Standard Chartered shares fall after new profits warning

Standard Chartered’s shares tumbled on Tuesday after the emerging markets bank issued another warning on profits, putting further pressure on its boss, Peter Sands.

Sands, who until last year had presided over 10 years of rising profits, said the bank would not now be able to report increased profits for the second half.

This was in contrast to its promise three months ago that profits would rise in the last six months of the year, although not by enough to offset the first half shortfall. But third-quarter profits have fallen by 16%, in part because of a higher UK bank levy, leaving profits for the first nine months of the year 19% lower at $4.8bn (£3bn).

Sands is preparing to embark on three days of meetings with investors in Hong Kong, where he intends to provide more detail about Standard Chartered’s plans to adapt to a downturn in emerging markets. It was the resilience of these markets that helped the bank survive the 2008 banking crisis relatively unscathed.

Sands is targeting a further $400m in cost reductions and attempting to turnaround the troubled Korean business. “While some of these actions will impact near-term performance, they are crucial to getting us back to a trajectory of sustainable, profitable growth,” he said.

The shares, already down more than 20% this year, fell 9% to a five-year low of £10.00 after the results, which will put more scrutiny on Sand’s strategy. In July, the bank’s board issued a statement backing the management team after reports that shareholders wanted change at the top. In an effort to bolster its relationship with the City, Standard Chartered’s third-quarter statement on Tuesday was more detailed than usual. It also said it would ditch its traditional practice of providing trading updates in between quarterly figures.

Analysts at UBS said the market may be concerned about the bank’s capital strength despite assurances from management that the bank remains above requirements.