Is It Safe To Buy Standard Chartered PLC After Latest $300m Fine?

Standard Chartered

It’s been a tough year for investors in Standard Chartered (LSE: STAN). The bank has delivered half-year results that showed profit being 20% down on the same period last year, has seen its share price fall by 10%, and is now settling with the New York financial regulator for a sum believed to be as high as $300m.

However, the future could be a lot brighter than the recent past and, as such, now could be a good time to buy shares in Standard Chartered. Here’s why.

Weak Sentiment

Clearly, all investors want to buy shares in any company when they are low in price. However, for shares in any company to be lowly priced, there must be uncertainty surrounding the company in question. In Standard Chartered’s case, uncertainty takes the form of investigations by regulators and short-term declines in profit. Both of these items are unlikely to last in the long run, which gives investors the chance to buy shares in Standard Chartered when they are attractively priced.

Looking Ahead

Indeed, Standard Chartered has huge potential when it comes to the long term. Certainly, results for the first half of the year were disappointing, however the bank is forecast to increase earnings per share (EPS) by 10% next year. This is impressive and highlights the bank’s longer-term potential in the Far East, where it has a strong foothold. With China’s economy transitioning from a capital expenditure-led economy to a consumer-led economy, there are likely to be vast opportunities for banks such as Standard Chartered to increase the size of their loan books, as credit becomes a more integral part of emerging economies moving forward.

So, while results may disappoint in the present year, there is considerable potential in future. Furthermore, sentiment towards Standard Chartered may be weak at present but, if the rumours are true, a settlement with the New York regulator could mean that a dark cloud is no longer hanging over the shares. This could help them to recover at least some of their 2014 losses.


With shares in Standard Chartered trading on a price to earnings (P/E) ratio of just 10.9, now could be a great time to buy. They are certainly trading at a low point, with the FTSE 100 currently having a P/E of 13.4. If a settlement takes place, it could prove to be the catalyst that shareholders having been waiting for and that signifies a brighter future for the bank. 

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Peter Stephens has no position in any shares mentioned. The Motley Fool owns shares of Standard Chartered. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.