Standard Chartered PLC Profits Fall Ending Decade Of Growth

stanStandard Chartered (LSE: STAN) (NASDAQOTH: SCBFF.US), the Asia-focused bank listed in London, today reported its first fall in annual profits for a decade. But investors were braced following a profit warning in December and the shares added 25p to 1,300, or 2%, during early trade on the firm’s improved capital position and a dividend increase.

The bank’s Tier 1 capital ratio, a key measure of financial strength, improved slightly to 11.8% from 11.7% a year earlier.

Profit fell to £7bn in 2013 down from £7.5bn the year before, amid turmoil in emerging markets and a $1bn writedown on its South Korean business after the government obliged lenders to write off personal loans.

Additionally, revenue was broadly flat at $18.8bn, with struggles in Korea and elsewhere in the Asia Pacific region offset by growth in Africa and Hong Kong of 10% and 11% respectively.

The chief executive, Sir John Peace, commented:

“2013 was a challenging year, for the industry and for Standard Chartered, but the bank remains an exciting growth story. We are focused on driving profitable growth, delivering further value for shareholders.  The Group has an excellent balance sheet, remains well capitalised and continues to support our clients as they seek to invest and expand across Asia, Africa and the Middle East”.

Standard Chartered unveiled a 9% decline in earnings per share to 122p, while the dividend was raised 2% to 52p.

Therefore, shares in Standard Chartered currently trade on a P/E of 11, while the dividend yield for 2013 comes in at 4%.

Over the past 12 months shares had fallen 30% leading to takeover speculation. Whether today’s share price increase is part of a broader rally for the shares remains to be seen.

Of course, the decision to ‘buy’ — based on the above valuation metrics, combined with the wider prospects for the banking sector and today’s results — is solely up to you.

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> Mark does not own shares in Standard Charted. The Motley Fool owns shares in Standard Chartered.