Standard Chartered suffers shares slump despite profit boost

Published on Tuesday 4 August 2009 21:44

SHARES in Asia-focused bank Standard Chartered slumped 7.5 per cent yesterday as a forecast-beating record interim profit was overshadowed by a surprise £1billion cash-call on the market.

Peter Sands, group chief executive, announced a pre-tax profit of $2.84bn (1.67bn) for the six months to the end of June – up from $2.59bn a year ago and ahead of a City consensus forecast of $2.49bn.

The bank's new capital-raising via a placing of shares with institutional investors followed a separate 1.8bn cash call late last year.

Sands said: "It's about staying ahead of the game. Given that we see Asia having a shorter and shallower recession than other parts of the world, our clients are seeing a light at the end of the tunnel, and we want to anticipate that and support them."

Standard's star turn this time round was wholesale banking, where interim profits jumped 36 per cent to $2.25bn.

However, like HSBC and Barclays the day before, Standard's retail banking business did less well in the first half as bad debts have risen and its business in Korea has struggled.

The unit's operating profit tumbled 57 per cent to $348million. However, Sands said he was confident the business was through the worst and was being successfully reshaped. The bank's charge for bad loans more than doubled to $1.1bn.

Core tier 1 capital – a key measure of balance sheet strength – will rise to 8.4 per cent after the share placing, up from 7.6 per cent at the end of June and 6.1 per cent a year ago.

Richard Hunter, head of UK equities at broker Hargreaves Lansdown, said the fall in the share price given the announcement of the further 1bn fund-raising exercise "masks another set of extremely robust numbers from Standard".

"Any tentative weakness in the consumer units is more than being offset by further growth in the wholesale business," he added.

BIG LOSS FOR BIGGEST SWISS BANK

UBS, Switzerland's biggest bank, has suffered another big quarterly loss as wealthy clients were scared off by a US tax row.

UBS said yesterday it remained cautious about its prospects, given the economic environment, as it posted a net loss of SFr1.4 billion (780 million).

However, the losses masked its best underlying performance in two years.