19 June 2019

STANDARD CHARTERED

Standard Chartered is a restructuring story

by John Royden

Head of Research

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Price
£6.87
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52 Week High-Low
£7.59—£5.14
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Net Yield
2.5%
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Hist / Pros Per
42.8—11.3
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Equity Market Cap
£22,172

Standard Chartered is a restructuring story. The bank is led by CEO Bill Winters, who took over a bit of a mess back in 2015. From 2000 Standard Chartered pursued what they now see as a flawed policy of focussed lending to oil and commodity producers in India, China and Indonesia, rather than selling all-encompassing banking services. This strategy went wrong when the commodity and oil markets collapsed in 2015 and drove the bank to launch a £3.3 billion rights issue and cut the dividend.

Bill’s strategy for less risky growth is to focus on banking and wealth management and to down play the lending unless it is key to the banking relationship. Whilst many of the countries in which they operate can be thought of as being high risk, the bank is seeking to follow the supply and distribution chains of companies like Apple where much of the credit risk is related to Apple rather than a local business.

The market seems to be coming around to the idea that Bill might just be able to deliver on his ambitious expectations for growth in profitability.


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