Standard Chartered surges to pounds 661m

JOHN EISENHAMMER

Financial Editor

Standard Chartered celebrated yesterday the dynamism of its Asian focus with a 30 per cent surge in pre-tax profits to a record pounds 661m. With the bank's key regions continuing to display strong growth, analysts put an even more optimistic gloss on 1996 forecasts, pointing to strong underlying profits and good cost controls.

But the share price, which virtually doubled last year on bid speculation and growth expectations, is not expected to rally much more in the short- term. The full year dividend was raised by 38 per cent to 11p.

Malcolm Williamson, chief executive, said Standard Chartered is in the right place with its Asia specialisation. "If you look at IMF forecasts, they expect Asia over the next five to 20 years to be the engine of world economic growth.

The bank expressed optimism about its Hong Kong stronghold, which generated 35 per cent of its 1995 pre-tax earnings. "We see no evidence that business opportunities and conditions in Hong Kong will be affected [by the handover to China in July 1997]" said Patrick Gillam, the bank's chairman. "Indeed, as the level of trade between China and the outside world expands, we believe that Hong Kong has the opportunity to enhance its position as one of the world's most vibrant and influential financial trading centres."

Standard Chartered's management reiterated a commitment to independence, saying the bank's operations in high growth regions meant it did not face the same consolidation pressures as banks in mature, low growth markets like the UK and the US. Mr Williamson said it has had no merger talks, a reference to recent speculation about interest from NatWest Group.

The 30 per cent rise in pre-tax profits was helped by a sharp reduction in bad debt charges to pounds 72m from pounds 122m, as well as improved revenue growth and tight cost control. Net revenues grew 8 per cent to 1.8bn with commercial banking powering ahead with a 45 per cent jump in pre-tax profits to 461m.

The bank said the 3 per cent increase in operating costs represented a real reduction as inflation exceeded 5 per cent in many of its key operating areas. Costs were seen as remaining flat in 1996.

Analysts said that they found the 16 per cent rise in operating profits particularly encouraging and are looking to edge higher current year earnings forecasts. Standard Chartered's share price closed yesterday at 636p, up 37p