Standard Chartered hurt by Indian rate rise

Standard Chartered hurt by Indian rate rise
Published: 17 July 2013
Standard Chartered was a faller yesterday as a move by India to tighten liquidity raised concerns about the strength of its loan book. Chartered lost 2.8 per cent to £15.04 after the Reserve Bank of India unexpectedly lifted key interbank interest rates in an attempt to underpin the rupee.

India's tightening would push short-term wholesale funding costs sharply higher and risked damaging asset quality across the domestic sector, according to Barclays. India last year accounted for around 8 per cent of Chartered's revenue and risk-weighted assets.

The news added to concerns that Chartered might take further impairment charges when it delivers interim results next month. According to Goldman Sachs, non-performing loans among the Hong Kong banks have quadrupled over the past two years and are now at their highest level since the 1997 Asia crisis. Historically, asset quality concerns have meant lenders tend to underperform during the initial phase of rate tightening, it added.

 The wider market drifted away from a six-week high, leaving the FTSE 100 lower by 0.5 per cent or 29.76 points at 6,556.35. Supermarkets held steady after market share data from Kantar confirmed that recent sunny weather boosted sales across the industry. Tesco rose 0.7 per cent to 355.5p, J Sainsbury was off 0.4 per cent to 380.8p and Wm Morrison drifted 0.7 per cent to 282.3p. 
- FT


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