The bank wrote back loans amounting to $421 million last June. This year a loan provision of $37 million was made.

The difference accounted for the decrease in trading profit.

Disposal of branches contributed $192 million in exceptional items.

A secondary listing in Hong Kong and Singapore ''will help to widen the investor base and make information available to investors in these markets'', said Tony Nicolle, general manager for Hong Kong and China.

Higher trading profit in personal banking, the treasury division and subsidiaries contributed to the improved result.

''Trading profit for the personal banking division grew 38 per cent compared with the same period last year, reflecting excellent performance in credit-card, personal lending, savings and mortgage business,'' Mr Nicolle said.

Its dealing profits went from $97 million to $127 million.

''The alliance with First Interstate Bancorp earlier this year also assisted growth in trade financing, which is the core business of the corporate and institutional banking division,'' he said.

Profit from its brokerage company, Standard Chartered Securities, and finance company, Standard Chartered Finance, recorded more than 60 per cent growth, he said.

Its merchant bank, Standard Chartered Asia, raised more than $1.1 billion, sponsoring 10 new issues.

Lending and deposits grew seven per cent compared with the same period last year.

Fee income went up 30 per cent to $694 million.

Together with the dealing profit, non-interest income made up 29 per cent of its net revenue.

''It is our strategy to develop more fee-generated profit. Ideally, we would like the proportion to go up to 40 per cent in the coming two to three years,'' said Mark Waller, the bank's head of finance.

Although operating expenses went up 16 per cent, the bank's cost-to-income ratio was down from 59 per cent last year to 55 per cent, Mr Waller said.

''Operating expenses were up due to salary inflation and branch rental increases. Branch premises were renewed at higher rates,'' he said.

The lower cost-to-income ratio reflected the result of the bank's cost reduction programme, he said.

''For example, we moved some of our staff from Central to less-expensive areas. Also, more automation will be initiated,'' he said.

The unprecedented move to disclose the Hong Kong performance was interpreted by some analysts as a prelude to a spin-off of its Hong Kong operation.

''This speculation of a separate listing for the group's Asian operation appears to be completely wrong. We are not giving any consideration to it at all,'' Mr Nicolle said.

He said the move was due to Hong Kong's large contribution to the group's profit.

''It is the largest single operating centre in the group and is considerably ahead of other centres,'' he said.

He said the bank's China operations made a good profit last year.

Two more representative offices would be opened in the next few months, he said.

At present, the bank employs more than 280 staff in seven branches and five representative offices.

A dealing room is open in Shanghai, Standard Chartered Securities having obtained seats on the Shanghai and Shenzhen stock exchanges.

Analysts considered the bank's result satisfactory. Although the charge for debt clouded its result, the underlying strength was still there.

The bank is seen to be shifting its operations from asset-intensive activities to treasury dealings and trade-related financing which require less capital back-up.

''The group is under-capitalised. It has drained capital from the Asia-Pacific area to other loss-making areas,'' Salomon Brothers investment analyst Alvin Chong said.

To support further growth in this area, fresh capital was needed, or a shift in business focus.

He said: ''By selling its mortgage portfolio, the bank has been actively building up its intra-regional trade network.

''It is reflected in its large network in Indonesia and its Singapore operation, and in its acquisition of First Interstate Bancorp last year which is strong in trade financing.''