Standard Chartered share price rises as bank dispels fears of share sale

on Mar 4, 2015
Updated: Oct 21, 2019

Standard Chartered Plc (LON:STAN) missed estimates for full-year profit, but its shares rose today in London, as the bank said it had no plans to raise capital and maintained its dividend at the same level as 2013. In its 2014 financial report published today, the Asia-focused bank revealed that its full-year profit (including exceptional items) had fallen 30 percent to $4.2 billion. The result was below the $5.6-billion average estimate of 17 analysts polled by Bloomberg. Operating income fell two percent to $18.23 billion, while bad loans across the group increased 32 percent to $2.14 billion. Because of the disappointing performance, Standard Chartered’s board of directors had decided to forego their bonuses, the bank said.

Standard Chartered chairman John Peace commented: “2014 was a challenging year and our performance was disappointing, but it was also a year when we took decisive action to refocus our strategy and to reposition the Group for the future and to restore shareholder value.”
Shareholders had feared that StanChart might launch a share sale in order to boost capital, but today the bank dispelled these concerns.

“We have no plans for a capital raise,” CEO Peter Sands, who is leaving the bank in June, said today on a conference call. Instead, the bank plans to improve its financial strength by cutting costs, selling assets and removing riskier assets. It boosted its 2015 cost reduction target of $400 million to $600 million, as part of a plan to trim costs around $1.8 billion over the next three years.The responsibility for overseeing these measures will fall to Sands’ successor, former JPMorgan executive Bill Winters.

StanChart said that it aimed to increase its common equity tier one ratio – a measure of financial strength – to between 11 percent and 12 percent. Last year this measure fell to 10.7 percent from 11.2 percent.
The announced measures prompted a positive reaction from investors, who also cheered the bank’s decision to maintain its full-year dividend at 86 cents a share. In today’s trading, Standard Chartered shares were up 4.7 percent at 1,019.50p, as of 11:06 UTC. The company’s stock has risen 6.1 percent since the start of the year.
According to the Financial Times, as of March 01, 2015, the consensus forecast amongst 42 polled investment analysts covering Standard Chartered has it that investors should hold their position in the company. The same consensus estimate has been maintained since May 08, 2013, when the sentiment of investment analysts deteriorated.
As of 13:20 GMT, Wednesday, 04 March, Standard Chartered PLC share price is 1,010.50p.

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