Standard Chartered is bucking the day's downward trend after reporting record quarterly profits.
The bank said it had made a strong start to the year despite increased competition and pressure on margins due to low interest rates. Consumer banking made a larger contribution than last year, while wholesale banking saw a sharp rise in income. The bank's shares have added 16p to £17.73 and Seymour Pierce analyst Bruce Packard commented:
Standard Chartered says [it had a] very strong start to the year. Consumer banking, which is the part of the business which deserves a higher rating, in our view, is growing income at double digit rates versus the first quarter of 2009.
Wholesale banking's core commercial banking businesses of trade finance, cash,
payments, and directly related foreign exchange hedging have performed well. However, cost growth is ahead of income growth.Standard's wholesale bank is currently enjoying a fair tail wind, but this statement suggests that the consumer bank which has enormous potential, is beginning to take up the running from wholesale banking, improving the balance between the two businesses. Valuation looks expensive compared to UK peers, but this not a fair comparison. Our recommendation is hold, we would like to see how the bank performs when the central banks' emergency stimulus measures are removed, before chasing higher.
