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Standard Chartered H1 net profit up 8.4%

HONG KONG--Standard Chartered said Wednesday its year-on-year profit for the first half of 2014 was up slightly at 8.4 percent, but confirmed it faces fresh U.S. fines over alleged breaches of money-laundering regulations.

Net profit stood at US$2.31 billion for the six months ending June 30, up from US$2.13 billion in the same period last year, though the London-based and Asia-focused bank saw increasing losses on loans and a weak financial market affect its operations.

The bank's profit before tax was down 20 percent at US$3.27 billion from US$4.09 billion last year, with impairment losses on loans seeing a loss of US$846 million increased from last year's loss of US$730 million in the same period.

Operating income fell almost five percent to US$9.27 billion from US$9.75 billion in the previous year.

“Our performance in the first half of 2014 is clearly disappointing. It is not what we strive for and not what our investors expect,” the group's chief executive Peter Sands said in the filing.

Sands cited continued weakness of the financial markets and the bank's challenges in Korea as major reasons for the weak performance.

“We have completely reorganized the Group, made a number of disposals, re-worked our segment strategies, and redirected capital and investment spend,” Sands said of the first half, adding that 2014 will be a “challenging” year.

The company said it saw a loss of US$126 million before taxation for Korea where the bank announced the sale of its consumer finance and savings bank businesses.

“Turning this business around will take time and a lot of work on multiple fronts, not least because the industry as a whole faces huge challenges,” Sands said.

The southern Chinese city of Hong Kong was the bank's most profitable market where it saw a profit of US$900 million before taxation for the period, followed by Singapore where it saw a profit of US$435 million.

It also saw a profit of US$395 million in India before taxation and a profit of US$194 million in China for the period.

The results were announced along with confirmation from the bank that it faces fresh U.S. fines over alleged breaches in its anti-money laundering systems, two years after it paid massive penalties for violating American sanctions.

The bank said it was bracing to pay fines following the new investigation, with The New York Times reporting that regulators were seeking a “nine-figure penalty.”

Competitor HSBC said on Monday that profits fell for the first half of the year because one-off gains were not repeated and after a weaker showing at its investment arm.

It also warned of dangers of “risk aversion” by its bankers in the wake of industry-wide scandals.

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