StanChart still on soaraway curve, aims to continue
Standard Chartered says it is aiming for 'double-digit growth' in revenue again this year, after announcing record annual profits for the ninth consecutive year despite setbacks in two of its largest Asian markets, South Korea and India.
Net profit rose 12 per cent to US$4.85 billion, on strong growth in consumer banking. This beat analyst estimates of US$4.75 billion.
'We are clearly in a very different place than most of the rest of the banks,' said Jaspal Bindra, Standard Chartered's chief executive for Asia. 'You should take some comfort from the fact that when two of our largest markets have gone substantially negative ... we have still delivered record income and profit.'
Bindra said the bank was on track to deliver double-digit income growth this year, but added that a number of factors could affect its performance. The bank outperformed its British competitors and delivered a return on equity of 12.2 per cent, despite raising more shares in late 2010 and having to comply with the British bank levy, a tax on British-based lenders' balance sheets introduced by the government last year in response to the global financial crisis. ROE measures a bank's profits against shareholders' capital.
The rights issue slashed Standard Chartered's ROE by 180 basis points, or 1.8 percentage points, and the bank levy, which cost about US$165 million, dragged its ROE down by 40 basis points.
Profits from the bank's Hong Kong operation rose 41 per cent to US$1.5 billion, a record for any of the bank's markets.
Commenting on rising salary costs, Benjamin Hung, the chief executive of Standard Chartered Bank Hong Kong, said the city's inflation could drop two percentage points to about 3 per cent this year, easing wage inflation pressures.
On the mainland, the bank made losses of about US$100 million in consumer banking as it invested in building its franchise, but it said it was determined to keep making inroads in that market.
Bindra said the bank had 'an aspiration to get into the hundreds' in terms of branch openings on the mainland. He added that foreign banks usually received at most 30 to 35 branch licences a year, so this could take years.
The bank opened 19 branches and sub-branches on the mainland last year, bringing its total mainland network across 21 cities to 81.
The bank employed 86,865 people as of December, up 1,634 from 2010, while other global banks such as HSBC and Royal Bank of Scotland have been laying off staff.
The bank experienced a setback in India last year after a record year in 2010. Profit fell 33 per cent to US$804 million, due to a challenging economy and political and corporate governance issues, the bank said.
Standard Chartered said its performance in South Korea suffered from low labour productivity, high costs and a 10-week strike. Profit slipped 56 per cent US$172 million. The bank launched an early retirement programme in the country in December, hoping to deliver annualised savings of US$95 million in the country and a shift in corporate culture.