A surge in bad-debt charges made a substantial dent in Standard Chartered Bank's profits in Hong Kong last year as personal bankruptcies reached a record high.
But even though its earnings in Hong Kong faltered, the bank surprised the market yesterday with better than expected results for the group due to cost-cutting and revenue growth in markets outside Hong Kong.
Standard Chartered reported a 20.74 per cent rise in net profit to US$844 million from US$699 million in the previous year on US$4.54 billion in revenue, a 2.94 per cent increase from US$4.41 billion in 2001.
The bank was expected to report a 9.7 per cent decline in net profit, based on the consensus estimate by Thomson First Call, which forecast HK$4.92 billion compared with HK$5.45 billion in 2001.
Standard Chartered's operating profits in Hong Kong slid 28 per cent to HK$2.86 billion last year from HK$3.95 billion the year before, due to a steep increase in bad debt. It wrote off HK$3.33 billion in bad debt, 66.28 per cent more than its HK$2.01 billion bad-debt provision in 2001.
Hong Kong's struggle with mounting credit card defaults and personal bankruptcies also took a toll on the group's profits, as the bad-debt charge in Hong Kong accounted for 60.11 per cent of the bank's total bad-debt charge of US$712 million.