Standard Chartered PLC said yesterday profit rose 28 percent to a record US$4.33 billion last year as bad-loan costs fell, predicting “double-digit” income growth for this year even as a UK bank levy weighs on earnings.
Net income rose from US$3.38 billion in 2009 and beat the US$4.21 billion median estimate of 18 analysts surveyed by Bloomberg. Bad-loan costs declined 56 percent and lending jumped 22 percent, Standard Chartered said in a statement.
CEO Peter Sands, whose bank gets most of its profit from Asia’s growing economies, said regulation posed the biggest threat as global lenders grapple with stricter capital rules. A UK bank levy set to take effect this year will cost Standard Chartered US$180 million after tax this year, Sands said in the statement.
“The biggest external challenge we face this year is regulation,” Sands said. “Rather than seeing increasingly global coordination and consistency of regulation, we are seeing increased fragmentation and unilateral action.”
British Chancellor of the Exchequer George Osborne last month increased a tax on the nation’s lenders to raise an extra £800 million (US$1.3 billion) as he presses banks to boost lending targets and curb pay. The government will charge banks 0.1 percent on short-term liabilities and 0.05 percent for long-term liabilities this month and next, the UK Treasury said in a Feb. 8 statement.
Net interest income, or revenue from lending minus payments to depositors, climbed 11 percent last year to US$8.47 billion, Standard Chartered said. Fee income climbed 19 percent to US$4.56 billion.
“The record profit is driven by balanced growth in consumer banking and wholesale banking, as well as an improvement in asset quality,” said Sunil Garg, a banking analyst at JPMorgan Chase & Co in Hong Kong. “There are cost pressures across the entire banking industry in Asia.”
Standard Chartered’s expenses last year rose after the bank added branches in China and hired 7,000 people. Staff costs swelled 17 percent, while headcount climbed 9 percent, the company said.
HSBC Holdings PLC, the other London-based bank dependent on Asia for a majority of profit, this week said it’s also paying more for bankers in the region than in Britain, forcing up expenses.
Standard Chartered raised US$540 million in May from a sale of its shares in India. A month later it invested US$500 million in Agricultural Bank of China Ltd’s initial public offering and said it would create a joint venture with the Chinese bank to lend to businesses.
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