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Standard Chartered Profit Collapses, Dividend Halved Amid Commodities Carnage
Standard Chartered’s new CEO Bill Winters thinks the bank is positioned well in "markets which will offer outstanding opportunities for decades to come", and while that may be true, the opportunities in those markets didn’t prove to be all that outstanding in the first half of the year, as the bank’s EM and commodities exposure contributed to a 44% decline in H1 profits. NIM fell 33 bps Y/Y.
The bank says it needs to better "align its dividends to earnings" which will require a "rebasing" of the payout, which is a really nice way of saying this: "we can’t pay out as much because we aren’t making as much." In any event, the dividend was cut in half:
Nevertheless, investors are apparently willing to trade a 50% dividend cut for a momentary reprieve on the "you need to raise capital now" calls, because shares moved higher on the back of news the bank’s fully loaded CET1 ratio rose to 11.5% from 10.7%.
Bernstein’s Chirantan Barua, called the dividend cut a "great move and minimizes the probability of a capital raise north of $5 billion in the months to come." For his part, Winters had the following words of wisdom regarding the bank’s capital position: "If we decide we need capital .. we will raise capital. If we decide we don't need it, we won't."
Fair enough, but the underlying business looks to be headed down hill in a hurry as the bank is quite clearly the latest example of an EM casualty. For instance, impairments soared, especially among corporate and institutional clients, where "continued weak commodity markets" contributed to a 158% increase. China and India accounted for 64% of those impairments.
Overall, total impairments jumped $225 million even as the bank struggles to pare down its exposure to plunging commodities. NPLs jumped 16% sequentially.
Here’s Barlcalys with a bit more color:
The miss is due to a combination of significantly worse provisions and weaker net interest income. This is said to be a continuation of previous trends, driven by China, India and commodities, with provisions up 70% YoY and 15% higher HoH and the NPL ratio deteriorating 30bp HoH to 3.1%. However, the capital position has been materially strengthened with a fully loaded CET1 ratio of 11.5% vs 10.7% at FY15. The dividend of 14.4c is 50% below our expectation. So the balance sheet is in much better shape but with a weak P&L. Despite getting well into the previously targeted range, capital targets remain under review, taking into account capital generation and the BoE stress test currently underway (focused on EM). Capital levels will be set with the intention of staying "absolutely and relatively strong through economic cycles" while also absorbing conduct costs – will raise capital if needed for the long-term benefit of the Group, won't if not.
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Reality is a bitch. Get used to it.
The reality in this fucked up world is STAN stock is up!!!
The dividend is payed out in freshly printed FRN's that come off the press at 110 mph.....wear gloves.....safety first.
44% decline in profits
That could happen to Apple if China sales implode, and smartphone prices continue to plummet, and Chinese smartphone makers keeping winning market share in China, India and Latin America.
There's gotta' be a point at which pretty much everyone who wants one has one. What then? Latest & greates iPhone 19, 20, 99, etc forever?
I posted a link about this under the "Apple is falling again..." article. They review a bunch of Chinese phones. Specs are impressive! The Chinese have some darned nice phones I didn't know about. Now I'm ready to buy one of them! Apple was wonderful, now working full time to screw up their products. Each upgrade pisses me off more. I'm glad there's still some third party stuff I can use, because that's becoming my fallback. The banks forget one thing: for them to make money, somewhere, someplace, somebody has to do real work to make it happen. Sitting on your pile of paper and shuffling it around for profits will work only so much and take you only so far.
As I have been saying for a long time. Apple is the company that it is mostly because of labor arbitrage. They build something at Chinese costs and sell something at US price.
They have benefitted from good advertising and follow-on purchases.
The Apple watch is a loser and down the road will be seen as the product that signaled the change in Apple's fortunes.
The leader in mobile communications has rotated several times. It is seemingly rotating again. We may now see a streak of multiple generation of Chinese "leaders". They can probably kill Apple, even in the US, if they want. It may be time.
They should reinvent themselves with the sex-bot if they're not too late already.
I wouldn't count out the iWatch yet. Even the iPad took a year to take hold.
It seems the world of banking is collapsing! There is simply no business!
#demanddestruction is causing everything to collapse plus the Shemitah is coming!
All the below happened in just July 2015!!
4,000 people fired by SCB....
http://www.zawya.com/story/StanChart_says_has_cut_4000_staff_this_year-TR20150805nL5N10G1Q9X8/#utm_source=zawya&utm_medium=web&utm_content=image-toolbox&utm_campaign=free-homepage
UK Private Bank Head quit. http://www.ftadviser.com/2015/08/03/ifa-industry/companies-and-people/brown-shipley-s-head-of-private-banking-exits-ac0exMkqBLbqniCqXzlMMJ/article.html
Canada's RBC withdrew from Switzerland.
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/11738195/RBC-quits-Swiss-private-banking-with-sale-to-Banque-SYZ.html
Abu Dhabi's Al Hilal Bank lost its Chairman as well as the CEO: http://gulfnews.com/business/sectors/banking/chairman-of-abu-dhabi-s-al-hilal-bank-resigns-sources-1.1553248
Merrill Lynch lost their Global CIO. http://www.wsj.com/articles/merrill-cio-resigns-amid-wealth-and-retirement-shuffle-1437162321
Credit Suisse HK head also resigned: http://www.carrawaygroup.com/news/credit-suisse-s-hong-kong-head-resigns/6647/
Rothschild lost HK CEO: http://www.carrawaygroup.com/news/credit-suisse-s-hong-kong-head-resigns/6647/
BMO lost its HK CEO; http://www.carrawaygroup.com/news/bmo-hires-new-head-of-asian-private-banking-business/6406/
SCB lost China head in Singapore: http://www.carrawaygroup.com/news/standard-chartered-private-bank-loses-market-head-for-singapore-and-greater-china/6503/
RBS sold it's Private Bank in India: http://articles.economictimes.indiatimes.com/2015-07-27/news/64919277_1_private-wealth-framework-shiv-gupta
JP Morgan CEO quit in Singapore: http://citywireasia.com/news/singapore-based-md-leaves-jp-morgan-private-bank/a825214
China bought itself a whole private bank in Germany. Of course will fire a few top people: http://www.bloomberg.com/news/articles/2015-07-08/china-s-fosun-to-buy-private-bank-h-a-in-push-for-german-wealth
Barclays will fire over 30,000: http://www.thetimes.co.uk/tto/business/industries/banking/article4502630.ece
MAS Clearsight CEO ran away in Dubai, DIFC.
Not to mention that SCB, Credit Suisse, Barclays and Deutsche all fired their CEO's and in some cases many other senior executives in the past 6 months!
Also, hundreds of thousands of jobs have been cut across oil/energy sector and several thousand in the gold and coal sector.....
Most will never find jobs and manufacturing will slow down to a standstill.....and all over indebted firms will fall apart...
The next major default in India will blow up any minute. This is at least 4 times larger loss as compared to Mallya's Kingfisher airlines that went bust previously : http://www.livemint.com/Money/7sqngwbKFhkYYigdP51swJ/Jaiprakash-Associates-debt-rating-cut-to-default.html
It seems the world of banking is collapsing
Well sure....when you put it that way.
I have three magic words for you......YES WE CAN......feel better?
"Yes we can get out while we still have a chance" makes me feel even better.
We never see 44% decline in the HUD budget .... governments always get moar !
Right, just ask Greece.
As long as it is in the interest of banks to create more debt-money for governments, they will. If the banks find it in their interest to kill a country by choking off its debt-money, then they will do that as well.
The banks do EVERYTHING for self-interest. They and the people who run them are parasites.
The bankers would like to believe that all people are solely motivated by self-interest. It is a hard argument to refute, even the self-sacrificing, self-sacrifice because it returns something to them ... but greed and parasitism are different kinds of self-interest. They are destructive and debillitating, not constructive.
let me see if i have this right. their rwa and dividend craters which makes the capital ratio look better so the stock is up? holy crap let me off this ride.
Every time I work with companies booking losses, I always suggest a 100 for 1 stock split to dliute losses per share.
Fixed!
Go ahead, pull my dinky!
"markets which will offer outstanding opportunities for decades to come"
Somebody please drag this CEO into the public square and flog him relentlessly.
In 2010, Standard Chartered's net assets were 38 billion
In 2014, Standard Chartered's net assets are 46 billion
http://www.redmayne.co.uk/research/securitydetails/financials.htm?tkr=STAN