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Hong Kong - Asia-focused bank Standard Chartered said its
operating profit grew by a mid-single digit rate in the first nine months of
the year, putting it on track for a 10th straight year of record earnings.
Earnings would have risen by at least 10% if not for a $340m
settlement paid to New York regulators who threatened to strip the bank of its
state licence over allegations it hid some $250bn worth of transactions with
Iran.
“Although the environment remains turbulent, we are in the
right markets and continue to see good momentum across our businesses and
geographies,” CEO Peter Sands wrote in a third-quarter trading update on
Tuesday.
The bank’s forecast is roughly in line with full-year
expectations for a 6% rise in pretax profit to about $7.2bn, according to
Thomson Reuters I/B/E/S. It does not release specific numbers in its quarterly
updates.
Hong Kong, China, Indonesia and Europe delivered a strong
performance, the bank said, without elaborating. That offset weakness in India,
Singapore’s wholesale banking, and South Korea’s consumer banking.
Rising household debt in South Korea - which now exceeds
that of the United States before the subprime mortgage crisis - has prompted
worries the country may soon see a spike in bad loans. In Singapore, the
city-state narrowly escaped a recession in the third quarter.
Despite the slowdown, Standard Chartered said it reduced how
much it put aside in case of bad loans - its impairment charge - by tens of
millions of dollars. In the first half of the year, the bank set aside $583m
for impairment charges.
Standard Chartered said portfolio quality in its wholesale
bank - which includes its investment bank and commercial bank - was good,
though it was watchful in India and the Middle East.
Questions about Standard Chartered’s asset quality arose
after the bank made a $1bn loan to the Indonesian chairman of London-listed
Bumi, triggering some concern over the bank’s lending practices.
Costs remained under control, with revenue growth roughly in line with the increase in costs - a trend known as “neutral jaws”. Standard Chartered was bogged down by rising costs in much of 2010 and 2011 as it expanded across Asia.
Standard Chartered shares in Hong Kong have risen about 9% this year, lagging the benchmark Hang Seng Index’s 20% gain. The stock reversed earlier losses after the trading update on Tuesday, trading flat at around HK$186.50.
