Standard Chartered: What We Think of the Stock After Earnings

Key Morningstar Metrics for Standard Chartered

• Fair Value Estimate
  : GBX 2,240
• Morningstar Rating
  : ★★★
• Morningstar Economic Moat Rating
  : None
• Morningstar Uncertainty Rating
  : Medium

What We Thought of Standard Chartered’s Earnings

Standard Chartered STAN‘s, or StanChart’s, second-quarter operating income rose 8% year on year, excluding last year’s one-off disposal gain, as loan growth offset lower interest rates, and wealth and global banking drove strong noninterest income. Pretax profit grew only 2% due to higher credit costs.

Why it matters: We think investors will welcome the USD 1 billion buyback program and management’s modest upgrade to 2026 revenue growth guidance, now expected in the middle of the 5%-7% range versus the lower end previously, supported by low-single-digit growth in net interest income.

• We fine-tuned our net interest margin assumptions, as we now expect the Federal Reserve to keep rates unchanged through the remainder of 2026 before resuming cuts in 2027. We also raise our loan growth assumption to 6%, as first-half loan growth of 4% was a modest positive surprise.
• Credit impairment charges rose 26% due to additional management overlays related to the Middle East conflict, but the annualized credit cost of 20 basis points remains below management’s 30-35 basis-point guidance range. We continue to assume credit cost at the high end of the range.

The bottom line: We raise our fair value estimate for no-moat StanChart to GBX 2,240/HKD 238 from GBX 2,100/HKD 222, reflecting the USD 1 billion buyback program. Our earnings forecasts are largely unchanged following revisions to our NIM and loan growth assumptions.

• We think the shares are fairly valued and that the improvement in return on equity is largely reflected in the current valuation.

Long view: Wealth momentum remained strong during the quarter, with USD 15 billion of net new money inflows. We expect this to continue supporting cross-selling of wealth products and underpin average annual noninterest income growth of 7% over 2026-30.