StanChart still expects 10 percent profit growth for year
HONG KONG |
HONG KONG (Reuters) - Asia-focused bank Standard Chartered still expects full-year profit growth of 10 percent after slowing below that rate in the first half as the euro zone crisis hit wealth management income and Asian currencies weakened.
First-half revenue growth was also expected to be below 10 percent, as Indian and Korean markets were weak and mortgage income in Hong Kong fell, StanChart said on Wednesday.
"My numbers show we can hit double-digit (full-year) income growth," finance director Richard Meddings said. "The issue is, in a world like this with the euro zone pressures and exchange rates, there is more risk to the downside."
Africa, China, Indonesia and Malaysia all delivered revenue growth over 10 percent in the first half.
But the euro zone crisis hit investor sentiment in May and June, Meddings said, and wealth management income was hurt by weak demand for equity products. Global trade volumes could be hurt if the crisis continues, he said.
Staff numbers were kept largely flat at the end of May from the end of 2011, StanChart said. The bank employed about 85,000 people at the end of last year, it said in March.
Led by chief executive Peter Sands, the bank grew exponentially for much of the past decade, riding on Asia's rise and reporting a ninth straight year of record earnings in 2011 on the back of buoyant growth in Hong Kong and Singapore.
However, concern over slowing growth in large Asian markets, such as China and India, has weighed on its stock this year.
Meddings told reporters he was comfortable with analysts' 2012 forecasts. Pretax profit was forecast to rise 10.6 percent to $7.4 billion, according to a Thomson Reuters I/B/E/S poll.
"Many people are expecting things to slow, and this has been reflected in the share price," said Adam Chan, an analyst at CCB International who has an "outperform" rating on the stock.
"Management knows that sentiment is weak, and that is why they are choosing to invest this year and have those investments pay off in 2013 or 2014 when things get better."
The bank said it will step up the pace of investment. In Africa, it aims to add 100 branches to its 160 branches within two years, rather than three years as previously planned.
INDIA PROFIT WEAK
The update provided few numbers as StanChart only issues half-year and full-year earnings reports.
The weakness of the Indian rupee and other Asian currencies would drag income down more than 2 percent, as the bank reports in dollars.
Profit in India, once its biggest market, continued to be weak, hit by deteriorating business confidence that has pushed the rupee to a multi-year low.
Growth in the Asian financial hubs of Hong Kong and Singapore also slowed. Its biggest market, Hong Kong, was expected to see income grow around 10 percent, while the bank said Singapore saw "good income momentum" without naming it among markets that saw double-digit growth.
Previously, both cities had consistently reported earnings growth of more than 10 percent. Revenues and profit from Singapore have more than doubled since 2007.
Standard Chartered, which started life financing trade between Europe and Asia and Africa, expected its wholesale bank - which includes investment banking and accounts for about three quarters of earnings - to drive future growth.
Its London-listed shares were up 1.0 percent at 1,347 pence at 0752 GMT, in line with a firmer European bank index. The shares are down 5 percent this year, in line with the banking index.
(Additional reporting by Steve Slater in London; Editing by Alex Richardson and Dan Lalor)
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