Week Ahead: HSBC, Standard Chartered, Xchanging

25th Feb 2011 11:37

The banking results season comes to a close next week with the two Asia-focused operators, HSBC and Standard Chartered, declaring full year figures.HSBC is first to declare, on Monday. The performance of the Personal Financial Services division is likely to be a highlight, as bad debt write-downs lessen. Global Banking and Markets may report lower trading activity, however.The group was minded to warn back in November of last year that the rate of recovery of emerging markets was slowing down, and the market will be keen to learn whether this is still the case.Newspaper headline writers may be more interested in the bank's bonus pot, which could be $2bn or more, chairman Douglas Flint told MPs on the Treasury Select Committee earlier this month. Some staff had already received pay rises worth $150m (£93m) ahead of the bonus season, Broker Charles Stanley is forecasting a sharp increase in profit before tax to $20.3bn from $7.1bn in 2009. The broker's earnings per share estimate is 78 cents, up from 34 cents the year before, and it thinks the dividend will be nudged up to 36 cents from 34 cents in 2009. Turning to Standard Chartered, Charles Stanley's forecasts are for a profit before tax of $6.15bn, up from $5.15bn in 2009, and earnings per share of 197 cents, up from 159.2 cents in 2009. The broker predicts the dividend will be hiked to 70 cents from 2009's 64 cents."Cost growth is expected to exceed income growth for the full year by broadly the same margin as in the first half of the year. Standard Chartered has continued to invest but costs have risen due to increased regulatory and compliance costs and secondly increasing competition for staff. Credit quality continues to be very good in both businesses and it is expected that there will be profit before tax growth in both businesses. The group's liquidity position remains strong with good deposit growth in both businesses," said Charles Stanley banking analyst Nic Clarke. "We will be looking at the full year results to see whether the recent slower income growth and negative 'jaws' was just a function of slower investment spend in H1 [first half] 2009 or whether it is something more enduring. However, Standard Chartered stated that it has 'excellent momentum' going into 2011 and that cost growth will be a shade below income growth in 2011," Clarke added.Results from troubled business process outsourcing firm Xchanging should be interesting, given its shock profits warning on 9 February which coincided with the abrupt departure of chief executive and founder, David Andrews.In terms of meeting expectations for 2010, everything is fine and dandy, with the company saying revenue and underlying operating profit for 2010 are both expected to be within the current range of analysts' estimates. However, the group warned that while revenue for 2011 is expected to be within the current range of analysts' estimates, underlying operating profit will be below £55.5m, the figure which, at the time of the profits warning, represented the most bearish forecast in the broking community.Though the company's profits warning included a fair amount of detail on what has been going wrong at the company, the market always wants to know more. Panmure Gordon thinks the results "could fuel further share price weakness as analysts gain a more detailed insight into the Cambridge acquisition, contract losses and ongoing margin pressures, all of which have negatively impacted group operations." "The key focus is likely to be on the short term risk from the lack of leadership and the impact this could have on future contract renewals," the broker added.Market consensus is for pre-tax profit in 2010 of £63.1m on turnover of £778.2m. The company has already announced it won't be paying a dividend in respect of 2010.Panmure Gordon, which has a "sell" rating on the shares, is forecasting profit before tax of £66m, towards the top end of the range of forecasts, which spans from £62.3m to £67.7m."Having already factored into our forecasts some of the expected contract terminations, deterioration in the US claims business, investment in US business development and pricing pressure on the financial services business, we believe there could be further risks from ongoing margin pressures and contract renewals further down the line," the broker warned.Monday February 28INTERIMSBaqus Group, Cheerful Scout, Craneware, Hays, Waterman GroupINTERIM DIVIDEND PAYMENT DATECity of London Investment GroupQUARTERLY PAYMENT DATEBankers Inv Trust, City of London Inv TrustINTERNATIONAL ECONOMIC ANNOUNCEMENTSBalance of Payments (GER) (07:00)Chicago PMI (US) (13:45)Consumer Price Index (EU) (10:00)Harmonised Index of Consumer Prices (EU) (10:00)International Reserves (EU) (11:00)Pending Homes Sales (US) (15:00)GMSMax PetroleumFINALSAer Lingus Group, Balmoral International Land, Bloomsbury Publishing, Goals Soccer Centres, Hiscox Ltd., HSBC Holdings, Keller Group, Kingspan Group, New Britain Palm Oil Ltd. (DI), Pearson, Sagentia Group, Senior, Ultra Electronics Holdings, WSP GroupEGMSFindel, Insetco, NEOVIA Financial, OPG Power Ventures, SocialGOTRADING ANNOUNCEMENTSAssociated British FoodsFINAL DIVIDEND PAYMENT DATECompass Group, Dunedin Smaller Companies Inv TrustTuesday March 01INTERIMSAI Claims Solutions, Dawson International, Eleco, RicardoINTERIM DIVIDEND PAYMENT DATEDS Smith, IG Group Holdings, Puma High Income VCT QUARTERLY PAYMENT DATEJPMorgan Claverhouse Inv TrustINTERNATIONAL ECONOMIC ANNOUNCEMENTSISM Prices Paid (US) (15:00)Unemployment Rate (EU) (10:00)Unemployment Rate (GER) (08:55)FINALSCookson Group, CRH, Development Securities, Elementis, Fresnillo, GKN, Hydro International, IP Group, Jardine Lloyd Thompson Group, Lavendon Group, Meggitt, Molins, Moneysupermarket.com Group, Persimmon, Promethean World, Provident Financial, Rotork, Share Plc, United Business Media Ltd., XchangingAGMSArtemis VCT, Driver Group, ServocaFINAL DIVIDEND PAYMENT DATEBritish Portfolio Trust, OMG, TUI Travel, WichfordWednesday March 02INTERIM DIVIDEND PAYMENT DATECohort, Stagecoach Theatre ArtsINTERIM EX-DIVIDEND DATEAnglo & Overseas, Aquarius Platinum Ltd., Carclo, Casdon plc, Colefax Group, Diageo, Downing Distribution VCT 2 , Hansard Global, Hargreaves Services, JPMorgan Mid Cap Inv Trust, Jupiter Primadona Growth Trust, Kesa Electricals, Kier Group, Oxford Instruments, Park Group, Ruffer Investment Company Ltd., Stewart & WightQUARTERLY PAYMENT DATEM&G Equity Inv Trust Income SharesQUARTERLY EX-DIVIDEND DATECanaccord Financial Inc.INTERNATIONAL ECONOMIC ANNOUNCEMENTSProducer Price Index (EU) (10:00)GMSBerkeley Resources Ltd. (DI)FINALS4imprint Group, Admiral Group, Amlin, BBA Aviation, Cape, Capital & Counties Properties , Carillion, Fiberweb, Fyffes, GlobeOp Financial Services SA (DI), Goldenport Holdings Inc., International Personal Finance, International Power, Irish Life & Permanent Group Holding, LSL Property Services, Macfarlane Group, Oxford Biomedica, RPS Group, Serco Group, Unite GroupSPECIAL EX-DIVIDEND PAYMENT DATEBeazleyEGMSChaarat Gold Holdings Ltd. (DI), Infrastructure IndiaAGMSAberforth Geared Capital & Income Trust Capital Shares, Aberforth Smaller Companies Trust, Holidaybreak, Impax Asset Management Group, Innovise, Sage GroupFINAL DIVIDEND PAYMENT DATEGooch & HousegoFINAL EX-DIVIDEND DATEElectronic Data Processing, Income & Growth VCT , LPA Group, New Europe Property Investments, Rights & Issues Inv Trust Capital Shares, Rights & Issues Inv Trust Income Shares, Rio Tinto, RSA Insurance Group, Sanderson Group, St James's Place, THB GroupThursday March 03INTERIMSFrontier IP GroupINTERNATIONAL ECONOMIC ANNOUNCEMENTSECB Interest Rate (EU) (12:45)ISM Services (US) (15:00)Retail Sales (EU) (10:00)GMSAnglo & Overseas, Astaire Group, Evolve Capital, Moss Bros GroupFINALSACTA Spa, Amec, Aviva, Balfour Beatty, Cobham, Communisis, CPP Group, Grafton Group Units, Hardy Underwriting Bermuda Ltd. (DI), Howden Joinery Group, IMI, OAO Severstal GDR (Reg S), Psion, Taylor Wimpey, Total Produce, Trinity Mirror, Vitec GroupIMSSDS SmithEGMSAtlantic Coal, e-Therapeutics, Gitanjali Gems Ltd. GDR (Reg S), Premier FoodsAGMSIDOX, Jersey Electricity 'A' Shares, Local Shopping REIT, LPA GroupTRADING ANNOUNCEMENTSKazakhmys, Liontrust Asset ManagamentFriday March 04INTERIM DIVIDEND PAYMENT DATEClyde Process Solutions, CPL Resources, Daejan Holdings, Latchways, Mattioli WoodsFINALSCharlemagne Capital Ltd., Just Car Clinics Group, Quadnetics Group, WPPIMSSSThreeEGMSIGas Energy, M&G Equity Inv Trust Income Shares, MeDaVinci, OptareAGMSNoventa Ltd.FINAL DIVIDEND PAYMENT DATEAsset Management Investment Co, Treatt