Analysts said Standard Chartered was less vulnerable to the global downturn than many European counterparts and should feel comfortable expanding operations with its higher capital level.

'While the reality of the global recession will mean concerns surrounding capital will not go away, having a US$1.5 billion higher starting point than we previously thought provides incremental comfort on core capital,' Morgan Stanley said.

Standard Chartered reported a core tier 1 capital ratio of 7.6 per cent at the end of last year, up from 6.6 per cent a year earlier.

Its profit for last year rose 17.24 per cent, thanks in part to strong growth in wholesale banking, outperforming rivals such as HSBC Holdings, whose profit slumped 70 per cent on soured operations in the United States.

However, some said Standard Chartered's heavy exposure to Asia was also a risk, as economies in the region, such as Hong Kong, Taiwan and South Korea, worsened. The bank's worse than expected non-performing loans and a sharp rise in provisions in the second half were also concerns, they said.

Goldman Sachs pointed to the lender's weakness in credit costs, which more than doubled from 0.6 per cent in the first half of last year to 1.49 per cent in the second.

'It would be hard to call this a peak or dismiss it as a one-off, given the ongoing sharp contraction in trade, investment properties and consumer confidence metrics for the bank's key markets, including Taiwan, Korea, Hong Kong, Singapore, India and Thailand,' said the report.

Pre-tax profit from Hong Kong, the bank's biggest market, dropped 15 per cent last year, and loan impairment rose 266 per cent to HK$1.43 billion on loan charges to companies and a lack of write-backs from provisions.

Beating expectations An increase in net profit saw Standard Chartered shares climb yesterday by: 8.27%