Standard Chartered saw strong returns in the Asia-Pacific, flat direction in HK Emerging markets' lender Standard Chartered expects operating profit before tax for this year to be in line with market consensus, or about US$2.675 billion, according to the group's finance head. The lender earns almost 30 per cent of its profits in Hong Kong. Since it recorded US$2.233 billion operating profit before tax last year under the new accounting standards, which would imply creditable growth in core underlying profitability of 20 per cent, group finance director Peter Sands said. 'We continue to achieve strong growth in client incomes across multiple markets, client segments, and products,' Mr Sands told analysts yesterday during a pre-close trading update web cast. However, the bank faced margin pressure in certain countries including Singapore and India, particular in mortgage lending. Mr Sands said consumer banking business (excluding Standard Chartered First Bank) remained strong, particularly in markets such as Malaysia and other Asia-Pacific economies. In Hong Kong, asset levels had remained broadly flat. Business was nonetheless good, he said and encouraging signs of income growth had been seen. 'There's strong growth in wealth management and SME business,' he said. The interest rate environment had delivered different effects to the bank, said Mr Sands, adding that on the asset side, products experienced margin pressure, while liabilities had seen improved margins. Alterations in prime-Hibor movement in Hong Kong, he said, had had a neutral impact on the bank's business. Standard Chartered will continue to invest significantly in India as the market will be very attractive in the medium term, despite the prospect of a negative impact on near-term profitability, Mr Sands said. Consumer banking loan impairment charges, he said, were increasing in line with customer assets. However, the unsecured market in Taiwan continued to deteriorate, though the bank had taken measures to manage its exposure, said Mr Sands. On wholesale banking (excluding Standard Chartered First Bank), revenue was strong but the bank's own account income was broadly flat on a year-on-year basis, with the second half unlikely to match the first half. Hong Kong, Malaysia and other Asia-Pacific markets were recording high double-digit income growth, said Mr Sands, in marked contrast to Zimbabwe where the worsening economic situation had reflected poorly in the performance of the group's Africa business. Extra provisions had been made for Zimbabwe as the economic situation worsened, prompting a total 'hyperinflation charge' of about US$60 million for the three quarters and a loan impairment charge of US$40 million. Mr Sands said for the group as a whole, the income run rate in the second half was broadly comparable to the underlying run rate seen in the first 21/2 months of the year.
