Standard Chartered produced the strongest performance so far of the British banks yesterday as Asia's booming markets helped to drive a 27 per cent increase in annual profit.
The bank's shares rose 7.9 per cent after it announced record pre-tax profit for 2007 of $4.03bn (£2.04bn) as income jumped 28 per cent to $11.1bn.
Key growth markets included Hong Kong – Standard Chartered's biggest market – and India. In Hong Kong, profit rose 34 per cent to $1.2bn, and in India profit jumped 71 per cent to $690m – more than 2005 and 2006 combined.
The London-based bank makes almost all its profit in Asia, Africa and the Middle East, where high energy and commodity prices, growing international businesses and spreading consumer affluence have fuelled booming markets.
The bank warned that a US slowdown would affect its markets but forecast continued strong growth well above the level expected in the US and the eurozone.
Richard Meddings, the bank's finance director, said: "The world is more uncertain. All we can do is present the facts. We are left with very strong momentum across our many different engines... We started the year excellently."
Standard Chartered has been largely unaffected by the credit crunch because its exposure to US sub-prime mortgages is indirect and minimal. Its only real headache has been its Whistlejacket structured investment vehicle (SIV) fund, which went into receivership this month after a slump in the value of its assets set off triggers. The bank took a $116m write-down for Whistlejacket as part of a $300m charge that included potential losses on asset securitisations. But some analysts have said the greater damage could be to Standard Chartered's standing with investors in the SIV.
Other banks such as HSBC have bailed out their SIVs, but Standard Chartered said it did not have this option because of Whistlejacket's high trigger point and details of the receivership process.
Mr Meddings said: "We understand that clients and customers have been hurt here. We will keep talking with them generally." He said he did not expect any litigation from clients over losses from Whistlejacket.
The weak point in Standard Chartered's performance was Korea, where it made its biggest acquisition in 2005 with the $3.3bn deal to buy Korea First Bank. Profit in Korea fell to $324m from $454m a year earlier as the mortgage-dominated consumer bank struggled to grow.
Peter Sands, the bank's chief executive, said he had revamped the management team in Korea and that he would be disappointed if the country did not produce double-digit income growth this year.
Another problem for the bank is unease in Hong Kong about its biggest shareholder, the Singaporean sovereign wealth fund Temasek. The fund has built its stake in Standard Chartered to 19 per cent, approaching a 20 per cent cut-off point imposed by the Hong Kong authorities that could see Standard Chartered stripped of its prestigious note-issuing status.
Mr Meddings said the benefit to revenue of issuing notes in Hong Kong was "de minimis" but added: "It is valuable for us to have our brand and name on the notes in circulation in Hong Kong."Reuse content