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European Bank Results Season: Asia Africa specialist StanChart reports on Q3 2011

With investors on hold in Mumbai, Dubai and London, Stanchart again looks forward to being a calm ocean in the middle of the European crisis having almost doubled income out of Hongkong and China in the first half. The bank had RWA of $73 blln in Consumer Banking and $183 bln in Wholesale and Commercial Banking at June 30, 2011. The earnings conference was preceded by another non descript Interim Management statement promising nothing amiss. The bank’s cost income ratio had increased for the first half but Financial Markets had performed sterlingly on its currency and Interest rate bets to $2 bn for 6 months. Advance/Deposits ratio for the bank was a high 78.1% and the LTV value for the mortgages down to a low 49% ITs Principal Capital may further drop from its $176 mln in H1 a drop of 50% over the 2010 year end numbers

The bank sticks to its double digit growth estimates for 2011

Management Speak

 

> Income grew at double digits for Consumer Banking incl SME and unsecured Credit

> Depreciation in Asian currencies has caused headwinds in its FX income and trading ncome has ticked down

> Headcount has increased by 2000 in Q3

> Income growth has outpaced cost growth ezxcept for the impact of the UK Financial Levy which had caused Jaws to a low 1% from 3% excl the levy in the first 6 months

> Cost-income jaws are negative in the first nine months of 2011 in Wholesale banking

> Client Income in Financial Markets has grown to more than 80%

> No specific areas for concern

> Minimal exposure to problem asset classes

> Added Temasek bonds by Temasek used Stanchart equity sale by warrants to smoothen the deal

> Added capital using bonds. (Rights issue impact in H1 was 150 bp)

> Increased margins in Transaction Banking as they posted good volume growth, on Trade side 127 bp in Trade from 120 bp in the H1(already a good business) – responded to Citi analyst

India continues to be a challenge

Management speak on India results : India slowdown is predominantly Domestic Wholesale due to rapidly rising Interest rates as offshore franchise and Domestic CB continues to do well. Also a face off between Government and Businesses in India on Telecom licenses is affecting confidence

Savings rate deregulation in India could follow how bank has gained from other deregulation in Asia in the medium term!!!

 

Financial statements release are awaited

 

 

 

2 comments on “European Bank Results Season: Asia Africa specialist StanChart reports on Q3 2011

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  2. Pingback: Stanchart makes China business count | The Banking and Strategy Initiative

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This entry was posted on November 2, 2011 by in Banking, Europe, European Sovereign Debt crisis, Financial Services, Global and tagged , , , .

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