Interim Management Statement

RNS Number : 5510C

Standard Chartered PLC

02 May 2012

 



Standard Chartered PLC

Interim Management Statement

2 May 2012

Standard Chartered today releases its Interim Management Statement (IMS) for the first quarter of 2012.

Peter Sands, Group Chief Executive, commented, "Standard Chartered has had a strong start to 2012, with good performances across a broad spread of geographies and products.  We continue to benefit from the disciplined execution of our strategy and are very well positioned in dynamic markets with strong fundamentals.  We are in excellent shape, we are a growth company and are differentiated by our liquidity and capital strength.  Macroeconomic sentiment is showing signs of improvement, although there remain clear uncertainties and risks in the global environment."

The Group had a strong start to the year, with high single digit income growth over the comparative period of 2011. The Group's first quarter performance builds on the excellent momentum seen at the end of 2011 with good income progression in both businesses over the comparable period.  Income growth has, however, been impacted by the continued strength of the USD against Asian currencies in the first quarter, as indicated at the time of the full year results.

From a geographic perspective, diverse double digit income growth in Hong Kong, Malaysia, Indonesia, China and the Americas, UK and Europe region has more than compensated for the impact of subdued domestic business sentiment in India. In Korea, we continue to make progress with the repositioning of our business and are seeing the benefits of the Early Retirement Programme (ERP) in the cost line.

Across the Group, expenses remain under tight control; in the first quarter income growth exceeded cost growth. Headcount levels at the end of the first quarter were broadly flat on the end of 2011. In light of the Group's strong start to 2012 we have approved an accelerated release of investment spend over and above budget levels.

In the first quarter loan impairment was above the level seen in the comparable period of 2011, in line with expectation, with credit quality remaining good. The increase year on year was driven by Consumer Banking, where loan impairment has increased in line with disciplined growth in the book and mix change, as previously guided.

Overall the Group delivered low double digit growth in operating profit in the first quarter over the comparable period in 2011.

The Group remains highly liquid and well capitalised and we continue to see disciplined growth on both sides of the balance sheet, in both Consumer Banking and Wholesale Banking. Risk Weighted Asset growth was well controlled in the first quarter of 2012.

Consumer Banking

Consumer Banking delivered good single digit income growth on the first quarter of 2011. 

Income continued to be broadly spread, with Deposit income growing at a double digit rate, reflecting good volume growth and improved margins. Credit Cards and Personal Loans performed well, with double digit income growth year on year, as we selectively grew our unsecured business, especially in Hong Kong, Singapore, Malaysia, Taiwan and Korea.

Wealth Management income was in line with the strong first quarter of 2011 and up on the run rate seen in the second half of 2011. Mortgage income was down on the first quarter of 2011 with assets broadly stable on the year end position and continued margin pressure.

SME performed well, with double digit income growth over the comparable period in 2011, driven by Trade and Cash Management.

Expenses have been well controlled in the first quarter of 2012, and were up on the comparable period in 2011 by a single digit rate. 

There has been growth on both sides of the balance sheet since the year end, with a partial benefit from currency translation. Liability margins in the first quarter increased on the year end position, whilst asset margins were broadly flat on the level seen during the second half of 2011.

Asset quality continues to be good within the Consumer Banking business, reflecting our disciplined approach to risk management and stable leading indicators.  Loan impairment was, as expected, higher than the run rate in the second half of 2011, by a mid single digit rate, reflecting continued growth in the portfolio and deliberate shifts in product mix.

Wholesale Banking

The Wholesale Banking business had a strong start to 2012 with client income growing at a high single digit rate over the comparable period in 2011. Client income continued to contribute around 80 per cent of total Wholesale Banking income.

Commercial banking, by which we mean Cash, Trade and associated FX, continues to be the core of our Wholesale Banking business and performed well in the first quarter.  Margins in Cash were broadly stable and margins in Trade improved compared to the second half of 2011. Cash and Trade average balances continue to grow well, however, the rate of growth in balances moderated compared to the growth seen in 2011 due to a combination of reduced growth in market activity, our stance on pricing and increased competition. Transaction Banking income showed strong double digit growth over the first quarter of 2011. 

In Corporate Finance, income in the first quarter of 2012 was marginally down on the very strong comparative period in 2011. The deal pipeline remains robust.

Financial Markets client income showed high single digit income growth over the first quarter of 2011.  Compared to the second half run rate of 2011 Financial Markets client income grew at a strong double digit rate, with double digit growth in FX, Rates and Credit. Volumes in the first quarter of 2012 were up on the comparable period in 2011.

Own account income grew at a low double digit rate year on year.  Financial Markets own account income was down on the comparable period in 2011, which was a very strong quarter. However, ALM and Principal Finance income grew at a double digit rate.  

Wholesale Banking expenses were marginally above the run rate seen in the second half of 2011.

Whilst we continue to monitor closely a small number of accounts, overall asset quality remains good. The loan impairment charge in the first quarter was, as expected, very low.

Group

Overall, the Group had a strong start to the year, building on a strong close to 2011, underpinned by continued momentum in the balance sheet and well diversified income streams. The Group remains very well capitalised and highly liquid. We look forward to providing a further performance update in our pre-close trading statement in June.

For further information, please contact:

James Hopkinson, Head of Investor Relations                    [phone]

Ashia Razzaq, Head of Investor Relations, Asia                         [phone]

Jon Tracey, Head of Media Relations                                  [phone]

This announcement contains or incorporates by reference 'forward-looking statements' regarding the belief or current expectations of Standard Chartered, the Directors and other members of its senior management about the Company's businesses and the transactions described in this announcement. Generally, words such as ''may'', ''could'', ''will'', ''expect'', ''intend'', ''estimate'', ''anticipate'', ''believe'', ''plan'', ''seek'', ''continue'' or similar expressions identify forward-looking statements.

These forward-looking statements are not guarantees of future performance.  Rather, they are based on current views and assumptions and involve known and unknown risks, uncertainties and other factors, many of which are outside the control of the Company and/or its Group and are difficult to predict, that may cause actual results to differ materially from any future results or developments expressed or implied from the forward-looking statements. Such risks and uncertainties include changes in the credit quality and the recoverability of loans and amounts due from counterparties; changes in the Group's financial models incorporating assumptions, judgments and estimates which may change over time; risks relating to capital, capital management and liquidity; risks arising out of legal and regulatory matters, investigations and proceedings; the policies and actions of regulatory authorities; the impact of tax; operational risks inherent in the Group's business; risks arising out of the Group's holding company structure; risks associated with the recruitment, retention and development of senior management and other skilled personnel; risks associated with business expansion and engaging in acquisitions; global macroeconomic risks; risks arising out of the dispersion of the Group's operations, the locations of its businesses and the legal, political and economic environment in such jurisdictions; competition; risks associated with the UK Banking Act 2009 and other similar legislation or regulations; changes in the credit ratings or outlook for the Group; market, interest rate, commodity prices, equity price and other market risk; foreign exchange risk; financial market volatility; systemic risk in the banking industry and amongst other financial institutions or corporate borrowers; cross-border country risk; risks arising from operating in markets with less developed judicial and dispute resolution systems; risks arising out of regional hostilities, terrorist attacks, social unrest or natural disasters and failure to generate sufficient level of profits and cash flows to pay future dividends. 

Any forward-looking statement contained in this announcement based on past or current trends and/or activities of Standard Chartered should not be taken as a representation that such trends or activities will continue in the future. No statement in this announcement is intended to be a profit forecast or to imply that the earnings of the Company for the current year or future years will necessarily match or exceed the historical or published earnings of the Company.

Each forward-looking statement speaks only as of the date of the particular statement.  Save in respect of any requirement under applicable law or regulation, Standard Chartered expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Standard Chartered's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

 

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