UK-based Standard Chartered (SC) will reduce its operations in the Asian market. In line with the prospect that the growth rate in Asia is likely to slow down, the company has scaled back its income growth target, and is planning to reduce the number of local branches in some Asian countries.
In a November 11 interview with the Financial Times (FT), Peter Sands, chief executive of Standard Chartered, predicted that Asian GDP will grow by 6.3% in 2015-2018. In comparison, the year of 2012 showed a 6.7% growth rate. The CEO added that China’s annual growth of 7 percent, a 0.8% decrease from the previous record, is likely to lower the average Asian growth rate.
Based on these predictions, the bank will downsize local offices in charge of consumer and commercial banking, and reorganize them in a way that mainly targets Korean exporters.
According to SC’s new management strategy, it will decrease the number of local branches first, and adjust its target profit margin. The bank already reduced the figure by 20%. A further 25% decrease means that among 350, only 250 branches will continue to operate in Korea.
Korea is not the only country for the curtailment of SC’s operations. Last year the company closed asset management services in Japan, and retail banking in Lebanon. In India, it got rid of all businesses except asset management and fund management services. In contrast, the bank will expand its operations in China and Myanmar.
The FT said that these measures were inevitable due to the bank’s aggravated profits. The South Korean government’s policy about debt cancellation resulted in SC’s charge-off of US$1 billion. The bank also struggled in Singapore. In the first half of this year, SC’s net profits recorded US$3.33 billion, a year-on-year decrease of 16%.