Standard Chartered ‘Comfortable’ With Full-Year EstimatesHoward Mustoe and Gavin Finch
Standard Chartered Plc, the U.K. bank that generates more than three-quarters of its earnings in Asia, reiterated its forecast for profit in 2013 amid a rout in emerging markets.
The bank said in a statement today it’s “comfortable” with analyst estimates for full-year operating profit. That’s about $8 billion for 2013 compared with about $6.88 billion in the year-earlier-period, Finance Director Richard Meddings told reporters on a call today. Revenue growth in the first half will be in the “low single-digit” range compared with the year-earlier period, the firm said in a statement.
Investors are pulling money from emerging markets at the fastest pace in two years as slowing economic growth and the prospect of less global stimulus hurts stocks, bonds and currencies from India to Brazil. China, the largest developing economy, is forecast by the World Bank to expand at the slowest pace since 1999 this year, and the CSI 300 Index of Chinese equities tipped into a bear market on June 24.
“The tone of the interim update is far more confident than the weak first quarter,” Andrew Coombs, an analyst at Citigroup Inc., wrote in a note to clients today. Revenue is up by “high single-digits” for the second quarter, “far better than the ‘modest’ year on year growth in the first quarter,” wrote Coombs who has a buy rating on the stock.
The stock rose as much as 3.9 percent and was up 1.5 percent at 1,431 pence by 11:22 a.m. in London trading. Standard Chartered has fallen 9.1 percent this year, valuing it at about 35 billion pounds ($53.8 billion).
The net interest margin, a measure of profitability on lending, will decline by 20 basis points from the end of 2012, the bank said. Impairments are expected to increase by about 15 percent from a year earlier, driven by souring loans in Korea, the London-based lender said today.
The impairment rise “reflects a change in the mix of assets with a higher proportion of unsecured assets which carry a higher propensity to loss,” Meddings said.
Korea was a “major” source of impairments as the government seeks to help consumers reduce their debts, he said.
“This is a good performance against a backdrop of ongoing turbulence in the global economy,” Chief Executive Officer Peter Sands, 51, said in the statement. “Growth has remained resilient across our footprint markets of Asia, Africa and the Middle East with high levels of client activity.”
The second quarter showed “an acceleration over the first quarter for 2013 and over the comparable period last year,” Sands said. “We continue to see good momentum.”
Meddings said he is “very happy at Standard Chartered,” when asked whether he would consider filling the position of CEO at Royal Bank of Scotland Group Plc following the departure of Stephen Hester.