Standard Chartered said today that recent economic uncertainty had hurt business, taking the shine off a strong first-half performance as its key Asian markets fared better than the west and it grabs market share.
In a trading update released this morning, the bank said worries about the sovereign debt crisis in Europe had dented client demand for some products in its key wholesale banking arm and wealth management in recent weeks and created a subdued trading environment.
"In late May and in the first part of June we saw some impact on our income levels, washing over from the uncertainty in Europe. But this was off very strong underlying growth," finance director Richard Meddings said on a conference call.
Standard Chartered is one of the first banks to signal the impact of Europe's troubles on global markets, and its shares dipped 2 per cent as analysts said the comments were less upbeat than its previous statement in May, when it said it had a record first quarter.
Mr Meddings said he remained "very comfortable" with analysts' consensus forecasts for a 15 per cent rise in 2010 pretax profit to a record $5.9 billion.
The bank, based in London but deriving over four-fifths of its profits from Asia, said its income and profit in the first five months of the year were ahead of the comparable period of 2009, stripping out a gain last year on the buyback of debt.
Growth at Standard Chartered, whose history of financing trade between Europe, Asia and Africa dates back to 1853, has been driven in recent years by its wholesale arm, which includes investment banking services and last year accounted for near 85 per cent of group earnings.
It said it is winning market share and continued to invest, hiring 450 staff in wholesale banking. Wholesale banking income in the first half was expected to be similar to the strong first half of last year, and up over 10 per cent on 2009's second half.
Its consumer banking has fared less well in recent years, but the bank said the business turned a corner last year and was continuing its recovery.
Bad debts in both its wholesale and consumer banking businesses had improved significantly, the bank said.
The bank this month listed shares in India and Meddings said it remained keen to list in Shanghai, but the timing was dependent on regulators there and was unlikely this year.
Mr Meddings declined to comment on whether his bank will invest in Agricultural Bank of China as part of its initial public listing. Standard Chartered will invest $500 million, people familiar with the matter have said.
Reuters