Record Profits Standard At Standard Chartered

Published in Company Comment on 1 August 2012

The bank notches its 10th consecutive record-setting half year.

Standard Chartered (LSE: STAN) is in the Olympic swing as it posted its tenth consecutive year with record-setting first-half profits, which were up 12% to $2.8 billion on the back of continued growth in wholesale banking (that's financing trade and helping companies manage their cash flow, as opposed to the banking you or I would do) in the bank's core Asian markets.

The strength in wholesale banking more than made up for a weaker performance from the bank's consumer banking division, which suffered from lower margins on mortgages and higher operating expenses as Standard Chartered builds out its network of branches and staff in the region.

Standard Chartered has one of the healthiest balance sheets of the UK-listed banks and, unlike HSBC (LSE: HSBA) and Barclays (LSE: BARC), it isn't trying to recover from serious reputational damage, which may be why it is the highest rated with a price-to-tangible-book ratio of 1.6 compared to 1.1 for HSBC and 0.4 for Barclays. Standard Chartered's focus on the emerging markets of Asia and Africa and relatively low exposure to the mess in Europe also provides some comfort for investors.

Even after the 10% increase in the interim dividend, Standard Chartered's 3.2% dividend yield isn't overly impressive, but the bank's proven track record and emerging market exposure could still provide solid returns for investors in the coming years. Even after the shares' run-up from around £13 in May and June investors looking for some exposure to financials could do worse than consider Standard Chartered.

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> Nate does not own any shared discussed above. The Motley Fool owns shares of Standard Chartered.

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richjfool 01 Aug 2012 , 3:01pm

Never mind Warren Buffet or Neil Woodford, Standard Chartered was a stock pick last year of Todd Wenning in the Dividend Edge service. Although the Motley Fool later abandoned the "Dividend Edge" service and its members, I am pleased to say I still hold the stock.

The top ten holdings of Neil Woodford's Edinburgh IT, can be found here (link below) and they don't include Standard Chartered:

geeWCee 01 Aug 2012 , 4:35pm

Yes was a good pick by Todd, sorely missed!

bexleydave54 01 Aug 2012 , 5:58pm

Yes an excellent pick - the only bank I'd consider currently - glad I purchased on Todd's rec.


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