Standard Chartered profits hit record $ 6.9 billion

Wednesday, 6 March 2013 00:00 - - {{hitsCtrl.values.hits}}

Bonus pool cut by 7% to $ 1.4 b
CEO bonus cut 10% to $ 3.15 m
Bank says tougher regulations cost well over $ 500 m/year

LONDON (Reuters): Standard Chartered notched up a tenth successive rise in annual profit with a 1% gain that was capped by the bank’s big fine for breaking US sanctions on Iran and rising regulatory costs.

London-listed Standard Chartered which has benefited from Asia’s growth through the last decade, said new regulations including tougher liquidity and capital rules and a UK bank tax were costing it “well north” of $ 500 million a year.

Many banks have said extra global regulations, brought in to make them safer after the 2008 financial crisis, are hurting profitability and could restrict their lending. But very few have quantified the impact on their bottom line.

A European Union proposal to cap bankers’ bonuses at double their salary was also a worry, the bank said.

“We are concerned about it because we are a global bank and 97% of our staff are outside the EU and we’re concerned about our ability to be competitive in attracting and retaining talent,” Chief Executive Peter Sands said.

Asked if it could prompt the bank to leave London, he said it was “too early to draw conclusions on what action we would take as we don’t know what we are dealing with.”

Standard Chartered said it had cut its 2012 bonus pool by 7% from a year before to $1.43 billion, after it was fined $667 million by US regulators for breaching sanctions related to Iran and three other countries.

Sands said his bonus would fall 10% on the year to $3.15 million.

Decade of hiring

The Iran-related fine was a rare blip after a decade of buoyant growth and few problems for Standard Chartered. It was accused of moving millions of dollars through the American banking system on behalf of customers in sanctioned countries.

The bank reported a pretax profit of $6.9 billion for 2012, up from $6.8 billion in 2011 but just short of an average forecast from analysts of $7 billion.

Its shares rose 2.8% by 1056 GMT, outperforming a 1.6% rise in the European bank index.

The bank, led by former McKinsey consultant Sands for more than six years, added 2,200 staff in 2012 and has said it could expand by a similar amount this year, although it plans to keep any cost increase below its rise in income.

Income in Malaysia, China and Indonesia grew by more than 10% last year. Income rose 10% in Hong Kong, its biggest market, mirroring the strong performance there by its rival HSBC on Monday.

Income in India, one of its biggest markets, fell 12% as the economy slowed and its currency weakened against the dollar.