Keefe Bruyette & Woods has stuck to its 'underperform' rating on Standard Chartered PLC (LSE:STAN), though it lifted its target price a smidge, to 1,420p from 1,275p.
This was despite the bank turning in a tidy set of third-quarter numbers.
Revenue was the standout. Wealth management grew 28% year on year and retail banking also played its part, more than offsetting a weaker showing in markets.
Management has nudged full-year revenue guidance to the upper end of its 5% to 7% range, implying about $20.7 billion of income for FY25. That looks cautious given the bank has already booked $16 billion so far this year, up 8%.
KBW forecasts $20.8 billion, stripping out a $0.2 billion one-off gain booked earlier in the year.
The return on tangible equity guidance tells a similar story. Management now points to “around 13%” in FY25, with “progress thereafter”. KBW is already pencilling in 13.1%.
The trickier question is whether that “progress thereafter” is realistic. Lower interest rates, heavier restructuring charges and the lack of any repeat of this year’s one-offs leave FY26 looking demanding.
The wider backdrop in Asia explains the caution. Hong Kong banks enjoyed a good quarter, helped by lower HIBOR, which gave loan volumes a lift while squeezing net interest income less than feared.
Wealth activity remains brisk, helped by outflows from mainland China. Yet the region’s largest economy is struggling with falling house prices and consumers who are reluctant to spend. Add in the drag from expected rate cuts in 2026 and a layer of geopolitical risk and the glow from Q3 fades quickly.
That makes Standard Chartered’s valuation harder to justify. The shares trade on 7.7 times consensus FY27 earnings, or 1.2 times forecast tangible book value for FY25, which is a premium to the UK banking sector’s average multiple of 7.2.
And that is before factoring in restructuring costs or the bank’s relatively low dividend yield. On an adjusted basis, KBW puts the FY27 price-earnings ratio at 7.5, a 14% premium to the UK average of 6.3.
In short, a good quarter does not fix the structural worries. The bank is growing in the right areas, but the macroeconomic and regulatory headwinds remain stiff. KBW, unconvinced that the risks are being fully priced in, reiterates its Underperform call.