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Thursday Sep 19, 2024
Friday, 8 August 2014 00:55 - - {{hitsCtrl.values.hits}}
Q: Your interim profits down by a fifth, that was pretty much as you had suggested in guidance, but what is Standard Chartered really going to do at this point to get growth back on track?
A: I think clearly, a lot of action needed, and a lot that we’ve already begun. For the few that are centre stage, we’re de-risking the unsecured book, we’re reshaping Korea, and we are obviously keeping a huge focus and discipline on cost.
Q: Tell me a little about Korea. You had divested a bit from that business a while ago. What are you going to do? Sell off more business there?
A: Just on Korea, to give you some context, I mean, it’s a tough market. The revenue pool for the entire industry is falling, the impairments are growing for everyone. And there’s huge inflexibility in cost management. So, in the light of those things we did divest the consumer finance business, as you said. But we’ve unrisked or derisked the unsecured book. And so we’re 16 percent down on our balances on unsecured from last year, that as well. And then of course we are also reducing head count 600 down year-on-year, we’ve reduced 47 branches - so we’ve brought branches down by 47. So a host of measures been taken. And now with the RMB new opportunity in Korean, that will give us a new stream of income as well.
Q: You also mentioned cost cutting - an obvious thing to do in difficult times. Does that mean jobs on the line around the region? Or how are you going to cut back on costs?
A: I think it’s largely around efficiency. So, we are having for a long time now wage inflation of an average of 5% or so around the globe. We are obviously having regulatory costs, which, you know, is going up quite significantly every year. So in the face of that, plus investments that we have to meet and want to meet, we’ve been able to keep in 2013 our cost was only 1% over 2012, and in the first half again it’s 1% over that. So, against the 5% kind of inflation, plus regulatory and everything else, we’re being able to be quite disciplined. Most of the inefficiencies are coming from within, and the new organisation we have put in place will hopefully give us even more the simplification and savings, as well.
Q: What about in terms of jobs and geographies, though? Are you going to need to make some tough decisions in the year ahead?
A: No, we are not looking at cost per se through headcount alone. There will be some rationalisation of headcount in certain areas where, say trading in the financial markets doesn’t pick up over a period of time then, clearly, there will some rationalisation there although we’re not foreseeing it immediately. But, on the other hand, private banking is growing, legal compliance we are adding headcount substantially, financial climb we are adding. So in the net I don’t think you are going to see a headcount reduction.
Q: We had that fraud at Qingdao Port, which is costing you about 175 million (USD). But does it lead to the question that risk is very risky right now, and you need to change your strategy - especially as far as Asia is concerned.
A: Clearly, a fraud cannot dictate risk direction in that sense because it is something that is not in the normal course of business. But if we look at even the commodities business, which is where we’ve got hit, we’ve been watching that space for quite some time. We’ve been quite conscious. And since the Qingdao Port incident we reduced our exposure there by $600 million. So we’re obviously taking action where it’s deserved. But overall the book is still very well diversified. We have huge collateral. We’ve built collateral over the years as substitute for giving up some revenue for building more collateral. That has done well. And the book is still short-term in nature. So, you know, 60% of our book is less than one year in exposure. So we’re quite happy with the overall portfolio trends.
