Standard Chartered Plc (STAN), the U.K.’s second-largest bank by market value, said it plans to hire as many as 2,600 employees after posting its eighth annual record earnings on growth in corporate and consumer banking.
Net income rose to $4.85 billion in 2011 from $4.33 billion a year earlier, the London-based bank said today in a statement. That compared with the $4.75 billion median estimate of 26 analysts surveyed by Bloomberg.
Standard Chartered, which focuses on faster-growing markets in Asia, the Middle East and Africa, had a return on equity of 12.2 percent last year, surpassing the profitability of its four biggest U.K. competitors. The lender plans to hire this year after adding 1,600 people in 2011, as banks including HSBC Holdings Plc (HSBA) and Royal Bank of Scotland Group Plc eliminate jobs.
“Standard Chartered is likely to report another record year of profit unless the exchange rate worsens a lot,” Steven Chan, an analyst at Citic Securities International Co., said by telephone. “Last year’s weak geographies, India and Korea, are also likely to improve.”
Standard Chartered is on track to post “double-digit” growth in revenue and earnings on a per-share basis this year, Chief Executive Officer Peter Sands said in the statement. Return on equity may be “somewhat under our aspiration” due to tightened regulations and low interest rates, he said.
The stock fell 0.3 percent to 1,617.5 pence in London trading. Shares of Standard Chartered fell 18 percent last year in London trading, valuing it at 1.5 times the value of its assets. The Bloomberg Europe Banks and Financial Services Index fell 32 percent during the same period.
The bonus pool for staff has been kept “flat” at about 800 million pounds ($1.27 billion) and Sands will receive a payout of $3.5 million, he told reporters in London today. The full-year dividend rose 10 percent to 76 cents a share. The number of employees climbed to 86,865 and the company would increase this by 2 percent to 3 percent, Sands said.
The lender trimmed its full-year revenue growth forecast in December because of Asian currencies’ depreciation against the U.S. dollar. Income will grow “at just below a double-digit rate” because of Asian currencies’ 1 percent to 5 percent depreciation since early November, the bank said on Dec. 8.
Operating revenue in the wholesale and consumer business in India fell 11 percent to $1.8 billion in 2011 as business confidence was hurt by the Reserve Bank of India increasing interest rates 13 times in two years, the company said.
In Korea, revenue rose 1 percent to $1.72 billion after the bank’s efforts to introduce performance-related pay sparked a 10-week labor strike that closed branches. The bank took a $206 million charge relating to an early retirement program for employees and the unit known as SC First Bank was renamed Standard Chartered, the company said.
Hong Kong revenue gained 22 percent to about $3 billion, lifted by credit cards and personal loans, the bank said.
Standard Chartered, whose origins date to 19th century British colonial rule in Africa and India, earns more than three quarters of its profit from corporate banking. Operating profit from the division led by Michael Rees rose 9 percent.
Profit from consumer banking operations, which are run by Steve Bertamini and account for less than a quarter of the total, climbed 26 percent last year, the lender said today.
Sands told parliamentarians in December that a U.K. bank levy and additional regulations would cost the lender more than $500 million a year. The bank faces an “avalanche” of regulation, he said at the time. Standard Chartered paid a $165 million charge for the U.K. bank levy last year, the bank said today.
Standard Chartered and HSBC, which earn most of their profit in Asia, are the only two of Britain’s five biggest banks to report increases in profit for 2011.
HSBC, Europe’s largest bank by market value, said full-year profit rose 27 percent, boosted by an accounting gain on the revaluation of its own debt. The bank recorded a ROE of 10.9 percent for the period, while Barclays Plc’s was 6.9 percent. Standard Chartered may not reach its goal for a “mid teens” ROE this year, Sands said.
Lloyds Banking Group Plc (LLOY), Britain’s biggest mortgage lender, and RBS (RBS), Britain’s biggest government-owned lender, reported wider losses after compensating customers improperly sold insurance. Barclays posted a 16 percent drop in profit.
Salaries rose by about 5 percent across the bank’s markets, though the lender retains a “tight grip” on costs, Sands said. Overall employee costs rose 15 percent, the bank said.
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