Chillin' out till it needs to be funded
StanChart was later than the others who were approved for business in China in 2007 and still has only 19 branches totalling to 83 outlets. In terms of all outlets, not counting associates, HSBC is already more than 100 outlets.
StanChart also expects that China’s $6 tln GDP will outgrow everyone else in another 18 years now to $73 Tln in 2030, with India in third position behind the US with $30 tln in GDP and Brazil close behind.
With European banks holding one fifth of Asia’s debt, their withdrawal has already raised borrowing costs by 50% for corporates in Asia, and StanChart research expects them to critically impact China and Singapore However we feel, China’s growth and that of the rest of Asia and US will not be impacted too negatively by Europe though Europe itself will unlikely recover. StanChart and HSBC with their predominantly Asia focused models are thus likely to remain victors of the game even as the plateaued Yuan business shows signs of recovery as bank policy starts easing in China.
In 2010, Standard Chartered China received many awards and honors, including “First Class Award for 2010 Banker Survey” from PBoC Shanghai Headquarters, “Best CSR Company Award” from China Business Network, “2010 Best Debt House in China” from The Asset, “2010 China CFO Most Trusted Bank” from CFO World, “Golden Shell Award of Finance” from 21st Century Business Herald and “100 Best Human Resource Management Companies” from 51job.com.
StanChart led McDonalds’ $2 bln yuan offering to finance its mainland growth. That is a good 11% share of the new Yuan bonds. The bank also has natural strengths in the Transaction Banking business as cross border Yuan settlements, and China’s International trade finance requirements grow in line with its trade bill of $5 tln with almost $200 bln in exports and imports each evry month. $1.5 tln is created by FIEs only (Foreign Invested Entrerprises)
StanChart has been growing from Hongkong growing H1-2011 business in HK to $1.59 bln but China business has also grown to $404 mln in the same period.
Its Operating Profits in mainland operations are a good comparable 94 mln but while HSBC is already slowing in HK, SCB is growing almost 60% in the first six months of 2011 in HK itself in Operating Profits/ PBT
As of now its India business is the larger one next to Hongkong to with 4900 mln in business in the first half and $509 mln in Op Profits/ PBT but India loan growth is now a slower rate as franchises in India need to grow into the rural hinterland and scale up. China on the other hand offers ready opportunity with Transaction Banking/Trade Finance and new Yuan business in Currency also.
To reiterate for Stanchart, China is a new top 5 priority with Hongkong and others while it has earlier grown in India and the Middle East only, degrowing by 25% in India alone in the June 2011 figures. It is probable that China business alone will outgrow its India franchise in 2011 once December results come out.
Its new plans for China include emulation of other successful wealth franchises with Yuan offerings as emigration and luxury takes strong shape in the middle kingdom.