Standard Chartered brushes off China fears after stronger quarter
By Matt Scuffham
LONDON (Reuters) - Standard Chartered (STAN.L: Quote) brushed off fears that a slowdown in China's economy would hit the Asia-focused lender hard and said it would meet analysts' expectations for the full-year following an improved second-quarter.
The bank, which makes about four-fifths of its earnings in Asia and the Middle East, said it was on track to meet forecasts for full-year operating profit of about $8 billion but would miss its usual target of 10 percent profit and revenue growth.
U.S. activist investor group Muddy Waters has bet against the bank, saying that a slowdown in China would lead to "considerable stress" at the London-based lender. A cash crunch in China's money market over the last three weeks and consequent sharp rise in borrowing costs, has sent Chinese stocks to four-year lows and spilled over into global markets.
Standard Chartered's finance chief Richard Meddings said on Wednesday actions being taken by the government in China were appropriate and its interventions in the inter-bank lending market would not materially affect the bank's ability to borrow there.
"We think these are very good reforms that are being introduced. I think what it points to is perhaps slower growth but on a more sustainable level," Meddings told reporters on a conference call.
The profitability of banks in Asia has been squeezed by ultra-easy monetary policy in the West, which has created a flood of cheap money that has pressured margins for banks competing to lend to fast-growing emerging markets.
Standard Chartered, which has been one of the most consistent performers during the financial crisis, said revenue for the first six months of 2013 was expected to rise by about 5 percent following an acceleration in the second quarter.
Chief Executive Peter Sands said second quarter growth was up on the previous quarter and the same period the year before. Continued...