| CATEGORY: BROKER RECOMMENDATIONS SECTOR: BANKS |
Broker snap: StanChart preferred to HSBC |
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Tue 29 Jun 2010
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LONDON (SHARECAST) - Standard Chartered’s recent trading statement indicated weaker revenue and cost trends than Nomura Securities was expecting but the broker continues to prefer the stock to fellow Asia-focused bank HSBC.
Nomura said the underperformance was largely due to the normalisation of strong account income within the wholesale banking division.
“We have accordingly downgraded our pre provision estimates, which are offset by lower impairments in 2010,” said Nomua analyst Raul Sinha.
The broker’s “buy” recommendation and price target of 1990p have been maintained, however.
“Although the group trades at a significant premium to the European bank sector, its valuations are inline with its natural peer group of Far Eastern banks. Also, the current revenue pressures are industry wide and we would still argue that, given its business mix, StanChart would outperform other developed market banks in operating performance in a weaker environment for wholesale revenues,” Sinha said.
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