Strong pound hits Standard's interim profits
Malcolm Williamson, chief executive, said he had not experienced such a big effect on translation before: "The problem is that we are very much a dollar-related bank. We either get our money in US dollars, currencies linked to it or currencies that have depreciated even more against sterling."
At constant exchange rates, Standard Chartered's profits rose 16 per cent but the reported surplus was up just 8 per cent from pounds 402m to pounds 434m. The bank used a sterling/dollar exchange rate of 1.67 compared with 1.55 a year ago. It estimates that every 1 per cent movement in the exchange rate costs around pounds 50m in lost profits.
The currency effect was mitigated to some extent by the bank's treasury operation, which took advantage of volatile foreign exchange markets in countries such as Thailand to increase its profits from pounds 76m to pounds 103m. The figures scotched rumours Standard Chartered had been a big loser from the volatility.
Mr Williamson said the recent turmoil in Thailand had not affected the bank's other businesses. It had no exposure to the Thai property market but was exposed to some Thai banks and had made a pounds 5m provision as a precaution.
He added that he didn't believe the problems in some of South-east Asia's so-called tiger economies should distract from the fundamental attractions of the region where economic growth is expected to continue to power ahead. The region, he said, was characterised by high investment, high savings rates and relatively low penetration of banking services.
In line with other banks reporting recently, Standard Chartered rewarded shareholders with a big jump in the interim dividend, which rose 24 per cent from 4.25p to 5.25p. The higher payout helped the shares, which have risen 44 per cent since the start of the year, to close another 32.5p up at pounds 10.38.
Just over a third of Standard Chartered's profits come from Hong Kong where, Mr Williamson said, the smooth transition to Chinese control on 30 June had laid a strong foundation for the former colony's strong development as one of the world's principal financial centres.
However, analysts were divided yesterday on whether the Asian growth story had further to go. John Aitken at UBS warned that, unlike HSBC, Standard Chartered had little exposure to the US and UK markets to offset any downturn in Asia. But Richard Coleman at Merrill Lynch said he was maintaining his profit forecast for 1997 at pounds 939m.
- 1 Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
- 2 Kim Kardashian on Bruce Jenner's 'story': 'We support him no matter what, and I think when the time is right, he'll talk'
- 3 Russian girl takes her own life after parents find pornography on her computer
- 4 Ball pool for adults opens in London
- 5 Amal Clooney gives excellent response to fashion question at European Court of Human Rights
Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
Kim Kardashian on Bruce Jenner's 'story': 'We support him no matter what, and I think when the time is right, he'll talk'
Michelle Obama highlights harsh restrictions faced by Saudi women after meeting King Salman without wearing a headscarf
Russian girl takes her own life after parents find pornography on her computer
Ball pool for adults opens in London
9 reasons Greece's experiment with the radical left is doomed to failure
'We would evict Queen from Buckingham Palace and allocate her council house,' say Greens
Have we reached 'peak food'? Shortages loom as global production rates slow
Greece elections: Syriza and EU on collision course after election win for left-wing party
British Muslim school children suffering a backlash of abuse following Paris attacks
British grandmother Lindsay Sandiford faces execution by firing squad in Indonesia
iJobs Money & Business
£13000 per annum: Recruitment Genius: This Pension Specialist was established ...
£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...
£25000 - £35000 per annum: Recruitment Genius: A Technical Report Writer is re...
Competitive salary & benefits!: MBDA UK Ltd: MBDA UK LTD Indirect Procurement...