Concerns that the global financial crisis will impact the Asian economies seem to be finally impacting Standard Chartered. Standard Chartered seem pretty immune up until now - just when Western banks were getting hammered, Standard Chartered massively outperformed in the first half of 2008 (31% increase in pre-tax profits).
According to the FT, analysts at Citigroup speculated that StanChart might need to raise $5bn of capital, in order take its core tier one ratio from 6.1% in the first half of 2008 to 7.6%on a pro forma basis – "in line with HSBC , but below the Asian bank average of 10.5%". Personally, I doubt this. Standard was not really caught up in the credit madness. Clearly, the economies of Asia – where it does 80 per cent of its business – are slowing but even, at mid-single-digit percentage gains, the economies of Asia are still growing and, unlike their Western counterparts, are forecast to carry on doing so next year.
I personally think that the decline in the share price is overdone - Standard’s relative insulation from the credit crunch will enable it to prosper at its rivals’ expense – especially in its aim of selling a wider range of products to corporate clients.
Hard to recommend any buys in the banking sector but this is one for me.
