Record profits again for Standard Chartered

3rd Aug 2011 06:34

Standard Chartered, the bank focused on emerging markets, topped market expectations with record first half profits for the ninth successive year.Half-year profits before tax of $3.64bn were up from $3.12bn the year before, and ahead of the $3.4bn predicted by Japanese broker Nomura Securities.Normalised earnings per share were up 4.1% at 105.2 cents from 101.1 cents the year before, and marginally ahead of the 104.9 cents predicted by broker Charles Stanley. Profit attributable to ordinary shareholders2 of $2.52b, up 20% from $2.10bn in the first half of 2010. Operating income of $8.76bn was up 11% from $7.92bn the year before, and ahead of Nomura's forecast of $8.65bn.Loans and advances to customers increased by 22% to $268bn from $219bn in the first six months of last year, while customer deposits grew by 19% to $343bn, up from $288bn at the interim stage last year.The bank's core Tier 1 capital ratio improved to 11.9% from 9.0% at the halfway stage last year and 11.8% at the end of 2010.The advances-to-deposit percentage climbed to 78.1% from 76.2% a year earlier and 77.9% at the end of 2010. The liquid asset ratio, meanwhile, eased to 26.5% from 27.2% the year before and 26.6% at the end of 2010."Our costs are tightly controlled and we have many diverse sources of good income growth. We have increased our support to our customers, with loans and deposits up, and our capital and liquidity remain strong. Standard Chartered is growing and winning market share in many product areas and markets," said the bank's chairman, Sir John Pearce.The Consumer Banking division's operating profit surged to $3,337m from $2,912m the year before, while the Wholesale Banking division saw operating profit climb to $5,427m from $5,012m the year before.Loan impairment on the Consumer Banking side was lower by $88m, or 29%, at $211m, but on the Wholesale Banking side moved up by $63m to $201m, mainly as a result of incremental provisions on existing problem accounts and a higher level of portfolio impairment provision in Indiareflecting uncertainty in the market. The portfolio remains welldiversified and is increasingly well collateralised, the group said.Though generally pleased with the first half performance, group chief executive Peter Sands identified a couple of challenging areas, namely India, where the slow-down "has come faster and deeper than we thought" and Korea, where the bank's costs are too high and the balance sheet is inefficiently structured. "We have started the second half of the year well; July has seen good income momentum in Consumer Banking and in Wholesale Banking client income remains strong. Costs remain tightly managed. Both businesses continue to benefit from ongoing increases in volumes off theback of strong economic activity," Sands said.The interim dividend has been hiked by 10% to 24.75 cents, well ahead of Charles Stanley's prediction of 23.35 cents. --jh