Strong First-Half Result For Standard Chartered Sees Another Share Buyback

While Standard Chartered reported a strong first-half performance we lower our fair value estimate to HKD 80 per share, from HKD 90 per share, and to GBX 850 per share from GBX 930 per share. The latter also factors in current USD/GBP assumption of 0.82, compared to 0.80 previously. The cut is mainly driven by our view that the cumulative increase in the net interest margin, or NIM, to 2024 will be 37 basis points versus 57 previously. We also factor in a decline in NIM from 2024 as interest rates are likely to normalize once inflation subsides and economic conditions slow. The shares are undervalued and we think the share price will find support after Standard Chartered announced a USD 500 million buyback after recently completing a USD 750 million buyback. While we believe the bank had further capacity for capital management initiatives, the timing was ahead of our earlier view of initiatives being announced at the full-year result.