Aug. 4 (Bloomberg) -- Standard Chartered Plc, the U.K. bank that earns almost all its income in emerging markets, raised 1.02 billion pounds ($1.7 billion) in a share sale after first- half profit beat estimates.

Net income rose 5 percent to $1.93 billion in the first six months, the bank said in a statement today. That beat the $1.82 billion median estimate of five analysts surveyed by Bloomberg.

The stock offering comes less than nine months after the London-based bank raised 1.8 billion pounds in a rights offer to boost capital. The stock has since gained 83 percent. Standard Chartered said it will use the money from today’s offering to increase its capital strength and fund expansion in Asia, where it expects growth to rebound faster than in Europe and the U.S.

“I don’t believe they are going to go on a spending spree,” said Guy de Blonay, who helps manage about $70 billion, including Standard Chartered shares, at Henderson Global Investors Ltd. in London. “This should be seen more as a precautionary measure” to increase capital, he said.

The lender is in talks to buy Royal Bank of Scotland Group Plc’s assets in China, India and Malaysia. Acquisitions in India and China will only cost “low hundreds of millions of dollars,” Chief Executive Officer Peter Sands said on a conference call with reporters today.

“This is not a war chest,” Sands said. “This is about us staying ahead of the game.” Unlike Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc, Standard Chartered has avoided a government bailout.

Shares Drop

Standard Chartered sold the shares to investors for 1,360 pence each, the bank said in a statement. JPMorgan Cazenove Ltd. and UBS AG managed the sale.

The stock dropped 7.5 percent to 1,328 pence in London trading. The lender has gained 52 percent this year, making it the second-best performer in the FTSE 350 Banks Index after Barclays Plc.

The bank’s first-half net income rose to $1.88 billion after the payment of dividends on preferred stock, compared with $1.79 billion in the year-earlier period.

Profit at Standard Chartered’s wholesale banking unit rose 36 percent to $2.25 billion as bond sales and commodities trading surged. HSBC and Barclays Plc, the U.K.’s second-biggest, said yesterday profit at their securities units doubled, helped by record bond sales in the period.

“We interpret this as a sign of management’s confidence, in both the macro prospects in Standard’s emerging markets and their business model,” wrote Sandy Chen, an analyst at Panmure Gordon & Co. in London.

Korea, Middle East

The wholesale unit’s operating profit rose in all its main markets, with the exception of Korea and the Middle East. Revenue from corporate finance rose 68 percent to $615 million.

Standard Chartered bought Cazenove Asia Ltd. from JPMorgan Cazenove Ltd. in November to help expand its equity capital markets and institutional brokerage business. The acquired unit comprising 150 people, offers clients financing, distribution, equity research and advisory services. Mike Rees, Standard Chartered’s 52-year-old head of wholesale banking, will join the board, the bank said today.

Earnings were eroded by a 57 percent drop in operating profit at its consumer unit, where profit declined to $348 million. Falling interest rates trimmed profit margins, while demand for wealth management investment products was “weak” the bank said. Korea posted an $11 million loss, compared with a profit of $87 million. The consumer division’s profit in Hong Kong fell 30 percent to $227 million.

Consumer banking head Steve Bertamini, who joined the bank in May last year, is trying to boost revenue and profit at the unit by expanding in private banking.

To contact the reporter on this story: Jon Menon in London at jmenon1@bloomberg.net

Last Updated: August 4, 2009 11:51 EDT