SINGAPORE: A recent article says that Standard Chartered’s bankers in Singapore and Hong Kong are carrying the load across the globe for the bank, with 79 per cent of Standard Chartered’s profits coming from these two cities, based on the bank’s third-quarter results.
“Two cities are subsiding the entire rest of the bank,” wrote Mr Zeno Toulon in a piece for efinancialcareers.com, a leading global financial services careers website published on Friday (Oct 27), after saying that this is something that many have observed for some time now. The writer also called Singapore and Hong Kong Standard Charter’s money makers “by some margin.”
He noted that in spite of Standard Chartered’s bankers in the two cities only employing less than 39 per cent of the bank’s capital, combined, 79 per cent of the bank’s underlying profit came from Singapore and Hong Kong.
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The two cities, plus Taiwan and the UAE, have performed the most efficiently when it comes to Return on tangible equity (ROTE), and also have the the lowest cost-income ratios. ROTE, which is a company’s profit post-tax, divided by tangible equity, has long been a benchmark of profitability and performance.
On the other end of the scale is Standard Charter UK, which has lost money for the bank. Though it employs nearly twenty-five per cent of Standard Chartered’s assets, it posted a loss of almost US$200 million (S$274 million), as well as wrote off almost $700m (S$959 million), in relation to its position in local retail Bohai Bank. The bank remains optimistic about its business prospects in China, Mr Toulon added.
And while the world’s second largest economy has been going through tough times, the opposite is true of Standard Chartered in Hong Kong, which has had a very good year so far.
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For people considering a career in finance or are already in it and are wondering which finance hub is a better choice, there are a few factors to consider. A recent piece in Bloomberg pointed out that Singapore, “the Switzerland of Asia,” has been attracting an influx of wealth from overseas.
Funds overseen by the asset management industry have grown to twice its size in six years and are now at around $4 trillion (S$5.45 trillion). High-net-worth and ultra-high-net-worth individuals have been drawn by political and economic stability and low-income tax rates in Singapore, and industry experts are saying the inflow is unlikely to stop anytime soon.
Strict COVID-19 restrictions and fears of restrictions from Beijing even drove a considerable number of finance workers from Hong Kong to Singapore during the early years of the pandemic. Still, some have started to go back to Hong Kong since then, Bloomberg reported.
Nevertheless, Hong Kong has kept its edge as Asia’s top financial centre, given its relation to China, the second-largest global economy. Hong Kong has the advantage of proximity to China’s US$18 trillion (S$24.5 trillion) economy, compared to Singapore’s relationship to countries in South East Asia, with a combined US$3 trillion (S$4.1 trillion) economy. Small wonder that nearly half of Asia’s hedge fund managers are based in Hong Kong. /TISG