LONDON (REUTERS) - Standard Chartered warned profits would fall in 2014 for the second year in a row after first-half earnings dropped by a fifth due to tougher regulations and low market volatility in its trading business.
The bank also said on Thursday the head of its financial markets arm, Lenny Feder, would take a one-year sabbatical and would not return in the same role. An industry source had told Reuters earlier that Feder would take a sabbatical.
Standard Chartered makes more than three-quarters of its profits in Asia, Africa and the Middle East, which helped it come through the 2008 financial crisis relatively unscathed. But after a decade of sustained growth, the bank has had a rocky patch and been hit by big losses in Korea, a slowdown in its main Asian markets and the impact of tougher regulations.
Last year, the bank reported its first drop in full year profits for a decade and it had been expected to show a 4 percent rise to about $7.2 billion this year, according to the average analyst forecast on Reuters Eikon.
Its London-listed shares were down 4.3 percent at 12.03 pounds by 1100 GMT, after falling to 11.73 pounds, their lowest level since August 2012.
Revenues at the bank's financial markets business, which includes equities, commodities, foreign exchange and other capital markets activities, are set to fall by 20 percent in the first half from a year ago, the bank said in a trading update.
Standard Chartered and its rivals have experienced a slump in trading volumes since the middle of last year as clients do less business in a low interest rate environment and banks have to hold more capital against these businesses.
Interest rate and foreign exchange trading have been particularly hard hit.
Standard Chartered said its revenues in the first half of this year are expected to be down by 3-7 percent from a year ago, and losses from bad loans would be up by 15-19 percent, in line with expectations.
"The first half does look disappointing ... the main challenge has been in financial markets, and the challenges there are very much affecting the industry as a whole," Chief Executive Peter Sands said on a conference call.