StanChart set for strong H1, margins weaken

StanChart set for strong H1, margins weaken

London: Standard Chartered Plc said it was on track for a strong first-half performance as its key Asian markets fared better than the west and it grabs market share, although recent economic uncertainty had hurt business.

The bank said in a trading update on Monday that increased economic uncertainty had resulted in a weakening in client demand for some products in its key wholesale banking arm in recent weeks and created a subdued trading environment.

The bank, based in London but deriving over four-fifths of its profits from Asia, said its income and profit in the first five months of the year were ahead of the comparable period of 2009, stripping out a gain last year on the buyback of debt.

Standard Chartered said in May it had enjoyed a record first quarter and its trading update -- one of the first signals from a UK bank on first-half performance -- said it had continued to do well, but did not report any figures.

Growth at the bank, whose history of financing trade between Europe, Asia and Africa dates back to 1853, has been driven in recent years by its wholesale arm, which includes investment banking services and last year accounted for near 85% of group earnings.

It said it is winning market share and continued to invest, hiring 450 staff in wholesale banking. Wholesale banking income in the first half was expected to be similar to the strong first half of last year, and up over 10% on 2009’s second half.

Its consumer banking has fared less well in recent years, but the bank said the business turned a corner last year and was continuing its recovery this year.

Bad debts in both its wholesale and consumer banking businesses had improved significantly, the bank said.

Dealers expect Standard Chartered shares to open down about 1.5% on Monday.

The bank’s 2010 pretax profit is expected to rise 18% from last year to a record $6.1 billion, according to the average of 19 analysts polled by Thomson Reuters.

Its shares are up 11% this year and are only 6% below their all-time high from March, unlike most western peers, which are well below their peaks from 2007.

The European bank sector is down 10% this year.