UBS: STANCHART (02888) Wealth Business Becomes Growth Engine, Target Price Raised to 229.2 Hong Kong Dollars.

UBS Research Report: Standard Chartered (02888)s pre-provision operating profit in the fourth quarter of last year was 11% lower than expected, at $182 million, even though net interest income was 8% better than expected. The bank has advised investors not to consider this outperformance as the norm. The gap in pre-provision profit is mostly attributed to one-time operating expenses and inventory losses from trading operations, neither of which will impact future earnings per share forecasts. UBS has reiterated their "buy" recommendation for Standard Chartered, with a target price raised from HK$225.1 to HK$229.2, valuing the bank comprehensively. The bank has raised Standard Chartered's EPS forecast by 5% to 6%, primarily driven by higher revenue. Net interest income has benefited from net interest margin and deposit growth, while non-interest income is driven by wealth management. Data shows that Standard Chartered's assets under management and wealth-related deposits grew by 25% and 18% respectively last year, and the bank believes this strong growth will continue. UBS predicts that Standard Chartered's earnings per share will grow at a rate of 13% per year until the 2028 fiscal year, as the business portfolio shifts towards wealth management. The bank believes the stock price has yet to reflect that Standard Chartered has transformed into a bank with a growth premium and high returns.