Published March 5, 2009

Stanchart rides high on wholesale banking

Operating income hits US$1.43b, up 60% from 2007

By EMILYN YAP

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(SINGAPORE) Boosted by stronger results from wholesale banking, Standard Chartered Bank (Stanchart) Singapore posted high double-digit growth in income and profit for 2008 despite the ongoing financial crisis.

Consumer banking saw its fair share of action - customer deposits grew over 60 per cent last year as investors embarked on a 'flight to quality', said Stanchart Singapore CEO Lim Cheng Teck at a press briefing yesterday. 'We are strongly liquid and well-capitalised.'

Stanchart Singapore earned US$1.43 billion (S$2.21 billion) in operating income last year - up 60 per cent from a year ago. This is the first time that income here crossed the $2 billion mark. Profit before tax also rose 67 per cent to US$744 million.

'Last year was a difficult year,' said Mr Lim. But 'we have gained market share - some peers were particularly distracted because of the problems they face back home'.

Singapore was the third-largest contributor to Stanchart's group pre-tax profit after Hong Kong and India. Beating market expectations, the UK-based bank reported on Tuesday a 17 per cent year-on-year increase in profit attributable to ordinary shareholders of US$3.30 billion.

Wholesale banking accounted for more than half of Stanchart Singapore's takings. The division's operating income almost doubled from 2007 to US$808 million last year, while profit before tax surged 140 per cent to US$435 million.

Contributing to the income growth were activities such as asset and liability management and fixed income trading, as well as client services such as interest rate derivative sales.

Consumer banking income rose 31 per cent to US$618 million last year, driving pre-tax profit up 17 per cent to US$309 million.

The division enjoyed a surge in deposits - customer accounts grew 63 per cent last year to US$32.16 billion as the bank launched deposit gathering campaigns. 'During volatile times, there is a flight to quality,' Mr Lim said.

Mortgage loans rose 31 per cent to US$6.04 billion as the bank targeted wealth management customers and competitive pricing drove customer refinancing. Stanchart Singapore's share of new market sales for mortgages also doubled to 20 per cent.

Across consumer and wholesale banking, Stanchart Singapore extended loans amounting to US$20.35 billion in 2008, 18.5 per cent more than a year ago. This included an impairment provision of US$47 million, up from US$40 million in 2007.

'2009 will be a challenging year but we remain very much open for business,' said Mr Lim. According to him, business in January this year has improved compared with a year ago.

The momentum in wholesale banking has also not changed, he noted. As for consumer banking, there is still 'good growth in mortgages' and Stanchart Singapore aims to cross-sell more effectively to clients.

In spite of the weak economic climate, Mr Lim said that Stanchart Singapore is still hiring. Its headcount has increased by around 900 to more than 5,500, and this includes around 60 fresh graduates taken in recently.

But the group has frozen senior management salary globally and for some, a larger proportion of bonus will be deferred and paid out as shares.