Standard Chartered Sees Lower Income On Weak Financial Markets, Stock Dips

(RTTNews) - Shares of Standard Chartered Plc. (SCBFF.PK, STAC.L, STAN.L) declined around 5 percent in London trading after the bank said it expects lower profit in its first half and fiscal 2014.

In its pre-close trading update, the Asia-focused lender said it expects Group income for the first half to be down by a mid-single digit percentage or by a low single digit percentage on a constant currency basis. Meanwhile, the forecast for first half remains ahead of the second half of last year.

Operating profit in the first half is now expected to be down by around 20 percent on a strong first half of the same year, but up on the second half of 2013.

The company noted that costs remain well controlled and are expected to be only slightly higher than year. Meanwhile, the results would be hurt by loan impairment, which is expected to be up by a high-teens percentage, and other impairment including some $75 million in relation to valuation impairment of certain strategic investments.

The company noted that all comparisons exclude the impact of the UK Bank Levy, Own Credit Adjustment and impairment of goodwill in respect of Korea.

According to the firm, the momentum of most of its businesses remains in line with expectations. Meanwhile, Financial Markets continues to be impacted by the challenging external environment, alongside the rest of the industry, and its income would be down around 20 percent.

In the first half, ongoing income growth in markets such as China and Africa were offset by weaker performance in markets such as India, Korea and Singapore, the company noted.

Group Chief Executive Peter Sands said, "This has been a disappointing first half, with difficult trading conditions, particularly in financial markets. We are making good progress against our refreshed strategy and are taking the right actions in response to a challenging environment - managing costs very tightly, disposing of non-core businesses and optimising the deployment of capital."

Looking forward, Standard Chartered noted that transaction banking segment has momentum, wealth management segment will benefit from the recently signed Prudential PLC Bancassurance agreement, and corporate finance segment has a good pipeline. However, the outlook for Financial Markets remains somewhat uncertain.

"Given these dynamics, our expectation is that full year profits, excluding goodwill impairment and Own Credit Adjustment, but including the UK Bank Levy, will be down on 2013. However, profits in the second half are likely to be higher than in the same period last year," the company said in its statement. The company added that it remains confident in the strong underlying potential of markets and of its competitive positioning.

The company also said it is maintaining tight control of costs and risk and have a highly liquid, diverse and well capitalised balance sheet. Standard Chartered will provide a further update along with its first-half results announcement on August 6.

In London, Standard Chartered stock is losing 56.06 pence or 4.5 percent, and trading at 1,201.44 pence.