Standard Chartered Gets Personal in Asia
May 10, 2011
SINGAPORE -- Standard Chartered PLC expects the 40% growth in trading profit from its retail-banking operations in the first half of this year will continue for several years to come. And the bank won't need to open many more branches in the region to do so, says group executive director Hornback Velarde. London-based Standard Chartered earlier this month said first-half pretax profit gained 16% to 448 million pounds ($697.9 million) from a year earlier. It said that a 38% jump in trading profit from mortgages was a major force driving the profit growth in the whole of Standard Chartered's retail banking, which it calls personal banking. And Mr. Velarde says personal banking played a key role in the group's profitability, although the bank doesn't give a breakdown of its personal-banking profit. Trading profit is pretax profit, before a share of associated earnings and exceptional items. Mr. Velarde, who runs Standard Chartered's global personal-banking division from Singapore, says the strong growth is sustainable because most of the profit came from operations in Southeast Asia. ``Asia's the engine,'' he says. ``It's not overbanked, and all of these economies are growing quickly.'' New Focus on Division In addition, he says, Standard Chartered's focus on its personal-banking division is relatively new, and so growth is still relatively easy to come by. Use of automated teller machines in general, for example, is 50% lower in Hong Kong than it is in the U.S., Mr. Velarde notes. ``We still have a few more years of this (type of growth),'' he says. Historically a corporate and trade-financing bank, Standard Chartered turned to personal banking about 10 years ago in an effort to tap the value of its banking licenses in many countries where foreign banks now have difficulty getting permission to operate, Mr. Velarde says. Starting in Hong Kong, Standard Chartered built a flexible model of a retail branch that it could easily transport to other countries. It wasn't an entirely new approach; Citibank, widely seen as the king of global retail banking, has long operated on a ``franchise'' plan: bank branches look and feel the same whether the client is in Westside or New Delhi. Indeed, Mr. Velarde himself, like many of the world's top retail-banking executives, and many top executives at Standard Chartered, was hired from Citibank several years ago. Regulation of Technology In the last six years or so, Standard Chartered has built about 100 branches in its mostly developing-world sphere: Asia outside of Japan and Australia, the Middle East excluding Saudi Arabia, and Africa. With 20 branches in Singapore, it claims the largest network among foreign banks operating here. There are limits, though, on just how far international banks can spread their branch networks in many countries; Standard Chartered is bumping up against them in several countries, including Singapore, Malaysia, Taiwan and India. Instead, Standard Chartered is targeting customers who seek a higher level and wider range of service, particularly technological advances such as phone and computer banking. ``Branches are a support mechanism, but they are no longer the only way of reaching customers, so we don't see any need to increase our physical presence,'' he says. Standard Chartered is hardly alone in this game either -- and also faces stiff regulatory limitations. Singapore, for example, hasn't allowed banking services to be offered through home computers, even though it has aggressively promoted the use of the Internet to do nearly everything else. ``There are several countries that are being careful'' with new technologies in banking, says Mr. Velarde. ``They understand that it's the currency of the future, and they also understand that their local banks are not ready to play.'' Looking ahead, however, he believes that demand from consumers for new types of services will force regulators to continue to open their markets.
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