Hong Kong/London: Standard Chartered Plc said it had cut 800 jobs this year to restrain rising costs after making record first quarter profits and revenue on the back of strong Asian markets like India and Hong Kong.
Standard Chartered said on Wednesday its income rose by more than 10% in the first quarter, putting it on track for its ninth successive year of record earnings.
Costs rose at a faster rate than income after a hiring spree last year, however, taking the shine off the trading update.
Banks in Asia have been in an increasingly intense battle to hire and retain talent, especially in hot markets such as India and China.
Standard Chartered is under pressure to show it has costs under control, and the first quarter rise knocked its shares 2% lower.
“They are still seeing a high level of cost growth in the wholesale bank,” said Bruce Packard, analyst at Seymour Pierce in London.
The bank said it would deliver on its promise to keep cost growth in line with income growth this year.
“We’ve got a good grip on expenses,” Finance Director Richard Meddings told reporters on a conference call. “This isn’t about cutting jobs, it’s about the pace of hiring...this is about management pulling the levers of expense growth.”
Meddings said he expected the bank to add about 1,000 staff net this year, after a net 800 fall in the first quarter. It added 7,000 employees last year, giving it roughly 85,000 staff.
The hiring and competition last year drove costs up 13%, outpacing a 6% income rise. So-called “negative jaws” remained in the first quarter, but was significantly narrower than last year, the bank said.
The London-based bank, which generates more than four fifths of its profit in Asia and other emerging markets, said income in its consumer banking division grew by a low double-digit amount and wholesale banking was up by at least 10%.
The bank does not issue full quarterly earnings.
India, now the bank’s biggest market after contributing $1.2 billion in profit last year, will continue to grow strongly but at a slower pace due to the size of the business, Meddings said, underpinned by economic growth of at least 8% this year.
Hong Kong, Singapore, Malaysia and China were among other good performers in a broad-based income rise, Meddings said.
The bank is expected to make a profit of $7 billion this year, up 14% from $6.1 billion last year, according to the average of 15 analysts polled by Thomson Reuters. That would mark a ninth successive year of record profit.
Its London-listed shares were down 2% at 16.31 pounds, valuing the bank at 38 billion pounds ($62.6 billion). The shares have underperformed rivals this year and are down 5%, but still trade at almost 12 times expected 2011 earnings, compared to near 8 times for most European rivals.