Final Results - Year Ended 31 Dec 1999, Part 2
Standard Chartered PLC
23 February 2000
PART 2
Standard Chartered PLC
Notes
1. Segmental information
By geographic segment
1999
Asia Pacific Middle
Hong Other East &
Kong countries Africa S Asia
£m £m £m £m
Interest receivable 1,349 1,268 258 404
Interest payable (820) (809) (127) (261)
Net interest income 529 459 131 143
Fees and commissions
receivable, net 127 152 58 56
Dealing profits and
exchange 30 89 36 23
Other operating income 4 13 8 2
Net revenue 690 713 233 224
Costs (316) (381) (122) (143)
Amortisation of goodwill - - - -
Year 2000 costs - - - -
Total operating expenses (316) (381) (122) (143)
Profit before provisions 374 332 111 81
Charge for debts (178) (188) (6) (70)
Profit before taxation 196 144 105 11
Loans and advances to
customers - average 10,323 9,393 734 1,809
Net interest margin (%) 3.0 2.8 8.4 3.8
1999
UK &
Group
Head
Americas Office Total
£m £m £m
Interest receivable 279 1,304 4,862
Interest payable (203) (1,006) (3,226)
Net interest income 76 298 1,636
Fees and commissions
receivable, net 42 3 438
Dealing profits and
exchange 23 45 246
Other operating income 7 24 58
Net revenue 148 370 2,378
Costs (103) (229) (1,294)
Amortisation of goodwill - (22) (22)
Year 2000 costs - (60) (60)
Total operating expenses (103) (311) (1,376)
Profit before provisions 45 59 1,002
Charge for debts (16) (37) (495)
Profit before taxation 29 22 507
Loans and advances to
customers - average 1,412 4,389 28,060
Net interest margin (%) 1.3 2.3 3.4
a)Total interest receivable and total interest payable include intra-
group interest of £1,132 million.
b)Group central expenses and other overhead costs have been distributed
between segments in proportion to their direct costs and the benefit
of the Group s capital has been distributed between segments in
proportion to their risk weighted assets.
c)Business acquisitions have been made as part of the Group s growth
strategy. These activities are a result of corporate decisions made
at the centre and the amortisation of purchased goodwill is included
in the UK & Group Head Office segment. The total amortisation charge
comprises £7 million (1998: nil) in respect of the purchase of UBS
global trade finance business outside of Switzerland, £2 million
(1998: nil) for Standard Chartered Nakornthon Bank, £3 million (1998:
£3 million) for Banco Standard Chartered and £10 million (1998: £4
million) for the UK consumer finance companies acquired in 1998.
d)The resolution of Year 2000 related technology issues has been managed
from the centre as a global project and all expenses are included in
the UK & Group Head Office segment.
1. Segmental information
By geographic segment (continued)
1999
Asia Pacific Middle
Hong Other East &
Kong countries Africa S Asia
£m £m £m £m
Mortgages 6,396 2,684 13 13
Other retail 913 1,097 100 457
Other 3,119 5,771 667 1,452
Loans and advances to 10,428 9,552 780 1,922
customers
Loans and advances to banks 1,646 3,052 105 550
Total assets employed 20,328 18,967 1,905 4,304
Total risk weighted assets
and contingents 9,113 11,186 1,005 2,871
Gross non-performing loans
and advances 529 1,546 48 137
Specific provisions for bad
and doubtful debts (203) (445) (9) (88)
Interest in suspense (49) (115) (14) (16)
277 986 25 33
1999
UK &
Group
Head
Americas Office Total
£m £m £m
Mortgages - 226 9,332
Other retail 3 26 2,596
Other 1,594 4,266 16,869
Loans and advances to 1,597 4,518 28,797
customers
Loans and advances to banks 2,100 3,948 11,401
Total assets employed 7,550 13,920 66,974
Total risk weighted assets
and contingents 2,949 8,209 35,333
Gross non-performing loans
and advances 128 210 2,598
Specific provisions for bad
and doubtful debts (50) (69) (864)
Interest in suspense (3) (11) (208)
75 130 1,526
e)Total assets employed include intra-group items of £12,218 million and
balances of £624 million which are netted in the summarised
consolidated balance sheet. Total risk weighted assets and
contingents include balances of £130 million which are netted in
note 15 on capital ratios.
f)Gross non-performing loans and advances in other Asia Pacific
countries include £596 million of non-performing loans from the
acquisition of Nakornthon Bank (now renamed Standard Chartered
Nakornthon Bank) in September 1999, against which provisions of £63
million are held. (See note 12)
g)Assets held at the centre have been distributed between geographic
segments in proportion to their total assets employed.
1. Segmental information
By geographic segment (continued)
1998
Asia Pacific Middle
Hong Other East &
Kong countries Africa S Asia
£m £m £m £m
Interest receivable 1,441 1,424 251 347
Interest payable (983) (960) (127) (226)
Net interest income 458 464 124 121
Fees and commissions
receivable, net 129 139 52 45
Dealing profits and
exchange 50 180 39 22
Other operating income 3 5 3 3
Net revenue 640 788 218 191
Costs (293) (329) (110) (125)
Amortisation of goodwill - - - -
Year 2000 costs - - - -
Total operating expenses (293) (329) (110) (125)
Profit before provisions 347 459 108 66
Charge for debts (90) (252) (9) (24)
Profit before taxation 257 207 99 42
Loans and advances to
customers-average 9,762 8,213 685 1,643
Net interest margin (%) 2.9 3.2 9.5 3.5
1998
UK &
Group
Head
Americas Office Total
£m £m £m
Interest receivable 344 1,362 5,169
Interest payable (269) (1,080) (3,645)
Net interest income 75 282 1,524
Fees and commissions
receivable, net 37 3 405
Dealing profits and
exchange 40 87 418
Other operating income 2 4 20
Net revenue 154 376 2,367
Costs (91) (197) (1,145)
Amortisation of goodwill - (7) (7)
Year 2000 costs - (76) (76)
Total operating expenses (91) (280) (1,228)
Profit before provisions 63 96 1,139
Charge for debts (17) (44) (436)
Profit before taxation 46 52 703
Loans and advances to
customers-average 1,452 4,320 26,075
Net interest margin (%) 1.4 1.8 3.5
h)Total interest receivable and total interest payable include intra-
group interest of £1,166 million.
i)See notes (b), (c) and (d) on page 18.
1. Segmental information
By geographic segment (continued)
1998
Asia Pacific Middle
Hong Other East &
Kong countries Africa S Asia
£m £m £m £m
Mortgages 5,622 2,302 11 15
Other retail 903 889 69 332
Other 3,278 4,982 580 1,296
Loans and advances to 9,803 8,173 660 1,643
customers
Loans and advances to banks 1,154 3,192 92 533
Total assets employed 18,083 17,461 1,609 3,692
Total risk weighted assets
and contingents 8,700 10,199 881 2,556
Gross non-performing loans
and advances 197 730 66 91
Specific provisions for bad
and doubtful debts (86) (300) (16) (39)
Interest in suspense (15) (67) (21) (11)
96 363 29 41
1998
UK &
Group
Head
Americas Office Total
£m £m £m
Mortgages - 157 8,107
Other retail 7 65 2,265
Other 1,401 4,182 15,719
Loans and advances to 1,408 4,404 26,091
customers
Loans and advances to banks 1,087 3,470 9,528
Total assets employed 5,255 14,073 60,173
Total risk weighted assets
and contingents 2,827 7,574 32,737
Gross non-performing loans
and advances 67 267 1,418
Specific provisions for bad
and doubtful debts (23) (96) (560)
Interest in suspense (1) (34) (149)
43 137 709
j)Total assets employed include intra-group items of £11,160 million and
balances of £1,155 million which are netted in the summarised
consolidated balance sheet. Total risk weighted assets and
contingents include balances of £239 million which are netted in
note 15 on capital ratios.
k)Assets held at the centre have been distributed between geographic
segments in proportion to their total assets employed.
2. Segmental information
By class of business
1999 1998
£m £m
Consumer Banking
Profit before provisions 540 484
New provisions (196) (145)
Recoveries/provisions no longer required 55 25
Net charge (141) (120)
Trading profit 399 364
Corporate and Institutional Banking
Profit before provisions 348 386
New provisions (425) (290)
Recoveries/provisions no longer required 70 53
Net charge (355) (237)
Trading profit/(loss) (7) 149
Treasury
Profit before provisions 196 352
New provisions (1) (29)
Recoveries/provisions no longer required 2 -
Net release/charge 1 (29)
Trading profit 197 323
Amortisation of goodwill (22) (7)
Year 2000 costs (60) (76)
Profit before general debt provision 507 753
General debt provision - (50)
Profit before taxation 507 703
Total assets employed:
Consumer Banking 21,377 19,907
Corporate and Institutional Banking 22,972 19,455
Treasury 22,625 20,811
66,974 60,173
a)Group central expenses and other overhead costs have been distributed
between classes of business in proportion to their direct costs and
the benefit of the Group s capital has been distributed between
classes of business in proportion to their risk weighted assets.
b)See notes (c) and (d) on amortisation of goodwill and Year 2000 costs
on page 18.
c)Total assets employed include intra-group items of £12,218 million
(1998: £11,160 million) and balances which are netted in the
summarised consolidated balance sheet of £624 million (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
1999 1998
£m £m
Income from foreign exchange dealing 218 386
Profits less losses on dealing securities 17 5
Other dealing profits and exchange 11 27
246 418
4. Other operating income
1999 1998
£m £m
Other operating income includes:
Share of profits arising on securitised instalment 24 5
credit agreements
Profits less losses on disposal of investment 3 1
securities
Dividend income 6 5
5. Taxation
1999 1998
£m £m
United Kingdom corporation tax at 30.25% (1998: 96 140
31.0%)
Relief for overseas tax (51) (86)
45 54
Overseas tax 104 173
149 227
Effective tax rate 29.4% 32.3%
6. Dividends on preference shares
1999 1998
£m £m
Non-cumulative irredeemable preference shares:
73/8% preference shares of £1 each 8 8
81/4% preference shares of £1 each 8 8
16 16
7. Dividends on ordinary shares
1999 1998
Pence per Pence per
share £m share £m
Interim paid 6.75p 71 6.25p 62
Final proposed 16.10p 171 14.50p 145
22.85p 242 20.75p 207
The 1999 final dividend of 16.10 pence per share will be paid on 26 May
2000 to shareholders on the register at close of business on 10 March
2000. Shareholders will be entitled, if they wish, to elect to receive
shares credited as fully paid instead of the final dividend (or part
thereof). Details will be sent to shareholders on or around 20 March
2000.
8. Earnings per ordinary share
1999
Average
number of Per share
Profit shares amount
£m ( 000) Pence
Basic EPS
Profit attributable to ordinary
shareholders 328 1,046,182 31.4
Effect of dilutive potential
ordinary shares
Options - 10,086
Diluted EPS 328 1,056,268 31.1
1998
Average
number of Per share
Profit shares amount
£m ( 000) Pence
Basic EPS
Profit attributable to ordinary
shareholders 447 997,147 44.8
Effect of dilutive potential
ordinary shares
Options - 7,790
Diluted EPS 447 1,004,937 44.5
Headline earnings per ordinary share
The Institute of Investment Management and Research Statement of
Investment Practice No 1 provides a definition of headline earnings, a
measure which has gained widespread acceptance. As this differs from
earnings defined in Financial Reporting Standard 14 the table below
provides a reconciliation.
1999 1998
£m £m
Profit attributable to shareholders after preference 328 447
dividends
Amortisation of goodwill 22 7
Profits less losses on disposal of investment (3) (1)
securities
Headline earnings 347 453
Headline earnings per ordinary share 33.2p 45.4p
9. Called up share capital
1999 1998
£m £m
Equity capital
Ordinary shares of 25p each 265 250
Non-equity capital
Non-cumulative irredeemable preference shares:
73/8% preference shares of £1 each 100 100
81/4% preference shares of £1 each 100 100
465 450
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 - - 1 12 13
differences
Shares issued 15 380 - 64 459
Premises revaluation - - (10) - (10)
Retained profit - - - 86 86
Capitalised on exercise
of share options - 6 - (6) -
Other - - (3) 1 (2)
At 31 December 1999 465 814 38 2,049 3,366
On 15 March 1999, £380 million, net of expenses, was raised by way of a
placing for cash of 49 million 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 purchase of Nakornthon Bank (now renamed
Standard Chartered Nakornthon Bank); the balance has been used 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:
1999
Specific General Total
£m £m £m
Provisions held at 1 January 641 269 910
Exchange translation 6 2 8
differences
Amounts written off (302) - (302)
Recoveries of amounts
previously written off 52 - 52
Acquisition of subsidiary 63 - 63
Other (15) - (15)
New provisions 622 - 622
Recoveries/provisions no longer
required (127) - (127)
Net charge against profit 495 - 495
Provisions held at 31 December 940 271 1,211
Total provisions held at
31 December against:
Loans and advances to banks 11 - 11
Loans and advances to customers 929 271 1,200
940 271 1,211
1998
Specific General Total
£m £m £m
Provisions held at 1 January 338 218 556
Exchange translation 11 (3) 8
differences
Amounts written off (157) - (157)
Recoveries of amounts
previously written off 33 - 33
Acquisition of subsidiary 16 4 20
Other 14 - 14
New provisions 463 50 513
Recoveries/provisions no longer
required (77) - (77)
Net charge against profit 386 50 436
Provisions held at 31 December 641 269 910
Total provisions held at
31 December against:
Loans and advances to banks 19 - 19
Loans and advances to customers 622 269 891
641 269 910
Specific provisions for bad and doubtful debts include £76 million (1998:
£81 million) of provisions against enhanced and other performing emerging
markets debt.
12. Non-performing loans and advances
1999 1998
Standard
Chartered Other Total Total
Nakorntho £m £m £m
n Bank
£m
Loans and advances on which
interest is suspended 596 2,002 2,598 1,418
Specific provisions for bad and (63) (801) (864) (560)
doubtful debts
Interest in suspense - (208) (208) (149)
533 993 1,526 709
The Group acquired Standard Chartered Nakornthon Bank (SCNB) (formerly
Nakornthon Bank) in September 1999. Under the terms of the acquisition,
net non-performing loans (NPLs) of £533 million are subject to a Loan
Management Agreement (LMA) with the Financial Institutions Development
Fund (FIDF), a Thai Government agency. Under the LMA, the FIDF has
guaranteed the recovery of a principal amount of the NPLs of
£379 million. The LMA also provides, inter alia, for loss sharing
arrangements whereby the FIDF will bear up to 85 per cent of losses in
excess of the guaranteed amount. The carrying cost of the NPLs is
reimbursable by the FIDF to SCNB for a period of five years from the date
of acquisition.
Excluding the SCNB non-performing loan portfolio, specific provisions and
interest in suspense, including provisions held against enhanced and
other performing emerging markets debt (See note 11), together cover 54
per cent (1998: 56 per cent) of total non-performing lending to
customers. If lending and provisions are adjusted for the cumulative
amounts written off, the effective cover is 60 per cent (1998: 69 per
cent).
13. 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.
1999
Public
sector Banks Other Total
£m £m £m £m
USA 764 282 424 1,470
Hong Kong 8 95 1,188 1,291
Germany 32 1,187 7 1,226
Singapore 18 364 523 905
Korea 3 684 101 788
France 53 676 32 761
Japan 2 637 19 658
Brazil 8 559 69 636
1998
Public
sector Banks Other Total
£m £m £m £m
Hong Kong 7 67 1,389 1,463
USA 723 264 283 1,270
China - 193 554 747
Singapore 20 191 505 716
Germany - 710 - 710
France 92 509 28 629
14. Net interest margin and interest spread
1999 1998
% %
Net interest margin 3.4 3.5
Interest spread 2.8 2.7
£m £m
Average interest earning assets 47,977 44,143
Average interest bearing liabilities 41,998 38,891
15. Capital ratios
1999 1998
£m £m
Tier 1 capital 3,026 2,668
Tier 2 capital 2,195 1,469
5,221 4,137
Less supervisory adjustments (24) (6)
Adjusted capital base 5,197 4,131
Risk weighted assets 28,082 25,851
Risk weighted contingents 7,121 6,647
Total risk weighted assets and contingents 35,203 32,498
Capital ratios % %
Tier 1 capital 8.6 8.2
Total capital 14.8 12.7
16. 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 on
page 18.
1999 1998
HKDm HKDm
Net revenue 8,661 8,218
Total operating expenses (3,966) (3,762)
Profit before provisions 4,695 4,456
Provisions for bad and doubtful debts (2,240) (1,156)
Profit before taxation 2,455 3,300
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.
1999 1998
HKDm HKDm
Advances to customers (including trade bills) 134,138 129,104
Other assets 105,335 76,399
Total assets 239,473 205,503
Analysis of advances to customers
Mortgages 76,139 68,400
Other consumer 11,181 11,297
Trade finance 10,728 14,564
Trade bills 2,100 3,293
Financial concerns 11,787 10,593
Other* 22,203 20,957
Provisions (2,853) (1,122)
Net advances to customers 131,285 127,982
* Includes HKD4,323 million (1998: HKD3,987 million)
reported as mortgages in note 1
Gross non-performing advances to customers 7,397 2,717
Suspended interest (805) (262)
Specific provisions (2,853) (1,122)
3,739 1,333
Gross non-performing advances as a percentage of
gross advances to customers 5.5% 2.1%
17. 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 on
page 18.
1999 1998
SGDm SGDm
Net revenue 729 769
Total operating expenses (280) (278)
Profit before provisions 449 491
Provisions for bad and doubtful debts (146) (163)
Profit before taxation 303 328
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.
1999 1998
SGDm SGDm
Advances to customers (net) 10,089 9,767
Other assets 10,711 11,853
Total assets 20,800 21,620
Analysis of advances to customers
Mortgages 4,373 4,231
Other consumer 1,566 1,616
Trade finance 741 694
Other 3,709 3,392
Provisions (300) (166)
Net advances to customers 10,089 9,767
Gross non-performing advances to customers 614 538
Suspended interest (63) (34)
Specific provisions (237) (132)
314 372
Gross non-performing advances as a percentage of
gross advances to customers 5.9% 5.4%
18. Supplementary information on Malaysia
The information below is derived from the 1999 Annual Report of Standard
Chartered Bank Malaysia Berhad which will be filed with Bank Negara
Malaysia.
1999 1998
MYRm MYRm
Net revenue 900 1,034
Total operating expenses (369) (386)
Profit before provisions 531 648
Provisions for bad and doubtful debts (193) (383)
Profit before taxation 338 265
Advances and financing (net) 11,975 11,150
Other assets 5,986 4,861
Total assets 17,961 16,011
Analysis of loans and advances and financing
Mortgages (excluding MYR834 million of loans sold to
Cagamas (1998: MYR786 million)) 4,952 4,720
Other consumer 995 844
Trade finance 1,503 1,794
Other 5,470 4,489
Provisions (945) (697)
Net advances to customers 11,975 11,150
Gross non-performing advances to customers 1,513 1,262
Suspended interest (233) (156)
Specific provisions (492) (328)
788 778
Gross non-performing loans and advances as a
percentage of gross loans and advances 11.0% 10.0%
The financial information included herein has been derived from the audited
and unaudited information contained in the Group s Report and Accounts for the
years ended 31 December 1999 and 1998. Statutory accounts for 1998 have been
delivered to the Registrar of Companies; those for 1999 will be delivered
following the company s Annual General Meeting. 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.
Financial calendar
Ex-dividend date 6 March 2000
Record date 10 March 2000
Posting to shareholders of 1999 Report and Accounts 20 March 2000
Annual General Meeting 11 May 2000
Payment date - final dividend on ordinary shares 26 May 2000
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:
Pamela McGann, Group Head of External Affairs
on (020) 7280 7245
or
Tim Halford, Director of Corporate Affairs
on (020) 7280 7159
or
Stephen Seagrove, Group Investor Relations Manager
on (020) 7280 7164
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