Standard Chartered (Other OTC: SCBFF - news) falls 4.8 percent to the bottom of a flat FTSE 100 index as the Asia-focused bank reports an operating profit fall in its consumer and wholesale businesses, casting a shadow on its full-year (FY) performance.
"STAN's management indicated that they remain comfortable with FY consensus; in our view, however, this could be a challenge," analysts at RBC Capital Markets say in a note, adding consensus estimates may need to come down by as much as 12 percent.
"It would take a very robust recovery to deliver the near-double-digit (PBT) profit before tax growth after the falling operating profit in Q1."
The disappointment is heightened by a relatively strong earnings season for European banks that have reported so far, 62 percent of which have beaten consensus estimates according to Thomson Reuters StarMine data, including global peer HSBC (LSE: HSBA.L - news) on Tuesday.
Standard Chartered has notched up 10 years of consecutive record profits thanks to strong Asian markets, helping it become one of the most loved European-listed banks, as shown by high valuation multiples and low interest from short sellers.
The stock trades at 19.3 times its expected earnings for next year, a slight premium to HSBC's 19 multiple and well above UK domestic lenders Barclays and Lloyds.
Around 3 percent of Standard Chartered's stock available for lending was out on loan as of the market close on Monday, Markit data showed, compared to a 5.7 percent average utilisation rate for all banks listed in Europe, the Middle East and Africa.
Short sellers borrow a security with a view to selling it and buying back and at a lower price before returning it to the lender, pocketing the difference.
In the first hour of trading Standard Chartered's stock has gone through half of its full-session average volume for the past 90 days.
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