Standard Chartered Bank Kenya Ltd Earnings Expectations
• We recommend a HOLD on Standard Chartered Bank guided by our fair value estimate of KES.192, a downside of 3.4% from the current price of KES.199.
• The bank operates on a forward P/E of 7.5x and a forward P/B of 1.4x, above the industry average of 7.3x and 1.3x.
• We project PAT growth of 28.9% driven by an increase in government securities (KES.133.7Bn) that will boost income from government securities to KES.12.8Bn from KES.11.1Bn.
• Loans & Advances should exhibit insignificant growth (0.5%) to KES.126.9Bn contributing to a flat growth in interest income.
• Operating expenses are expected to remain at KES.12.8Bn resulting in cost to income ratio of 45.8% from 48.0% in FY2017 due to the bank’s organizational transformation journey which started back in 2015 to improve effectiveness in the business through cutting costs. Download Report