* FD says in constructive dialogue with other agencies
* 9-mth op profit up by mid-single digit, in line with
* 9-mth income up by high-single digit rate
* Impairment charge cut by tens of millions of dollars
* StanChart shares down 0.6 pct in London
By Kelvin Soh and Matt Scuffham
HONG KONG/LONDON, Oct 30 Standard Chartered
said it was aiming for a wider year-end settlement with
U.S. authorities investigating its Iran-linked transactions.
The Asia-focused bank, on track for a tenth straight year of
record earnings, agreed in August to pay New York's banking
regulator $340 million to settle allegations it hid some $250
billion worth of transactions with Iran.
But other probes, including a criminal investigation, are
still going on.
"We're in active and constructive dialogue with all of the
other agencies. We hope to get that finished and completed by
the year end but it's not wholly in our power to do that,"
Finance Director Richard Meddings said.
Standard Chartered, which is negotiating with the Manhattan
District Attorney, the U.S. Treasury Department, the Justice
Department and the New York Federal Reserve, said last month it
could not predict the outcome or quantify potential liabilities.
The bank said on Tuesday its operating profit grew by a
mid-single digit rate in the first nine months of the year.
Earnings would have risen by at least 10 percent but for the
settlement with New York regulators who threatened to strip the
bank of its state licence over its Iranian deals.
"Although the environment remains turbulent, we are in the
right markets and continue to see good momentum across our
businesses and geographies," CEO Peter Sands wrote in a
third-quarter trading update on Tuesday.
The bank's forecast is roughly in line with full-year
expectations for a 6 percent rise in pretax profit to about $7.2
billion, according to Thomson Reuters I/B/E/S.
It does not release specific numbers in its quarterly
updates. First-half pretax profit and income both increased by
around 9 percent, the bank said in August.
Hong Kong, China, Indonesia and Europe delivered a strong
performance, the bank said, without elaborating.
It also managed to keep costs under control, with expenses
rising roughly in line with revenue - a trend known as "neutral
jaws". Standard Chartered was bogged down by rising costs in
much of 2010 and 2011 as it expanded across Asia.
Standard Chartered is one of few still expanding its
headcount, which totalled about 85,000 at end-June. In August,
the bank said it planned to add 1,500 staff in the second half.
Major European peers, in contrast, are pruning staff numbers.
RISK OF BAD LOANS
Weighing on Standard Chartered's earnings was weakness in
India, Singapore's wholesale banking and South Korea's consumer
banking, it said.
Rising household debt in South Korea - which now exceeds
that of the United States before the subprime mortgage crisis -
has prompted worries the country may soon see a spike in bad
loans. In Singapore, the city-state narrowly escaped a recession
in the third quarter.
"You can't fight gravity," said Jim Antos, an analyst at
Mizuho Securities in Hong Kong. "Let's face it. The global
economy isn't getting better, so that's going to have an impact
Antos said he expects analysts to revise down Standard
Chartered's full-year earnings forecast by another 5-10 percent,
given the external headwinds.
Despite the slowdown, Standard Chartered said it reduced the
amount of money put aside in case of bad loans - its impairment
charge - by tens of millions of dollars. In the first half, the
bank set aside $583 million for impairment charges.
A $1 billion loan Standard Chartered made to the Indonesian
chairman of London-listed coal miner Bumi Plc - which
is probing alleged financial irregularities at its Indonesian
units - triggered some concern over the bank's asset quality and
Standard Chartered shares were down 0.6 percent in London,
lagging a 1.1 percent gain in the European bank index.