London: Asia-focused bank Standard Chartered said any losses it suffers in Dubai were unlikely to be material and it was on track for a record profit this year.
The London-based bank said on Wednesday that in the 11 months to the end of November it had delivered a strong performance with record levels of income and operating profit before tax.
Income growth has been driven by a ‘very strong’ performance in wholesale banking, offsetting lower income in consumer banking. It expected 2009 income growth to exceed cost growth.
“Our markets are returning to growth as economic conditions improve, although it is still too early to forecast a sustained recovery and we therefore retain a degree of caution as to the macroeconomic outlook,” chief executive Peter Sands said in a statement.
Standard Chartered’s shares have fallen 12% since 25 November when Dubai announced it would ask creditors for a debt standstill for two of its flagship firms, which raised concerns about the bank’s exposure to Dubai and the Middle East.
With regard to recent developments in the United Arab Emirates, the situation remains in its early stages and is fluid. However, given the profile of our exposures in Dubai, we do not believe any impairment would be material, the bank said.
There is little clarity on where exposures to Dubai World lie and how wide the issue will spread.
British banks have loans totaling $50 billion into the UAE, out of total loans of $123 billion by international banks, according to the Bank of International Settlements (BIS).
Standard Chartered has weathered the financial crisis better than most rivals, thanks to relatively healthy capital and liquidity and its exposure to faster growing and less troubled Asian economies.
It made a first-half pretax profit of $2.8 billion, up from $2.6 billion a year earlier, fuelled by its wholesale arm where first half-profit jumped 36%.
Net interest margins had fallen ‘fractionally’ since June, it said, while a one-off tax charge of up to $200 million announced in October was now expected to be slightly lower.