Standard Chartered shares up after earnings beat market expectations

Investing.com -- Shares of Standard Chartered PLC (LON:STAN ) rose over 3% on Wednesday following the company’s third-quarter financial results, which comfortably exceeded market expectations. 

The bank reported a 16% increase in its underlying profit before tax (PBT) over analyst consensus, reflecting robust performance in both its Wealth Management and Capital Markets divisions. 

The bank’s non-interest income surged 7% above expectations, boosted by gains in Wealth Solutions and Global Markets. This helped lift Standard Chartered’s total income to 4% higher than consensus estimates.

Standard Chartered also delivered improvements in cost management, with operating expenses coming in 2% below consensus. The bank noted that it maintained tight control over credit losses, with loan impairments totaling $178 million, which was better than anticipated. 

Standard Chartered has also raised its 2026 return on tangible equity (RoTE) target from 12% to just under 13%.

The bank’s future guidance added to the optimistic outlook, with an upgraded income growth projection now expected to approach 10% for FY2024, ahead of previous guidance. 

Moreover, the bank reaffirmed its capital return plans, aiming to return over $8 billion to shareholders from 2024 through 2026, with this pledge likely contributing to today’s positive stock movement.

Barclays analysts are cautious about earnings beyond 2024, with estimates 12-18% below consensus 2025/26e EPS. 

However, they see support from accretive share buybacks, boosted by a likely improved Basel 3.1 guide, and a low valuation (8.0x/6.6x 2025/26e PE or 0.7x TNAV for 11% underlying RoTE in 2026e), alongside the execution of a much-needed 'Fit for Growth' cost program. 

While an impending China policy 'bazooka' is unlikely to be a game changer, it could positively impact sentiment.

Source: Investing.com