Standard Chartered Plc (STAN), which earns most of its income from Asia, posted an 11 percent increase in first-half profit, escaping the interest-rate rigging scandal that has embroiled its U.K. competitors.
Net income rose to $2.86 billion from $2.57 billion a year earlier, the bank said in a statement today. That compared with the $2.76 billion median prediction of 16 analysts surveyed by Bloomberg. The lender is set to meet its full-year target for “double-digit” growth in revenue and earnings per share, Chief Executive Officer Peter Sands said today.
Standard Chartered, Britain’s second-biggest bank by market value, plans to hire more than 1,000 people this year in emerging markets as lenders such as HSBC Holdings Plc (HSBA) cut jobs and sell assets. Because of its focus on Asia, the lender hasn’t been tainted by allegations of Libor-manipulation or the mis- selling of derivatives and payment-protection plans that have hit London-based competitors such as Barclays (BARC) Plc.
“The earnings were reasonably good in a challenging environment,” Tom Quarmby, head of regional banking research at Barclays Plc in Hong Kong, said by phone today. “The key areas of strength appear to be around the wholesale bank with strong performance, particularly around trade and Greater China-related trade business.”
The lender will have 100 branches each in China and India by the time it reports full-year results in early 2013, according to the statement. The lender last week opened its 90th China outlet in Dalian, and has 94 branches in India.
In Africa, the bank said it will have about 250 outlets in the next couple of years, up from 183 now. Standard Chartered is also investing in mobile and Internet banking, Sands said in the statement.
Operating profit in the consumer bank fell 11 percent to $899 million as earnings in Asia Pacific declined. Wholesale or corporate banking profit rose 16 percent to $2.99 billion, as gains in Hong Kong and Korea outweighed a fall in India and the Middle East.
“Given the opportunities we see arising from the turbulence and the disarray of our competitors, we are stepping up the pace of investment,” Sands said.
The stock gained 4.5 percent to 1,531 pence by 11:20 a.m. in London, giving it a market value of 36.6 billion pounds ($57.3 billion). The shares have gained 8.7 percent this year, compared with a 0.5 percent decline in the Bloomberg Europe Banks and Financial Services Index.
The lender in February posted its eighth annual record earnings as 2011 net income rose 12 percent to $4.85 billion. About three quarters of its profit comes from corporate banking led by Michael Rees, which includes trade finance, payment processing and some investment banking activities such as merger advisory and equities. Steve Bertamini heads the bank’s consumer-lending unit.
“Its momentum is strong and fundamental long-term attractions remain intact for those without the stomach for investing in cheap U.K. domestic banks,” Ian Gordon, an analyst at Investec Plc (INVP) in London said in a note to clients today. “It is the pick of the quality names.”
Sands told analyst today that the euro region’s crisis probably won’t be solved “any time soon.”
Italy’s Prime Minister Mario Monti is urging his European counterparts to agree to collective action to fight the financial crisis, trying to bridge a north-south divide in the euro area to help to lower borrowing costs.
HSBC, the other U.K. lender that gets most of its profit from emerging markets, apologized to investors this week after a U.S. Senate committee found that the bank gave terrorists, drug cartels and criminals access to the U.S. financial system. It set aside $2 billion more to cover the costs of fines for that and redress for wrongly selling insurance and derivatives, and posted an 8.3 percent fall in first-half net income to $8.44 billion.
“We are not under investigation anywhere” for involvement in the alleged rigging of benchmark interest rates, Sands said on a call with journalists today. “We are not involved in Libor or Euribor.”
Barclays and Lloyds Banking Group Plc (LLOY) have set aside a total of 5.6 billion pounds to compensate clients who were sold payment-protection insurance they didn’t need. Barclays in June paid a record 290 million pounds in fines for manipulating the London interbank offered rate, a benchmark for $500 trillion of securities.
Finance Director Richard Meddings said he is “very happy” with his current job, when asked by Bloomberg Television whether he had been approached to fill the CEO position at Barclays made vacant after Robert Diamond stepped down.
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