Higher expenses overshadow better than expected quarterly profit for Standard Chartered, sending shares in the Asia-focused bank more than 5 percent lower. David Pollard reports.
Two years of restructuring at Standard Chartered saw the bank slash 15,000 jobs. That, and axe business lines such as Asian equities. On Wednesday, it was the turn of investors to slash its share price. Even though its latest earnings report wasn't - apparently - that bad. (SOUNDBITE) (English) CMC MARKETS, MARKET ANALYST, DAVID MADDEN, SAYING: "The numbers were quite quite impressive .... We saw profits rise .... Standard Chartered are known to try to derive a large proportion of their profits in emerging market economies. So their numbers were good." Pretax profits jumped 78 per cent to over 800 million dollars. Loan impairments were down 42 per cent. But by afternoon trading, its shares were on course to their biggest single-day decline in three months. Traders taking in a four per cent rise in reinvestment expenses - while betting on only flat revenues ahead. (SOUNDBITE) (English) CMC MARKETS, MARKET ANALYST, DAVID MADDEN, SAYING: "The slightly cautious tone that that accompanied today's figures sent the share price a bit lower, and the fact that they weren't overly bullish is something to be slightly concerned about." As was a nine per cent drop in income from the bank's financial markets business. Though that does come in a competitive environment - where banks still struggle against low interest rates. (SOUNDBITE) (English) CMC MARKETS, MARKET ANALYST, DAVID MADDEN, SAYING: "Trading operations in financial markets division isn't overly strong but that's fairly common in UK and American banks. So it's sort of Standard Chartered are performing ahead of the pack but not not the best of the bunch." As for the bank resuming dividends this year, there too the prospects look slimmer. On news that the its core capital ratio - a closely-watched measure of financial strength - has also fallen.