LONDON - Standard Chartered, the British bank that generates most of its earnings in Asia, warned on Wednesday that operating profit at its consumer banking unit would fall this year for the first time in a decade.
The London-based bank, whose large business in Asia helped it fare better than other European banks during the financial crisis, said a “double-digit drop†in the consumer banking results was due to its unprofitable business in South Korea. Revenue for the entire bank is expected to be unchanged this year from $19 billion last year, Standard Chartered said in a statement.
“We are responding to near-term challenges to ensure we strike the right balance between growth and returns, and have successfully managed costs tightly in light of the pressures on income,†Peter Sands, the chief executive, said in the statement. Shares in Standard Chartered were down 6.3 percent midday in London.
After attracting investors during the financial crisis because of its large operations in faster-growing economies in Asia, Standard Chartered started to face some difficulties earlier this year. The bank’s income suffered from a weakness in currencies in emerging markets and its management abandoned a 10 percent revenue growth target for the full year. Some analysts have raised concerns about the growth prospects for the bank as economies in Asia slowed while costs to comply with stricter financial regulation increased.
Troubles at its South Korean unit, which mainly includes a dispute with regulators and a reduction in its branch network there, led to a write-down of $1 billion on the value of the business in the first six months.
Standard Chartered said Wednesday that it expected an operating loss of $200 million at the South Korean unit. Excluding the unit, consumer banking earnings are expected to increase by more than 5 percent.
The 150-year old bank has been cutting jobs and seeking to streamline operations to cope with what it has been calling temporary challenges. Standard Chartered a year ago reached a deal with federal and state prosecutors in the United States over accusations that it had illegally funneled money for Iranian banks and corporations. It agreed to pay $327 million as part of a settlement.
