Standard Chartered bank profits from emerging markets

Wednesday August 04 2010

Standard Chartered, like HSBC, survived the global financial crisis without state assistance and has a strong footprint across emerging markets. Photo/REUTERS

British-based bank Standard Chartered said Wednesday that net profits rose 9.5 percent in the first half of 2010, as it drew strength from the "positive" economic mood across emerging markets.

Profits after tax climbed to 2.181 billion dollars (1.649 billion euros) in the six months to the end of June, which compared with 1.991 billion dollars in the same part of 2009, the lender said in a results statement.

Loan impairment losses narrowed 60 percent to 437 million dollars in the first half, compared with 1.09 billion dollars last time around.

"We continued our strong performance in the first half of 2010 and both of our businesses have had an encouraging start to the second half," said chairman John Peace in comments accompanying the release.

"Despite the regulatory and economic uncertainties, our focus on the basics of banking will continue to hold us in good stead. Standard Chartered remains in excellent shape."

The Asia-focused group also sounded a cautious note about the outlook for the world economy.


"These remain challenging times. There is fragility in the global economy and nervousness in financial markets," said Peace.

"While there is economic improvement in our markets of Asia, Africa and the Middle East, they are still dependent on a recovery in the West which is much less certain.

"As a bank which spans East and West, we can see how much more positive the mood is across our markets," he added.

The lender, which derives more than 90 percent of its income from emerging markets, added that pre-tax profits increased to 3.12 billion dollars, up from 2.84 billion, in line with market expectations.

"The challenging credit environment seen in early 2009 has continued to ease, resulting in lower delinquency trends since the second half of 2009 and consequent lower provisions," the group said.

Total operating income, meanwhile, dipped to 7.92 billion dollars in the reporting period, compared with 7.96 billion last year.

However, the company's share price slid 6.44 percent to 1,779.5 pence in midday deals on the London FTSE 100 index of leading companies, which was down 1.10 percent at 5,337.09 points.

Oriel Securities analyst Mike Trippitt described the bank's overall performance as "good" -- but added that its consumer banking division had disappointed investors.

Wednesday's results come just two days after Asia-focused global banking giant HSBC revealed that its first-half net profits more than doubled to 6.76 billion dollars on the back of plunging bad debts.

Standard Chartered, like HSBC, survived the global financial crisis without state assistance and has a strong footprint across emerging markets.

The company had meanwhile bought 500 million dollars of shares in Agricultural Bank of China's stock market flotation last month.

"We established a strategic partnership with Agricultural Bank of China (ABC), underpinned by becoming a cornerstone investor," Standard Chartered added on Wednesday.

"With 2.6 million corporate clients, over 320 million personal customers, and nearly 24,000 branches, but virtually no international network, ABC offers plenty of scope for mutually beneficial cooperation."