Standard Chartered warned its income growth will be “just below” its 10 per cent target this year as the eurozone debt crisis slows deal activity in its key Asian markets, adding to problems in India and Korea.
The bank said it expects pre-tax profit to still rise by at least 10 per cent this year, however, helped by a strong performance in emerging markets such as Singapore and Hong Kong. It expects to report record profit and income.
Standard Chartered said that although it had “a strong pipeline in difficult market conditions”, income in 2011 is now expected to grow at just below 10 per cent, compared with 11 per cent in the first half of the year.
A depreciation in Asian currencies has hurt income, which is reported in US dollars, while India and South Korea continued to perform poorly.
“The shine has come off a little with the foreign exchange translation. But it’s still a very good story, you’ve got the combination of growth with capital strength and liquidity,” said Mike Trippitt, an analyst at Oriel Securities.
A 2-5 per cent depreciation in Asian currencies versus the dollar since August has depressed income by about $200m (£127m) and will hurt profits by $30-40m, finance director Richard Meddings estimated.
Wealth management and corporate finance businesses had been impacted by the difficult markets, the bank said. “As market conditions have remained difficult this has impacted on deal execution, although we expect any deals not closed out in 2011 will be closed out in early 2012,” Mr Meddings said.