Emerging markets bank Standard Chartered saw profits drop for the first time in a decade last year and its chief executive Peter Sands is taking a 21 per cent cut in his annual bonus.
The bank, which survived the financial crisis without a bailout, said that it expects the current year to be “challenging” with another fall in profits likely in the first half and only “modest” growth for the full year.
But Standard Chartered shares rose 2 per cent as investors reacted well to better-than-expected balance sheet ratios which suggest it may avoid the need to raise extra capital through a rights issue.
Sands’ 21 per cent cut will take his bonus to £1.6 million while the overall bonus pool across the bank is down 15 per cent to £772 million.
He said the bank was consulting with shareholders over new pay arrangements for up to 700 key staff for next year which would see them get a fixed-pay allowance paid in shares to get around European bonus cap rules.
He added: "Banks and headhunters from outside the EU are seeing this as an opportunity and we have lost talent to other banks. We want to be able to attract talent and align their interests with those of our shareholders."
Sands said 2013 had been particularly tough: "Since May there was a sharp change in sentiment to emerging markets as QE tapering started and more recently with geo-political events such as in the Ukraine. Markets are more difficult and volatile than they were a year ago. But we remain convinced that the long-term attractions of Asia, Africa and the Middle East remain compelling."
Standard Chartered’s headline profit fell by 7 per cent to $6.6 billion (£3.97 billion) on operating income down by 1 per cent at $18.6 billion. Earnings per share were down 9 per cent at 204 cents but the dividend goes up 2 per cent to 86 cents.
The South Korea market, which saw a $527 million swing from profits to losses of $162 million, was "a challenging year for the industry and specifically for us," said Sands, adding: "There is no silver bullet for improving Korea."
He pointed out that despite growing its balance sheet Standard Chartered’s key core tier one capital ratio at 11.8 per cent was as high as in 2010.
He added that under the new Basel III rules the ratio of 10.9 per cent is already ahead of the target set for the bank by the Prudential Regulation Authority for 2019. The UK bank levy paid to the Treasury rose by 63 per cent to $235 million.
Shares rose 12p to 1286.25p.