Emerging-markets bank Standard Chartered shocked investors today with news that profits for the first three months of the year were "slightly down" on a year ago.
The bank, which was fined £415 million last year by US authorities for busting sanctions against Iran and other countries, blamed quantitative easing by Western governments for a fall in its wholesale banking revenues. The shares fell as much as 6 per cent despite finance director Richard Meddings, pictured, insisting that the bank remained comfortable with City forecasts that pre-tax profits would rise to $8.2 billion (£5.3 billion) for the full year.
Meddings said: "We made a good start to the year in January and February but March was much tougher. April was more in line with our longer-term growth but I would prefer to see how May and June land before giving further guidance for revenue growth for the year. Last year we produced revenue growth of 8 per cent, and it may be that we're more likely to be at that level."
The market reacted badly to Standard Chartered's failure to keep up its normal double-digit income growth. It said the consumer bank had achieved high single-digit growth in the first quarter but the wholesale bank's income had fallen by a mid-single digit percentage.
Meddings said: "A great deal of Western quan-titative easing is making its way into Asia. Cheap dollars are chasing higher yields available in Asia and that has driven down margins. Those cheap dollars are tending to be placed in short tenor assets. We are still seeing plenty of client activity but trading on our own account is down."
He added: "Our key anxiety going forward will be the consequ- ences of Western monetary policy on Asia."
The bank also saw a rise in bad-debt writedowns in the first quarter hit particularly by new legislation in Korea which makes it easier for consumers to get rid of their debts without having to go bankrupt.
Meddings said the bank would not chase growth for the sake of it: "We are not going to change our risk appetite and have a very firm grip on costs." The shares today dropped 99p to 1599p.