Standard Chartered rides the storm
In the middle of global financial angst, how refreshing it was to see the results from Standard Chartered.
If a corporate strategist had been told, say three years ago, that in 2007 there would be a meltdown in the American mortgage market and a global credit crisis, and he was asked to design a financial services group to avoid those dangers, he would have come up with the Standard Chartered organisation chart.
Even the bank’s rivals give it credit for setting its priorities, and sticking to them come what may. Stanchart has concentrated on its traditional strengths – the fast-growing markets of Asia, the Middle East and Africa.
The financial results were there for all to see. Profits were up 27 per cent to more than $4 billion. While the bigger US banks were writing off billions, Stanchart’s total exposure to asset-backed securities was less than 2 per cent of its balance sheet.
There is always the possibility that any US economic slowdown will impact Stanchart’s Asian operations, and it is too early to tell if this will be the case this year. But in 2007 business in China, Hong Kong and India soared.
The Middle East could also be a source of financial comfort. Last year, the UAE made a significant contribution, with income in consumer banking up 32 per cent to $302m and wholesale banking 24 per cent ahead at $261m.
When Stanchart chairman Mervyn Davies was recently in the UAE, he went out of his way to stress that the bank would be open to any approach by a sovereign investor, and the logic of these financial results is that those funds should be forthcoming even more quickly.
Stanchart has been the subject of takeover rumours for years, with large chunks of shares swapping hands between different power brokers, each time prompting more speculation of an outright bid. That situation now looks to be normalizing.
Though I suspect the bid stories will continue, I think Stanchart has the opportunity now to show that its impressive performance in 2007 was no fluke, and that it can go on to greater things.
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