Interim Results - Part 3
Standard Chartered PLC
1 August 2001
Part 3
STANDARD CHARTERED PLC
NOTES (Cont)
2. Segmental information
By class of business
6 months ended 30.06.01
Consumer Wholesale
Banking Banking Total
$m $m $m
Net interest income 825 603 1,428
Other income 259 500 759
Net revenue 1,084 1,103 2,187
Costs (614) (585) (1,199)
Amortisation of goodwill (68)
Restructuring charge -
Year 2000 costs -
Total operating
expenses (614) (585) (1,267)
Profit before provisions 470 518 920
Charge for debts and
contingent liabilities (123) (146) (269)
Profit before taxation 347 372 651
Total assets employed 39,896 95,998 135,894
6 months ended 30.06.00
Consumer Wholesale
Banking Banking Total
$m $m $m
Net interest income 813 523 1,336
Other income 188 444 632
Net revenue 1,001 967 1,968
Costs (529) (580) (1,109)
Amortisation of goodwill (25)
Restructuring charge -
Year 2000 costs (18)
Total operating
expenses (529) (580) (1,152)
Profit before provisions 472 387 816
Charge for debts and
contingent liabilities (88) (169) (257)
Profit before taxation 384 218 559
Total assets employed 35,549 75,811 111,360
(a) Group central expenses and other overhead costs have been distributed
between classes of business in proportion to their direct costs and the
benefit of the Group's capital has been distributed between classes of
business in proportion to their risk weighted assets.
(b) See notes (c) and (g) on amortisation of goodwill, restructuring charge
and Year 2000 costs on pages 18 and 20 respectively.
(c) Total assets employed include intra-group items of $23,132 million
(30.06.00: $19,169 million; 31.12.00: $21,790 million) and balances which
are netted in the summarised consolidated balance sheet of $3,081
million (30.06.00: $1,753 million; 31.12.00: $2,616 million).
(d) Assets held at the centre have been distributed between classes of
business in proportion to their total assets employed.
2. Segmental information
By class of business (continued)
6 months ended 31.12.00
Consumer Wholesale
Banking Banking Total
$m $m $m
Net interest income 805 568 1,373
Other income 265 484 749
Net revenue 1,070 1,052 2,122
Costs (595) (593) (1,188)
Amortisation of goodwill (46)
Restructuring charge (323)
Year 2000 costs (5)
Total operating
expenses (595) (593) (1,562)
Profit before provisions 475 459 560
Charge for debts and contingent (94) (119) (213)
liabilities
Operating profit 381 340 347
Profit on sale of subsidiary 532
undertakings
Profit before taxation 879
Total assets employed 42,729 83,957 126,686
(e) Group central expenses and other overhead costs have been distributed
between classes of business in proportion to their direct costs and the
benefit of the Group's capital has been distributed between classes of
business in proportion to their risk weighted assets.
(f) See notes (c) and (g) on amortisation of goodwill, restructuring charge
and Year 2000 costs on pages 18 and 20 respectively.
(g) Total assets employed include intra-group items of $21,790 million and
balances which are netted in the summarised consolidated balance sheet of
$2,616 million.
(h) Assets held at the centre have been distributed between classes of
business in proportion to their total assets employed.
3. Consolidated profit and loss account
For the six months ended 30 June 2001
6 months ended 30.06.01
Continuing operations Discontinued Total
Underlying Acquisitions Operations
$m $m $m $m
Net revenue 1,897 290 - 2,187
Total expenses
- ongoing (1,055) (212) - (1,267)
- restructuring - - - -
Total operating (1,055) (212) - (1,267)
expenses
Operating profit
before provisions 842 78 - 920
Charge for debts
and contingent (242) (27) - (269)
liabilities
Operating profit 600 51 - 651
6 months ended 30.06.00
Continuing operations Discontinued Total
Underlying Acquisitions Operations
$m $m $m $m
Net revenue 1,823 1 144 1,968
Total expenses
- ongoing (1,064) (2) (86) (1,152)
- restructuring - - - -
Total operating (1,064) (2) (86) (1,152)
expenses
Operating profit
before provisions 759 (1) 58 816
Charge for debts
and contingent (230) - (27) (257)
liabilities
Operating profit 529 (1) 31 559
6 months ended 31.12.00
Continuing operations Discontinued Total
Underlying Acquisitions Operations
$m $m $m $m
Net revenue 1,890 190 42 2,122
Total expenses
- ongoing (1,045) (173) (21) (1,239)
- restructuring (244) (74) (5) (323)
Total operating (1,289) (247) (26) (1,562)
expenses
Operating profit
before provisions 601 (57) 16 560
Charge for debts
and contingent (187) (17) (9) (213)
liabilities
Operating profit 414 (74) 7 347
4. Dealing profits and exchange
6 months 6 months 6 months
ended ended ended
30.06.01 30.06.00 31.12.00
$m $m $m
Income from foreign exchange dealing 193 169 156
Profits less losses on dealing 25 11 15
securities
Other dealing profits and exchange 31 - 26
249 180 197
5. Other operating income
6 months 6 months 6 months
ended ended ended
30.06.01 30.06.00 31.12.00
$m $m $m
Other operating income includes:
Share of profits arising on
securitised instalment credit - 20 6
agreements
Profits less losses on disposal of 7 6 5
investment securities
Dividend income 2 2 4
6. Taxation
6 months 6 months 6 months
ended ended ended
30.06.01 30.06.00 31.12.00
$m $m $m
United Kingdom corporation tax at 30%
(30.06.00: 30%; 31.12.00: 30%) 109 103 91
Relief for overseas tax (75) (78) (72)
34 25 19
Overseas tax 184 154 179
218 179 198
Effective tax rate 33.5% 32.0% 22.5%
There is no tax chargeable against the profit on sale of subsidiary
undertakings of $532 million recognised in the six months ended 31
December 2000.
7. Dividends on preference shares
6 months 6 months 6 months
ended ended ended
30.06.01 30.06.00 31.12.00
$m $m $m
Non-cumulative irredeemable
preference shares:
7 3/8% preference shares of £1 each 5 6 6
8 1/4% preference shares of £1 each 6 6 6
8.9% preference shares of US$5 each 1 - -
12 12 12
8. Dividends on ordinary shares
6 months ended
30.06.01
Cents per
share $m
Interim 12.820 145
Final - -
12.820 145
6 months ended 6 months ended
30.06.00 31.12.00
Cents per Cents per
share $m share $m
Interim 11.651 126 - -
Final - - 26.454 298
11.651 126 26.454 298
The 2001 interim dividend of 12.82 cents per share will be paid in
sterling, unless shareholders elect to be paid in US dollars, on 12
October 2001 to shareholders on the register of members at the close of
business on 10 August 2001. Shareholders will be entitled, if they wish,
to elect to receive shares credited as fully paid instead of the interim
dividend (or part thereof). Details will be sent to shareholders on or
around 30 August 2001.
9. Earnings per ordinary share
6 months ended 30.06.01
Average Per
number of share
Profit shares amount
( 000) Cents
$m
Basic EPS
Profit attributable to ordinary
shareholders 392 1,127,853 34.8
Effect of dilutive potential ordinary
shares:
Convertible bonds 8 34,488
Options - 5,907
Diluted EPS 400 1,168,248 34.2
6 months ended 30.06.00 6 months ended 31.12.00
Average Per Average Per
number of share number of share
Profit shares amount Profit shares amount
( 000) Cents ( 000) Cents
$m $m
Basic EPS
Profit
attributable
to ordinary 351 1,064,197 33.0 651 1,109,041 58.7
shareholders
Effect of
dilutive
potential
ordinary
shares:
Convertible 8 17,244 6 34,488
bonds
Options - 7,229 - 6,789
Diluted EPS 359 1,088,670 33.0 657 1,150,318 57.1
Headline earnings per ordinary share
The Institute of Investment Management and Research Statement of
Investment Practice No 1 provides a definition of headline earnings. As
this differs from earnings defined in Financial Reporting Standard 14
the table below provides a reconciliation.
6 months 6 months 6 months
ended ended ended
30.06.01 30.06.00 31.12.00
$m $m $m
Profit attributable to shareholders 392 351 651
after preference dividends
Amortisation of goodwill 68 25 46
Profits less losses on disposal of (7) (6) (5)
investment securities
Profit on disposal of subsidiaries - - (532)
Tax charge relating to the above items - - -
Headline earnings 453 370 160
Headline earnings per ordinary share 40.2c 34.8c 14.4c
Normalised earnings per ordinary share
The following table shows the calculation of normalised earnings per
share, i.e. based on the Group's results excluding profits on disposal
of subsidiary undertakings and the charge for restructuring.
6 months 6 months 6 months
ended ended ended
30.06.01 30.06.00 31.12.00
$m $m $m
Profit attributable to shareholders 392 351 651
after preference dividends
Amortisation of goodwill 68 25 46
Profits less losses on disposal of (7) (6) (5)
investment securities
Profit on disposal of subsidiary - - (532)
undertakings
Restructuring charge - - 323
Tax credit relating to restructuring - - (81)
charge
Normalised earnings 453 370 402
Normalised earnings per ordinary share 40.2c 34.8c 36.2c
10. Called up share capital
6 months 6 months 6 months
ended ended ended
30.06.01 30.06.00 31.12.00
$m $m $m
Equity capital
Ordinary shares of US$0.50 each 564 - -
Ordinary shares of £0.25 each - 406 419
Non-equity capital
Non-cumulative irredeemable
preference shares:
7 3/8% preference shares of £1 each 141 151 150
8 1/4% preference shares of £1 each 141 151 150
8.9% preference shares of US$5 each 5 - -
851 708 719
Under the terms of the share conversion on 18 January 2001, each
shareholder of Standard Chartered PLC received one new ordinary share of
US$0.50 for each ordinary share of £0.25 that they held before the
conversion. The ordinary shares of £0.25 each have been cancelled and
share certificates for these shares are no longer valid.
On 26 June 2001 the Company issued 1 million Non-cumulative Preference
Shares with a nominal value of US$5 at a price of US$1,000 per Preference
Share. The Preference Shares rank pari passu inter se with the existing
preference shares and in priority to the ordinary shares. Subject to
certain conditions, all or part of the Preference Shares may be redeemed
at the option of the issuer, at dividend payment dates on or after
October 2006.
11. Shareholders funds
Share
Share premium Capital
capital account reserve
$m $m $m
At 1 January 2001 719 1,907 -
Exchange translation
differences (17) - -
Transfer from share
premium as a result of
capital conversion 144 (149) 5
Shares issued 5 979 -
Retained profit - - -
Capitalised on exercise
of share options - 5 -
At 30 June 2001 851 2,742 5
Equity interests
Non-equity interests
At 30 June 2001
Premises Profit Total
revaluation and loss Shareholders
reserve account funds
$m $m $m
At 1 January 2001 49 3,678 6,353
Exchange
translation (1) (80) (98)
differences
Transfer from share
premium as a result
of capital - - -
conversion
Shares issued - - 984
Retained profit - 247 247
Capitalised on
exercise of share
options - (5) -
At 30 June 2001 48 3,840 7,486
Equity interests 6,235
Non-equity 1,251
interests
At 30 June 2001 7,486
12. Provisions for bad and doubtful debts
6 months ended
30.06.01
Specific General
$m $m
Provisions held at beginning of period 1,146 468
Exchange translation differences (14) (1)
Amounts written off (404) -
Recoveries of amounts previously written off 30 -
Business acquisitions - -
Business disposal - -
Other (4) -
New provisions 404 -
Recoveries/provisions no longer required (135) -
Net charge against profit 269 -
Provisions held at period end 1,023 467
6 months ended 6 months ended
30.06.00 31.12.00
Specific General Specific General
$m $m $m $m
Provisions held at
beginning of period 1,519 439 1,467 439
Exchange translation (20) - (7) -
differences
Amounts written off (312) - (693) -
Recoveries of amounts
previously written off 26 - 26 -
Business acquisitions - - 165 32
Business disposal - - (68) (3)
Other (3) - 51 -
New provisions 364 - 341 -
Recoveries/provisions no
longer required (107) - (136) -
Net charge against profit 257 - 205 -
Provisions held at period 1,467 439 1,146 468
end
Corporate loans and advances to customers against which provisions have
been outstanding for 2 years or more are written down to their net
realisable value.
There were no provisions against enhanced and other performing emerging
markets debt as at 30 June 2001 (30.06.00: $123 million; 31.12.00: $nil).
13. Non-performing loans and advances
30.06.01
SCNB Other Total
$m $m $m
Loans and advances on which interest is
suspended 759 2,480 3,239
Specific provisions for bad and doubtful
debts (79) (944) (1,023)
Interest in suspense - (285) (285)
680 1,251 1,931
30.06.00 31.12.00
SCNB Other Total SCNB Other Total
$m $m $m $m $m $m
$m
Loans and advances
on which interest
is suspended 876 3,033 3,909 796 2,557 3,353
Specific
provisions for bad (104) (1,240) (1,344) (72) (1,074) (1,146)
and doubtful debts
Interest in - (343) (343) - (322) (322)
suspense
772 1,450 2,222 724 1,161 1,885
The Group acquired Standard Chartered Nakornthon Bank (SCNB) (formerly
Nakornthon Bank) in September 1999. At 30 June 2001, under the terms of
the acquisition, net non-performing loans (NPLs) of $756 million are
subject to a Loan Management Agreement (LMA) with the Financial
Institutions Development Fund (FIDF), a Thai Government agency. Under
the LMA, the FIDF has guaranteed the recovery of a principal amount of
the NPLs of $508 million. The LMA also provides, inter alia, for loss
sharing arrangements whereby the FIDF will bear up to 85 per cent of
losses in excess of the guaranteed amount. The carrying cost of the
NPLs is reimbursable by the FIDF to SCNB for a period of five years from
the date of acquisition.
Excluding the SCNB non-performing loan portfolio, specific provisions and
interest in suspense together cover 50 per cent (30.06.00: 56 per cent,
including provisions held against enhanced and other performing emerging
markets debt, 31.12.00: 55 per cent) of total non-performing lending to
customers. If lending and provisions are adjusted for the cumulative
amounts written off, the effective cover is 68 per cent (30.06.00: 63 per
cent including provisions held against enhanced and other performing
emerging markets debt, 31.12.00: 69 per cent).
14. 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
30.06.01 30.06.00 31.12.00
$m $m $m
Operating profit 651 559 347
Items not involving cash flow:
Amortisation of goodwill 68 25 46
Depreciation and amortisation of 84 86 140
premises and equipment
Amortisation of investments (3) (30) 3
Charge for bad and doubtful debts 269 257 213
and contingent liabilities
Debts written off, net of recoveries (374) (286) (667)
(Decrease)/increase in accruals and (52) (107) 266
deferred income
Decrease/(increase) in prepayments 176 134 (474)
and accrued income
Adjustments for items shown
separately:
Interest paid on subordinated loan 128 92 110
capital
Net cash inflow from trading 947 730 (16)
activities
Net increase in cheques in the course (41) (24) (34)
of collection
Net increase in treasury bills and (19) (80) (23)
other eligible bills
Net increase in loans and advances to (6,942) (4,423) (1,207)
banks and customers
Net increase in deposits from banks,
customer accounts and debt securities 7,082 5,079 2,446
in issue
Net (increase)/decrease in dealing (409) (149) 102
securities
Net decrease/(increase) in mark-to- 342 (202) 96
market adjustment
Net increase in other accounts 270 365 974
Net cash inflow from operating 1,230 1,296 2,338
activities
Analysis of changes in cash
Balance at beginning of period 4,278 2,245 3,543
Exchange translation differences (138) (117) (119)
Net cash (outflow)/inflow (1,445) 1,415 854
Balance at end of period 2,695 3,543 4,278
15. Cross border assets
The following table shows the Group's cross border assets, including
acceptances, where they exceed 1 per cent of the Group's total assets.
Cross border assets exclude facilities provided within the Group. They
comprise loans and advances, interest bearing deposits with other banks,
trade and other bills, acceptances, amounts receivable under finance
leases, certificates of deposit and other negotiable paper and 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 to local residents denominated in currencies other than
the local currency.
30.06.01
Public
sector Banks Other Total
$m $m $m $m
Germany - 4,930 25 4,955
USA 1,658 1,323 1,229 4,210
France 280 1,510 587 2,377
Hong Kong 19 480 1,713 2,212
Italy 218 1,503 77 1,798
Korea - 1,297 320 1,617
Singapore 14 520 1,071 1,605
Australia 234 1,049 123 1,406
Netherlands - 1,048 155 1,203
Austria - 1,135 1 1,136
Switzerland - 391 722 1,113
Ireland - 1,086 16 1,102
31.12.00
Public
Sector Banks Other Total
$m $m $m $m
USA 643 1,583 696 2,922
Germany - 2,408 13 2,421
Hong Kong 12 81 1,921 2,014
Singapore 4 672 1,070 1,746
Korea 97 1,349 112 1,558
France 3 857 665 1,525
Italy 194 1,243 32 1,469
Japan - 1,027 57 1,084
Australia 122 877 69 1,068
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