WHEN you’re consistently good at something, people start to raise their expectations.
It’s a tricky position to be put in. Meet those expectations and you receive little more than a nod of acknowledgement. But undershoot them and be damned.
Year after year, Standard Chartered has been top of the class for investors, delivering growth as promised and relying on its huge Asian exposure to offset concerns about economic uncertainty.
Yesterday it fell out of favour. From the mouth of usually upbeat CEO Peter Sands came a muted update – operating profits down (though no firm numbers, a quirk of the bank’s reporting style), revenues well short of target and margins under pressure.
Investors were horrified. Shares have already fallen almost eight per cent since the start of March on rumours of weak margins, but yesterday they dropped another five per cent –and investors displayed even more unease later in the afternoon as 22 per cent failed to back key director re-elections at the AGM.
It’s an over-reaction.
In the same breath that Sands admitted momentum had slowed in February and March, he reassured investors that April’s performance was back on trend (that is, back in double-digit growth) and was clear that the bank is still confident of achieving full-year forecasts for profits before tax of $8.2bn.
That means not only does Standard Chartered think the rest of the year will be on target, but that it can bring in enough to offset a weaker first quarter than anyone was expecting.
Standard Chartered may have momentarily lost its place as the teacher’s pet, but this temporary dip should be seen as an opportunity to buy, not as the start of a downward trend.