The Low Post News

Weakness in Emerging Markets Hits Standard Chartered

Profits and income dropped at Standard Charter during the first quarter of 2014, as the bank took a hit from a weakness in financial markets and in the currencies of emerging markets.

The drops came after the bank had reported its first drop in profits in more than 10 years in 2013 and had warned there would be slower progress going forward.

The bank, which earns over 90% of its income across, the Middle East, Africa and Asia, said its income would be off a percentage in the low single digits during the first three months of 2014, mainly because of weakness in Indonesian and Indian currencies.

Stripping out the impact on currency, income for the group, was slightly higher said the bank Thursday.

The bank warned of difficult conditions in the market that started on 2013 had continued through the first three months of 2014 and remained into April.

However, the finance director, Richard Meddings who will step down in June, said the bank’s momentum improved from the second six months of 2013.

Until last year, StanChart enjoyed more than a decade of growth in the double digits. It abandoned however its yearly target of revenue expansion in the double digits last November.

The bank has had to take large write down in South Korea on its consumer loans after government attempts to reduce the household debt burden in the country. This has become quite a problem for the bank.

In South Korea, the bank said its income had dropped by $110 million from the previous year, offsetting its growth in many other areas.

Excluding Korea, the bank said income during the first three months of 2014, was flat in comparison to last year.

Meddings said performance in South Korea deteriorated during the entire year, after an impairment charge of $1 billion was taken by the bank during the first six month of last year.

Shares at StanChart were up by 0.4% in early trading in London on Thursday.

Shareholders at StanChart will vote late Thursday on the pay policy of the bank.

The banks operating profit in the first quarter was lower by a percentage in the high single digits, which was in line with expectations as the bank.

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