Asian revival helps international banks<\/p>\n
LONDON (Reuters): International banking groups HSBC Holdings
\nPlc and Standard Chartered Plc, reporting 1999 results in the
\nnext two weeks, are expected to show some benefit from a
\nburgeoning recovery in Asian economies.<\/p>\n
Standard Chartered, publishing results on Wednesday, is
\nexpected to see profits fall by nearly a third to about 504
\nmillion pounds ($808.6 million) from 703 million in the previous
\nyear. The range of forecasts is between 485 million and 520
\nmillion pounds.<\/p>\n
Analysts said the past year had been a tough one for the bank
\nbut there might be signs of an upturn in 2000.<\/p>\n
Standard, with operations in Hong Kong, the Philippines, India
\nand elsewhere in Asia and the Middle East, has seen its shares
\nunderperform the wider UK market by 17 percent this year, as
\nearnings forecasts have spiraled downwards.<\/p>\n
Analysts' attributed the profit downturn in part to higher
\ninvestment spending and higher than expected bad debts.<\/p>\n
\"Although few new problems are emerging, we expect the charge
\nin Hong Kong to continue to run at a high level,\" Deutsche Bank
\nsaid in a research note.<\/p>\n
The bad debt provision is expected to rise to between 470 to
\n480 million pounds from 436 million last year, according to
\nanalysts' estimates.<\/p>\n
Some see a recovery going forward as the Asian economies
\nrevive and the bank's investment program starts to bring in
\nhigher income and lower costs. HSBC, one of the world's top
\ninternational banks, reports on February 28 and is forecast to
\nproduce pre-tax profits of between $7.67 and $8.37 billion,
\nagainst $6.57 billion in the previous year.<\/p>\n
The bank, whose operations span the UK, the U.S. and Asia, has
\njust completed the acquisition of U.S. bank Republic New York
\nCorporation and Safra Republic Holdings, which analysts expect to
\ndeliver income and cost benefits in the current year.<\/p>\n
Bad debt provisions are expected to be around $2.2 billion,
\ndown from $2.6 billion in the previous year.<\/p>\n
\"Although it's still tough going in Hong Kong, other APR
\n(Asian Pacific Rim) economies are picking up,\" said Williams de
\nBroe in a research note.<\/p>\n
The bank's exposure to conglomerate Daewoo in South Korea
\ncould also lead to a provision of some $100 to $200 million,
\naccording to Salomon Smith Barney in their research note on the
\nUK bank results season.<\/p>\n
HSBC, as a diversified player, has seen its shares do better
\nthan its UK peers, whose shares have been savaged by worries
\nabout fierce competition in UK financial services.<\/p>\n
HSBC's stock has outperformed the UK banking sector by some 23
\npercent since the beginning of November last year.<\/p>",
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