A DROP in loan impairments across the board saw Standard Chartered push its pre-tax profits up 19 per cent to $6.12bn (£3.75bn), the bank’s full-year results showed yesterday.
Bad loans were down 68 per cent in wholesale banking, which accounts for most of the bank’s revenues, and 45 per cent in its consumer business.
Standard Chartered bucked the overall trend for British-based banks, delivering returns on equity of 14 per cent last year at a time when many of its rivals with business concentrated in Europe are struggling to bring returns above 10 per cent.
Despite its successful focus on high-growth emerging markets, however, the bank warned that the complex onslaught of regulations planned for financial institutions represent “the biggest external challenge” it faces.
Chief executive Peter Sands said that despite having worthy aims, global regulation to make banks safer “represents a very considerable challenge and there is the real risk of unintended consequences”.
He warned that regulators are descending into “increased fragmentation and unilateral action” and cited the UK’s bank levy as an example, saying it will cost the bank $180m this year. Chancellor George Osborne unexpectedly sped up the phase-in of the levy last month in order to bag more money for the Treasury this year. Figures showed that Standard Chartered, which did not participate in the government’s negotiations with banks known as Project Merlin, paid $1.7bn in taxes globally, equating to a total effective tax rate of 27.9 per cent this year.