Standard Chartered's profit hit by $1 billion Korean writedown
By Steve Slater and Carmel Crimmins
LONDON (Reuters) - Asia-focused bank Standard Chartered (STAN.L: Quote) took a $1 billion hit on the value of its troubled Korean business on Tuesday, dragging earnings down 16 percent and warning of a slow turnaround in its most difficult market.
Standard Chartered has had a hard time in South Korea since buying First Bank in 2005 for $3.3 billion, its largest ever acquisition.
It had a long dispute with staff and the profitability for all banks there have been hit by tougher regulations. Bad debts have also risen after an overhaul of personal debt restructuring processes, allowing more forgiveness on long-term loans.
The UK-listed bank, which makes more than 90 percent of its profit in Asia, Africa and the Middle East, said excluding its Korean woes it would still meet consensus forecasts for a full-year operating profit of $7.9 billion, up 15 percent from last year, and buoying its share price.
Like larger rival HSBC (HSBA.L: Quote), Standard Chartered has seen a slowdown in emerging markets, which has dented its stock price in recent months and deflated hopes for the sort of double-digit revenue growth it generated throughout the financial crisis.
Standard Chartered 2888.HK reported a pretax profit of $3.3 billion for the six months to the end of June, down from $3.9 billion a year ago due to the writedown in Korea.
The bank had flagged a possible writedown in June.
The bank posted a $861 million pretax loss in Korea for the first half, after a two-thirds jump in loan losses and provisions for souring debt. Continued...