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LONDON (Reuters) - Standard Chartered (STAN.L) 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.
After a slowdown in financial markets that began in August, Meddings said the fourth quarter had been weaker than the third quarter. Particularly hard hit was its rates business, where activity had been sapped by uncertainty over the direction of interest rates.
The bank said it is keeping a "tight rein" on costs but they would be slightly higher than 2012 because of higher compliance spending and a rise in a British bank levy, while losses from bad debts are also expected to rise, mainly in Korea.
Standard Chartered has reported 10 consecutive years of record income and profits but last month scaled back its income growth target for the next couple of years as slower economic growth and tougher regulations bite.
The bank expects its Korean consumer banking arm to lose $200 million this year, with income down 15 percent. The bank wrote down the value of its Korean business by $1 billion in August and is restructuring its operations there.
Its businesses in Hong Kong and Africa continue to perform well, but growth in Singapore has slowed.
The bank has been taking action to reduce spending and streamline operations in the face of what it described as near-term problems and said it remains confident in its long-term growth prospects.
Standard Chartered has cut about 2,000 jobs in the past year, halting a hiring spree over the past decade that has trebled its workforce to 89,000.
The bank had been expected to make a pretax profit of $7.4 billion for 2013, up 8 percent from last year's $6.9 billion, according to the average forecast from 26 analysts polled by Thomson Reuters.
Editing by David Goodman