29th Oct 2013 06:52
LONDON (Alliance News) - Asia-focused lender Standard Chartered PLC Tuesday said its operating profit for the first nine months of the year was up by a low single digit percentage and that income also grew at a similar rate, as the lender witnessed strong client activity despite a volatile market environment.
However, income in the third quarter was down by a low single digit percentage, amid adverse currency and woes in Korea. Costs in the quarter were broadly flat, while quarterly impairment was below the first half run rate, at less than USD300 million, although it was ahead of last year. This reflects the continued elevated loan impairment levels in Consumer Banking and limited impairment in Wholesale Banking, the firm added.
According to the company, there has been some recent depreciation in several emerging market currencies, including the Indian Rupee and Indonesian Rupiah. Based on current rates, the full-year impact of this would be some USD200 million on income and around USD70 million on profits.
"In the third quarter, we delivered a resilient performance despite an uncertain macro environment, with continued strong levels of client activity and good volumes across many of our markets. Our diversity by market, product and industry has underpinned our performance in the quarter, as has our ongoing tight control of costs and risk," Peter Sands, chief executive, said in a statement.
In a trading update, the firm said Hong Kong and Africa delivered strong performances and continue to grow income and profit at double digit rates for the year to date, while these were offset by weaker performances in Korea and Singapore where income in both markets declined by single digit percentages.
The update excludes the impact of the estimated USD260 million in UK bank levy, the own credit adjustment, impairment of goodwill in respect of Korea, and the payment of USD340 million in the third quarter of 2012 to the New York State Department of Financial Services.
For the full year, the firm now expects a non-recurring tax related cost in Korea of USD60 million.
In Consumer Banking, operating profit for the first nine months of the year was down by a mid single digit percentage, as performance of Korea continues to have a material impact on the segment. Excluding Korea, Consumer Banking grew both income and profits by high single digit percentages.
Income in the third quarter was slightly ahead of last year. According to the lender, income remains well spread with strong performances in Hong Kong, India, MESA, China and Africa offsetting weaker performances in Korea and Singapore.
Mortgages continued to grow income at a double digit rate for the year to date. Wealth Management income was impacted in the third quarter by market volatility although it was up by a mid single digit percentage for the first 9 months.
Income grew at a high single digit percentage in Credit Cards and Personal Loans for the year to date, slightly behind the growth rate in the first half, amid increased de-risking actions, notably in Korea.
Loan impairment remained at elevated levels, similar to the first half, reflecting the ongoing impact of PDRS in Korea, the historical growth in unsecured assets, and lower loan sales in the year to date.
For the 9-month-period, Wholesale Banking income was flat with last year. While strong client activity sustained a mid single digit percentage growth in client income, despite the market turbulence in August and September, this was offset by continued weakness in Own Account, principally in Asset and Liability Management and in Principal Finance.
Within Commercial Banking, which contributes around 50% of client income, Transaction Banking income slid mid single digit percentage year-to-date and the third quarter.
Margins in the quarter remained materially lower, with margins in Trade being some 26 basis points lower, and margins in Cash some 15 basis points lower. Margins in both Trade and Cash are now broadly stable.
Despite the negative factors, Wholesale Banking operating profit for the first nine months of the year was up by a low single digit percentage, amid good growth in client income, weak own account performance and tight control of costs and risk.
STAN.L closed nearly unchanged on Monday at 1,525.00 pence.
Copyright RTT News/dpa-AFX
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