FTSE 100 bank Standard Chartered (STAN) says it has increased revenues in the third quarter by 4%. In a management statement issued today the emerging markets specialist lender reports year-on-year operating income (which in effect is revenue) of $3.58bn versus $3.46bn.
But looking a little deeper, this represents an ongoing declining trend. Operating income actually fell by $25m on the $3.61bn reported in the second quarter.
Full year headline revenues have not actually grown for five years, according to data supplied by Reuters Eikon.
Revenues missed Bloomberg consensus forecasts by $51m. The underlying pre-tax profit picture is also not quite as rosy as the bank would have you believe, the reported 78% jump to $814m actually missed market expectations by 5% for the quarter.
Investors are clearly unhappy with the results, sending the bank's share price tumbling 7% in trading on Wednesday to 697.60p. This represents around £1.7bn of its market cap.
SPLIT OPINIONS
One figure in the management statement which is reason to cheer is the loan impairment number, or bad debts. This is $348m, 42% lower on a year-on-year basis. It should be watched by investors closely as bad debts caused heavy losses for Standard Chartered in 2015 and 2016.
The impairment figure did beat consensus estimates by 3% and the more bearish forecasts of Investec analyst Ian Gordon by 13%.
Both Investec and Jefferies are not optimistic on Standard Chartered, giving ‘sell’ and ‘underperform’ ratings respectively.
Investec’s Gordon says that the bank is too expensive with a price to book of 0.82 for a return on equity of just 3% to 6%.
Jefferies’ Joseph Dickerson says that as the bank’s capital requirement has missed consensus estimates this dashes any hope of capital distribution at year end.
