Standard Chartered reports a strong year after its Asian operations delight, but the British bank reports a mixed picture in the Middle East.
Local strength spurs Standard Chartered record
An improved performance in the UAE helped Standard Chartered to make record profits last year.
The multinational bank headquartered in London reported pre-tax profits of US$6.7 billion (Dh24.61bn), a rise of 10.6 per cent from the same period a year earlier.
Annual pre-tax profits from the Middle East and South Asia region, however, dipped by 0.8 per cent to $834 million compared with a year earlier.
The lender's Middle East franchise proved "resilient" despite political turmoil in parts of the region, generating a 2 per cent rise in operating income to $2.2bn during the year, said Peter Sands, the bank's chief executive.
"In our biggest market, the UAE, we are seeing a return of confidence, despite the debt overhang, with hotel bookings, airport arrivals and container traffic all up strongly."
Despite increasing revenues from the region, an increase in costs stopped the bank from generating stronger profits during the year.
An increase in staff numbers in the UAE led to a rise in costs at its consumer and wholesale lending divisions, the bank said.
The bank's income from its consumer lending division in the UAE grew 7 per cent on increased personal loans and mortgages.
Levels of bad debts fell across the region, with impairments for defaulting loans 5.2 per cent lower at $286m and charges for bad debts at its consumer banking division 44 per cent lower at $89m.
The majority of the decline in bad debt was in the UAE, where the bank has tightened underwriting criteria and focused on secured lending, while an improving jobs market aided its customers' personal finances.
"UAE income growth was partly offset by lower income in Qatar, as regulatory restrictions impacted asset volumes and asset and liability margins," the bank said.
The Middle East and South Asia was one of only three regions where the bank registered a drop in income.
Pre-tax profits fell by 32.8 per cent in India during the year to $804m, after the bank was hit by multiple interest-rate hikes by the Reserve Bank of India.
In Korea, profits fell to $172m, a decline of 55.6 per cent. The bank suffered a 10-week strike last year after an attempt to implement performance-based pay in the country, where salary is usually determined by seniority.
The bank attempted to rein in bonus payments during the year, said Sir John Peace, the lender's chairman.
"Despite considerable growth in profits, the bonus pool has been kept flat and the amount we are paying out in bonuses is less than we are paying to our shareholders by way of a dividend," he said.