Interim Results - Part 3

STANDARD CHARTERED PLC 4 August 1999 Part 3 2. Segmental information By class of business 6 months 6 months 6 months ended ended ended 30.6.99 30.6.98 31.12.98 £m £m £m Consumer Banking Profit before provisions 269 213 267 New provisions (98) (61) (84) Recoveries/provisions no longer required 25 11 14 Net charge (73) (50) (70) Trading profit 196 163 197 Corporate and Institutional Banking Profit before provisions 158 203 180 New provisions (185) (81) (208) Recoveries/provisions no longer required: Emerging Markets Debt Unit 2 3 10 Other 17 7 32 Net charge (166) (71) (166) Trading (loss)/profit (8) 132 14 Treasury Profit before provisions 114 223 129 New provisions (1) (18) (11) Trading profit 113 205 118 Year 2000 costs (30) (34) (42) Profit before general debt provision 271 466 287 General debt provision - (50) - Profit before taxation 271 416 287 a) Operating expenses are attributed to classes of business on an appropriate basis. Group central expenses have been distributed between classes of business in proportion to their direct costs. The benefit of the Group s capital has been distributed between classes of business in proportion to their risk weighted assets. b) See Note c) on Year 2000 costs on page 13. 2. Segmental information By class of business (continued) 30.6.99 30.6.98 31.12.98 £m £m £m Total assets employed: Consumer Banking 20,225 17,186 19,907 Corporate & Institutional Banking 21,012 22,697 19,455 Treasury 25,841 20,484 20,811 67,078 60,367 60,173 c) Total assets employed include intra-group items of £11,636 million (30 June 1998: £10,305 million; 31 December 1998: £11,160 million) and balances which are netted in the Summarised Consolidated Balance Sheet of £735 million (30 June 1998: £1,635 million; 31 December 1998: £1,155 million). d) Assets held at the centre have been distributed between classes of business in proportion to their total assets employed. 3. Dealing profits and exchange 6 months 6 months 6 months ended ended ended 30.6.99 30.6.98 31.12.98 £m £m £m Income from foreign exchange dealing 114 228 158 Profits less losses on dealing securities 11 (3) 8 Other dealing profits and exchange 7 13 14 132 238 180 4. Other operating income 6 months 6 months 6 months ended ended ended 30.6.99 30.6.98 31.12.98 £m £m £m Other operating income includes: Share of profits arising on securitised instalment credit agreements 7 1 4 Profits less losses on disposal of investment securities 2 - 1 Dividend income - - 5 5. Taxation 6 months 6 months 6 months ended ended ended 30.6.99 30.6.98 31.12.98 £m £m £m United Kingdom corporation tax at 30.25% (30 June 1998: 31.0%; 31 December 1998: 56 95 45 31.0%) Relief for overseas tax (27) (47) (39) 29 48 6 Overseas tax 51 98 75 80 146 81 Effective tax rate 29.5% 35.1% 28.2% 6. Dividends on preference shares 6 months 6 months 6 months ended ended ended 30.6.99 30.6.98 31.12.98 £m £m £m Non-cumulative irredeemable preference shares: 73/8% preference shares of £1 each 4 4 4 81/4% preference shares of £1 each 4 4 4 8 8 8 7. Dividends on ordinary shares 6 months ended 6 months ended 30.6.99 30.6.98 Pence per Pence per share £m share £m Dividend 6.75 71 6.25 62 6 months ended 31.12.98 Pence per share £m Dividend 14.50 145 The 1999 interim dividend of 6.75 pence per share will be paid on 15 October 1999 to shareholders on the register at close of business on 20 August 1999. 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 2 September 1999. 8. Earnings per ordinary share 6 months ended 30.6.99 Average number of Per share Profit shares amount £m ( 000) Pence Basic EPS Profit attributable to ordinary shareholders 177 1,032,200 17.1 Effect of dilutive potential ordinary shares Options - 9,465 - Diluted EPS 177 1,041,665 17.0 6 months ended 30.6.98 Average number of Per share Profit shares amount £m ( 000) Pence Basic EPS Profit attributable to ordinary shareholders 256 994,578 25.7 Effect of dilutive potential ordinary shares Options - 8,874 - Diluted EPS 256 1,003,452 25.5 6 months ended 31.12.98 Average number of Per share Profit shares Amount £m ( 000) Pence Basic EPS Profit attributable to ordinary shareholders 191 999,716 19.1 Effect of dilutive potential ordinary shares Options - 6,617 - Diluted EPS 191 1,006,333 19.0 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 30.6.99 30.6.98 31.12.98 £m £m £m Profit attributable to shareholders after preference dividends 177 256 191 Amortisation of goodwill 8 1 6 Profits less losses on disposal of investment securities (2) - (1) Tax charge relating to the above items - - - Headline earnings 183 257 196 Headline earnings per ordinary share 17.7p 25.8p 19.6p 9. Called up share capital 30.6.99 30.6.98 31.12.98 £m £m £m Equity capital Ordinary shares of 25p each 265 249 250 Non-equity capital Non-cumulative irredeemable preference shares: 73/8% preference shares of £1 each 100 100 100 81/4% preference shares of £1 each 100 100 100 465 449 450 10. Shareholders funds Share Premises Profit Total Share premium revaluat and loss sharehol capital account ion account ders £m £m reserve £m funds £m £m At 1 January 1999 450 428 50 1,892 2,820 Exchange translation differences - - 1 51 52 Shares issued 15 374 - 58 447 Retained profit - - - 106 106 Capitalised on exercise of share options - 3 - (3) - At 30 June 1999 465 805 51 2,104 3,425 On 5 March 1999, £380 million, net of expenses, was raised by way of a placing for cash of 49 million new ordinary shares with institutional investors. The net proceeds of the placing have been used partly to finance the acquisition from UBS of their global trade finance business outside Switzerland, and the balance to provide additional capital to back customer assets. 11. Provisions for bad and doubtful debts Loans and advances are stated after deducting the following provisions for bad and doubtful debts: 6 months ended 6 months ended 30.6.99 30.6.98 Specific General Specific General £m £m £m £m Provisions held at beginning of period 641 269 338 218 Exchange translation 29 12 (11) (5) differences Amounts written off (133) - (67) - Recoveries of amounts previously written off 16 - 9 - Other (11) - 17 - New provisions 284 - 160 50 Recoveries/provisions no longer required (44) - (21) - Net charge against profit 240 - 139 50 Provisions held at period end 782 281 425 263 Total provisions held at period end against: Loans and advances to banks 4 - 13 - Loans and advances to customers 778 281 412 263 782 281 425 263 6 months ended 31.12.98 Specific General £m £m Provisions held at beginning of period 425 263 Exchange translation 22 2 differences Amounts written off (90) - Recoveries of amounts previously written off 24 - Other 13 4 New provisions 303 - Recoveries/provisions no longer required (56) - Net charge against profit 247 - Provisions held at period end 641 269 Total provisions held at period end against: Loans and advances to banks 19 - Loans and advances to customers 622 269 641 269 Specific provisions for bad and doubtful debts include £84 million (30 June 1998: £60 million; 31 December 1998: £81 million) of provisions against enhanced and other performing emerging markets debt. 12. 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. 30.6.99 Public sector Banks Other Total £m £m £m £m China 25 85 470 580 France 57 817 40 914 Germany - 1,721 10 1,731 Hong Kong 8 120 1,385 1,513 Italy 184 626 15 825 Japan 1 783 41 825 Korea - 517 74 591 Singapore 54 127 523 704 USA 1,042 195 455 1,692 31.12.98 Public sector Banks Other Total £m £m £m £m China - 193 554 747 France 92 509 28 629 Germany - 710 - 710 Hong Kong 7 67 1,389 1,463 Singapore 20 191 505 716 USA 723 264 283 1,270 13. Net interest margin and interest spread 6 months 6 months 6 months ended ended ended 30.6.99 30.6.98 31.12.98 % % % Net interest margin 3.5 3.4 3.5 Interest spread 2.9 2.6 2.8 £m £m £m Average interest earning assets 46,444 44,416 43,870 Average interest bearing liabilities 40,535 38,531 39,251 14. Capital ratios 30.6.99 30.6.98 31.12.98 £m £m £m Tier 1 capital 3,174 2,709 2,668 Tier 2 capital 2,260 1,464 1,469 5,434 4,173 4,137 Less supervisory adjustments (20) (10) (6) Adjusted capital base 5,414 4,163 4,131 Risk weighted assets 28,321 25,502 25,851 Risk weighted contingents 7,177 6,717 6,647 Total risk weighted assets and contingents 35,498 32,219 32,498 Capital ratios % % % Tier 1 capital 8.9 8.4 8.2 Total capital 15.3 12.9 12.7 15. 1998 restated at June 1999 exchange rates The restatement of 1998 results below has been made by translating them at the average exchange rates used in the translation of the results for the period ended 30 June 1999, and the restatement of the 1998 balance sheets has been made by translating them at the closing exchange rates as at 30 June 1999. 6 months 6 months 6 months ended ended ended 30.6.99 30.6.98 31.12.98 £m £m £m Results Net revenue 1,178 1,221 1,191 Total operating expenses (667) (599) (640) Profit before provisions 511 622 551 Provisions for bad and doubtful debts (240) (199) (259) Profit before taxation 271 423 292 Balance sheet Loans and advances to banks 12,616 11,704 9,825 Loans and advances to customers 28,406 27,262 27,138 Total assets 54,707 51,074 49,594 Shareholders funds 3,425 2,800 2,850 Capital resources 5,410 4,058 4,105 16. Accounting policies Accounting policies are unchanged from those set out in the 1998 Annual Report. 17. Supplementary information on Hong Kong The following table includes the results of all the Group s activities in Hong Kong. It has been prepared using the same principles as those used to prepare the geographical segmental information included in Note 1. 6 months 6 months 6 months ended ended ended 30.6.99 30.6.98 31.12.98 HKDm HKDm HKDm Net revenue 4,394 4,050 4,168 Total operating expenses (2,021) (1,919) (1,843) Profit before provisions 2,373 2,131 2,325 Provisions for bad and doubtful debts (1,356) (332) (824) Profit before taxation 1,017 1,799 1,501 The information below is extracted from the financial information required by the Hong Kong Monetary Authority to be disclosed by authorised institutions incorporated outside Hong Kong. It excludes subsidiaries of Standard Chartered Bank in Hong Kong. It should be noted that definitions used by the Hong Kong Monetary Authority differ from those used by the Group. 30.6.99 30.6.98 31.12.98 HKDm HKDm HKDm Advances to customers (including trade 135,209 128,215 129,104 bills) Other assets 91,133 85,845 76,399 Total assets 226,342 214,060 205,503 Analysis of advances to customers Mortgages 74,892 61,395 68,400 Other consumer 10,905 11,579 11,297 Trade finance 13,024 15,818 14,564 Trade bills 2,364 6,669 3,293 Financial concerns 9,894 10,123 10,593 Other* 24,130 22,631 20,957 Provisions (2,211) (510) (1,122) Net advances to customers 132,998 127,705 127,982 * Includes HKD4,071 million (30.6.98: HKD3,564 million; 31.12.98: HKD3,987 million) reported as mortgages in Note 1. Gross non-performing advances to customers 5,717 1,530 2,717 Suspended interest (485) (177) (262) Specific provisions (2,211) (510) (1,122) 3,021 843 1,333 Gross non-performing advances as a percentage of gross advances to customers 4.2% 1.2% 2.1% 18. Supplementary information on Singapore The following table includes the results of all the Group s activities in Singapore. It has been prepared using the same principles as those used to prepare the geographical segmental information included in Note 1. 6 months 6 months 6 months ended ended ended 30.6.99 30.6.98 31.12.98 SGDm SGDm SGDm Net revenue 368 383 386 Total operating expenses (129) (145) (133) Profit before provisions 239 238 253 Provisions for bad and doubtful debts (86) (54) (109) Profit before taxation 153 184 144 The information below is provided in the same format as the financial information given for Hong Kong, but has been prepared using the same definitions as those used for the Group. 30.6.99 30.6.98 31.12.98 SGDm SGDm SGDm Advances to customers (net) 10,493 9,749 9,767 Other assets 14,835 11,022 11,853 Total assets 25,328 20,771 21,620 Analysis of advances to customers Mortgages 4,464 4,026 4,231 Other consumer 1,596 1,745 1,616 Trade finance 629 816 694 Other 4,032 3,241 3,392 Provisions (228) (79) (166) Net advances to customers 10,493 9,749 9,767 Gross non-performing advances to customers 496 331 538 Suspended interest (46) (19) (34) Specific provisions (182) (60) (132) 268 252 372 Gross non-performing advances as a percentage of gross advances to customers 4.6% 3.4% 5.4% 19. Supplementary information on Malaysia The information below is derived from the 1998 Half Year and 1998 Annual Reports of Standard Chartered Bank Malaysia Berhad which were filed with Bank Negara Malaysia and from the 1999 Half Year Report which will be filed with Bank Negara Malaysia. 6 months 6 months 6 months ended ended ended 30.6.99 30.6.98 31.12.98 MYRm MYRm MYRm Net revenue 448 568 466 Total operating expenses (171) (174) (212) Profit before provisions 277 394 254 Provisions for bad and doubtful debts (163) (190) (193) Profit before taxation 114 204 61 30.6.99 30.6.98 31.12.98 MYRm MYRm MYRm Advances and financing (net) 11,780 10,640 11,150 Other assets 5,223 4,726 4,861 Total assets 17,003 15,366 16,011 Analysis of loans and advances and financing Mortgages (excluding MYR 888 million of loans sold to Cagamas (30.6.98: MYR 904 million; 31.12.98: MYR 786 million)) 4,743 4,194 4,720 Other consumer 885 954 844 Trade finance 1,443 1,554 1,794 Other 5,592 4,429 4,489 Provisions (883) (491) (697) Net advances to customers 11,780 10,640 11,150 Gross non-performing advances to customers 1,554 718 1,262 Suspended interest (198) (106) (156) Specific provisions (471) (179) (328) 885 433 778 Gross non-performing loans and advances as a percentage of gross loans and advances 11.5% 6.0% 10.0% Independent review report by KPMG Audit Plc to Standard Chartered PLC Introduction We have been instructed by the company to review the financial information set out on pages 10 to 27 and we have read the other information contained in the press release and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. Directors responsibilities The press release, including the financial information contained therein, is the responsibility of, and has been approved by, the directors. The Listing Rules of the London Stock Exchange require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where they are to be changed in the next annual accounts, in which case any changes and the reasons for them are to be disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4: Review of interim financial information issued by the Auditing Practices Board. A review consists principally of making enquiries of Group management and applying analytical procedures to the financial information and underlying financial data and, based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review is substantially less in scope than an audit performed in accordance with Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly, we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30 June 1999. KPMG Audit Plc Chartered Accountants 4 August 1999 The financial information included herein has been derived from the audited and unaudited information contained in the Group s Report and Accounts for the year ended 31 December 1998. Statutory accounts for 1998 have been delivered to the Registrar of Companies. The auditors have reported on these accounts; their report was unqualified and did not contain a statement under Section 237(2) (accounting records or returns inadequate or accounts not agreeing with records and returns) or 237(3) (failure to obtain necessary information and explanation) of the Companies Act 1985. Copies of this statement are available from Investor Relations, Standard Chartered PLC, 1 Aldermanbury Square, London, EC2V 7SB or from our website on www.standardchartered.com. For further information please contact: Tim Halford, Director of Corporate Affairs on 0171 280 7159 or Pamela McGann, Group Investor Relations Manager on 0171 280 7164
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