Standard Chartered sees H1 profits fall 20%, faces another US fine

6th Aug 2014 10:31

- Pre-tax profit down 20%, but ahead of forecasts- Financial Markets, Korea weigh on bottom line- Bank facing potential fine regarding anti-money laundering systemsAsia-focused banking group Standard Chartered saw profits drop by a fifth in the first half on the back of continued weakness in the Financial Markets division, as well as challenges in Korea.While the decline wasn't as bad as markets had feared, the company also revealed that it could face another fine related to "certain issues" with its anti-money laundering systems and controls.Adjusted pre-tax profit, which excludes goodwill and own-credit adjustments, totalled $3.27bn for the six months to 30 June, down 20% year-on-year but ahead of the $3.19bn consensus forecast. The group said that higher impairments, mainly due to a commodity fraud exposure in China and write-offs relating to "pre-crisis strategic investments" in Europe, also weighed on the bottom line.Operating income declined by 5% to $9.27bn, slightly ahead of analysts' estimates.Despite beating the market's prediction, chief executive Peter Sands said that the bank's performance in the first half was "clearly disappointing". "It is not what we strive for and not what our investors expect," he said.Meanwhile, chairman John Peace said that Standard Chartered's performance was affected by difficult market conditions, including "the cyclical downturn in sentiment towards emerging markets".The bank kept its dividend flat at 28.80 cents per share.Potential fineStandard Chartered said that it has found problems with its post-transaction surveillance system - a part of its anti-money laundering operations - and is engaged in discussions with the New York State Department of Financial Services (NYSDFS)."The group believes that the resolution of these issues is likely to involve an enforcement action by the NYSDFS that would include an extension of the term of the monitor beyond the original two-year term, a monetary penalty and remedial actions."Monitoring by regulators had been imposed back in 2012 after the bank was fined $667m for breaking US sanctions on Iran due to its lax anti-money laundering systems.After an initial jump into positive territory, the stock was trading down 0.3% at 1,212.5p by 10:08 on Wednesday.BC