[ET Net News Agency, 4 May 2018] HSBC Global Research said Standard Chartered's
(STAN)(02888) 1Q revenues were a little light, cost guidance was revised up a touch,
franchise growth was lacklustre. But otherwise, no major change to STAN investment story.
The research house noted that the more interesting development in recent weeks is the
dramatic change in deposit competition in Hong Kong. At the end of March when a small
group of banks (including STAN), sharply raised the rates they offered on time deposits
from 20-30bp for HKD, new deposits were being remunerated at 160bp or higher. Likewise,
USD time deposits rose to 250bp (having previously been 60-70bp). In recent weeks, other
larger HK banks joined in.
To the extent that higher rates are going to be passed equally to deposits (in this case
ahead of interest rate increases) HSBC regards this as an incremental negative.
Mathematically every 20bp uplift in the average cost of these funds would take 5% off
HSBC's 2019 PBT estimate, the research house said.
HSBC retained its "reduce" rating on STAN, with an.unchanged target price of 680p, or
HK$72.56. (KL)