HONG KONG/LONDON Standard Chartered (STAN.L) notched up a ninth consecutive year of record earnings in 2011 on the back of buoyant growth in Hong Kong and Singapore, though rising competition for staff pushed up its wages bill.
London-based Standard Chartered (2888.HK), which makes more than three quarters of its profit in Asia, said on Wednesday strong growth in both investment and retail banking arms absorbed a 15 percent rise in staff costs and a fall in profit in two of its biggest markets, India and Korea.
Underlying wage inflation was about 5 percent as the bank competed to hire and retain staff, notably in China and India, chief executive Peter Sands said.
"Yes, we are facing acute competition for talent, but we are still managing to invest and keep a tight grip on costs," Sands told reporters on a conference call.
He said the bank paid about 800 million pounds in bonuses to staff for last year, similar to 2010.
Total staff costs were $6.6 billion (4.1 billion pounds), up from $5.8 billion in 2010, but that was swelled by costs for a voluntary retirement plan in Korea, foreign exchange effects and the addition of 1,400 staff during the year.
Rival HSBC (HSBA.L) this week warned wages were rising in Asia.
Sands said the bank was likely to add 2-3 percent to its 87,000 staff this year.
"Growth momentum will likely accelerate in 2012," said Dominic Chan, an analyst at BNP Paribas in Hong Kong. "Key markets such as India are showing signs of improving, and the bank is well placed to gain market share in areas such as trade finance and wholesale banking."
Its London-listed shares were up 2 percent at 16.55 pounds at 10 a.m. British time, in line with a firmer bank sector index .SX7P. The stock is up 17 percent this year, valuing it at more than $62 billion. Its Hong Kong-listed shares rose 0.4 percent.
StanChart reported a 2011 pretax profit of $6.8 billion, up 11 percent from $6.1 billion a year earlier and in line with the average forecast from analysts polled by Reuters.
Sands and analysts said the results beat forecasts after stripping out a far bigger than expected charge of $206 million for the Korean staff retirement plan.
Southeast Asian city-state Singapore was the star performer and became the third of its markets to deliver more than $1 billion in profit. Revenues there rose 26 percent, while operating profit jumped 40 percent.
Revenues and profit from Singapore have more than doubled since 2007, and the bank said there were "considerable opportunities" to keep up the pace.
Hong Kong remains its biggest market, with profits up 41 percent at $1.5 billion, and seen as the focus of plans to benefit from the internationalisation of China's yuan currency.
Sands, a former McKinsey consultant who has also worked in the UK Foreign Office and grew up in Asia, has headed Standard Chartered for 5-1/2 years. He said the bank had started 2012 strongly and was in "great shape" to win market share in areas like trade finance from retreating rivals, including European banks pulling back from Asia.
He expects to deliver revenue and earnings growth of at least 10 percent this year and keep cost growth in line with income growth, although it is likely to miss its profitability target due to the extra burden of regulation and the negative impact of a low interest rate environment.
Return of equity was 12.2 percent last year, better than most rivals in the West but short of its target of near 15 percent, and Sands confirmed previous guidance that it was probably out of reach again this year.
There was a danger of an "avalanche" of regulation on a number of fronts, he said.
Britain's tax on bank balance sheets cost $165 million, and Sands said the bank continued to monitor the extra regulatory cost of being based in London, which investors have questioned in the past.
Profits in India slumped by a third, hit by the impact on the economy and business confidence of 13 interest rate increases over two years, and uncertain political and governance issues.
Korea profits more than halved, hit by industrial action last year and the retirement costs, though the bank said that plan would deliver savings of $95 million a year.
(Editing by Chris Lewis and Will Waterman)
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