StanChart earnings held back by capital improvement, says Credit Suisse

LONDON (ShareCast) - Credit Suisse (NYSE: CS - news) has lowered its price target for emerging markets-focused lender Standard Chartered (Other OTC: SCBFF - news) from 880p to 850p and kept an 'underperform' rating, causing shares to slip on Wednesday. The Swiss investment bank said StanChart (HKSE: 2888-OL.HK - news) is "trading earnings for capital".

"The company is now prioritising building capital by holding back growth, but we think that gives up future earnings," warned analyst Carla Antunes-Silva.

She said that the risk-reward balance at the bank remains "unattractive" and believes new management will significant restructure the balance sheet and capital position.

The bank has forecast an adjusted pre-tax profit of $4.95bn in 2015, down from the $5.01bn reported last year. It expects negative operating 'jaws' (expense growth being larger than income growth), with a higher bank levy, inflation and regulatory expenses.

For the first quarter, results of which are due on 28 April, Credit Suisse has pencilled in an adjusted pre-tax profit of $1.46bn on revenues of $4.60bn.

The stock was down 2.1% at 1,042.5p by 11:40.