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StanChart H2 up 52%; but costs weigh as Asia booms

StanChart H2 up 52%; but costs weigh as Asia booms
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First Published: Wed, Mar 02 2011. 12 45 PM IST
Updated: Wed, Mar 02 2011. 12 45 PM IST
Hong Kong: Asia-focused Standard Chartered Bank Plc met earnings expectations, reporting a 52% rise in second-half net profit amid strong growth in emerging markets.
The bank reported profit attributable to ordinary shareholders of $2.13 billion for July-December, based on Reuters calculations, up from $1.4 billion recorded a year earlier and in line with expectations for a $2.14 billion net profit from a poll of 10 analysts surveyed by Thomson Reuters I/B/E/S.
“We start 2011 strongly with the balance sheet in excellent shape, with good momentum and with volume growth in both businesses,” the bank said in a statement posted on the Hong Kong stock exchange. “We have had a record January, both in terms of income and profit.”
Standard Chartered, which is based in London but generates more than 80% of its profit in Asia and other emerging markets, said its normalised cost-income ratio rose to 55.9% in 2010 compared with 51.3% in 2009 as it fights to hire and retain staff in competitive Asian markets.
The bank added about 7,000 staff in 2010, a near 10% rise to about 85,000 people.
Rival HSBC Holdings Plc, which reported its own 2010 earnings on Monday, cut its profitability targets because of the cost of tougher banking regulations and plans to cut costs and overhaul other areas after its annual profit fell short of expectations.
Its wholesale business, which includes investment banking and trade finance operations, posted an operating profit of $4.5 billion in 2010, up 17% from 2009. Consumer banking operating profit rose 51% to $1.3 billion, the bank said.
Operating expenses at its wholesale business rose 16% in the full year to $655 million, faster than the 7% rise in income amid a battle for banking talent in Asia.
This is called negative jaws, which suggests that income is growing more slowly than expenses, and the bank said it widened to 9% for its wholesale business in 2010.
The bank paid top dollar to snag several high-profile hires as its aggressively expands in the fast-growing emerging markets segments of Asia and Africa, where it has a history of financing trade between those two continents and Europe.
Its Hong Kong-listed shares rose 12% in 2010, outpacing the benchmark Hang Seng Index’s 5.3% advance.
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First Published: Wed, Mar 02 2011. 12 45 PM IST