bodyType

customContents

entityId

entityUuid

articlePageQuery

filter

article

articleBaseAdvertisingInfoArticle

articleListArticle

articleSeoArticle

hooksArticleAcknowledgementGateOverlayArticle

hooksTrackPageViewArticle

hooksContentInterestArticle

articleLinkingDataContent

hooksAmpRedirectArticle

articleSchemaContent

liveArticle

advertZone

sentiment

contentLock

topics

types

sections

paywallTypes

createdDate

publishedDate

sponsorType

urlAlias

moreOnThisArticles

commentCount

authorLocations

authors

corrections

displaySlideShow

multimediaEmbed

printHeadline

seriesContainer

articleSpeeches

socialHeadline

headline

images

flag

firstTopic

glossary

flattenTypeIds

image

relatedLinks

relatedNewsletters

__typename

sponsor

pdfFiles

seriesReverseOrder

series

disableOffPlatformContent

published

updatedDate

summary

subHeadline

body

keywords

readingTime

customTimezone

liveContents

SCMP Reporter

Hong Kong's fourth-largest lender, Standard Chartered will continue buying branch premises to  move more of its outlets to owner-occupied branches from leased sites, in a bid to stabilise property expenses, chief executive Peter Sullivan said.

'We have bought 11 properties so far [in slightly more than one year] and will continue to look for the right properties,' Mr Sullivan told the South China Morning Post in an interview.

Seven  of the bank's 70 branches are owner-occupied with the balance still leased.

Explaining the bank's strategy of buying more branch sites, Mr Sullivan said the biggest costs  for most banks were people and premises and having self-owned properties would give Standard Chartered more predictability on property costs.

Meanwhile, he expected rentals paid on the leased  outlets to continue to rise despite the recent slowdown in the property market rebound.

'If you look at rentals in Hong Kong over a period of time, they go up steadily because  property prices go up,' he said.

High street shop rents in the city rose  15.9 per cent this year, after growing  30.4 per cent last year,  according to a survey from property consultants Jones Lang LaSalle.

In the view of bank analysts,  Standard Chartered's strategy was a correct one  and could cut its property costs in the longer term.

However, the short-term effect of the policy to buy premises might be negative for the bank's  bottom line.

Mr Sullivan said overall costs had improved in the first half of this year and full year last year and the bank would continue to manage  these costs tightly.

Owning branches would allow  more flexibility, he said, but he declined to identify how much the bank had invested in buying properties in the past year.

As the demography of the city changed,  the bank should be flexible enough to ensure  its branches were  at suitable locations and it was able to  continually 'modify its footprint' to suit its customers, Mr Sullivan said.

In Hong Kong's heavily over-banked and over-branched marketplace, Standard Chartered aimed to maintain a network of  about 70 branches, some of which would be owner-occupied. However,  it did not plan  to own most of its branches, due to the expense involved.

Mr Sullivan declined to say what the ideal ratio of owner-occupied and leased branches would be.

In addition to  property spending, Standard Chartered had also invested in people, he said.

The bank had added about 150 employees to its consumer banking business since its controversial sacking of 200 back-office staff in November last year.

The new staff are in sales, personal finance and customer relationship services.

Mr Sullivan said the bank had also added 80 to 90 staff to its wholesale banking unit  this year and intended to increase the head count by another 70 to 80 next year.

On the final accounting for the current year, he  said the bank's performance in Hong Kong this year would be slightly better than last year. Consumer banking had expanded its profit contribution despite flat asset growth and margin compression in the industry under the rising interest rate environment.

'However, we have seen very healthy growth in wealth management and also in small and medium-enterprise business,' Mr Sullivan  added.

He said the bank would give the bank's 4,500 Hong Kong staff a pay rise, adding that  the amount would depend on the group's performance and Hong Kong's economic situation.



StanChart buying branch premises to control costs