Lending & deposits grow at Standard Chartered -UPDATE

30th Oct 2012 07:10

Standard Chartered, the bank focused on emerging markets, continued to see good momentum across its businesses and geographies in the third quarter.In the year-to-date, income grew at a high single digit percentage rate, maintaining the trajectory seen in the first half of 2012. Income has continued to be affected by the strength of the US dollar against Asian currencies, with year to date income growing at a double digit rate on a constant currency basis.The group, which recently reached a $340m settlement with the New York State Department of Financial Services over breaches of US sanctions against Iran, continues to engage with the other US agencies on their review of the group's historical US sanctions compliance. The group's operating profit for the year to date has grown at a mid-single digit rate, or at a double digit rate excluding the New York settlement."Lending and deposits have both increased over the last three months as we continue to support our customers and clients," revealed Peter Sands, Group Chief Executive. "We manage the group conservatively with costs controlled tightly and risk well managed. Our balance sheet philosophy remains a source of competitive advantage with a focus on diversity, high levels of liquidity and a strong capital position," Sands claimed.Nomura highlights the impact from FX headwindsFor their part, analysts at Nomura are this morning highlighting that growth in profits before tax (excluding litigation costs), at around 8.5% by their estimates, were almost in line with the 9% consensus forecast. That despite a circa 3% headwind on income, from foreign exchange, at the group level. As well, they point out that this headwind could easily turn into a tailwind in coming quarters. Furthermore, the group benefits from cost flexibility, which should allow it to beat consensus PBT forecasts for 2012-13, although not those for income, they believe.Furthermore, Nomura adds that: "As long as prospects of Asian economies are better than Europe, banks exposed to those prospects will continue to outperform over the longer term, and as such retain our Buy rating on STAN (and HSBC)." Nevertheless, they add that: "In the very near term, though, a lack of positive earnings momentum may weigh on the stock, but we expect by full year stage, STAN can beat lowered consensus expectations, particularly with its cost flexibility. JH