HONG KONG: Standard Chartered Bank reassured investors yesterday that the current debt crisis in Dubai is unlikely to have a "material" impact on its operation and profit.

The Asia-focused British bank gave the reassurance yesterday as it announced an upbeat operational update.

In a conference call yesterday, Richard Meddings, finance director of Standard Chartered, failed to provide any actual figures when addressing concerns about the bank's potential loss in the Dubai crisis, while stating that the situation there "remains in its early stages and is fluid".

However, he reassured analysts and investors that the lender does not see any significant impact from the crisis.

"Based on our loan book, we do not believe any impairment would be material," he said.

Replying to questions about the bank's loan portfolio in the Middle East region, he did not provide a breakdown, but said "I would like to re-emphasize that we have a good spread in our exposure to the region."

Meanwhile, the lender said it had delivered a strong performance as of the end of November, with both income and operating profit before tax hitting new records.

"Standard Chartered has continued to deliver during 2009, with another strong performance to date. Our markets are returning to growth as economic conditions improve, although it is still too early to forecast a sustained recovery and we therefore retain a degree of caution as to the macroeconomic outlook," said Peter Sands, Group Chief Executive.

"We have emerged from the downturn in a strong position as a result of our conservative business model and our continuing focus on the basics of good banking - liquidity, funding profile, capital, risk and costs. The group is very well positioned to benefit from the opportunities in our markets as they continue to recover," the Bank said in a statement.

StandChart added income growth this year has been driven by a very strong performance in its wholesale banking operation, which has been partly offset by lower income in the consumer banking unit.

The bank said the group's overall net interest margins have fallen fractionally since the half year with liability margin compression largely offset by higher asset margins. The group continues to manage expenses tightly and as a result, it is anticipated that the rate of income growth for the full year will exceed the rate of cost growth, it says.

The lender added asset quality in both the wholesale and consumer businesses has continued to improve since the first half of the year while the group remains highly liquid with an asset to deposit ratio at similar levels to the first half of the year.

The bank sees "very low levels" of refinancing required in the capital markets over the next few years as it maintains a "conservative" funding structure, noting that it remains a significant net lender in the inter-bank market.

It remains well capitalized with the tier-1 and total capital ratios above its stated target ranges, the lender notes.

Meanwhile, growth in its risk assets has been well controlled with single digit percentage growth since the half year.

(HK Edition 12/10/2009 page4)