Standard Chartered has become the second bank in as many weeks to suffer a bloodied nose after yesterday promising operating pre-tax profits only "broadly" in line with City targets this year.
Like Barclays a week earlier, "broadly" was taken to be a veiled signal that profits are likely to fall shy of analysts' expectations.
And like Barclays, Standard shares duly turned in the worst performance in the FTSE 100. Its shares fell 38p to 1215p as Standard, an emerging markets specialist and the star of the banking sector this year, effectively wrote off the value of its banking operations in Zimbabwe.
London-based Standard has absorbed $60m (£34.5m) in charges in the first nine months of this year against the impact of hyperinflation in the troubled southern African nation, where it has been trading since 1892 and is now the biggest bank. Yesterday Standard went further, revealing it would write down the value of its Zimbabwean assets by a further $40m. It also unexpectedly lifted bad debt charges for Taiwan, and confirmed overall costs are rising faster than income in the second half of the year.
Analysts also said Peter Sands, the finance director, failed to answer questions about the bank's prospects next year to their satisfaction. Simon Maughan, a sector analyst at Dresdner Kleinwort Wasserstein, took the red pen to forecasts. He now expects pre-tax profits of $2.54bn, up from $2.25bn last time, and told clients to reduce their holdings.
But the City applauded Standard's decision to take a 20 per cent stake in Fleming Family & Partners, a wealth management business, for £45m. Standard should be able to tap into Fleming's expertise to unlock the richest families in Asia.Reuse content