Standard Chartered sees $330-mn settlement on Iran, denting profits

Last Updated: Fri, Dec 07, 2012 07:42 hrs

pStandard Chartered expects to pay 330 million to settle a case with US regulators who accused the Asia-focused bank of failing to comply with sanctions against Iran further denting profit growth this yearppThe settlement will be on top of the 340 million it paid to New Yorks Department of Financial Services in the third quarter which pushed its before-tax profit growth in 2012 to a mid-single-digit percentage from more than 10 per cent StanChart said in a statement on ThursdayppAny earnings growth would mean a 10th straight year of record profits as StanChart has ridden on Asias rise through much of the last decade allowing it to continue hiring and increasing earnings when much of the industry is shrinking "It aint broke so theyre not fixing it" said Jim Antos an analyst at Mizuho Securities in Hong Kongpp"The thing they are doing is trying to add new businesses but there isnt a compelling story and thats why their shares havent moved"ppStandard Chartered said it expected talks with US Federal regulators to conclude shortly confirming a Reuters report in early NovemberppDespite its regulatory woes the bank is one of the few still hiring in the industry saying in August it intended to add at least 1500 more staff in the second half of this year By contrast most rivals have been cutting with Citi saying on Wednesday it was cutting 11000 jobspp"We continue to see significant opportunities across our markets in Asia Africa and the Middle East" Chief Executive Peter Sands wrote in a statement released on ThursdayppA rise in the number of out-of-work bankers meant Standard Chartered was able to maintain a lid on costs with revenue growing faster than costs &mdash a phenomenon known in financial industry jargon as "positive jaws"ppFor much of 2010 StanChart was hit by ever-rising costs as an increasing number of banks and brokerages tried to expand in Asia Since then various minor players including Samsung Securities and KBW have begun pulling outppThe bank does not release specific numbers in its trading updates which it keeps for its annual report that is typically released in late February It singled out Malaysia China and Indonesia as regions where income grew by at least 10 per centppIn Hong Kong its biggest market income grew at a high single-digit percentage the bank saidppStanCharts Hong Kong-listed shares are up 9 per cent year-to-date lagging the 20 per cent rise on the Hang Seng IndexppAsset quality remained good the bank said with loan impairments within the wholesale bank expected to be below the levels seen in the first half of this year For the consumer bank loan impairment is expected to increase by at least 10 percent from the first halfppHowever StanChart pointed to India and the Middle East as two markets where it was watchful for asset quality Slowing growth in some emerging markets has raised concern that StanChart could be hit by a rise in bad loansppThe bank appointed a new global head of loan syndication in late November naming Cristian Jonsson to replace Philip Cracknell who is retiring in MarchppTo diversify away from its traditional lending business the bank has been looking to expand to areas such as commodities where it aims to double revenue in the next four years it said on Tuesdayp

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