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Wed 4 May 2011 12:06 PM

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Standard Chartered cuts jobs, pledges 'firm grip' on costs

UK bank records 'double digit' revenue growth in Q1, with consumer and corporate banking expanding

Standard Chartered cuts jobs, pledges 'firm grip' on costs
UK BANK: Standard Chartered, the UK bank that makes three-quarters of its profit in Asia, cut jobs to control costs in the first quarter (Getty Images - for illustrative purposes only)

Standard Chartered, the UK bank that makes three-quarters of its profit in Asia, cut jobs to control costs in the first quarter as competition raised pressure on profitability.

Overall margins were stable and the bank has a “firm grip” on expenses, with the number of employees dropping by 800 from 85,000 at the end of last year, Finance Director Richard Meddings told reporters on a conference call on Wednesday.

The bank still plans to add 1,000 employees by the end of the year, he said. The shares fell.

“Costs remain well controlled,” said Meddings. “We have made an excellent start to the year.”

The bank had “double digit” revenue growth in the first quarter, with consumer and corporate banking expanding as the bank sought an eighth successive year of record profit. Meddings told reporters they could “deduce” that the London-based bank had record profit in three months to March 31, on a conference call on Wednesday.

“Whereas there is probably not enough in Standard Chartered’s first quarter interim management statement to deliver a positive market reaction today, we still see it as fundamentally reassuring, underpinning existing consensus expectations, and confirming that the growth story continues apace,” said Ian Gordon, an analyst at Exane BNP Paribas in London, in an e-mailed note to investors today.

The shares declined 2.1 percent to 1630.5 pence at 8:37 am in London, the worst performer in the five-member FTSE 350 Index of Britain’s biggest banks.

Unlike some other British banks, including Barclays and HSBC Holdings, Standard Chartered has maintained its profitability target even as regulators forced lenders to boost capital reserves.

Barclays, the UK’s second-largest bank by assets, said pretax profit at its Barclays Capital investment banking unit declined by a third after revenue from fixed income, currencies and commodities trading fell in a “challenging” market.

Standard Chartered said market conditions “resulted in a lower number of deals being closed,” in its corporate finance unit.

In its wholesale banking business, Standard Chartered’s own account income in the first quarter had “double digit” growth. Client income continued to contribute over 80 percent of total wholesale banking income, it said.

The bank hired 7,000 people last year, as expenses rose faster than revenue. The bank has made “significant strides,” to align cost growth with revenue growth, Meddings has said.

In March, the lender reported its seventh successive year of record profit. Net income at Standard Chartered rose 28 percent to $4.33bn. The bank’s roots date back to British colonial expansion in Africa and India in the 19th century. The bank is 15.7 percent-owned by Temasek Holdings, Singapore’s state investment company, according to Bloomberg data.

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