* Q1 operating profit falls in consumer, wholesale
* Bank says confident will meet 2013 profit growth goal
* Bank will add more staff, but may slow pace of hiring-CFO
* Protest vote/abstention at re-election of 4 executives
* Shares fall 4.4 pct
(Adds shareholder votes on pay, director re-elections)
By Lawrence White and Steve Slater
HONG KONG/LONDON, May 8 Standard Chartered
faced a protest from over 20 percent of shareholders
over its board structure on Wednesday and warned it could miss
this year's revenue target after higher bad debts and falling
interest rates hit first-quarter earnings.
Shares in the Asia-focused bank, one of the most consistent
performers during the financial crisis, fell over 4 percent.
More than 22 percent of the London-based bank's shareholders
abstained or voted against the re-election of four directors at
an annual meeting, including probably its largest investor,
Singapore state investor Temasek. Almost 13 percent of
shareholders also failed to back the bank's pay policy.
Temasek, which owns an 18 percent stake, last year abstained
on the re-election of some directors, in part because it wants
fewer executives on the board. The investor was considering
abstaining again this year, sources familiar with the matter
told Reuters before the shareholder meeting. It could not
immediately be reached for comment after the vote.
Standard Chartered Chairman John Peace said he had discussed
governance with Temasek, and said his bank - which has six
executives on its board of 19 people - had a structure that
reflected best UK corporate practice.
"They believe in a different model. They expressed a
different philosophy to us and I respect that," Peace said.
Standard Chartered said that, despite a weak March, it was
still on course to achieve an 11th consecutive year of record
profits, driven by strong Asian markets, but it would ease back
on hiring to rein in growing wage costs.
The profitability of banks in Asia has been squeezed by
ultra-easy monetary policy in the West, which has created a
flood of cheap money that has pressured margins for banks
competing to lend to fast-growing emerging markets.
Operating profit at both Standard Chartered's consumer and
investment banking arms fell by about 5 percent in the first
three months of 2013.
Revenues in the first quarter were slightly higher than in
the first quarter of 2012 and Finance Director Richard Meddings
said profit margins had stabilised.
But he said the impact of Western monetary policy on Asia
was "the key anxiety" that could affect revenues, which Standard
Chartered aims to increase by 10 percent a year.
"At this point, we'd prefer to wait to see how May and June
land before we give that guidance (of 10 percent revenue
growth)," Meddings told reporters on a conference call. "Last
year we produced revenue growth of 8 percent and it may be that
we're more likely to be at that level."
The bank, which makes about four-fifths of its operating
profit in Asia and the Middle East, said it was comfortable with
analyst forecasts for pretax profit of $8.2 billion this year,
up 18 percent from 2012.
It said its performance had weakened in South Korea and in
Singapore. South Korea's government has overhauled personal debt
restructuring processes as part of a wider social welfare
programme, which includes more forgiveness on troubled long-term
loans, and Standard Chartered said its consumer bad debts there
had increased by more than 10 percent, more than expected.
STAFF COSTS GROW
Its shares closed down 4.4 percent at 16.25 pounds, the
biggest daily drop since they slumped in August after charges
the bank violated U.S. sanctions against Iran. That ended in a
$667 million settlement with U.S. authorities.
"The Q1 trading statement is the first one in a long time in
which Standard Chartered is down in operating profit comparisons
on a year-on-year basis, both in the wholesale bank and the
consumer bank," said Bernstein analyst Chirantan Barua.
Costs rose on the year, including a "high single-digit"
percentage rise in staff costs after the addition of 560 staff
in the quarter and wage inflation, the bank said. It does not
issue full quarterly numbers and releases earnings twice a year.
Standard Chartered has previously said it could hire about
2,000 staff this year.
"We will still be hiring, the business still has good
growth, but we will be pacing the rate of that hiring more
acutely until we are more certain of the income run rate,"
Hong Kong was once again Standard Chartered's standout
market in the first quarter, with income growing more than 10
percent, mirroring a strong performance there reported by rival
HSBC on Tuesday.
Income in Africa also rose more than 10 percent.
(Editing by Tom Pfeiffer and Mark Potter)