StanChart shares tumble to five-year low

HONG KONG/LONDON, Oct 28 (Reuters): Asia-focused bank Standard Chartered Plc warned investors that profits would fall in the second half of this year, after quarterly earnings were hit by a surge in bad loans and higher regulation and compliance costs.

Standard Chartered said that as bad debts rise in key markets like India and China, it will step up its restructuring plan and aims to cut $400 million more from costs next year.

Its London-listed shares tumbled more than 8 per cent to their lowest level for five years. Analysts said the grim results showed the tough task facing Chief Executive Peter Sands, as he tries to turn around the bank after its 10 years of record earnings came to a shuddering halt last year.

"Not only has credit started to deteriorate and will be the driver of the next earnings downgrade cycle, but volume, revenue and cost trends are weak," said Joseph Dickerson, analyst at Jefferies.

He estimated average earnings forecasts for this year will come down by about 15 per cent and will also be cut for 2015.

"The (Q3) numbers indicate the continuing challenges we face," CEO Sands told reporters on a conference call.

"We are redoubling our focus on costs ... achieving this will require further rationalisation of our branches, more standardisation and automation and reconfiguration or exit of certain businesses."
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