ANALYSIS OF STANDARD CHATERED BANK IN UK
This is one of the best banks in United Kingdom and was formed back in 1969, which was through a merger of two banks, the Standard Bank of British South Africa and the India Chartered Bank , Australia and China. The bank was capitalizing on the expansion of business between Europe and Asia (Sc.com, 2015).
In the United Kingdom and the entire Europe, there have been measures to improve effectiveness and resilience of the banking system by the European Banking Authority. The directives fro EBA gave instructions on issues to do with remuneration that would help companies from taking the unnecessary risk that would destabilize the concerned institutions during the occurrence of the risk. Standard bank in United Kingdom is doing some market capitalization within the banking sector. This being one of the leading banks in Unite Kingdom means it is a crucial bank in the financial industry. Market capitalization of a company is the total market value of a company’s outstanding shares (Channel NewsAsia, 2014).
The share price of the standard group has been going down since 2014, compared t 2013 which recorded high revenue after tax compared to 2014. P/ E ratio is realized by dividing market value per share with earnings per share (Sc.com, 2015).
|Profit before tax (m):||4,235.00||6,064.00|
|EPS growth (%):||(28.00)||n/a|
Values are quoted in the stock’s local currency: US cent
This was 2011, but the report was different for the fiscal year ending 31st December 2014 where the firm had to cut bonuses. According to the management team of the standard bank, the bank profits went down by 30%, and this forced the company to waive bonuses. Currently in the stock exchange market value of standard chartered bank share is estimated to be around 93.55pounds that have been trending for a while. In 2013, the CEO was issued with a bonus because the company had accrued a good amount of income, and it was doing very well in the stock exchange market. Earning per share in 2013 was commendable, and this was the reason the bank was comfortable on awarding its bankers with real rewards (wilson, 2015).
When compared to 2014 things have been tough to the extent that the bank revenue went down by a significant margin. This forced some bankers in the company to be deducted some amount from their salary because the Bank was finding it hard to finance its operating cost. In 2014, the bank market value went down as compared to 2013. Earning per share in 2013 was 64.4 which reduced in 2014 to 102.2, this highly affected the revenue generation of the standard chartered bank and led to reduced income (wilson, 2015).
Reduced earning per share was sending the information that the bank in 2014 was not fairing well in the stock market it in 2013. This was the reason the firm found it hard to award individuals in 2014 as they did comfortably in 2013. The bank has been offering one of the best remuneration packages in the banking industry, but this blow of 2014 changed things and profoundly affected many things within the organization. The issue of reduced revenue for Standard Bank Uk has made investors and shareholders get concerned with what is happening with their highly coveted bank. The shareholder is in need of right measures to being put in place and make sure the deficit is corrected. They are arguing that even the paying of bonuses should put on hold first and first make sure the bank gets back on the course of creating wealth to shareholders, and growing in the market. According there is need for the bank to make the right decisions that will enable the earning per share to shareholders increase for this will pool in people to be willing in purchasing the bank’s shares in the stock exchange market (wilson, 2015).
The above information compares the market performance of the standard chartered bank as at 31 December 2013 and December 2014. As seen from the figure revenue realized in 2013 was more compared to 2014, and this was still reflected in the case of profit after tax in both years. In 2013, the EPS of the bank was more compared to that of 2014 meaning the firm was doing well in the stock market in 2013 compared to 2014. In the case of standard chartered bank P/E ratio between the two years more was realized in 2013 meaning that more share were sold during this period of 2013 compared to 2014. The PEG ratio is for determining a stock value while taking the company’s earnings growth into consideration. From the provide information, it is clear that the company is growing the EPS increased by 28% in 2014 meaning the bank was generally doing well in the stock market.
It is clear that standard chartered pays generous bonuses that are said to have limited deferrals. According to the investor report of 2011 which included the remuneration report it showed how much the bank was paying its code staff. Below is a chart giving more details about the same.
Channel NewsAsia, (2014). Standard Chartered says net profit fell 37% to US$2.51b in 2014. [online] Available at: http://www.channelnewsasia.com/news/business/international/standard-chartered-says/1694618.html?cx_tag=similar#cxrecs_s [Accessed 22 Apr. 2015].
Driving investment, trade and the creation of wealth across Asia, Africa and the Middle East. (2013). 1st ed. [ebook] London: standard Bank. Available at: http://reports.standardchartered.com/annual-report-2013/pdf/2013-Annual-Report.pdf [Accessed 22 Apr. 2015].
Sc.com, (2015). About Us – Standard Chartered Bank United Kingdom. [online] Available at: https://www.sc.com/uk/about-us/ [Accessed 22 Apr. 2015].
Sc.com, (2015). Standard Chartered Bank United Kingdom. [online] Available at: https://www.sc.com/uk/ [Accessed 22 Apr. 2015].
wilson, H. (2015). Standard Chartered stumbles into 2014. The Telegraph. [online] Available at: http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/10565723/Standard-Chartered-stumbles-into-2014.html [Accessed 22 Apr. 2015].