StanChart turns in strong performance in S'pore

Standard Chartered Singapore chief executive Patrick Lee says that the bank wants to leverage its current growth momentum while delivering double-digit growth on its return on equity. The bank's positive results in Singapore come amid recent news fro
Standard Chartered Singapore chief executive Patrick Lee says that the bank wants to leverage its current growth momentum while delivering double-digit growth on its return on equity. The bank's positive results in Singapore come amid recent news from its headquarters that restructuring plans and cost-cutting measures are in the works.ST PHOTO: SAHIBA CHAWDHARY

Commercial, retail, institutional, corporate banking incomes up in 2018; private banking earnings fall

Standard Chartered Bank delivered a strong performance in Singapore last year - a positive result in the light of recent news from its headquarters that restructuring plans and cost-cutting measures are in the works.

Income from its commercial banking arm was US$128 million (S$173.4 million), a 15 per cent increase from 2017.

Its retail banking business was up 11 per cent to US$599 million, while its corporate and institutional banking services rose 6 per cent to US$598 million. Earnings from its private banking arm dipped 4 per cent to US$201 million.

StanChart Singapore chief executive Patrick Lee told a briefing yesterday that the bank wants to leverage its current growth momentum while delivering double-digit growth on its return on equity. "We are doing everything we can to be very focused on (increasing the return-on-equity)," said Mr Lee, who was named CEO in July last year.

StanChart group CEO Bill Winters announced plans last month to reduce costs and indicated he will restructure operations in markets, including India and South Korea, as part of a long-awaited plan to turn around the lender.

The bank is aiming to cut US$700 million in costs as part of a three-year strategy in hopes of soothing investor concerns over its lacklustre returns.

Mr Winters took over the bank in June 2015 and has spent much of his time cleaning up the bad loans and penalties left by predecessors who poorly managed its expansion.

StanChart's share price has fallen almost 40 per cent since then and trades at about £6 today, a sharp drop from £15.24 when Temasek first bought in during 2006, the Financial Times reported.

Chief among the bank's priorities is to raise its return on equity to 10 per cent. The measure indicates how effectively management uses a company's assets to create profits.

Reports in January stated that Temasek, the largest investor in StanChart with a 16 per cent stake, has grown frustrated with the slow pace of reform at the bank and it had stepped up pressure ahead of Mr Winters' strategy update.

ONE BANK

We operate as one bank, one balance sheet so there are efficiencies that we can derive from there because we don't have to operate as two separate legal entities. So in terms of just governance, administration, management ... it is much more efficient, given that we have a very large sizeable business here.

STANCHART SINGAPORE CHIEF EXECUTIVE PATRICK LEE, on how the bank is consolidating its Singapore operations.

Temasek had reportedly asked for more frequent and detailed briefings from the bank's top executives, the Financial Times said.

StanChart Singapore's Mr Lee said that results have started to show as its office here reported how "operating profit (has) more than doubled" and there is "strong income growth... across business segments".

Singapore is StanChart's second-largest market after Hong Kong.

He pointed to how StanChart Singapore's return on equity increased to 6.5 per cent last year from "just over 2 per cent in 2017".

"Singapore is a good example of the momentum (in the bank's trajectory to increase profits)," said Mr Lee.

The bank has not decided on how the cost-cutting measures will be implemented, he said in response to requests for more details.

He noted that no specific figures or allocation have been worked out yet, without confirming if headcount figures will be reduced.

The cost-saving moves will be achieved through measures such as streamlining operational processes, redeploying full-time employees to reduce concentration in "big-cost hub locations" and a global third-party vendor review.

StanChart announced in February last year that it will consolidate its local business into its Singapore subsidiary.

Mr Lee said of the move: "We operate as one bank, one balance sheet so there are efficiencies that we can derive from there because we don't have to operate as two separate legal entities. So in terms of just governance, administration, management... it is much more efficient given that we have a very large sizeable business here."

The bank has about 9,000 full-time staff in Singapore.

A version of this article appeared in the print edition of The Straits Times on March 05, 2019, with the headline 'StanChart turns in strong performance in S'pore'. Print Edition | Subscribe