THE ''financial scam'' on the Bombay Stock Exchange predictably
devastated the Standard Chartered figures for last year with the
wideflung bank making a #272m provision against its liabilities.
But the City reckoned that that was more than adequate after hearing
the breakdown from chief executive Malcolm Williamson, took one look at
the rest of the business and marked the shares up 25p to 716p.
The pre-tax total was little changed, dropping #3m to #202m. But if
the impact of an inflow of #111m from the sale of properties offset by a
total cost for India of #305m including the cost of capital having to be
injected in addition to the provisions, then there would have been a
near doubling in the outturn.
First the good news. The operating profits jumped 35% to #470m thanks
to a doubling in the contribution from Asia Pacific and in particular
Hong Kong. That benefited from the combination of a rising volume of
business as well as higher prices -- retiring chairman Rodney Galpin is
quite relaxed that half the bank's assets are in the area he sees as the
growth point for the world economy. Divisional profits were helped by a
#63m inflow from the settlement of the MiniScribe and GPI legal cases.
Good progress was also seen in Africa and the Middle East and South
Asia, apart from India. There, the criminal cases of connivance between
dealers and brokers and attempts at recovery will take some long time to
reach a conclusion -- there has have also been three dismissals in the
London head office.
In the UK, there was an #18m increase in the trading loss to #64m with
the bad-debt provision of #122m only marginally lower. Apart from a
same-again #34m charge at the Chartered Trust consumer finance
subsidiary there were several top-up provisions on earlier major
defaults such as Heron, Isosceles and Brent Walker. But as heavy UK
lending has now ceased, the charge in the current year should be
considerably lower.
One concern is the capital adequacy with the tier one ratio at just
4.9% which is below the 5% that the Bank of England feels comfortable
with. But this could be redressed by both debt recoveries and the
possible issue of dollar preference shares.
Although the dividend total of 20p for a 3.7% yield has effectively
been paid for from the Far East property sales, the City is looking for
the payout to be coverted by earnings this year.
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