UK-based Standard Chartered bank income in Middle East and South Asia (MESA) inched up two per cent, or $7 million, to $344 million in the first half of 2010 while income in the UAE grew six per cent.

The bank said its income in the UAE was helped by a stronger wealth management performance but was partially offset by a reduction of the high-yield personal loan portfolio in light of the economic stress and tighter underwriting criteria. The bank didn't provide income figures for the UAE.
 
“Growth in focus segments such as Private Banking and Priority Banking was strong but liability margins continued to be under pressure in a low interest rate environment with increased competition,” the bank said in a statement.
 
It said cross-border exposure to China, India, and UAE has risen significantly over the past year, reflecting its focus and continued expansion in core countries. “Cross-border exposure to the UAE has increased as we grew our core business with particular emphasis on the Abu Dhabi portfolio,” the bank said in its first half results statement.
 
Consumer Banking segment in the MESA region returned into black in the first half of 2010, posting $36m profit against $2m loss for the same period last year. Its loan impairments dropped nearly 39 per cent, or $56m, to $87m in H1 2010.
 
It said operating expenses in MESA were higher by $25 million, or 13 per cent, at $221 million primarily driven by UAE where expenses were up by $20 million, or 26 per cent, as the business continued to invest in frontline staff and realignment of distribution channels.
 
Loan impairment was lower at $87 million, 39 per cent down from $143 million in the first half of 2009. Whilst the decrease was primarily in the UAE and Pakistan, all markets benefitted from an improving economic climate coupled with the shift to secured lending products.
 
MESA delivered an operating profit of $36 million, compared to an operating loss of $2 million in the first half of 2009.
 
In the wholesale banking segment, income was down $94 million, or 12 per cent, to $712 million with increases in client income partially offsetting the drop in own account incomes.
 
Client income growth was broad based with Lending, Trade and Corporate Advisory reflecting increased volumes and steady margins and Islamic banking continued to be a key focus area. UAE income was lower with the growth in local corporate segment being offset by a drop in other client segments.
 
Bahrain saw an income drop of 35 per cent as a deteriorating credit environment in the region impacted risk appetite and business flow.
 
Operating expenses were up $27 million, or 10 per cent, to $294 million driven by staff and investment expenditure. Working profit was down $121 million, or 22 per cent, to $418 million. Impairment in the region, which continues to be driven by a few existing problem exposures, was significantly lower than in the first half of 2009.
 
Operating profit at $364 million was $142 million, or 64 per cent higher.
 
“While there is economic improvement in our markets of Asia, Africa and the Middle East, they are still dependent on a recovery in the West which is much less certain,” said its Chairman John Peace.
 
Standard Chartered announced record global half-year profit of $3.12 billion as bad debts more than halved and its key Asian markets fared better than those in the West.