Sharply higher loan provisions arising largely from lending to mainland-related companies have forced Standard Chartered Bank to report a 35 per cent fall in pre-tax profit to GBP271 million (HK$3.4 billion) in the first half of the year. The higher provisions reflect what the bank's chief executive for Hong Kong, Mervyn Davies, described as a 'very prudent approach' to loans made to mainland-related companies such as the collapsed Guangdong Enterprises. Charges for bad debts in Hong Kong amounted to HK$1.35 billion, up from HK$332 million in the same period last year and HK$824 million as at December. These and provisions taken in other North Asian countries accounted for almost half of the GBP284 million in new provisions made by the entire group. 'The challenge has been China,' Mr Davies said. 'But we have been very cautious and prudent.' Standard Chartered's higher total provisions are in contrast to the drop in provisions announced by HSBC Holdings, although Hong Kong still accounted for almost 30 per cent of HSBC's total bad debt.