Standard Chartered profits up

Standard Chartered PLC on Monday announced another record performance for the first half of 2009 with income rising 14 percent to US$7.96 billion and operating profit before tax of 10 percent to $2.84 billion. The Group has seen substantial income momentum across markets with four key geographies reporting over $500 million of income each in the first half.

Standard Chartered PLC head office

The performance was driven by strong momentum in Wholesale Banking with income rising 37 percent, benefitting from market dislocation and volatility leading to market share gains.

Restructuring initiatives in Consumer Banking began to show early positive results with income falling only three percent over the second half of 2008 while operating profit increased 11 percent over the same period.

The Board of Directors have also announced an interim dividend of 21.23 cents per share, up 10 percent.

Group Chief Executive, Standard Chartered, Peter Sands said: "These results show record income and profit performance, characterized by significant momentum over both the first and second halves of last year. Our balance sheet strength is now a source of competitive differentiation helping us win more businesses. We are in the right markets at the right time."

The foundations of the Group remain in good shape with capital ratios running higher than target ranges with tier 1 ratio at 10.5 percent and total capital at 15.8 percent. The Group showed demonstrable cost control in the face of continued economic uncertainty with costs up only three percent and cost income ratio down to 49.6 percent compared to 56.4 percent in the first half of 2008.

Wholesale Banking income increased to $5.03 billion for the first half while operating profit increased 36 percent to $2.25 billion, benefiting from the strategy of deepening client relationships which saw revenue from the top 50 clients rising 40 percent. Within the business, Financial Markets increased income by 68 percent, Corporate Finance by 68 percent and Lending and Portfolio Management by 67 percent. Three of the four client segments each generated income of over $1 billion in the first half.

Compared to the first half of 2008, Consumer Banking income declined 15 percent to $2.69 billion while operating profit fell 57 percent to $348 million. The performance was a reflection of the combined effect of lower interest rates, pressure on the Wealth Management business and a shift towards a more secured asset portfolio. However Consumer Banking was more profitable compared to the second half of last year as it benefitted from a series of cost saving and efficiency initiatives.

With the Group firmly focused on balance sheet strength, Consumer Banking has successfully attracted deposits with total deposit balances growing 12 percent creating some $40 billion of surplus liquidity for the Group. In three of the core markets of Hong Kong, Singapore and Korea, deposits grew by 31 percent, 34 percent and 33 percent respectively.

Faced with a slowdown and deteriorating credit environment, Consumer Banking is re-shaping the business and de-risking the lending book. "Central to this transformation is the shift away from product sales towards much greater focus on deep, multi-product customer relationships. When investor confidence returns, and interest rates begin to rise, income will surge. This will have a powerful effect on the bottom line of Consumer Banking," Sands said.

The Group's portfolio continued to perform well given the underlying economic conditions, though both in Wholesale and in Consumer Banking customers are experiencing increased financial pressure. The Group remains vigilant and continues to take a proactive approach to managing risk by tightening underwriting standards, increasing collateral requirement, reshaping the unsecured business away from high risk segments and significantly increasing collection resources.

Group Finance Director, Standard Chartered, Richard Meddings said: "The second half of 2009 has started well with Wholesale Banking in July running ahead of the first half average monthly profit with robust transaction pipelines."

Standard Chartered also announced a placing of new shares to raise approximately $1.6 billion or around 4 percent of issued share capital through an accelerated book build. "The additional capital will enable us to take full advantage of the opportunities emerging from the crisis. We are winning market share in both the wholesale and consumer banking businesses, in most products and in most of our markets. We want to be there to support our customers as they turn the crisis to their advantage," Sands said.