Standard Chartered profits plummet 30%

Outgoing boss Peter Sands laments a perfect 'storm' of low commodity prices, QE and fines, but shares still go up.

by Adam Gale
Last Updated: 03 Nov 2015

In the icy depths of the recession, rival bankers may well have looked upon Standard Chartered as a kind of tropical haven from the West's financial woes. Now, however, the bank's focus on commodity-rich emerging markets, which led to a decade of continuous growth, is proving a serious liability.

Pre-tax profits for 2014 were $4.2bn (£2.7bn) after exceptional items, down 30% from 2013. Loan impairments primarily tied to the collapse of commodity prices were the main culprit, with $2.1bn written off, compared to a mere $1.6bn last year. August's $300m US fine over money laundering surveillance systems hardly helped matters either.

'We faced a perfect storm,' lamented outgoing boss Peter Sands. 'Negative sentiment towards emerging markets, a sharp drop in commodity prices, persistent low interest rates and surplus liquidity, low volatility and a welter of regulatory challenges'.

Sands was given the boot (or rather notice of the boot - he leaves in June) last week after eight years as chief executive, along with three other non-executive directors and chairman Sir John Peace. Perhaps by way of a kick on the way out, the bank's top executives are forgoing their bonuses for 2014 in light of the poor results.

This is perhaps unfair. Sands presided over many years of growth while others foundered, but his bank is on a different cycle. Now times are tough, StanChart's investors are grumbling that he didn't react fast enough to it.

Sands has been pushing a cost-cutting programme to help restore the bank to health, saying that, although its costs increased 5% last year to $10.7bn, Standard Chartered was due for $600m of savings in 2015.

Investors, it seems, are happy with this parting gift. Shares rose 4.7% to £10.19 this morning on the news, the highest level since October.

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