StanChart set to end 10-year boom with 2013 profit drop

Wed Dec 4, 2013 5:32am EST
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By Steve Slater

LONDON (Reuters) - Standard Chartered (STAN.L: Quote) warned that 10 years of record earnings are likely to end this year, with profit set to fall because of losses in Korea, a slowdown in its key Asian markets and tougher regulations.

Shares in the bank, which makes more than 90 percent of its profit in Asia, Africa and the Middle East, tumbled more than 7 percent to their lowest level for 16 months.

Standard Chartered said on Wednesday that operating profit in its consumer bank will be down by at least 10 percent from a year ago because of problems in Korea and profit from wholesale banking is expected to be flat, leaving overall profit down.

"We've seen significant softening in this fourth quarter, particularly in financial markets," Group Finance Director Richard Meddings said.

The bank's London-listed shares tumbled 7.1 percent to 13.30 pounds by 0937 GMT. This was their lowest level since August 2012, when the shares were hit by concerns about a fine from U.S. authorities for breaking sanctions on Iran.

Analysts said the concern now is the bank's growth prospects.

Top-line growth is the key issue, Shore Capital analyst Gary Greenwood said, adding that potentially higher capital requirements mean that it will be difficult for the company to make short-term headway on its return on equity.

Income for the full year is likely to be "broadly flat" from 2012, the bank said, against analysts' expectations for a rise of about 4 percent.   Continued...

A man walks on a footbridge connected to the Standard Chartered headquarters in Hong Kong August 7, 2012. REUTERS/Bobby Yip