Standard Chartered first half profit down 44% upon adverse loan impairments
(10 August 2015 – United Kingdom) Standard Chartered’s profit before tax was down 44 percent to US$1.824 billion (A$2.486 billion) in the first half, with adverse loan impairment trends impacting the Asia-focused bank.
Continued adverse loan impairment trends in India and commodities more than offset improvement in Retail Clients’ loan impairment.
Operating income of US$8.495 billion was down 8 percent from the first half of 2014, primarily driven by currency translation, business divestments and mark to market valuations.
Disciplined capital and balance sheet management has resulted in customer advances down 2 percent to US$282 billion, customer deposits down 6 percent to US$389 billion and risk weighted assets (RWA) down 5 percent to US$326 billion.
Corporate and Institutional Clients experienced growth in high returning clients and products which was offset by increased impairment and tight RWA management.
Retail Clients operating profit up 14 percent with improved performance in Korea.
Commenting on these results, chairman, Sir John Peace, said: “We have delivered good progress on our target of strengthening the Group’s capital ratio and will continue to do so.
“However, these actions have also impacted our return on equity, and combined with a disappointing earnings performance and the current near term outlook for the Group, the Board has decided to reduce the dividend by 50 percent.
“The Board and newly announced Management Team are committed to build a business that will deliver significantly better returns for our shareholders.”
Group chief executive, Bill Winters, said: “Today’s results show the Group has some very real challenges, but they are fixable and it is important to remember that there is a strong business at the heart of the Group.
“The newly announced Management Team, together with all of our staff, are determined to get the Group back on track.”
A new member of the Management Team was announced on 5 August – Mark Smith has been appointed Group chief risk officer and will join the Bank in January 2015, based in London.
Smith will be responsible for managing Credit, Market, and Operational Risk across the Group.
He will report directly to Winters as a member of the Bank’s recently announced Management Team.
Pam Walkden will continue as interim Group chief risk officer until Smith joins the Bank.
Smith joins the Bank from HSBC Bank plc, where he is currently chief risk officer Europe, Middle East and Africa and Global head, Wholesale Credit and Traded Risk.
He has also served as chief operating officer, Global Corporate and Institutional Banking, and held roles in London and Hong Kong.
Winters said; “Mark is a highly capable individual who brings with him a wealth of experience from his previous roles, bolstered by a deep understanding of our footprint.
“I and the rest of our Management Team look forward to working closely with Mark as he leads our Global Risk Function at this important time for the Bank.”
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