UPDATE 2-Standard Chartered says record Q1 profits

LONDON, May 4 (Reuters) - Asia-focused bank Standard Chartered said it had record first profit and income as strong wholesale banking and improving consumer banking outweighed pressure on margins from increased competition.

'Overall, the group has had a very strong start to the year, despite margin headwinds and increasing competitive pressures, with a record quarter in terms of both profit and income,' the bank said in a brief statement on Tuesday.

Standard Chartered, based in London but deriving over four-fifths of its profits from Asia, does not report quarterly results. Profits were a record $2.84 billion in the first half of last year and income was $8 billion, giving quarterly run rates of $1.4 billion in profit and $4 billion in revenue.

The bank has been steered through the financial crisis relatively unscathed by Chief Executive Peter Sands, aided by its reliance on Asia and traditionally decent capital and liquidity positions. Sands, a former McKinsey director, has been CEO for just over three years.

Wholesale banking, which includes advisory, trade finance and other investment banking business, saw client income rise over 20 percent on the first quarter of 2009 and contributed over 80 percent of wholesale income.

Wholesale banking has driven Standard Chartered's growth in recent years and accounted for over 80 percent of group profit last year.

The unit's expenses are ahead of the run rate seen in the first half of 2009 due to a rise in staff numbers and as a result cost growth exceeded income growth in the quarter.

Wholesale own-account income was significantly below a year ago, as expected, but around the run rate of the second half of 2009. Its wholesale unit's cash business has seen volumes rise offset by margin pressure, the bank said.

'Pressure on the wholesale business appears to have continued from what we initially saw at year-end 2009, but we believe this will be more than offset by the recovery in the higher quality consumer business,' said Andrew Lim, analyst at Matrix in London.

Standard Chartered's consumer banking has fared less well in recent years as bad debts have risen and its Korea business has struggled. The bank said the business turned a corner last year, however, and income momentum continued in the first quarter and was up over 10 percent from a year ago.

Consumer banking's income rose over 10 percent in the first quarter and underlying revenue was ahead of the average run rate in the second half of 2009, it said.

Good volume growth in mortgages had been more than offset by pressure on margins as competition increases, however.

Bad debts in wholesale remains good, with no material new impairments, and has improved in consumer banking, the bank said.

Standard Chartered reported record annual profits of $5.15 billion last year, up 13 percent on the year. Profits are expected to rise to $6.1 billion this year, according to the average of 19 analysts polled by Thomson Reuters.

(Reporting by Steve Slater and Clara Ferreira-Marques; Editing by Hans Peters) Keywords: STANDARDCHARTERED/ ([e-mail]; [phone]; Reuters Messaging: [e-mail]) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.