Core Viewpoint - Standard Chartered Group reported better-than-expected performance for Q2 2025, with adjusted operating income of $5.5 billion, a year-on-year increase of 14.6%, and adjusted net profit attributable to shareholders of $1.8 billion, up 53.7% year-on-year, primarily driven by stronger non-interest income [1] Financial Performance - Non-interest income exceeded expectations, growing 33% year-on-year to $2.8 billion, with a contribution of $240 million from the sale of Solv India equity; even excluding this, non-interest income still showed a 22% year-on-year increase [1] - The company's financial market services revenue grew 47.2% year-on-year, driven by demand for interest rate and currency hedging amid market volatility [1] - Wealth management revenue increased by 20.1% year-on-year, primarily from affluent clients in overseas markets such as India, Hong Kong, and the Middle East [1] Guidance and Projections - The strong performance in non-interest income led the company to raise its revenue growth guidance for 2025 from "below 5%" to a lower limit of "5%-7%" [1] - Net interest income was in line with expectations, remaining flat year-on-year and decreasing 3% quarter-on-quarter, mainly due to the decline in HIBOR; the adjusted net interest margin was 2.03%, down 9 basis points quarter-on-quarter [2] - The company maintained its guidance for operating expenses to be below $12.3 billion in 2026, with credit costs expected to gradually normalize to 30-35 basis points [2] Shareholder Returns - The company announced a new $1.3 billion share buyback, following the completion of a previous $1.5 billion buyback, maintaining a total buyback guidance of at least $8 billion for 2024-2026 [3] - The company aims to gradually increase its annual dividend per share and maintain a return on tangible equity (ROTE) close to 13% by the end of 2026 [3] Earnings Forecast and Valuation - Due to the strong performance in non-interest income and better-than-expected asset quality, the company raised its 2025E/2026E net profit forecasts by 30.6% and 21.2% to $5.01 billion and $4.80 billion, respectively [3] - The company is currently trading at 0.9x/0.8x 2025E/2026E price-to-book ratios, and the target price was raised by 21.7% to HKD 158.8, corresponding to 1.0x/0.9x 2025E/2026E price-to-book ratios with an upside potential of 11.8% [3]

Core Viewpoint - Standard Chartered Group's strong non-interest income performance and better-than-expected asset quality have led to an upward revision of the company's net profit forecasts for 2025E and 2026E by 30.6% and 21.2% to $5.01 billion and $4.80 billion respectively [1] Group 1: Financial Performance - The company's 2Q25 adjusted operating income was $5.5 billion, a year-on-year increase of 14.6% [2] - Adjusted net profit attributable to shareholders for 2Q25 was $1.8 billion, reflecting a year-on-year growth of 53.7%, exceeding both the company's and market expectations due to strong non-interest income [2][3] Group 2: Non-Interest Income - Non-interest income increased by 33% to $2.8 billion, with a contribution of $240 million from the sale of equity in Solv India, while excluding this, non-interest income still showed a 22% year-on-year growth [3] - Financial market services revenue grew by 47.2% year-on-year in 2Q25, driven by demand for interest rate and currency hedging amid market volatility [3] - Wealth management revenue in 2Q25 rose by 20.1%, primarily from affluent clients in overseas markets such as India, Hong Kong, and the Middle East [3] - The strong performance in non-interest income has prompted the company to revise its revenue growth guidance for 2025 from "below 5%" to a lower limit of "5%-7%" [3] Group 3: Net Interest Income - Net interest income was in line with expectations, remaining flat year-on-year but decreasing by 3% quarter-on-quarter, mainly due to the decline in HIBOR [4] - The adjusted net interest margin was measured at 2.03%, with a quarter-on-quarter decrease of 9 basis points [4] - The company plans to continue increasing structural hedging in the second half of the year, with guidance indicating a single-digit year-on-year decline in net interest income for 2025 [4] Group 4: Operating Expenses and Asset Quality - Operating expenses in 2Q25 grew at a rate lower than revenue growth, with the company maintaining guidance for 2026 operating expenses to be below $12.3 billion [5] - Credit costs were annualized at 16 basis points in 2Q25, slightly increasing but still at a low level, with guidance suggesting a gradual return to normalized credit costs of 30-35 basis points [5] - The company expressed confidence in the quality of its exposure to the Hong Kong commercial real estate market, with local real estate exposure amounting to approximately $2 billion, representing less than 50 basis points of overall risk exposure [5] Group 5: Dividends and Buybacks - The company has nearly completed the $1.5 billion buyback announced with the 2024 annual report and has declared a new $1.3 billion buyback, maintaining guidance for a total of at least $8 billion in buybacks from 2024 to 2026 [6] - The company aims to gradually increase the annual dividend per share and maintain a return on tangible equity (ROTE) close to 13% by the end of 2026, with plans for further increases thereafter [6]

Core Viewpoint - CICC has upgraded Standard Chartered Group's (02888) net profit forecasts for 2025E and 2026E by 30.6% and 21.2% to $5.01 billion and $4.80 billion respectively, due to strong non-interest income performance and better-than-expected asset quality [1] Group 1: Financial Performance - In Q2 2025, Standard Chartered reported adjusted operating income of $5.5 billion, a year-on-year increase of 14.6%, and adjusted net profit of $1.8 billion, up 53.7%, exceeding both CICC's and market expectations primarily due to better-than-expected non-interest income [2] - Non-interest income grew by 33% to $2.8 billion, with a contribution of $240 million from the sale of equity in Solv India, while excluding this, non-interest income still showed a 22% year-on-year growth [3] - The bank's financial market services income in Q2 2025 increased by 47.2%, driven by demand for interest rate and currency hedging amid market volatility [3] Group 2: Guidance and Projections - The strong performance in non-interest income has led the company to raise its revenue growth guidance for 2025 from "below 5%" to a lower limit of "5%-7%" [3] - Net interest income was in line with expectations, remaining flat year-on-year but decreasing by 3% quarter-on-quarter, primarily due to the decline in Hibor [3] - The company expects net interest income to decline in single digits year-on-year for 2025, based on the anticipated recovery of Hibor [3] Group 3: Operating Expenses and Asset Quality - Operating expenses in Q2 2025 continued to grow at a rate lower than income growth, with guidance to keep 2026 operating expenses below $12.3 billion [4] - Credit costs were annualized at 16 basis points, slightly increasing year-on-year but still at a low level, with guidance indicating a gradual return to a normalized range of 30-35 basis points [4] - The company expressed confidence in the quality of its asset exposure in Hong Kong's commercial real estate, with only about $2 billion in local real estate exposure, representing less than 50 basis points of overall risk exposure [4] Group 4: Shareholder Returns - The company has nearly completed the $1.5 billion share buyback announced in the 2024 annual report and has declared a new $1.3 billion buyback, maintaining guidance for a total of at least $8 billion in buybacks from 2024 to 2026 [5] - The company aims to gradually increase its annual dividend per share and maintain a return on tangible equity (ROTE) close to 13% by the end of 2026, with plans for further increases thereafter [5]