Standard Chartered profits rose 17 percent in 2008
By ROBERT BARR
LONDON (AP) — Standard Chartered PLC reported Tuesday that profits rose 17 percent in 2008, driven by growth in wholesale banking despite the global economic turmoil.
For the year ending Dec. 31, Standard Chartered reported a profit of $3.3 billion, up from $2.8 billion in 2007. Operating income rose 26 percent to $13.97 billion and total assets rose 32 percent to $435 billion.
Standard Chartered’s results were an upbeat ending to a series of depressed results from the financial sector, including Royal Bank of Scotland’s record British corporate loss of 24.1 billion pounds ($33.9 billion) last week and HSBC’s announcement Monday it would ask shareholders for 12.5 billion pounds after seeing its profits slump 70 percent.
Standard Chartered shares rose 8.4 percent to 636 pence in morning trade on the London Stock Exchange.
“These results appear the best we have seen this results season. However, trends into 2009, especially in consumer banking and corporate asset quality, are weakening,” said Alex Potter, analyst at Collins Stewart.
Potter pointed to impairment charges of $1.8 billion in 2008, more than doubling last year’s $818 million. The bank said the rate of impairment charges accelerated in the last months of the year.
“Worsening credit conditions have driven up impairment charges across the franchise in the latter part of the year, most notably in the unsecured and SME (small to medium enterprises) portfolios in Hong Kong, Korea, United Arab Emirates and India,” the bank said.
Standard Chartered said it was surprised by the speed and extent of the downturn in Asia as export markets shrank.
“Many of our markets across Asia, Africa and the Middle East are experiencing a sharp cyclical slowdown,” the report said. “But they do not face the structural credit deleveraging afflicting Western markets. As a result, the downturn should be much shorter.”
“Whilst the near-term economic conditions have deteriorated sharply across virtually all our markets, they remain fundamentally attractive. With young, increasingly well-educated populations, a growing middle class, rapid urbanization and continuing industrialization, our markets in Asia, Africa and the Middle East still offer enormous long-term potential,” the report added.
At the end of the year, Standard Chartered raised $1.8 billion in a rights issue to boost its capital position.
“Following HSBC’s demise yesterday, Standard has become the best performing of the UK banks, even though it has shed some 37 percent from its share price over the last year,” said Richard Hunter, analyst at Hargreaves Lansdown Stockbrockers.
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