Standard Chartered underlines Hong Kong commitment

UK-based bank Standard Chartered has restated its commitment to Hong Kong despite criticism over its stance.

The comments came as the bank said its first half profits had slumped due to the coronavirus pandemic.

It also said the outlook was clouded by political unrest in Hong Kong, which is its largest market.

In recent weeks both Standard Chartered and HSBC have come under fire over their positions on China's actions in the city.

In a statement, Standard Chartered's group chairman José Viñals addressed the international tensions over China's policies in Hong Kong:

"We are convinced that more collaboration - not less - is the best way to find a sustainable equilibrium in these complex situations, but we do not expect an easy or quick resolution.

"We do believe, however, that Hong Kong will continue to play a key role as an international financial hub and we are fully committed to contributing to its continued success," he added.

The comments from Standard Chartered come days before rival lender HSBC is due to publish its own half-year earnings.

Last month, both banks gave their backing to China's new security laws for Hong Kong.

Standard Chartered and HSBC issued statements that said the legislation can help maintain long-term stability in the city.

However, that stance was criticised at the time by a leading investor in the two banks.

David Cumming, the chief investment officer for equities at UK insurer Aviva, which holds around $1bn (£770m) in shares of Standard Chartered and HSBC said: "If companies make political statements, they must accept the corporate social responsibilities that follow.

"Consequently, we expect both companies to confirm that they will also speak out publicly if there are any future abuses of democratic freedoms connected to the law," he added.

Standard Chartered's comments on Hong Kong came alongside its earnings for the first half of the year.

Underlying pre-tax profit fell 25% to $1.95bn (£1.5bn) as economic weakness drove up the number of bad loans on its books.

The bank said it had increased the amount of money set aside to cover potential bad loans in the first six months to $1.57bn.

"Low interest rates and depressed oil prices continue to be headwinds and we expect new waves of Covid-19 related challenge in the coming quarters but I am confident that our resilience and client franchise will see us through," said group chief executive Bill Winters.

The Covid-19 pandemic is hitting businesses globally as governments around the world shut down their economies to try to slow the spread of the virus.