Shares of Standard Chartered rose on Wednesday, despite the weak performance of its Indian and Korean divisions, as it forecast a return to growth in those markets in 2012, and results came in at consensus levels, in contrast to the raft of weak results that have emerged from Britain’s banking sector over the past few weeks.
Operating profit for the group was reported at $6.775 billion for the full year 2011, against $7.039 billion the year before, as revenues grew in both the wholesale and divisions, by 9 and 12 percent respectively. However, profits in India declined sharply, down 33 percent to $804 million from $1.197 billion a year earlier, despite a recovery in the second half of the year, with pre tax profits up 13 percent against the first half, and impairments falling sharply to $47 million from $125 million in the first half. It contrasted with the bank’s strong performance in India in 2010, with operating profits there up 13 percent.
Group CEO, Mr Peter Sands attributed the weakness in India to an undermining of business confidence as a result of the interest rate hikes – 13 of which have occurred over the past 2 years as a result of inflationary pressure, along side issues of transparency and political conflict. This led to the “slowing of the reform agenda, with many projects delayed or cancelled,” he said. “While this has not all gone away over night we are seeing some signs we are coming through this,” he added. He said that he expected India – along side Korea, which saw operating profits fall 56 percent as a result of an ongoing labour dispute in the country – to return to growth in 2012.
Outweighing the troubles in India and Korea was Hong Kong, where pretax operating profits grew 41 percent to $1.55 billion, and Singapore where they rose by 40% to just over $1 billion.
Mr. Sands struck a cautious note of optimism for the future., confirming that the company expecting to keep on track with double digit income growth for the year 2012, and had a “very good start” to 2012. While the crisis was still unfolding in the West, taking its toll on European trade with its Asian and other growth markets, intra regional trade within these regions would partly compensate. “We are not complacent at all about the risks,” he said.
The results were met positively by analysts. Top of the league,” declared Investec in a note to investors, while Deutsche Bank suggested that “Perhaps the worst thing that might be said of these results is that they will likely not trigger positive earning revisions in our view.”
The banks shares were up 1.67 per cent in London at 16.51 pounds in early afternoon trading.