London: Asia-focused bank Standard Chartered unveiled a surprise £1 billion ($1.7 billion) fundraising on Tuesday as it beat expectations with a record pretax profit for the first six months of 2009.
Standard Chartered chief executive Peter Sands said the share placing was “absolutely not” to build a warchest for a big acquisition, but was to give the bank firepower to take advantage of opportunities as Asian economies and customers recovered.
“It’s about staying ahead of the game,” Sands said on a conference call. “Given that we see Asia having a shorter and shallower recession than other parts of the world, our clients are seeing a light at the end of the tunnel, and we want to anticipate that and support them.”
He said the bank was in talks about small acquisitions in China and India, which would cost “low hundreds of millions of dollars”. Standard Chartered is in talks to buy Royal Bank of Scotland’s assets there, which could cost about $200 million, a person familiar with the matter has previously told Reuters.
By 0735 GMT its shares were down 3.8% at £13.82, due to the placing of 4% of the bank’s stock.
Standard Chartered reported pretax profit for the six months to the end of June of $2.84 billion, up from $2.59 billion a year ago and ahead of a forecast of $2.49 billion from a Reuters poll of five analysts.
Other European banks have also reported improving results to the end of June, including HSBC and Barclays in Britain, and Switzerland’s Credit Suisse, but Standard Chartered has weathered the financial crisis better than most thanks to its focus on Asia and strong capital and liquidity.
Unlike many rivals, it has not taken taxpayer rescue cash, but raised $2.7 billion in a rights issue last year.
Wholesale banking fuelled the first-half profit rise with a 36% jump in operating profit to $2.25 billion.
Consumer banking is faring less well as Asian economies have weakened, bad debts have risen and its business in Korea has struggled. The unit’s operating profit tumbled 57% to $348 million, but Sands said he was confident the business was through the worst and was being successfully reshaped.
The bank’s charge for bad loans more than doubled to $1.1 billion as both wholesale and consumer banking losses rose.
Core tier 1 capital, a key measure of balance sheet strength, will rise to 8.4% after the share placing, up from 7.6% at the end of June and 6.1% a year ago. The bank may hold the ratio above 8%, Sands said.