This FTSE 100 bank has had a storming run. Its share price is up 60% in the last 12 months, and 170% over five years.
The company in question is Standard Chartered (LSE: STAN), and to my irritation, I’ve paid very little attention to it.
I’m all over Barclays, Lloyds, HSBC and NatWest. My interest is no doubt boosted by the fact they have a UK high street presence. Standard Chartered doesn’t.
The shares are flying
Despite being headquartered in the UK, it doesn’t offer retail banking here. Instead, around 90% of profits come from Asia, Africa and the Middle East, which gives it access to a far bigger, faster-growing target market.
For those seeking international exposure, it’s easy to overlook in favour of HSBC, which does both, and has a far larger market cap at £152bn, compared to £27bn. But none of that has held the Standard Chartered share price back lately.
Full-year results, published on 27 February, were impressive. Pre-tax profit for 2024 jumped almost 18% from $5.1bn to $6bn year-on-year.
Operating income climbed 14% to $19.7bn, with a record performance in the wealth division. Global markets and global banking also delivered double-digit growth.
The net interest margin edged up to 1.94%, and the bank said it attracted 265,000 new affluent clients, bringing in $44bn of new money. That’s a 61% year-on-year increase. Management treated shareholders to a $1.5bn share buyback.
Earnings growth and rising margins
Momentum continued into the first quarter of 2025, with results published on 2 May showing pre-tax profits up again, to $2.1bn. The group stuck to its medium-term forecast of 5%-7% annual income growth through to 2026.
While the outlook is encouraging, no bank is risk-free. One concern is geopolitics. Standard Chartered’s deep exposure to Asia, and China in particular, leaves it vulnerable to worsening trade tensions with the US. Management has warned that protectionist policies and tariffs could hit global growth and weigh on client activity.
The second issue is exposure to unsecured consumer borrowing. Credit impairment charges rose 24% in Q1, mostly due to rising stress in parts of the wealth and retail banking division. That’s a red flag if interest rates stay high for longer.
A final concern is that the recent share price rally may be overdone. Analyst forecasts now suggest limited short-term growth from here, with a consensus one-year target of 1,224p. That would be just 2.5% above today’s level.
Valuation remains attractive
Despite the recent surge, Standard Chartered’s price-to-earnings ratio is just 9.24. That compares favourably to HSBC at 9.32, NatWest at 9.75, and Barclays at 8.88.
Its dividend yield is relatively modest, at 2.34%. But don’t be misled. The 2024 total payout was hiked 37%, from 27 US cents per share to 37 cents.
I’m tempted, but I think I’ll stick to Lloyds, which I hold. It lacks the international growth of an Asia listing but also ducks the risks. But I’ll be keeping a closer eye on Standard Chartered from now on.
