Standard Chartered 'still the best in the world' says Investec

6th Aug 2014 11:50

Investec says Standard Chartered coped well with a difficult first half of the year and is "still probably the best bank in the world". The broker acknowledges that 2014 "may not be a stellar year", but it expects a kick-start for revenue-led growth in the second half of the year and beyond.With no effect from payment protection insurance misselling, Libor manipulation nor other regulatory breaches in the results, together with earnings per share up 7% and ahead of consensus forecasts, Investec was impressed - "Crisis? What crisis?" - and reaffirmed its 'buy' recommendation.Furthermore, underlying return on equity of 10.4% is "respectable" and ahead of peers, capital requirements are "robust", triple net asset value up 7% half-on-half to 1,647 cents, and the dividend was kept at 28.8 cents. Analyst Ian Gordon emphasised that the period was "actually a very difficult half, with a raft of material headwinds in financial markets, cash/trade, own account, principal finance, Korea and FX". The outturn is that underlying revenues were down 5% and underlying profit before tax down 20%, which had been suitably guided within the company's 26 June pre-close statement.Looking ahead, Gordon notes that the second half offers materially easier comparatives in several areas, while currency spot rates suggest forex headwinds should become a meaningful tailwind. He also hopes to see a resumption of growth in corporate finance, based on the strong pipeline. One downside he notes is media reports about discussions with a New York regulator over an alleged computer glitch, that could lead to "over $100m" of fines.OH