Standard Chartered

SUCCESS stories of this magnitude are always a little too good to be true. On the face of it, Standard Chartered is probably the strongest of the major banks: it avoided the worst of the crisis; its Asian focus means it is exposed to some of the world’s fastest-growing nations; and it holds a negligible amount of Southern Europe’s sovereign debt.

Still, this statement creates a nagging feeling that something isn’t quite right. On 4 May, Standard Chartered informed markets of a strong start to the year.?Now we find out that income in the first half will be flat on the same period last year. Trading on its own account has softened slightly, while wholesale banking revenues have been hit by jittery markets in recent weeks, despite its supposed shelter from?Europe.

Costs are also creeping up, by around two per cent year-on-year. Standard Chartered reined in investment in the first half of 2009, partly accounting for the rise. But a longer-term drag on profitability is competition, which is hotting up in Asia, meaning Standard Chartered is having to fight tooth and nail to win clients and talent. This situation is likely to persist, meaning the Standard Chartered growth story will progress a little more slowly.