1:00PM New York - Standard Chartered plc reported fiscal 2007 profit increased 25% on stronger growth in Asia, Africa and the Middle East.

Earnings Review

Standard Chartered plc reported Tuesday net profit for fiscal 2007 rose 25% to $2.81 billion compared with $2.25 billion in 2006, spurred by firmer growth in its key markets of Asia, Africa and the Middle East.

The bank said net interest income increased 18% to $6.26 billion from $5.32 billion a year earlier. Net interest margin remained flat at 2.5%. Non-interest income jumped 46% to $4.8 billion, with underlying growth of 41%.

Normalised earnings gained 15.8% to 197.6 cents per share from 170.7 cents per share posted in 2006.

The company will pay a full-year dividend of 79.35 cents from 71.04 cents paid out a year earlier. Pre-tax profit at $4.04 billion was up 27% from $3.2 billion prior year.

Operating income rose 28% to $11.07 billion. On an underlying basis, operating income grew 23%.

Standard Chartered said profits in its main operations outside Europe reported stronger growth. Profits in Hong Kong rose 20%. In India income gained 60% and was up 73% in China. Earnings declined in the U.K and Korea, as a result of the U.S induced financial market turmoil.

Including Consumer Banking, India broke through $1 billion in income for the first time in 2007, growing 60 per cent to $1.3 billion, with profits up 71 per cent to $690 million. India generated more profit in 2007 than in 2006 and 2005 together. The bank operated a branch network of 83 locations, the largest foreign banks in India and employs 18,000 people, the largest employment base in any country.

For fiscal 2007, Standard Chartered increased its write-downs on investments due to global financial disturbances to $300 million from $116 million.

The bank is exposed by $6 billion to asset backed securities including collateralised debt obligations.

In the review year, the cost to income ratio increased to 56% from 55.2%, as the return on equity slowed down to 15.6% against 16.9% in 2006.

Standard Chartered said sales of wealth management products such as unit trusts, insurance and structured investment products increased significantly. Custody and securities services benefited from higher volumes in the regional equity markets.

Operating expenses increased 30% to $6.2 billion. Underlying expenses grew 24%.

Expenses grew mainly due to the increase in staffing levels, particularly in sales staff, and higher performance related pay, said the bank.

In January 2008, Standard Chartered's investment vehicle Whistlejacket went into receivership with the loss of $116 million. The fall in the value of its assets was prompted by uncertainty in the world's financial markets.

The bank has provisioned $761 million for bad loans. Net impairment charges fell $96 million to $159 million in Taiwan and were $65 million higher in Pakistan. Similar charges rose in Thailand and India “due to a wider deterioration in the unsecured and consumer lending environment.”

In September 2007 the bank raised $2 billion in Tier 2 capital which, despite stressed market conditions, was more than five times oversubscribed.

Segment Review

In Hong Kong, operating income rose beyond $2 billion. Profit gained 34% to $1.2 billion, as the wholesale banking division rose faster than all else, up 50%.