The article "After the Performance" summarizes the latest ratings, target prices, and opinions of major banks on Standard Chartered's announced performance

Standard Chartered (02888.HK) announced its performance for last year yesterday at noon, with management providing an optimistic outlook for this year's prospects. On the 24th, the stock price rose nearly 3.1%, but this morning (25th) it opened down 1.2% and once fell by 4.2%, later narrowing the decline to 1.4% at HKD 195.1. Citigroup's report indicated that Standard Chartered's mid-term guidance will not be announced before May, leading to a certain degree of uncertainty during the earnings call, as analysts attempted to explore the bank's cost outlook for the rest of the year. The bank believes that the market is concerned that management will continue to utilize a better revenue mix to cope with larger investment expenditures, rather than allowing revenue to drive profits. This concern has intensified under management's commitment to revenue growth outpacing expenditures (positive jaws), rather than confirming that statutory cost expenditures will decline in 2027, when the market expects restructuring expenses to end.

Standard Chartered announced its performance for last year yesterday, reporting a statutory pre-tax profit of USD 6.963 billion, up 15.8% year-on-year, slightly below the lower limit of USD 6.966 billion predicted by our comprehensive analysis of eight brokerages; operating income grew 7% year-on-year to USD 20.942 billion. The statutory profit attributable to ordinary shareholders increased by 27% year-on-year to USD 4.558 billion, slightly above the lower limit of USD 4.517 billion predicted by our comprehensive analysis of seven brokerages; the statutory earnings per share was USD 1.954. The bank declared a final dividend of HKD 0.49 per share, with a total annual dividend of HKD 0.61 per share, an increase of 65% year-on-year, far exceeding the upper limit of HKD 0.53 predicted by our comprehensive analysis of seven brokerages. The group also announced a USD 1.5 billion share buyback, which is expected to reduce the common equity tier 1 capital ratio by approximately 58 basis points. The bank's return on tangible equity last year was 14.7%, achieving the target one year ahead of the original three-year plan. The bank's guidance for this year indicates that, based on fixed exchange rates, the statutory operating income is expected to grow at a lower range of approximately 5% to 7% year-on-year. Among them, net interest income is expected to remain roughly flat year-on-year. Statutory costs are expected to remain roughly flat, including expenditures for the final year of the "efficiency gain" program. The statutory return on tangible equity is expected to exceed 12%.

【Citigroup focuses on cost growth and limited upside for ROTE】

Citigroup stated that based on Standard Chartered's revenue and cost guidance for this year, assuming credit loss costs of 30 to 35 basis points, stable joint venture income, and an approximately 27% normalized tax rate, this implies a net profit of USD 5.6 billion, higher than the market forecast of USD 5.2 billion. This includes the additional tier 1 (AT1) notes issued last November, implying a statutory return on tangible equity of about 13%, higher than the market consensus of 11.7% and the official target of over 12%. However, Standard Chartered's annual report also shows that management's new long-term incentive plan for 2026 to 2028 aims for a statutory return on tangible equity of 12% to 16% by 2028. Under comparable benchmarks, the market's forecast of 14.7% is already at the upper end of that target range. Even though there is a possibility of upward revisions to Standard Chartered's earnings per share forecasts for this year, the long-term incentive plan suggests limited potential for upward revisions to earnings per share forecasts for next year and beyond, meaning that the mid-term guidance to be announced in May may disappoint the market The bank gives Standard Chartered a "Neutral" rating and a target price of HKD 186.

【JP Morgan states that the guidance implies there is room for upward revision in this year's revenue forecast】

JP Morgan indicated that Standard Chartered's revenue in the fourth quarter of last year was generally in line with expectations, with net interest income exceeding expectations, but non-net interest income fell short of expectations due to the impact of global market revenues. The actual pre-tax profit was 6% lower than expected, as costs were 4% higher than market expectations. The dividend per share was 40% higher than market expectations, but the USD 1.5 billion share buyback was only in line with expectations. The bank believes the market focus will be on this year's performance guidance exceeding expectations and welcomes management's forecast of a statutory tangible equity return exceeding 12% this year, higher than the market expectation of 11.7% and last year's 11.9%. It also indicated that the year-on-year growth rate of reported benchmark operating income is expected to be at a lower level close to the range of 5% to 7%, implying a 2% upward revision space for market consensus forecasts. Standard Chartered also expects actual costs to rise, but the "Fit For Growth" restructuring costs are lower, resulting in reported inflation costs remaining flat year-on-year. The bank expects Standard Chartered's guidance to drive an upward adjustment of mid-single digits in this year's pre-provision operating profit expectations, with the statutory tangible equity return expected to trend towards 14.5% by 2028. The bank continues to give Citigroup an "Overweight" rating and maintains a target price of HKD 265.

Goldman Sachs raised its target price for Standard Chartered from HKD 228 to HKD 233, maintaining a "Buy" rating. The bank generally maintains its net profit forecast for Goldman Sachs this year, but due to an upward adjustment in operating expense assumptions, it has lowered its net profit forecasts for next year and the following years by 1% to 2%, including adjustments to restructuring expense forecasts. The bank has raised its earnings per share forecast for Standard Chartered during the period by 1% to 2%, based on the share buyback amount reaching USD 1.5 billion, slightly higher than its forecast of USD 1.4 billion, as well as an upward adjustment in revenue assumptions for Standard Chartered, primarily driven by corporate and investment banking services, offsetting the impact of increased actual operating expenses after deducting restructuring expenses. Goldman Sachs expects Standard Chartered's core ROTE for 2026 to 2028 to be 14.2%, 15.1%, and 15.8% respectively (with market consensus forecasts of 13.3%, 14.2%, and 15%).

CICC stated that Standard Chartered's guidance for 2026 is positive, focusing on the new three-year strategy to be announced in May. The company indicated that the 2026 reported ROTE is expected to exceed 12% (11.8% in 2025), with operating income expected to grow approximately 5% year-on-year, and NII and operating costs remaining roughly flat compared to 2025. The company announced that it has completed its three-year strategy for 2024 to 2026 ahead of schedule and will announce a new three-year guidance in May 2026. Standard Chartered is currently trading at a forecast price-to-book ratio of 1.2 times and 1.1 times for this year and next year, respectively. Considering performance expectations and changes in market risk appetite, the bank has slightly raised the company's target price to HKD 227.27, corresponding to price-to-book ratios of 1.3 times and 1.2 times for this year and next year, maintaining an "Outperform" rating.

-------------------------------------- The latest comprehensive investment ratings and target prices from 6 brokerages:

Brokerage │ Investment Rating │ Target Price

JP Morgan │ Overweight │ 265 CNY

UBS │ Buy │ 225.1 CNY

Goldman Sachs │ Buy │ 228 CNY -> 233 CNY

CICC │ Outperform │ 213 CNY -> 227.27 CNY

Morgan Stanley │ Overweight │ 222 CNY

Citigroup │ Neutral │ 186 CNY

Brokerage │ Viewpoint

JP Morgan │ Mixed quarterly results, but new guidance will raise market forecasts for its pre-provision operating profit

UBS │ Weak performance in the fourth quarter last year, a drop in stock price would be a buying opportunity

Goldman Sachs │ Quarterly results below expectations, but this year's guidance is above market consensus

CICC │ Last year's performance met expectations, with dividends above expectations

Morgan Stanley │ Quarterly pre-tax profit was below expectations due to costs, capital returns improved, and this year's outlook slightly exceeds the bank's expectations

Citigroup │ An upward revision of this year's consensus expectations seems possible, but the potential for upward revisions next year and beyond is relatively small