21st Mar 2005 09:28
Standard Chartered PLC21 March 2005 Standard Chartered PLC 21 March 2005 Announcement by Korea First Bank of its 2004 Results On 10 January 2005, Standard Chartered PLC ("the Company") announced thatStandard Chartered Bank had entered into an agreement to acquire the entireshare capital of Korea First Bank. The acquisition, which is subject to certainconditions including regulatory consents, is expected to be completed by the endof April 2005. On 11 March 2005, Korea First Bank announced their unaudited Financial Resultsfor the twelve months ended 31 December 2004. The following is a copy of a further announcement released by Korea First Banktoday. The Company is issuing this announcement for information purposes only. "Korea First Bank Reports Growth In Net Income To KRW120 billion • Earnings before tax increases to KRW166.5 billion in 2004 from KRW93.1 billion in 2003 • NPL ratio stable at 1.5% at December 31, 2004 • Maintains strong BIS capital ratio • Completes a year of highly successful capital market transactions Korea First Bank today announced net income after tax of W120.0 billion for2004, an improvement of W133.5 billion from the net loss of W13.5 billion in2003. The 2004 results reflect an overall improvement in credit from 2003 withthe total credit charges improving W116.9 billion (see the analysis of thecredit performance presented below), and further growth in the loan portfolio,which drove an increase in interest income of W65.8 billion. Total revenues increased KRW59.4 billion, or 6.0%, from KRW988.3 billion in 2003to KRW1,047.7 billion in 2004 driven by an increase of KRW5.9 trillion or 18.9%increase in the average balance of interest earning assets which grew to KRW37.0trillion in 2004. The effect of the increase in interest earning assets waspartially offset by a 21 basis point decrease in the net interest margin to2.24% in 2004, from 2.45% in 2003, due primarily to the decreasing interest rateenvironment. Operating margin increased by KRW25.4 billion, or 7%, to KRW389.6billion in 2004 with the increase in revenue being partially offset by a modestincrease in operating expenses which grew 5.4%, to KRW 658.1 billion in 2004 ofwhich KRW11.4 billion is related to the change of control. Earnings before taxincreased by KRW73.4 billion, or 79%, to KRW166.5 billion in 2004 with animprovement in credit losses on the sales of NPLs contributing most to thisimprovement. Growth in interest earning assets was driven by loan growth which continued tobe strong in 2004 despite the increased competition in the banking sectorcoupled with a relatively weak economic environment. The declining interest rateenvironment during the year put interest margins under pressure as the Bank'sassets reprice at a faster rate than its liabilities. However, with the advancedcorporate and consumer credit risk management methodologies, which includefocusing on pricing for risk, the Bank is well-positioned to manage the currenteconomic environment and realize benefits expected from a rising interest rateenvironment with the predicted gradual economic improvement. The Bank has continued its focus on mortgage lending with total mortgage loansincreasing by more than 55% in 2004 (including loans securitized in the Bank'sthree mortgage-backed securities issuances during the year). This growth hasbuilt a strong foundation for growth in profitability into the future. KFB remains one of the best capitalized financial institutions in Korea with atier 1 capital ratio of 7.09% and a total capital adequacy ratio of 11.91%.These levels are appreciably higher than the regulatory requirements forwell-capitalized institutions, notwithstanding the strong asset growth duringthe year. The maintenance of appropriate levels of capital is a managementpriority, particularly in these uncertain economic times, as capital provides asolid foundation for the future anticipated asset growth and promotes depositorand investor confidence. The Bank completed a number of highly successful capital market transactionsduring 2004 to support its loan growth. These include a hybrid tier Isubordinated debt issuance of USD300 million completed in March and threemortgage loan securitization transactions totaling KRW1,930 billion in March,July and December. The hybrid tier 1 deal received "Best Asian Subordinated BondDeal" in "Euroweek's" 2004 deal awards, and the bank's third mortgage-backedsecurities issuance received "Best Cross Border Securitization" from both"Finance Asia" and "The Asset Asia" as well as "Best Securitization of AsianAssets" from "Structured Finance International". These accomplishments in thecapital markets demonstrate the bank's recognition by the investor community andits success in balance sheet efficiency and diversified funding. Korea First Bank has total assets of KRW41.7 trillion at December 30, 2004. Ithas over 3.5 million customers served through its nationwide network of 406branches and 3 overseas units. The Bank is ranked BBB- by Standard & Poor's,Baa3 by Moody's and BBB+ by Fitch. BANKING ACCOUNTS Better / (Worse)Operating Results 2004 2003 Amt %Net interest income 830.8 765.0 65.8 8.6Net fees and commissions 216.8 223.3 (6.5) (2.9)Total revenue 1,047.7 988.3 59.4 6.0Operating expense 658.1 624.2 (33.9) (5.4)Operating margin 389.6 364.2 25.4 7.0Provisions for credit losses 150.3 113.9 (36.4) (32.0)Net operating income 239.3 250.3 (11.0) (4.4)Net non-operating income / (expense) (72.8) (157.2) 84.4 N/MIncome before income tax 166.5 93.1 73.4 78.8Current income tax expense 1.1 0.4 (0.7) N/MDeferred income tax expense / (benefit) 45.4 106.2 60.8 57.3Income tax expense / (benefit) 46.5 106.6 60.1 56.4Net income 120.0 (13.5) 133.5 N/MLoans net of loan provisions 30,419.0 26,790.7 3,628.3 13.5Total assets 41,712.7 39,480.7 2,232.0 5.7Deposits 27,488.1 27,196.9 291.2 1.1 The analysis of the credit performance for the past two years is presented asfollows: Won in Billions / % Better / (Worse) 2004 2003 Amt %Provisions for credit losses 150.3 113.9 (36.4) (32.0)Loss on sale of NPLs (included in non-operating exps) 98.6 251.2 152.6 60.7Gain on sale of NPLs (included in non-operating income) (0.7) 0.0 0.7 N/MTotal credit provisioning 248.2 365.1 116.9 32.0 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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