Standard Chartered Bank
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StanChart extends profit-growth run

Standard Chartered Bank will continue to invest and hire in the second half of this year, after posting record first-half profits for the 10th consecutive year.

Net profit rose 12 per cent to US$2.8 billion compared with the same period last year, boosted by growth across all regions except India, where non-performing loans jumped 2.5 times to US$649 million.

Although this was the slowest growth in three years, analysts said it was a creditable performance as Standard Chartered delivered a solid set of results without being involved in any scandals and amid a slowing global economy.

The bank plans to add 1,000 to 1,500 jobs and increase investment by about US$100 million in the second half of this year.

'We start the second half extraordinarily well positioned in an extraordinarily turbulent world,' chief executive Peter Sands said.

Sands said the bank remained on track to deliver double-digit revenue growth, double-digit earnings per share growth, and maintain a firm grip on costs this year.

Bad loans rose due to 'a very small number of exposures' in India and the United Arab Emirates. The bank said it expected asset quality to remain stable in the second half.

But James Antos, a senior analyst at Mizuho Securities, said that despite the claim that only a small number of exposures were involved, 'the increase in non-performing loans is fairly large, so the underlying question is what is the credit quality trend going forward in this market'.

On the mainland, the bank said it aimed to focus on high-end customers and small- and medium-sized enterprises.

'We are focusing on working with China's new and rapidly growing private-sector companies since these are often underserved by the local banks and represent the future of China's economy,' Sands said.

The bank opened its 90th mainland branch in the seaport city of Dalian last week, and expects to have 100 by early next year.

Its consumer banking operating income grew 5 per cent to US$3.5 billion on the back of growth in deposits, credit card business and personal loan income.

This offset a setback in mortgage and wealth management businesses caused by thinning margins and turbulent markets.

The operating income in wholesale banking rose 10 per cent to nearly US$6 billion, boosted by improvement in the commercial banking business.

The bank posted a 13.8 per cent return on equity (ROE), excluding Britain's bank levy, up 80 basis points compared with the same time last year. ROE measures a bank's profitability against shareholders' capital.

The levy was expected to cost the bank US$220 million this year, Asia chief executive Jaspal Bindra said.

The bank's capital adequacy ratio dropped by 1 percentage point to 16.9 per cent year on year, due to dividend payout and higher risk-bearing assets. Its core capital, which mainly consists of equity, fell 30 basis points to 11.6 per cent when measured against risk-weighted assets.


The number of mainland branches Standard Chartered plans to have on the mainland by early next year

- It has 90 now