StanChart peak profits in 2008?
Posted on 04 March 2009 with no comments from readers
Yesterday Standard Chartered Bank unveiled the best set of results from any UK based bank this season and posted a 19 per cent rise in annual profits to $4.8 billion.
The banks gets two thirds of its revenue from Asia where the impact of the global financial crisis was least felt in 2008. That good luck may not last in 2009.
Asia focus
‘Asia will obviously see a sharp correction in economic performance,’ admitted CEO Peter Sands. ‘But I think it will be shorter and shallower than what you will see in the West. The ingredients of the de-leveraging spiral and financial crisis are not present to anything like the same extent.’
He is perhaps being a little modest about the bank’s track record in the region which has been highly volatile during many periods, most recently the Asian Financial Crisis of a decade ago. Standard Chartered runs a tight ship and knows how to handle emerging market volatility well.
This skill will, however, be even more important in the year or two ahead. Across Asia consumer banking and corporate lending are weakening as the global financial crisis impacts the region.
Even the Middle East – where the bank counts alongside HSBC as the leading international banks – 2008 will be a peak year for profits that may not be seen for some years into the future. The six-year oil boom has bust and with it a real estate bubble that threatens banking write-offs, business failures and exacerbates the local downturn.
Good management practice
Standard Chartered might just be putting on a brave face in the circumstances but the bank has shown its metal in the past, and is doubtless looking to use its strength to expand market share in a downturn which will impact more on its less well managed rivals.
Indeed, Standard Chartered looks to be a winner from the crisis along with its old rival from its Hong Kong days HSBC, whereas ABN Amro’s Asian arm is up for sale due the RBS takeover disaster, and Citi is now partly owned by the US government.
That said 2009 and 2010 look difficult years for the banking sector, even for the future winners.
