Daily Telegraph29 Mar 2015 10:03
Standard Chartered's run going to continue: Standard Chartered had a terrible 2014. The emerging markets-focused bank issued two profit warnings, saw a 29pc decline in its share price, and eventually, after months of shareholder pressure, announced a comprehensive boardroom clear-out that will see both Chief Executive Peter Sands and Chairman Sir John Peace leave. A commodities collapse led to serious fears about Standard Chartered’s loan book, which is heavily exposed to Asian producers, while cost inflation – largely from wages in developing markets – put pressure on profits. With Standard Chartered having ballooned in the previous decade, growing profits even throughout the financial crisis, its ability to deal with an Asian slowdown was sorely doubted. The bank was under pressure to announce a substantial capital raise and swingeing cuts. Since the turn of the year, however, StanChart has been on something of a roll. Its shares are up 14.8pc since the start of January, and some analysts have done an about-turn on their forecasts of a rights issue. This comes despite profits falling 25pc last year, which led Mr Sands and others to forgo bonuses this month. Two major things have happened to brighten the outlook for StanChart. Firstly, management has shown signs (belatedly) of doing what investors want. At annual results this month, Mr Sands outlined a programme of $1.8billion (£1.2billion) in cost cuts over the next three years, and said the bank would shrink risk-weighted assets by up to $30billion – almost 10pc of the loan book. The second, perhaps more significant, development has been the appointment of his successor. Bill Winters, a former JP Morgan Executive, will take charge in the summer. A change of blood after eight years will allow Standard Chartered to clear the decks, and Mr Winters is a very solid choice. He will begin his role with the support needed to make any drastic changes Standard Chartered might need. Standard Chartered at £11.03½-16½p. Questor says “Sell”.
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