Is Stanchart good for investing?

Good morning 😃🌞☀️ let’s get into it

We are continuing our series guide on different companies to invest in. To invest in individual stocks you need research first before you start, otherwise you risk losing your money.

So let’s begin

1) Snapshot

• What it is: Botswana subsidiary of Standard Chartered PLC serving corporates, public sector, SMEs and retail. Two main engines: CPBB (retail/SME) and CCIB (corporate/institutional).

• FY2023 performance:
  

  • PBT: P402.7m (+59% YoY). PAT: P307.4m. EPS: 93.65 thebe. CIR: 64% (mgmt says costs flat YoY, CTI improved). CAR (Total): 19.3%. Tier 1: 11.8%.

  • Loans (net): P8.56bn; Deposits: P13.08bn; Advances/Deposits: 65.4%; Gross Stage-3 (NPL) book: P172m (c.2.0% of gross loans).

  • Dividend (paid in 2023 for prior year): 68.2 thebe (total P202m).

• Market check (27 Aug 2025): Share price: ~P8.70.

2) Business model & moat

• Funding strength: Low-cost local deposits (P13.1bn) underpin NIM (net margin 4.0% in 2023). Global parent provides product breadth and risk governance that smaller peers may lack.

• Corporate franchise: Deep relationships with multinationals, public sector and development orgs; FX and transaction banking contribute meaningfully.

• Switching costs & brand: 125+ year Standard Chartered brand in Africa; sticky corporate cash-management relationships = mild moat.

  3) Financial quality (FY2023)

• Profitability: PBT up to P403m; ROE ~25–26% (PAT ~P307m on average equity ~P1.2bn), aligning with management’s 24.7% ROCE disclosure.

• Efficiency: Cost-to-income ~64% (mgmt notes improvement with flat costs). Peers run lower CTIs (see table).

• Asset quality: Stage-3 gross loans c. 2%; coverage robust; credit impairment swung to a net write-back in 2023.

• Capital & liquidity: Total CAR 19.3%, LAR 21.7%, A/D 65% — comfortably above regulatory minima.

4) Growth drivers

• Rate cycle tailwinds sustained NII; CPBB retail growth and controlled impairments drove earnings. Income +6% YoY; CPBB operating income P397m.

• Corporate flows & markets activity support fees/trading.

5) Risks

• Concentration/macro: Corporate book exposure to mining/public sector cycles; liquidity shifts as government cash moves.

• Operating leverage: CTI still higher than FNBB; if volumes slow, jaws could narrow.

• Regulatory/sovereign: Local compliance, IFRS 9 provisioning sensitivity.

6) Governance

• Local board & management with Standard Chartered group oversight; recent board changes disclosed in 2025 filings/news.

7) Valuation (as of 27 Aug 2025; trailing FY2023 fundamentals)

Using FY2023 EPS and DPS vs. current price P8.70:

• P/E: ~9.3x (8.70 / 0.9365).

• Dividend yield: ~7.8% (0.682 / 8.70).

• P/B: ~2.1x (BVPS ~P4.17). Numbers built from 2023 FS and the current quote.

8) Peer comparison (Botswana banks, latest FY2023 sets)

9) What’s priced in?

• At ~9.3x trailing and ~7.8% yield, SCBB trades cheaper than many regional quality banks but at a premium P/B (~2.1x) given high returns and deposit franchise. If 2024–2025 earnings (already signalled up in news flow) hold, forward multiples could be lower; but CTI improvement is the swing factor.

10) Verdict for a value investor

• Quality: Solid — double-digit ROE, sound capital/liquidity, low NPLs, credible parent.

• Valuation: Reasonable on P/E and yield; P/B reflects franchise quality but leaves less margin of safety than FNBB.

• Catalysts: Continued CTI reduction, sustained NII/fees with benign impairments, and steady dividends.

• Watch-outs: If funding costs rise or fees soften, jaws tighten. Execution on cost discipline is key.

Bottom line

SCBB looks suitable for value-leaning investors seeking a profitable, well-capitalised bank with defensive deposits and a 7–8% cash yield, provided you’re comfortable paying around 2.1x book for the franchise and you believe management can further close the cost gap vs. FNBB. On a simple checklist: Quality = Yes, Balance sheet = Yes, Price = “fair to good,” not a screaming bargain — but attractive if your hurdle is ~10% IRR with dividends doing heavy lifting.

Sources:

SCBB 2023 Annual Report for PBT, EPS, deposits/loans, CTI, CAR, DPS.

FNBB FY to 30-Jun-2023 Integrated Report (PBT P1.4bn, ROE 32%, CTI 49%, advances P16.3bn, deposits P23.3bn, DPS 32t).

Absa Botswana FY2023 release/financial statements (PBT ~P1.17bn, ROE ~20%, CTI ~56%, advances ~P13.5bn, deposits ~P18.5bn; plus CAR ~17.2%).

Note: Each bank has a different year-end (FNBB to June, SCBB/ABBB to December). I’ve kept figures to each FY2023 as reported and rounded for comparability.