- Full-year revenue expected to be flat
- Poor performance in Korea
- Currency depreciation adds to woes
- Net interest margin to be 'slightly' lower
Standard Chartered shares
fell heavily on Wednesday morning after the group admitted a 'challenging year' had resulted in a 'significant impact' on its performance in the second half and as such income for the full year is expected to be broadly flat on 2012.
The financial services company, which has until now delivered a decade of both revenue and profit growth, said currency depreciation would reduce income and profit growth by around 1%, while costs were expected to rise by a "low single digit percentage".
The net interest margin for the group has been "slightly" down on last year, with high levels of liquidity in many of its markets affecting margins.
Standard also said the total impairment in the second half is currently expected to be greater than the first half.
Consumer Banking income had increased by a low single digit rate, while Wholesale Banking income has been broadly flat.
Geographically, Hong Kong, India and Africa all grew income at a double digit rate year-on-year, which offset weaker performances elsewhere and particularly in Korea where income is now expected to decline by a double digit percentage. The cost of the UK Bank levy is expected to be around $250m for 2013, up from $174m in 2012.
Peter Sands, Group Chief Executive, said: "In a challenging year, Standard Chartered has continued to support the growth and activity of our customers and clients.
"We are responding to near-term challenges to ensure we strike the right balance between growth and returns, and have successfully managed costs tightly in light of the pressures on income. We retain a highly diversified and strong balance sheet and remain confident in the potential of our markets."
Excluding Korea, Consumer Banking income is expected to grow at a mid-single digit rate for the year, although when included the division is expected to suffer a 15% decline in income, reflecting continued difficult market conditions, de-risking of the portfolio, as well as the impact of the planned sale of the consumer finance businesses.
The division's operating profit for the full year is now expected to be down by a double digit rate.
In Wholesale Banking, where income was broadly flat on the prior period, strong levels of client activity underpinned mid-single digit percentage growth in client income. However, this was offset by continued weakness in Own Account income, particularly in Financial Markets, Principal Finance and Asset and Liability Management.
Expenses in the division remain tightly managed, increasing by a low single digit percentage. Expense growth is expected to be above income growth, although below growth in client income. Wholesale Banking operating profit is currently expected to be flat year-on-year.
The company stressed that it remained "well capitalised, strongly funded and highly liquid".
Shares fell 6.57% at 10:00 following the trading update.