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We can easily overlook the Standard Chartered (LSE: STAN) share price when we think of FTSE 100 banks. It mostly works in the world of corporate banking, so it doesn’t make the headlines the way retail banks like Lloyds Banking Group do.
But ignoring Standard Chartered means turning up our noses at a 215% share price gain over the past five years. And it’s up 60% in 2025 alone. Let’s see what third-quarter results tell us.
Hitting targets
In a 30 October update, CEO Bill Winters said: “We now expect to deliver an underlying return on tangible equity of around 13% in 2025, hitting our target a year earlier than planned.”
Operating income rose 5% from the same quarter a year ago, to $5.1bn. Net interest income dipped 1% to $2.7bn. But that seems like a solid performance to me, considering global interest rates have mostly fallen in the past 12 months.
For me, liquidity is a crunch measure when it comes to valuing bank shares. It’s what brought the world’s banking system to its knees in the 2008 financial crisis, after all.
On that score, a Common Equity Tier 1 (CET1) ratio of 14.2% looks very healthy to me. It’s a measure of a bank’s highest-quality capital which is relatively quickly accessible, compared to total risk-weighted assets.
Cash cow?
Dividends are modest by FTSE 100 bank sector standards, with a forecast yield of only 2%. And that’s going to keep away some investors. But Standard Chartered has been repurchasing its own shares too, which should boost future per-share earnings and dividends.
The bank is part-way through a $1.3bn buyback announced in July. Oh, and that strong CET1 ratio allows for the completion of the entire buyback, even though we were only at the $413m mark on results day on 30 September. So the bank seems to be a bit healthier than that figures suggests.
The big question is whether we’ve missed the boat, or does the Standard Chartered share price still make it one to consider for the long term?
Corporate risk
I think we do need to look at the different risks involved in retail and corporate banking. Corporate banking failures drove the 2008 crash. The way investments in that world can be chopped, changed, repackaged and sold on hid an insidiously creeping crunch in liquidity that with hindsight seemed inevitable.
Can we be sure the lessons have been learned and the banking system won’t stretch to breaking point again? We can’t be sure, no. And whether we’ll see something similar again is a definite maybe. The risk is far from over.
We do have much tighter liquidity regulations these days… but the Trump administration seems keen to unwind them.
Bottom line
For me though, corporate banking risk lies hand in hand with profit opportunities. The shares are on a forward price-to-earnings (P/E) ratio of 11, dropping to eight based on 2027 forecasts. At that valuation, Standard Chartered could be one to consider for the long term.
