2nd UPDATE: Standard Chartered 1H Strong,But Recent Wks Weaker

28th Jun 2010 08:17

(Adds finance director and analyst comments and detail.) By Patricia Kowsmann Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Standard Chartered PLC (STAN.LN) said Monday that it had a strong performance in the first half of the year, mostly driven by its consumer banking and wholesale banking client businesses, although weaker market sentiment in recent weeks has hurt income momentum. Income in the first six months of the year is expected to be flat from the year-ago period, but should show double-digit growth over the second half of 2009, the U.K.-based, Asia-focused bank said in a statement. Excluding a $248 million gain from a notes buyback in the year-ago period, the bank's income and profit as of the end of May were ahead of 2009, it added. Net profit for the six months ended June 30, 2009, was $1.88 billion. "Economic conditions continue to improve across our geographies and business activity levels are increasing, although recent market volatility has had some impact on sentiment," it said. "Despite this, we are performing well and taking market share," it added. In a conference call, Finance Director Richard Meddings said the bank is comfortable with an analysts consensus of a $5.9 billion pretax profit for the whole year. He also said Standard Chartered supports making stress test results public, and is confident on what the bank will report. He declined to say when the results will be released, although the deadline for all European banks to report is at the end of next month. The lender said first-quarter trends continued to persist in the second quarter, with loan impairment trends "very good" in all businesses. However, it said net interest margins "have fallen fractionally from the levels seen in 2009," while its own-account income in the wholesale banking division continued to fall from a year ago. Standard Chartered attributed the decline to increased competition, tightening spreads and lower levels of volatility compared with the first half of 2009. Compared with the second half, however, the bank said own-account income "has shown good growth." Meanwhile, income derived from clients was up 20% from a year earlier and contributed over 80% of total income in the business, the bank said. Credit quality in its wholesale banking portfolio remains good, and loan impairments in the first half of the year will likely to be "noticeably less than half" of the level seen a year ago. On consumer banking, the lender said it expects first-half income to show good growth year-on-year, while income on an underlying basis should grow slightly from the second half of 2009. "The business has shown a good income growth story, which was one of the positives of the update," Oriel Securities analyst Mike Trippitt said. "There are negatives, however, including that weaker market sentiment in recent weeks has hurt momentum in the wholesale division," he added. Shares of the bank were down 22 pence, or 1.3%, at GBP17.20. Standard Chartered derives more than 90% of its income from emerging markets in Asia, Africa and the Middle East. Contrary to some peers, it doesn't release full earnings for the first and third quarters, but it provides a pre-closing update at the end of the first half of the year. The lender has outperformed its U.K. peers due to its large exposure to Asia, as emerging markets have rebounded at a faster rate following the global financial crisis. All European banks, however, have had their short-term funding abilities hit by sovereign debt woes in the region. Standard Chartered said it remains "highly liquid" and continues to be well-capitalized. The bank said it has no direct exposure to sovereign debt in Southern Europe. -By Patricia Kowsmann, Dow Jones Newswires. Tel +44(0)207-842-9295, [email protected] (END) Dow Jones Newswires June 28, 2010 03:17 ET (07:17 GMT)