Standard Chartered PLC (“StanChart”) plans to issue new SGD NC5.5 AT1 perpetuals at an initial price guidance (“IPG”) of 4.70%. StanChart will have the option to call the bond anytime from 15 July 2031 (Year 5.5) to the first reset date of 15 January 2032 (Year 6) or on any subsequent reset date where subsequent reset dates will be every 5 years thereafter (e.g., 15 January 2037).
The issuer is rated A3 by Moody’s, BBB+ by S&P, and A by Fitch. The bond is expected to be rated Ba1 by Moody’s, BB+ by S&P, and BBB- by Fitch. Net proceeds will be used for the general business purposes of the Group and to further strengthen the regulatory capital base of the Group.
We provide a quick update on StanChart’s financials below, but broadly speaking, we think StanChart continues to be a solid issuer who should have no issues meeting its debt obligations.
Financial Highlights:
For the third quarter ending 30 September 2025 (“3Q2025”), underlying operating income rose 5% year-on-year (“YoY) to USD$5.15b on a constant currency (“CC”) basis. This was due to a 12% YoY growth in non-net interest income, while net interest income was flat (-1% YoY). Net interest income came in flat (-1% YoY) as an increase in average interest-earning assets (+ USD$58m) was offset by a decline in rates and margins owing to a lower interest rate environment. Meanwhile, non-net interest income continues to benefit from the Wealth Solutions segment, which saw a double-digit growth amidst continued strong net inflows.
Meanwhile, operating expenses in 3Q2025 grew by a similar margin: +4% YoY to USD$2.95b in constant currency terms. A large portion of this increase was a USD$227m attributed to business growth, mainly to support the corporate & investment bank (CIB) and Affluent Wealth & Retail Banking (WRB) business segments.
Underlying profit before taxation (PBT) rose 9% YoY in 3Q2025 to USD$1.99b (3Q2024: USD$1.81b). This was mainly driven by higher underlying operating income highlighted earlier We also highlight that reported PBT growth came in much lower at just +3% YoY (compared to the 9% for underlying), mainly due to restructuring costs of USD$54m as well as other costs of USD$165m due to ongoing transformation cost from its Fit for Growth (“FFG”) programme. Nonetheless, we like that StanChart remains profitable in its core banking business, with drivers seen in its less rate-sensitive segments (Wealth Management) while its rate-sensitive (net interest income) segment remains resilient.
Outlook:
Management has maintained its guidance for FY25 net interest income at roughly USD$10b, down low single digit YoY in constant currency terms. This gives rise to one important risk: if lower actual rates (aggressive rate cuts) materialise, StanChart could see further headwinds on its rates-sensitive segments. Nonetheless, for us, given that we do not expect drastic rate cuts and think market expectations are overdone, we think net interest income could remain supported.
Meanwhile, cost management continues to be a focus of the company and its ‘Fit for Growth’ program. They have maintained their guidance for USD$1.5b in cost savings from 2024 to 2026, with a big part of this USD$1.5b (~85% run-rate savings) to be delivered by the end of 2026, with USD$600m already saved so far by 3Q2025. We think this (if successful) could continue supporting this issuer’s profitability.
Finally, we highlight that management has recently upgraded its guidance in 3Q2025 for 2025 operating income. Operating income is now expected to increase above 7% in 2024, excluding two notable items in 1Q24 (previously ‘around the top of the 5-7% range’). We are not overly surprised – as mentioned previously, the 5-7% range appeared to be conservative, especially when compared to previous guidance. Considering (i) our view of not expecting drastic rate cuts supporting rates-sensitive segments; (ii) strong growth observed in other segments like Wealth Management; and (iii) good progress made in cost savings, we think StanChart remains well-placed to deliver positive earnings growth in the years ahead.
Additionally, management is also guiding to increased profitability, with a ROTE of 13% exiting 2025, reaching their target a year early. This target achievement on an accelerated timeframe supports our view of positive earnings growth in the years ahead.
Credit Profile:
StanChart’s loan-loss rate remained decent at 24bps in 3Q2025, comparable to the previous quarters (2Q2025: 12bps / 1Q2025: 25bps), despite a slight increase in credit impairment. Broadly speaking, we believe StanChart’s asset quality is resilient, and we do not expect any significant signs of stress.
StanChart’s CET1 ratio was reported at 14.2%, flat from 31 December 2024. This remains well above the regulatory minimum of 10.3% and above management’s target range of 13% to 14%. Do note that this 14.2% figure accounts for the full USD$1.3b share buyback programme the bank has in place. We reiterate our previous stance that StanChart’s CET1 ratio remains healthy and could even see further uplifts from profit accretion in the coming quarters.
Finally, we also highlight that its leverage ratio of 4.6% and liquidity coverage ratio of 151% remain healthy and stable (at least relative to previous quarters).
In all, we continue to find that StanChart’s key solvency ratios remain healthy, with decent buffers over regulatory minimums.
Recommendation:
Table 1: SGD perpetual bonds
|
Bond Issue |
Years to Call |
Ask Price |
Yield to Next Worst (%) |
Credit Rating (S&P / Moody’s / Fitch) |
|
STANLN New Issue |
5.500 |
100.000* |
4.700% |
BB+ / Ba1 / BBB- |
|
2.144 |
103.900 |
3.977% |
BBB- / - / BBB |
|
|
5.491 |
101.650 |
4.333% |
- / Ba1 / BBB- |
|
|
4.188 |
103.067 |
4.590% |
- / Ba1 / BBB- |
|
|
2.440 |
106.800 |
4.343% |
- / Ba1 / BBB- |
|
|
1.689 |
106.753 |
4.134% |
- / Ba1 / BBB- |
|
|
4.733 |
102.582 |
2.418% |
BBB- / Baa1 / - |
|
|
3.111 |
106.766 |
2.230% |
BBB- / Baa1 / BBB+ |
|
|
1.418 |
102.750 |
1.924% |
BBB- / Baa1 / BBB+ |
|
|
3.777 |
106.300 |
2.296% |
BBB- / Baa1 / BBB+ |
|
|
1.519 |
106.183 |
4.009% |
BB / Ba2 / BB+ |
|
|
3.623 |
105.250 |
4.171% |
- / Baa3 / BBB- |
|
|
3.958 |
104.950 |
4.227% |
- / Baa3 / BBB- |
|
|
*Not yet issued. Yield is based on IPG and is likely to be revised downwards. (“FPG”) Source: Bondsupermart, Bloomberg, iFAST Compilations. Data as of 6 January 2026. |
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We compare StanChart’s latest issue with other SGD perpetuals issued by major banks. Factoring in the likelihood of the final price guidance (“FPG”) adjusting downwards and comparing perpetuals with similar credit ratings (Moody’s and Fitch) such as Barclays, we find these new StanChart perpetuals to be fairly priced.
Investors should be mindful of risks associated with AT1s, such as the loss-absorption risks involved and the possibility of non-call risks. We think that investors should demand adequate compensation for such risks.
Declaration: For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) holds a position in BACR 4.650% Perpetual Corp (SGD), BACR 8.300% Perpetual Corp (SGD), and OCBCSP 3.900% Perpetual Corp (SGD). The analyst who produced this report holds a NIL position in the abovementioned securities.
