Standard Chartered Posts 11% Rise In First-Half Profit
Published Wednesday, 01 August 2012 12:55 | Written by Amwal Al Ghad
Standard Chartered Plc (STAN), the U.K. bank that gets most of its revenue from Asia, posted an 11 percent gain in first-half profit and plans to add branches in China and India as rivals falter amid the global economic slowdown.
Net income rose to $2.86 billion from $2.57 billion a year earlier, the London-based bank said in a statement today. That compared with the $2.76 billion median prediction of 16 analysts surveyed by Bloomberg.
Standard Chartered, which focuses on Asia, Africa and the Midlde East, is set to meet its full-year targets for “double- digit” growth in revenue and earnings per share, Chief Executive Officer Peter Sands said. The London-based bank plans to hire more than 1,000 people this year in emerging markets, it said in June, as lenders such as HSBC Holdings Plc (HSBA) cut jobs and sell assets.
“The earnings were reasonably good in a challenging environment,” Tom Quarmby, head of regional banking research at Barclays Plc in Hong Kong, said by phone today. “The key areas of strength appear to be around the wholesale bank with strong performance, particularly around trade and Greater China-related trade business.”
The lender will have 100 branches each in China and India by the time it reports full-year results in early 2013, according to the statement. The lender last week opened its 90th China outlet in Dalian, and has 94 branches in India.
In Africa, the bank said it will have about 250 outlets in the next couple of years, up from 183 now. Standard Chartered is also investing in mobile and Internet banking, Sands said in the statement.
“Given the opportunities we see arising from the turbulence and the disarray of our competitors, we are stepping up the pace of investment,” he said.
The stock gained 2.3 percent to 1,498 pence by 8:18 a.m. in London, giving it a market value of 35.9 billion pounds ($56.3 billion). The shares have gained 6.1 percent this year, compared with a 0.3 percent decline in the Bloomberg Europe Banks and Financial Services Index.
The lender in February posted its eighth annual record earnings as 2011 net income rose 12 percent to $4.85 billion. About three quarters of its profit comes from corporate banking led by Michael Rees, which includes trade finance, payment processing and some investment banking activities such as merger advisory and equities. Steve Bertamini heads the bank’s consumer-lending unit.
“Its momentum is strong and fundamental long-term attractions remain intact for those without the stomach for investing in cheap U.K. domestic banks,” Ian Gordon, an analyst at Investec Plc (INVP) in London said in a note to clients today. “It is the pick of the quality names.”
Standard Chartered is 18 percent-owned by Temasek Holdings Pte, Singapore’s state investment company, according to data compiled by Bloomberg.
It is also the only U.K. bank that hasn’t been involved in Libor, money laundering, interest rate derivatives or payment protection insurance scandals.
HSBC, the other U.K. lender that gets most of its profit from emerging markets, apologized to investors this week after a U.S. Senate committee found that the bank gave terrorists, drug cartels and criminals access to the U.S. financial system. It set aside $2 billion more to cover the costs of fines for that and redress for wrongly selling insurance and derivatives, and posted an 8.3 percent fall in first-half net income to $8.44 billion.
“We are not under investigation anywhere” for involvement in the alleged rigging of benchmark interest rates, Sands said on a call with journalists today. “We are not involved in Libor or Euribor.”
Barclays Plc (BARC) and Lloyds Banking Group Plc (LLOY) have set aside a total of 5.6 billion pounds to compensate clients who were sold payment-protection insurance they didn’t need. Barclays in June paid a record 290 million pounds in fines for manipulating the London interbank offered rate, a benchmark for $500 trillion of securities.