Standard Chartered's Q3 Result in Line, Lack of Further Capital Management Disappoints

While Standard Chartered posted a good third-quarter result in line with consensus expectations, the bank’s share price declined sharply during London trading. In our view, the market was expecting further capital management initiatives at this result, after completing its USD 250 million share buyback announced at the second-quarter fiscal 2021 result. The bank remains well capitalised with higher profitability and a lower level of risk-weighted assets resulting in a 50 basis point increase in common equity Tier 1 ratio to 14.6%. This is above the bank’s target of 13% to 14% and management expects the common equity Tier 1 ratio to be at the top end of guidance at 14%. The bank noted further capital management is expected for the fiscal 2021 result with an intention to lower the common equity Tier 1 ratio to be at the lower end of the range closer to 13%.