Standard Chartered operating profit rises 10% to $2.84bn, income 14% to $7.96bn in the first half of 2009

The Group has seen substantial income momentum across markets with four key geographies reporting over $500m of income each in the first half.

The performance was driven by strong momentum in Wholesale Banking with income rising 37%, benefitting from market dislocation and volatility leading to market share gains.

Restructuring initiatives in Consumer Banking began to show early positive results with income falling only 3% over the second half of 2008 while operating profit increased 11% over the same period.

The Board of Directors have also announced an interim dividend of 21.23 cents per share, up 10%.

Peter Sands, Group Chief Executive, Standard Chartered, said:

"These results show record income and profit performance, characterised by significant momentum over both the first and second halves of last year. Our balance sheet strength is now a source of competitive differentiation helping us win more businesses. We are in the right markets at the right time."

The foundations of the Group remain in good shape with capital ratios running higher than target ranges with tier 1 ratio at 10.5% and total capital at 15.8%. The Group showed demonstrable cost control in the face of continued economic uncertainty with costs up only 3% and cost income ratio down to 49.6% compared to 56.4% in the first half of 2008.

Shayne Nelson, Regional Chief Executive, Standard Chartered MENA, said:

"Our continued disciplined approach to our strategy and our focus on Asia, Africa and the Middle East, has enabled us to remain liquid and well capitalised. Standard Chartered's performance in the region has been good and has contributed to our strong Group interim results."

"In the Middle East and North Africa, we have seen a number of record months in the first half of the year and we are well positioned to continue our good momentum in the second half as economies in the region stabilise. Our focus is to considerably deepen our existing client relationships and our role in the recent Ras Al Khaimah Government Sukuk issuance is testament to this. We will actively monitor the economy, manage risks and stand by our customers in times of uncertainty to continue to lay strong foundations for all our stakeholders," Nelson added.

Group Wholesale Banking income increased to $5.03bn for the first half while operating profit increased 36% to $2.25bn, benefiting from the strategy of deepening client relationships which saw revenue from the top 50 clients rising 40%. Within the business, Financial Markets increased income by 68%, Corporate Finance by 68% and Lending & Portfolio Management by 67%. Three of the four client segments each generated income of over $1bn in the first half.

Compared to the first half of 2008, Group Consumer Banking income declined 15% to $2.69bn while operating profit fell 57% to $348m. The performance was a reflection of the combined effect of lower interest rates, pressure on the Wealth Management business and a shift towards a more secured asset portfolio. However Consumer Banking was more profitable compared to the second half of last year as it benefitted from a series of cost saving and efficiency initiatives.

With the Group firmly focused on balance sheet strength, Consumer Banking has successfully attracted deposits with total deposit balances growing 12% creating some $40bn of surplus liquidity for the Group. In three of the core markets of Hong Kong, Singapore and Korea, deposits grew by 31%, 34% and 33% respectively.

Faced with a slowdown and deteriorating credit environment, Consumer Banking is re-shaping the business and de-risking the lending book.

"Central to this transformation is the shift away from product sales towards much greater focus on deep, multi-product customer relationships. When investor confidence returns, and interest rates begin to rise, income will surge. This will have a powerful effect on the bottom line of Consumer Banking," Sands added.

The Group's portfolio continued to perform well given the underlying economic conditions, though both in Wholesale and in Consumer Banking customers are experiencing increased financial pressure. The Group remains vigilant and continues to take a proactive approach to managing risk by tightening underwriting standards, increasing collateral requirement, reshaping the unsecured business away from high risk segments and significantly increasing collection resources.

Richard Meddings, Group Finance Director, Standard Chartered said, "The second half of 2009 has started well with Wholesale Banking in July running ahead of the first half average monthly profit with robust transaction pipelines."

Standard Chartered also announced a placing of new shares to raise approximately $1.6bn or around 4% of issued share capital through an accelerated book build.

"The additional capital will enable us to take full advantage of the opportunities emerging from the crisis. We are winning market share in both the wholesale and consumer banking businesses, in most products and in most of our markets. We want to be there to support our customers as they turn the crisis to their advantage," Sands said.