US Edition Standard Chartered
£15.10 +48p
Questor says BUY
In its trading update on Tuesday, the bank said it had made about $12bn in loans to the United Arab Emirates, with just $400m or so of this being exposure to commercial real estate.
Richard Meddings, its finance director, reiterated that the company's Dubai exposure would have little impact on the group. So, far $230m of provisions have been raised and the update was in line with the group's previous statements this year.
The reason Standard Chartered managed to sail through the financial crisis with aplomb is that the group is managed on more traditional lines and acts primarily as a trade bank. It also had stronger capital and liquidity positions than the banks hit hardest by the crisis and it has its main operations in growth markets, rather than in the indebted West.
The group also shored up its balance sheet in November last year with a rights issue, raising $1.7bn. The company has not needed any government funds.
Standard Chartered expects to post record results this year and it remains very leveraged to global trade. It also is very diversified, operating in more than 70 markets globally, including dozens in Asia.
Its wholesale operations really have stood up well. Traditional lending and trade finance are at record levels and newer activities, such as corporate finance activities, are continuing to grow.
The consumer banking side saw lower income than in the same period last year, but it is continuing to recover. Its mortgages business performed well, driven by good volume growth and improving margins. Wealth Management fees also saw strong growth.
The shares are trading on a December 2009 earnings multiple of 14.4, falling to 12.9 in 2010. The current yield is 2.7pc. Shares in Standard Chartered were recommended on April 6 at £12.40 and they are now 22pc ahead compared with a market up 31pc. The stance remains buy.