Comparison of Barclays and Standard Chartered monthly stock return performance

INDIVIDUAL
ASSIGNMENT

Table of Contents
PART 1............................................................................................................................................3
Brief description of Company A and Company B.......................................................................3
Comparison and contrasting between Barclays and Standard Chartered monthly stock return
performance.................................................................................................................................4
Comment on result and Stock Recommendation.........................................................................5
2. Portfolio formation and analysis..............................................................................................5
a. Calculation of mean, variance and standard deviation of portfolio returns.............................5
b. Trade – Off between mean return and standard deviation of the portfolio.............................8
c. Indicating Efficient Frontier in a Trade – off graph................................................................9
d. Minimum Variance Portfolio.................................................................................................10
e. Advise to investor on the basis of above findings.................................................................12
PART 2..........................................................................................................................................13
1. Calculation of investor’s required rate of return on company A’s equity.............................13
2. Valuation of company A’s equity..........................................................................................14
3. Comparison of calculated equity value with market value (or current stock price) of the
company.....................................................................................................................................14
REFERENCES..............................................................................................................................15
Books and Journals....................................................................................................................15

PART 1
Brief description of Company A and Company B
Company A: Barclays Plc
Barclays is a British multinational universal bank having its headquarter in London,
England which was founded in the year 1630. Barclay is basically operating as two divisions i.e.,
Barclays UK and Barclays International. The company is a public limited company and primarily
listed on London Stock Exchange (LSE). Secondly, Barclays is also listed on New York Stock
Exchange. The company generally operates in over 40 countries and provide employment to
more than 80000 people. It is one of the fifth largest bank in Europe because of its total assets
value of £1.384 trillion as per 2021 annual report (Augar, 2018). Basically, Barclays products &
comprises of retail banking, consumer credit cards, wealth management service, private banking,
wholesale banking, investment, commercial banking etc.
As per 2021 annual report, the total revenue of Barclays includes £21.940 billion which is
higher than the previous year total revenue of 21.766 billion. The net income and operating
income of the company in the year 2021 was £7.226 billion and 8.414 billion respectively.
Further, the earning per share of Barclays in the year 2021 is $2.01 that is higher than the year
2020 of $0.44 EPS. The company have market share of around 10.50% beside of the top
competitors such as HSBC, JP Morgan Securities Plc whose market shares is lower than
Barclays with 6.75% and 6.07% respectively (Nyanaro and Bett, 2018).
Company B: Standard Chartered Plc
Standard Chartered Plc is a British multinational banking and financial service public
limited company that was founded in the year 1853. The company have its headquarter in
London, England. The company basically operates a network of more than 1200 branches and
outlet in more than 70 countries in order to enhance their international presence. The products
and service of Standard Chartered Plc is comprising of credit cards, consumer banking, corporate
banking, investment, private, mortgage loan, wealth management etc. The company is primarily
listed on the London Stock Exchange (LSE). It is one of the largest international bank. The total
number of employees worked with Standard Chartered Plc is 85000 employees. The total
revenue of the company in the year 2021 is US$ 337 million which was higher than the year

2020 of US$227 million. Further, the net income and operating income of the company in the
year 2021 was US$2.313 billion and US$ 3.347 billion respectively (Jun and Yoon, 2020).
The closest competitors of Standard Chartered are HDFC but the average customer rating
of Standard Chartered is 4.6 and HDFC is 4.5. This indicate that the company are highly focused
towards their customer service enhancement. Standard Chartered Plc annual earnings per share
in the year 2021 was $0.6 which was 486.41% higher than previous year EPS of $0.5. The
largest shareholder of Standard Chartered Plc is Temasek Holdings (Private) Limited with the
17% of share holdings (Mbai, Ngui and Ndiao, 2018). It is systematically an important bank as
per Financial Stability Board.
Comparison and contrasting between Barclays and Standard Chartered monthly stock return
performance
On the basis of the computation of mean, variance and standard deviation of both company
such as Barclays and standard chartered stock return, it is analysed that both risk and return are
higher in purchasing Barclays stocks. It is because the standard deviation of Standard chartered
is 9.04% while the standard deviation of Barclays Plc is 10.38%. This means that the risk is
lower in Standard Chartered shares. However, on the other hand, despite of lower risk in shares,
the return from Standard chartered stocks is negative. It is because the mean of Standard
chartered monthly stock return is -0.33%. But on the other hand, the mean of Barclays Plc
monthly stock return is positive 0.68%. This indicate that by taking a little higher risk and
investing the fund in Barclays stocks will provide the investors with positive and higher return as
compared to the investment in Standard Chartered stocks. On the basis of the standard deviation
calculation of both stock, it is analysed that the risk is higher in Barclays Plc but on the same side
with the analysis of mean calculation of both stock, it is analysed that the return is also higher in
Standard Chartered (Chiang, 2019).
So, on this basis it can be said that there is a positive correlation exist between risk and
return. The greater the risk, the higher the potential return. If the investor take risk by investing
the money in Barclay Plc than they able to earn higher return from the investment. Further, on
the basis of monthly stock return calculation of both stock, it is identified that Barclays average
return are higher than the average return of Standard Chartered. Hence, it means that low level of