Korean debts knock Standard

Korea is especially problematic. Loan impairments in the country soared 67 per cent to $371m (£186m), largely driven by increased use of a government-sponsored debt forgiveness programme for struggling consumers. Standard wrote down the goodwill value of its Korean operation by $1bn, which was a big driver behind the slippage in the group’s reported profit. The business also made a $162m loss last year.

But with the group impairment charge up 35 per cent to $1.62bn, not all of Standard’s problems stem from Korea. Consumer loan impairments also rose 46 per cent in Hong Kong, 41 per cent in India and 67 per cent in the other Asia Pacific unit. Unlike in Korea, however, such operations remain solidly profitable; Hong Kong, for instance, grew operating profit by 15 per cent. The wholesale operation, meanwhile, saw income fall 2 per cent, reflecting market uncertainty on the back of such issues as the tapering of quantitative easing in the US and negative sentiment towards emerging markets.

Recent rumours about a capital raising were firmly squashed. "We’re well capitalised now and by any measure," emphasised chief executive Peter Sands, alluding to Standard’s 10.9 per cent Basel III core-tier-one capital ratio. "That’s significantly and materially ahead of [the regulator’s] guidance". Costs, too, looks under control. Adjust for a 53 per cent hike in the UK bank levy to $266m and underlying costs rose just 1.4 per cent.

Earnings modestly missed analysts’ estimates and, ahead of possible tweaking, Investec Securities was expecting EPS of 239¢ this year and net tangible assets (NTA) of 1,764¢ at the year-end.