LONDON -(Dow Jones)- Standard Chartered PLC (LSE:STAN) (STAN.LN) said Thursday that its trading performance for the first half of the year has "been very strong" but expects some economic uncertainty going forward.
In a trading update, the bank said it "had a very strong performance, building on the very good start to the year" and said it remains well-capitalized and highly liquid, with a loan-to-deposit ratio of around 90%.
However, it also said "the economic horizon is increasingly uncertain and our approach to risk management remains highly disciplined."
Standard Chartered, which generates over 90% of its profit outside the U.K. and largely in emerging markets, said trading in its main operating markets has benefited from robust economic growth, good local currency liquidity and a sound credit environment.
"Standard Chartered has continued to deliver very strong performance, primarily driven by excellent results from wholesale banking. We have yet to see a material slowdown in our markets," Chief Executive Peter Sands said.
"However, given the extraordinary turbulence in financial markets, and increasing inflationary pressures now arising in our geographies, we remain disciplined in our management of risks and costs," Sands said.
The bank said its net interest margins have remained broadly stable.
For the first half of the year, it expects expense growth to be "broadly in line with income growth."
The bank said the sale of its asset management business in India has been completed, giving it a pretax profit of $146 million.
It said its integration with newly-acquired American Express Bank is proceeding well.
"We continue to expect that American Express Bank will be earnings-per-share accretive in 2009," it said.
Meanwhile, although largely unscathed by credit market turmoil, the bank said its asset-backed securitization portfolio saw a combination of impairment and widening credit spreads which led to a charge to profits of $108 million and an additional charge to the available-for-sale reserve of $184 million from January to the end of May.
Losses on assets available for sale are only taken through the profit and loss account when they are permanently impaired.
In 2007, Standard Chartered's entire profit came from Asia, the Middle East and Africa, offsetting a $315 million pretax loss from the Americas, U.K. and Europe operations, mainly a result of $282 million in write-downs.
At 0915 GMT, Standard Chartered's shares were down 0.6% at 1,560 pence, compared with the FTSE 100 index which was down 1%.
Company Web site: http://www.standardchartered.com
-By Vladimir Guevarra, Dow Jones Newswires; +44 (0) 20 7842 9486, vladimir.guevarra@dowjones.com
(END) Dow Jones Newswires 06-26-08 0543 Copyright (c) 2008 Dow Jones & Company, Inc.
