Standard Chartered is known for making most of its money in Asia, Africa and the Middle East.
Dividend rise
The 2013 dividend of 86p per share, up 2p from 2012, was described by Justin Cooper, chief executive of the Shareholder Solutions arm of Capita Asset Services as representing the "slowest increase" in the bank's dividend since 2008/2009.
“After raising its payout 158% since 2007, far ahead of the wider banking sector", the rise reflected, he noted, the bank's struggle with difficult trading conditions in its Asian markets.
"Nevertheless, fears of a rights issue to shore up the bank’s capital seem to be receding, which will reassure investors – paying dividends only to scoop them back in again via a capital increase is bad economics," he said.
"Furthermore, protecting the dividend at the expense of bonuses is another sign of the bank’s commitment to its shareholders.”
To read and download a 153-page summary of the Standard Chartered results, click here.
Standard Chartered Plc – for the year ended 31 December 2013
| 2013 ($million) | 2012 ($million) | |
| Operating income | 18,671 | 18,783 |
| Pre-tax profit | 6,064 | 6,851 |
| Statutory profit attributable to ordinary shareholders | 3,989 | 4,786 |
| Normalised earnings per share (in cents) | 204 | 225.2 |
