Steve Bertamini is a man in a hurry. The Singapore-based global head of retail and SME banking at Standard Chartered likes to interrupt and pre-empt what you say, so eager is he to get on. That impatience appears to be showing up in the bank’s results.
The business generated operating profit of $1bn in the first half of the year, up 58 per cent.
Since he joined StanChart from General Electric three years ago, Mr Bertamini has pulled apart the way the bank operates across its 32 markets and put it back together again. The network today looks lower-risk (loan impairments were down 29 per cent in the first half of the year), appears to be on a better growth path (revenue rose 15 per cent), and is more efficient (the cost-income ratio, now 63 per cent, is falling), though analysts point out that costs, in particular, are still running in excess of rivals’, notably HSBC.
Of course the American-born banker has been helped on his way by benign markets – and only when there is a clearer outlook for the impact of the global economic slowdown on StanChart’s heartland Asian business and its other operations, mainly in the Middle East and Africa, will investors know how sustainable the bank’s recent performance really is. Rivals HSBC and Citigroup have also been growing strongly in those regions.
But there has been judgment as well as luck. Mr Bertamini’s reforms began with a root-and-branch rethink of what StanChart’s high-street presence should look like. “When I joined the business, we were running a loose federation on the consumer side – mini Standard Chartereds everywhere,” he says. “That wasn’t sustainable. There’s no way we can compete with the Chinese or the Indians. The first thing we did, we clarified what we would and what we wouldn’t do.”
Stratifying the bank’s operations into three categories has led to the current focus on core markets such as Hong Kong, Singapore, Korea, Pakistan and the UAE, where it seeks to provide a full-service operation; a second category of targeted “city-focused” markets, including China, India, Nigeria and Thailand; and a third “lean premium” bucket for smaller countries ranging from Bahrain to Brunei, where it provides a stripped-back service.
If that was the initial macro-overhaul, Mr Bertamini’s more recent focus has been on the micro. He has introduced the usual “customer-focused” approach, underpinning the marketing speak with ideas imported from the world of retailing. “In Hong Kong we have a fleet of people in cars that will come to you for a mortgage,” he says with evident glee. “They’ll give you approval in principle in 15 minutes.”
He is also trying to make the various operations that come under his purview work better together. One neat innovation has been to restrict unsecured consumer lending to customers who pay automatically through their payroll. That reduces the risk of default on the consumer loan, but by linking it into a business banking deal with the employer StanChart solidifies that relationship, too.
In India, he has had a quite different challenge to deal with – adapting the business swiftly to cope with a rapid succession of base interest rate rises that caught the bank off-guard, eating up lending margins and slicing 40 per cent off profits in the country in the first half of the year.
The bank has tried to devise ways to make its Indian operations more efficient, while at the same time working within tight restrictions from the authorities on branch openings.
Mr Bertamini concedes some of the positive trends of recent years are bound to slow down. “There has been pressure on growth in the mortgage market [because] regulators are concerned about asset bubbles and they are consistently reducing maximum loan-to-value ratios,” he explains, adding that competitive pressures shrank margins, too.
But he sees more reasons to be bullish. Tougher competition evident up to a few months ago has fallen away in many areas. “Up to 90 days ago, there was huge appetite to come back into the market, drop prices, try to buy [market] share. All of a sudden that seems to have slowed right down. The western banks, who were getting aggressive, are now getting hesitant again.”
In wealth management, StanChart’s fastest growing business with revenue up 23 per cent in the first six months of the year, he is most bullish of all. Asian wealth is growing at more than 11 per cent a year, versus 4 per cent in Europe and 5 per cent in North America, according to Boston Consulting Group. “And there’s no sign that it’s going to slow down any time soon.”
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