Shares in Standard Chartered climbed sharply yesterday as the bank, which is especially strong in Asia, reported powerful first- half earnings and a big dividend increase. The shares closed up 27p at 387p on the strength of a 35 per cent jump in pre-tax profits to pounds 319m. The interim dividend was increased by 44 per cent to 3.25p.
Analysts were yesterday raising their earnings estimates for the full year to around pounds 650m. "These are excellent results. The dividend is astonishing. Standard Chartered is probably the most attractive banking franchise you can find at the moment," said Richard Coleman, analyst at Smith New Court.
Some of the improvement came from lower bad-debt provisions of pounds 30m against pounds 69m in the first half of 1994. But Malcolm Williamson, chief executive, stressed that this reflected in part a concerted effort to improve the quality of its loans.
The bank is making a big push in retail operations in South-east Asia, from where 68 per cent of pre-provision earnings came last year, yet Standard Chartered continued to hold costs flat in the first half. The bank said it will have taken pounds 200m out of the cost base by the end of 1995 compared to two years ago through staff reductions and reorganisation. Staff levels, 30,000 a year ago, are to be cut to 25,000 by the end of 1996.
Patrick Gillam, chairman, said Standard Chartered was a different bank from two years ago, with its UK and US operations focused on feeding and enhancing the main trading and corporate activities in Asia, the Gulf and Africa.
Mr Williamson said: "Asia has enormous retail potential, strong economies, very high savings rates, and generally weak banking competition."
Mr Gillam dismissed concerns over the bank's big role in Hong Kong. It was avoiding lending to the volatile commercial property sector and was cautiously expanding its mortgage lending to people who will find it difficult to leave once the colony reverts to China in 1997. The bank is still looking to sell its loss-making Hong Kong broking operation.