Asia-focused bank Standard Chartered beat expectations with a 20 percent rise in half-year profit and said it was well-placed for continued strong revenue growth, propelling its shares to a record high.
The London-based bank said on Monday pretax profit rose to $1.3 billion from $1.1 billion in the first half of 2004, aided by strong revenues and the first time inclusion of results from Korea First Bank (KFB), South Korea's seventh-largest bank, which Standard bought for $3.3 billion in April.
The average forecast in a Reuters poll of 10 analysts was for a pretax profit of $1.21 billion. However, forecasts were complicated by the introduction of Europe's new IFRS accounting rules and the inclusion of KFB.
"Standard is firing on all cylinders. I think both businesses (consumer and wholesale banking) have good income momentum and we expect them to deliver continued income growth," CEO Mervyn Davies told reporters on a conference call.
Davies said Standard was making good progress with the integration of KFB and he was more confident that the bank's largest ever acquisition would be earnings accretive next year.
At 1235 GMT Standard's shares were up 6.67 percent at 1,200 pence, after earlier gaining a pound to hit an all-time high of 1,225 pence.
Over the past 6 months Standard has been the best-performing stock in the UK banking sector, bolstered by its immunity from a rise in UK retail bad debts, the recent revaluation of China's currency and its attractiveness as a possible take-over target.
"They seem to have outperformed in all areas. I'm slightly surprised that the share price is up as much as it is. But if you are looking for a business with growth potential, Standard ticks all the right boxes," said Richard Peirson, fund manager at Framlington.
DKW analyst Simon Maughan called the results particularly strong because, unlike previous years, they were not flattered by lower bad debts. He said the possibility of a bidding war for the bank would also discourage investors from taking profits.
"The group has many rumoured suitors, but the prospect of a bidding war against the back drop of soaring Asian stock markets is a great one for existing holders," Maughan wrote in a note.
Including KFB, revenues rose 19 percent to $3.24 billion and the charge for bad debts rose 40 percent to $194 million. KFB accounted for more than half the rise in impairment losses, which were also increased under the new IFRS accounting rules.
On an underlying basis, which excludes one-off items and results from KFB, the pretax profit rose 15 percent on a 14 percent rise in revenues. Underlying costs rose 12 percent. Headquartered in London, Standard Chartered's operations are in Asia, where it makes more than three quarters of its profit, Africa and the Middle East.
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