Interim Results
Standard Chartered PLC
06 August 2003
TO CITY EDITORS 6 August 2003
FOR IMMEDIATE RELEASE
HIGHLIGHTS
STANDARD CHARTERED PLC RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2003
Results
• Profit before tax rose 17 per cent to $741 million compared with $634
million in H1 2002 (H2 2002: $628 million).
• Net revenue up three per cent to $2,347 million from $2,285 million (H2
2002: $2,254 million).
• Costs firmly controlled at $1,292 million (H1 2002: $1,244 million; H2
2002: $1,313 million) with significant investment made in the business.
• Debt charge down to $308 million (H1 2002: $407 million) due to proactive
management of personal bankruptcies in Hong Kong.
• Normalised earnings per share at 41.7 cents (H1 2002: 36.1 cents; H2 2002:
38.8 cents).
• Normalised return on equity at 14.2 per cent (H1 2002: 12.8 per cent; H2
2002: 13.9 per cent).
• Interim dividend per share increased by ten per cent to 15.51 cents.
Significant achievements
• Normalised earnings per share up 16 per cent.
• Strong performance in many markets, including India, United Arab Emirates,
Thailand, Taiwan, the Philippines, Bangladesh, Pakistan and Kenya.
• Expanded network, including opening branches in eight new cities in India.
• Good progress in Consumer Banking.
• Strong performance in Wholesale Banking.
• Re-entered South Africa.
Commenting on these results, the Chairman of Standard Chartered PLC, Bryan
Sanderson, said:
'I am pleased to be able to report strong performance despite the economic
uncertainty that dominated the first half of 2003. These results demonstrate
that we have developed the strength and flexibility to withstand the tough
conditions that prevailed in some markets and to thrive where conditions were
more favourable.'
STANDARD CHARTERED PLC - TABLE OF CONTENTS
Page
Summary of Results 3
Chairman's Statement 4
Group Chief Executive's Review 6
Financial Review
Group Summary 10
Consumer Banking 10
Wholesale Banking 13
Risk 16
Capital 30
Financial Statements
Consolidated Profit and Loss Account 32
Summarised Consolidated Balance Sheet 33
Other Statements 34
Consolidated Cash Flow Statement 35
Notes on the Financial Statements 36
Unless another currency is specified, the word 'dollar' or symbol '$' in this
document means United States dollar.
STANDARD CHARTERED PLC - SUMMARY OF RESULTS
FOR THE SIX MONTHS ENDED 30 JUNE 2003
6 months 6 months 6 months
ended ended ended
30.06.03 30.06.02 31.12.02
$m $m $m
RESULTS
Net revenue 2,347 2,285 2,254
Provisions for bad and doubtful debts and contingent liabilities (308) (407) (305)
Profit before taxation 741 634 628
Profit attributable to shareholders 489 416 428
BALANCE SHEET
Total assets 119,915 112,817 113,010
Shareholders' funds:
Equity 7,023 6,470 6,695
Non-equity 625 1,273 632
Capital resources 13,537 13,507 13,031
INFORMATION PER ORDINARY SHARE Cents Cents Cents
Earnings per share - normalised basis 41.7 36.1 38.8
basic 39.4 31.8 25.8
Dividends per share 15.51 14.10 32.90
Net asset value per share 599.0 570.7 572.1
RATIOS % % %
Post-tax return on equity - normalised basis 14.2 12.8 13.9
Cost to income ratio - normalised basis 53.4 51.9 55.3
Capital ratios:
Tier 1 capital 8.8 9.0 8.6
Total capital 14.5 15.9 14.5
Results on a normalised basis reflect the Group's results excluding amortisation
of goodwill, profits/losses of a capital nature and profits/losses on repurchase
of share capital.
STANDARD CHARTERED PLC - CHAIRMAN'S STATEMENT
I am pleased to be able to report strong performance India's economy continues to enjoy strong growth, with
despite the economic uncertainty that dominated the first GDP growth forecast to exceed five per cent once again
half of 2003. These results demonstrate that we have this year.
developed the strength and flexibility to withstand the
tough conditions that prevailed in some markets and to
thrive where conditions were more favourable. The war in Iraq created uncertainty, not least in the
Middle East but the negative economic effects of the
conflict were short-lived. Higher oil prices and
Our profit before tax was $741 million, 17 per cent diversification will sustain economic growth in the Gulf.
higher than the same period in 2002. Normalised earnings There are challenges ahead, but there are also many
per share was up 16 per cent at 41.7 cents. exciting opportunities for us in the region.
We are declaring an interim dividend of 15.51 cents per Most African economies gained from the weakness of the US
share, an increase of ten per cent. dollar, stable commodity prices, continuing inflows of
aid and stable macro-economic policies that have helped
keep inflation low. Africa remains a region of strong
Economic Commentary potential for those, like us, who know it well.
In recent years the world economy has had to contend with Business Progress
a succession of shocks and the first half of 2003 was no
different.
The Group is building a reputation for delivery. This has
continued in the first six months.
SARS reduced discretionary spending across Asia, where
tourism, business travel and retail spending all
suffered. It also dented business and consumer confidence We have balanced the pursuit of growth with firm control
and led to a cooling of investor sentiment towards Asia. of risks.
Hong Kong's economic recovery has been temporarily We have continued to control costs. This will be the
stalled by SARS. Despite high unemployment, recovery is first year we see net savings from our global shared
starting to take hold in Hong Kong once again, led by the service centres in Kuala Lumpur and Chennai, as more
growth of exports and other areas of the economy linked services are centralised.
to China. However, the environment remains challenging in
the short term.
Consumer Banking has performed well, outside of Hong
Kong. It is on track and we are building an advantaged
China's sustained growth is stimulating intra-regional business model. Wholesale Banking is showing strong
trade in Asia which grew by 21 per cent in the first half growth.
of 2003. The emergence of Asia as an increasingly
influential trading bloc bodes well for the economies of
our key markets in the region. As the world changes, there is a need for us to
reconsider our branch footprint. Consequently, I am
delighted that we are re-entering South Africa.
Singapore's economy is having to move further up the
value chain in the face of tougher regional competition.
However, we expect GDP to grow at 1.5 per cent this year, This month we announced that we had been granted a
rising to 4.5 per cent in 2004. banking licence to open a branch in Johannesburg. At the
same time we acquired 20twenty, an internet financial
services firm, as a starting point for Consumer Banking
in South Africa.
STANDARD CHARTERED PLC - CHAIRMAN'S STATEMENT (continued)
We have applied for a banking licence in Afghanistan and The Board
expect to be the first major international bank to open
for commercial business there. We expect to open a
representative office in Turkey in the fourth quarter. This is my first statement to you as Chairman, having
taken over the role in May 2003 following the retirement
of Sir Patrick Gillam. Under his guidance Standard
Meanwhile, in India, we have embarked on a major branch Chartered grew total shareholder return seven fold over
expansion programme and opened in eight new cities during ten years and the Group is now well positioned for
the first half of 2003. further growth.
Community Achievements Three directors have retired from the Board. Cob Stenham
and Ronnie Chan stepped down in May while Barry Clare
stepped down in July.
One of the things that has struck me about this
organisation is the enormous amount of work and
commitment for the community. I'm proud that our efforts I would like to thank them for their valued contributions
to make a difference to the communities in which we to the Board.
operate have been recognised through two awards.
I am delighted to be working with such a strong and
Our 'Living with HIV' campaign received the Global dynamic management team towards the continued growth of
Business Coalition Award 2003 for Business Excellence in this impressive company.
the Workplace. We have also been awarded the Business in
the Community International Award for our Community
Partnership for Africa. Summary
In February we launched a major fund-raising initiative As I have travelled around the Bank I have been impressed
called 'Seeing is Believing'. This is a joint venture by our local talent and by the many opportunities we
with Sight Savers International. We aim to raise have. The Group's long term strategy to focus on the
sufficient funds to restore the sight of 28,000 people world's leading growth markets and the proven ability of
around the world. the management team to consistently deliver against
performance targets will ensure that we continue to lead
the way in Asia, Africa and the Middle East.
Bryan Sanderson
Chairman
6 August 2003
STANDARD CHARTERED PLC - GROUP CHIEF EXECUTIVE'S REVIEW
We have had a strong first half. We achieved a 17 per winning mandates and improving our position in areas such
cent increase in pre-tax profit and, despite the economic as structured finance and debt capital markets.
impact of the Iraq war and the SARS virus, we have stayed
on track and continued to deliver good growth. We have
consistently met our targets, we have a strong management In an interest rate environment where it has been
team, motivated employees, and we see excellent difficult to sustain earnings from asset and liability
opportunities for growth. management, the diversification of our earnings mix has
strengthened our Wholesale Banking business.
Progress on Management Agenda
Consumer Banking
At our Annual Results presentation in February we
outlined the five key points of our Management Agenda for Consumer Banking is ahead of plan and on track to
2003. These were: building an advantaged Consumer Banking business in our
markets. We have de-risked the Hong Kong business and the
revenue impact is as expected.
• Drive returns in Wholesale Banking
• Grow Consumer Banking revenue We have achieved double-digit revenue growth in many
markets, including Thailand, Indonesia and the
• Accelerate India growth Philippines and across the Middle East and South Asia
region.
• Leverage the China opportunity
• Drive technology improvements We have grown Consumer Banking assets outside of Hong
Kong by 15 per cent. We continued to win market share in
mortgages in places like Hong Kong, Singapore and India.
We have made substantial progress on this agenda in the
first half of the year.
We continue to invest in the consumer business.
Initiatives in the first half included:
Wholesale Banking
• the branch expansion programme in India,
The performance of Wholesale Banking has been strong. We
set out, a year ago, to reposition this business to • upgrading branches in the United Arab Emirates and
generate greater returns from a tightly controlled Africa,
capital base. This strategy is delivering. We have
reduced the risk in this business. We have focused on • increasing the size of our direct sales teams, in
which customers we should serve and we have developed a countries such as Thailand and Taiwan.
broader and more balanced range of products.
We believe that customer service can continue to be a
While we have seen six per cent revenue growth overall, differentiator for us and we have commenced a major drive
customer revenues are up seven per cent with local to improve service levels to customers in all our
corporates being the main source of growth. markets.
An example of an innovative new product is B2BeX, an Hong Kong and Greater China
internet platform for trade sourcing, payments and
financing. We already have 250 corporations using B2BeX
for trade facilitation. The market environment in Hong Kong remains tough, having
been set back in recent months by SARS. In the first half
of the year, the rate of revenue decline has flattened
In a climate of low asset demand and low interest rates, while profit before tax rose seven per cent over the
growth in our cash and lending products remains slow. second half of
However, we are
STANDARD CHARTERED PLC - GROUP CHIEF EXECUTIVE'S REVIEW (continued)
last year. However, we achieved 22 per cent growth in mortgages and personal loan business.
trade finance, and reduced bad debts from personal
bankruptcies by 30 per cent.
MESA
However, Hong Kong is a maturing market and,
consequently, we will continue to reshape our business to The MESA region is now a significant part of our Group
improve our scale and efficiency. We are well placed for and has huge potential. In the last six months revenues
renewed growth in credit card revenues on the back of the were up 12 per cent and profit before tax up 17 per cent
positive credit bureau and are re-launching our Manhattan over the equivalent period last year. We are now the most
Card this month. profitable foreign bank in the United Arab Emirates. We
retain our position as the number one foreign bank in
Pakistan and Bangladesh and we are the leading issuer of
Hong Kong continues to be our most important market. It Visa cards in South Asia and the UAE. Revenues have also
is an integral part of the Pearl River Delta, China's been driven by Wholesale Banking, through growth in trade
most dynamic economic region. products and structured and fixed income products.
In China we continue to make progress and it is a market Following the Iraq War, cross-border trade flows with
that will remain high on our agenda in the coming years. markets like Turkey, Afghanistan, Iraq and Iran appear to
We are a leader in Renminbi business among foreign banks be growing and offer potential to us.
and were among the first foreign financial institutions
to be awarded custody licences in Shanghai.
Our MESA business will continue to grow - it is a
priority area for us. We have a strong track record and
India we are well positioned in the region.
India is an important market for Standard Chartered. Two Africa
years ago it accounted for around ten per cent of the
Group, now it contributes over 15 per cent of Group
profit. With strong management, good execution of growth Our business in sub-Saharan Africa has consistently
plans and the transformation of our branch offices, we produced good returns and we have strong market shares.
are building on the platform created by the Grindlays
acquisition.
Our Wholesale Banking business already has a dominant
position and, as a result of investment in branch
The Bank has strong market positions across a number of refurbishment, training and new products, we have grown
businesses including global markets and cash management. our Consumer Banking revenues by over 20 per cent.
Mortgages are a relatively new industry in India. We see opportunities to grow our business in the two
However, we have identified this area as a major biggest economies in the region, South Africa and
opportunity and have expanded this business substantially Nigeria.
in the first half.
There are major challenges in Africa, such as the
There remains strong growth potential for our Bank in economic situation in Zimbabwe and the impact of AIDS
India. We have 26 per cent market share among the foreign across the region. However, we have seen strong
banks but only two per cent of the total market. We will performances in markets like Kenya, Botswana and Ghana.
be opening more new branches, expanding into additional In a number of economies the improving political
cities and accelerating the growth of our situation and
STANDARD CHARTERED PLC - GROUP CHIEF EXECUTIVE'S REVIEW (continued)
a new international recognition of the role of Africa is In realising these opportunities we will combine global
leading to reward and investment. capability with deep local knowledge.
Market Growth Management Strength
We focus on attractive growing markets where we can Management strength is what sets the best companies
leverage our customer relationships and our expertise. apart. We have made considerable efforts to strengthen
These markets present a range of opportunities for us. We our team. We have moved 60 of our top 250 executives
must prioritise and balance growth in order to ensure during the past year to broaden their international
that we deliver for today as well as investing for the managerial capability and experience. Forty of these
future. moves have been across geographies.
Within more mature markets, like Singapore and Hong Kong We are bringing in more retailers and marketeers, as we
we want to gain scale and improve efficiency. recognise the importance of our brand and service levels.
Some of the faster growing economies including India, We also have a rich diversity of people. Forty-eight per
Thailand and the UAE present immediate growth cent of our employees are women and 35 per cent of our
opportunities. We intend to use our competitive edge to managers are Asian. We still have progress to make.
grow faster than GDP in these countries. However, I am proud of our employees and am pleased that
we are increasingly seen as an employer of choice - a
place where people want to work.
There are also markets where we currently have a small
presence that we believe represent significant potential
future growth opportunities; South Africa and South Korea Brand and Values
are good examples. We have taken steps in both these
markets.
We are an international bank with a strong brand and a
strong set of internal values. Recent research into how
In South Africa we have been granted a banking licence we are perceived by our customers and our stakeholders
and acquired 20twenty, an internet financial services has shown that our brand awareness has increased
company, for less than $10 million. In South Korea we are significantly in markets like Thailand, India and
planning to launch our Consumer Banking business in the Singapore.
third quarter and we have also taken a 3.7 per cent stake
in KorAm Bank, one of the leading banks in South Korea,
for a consideration of $56 million. We have also modernised our image and reshaped our brand
and values.
In other markets, like China, the growth of market
opportunities is dependent on regulatory change. We will Our brand promise is to be the right partner for our
introduce our brand and services as the markets develop. customers, communities and employees.
STANDARD CHARTERED PLC - GROUP CHIEF EXECUTIVE'S REVIEW (continued)
The Outlook
In a challenging environment we have delivered in the confident that our momentum will continue.
first half and we are making progress against key
performance metrics.
Although economic confidence is improving in the short
term, it does remain fragile worldwide. We remain
In Consumer Banking, we have good revenue growth confident that we will continue to deliver on our
opportunities and we are investing further in key growth management agenda and financial targets and we intend to
markets, like India and MESA. However the challenges deliver again in the second half.
remain in Hong Kong where short term pressures are
considerable. In Wholesale Banking, we are
Mervyn Davies
Group Chief Executive
6 August 2003
STANDARD CHARTERED PLC - FINANCIAL REVIEW
GROUP SUMMARY
The results for the six months ended 30 June 2003, Singapore and Africa all made significant contributions
reflect a strong performance with profit before taxation with strong growth in customer driven revenue.
17 per cent higher than the equivalent period last year,
at $741 million. Normalised earnings per share has grown
by 16 per cent to 41.7 cents. This is a particularly good Other operating income more than doubled from $38 million
performance given the economic uncertainty, with war in to $79 million, largely from profit on sale of investment
Iraq and the outbreak of the SARS virus. SARS led to securities as part of a programme to de-risk the book.
lower consumer spending and higher unemployment in Hong
Kong and Singapore.
Costs have grown by four per cent to $1,292 million but
fell two per cent over the second half of 2002. Tight
Despite this difficult environment, net revenue has grown control over costs while continuing to invest in the
three per cent from $2,285 million in the first half of business remains a priority. Centralising to global hubs,
2002 to $2,347 million in this period. This is due to standardisation and re-engineering underpin the drive for
strong asset growth in our growing markets, particularly cost efficiency. In the first half of 2003 investment has
India, MESA and Africa, and increasing sales of been focused on infrastructure, product innovation and
investment products. improvement of service platforms and distribution. The
cost income ratio (on a normalised basis) at 53.4 per
cent is higher than the equivalent period last year but
Net interest income fell by five per cent to $1,458 is lower than the full year 2002 ratio of 53.6 per cent.
million. This was driven by bankruptcy containment
actions in Hong Kong, margin pressure on mortgages in
Singapore and lower yields on asset and liability Effective risk management led to a reduction in the debt
management, particularly in Hong Kong and the Americas, charge of $99 million or 24 per cent from $407 million to
UK and Group Head Office. Growth was seen in all other $308 million. Provision for bankruptcies in Hong Kong
areas. The net interest margin fell from 3.1 per cent in fell from $149 million to $104 million. The corporate
the first half of 2002 to 2.8 per cent this period. The portfolio performed well.
generally low interest rate environment and, in Hong
Kong, a change in product mix was behind this fall.
CONSUMER BANKING
Net fees and commissions increased by 13 per cent from
$476 million to $536 million. Most regions contributed to Consumer Banking continues to be a key business for
this increase, but an excellent performance was seen in Standard Chartered. Operating profit has increased ten
MESA, where fee income increased $16 million, or 30 per per cent from $326 million in the first half of 2002 to
cent, over the first half of 2002. Singapore's results $357 million in the six months to June 2003, despite the
improved by 23 per cent, or $10 million, and in Africa impact of SARS. Consumer Banking revenues have been flat,
there was a $9 million increase. with nine per cent revenue growth outside Hong Kong
offset by a 13 per cent decline in Hong Kong.
The revenue from dealing profits increased 20 per cent
from $229 million to $274 million. India,
STANDARD CHARTERED PLC - FINANCIAL REVIEW (continued)
The following table provides an analysis of operating profit by geographic
segment for Consumer Banking:
6 months ended 30.06.03
Asia Pacific
Other
Hong Asia
Kong Singapore Malaysia Pacific
$m $m $m $m
Net revenue 465 162 78 157
Costs (192) (53) (40) (86)
Charge for debts (164) (19) (9) (32)
Operating profit 109 90 29 39
6 months ended 30.06.03
Americas
Middle UK &
East & Group Consumer
Other Head Banking
India S Asia Africa Office Total
$m $m $m $m $m
Net revenue 107 116 86 40 1,211
Costs (58) (57) (73) (37) (596)
Charge for debts (23) (8) (2) (1) (258)
Operating profit 26 51 11 2 357
6 months ended 30.06.02
Asia Pacific
Other
Hong Asia
Kong Singapore Malaysia Pacific
$m $m $m $m
Net revenue 533 149 75 135
Costs (200) (49) (38) (80)
Charge for debts (238) (16) (10) (30)
Operating profit 95 84 27 25
6 months ended 30.06.02
Americas
Middle UK &
East & Group Consumer
Other Head Banking
India S Asia Africa Office Total
$m $m $m $m $m
Net revenue 101 102 70 50 1,215
Costs (62) (49) (60) (30) (568)
Charge for debts (18) (7) (1) (1) (321)
Operating profit 21 46 9 19 326
6 months ended 31.12.02
Asia Pacific
Other
Hong Asia
Kong Singapore Malaysia Pacific
$m $m $m $m
Net revenue 480 164 81 150
Costs (222) (57) (41) (97)
Charge for debts (196) (19) (12) (28)
Operating profit 62 88 28 25
6 months ended 31.12.02
Americas
Middle UK &
East & Group Consumer
Other Head Banking
India S Asia Africa Office Total
$m $m $m $m $m
Net revenue 103 111 67 45 1,201
Costs (52) (55) (64) (34) (622)
Charge for debts (20) (9) (2) 4 (282)
Operating profit 31 47 1 15 297
STANDARD CHARTERED PLC - FINANCIAL REVIEW (continued)
In Hong Kong, revenue dropped from $533 million to $465 the underlying momentum of the business. The distribution
million as a direct result of bankruptcy containment network has been expanded with branches in eight new
actions. Revenue attrition has been partially offset by cities.
growth in mortgages and Wealth Management. This coupled
with an $8 million reduction in costs and a $74 million
reduction in debts generated a $109 million operating Although private sector competition is driving down
profit, reflecting the success of the action taken to margins, MortgageOne has been successfully launched and
contain bankruptcy losses. has great potential as mortgages are a relatively new
business in India. Costs have been reduced by six per
cent to $58 million.
In Singapore, revenue rose by $13 million to $162 million
despite acute margin pressure. Mortgage revenue grew as a
result of increased lending to smaller corporates in In MESA revenue grew by 14 per cent to $116 million.
Business Financial Services and as a result of the low Unsecured loans and Wealth Management are key business
interest rate environment. drivers in the region. Internet banking has been launched
and there has been good growth in the card market,
especially in UAE, Pakistan, Bangladesh and Jordan.
In Malaysia, operating profit grew by seven per cent to
$29 million. Revenue increased by four per cent. There
was strong growth in mortgages and good performance in Revenue in Africa increased by $16 million, or 23 per
Business Financial Services. cent, to $86 million with strong growth in lending
volumes.
The Other Asia Pacific region had good results, with a 56
per cent increase in operating profit from $25 million to The Americas, UK and Group Head Office has seen a
$39 million. This was largely due to Indonesia, Taiwan reduction in operating profit from $19 million to $2
and Thailand, where there has been excellent growth in million. This is due to the restructuring of the Offshore
mortgages and Wealth Management. This growth was despite Banking Business based in Jersey. Revenue has decreased
interest rate caps on credit card lending. by $10 million as the business is reconfigured and
refocused. Costs have increased by $7 million to prepare
for a new integrated sales and technology platform.
In India revenue increased by $6 million from $101
million to $107 million. This understates
STANDARD CHARTERED PLC - FINANCIAL REVIEW (continued)
An analysis of Consumer Banking revenue by product is set out below:
6 months 6 months 6 months
ended ended ended
Revenue by product 30.06.03 30.06.02 31.12.02
$m $m $m
Cards and Personal Loans 508 557 525
Wealth Management / Deposits 403 412 403
Mortgages and Auto Finance 283 232 260
Other 17 14 13
1,211 1,215 1,201
Credit Cards and Personal Loans has grown steadily and 46.7 per cent in June 2002 and 51.8 per cent in December
performed well outside Hong Kong. However in Hong Kong 2002.
the bankruptcy situation and SARS has affected
performance. Elsewhere regulatory intervention and
interest caps limited margin growth in some markets. The charge for bad debts is $258 million compared to $321
million for the period ended June 2002 and $282 million
for the period ended 31 December 2002. The Hong Kong
Wealth Management revenue has fallen by $9 million to bankruptcy situation is gradually improving.
$403 million, due to margin pressure. The impact of this
however has been partially offset by strong sales of
investment service products. WHOLESALE BANKING
The volume of Mortgages and Auto Finance has grown, and Wholesale Banking has performed well in the first six
with it revenue has increased 22 per cent from $232 months of 2003. The repositioning of the business towards
million to $283 million. This business benefited from higher returns that was undertaken through 2002 has led
stable margins and product innovation. to improved profitability. Revenue has increased by six
per cent to $1,136 million and costs have increased three
per cent from $608 million to $629 million resulting in a
Costs have increased from $568 million to $596 million, positive cost-income 'jaws' of three per cent. Risk
reflecting continued investment in infrastructure, management has been effective with the debt charge
product innovation, service platform and distribution. reduced from $86 million in the six months to 30 June
The cost income ratio at 30 June 2003 is 49.2 per cent 2002 to $50 million in this period.
compared with
STANDARD CHARTERED PLC - FINANCIAL REVIEW (continued)
The following table provides an analysis of operating profit by geographic
segment for Wholesale Banking:
6 months ended 30.06.03
Asia Pacific
Other
Hong Asia
Kong Singapore Malaysia Pacific
$m $m $m $m
Net revenue 186 89 42 163
Costs (108) (51) (31) (129)
Charge for debts (17) - 5 (31)
Amounts written off fixed asset - - - -
investments
Operating profit 61 38 16 3
6 months ended 30.06.03
Americas
Middle UK &
East & Group Wholesale
Other Head Banking
India S Asia Africa Office Total
$m $m $m $m $m
Net revenue 143 155 126 232 1,136
Costs (40) (49) (60) (161) (629)
Charge for debts 1 18 (8) (18) (50)
Amounts written off fixed (1) - - (5) (6)
asset investments
Operating profit 103 124 58 48 451
6 months ended 30.06.02
Asia Pacific
Other
Hong Asia
Kong Singapore Malaysia Pacific
$m $m $m $m
Net revenue 201 86 40 148
Costs (96) (48) (35) (115)
Charge for debts 7 (1) - (4)
Operating profit/(loss) 112 37 5 29
6 months ended 30.06.02
Americas
Middle UK &
East & Group Wholesale
Other Head Banking
India S Asia Africa Office Total
$m $m $m $m $m
Net revenue 97 140 106 252 1,070
Costs (41) (43) (51) (179) (608)
Charge for debts (1) 7 4 (98) (86)
Operating profit/(loss) 55 104 59 (25) 376
6 months ended 31.12.02
Asia Pacific
Other
Hong Asia
Kong Singapore Malaysia Pacific
$m $m $m $m
Net revenue 202 86 38 139
Costs (104) (55) (29) (114)
Charge for debts (1) (5) 9 1
Amounts written off fixed asset - - - -
investments
Operating profit 97 26 18 26
6 months ended 31.12.02
Americas
Middle UK &
East & Group Wholesale
Other Head Banking
India S Asia Africa Office Total
$m $m $m $m $m
Net revenue 93 148 89 258 1,053
Costs (35) (49) (53) (164) (603)
Charge for debts 1 (4) (4) (20) (23)
Amounts written off fixed - - - (8) (8)
asset investments
Operating profit 59 95 32 66 419
STANDARD CHARTERED PLC - FINANCIAL REVIEW (continued)
In Hong Kong net revenue fell by $15 million. A decline repositioning and de-risking the investment portfolio,
in asset and liability management was partially offset by together with strong growth in commercial banking.
growth in trade, customer driven foreign exchange on the
back of steady growth in exports, and cash management.
The debt charge increased by $24 million. This was due to The operating profit for MESA has increased from $104
the first half of 2002 benefiting from strong recoveries. million to $124 million due to improved margins in
commercial banking and asset and liability management,
increased customer sales activity in Global Markets, the
Singapore increased revenue by $3 million to $89 million, repositioning of the risk profile, and enhanced Global
due to asset growth. However this was offset by a $3 Market product offering.
million increase in costs.
In Africa revenue increased by $20 million to $126
In Malaysia, revenues grew by five per cent. This, million. This was offset by a $9 million increase in
together with tight cost and credit control has led to an costs and a $12 million increase in the debt charge (30
increase in operating profit from $5 million to $16 June 2002 was a net $4 million recovery).
million.
In the Americas, UK and Group Head Office the
In the Other Asia Pacific region, revenue grew by ten per restructuring of Latin America that took place in 2002 is
cent or $15 million to $163 million reflecting the reflected in the $73 million increase in operating
benefit of the restructuring that took place in 2002, profit. Although revenue fell by $20 million, this was
together with an improved performance in Global Markets. more than offset by an $18 million reduction in costs and
an $80 million reduction in the debt charge.
India operating profit increased by 87 per cent to $103
million. This is largely due to
STANDARD CHARTERED PLC - FINANCIAL REVIEW (continued)
An analysis of Wholesale Banking revenue by product is set out below:
6 months 6 months 6 months
ended ended ended
Revenue by product 30.06.03 30.06.02 31.12.02
$m $m $m
Trade and Lending 395 393 382
Global Markets 556 488 485
Cash Management 158 158 157
Custody 27 31 29
1,136 1,070 1,053
Trade and Lending revenue grew one per cent to $395 The debt charge has fallen $36 million or 42 per cent.
million. Trade finance grew well underpinned by the This reflects the continued effectiveness of risk
integrated trade platform B2BeX, which was launched in management strategies undertaken since 2001 to de-risk
October 2002, while lending fell. Growth in India, MESA the Wholesale Bank portfolio, together with strong
and Africa was offset by Other Asia Pacific where there recoveries.
was subdued demand, strong liquidity and falling loan
prices.
RISK
Revenue in Global Markets increased by $68 million, or 14 Risk is inherent in the Group's business and the
per cent to $556 million. This performance reflects effective management of that risk is seen as a core
growth in derivatives, fixed income, and structured competence within Standard Chartered. Through its risk
products. Customer revenues have increased faster than management structure the Group seeks to manage
trading revenues. Revenues from asset and liability efficiently the eight core risks: Credit, Market, Country
management fell due to low interest rates and the flat and Liquidity risk, which arise directly through the
dollar yield curve. This however was partially offset by Group's commercial activities, whilst Business,
gains on investment securities. Regulatory, Operational and Reputational risk are a
normal consequence of any business undertaking. The key
element of risk management philosophy is for the risk
Cash Management revenue was flat in a low interest rate functions to operate as an independent control function
environment but volumes increased by ten per cent. working in partnership with the business units to provide
Revenue growth was reported in MESA, Africa, UK and a competitive advantage to the Group.
Americas, and was particularly driven by multi-national
corporations. Credit Risk
Credit risk is the risk that a counterparty will not
Custody revenue fell $4 million to $27 million despite settle its obligations in accordance with agreed terms.
higher business volumes. This was mainly due to the
subdued Asian stockmarkets. Credit exposures include individual borrowers, connected
groups of counterparties, and portfolios, on the banking
and trading books.
Costs have risen by three per cent for the half year due
mainly to increased investment in technology and
infrastructure. There was continued investment in B2BeX
and a $6 million write down of investments.
STANDARD CHARTERED PLC - FINANCIAL REVIEW (continued)
Loan Portfolio
The following table sets out by maturity the amount of customer loans net of
provisions:
30.06.03
One One to Over
year five five
or less years years Total
$m $m $m $m
Consumer Banking
Mortgages 2,144 4,372 14,055 20,571
Other 4,832 3,175 1,512 9,519
Total 6,976 7,547 15,567 30,090
Wholesale Banking 21,565 4,234 2,582 28,381
General Provisions (458)
Net loans and advances to customers 28,541 11,781 18,149 58,013
30.06.02
One One to Over
year five five
or less years years Total
$m $m $m $m
Consumer Banking
Mortgages 2,914 3,989 13,156 20,059
Other 4,727 2,780 1,140 8,647
Total 7,641 6,769 14,296 28,706
Wholesale Banking 20,821 3,497 2,327 26,645
General Provisions (468)
Net loans and advances to customers 28,462 10,266 16,623 54,883
31.12.02
One One to Over
year five five
or less years years Total
$m $m $m $m
Consumer Banking
Consumer Banking
Mortgages 1,977 4,399 14,012 20,388
Other 4,798 3,197 1,218 9,213
Total 6,775 7,596 15,230 29,601
Wholesale Banking 22,035 4,077 1,764 27,876
General Provisions (468)
Net loans and advances to customers 28,810 11,673 16,994 57,009
The Group's loans and advances to customers are predominantly short term with
approximately half the portfolio having a maturity of one year or less. The
longer term portfolio, with a maturity of over five years, mainly relates to
Consumer Banking personal residential mortgages.
STANDARD CHARTERED PLC - FINANCIAL REVIEW (continued)
The following table sets out an analysis of the Group's net loans and advances
as at 30 June 2003, 30 June 2002 and 31 December 2002 by the principal category
of borrowers, business or industry and/or geographical distribution:
30.06.03
Asia Pacific
Other
Hong Asia
Kong Singapore Malaysia Pacific
$m $m $m $m
Loans to Individuals
Mortgages 12,833 3,925 2,153 818
Other 2,285 1,726 598 1,781
Consumer Banking 15,118 5,651 2,751 2,599
Agriculture, Forestry and Fishing 4 6 74 36
Construction 60 33 28 32
Commerce 1,513 879 167 599
Electricity, Gas and Water 118 66 10 157
Financing, Insurance and Business services 1,578 773 365 643
Loans to Governments - 162 414 8
Mining and Quarrying - 8 37 26
Manufacturing 1,231 595 251 2,111
Commercial real estate 896 712 15 151
Transport, Storage and Communication 406 149 146 159
Other 17 35 59 181
Wholesale Banking 5,823 3,418 1,566 4,103
General provisions
Total loans and advances to customers 20,941 9,069 4,317 6,702
Total loans and advances to banks 4,145 2,015 414 2,796
30.06.03
Americas
Middle UK &
East & Group
Other Head
India S Asia Africa Office Total
$m $m $m $m $m
Loans to Individuals
Mortgages 418 62 24 338 20,571
Other 980 1,707 282 160 9,519
Consumer Banking 1,398 1,769 306 498 30,090
Agriculture, Forestry and Fishing 20 25 81 267 513
Construction 6 103 30 4 296
Commerce 58 960 312 949 5,437
Electricity, Gas and Water 102 126 29 114 722
Financing, Insurance and Business services 112 645 167 1,268 5,551
Loans to Governments - 13 - 352 949
Mining and Quarrying 5 91 43 569 779
Manufacturing 1,102 1,098 227 1,731 8,346
Commercial real estate - - 3 5 1,782
Transport, Storage and Communication 188 245 115 1,647 3,055
Other - 204 37 418 951
Wholesale Banking 1,593 3,510 1,044 7,324 28,381
General provisions (458) (458)
Total loans and advances to customers 2,991 5,279 1,350 7,364 58,013
Total loans and advances to banks 224 1,692 228 6,452 17,966
Under 'Loans to individuals - other', $1,360 million (30 predominantly personal residential mortgages.
June 2002: $1,804 million; 31 December 2002: $1,487
million) relates to the cards portfolio in Hong Kong. The
total cards portfolio is $3,249 million (30 June 2002: The Wholesale Banking portfolio is well diversified
$3,578 million; 31 December 2002: $3,378 million). across both geography and industry. The Group does not
have any significant concentrations in special interest
industries such as Aviation, Telecoms and Tourism.
Approximately 52 per cent (30 June 2002: 52 per cent; 31 Exposure to each industry is less than five per cent of
December 2002: 52 per cent) of total Loans and Advances Wholesale Banking Loans and Advances to Customers.
to Customers relates to the Consumer Banking portfolio,
STANDARD CHARTERED PLC - FINANCIAL REVIEW (continued)
30.06.02
Asia Pacific
Other
Hong Asia
Kong Singapore Malaysia Pacific
$m $m $m $m
Loans to Individuals
Mortgages 12,764 3,447 1,970 1,104
Other 2,952 1,324 541 1,159
Consumer Banking 15,716 4,771 2,511 2,263
Agriculture, Forestry and Fishing 2 2 68 42
Construction 53 47 28 108
Commerce 1,048 536 236 664
Electricity, Gas and Water 330 44 24 285
Financing, Insurance and Business services 1,643 641 208 621
Loans to Governments - 40 338 67
Mining and Quarrying - 1 27 20
Manufacturing 1,129 500 203 1,999
Commercial real estate 877 979 20 121
Transport, Storage and Communication 304 196 68 202
Other 53 18 29 164
Wholesale Banking 5,439 3,004 1,249 4,293
General provisions
Total loans and advances to customers 21,155 7,775 3,760 6,556
Total loans and advances to banks 4,053 2,644 725 2,771
30.06.02
Americas
Middle UK &
East & Group
Other Head
India S Asia Africa Office Total
$m $m $m $m $m
Loans to Individuals
Mortgages 192 26 36 520 20,059
Other 812 1,467 188 204 8,647
Consumer Banking 1,004 1,493 224 724 28,706
Agriculture, Forestry and Fishing 13 16 91 182 416
Construction 6 138 17 7 404
Commerce 61 799 253 864 4,461
Electricity, Gas and Water 31 99 22 124 959
Financing, Insurance and Business services 101 318 49 1,822 5,403
Loans to Governments 2 13 - 446 906
Mining and Quarrying 9 126 33 744 960
Manufacturing 792 940 302 2,510 8,375
Commercial real estate - 81 6 7 2,091
Transport, Storage and Communication 45 157 89 1,162 2,223
Other - 54 16 113 447
Wholesale Banking 1,060 2,741 878 7,981 26,645
General provisions (468) (468)
Total loans and advances to customers 2,064 4,234 1,102 8,237 54,883
Total loans and advances to banks 335 1,731 279 7,565 20,103
31.12.02
Asia Pacific
Other
Hong Asia
Kong Singapore Malaysia Pacific
$m $m $m $m
Loans to Individuals
Mortgages 13,045 3,813 2,031 779
Other 2,573 1,524 575 1,684
Consumer Banking 15,618 5,337 2,606 2,463
Agriculture, Forestry and Fishing 5 7 59 35
Construction 58 38 37 18
Commerce 1,251 777 147 572
Electricity, Gas and Water 269 40 12 178
Financing, Insurance and Business services 1,645 586 404 489
Loans to Governments - 41 552 66
Mining and Quarrying - 19 51 26
Manufacturing 1,019 399 201 2,020
Commercial real estate 1,012 665 18 112
Transport, Storage and Communication 405 112 77 217
Other 31 39 37 194
Wholesale Banking 5,695 2,723 1,595 3,927
General provisions
Total loans and advances to customers 21,313 8,060 4,201 6,390
Total loans and advances to banks 2,507 2,027 394 2,703
31.12.02
Americas
Middle UK &
East & Group
Other Head
India S Asia Africa Office Total
$m $m $m $m $m
Loans to Individuals
Mortgages 283 20 35 382 20,388
Other 882 1,537 231 207 9,213
Consumer Banking 1,165 1,557 266 589 29,601
Agriculture, Forestry and Fishing 15 14 62 365 562
Construction 4 157 25 7 344
Commerce 19 784 283 1,151 4,984
Electricity, Gas and Water 23 50 35 109 716
Financing, Insurance and Business services 209 638 47 1,921 5,939
Loans to Governments - 13 - 273 945
Mining and Quarrying 23 134 20 536 809
Manufacturing 887 1,242 299 2,256 8,323
Commercial real estate - - 6 6 1,819
Transport, Storage and Communication 113 178 107 1,577 2,786
Other - 116 18 214 649
Wholesale Banking 1,293 3,326 902 8,415 27,876
General provisions (468) (468)
Total loans and advances to customers 2,458 4,883 1,168 8,536 57,009
Total loans and advances to banks 212 1,792 218 6,148 16,001
STANDARD CHARTERED PLC - FINANCIAL REVIEW (continued)
Problem Credits Consumer Banking
The Group employs a variety of tools to monitor the Provisions are derived on a formulaic basis depending on
portfolio and to ensure the timely recognition of problem the product:
credits.
Mortgages: a provision is raised where accounts are 150
In Wholesale Banking, accounts are placed on Early Alert days past due based on the difference between the
when they display signs of weakness. Such accounts are outstanding value of the loan and the forced sale value
subject to a dedicated process involving senior risk of the underlying asset.
officers and representatives from a specialist recovery
unit, which is independent of the business units. Account
plans are re-evaluated and remedial actions are agreed Credit cards: a charge off is made for all balances which
and monitored until complete. Remedial actions include, are 150 days past due or earlier as circumstances
but are not limited to, exposure reduction, security dictate. In Hong Kong charge off is currently at 120
enhancement, exit of the account or immediate movement of days.
the account into the control of the specialist recovery
unit.
Other unsecured Consumer Banking products: a charge off
is made at 150 days past due.
In Consumer Banking, an account is considered to be in
default when payment is not received on the due date.
Accounts that are overdue by more than 30 days (60 days Other secured Consumer Banking products: a provision is
for mortgages) are considered delinquent. These are raised at 90 days past due for the difference between the
closely monitored and subject to a special collections outstanding value and the forced sale value of the
process. underlying asset. The underlying asset is then re-valued
periodically until disposal.
In general, loans are treated as non-performing when
interest or principal is 90 days or more past due. It is current practice to provision and write-off
exposure in respect of Hong Kong bankruptcies at the time
the customer petitions for bankruptcy.
The Small and Medium Enterprises (SME) portfolio is
provisioned on a case by case basis.
STANDARD CHARTERED PLC - FINANCIAL REVIEW (continued)
The following table sets out the non-performing portfolio in Consumer Banking:
30.06.03
Asia Pacific
Other
Hong Asia
Kong Singapore Malaysia Pacific
$m $m $m $m
Loans and advances - Gross 144 109 192 72
non-performing
Specific provisions for bad and (55) (16) (25) (17)
doubtful debts
Interest in suspense (1) (3) (23) (10)
Net non-performing loans and 88 90 144 45
advances
Cover ratio
30.06.03
Americas
Middle UK &
East & Group
Other Head
India S Asia Africa Office Total
$m $m $m $m $m
Loans and advances - Gross 46 40 15 26 644
non-performing
Specific provisions for bad (6) (18) (5) (5) (147)
and doubtful debts
Interest in suspense (8) (10) (7) (2) (64)
Net non-performing loans and 32 12 3 19 433
advances
Cover ratio 33%
30.06.02*
Asia Pacific
Other
Hong Asia
Kong Singapore Malaysia Pacific
$m $m $m $m
Loans and advances - Gross 200 115 172 78
non-performing
Specific provisions for bad and (121) (18) (21) (27)
doubtful debts
Interest in suspense - (3) (21) (9)
Net non-performing loans and 79 94 130 42
advances
Cover ratio
30.06.02*
Americas
Middle UK &
East & Group
Other Head
India S Asia Africa Office Total
$m $m $m $m $m
Loans and advances - Gross 40 85 17 11 718
non-performing
Specific provisions for bad (9) (54) (6) (3) (259)
and doubtful debts
Interest in suspense (5) (20) (8) (1) (67)
Net non-performing loans and 26 11 3 7 392
advances
Cover ratio 45%
31.12.02*
Asia Pacific
Other
Hong Asia
Kong Singapore Malaysia Pacific
$m $m $m $m
Loans and advances - Gross
non-performing 118 111 176 68
Specific provisions for bad and
doubtful debts (45) (18) (24) (16)
Interest in suspense (1) (3) (22) (10)
Net non-performing loans and 72 90 130 42
advances
Cover ratio
31.12.02*
Americas
Middle UK &
East & Group
Other Head
India S Asia Africa Office Total
$m $m $m $m $m
Loans and advances - Gross
non-performing 41 27 15 18 574
Specific provisions for bad
and doubtful debts (8) (7) (8) (1) (127)
Interest in suspense (7) (7) (7) (1) (58)
Net non-performing loans and 26 13 - 16 389
advances
Cover ratio 32%
* In 2002, gross non-performing loans for Other Asia Pacific have been restated.
$58 million of gross non-performing loans in Standard Chartered Nakornthon Bank
(SCNB) subject to a Loan Management Agreement (LMA) are now reported in
Wholesale Banking.
STANDARD CHARTERED PLC - FINANCIAL REVIEW (continued)
The relatively low Consumer Banking cover ratio reflects independent of the main businesses of the Group.
the fact that Standard Chartered classifies all exposure
which is more than 90 days past due as non-performing,
whilst provisions on unsecured lending are only raised at For loans and advances designated non-performing,
the time of charge-off. For secured products, provisions interest continues to accrue on the customer's account
reflect the difference between the underlying assets, and but is not included in income.
the outstanding loan (see details relating to the raising
of provisions above).
Where the principal, or a portion thereof, is considered
uncollectable and of such little realisable value that it
Wholesale Banking can no longer be included at its full nominal amount on
the balance sheet, a specific provision is raised. In any
decision relating to the raising of provisions, the Group
Loans are designated as non-performing as soon as payment attempts to balance economic conditions, local knowledge
of interest or principal is 90 days or more overdue or and experience and the results of independent asset
where sufficient weakness is recognised that full payment reviews.
of either interest or principal becomes questionable.
Where customer accounts are recognised as non-performing
or display weakness that may result in non-performing Where it is considered that there is no realistic
status being assigned, they are passed to the management prospect of recovering the principal of an account
of a specialist unit which is against which a specific provision has been raised, then
that amount will be written off.
STANDARD CHARTERED PLC - FINANCIAL REVIEW (continued)
The following table sets out the non-performing portfolio in Wholesale Banking:
30.06.03
Asia Pacific
Other
Hong Asia
Kong Singapore Malaysia Pacific
$m $m $m $m
Loans and advances - Gross 379 274 261 1,195
non-performing
Specific provisions for bad and (202) (127) (152) (426)
doubtful debts
Interest in suspense (95) (69) (73) (89)
Net non-performing loans and 82 78 36 680
advances
30.06.03
Americas
Middle UK &
East & Group
Other Head
India S Asia Africa Office Total
$m $m $m $m $m
Loans and advances - Gross 79 251 125 818 3,382
non-performing
Specific provisions for bad (50) (145) (55) (420) (1,577)
and doubtful debts
Interest in suspense (29) (78) (43) (105) (581)
Net non-performing loans and - 28 27 293 1,224
advances
30.06.02*
Asia Pacific
Other
Hong Asia
Kong Singapore Malaysia Pacific
$m $m $m $m
Loans and advances - Gross 456 274 408 1,284
non-performing
Specific provisions for bad and (235) (137) (221) (384)
doubtful debts
Interest in suspense (117) (67) (78) (103)
Net non-performing loans and 104 70 109 797
advances
30.06.02*
Americas
Middle UK &
East & Group
Other Head
India S Asia Africa Office Total
$m $m $m $m $m
Loans and advances - Gross 89 396 108 991 4,006
non-performing
Specific provisions for bad (58) (270) (49) (498) (1,852)
and doubtful debts
Interest in suspense (28) (94) (43) (112) (642)
Net non-performing loans and 3 32 16 381 1,512
advances
31.12.02*
Asia Pacific
Other
Hong Asia
Kong Singapore Malaysia Pacific
$m $m $m $m
Loans and advances - Gross 400 273 353 1,166
non-performing
Specific provisions for bad and (210) (141) (211) (342)
doubtful debts
Interest in suspense (111) (73) (84) (102)
Net non-performing loans and 79 59 58 722
advances
31.12.02*
Americas
Middle UK &
East & Group
Other Head
India S Asia Africa Office Total
$m $m $m $m $m
Loans and advances - Gross 84 384 103 920 3,683
non-performing
Specific provisions for bad (52) (245) (45) (451) (1,697)
and doubtful debts
Interest in suspense (31) (97) (44) (121) (663)
Net non-performing loans and 1 42 14 348 1,323
advances
* Prior periods have been restated. Corporate loans and advances to customers
against which provisions have been outstanding for two years or more are no
longer written down. $58 million of gross non-performing loans in Standard
Chartered Nakornthon Bank (SCNB) subject to a Loan Management Agreement (LMA)
previously reported in Consumer Banking have been moved to Wholesale Banking.
STANDARD CHARTERED PLC - FINANCIAL REVIEW (continued)
Wholesale Banking Cover Ratio
The following table shows the cover ratio. The non-performing loans recorded
below under Standard Chartered Nakornthon Bank (SCNB) are excluded from the
cover ratio calculation as they are the subject of a Loan Management Agreement
(LMA) with a Thai Government Agency.
30.06.03
Total
SCNB excl
Total (LMA) LMA
$m $m $m
Loans and advances - Gross non-performing 3,382 757 2,625
Specific provisions for bad and doubtful debts (1,577) (94) (1,483)
Interest in suspense (581) - (581)
Net non-performing loans and advances 1,224 663 561
Cover ratio 79%
30.06.02
Total
SCNB excl
Total (LMA) LMA
$m $m $m
Loans and advances - Gross non-performing 4,006 849 3,157
Specific provisions for bad and doubtful debts (1,852) (92) (1,760)
Interest in suspense (642) - (642)
Net non-performing loans and advances 1,512 757 755
Cover ratio 76%
31.12.02
Total
SCNB excl
Total (LMA) LMA
$m $m $m
Loans and advances - Gross non-performing 3,683 781 2,902
Specific provisions for bad and doubtful debts (1,697) (91) (1,606)
Interest in suspense (663) - (663)
Net non-performing loans and advances 1,323 690 633
Cover ratio 78%
The Wholesale Banking non-performing portfolio is well covered. The balance
uncovered by specific provision represents the value of collateral held and/or
the Group's estimate of the net value of any work-out strategy.
STANDARD CHARTERED PLC - FINANCIAL REVIEW (continued)
Group
The following table sets out the movements in the Group's total specific
provisions against loans and advances.
6 months ended 30.06.03
Asia Pacific
Other
Hong Asia
Kong Singapore Malaysia Pacific
$m $m $m $m
Provisions held at 1 January 2003 255 159 235 358
Exchange translation differences - (1) - 2
Amounts written off (188) (37) (66) (47)
Recoveries of amounts previously written off 9 3 5 8
Other - - (1) 59
New provisions 207 30 17 85
Recoveries/provisions no longer required (26) (11) (13) (22)
Net charge against/(credit to) profit 181 19 4 63
Provisions held at 30 June 2003 257 143 177 443
6 months ended 30.06.03
Americas
Middle UK &
East & Group
Other Head
India S Asia Africa Office Total
$m $m $m $m $m
Provisions held at 1 January 2003 60 252 53 452 1,824
Exchange translation differences 2 2 (1) 1 5
Amounts written off (37) (84) (3) (69) (531)
Recoveries of amounts previously written off 8 1 1 2 37
Other 1 2 - 10 71
New provisions 62 18 17 38 474
Recoveries/provisions no longer required (40) (28) (7) (9) (156)
Net charge against/(credit to) profit 22 (10) 10 29 318
Provisions held at 30 June 2003 56 163 60 425 1,724
6 months ended 30.06.02*
Asia Pacific
Other
Hong Asia
Kong Singapore Malaysia Pacific
$m $m $m $m
Provisions held at 1 January 2002 335 151 240 428
Exchange translation differences 2 5 - 9
Amounts written off (217) (20) (14) (66)
Recoveries of amounts previously written off 5 2 6 6
New provisions 269 25 21 62
Recoveries/provisions no longer required (38) (8) (11)0 (28)
Net charge against/(credit to) profit 231 17 10 34
Provisions held at 30 June 2002 356 155 242 411
6 months ended 30.06.02*
Americas
Middle UK &
East & Group
Other Head
India S Asia Africa Office Total
$m $m $m $m $m
Provisions held at 1 January 2002 85 333 63 424 2,059
Exchange translation differences (1) (1) (3) - 11
Amounts written off (41) (9) (2) (22) (391)
Recoveries of amounts previously written off 6 1 - - 26
New provisions 45 17 3 108 550
Recoveries/provisions no longer required (27) (17) (6) (9) (144)
Net charge against/(credit to) profit 18 - (3) 99 406
Provisions held at 30 June 2002 67 324 55 501 2,111
6 months ended 31.12.02*
Asia Pacific
Other
Hong Asia
Kong Singapore Malaysia Pacific
$m $m $m $m
Provisions held at 1 July 2002 356 155 242 411
Exchange translation differences - 1 - (3)
Amounts written off (307) (24) (14) (78)
Recoveries of amounts previously written off 9 3 4 7
Other - - - (6)
New provisions 233 34 24 53
Recoveries/provisions no longer required (36) (10) (21) (26)
Net charge against profit 197 24 3 27
Provisions held at 31 December 2002 255 159 235 358
6 months ended 31.12.02*
Americas
Middle UK &
East & Group
Other Head
India S Asia Africa Office Total
$m $m $m $m $m
Provisions held at 1 July 2002 67 324 55 501 2,111
Exchange translation differences 1 - (1) 6 4
Amounts written off (34) (82) (7) (69) (615)
Recoveries of amounts previously written off 7 - - 9 39
Other - 3 - (11) (14)
New provisions 59 23 6 30 462
Recoveries/provisions no longer required (40) (16) - (14) (163)
Net charge against profit 19 7 6 16 299
Provisions held at 31 December 2002 60 252 53 452 1,824
* Corporate loans and advances to customers against which provisions have been
outstanding for two years or more are no longer written down. Prior periods have
been restated.
STANDARD CHARTERED PLC - FINANCIAL REVIEW (continued)
Country Risk
Cross border assets exclude facilities provided within
the Group. They comprise loans and advances, interest
Country Risk is the risk that a counterparty is unable to bearing deposits with other banks, trade and other bills,
meet its contractual obligations as a result of adverse acceptances, amounts receivable under finance leases,
economic conditions or actions taken by governments in certificates of deposit and other negotiable paper and
the relevant country. investment securities where the counterparty is resident
in a country other than that where the cross border asset
is recorded. Cross border assets also include exposures
The following table based on the Bank of England Cross to local residents denominated in currencies other than
Border Reporting (C1) guidelines, shows the Group's cross the local currency.
border assets including acceptances, where they exceed
one per cent of the Group's total assets.
30.06.03 30.06.02
Public Public
sector Banks Other Total sector Banks Other Total
$m $m $m $m $m $m $m $m
USA 1,071 1,503 2,680 5,254 1,078 1,154 2,078 4,310
Germany - 2,965 295 3,260 - 3,554 118 3,672
Hong Kong 22 111 2,146 2,279 8 100 1,671 1,779
Korea 20 1,596 606 2,222 164 1,355 128 1,647
France 4 1,537 313 1,854 4 1,316 336 1,656
Italy 502 788 386 1,676 438 1,322 323 2,083
Singapore - 169 1,334 1,503 10 395 1,420 1,825
India** 103 869 592 1,564
Austria* - 1,216 - 1,216
Australia* 387 656 94 1,137
* Less than one per cent of total assets at 30 June 2003.
** Less than one per cent of total assets at 30 June 2002.
31.12.02
Public
sector Banks Other Total
$m $m $m $m
USA 1,084 1,729 2,462 5,275
Germany - 2,363 234 2,597
Hong Kong 16 181 1,842 2,039
Korea 12 1,334 407 1,753
France 4 1,202 323 1,529
Italy 488 613 374 1,475
Singapore 1 190 1,361 1,552
Australia 359 988 59 1,406
STANDARD CHARTERED PLC - FINANCIAL REVIEW (continued)
Argentina
Standard Chartered has net non-performing exposure (net of cash collateral and
export credit agency guarantees) of $164 million (30 June 2002: $262 million; 31
December 2002: $211 million) against which provisions of $127 million (30 June
2002: $132 million; 31 December 2002: $136 million) are held. This provides a
cover ratio of 77 per cent (30 June 2002: 50 per cent; 31 December 2002: 64 per
cent). The following table shows the breakdown of this exposure:
30.06.03 30.06.02 31.12.02
$m $m $m
Banks
Foreign owned banks 66 102 79
Government owned banks 16 24 21
Local banks 37 62 41
Corporates 38 74 63
Government bonds 7 - 7
Total exposure after cash collateral and export credit agency cover 164 262 211
Provisions held (127) (132) (136)
Net at risk 37 130 75
Cover ratio 77% 50% 64%
Other Latin American exposure
In addition to Argentina, the Group has exposure to a number of other Latin
American countries. The following table shows cross border assets based on the
Bank of England Cross Border Reporting (C1) guidelines (net of specific
provisions where appropriate).
30.06.03
Non
Banks banks Total
$m $m $m
Brazil 220 92 312
Chile 129 41 170
Colombia 47 41 88
Peru 18 200 218
Venezuela - 34 34
Others 20 - 20
30.06.02 31.12.02
Non Non
Banks banks Total Banks banks Total
$m $m $m $m $m $m
Brazil 479 156 635 195 78 273
Chile 154 75 229 120 43 163
Colombia 202 92 294 155 45 200
Peru 32 254 286 18 218 236
Venezuela 8 96 104 6 46 52
Others 12 6 18 8 8 16
Local currency exposure to local residents in these countries totals $103
million (30 June 2002: $179 million; 31 December 2002: $165 million).
STANDARD CHARTERED PLC - FINANCIAL REVIEW (continued)
Market Risk In 2002 the Group used a combination of
variance-covariance methodology and historical simulation
to measure VaR on all market risk related activities.
The Group recognises market risk as the exposure created From January 2003, the Group has started to phase out
by potential changes in market prices and rates. Market variance-covariance methodology in preference of
risk arises on financial instruments, which are either historical simulation. The change in methodology has been
valued at current market prices (mark to market) or at reflected in the comparative numbers.
cost plus any accrued interest (non-trading basis). The
Group is exposed to market risk arising principally from
customer driven transactions. The total VaR for trading and non-trading books combined
as at 30 June 2003 was $14.9 million (30 June 2002: $14.6
million; 31 December 2002: $12.4 million). Of this total,
Market risk is supervised by the Group Risk Committee, $14.6 million (30 June 2002: $12.6 million; 31 December
which agrees policies and levels of risk appetite in 2002: $11.3 million) related to interest rate risk and
terms of Value at Risk (VaR). A Group Market Risk $1.3 million (30 June 2002: $2.0 million; 31 December
Committee sits as a specialist body to provide business 2002: $1.1 million) to exchange rate risk.
level management, guidance and policy setting. Policies
cover the trading book of the Group and also market risks
within the non-trading books. Limits by location and The average total VaR for trading and non-trading books
portfolio are proposed by the business within the terms during the six months to 30 June 2003 was $14.0 million
of agreed policy. Group Market Risk agrees the limits and (30 June 2002: $16.3 million; 31 December 2002: $15.2
monitors exposures against these limits. million) with a maximum exposure of $14.9 million. The
total VaR for market risks in the Group's trading book
was $4.6 million at 30 June 2003, (30 June 2002: $5.0
Group Market Risk augments the VaR measurement by million; 31 December 2002: $2.7 million). Of this total,
regularly stress testing aggregate market risk exposures $4.0 million related to interest rate risk (30 June 2002:
to highlight potential risk that may arise from extreme $2.7 million; 31 December 2002: $1.6 million) and $1.3
market events that are rare but plausible. In addition, million to exchange rate risk (30 June 2002: $2.0
VaR models are back tested against actual results to million; 31 December 2002: $1.1 million).
ensure pre-determined levels of accuracy are maintained.
VaR for interest rate risk in the non-trading books of
Additional limits are placed on specific instrument and the Group totalled $11.5 million at 30 June 2003 (30 June
currency concentrations where appropriate. Factor 2002: $11.1 million; 31 December 2002: $10.6 million).
sensitivity measures are used in addition to VaR as
additional risk management tools. Option risks are
controlled through revaluation limits on currency and The Group has no significant trading exposure to equity
volatility shifts, limits on volatility risk by currency or commodity price risk.
pair and other underlying variables that determine the
option's value.
Foreign Exchange Exposure
Value at Risk
The Group's foreign exchange exposures comprise trading
and structural foreign currency translation exposures.
The Group measures the potential impact of changes in
market prices and rates using VaR models.
Foreign exchange trading exposures are principally
derived from customer driven
STANDARD CHARTERED PLC - FINANCIAL REVIEW (continued)
transactions. The average daily foreign exchange trading exchange rates. Only offices with sufficient product
revenue during the six months ended 30 June 2003 was $1.2 expertise and appropriate control systems are authorised
million. to undertake transactions in derivative products.
Interest Rate Exposure The credit risk arising from a derivative contract is
calculated by taking the cost of replacing the contract,
where its mark-to-market value is positive together with
The Group's interest rate exposures comprise trading an estimate for the potential change in the future value
exposures and structural interest rate exposures. of the contract, reflecting the volatilities that affect
Interest rate risk arises on both trading positions and it. The credit risk on contracts with a negative
non-trading books. mark-to-market value is restricted to the potential
future change in their market value. The credit risk on
derivatives is therefore usually small relative to their
Structural interest rate risk arises from the differing notional principal values.
repricing characteristics of commercial banking assets
and liabilities, including non-interest bearing
liabilities such as shareholders' funds and some current The Group applies a potential future exposure methodology
accounts. to manage counterparty credit exposure associated with
derivative transactions.
The average daily interest rate revenue from market-risk
related activities during the six months ended 30 June Liquidity Risk
2003 was $2.7 million.
The Group defines liquidity risk as the risk that funds
Derivatives will not be available to meet liabilities as they fall
due. At the local level, in line with policy, the day to
day monitoring of future cash flows takes place and
Derivatives are contracts whose characteristics and value suitable levels of easily marketable assets are
derive from underlying financial instruments, interest maintained by the businesses.
and exchange rates or indices. They include futures,
forwards, swaps and options transactions in the foreign
exchange and interest rate markets. Derivatives are an A substantial portion of the Group's assets are funded by
important risk management tool for banks and their customer deposits made up of current and savings accounts
customers because they can be used to manage the risk of and other short-term deposits. These customer deposits,
price, interest rate and exchange rate movements. which are widely diversified by type and maturity,
represent a stable source of funds. Lending is normally
funded by liabilities in the same currency and if other
The Group's derivative transactions are principally in currencies are used the foreign exchange risk is usually
plain vanilla instruments, where the mark to market hedged.
values are readily determinable by reference to
independent prices and valuation quotes or by using
standard industry pricing models.
The Group enters into derivative contracts in the normal
course of business to meet customer requirements and to
manage its own exposure to fluctuations in interest and
STANDARD CHARTERED PLC - FINANCIAL REVIEW (continued)
Operational and Other Risks
Operational Risk is the risk of direct or indirect loss investments in subsidiaries and branches. Hedges may be
due to an event or action causing failure of technology, taken where there is a risk of a significant exchange
processes, infrastructure, personnel, and other risks rate movement but, in general, the management believes
having an operational impact. Standard Chartered seeks to that the Group's reserves are sufficient to absorb any
minimise actual or potential losses from Operational Risk foreseeable adverse currency depreciation.
failures through a framework of policies and procedures
to identify, assess, control, manage and report risks.
Standard Chartered also seeks to match closely its
foreign currency-denominated assets with corresponding
An independent Group Operational Risk function is liabilities in the same currencies. The effect of
responsible for establishing and maintaining the overall exchange rate movements on the capital risk asset ratio
Operational Risk framework. They are supported by is mitigated by the fact that both the value of these
Wholesale Banking and Consumer Banking Operational Risk investments and the risk weighted value of assets and
units. The Group Operational Risk function provides contingent liabilities follow substantially the same
reports to the Group Risk Committee. exchange rate movements.
Compliance with Operational Risk policy is the CAPITAL
responsibility of all managers. Every country operates a
Country Operational Risk Group (CORG). The CORG has The Group Asset and Liability Committee targets Tier 1
in-country governance responsibility for ensuring that an and Total capital ratios of seven - nine per cent and 12
appropriate and robust risk management framework is in - 14 per cent respectively. The Group believes that being
place to monitor and manage operational risk, including well capitalised is important.
social, ethical and environmental risk. Significant
issues and exceptions must be reported to the CORG. Where
appropriate, issues must also be reported to Business The Group identified improving the efficiency of capital
Risk Committees. Other risks recognised by the Group management as a strategic priority in 2002. A capital
include Business, Regulatory and Reputational risks. plan to achieve this has been developed. This includes
several key elements; in particular, to reduce the amount
of Tier 2 capital and to improve the overall capital mix
Hedging Policies within the broad target ratios. Consistent with this
strategy the Company has made repurchases from various
classes of preference shares during the first half of
Standard Chartered does not generally hedge the value of 2003 amounting to a capital reduction of $17 million.
its foreign currency denominated
STANDARD CHARTERED PLC - FINANCIAL REVIEW (continued)
CAPITAL (continued)
30.06.03 30.06.02 31.12.02
$m $m $m
Tier 1 capital:
Shareholders' funds 7,648 7,743 7,327
Minority interests 235 168 249
Innovative tier 1 securities 1,058 939 997
Unconsolidated associated companies 12 27 31
Less: premises revaluation reserves (1) (60) (3)
goodwill capitalised (2,049) (2,201) (2,118)
own shares held (see note 1 below) and other adjustments (58) (35) (57)
Total tier 1 capital 6,845 6,581 6,426
Tier 2 capital:
Premises revaluation reserves 1 60 3
General provisions 458 468 468
Undated subordinated loan capital 1,867 1,829 1,853
Dated subordinated loan capital 2,729 2,828 2,605
Total tier 2 capital 5,055 5,185 4,929
Investments in other banks (635) (199) (558)
Other deductions (4) (15) (4)
Total capital 11,261 11,552 10,793
Risk weighted assets 57,682 55,756 55,931
Risk weighted contingents 20,160 17,096 18,623
Total risk weighted assets and contingents 77,842 72,852 74,554
Capital ratios:
Tier 1 capital 8.8% 9.0% 8.6%
Total capital 14.5% 15.9% 14.5%
30.06.03 30.06.02 31.12.02
$m $m $m
Shareholders' funds
Equity 7,023 6,470 6,695
Non Equity 625 1,273 632
7,648 7,743 7,327
Post tax return on equity (normalised) 14.2% 12.8% 13.9%
Note 1: Own shares are held in trust to fulfil the Group's obligations under
employee share plans.
STANDARD CHARTERED PLC - FINANCIAL STATEMENTS
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the six months ended 30 June 2003
6 months 6 months 6 months
ended ended ended
30.06.03 30.06.02 31.12.02
Notes $m $m $m
Interest receivable 2,330 2,553 2,735
Interest payable (872) (1,011) (1,214)
Net interest income 1,458 1,542 1,521
Fees and commissions receivable, net 536 476 515
Dealing profits and exchange 274 229 191
Other operating income 79 38 27
889 743 733
Net revenue 2,347 2,285 2,254
Administrative expenses:
Staff (664) (634) (636)
Premises (145) (138) (131)
Other (308) (315) (358)
Depreciation and amortisation, of which: (175) (157) (188)
Amortisation of goodwill (67) (68) (88)
Other (108) (89) (100)
Total operating expenses (1,292) (1,244) (1,313)
Operating profit before provisions 1,055 1,041 941
Provisions for bad and doubtful debts (308) (406) (299)
Provisions for contingent liabilities and commitments - (1) (6)
Amounts written off fixed asset investments (6) - (8)
Operating profit before taxation 741 634 628
Taxation 2 (238) (201) (186)
Operating profit after taxation 503 433 442
Minority interests (equity) (14) (17) (14)
Profit for the period attributable to shareholders 489 416 428
Dividends on non-equity preference shares (28) (56) (52)
Dividends on ordinary equity shares (182) (160) (385)
Retained profit 279 200 (9)
Normalised earnings per ordinary share 41.7c 36.1c 38.8c
Basic earnings per ordinary share 39.4c 31.8c 25.8c
Dividend per ordinary share 15.51c 14.10c 32.90c
STANDARD CHARTERED PLC - FINANCIAL STATEMENTS
SUMMARISED CONSOLIDATED BALANCE SHEET
As at 30 June 2003
30.06.03 30.06.02 31.12.02
$m $m $m
Assets
Cash, balances at central banks and cheques in course of collection 1,736 1,004 1,237
Treasury bills and other eligible bills 4,873 4,501 5,050
Loans and advances to banks 17,966 20,103 16,001
Loans and advances to customers 58,013 54,883 57,009
Debt securities and other fixed income securities 22,620 18,659 20,187
Equity shares and other variable yield securities 250 131 250
Intangible fixed assets 2,049 2,201 2,118
Tangible fixed assets 888 993 928
Prepayments, accrued income and other assets 11,520 10,342 10,230
Total assets 119,915 112,817 113,010
Liabilities
Deposits by banks 14,785 13,281 10,850
Customer accounts 71,782 70,178 71,626
Debt securities in issue 6,433 3,485 4,877
Accruals, deferred income and other liabilities 13,378 12,366 12,626
Subordinated liabilities:
Undated loan capital 1,867 1,829 1,853
Dated loan capital 3,787 3,767 3,602
Minority interests (equity) 235 168 249
Shareholders' funds 7,648 7,743 7,327
Total liabilities and shareholders' funds 119,915 112,817 113,010
STANDARD CHARTERED PLC - FINANCIAL STATEMENTS (continued)
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
For the six months ended 30 June 2003
6 months 6 months 6 months
ended ended ended
30.06.03 30.06.02 31.12.02
$m $m $m
Profit attributable to shareholders 489 416 428
Premises revaluation - - (48)
Exchange translation differences 36 (39) 39
Total recognised gains and losses for the period 525 377 419
NOTE OF CONSOLIDATED HISTORICAL COST PROFITS AND LOSSES
For the six months ended 30 June 2003
There is no material difference between the results as reported and the results
that would have been reported on a historical cost basis. Accordingly, no note
of the historical cost profits and losses has been included.
Accounting Convention
The accounts of the Group have been prepared under the historical cost
convention, modified by the revaluation of certain fixed assets and dealing
positions. The accounting policies, as listed in the Annual Report 2002,
continue to be consistently applied.
STANDARD CHARTERED PLC - FINANCIAL STATEMENTS (continued)
Consolidated cash flow statement
For the six months ended 30 June 2003
6 months 6 months 6 months
ended ended ended
30.06.03 30.06.02 31.12.02
$m $m $m
Net cash inflow from operating activities (see note 1) 1,672 960 3,818
Returns on investment and servicing of finance
Interest paid on subordinated loan capital (239) (208) (122)
Premium and costs on repayment of subordinated liabilities - - (10)
Dividends paid to minority shareholders of subsidiary undertakings (6) (1) (17)
Dividends paid on preference shares (27) (57) (66)
Net cash outflow from returns on investment and servicing of finance (272) (266) (215)
Taxation
UK taxes paid (52) (29) 4
Overseas taxes paid (225) (154) (149)
Total taxes paid (277) (183) (145)
Capital expenditure and financial investment
Purchases of tangible fixed assets (68) (99) (110)
Acquisitions of treasury bills held for investment purposes (6,073) (5,449) (5,004)
Acquisitions of debt securities held for investment purposes (22,232) (15,044) (23,270)
Acquisitions of equity shares held for investment purposes (63) (37) (138)
Disposals of tangible fixed assets 7 13 19
Disposals and maturities of treasury bills held for investment purposes 6,398 6,177 4,490
Disposals and maturities of debt securities held for investment purposes 21,394 13,622 21,908
Disposals of equity shares held for investment purposes 53 9 9
Net cash outflow from capital expenditure and financial investment (584) (808) (2,096)
Net cash inflow/(outflow) before equity dividends paid and financing 539 (297) 1,362
Equity dividends paid to members of the Company (364) (308) (154)
Financing
Gross proceeds from issue of ordinary share capital 2 25 374
Ordinary share issue expenses - - (31)
Redemption of preference share capital (17) - (732)
Preference share capital - redemption expenses - - (9)
Issue of subordinated loan capital - - 11
Repayment of subordinated liabilities - - (355)
Net cash (outflow)/inflow from financing (15) 25 (742)
Increase/(decrease) in cash in the period 160 (580) 466
STANDARD CHARTERED PLC - NOTES
1. Consolidated Cash Flow Statement
Reconciliation between operating profit before taxation and net cash inflow from
operating activities:
6 months 6 months 6 months
ended ended ended
30.06.03 30.06.02 31.12.02
$m $m $m
Operating profit 741 634 628
Items not involving cash flow:
Amortisation of goodwill 67 68 88
Depreciation and amortisation of premises and equipment 108 89 100
Loss on disposal of tangible fixed assets - 1 2
Gain on disposal of investment securities (48) (19) 1
Amortisation of investments 12 (16) (32)
Charge for bad and doubtful debts and contingent liabilities 308 407 305
Amounts written off fixed asset investments 6 - 8
Debts written off, net of recoveries (494) (365) (576)
Increase/(decrease) in accruals and deferred income 42 (149) (107)
(Increase)/decrease in prepayments and accrued income (452) 109 (125)
Adjustments for items shown separately:
Interest paid on subordinated loan capital 239 208 122
Premium and costs on repayment of subordinated liabilities - - 10
Net cash inflow from trading activities 529 967 424
Net increase in cheques in the course of collection (73) (2) (17)
Net increase in treasury bills and other eligible bills (14) (47) (46)
Net (increase)/decrease in loans and advances to banks and customers (2,856) (2,099) 2,559
Net increase/(decrease) in deposits from banks, customer accounts and debt 5,320 3,043 (152)
securities in issue
Net (increase)/decrease in dealing securities (972) (615) 313
Net (increase)/decrease in mark-to-market adjustment (104) 128 286
Net (decrease)/increase in other accounts (158) (415) 451
Net cash inflow from operating activities 1,672 960 3,818
Analysis of changes in cash
Balance at beginning of period 3,496 3,549 3,050
Exchange translation differences 7 81 (20)
Net cash inflow/(outflow) 160 (580) 466
Balance at end of period 3,663 3,050 3,496
STANDARD CHARTERED PLC - NOTES (continued)
2. Taxation
6 months 6 months 6 months
ended ended ended
30.06.03 30.06.02 31.12.02
Analysis of taxation charge in the period $m $m $m
The charge for taxation based upon the profits for the period comprises:
United Kingdom corporation tax at 30% (30 June 2002: 30%; 31 December 2002:
30%)
Current tax on income for the period 158 130 136
Adjustments in respect of prior periods 2 (1) 18
Double taxation relief (139) (90) (90)
Foreign tax:
Current tax on income for the period 223 183 199
Adjustments in respect of prior periods (1) (1) (55)
Total current tax 243 221 208
Deferred tax:
Origination/reversal of timing differences (5) (20) (22)
Tax on profits on ordinary activities 238 201 186
Effective tax rate 32.1% 31.7% 29.6%
Overseas taxation includes taxation on Hong Kong profits of $25 million (30 June
2002: $21 million; 31 December 2002: $10 million) provided at a rate of 17.5 per
cent (30 June 2002: 16 per cent; 31 December 2002: 16 per cent) on the profits
assessable in Hong Kong. The Group's net deferred tax asset is $258 million, and
is included in other assets (30 June 2002: $208 million; 31 December 2002: $236
million)
3. Statutory Accounts
The information in this Interim statement is unaudited statutory accounts for that financial year. Those
and does not constitute statutory accounts within the accounts have been reported on by the Company's auditors
meaning of Section 240 of the Companies Act 1985. This and delivered to the Registrar of Companies. The report
document was approved by the Board on 6 August 2003. The of the auditors was unqualified and did not contain a
comparative figures for the financial year ended 31 statement under Section 237 (2) or (3) of the Companies
December 2002 are not the Company's Act 1985.
4. Forward Looking Statements
Standard Chartered. They are subject to a number of risks
This document contains forward-looking statements, and uncertainties that might cause actual results and
including such statements within the meaning of section outcomes to differ materially from expectations outlined
27A of the US Securities Act of 1993 and section 21E of in these forward-looking statements. These factors are
the Securities Exchange Act of 1934. These statements not limited to regulatory developments but include stock
concern or may affect future matters. These may include markets, IT developments, competitive and general
Standard Chartered's future strategies, business plans, operating conditions.
and results and are based on the current expectations of
the directors of
Independent review report by KPMG Audit Plc to Standard Chartered PLC
Introduction Review work performed
We have been engaged by the Company to review the We conducted our review in accordance with guidance
financial information set out on pages 32 to 37 and we contained in Bulletin 1999/4: Review of interim financial
have read the other information contained in the interim information issued by the Auditing Practices Board for
report and considered whether it contains any apparent use in the United Kingdom. A review consists principally
misstatements or material inconsistencies with the of making enquiries of Group management and applying
financial information. analytical procedures to the financial information and
underlying financial data and, based thereon, assessing
whether the accounting policies and presentation have
This report is made solely to the Company in accordance been consistently applied unless otherwise disclosed. A
with the terms of our engagement to assist the Company in review is substantially less in scope than an audit
meeting the requirements of the Listing Rules of the performed in accordance with Auditing Standards and
Financial Services Authority. Our review has been therefore provides a lower level of assurance than an
undertaken so that we might state to the Company those audit. Accordingly, we do not express an audit opinion on
matters we are required to state to it in this report and the financial information.
for no other purpose. To the fullest extent permitted by
law, we do not accept or assume responsibility to anyone
other than the Company for our review work, for this Review conclusion
report, or for the conclusions we have reached.
On the basis of our review we are not aware of any
Directors' responsibilities material modifications that should be made to the
financial information as presented for the six months
ended 30 June 2003.
The interim report, including the financial information
contained therein, is the responsibility of, and has been
approved by, the directors. The directors are responsible
for preparing the interim report in accordance with the
Listing Rules which require that the accounting policies
and presentation applied to the interim figures should be
consistent with those applied in preparing the preceding KPMG Audit Plc
annual accounts except where they are to be changed in
the next annual accounts, in which case any changes and Chartered Accountants
the reasons for them are to be disclosed.
London
6 August 2003
Financial Calendar
Ex-dividend date 13 August 2003
Record date 15 August 2003*
Posting to shareholders of 2003 Interim Report 22 August 2003
Payment date - interim dividend on ordinary shares 10 October 2003
*At 9:00am (Hong Kong time) for shareholders on the Hong Kong Branch Register
and at 6:00pm GMT for shareholders on the United Kingdom Share Register.
For further information please contact:
Tracy Clarke, Group Head of Corporate Affairs
(020) 7280 7708
Paul Marriage, Head of Media Relations
(020) 7280 7163
Benjamin Hung, Head of Investor Relations
(020) 7280 7245
The following information is available on our website www.standardchartered.com/
investor
• Interviews with Mervyn Davies (Group Chief Executive) and Peter Sands
(Group Finance Director)
• Interim Report 2003
• Press Release 2003 Interim Results
• A live webcast of the interim results analyst presentation (available 9:
45am GMT )
• Slides for the Group's presentations (available 12:00pm GMT)
• A pre recorded and Q/A session of analyst presentation in London
(available 1:00pm GMT)
Images of Standard Chartered and the logo are available for the media at
www.newscast.co.uk
Information regarding the Group's commitment to corporate and social
responsibility is available at www.standardchartered.com/ourbeliefs.
The information required by the Stock Exchange of Hong Kong's Listing Rules,
Appendix 16, paragraphs 46 (1) to 46 (6) inclusive, is in the Interim Report
2003, which can be found on the website of the Stock Exchange of Hong Kong and
on Standard Chartered's website.
This information is provided by RNS
The company news service from the London Stock Exchange
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