Liverpool FC sponsor Standard Chartered on track for record profits

June 28th, 2011 Luke Mofflin Leave a comment Go to comments

STAFF cuts, coupled with growth in Hong Kong and other key Asian markets, have put Standard Chartered on track for record profits in the first half of this year, up over 10% on a year earlier.

The Asia-focused bank, which has just completed the first year in a four-year sponsorship deal with Liverpool FC worth up to £81m, yesterday said income and profit were up over 10% in the first five months of the year, and cost growth would be broadly in line with income growth in the first half.

“It’s a very positive statement and an improvement on the Q1 stage, as they’ve clearly improved the situation on the cost to income line,” said Mike Trippitt, analyst at Oriel Securities, in London, keeping a “buy” stance on the stock.

Cost growth rising faster than income growth, known as “negative jaws”, has dogged Standard Chartered for the past year, as it battles rivals such as HSBC Holdings to keep and retain talent in key fast- growing Asian markets such as China and Hong Kong.

Analysts had expected costs to outpace income again in the first half and be broadly flat for the full year.

Standard Chartered’s finance director, Richard Meddings, said the bank had cut 1,300 staff in the first five months of the year, after adding 7,000 staff last year, to give it 85,000 employees.

Investment and hiring will pick up in the second half, he said, resulting in a net increase in staff for the full year in line with previous guidance of a 1,000 rise or slightly fewer.

“We have a relatively high attrition rate, consistent with the financial services industry, so when people leave us we are able to manage the pace at which we rehire,” Mr Meddings said.

“We will accelerate investment in the second half,” he added, aiming to keep cost growth in line with income growth for the year.

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