Standard Chartered PLC on Wednesday reported a seventh consecutive record annual profit, of $3.38 billion, as stronger wholesale banking earnings offset an increase in provisions for bad loans and other credit risks.
The bank said net profit rose 4 percent in 2009 from $3.24 billion a year earlier.
Impairment losses on loans and other credit rose from $1.3 billion to $2 billion, although the bank said the rate of impairment declined in the second half.
Pretax profit rose 13 percent to $5.15 billion, and operating income was up nearly 9 percent to $15.2 billion, driven by the bank's wholesale division with a 17 percent rise in interest income.
The bank set a final dividend of 44.8 cents, up 7 percent.
Standard Chartered shares were up 2.8 percent at 1,635 pence at midday on the London Stock Exchange.
"The bank's exposure to Dubai had weighed on investors' minds, but management today issued further assurance that the losses would not be material," said Richard Hunter, analyst at Hargreaves Lansdown Stockbrokers.
"Elsewhere, the capital position remains strong and Standard has been able to continue with business as usual, even throughout the eye of the recent storm."
"Standard Chartered provides an unrivaled way to gain exposure to emerging markets where growth is expected to outpace the developed world in both the short term and further out," said Jonathan Jackson, analyst at Killik & Co.
"The group is well capitalized, with high levels of liquidity, a conservative risk profile and a disciplined cost structure."
Increases in impairment charges were mainly in the Middle East, India, Singapore and Korea, the bank said.
"In United Arab Emirates the impairment charge has been impacted by rising unemployment, with the bulk of the charge taken in the unsecured credit card and personal loan portfolios. The high level of expatriate customers in this market has made collections a particular challenge," the bank said.
In India the problems center on unsecured credit card and installment loan portfolios; rising unemployment and declining exports were blamed for rising impairments in Singapore, and unsecured lending portfolios in Korea had been hit by increases in personal bankruptcy and debt restructuring filings, the bank said.
While hailing the record profit, Chief Executive Peter Sands highlighted the uncertain outlook for the current year.
"Remarkably little progress appears to have been made in rebalancing the world economy. And while imbalances of such scale exist, so there remains the potential for currency crises, asset bubbles and trade wars," Sands said.
He added that there was more deleveraging ahead in public and private sectors in the West, it is unclear how the recovery will proceed when governments withdraw stimulus measures, and there is a risk of protectionism as unemployment rises.
"Finally, there is the risk that the pendulum swings too far in the reform of banking regulation, with the result that the real economy is starved of credit just as confidence and the desire to invest begins to return," Sands said.
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