20th Jun 2007 09:18
Standard Chartered PLC20 June 2007 Standard Chartered PLC Pre-close Trading Update 20 June 2007 Standard Chartered PLC will be holding discussions with analysts and investorsahead of its close period for the half year ending 30 June 2007. This statementdetails the information that will be covered in those discussions. The following sections outline Standard Chartered's progress in the first halfof 2007, including a review of the overall business, an update on theperformance of Consumer Banking and Wholesale Banking, and an update on the mostrecent acquisitions. Unless otherwise stated, references to 2006 are made inrelation to the first half of the year. Overall Standard Chartered has continued to perform very strongly, building on theexcellent start to 2007. The Group has very strong income momentum, especiallyin Wholesale Banking. We have accelerated investment, whilst still producingvery good double digit working profit and operating profit growth. The Group has very good double digit income growth in both Consumer Banking andWholesale Banking and across almost all geographies. The Group continues to deliver a strong performance across a wide range ofproducts and customer segments. Net interest margins have remained broadly stable. The Group continues to take a dynamic approach to managing expense growth. Inline with guidance previously given on 27 February and 3 May, we have stepped upthe pace of investment, particularly in Consumer Banking, and we expect thatexpense growth will exceed income growth for the first half of 2007. For thefull year, we anticipate that expense growth will be broadly in line with incomegrowth. We are comfortable with the asset quality for both businesses. The integrations of Union Bank and of Hsinchu International Bank are progressingwell with contribution to Group performance in line with expectations. Business Performance Consumer Banking Consumer Banking has delivered strong income growth. On an underlying basis(excluding the impact of the recent 2006 acquisitions), Consumer Banking hasmaintained good income momentum. Markets such as Other APR, MESA, and Singapore have performed particularly wellwith India, Malaysia and Korea also generating double digit income growth. In Hong Kong, the rate of income growth has accelerated despite competitivepressures. Wealth Management and SME are both achieving excellent growth across manygeographies, with particularly strong performances in MESA, India, Korea, HongKong, Malaysia and Singapore. Mortgage income, however, has continued to be affected by rising interest rates,regulatory constraints and strong competition in a number of key markets. We have accelerated investment across the franchise, especially in: distribution(where we have upgraded and added outlets and ATMs); the Private Bank (which hasnow been launched in 7 countries); China, where we launched RMB Consumer Bankingfollowing the incorporation of the business in April; and in India. In linewith previous guidance, growth in expenses will therefore significantly exceedthe growth in income in the first half of the year. Consumer Banking loan impairment has improved slightly on the first half of2006, in line with expectations. This reflects: the improving situation inTaiwan, where impairment is moving to more normalised levels; inclusion of thetwo most recent acquisitions; and the change in volume, mix and maturity. The Consumer Banking asset position reflects strong growth in unsecuredproducts, inclusion of the most recent acquisitions but also pressure on securedproducts in some key markets. Wholesale Banking Wholesale Banking continues to demonstrate very strong income momentum, bothoverall and on an underlying basis (excluding the impact of the recent 2006acquisitions), delivering broad based growth in all key client segments andacross multiple products. Client driven income has performed very strongly, showing high double digitgrowth as a result of our successful client centric strategy and an increase incross-sell ratios. The investments made in enhancing Global Markets capabilities have contributedto strong growth in the Rates and FX client business, Capital Markets andCorporate Finance businesses. Transaction Banking, especially Cash Management,continues to benefit from both volume growth and the rising interest rateenvironment in many markets. Investment has been accelerated as Wholesale Banking has: expanded clientcoverage and product capabilities (investing in commodity derivative capabilityand Transaction Banking); invested in systems infrastructure and premises as thebusiness continues its rapid expansion; and invested in its control environmentand regulatory reporting infrastructure (improving anti money launderingprocesses and continuing investment for Basel). Notwithstanding this investmentprogramme, Wholesale Banking will deliver positive jaws for the first half ofthe year. Wholesale Banking continues to benefit from the benign credit environment. Thequality of the Wholesale Banking loan book remains excellent. New impairmentsremain low, and recoveries and releases continue to be achieved, albeit at lowerlevels than in 2006. Growth in Risk Weighted Assets has strong momentum but is growing more slowlythan client income. Korea In Korea, overall income growth has been moderate. Good performance in ConsumerBanking income reflects strength in SME and Wealth Management. Incomeperformance in Wholesale Banking has been weaker, remaining broadly flat on thesecond half of 2006. Growth in expenses has exceeded income growth, in partreflecting a full allocation of Group expenses as well as continued investmentin new products and infrastructure. Pakistan and Taiwan The integration of Union Bank and Standard Chartered operations in Pakistan isproceeding smoothly, with significant investment in rebranding and enhancing thebranch network. Progress has been particularly strong in Capital Markets,Lending and SME. The integration process in Taiwan is at a much earlier stage, but progress isgood and the amalgamation of Hsinchu and Standard Chartered's existing businessis expected imminently. We remain confident that Hsinchu will be EPS accretiveand deliver double digit ROI in 2008. Conclusion In summary, the Group is performing very strongly. Income momentum is verystrong and expense growth remains at high levels as we continue to make furtherinvestment in the franchise. The approach to risk management remains highlydisciplined. Peter Sands, Group Chief Executive, commented, "It's been another period ofexcellent delivery. We have incorporated our business in China, launched thePrivate Bank, and the integration of our acquisitions is going very well. Thepace of growth in both businesses is strong and the credit quality of our loanportfolios remains robust. The Group is in great shape." The pre-close conference call, hosted by Richard Meddings, Group FinanceDirector, will be webcast live on Standard Chartered's website. To access thewebcast follow this link http://investors.standardchartered.com from 10:30 BSTonwards. A recording of the webcast and a podcast will also be availableshortly after the event. For further information, please contact: Stephen Atkinson, Head of Investor Relations +44 (0)20 7280 7245 Tim Baxter, Head of External Communications +44 (0)20 7457 5573 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, and include matters which are not facts. Theseforward-looking statements can be identified by the fact that they do not relateonly to historical or current facts. Forward-looking statements often use wordssuch as anticipate, target, expect, estimate, intend, plan, goal, believe, will,may, should, would, could or other words of similar meaning. Undue relianceshould not be placed on any such statements because, by their very nature, theyare subject to known and unknown risks and uncertainties and can be affected byother factors that could cause actual results, and Standard Chartered's plansand objectives, to differ materially from those expressed or implied in theforward-looking statements. Any forward-looking statements contained in thisdocument based on past or current trends and activities of Standard Charteredshould not be taken as a representation that such trends or activities willcontinue in the future. Any forward-looking statements speak only as of the dateof 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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