Stanchart posts US$11m operating profit

largely driven by a US$6,3 million one-off debt recovery.
The half-year performance represented a 110 percent growth in profits when compared to the same period last year.
The bank said both interest and non-funded income enhanced profits, with the latter weighing in with the bulk at US$21 million. Interest income totalled US$6 million in the six months.
But despite making profits, the bank said margins remained subdued, a reflection of both local competition and market-wide scenarios where interest rates are in line with international trends.
Operating costs, at US$15,9 million in the period under review increased by 17 percent, well above average annual inflation.
Annual inflation was contained below 3 percent in the first quarter of the year, but has gained pace peaking at 3,3 percent in July after the recent spate of price hike on basic goods.
The half-year cost to income ratio improved from 72 percent to 59 percent with income almost doubling at US$27 million.
Loans and advances to customers grew by 47,4 percent year-on-year reflecting increased support to clients while asset to income ratio increased from 48 percent to 58 percent. Standard Chartered is among the foreign financial institutions that have been criticised for limited lending to industry.
Standard Chartered noted that although the local financial sector has improved in respect of deposits, they are still largely short-term in nature, a factor that is contributing to low lending rates.
“Banking sector deposits grew from US$2,3 billion in December 2010 to US$2,9 billion in June 2011, but remained largely short-term in nature and would result in mismatches if deployed to medium-term funding necessary for the recapitalisation of industry,” the bank said in a statement.
The bank said low lending levels were a result of the fact that the interbank market has remained inactive due to challenges at the Reserve Bank of Zimbabwe as a lender of last resort.