A man uses a Standard Chartered cash machine in Hong Kong. The bank's net profit jumped 29 percent to a record $4.23 billion in 2010. ED Jones / AFP

Standard Chartered Bank Plc has set its sights on double-digit income growth for 2011, the London-based but Asia-focused bank said Wednesday after reporting a record full-year net profit in 2010.

The bank's net profit jumped 29 percent year-on-year (YoY) to a record $4.23 billion for the year ended Dec 31 on operating income of $16.06 billion, up 6 percent from a year ago. In a statement accompanying the bank's 2010 results, Chairman John Peace called the past year the bank's "eighth consecutive year of record income and profits".

The normalized earnings per share for Standard Chartered finished the year up 14 percent at 197 US cents. The board proposed a final dividend of 46.65 US cents per share, taking the total dividend for the year to 69.15 US cents per share, a YoY rise of 9 percent.

"It's been another year of consistent record performance," Jaspal Bindra, CEO for Standard Chartered (Asia) said Wednesday at a media briefing.

The progress was broad-based, he noted. Operating profit of the consumer banking business soared 51 percent YoY to $1.31 billion. Income from wealth management grew 24 percent YoY, while income from the mortgage lending business jumped 22 percent over a year earlier.

Operating profit of wholesale banking went up 17 percent to $4.77 billion from a year earlier. Global market sales increased 7 percent YoY, with strong growth seen in both corporate finance and principal finance. But overall, the bank's performance in the financial markets was not as good, with zero income growth. Income from trade exhibited robust growth, up 14 percent.

Among other things, the bank said it benefited from an improved credit environment and better risk management, which together led to a markedly low level of loan impairment in 2010. At $883 million, the loan impairment provisions for 2010 were 56 percent less compared with 2009, when the figure stood at $2 billion. The total net charge for wholesale banking loan impairment more than halved to $305 million for 2010 from $948 million a year earlier.

Hong Kong continued to be a major growth driver for the bank, with the pre-tax profit rising 4 percent YoY to $1.1 billion. Apart from Hong Kong, India and the mainland are both expected to be the main growth engines for the bank in the future.

With a pre-tax profit of around $1.2 billion, India for the first time became the bank's most profitable market. And the Chinese mainland market is also about to enter a fast-growth period, noted Bindra, fuelled by yuan internationalization and Hong Kong's development as an offshore yuan center. The bank established another 14 branches on the mainland over the past 12 months, with three more to be opened next month.

"Our markets - particularly in Asia - are going strongly," said Bindra.

Looking ahead, Bindra said Standard Chartered will be striving for consistent growth. "For 2011, we are going for double-digit income growth," he said. The bank's highly-liquid and well diversified balance sheet will certainly help, he added.

The bank's core tier 1 capital ratio stood at 11.8 percent at end-2010, up from 8.9 percent in 2009, while the total capital ratio was at 18.4 percent compared with 16.5 percent in the previous year.

The lender also aims to maintain its return on equity in a mid-teens percentage ratio and will add about 1,000 staff globally in 2011, said Bindra.

The bank's assets totaled $517 billion as of the end of 2010, of which 26.6 percent were liquid.

"Standard Chartered is a remarkable success story, with very significant momentum, delivering outstanding results notwithstanding the adverse ... impact from low interest rates," said Ian Gordon, an analyst at Exane BNP Paribas.

However, costs also rose as the bank hired 7,000 staff in 2010, a near 10 percent rise to 85,000 employees.

Standard Chartered, which generates more than 80 percent of its profit in Asia, said its normalized cost-income ratio rose to 55.9 percent in 2010 compared with 51.3 percent in 2009 as it fights to hire and retain staff in competitive Asian markets. Operating expenses at its wholesale business also rose 16 percent in the year to $655 million, faster than the 7 percent rise in income in the division.

However, Arturo de Frias, a London-based analyst at Evolution Securities, said that although costs had risen sharply in the second half - 43 percent in India and 37 percent in Singapore - he remains a buyer of the shares. "The medium term growth story is very good, and absolutely intact," he said.

The bank's share price closed marginally lower in Hong Kong trading Wednesday at HK$206.00, down 0.29 percent. However, traders in London reacted well to the results news, sending shares up 4.6 percent to 1692.50 pence in Wednesday afternoon trading.

Reuters and AP contributed to this story.

China Daily

(HK Edition 03/03/2011 page2)