22nd Jun 2005 09:03
Standard Chartered PLC22 June 2005 Standard Chartered PLC Pre-close trading update 22 June 2005 Standard Chartered PLC will be holding discussions with analysts ahead of itsclose period for the half year ending 30 June 2005. This statement details theinformation that will be covered in those discussions. On 8 August 2005 we will present our first half 2005 numbers in compliance withIFRS as endorsed by the EU or expected to be applicable at 31 December 2005.Unless otherwise stated, comments that are made with reference to 2004 are madein relation to the first half results under IFRS excluding IAS 32 & 39 (asannounced on 12 May 2005) and excluding the one-off items identified in our 2004Interim Report (amounting to USD92 million) and the goodwill impairment chargeunder IFRS identified on 12 May (amounting to USD67 million). Operating Profitbefore Tax for the first half of 2004 on this basis was USD1,082 million (andincluding one-off items and goodwill impairment was USD1,107 million). Comments made in sections 1-4 refer to Standard Chartered including acquisitionscompleted in 2004 but exclude the acquisition of Korea First Bank ("KFB")completed on 15 April 2005. In section 5 we give an update on KFB specifically. 1. Overall Standard Chartered has continued to make strong progress in the first few monthsof 2005. Performance is in line with guidance given to the market in February 2005, inparticular: • Continued strong growth in customer income across both businesses • Growth in expenses broadly in line with income • Consumer Banking loan impairment charges growing with assets; Wholesale Banking charges still benefiting from a benign credit environment. The Group has good organic income momentum in both Wholesale Banking andConsumer Banking across a wide range of products, customers and geographies,with excellent growth in a number of markets. Overall asset growth has continued. Consumer Banking is achieving good assetincreases across a number of markets and has benefited from the impact of PTBank Permata ("Permata"). Wholesale Banking has also shown good asset growthwhilst maintaining its disciplined approach. Net interest margins in most markets have remained broadly stable, despitesignificant margin pressure in India and Singapore. We are achieving good productivity improvements, but are also continuing toinvest to capture the many opportunities across our markets. Expenses haveincreased broadly in line with income. 2. Income Consumer Banking Consumer Banking continues to deliver good income growth. Most geographies have seen double digit income increases; with markets such asUAE, Other MESA, Africa and Other APR maintaining strong double digit growthtrajectories. The UAE, Other MESA and Africa have benefited from good assetmomentum. Other APR income growth has accelerated significantly, driven byThailand, Taiwan and Indonesia (including Permata). In Hong Kong we are seeing signs of modest consumer asset growth. Income isbroadly stable. Our focus on operational efficiencies has enabled us to investin product development, marketing and distribution channels to captureopportunities in the improved economic environment, while keeping tight controlon expenses. In Singapore margin pressures have impacted income. We are taking steps toimprove operational efficiency and to grow through innovation. India continues to see strong asset and liability growth, but competitivepressures have affected margins, resulting in income growing more slowly thanthe balance sheet. We are continuing to invest in building capability andpresence in India, which will impact operating profits in the near-term. Wholesale Banking Wholesale Banking continues to demonstrate good income momentum. Income growthis broad based across both Commercial Banking and Global Markets products. Ourinvestments in more sophisticated Global Markets and transactional products aregenerating good returns. Growth is also broad-based from a customer segmentperspective. We are achieving good growth with Multinational Corporates,Financial Institutions and Local Corporates. There is particularly good growthin Hong Kong, Other APR, UAE and Other MESA. Income in Singapore and Africa hasbeen broadly flat in part reflecting increasing pressure in Zimbabwe. We are maintaining our disciplined approach to deployment of capital to ensurewe sustain attractive returns. 3. Expenses We continue to place great emphasis on the tight management of expenses. We arefocused on improving the efficiency of the businesses to enable us to invest forfuture growth. We continue to invest in both our Consumer and Wholesale Banking businesses,pacing our investments in response to the overall performance of the businessesand the emergence and nature of the opportunities. We accelerated the pace ofinvestment in 2004 and are seeing the benefits in our income momentum in 2005. In Consumer Banking we continue to invest to take advantage of growthopportunities in markets such as China, India, Thailand, Pakistan, Indonesia(both organically and through the acquisition of a stake in Permata) and Japan. In Wholesale Banking, we have maintained our approach of building our productcapabilities and expanding our geographic coverage through investments inCorporate Finance, Transaction Banking and Global Markets. Investments includethe integration of ANZ's Project Finance business. 4. Loan Impairments Consumer Banking Overall, the Consumer Banking loan impairment charge is increasing in line withassets, the asset mix and as a result of the changes required under IAS 32 and39. In Hong Kong, impairments stabilised in the second half of 2004, reflecting theimprovement in the bankruptcy situation and are expected to increase in linewith assets and the addition of Prime Credit. Wholesale Banking The Wholesale Banking loan impairment charge is still benefiting from a benignenvironment in our markets as well as from our strengthened risk managementpractices and continued good progress in recoveries. 5. Korea First Bank We have completed the acquisition of KFB and have made good progress in a numberof key areas. These include the formation of a strong and experienced Board, theappointment of the senior management team and agreement with the union who aresupportive of our aim to make KFB a leading financial services company in Korea.The integration is proceeding smoothly and is ahead of schedule. With StandardChartered's deep experience in Asia and strong product range, the KFBacquisition provides a strong platform for value creation and rapid sustainedprofit growth. Since completion, trading has been in line with our expectations and is on trackto meet the targets we stated on 10 January 2005. At our interim results we willseparately disclose the impact of the acquisition of KFB on the Group'searnings. Bryan Sanderson, Chairman, commented, "We are continuing to build on our trackrecord of financial performance coupled with prudent governance. The benefits ofour focused strategic drive to grow within our markets are becoming everclearer." Mervyn Davies, Group Chief Executive, commented, "We are demonstrating, onceagain, good income momentum aided by the investments we have made in our highgrowth markets. We have shown we can deliver sustainable performance, whileachieving ambitious goals. We are continuing to drive performance and ourmomentum reflects the success of our business strategy and the disciplined wayit is being implemented. "The integration of Korea First Bank is one of our highest priorities and, I ampleased to report, it is progressing very well." For further information, please contact: Romy Murray, Head of Investor Relations (44) 207 280 7245 Cindy Tang, Head of Media Relations (44) 207 280 7163 Betty Ku, Head of Corporate Affairs, Hong Kong (852) 2821 1310 This document contains forward-looking statements, including such statementswithin the meaning of Section 27A of the US Securities Act of 1993 and section21E of the Securities Exchange Act of 1934. These statements concern or mayaffect future matters. Forward-looking statements can be identified by the factthat they do not relate to historical or current events. Forward-lookingstatements often use words such as "expect", "estimate", "intend", "plan","goal", or "believe" or similar words. These statements may include StandardChartered's future strategies, business plans, and results and are based on thecurrent expectations of the directors of Standard Chartered. They are subject toa number of risks and uncertainties that might cause actual results and outcomesto differ materially from expectations outlined in these forward-lookingstatements. These factors are not limited to regulatory developments but includestock markets, IT, developments, and general economic, competitive and generaloperating conditions. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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