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Bill Winters was the standard chartered director this month 10 years ago. At the time, London-listed lenders were fighting concerns about high costs, weak capital levels, regulatory issues, growth in anemia in core markets, and stubbornly low stock prices.
In some respects, it hasn’t changed much. The underlying cost-to-revenue ratio for Stanchart in 2024 was the same as in 2014. Winter stocks have risen just 20%, with winter below the starting point for April. The Hong Kong real estate market, the bank’s largest market, is flashing warning signs. Banks are even fighting lawsuits related to historic sanctions issues.
However, this underestimates its performance. It was a hangover from his predecessor that saw the stock fall early in Winters’ tenure. He refused to grasp nettles about the need to raise capital and rebuild Stunchart’s vast business. Bank stocks measured from the rights issue in late 2015 slightly outperformed the HSBC and Asian-centric bank indexes, rising more than twice the European list lender’s STOXX 600 Bank Index.
Unlike rival HSBC, which struggles to show how to drive future growth, Stanchart currently focuses fairly clearly on two areas of growth: banking for large international companies and managing the wealth of “wealthy” individuals. Compared to HSBC’s 1.5%, net profit is projected to increase by an average annual 10% between 2025 and 2028.
Stanchart says that diversification should limit the impact of local recessions or disruptions on trade in certain corridors such as China. The bigger risk was another global crisis, like the coronavirus pandemic, which was particularly violently hit by Asian-focused banks.
The multilateral trade war could be another such shock, but the government has returned from the edge. Winters told investors last month that “from a position of strength that could directly affect market growth over a long period of uncertainty (but) enters the current period of global volatility.”
His pitch may not yet appeal to traditional bank investors. Many of them focus on income. The 2.4% dividend yield is one of the lowest of more than 50 European banks tracked by Citi. However, recent large investments from Capital Group and T Rowe Price have led to more growth-centric investors.
One of the winter winters that I couldn’t overcome was the Stanchart rating discount. The company’s current price is close to its highest level in years, with a book value of about 0.9 times, but lags 1.1 times the wider European bank index. With new chairs in place, it is widely believed that Winters’ season is nearing an end, but he may have plenty of time to close the gap before he goes.
nicholas.megaw@ft.com
