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Strategies & Market Trends : India Coffee House -- Ignore unavailable to you. Want to Upgrade?

To: Mohan Marette who wrote (3798)	2/24/1999 3:20:00 PM
From: Mohan Marette	Read Replies (1) \| Respond to of 12475

StanChart to Increase Asian Investment-Says CEO Ratan Talwar 2nd-Half Profit Falls 32% Standard Chartered Plans to Boost Asian Investment (Update10) (Rewrites 1st paragraph, adds more on stock in 5th.) London, Feb. 24 (Bloomberg) -- Standard Chartered Plc said it will increase investment in Asia this year while setting aside more money for problem loans in the region, where the U.K. bank makes two-thirds of its income. While it's putting its money on recovery, the bank said 1999 will be as tough as the second half of 1998, when profit fell 32 percent to 199 million pounds ($324 million), or 19.6 pence a share, from 291 million pounds, or 32.9p, in the same period a year earlier. London-based Standard Chartered, like its rival HSBC Holdings Plc, sees opportunities to expand in Hong Kong, Singapore and Malaysia to prepare for a recovery in 2000. As a result, it said costs will increase at least 10 percent as it opens branches, sells new products and hires workers. ''Investing when others do not will materially enhance the long-term competitive position'' of Standard Chartered, said John-Paul Crutchley, a banking analyst at Credit Lyonnais Securities. That prospect sent its shares 2.7 percent higher to 832.5 pence, adding to a 40 percent gain in the last six months that makes Standard Chartered the best-performing U.K. bank stock. Problems in Asia In the second half, Britain's ninth-largest bank set aside 247 million pounds -- two and a half times as much as in the year-earlier period -- to cover problem loans in Asia. Excluding those provisions, second-half profit rose 2 percent to 523 million pounds, with a 17 percent increase in income from lending, to 768 million pounds. Among its problem credits are Chinese foreign investment companies, known as Itics, such as Guangdong International Trust and Investment Corp., which collapsed last year. Standard Chartered set aside 50 million pounds, representing half of its exposure to such companies. ''We want it to be clear to people that we want to put this one behind us,'' said Finance Director Peter Wood. He said that while the bank has lent to Chinese investment companies that are not in difficulties, Standard Chartered has been ''as conservative as anyone'' with these companies' problem loans. Chief Executive Rana Talwar said the bank is preparing for economic recovery in Asia by increasing investment in Hong Kong, Singapore and Malaysia. It is also examining other Asian markets to see which offer the best prospects for growth, particularly in credit cards and mortgages. Rising Costs ''We will have expense growth in double digits in 1999'' because of the investment, he said in an interview. Higher profits on currency trading compensated the bank for setting aside more money for problem loans in the first half of 1998. Smaller swings in Asian exchange rates meant second-half profits from that business fell. Talwar said, though, that Standard Chartered will see increases in income in many Asian businesses other than foreign exchange in 1999. ''Standard Chartered's performance can't be isolated from the general risks in the region,'' said Gary Jenkins, head of credit research at Barclays Capital. Second-half trading and foreign-exchange profit fell to 180 million pounds, down 24 percent from the first half of 1998 and 15 percent from the second half of 1997. Full-year net income was 463 million pounds, or 45.4 pence per share, down from 584 million pounds, or 61.7p. A survey of 18 analysts by IBES International Inc. produced an average estimate of full-year EPS of 45.8p from a range of 39.6p to 52.6p. Full-year profit was bolstered by a 21 percent increase in trading profit in Africa to 99 million, and 18 percent growth to 42 million pounds in the Middle East and South Asia.