Standard Charter Bank Insights Analysis
23, Dec 2011

Introduction

Business:                     Banking

Established:                30.01.1887

Chairman:                  Mr. Neeraj Swaroop

CEO:                         Mr. Joseph Silvanus

Branches:                   15

Extention Counters:    4

ATMs:                       23

No of Staffs:               More than 425

Head Office:               New Baneshwor, Kathmandu

Group headquarter:    London, UK (Standard Chartered PLC)

Stock code(SC PLC):    02888

 

Ownership Pattern

Domestic Ownership 25%

Ø  Individuals       23.79%

Ø  Entities            1.12%

Ø  Others             0.09%

Foreign Ownership     75%

                       

List of some Prominent Shareholders

Name                                                                                      Shareholding(%)

  1. Standard Chartered Grindlays Bank, Sydney, Australia            50%
  2. Standard Chartered Bank, London, UK                                  25%
  3. Pashupati Soap Industries                                                       0.53%
  4. Priynka Agrawal                                                                     0.53%
  5. Avinash Agrawal                                                                     0.53%
  6. Komal Agrawal                                                                       0.53%
  7. Sashi Agrawal                                                                         0.53%
  8. Shankar Lal Agrawal                                                               0.53%
  9. Arjun Bandhu Regmi                                                               0.51%

 

Key Indicators

 

Particulars

062/63

063/64

064/65

065/66

066/67

067/68*

% Net profit/ Total Assets

2.56

2.42

2.46

2.56

2.70

2.54%

% Total Credit/ Deposit

39.92

43.78

46.95

39.27

45.98

49.11%

% NPL

2.13

1.83

0.92

0.66

0.61

0.62%

% Dividend (including bonus Shares)

140

130

130

100

70

50

% Bonus shares

10

50

50

50

15

Nil

% of Total Operating Expenses to Total Assets

2.69

2.94

2.78

2.68

2.94

3.80%

           

*As of unaudited Q4 2067/68.

 

Company's Strength

1.      Advantage of its internationally renowned brand name. This international brand has the history of 150 + years of successfull banking business in over 70 countries with above 1750 branches.

2.      Its conservative business model has made it more resistant to any turmoil.

3.      Recognized as the pioneer bank in Nepal in product and service innovation.

4.      A leading bank making availalable several wholesale banking facilities to its customers Viz Foreign exchange options, Structured deposits, Cross currency swaps, Supranational trade finance etc.

5.      First bank in Nepal to implement anti-money laundring policy and introduced `Know Your Customer' procedure on all customer accounts.

6.      Awarded `Bank of the Year' award for 2009 by The Financial Times, London.

7.      Major promoter of some rural development banks and rural microfinance development centre(RMDC).

8.      Better internal control system for effective risk goverance.

 

Equity Analysis

52 Week high price:                           Rs. 2199

52 Week low price:                            Rs. 129

Last trading price(22.12.2011):          Rs. 1306

Paidup Capital:                                  Rs. 1,610,168,00.

Market Capitalization:                        Rs. 2,102.88 C.

EPS(annualised)*:                              Rs. 82.44

P/E Ratio*:                                          15.8

Net Worth per Share*:                       Rs. 24.02

P/B.V Ratio*:                                       5.24    

Total trading days*:                            56 days

Total shares traded*:                          46,599

 

*Based on unaudited first Quarter 2068/69.

 

Key Findings/Disclosures

 

1.      Based on FY 2067/68 comparison among 24 Commercial banks listed in Nepal Stock Exchange, Standard Chartered bank ranks as follows:

 

           

Head                                               Rank

Ø  By M-Cap                             1st

Ø  By Operation date                  3r

Ø  By Deposits                           7t

Ø  By Total Assets                      7th

Ø  BY P/E Ratio                          23rd (One with small P/E ranked top

Ø  By P/B.V Ratio                       24th (smaller P/BV ranked on top)

 

2.      Ratio of total assets value to market capitalization for this bank comes around 2, signalize that its scrip is abit overpriced. Industrial average of such ratio for the banking industry usually remains above 5.

In addition, on observing the value of P/E and P/B.V, the scrip has some chance of smaller correction in case the market continues to witness the same downfall in the coming months. Industrial average for banking sectors P/E usually comes below 12(most of them below 10) in most of emerging market in Asia and Africa. Even our comparison with the banks of this group(SC PLC) in those emerging markets has verified the aforementioned fact.

 

3.      The bank follows the highly conservative business model which can be illustrated by the following facts:

Ø  Less than 50% of total deposits is used to grant loan and advances, where most of other banks have such ratio above 80%.

Ø  Above 43% of the total deposit is utilized for the Investment purpose.

Ø  Based on financial statement of Q1 2068/69, out of 1863.78 Cr of total landings, the portfolio is well diversified with following apportionment:

 

Head                                         Exposure (%)

Real Estate Loan                          12%

Personal home loan                      12.53%

(80 lakh or less)                                                               

Margin type loan                          0%

O.D/ TR Loan/ WC Loan            40.17%

Term Loan                                   3.73%

Other landings                               31.55%

 

4.      It should be noted that real estate loan is gradually increasing in each of these new Quarters as compared to previous Quarter and corresponding previous year period. The voluminous increase in seen under the head "Other real estate loan" which includes land purchasing and plotting:

 

Base period                       Total Real estate loan             Land purchase and plotting

Q1 2067/68                       Rs. 162.13 Cr                           Rs.139.90 Cr               

Q4 2067/68                       Rs. 187.21 Cr                           Rs.169.95 Cr

Q1 2068/69                       Rs. 210.26 Cr                           Rs.210.26 Cr

 

 

i.e. 12% increase in total real estate loan in just last single Quarter period.

And, whopping 23.72% increase in loan for plotting in the same period.

 

5.      The more surprising achievement of the bank is that it has the `lowest cost of fund' among overall banking peers.

COF (LCY) in Q1 2068/69 = 3.51%

COF (LCY) in Q4 2067/68 = 3.94%

 

Note: Most of the commercial banks COF go above 7%.

Despite that lowest COF, the bank enjoys relatively moderate interest spread advantage. This has enabled the bank to strengthen its continuity concerns and help it acquire very good and trustworthy clients and customers.

 

6.      Based on annual result of Commercial banks for FY 2067/68, this is the only commercial bank having its non-interest income above 30% of total operating income.

 

 

 

 




Source:
Jamb Market Insights (JMI)
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