12th Dec 2006 08:19
Standard Chartered PLC12 December 2006 Standard Chartered PLC Pre-close trading update 12 December 2006 Standard Chartered PLC will be holding discussions with analysts ahead of itsclose period for the full year ending 31 December 2006. This statement detailsthe information that will be covered in those discussions. The following sections outline Standard Chartered's progress in the second halfof 2006, including a review of the overall business and an update on theperformance of Consumer Banking and Wholesale Banking. All comparisons will be made on a full year basis unless otherwise stated. 1. Overall Standard Chartered has continued to make progress in the second half of 2006 andon a full year basis, income and working profit growth are expected to bestrong. We expect to deliver a good performance for the full year. Based on our performance year to date, we expect to be broadly in line with thecurrent market consensus for operating profit before tax for 2006. In line with guidance previously given on 8 August, 29 September and 20November, we continue to see strong income momentum in both businesses with goodperformances across a wide range of products, customer segments and geographies. Net interest margins have remained broadly stable. Given the momentum of our business, we have taken the opportunity to acceleratethe rate of investment in our franchise and as a result, expense growth iscurrently expected to be broadly in line with income growth. We take a dynamic approach to managing expense growth, pacing investments toreflect income growth and the overall performance of the business. We continueto pursue multiple process redesign, restructuring and hubbing activities acrossthe Group to improve efficiency, and we are disciplined and focused in ourinvestments for future growth. We are comfortable with asset quality for both businesses. In Consumer Bankingexcluding Taiwan, the loan impairment charge continues to reflect the asset mixand maturity profile. The Taiwan credit environment continues to improve, andthe asset quality of the Wholesale Banking book remains good. The integrations of Union Bank of Pakistan and of Hsinchu International Bank areprogressing well with contribution to overall performance in line withexpectations developed at the time of acquisition. The impact on the Group willnot be material in 2006. On an underlying organic basis (excluding Korea, Hsinchu and Union) the rate ofincome growth for the full year remains in line with that reported for the firstsix months of the year. We continue to make progress in Korea as we develop the business, introduce newproducts and roll out new practices from the Group. 2. Consumer Banking In Consumer Banking, we continue to make good progress with strong overallincome growth, and on an underlying organic basis (excluding Korea, Hsinchu andUnion), we continue to see good income growth. Markets such as Korea, India, Other APR and MESA are achieving good double-digitincome growth, and in Singapore and Malaysia we continue to make progress. InHong Kong, we continue to deliver income growth despite strong competitivepressures. Wealth Management and SME are achieving excellent income growth across many ofour markets, and especially in Hong Kong, Singapore, India, MESA and Other APRin particular China and Indonesia. Mortgage income has been affected by rising interest rates and strongcompetition in some key markets as we have pursued disciplined pricing toprotect margins. We are achieving income growth in credit cards and personal loans in someselective markets such as MESA, especially UAE and Pakistan, and Africa as wegrow the unsecured business. Our balance sheet continues to broaden, diversify and strengthen as a result ofthis changing mix of products. Customer assets remain in line with the firsthalf as growth in cards, loans and SME have balanced the decrease in mortgageassets. We continue to see double-digit growth in liabilities. In the second half of 2006, we have accelerated investment in Consumer Bankingwith particular focus in three areas: distribution in China, Consumer Finance inIndia and Korea, and the Private Banking business. Loan impairment continues to reflect the asset mix and maturity profile. Asexpected, in the second half of 2006, there has been a sharp half on halfdecrease in the loan impairment charge in Taiwan as the situation trends to morenormalised levels and the emerging levels of stress seen in the first half ofthis year in Indonesia and Thailand have reduced. 3. Wholesale Banking On a full year basis, Wholesale Banking is delivering very strong incomemomentum, both overall and on an underlying organic basis (excluding Korea,Hsinchu and Union), with broad based growth across multiple products andgeographies. Second half income is broadly in line with the first half. Client driven income continues to perform strongly across all client segments.Reflecting our client focused strategy, the mix of client to own account incomeremains consistent with guidance previously given. The client centric strategy and resultant increase in cross-sell ratios, aspresented during the Wholesale Banking Investor Day, has been instrumental indriving client income. All regions are contributing to the double-digit income growth illustrating thegeographic diversity of Wholesale Banking income. Markets such as Singapore,Malaysia, Other APR, India, MESA and Africa are performing particularly wellwith high double-digit income growth. We continue to manage expense growth in line with income growth on a full yearbasis, as we expand product capability and client coverage, especially in Indiaand Greater China. Our investments in enhancing our Global Markets capabilitieshave contributed to strong growth in our Rates and FX and Corporate Financebusinesses. Cash Management has benefited from both volume growth and the risinginterest rate environment in many of our markets. The quality of the Wholesale Banking loan book is good. Our risk managementpractices enable us to continue to benefit from the benign credit environment inour geographies and we have had continued success in recoveries. As a result of our disciplined management of risk and capital, Risk WeightedAssets have grown at a slower rate than client income growth. 4. Conclusion In summary, the Group's businesses are performing well. We are in rapidlygrowing markets and we have the competitive strengths to pursue profitablegrowth. Income momentum is strong, and we continue to dynamically manageexpenses and risks. Our acquisitions are delivering. We have a well-balancedbusiness. Peter Sands, Group Chief Executive, commented, "We have good momentum in bothbusinesses. The integrations of Union Bank and Hsinchu International Bank areprogressing very well. We are delivering good performance through client focus,geographic diversity and innovation in products." The pre-close conference call, hosted by Richard Meddings, Group FinanceDirector, will be webcast live on Standard Chartered's website http://investors.standardchartered.com from 0930 GMT onwards. A recording of thewebcast and a podcast will also be available shortly after the event. For further information, please contact: Steve Atkinson, Head of Investor Relations + (44) 207 280 7245 Sean Farrell, Head of Media Relations + (44) 207 280 7163 Ruth Naderer, Head of Investor Relations, Asia Pacific + (852) 2820 3075 It is possible that this document could or may contain "forward-lookingstatements" that are based on current expectations or beliefs, as well asassumptions about future events. These forward-looking statements can beidentified by the fact that they do not relate only to historical or currentfacts. Forward-looking statements often use words such as anticipate, target,expect, estimate, intend, plan, goal, believe, will, may, should, would, couldor other words of similar meaning. Undue reliance should not be placed on anysuch statements because, by their very nature, they are subject to known andunknown risks and uncertainties and can be affected by other factors that couldcause actual results, and Standard Chartered's plans and objectives, to differmaterially from those expressed or implied in the forward-looking statements.Any forward-looking statements speak only as of the date of this document. Standard Chartered undertakes no obligation to revise or update any forward-looking statement contained within this document, regardless of whether thosestatements are affected as a result of new information, future events orotherwise. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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