Standard Chartered scales back double-digit growth goal
Weighed down by US$1b South Korean charge, bank concedes it will miss target of double-digit income expansion for full year
Standard Chartered played down the risks to its business of a slowing global economy as it unveiled first-half pre-tax profits that included a painful US$1 billion write-down against its South Korean operations. It admitted that plans for double-digit income growth were unrealistic.
"At a time when market sentiment towards emerging markets seems remarkably correlated, it is worth remembering that these economies don't all rise and fall simultaneously," group chief executive Peter Sands said in a statement revealing pre-tax profit of US$3.3 billion, after the Korean charge, for the six months to June.
The bank had made US$3.9 billion in the same period last year, but Sands said it was impossible to ignore the realities of business in Korea, where the return on equity in the banking sector had slumped to about 4 per cent from the roughly 18 per cent it was in 2005 when Standard Chartered bought Korea First Bank.
"This won't be a quick turnaround. Indeed we expect that the second half will also be very difficult," Sands said of Korea, adding that the bank as a whole was "clearly not tracking to a double-digit income performance for 2013".
Sands insisted he would not compromise standards to achieve an unrealistic growth target and pointed instead to figures showing income up across a range of business segments, despite a broad squeeze on margins, and an interim dividend up 6 per cent at 28.8 US cents.
Investors seemed willing to give him the benefit of any doubt, pushing the bank's London-listed shares up about 3 per cent in early trade yesterday.
