The Banking and Strategy Initiative

Chillin' out till it needs to be funded

Bank Results Season: Standard Chartered effectively neutralised in Asia? (Q1 2012)

The Temasek controversy apart ( Aside: This is not much of a controversy really, The investor wanted to hold $10 bln worth of Stan C shares and we assume and hope that Stan C will find ADIA or other bidders to take up the amount Temasek needs to sell after the reorganisation as Singapore has to review its multifaceted SWF approach)

Standard Chartered had given up on its fat india territory in the middle of 2010 and its bets on the rupee continued to make it profits till mid/late 2011. However it must review its Asia strategy again as both China and India seem to be not giving it leadership status and its Middle East expansion, if alone is enough for the bank, it must show so clearly. The bank’s independent country units are increasingly at risk of operating in silos despite moves from India/Asia Pac to HO at Stan Chart and Deutsche Bank as they both struggle with some of their older trading assets / loan books and commercial banking growth seems to be poassing them by. But seriously, we should be giving them a fair hearing and looking at their numbers for Q1

Apart from questionable performance in India, Korean costs continue to hurt the bank as it enforces an ERP there ( Early Retirement) while double digit growth in Hongkong, Malaysia and indonesia shows them to be in sync in the rest of Asia. However, unless you believe that Hongkong, Malaysia and indonesia are suddenly going to make China, India and Singapore marginal players in the growth game, that overperformance would not compensate for strategy holes in the continent they propose to rule , relying on the continent’s growth still requires a focus and size in India and China

Loan impairment and Net Operating improvement showed growth but Indian peers and even the Chinese in a bad year/quarter have stamped the likelihood of 30% profit and 20% toplinbe growth as benchmarks for winning in the region and a 10%+ growth may not be fine enough if the asset books are bigger than some of the competition in India. even INR 8 tln banks in india have shown an easy conversationalness with 30% bottomline growth and stresses ( and thus costs) are greater in the rest of Asia

However mortgage assets were stable  and Commercial Banking growth was this quarter replaced by continuing growth in Transaction Banking Africa and Middle East continue to grow off a small base and hopefully bank will relearn the growth regimen it has been well invested in for a 100 years

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This entry was posted on May 2, 2012 by in Amitonomics, Banking, Europe, Global, India Infrastructure and tagged , , , , , , , .


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