Standard Chartered PLC - Notes
1. Basis of preparation |
The Group condensed consolidated interim financial statements consolidate those of Standard Chartered PLC (the Company) and its subsidiaries (together referred to as the Group) and equity account the Group's interest in associates and jointly controlled entities.
These interim financial statements have been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority (FCA) and with IAS 34 Interim Financial Reporting as adopted by the European Union (EU). They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group as at, and for, the year ended 31 December 2012, which were prepared in accordance with International Financial Reporting Standards (IFRS) and IFRS Interpretations Committee (IFRIC) interpretations as adopted by the EU.
The following parts of the Risk review form part of these interim financial statements: from the start of the "Risk management" section on page 25 to the end of the "Liquidity risk" section on page 86, with the exception of the "Asset backed securities" and "The impact of Basel III" sections on page 66, 67 and 79.
These interim financial statements were approved by the Board of Directors on 6 August 2013.
Except as noted below, the accounting policies applied by the Group in these interim financial statements are the same as those applied by the Group in its consolidated financial statements as at, and for, the year ended 31 December 2012. The following accounting standards and amendments have been endorsed by the EU.
Accounting standards adopted for reporting periods beginning 1 January 2013
On 1 January 2013, the Group adopted IFRS 13 Fair Value Measurement, which consolidates the guidance on how to measure fair value, which was spread across various IFRS, into one comprehensive standard. It introduces the use of an exit price, as well as extensive disclosure requirements, particularly the inclusion of non-financial instruments into the fair value hierarchy. IFRS 13 is required to be applied prospectively. The most significant impact of applying IFRS 13 is the mandatory requirement for the fair value of derivative liabilities and other liabilities held at fair value through profit or loss to take into account an adjustment for an entity's own credit risk and enhanced disclosure of valuation techniques and details on significant unobservable inputs for level 3 financial instruments. The adjustment for own credit risk is recognised as part of Net trading income (see note 3), and the approach for determining these fair values, along with the enhanced disclosures, are set out in note 12.
On 1 January 2013, the group adopted IAS 19 Employee Benefits (Revised), which introduces significant changes in the measurement, presentation and disclosure of defined benefit plans. The most significant impact on the Group as a result of these revisions comes in the form of the rate used to discount the plan assets. Where this rate has historically (until 31 December 2012) been based on the expected return on each class of pension assets, from 1 January 2013, IAS 19 requires assets to be measured based on an AA rated corporate bond yield, which aligns to the rate at which the liability is discounted. IAS 19 also makes changes to termination benefits as well as enhancing disclosure requirements and is required to be applied retrospectively. The effect of these changes on total operating expenses and pre-tax profit is not material.
On 1 January 2013 the Group early adopted IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements, IFRS 12 Disclosure of Interests in Other Entities, IAS 27 Separate Financial Statements, IAS 28 Investments in Associates and Joint Ventures. Though the EU has endorsed these standards for application from 1 January 2014, which is one year later than the mandatory adoption date required by the IASB of 1 January 2013, the EU has permitted early adoption from 1 January 2013.
IFRS 10 and 11, IAS 27 and 28 require retrospective application while IFRS 12 is applied prospectively. IFRS 10 replaces the current guidance on consolidation in IAS 27 Consolidated and Separate Financial Statements and SIC-12 Special Purpose Entities. It introduces a single model of assessing control whereby an investor controls an investee when it has the power, exposure to variable returns and the ability to use its power to influence the returns of the investee. IFRS 10 also includes specific guidance on de facto control, protective rights and the determination of whether a decision maker is acting as principal or agent, all of which influence the assessment of control. The application of IFRS 10 has not had a material impact on the Group.
IFRS 11 replaces IAS 31 Interests in Joint Ventures. It requires all joint ventures to be equity accounted thereby removing the option in IAS 31 for proportionate consolidation. It also removes the IAS 31 concept of jointly controlled assets. As a result, the Group's joint venture investment in PT Bank Permata Tbk (Permata) which was proportionately consolidated until 31 December 2012, is from 1 January 2013 being accounted for using the equity method as mandated under IFRS 11. The impact of this change is provided in note 32.
IFRS 12 prescribes additional disclosures around significant judgements and assumptions made in determining whether an entity controls another entity and has joint control or significant influence over another entity. The standard also requires disclosures on the nature and risks associated with interests in unconsolidated structured entities. The Group will present these disclosures, where appropriate, in the 2013 Annual Report and Accounts.
The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. The significant judgements made by management in applying the Group's accounting policies and key sources of uncertainty were the same as those applied to the consolidated financial statements as at, and for, the year ended 31 December 2012.
A summary of the Group's significant accounting policies will be included in the 2013 Annual Report and Accounts.
Standard Chartered PLC - Notes continued
2. Segmental Information |
The Group is organised on a worldwide basis for management and reporting purposes into two main business segments: Consumer Banking and Wholesale Banking. The products offered by these segments are summarised under 'Income by product' below. The businesses' focus is on broadening and deepening the relationship with clients and customers, rather than maximising a particular product line. Hence the Group evaluates segmental performance based on overall profit or loss before taxation (excluding corporate items not allocated) and not individual product profitability. Product revenue information is used as a way of assessing client and customer needs and trends in the market place. The strategies adopted by Consumer Banking and Wholesale Banking need to be adapted to local market and regulatory requirements, which is the responsibility of country management teams. While not the primary driver of the business, country performance is an important part of the Group's matrix structure and is also used to evaluate performance and reward staff. Corporate items not allocated are not aggregated into the businesses because of the one-off nature of these items.
The Group's entity-wide disclosure which includes profit before tax, net interest margin and structure of the Group's deposits comprises geographic areas, classified by the location of the customer, except for Financial Market products which are classified by the location of the dealer.
Transactions between the business segments and geographic areas are carried out on an arms length basis. Apart from the entities that have been acquired in the last two years, Group central expenses have been distributed between the business segments and geographic areas in proportion to their direct costs, and the benefit of the Group's capital has been distributed between segments in proportion to their average risk weighted assets. In the year in which an acquisition is made, the Group does not charge or allocate the benefit of the Group's capital. The distribution of central expenses is phased in over two years, based on the estimate of central management costs associated with the acquisition.
By class of business |
||||||||||
|
30.06.13 |
30.06.12 |
2 |
|
||||||
|
Consumer Banking |
Wholesale Banking3 |
Total reportable segments |
Corporate items not allocated4 |
Total |
Consumer Banking |
Wholesale Banking |
Total reportable segments |
Corporate items not allocated |
Total |
$million |
$million |
$million |
$million |
$million |
$million |
$million |
$million |
$million |
$million |
|
Internal income |
10 |
(10) |
- |
- |
- |
(24) |
24 |
- |
- |
- |
Net interest income |
2,476 |
3,122 |
5,598 |
- |
5,598 |
2,348 |
3,026 |
5,374 |
- |
5,374 |
Non-interest income |
1,197 |
3,193 |
4,390 |
- |
4,390 |
1,105 |
2,892 |
3,997 |
- |
3,997 |
Operating income |
3,683 |
6,305 |
9,988 |
- |
9,988 |
3,429 |
5,942 |
9,371 |
- |
9,371 |
Operating expenses |
(2,340) |
(2,694) |
(5,034) |
- |
(5,034) |
(2,246) |
(2,633) |
(4,879) |
- |
(4,879) |
Operating profit before impairment losses and taxation |
1,343 |
3,611 |
4,954 |
- |
4,954 |
1,183 |
3,309 |
4,492 |
- |
4,492 |
Impairment losses on loans and advances and other credit risk provisions |
(506) |
(224) |
(730) |
- |
(730) |
(290) |
(285) |
(575) |
- |
(575) |
Other impairment |
- |
(11) |
(11) |
(1,000) |
(1,011) |
(9) |
(65) |
(74) |
- |
(74) |
Profit from associates and joint ventures |
21 |
91 |
112 |
- |
112 |
24 |
69 |
93 |
- |
93 |
Profit before taxation |
858 |
3,467 |
4,325 |
(1,000) |
3,325 |
908 |
3,028 |
3,936 |
- |
3,936 |
Total assets employed |
136,598 |
506,325 |
642,923 |
7,034 |
649,957 |
132,246 |
473,126 |
605,372 |
8,184 |
613,556 |
Total liabilities employed |
182,364 |
420,771 |
603,135 |
1,464 |
604,599 |
172,905 |
396,387 |
569,292 |
1,330 |
570,622 |
Other segment items: |
|
|
|
|
|
|
|
|
|
|
Capital expenditure1 |
121 |
571 |
692 |
- |
692 |
71 |
806 |
877 |
- |
877 |
Depreciation |
62 |
151 |
213 |
- |
213 |
77 |
119 |
196 |
- |
196 |
Interests in associates and joint ventures |
512 |
1,150 |
1,662 |
- |
1,662 |
474 |
934 |
1,408 |
- |
1,408 |
Amortisation of intangible assets |
41 |
97 |
138 |
- |
138 |
26 |
97 |
123 |
- |
123 |
1 Includes capital expenditure in Wholesale Banking of $434 million in respect of operating lease assets (30 June 2012: $684 million)
2 Amounts have been restated as explained in note 32.
3 Wholesale Banking non-interest income includes Own credit adjustment (OCA) of $237 million
4 Relates to goodwill impairment charge on Korea business
2. Segmental Information continued
|
31.12.12 |
3 |
|
|
|||
|
Consumer Banking |
Wholesale Banking |
Total reportable segments |
Corporate items not allocated2 |
Total |
|
|
$million |
$million |
$million |
$million |
$million |
|
||
Internal income |
8 |
(8) |
- |
- |
- |
|
|
Net interest income |
2,432 |
2,975 |
5,407 |
- |
5,407 |
|
|
Non-interest income |
1,152 |
2,763 |
3,915 |
90 |
4,005 |
|
|
Operating income |
3,592 |
5,730 |
9,322 |
90 |
9,412 |
|
|
Operating expenses |
(2,350) |
(3,319) |
(5,669) |
(174) |
(5,843) |
|
|
Operating profit/(loss) before impairment losses and taxation |
1,242 |
2,411 |
3,653 |
(84) |
3,569 |
|
|
Impairment losses on loans and advances and other credit risk provisions |
(384) |
(237) |
(621) |
- |
(621) |
|
|
Other impairment |
(36) |
(86) |
(122) |
- |
(122) |
|
|
Profit from associates and joint ventures |
19 |
70 |
89 |
- |
89 |
|
|
Profit/(loss) before taxation |
841 |
2,158 |
2,999 |
(84) |
2,915 |
|
|
Total assets employed |
138,632 |
484,383 |
623,015 |
8,193 |
631,208 |
|
|
Total liabilities employed |
186,327 |
397,599 |
583,926 |
1,227 |
585,153 |
|
|
Other segment items: |
|
|
|
|
|
|
|
Capital expenditure1 |
139 |
1,236 |
1,375 |
- |
1,375 |
|
|
Depreciation |
70 |
140 |
210 |
- |
210 |
|
|
Interests in associates and joint ventures |
492 |
1,035 |
1,527 |
- |
1,527 |
|
|
Amortisation of intangible assets |
55 |
76 |
131 |
- |
131 |
|
|
1 |
Includes capital expenditure in Wholesale Banking of $1,104 million in respect of operating lease assets |
||||||
2 |
Relates to profits realised from repurchase of subordinated liabilities and UK bank levy |
||||||
3 |
Amounts have been restated as explained in note 32 |
||||||
|
|
||||||
The following table details entity-wide operating income by product: |
|
|
|
|
|
|
6 months ended |
6 months ended |
6 months ended |
|
|
|
30.06.13 |
30.06.12 |
31.12.12 |
|
|
|
$million |
$million |
$million |
|
|
Consumer Banking |
|
|
|
|
|
Cards, Personal Loans and Unsecured Lending |
1,411 |
1,278 |
1,390 |
|
|
Wealth Management |
686 |
636 |
632 |
|
|
Deposits |
714 |
765 |
761 |
|
|
Mortgages and Auto Finance |
727 |
614 |
684 |
|
|
Other |
145 |
136 |
125 |
|
|
|
3,683 |
3,429 |
3,592 |
|
|
Wholesale Banking |
|
|
|
|
|
Lending and Portfolio Management |
400 |
421 |
416 |
|
|
Transaction Banking |
|
|
|
|
|
Trade |
932 |
945 |
970 |
|
|
Cash Management and Custody |
814 |
880 |
841 |
|
|
|
1,746 |
1,825 |
1,811 |
|
|
Global Markets |
|
|
|
|
|
Financial Markets1 |
2,344 |
1,989 |
1,668 |
|
|
Asset and Liability Management |
410 |
484 |
353 |
|
|
Corporate Finance |
1,238 |
991 |
1,231 |
|
|
Principal Finance |
167 |
232 |
251 |
|
|
|
4,159 |
3,696 |
3,503 |
|
|
|
6,305 |
5,942 |
5,730 |
|
|
1 |
Includes $237 million (June and December 2012: $nil) benefit relating to Own credit adjustment (OCA) |
||||
2. Segmental Information continued
Entity-wide information
By geography
The Group manages its reportable business segments on a global basis. The operations are based in eight main geographic areas. The UK is the home country of the Company.
|
30.06.13 |
|
|||||||||
|
Hong Kong |
Singapore |
Korea |
Other Asia Pacific |
India |
Middle East & Other S Asia |
Africa |
Americas UK & Europe1 |
Total |
|
|
$million |
$million |
$million |
$million |
$million |
$million |
$million |
$million |
$million |
|
||
Internal income |
53 |
(55) |
(34) |
84 |
59 |
36 |
63 |
(206) |
- |
|
|
Net interest income |
839 |
587 |
642 |
1,119 |
511 |
583 |
489 |
828 |
5,598 |
|
|
Fees and commissions income, net |
453 |
291 |
133 |
335 |
143 |
245 |
201 |
294 |
2,095 |
|
|
Net trading income |
444 |
233 |
60 |
249 |
94 |
230 |
99 |
276 |
1,685 |
|
|
- Underlying |
442 |
169 |
58 |
215 |
94 |
230 |
99 |
141 |
1,448 |
|
|
- Own credit adjustment |
2 |
64 |
2 |
34 |
- |
- |
- |
135 |
237 |
|
|
Other operating income |
142 |
131 |
99 |
(22) |
120 |
49 |
1 |
90 |
610 |
|
|
Operating income |
1,931 |
1,187 |
900 |
1,765 |
927 |
1,143 |
853 |
1,282 |
9,988 |
|
|
Operating expenses |
(826) |
(614) |
(549) |
(1,049) |
(364) |
(554) |
(421) |
(657) |
(5,034) |
|
|
Operating profit before impairment losses and taxation |
1,105 |
573 |
351 |
716 |
563 |
589 |
432 |
625 |
4,954 |
|
|
Impairment losses on loans and advances and other credit risk provisions |
(70) |
(39) |
(193) |
(190) |
(113) |
(38) |
(75) |
(12) |
(730) |
|
|
Other impairment |
(2) |
10 |
(1,019) |
(1) |
- |
- |
- |
1 |
(1,011) |
|
|
Profit from associates and joint ventures |
- |
- |
- |
111 |
- |
- |
- |
1 |
112 |
|
|
Profit before taxation |
1,033 |
544 |
(861) |
636 |
450 |
551 |
357 |
615 |
3,325 |
|
|
Capital expenditure2 |
448 |
143 |
9 |
29 |
10 |
15 |
19 |
19 |
692 |
|
|
1 |
Americas UK & Europe includes operating income of $701 million in respect of the UK, the Company's country of domicile |
||||||||||
2 |
Includes capital expenditure in Hong Kong of $434 million in respect of operating lease assets. Other capital expenditure comprises additions to property and equipment and software related intangibles including any post-acquisition additions made by the acquired entities |
||||||||||
|
30.06.12 |
|
|||||||||
|
Hong Kong |
Singapore |
Korea |
Other Asia Pacific |
India |
Middle East & Other S Asia |
Africa |
Americas UK & Europe1 |
Total |
|
|
$million |
$million |
$million |
$million |
$million |
$million |
$million |
$million |
$million |
|
||
Internal income |
47 |
(72) |
(44) |
34 |
58 |
45 |
12 |
(80) |
- |
|
|
Net interest income |
817 |
647 |
720 |
1,087 |
464 |
559 |
447 |
633 |
5,374 |
|
|
Fees and commissions income, net |
390 |
264 |
96 |
345 |
153 |
231 |
183 |
291 |
1,953 |
|
|
Net trading income |
364 |
258 |
80 |
288 |
108 |
250 |
69 |
143 |
1,560 |
|
|
Other operating income |
70 |
65 |
98 |
78 |
7 |
40 |
24 |
102 |
484 |
|
|
Operating income |
1,688 |
1,162 |
950 |
1,832 |
790 |
1,125 |
735 |
1,089 |
9,371 |
|
|
Operating expenses |
(766) |
(588) |
(530) |
(1,052) |
(383) |
(559) |
(399) |
(602) |
(4,879) |
|
|
Operating profit before impairment losses and taxation |
922 |
574 |
420 |
780 |
407 |
566 |
336 |
487 |
4,492 |
|
|
Impairment losses on loans and advances and other credit risk provisions |
(44) |
(26) |
(117) |
(104) |
(105) |
(162) |
(11) |
(6) |
(575) |
|
|
Other impairment |
(8) |
(2) |
- |
(30) |
9 |
(26) |
- |
(17) |
(74) |
|
|
Profit from associates and joint ventures |
- |
- |
- |
93 |
- |
- |
- |
- |
93 |
|
|
Profit before taxation |
870 |
546 |
303 |
739 |
311 |
378 |
325 |
464 |
3,936 |
|
|
Capital expenditure 2 |
708 |
91 |
12 |
28 |
11 |
14 |
10 |
3 |
877 |
|
|
1 |
Americas UK & Europe includes operating income of $536 million in respect of the UK, the Company's country of domicile |
||||||||||
2 |
Includes capital expenditure in Hong Kong of $684 million in respect of operating lease assets. Other capital expenditure comprises additions to property and equipment and software related intangibles including any post-acquisition additions made by the acquired entities |
||||||||||
2. Segmental Information continued
Entity-wide information continued
By geography continued
|
31.12.12 |
|
|||||||||
|
Hong Kong |
Singapore |
Korea |
Other Asia Pacific |
India |
Middle East & Other S Asia |
Africa |
Americas UK & Europe1 |
Total |
|
|
$million |
$million |
$million |
$million |
$million |
$million |
$million |
$million |
$million |
|
||
Internal income |
64 |
(35) |
(41) |
59 |
71 |
39 |
48 |
(205) |
- |
|
|
Net interest income |
747 |
604 |
701 |
1,081 |
456 |
584 |
470 |
764 |
5,407 |
|
|
Fees and commissions income, net |
440 |
287 |
114 |
332 |
151 |
240 |
233 |
329 |
2,126 |
|
|
Net trading income |
289 |
119 |
67 |
287 |
49 |
198 |
88 |
82 |
1,179 |
|
|
Other operating income |
120 |
66 |
61 |
81 |
68 |
48 |
19 |
237 |
700 |
|
|
Operating income |
1,660 |
1,041 |
902 |
1,840 |
795 |
1,109 |
858 |
1,207 |
9,412 |
|
|
Operating expenses |
(806) |
(581) |
(551) |
(1,206) |
(370) |
(541) |
(385) |
(1,403) |
(5,843) |
|
|
Operating profit before impairment losses and taxation |
854 |
460 |
351 |
634 |
425 |
568 |
473 |
(196) |
3,569 |
|
|
Impairment losses on loans and advances and other credit risk provisions |
(65) |
(40) |
(132) |
(117) |
(60) |
(154) |
(27) |
(26) |
(621) |
|
|
Other impairment |
1 |
- |
(8) |
(127) |
- |
(6) |
- |
18 |
(122) |
|
|
Profit from associates and joint ventures |
- |
- |
- |
88 |
- |
- |
- |
1 |
89 |
|
|
Profit before taxation |
790 |
420 |
211 |
478 |
365 |
408 |
446 |
(203) |
2,915 |
|
|
Capital expenditure 2 |
1,120 |
156 |
11 |
35 |
16 |
5 |
27 |
5 |
1,375 |
|
|
1 |
Americas UK & Europe includes operating income of $651 million in respect of the UK, the Company's country of domicile |
||||||||||
2 |
Includes capital expenditure in Hong Kong of $1,104 million in respect of operating lease assets. Other capital expenditure comprises additions to property and equipment and software related intangibles including any post-acquisition additions made by the acquired entities |
||||||||||
Net interest margin and yield |
|
|
|
|
||||||||||
|
6 months ended |
6 months ended |
6 months ended |
|
||||||||||
|
30.06.13 |
30.06.12 |
31.12.12 |
|
||||||||||
$million |
$million |
$million |
|
|||||||||||
Net interest margin (%) |
2.2 |
2.3 |
2.2 |
|
||||||||||
Net interest yield (%) |
2.1 |
2.2 |
2.1 |
|
||||||||||
Average interest-earning assets |
512,250 |
470,746 |
496,100 |
|
||||||||||
Average interest-bearing liabilities |
477,113 |
440,946 |
472,876 |
|
||||||||||
|
|
|
|
|
||||||||||
Net interest margin by geography |
|
|||||||||||||
|
30.06.13 |
|
||||||||||||
|
Hong Kong |
Singapore |
Korea |
Other Asia Pacific |
India |
Middle East & Other S Asia |
Africa |
Americas UK & Europe1 |
Intra-group/ tax assets |
Total |
||||
$million |
$million |
$million |
$million |
$million |
$million |
$million |
$million |
$million |
$million |
|||||
Total assets employed |
140,628 |
108,411 |
56,477 |
113,175 |
36,407 |
46,929 |
23,589 |
187,029 |
(62,688) |
649,957 |
||||
Of which: Loans to customers |
57,645 |
55,334 |
31,681 |
56,597 |
23,748 |
25,683 |
12,600 |
28,505 |
- |
291,793 |
||||
Average interest-earning assets |
111,048 |
84,890 |
50,153 |
100,579 |
31,137 |
38,372 |
21,131 |
124,249 |
(49,309) |
512,250 |
||||
Net interest income |
911 |
533 |
609 |
1,185 |
570 |
621 |
554 |
615 |
- |
5,598 |
||||
Net interest margin (%) |
1.7 |
1.3 |
2.4 |
2.4 |
3.7 |
3.3 |
5.3 |
1.0 |
- |
2.2 |
||||
1 |
Americas UK & Europe includes total assets employed of $117,153 million in respect of the UK, the Company's country of domicile |
|
||||||||||||
|
|
|
||||||||||||
2. Segmental Information continued
|
30.06.12 |
|
||||||||||
|
Hong Kong |
Singapore |
Korea |
Other Asia Pacific |
India |
Middle East & Other S Asia |
Africa |
Americas UK & Europe1 |
Intra-group/ tax assets |
Total |
|
|
$million |
$million |
$million |
$million |
$million |
$million |
$million |
$million |
$million |
$million |
|
||
Total assets employed |
126,287 |
97,056 |
62,026 |
112,351 |
39,838 |
49,064 |
22,743 |
170,086 |
(65,895) |
613,556 |
|
|
Of which: Loans to customers |
52,254 |
49,262 |
37,743 |
51,874 |
23,453 |
24,724 |
12,121 |
26,709 |
|
278,140 |
|
|
Average interest-earning assets |
103,384 |
73,209 |
54,381 |
95,410 |
29,703 |
36,184 |
16,331 |
114,011 |
(51,867) |
470,746 |
|
|
Net interest income |
883 |
572 |
674 |
1,107 |
523 |
602 |
458 |
555 |
- |
5,374 |
|
|
Net interest margin (%) |
1.7 |
1.6 |
2.5 |
2.3 |
3.5 |
3.3 |
5.6 |
1.0 |
- |
2.3 |
|
|
1 |
Americas UK & Europe includes total assets employed of $106,009 million in respect of the UK, the Company's country of domicile. |
|||||||||||
|
|
|||||||||||
|
31.12.12 |
|
||||||||||
|
Hong Kong |
Singapore |
Korea |
Other Asia Pacific |
India |
Middle East & Other S Asia |
Africa |
Americas UK & Europe1 |
Intra-group/ tax assets |
Total |
|
|
$million |
$million |
$million |
$million |
$million |
$million |
$million |
$million |
$million |
$million |
|
||
Total assets employed |
130,601 |
107,973 |
62,903 |
112,476 |
36,935 |
46,219 |
20,890 |
179,516 |
(66,305) |
631,208 |
|
|
Of which: Loans to customers |
53,330 |
51,318 |
36,165 |
54,730 |
23,994 |
25,200 |
11,304 |
28,575 |
|
284,616 |
|
|
Average interest-earning assets |
109,727 |
79,324 |
53,760 |
105,234 |
29,791 |
37,662 |
20,209 |
113,332 |
(52,939) |
496,100 |
|
|
Net interest income |
832 |
572 |
661 |
1,125 |
527 |
628 |
519 |
543 |
- |
5,407 |
|
|
Net interest margin (%) |
1.5 |
1.4 |
2.4 |
2.1 |
3.5 |
3.3 |
5.1 |
1.0 |
- |
2.2 |
|
|
1 |
Americas UK & Europe includes total assets employed of $108,775 million in respect of the UK, the Company's country of domicile. |
|||||||||||
|
|
|||||||||||
The following tables set out the structure of the Group's deposits by principal geographic areas. |
|||||||||
|
30.06.13 |
||||||||
|
Hong Kong |
Singapore |
Korea |
Other Asia Pacific |
India |
Middle East & Other S Asia |
Africa |
Americas UK & Europe |
Total |
$million |
$million |
$million |
$million |
$million |
$million |
$million |
$million |
$million |
|
Non-interest bearing current and demand accounts |
9,278 |
7,495 |
63 |
3,568 |
2,332 |
9,575 |
3,626 |
7,927 |
43,864 |
Interest bearing current accounts and savings deposits |
55,767 |
32,741 |
17,927 |
26,108 |
1,904 |
4,786 |
3,101 |
29,697 |
172,031 |
Time deposits |
37,982 |
35,413 |
13,705 |
38,245 |
6,646 |
11,971 |
4,149 |
55,136 |
203,247 |
Other deposits |
1,165 |
158 |
565 |
938 |
1,714 |
360 |
169 |
1,964 |
7,033 |
Total |
104,192 |
75,807 |
32,260 |
68,859 |
12,596 |
26,692 |
11,045 |
94,724 |
426,175 |
Deposits by banks |
3,788 |
2,505 |
2,493 |
7,197 |
475 |
1,535 |
611 |
26,786 |
45,390 |
Customer accounts |
100,404 |
73,302 |
29,767 |
61,662 |
12,121 |
25,157 |
10,434 |
67,938 |
380,785 |
|
104,192 |
75,807 |
32,260 |
68,859 |
12,596 |
26,692 |
11,045 |
94,724 |
426,175 |
Debt securities in issue: |
|
|
|
|
|
|
|
|
|
Senior debt |
408 |
- |
3,625 |
2,034 |
- |
69 |
6 |
15,606 |
21,748 |
Other debt securities |
1,921 |
2,822 |
3,719 |
4,177 |
75 |
- |
242 |
30,820 |
43,776 |
Subordinated liabilities and other borrowed funds |
1,396 |
- |
586 |
1,184 |
500 |
535 |
146 |
14,046 |
18,393 |
Total |
107,917 |
78,629 |
40,190 |
76,254 |
13,171 |
27,296 |
11,439 |
155,196 |
510,092 |
|
|
|
|
|
|
|
|
|
|
2. Segmental Information continued
|
30.06.12 |
||||||||
|
Hong Kong |
Singapore |
Korea |
Other Asia Pacific |
India |
Middle East & Other S Asia |
Africa |
Americas UK & Europe |
Total |
$million |
$million |
$million |
$million |
$million |
$million |
$million |
$million |
$million |
|
Non-interest bearing current and demand accounts |
8,130 |
7,962 |
61 |
4,457 |
2,413 |
9,103 |
4,034 |
3,890 |
40,050 |
Interest bearing current accounts and savings deposits |
46,770 |
26,339 |
18,493 |
28,127 |
2,264 |
3,906 |
2,445 |
30,922 |
159,266 |
Time deposits |
38,657 |
33,328 |
18,730 |
36,891 |
7,091 |
12,204 |
3,266 |
46,765 |
196,932 |
Other deposits |
209 |
379 |
611 |
2,985 |
1,081 |
365 |
133 |
2,428 |
8,191 |
Total |
93,766 |
68,008 |
37,895 |
72,460 |
12,849 |
25,578 |
9,878 |
84,005 |
404,439 |
Deposits by banks |
1,676 |
1,975 |
1,551 |
9,979 |
303 |
2,065 |
478 |
27,766 |
45,793 |
Customer accounts |
92,090 |
66,033 |
36,344 |
62,481 |
12,546 |
23,513 |
9,400 |
56,239 |
358,646 |
|
93,766 |
68,008 |
37,895 |
72,460 |
12,849 |
25,578 |
9,878 |
84,005 |
404,439 |
Debt securities in issue: |
|
|
|
|
|
|
|
|
|
Senior debt |
324 |
- |
7,752 |
1,439 |
- |
62 |
7 |
12,817 |
22,401 |
Other debt securities |
1,437 |
675 |
332 |
4,965 |
161 |
- |
282 |
32,159 |
40,011 |
Subordinated liabilities and other borrowed funds |
1,455 |
- |
814 |
1,177 |
501 |
542 |
233 |
11,686 |
16,408 |
Total |
96,982 |
68,683 |
46,793 |
80,041 |
13,511 |
26,182 |
10,400 |
140,667 |
483,259 |
|
|
|
|
|
|
|
|
|
|
|
31.12.12 |
||||||||
|
Hong Kong |
Singapore |
Korea |
Other Asia Pacific |
India |
Middle East & Other S Asia |
Africa |
Americas UK & Europe |
Total |
$million |
$million |
$million |
$million |
$million |
$million |
$million |
$million |
$million |
|
Non-interest bearing current and demand accounts |
8,178 |
9,260 |
49 |
3,529 |
2,691 |
9,223 |
4,380 |
4,920 |
42,230 |
Interest bearing current accounts and savings deposits |
56,261 |
28,978 |
21,368 |
30,481 |
2,224 |
4,159 |
2,392 |
27,240 |
173,103 |
Time deposits |
35,224 |
37,968 |
16,989 |
38,596 |
7,380 |
12,367 |
3,318 |
49,281 |
201,123 |
Other deposits |
199 |
242 |
595 |
915 |
1,636 |
455 |
163 |
1,851 |
6,056 |
Total |
99,862 |
76,448 |
39,001 |
73,521 |
13,931 |
26,204 |
10,253 |
83,292 |
422,512 |
Deposits by banks |
1,585 |
2,005 |
1,769 |
5,628 |
441 |
1,934 |
540 |
23,493 |
37,395 |
Customer accounts |
98,277 |
74,443 |
37,232 |
67,893 |
13,490 |
24,270 |
9,713 |
59,799 |
385,117 |
|
99,862 |
76,448 |
39,001 |
73,521 |
13,931 |
26,204 |
10,253 |
83,292 |
422,512 |
Debt securities in issue: |
|
|
|
|
|
|
|
|
|
Senior debt |
1,291 |
- |
4,038 |
1,485 |
- |
69 |
6 |
14,767 |
21,656 |
Other debt securities |
5 |
1,903 |
1,999 |
3,617 |
47 |
- |
294 |
31,719 |
39,584 |
Subordinated liabilities and other borrowed funds |
1,454 |
- |
871 |
349 |
- |
29 |
62 |
15,823 |
18,588 |
Total |
102,612 |
78,351 |
45,909 |
78,972 |
13,978 |
26,302 |
10,615 |
145,601 |
502,340 |
2. Segmental Information continued
Entity-wide information
By region
|
30.06.13 |
||||||
|
China |
Malaysia |
Indonesia |
Taiwan |
Thailand |
Other |
Other Asia Pacific Region |
|
$million |
$million |
$million |
$million |
$million |
$million |
$million |
Operating income1 |
453 |
358 |
221 |
282 |
210 |
241 |
1,765 |
Operating expenses |
(383) |
(173) |
(118) |
(175) |
(94) |
(106) |
(1,049) |
Loan impairment |
(27) |
(57) |
(26) |
(30) |
(38) |
(12) |
(190) |
Other impairment |
6 |
- |
- |
2 |
- |
(9) |
(1) |
Profit from associates and joint ventures |
73 |
- |
37 |
- |
- |
1 |
111 |
Profit before taxation |
122 |
128 |
114 |
79 |
78 |
115 |
636 |
Total assets employed |
31,517 |
18,790 |
8,087 |
23,924 |
10,198 |
20,659 |
113,175 |
Loans to customers |
16,293 |
13,045 |
4,804 |
12,473 |
4,528 |
5,454 |
56,597 |
Deposits by banks |
1,772 |
665 |
340 |
988 |
999 |
2,433 |
7,197 |
Customer accounts |
18,520 |
11,379 |
2,482 |
17,135 |
4,188 |
7,958 |
61,662 |
Debt securities in issue |
815 |
860 |
- |
1,813 |
132 |
2,591 |
6,211 |
|
|
|
|
|
|
|
|
1Operating income includes OCA of $5 million in China, $21 million in Thailand and $8 million in Malaysia. |
|||||||
|
30.06.12 |
||||||
|
China |
Malaysia |
Indonesia |
Taiwan |
Thailand |
Other |
Other Asia Pacific Region |
|
$million |
$million |
$million |
$million |
$million |
$million |
$million |
Operating income |
494 |
370 |
279 |
282 |
180 |
227 |
1,832 |
Operating expenses |
(366) |
(162) |
(109) |
(176) |
(98) |
(141) |
(1,052) |
Loan impairment |
(13) |
(33) |
(30) |
- |
(19) |
(9) |
(104) |
Other impairment |
(29) |
- |
- |
(1) |
- |
- |
(30) |
Profit from associates and joint ventures |
41 |
- |
37 |
- |
- |
15 |
93 |
Profit before taxation |
127 |
175 |
177 |
105 |
63 |
92 |
739 |
Total assets employed |
29,631 |
17,388 |
8,498 |
24,400 |
9,263 |
23,171 |
112,351 |
Loans to customers |
14,002 |
11,721 |
5,145 |
13,110 |
3,605 |
4,291 |
51,874 |
Deposits by banks |
2,941 |
925 |
455 |
565 |
1,624 |
3,469 |
9,979 |
Customer accounts |
18,808 |
11,478 |
2,564 |
17,995 |
3,755 |
7,881 |
62,481 |
Debt securities in issue |
- |
595 |
- |
1,786 |
388 |
3,635 |
6,404 |
|
|
|
|
|
|
|
|
|
31.12.12 |
||||||
|
China |
Malaysia |
Indonesia |
Taiwan |
Thailand |
Other |
Other Asia Pacific Region |
|
$million |
$million |
$million |
$million |
$million |
$million |
$million |
Operating income |
505 |
373 |
246 |
285 |
211 |
220 |
1,840 |
Operating expenses |
(392) |
(176) |
(114) |
(190) |
(94) |
(240) |
(1,206) |
Loan impairment |
(25) |
(35) |
(25) |
(4) |
(18) |
(10) |
(117) |
Other impairment |
(15) |
- |
- |
- |
- |
(112) |
(127) |
Profit from associates and joint ventures |
55 |
- |
29 |
- |
- |
4 |
88 |
Profit before taxation |
128 |
162 |
136 |
91 |
99 |
(138) |
478 |
Total assets employed |
29,710 |
18,665 |
8,761 |
25,831 |
9,417 |
20,092 |
112,476 |
Loans to customers |
14,353 |
12,110 |
5,163 |
13,609 |
4,691 |
4,804 |
54,730 |
Deposits by banks |
1,690 |
948 |
192 |
251 |
849 |
1,698 |
5,628 |
Customer accounts |
20,536 |
11,753 |
2,691 |
20,014 |
4,390 |
8,509 |
67,893 |
Debt securities in issue |
- |
944 |
- |
1,971 |
177 |
2,010 |
5,102 |
|
|
|
|
|
|
|
|
2. Segmental Information continued
Entity-wide information continued
By region continued
|
30.06.13 |
||||
|
UAE |
Pakistan |
Bangladesh |
Other |
MESA |
|
$million |
$million |
$million |
$million |
$million |
Operating income |
631 |
129 |
140 |
243 |
1,143 |
Operating expenses |
(290) |
(84) |
(44) |
(136) |
(554) |
Loan impairment |
(17) |
(13) |
(4) |
(4) |
(38) |
Other impairment |
- |
- |
- |
- |
- |
Profit before taxation |
324 |
32 |
92 |
103 |
551 |
Total assets employed |
25,738 |
4,371 |
3,432 |
13,388 |
46,929 |
Loans to customers |
14,657 |
1,641 |
1,932 |
7,453 |
25,683 |
Deposits by banks |
1,142 |
210 |
17 |
166 |
1,535 |
Customer accounts |
15,571 |
2,942 |
2,107 |
4,537 |
25,157 |
Debt securities in issue |
- |
69 |
- |
- |
69 |
|
|
|
|
|
|
|
30.06.12 |
||||
|
UAE |
Pakistan |
Bangladesh |
Other |
MESA |
|
$million |
$million |
$million |
$million |
$million |
Operating income |
627 |
142 |
109 |
247 |
1,125 |
Operating expenses |
(290) |
(89) |
(41) |
(139) |
(559) |
Loan impairment |
(129) |
(24) |
(5) |
(4) |
(162) |
Other impairment |
- |
- |
- |
(26) |
(26) |
Profit before taxation |
208 |
29 |
63 |
78 |
378 |
Total assets employed |
28,156 |
4,059 |
2,671 |
14,178 |
49,064 |
Loans to customers |
14,110 |
1,731 |
1,744 |
7,139 |
24,724 |
Deposits by banks |
1,678 |
146 |
8 |
233 |
2,065 |
Customer accounts |
14,906 |
2,694 |
1,684 |
4,229 |
23,513 |
Debt securities in issue |
- |
62 |
- |
- |
62 |
|
|
|
|
|
|
|
31.12.12 |
||||
|
UAE |
Pakistan |
Bangladesh |
Other |
MESA |
|
$million |
$million |
$million |
$million |
$million |
Operating income |
603 |
149 |
116 |
241 |
1,109 |
Operating expenses |
(279) |
(85) |
(46) |
(131) |
(541) |
Loan impairment |
(101) |
(22) |
(2) |
(29) |
(154) |
Other impairment |
- |
(4) |
- |
(2) |
(6) |
Profit before taxation |
223 |
38 |
68 |
79 |
408 |
Total assets employed |
26,306 |
4,284 |
3,105 |
12,524 |
46,219 |
Loans to customers |
14,366 |
1,758 |
1,802 |
7,274 |
25,200 |
Deposits by banks |
1,527 |
247 |
10 |
150 |
1,934 |
Customer accounts |
15,453 |
2,797 |
1,935 |
4,085 |
24,270 |
Debt securities in issue |
- |
69 |
- |
- |
69 |
|
|
|
|
|
|
3. Net trading income |
|
||||
|
6 months ended |
6 months ended |
6 months ended |
|
|
|
30.06.13 |
30.06.12 |
31.12.12 |
|
|
$million |
$million |
$million |
|
||
Gains less losses on instruments held for trading: |
|
|
|
|
|
Foreign currency1 |
660 |
1,045 |
800 |
|
|
Trading securities |
(512) |
421 |
309 |
|
|
Interest rate derivatives |
586 |
2 |
178 |
|
|
Credit and other derivatives |
714 |
40 |
(193) |
|
|
|
1,448 |
1,508 |
1,094 |
|
|
Gains less losses from fair value hedging: |
|
|
|
|
|
Gains less losses from fair value hedged items |
806 |
(31) |
41 |
|
|
Gains less losses from fair value hedged instruments |
(819) |
31 |
(44) |
|
|
|
(13) |
- |
(3) |
|
|
Gains less losses on instruments designated at fair value: |
|
|
|
|
|
Financial assets designated at fair value through profit or loss |
47 |
115 |
114 |
|
|
Financial liabilities designated at fair value through profit or loss |
163 |
(128) |
(128) |
|
|
Own credit adjustment (OCA) |
237 |
- |
- |
|
|
Derivatives managed with financial instruments designated at fair value through profit or loss |
(197) |
65 |
102 |
|
|
|
250 |
52 |
88 |
|
|
|
1,685 |
1,560 |
1,179 |
|
|
1 |
Includes foreign currency gains and losses arising on the translation of foreign currency monetary assets and liabilities |
||||
Gains less losses on instruments held for trading is presented by product type. Gains or losses on certain trading securities are offset by gains or losses within interest rate derivatives and credit and other derivatives. |
|||||
|
|
|
|||
4. Other operating income |
|
|
|||
|
6 months ended |
6 months ended |
6 months ended |
|
|
|
30.06.13 |
30.06.12 |
31.12.12 |
|
|
$million |
$million |
$million |
|
||
Other operating income includes: |
|
|
|
|
|
Gains less losses on disposal of financial instruments: |
|
|
|
|
|
Available-for-sale |
210 |
147 |
189 |
|
|
Loans and receivables |
5 |
2 |
35 |
|
|
Dividend income |
64 |
36 |
56 |
|
|
Gains arising on repurchase of subordinated liabilities |
- |
- |
90 |
|
|
Gains arising on assets fair valued at acquisition |
1 |
2 |
1 |
|
|
Rental income from operating lease assets |
239 |
166 |
181 |
|
|
Gain on disposal of property, plant and equipment |
31 |
89 |
11 |
|
|
Gain on arising on sale of business |
- |
- |
15 |
|
|
|
|
||||
5. Operating expenses |
|
|
|||
|
6 months ended |
6 months ended |
6 months ended |
|
|
|
30.06.13 |
30.06.12 |
31.12.12 |
|
|
$million |
$million |
$million |
|
||
Staff costs: |
|
|
|
|
|
Wages and salaries |
2,574 |
2,552 |
2,325 |
|
|
Social security costs |
84 |
78 |
70 |
|
|
Other pension costs |
168 |
148 |
151 |
|
|
Share based payment costs |
154 |
173 |
201 |
|
|
Other staff costs |
417 |
355 |
439 |
|
|
|
3,397 |
3,306 |
3,186 |
|
|
Variable compensation is included within wages and salaries. Other staff costs include training and travel costs.
5. Operating expenses continued
The following tables summarise the number of employees within the Group : |
||||||||
|
|
|||||||
|
Consumer Banking |
Wholesale Banking |
Support Services |
Total |
||||
At 30 June 2013 |
53,596 |
20,050 |
14,544 |
88,190 |
||||
Average for the six months ended 30 June 2013 |
54,872 |
19,986 |
14,332 |
89,190 |
||||
|
|
|
|
|
||||
At 30 June 2012 |
54,219 |
19,586 |
13,113 |
86,918 |
||||
Average for the six months ended 30 June 2012 |
54,438 |
19,601 |
12,851 |
86,890 |
||||
|
||||||||
At 31 December 2012 |
55,237 |
19,752 |
14,069 |
89,058 |
||||
Average for the six months ended 31 December 2012 |
54,650 |
19,565 |
13,354 |
87,569 |
||||
|
6 months ended
|
|
||||||
|
30.06.13 |
30.06.12 |
31.12.12 |
|
||||
$million |
$million |
$million |
|
|||||
Premises and equipment expenses: |
|
|
|
|
||||
Rental of premises |
220 |
225 |
207 |
|
||||
Other premises and equipment costs |
193 |
176 |
230 |
|
||||
Rental of computers and equipment |
13 |
12 |
13 |
|
||||
|
426 |
413 |
450 |
|
||||
General administrative expenses: |
|
|
|
|
||||
UK bank levy |
- |
- |
174 |
|
||||
Settlements with US authorities |
- |
- |
667 |
|
||||
Other general administrative expenses |
860 |
841 |
1,025 |
|
||||
|
860 |
841 |
1,866 |
|
||||
The UK bank levy is applied on the chargeable equities and liabilities on the Group's consolidated balance sheet. Key exclusions from chargeable equities and liabilities include Tier 1 capital, insured or guaranteed retail deposits, repos secured on certain sovereign debt and liabilities subject to netting.
The rate of the levy for 2013 is 0.13 per cent for chargeable short-term liabilities, with a lower rate of 0.065 per cent generally applied to chargeable equity and long-term liabilities (i.e. liabilities with a remaining maturity greater than one year). The rate for 2014 has been increased to 0.142 per cent for qualifying liabilities, with a long-term rate of 0.071 per cent.
Under current accounting requirements, the UK bank levy is only recognised in the financial statements on 31 December each year. The Group estimates that the liability in respect of 2013 would be between $280 million and $310 million. If the UK bank levy had been included in these interim financial statements, based on the estimated year end liabilities the impact would be as follows:
|
30.06.13 |
|
30.06.13 |
|
|
|
(Excluding UK bank Levy) |
UK bank Levy Impact |
(Including UK bank Levy) |
|
|
Profit before tax ($million) |
3,325 |
(148) |
3,177 |
|
|
Normalised earnings per share (cents) |
121.9 |
(6.1) |
115.8 |
|
|
Normalised return on equity (per cent) |
13.3 |
(0.7) |
12.6 |
|
|
|
|
|
|
|
|
6. Depreciation and amortisation |
|
||||
|
6 months ended |
6 months ended |
6 months ended |
|
|
|
30.06.13 |
30.06.12 |
31.12.12 |
|
|
|
$million |
$million |
$million |
|
|
Premises |
54 |
63 |
63 |
|
|
Equipment: |
|
|
|
|
|
Operating lease assets |
100 |
66 |
82 |
|
|
Others |
59 |
67 |
65 |
|
|
Intangibles: |
|
|
|
|
|
Software |
108 |
92 |
97 |
|
|
Acquired on business combinations |
30 |
31 |
34 |
|
|
|
351 |
319 |
341 |
|
|
|
|
|
|
|
|
7. Impairment losses on loans and advances and other credit risk provisions |
|
||||
The following table reconciles the charge for impairment provisions on loans and advances to the total impairment charge and other credit risk provision: |
|
||||
|
6 months ended |
6 months ended |
6 months ended |
|
|
|
30.06.13 |
30.06.12 |
31.12.12 |
|
|
$million |
$million |
$million |
|
||
Net charge against profit on loans and advances: |
|
|
|
|
|
Individual impairment charge |
692 |
619 |
611 |
|
|
Portfolio impairment charge/(release) |
34 |
(40) |
5 |
|
|
|
726 |
579 |
616 |
|
|
Provisions related to credit commitments |
- |
- |
5 |
|
|
Impairment charges/(releases) relating to debt securities classified as loans and receivables |
4 |
(4) |
- |
|
|
|
730 |
575 |
621 |
|
|
|
|
||||
An analysis of impairment provisions by geography and business is set out within the Risk review on pages 37 to 61. |
|
||||
|
|
||||
8. Other impairment |
|
||||
|
6 months ended |
6 months ended |
6 months ended |
|
|
|
30.06.13 |
30.06.12 |
31.12.12 |
|
|
$million |
$million |
$million |
|
||
Impairment losses on available-for-sale financial assets: |
|
|
|
|
|
- Asset backed securities |
(1) |
1 |
(4) |
|
|
- Other debt securities |
2 |
(15) |
(1) |
|
|
- Equity shares |
39 |
51 |
83 |
|
|
|
40 |
37 |
78 |
|
|
Impairment of investment in associates |
- |
10 |
60 |
|
|
Impairment of goodwill |
1,000 |
- |
- |
|
|
Other |
- |
27 |
9 |
|
|
|
1,040 |
74 |
147 |
|
|
Recovery of impairment on disposal of equity instruments1 |
(29) |
- |
(25) |
|
|
|
1,011 |
74 |
122 |
|
|
1 |
Relates to equity shares sold during the period which had impairment provisions raised against them in previous periods |
||||
9. Taxation |
|
|
|||
Analysis of taxation charge in the period: |
6 months ended |
6 months ended |
6 months ended |
|
|
|
30.06.13 |
30.06.12 |
31.12.12 |
|
|
|
$million |
$million |
$million |
|
|
The charge for taxation based upon the profits for the period comprises: |
|
|
|
|
|
Current tax: |
|
|
|
|
|
United Kingdom corporation tax at 23.25 per cent (30 June 2012 and 31 December 2012: 24.5 per cent): |
|
|
|
|
|
Current tax on income for the period |
136 |
98 |
12 |
|
|
Adjustments in respect of prior periods (including double taxation relief) |
(2) |
(1) |
11 |
|
|
Double taxation relief |
(5) |
(5) |
(4) |
|
|
Foreign tax: |
|
|
|
|
|
Current tax on income for the period |
961 |
944 |
743 |
|
|
Adjustments in respect of prior periods |
- |
63 |
(67) |
|
|
|
1,090 |
1,099 |
695 |
|
|
Deferred tax: |
|
|
|
|
|
Origination of temporary differences |
(11) |
15 |
49 |
|
|
Adjustments in respect of prior periods |
10 |
(78) |
86 |
|
|
|
(1) |
(63) |
135 |
|
|
Tax on profits on ordinary activities |
1,089 |
1,036 |
830 |
|
|
Effective tax rate |
32.8% |
26.3% |
28.5% |
|
|
|
|
|
|
|
|
The UK corporation tax rate was reduced from 24 per cent to 23 per cent with an effective date of 1 April 2013, giving a blended 23.25 per cent for the full calendar year.
9. Taxation continued
Foreign taxation includes current taxation on Hong Kong profits of $134 million (30 June 2012: $108 million, 31 December 2012: $81 million) provided at a rate of 16.5 per cent (30 June 2012 and 31 December 2012: 16.5 per cent) on the profits assessable in Hong Kong.
Deferred taxation includes origination/(reversal) of temporary differences on Hong Kong profits of $(2) million (30 June 2012: $(2) million, 31 December 2012: $5 million) provided at a rate of 16.5 per cent (30 June 2012 and 31 December 2012: 16.5 per cent) on the profits assessable to Hong Kong.
10. Dividends |
|
|
|
|||||
Ordinary equity shares |
30.06.13 |
30.06.12 |
31.12.12 |
|
||||
|
cents per share |
$million |
cents per share |
$million |
cents per share |
$million |
|
|
2012/2011 Final dividend declared and paid during the period1 |
56.77 |
1,366 |
51.25 |
1,216 |
- |
- |
|
|
2012 Interim dividend declared and paid during the period1 |
- |
- |
- |
- |
27.23 |
650 |
|
|
|
56.77 |
1,366 |
51.25 |
1,216 |
27.23 |
650 |
|
|
1 |
The amounts are gross of scrip adjustments |
|||||||
The amounts in the table above reflect the actual dividend per share declared and paid to shareholders in 2013 and 2012. Dividends on ordinary equity shares are recorded in the period in which they are declared and, in respect of the final dividend, have been approved by the shareholders. Accordingly, the final ordinary equity share dividends set out above relate to the respective prior years. The 2012 interim dividend of 27.23 cents per ordinary share ($650 million) was paid to eligible shareholders on 11 October 2012 and the final dividend of 56.77 cents per ordinary share ($1,366 million) was paid to eligible shareholders on 14 May 2013.
2013 recommended interim dividend
The 2013 interim dividend of 28.80 cents per share ($696 million) will be paid in either pounds sterling, Hong Kong dollars or US dollars on 17 October 2013 to shareholders on the UK register of members at the close of business in the UK (10:00 pm London time) on 16 August 2013, and to shareholders on the Hong Kong branch register of members at the opening of business in Hong Kong (9:00 am Hong Kong time) on 16 August 2013. The 2013 interim dividend will be paid in Indian rupees on 17 October 2013 to Indian Depository Receipt holders on the Indian register at the close of business in India on 16 August 2013.
It is intended that shareholders on the UK register and Hong Kong branch register will be able to elect to receive shares credited as fully paid instead of all or part of the final cash dividend. Details of the dividend arrangements will be sent to shareholders on or around 6 September 2013. Indian Depository Receipt holders will receive their dividend in Indian rupees only.
Preference shares |
|
|
|
|
|
|
|
|
30.06.13 |
30.06.12 |
31.12.12 |
|
|
|
|
$million |
$million |
$million |
|
|
Non-cumulative irredeemable preference shares: |
7 3/8 per cent preference shares of £1 each1 |
6 |
6 |
5 |
|
|
|
8 1/4 per cent preference shares of £1 each1 |
6 |
6 |
7 |
|
|
Non-cumulative redeemable preference shares: |
8.125 per cent preference shares of $5 each1 |
38 |
38 |
37 |
|
|
|
7.014 per cent preference shares of $5 each2 |
26 |
26 |
27 |
|
|
|
6.409 per cent preference shares of $5 each2 |
24 |
24 |
24 |
|
|
|
|
|
||||
1 |
Dividends on these preference shares are treated as interest expense and accrued accordingly |
|||||
2 |
Dividends on those preference shares classified as equity are recorded in the period in which they are declared |
|||||
11. Earnings per ordinary share |
||||||
|
6 months ended 30.06.13 |
6 months ended 30.06.12 |
||||
|
Profit1 |
Weighted average number of shares |
Per share amount |
Profit1 |
Weighted average number of shares |
Per share amount |
$million |
('000) |
cents |
$million |
('000) |
cents |
|
Basic earnings per ordinary share |
2,131 |
2,418,845 |
88.1 |
2,806 |
2,386,841 |
117.6 |
Effect of dilutive potential ordinary shares: |
|
|
|
|
|
|
Options2 |
|
22,637 |
|
|
21,116 |
|
Diluted earnings per ordinary share |
2,131 |
2,441,482 |
87.3 |
2,806 |
2,407,957 |
116.5 |
|
|
|
|
|
|
|
11. Earnings per ordinary share continued
|
6 months ended 31.12.12 |
|
|||||||
|
|
|
|
Profit1 |
Weighted average number of shares |
Per share amount |
|
||
|
|
|
$million |
('000) |
cents |
|
|||
Basic earnings per ordinary share |
|
|
|
1,980 |
2,406,844 |
82.3 |
|
||
Effect of dilutive potential ordinary shares: |
|
|
|
|
|
|
|
||
Options2 |
|
|
|
|
25,344 |
|
|
||
Diluted earnings per ordinary share |
|
|
|
1,980 |
2,432,188 |
81.4 |
|
||
|
|
|
|
|
|
|
|
||
There were no ordinary shares issued after the balance sheet date that would have significantly affected the number of ordinary shares used in the above calculation had they been issued prior to the end of the balance sheet date. |
|
||||||||
|
|||||||||
The Group measures earnings per share on a normalised basis. This differs from earnings defined in IAS 33 Earnings per share (IAS 33). The table below provides a reconciliation. |
|
||||||||
|
|
|
|
6 months ended |
|
||||
|
|
|
|
30.06.13 |
30.06.12 |
31.12.12 |
|
||
|
|
|
|
$million |
$million |
$million |
|
||
Profit attributable to ordinary shareholders |
|
|
2,131 |
2,806 |
1,980 |
|
|||
Normalised income items |
|
|
|
|
|
||||
- Fair value gains on own credit adjustment |
|
(237) |
- |
- |
|
||||
- Gain on disposal of property |
|
(20) |
(74) |
(17) |
|
||||
- Gain on sale of business |
|
- |
(2) |
(13) |
|
||||
- Gain on repurchase of subordinated liabilities |
|
- |
- |
(90) |
|
||||
Normalised expense items |
|
|
|
|
|
||||
- Amortisation of intangible assets arising on business combinations |
|
30 |
32 |
37 |
|
||||
- Settlements with US authorities |
|
|
|
- |
- |
667 |
|
||
Impairment of associates |
|
|
- |
10 |
60 |
|
|||
Impairment of goodwill (see note 20) |
|
|
|
1,000 |
- |
- |
|
||
Tax on normalised items 3 |
|
|
|
45 |
10 |
(8) |
|
||
Normalised earnings |
2,949 |
2,782 |
2,616 |
|
|||||
Normalised basic earnings per ordinary share (cents) |
121.9 |
116.6 |
108.7 |
|
|||||
Normalised diluted earnings per ordinary share (cents) |
120.8 |
115.5 |
107.6 |
|
|||||
1 |
The profit amounts represent the profit attributable to ordinary shareholders, which is profit for the year after non-controlling interest and the declaration of dividends payable to the holders of the non-cumulative redeemable preference shares classified as equity (see note 10) |
|
|||||||
2 |
The impact of anti-dilutive options has been excluded from this amount as required by IAS 33 |
|
|||||||
3 |
No tax is included in respect of the impairment of goodwill as no tax relief is available |
|
|||||||
|
|
|
|
6 months ended |
|
||||
|
|
|
|
30.06.13 |
30.06.12 |
31.12.12 |
|
||
|
|
|
|
$million |
$million |
$million |
|
||
Operating Income |
|
|
9,988 |
9,371 |
9,412 |
|
|||
Normalised income items |
|
(257) |
(76) |
(120) |
|
||||
Normalised Income |
|
9,731 |
9,295 |
9.292 |
|
||||
Operating expenses |
|
(5,034) |
(4,879) |
(5,843) |
|
||||
Normalised Expense items |
|
30 |
32 |
704 |
|
||||
Normalised expenses |
|
(5,004) |
(4,847) |
(5,139) |
|
||||
Normalised cost income ratio |
51.4% |
52.1% |
55.3% |
|
|||||
|
12. Financial instruments
Classification
Financial assets are classified between four measurement categories: held at fair value through profit or loss (comprising trading and designated), available-for-sale, loans and receivables and held-to-maturity; and two measurement categories for financial liabilities: held at fair value through profit or loss (comprising trading and designated) and amortised cost. Instruments are classified in the balance sheet in accordance with their legal form, except for instruments that are held for trading purposes and those that the Group has designated to hold at fair value through the profit and loss account. The latter are combined on the face of the balance sheet and disclosed as financial assets or liabilities held at fair value through profit or loss.
The Group's classification of its principal financial assets and liabilities is summarised in the table below.
|
Assets at fair value |
|
Assets at amortised cost |
|
|
|
||||
Assets |
Trading |
Derivatives held for hedging |
Designated at fair value through profit or loss |
Available- for-sale |
|
Loans and receivables |
Non-financial assets |
Total |
|
|
$million |
$million |
$million |
$million |
|
$million |
$million |
$million |
|
||
Cash and balances at central banks |
- |
- |
- |
- |
|
57,621 |
- |
57,621 |
|
|
Financial assets held at fair value through profit or loss |
|
|
|
|
|
|
|
|
|
|
Loans and advances to banks1 |
1,278 |
- |
297 |
- |
|
- |
- |
1,575 |
|
|
Loans and advances to customers1 |
6,257 |
- |
183 |
- |
|
- |
- |
6,440 |
|
|
Treasury bills and other eligible bills |
3,380 |
- |
- |
- |
|
- |
- |
3,380 |
|
|
Debt securities |
13,516 |
- |
368 |
- |
|
- |
- |
13,884 |
|
|
Equity shares |
2,316 |
- |
540 |
- |
|
- |
- |
2,856 |
|
|
|
26,747 |
- |
1,388 |
- |
|
- |
- |
28,135 |
|
|
Derivative financial instruments |
53,114 |
1,434 |
- |
- |
|
- |
- |
54,548 |
|
|
Loans and advances to banks1 |
- |
- |
- |
- |
|
73,305 |
- |
73,305 |
|
|
Loans and advances to customers1 |
- |
- |
- |
- |
|
285,353 |
- |
285,353 |
|
|
Investment securities |
|
|
|
|
|
|
|
|
|
|
Treasury bills and other eligible bills |
- |
- |
- |
22,370 |
|
- |
- |
22,370 |
|
|
Debt securities |
- |
- |
- |
65,793 |
|
3,946 |
- |
69,739 |
|
|
Equity shares |
- |
- |
- |
2,703 |
|
- |
- |
2,703 |
|
|
|
- |
- |
- |
90,866 |
|
3,946 |
- |
94,812 |
|
|
Other assets |
- |
- |
- |
- |
|
30,123 |
7,918 |
38,041 |
|
|
Total at 30 June 2013 |
79,861 |
1,434 |
1,388 |
90,866 |
|
450,348 |
7,918 |
631,815 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and balances at central banks |
- |
- |
- |
- |
|
50,683 |
- |
50,683 |
|
|
Financial assets held at fair value through profit or loss |
|
|
|
|
|
|
|
|
|
|
Loans and advances to banks1 |
566 |
- |
109 |
- |
|
- |
- |
675 |
|
|
Loans and advances to customers1 |
5,434 |
- |
253 |
- |
|
- |
- |
5,687 |
|
|
Treasury bills and other eligible bills |
4,542 |
- |
- |
- |
|
- |
- |
4,542 |
|
|
Debt securities |
14,487 |
- |
327 |
- |
|
- |
- |
14,814 |
|
|
Equity shares |
1,404 |
- |
621 |
- |
|
- |
- |
2,025 |
|
|
|
26,433 |
- |
1,310 |
- |
|
- |
- |
27,743 |
|
|
Derivative financial instruments |
50,692 |
1,838 |
- |
- |
|
- |
- |
52,530 |
|
|
Loans and advances to banks1 |
- |
- |
- |
- |
|
73,930 |
- |
73,930 |
|
|
Loans and advances to customers1 |
- |
- |
- |
- |
|
272,453 |
- |
272,453 |
|
|
Investment securities |
|
|
|
|
|
|
|
|
|
|
Treasury bills and other eligible bills |
- |
- |
- |
21,979 |
|
- |
- |
21,979 |
|
|
Debt securities |
- |
- |
- |
58,655 |
|
4,804 |
- |
63,459 |
|
|
Equity shares |
- |
- |
- |
2,757 |
|
- |
- |
2,757 |
|
|
|
- |
- |
- |
83,391 |
|
4,804 |
- |
88,195 |
|
|
Other assets |
- |
- |
- |
- |
|
22,518 |
7,649 |
30,167 |
|
|
Total at 30 June 2012 |
77,125 |
1,838 |
1,310 |
83,391 |
|
424,388 |
7,649 |
595,701 |
|
|
1 |
Further analysed in Risk review on pages 22 to 86 |
|||||||||
|
|
|||||||||
12. Financial instruments continued
Classification continued
|
Assets at fair value |
|
Assets at amortised cost |
|
|
|
||||
Assets |
Trading |
Derivatives held for hedging |
Designated at fair value through profit or loss |
Available- for-sale |
|
Loans and receivables |
Non-financial assets |
Total |
|
|
$million |
$million |
$million |
$million |
|
$million |
$million |
$million |
|
||
Cash and balances at central banks |
- |
- |
- |
- |
|
60,537 |
- |
60,537 |
|
|
Financial assets held at fair value through profit or loss |
|
|
|
|
|
|
|
|
|
|
Loans and advances to banks1 |
677 |
- |
97 |
- |
|
- |
- |
774 |
|
|
Loans and advances to customers1 |
4,793 |
- |
185 |
- |
|
- |
- |
4,978 |
|
|
Treasury bills and other eligible bills |
2,955 |
- |
- |
- |
|
- |
- |
2,955 |
|
|
Debt securities |
14,882 |
- |
333 |
- |
|
- |
- |
15,215 |
|
|
Equity shares |
2,140 |
- |
1,014 |
- |
|
- |
- |
3,154 |
|
|
|
25,447 |
- |
1,629 |
- |
|
- |
- |
27,076 |
|
|
Derivative financial instruments |
47,133 |
2,362 |
- |
- |
|
- |
- |
49,495 |
|
|
Loans and advances to banks1 |
- |
- |
- |
- |
|
67,797 |
- |
67,797 |
|
|
Loans and advances to customers1 |
- |
- |
- |
- |
|
279,638 |
- |
279,638 |
|
|
Investment securities |
|
|
|
|
|
|
|
|
|
|
Treasury bills and other eligible bills |
- |
- |
- |
26,740 |
|
- |
- |
26,740 |
|
|
Debt securities |
- |
- |
- |
65,356 |
|
3,851 |
- |
69,207 |
|
|
Equity shares |
- |
- |
- |
3,278 |
|
- |
- |
3,278 |
|
|
|
- |
- |
- |
95,374 |
|
3,851 |
- |
99,225 |
|
|
Other assets |
- |
- |
- |
- |
|
21,406 |
7,142 |
28,548 |
|
|
Total at 31 December 2012 |
72,580 |
2,362 |
1,629 |
95,374 |
|
433,229 |
7,142 |
612,316 |
|
|
1 |
Further analysed in Risk review on pages 22 to 86 |
|||||||||
|
|
|||||||||
|
Liabilities at fair value |
|
|
|
||
Liabilities |
Trading |
Derivatives held for hedging |
Designated at fair value through profit or loss |
Amortised cost |
Non-financial liabilities |
Total |
$million |
$million |
$million |
$million |
$million |
$million |
|
Financial liabilities held at fair value through profit or loss |
|
|
|
|
|
|
Deposits by banks |
- |
- |
378 |
- |
- |
378 |
Customer accounts |
- |
- |
9,471 |
- |
- |
9,471 |
Debt securities in issue |
- |
- |
6,834 |
- |
- |
6,834 |
Short positions |
5,773 |
- |
- |
- |
- |
5,773 |
|
5,773 |
- |
16,683 |
- |
- |
22,456 |
Derivative financial instruments |
52,757 |
1,024 |
- |
- |
- |
53,781 |
Deposits by banks |
- |
- |
- |
45,012 |
- |
45,012 |
Customer accounts |
- |
- |
- |
371,314 |
- |
371,314 |
Debt securities in issue |
- |
- |
- |
58,690 |
- |
58,690 |
Other liabilities |
- |
- |
- |
23,526 |
5,193 |
28,719 |
Subordinated liabilities and other borrowed funds |
- |
- |
- |
18,393 |
- |
18,393 |
Total at 30 June 2013 |
58,530 |
1,024 |
16,683 |
516,935 |
5,193 |
598,365 |
|
|
|
|
|
|
|
12. Financial instruments continued
Classification continued
|
Liabilities at fair value |
|
|
|
||
Liabilities |
Trading |
Derivatives held for hedging |
Designated at fair value through profit or loss |
Amortised cost |
Non-financial liabilities |
Total |
$million |
$million |
$million |
$million |
$million |
$million |
|
Financial liabilities held at fair value through profit or loss1 |
|
|
|
|
|
|
Deposits by banks |
- |
- |
1,039 |
- |
- |
1,039 |
Customer accounts |
- |
- |
8,398 |
- |
- |
8,398 |
Debt securities in issue |
- |
- |
4,598 |
- |
- |
4,598 |
Short positions |
5,032 |
- |
- |
- |
- |
5,032 |
|
5,032 |
- |
14,035 |
- |
- |
19,067 |
Derivative financial instruments |
48,931 |
1,213 |
- |
- |
- |
50,144 |
Deposits by banks |
- |
- |
- |
44,754 |
- |
44,754 |
Customer accounts |
- |
- |
- |
350,248 |
- |
350,248 |
Debt securities in issue |
- |
- |
- |
57,814 |
- |
57,814 |
Other liabilities |
- |
- |
- |
21,010 |
4,932 |
25,942 |
Subordinated liabilities and other borrowed funds |
- |
- |
- |
16,408 |
- |
16,408 |
Total at 30 June 2012 |
53,963 |
1,213 |
14,035 |
490,234 |
4,932 |
564,377 |
|
|
|
|
|
|
|
1 Amounts have been restated as explained in note 32 |
||||||
Financial liabilities held at fair value through profit or loss1 |
|
|
|
|
|
|
Deposits by banks |
- |
- |
968 |
- |
- |
968 |
Customer accounts |
- |
- |
12,243 |
- |
- |
12,243 |
Debt securities in issue |
- |
- |
5,261 |
- |
- |
5,261 |
Short positions |
4,592 |
- |
- |
- |
- |
4,592 |
|
4,592 |
- |
18,472 |
- |
- |
23,064 |
Derivative financial instruments |
46,459 |
733 |
- |
- |
- |
47,192 |
Deposits by banks |
- |
- |
- |
36,427 |
- |
36,427 |
Customer accounts |
- |
- |
- |
372,874 |
- |
372,874 |
Debt securities in issue |
- |
- |
- |
55,979 |
- |
55,979 |
Other liabilities |
- |
- |
- |
19,547 |
4,738 |
24,285 |
Subordinated liabilities and other borrowed funds |
- |
- |
- |
18,588 |
- |
18,588 |
Total at 31 December 2012 |
51,051 |
733 |
18,472 |
503,415 |
4,738 |
578,409 |
|
|
|
|
|
|
|
1 Amounts have been restated as explained in note 32 |
||||||
|
|
|
|
|
|
|
Valuation of financial instruments
Valuation of financial assets and liabilities held at fair value are subject to a review independent of the Business by Valuation Control. Valuation Control is primarily responsible for calculating valuation adjustments and performing independent price verification. With a reporting line to the Group Finance Director, Valuation Control performs price testing by comparing external and independent market data (e.g. consensus data, traded prices and broker quotes) against internal data. Financial instruments held at fair value in the balance sheet have been classified into a three level valuation hierarchy (see below for how each level is defined and the types of instruments included within them) that reflects the significance of the observability of the inputs used in fair value measurement. The Group uses the portfolio exemption in IFRS 13 to measure the fair value of a group of financial assets and financial liabilities.
A Product Valuation Committee (PVC) exists for each asset class where there is a material valuation risk. The committees meet monthly and comprise of representatives from Group Market Risk, Product Control, Valuation Control and the Business. The committees are responsible for reviewing the results of the valuation control process. The committees report to the Financial Markets Valuation Committee which is a sub-committee of the Group Market Risk Committee.
Use of third party information
Valuation Control performs a semi-annual review of the suitability of the market data used for price testing. The market data used for price testing may include those sourced from recent trade data involving external counterparties or third parties such as Bloomberg, Reuters, brokers and consensus pricing providers. The market data used should be representative of the market as much as possible, which can evolve over time as markets and financial instruments develop. To determine the quality of the market data inputs, factors such as independence, relevance, reliability, availability of multiple data sources and methodology employed by the pricing provider are taken into consideration.
12. Financial instruments continued
For instruments classified as level 2 or level 3 fair value adjustments are also made to system valuations to arrive at fair value in accordance with accounting requirements. The main adjustments are described below:
Bid Offer Valuation Adjustments
Where market parameters are marked on a mid market basis in the revaluation systems, a bid offer valuation adjustment is required to quantify the expected cost of neutralising the Business' positions through dealing away in the market, thereby bringing long positions to bid and short positions to offer. The methodology to calculate the bid-offer adjustment for a derivative portfolio involves netting between long and short positions and the bucketing of risk by strike and tenor based on the hedging strategy. Where long positions are marked to bid and short positions marked to offer in the systems, e.g. for cash securities, no bid offer valuation adjustments are required.
Credit Adjustments
The Group makes a credit adjustment (CA) against derivative products. CA is an estimate of the adjustment to fair value to account for the possibility that the counterparty may default and the Group would not receive the full market value of the transactions. AIRB models are used to calculate the PD and LGD which, together with the results of the exposure simulation engine, generates a view of expected losses. The Group assesses actual losses against the provisions incurred against expected losses on a portfolio basis. Collateral positions are taken in to account for the calculation of CA.
In addition to periodic reassessment of the counterparties, credit exposures and external trends which may impact risk management outcomes are closely monitored. Accounts or portfolios are placed on early alert when they display signs of weakness or financial deterioration. Some examples of such signs of weakness are decline in the customer's position within the industry, a breach of covenants, or non-performance of an obligation, or there are issues relating to ownership or management.
The CA is not significant in the context of the overall fair value of these financial instruments.
Own Credit Adjustments
With the adoption of IFRS 13, the Group calculates own credit adjustments to reflect changes in its own credit standing. The Group's own credit adjustments are calculated on its derivative liabilities and issued debt designated at fair value, including structured notes. The Group's own credit adjustments will increase if its credit standing worsens and conversely, decrease if its credit standing improves. The Group's own credit adjustments will reverse over time as its liabilities mature.
For derivative liabilities, an own credit adjustment is determined by applying the Group's probability of default to the Group's negative expected exposure against the counterparty. The Group's probability of default and loss expected in the event of default is derived based on internally assessed credit ratings and market standard recovery levels. The expected exposure is modelled based on simulation methodology and is generated through simulation of underlying risk factors over the life of the deal booked against the particular counterparty. This simulation methodology incorporates the collateral posted by the Group and the effects of master netting agreements. The methodology used to determine an own credit adjustment on derivative liabilities is consistent with the methodology used to determine counterparty credit adjustment (CA) on derivative assets.
For issued debt and structured notes designated at fair value, an own credit adjustment is determined by discounting the contractual cash flows using a yield curve adjusted for market observed secondary senior debt issuance spreads above average interbank rates.
Model Valuation Adjustments
Certain models may have pricing deficiencies or limitations that require a valuation adjustment. These pricing deficiencies or limitations arise due to the choice, implementation and calibration of the pricing model, amongst other reasons.
Day One Profit and Loss
A financial instrument is initially recognized at fair value, which is generally its transaction price. In cases where the value obtained from the relevant valuation model differs from the transaction price, we record the asset or liability based on our valuation model, but do not recognize that initial difference in profit and loss unless the valuation model used is widely accepted and all inputs to the model are observable.
Funding Adjustments
Funding valuation adjustments account for the additional costs of funding in the valuation of funded derivative transactions. Examples of funded derivative transactions are prepaid swaps or funded loans in the form of a derivative.
In total, the Group has made $372 million (30 June 2012: $349 million, 31 December 2012: $349 million) of valuation adjustments in determining fair value for financial assets and financial liabilities.
Valuation adjustments |
30.06.13 |
30.06.12 |
31.12.12 |
Bid offer |
81 |
90 |
80 |
Credit1 |
135 |
149 |
133 |
Model |
16 |
13 |
10 |
Funding |
63 |
60 |
73 |
Others (including Day 1) |
77 |
37 |
53 |
Total |
372 |
349 |
349 |
1 includes own credit adjustments on derivatives in H1 2013
12. Financial instruments continued
Valuation hierarchy
The valuation hierarchy and the types of instruments classified into each level within that hierarchy are set out below:
|
Level 1 |
Level 2 |
Level 3 |
Fair value determined using: |
Unadjusted quoted prices in an active market for identical assets and liabilities |
Directly or indirectly observable inputs other than unadjusted quoted prices included within level 1 that are observable |
Significant inputs for the asset or liability that are not based on observable market data (unobservable inputs) |
Types of financial assets: |
Actively traded government and other securities Listed equities Listed derivative instruments Investments in publicly traded mutual funds with listed market prices |
Corporate and other government bonds and loans Over-the-counter (OTC) derivatives Asset backed securities
|
Asset backed securities Private equity investments Highly structured OTC derivatives with unobservable inputs Illiquid or highly structured corporate bonds with unobservable inputs Illiquid loans and advances |
Types of financial liabilities: |
Listed derivative instruments |
OTC derivatives Structured deposits Credit structured debt securities in issue |
Highly structured OTC derivatives with unobservable inputs. Illiquid or highly structured debt securities in issue with unobservable inputs |
Level 1 portfolio
Level 1 assets and liabilities are typically exchange traded positions and some government bonds traded in active markets. These positions are valued using unadjusted quoted prices in active markets.
Level 2 portfolio
Where instruments are not quoted in an active market the Group utilises a number of valuation techniques to determine fair value. These valuation techniques include discounted cash flow analysis models, option pricing models, simulation models and other standard models commonly used by market participants. Valuation techniques incorporate assumptions that other market participants would use in their valuations, such as discount rates, default rates, credit spreads and option volatilities. These inputs need to be directly or indirectly observable in order to be classified as Level 2.
In line with changes in market practice, certain interest rate swaps have been subject to overnight index swap (OIS) rate discounting since 2011. The factors to be considered for the selection of such interest rate swaps include the currency in which the swaps are traded, counterparties with credit support annex agreement and the form of the collateral posted by the counterparties.
Level 3 portfolio
Level 3 assets and liabilities are valued using techniques similar to those outlined for Level 2, except that if the instrument has one or more inputs that are unobservable and significant to the fair value measurement of the instrument in its entirety, it will be classified as Level 3. Page 126 to 127 set out the significant unobservable inputs used to measure level 3 instruments.
At 30 June 2013 level 3 assets with a fair value of $4,081 million (30 June 2012: $3,581 million, 31 December 2012: $5,109 million) and level 3 liabilities with a fair value of $673 million (30 June 2012: $387 million, 31 December 2012: $677 million) were held in respect of which there was no observable market data. For these instruments, a sensitivity analysis is presented on page 128 in respect of reasonably possible changes to the valuation assumptions.
The primary products classified as Level 3 are as follows:
Loan and advances
These include loans in the global syndications underwriting book which are not syndicated yet. These loans are generally bilateral in nature and their valuation is primarily based on recent trades or proxies, i.e. comparable loans with similar credit grade, sector etc. Where there are no recent transactions and reliable comparable loans to proxy from, the valuation of these loans is based on unobservable inputs resulting in them being classified as level 3.
Debt securities - Asset backed securities
Due to the lack of liquidity in the market and the prolonged period of time under which many securities have not traded, obtaining external prices is not a strong enough measure to determine whether an asset has an observable price or not. Therefore, once external pricing has been verified, an assessment is made whether each security is traded with significant liquidity based on its credit rating and sector. If a security is of low credit rating and/or is traded in a less liquid sector, it will be classified as Level 3. Where third party pricing is not available, the valuation of the security will be estimated from market standard cash flow models with input parameter assumptions which include prepayment speeds, default rates, discount margins derived from comparable securities with similar vintage, collateral type, and credit ratings. These securities are also classified as Level 3.
12. Financial instruments continued
Other debt securities
These debt securities include certain convertible bonds, corporate bonds, credit and equity structured notes where there are significant valuation inputs which are unobservable in the market, due to illiquid trading or the complexity of the product. Debt securities are valued using available prices provided through pricing vendors, brokers or trading activities. Where such liquid external prices are not available, valuation of these cash securities are implied using input parameters such as bond spreads and credit spreads. These input parameters are determined with reference to the same issuer (if available) or proxied from comparable issuers or assets.
Equity shares - private equity
Private equity investments are generally valued based on earning multiples - Price-to-Earnings (P/E) or Enterprise Value to Earning Before Income Tax, Depreciation and Amortisation (EV/EBITDA) ratios - of comparable listed companies. The two primary inputs for the valuation of these investments are the actual or forecast earnings of the investee companies and earning multiples for the comparable listed companies. In circumstances where an investment doesn't have direct comparables or where the multiples for the comparable companies cannot be sourced from reliable external sources, alternate valuation techniques (for example, discounted cash flow models), which use predominantly unobservable inputs or level 3 inputs, may be applied. Even though earning multiples for the comparable listed companies can be sourced from third party sources (for example, Bloomberg), and those inputs can be deemed Level 2 inputs, all unlisted investments (excluding those where observable inputs are available, for example, OTC prices) are classified as Level 3 on the grounds that the valuation methods involve judgments ranging from determining comparable companies to discount rates where the discounted cash flow method is applied.
Derivatives
These trading derivatives are classified as Level 3 if there are parameters which are unobservable in the market, such as products where the performance is linked to more than one underlying. Examples are foreign exchange basket options, equity options based on the performance of two or more underlying indices and interest rate products with quanto payouts. These unobservable correlation parameters could only be implied from the market, through methods such as historical analysis and comparison to historical levels or benchmark data.
Debt securities in issue
These debt securities relate to credit structured notes issued by the Group where there are significant valuation inputs which are unobservable in the market, due to illiquid trading or the complexity of the product. Debt securities are valued using available prices provided through pricing vendors, brokers or trading activities. Where such liquid external prices are not available, valuation of these debt securities are implied using input parameters such as bond spreads and credit spreads. These input parameters are determined with reference to the same issuer (if available) or proxied from comparable issuers or assets.
12. Financial instruments continued
Valuation hierarchy continued
The following tables show the classification of financial instruments held at fair value into the valuation hierarchy set out above as at 30 June 2013, 30 June 2012 and 31 December 2012. |
||||
|
Level 1 |
Level 2 |
Level 3 |
Total |
Assets |
$million |
$million |
$million |
$million |
Financial instruments held at fair value through profit or loss |
|
|
|
|
Loans and advances to banks |
297 |
1,278 |
- |
1,575 |
Loans and advances to customers |
136 |
5,804 |
500 |
6,440 |
Treasury bills and other eligible bills |
3,225 |
155 |
- |
3,380 |
Debt securities |
6,928 |
6,799 |
157 |
13,884 |
Of which: |
|
|
|
|
Government bonds |
6,720 |
1,434 |
3 |
8,157 |
Issued by corporates other than financial institutions |
136 |
3,307 |
154 |
3,597 |
Issued by financial institutions |
72 |
2,058 |
- |
2,130 |
|
|
|
|
|
Equity shares |
2,133 |
- |
723 |
2,856 |
|
|
|
|
|
Derivative financial instruments |
463 |
53,451 |
634 |
54,548 |
Of which: |
|
|
|
|
Foreign exchange |
130 |
33,787 |
387 |
34,304 |
Interest rate |
- |
16,093 |
38 |
16,131 |
Commodity |
331 |
2,502 |
- |
2,833 |
Credit |
- |
872 |
13 |
885 |
Equity and stock index |
2 |
197 |
196 |
395 |
Investment securities |
|
|
|
|
Treasury bills and other eligible bills |
16,553 |
5,789 |
28 |
22,370 |
Debt securities |
21,684 |
43,525 |
584 |
65,793 |
Of which: |
|
|
|
|
Government bonds |
13,282 |
5,551 |
66 |
18,899 |
Issued by corporates other than financial institutions |
5,075 |
8,157 |
476 |
13,708 |
Issued by financial institutions |
3,327 |
29,817 |
42 |
33,186 |
|
|
|
|
|
Equity shares |
1,239 |
9 |
1,455 |
2,703 |
|
|
|
|
|
At 30 June 2013 |
52,658 |
116,810 |
4,081 |
173,549 |
Liabilities |
|
|
|
|
Financial instruments held at fair value through profit or loss |
|
|
|
|
Deposits by banks |
- |
378 |
- |
378 |
Customer accounts |
- |
9,471 |
- |
9,471 |
Debt securities in issue |
- |
6,579 |
255 |
6,834 |
Short positions |
5,197 |
576 |
- |
5,773 |
|
|
|
|
|
Derivative financial instruments |
652 |
52,711 |
418 |
53,781 |
Of which: |
|
|
|
|
Foreign exchange |
244 |
33,865 |
326 |
34,435 |
Interest rate |
- |
15,516 |
25 |
15,541 |
Commodity |
405 |
1,690 |
- |
2,095 |
Credit |
- |
1,178 |
14 |
1,192 |
Equity and stock index |
3 |
462 |
53 |
518 |
|
|
|
|
|
Total at 30 June 2013 |
5,849 |
69,715 |
673 |
76,237 |
There are no significant transfers of financial assets and liabilities measured at fair value between level 1 and level 2 during the period. |
12. Financial instruments continued
Valuation hierarchy continued
|
Level 1 |
Level 2 |
Level 3 |
Total |
Assets |
$million |
$million |
$million |
$million |
Financial instruments held at fair value through profit or loss |
|
|
|
|
Loans and advances to banks |
101 |
574 |
- |
675 |
Loans and advances to customers |
- |
5,687 |
- |
5,687 |
Treasury bills and other eligible bills |
4,163 |
379 |
- |
4,542 |
Debt securities |
7,660 |
6,954 |
200 |
14,814 |
Of which: |
|
|
|
|
Government bonds |
7,067 |
248 |
- |
7,315 |
Issued by corporates other than financial institutions |
279 |
3,902 |
198 |
4,379 |
Issued by financial institutions |
314 |
2,804 |
2 |
3,120 |
|
|
|
|
|
Equity shares |
1,364 |
6 |
655 |
2,025 |
|
|
|
|
|
Derivative financial instruments |
1,258 |
50,935 |
337 |
52,530 |
Of which: |
|
|
|
|
Foreign exchange |
141 |
24,936 |
41 |
25,118 |
Interest rate |
801 |
20,888 |
177 |
21,866 |
Commodity |
288 |
3,747 |
- |
4,035 |
Credit |
- |
1,159 |
3 |
1,162 |
Equity and stock index |
28 |
205 |
116 |
349 |
Investment securities |
|
|
|
|
Treasury bills and other eligible bills |
18,841 |
3,051 |
87 |
21,979 |
Debt securities |
17,601 |
40,376 |
678 |
58,655 |
Of which: |
|
|
|
|
Government bonds |
9,582 |
2,079 |
40 |
11,701 |
Issued by corporates other than financial institutions |
4,088 |
4,443 |
564 |
9,095 |
Issued by financial institutions |
3,931 |
33,854 |
74 |
37,859 |
|
|
|
|
|
Equity shares |
1,129 |
4 |
1,624 |
2,757 |
|
|
|
|
|
Total at 30 June 2012 |
52,117 |
107,966 |
3,581 |
163,664 |
Liabilities |
|
|
|
|
Financial instruments held at fair value through profit or loss |
|
|
|
|
Deposits by banks |
34 |
1,005 |
- |
1,039 |
Customer accounts |
- |
8,398 |
- |
8,398 |
Debt securities in issue |
- |
4,501 |
97 |
4,598 |
Short positions |
4,249 |
783 |
- |
5,032 |
|
|
|
|
|
Derivative financial instruments |
1,446 |
48,408 |
290 |
50,144 |
Of which: |
|
|
|
|
Foreign exchange |
186 |
24,570 |
59 |
24,815 |
Interest rate |
850 |
19,259 |
184 |
20,293 |
Commodity |
369 |
3,043 |
- |
3,412 |
Credit |
- |
1,136 |
8 |
1,144 |
Equity and stock index |
41 |
400 |
39 |
480 |
|
|
|
|
|
Total at 30 June 2012 |
5,729 |
63,095 |
387 |
69,211 |
There are no significant transfers of financial assets and liabilities measured at fair value between level 1 and level 2 during the period. |
12. Financial instruments continued
Valuation hierarchy continued
|
Level 1 |
Level 2 |
Level 3 |
Total |
Assets |
$million |
$million |
$million |
$million |
Financial instruments held at fair value through profit or loss |
|
|
|
|
Loans and advances to banks |
97 |
677 |
- |
774 |
Loans and advances to customers |
- |
4,068 |
910 |
4,978 |
Treasury bills and other eligible bills |
2,812 |
143 |
- |
2,955 |
Debt securities |
8,523 |
6,516 |
176 |
15,215 |
Of which: |
|
|
|
|
Government bonds |
8,286 |
1,482 |
4 |
9,772 |
Issued by corporates other than financial institutions |
132 |
2,683 |
172 |
2,987 |
Issued by financial institutions |
105 |
2,351 |
- |
2,456 |
|
|
|
|
|
Equity shares |
2,029 |
- |
1,125 |
3,154 |
|
|
|
|
|
Derivative financial instruments |
260 |
48,749 |
486 |
49,495 |
Of which: |
|
|
|
|
Foreign exchange |
41 |
25,125 |
401 |
25,567 |
Interest rate |
- |
20,364 |
9 |
20,373 |
Commodity |
219 |
2,151 |
- |
2,370 |
Credit |
- |
824 |
6 |
830 |
Equity and stock index |
- |
285 |
70 |
355 |
Investment securities |
|
|
|
|
Treasury bills and other eligible bills |
22,781 |
3,901 |
58 |
26,740 |
Debt securities |
20,771 |
44,189 |
396 |
65,356 |
Of which: |
|
|
|
|
Government bonds |
11,809 |
3,419 |
87 |
15,315 |
Issued by corporates other than financial institutions |
4,516 |
7,853 |
266 |
12,635 |
Issued by financial institutions |
4,446 |
32,917 |
43 |
37,406 |
|
|
|
|
|
Equity shares |
1,307 |
13 |
1,958 |
3,278 |
|
|
|
|
|
Total at 31 December 2012 |
58,580 |
108,256 |
5,109 |
171,945 |
Liabilities |
|
|
|
|
Financial instruments held at fair value through profit or loss |
|
|
|
|
Deposits by banks |
- |
968 |
- |
968 |
Customer accounts |
68 |
12,175 |
- |
12,243 |
Debt securities in issue |
- |
5,147 |
114 |
5,261 |
Short positions |
4,320 |
272 |
- |
4,592 |
|
|
|
|
|
Derivative financial instruments |
383 |
46,246 |
563 |
47,192 |
Of which: |
|
|
|
|
Foreign exchange |
72 |
24,584 |
411 |
25,067 |
Interest rate |
- |
19,106 |
33 |
19,139 |
Commodity |
311 |
1,173 |
- |
1,484 |
Credit |
- |
1,120 |
10 |
1,130 |
Equity and stock index |
- |
263 |
109 |
372 |
|
|
|
|
|
Total at 31 December 2012 |
4,771 |
64,808 |
677 |
70,256 |
There are no significant transfers of financial assets and liabilities measured at fair value between level 1 and level 2 during the period. |
12. Financial instruments continued
Level 3 movement tables - Financial assets
|
Held at fair value through profit or loss |
Derivative financial instruments |
|
Investment securities |
|
||||
Assets |
Loans and advances to customers |
Debt securities |
Equity shares |
|
Treasury Bills |
Debt securities |
Equity shares |
Total |
|
$million |
$million |
$million |
$million |
|
$million |
$million |
$million |
$million |
|
At 1 January 2013 |
910 |
176 |
1,125 |
486 |
|
58 |
396 |
1,958 |
5,109 |
Total gains/(losses) recognised in income statement |
- |
4 |
(14) |
80 |
|
- |
- |
59 |
129 |
Total (losses) recognised in other comprehensive income |
- |
- |
- |
- |
|
- |
(34) |
(134) |
(168) |
Purchases |
- |
1 |
64 |
68 |
|
15 |
232 |
3 |
383 |
Sales |
- |
(23) |
(451) |
(2) |
|
- |
(40) |
(408) |
(924) |
Settlements |
(83) |
(2) |
- |
(34) |
|
- |
(87) |
(4) |
(210) |
Transfers out |
(327) |
- |
(1) |
(1) |
|
(45) |
(19) |
(19) |
(412) |
Transfers in |
- |
1 |
- |
37 |
|
- |
136 |
- |
174 |
At 30 June 2013 |
500 |
157 |
723 |
634 |
|
28 |
584 |
1,455 |
4,081 |
Total (losses)/gains recognised in the income statement relating to assets held at 30 June 2013 |
- |
- |
(74) |
114 |
|
- |
- |
- |
40 |
|
|
|
|
|
|
|
|
|
|
|
Held at fair value through profit or loss |
Derivative financial instruments |
|
Investment securities |
|
||||
Assets |
Loans and advances to customers |
Debt securities |
Equity shares |
|
Treasury Bills |
Debt securities |
Equity shares |
Total |
|
$million |
$million |
$million |
$million |
|
$million |
$million |
$million |
$million |
|
At 1 January 2012 |
- |
293 |
566 |
276 |
|
49 |
745 |
1,418 |
3,347 |
Total (losses)/gains recognised in income statement |
- |
(2) |
125 |
(14) |
|
(2) |
27 |
(15) |
119 |
Total (losses) recognised in other comprehensive income |
- |
- |
- |
- |
|
- |
(30) |
(52) |
(82) |
Purchases1 |
- |
12 |
28 |
137 |
|
40 |
123 |
298 |
638 |
Sales1 |
- |
- |
(64) |
(12) |
|
- |
(141) |
(8) |
(225) |
Settlements |
- |
(70) |
- |
(47) |
|
- |
(12) |
(8) |
(137) |
Transfers out |
- |
(83) |
- |
(5) |
|
- |
(36) |
(14) |
(138) |
Transfers in |
- |
50 |
- |
2 |
|
- |
2 |
5 |
59 |
At 30 June 2012 |
- |
200 |
655 |
337 |
|
87 |
678 |
1,624 |
3,581 |
Total gains/(losses) recognised in the income statement relating to assets held at 30 June 2012 |
- |
- |
122 |
(7) |
|
- |
- |
- |
115 |
1 Certain amounts have been reclassified.
|
Held at fair value through profit or loss |
Derivative financial instruments |
|
Investment securities |
|
||||
Assets |
Loans and advances to customers |
Debt securities |
Equity shares |
|
Treasury bills |
Debt securities |
Equity shares |
Total |
|
$million |
$million |
$million |
$million |
|
$million |
$million |
$million |
$million |
|
At 1 July 2012 |
- |
200 |
655 |
337 |
|
87 |
678 |
1,624 |
3,581 |
Total gains/(losses) recognised in income statement |
- |
11 |
188 |
(34) |
|
2 |
21 |
2 |
190 |
Total (losses)/gains recognised in other comprehensive income |
- |
- |
- |
- |
|
- |
(26) |
185 |
159 |
Purchases |
- |
10 |
282 |
199 |
|
2 |
11 |
227 |
731 |
Sales |
- |
(5) |
- |
(1) |
|
- |
(58) |
(63) |
(127) |
Settlements |
(27) |
(27) |
- |
(13) |
|
- |
(5) |
(15) |
(87) |
Transfers out |
- |
(13) |
- |
(2) |
|
(33) |
(225) |
(2) |
(275) |
Transfers in |
937 |
- |
- |
- |
|
- |
- |
- |
937 |
At 31 December 2012 |
910 |
176 |
1,125 |
486 |
|
58 |
396 |
1,958 |
5,109 |
Total (losses)/gains recognised in the income statement relating to assets held at 31 December 2012 |
- |
(10) |
73 |
(23) |
|
- |
- |
- |
40 |
|
|
|
|
|
|
|
|
|
|
Transfers in during the periods primarily relate to markets for certain financial instruments becoming illiquid or where the valuation parameters became unobservable during the period. |
|||||||||
|
|
|
|
|
|
|
|
|
|
Transfers out during the periods primarily relate to certain financial instruments where the valuation parameters became observable during the period. |
12. Financial instruments continued
Level 3 movement tables - Financial liabilities
|
30.06.13 |
30.06.12 |
||||
Liabilities |
Debt securities in issue |
Derivative financial instruments |
Total |
Debt securities in issue |
Derivative financial instruments |
Total |
$million |
$million |
$million |
$million |
$million |
$million |
|
At 1 January |
114 |
563 |
677 |
172 |
184 |
356 |
Total (gains)/losses recognised in income statement |
(39) |
(53) |
(92) |
(3) |
13 |
10 |
Issues |
320 |
6 |
326 |
6 |
111 |
117 |
Settlements |
(134) |
(86) |
(220) |
(51) |
(17) |
(68) |
Transfers out |
(12) |
(33) |
(45) |
(27) |
(1) |
(28) |
Transfers in |
6 |
21 |
27 |
- |
- |
- |
At 30 June |
255 |
418 |
673 |
97 |
290 |
387 |
Total (gains)/losses recognised in the income statement relating to liabilities held at the end of the period |
(16) |
6 |
(10) |
5 |
4 |
9 |
|
|
|
|
|
|
|
|
|
|
|
31.12.12 |
||
Liabilities |
|
|
|
Debt securities in issue |
Derivative financial instruments |
Total |
|
|
|
$million |
$million |
$million |
|
At 1 July |
|
|
|
97 |
290 |
387 |
Total (gains)/losses recognised in income statement |
|
|
|
(40) |
67 |
27 |
Issues |
|
|
|
44 |
213 |
257 |
Settlements |
|
|
|
23 |
(8) |
15 |
Transfers out |
|
|
|
(10) |
1 |
(9) |
At 31 December |
|
|
|
114 |
563 |
677 |
Total (gains)/losses recognised in the income statement relating to liabilities held at the end of the period |
|
|
|
(2) |
40 |
38 |
|
|
|
|
|
|
|
Transfers in during the periods primarily relate to certain financial instruments which parameters became unobservable during the period. |
||||||
|
|
|
|
|
|
|
12. Financial instruments continued
The following tables present the Group's primary level 3 financial instruments which are held at the fair value. The table also present the valuation techniques used to measure the fair value of those financial instruments, the significant unobservable inputs, the range of values for those inputs and the weighted average of those inputs:
|
Value at 30 June 2013 |
|
|
|
|
|
|||||
Instrument |
Assets |
Liabilities |
Principal valuation technique |
Significant unobservable inputs |
Range1 |
Weighted |
|||||
Loans and advances to customers |
500 |
- |
Comparable pricing |
Yield |
14.0% to 17.3% |
14.2% |
|||||
Debt securities |
573 |
- |
Comparable pricing |
Yield |
0.0% to 27.0% |
8.4% |
|||||
|
|
|
Discounted cash flows |
Credit correlation |
55.0% to 88.0% |
81.5% |
|||||
|
|
|
Internal pricing model |
Equity correlation |
30.0% to 99.0% |
N/A |
|||||
Asset backed securities |
102 |
- |
Discounted cash flows |
Yield |
2.5% to 6.0% |
4.6% |
|||||
Government bonds |
66 |
- |
Comparable pricing |
Yield |
2.7% to 6.5% |
4.4% |
|||||
Treasury bills |
28 |
- |
Comparable pricing |
Yield |
2.5% to 12% |
6.8% |
|||||
Debt securities in issue |
- |
255 |
Discounted cash flows |
Credit correlation |
55.0% to 88.0% |
81.5% |
|||||
|
|
|
Internal pricing model |
Equity correlation |
30.0% to 99.0% |
N/A |
|||||
Derivative financial instruments of which |
|
||||||||||
Foreign exchange |
387 |
326 |
Option pricing model |
Foreign exchange volatility |
0.2% to 4.8% |
1.1% |
|
||||
|
|
|
|
Foreign exchange correlation |
-67.0% to 94.0% |
78.6% |
|
||||
Interest rate |
38 |
25 |
Discounted cash flows |
Interest rate curves |
0.1% to 16.1% |
4.5% |
|
||||
|
|
|
Spread option model |
Interest rate correlation |
97.9% to 98.3% |
98.1% |
|
||||
Credit |
13 |
14 |
Discounted cash flows |
Credit correlation |
55.0% to 88.0% |
81.5% |
|
||||
|
|
|
Discounted cash flows |
Credit spreads |
0.9% to 56.0% |
1.1% |
|
||||
|
|
|
Option pricing model |
Bond price volatility |
16.0% to 25.0% |
20.6% |
|
||||
Equity |
196 |
53 |
Comparable pricing |
Yield |
3.5% to 4.2% |
3.5% |
|
||||
|
|
|
Internal pricing model |
Equity correlation |
30.0% to 99.0% |
N/A |
|
||||
Equity shares |
2,178 |
- |
Comparable pricing |
EV/EBITDA multiples |
5.8x to 13.6x |
9.3x |
|
||||
(includes private equity |
|
|
|
P/B multiples |
1.3x |
1.3x |
|
||||
investments) |
|
|
|
P/E multiples |
6.9x to 20.4x |
14.1x |
|
||||
|
|
|
|
Liquidity discount |
10.0% to 30.0% |
15.6% |
|
||||
Total |
4,081 |
673 |
|
|
|
|
|
||||
1 The ranges of values shown in the above table represent the highest and lowest levels used in the valuation of the Group's level 3 financial instruments as at 30 June 2013. The ranges of values used are reflective of the underlying characteristics of these Level 3 financial instruments based on the market conditions at the balance sheet date. However, these ranges of values may not represent the uncertainty in fair value measurements of the Group's level 3 financial instruments. |
|
||||||||||
2 Weighted average for non-derivative financial instruments have been calculated by weighting inputs by the relative fair value. Weighted average for derivatives has been provided by weighting inputs by the risk relevant to that variable. N/A has been entered for the cases where weighted average is not a meaningful indicator. |
|
||||||||||
|
|
||||||||||
12. Financial instruments continued
The following section describes the significant unobservable inputs identified in the valuation technique table.
Comparable pricing
Comparable pricing refers to the method where valuation is done by calculating an implied yield from the price of a similar comparable observable instrument. The comparable instrument for a private equity investment is a comparable listed company. The comparable instrument in case of bonds is a similar comparable but observable bond.
This may involve adjusting the yield to derive a value for the unobservable instrument.
EV/EBITDA Ratio multiples
This is theratio of Enterprise Value (EV) to Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA), EV is the aggregate market capitalisation and debt minus the cash and cash equivalents. An increase in EV/EBITDA multiple in isolation will result in a favourable movement in the fair value of the unlisted firm.
P/E and P/B multiples
Price Earnings multiple is the ratio of the Market Capitalisation to the Net Income. Price to Book multiple is the ratio of the Market Capitalisation to the Book Value. The multiples are determined from multiples of listed comparables, which are observable. An increase in P/E multiple or P/B multiple in isolation will result in a favourable movement in the fair value of the unlisted firm.
Yield
Yield is the interest rate that is used to discount the future cash-flows in a discounted cash-flow model.
Correlation
Correlation is the measure of how movement in one variable influences the movement in another variable. Credit correlation generally refers to the factor that describes the relationship between the probability of individual entities to default on obligations and the joint probability of multiple entities to default on obligations. Similarly, equity correlation is the correlation between two equity instruments. An interest rate correlation refers to the correlation between two swap rates. FX correlation represents the correlation between two different exchange rates.
Liquidity Discount
A liquidity discount is primarily applied to unlisted firms to reflect the fact that these stocks are not actively traded. An increase in liquidity discount in isolation will result in unfavourable movement in the fair value of the unlisted firm.
Volatility
Volatility represents an estimate of how much a particular instrument, parameter or Index will change in value over time. Volatilities are generally implied from the observed option prices. For certain instruments, volatility may change with strike and maturity profile of the option.
Credit Spreads
Credit Spreads represent the additional yield that a market participant would demand for taking exposure to the credit risk of an instrument.
12. Financial instruments continued
Sensitivities in respect of the fair values of level 3 assets and liabilities
|
Held at fair value through profit or loss |
|
Available-for-sale |
||||
|
|
Favourable |
Unfavourable |
|
|
Favourable |
Unfavourable |
|
Net exposure |
Changes |
Changes |
|
Net exposure |
Changes |
Changes |
|
$million |
$million |
$million |
|
$million |
$million |
$million |
Financial instruments held at fair value through profit or loss |
|
|
|
|
|
|
|
Debt securities |
157 |
160 |
154 |
|
- |
- |
- |
Equity shares |
723 |
796 |
650 |
|
- |
- |
- |
Loan and advances |
500 |
511 |
489 |
|
- |
- |
- |
Derivative financial instruments |
216 |
276 |
164 |
|
- |
- |
- |
Debt securities in issue |
(255) |
(255) |
(255) |
|
- |
- |
- |
Investment securities |
|
|
|
|
|
|
|
Treasury bills and other eligible bills |
- |
- |
- |
|
28 |
28 |
28 |
Debt securities |
- |
- |
- |
|
584 |
587 |
579 |
Equity shares |
- |
- |
- |
|
1,455 |
1,628 |
1,282 |
At 30 June 2013 |
1,341 |
1,488 |
1,202 |
|
2,067 |
2,243 |
1,889 |
|
|
|
|
|
|
|
|
Financial instruments held at fair value through profit or loss |
|
|
|
|
|
|
|
Debt securities |
200 |
204 |
196 |
|
- |
- |
- |
Equity shares |
655 |
721 |
589 |
|
- |
- |
- |
Loan and advances |
- |
- |
- |
|
- |
- |
- |
Derivative financial instruments |
47 |
47 |
47 |
|
- |
- |
- |
Debt securities in issue |
(97) |
(89) |
(105) |
|
- |
- |
- |
Investment securities |
|
|
|
|
|
|
|
Treasury bills and other eligible bills |
- |
- |
- |
|
87 |
87 |
87 |
Debt securities |
- |
- |
- |
|
678 |
727 |
630 |
Equity shares |
- |
- |
- |
|
1,624 |
1,777 |
1,471 |
At 30 June 2012 |
805 |
883 |
727 |
|
2,389 |
2,591 |
2,188 |
|
|
|
|
|
|
|
|
Financial instruments held at fair value through profit or loss |
|
|
|
|
|
|
|
Debt securities |
176 |
180 |
171 |
|
- |
- |
- |
Equity shares |
1,125 |
1,237 |
1,013 |
|
- |
- |
- |
Loan and advances |
910 |
924 |
896 |
|
- |
- |
- |
Derivative financial instruments |
(77) |
2 |
(154) |
|
- |
- |
- |
Debt securities in issue |
(114) |
(114) |
(114) |
|
- |
- |
- |
Investment securities |
|
|
|
|
|
|
|
Treasury bills and other eligible bills |
- |
- |
- |
|
58 |
58 |
58 |
Debt securities |
- |
- |
- |
|
396 |
401 |
385 |
Equity shares |
- |
- |
- |
|
1,958 |
2,167 |
1,759 |
At 31 December 2012 |
2,020 |
2,229 |
1,812 |
|
2,412 |
2,626 |
2,202 |
|
|
|
|
|
|
|
|
12. Financial instruments continued
Where the fair value of financial instruments are measured using valuation techniques that incorporate one or more significant inputs which are based on unobservable market data, we apply a 10 per cent increase or decrease on the values of these unobservable parameter inputs, to generate a range of reasonably possible alternative valuations in accordance with the requirements of IFRS 7. The percentage shift is determined by statistical analyses performed on a set of reference prices, which included certain equity indices, credit indices and volatility indices, based on the composition of our Level 3 assets. Favourable and unfavourable changes are determined on the basis of changes in the value of the instrument as a result of varying the levels of the unobservable parameters. This Level 3 sensitivity analysis assumes a one way market move and does not consider offsets for hedges.
As of 30 June 2013, these reasonably possible alternatives could have increased fair values of financial instruments held at fair value through profit or loss by $147 million (30 June 2012: $78 million, 31 December 2012: $209 million) and available-for-sale by $176 million (30 June 2012: $202 million, 31 December 2012: $214 million) or decreased fair values of financial instruments held at fair value through profit or loss by $(139) million (30 June 2012: $(78) million, 31 December 2012: $(208) million) and available-for-sale by $(178) million (30 June 2012: $(201) million, 31 December 2012: $(210) million).
Valuation of financial instruments measured at amortised cost on a recurring basis
The valuation techniques used to establish the Group's fair values are consistent with those used to calculate the fair values of financial instruments carried at fair value. The fair values calculated are for disclosure purposes only and do not have any impact on the Group's reported financial performance or position. The fair values calculated by the Group may be different from the actual amount that will be received/paid on the settlement or maturity of the financial instrument. Resultantly given that certain categories of financial instruments are not traded there is a significant level of management judgement involved in calculating the fair values.
The following sets out the Group's basis of establishing fair values of financial assets and liabilities carried at amortised cost.
Cash and balances at central banks
The fair value of cash and balances at central banks is their carrying amounts.
Loans and advances to banks and customers
For loans and advances to banks, the fair value of floating rate placements and overnight deposits is their carrying amounts. The estimated fair value of fixed interest bearing deposits is based on discounted cash flows using the prevailing money market rates for debts with a similar credit risk and remaining maturity.
The Group's loans and advances to customers portfolio is well diversified by geography and industry. Approximately one-third of the portfolio reprices within one month, and approximately half reprices within 12 months. Loans and advances are presented net of provisions for impairment. The fair value of loans and advances to customers with a residual maturity of less than one year generally approximates the carrying value, subject to any significant movement in credit spreads. The estimated fair value of loans and advances with a residual maturity of more than one year represents the discounted amount of future cash flows expected to be received, including assumptions relating to prepayment rates and, where appropriate, credit spreads. Expected cash flows are discounted at current market rates to determine fair value. The Group has a wide range of individual instruments within its loans and advances portfolio and as a result providing quantification of the key assumptions used to value such instruments is impractical, with no one assumption being material.
Investment securities
For investment securities that do not have directly observable market values, the Group utilises a number of valuation techniques to determine fair value. Where available, securities are valued using inputs proxied from the same or closely related underlying (for example, bond spreads from the same or closely related issuer) or inputs proxied from a different underlying (for example, a similar bond but using spreads for a particular sector and rating). Certain instruments cannot be proxied as set out above, and in such cases the positions are valued using non-market observable inputs. This includes those instruments held at amortised cost and predominantly relate to asset backed securities. The fair value for such instruments is usually proxied from internal assessments of the underlying cash flows. The Group has a wide range of individual investments within the unlisted debt securities portfolio. Given the number of instruments involved, providing quantification of the key assumptions used to value such instruments is impractical, with no one assumption being material.
Deposits and borrowings
The estimated fair value of deposits with no stated maturity is the amount repayable on demand. The estimated fair value of fixed interest bearing deposits and other borrowings without quoted market prices is based on discounting cash flows using the prevailing market rates for debts with a similar credit risk and remaining maturity. Following the adoption of IFRS 13 the Group also adjusts the fair value of deposits and borrowings for own credit adjustment using the principles described above.
Debt securities in issue, subordinated liabilities and other borrowed funds
The aggregate fair values are calculated based on quoted market prices. For those notes where quoted market prices are not available, a discounted cash flow model is used based on a current market related yield curve appropriate for the remaining term to maturity.
12. Financial instruments continued
Instruments carried at amortised cost |
||||
The following tables show the classification and the Group's estimate of fair values for those financial instruments carried at amortised cost into the valuation hierarchy set out above as at 30 June 2013, 30 June 2012 and 31 December 2012. |
||||
|
30.06.13 |
30.06.12 |
||
|
Carrying value |
Fair value |
Carrying value |
Fair value |
|
$million |
$million |
$million |
$million |
Assets |
|
|
|
|
Cash and balances at central banks |
57,621 |
57,621 |
50,683 |
50,683 |
Loans and advances to banks |
73,305 |
73,201 |
73,930 |
73,941 |
Loans and advances to customers |
285,353 |
284,803 |
272,453 |
272,474 |
Investment securities |
3,946 |
3,625 |
4,804 |
4,737 |
Other assets |
30,123 |
30,123 |
22,518 |
22,518 |
At 30 June |
450,348 |
449,373 |
424,388 |
424,353 |
|
|
|
|
|
Liabilities |
|
|
|
|
Deposits by banks |
45,012 |
45,011 |
44,754 |
44,649 |
Customer accounts |
371,314 |
370,709 |
350,248 |
349,302 |
Debt securities in issue |
58,690 |
58,820 |
57,814 |
58,306 |
Subordinated liabilities and other borrowed funds |
18,393 |
18,116 |
16,408 |
16,853 |
Other liabilities |
23,526 |
23,526 |
21,010 |
21,010 |
At 30 June |
516,935 |
516,182 |
490,234 |
490,120 |
|
|
|
|
|
|
|
31.12.12 |
||
|
|
|
Carrying value |
Fair value |
|
|
$million |
$million |
|
Assets |
|
|
|
|
Cash and balances at central banks |
|
|
60,537 |
60,537 |
Loans and advances to banks |
|
|
67,797 |
67,761 |
Loans and advances to customers |
|
|
279,638 |
278,672 |
Investment securities |
|
|
3,851 |
3,803 |
Other assets |
|
|
21,406 |
21,406 |
At 31 December 2012 |
|
|
433,229 |
432,179 |
|
|
|
|
|
Liabilities |
|
|
|
|
Deposits by banks |
|
|
36,427 |
35,961 |
Customer accounts |
|
|
372,874 |
371,702 |
Debt securities in issue |
|
|
55,979 |
56,469 |
Subordinated liabilities and other borrowed funds |
|
|
18,588 |
19,773 |
Other liabilities |
|
|
19,547 |
19,547 |
At 31 December 2012 |
|
|
503,415 |
503,452 |
|
|
|
|
|
12. Financial instruments continued
Reclassification of financial assets
In 2008 the Group reclassified certain non-derivative financial assets classified as held for trading into the available-for-sale (AFS) category as these were no longer considered to be held for the purpose of selling or repurchasing in the near term. At the time of transfer, the Group identified the rare circumstances permitting such a transfer as the impact of the credit crisis in financial markets, particularly from the beginning of 2008, which significantly impacted the liquidity in certain markets. The Group also reclassified certain eligible financial assets from trading and available-for-sale categories to loans and receivables where the Group had the intent and ability to hold the reclassified assets for the foreseeable future or until maturity. There have been no reclassifications since 2008.
The following tables provide details of the remaining balances of assets reclassified during 2008:
|
If assets had not been reclassified, fair value gains from 1 January 2013 to 30 June 2013 that would have been recognised within |
|
|
|
||||
For assets reclassified: |
Carrying amount at 30 June 2013 |
Fair value at 30 June 2013 |
Income |
|
AFS reserve |
Income recognised in income statement |
Effective interest rate at date of reclassification |
Estimated amounts of expected cash flows |
$million |
$million |
$million |
|
$million |
$million |
% |
$million |
|
From trading to AFS |
98 |
98 |
24 |
1 |
- |
2 |
6.2 |
187 |
From trading to loans and receivables |
273 |
240 |
22 |
|
- |
4 |
6.2 |
297 |
From AFS to loans and receivables |
558 |
592 |
- |
|
19 |
11 |
5.4 |
714 |
|
929 |
930 |
46 |
|
19 |
17 |
|
|
Of which asset backed securities: |
|
|
|
|
|
|
|
|
reclassified to AFS |
82 |
82 |
11 |
1 |
- |
2 |
|
|
reclassified to loans and receivables |
796 |
817 |
9 |
|
19 |
14 |
|
|
1 Post reclassification, the gain is recognised within the available-for-sale reserve
|
If assets had not been reclassified, fair value gains from 1 January 2012 to 30 June 2012 that would have been recognised within |
|
|
|
||||
For assets reclassified: |
Carrying amount at 30 June 2012 |
Fair value at 30 June 2012 |
Income |
|
AFS reserve |
Income recognised in income statement |
Effective interest rate at date of reclassification |
Estimated amounts of expected cash flows |
$million |
$million |
$million |
|
$million |
$million |
% |
$million |
|
From trading to AFS |
123 |
123 |
1 |
1 |
- |
8 |
4.9 |
238 |
From trading to loans and receivables |
623 |
584 |
20 |
|
- |
17 |
5.4 |
711 |
From AFS to loans and receivables |
751 |
712 |
- |
|
18 |
15 |
5.5 |
958 |
|
1,497 |
1,419 |
21 |
|
18 |
40 |
|
|
Of which asset backed securities: |
|
|
|
|
|
|
|
|
reclassified to AFS |
76 |
76 |
1 |
1 |
- |
6 |
|
|
reclassified to loans and receivables |
1,073 |
998 |
10 |
|
18 |
26 |
|
|
1 Post reclassification, the gain is recognised within the available-for-sale reserve
|
If assets had not been reclassified, fair value gains from 1 July 2012 to 31 December 2012 that would have been recognised within |
|
|
|
||||
For assets reclassified: |
Carrying amount at 31 December 2012 |
Fair value at 31 December 2012 |
Income |
|
AFS reserve |
Income recognised in income statement |
Effective interest rate at date of reclassification |
Estimated amounts of expected cash flows |
$million |
$million |
$million |
|
$million |
$million |
% |
$million |
|
From trading to AFS |
85 |
85 |
4 |
1 |
- |
2 |
4.1 |
195 |
From trading to loans and receivables |
550 |
532 |
14 |
|
- |
11 |
5.0 |
609 |
From AFS to loans and receivables |
673 |
661 |
- |
|
27 |
11 |
5.3 |
826 |
|
1,308 |
1,278 |
18 |
|
27 |
24 |
|
|
Of which asset backed securities: |
|
|
|
|
|
|
|
|
reclassified to AFS |
81 |
81 |
4 |
1 |
- |
2 |
|
|
reclassified to loans and receivables |
924 |
896 |
58 |
|
27 |
17 |
|
|
1 Post reclassification, the gain is recognised within the available-for-sale reserve
12. Financial instruments continued
Transfers of financial assets
Transfers where financial assets are not derecognised
Repurchase (repo) transactions
The Group enters into collateralised repos which typically entitle the Group's counterparties to have recourse to assets similar to those provided as collateral in the event of a default. Securities sold subject to repos continue to be recognised on the balance sheet as the Group retains substantially the associated risk and rewards of the securities. The counterparty liability is included in deposits by banks or customer accounts, as appropriate.
The table below sets out the financial assets provided by the Group as collateral for repurchase transactions:
|
Fair value through profit and loss |
Available for sale |
Loans and receivables |
Total |
Collateral pledged against repurchase agreements |
$million |
$million |
$million |
$million |
On balance sheet |
|
|
|
|
Treasury bills and other eligible bills |
18 |
815 |
- |
833 |
Debt securities |
215 |
2,200 |
- |
2,415 |
Loan and advances to banks and customers |
- |
- |
1,665 |
1,665 |
Repledged collateral received |
291 |
- |
870 |
1,161 |
At 30 June 2013 |
524 |
3,015 |
2,535 |
6,074 |
|
|
|
|
|
Balance sheet liabilities - Repurchase agreements |
|
|
|
|
Deposits by banks |
|
|
|
2,989 |
Customer accounts |
|
|
|
1,407 |
At 30 June 2013 |
|
|
|
4,396 |
|
|
|
|
|
|
Fair value through profit and loss |
Available for sale |
Loans and receivables |
Total |
Collateral pledged against repurchase agreements |
$million |
$million |
$million |
$million |
On balance sheet |
|
|
|
|
Treasury bills and other eligible bills |
137 |
492 |
- |
629 |
Debt securities |
936 |
3,928 |
- |
4,864 |
Loan and advances to banks and customers |
- |
- |
15 |
15 |
Repledged collateral received |
100 |
- |
770 |
870 |
At 30 June 2012 |
1,173 |
4,420 |
785 |
6,378 |
|
|
|
|
|
Balance sheet liabilities - Repurchase agreements |
|
|
|
|
Deposits by banks |
|
|
|
3,430 |
Customer accounts |
|
|
|
1,966 |
At 30 June 2012 |
|
|
|
5,396 |
|
|
|
|
|
|
Fair value through profit and loss |
Available for sale |
Loans and receivables |
Total |
Collateral pledged against repurchase agreements |
$million |
$million |
$million |
$million |
On balance sheet |
|
|
|
|
Treasury bills and other eligible bills |
62 |
424 |
- |
486 |
Debt securities |
522 |
590 |
- |
1,112 |
Loan and advances to banks and customers |
- |
- |
1,780 |
1,780 |
Off balance sheet |
|
|
|
|
Repledged collateral received |
97 |
- |
1,281 |
1,378 |
At 31 December 2012 |
681 |
1,014 |
3,061 |
4,756 |
|
|
|
|
|
Balance sheet liabilities - Repurchase agreements |
|
|
|
|
Deposits by banks |
|
|
|
1,338 |
Customer accounts |
|
|
|
1,917 |
At 31 December 2012 |
|
|
|
3,255 |
12. Financial instruments continued
Repurchase and reverse repurchase agreements |
|
|
|
The Group also undertakes reverse repurchase (reverse repo) lending agreements with counterparties typically financial institutions in exchange for collateral. Reverse repo agreements entitle the Group to have recourse to assets similar to those received as collateral in the event of a default. In addition the Group also obtains collateral on terms that permit the Group to repledge or resell the collateral to others. The Group does not recognise the securities bought under reverse repos as collateral on its balance sheet as the Group is not substantially entitled to the risks and rewards associated with those assets and instead recognises the lending as loans and advances to banks or customers, as appropriate. The Group's reverse repos at 30 June 2013, 30 June 2012 and 31 December 2012 are set out in the table below: |
|||
Balance sheet assets - Reverse repurchase agreements |
|
|
|
|
30.06.13 |
30.06.12 |
31.12.12 |
$million |
$million |
$million |
|
Loans and advances to banks |
6,304 |
5,505 |
7,759 |
Loans and advances to customers |
3,637 |
2,977 |
2,900 |
|
9,941 |
8,482 |
10,659 |
Under reverse repurchase and securities borrowing arrangements, the Group obtains securities on terms which permit it to repledge or resell the securities to others. Amounts on such terms are: |
|||
|
30.06.13 |
30.06.12 |
31.12.12 |
$million |
$million |
$million |
|
Securities and collateral which can be repledged or sold (at fair value) |
8,710 |
7,681 |
10,517 |
Thereof repledged/transferred to others for financing activities, to satisfy commitments under short sale transactions or liabilities under sale and repurchase agreements (at fair value) |
1,161 |
870 |
1,378 |
|
|
|
|
Securitisation transactions
The Group has also entered into a number of securitisation transactions where the underlying loans and advances have been transferred to special purpose entities (SPEs) that are fully consolidated by the Group. As a result, the Group continues to recognise the assets on its balance sheet, together with the associated liability instruments issued by the special purpose entities. The holders of the liability instruments have recourse only to the assets transferred to the SPE. Further details of SPE in note 33.
The following table sets out the carrying value and fair value of the assets transferred and the carrying value and fair value of the associated liabilities at 30 June 2013, 30 June 2012 and 31 December 2012 respectively.
|
30.06.13 |
30.06.12 |
31.12.12 |
|||
|
Carrying value |
Fair value |
Carrying value |
Fair value |
Carrying value |
Fair value |
|
$million |
$million |
$million |
$million |
$million |
$million |
Loan and advances to customers |
1,034 |
1,032 |
1,714 |
1,712 |
1,321 |
1,319 |
Securitisation liability |
833 |
833 |
1,530 |
1,530 |
1,093 |
1,093 |
Net |
201 |
199 |
184 |
182 |
228 |
226 |
|
|
|
|
|
|
|
The Group did not undertake any transactions that required the recognition of an asset representing continuing involvement in financial assets. |
13. Financial instruments held at fair value through profit or loss |
Financial assets held at fair value through profit or loss
Financial assets held at fair value through profit or loss comprise assets held for trading and those financial assets designated as being held at fair value through profit or loss. For certain loans and advances and debt securities with fixed rates of interest, interest rate swaps have been acquired with the intention of significantly reducing interest rate risk. Derivatives are recorded at fair value whereas loans and advances are usually recorded at amortised cost. To significantly reduce the accounting mismatch between fair value and amortised cost, these loans and advances and debt securities have been designated at fair value through profit or loss. The Group ensures the criteria under IAS 39 are met by matching the principal terms of interest rate swaps to the corresponding loans and debt securities.
Debt securities, equity shares and treasury bills held at fair value through profit or loss |
|||||
|
|
30.06.13 |
|||
|
|
Debt Securities |
Equity Shares |
Treasury bills |
Total |
|
|
$million |
$million |
$million |
$million |
Issued by public bodies: |
|
|
|
|
|
|
Government securities |
8,455 |
|
|
|
|
Other public sector securities |
80 |
|
|
|
|
|
8,535 |
|
|
|
Issued by banks: |
|
|
|
|
|
|
Certificates of deposit |
164 |
|
|
|
|
Other debt securities |
547 |
|
|
|
|
|
711 |
|
|
|
Issued by corporate entities and other issuers: |
|
|
|
|
|
|
Other debt securities |
4,638 |
|
|
|
Total debt securities |
13,884 |
|
|
|
|
Of which: |
|
|
|
|
|
|
Listed on a recognised UK exchange |
320 |
23 |
- |
343 |
|
Listed elsewhere |
8,871 |
2,110 |
1,474 |
12,455 |
|
Unlisted |
4,693 |
723 |
1,906 |
7,322 |
|
|
13,884 |
2,856 |
3,380 |
20,120 |
Market value of listed securities |
9,191 |
2,133 |
1,474 |
12,798 |
|
|
30.06.12 |
|||
|
|
Debt Securities |
Equity Shares |
Treasury bills |
Total |
|
|
$million |
$million |
$million |
$million |
Issued by public bodies: |
|
|
|
|
|
|
Government securities |
8,064 |
|
|
|
|
Other public sector securities |
98 |
|
|
|
|
|
8,162 |
|
|
|
Issued by banks: |
|
|
|
|
|
|
Certificates of deposit |
188 |
|
|
|
|
Other debt securities |
2,217 |
|
|
|
|
|
2,405 |
|
|
|
Issued by corporate entities and other issuers: |
|
|
|
|
|
|
Other debt securities |
4,247 |
|
|
|
Total debt securities |
14,814 |
|
|
|
|
Of which: |
|
|
|
|
|
|
Listed on a recognised UK exchange |
444 |
24 |
- |
468 |
|
Listed elsewhere |
8,930 |
1,346 |
1,776 |
12,052 |
|
Unlisted |
5,440 |
655 |
2,766 |
8,861 |
|
|
14,814 |
2,025 |
4,542 |
21,381 |
Market value of listed securities |
9,374 |
1,370 |
1,776 |
12,520 |
13. Financial instruments held at fair value through profit or loss continued |
Debt securities, equity shares and treasury bills held at fair value through profit or loss continued
|
|
31.12.12 |
|||
|
|
Debt Securities |
Equity Shares |
Treasury bills |
Total |
|
|
$million |
$million |
$million |
$million |
Issued by public bodies: |
|
|
|
|
|
|
Government securities |
10,174 |
|
|
|
|
Other public sector securities |
131 |
|
|
|
|
|
10,305 |
|
|
|
Issued by banks: |
|
|
|
|
|
|
Certificates of deposit |
255 |
|
|
|
|
Other debt securities |
1,723 |
|
|
|
|
|
1,978 |
|
|
|
Issued by corporate entities and other issuers: |
|
|
|
|
|
|
Other debt securities |
2,932 |
|
|
|
Total debt securities |
15,215 |
|
|
|
|
Of which: |
|
|
|
|
|
|
Listed on a recognised UK exchange |
467 |
23 |
- |
490 |
|
Listed elsewhere |
9,086 |
2,081 |
949 |
12,116 |
|
Unlisted |
5,662 |
1,050 |
2,006 |
8,718 |
|
|
15,215 |
3,154 |
2,955 |
21,324 |
Market value of listed securities |
9,553 |
2,104 |
949 |
12,606 |
Financial liabilities held at fair value through profit or loss
The Group designates certain financial liabilities at fair value through profit or loss where either the liabilities:
· have fixed rates of interest and interest rate swaps or other interest rate derivatives have been entered into with the intention of significantly reducing interest rate risk; or
· are exposed to foreign currency risk and derivatives have been acquired with the intention of significantly reducing exposure to market changes; or
· have been acquired to fund trading asset portfolios or assets, or where the assets and liabilities are managed, and performance evaluated, on a fair value basis for a documented risk management or investment strategy.
Derivatives are recorded at fair value whereas non-trading financial liabilities (unless designated at fair value) are recorded at amortised cost. Designation of certain liabilities at fair value through profit or loss significantly reduces the accounting mismatch between fair value and amortised cost expense recognition (a criterion of IAS 39). The Group ensures the criteria under IAS 39 are met by matching the principal terms of derivatives to the corresponding liabilities, either individually or on a portfolio basis.
14. Derivative financial instruments |
The tables below analyse the notional principal amounts and the positive and negative fair values of the Group's derivative financial instruments. Notional principal amounts are the amount of principal underlying the contract at the reporting date.
|
30.06.13 |
30.06.12 |
||||
Total derivatives |
Notional principal amounts |
Assets |
Liabilities |
Notional principal amounts |
Assets |
Liabilities |
$million |
$million |
$million |
$million |
$million |
$million |
|
Foreign exchange derivative contracts: |
|
|
|
|
|
|
Forward foreign exchange contracts |
1,358,712 |
17,260 |
17,543 |
1,294,950 |
14,606 |
13,752 |
Currency swaps and options |
1,067,827 |
17,044 |
16,892 |
995,628 |
10,512 |
11,063 |
Exchange traded futures and options |
8,747 |
- |
- |
486 |
- |
- |
|
2,435,286 |
34,304 |
34,435 |
2,291,064 |
25,118 |
24,815 |
Interest rate derivative contracts: |
|
|
|
|
|
|
Swaps |
1,438,134 |
15,176 |
14,840 |
2,009,285 |
20,261 |
18,665 |
Forward rate agreements and options |
85,468 |
955 |
701 |
185,122 |
803 |
775 |
Exchange traded futures and options |
1,046,902 |
- |
- |
462,089 |
802 |
853 |
|
2,570,504 |
16,131 |
15,541 |
2,656,496 |
21,866 |
20,293 |
Credit derivative contracts |
57,696 |
885 |
1,192 |
67,194 |
1,162 |
1,144 |
Equity and stock index options |
16,753 |
395 |
518 |
14,361 |
349 |
480 |
Commodity derivative contracts |
163,113 |
2,833 |
2,095 |
77,094 |
4,035 |
3,412 |
Total derivatives |
5,243,352 |
54,548 |
53,781 |
5,106,209 |
52,530 |
50,144 |
|
|
31.12.12 |
||||
Total derivatives |
|
|
|
Notional principal amounts |
Assets |
Liabilities |
|
|
|
$million |
$million |
$million |
|
Foreign exchange derivative contracts: |
|
|
|
|
|
|
Forward foreign exchange contracts |
|
|
|
1,220,806 |
11,635 |
12,697 |
Currency swaps and options |
|
|
|
853,460 |
13,932 |
12,370 |
Exchange traded futures and options |
|
|
|
8,772 |
- |
- |
|
|
|
|
2,083,038 |
25,567 |
25,067 |
Interest rate derivative contracts: |
|
|
|
|
|
|
Swaps |
|
|
|
1,463,777 |
19,107 |
18,343 |
Forward rate agreements and options |
|
|
|
145,020 |
1,266 |
796 |
Exchange traded futures and options |
|
|
|
306,054 |
- |
- |
|
|
|
|
1,914,851 |
20,373 |
19,139 |
Credit derivative contracts |
|
|
|
61,186 |
830 |
1,130 |
Equity and stock index options |
|
|
|
12,223 |
355 |
372 |
Commodity derivative contracts |
|
|
|
138,642 |
2,370 |
1,484 |
Total derivatives |
|
|
|
4,209,940 |
49,495 |
47,192 |
The Group limits exposure to credit losses in the event of default by entering into master netting agreements with certain market counterparties. As required by IAS 32, exposures are not presented net in these accounts as in the ordinary course of business they are not intended to be settled net. Details of the amounts available for offset can be found in the Risk review on page 29.
The Derivatives and Hedging sections of the Risk review on page 78 explain the Group's risk management of derivative contracts and application of hedging.
14. Derivative financial instruments continued |
Derivatives held for hedging
Hedge accounting is applied to derivatives and hedged items when the criteria under IAS 39 have been met. The tables below list the types of derivatives that the Group holds for hedge accounting.
|
30.06.13 |
30.06.12 1 |
||||
|
Notional principal amounts |
Assets |
Liabilities |
Notional principal amounts |
Assets |
Liabilities |
$million |
$million |
$million |
$million |
$million |
$million |
|
Derivatives designated as fair value hedges: |
|
|
|
|
|
|
Interest rate swaps |
35,639 |
857 |
498 |
35,082 |
1,150 |
722 |
Forward foreign exchange contracts |
369 |
- |
6 |
1,269 |
4 |
22 |
Currency swaps |
18,436 |
482 |
409 |
14,699 |
607 |
381 |
|
54,444 |
1,339 |
913 |
51,050 |
1,761 |
1,125 |
Derivatives designated as cash flow hedges: |
|
|
|
|
|
|
Interest rate swaps |
16,504 |
21 |
25 |
18,589 |
40 |
16 |
Forward foreign exchange contracts |
3,636 |
1 |
78 |
2,483 |
12 |
27 |
Currency swaps |
7,106 |
16 |
8 |
6,865 |
25 |
30 |
|
27,246 |
38 |
111 |
27,937 |
77 |
73 |
Derivatives designated as net investment hedges: |
|
|
|
|
|
|
Forward foreign exchange contracts |
1,042 |
57 |
- |
661 |
- |
15 |
Total derivatives held for hedging |
82,732 |
1,434 |
1,024 |
79,648 |
1,838 |
1,213 |
|
|
31.12.12 1 |
||||
|
|
|
|
Notional principal amounts |
Assets |
Liabilities |
|
|
|
$million |
$million |
$million |
|
Derivatives designated as fair value hedges: |
|
|
|
|
|
|
Interest rate swaps |
|
|
|
35,896 |
1,111 |
524 |
Forward foreign exchange contracts |
|
|
|
427 |
- |
9 |
Currency swaps |
|
|
|
18,396 |
1,143 |
117 |
|
|
|
|
54,719 |
2,254 |
650 |
Derivatives designated as cash flow hedges: |
|
|
|
|
|
|
Interest rate swaps |
|
|
|
17,033 |
33 |
17 |
Forward foreign exchange contracts |
|
|
|
2,066 |
52 |
1 |
Currency swaps |
|
|
|
8,955 |
23 |
13 |
|
|
|
|
28,054 |
108 |
31 |
Derivatives designated as net investment hedges: |
|
|
|
|
|
|
Forward foreign exchange contracts |
|
|
|
671 |
- |
52 |
Total derivatives held for hedging |
|
|
|
83,444 |
2,362 |
733 |
1 The split within fair value hedges and cash flow hedges has been reclassified for prior periods.
15. Loans and advances to banks |
|||
|
30.06.13 |
30.06.12 |
31.12.12 |
$million |
$million |
$million |
|
Loans and advances to banks |
74,982 |
74,694 |
68,676 |
Individual impairment provision |
(100) |
(87) |
(103) |
Portfolio impairment provision |
(2) |
(2) |
(2) |
|
74,880 |
74,605 |
68,571 |
Of which: loans and advances held at fair value through profit or loss (note 12) |
(1,575) |
(675) |
(774) |
|
73,305 |
73,930 |
67,797 |
Analysis of loans and advances to banks by geography as set out in the Risk review on page 31.
16. Loans and advances to customers |
|
||
|
30.06.13 |
30.06.12 |
31.12.12 |
|
$million |
$million |
$million |
Loans and advances to customers |
294,963 |
280,996 |
287,668 |
Individual impairment provision |
(2,433) |
(2,154) |
(2,330) |
Portfolio impairment provision |
(737) |
(702) |
(722) |
|
291,793 |
278,140 |
284,616 |
Of which: loans and advances held at fair value through profit or loss (note 12) |
(6,440) |
(5,687) |
(4,978) |
|
285,353 |
272,453 |
279,638 |
The Group has outstanding residential mortgages and loans to Korea residents of $13.7 billion (30 June 2012: $19.4 billion, 31 December 2012: $16.7 billion) and Hong Kong residents of $22.7 billion (30 June 2012: $19.5 billion, 31 December 2012: $21.4 billion).
Analysis of loans and advances to customers by geography and business and related impairment provisions as set out within the Risk review on pages 30 to 63.
17. Investment securities |
|
|||||||
|
30.06.13 |
|
||||||
|
Debt securities |
|
|
|
|
|
||
|
Available- for-sale |
Loans and receivables |
|
Equity shares |
Treasury bills |
Total |
|
|
|
$million |
$million |
|
$million |
$million |
$million |
|
|
Issued by public bodies: |
|
|
|
|
|
|
|
|
Government securities |
24,300 |
- |
|
|
|
|
|
|
Other public sector securities |
543 |
- |
|
|
|
|
|
|
|
24,843 |
- |
|
|
|
|
|
|
Issued by banks: |
|
|
|
|
|
|
|
|
Certificates of deposit |
5,510 |
- |
|
|
|
|
|
|
Other debt securities |
23,193 |
50 |
|
|
|
|
|
|
|
28,703 |
50 |
|
|
|
|
|
|
Issued by corporate entities and other issuers: |
|
|
|
|
|
|
|
|
Other debt securities |
12,247 |
3,896 |
|
|
|
|
|
|
Total debt securities |
65,793 |
3,946 |
|
|
|
|
|
|
Of which: |
|
|
|
|
|
|
|
|
Listed on a recognised UK exchange |
4,978 |
181 |
1 |
67 |
- |
5,226 |
|
|
Listed elsewhere |
24,556 |
385 |
1 |
1,164 |
9,786 |
35,891 |
|
|
Unlisted |
36,259 |
3,380 |
|
1,472 |
12,584 |
53,695 |
|
|
|
65,793 |
3,946 |
|
2,703 |
22,370 |
94,812 |
|
|
Market value of listed securities |
29,534 |
580 |
|
1,231 |
9,786 |
41,131 |
|
|
1 |
These debt securities listed or registered on a recognised UK exchange or elsewhere are thinly traded or the market for these securities is illiquid |
|||||||
There are no debt securities classified as held-to-maturity.
17. Investment securities continued
|
30.06.12 |
|
|||||||
|
Debt securities |
|
|
|
|
|
|||
|
Available- for-sale |
Loans and receivables |
|
Equity shares |
Treasury bills |
Total |
|
||
|
$million |
$million |
|
$million |
$million |
$million |
|
||
Issued by public bodies: |
|
|
|
|
|
|
|
||
Government securities |
20,158 |
389 |
|
|
|
|
|
||
Other public sector securities |
992 |
- |
|
|
|
|
|
||
|
21,150 |
389 |
|
|
|
|
|
||
Issued by banks: |
|
|
|
|
|
|
|
||
Certificates of deposit |
5,145 |
- |
|
|
|
|
|
||
Other debt securities |
23,243 |
1,175 |
|
|
|
|
|
||
|
28,388 |
1,175 |
|
|
|
|
|
||
Issued by corporate entities and other issuers : |
|
|
|
|
|
|
|
||
Other debt securities |
9,117 |
3,240 |
|
|
|
|
|
||
Total debt securities |
58,655 |
4,804 |
|
|
|
|
|
||
Of which: |
|
|
|
|
|
|
|
||
Listed on a recognised UK exchange |
6,034 |
237 |
1 |
54 |
- |
6,325 |
|
||
Listed elsewhere |
16,227 |
848 |
1 |
878 |
7,205 |
25,158 |
|
||
Unlisted |
36,394 |
3,719 |
|
1,825 |
14,774 |
56,712 |
|
||
|
58,655 |
4,804 |
|
2,757 |
21,979 |
88,195 |
|
||
Market value of listed securities |
22,261 |
1,017 |
|
932 |
7,205 |
31,415 |
|
||
1 |
|
||||||||
There are no debt securities classified as held-to-maturity.
|
31.12.12 |
|
|||||||
|
Debt securities |
|
|
|
|
|
|||
|
Available- for-sale |
Loans and receivables |
|
Equity shares |
Treasury bills |
Total |
|
||
|
$million |
$million |
|
$million |
$million |
$million |
|
||
Issued by public bodies: |
|
|
|
|
|
|
|
||
Government securities |
23,059 |
390 |
|
|
|
|
|
||
Other public sector securities |
1,229 |
- |
|
|
|
|
|
||
|
24,288 |
390 |
|
|
|
|
|
||
Issued by banks: |
|
|
|
|
|
|
|
||
Certificates of deposit |
5,974 |
- |
|
|
|
|
|
||
Other debt securities |
24,195 |
114 |
|
|
|
|
|
||
|
30,169 |
114 |
|
|
|
|
|
||
Issued by corporate entities and other issuers: |
|
|
|
|
|
|
|
||
Other debt securities |
10,899 |
3,347 |
|
|
|
|
|
||
Total debt securities |
65,356 |
3,851 |
|
|
|
|
|
||
Of which: |
|
|
|
|
|
|
|
||
Listed on a recognised UK exchange |
6,858 |
173 |
1 |
70 |
- |
7,101 |
|
||
Listed elsewhere |
22,816 |
878 |
1 |
1,104 |
13,039 |
37,837 |
|
||
Unlisted |
35,682 |
2,800 |
|
2,104 |
13,701 |
54,287 |
|
||
|
65,356 |
3,851 |
|
3,278 |
26,740 |
99,225 |
|
||
Market value of listed securities |
29,674 |
1,006 |
|
1,174 |
13,039 |
44,893 |
|
||
1 |
|
||||||||
There are no debt securities classified as held-to-maturity.
17. Investment securities continued
The change in the carrying amount of investment securities comprised: |
||||||||
|
30.06.13 |
30.06.12 |
||||||
|
Debt securities |
Equity shares |
Treasury bills |
Total |
Debt securities |
Equity shares |
Treasury bills |
Total |
|
$million |
$million |
$million |
$million |
$million |
$million |
$million |
$million |
Balances held at 1 January |
69,207 |
3,278 |
26,740 |
99,225 |
60,975 |
2,543 |
21,428 |
84,946 |
Exchange translation differences |
(1,554) |
(16) |
(859) |
(2,429) |
(195) |
(2) |
(122) |
(319) |
Additions |
52,917 |
82 |
19,840 |
72,839 |
51,205 |
413 |
19,039 |
70,657 |
Maturities and disposals |
(50,832) |
(498) |
(23,498) |
(74,828) |
(48,934) |
(42) |
(18,588) |
(67,564) |
Impairment, net of recoveries on disposal |
(5) |
(10) |
1 |
(14) |
18 |
(51) |
- |
(33) |
Changes in fair value (including the effect of fair value hedging) |
18 |
(133) |
(6) |
(121) |
412 |
(104) |
18 |
326 |
Amortisation of discounts and premiums |
(12) |
- |
152 |
140 |
(22) |
- |
204 |
182 |
Balances held at 30 June |
69,739 |
2,703 |
22,370 |
94,812 |
63,459 |
2,757 |
21,979 |
88,195 |
|
|
31.12.12 |
|||||||
|
|
|
|
|
Debt securities |
Equity shares |
Treasury bills |
Total |
|
|
|
|
|
|
$million |
$million |
$million |
$million |
|
Balances held at 1 July |
|
|
|
|
63,459 |
2,757 |
21,979 |
88,195 |
|
Exchange translation differences |
|
|
|
|
873 |
16 |
749 |
1,638 |
|
Additions |
|
|
|
|
60,117 |
370 |
25,739 |
86,226 |
|
Maturities and disposals |
|
|
|
|
(55,624) |
(175) |
(21,964) |
(77,763) |
|
Impairment, net of recoveries on disposal |
|
|
|
|
6 |
(58) |
- |
(52) |
|
Changes in fair value (including the effect of fair value hedging) |
|
|
|
|
315 |
368 |
38 |
721 |
|
Amortisation of discounts and premiums |
|
|
|
|
61 |
- |
199 |
260 |
|
Balances held at 31 December |
|
|
|
|
69,207 |
3,278 |
26,740 |
99,225 |
|
|
|
|
|
|
|
|
|
|
|
The analysis of unamortised premiums and unamortised discounts on debt securities and income on equity shares held for investment purposes is provided below: |
|
||||||||
|
30.06.13 |
30.06.12 |
31.12.12 |
|
|||||
|
$million |
$million |
$million |
|
|||||
Debt securities: |
|
|
|
|
|||||
Unamortised premiums |
589 |
496 |
607 |
|
|||||
Unamortised discounts |
229 |
480 |
443 |
|
|||||
Income from listed equity shares |
47 |
18 |
36 |
|
|||||
Income from unlisted equity shares |
17 |
18 |
20 |
|
|||||
|
|
|
|
|
18. Other assets |
|
|
||
|
30.06.13 |
30.06.12 |
31.12.12 |
|
$million |
$million |
$million |
|
|
Financial assets held at amortised cost (note 12) |
|
|
|
|
Hong Kong SAR Government certificates of indebtedness (note 24) |
4,341 |
4,142 |
4,191 |
|
Cash collateral |
7,563 |
4,784 |
5,068 |
|
Acceptances and endorsements |
5,320 |
5,215 |
4,957 |
|
Unsettled trades and other financial assets |
12,899 |
8,377 |
7,190 |
|
|
30,123 |
22,518 |
21,406 |
|
Non-financial assets |
|
|
|
|
Commodities |
4,516 |
5,571 |
5,574 |
|
Other assets |
3,402 |
2,078 |
1,568 |
|
Total other assets |
38,041 |
30,167 |
28,548 |
|
The Hong Kong SAR Government certificates of indebtedness are subordinated to the claims of other parties in respect of bank notes issued (note 24). |
|
|||
19. Business Combinations |
2013 acquisitions
No acquisitions were made in this period.
2012 acquisitions
On 4 November 2012, the Group completed the acquisition of 100 percent of the issued and paid up share capital of Credit Agricole Yatirim Bankasi Turk A.S. (CAYBT), a wholly-owned subsidiary of Credit Agricole Corporate and Investment Bank, for a consideration of $63 million, recognising goodwill of $26 million. The net assets acquired primarily comprised balances held with central banks. The goodwill acquired largely represents intangibles that are not separately recognised, and primarily relates to the associated banking licence.
Goodwill arising on the acquisitions is attributable to the synergies expected to arise from their integration with the Group, the skilled workforce acquired and the distribution networks. The primary reason for these acquisitions is to enhance capability and broaden product offering to customers.
|
|
|
|
|
|
|
|
|
20. Goodwill and intangible assets |
|||||||||
|
30.06.13 |
30.06.12 |
|||||||
|
Goodwill |
Acquired intangibles |
Software |
Total |
Goodwill |
Acquired intangibles |
Software |
Total |
|
$million |
$million |
$million |
$million |
$million |
$million |
$million |
$million |
||
Cost at 30 June |
6,326 |
650 |
976 |
7,952 |
6,348 |
646 |
821 |
7,815 |
|
Provision for amortisation |
- |
(499) |
(353) |
(852) |
- |
(437) |
(322) |
(759) |
|
Impairment charge |
(1,000) |
- |
- |
(1,000) |
- |
- |
- |
- |
|
Cost/ net book value at 30 June |
5,326 |
151 |
623 |
6,100 |
6,348 |
209 |
499 |
7,056 |
|
|
|||||||||
|
31.12.12 |
|
|||||||
|
Goodwill |
Acquired intangibles |
Software |
Total |
|
||||
$million |
$million |
$million |
$million |
|
|||||
Cost at 31 December |
6,535 |
658 |
923 |
8,116 |
|
||||
Provision for amortisation |
- |
(481) |
(333) |
(814) |
|
||||
Impairment charge |
- |
- |
- |
- |
|
||||
Cost/ net book value at 31 December |
6,535 |
177 |
590 |
7,302 |
|
||||
|
|
The Group performs an annual goodwill impairment review in September, and at each reporting date, to assess whether the carrying value of goodwill is impaired. For the purposes of impairment testing, goodwill is allocated at the date of acquisition to a cash-generating unit (CGU). Goodwill is considered to be impaired if the carrying amount of the relevant CGU exceeds its recoverable amount. The recoverable amounts for all CGUs were measured based on value-in-use. The key assumptions used in determining the recoverable amounts are set out in note 25 of the Group's 2012 Annual Report and Accounts.
The Group performed an impairment assessment on the level of goodwill assigned to the Korea CGU subsequent to its annual testing as a result of its consideration of reduced expectations for future cash flows and fluctuations in the discount rate. The Group's determination of value-in-use was based on using a pre-tax discount rate of 17 per cent, a steady long term forecast GDP growth rate of 3.9 per cent, and management approved forecasts up to 2017. Based on this analysis, the carrying amount was assessed as exceeding the recoverable value by $1 billion which has been recognised as an impairment charge. At 30 June 2013, the carrying value of the remaining goodwill assigned to the Korea CGU is $734 million.
The results of our impairment review on goodwill allocated to other CGU's did not indicate any goodwill impairment at 30 June 2013.
21. Deposits by banks |
|||
|
30.06.13 |
30.06.12 |
31.12.12 |
$million |
$million |
$million |
|
Deposits by banks |
45,012 |
44,754 |
36,427 |
Deposits by banks included within: |
|
|
|
Financial liabilities held at fair value through profit or loss (note 12) |
378 |
1,039 |
968 |
Total deposits by bank |
45,390 |
45,793 |
37,395 |
|
|
|
|
22. Customer accounts |
|||
|
30.06.13 |
30.06.12 |
31.12.12 |
$million |
$million |
$million |
|
Customer accounts |
371,314 |
350,248 |
372,874 |
Customer accounts included within: |
|
|
|
Financial liabilities held at fair value through profit or loss (note 12) |
9,471 |
8,398 |
12,243 |
Total customer accounts |
380,785 |
358,646 |
385,117 |
|
|
|
|
23. Debt securities in issue |
|||||||
|
|
30.06.13 |
30.06.12 |
||||
|
|
Certificates of deposit of $100,000 or more |
Other debt securities in issue |
Total |
Certificates of deposit of $100,000 or more |
Other debt securities in issue |
Total |
|
$million |
$million |
$million |
$million |
$million |
$million |
|
Debt securities in issue |
22,097 |
36,593 |
58,690 |
22,526 |
35,288 |
57,814 |
|
Debt securities in issue included within: |
|
|
|
|
|
|
|
|
Financial liabilities held at fair value through profit or loss (note 12) |
156 |
6,678 |
6,834 |
165 |
4,433 |
4,598 |
Total debt securities in issue |
22,253 |
43,271 |
65,524 |
22,691 |
39,721 |
62,412 |
|
|
|
|
|
|
|
|
|
|
|
|
31.12.12 |
||||
|
|
|
|
|
Certificates of deposit of $100,000 or more |
Other debt securities in issue |
Total |
|
|
|
|
$million |
$million |
$million |
|
Debt securities in issue |
|
|
|
16,982 |
38,997 |
55,979 |
|
Debt securities in issue included within: |
|
|
|
|
|
|
|
|
Financial liabilities held at fair value through profit or loss (note 12) |
|
|
|
165 |
5,096 |
5,261 |
Total debt securities in issue |
|
|
|
17,147 |
44,093 |
61,240 |
|
|
|
|
|
|
|
|
|
24. Other liabilities |
|
||
|
30.06.13 |
30.06.12 |
31.12.12 |
$million |
$million |
$million |
|
Financial liabilities held at amortised cost (note 12) |
|
|
|
Notes in circulation |
4,341 |
4,142 |
4,191 |
Acceptances and endorsements |
5,269 |
5,269 |
4,900 |
Cash collateral |
3,241 |
3,132 |
3,245 |
Unsettled trades and other financial liabilities |
10,675 |
8,467 |
7,211 |
|
23,526 |
21,010 |
19,547 |
Non-financial liabilities |
|
|
|
Cash-settled share based payments |
74 |
65 |
84 |
Other liabilities |
5,119 |
4,867 |
4,654 |
Total other liabilities |
28,719 |
25,942 |
24,285 |
|
|
|
|
Hong Kong currency notes in circulation of $4,341 million (30 June 2012: $4,142 million, 31 December 2012: $4,191 million) which are secured by the government of Hong Kong SAR certificates of indebtedness of the same amount included in other assets (note 18).
25. Subordinated liabilities and other borrowed funds |
|
|||||||||||||||
|
30.06.13 |
30.06.12 |
31.12.12 |
|
||||||||||||
$million |
$million |
$million |
|
|||||||||||||
Subordinated liabilities and other borrowed funds |
18,393 |
16,408 |
18,588 |
|
||||||||||||
|
|
|
|
|
||||||||||||
|
||||||||||||||||
|
30.06.13 |
30.06.12 |
|
|||||||||||||
|
USD |
GBP |
Euro |
Others |
USD |
GBP |
Euro |
Others |
|
|||||||
|
$million |
$million |
$million |
$million |
$million |
$million |
$million |
$million |
|
|||||||
Fixed rate subordinated debt |
9,766 |
3,709 |
2,577 |
2,018 |
5,344 |
4,101 |
1,632 |
1,881 |
|
|||||||
Floating rate subordinated debt |
238 |
46 |
- |
39 |
1,331 |
609 |
858 |
652 |
|
|||||||
Total |
10,004 |
3,755 |
2,577 |
2,057 |
6,675 |
4,710 |
2,490 |
2,533 |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
31.12.12 |
|
|||||||||||||
|
|
|
|
|
USD |
GBP |
Euro |
Others |
|
|||||||
|
|
|
|
|
$million |
$million |
$million |
$million |
|
|||||||
Fixed rate subordinated debt |
|
|
|
|
7,512 |
4,638 |
2,706 |
2,400 |
|
|||||||
Floating rate subordinated debt |
|
|
|
|
338 |
50 |
890 |
54 |
|
|||||||
Total |
|
|
|
|
7,850 |
4,688 |
3,596 |
2,454 |
|
|||||||
|
|
|
|
|
|
|
|
|
||||||||
All subordinated liabilities are unsecured, unguaranteed and subordinated to the claims of other creditors including without limitation, customer deposits and deposits by banks. The Group has the right to settle these debt instruments in certain circumstances as set out in the contractual agreements.
Issuances
On 11 January 2013, Standard Chartered PLC (the Company) issued $2 billion 3.95 per cent fixed interest rate notes due January 2023.
On 11 January 2013, Standard Chartered PLC (the Company) issued $500 million 5.3 per cent fixed interest rate notes due January 2043. On 17 January 2013, the Company issued a further $250 million 5.3 per cent fixed interest rate notes due January 2043 which were consolidated and form a single series with the existing $500 million 5.3 per cent fixed interest rate notes due January 2043 issued on 11 January 2013.
Redemptions
On 15 January 2013, Standard Chartered Bank (Botswana) Limited exercised its right to redeem its BWP75 million floating rate subordinated notes in full on the first optional call date.
On 25 January 2013, Standard Chartered Bank exercised the right to redeem its £300 million 6.0 per cent fixed rate subordinated notes in full on the first optional call date.
On 29 January 2013, Standard Chartered (Pakistan) Limited redeemed its PKR1 billion floating rate note on maturity.
On 28 March 2013, Standard Chartered Bank exercised its right to redeem its $100 million floating rate subordinated notes in full on the first optional call date.
On 28 March 2013, Standard Chartered Bank exercised the right to redeem its €675 million floating rate subordinated notes in full on the first optional call date.
On 25 April 2013, Standard Chartered Bank Korea Limited exercised its right to redeem its KRW260 billion 6.08 per cent subordinated debt in full on the first optional call date.
Note that the following subordinated notes issued by PT Bank Permata Tbk (Permata) are no longer disclosed as part of the Group consolidated accounts due to IFRS 11 'Joint Arrangements' which requires all joint ventures to be equity accounted:
· $22 million 9.75 per cent fixed to floating interest rate note 2021(callable and floating rate from 2016)
· IDR 700 billion 8.9 per cent subordinated notes 2019
· IDR 1,750 billion 11 per cent subordinated notes 2018
· IDR 1,800 billion 9.4 per cent subordinated notes 2019
26. Retirement benefit obligations |
|
||
Retirement benefit obligations comprise: |
|
||
|
30.06.13 |
30.06.12 |
31.12.12 |
$million |
$million |
$million |
|
Total market value of assets |
2,302 |
2,195 |
2,366 |
Present value of the scheme liabilities |
(2,696) |
(2,758) |
(2,836) |
Defined benefit schemes obligation |
(394) |
(563) |
(470) |
Defined contribution schemes obligation |
(17) |
(16) |
(21) |
Total obligation |
(411) |
(579) |
(491) |
|
|
||
Retirement benefit charge comprises: |
|
|
|
|
6 months ended |
6 months ended |
6 months ended |
|
30.06.13 |
30.06.12 |
31.12.12 |
$million |
$million |
$million |
|
Defined benefit schemes |
58 |
53 |
43 |
Defined contribution schemes |
110 |
95 |
108 |
Charge against profit |
168 |
148 |
151 |
|
|
|
|
The pension cost for defined benefit schemes was: |
|
||
|
6 months ended 30.06.13 |
6 months ended 30.06.12 |
6 months ended 31.12.12 |
|
$million |
$million |
$million |
Current service cost |
50 |
50 |
50 |
Past service cost |
- |
2 |
1 |
Gain on settlements and curtailments |
- |
- |
(6) |
Interest income on pension scheme assets |
(46) |
(56) |
(56) |
Interest on pension scheme liabilities |
54 |
57 |
54 |
Total charge to profit before deduction of tax |
58 |
53 |
43 |
Gain on assets in excess of expected return |
(11) |
(18) |
(57) |
Experience (gain)/loss on liabilities |
(33) |
94 |
57 |
Total (gain)/loss recognised directly in statement of comprehensive income before tax |
(44) |
76 |
- |
Deferred taxation |
6 |
(17) |
3 |
Total (gains)/loss after tax |
(38) |
59 |
3 |
27. Share capital, reserves and own shares |
|
|
|
|
|
Number of ordinary shares |
Ordinary share capital |
Preference share capital |
Total |
millions |
$million |
$million |
$million |
|
At 1 January 2012 |
2,384 |
1,192 |
- |
1,192 |
Capitalised on scrip dividend |
6 |
3 |
- |
3 |
Shares issued |
2 |
1 |
- |
1 |
At 30 June 2012 |
2,392 |
1,196 |
- |
1,196 |
Capitalised on scrip dividend |
19 |
10 |
- |
10 |
Shares issued |
2 |
1 |
- |
1 |
At 31 December 2012 |
2,413 |
1,207 |
- |
1,207 |
Capitalised on scrip dividend |
2 |
1 |
- |
1 |
Shares issued |
9 |
4 |
- |
4 |
At 30 June 2013 |
2,424 |
1,212 |
- |
1,212 |
2013
On 13 May 2013, the Company issued 1,727,682 new ordinary shares instead of the 2012 final dividend.
During the period 8,762,558 shares were issued under employee share plans at prices between nil and 1,463 pence.
2012
On 14 May 2012, the Company issued 6,961,782 new ordinary shares instead of the 2011 final dividend and on 11 October 2012 the Company issued 18,454,741 new ordinary shares instead of the 2012 interim dividend.
During the year 3,559,652 new ordinary shares were issued under employee share plans at prices between nil and 1,463 pence.
27. Share Capital, reserves and own shares continued
Own shares
Bedell Cristin Trustees Limited is trustee of both the 1995 Employees' Share Ownership Plan Trust (the 1995 Trust), which is an employee benefit trust used in conjunction with some of the Group's employee share schemes, and of the Standard Chartered 2004 Employee Benefit Trust (the 2004 Trust) which is an employee benefit trust used in conjunction with the Group's deferred bonus plan. The trustee has agreed to satisfy a number of awards made under the employee share schemes and the deferred bonus plan through the relevant employee benefit trust. As part of these arrangements Group companies fund the trusts, from time to time, to enable the trustee to acquire shares to satisfy these awards. All shares have been acquired through the London Stock Exchange.
Except as disclosed, neither the Company nor any of its subsidiaries has bought, sold or redeemed any securities of the company listed on The Stock Exchange of Hong Kong Limited during the period. Details of the shares purchased and held by the trusts are set out below.
|
1995 Trust |
|
2004 Trust |
Total |
|
|||||||||||
Number of shares |
30.06.13 |
|
30.06.12 |
|
31.12.12 |
|
30.06.13 |
|
30.06.12 |
|
31.12.12 |
30.06.13 |
|
30.06.12 |
31.12.12 |
|
Shares purchased during period |
4,855,145 |
|
11,384,974 |
|
4,599,083 |
|
790,829 |
|
977,761 |
1 |
- |
5,645,974 |
|
12,362,735 |
4,599,083 |
|
Market value of shares purchased ($million) |
133 |
|
291 |
|
95 |
|
21 |
|
25 |
|
- |
154 |
|
316 |
95 |
|
Shares held at end of period |
5,866,347 |
|
4,974,712 |
|
6,809,269 |
2 |
141,160 |
|
211,415 |
|
211,415 |
6,007,507 |
|
5,186,127 |
7,020,684 |
2 |
Maximum number of shares held during period |
|
|
|
|
|
|
|
|
|
|
|
7,278,439 |
|
18,321,546 |
7,593,625 |
|
1 The acquisition of shares in the period to 30 June 2012 was overstated by 4,472 shares in the 2012 accounts and has therefore been restated
2 The closing balance at 31 December 2012 was understated by 894 shares in the 2012 accounts and has therefore been restated
28. Non-controlling interests |
|||
|
$300m 7.267% Hybrid Tier 1 Securities |
Other non-controlling interests |
Total |
|
$million |
$million |
$million |
At 1 January 2012 |
320 |
341 |
661 |
Expenses in equity attributable to non-controlling interests |
- |
(43) |
(43) |
Other profits attributable to non-controlling interests |
11 |
33 |
44 |
Comprehensive income for the period |
11 |
(10) |
1 |
Distributions |
(11) |
(22) |
(33) |
At 30 June 2012 |
320 |
309 |
629 |
Income in equity attributable to non-controlling interests |
- |
29 |
29 |
Other profits attributable to non-controlling interests |
11 |
43 |
54 |
Comprehensive income for the period |
11 |
72 |
83 |
Distributions |
(11) |
(16) |
(27) |
Other increases |
- |
8 |
8 |
At 31 December 2012 |
320 |
373 |
693 |
Expense in equity attributable to non-controlling interests |
- |
(16) |
(16) |
Other profits attributable to non-controlling interests |
11 |
44 |
55 |
Comprehensive income for the period |
11 |
28 |
39 |
Distributions and disposals |
(11) |
(131) |
(142) |
At 30 June 2013 |
320 |
270 |
590 |
|
|
|
|
29. Cash flow statement |
|||
Adjustment for non-cash items and other adjustments included within the income statement |
|||
|
30.06.13 |
30.06.12 |
31.12.12 |
$million |
$million |
$million |
|
Amortisation of discounts and premiums of investment securities |
(140) |
(182) |
(260) |
Interest expense on subordinated liabilities |
330 |
272 |
297 |
Interest expense on senior debt liabilities |
217 |
178 |
240 |
Other non-cash items (including own credit adjustment) |
(161) |
15 |
105 |
Pension costs for defined benefit schemes |
58 |
53 |
43 |
Share based payment costs |
108 |
173 |
201 |
UK bank levy |
- |
- |
10 |
Impairment losses on loans and advances and other credit risk provisions |
730 |
575 |
621 |
Other impairment |
1,011 |
74 |
122 |
Profit from associates and joint ventures |
(74) |
(57) |
(59) |
|
2,079 |
1,101 |
1,320 |
Change in operating assets |
|
|
|
|
30.06.13 |
30.06.12 |
31.12.12 |
$million |
$million |
$million |
|
(Increase)/decrease in derivative financial instruments |
(5,858) |
15,179 |
3,505 |
Decrease/(increase) in debt securities, treasury bills and equity shares held at fair value through profit or loss |
547 |
1,024 |
(4,101) |
Net increase in loans and advances to banks and customers |
(19,520) |
(16,437) |
(4,488) |
(Increase)/decrease in prepayments and accrued income |
(188) |
(213) |
174 |
Increase in other assets |
(10,789) |
(2,893) |
(159) |
|
(35,808) |
(3,340) |
(5,069) |
Change in operating liabilities |
|
|
|
|
30.06.13 |
30.06.12 |
31.12.12 |
$million |
$million |
$million |
|
Increase/(decrease) in derivative financial instruments |
7,430 |
(15,562) |
(3,406) |
Net increase in deposits from banks, customer accounts, debt securities in issue, Hong Kong notes in circulation and short positions |
16,243 |
26,471 |
11,355 |
(Decrease)/increase in accruals and deferred income |
(504) |
(436) |
549 |
Increase/(decrease) in other liabilities |
3,773 |
2,714 |
(2,715) |
|
26,942 |
13,187 |
5,783 |
|
|
|
|
30. Cash and cash equivalents |
|||
|
|
|
|
For the purposes of the cash flow statement, cash and cash equivalents comprise cash, on demand and overnight balances with central banks (unless restricted) and balances with less than three months maturity from the date of acquisition, including: treasury bills and other eligible bills, loans and advances to banks, and short-term government securities. The following balances with less than three months maturity from the date of acquisition have been identified by the Group as being cash and cash equivalents. Restricted balances comprise minimum balances required to be held at central banks. |
|||
|
30.06.13 |
30.06.12 |
31.12.12 |
$million |
$million |
$million |
|
Cash and balances at central banks |
57,621 |
50,683 |
60,537 |
Less restricted balances |
(9,663) |
(8,656) |
(9,336) |
Treasury bills and other eligible bills |
1,331 |
4,952 |
3,101 |
Loans and advances to banks |
24,551 |
32,549 |
23,909 |
Trading securities |
2,651 |
3,754 |
1,307 |
|
76,491 |
83,282 |
79,518 |
31. Contingent liabilities and commitments |
|
||||
The table below shows the contract or underlying principal amounts of unmatured off-balance sheet transactions at the balance sheet date. The contract or underlying principal amounts indicate the volume of business outstanding and do not represent amounts at risk. |
|
||||
|
30.06.13 |
30.06.12 |
31.12.12 |
|
|
$million |
$million |
$million |
|
||
Contingent liabilities |
|
|
|
|
|
Guarantees and irrevocable letters of credit |
38,061 |
27,302 |
34,258 |
|
|
Other contingent liabilities |
9,533 |
16,257 |
10,035 |
|
|
|
47,594 |
43,559 |
44,293 |
|
|
Commitments |
|
|
|
|
|
Documentary credits and short term trade-related transactions |
8,171 |
8,614 |
7,610 |
|
|
Forward asset purchases and forward deposits placed |
852 |
1,068 |
711 |
|
|
Undrawn formal standby facilities, credit lines and other commitments to lend: |
|
|
|
|
|
One year and over |
43,894 |
30,381 |
39,294 |
|
|
Less than one year |
15,941 |
20,946 |
17,353 |
|
|
Unconditionally cancellable |
116,441 |
98,062 |
110,138 |
|
|
|
185,299 |
159,071 |
175,106 |
|
|
|
|
||||
|
|
||||
The Group receives legal claims against it in a number of jurisdictions arising in the normal course of business. The Group considers none of these matters as material either individually or in aggregate. Where appropriate the Group recognises a provision for liabilities when it is probable that an outflow of economic resources embodying economic benefits will be required and for which a reliable estimate can be made of the obligation.
The Group seeks to comply with all applicable laws and regulations, but may be subject to regulatory actions and investigations across our markets, the outcome of which are generally difficult to predict and can be material to the Group.
32. Restatement of prior periods
The Group has introduced the following changes in its financial statements and has re-presented prior period balances on a similar basis to enhance the comparability of information presented.
Restatements impacting 30 June 2012 and 31 December 2012
· Mandatory application of IFRS 11 Joint Arrangements as discussed in Note 1
The Group's investment in Permata has been presented using the equity method of accounting, applied on a retrospective basis. There is no impact on the profit for the period or Shareholders' equity, however, profit before taxation is lower as a result of profits from joint ventures been reported on a net of tax basis (see pages 149 to 157).
· Allocation of associates and joint ventures to Consumer Banking and Wholesale Banking
The Group's profits and interests in associates are allocated to Consumer Banking and Wholesale Banking. The associates balances were previously reported as corporate items not allocated. Joint venture balances were previously allocated to Consumer Banking and Wholesale Banking on a line by line basis and has been presented within the line following adoption of IFRS 11 (see pages 156 and 157).
Goodwill and intangible assets previously allocated to Consumer Banking and Wholesale Banking is now reported as Corporate items not allocated. (see pages 156 and 157)
· Reclassification of liabilities due to operational improvements
The Group has reclassified certain liabilities measured at fair value, these liabilities were previously reported as trading but now classified as fair value through profit and loss (see page 158).
Restatements impacting 30 June 2012
· Netting due to enhancements to system capabilities and operational improvements
These included the gross up of loans and advances to customers (Mortgages) and customer deposit accounts (Interest-bearing current accounts) that were previously recorded net, and the netting of certain Interest rate derivatives which were previously shown gross. These changes impact the Group's balance sheet only, which has been re-presented (see pages 152, 154, 157 and 158).
· Changes to the Group's entity-wide geographic disclosures
This is to reflect the transfer of Mauritius from Other Asia Pacific to Africa. Segmental information disclosed in Note 2 in addition to information on loans and advances disclosed as part of the Risk review has also been re-presented where applicable for this restatement (see pages 157 and 158).
The impact of the above restatements on the primary statements is set out on pages 149 to 155.
Income statement |
||||
|
|
As reported |
|
Restated |
|
|
6 months to |
Permata |
6 months to |
|
Notes |
30.06.12 |
restatement |
30.06.12 |
$million |
$million |
$million |
||
Interest income |
|
9,092 |
(208) |
8,884 |
Interest expense |
|
(3,609) |
99 |
(3,510) |
Net interest income |
|
5,483 |
(109) |
5,374 |
Fees and commission income |
|
2,229 |
(21) |
2,208 |
Fees and commission expense |
|
(255) |
- |
(255) |
Net trading income |
3 |
1,565 |
(5) |
1,560 |
Other operating income |
4 |
489 |
(5) |
484 |
Non-interest income |
|
4,028 |
(31) |
3,997 |
Operating income |
|
9,511 |
(140) |
9,371 |
Staff costs |
5 |
(3,353) |
47 |
(3,306) |
Premises costs |
5 |
(423) |
10 |
(413) |
General administrative expenses |
5 |
(863) |
22 |
(841) |
Depreciation and amortisation |
6 |
(324) |
5 |
(319) |
Operating expenses |
|
(4,963) |
84 |
(4,879) |
Operating profit before impairment losses and taxation |
|
4,548 |
(56) |
4,492 |
Impairment losses on loans and advances and other credit risk provisions |
7 |
(583) |
8 |
(575) |
Other impairment |
8 |
(74) |
- |
(74) |
Profit from associates and joint ventures |
|
57 |
36 |
93 |
Profit before taxation |
|
3,948 |
(12) |
3,936 |
Taxation |
9 |
(1,048) |
12 |
(1,036) |
Profit for the period |
|
2,900 |
- |
2,900 |
|
|
|
|
|
32. Restatement of prior periods continued
Income statement |
||||
|
|
As reported |
|
Restated |
|
|
6 months to |
Permata |
6 months to |
|
Notes |
31.12.12 |
restatement |
31.12.12 |
$million |
$million |
$million |
||
Interest income |
|
9,166 |
(223) |
8,943 |
Interest expense |
|
(3,639) |
103 |
(3,536) |
Net interest income |
|
5,527 |
(120) |
5,407 |
Fees and commission income |
|
2,389 |
(22) |
2,367 |
Fees and commission expense |
|
(242) |
1 |
(241) |
Net trading income |
3 |
1,183 |
(4) |
1,179 |
Other operating income |
4 |
703 |
(3) |
700 |
Non-interest income |
|
4,033 |
(28) |
4,005 |
Operating income |
|
9,560 |
(148) |
9,412 |
Staff costs |
5 |
(3,231) |
45 |
(3,186) |
Premises costs |
5 |
(463) |
13 |
(450) |
General administrative expenses |
5 |
(1,895) |
29 |
(1,866) |
Depreciation and amortisation |
6 |
(344) |
3 |
(341) |
Operating expenses |
|
(5,933) |
90 |
(5,843) |
Operating profit before impairment losses and taxation |
|
3,627 |
(58) |
3,569 |
Impairment losses on loans and advances and other credit risk provisions |
7 |
(638) |
17 |
(621) |
Other impairment |
8 |
(120) |
(2) |
(122) |
Profit from associates and joint ventures |
|
59 |
30 |
89 |
Profit before taxation |
|
2,928 |
(13) |
2,915 |
Taxation |
9 |
(843) |
13 |
(830) |
Profit for the period |
|
2,085 |
- |
2,085 |
|
|
|
|
|
32. Restatement of prior periods continued
Statement of other comprehensive income |
|||||||
|
|
|
|
|
As reported |
|
Restated |
|
|
|
|
|
6 months ended |
Permata |
6 months ended |
|
|
|
|
|
30.06.12 |
restatement |
30.06.12 |
|
|
Notes |
$million |
$million |
$million |
||
Profit for the period |
|
2,900 |
- |
2,900 |
|||
Other comprehensive income: |
|
|
|
|
|||
|
Items that will not be reclassified to Income statement: |
|
|
|
|
||
|
|
Actuarial losses on retirement benefit obligations |
26 |
(76) |
- |
(76) |
|
|
|
|
|
|
|
|
|
|
Items that may be reclassified subsequently to Income statement: |
|
|
|
|
||
|
|
Exchange differences on translation of foreign operations: |
|
|
|
|
|
|
|
|
Net losses taken to equity |
|
(217) |
(3) |
(220) |
|
|
|
Net losses on net investment hedges |
|
(4) |
- |
(4) |
|
|
|
Reclassified to income statement on change of control |
|
|
|
|
|
|
Share of other comprehensive income from associates and joint ventures |
|
(1) |
2 |
1 |
|
|
|
Available-for-sale investments: |
|
|
|
|
|
|
|
|
Net valuation gains taken to equity |
|
318 |
(1) |
317 |
|
|
|
Reclassified to income statement |
|
(150) |
3 |
(147) |
|
|
Cash flow hedges: |
|
|
|
|
|
|
|
|
Net gains taken to equity |
|
44 |
- |
44 |
|
|
Taxation relating to components of other comprehensive income |
|
(46) |
(1) |
(47) |
|
|
Other comprehensive income for the period, net of taxation |
|
(132) |
- |
(132) |
||
Total comprehensive income for the period |
|
2,768 |
- |
2,768 |
|||
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
Restated |
|
|
|
|
|
6 months ended |
Permata |
6 months ended |
|
|
|
|
|
31.12.12 |
restatement |
31.12.12 |
|
|
Notes |
$million |
$million |
$million |
||
Profit for the period |
|
2,085 |
- |
2,085 |
|||
Other comprehensive income: |
|
|
|
|
|||
|
Items that will not be reclassified to Income statement: |
|
|
|
|
||
|
|
Actuarial gains on retirement benefit obligations |
26 |
- |
- |
- |
|
|
|
|
|
|
|
|
|
|
Items that may be reclassified subsequently to Income statement: |
|
|
|
|
||
|
|
Exchange differences on translation of foreign operations: |
|
|
|
|
|
|
|
|
Net gains taken to equity |
|
792 |
(4) |
788 |
|
|
|
Net losses on net investment hedges |
|
(69) |
- |
(69) |
|
|
|
Reclassified to income statement on change of control |
|
|
|
|
|
|
Share of other comprehensive income from associates and joint ventures |
|
(1) |
4 |
3 |
|
|
|
Available-for-sale investments: |
|
|
|
|
|
|
|
|
Net valuation gains taken to equity |
|
738 |
(1) |
737 |
|
|
|
Reclassified to income statement |
|
(189) |
- |
(189) |
|
|
Cash flow hedges: |
|
|
|
|
|
|
|
|
Net gains taken to equity |
|
89 |
- |
89 |
|
|
|
Reclassified to income statement |
|
(20) |
- |
(20) |
|
|
Taxation relating to components of other comprehensive income |
|
(86) |
1 |
(85) |
|
|
Other comprehensive income for the period, net of taxation |
|
1,254 |
- |
1,254 |
||
Total comprehensive income for the period |
|
3,339 |
- |
3,339 |
|||
|
|
|
|
|
|
|
|
32. Restatement of prior periods continued
Balance sheet |
|||||
|
|
As reported |
Permata |
Netting |
Restated |
|
Notes |
30.06.12 |
restatement |
restatement |
30.06.12 |
$million |
$million |
$million |
$million |
||
Assets |
|
|
|
|
|
Cash and balances at central banks |
12, 30 |
51,111 |
(428) |
- |
50,683 |
Financial assets held at fair value through profit or loss |
12, 13 |
27,769 |
(26) |
- |
27,743 |
Derivative financial instruments |
12, 14 |
61,775 |
(2) |
(9,243) |
52,530 |
Loans and advances to banks |
12, 15 |
74,167 |
(237) |
- |
73,930 |
Loans and advances to customers |
12, 16 |
273,366 |
(3,930) |
3,017 |
272,453 |
Investment securities |
12, 17 |
88,341 |
(146) |
- |
88,195 |
Other assets |
12, 18 |
30,434 |
(267) |
- |
30,167 |
Current tax assets |
|
268 |
- |
- |
268 |
Prepayments and accrued income |
|
2,714 |
(26) |
- |
2,688 |
Interests in associates and joint ventures |
|
939 |
469 |
- |
1,408 |
Goodwill and intangible assets |
20 |
7,067 |
(11) |
- |
7,056 |
Property, plant and equipment |
|
5,601 |
(26) |
- |
5,575 |
Deferred tax assets |
|
879 |
(19) |
- |
860 |
Total assets |
|
624,431 |
(4,649) |
(6,226) |
613,556 |
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
Deposits by banks |
12, 21 |
44,838 |
(84) |
- |
44,754 |
Customer accounts |
12, 22 |
351,381 |
(4,150) |
3,017 |
350,248 |
Financial liabilities held at fair value through profit or loss |
12, 13 |
19,067 |
- |
- |
19,067 |
Derivative financial instruments |
12, 14 |
59,389 |
(2) |
(9,243) |
50,144 |
Debt securities in issue |
12, 23 |
57,814 |
- |
- |
57,814 |
Other liabilities |
12, 24 |
26,154 |
(212) |
- |
25,942 |
Current tax liabilities |
|
1,196 |
(10) |
- |
1,186 |
Accruals and deferred income |
|
4,215 |
(44) |
- |
4,171 |
Subordinated liabilities and other borrowed funds |
12, 25 |
16,543 |
(135) |
- |
16,408 |
Deferred tax liabilities |
|
144 |
- |
- |
144 |
Provisions for liabilities and charges |
|
165 |
- |
- |
165 |
Retirement benefit obligations |
26 |
591 |
(12) |
- |
579 |
Total liabilities |
|
581,497 |
(4,649) |
(6,226) |
570,622 |
|
|
|
|
|
|
Equity |
|
|
|
|
|
Share capital |
27 |
1,196 |
- |
- |
1,196 |
Reserves |
|
41,109 |
- |
- |
41,109 |
Total parent company shareholders' equity |
|
42,305 |
- |
- |
42,305 |
Non-controlling interests |
28 |
629 |
- |
- |
629 |
Total equity |
|
42,934 |
- |
- |
42,934 |
Total equity and liabilities |
|
624,431 |
(4,649) |
(6,226) |
613,556 |
32. Restatement of prior periods continued
Balance sheet |
|
|
||
|
|
As reported |
Permata |
Restated |
|
Notes |
31.12.12 |
restatement |
31.12.12 |
$million |
$million |
$million |
||
Assets |
|
|
|
|
Cash and balances at central banks |
12, 30 |
61,043 |
(506) |
60,537 |
Financial assets held at fair value through profit or loss |
12, 13 |
27,084 |
(8) |
27,076 |
Derivative financial instruments |
12, 14 |
49,496 |
(1) |
49,495 |
Loans and advances to banks |
12, 15 |
68,381 |
(584) |
67,797 |
Loans and advances to customers |
12, 16 |
283,885 |
(4,247) |
279,638 |
Investment securities |
12, 17 |
99,413 |
(188) |
99,225 |
Other assets |
12, 18 |
28,818 |
(270) |
28,548 |
Current tax assets |
|
215 |
- |
215 |
Prepayments and accrued income |
|
2,581 |
(29) |
2,552 |
Interests in associates and joint ventures |
|
953 |
574 |
1,527 |
Goodwill and intangible assets |
20 |
7,312 |
(10) |
7,302 |
Property, plant and equipment |
|
6,646 |
(26) |
6,620 |
Deferred tax assets |
|
691 |
(15) |
676 |
Total assets |
|
636,518 |
(5,310) |
631,208 |
|
|
|
|
|
Liabilities |
|
|
|
|
Deposits by banks |
12, 21 |
36,477 |
(50) |
36,427 |
Customer accounts |
12, 22 |
377,639 |
(4,765) |
372,874 |
Financial liabilities held at fair value through profit or loss |
12, 13 |
23,064 |
- |
23,064 |
Derivative financial instruments |
12, 14 |
47,192 |
- |
47,192 |
Debt securities in issue |
12, 23 |
55,979 |
- |
55,979 |
Other liabilities |
12, 24 |
24,504 |
(219) |
24,285 |
Current tax liabilities |
|
1,069 |
(3) |
1,066 |
Accruals and deferred income |
|
4,860 |
(49) |
4,811 |
Subordinated liabilities and other borrowed funds |
12, 25 |
18,799 |
(211) |
18,588 |
Deferred tax liabilities |
|
161 |
- |
161 |
Provisions for liabilities and charges |
|
215 |
- |
215 |
Retirement benefit obligations |
26 |
504 |
(13) |
491 |
Total liabilities |
|
590,463 |
(5,310) |
585,153 |
|
|
|
|
|
Equity |
|
|
|
|
Share capital |
27 |
1,207 |
- |
1,207 |
Reserves |
|
44,155 |
- |
44,155 |
Total parent company shareholders' equity |
|
45,362 |
- |
45,362 |
Non-controlling interests |
28 |
693 |
- |
693 |
Total equity |
|
46,055 |
- |
46,055 |
Total equity and liabilities |
|
636,518 |
(5,310) |
631,208 |
32. Restatement of prior periods continued
Cash flow statement |
||||||
|
|
|
As reported |
Permata |
Netting |
Restated |
|
|
Notes |
30.06.12 |
restatement |
restatement |
30.06.12 |
|
$million |
$million |
$million |
$million |
||
Cash flows from operating activities |
|
|
|
|
|
|
Profit before taxation |
|
3,948 |
(12) |
|
3,936 |
|
Adjustments for: |
|
|
|
|
|
|
|
Non-cash items and other adjustments included within income statement |
29 |
1,117 |
(16) |
|
1,101 |
|
Change in operating assets |
29 |
(10,521) |
955 |
6,226 |
(3,340) |
|
Change in operating liabilities |
29 |
19,787 |
(374) |
(6,226) |
13,187 |
|
Contributions to defined benefit schemes |
|
(46) |
1 |
|
(45) |
|
UK and overseas taxes paid |
|
(971) |
10 |
|
(961) |
Net cash from operating activities |
|
13,314 |
564 |
|
13,878 |
|
Net cash flows from investing activities |
|
|
|
|
|
|
|
Purchase of property, plant and equipment |
|
(72) |
(1) |
|
(73) |
|
Disposal of property, plant and equipment |
|
179 |
- |
|
179 |
|
Acquisition of investment in subsidiaries, associates and joint ventures, net of cash acquired |
|
(4) |
- |
|
(4) |
|
Purchase of investment securities |
|
(70,779) |
122 |
|
(70,657) |
|
Disposal and maturity of investment securities |
|
67,872 |
(308) |
|
67,564 |
|
Dividends received from investment in subsidiaries, associates and joint ventures |
|
13 |
- |
|
13 |
Net cash used in investing activities |
|
(2,791) |
(187) |
|
(2,978) |
|
Net cash flows from financing activities |
|
|
|
|
|
|
|
Issue of ordinary and preference share capital, net of expenses |
|
23 |
- |
|
23 |
|
Purchase of own shares |
|
(316) |
- |
|
(316) |
|
Exercise of share options through ESOP |
|
32 |
- |
|
32 |
|
Interest paid on subordinated liabilities |
|
(503) |
- |
|
(503) |
|
Gross proceeds from issue of subordinated liabilities |
|
1,085 |
(34) |
|
1,051 |
|
Repayment of subordinated liabilities |
|
(1,303) |
- |
|
(1,303) |
|
Interest paid on senior debts |
|
(540) |
- |
|
(540) |
|
Gross proceeds from issue of senior debts |
|
11,924 |
- |
|
11,924 |
|
Repayment of senior debts |
|
(6,122) |
- |
|
(6,122) |
|
Dividends paid to non-controlling interests and preference shareholders, net of scrip |
|
(84) |
- |
|
(84) |
|
Dividends paid to ordinary shareholders, net of scrip |
|
(1,045) |
- |
|
(1,045) |
Net cash from financing activities |
|
3,151 |
(34) |
|
3,117 |
|
Net increase in cash and cash equivalents |
|
13,674 |
343 |
|
14,017 |
|
|
Cash and cash equivalents at beginning of the period |
|
70,450 |
(884) |
|
69,566 |
|
Effect of exchange rate movements on cash and cash equivalents |
|
(319) |
18 |
|
(301) |
Cash and cash equivalents at end of the period |
30 |
83,805 |
(523) |
|
83,282 |
32. Restatement of prior periods continued
Cash flow statement |
|||||
|
|
|
As reported |
Permata |
Restated |
|
|
Notes |
31.12.12 |
restatement |
31.12.12 |
|
$million |
$million |
$million |
||
Cash flows from operating activities |
|
|
|
|
|
Profit before taxation |
|
2,928 |
(13) |
2,915 |
|
Adjustments for: |
|
|
|
|
|
|
Non-cash items and other adjustments included within income statement |
29 |
1,348 |
(28) |
1,320 |
|
Change in operating assets |
29 |
(5,361) |
292 |
(5,069) |
|
Change in operating liabilities |
29 |
6,629 |
(846) |
5,783 |
|
Contributions to defined benefit schemes |
|
(158) |
- |
(158) |
|
UK and overseas taxes paid |
|
(820) |
14 |
(806) |
Net cash from operating activities |
|
4,566 |
(581) |
3,985 |
|
Net cash flows from investing activities |
|
|
|
|
|
|
Purchase of property, plant and equipment |
|
(96) |
7 |
(89) |
|
Disposal of property, plant and equipment |
|
16 |
- |
16 |
|
Acquisition of investment in subsidiaries, associates and joint ventures, net of cash acquired |
|
(59) |
- |
(59) |
|
Purchase of investment securities |
|
(86,546) |
320 |
(86,226) |
|
Disposal and maturity of investment securities |
|
78,033 |
(270) |
77,763 |
|
Dividends received from investment in subsidiaries, associates and joint ventures |
|
1 |
- |
1 |
Net cash used in investing activities |
|
(8,651) |
57 |
(8,594) |
|
Net cash flows from financing activities |
|
|
|
|
|
|
Issue of ordinary and preference share capital, net of expenses |
|
36 |
- |
36 |
|
Purchase of own shares |
|
(109) |
- |
(109) |
|
Exercise of share options through ESOP |
|
7 |
- |
7 |
|
Interest paid on subordinated liabilities |
|
(368) |
(118) |
(486) |
|
Gross proceeds from issue of subordinated liabilities |
|
2,305 |
34 |
2,339 |
|
Repayment of subordinated liabilities |
|
(398) |
- |
(398) |
|
Interest paid on senior debts |
|
(327) |
- |
(327) |
|
Gross proceeds from issue of senior debts |
|
(471) |
- |
(471) |
|
Repayment of senior debts |
|
184 |
- |
184 |
|
Dividends paid to non-controlling interests and preference shareholders, net of scrip |
|
(77) |
- |
(77) |
|
Dividends paid to ordinary shareholders, net of scrip |
|
(261) |
- |
(261) |
Net cash from financing activities |
|
521 |
(84) |
437 |
|
Net decrease in cash and cash equivalents |
|
(3,564) |
(608) |
(4,172) |
|
|
Cash and cash equivalents at beginning of the period |
|
83,805 |
(523) |
83,282 |
|
Effect of exchange rate movements on cash and cash equivalents |
|
359 |
49 |
408 |
Cash and cash equivalents at end of the period |
30 |
80,600 |
(1,082) |
79,518 |
32. Restatement of prior periods continued
Restatement by class of business |
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
The Group's profits and interests in associates are allocated to Consumer Banking and Wholesale Banking. The associates balances were previously reported as corporate items not allocated. Joint venture balances were previously allocated to Consumer Banking and Wholesale Banking on a line by line basis and has been presented within the line following adoption of IFRS 11. |
||||||||||||
|
As reported |
restatement |
Restated |
|||||||||
|
6 months to |
6 months to |
6 months to |
|||||||||
|
30.06.12 |
30.06.12 |
30.06.12 |
|||||||||
|
Consumer Banking |
Wholesale Banking |
Corporate items not allocated |
Total |
Consumer Banking |
Wholesale Banking |
Corporate items not allocated |
Total |
Consumer Banking |
Wholesale Banking |
Corporate items not allocated |
Total |
$million |
$million |
$million |
$million |
$million |
$million |
$million |
$million |
$million |
$million |
$million |
$million |
|
Operating income |
3,515 |
5,996 |
- |
9,511 |
(86) |
(54) |
- |
(140) |
3,429 |
5,942 |
- |
9,371 |
Operating expenses |
(2,307) |
(2,656) |
- |
(4,963) |
61 |
23 |
- |
84 |
(2,246) |
(2,633) |
- |
(4,879) |
Operating profit before impairment losses and taxation |
1,208 |
3,340 |
- |
4,548 |
(25) |
(31) |
- |
(56) |
1,183 |
3,309 |
- |
4,492 |
Impairment losses on loans and advances and other credit risk provisions |
(300) |
(283) |
- |
(583) |
10 |
(2) |
- |
8 |
(290) |
(285) |
- |
(575) |
Other impairment |
(9) |
(65) |
- |
(74) |
- |
- |
- |
- |
(9) |
(65) |
- |
(74) |
Profit from associates and joint ventures |
- |
- |
57 |
57 |
24 |
69 |
(57) |
36 |
24 |
69 |
- |
93 |
Profit before taxation |
899 |
2,992 |
57 |
3,948 |
9 |
36 |
(57) |
(12) |
908 |
3,028 |
- |
3,936 |
Total assets employed |
133,629 |
488,716 |
2,086 |
624,431 |
(1,383) |
(15,590) |
6,098 |
(10,875) |
132,246 |
473,126 |
8,184 |
613,556 |
Total liabilities employed |
172,766 |
407,391 |
1,340 |
581,497 |
139 |
(11,004) |
(10) |
(10,875) |
172,905 |
396,387 |
1,330 |
570,622 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
restatement |
Restated |
|||||||||
|
6 months to |
6 months to |
6 months to |
|||||||||
|
31.12.12 |
31.12.12 |
31.12.12 |
|||||||||
|
Consumer Banking |
Wholesale Banking |
Corporate items not allocated |
Total |
Consumer Banking |
Wholesale Banking |
Corporate items not allocated |
Total |
Consumer Banking |
Wholesale Banking |
Corporate items not allocated |
Total reportable segments |
$million |
$million |
$million |
$million |
$million |
$million |
$million |
$million |
$million |
$million |
$million |
$million |
|
Operating income |
3,687 |
5,783 |
90 |
9,560 |
(95) |
(53) |
- |
(148) |
3,592 |
5,730 |
90 |
9,412 |
Operating expenses |
(2,416) |
(3,343) |
(174) |
(5,933) |
66 |
24 |
- |
90 |
(2,350) |
(3,319) |
(174) |
(5,843) |
Operating profit before impairment losses and taxation |
1,271 |
2,440 |
(84) |
3,627 |
(29) |
(29) |
- |
(58) |
1,242 |
2,411 |
(84) |
3,569 |
Impairment losses on loans and advances and other credit risk provisions |
(397) |
(241) |
- |
(638) |
13 |
4 |
- |
17 |
(384) |
(237) |
- |
(621) |
Other impairment |
5 |
(55) |
(70) |
(120) |
(41) |
(31) |
70 |
(2) |
(36) |
(86) |
- |
(122) |
Profit from associates and joint ventures |
- |
- |
59 |
59 |
19 |
70 |
(59) |
30 |
19 |
70 |
- |
89 |
Profit before taxation |
879 |
2,144 |
(95) |
2,928 |
(38) |
14 |
11 |
(13) |
841 |
2,158 |
(84) |
2,915 |
Total assets employed |
143,250 |
491,409 |
1,859 |
636,518 |
(4,618) |
(7,026) |
6,334 |
(5,310) |
138,632 |
484,383 |
8,193 |
631,208 |
Total liabilities employed |
189,779 |
399,454 |
1,230 |
590,463 |
(3,452) |
(1,855) |
(3) |
(5,310) |
186,327 |
397,599 |
1,227 |
585,153 |
|
|
|
|
|
|
|
|
|
|
|
|
|
32. Restatement of prior periods continued
Entity-wide information |
||||||||||||
Other Asia Pacific region |
||||||||||||
|
6 months to 30.06.12 |
6 months to 31.12.12 |
||||||||||
|
As reported |
Permata restatement |
Mauritius restatements |
Restated |
|
Permata restatement |
Restated |
|||||
|
$million |
$million |
$million |
$million |
$million |
$million |
$million |
|||||
Operating income |
1,993 |
(140) |
(21) |
1,832 |
1,988 |
(148) |
1,840 |
|||||
Operating expenses |
(1,143) |
84 |
7 |
(1,052) |
(1,296) |
90 |
(1,206) |
|||||
Loan impairment |
(112) |
8 |
- |
(104) |
(134) |
17 |
(117) |
|||||
Other impairment |
(30) |
- |
- |
(30) |
(125) |
(2) |
(127) |
|||||
Profit from associates and joint ventures |
57 |
36 |
- |
93 |
58 |
30 |
88 |
|||||
Profit before taxation |
765 |
(12) |
(14) |
739 |
491 |
(13) |
478 |
|||||
|
|
|
|
|
|
|
|
|||||
Africa region |
|
|
|
|
|
|
|
|
||||
|
|
|
Africa region |
|||||||||
|
|
|
|
|
|
As reported at 30 June 2012 |
Mauritius restatement |
As restated at 30 June 2012 |
||||
|
|
|
|
|
|
$million |
$million |
$million |
||||
Operating income |
|
|
|
|
|
714 |
21 |
735 |
||||
Operating expenses |
|
|
|
|
|
(392) |
(7) |
(399) |
||||
Loan impairment |
|
|
|
|
|
(11) |
- |
(11) |
||||
Profit before tax |
|
|
|
|
|
311 |
14 |
325 |
||||
|
|
|
|
|
|
|
|
|
||||
By geography |
||||||||||||
|
Hong Kong |
Singapore |
Other Asia Pacific |
India |
Africa |
Americas UK & Europe |
||||||
|
$million |
$million |
$million |
$million |
$million |
$million |
||||||
Loans and advances to customers |
||||||||||||
As reported at 30 June 2012 |
51,788 |
47,981 |
54,855 |
23,160 |
12,093 |
- |
||||||
Mortgage restatement |
466 |
1,281 |
977 |
293 |
- |
- |
||||||
Mauritius geographic change |
- |
- |
(28) |
- |
28 |
- |
||||||
Permata restatement |
- |
- |
(3,930) |
- |
- |
- |
||||||
Restated at 30 June 2012 |
52,254 |
49,262 |
51,874 |
23,453 |
12,121 |
- |
||||||
|
|
|
|
|
|
|
||||||
Total assets employed |
||||||||||||
As reported at 30 June 2012 |
125,821 |
95,775 |
118,997 |
39,545 |
19,826 |
179,272 |
||||||
Mortgage restatement |
466 |
1,281 |
977 |
293 |
- |
- |
||||||
Derivatives restatement |
- |
- |
- |
- |
- |
(9,243) |
||||||
Mauritius geographic change |
- |
- |
(2,917) |
- |
2,917 |
- |
||||||
Permata restatement |
- |
- |
(4,706) |
- |
- |
57 |
||||||
Restated at 30 June 2012 |
126,287 |
97,056 |
112,351 |
39,838 |
22,743 |
170,086 |
||||||
|
|
|
|
|
|
|
||||||
Customer accounts (Current accounts) |
||||||||||||
As reported at 30 June 2012 |
91,624 |
64,752 |
66,196 |
12,253 |
8,858 |
- |
||||||
Deposit restatement |
466 |
1,281 |
977 |
293 |
- |
- |
||||||
Mauritius geographic change |
- |
- |
(542) |
- |
542 |
- |
||||||
Permata restatement |
- |
- |
(4,150) |
- |
- |
- |
||||||
Restated at 30 June 2012 |
92,090 |
66,033 |
62,481 |
12,546 |
9,400 |
- |
||||||
|
|
|
|
|
|
|
||||||
Deposit by banks |
||||||||||||
As reported at 30 June 2012 |
- |
- |
10,083 |
- |
458 |
- |
||||||
Mauritius geographic change |
- |
- |
(20) |
- |
20 |
- |
||||||
Permata restatement |
- |
- |
(84) |
- |
- |
- |
||||||
Restated at 30 June 2012 |
- |
- |
9,979 |
- |
478 |
- |
||||||
32. Restatement of prior periods continued
Loans and advances to customers - Risk review disclosure |
|
|||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
|
|
Hong Kong |
Singapore |
Other Asia Pacific |
India |
Africa |
|
|||||||||
|
|
$million |
$million |
$million |
$million |
$million |
|
|||||||||
As reported at June 2012 |
|
51,484 |
53,584 |
50,656 |
11,001 |
6,427 |
|
|||||||||
Mortgage restatement |
|
466 |
1,281 |
977 |
293 |
- |
|
|||||||||
Mauritius segmental change |
|
- |
- |
(1,018) |
- |
1,018 |
|
|||||||||
Permata restatements |
|
- |
- |
(3,930) |
- |
- |
|
|||||||||
Restated at 30 June 2012 |
|
51,950 |
54,865 |
46,685 |
11,294 |
7,445 |
|
|||||||||
|
|
|
|
|
|
|
|
|||||||||
Reclassification of financial liabilities |
||||||||||||||||
|
As reported at 30 June 2012 |
Restatements |
Restated at 30 June 2012 |
|||||||||||||
|
Trading |
Designated at fair value through profit or loss |
Total |
Trading |
Designated at fair value through profit or loss |
Total |
Trading |
Designated at fair value through profit or loss |
Total |
|||||||
|
$million |
$million |
$million |
$million |
$million |
$million |
$million |
$million |
$million |
|||||||
Deposits by banks |
965 |
74 |
1,039 |
(965) |
965 |
- |
- |
1,039 |
1,039 |
|||||||
Customer accounts |
3,189 |
5,209 |
8,398 |
(3,189) |
3,189 |
- |
- |
8,398 |
8,398 |
|||||||
Debt securities in issue |
3,059 |
1,539 |
4,598 |
(3,059) |
3,059 |
- |
- |
4,598 |
4,598 |
|||||||
Total |
7,213 |
6,822 |
14,035 |
(7,213) |
7,213 |
- |
- |
14,035 |
14,035 |
|||||||
|
|
|
|
|
|
|
|
|
|
|||||||
|
As reported at 31 December 2012 |
Restatements |
Restated at 30 June 2012 |
|||||||||||||
|
Trading |
Designated at fair value through profit or loss |
Total |
Trading |
Designated at fair value through profit or loss |
Total |
Trading |
Designated at fair value through profit or loss |
Total |
|||||||
|
$million |
$million |
$million |
$million |
$million |
$million |
$million |
$million |
$million |
|||||||
Deposits by banks |
933 |
35 |
968 |
(933) |
933 |
- |
- |
968 |
968 |
|||||||
Customer accounts |
4,858 |
7,385 |
12,243 |
(4,858) |
4,858 |
- |
- |
12,243 |
12,243 |
|||||||
Debt securities in issue |
3,902 |
1,359 |
5,261 |
(3,902) |
3,902 |
- |
- |
5,261 |
5,261 |
|||||||
Total |
9,693 |
8,779 |
18,472 |
(9,693) |
9,693 |
- |
- |
18,472 |
18,472 |
|||||||
|
|
|
|
|
|
|
|
|
|
|||||||
33. Special purpose entities
The Group uses Special Purpose Entities (SPEs) in the normal course of business across a variety of activities. SPEs are established for specific limited purposes and take a number of legal forms. The main types of activities for which the Group utilises SPEs cover synthetic credit default swaps for portfolio management purposes, managed investment funds (including specialised principal finance funds), asset and other structured finance transactions.
SPEs are only consolidated when the Group has control of the SPE. Control is deemed to exist when the Group is exposed to, or has rights to, variable returns from its involvement with the SPE and has the ability to affect those returns through its power over the SPE. The assessment of power is based on the practical ability to direct the relevant activities of the SPE unilaterally for the Group's own benefit and is subject to reassessment if and when one or more of the elements of control change.
Most of the Group's consolidated SPEs are in respect of the Group's securitised portfolios of residential mortgages (see page 66 of the Risk review).
The total assets of unconsolidated SPEs in which the Group has an interest are set out below: |
|
|||||||
|
30.06.13 |
30.06.12 |
31.12.12 |
|
||||
|
Total assets |
Maximum exposure |
Total assets |
Maximum exposure |
Total assets |
Maximum exposure |
|
|
$million |
$million |
$million |
$million |
$million |
$million |
|
||
Portfolio management vehicles |
1,263 |
45 |
1,328 |
133 |
1,267 |
44 |
|
|
Principal Finance Funds1 |
739 |
177 |
758 |
152 |
766 |
181 |
|
|
Structured Finance |
450 |
102 |
244 |
20 |
464 |
103 |
|
|
Total |
2,452 |
324 |
2,330 |
305 |
2,497 |
328 |
|
|
1 |
Committed capital for these funds is $375 million (30 June 2012: $225 million and 31 December 2012: $375 million) of which $45 million (30 June 2012: $144 million and 31 December 2012: $145 million) have been drawn down net of provisions for impairment of $33 million (30 June 2012: $nil million and 31 December 2012: $33 million). During 2013 liquidation proceedings were initiated for a particular fund reducing the Group's committed capital. |
|||||||
For the purposes of portfolio management, the Group has entered into synthetic credit default swaps with note-issuing SPEs. The referenced assets remain on the Group's balance sheet as all the credit risk is not transferred to these SPEs. The Group's exposure arises from (a) the capitalised start-up costs in respect of the swap vehicles and (b) interest in the first loss notes and investment in a minimal portion of the mezzanine and senior rated notes issued by the note issuing SPEs. The proceeds of the notes issuance are typically invested in AAA-rated Government securities, which are used to collateralise the SPE's swap obligations to the Group, and to repay the principal to investors at maturity. The SPEs reimburse the Group on actual losses incurred, through the realisation of the collateral security. Correspondingly, the SPEs write down the notes issued by an equal amount of the losses incurred, in reverse order of seniority. All the funding is committed for the life of these vehicles and hence the Group has no indirect exposure in respect of the vehicles' liquidity position.
In the synthetic securitisation tranches such as those used for portfolio management, the underlying assets are not transferred into the associated SPE. Since the Group continues to own or hold all of the risks and returns relating to these assets and the credit protection afforded by the synthetic securitisation only serves to protect the Group against losses upon the occurrence of certain credit events, the assets are not de-recognised from the Group balance sheet. The assets will be fully de-recognised from the Group balance sheet if all the risks and returns relating to the assets have been transferred to the relevant SPE, and this typically entails a true sale of the assets to the SPE. Alternatively, the assets can be partially de-recognised from the Group balance sheet if a significant portion of risks and returns relating to the assets are transferred to the SPE and only a portion of the assets that commensurate with the retained risk and return of the assets is recognised on the Group balance sheet.
The Group's exposure to Principal Finance Funds represents committed or invested capital in unleveraged investment funds, primarily investing in pan-Asian infrastructure and real estate.
Structured finance comprises interests in transactions that the Group or, more usually, a customer has structured, using one or more SPEs, which provide beneficial arrangements for customers. The Group's exposure primarily represents the provision of funding to these structures as a financial intermediary, for which it receives a lender's return. The transactions largely relate to the provision of ship finance.
The Group has reputational risk in respect of certain portfolio management vehicles and investment funds either because the Group is the arranger and lead manager or because the SPEs have Standard Chartered branding.
34. Related party transactions |
Directors, connected persons or officers
There were no material transactions, arrangements or agreements outstanding for any director, connected person or officer of the Company which have to be disclosed under the Act, the rules of the UK Listing Authority or the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the 'Hong Kong Listing Rules').
Associates
The Group has loans and advances to China Bohai Bank of $16 million at 30 June 2013 (30 June 2012: $214 million; 31 December 2012: $32 million) and amounts payable of $14 million (30 June 2012: $9 million; 31 December 2012: $16 million).
Except as disclosed, the Group did not have any other amounts due to or from associate investments.
Joint ventures
The Group has loans and advances to PT Bank Permata Tbk totalling $23 million at 30 June 2013 (30 June 2012: $4 million; 31 December 2012: $18 million), and deposits of $61 million (30 June 2012: $26 million; 31 December 2012: $23 million).
The Group has an investment in subordinated debt issued by PT Bank Permata Tbk of $128 million (30 June 2012: $137 million and 31 December 2012: $128 million).
35. Post balance sheet events |
On 20 March 2013, the UK government announced a further reduction in the main rate of UK corporation tax rate of one percent with effect from 1 April 2015, in addition to the stepped reductions as previously announced. The combined effect of the reductions is to lower the main rate of UK corporation tax to 23 per cent in 2013-14, 21 per cent in 2014-15 and 20 per cent in 2015-16.
At 30 June 2013, only the tax rate change for 2013-14 to 23 percent had been substantively enacted. The rate changes for both 2014-15 and 2015-16 were contained within the UK Finance Act 2013 which was substantively enacted on 2 July 2013 and enacted on 17 July 2013. Accordingly these changes have not been reflected in this half year report. Had these changes been substantively enacted at the balance sheet date, the Group estimates that the UK deferred tax assets for the current period would have reduced by $26 million.
36. Statutory accounts |
The information in this half year report is unaudited and does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006. This document was approved by the Board on 6 August 2013. The statutory accounts for the year ended 31 December 2012 have been reported by the Company's auditors and delivered to the Registrar of Companies in England and Wales. The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498 of the Companies Act 2006.
37. Corporate governance |
The directors confirm that, throughout the period, the Company has complied with the code provisions set out in the Corporate Governance Code contained in Appendix 14 of the Hong Kong Listing Rules. The directors also confirm that the announcement of these results has been reviewed by the Company's Audit Committee. The Company confirms that it has adopted a code of conduct regarding securities transactions by directors on terms no less exacting than the required standard set out in Appendix 10 of the Hong Kong Listing Rules and that the directors of the Company have complied with this code of conduct throughout the period.
38. UK and Hong Kong accounting requirements |
As required by the Hong Kong Listing Rules, an explanation of the differences in accounting practices between EU endorsed IFRS and Hong Kong Financial Reporting Standards is required to be disclosed. There would be no significant differences had these accounts been prepared in accordance with Hong Kong Financial Reporting Standards. EU endorsed IFRS may differ from IFRSs published by the International Accounting Standards Board if a standard has not been endorsed by the EU.
Standard Chartered PLC - Statement of directors' responsibilities
We confirm that to the best of our knowledge:
· the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU;
· the interim management report includes a fair review of the information required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.
By order of the Board
R H Meddings
Group Finance Director
6 August 2013
Independent review report by KPMG Audit Plc to Standard Chartered PLC
Introduction
We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2013 set out on pages 96 to 160, which comprises the condensed consolidated interim balance sheet, the condensed consolidated interim income statement, the condensed consolidated interim statement of comprehensive income, the condensed consolidated interim statement of changes in equity, the condensed consolidated interim cash flow statement, and the related explanatory notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the Company in accordance with the terms of our engagement to assist the Company in meeting the requirements of the Disclosure and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA"). Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusions we have reached.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA.
As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the EU. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2013 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FCA.
John Hughes
for and on behalf of KPMG Audit Plc
Chartered Accountants
London
6 August 2013
Standard Chartered PLC - Additional information
A. Remuneration
Performance and reward philosophy and principles
Our performance, reward and benefits arrangements support and drives our business strategy and reinforce our values in the context of a clearly articulated risk appetite and a One Bank framework, under which we apply a consistent approach to reward for all employees. Our distinctive culture is underpinned by the importance we place on our values as part of compensation decision-making. We believe that performance and related reward outcomes should be a consequence of 'what' an employee has achieved as well as 'how' they have achieved it.
Our approach:
• Supports a strong performance-oriented culture, ensuring that individual reward and incentives are aligned with: (i) the performance and behaviour of the individual (ii) the performance of the business; and (iii) the interests of shareholders.
• Ensures a competitive reward package that reflects our international nature and enable us to attract, retain and motivate our employees.
• Reflects the fact that many of our employees bring international experience and expertise, and that we recruit from a global marketplace.
• Encourages an appropriate mix of fixed and variable compensation based on (i) the individual's accountability and (ii) the individual's and their business' risk profile.
The Remuneration Committee has oversight of all performance and reward policies for Standard Chartered employees. It is responsible for setting the principles and governance framework for all compensation decisions.
Employees have the opportunity to receive an element of performance-related compensation subject to their contractual entitlement. Typically the higher the total compensation, the greater the proportion delivered in variable form (either through a cash award, deferred shares/cash and/or performance shares).
B. Group Share Plans
2011 Standard Chartered Share Plan (the 2011 Plan)
Approved by shareholders in May 2011 this is the Group's main share plan, applicable to all employees with the flexibility to provide a variety of award types. The 2011 Plan is designed to deliver performance shares, deferred awards and restricted shares, giving us sufficient flexibility to meet the challenges of the changing regulatory and competitive environment. Discretionary share awards are a key part of both executive directors' and senior management's variable compensation and their significance as a proportion of potential total remuneration is one of the strongest indicators of our commitment to pay for sustainable performance ensuring there is an appropriate return for the risk taken and that the measure is aligned with the Group's risk appetite.
Performance shares are subject to a combination of three performance measures, Total Shareholder Return (TSR), Earnings Per Share (EPS) and Return on Risk Weighted Assets. The weighting between the three elements is split equally, one third of the award depending on each measure, assessed independently. Performance share awards for executive directors are currently subject to an annual limit of 400 per cent of base salary in face value terms and delivered as nil cost options.
Deferred awards are used to deliver the deferred portion of annual performance awards, in line with both market practice and the requirements of the PRA. These awards are subject to a three year deferral period, vesting equally one third on each of the first, second and third anniversaries. These awards are not subject to an annual limit to ensure that regulatory requirements relating to deferral levels can be met and in line with market practice of our competitors. Deferred awards will not be subject to any further performance criteria, although the Group's claw-back policy will apply.
Restricted share awards which are made outside of the annual performance process, as additional incentive or retention mechanisms, are provided as restricted shares under the 2011 Plan. These awards vest in equal instalments on the second and the third anniversaries of the award date. In line with similar plans operated by our competitors, restricted share awards are not subject to an annual limit and do not have any performance conditions.
The remaining life of the plan during which new awards can be made is eight years.
2000 Executive Share Option Scheme (2000 ESOS) - now closed to new grants
The Group previously operated the 2000 ESOS for executive directors and selected senior managers and there remain outstanding vested awards. Executive share options to purchase ordinary shares in Standard Chartered PLC were exercisable after the third, but before the tenth, anniversary of the date of grant subject to EPS performance criteria being satisfied. The exercise price per share is the share price at the date of grant.
2001 Performance Share Plan (2001 PSP) - now closed to new grants
The Group's previous plan for delivering performance shares was the 2001 PSP and there remain outstanding vested and unvested awards. Under the 2001 PSP half the award is dependent upon TSR performance and the balance is subject to a target of defined EPS growth. Both measures use the same three-year period and are assessed independently.
1997/2006 Restricted Share Scheme (2006 RSS)/ 2007 Supplementary Restricted Share Scheme (2007 SRSS)
The Group's previous plans for delivering restricted shares were the 2006 RSS and 2007 SRSS both now replaced by the 2011 Plan. There remain unvested and vested awards outstanding under these plans. Awards were generally in the form of nil cost options and do not have any performance conditions. Generally deferred restricted share awards vest equally over three years and for non-deferred awards half vests two years after the date of grant and the balance after three years. No further awards will be granted under the 2006 RSS and 2007 SRSS.
Standard Chartered PLC - Additional information continued
2004 Deferred Bonus Plan (DBP)
Under the DBP, shares are conditionally awarded as part of certain executive directors' annual performance award. Awards under the DBP are made in very limited circumstances to a small number of employees. Further details are contained in the 2012 Directors' remuneration report. The remaining life of the plan is one year.
All Employee Sharesave Plan (Sharesave)
Under the Sharesave plans, employees have the choice of opening a savings contract. Within a period of six months after the third or fifth anniversary, as appropriate, employees may purchase ordinary shares in the Company at a discount of up to 20 per cent on the share price at the date of invitation. There are no performance conditions attached to options granted under the Sharesave plans. In some countries in which the Group operates, it is not possible to operate Sharesave plans, typically due to securities law and regulatory restrictions. In these countries the Group offers an equivalent cash-based plan to its employees. The remaining life of the Sharesave plans is one year.
A new sharesave scheme, the Standard Chartered 2013 Sharesave Plan was approved by Shareholders at the AGM in May 2013 and new sharesave invitations will be made under this plan from September 2013.
Valuation of options
Details of the valuation models used in determining the fair values of options granted under the Group's share plans are detailed in the Group's 2012 Annual Report and Accounts.
Reconciliation of option movements for the 6 months to 30 June 2013
|
2011 Plan 1 |
PSP 1 |
RSS 1 |
SRSS 1 |
DBP 1,2 |
ESOS |
Weighted average exercise price |
Sharesave |
Weighted average exercise price |
|
Performance |
Deferred / |
|||||||||
Outstanding |
9,075,667 |
10,598,950 |
2,221,257 |
16,685,298 |
2,870,847 |
70,255 |
351,044 |
7.46 |
14,076,948 |
11.59 |
Granted |
4,528,0783 |
7,943,3874 |
- |
258,8705 |
- |
- |
- |
- |
- |
- |
Lapsed |
(123,420) |
(160,230) |
(72,916) |
(208,899) |
(5,889) |
- |
(22,610) |
5.82 |
(674,987) |
11.40 |
Exercised |
- |
(2,545,939) |
(1,399,182) |
(7,981,324) |
(1,334,979) |
(70,255) |
(215,754) |
7.41 |
(914,801) |
10.97 |
Outstanding at 30 June |
13,480,325 |
15,836,168 |
749,159 |
8,753,945 |
1,529,979 |
- |
112,680 |
7.90 |
12,487,160 |
11.65 |
Exercisable |
- |
929,800 |
697,088 |
5,721,609 |
1,111,715 |
- |
112,680 |
7.90 |
- |
- |
Range of exercise prices (£) |
- |
- |
- |
- |
- |
- |
7.89 to 8.08 |
- |
- |
- |
Intrinsic value of vested but not exercised options |
- |
1.1 |
1.4 |
10.5 |
2.4 |
- |
0.1 |
- |
- |
- |
Weighted average contractual remaining life (years) |
- |
5.65 |
5.38 |
3.78 |
3.29 |
- |
0.69 |
- |
- |
- |
Weighted average |
- |
17.15 |
16.65 |
17.44 |
17.47 |
16.12 |
17.35 |
- |
17.08 |
- |
Notes:
1 Employees do not contribute towards the cost of these awards
2 The opening figure at 1 January 2013 has been restated
3 4,506,380 granted on 11 March 2013 and 21,698 granted on 19 June 2013
4 7,478,046 granted on 11 March 2013, 301,575 granted on 13 March 2013, 159,388 granted on 19 June 2013, 4,310 granted on 20 June 2013 and 68 granted on 22 June 2013
5 Granted on 10 March 2013 and relates to notional dividend applied to unvested portion of awards
C. Directors' interests in ordinary shares(1,2,3)
|
At 1 January 2013 |
Personal interests |
Family interests |
At 30 June 2013 |
Chairman : |
|
|
|
|
Sir John Peace |
7,543 |
7,543 |
- |
7,543 |
Executive directors : |
|
|
|
|
P A Sands |
213,852 |
224,661 |
- |
224,661 |
R H Meddings |
121,552 |
68,188 |
60,776 |
128,964 |
A M G Rees |
138,951 |
169,835 |
- |
169,835 |
S P Bertamini |
123,980 |
123,980 |
- |
123,980 |
J S Bindra (4) |
168,142 |
178,776 |
- |
178,776 |
V Shankar |
151,598 |
150,539 |
- |
150,539 |
Independent non-executive directors : |
|
|
|
|
O P Bhatt |
2,000 |
2,000 |
- |
2,000 |
Dr K M Campbell (5) |
- |
- |
- |
- |
Dr L C Y Cheung |
2,000 |
2,000 |
- |
2,000 |
R Delbridge (6) |
12,035 |
12,798 |
- |
12,798 |
J F T Dundas |
3,141 |
3,141 |
- |
3,141 |
M Ewing |
2,000 |
2,037 |
- |
2,037 |
V F Gooding (6) |
4,820 |
5,903 |
- |
5,903 |
Dr Han Seung-Soo KBE |
2,413 |
2,465 |
- |
2,465 |
S J Lowth |
8,083 |
9,262 |
- |
9,262 |
R H P Markham |
4,248 |
4,339 |
- |
4,339 |
R Markland |
3,848 |
3,931 |
- |
3,931 |
J G H Paynter |
10,000 |
10,000 |
- |
10,000 |
P D Skinner |
16,005 |
16,005 |
- |
16,005 |
O H J Stocken |
17,915 |
17,915 |
- |
17,915 |
Dr L H Thunell |
6,200 |
6,335 |
- |
6,335 |
Notes:
1. The beneficial interests of directors and their families in the ordinary shares of the Company are set out above. The directors do not have any non-beneficial interests in the Company's shares.
2. No director had an interest in the Company's preference shares or loan stock, nor the shares or loan stocks of any subsidiary or associated undertaking of the Group.
3. No director had any corporate interests in the Company's ordinary shares.
4. 153,000 of these shares are subject to a charge from 28 December 2011.
5. Kurt Campbell joined the Board on 18 June 2013 and held no shares as of reporting date.
6. Richard Delbridge and Val Gooding stepped down from the Board on 1 May 2013. Their total interests represent their holding as at 1 May 2013.
2004 Deferred Bonus Plan ("DBP")
Director |
Shares held |
Shares awarded |
Shares awarded |
Awards |
Shares held |
A M G Rees |
70,255 |
- |
- |
70,255 |
- |
Notes:
1. Mike Rees was granted a final award under the DBP in March 2012 in line with the arrangements put in place to deliver the outstanding deferred elements of his 2009 Annual Performance Award (APA).
2. Under the 2004 DBP, shares were conditionally awarded as part of the executive director's deferred element of their APA. The shares are held in an employee benefit trust and vest one year after the date of acquisition.
Share awards
Sharesave
Director |
Plan |
Grant date |
As at |
Exercise |
Exercised |
Lapsed |
As at |
Period |
P A Sands |
Sharesave |
26-Sep-07 |
1,601 |
1,048 |
1,601 |
- |
- |
2012-2013 |
P A Sands |
Sharesave |
01-Oct-12 |
789 |
1,140 |
- |
- |
789 |
2015-2016 |
S P Bertamini |
Sharesave |
09-Oct-09 |
1,405 |
1,104 |
- |
- |
1,405 |
2014-2015 |
J S Bindra |
Sharesave |
09-Oct-09 |
1,407 |
1,104 |
- |
- |
1,407 |
2014-2015 |
R H Meddings |
Sharesave |
04 Oct-10 |
614 |
1,463 |
- |
- |
614 |
2013-2014 |
Other share awards
Director |
Plan |
Grant date |
As at |
Awarded |
Exercised |
Lapsed |
As at |
Period of |
Sir John Peace |
RSS |
28-Sep-09 |
43,105 |
- |
- |
- |
43,105 |
2011-2016 |
|
RSS |
21-Sep-10 |
21,552 |
- |
- |
- |
21,552 |
2012-2017 |
|
RSA |
22-Jun-11 |
14,863 |
- |
- |
- |
14,863 |
2013-2018 |
|
RSA |
20-Sep-11 |
18,491 |
- |
- |
- |
18,491 |
2013-2018 |
|
RSA |
13-Mar-12 |
15,974 |
- |
- |
- |
15,974 |
2014-2019 |
|
RSA |
21-Dec-12 |
15,782 |
- |
- |
- |
15,782 |
2014-2019 |
|
RSA(1) |
11-Mar-13 |
- |
13,888 |
- |
- |
13,888 |
2015-2020 |
P A Sands |
PSP(2) |
11-Mar-10 |
193,875 |
- |
182,572 |
11,303 |
- |
2013-2020 |
|
PSA |
06-May-11 |
211,526 |
- |
- |
- |
211,526 |
2014-2021 |
|
PSA |
13-Mar-12 |
239,127 |
- |
- |
- |
239,127 |
2015-2022 |
|
PSA |
11-Mar-13 |
- |
186,329 |
- |
- |
186,329 |
2016-2023 |
|
Deferred RSS |
11-Mar-10 |
30,850 |
- |
30,850 |
- |
- |
2012-2017 |
|
Deferred RSS(3) |
10-Mar-11 |
53,052 |
1,767 |
27,405 |
- |
27,414 |
2012-2018 |
|
Deferred RSA(4) |
13-Mar-12 |
86,580 |
2,883 |
29,818 |
- |
59,645 |
2013-2019 |
|
Deferred RSA(1) |
11-Mar-13 |
- |
67,399 |
- |
- |
67,399 |
2014-2020 |
S P Bertamini |
PSP(2) |
11-Mar-10 |
104,393 |
- |
98,306 |
6,087 |
- |
2013-2020 |
|
PSA |
06-May-11 |
113,427 |
- |
- |
- |
113,427 |
2014-2021 |
|
PSA |
13-Mar-12 |
127,809 |
- |
- |
- |
127,809 |
2015-2022 |
|
PSA |
11-Mar-13 |
- |
104,308 |
- |
- |
104,308 |
2016-2023 |
|
Deferred RSS |
11-Mar-10 |
13,497 |
- |
13,497 |
- |
- |
2012-2017 |
|
Deferred RSS(3) |
10-Mar-11 |
25,767 |
858 |
13,311 |
- |
13,314 |
2012-2018 |
|
Deferred RSA(4) |
13-Mar-12 |
47,000 |
1,565 |
16,187 |
- |
32,378 |
2013-2019 |
|
Deferred RSA(1) |
11-Mar-13 |
- |
37,444 |
- |
- |
37,444 |
2014-2020 |
J S Bindra |
PSP(2) |
11-Mar-10 |
89,480 |
- |
84,263 |
5,217 |
- |
2013-2020 |
|
PSA |
06-May-11 |
101,164 |
- |
- |
- |
101,164 |
2014-2021 |
|
PSA |
13-Mar-12 |
119,563 |
- |
- |
- |
119,563 |
2015-2022 |
|
PSA |
11-Mar-13 |
- |
100,742 |
- |
- |
100,742 |
2016-2023 |
|
Deferred RSS |
11-Mar-10 |
13,497 |
- |
13,497 |
- |
- |
2012-2017 |
|
Deferred RSS(3) |
10-Mar-11 |
25,767 |
858 |
13,311 |
- |
13,314 |
2012-2018 |
|
Deferred RSA(4) |
13-Mar-12 |
44,527 |
1,483 |
15,334 |
- |
30,676 |
2013-2019 |
|
Deferred RSA(1) |
11-Mar-13 |
- |
37,444 |
- |
- |
37,444 |
2014-2020 |
R H Meddings |
PSP(2) |
11-Mar-10 |
119,307 |
- |
112,351 |
6,956 |
- |
2013-2020 |
|
PSA |
06-May-11 |
144,083 |
- |
- |
- |
144,083 |
2014-2021 |
|
PSA |
13-Mar-12 |
162,854 |
- |
- |
- |
162,854 |
2015-2022 |
|
PSA |
11-Mar-13 |
- |
126,775 |
- |
- |
126,775 |
2016-2023 |
|
Deferred RSS |
11-Mar-10 |
21,210 |
- |
21,210 |
- |
- |
2012-2017 |
|
Deferred RSS(3) |
10-Mar-11 |
36,379 |
1,211 |
18,792 |
- |
18,798 |
2012-2018 |
|
Deferred RSA(4) |
13-Mar-12 |
59,369 |
1,977 |
20,446 |
- |
40,900 |
2013-2019 |
|
Deferred RSA(1) |
11-Mar-13 |
- |
46,216 |
- |
- |
46,216 |
2014-2020 |
Other share awardscontinued
Director |
Plan |
Grant date |
As at |
Awarded |
Exercised |
Lapsed |
As at |
Period of |
A M G Rees |
PSP(2) |
11-Mar-10 |
143,169 |
- |
134,822 |
8,347 |
- |
2013-2020 |
|
PSA |
06-May-11 |
168,608 |
- |
- |
- |
168,608 |
2014-2021 |
|
PSA |
13-Mar-12 |
192,745 |
- |
- |
- |
192,745 |
2015-2022 |
|
PSA |
11-Mar-13 |
- |
150,489 |
- |
- |
150,489 |
2016-2023 |
|
Deferred RSS |
11-Mar-10 |
35,792 |
- |
35,792 |
- |
- |
2012-2017 |
|
Deferred RSS(3) |
10-Mar-11 |
166,734 |
5,552 |
86,130 |
- |
86,156 |
2012-2018 |
|
Deferred RSA(4) |
13-Mar-12 |
247,373 |
8,238 |
85,195 |
- |
170,416 |
2013-2019 |
|
Deferred RSA(1) |
11-Mar-13 |
- |
192,570 |
- |
- |
192,570 |
2014-2020 |
V Shankar |
PSP(2) |
11-Mar-10 |
59,653 |
- |
56,175 |
3,478 |
- |
2013-2020 |
|
PSA |
06-May-11 |
76,640 |
- |
- |
- |
76,640 |
2014-2021 |
|
PSA |
13-Mar-12 |
92,764 |
- |
- |
- |
92,764 |
2015-2022 |
|
PSA |
11-Mar-13 |
- |
106,983 |
- |
- |
106,983 |
2016-2023 |
|
Deferred RSS |
11-Mar-10 |
18,743 |
- |
18,743 |
- |
- |
2012-2017 |
|
Deferred RSS(3,5) |
10-Mar-11 |
60,630 |
2,019 |
31,320 |
- |
31,329 |
2012-2018 |
|
Deferred SRSS |
11-Mar-10 |
41,511 |
- |
41,511 |
- |
- |
2012-2017 |
|
Deferred RSA(4) |
13-Mar-12 |
79,159 |
2,636 |
27,262 |
- |
54,533 |
2013-2019 |
|
Deferred RSA(1) |
11-Mar-13 |
- |
41,723 |
- |
- |
41,723 |
2014-2020 |
Notes:
1. Market value on date of award (11 March 2013) was 1,822 pence.
2. The performance conditions attached to these awards have been partially met and the awards can be exercised, in part, from 11 March 2013. The number of shares lapsed indicates the portion of the award which did not satisfy the performance conditions.
3. Notional dividend awarded 10 March 2013, market value on date of award was 1,800 pence.
4. Notional dividend awarded 13 March 2013, market value on date of award was 1,721 pence.
5. The closing balance for this award in the 2012 accounts was overstated by 13 shares and the opening balance for 2013 has therefore been restated.
D. Share price information
The middle market price of an ordinary share at the close of business on 28 June 2013 was 1,427 pence. The share price range during the first half of 2013 was 1,395 pence to 1,837.50 pence (based on the closing middle market prices).
E. Substantial shareholders
The Company and its shareholders have been granted partial exemption from the disclosure requirements under Part XV of the Securities and Futures Ordinance (SFO).
As a result of this exemption, shareholders no longer have an obligation under the SFO to notify the Company of substantial shareholding interests, and the Company is no longer required to maintain a register of interests of substantial shareholders under section 336 of the SFO. The Company is, however, required to file with The Stock Exchange of Hong Kong Limited any disclosure of interests made in the UK.
F. Code for Financial Reporting Disclosure
The British Bankers' Association Code for Financial Reporting Disclosure sets out five disclosure principles together with supporting guidance. The principles are that UK banks will: provide high quality, meaningful and decision useful disclosures; review and enhance their financial instrument disclosures for key areas of interest; assess the applicability and relevance of good practice recommendations to their disclosures acknowledging the importance of such guidance; seek to enhance the comparability of financial statement disclosures across the UK banking sector; and clearly differentiate in their annual reports between information that is audited and information that is unaudited. The Group's interim financial statements for the six months ended 30 June 2013 have been prepared in accordance with the Code's principles.
G. Shareholder information
2013 interim dividend |
|
Ex-dividend date |
14 August 2013 |
Record date for dividend |
16 August 2013 |
Dividend payment date |
17 October 2013 |
|
|
2013 final dividend |
(provisional only) |
Results and dividend announcement date |
5 March 2014 |
Preference shares |
Next half-yearly dividend |
7 3/8 per cent Non-Cumulative Irredeemable preference shares of £1 each |
1 October 2013 |
8 ¼ per cent Non-Cumulative Irredeemable preference shares of £1 each |
1 October 2013 |
6.409 per cent Non-Cumulative preference shares of $5 each |
30 July 2013 |
7.014 per cent Non-Cumulative preference shares of $5 each |
30 July 2013 |
8.125 per cent Non-Cumulative preference shares of $5 each |
27 November 2013 |
Previous dividend payments (not adjusted for rights issue)
Dividend and |
Payment date |
Dividend per ordinary share |
Cost of one new ordinary |
Interim 2002 |
15 October 2002 |
14.10c/9.023p |
£6.537/$10.215 |
Final 2002 |
13 May 2003 |
32.9c/20.692p/ HK$2.566 |
£6.884/$10.946 |
Interim 2003 |
10 October 2003 |
15.51c/9.3625p/HK$1.205 |
£8.597/$14.242 |
Final 2003 |
14 May 2004 |
36.49c/20.5277p/HK$2.8448 |
£8.905/$15.830 |
Interim 2004 |
8 October 2004 |
17.06c/9.4851p/HK$1.3303 |
£9.546/$17.16958 |
Final 2004 |
13 May 2005 |
40.44c/21.145p/HK$3.15156 |
£9.384/$17.947 |
Interim 2005 |
14 October 2005 |
18.94c/10.7437p/HK$1.46911 |
£11.878/$21.3578 |
Final 2005 |
12 May 2006 |
45.06c/24.9055p/HK$3.49343 |
£14.2760/$24.77885 |
Interim 2006 |
11 October 2006 |
20.83c/11.14409p/HK$1.622699 |
£13.2360/$25.03589 |
Final 2006 |
11 May 2007 |
50.21c/25.17397p/HK$3.926106 |
£14.2140/$27.42591 |
Interim 2007 |
10 October 2007 |
23.12c/11.39043p/HK$1.794713 |
£15.2560/$30.17637 |
Final 2007 |
16 May 2008 |
56.23c/28.33485p/HK$4.380092 |
£16.2420/$32.78447 |
Interim 2008 |
9 October 2008 |
25.67c/13.96133p/HK$1.995046 |
£14.00/$26.0148 |
Final 2008 |
15 May 2009 |
42.32c/28.4693p/HK$3.279597 |
£8.342/$11.7405 |
Interim 2009 |
8 October 2009 |
21.23c/13.25177p/HK$1.645304 |
£13.876/$22.799 |
Final 2009 |
13 May 2010 |
44.80c/29.54233p/HK$3.478306 |
£17.351/$26.252 |
Interim 2010 |
5 October 2010 |
23.35c/14.71618p/HK$1.811274/INR0.984124* |
£17.394/$27.190 |
Final 2010 |
11 May 2011 |
46.45c/28.2725p/HK$3.623404/INR1.9975170* |
£15.994/$25.649 |
Interim 2011 |
7 October 2011 |
24.75c/15.81958125p/HK$1.928909813/INR1.13797125* |
£14.127/$23.140 |
Final 2011 |
15 May 2012 |
51.25c/31.63032125p/HK$3.9776083375/INR2.6667015* |
£15.723/$24.634 |
Interim 2012 |
11 October 2012 |
27.23c/16.799630190p/HK$2.111362463/INR1.349803950* |
£13.417/$21.041 |
Final 2012 |
14 May 2013 |
56.77c/36.5649893p/HK$4.4048756997/INR2.976283575* |
£17.40/$26.28792 |
* The INR dividend is per Indian Depository Receipt
ShareCare
ShareCare is available to shareholders on the Company's UK register who have a UK address and bank account, and allows you to hold your Standard Chartered shares in a nominee account. Your shares will be held in electronic form so you will no longer have to worry about keeping your share certificates safe. If you join ShareCare you will still be invited to attend the Company's AGM and you will still receive your dividend at the same time as everyone else. ShareCare is free to join and there are no annual fees to pay. If you would like to receive more information please visit our website at: http://investors.standardchartered.com/mypage.cfm or contact the shareholder helpline on 0870 702 0138.
Donating shares to ShareGift
Shareholders who have a small number of shares often find it uneconomical to sell them. An alternative is to consider donating them to the charity ShareGift (registered charity 1052686), which collects donations of unwanted shares until there are enough to sell and uses the proceeds to support UK charities. Further information can be obtained from the Company's Registrars or from ShareGift on 020 7930 3737 or from www.sharegift.org. There is no implication for Capital Gains Tax (no gain no loss) when you donate shares to charity and UK tax payers may be able to claim income tax relief on the value of their donation.
Bankers' Automated Clearing System (BACS)
Dividends can be paid straight into your bank or building society account. Please register online at www.investorcentre.co.uk contact our registrar for a mandate form.
Registrars and shareholder enquiries
If you have any enquiries relating to your shareholding and you hold your shares on the United Kingdom register, please contact our registrar Computershare Investor Services PLC at The Pavilions, Bridgwater Road, Bristol, BS99 6ZZ. There is a shareholder helpline on 0870 702 0138.
If you hold your shares on the Hong Kong branch register and you have enquiries, please contact Computershare Hong Kong Investor Services Limited, 17M Floor, Hopewell Centre, 183 Queen's Road East, Wan Chai, Hong Kong. You can check your shareholding at: www.computershare.com/hk/investors
Chinese translation
If you would like a Chinese version of this Half year report, please contact: Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen's Road East, Wan Chai, Hong Kong.
本半年報告之中文譯本可向香港中央證券登記有限公司索取,地址:香港灣仔皇后大道東183號合和中心17M樓。
Shareholders on the Hong Kong branch register who have asked to receive corporate communications in either Chinese or English can change this election by contacting Computershare.
If you hold Indian Depository Receipts and you have enquiries, please contact Karvy Computershare Private Limited, 17-24, Vithalrao Nagar, Madhapur, Hyderabad 500 001, India.
If there is a dispute between any translation and the English version of this Half year report, the English text shall prevail.
Taxation
Information on taxation applying to dividends paid to you if you are a shareholder in the United Kingdom, Hong Kong and the United States will be sent to you with your dividend documents.
H. Convenience translation of selected financial statements into Indian Rupees |
|||||||
In compliance with clause 37(3) of Indian Depository Receipts Listing agreement, the condensed interim financial statements on pages 96 to 100 are presented in Indian rupees (INR) using a US dollar / Indian rupee exchange rate of 59.6995 as at 30 June 2013 as published by Reserve Bank of India. Amounts have been translated using the said exchange rate including totals and sub-totals and any discrepancies in any table between totals and sums of the amounts listed are due to rounding. |
|||||||
|
|
|
|
|
|
|
|
Condensed consolidated interim income statement (Translated to INR) |
|||||||
For the six months ended 30 June 2013 |
|||||||
|
|
|
|
|
6 months ended |
6 months ended |
6 months ended |
|
|
|
|
|
30.06.13 |
30.06.12 |
31.12.12 |
|
|
|
Rs. million |
Rs. million |
Rs. million |
||
Interest income |
|
|
|
|
532,161 |
530,370 |
533,893 |
Interest expense |
|
|
|
|
(197,964) |
(209,545) |
(211,097) |
Net interest income |
|
|
|
|
334,198 |
320,825 |
322,795 |
Fees and commission income |
|
|
|
|
139,577 |
131,816 |
141,309 |
Fees and commission expense |
|
|
|
|
(14,507) |
(15,223) |
(14,388) |
Net trading income |
|
|
|
|
100,594 |
93,131 |
70,386 |
Other operating income |
|
|
|
|
36,417 |
28,895 |
41,790 |
Non-interest income |
|
|
|
|
262,081 |
238,619 |
239,096 |
Operating income |
|
|
|
|
596,279 |
559,444 |
561,892 |
Staff costs |
|
|
|
|
(202,799) |
(197,367) |
(190,203) |
Premises costs |
|
|
|
|
(25,432) |
(24,656) |
(26,865) |
General administrative expenses |
|
|
|
|
(51,342) |
(50,207) |
(111,399) |
Depreciation and amortisation |
|
|
|
|
(20,955) |
(19,044) |
(20,358) |
Operating expenses |
|
|
|
|
(300,527) |
(291,274) |
(348,824) |
Operating profit before impairment losses and taxation |
|
|
|
|
295,751 |
268,170 |
213,068 |
Impairment losses on loans and advances and other credit risk provisions |
|
|
|
|
(43,581) |
(34,327) |
(37,073) |
Other impairment |
|
|
|
|
|
|
|
Goodwill impairment |
|
|
|
|
(59,700) |
- |
- |
Other |
|
|
|
|
(657) |
(4,418) |
(7,283) |
Profit from associates and joint ventures |
|
|
|
|
6,686 |
5,552 |
5,313 |
Profit before taxation |
|
|
|
|
198,501 |
234,977 |
174,024 |
Taxation |
|
|
|
|
(65,013) |
(61,849) |
(49,551) |
Profit for the period |
|
|
|
|
133,488 |
173,129 |
124,473 |
|
|
|
|
|
|
|
|
Profit attributable to: |
|
|
|
|
|
|
|
Non-controlling interests |
|
|
|
|
3,283 |
2,627 |
3,224 |
Parent company shareholders |
|
|
|
|
130,205 |
170,502 |
121,250 |
Profit for the period |
|
|
|
|
133,488 |
173,129 |
124,473 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Rupees |
Rupees |
Rupees |
Earnings per share: |
|
|
|
|
|
|
|
Basic earnings per ordinary share |
|
|
|
|
52.6 |
70.2 |
49.1 |
Diluted earnings per ordinary share |
|
|
|
|
52.1 |
69.5 |
48.6 |
|
|
|
|
|
|
|
|
Dividends per ordinary share: |
|
|
|
|
|
|
|
Interim dividend declared |
|
|
|
|
17.19 |
- |
- |
Interim dividend paid |
|
|
|
|
- |
16.26 |
- |
Final dividend paid |
|
|
|
|
- |
- |
33.89 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Rs. million |
Rs. million |
Rs. million |
Total dividend: |
|
|
|
|
|
|
|
Total interim dividend payable |
|
|
|
|
41,551 |
- |
- |
Total interim dividend (paid 11 October 2012) |
|
|
|
|
- |
38,805 |
- |
Total final dividend (paid 14 May 2013) |
|
|
|
|
- |
- |
81,550 |
|
|
|
|
|
|
|
|
Condensed consolidated interim statement of comprehensive income (Translated to INR) |
||||||
For the six months ended 30 June 2013 |
||||||
|
|
|
6 months ended |
6 months ended |
6 months ended |
|
|
|
|
30.06.13 |
30.06.12 |
31.12.12 |
|
|
Rs.million |
Rs.million |
Rs.million |
|
||
Profit for the period |
133,488 |
173,129 |
124,473 |
|
||
Other comprehensive income : |
|
|
|
|
||
Items that will not be reclassified to Income statement: |
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actuarial gains/(losses) on retirement benefit obligations |
2,627 |
(4,537) |
- |
|
|
|
|
|
|
|
|
|
Items that may be reclassified subsequently to Income statement: |
|
|
|
|
||
|
Exchange differences on translation of foreign operations: |
|
|
|
|
|
|
|
Net (losses)/gains taken to equity |
(66,386) |
(13,134) |
47,043 |
|
|
|
Net gains/(losses) on net investment hedges |
4,836 |
(239) |
(4,119) |
|
|
Share of other comprehensive income from associates |
(179) |
60 |
179 |
|
|
|
Available-for-sale investments: |
|
|
|
|
|
|
|
Net valuation (losses)/gains taken to equity |
(6,865) |
18,925 |
43,999 |
|
|
|
Reclassified to income statement |
(12,537) |
(8,776) |
(11,283) |
|
|
Cash flow hedges: |
|
|
|
|
|
|
|
Net (losses)/gains taken to equity |
(9,612) |
2,627 |
5,313 |
|
|
|
Reclassified to income statement |
(119) |
- |
(1,194) |
|
|
Taxation relating to components of other comprehensive income |
3,821 |
(2,806) |
(5,074) |
|
|
|
Other comprehensive income for the period, net of taxation |
(84,415) |
(7,880) |
74,863 |
|
|
Total comprehensive income for the period |
49,073 |
165,248 |
199,337 |
|
||
|
|
|
|
|
|
|
Total comprehensive income attributable to: |
|
|
|
|
||
Non-controlling interests |
2,328 |
60 |
4,955 |
|
||
Parent company shareholders |
46,745 |
165,189 |
194,382 |
|
||
|
49,073 |
165,248 |
199,337 |
|
Condensed consolidated interim balance sheet (Translated to INR) |
||||
As at 30 June 2013 |
||||
|
|
30.06.13 |
30.06.12 |
31.12.12 |
Rs.million |
Rs.million |
Rs.million |
||
Assets |
|
|
|
|
Cash and balances at central banks |
|
3,439,945 |
3,025,750 |
3,614,029 |
Financial assets held at fair value through profit or loss |
|
1,679,645 |
1,656,243 |
1,616,424 |
Derivative financial instruments |
|
3,256,488 |
3,136,015 |
2,954,827 |
Loans and advances to banks |
|
4,376,272 |
4,413,584 |
4,047,447 |
Loans and advances to customers |
|
17,035,431 |
16,265,308 |
16,694,249 |
Investment securities |
|
5,660,229 |
5,265,197 |
5,923,683 |
Other assets |
|
2,271,029 |
1,800,955 |
1,704,301 |
Current tax assets |
|
11,821 |
15,999 |
12,835 |
Prepayments and accrued income |
|
160,413 |
160,472 |
152,353 |
Interests in associates and joint ventures |
|
99,221 |
84,057 |
91,161 |
Goodwill and intangible assets |
|
364,167 |
421,240 |
435,926 |
Property, plant and equipment |
|
403,509 |
332,825 |
395,211 |
Deferred tax assets |
|
43,939 |
51,342 |
40,357 |
Total assets |
|
38,802,108 |
36,628,986 |
37,682,802 |
|
|
|
|
|
Liabilities |
|
|
|
|
Deposits by banks |
|
2,687,194 |
2,671,791 |
2,174,674 |
Customer accounts |
|
22,167,260 |
20,909,630 |
22,260,391 |
Financial liabilities held at fair value through profit or loss |
|
1,340,612 |
1,138,290 |
1,376,909 |
Derivative financial instruments |
|
3,210,699 |
2,993,572 |
2,817,339 |
Debt securities in issue |
|
3,503,764 |
3,451,467 |
3,341,918 |
Other liabilities |
|
1,714,510 |
1,548,724 |
1,449,802 |
Current tax liabilities |
|
76,774 |
70,804 |
63,640 |
Accruals and deferred income |
|
251,454 |
249,007 |
287,214 |
Subordinated liabilities and other borrowed funds |
|
1,098,053 |
979,549 |
1,109,694 |
Deferred tax liabilities |
|
10,627 |
8,597 |
9,612 |
Provisions for liabilities and charges |
|
8,776 |
9,850 |
12,835 |
Retirement benefit obligations |
|
24,536 |
34,566 |
29,312 |
Total liabilities |
|
36,094,258 |
34,065,848 |
34,933,342 |
|
|
|
|
|
Equity |
|
|
|
|
Share capital |
|
72,356 |
71,401 |
72,057 |
Reserves |
|
2,600,271 |
2,454,187 |
2,636,031 |
Total parent company shareholders' equity |
|
2,672,627 |
2,525,587 |
2,708,089 |
Non-controlling interests |
|
35,223 |
37,551 |
41,372 |
Total equity |
|
2,707,850 |
2,563,138 |
2,749,460 |
Total equity and liabilities |
|
38,802,108 |
36,628,986 |
37,682,802 |
|
|
|
|
|
|
|
|
|
|
Condensed consolidated interim statement of changes in equity (Translated to INR) |
|
||||||||||||
For the six months ended 30 June 2013 |
|
||||||||||||
|
Share capital |
Share premium account |
Capital and Capital redemption reserve1 |
Merger reserve |
Available -for-sale reserve |
Cash flow hedge reserve |
Translation reserve |
Retained earnings |
Parent company shareholders equity |
Non-controlling interests |
Total |
|
|
Rs.million |
Rs.million |
Rs.million |
Rs.million |
Rs.million |
Rs.million |
Rs.million |
Rs.million |
Rs.million |
Rs.million |
Rs.million |
|
||
At 1 January 2012 |
71,162 |
324,288 |
1,075 |
741,527 |
(6,507) |
(776) |
(83,221) |
1,383,058 |
2,430,605 |
39,461 |
2,470,067 |
|
|
Profit for the period |
- |
- |
- |
- |
- |
- |
- |
170,502 |
170,502 |
2,627 |
173,129 |
|
|
Other comprehensive income |
- |
- |
- |
- |
8,776 |
2,328 |
(12,835) |
(3,582)2 |
(5,313) |
(2,567) |
(7,880) |
|
|
Distributions |
- |
- |
- |
- |
- |
- |
- |
- |
- |
(1,970) |
(1,970) |
|
|
Shares issued, net of expenses |
60 |
1,313 |
- |
- |
- |
- |
- |
- |
1,373 |
- |
1,373 |
|
|
Net own shares adjustment |
- |
- |
- |
- |
- |
- |
- |
(16,955) |
(16,955) |
- |
(16,955) |
|
|
Share option expense, net of taxation |
- |
- |
- |
- |
- |
- |
- |
10,806 |
10,806 |
- |
10,806 |
|
|
Capitalised on scrip dividend |
179 |
(179) |
- |
- |
- |
- |
- |
- |
- |
- |
- |
|
|
Dividends, net of scrip |
- |
- |
- |
- |
- |
- |
- |
(65,431) |
(65,431) |
- |
(65,431) |
|
|
At 30 June 2012 |
71,401 |
325,422 |
1,075 |
741,527 |
2,269 |
1,552 |
(96,056) |
1,478,398 |
2,525,587 |
37,551 |
2,563,138 |
|
|
Profit for the period |
- |
- |
- |
- |
- |
- |
- |
121,250 |
121,250 |
3,224 |
124,473 |
|
|
Other comprehensive income |
- |
- |
- |
- |
26,268 |
3,283 |
43,222 |
3582 |
73,132 |
1,731 |
74,863 |
|
|
Distributions |
- |
- |
- |
- |
- |
- |
- |
- |
- |
(1,612) |
(1,612) |
|
|
Shares issued, net of expenses |
60 |
2,089 |
- |
- |
- |
- |
- |
- |
2,149 |
- |
2,149 |
|
|
Net own shares adjustment |
- |
- |
- |
- |
- |
- |
- |
(6,089) |
(6,089) |
- |
(6,089) |
|
|
Share option expense, net of taxation |
- |
- |
- |
- |
- |
- |
- |
10,627 |
10,627 |
- |
10,627 |
|
|
Capitalised on scrip dividend |
597 |
(597) |
- |
- |
- |
- |
- |
- |
- |
- |
- |
|
|
Dividends, net of scrip |
- |
- |
- |
- |
- |
- |
- |
(18,567) |
(18,567) |
- |
(18,567) |
|
|
Other increases |
- |
- |
- |
- |
- |
- |
- |
- |
- |
478 |
478 |
|
|
At 31 December 2012 |
72,057 |
326,914 |
1,075 |
741,527 |
28,536 |
4,836 |
(52,834) |
1,585,977 |
2,708,089 |
41,372 |
2,749,460 |
|
|
Profit for the period |
- |
- |
- |
- |
- |
- |
- |
130,205 |
130,205 |
3,283 |
133,488 |
|
|
Other comprehensive income |
- |
- |
- |
- |
(16,537) |
(7,880) |
(61,073) |
2,0302 |
(83,460) |
(955) |
(84,415) |
|
|
Distributions |
- |
- |
- |
- |
- |
- |
- |
- |
- |
(8,477) |
(8,477) |
|
|
Shares issued, net of expenses |
239 |
1,015 |
- |
- |
- |
- |
- |
- |
1,254 |
- |
1,254 |
|
|
Net own shares adjustment |
- |
- |
- |
- |
- |
- |
- |
(7,701) |
(7,701) |
- |
(7,701) |
|
|
Share option expense, net of taxation |
- |
- |
- |
- |
- |
- |
- |
6,149 |
6,149 |
- |
6,149 |
|
|
Capitalised on scrip dividend |
60 |
(60) |
- |
- |
- |
- |
- |
- |
- |
- |
- |
|
|
Dividends, net of scrip |
- |
- |
- |
- |
- |
- |
- |
(81,908) |
(81,908) |
- |
(81,908) |
|
|
At 30 June 2013 |
72,356 |
327,870 |
1,075 |
741,527 |
12,000 |
(3,045) |
(113,907) |
1,634,751 |
2,672,627 |
35,223 |
2,707,850 |
|
|
1 |
Includes capital reserve of Rs.298 million and capital redemption reserve of Rs.776 million |
||||||||||||
2 |
For the period ended 30 June 2013, comprises actuarial losses, net of taxation and non-controlling interests of Rs.2,209million (30 June 2012: losses of Rs.3,642 million and 31 December 2012: gains of Rs.179 million) and share of comprehensive income from associates of Rs.(179) million (30 June 2012: Rs.60 million and 31 December 2012: Rs.179 million) |
||||||||||||
Condensed consolidated interim cash flow statement (Translated to INR) |
|
|||||
For the six months ended 30 June 2013 |
|
|||||
|
|
6 months ended |
6 months ended |
6 months ended |
|
|
|
|
30.06.13 |
30.06.12 |
31.12.12 |
|
|
Rs.million |
Rs.million |
Rs.million |
|
|||
Cash flows from operating activities |
|
|
|
|
|
|
Profit before taxation |
|
198,501 |
234,977 |
174,024 |
|
|
Adjustments for: |
|
|
|
|
|
|
Non-cash items and other adjustments included within income statement |
|
124,115 |
65,729 |
78,803 |
|
|
Change in operating assets |
|
(2,137,720) |
(199,396) |
(302,617) |
|
|
Change in operating liabilities |
|
1,608,424 |
787,257 |
345,242 |
|
|
Contributions to defined benefit schemes |
|
(4,597) |
(2,686) |
(9,433) |
|
|
UK and overseas taxes paid, net of refund |
|
(49,909) |
(57,371) |
(48,118) |
|
|
Net cash (used in)/from operating activities |
|
(261,185) |
828,510 |
237,903 |
|
|
Net cash flows from investing activities |
|
|
|
|
|
|
Purchase of property, plant and equipment |
|
(5,313) |
(4,358) |
(5,313) |
|
|
Disposal of property, plant and equipment |
|
3,224 |
10,686 |
955 |
|
|
Acquisition of investment in subsidiaries and associates, net of cash acquired |
- |
(239) |
(3,522) |
|
||
Purchase of investment securities |
|
(4,348,452) |
(4,218,188) |
(5,147,649) |
|
|
Disposal and maturity of investment securities |
|
4,467,194 |
4,033,537 |
4,642,412 |
|
|
Dividends received from investment in associates and joint ventures |
|
239 |
776 |
60 |
|
|
Net cash from/(used in) investing activities |
|
116,892 |
(177,785) |
(513,058) |
|
|
Net cash flows from financing activities |
|
|
|
|
|
|
Issue of ordinary and preference share capital, net of expenses |
|
1,254 |
1,373 |
2,149 |
|
|
Purchase of own shares |
|
(9,194) |
(18,865) |
(6,507) |
|
|
Exercise of share options through ESOP |
|
1,492 |
1,910 |
418 |
|
|
Interest paid on subordinated liabilities |
|
(29,372) |
(30,029) |
(29,014) |
|
|
Gross proceeds from issue of subordinated liabilities |
|
164,174 |
62,744 |
139,637 |
|
|
Repayment of subordinated liabilities |
|
(100,832) |
(77,788) |
(23,760) |
|
|
Interest paid on senior debts |
|
(29,850) |
(32,238) |
(19,522) |
|
|
Gross proceeds from issue of senior debts |
|
253,842 |
711,857 |
(28,118) |
|
|
Repayment of senior debts |
|
(143,637) |
(365,480) |
10,985 |
|
|
Dividends paid to non-controlling interests and preference shareholders, net of scrip |
(11,462) |
(5,015) |
(4,597) |
|
||
Dividends paid to ordinary shareholders, net of scrip |
|
(78,923) |
(62,386) |
(15,582) |
|
|
Net cash from financing activities |
|
17,492 |
186,083 |
26,089 |
|
|
Net (decrease)/increase in cash and cash equivalents |
|
(126,802) |
836,808 |
(249,066) |
|
|
Cash and cash equivalents at beginning of the period |
|
4,747,185 |
4,153,055 |
4,971,894 |
|
|
Effect of exchange rate movements on cash and cash equivalents |
|
(53,909) |
(17,970) |
24,357 |
|
|
Cash and cash equivalents at end of the period |
|
4,566,474 |
4,971,894 |
4,747,185 |
|
|
|
|
|
|
|
|
|
|
|
|||||
I. Summary of significant differences between Indian GAAP and IFRS
The consolidated financial statements of the Group for the period ended 30 June 2013 with comparatives as at 30 June 2012 and 31 December 2012 are prepared in accordance with International Financial Reporting Standards (IFRS) and IFRS Interpretations Committee (IFRIC) interpretations as adopted by the European Union.
IFRS differs in certain significant respects from Indian Generally Accepted Accounting Principles (GAAP). Such differences involve methods for measuring the amounts shown in the financial statements of the Group, as well as additional disclosures required by Indian GAAP.
Set out below are descriptions of certain accounting differences between IFRS and Indian GAAP that could have a significant effect on profit attributable to parent company shareholders for the period ended 30 June 2013, 31 December 2012 and 30 June 2012 and total parent company shareholders' equity as at the same date. This section does not provide a comprehensive analysis of such differences. In particular, this description considers only those Indian GAAP pronouncements for which adoption or application is required in financial statements for period ended on or prior to 30 June 2013. The Group has not quantified the effect of differences between IFRS and Indian GAAP, nor prepared consolidated financial statements under Indian GAAP, nor undertaken a reconciliation of IFRS and Indian GAAP financial statements. Had the Group undertaken any such quantification or preparation or reconciliation, other potentially significant accounting and disclosure differences may have come to its attention which are not identified below. Accordingly, the Group does not provide any assurance that the differences identified below represent all the principal differences between IFRS and Indian GAAP relating to the Group. Furthermore, no attempt has been made to identify future differences between IFRS and Indian GAAP. In making an investment decision, potential investors should consult their own professional advisers for an understanding of the differences between IFRS and Indian GAAP and how those differences may have affected the financial results of the Group. The summary does not purport to be complete and is subject and qualified in its entirety by reference to the pronouncements of the International Accounting Standards Board (IASB), together with the pronouncements of the Indian accounting profession.
Changes in accounting policy
IFRS (IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors)
Changes in accounting policy are applied retrospectively. Comparatives are restated and the effect of period(s) not presented is adjusted against opening retained earnings of the earliest year presented. Policy changes made on the adoption of a new standard are made in accordance with that standard's transitional provisions.
Indian GAAP (AS 5 Net Profit or Loss for the period, Prior Period Items and Changes in Accounting Policies)
The cumulative amount of the change is included in the income statement for the period in which the change is made except as specified in certain standards (transitional provision) where the change during the transition period resulting from adoption of the standard has to be adjusted against opening retained earnings and the impact disclosed.
Where a change in accounting policy has a material effect in the current period, the amount by which any item in the financial statements is affected by such change should also be disclosed to the extent ascertainable. Where such an amount is not ascertainable this fact should be indicated.
Functional and presentation currency
IFRS (IAS 21 The Effects of Changes in Foreign Exchange Rates)
An entity may present its financial statements in any currency (or currencies). If the presentation currency differs from the entity's functional currency, it translates its results and financial position into the presentation currency.
Assets and liabilities are translated at the closing rate at the date of that statement of financial position. Income statement items are translated at the exchange rate at the date of transaction or at average rates. The functional currency is the currency of the primary economic environment in which an entity operates. The presentation currency of the Group is US dollars.
Indian GAAP (AS 11 The Effects of Changes in Foreign Exchange Rates)
There is no concept of functional or presentation currency. Entities in India have to prepare their financial statements in Indian rupees.
Consolidation
IFRS (IFRS 10 Consolidation of Financial Statements)
Entities are consolidated when the Group has the power to govern the financial and operating policies so as to obtain benefits. Control is presumed to exist when the Group owns more than one half of an entity's voting power. Currently potential voting rights should also be taken into consideration when determining whether control exists.
Indian GAAP (AS 21 Consolidated Financial Statements)
Similar to IFRS, except that potential voting rights are not considered in determining control.
Consolidation of Special Purpose Entities
IFRS (IFRS 10 Consolidation of Financial Statements)
Under IFRS 10 Consolidated Financial Statements, an SPV should be consolidated when the substance of the relationship between an enterprise and the SPV indicates that the SPV is controlled by that entity.
Indian GAAP (AS 21 Consolidated Financial Statements)
No specific guidance.
I. Summary of significant differences between Indian GAAP and IFRS continued
Business combinations
IFRS (IFRS 3 Business Combinations)
All business combinations are treated as acquisitions. Assets, liabilities and contingent liabilities acquired are measured at their fair values. Pooling of interest method is prohibited.
For acquisitions occurring on or after 1 January 2004, IFRS 3 'Business Combinations' (IFRS 3) requires that, when assessing the value of the assets of an acquired entity, certain identifiable intangible assets must be recognised and if considered to have a finite life, amortised through the income statement over an appropriate period. As the Group has not applied IFRS 3, or its predecessor IAS 22, to transactions that occurred before 1 January 2004, no intangible assets, other than goodwill, were recognised on acquisitions prior to that date.
Adjustments to provisional fair values are permitted provided those adjustments are made within 12 months from the date of acquisition, with a corresponding adjustment to goodwill.
After re-assessment of respective fair values of net assets acquired, any excess of acquirer's interest in the net fair values of acquirer's identifiable assets is recognised immediately in the income statement.
Where less than 100 per cent of an entity is acquired, non-controlling interests are stated at their proportion of the fair value of the identifiable net assets and contingent liabilities acquired.
Indian GAAP (AS 14 Accounting for Amalgamations)
Treatment of a business combination depends on whether the acquired entity is held as a subsidiary, whether it is an amalgamation or whether it is an acquisition of a business.
For an entity acquired and held as a subsidiary, the business combination is accounted for as an acquisition. The assets and liabilities acquired are incorporated at their existing carrying amounts.
For an amalgamation of an entity, either pooling of interests or acquisition accounting may be used. The assets and liabilities amalgamated are incorporated at their existing carrying amounts or, alternatively, if acquisition accounting is adopted, the consideration can be allocated to individual identifiable assets (which may include intangible assets) and liabilities on the basis of their fair values.
Adjustments to the value of acquired or amalgamated balances are not permitted after initial recognition.
Any excess of acquirer's interest in the net fair values of acquirer's identifiable assets is recognised as capital reserve, which is neither amortised nor available for distribution to shareholders. However, in case of an amalgamation accounted under the purchase method, the fair value of intangible assets with no active market is reduced to the extent of capital reserve, if any, arising on the amalgamation.
Minority interests arising on the acquisition of a subsidiary are recognised at their share of the historical book value.
Goodwill
IFRS (IFRS 3 Business Combinations and IAS 38 Intangible Assets)
IFRS 3 requires that goodwill arising on all acquisitions by the Group and associated undertakings is capitalised but not amortised and is subject to an annual review for impairment. Under the transitional provisions of IFRS 1, the Group has not applied IFRS 3, or its predecessor IAS 22, to transactions that occurred before 1 January 2004, the date of transition to IFRS. Accordingly, goodwill previously written off to reserves, as permitted under UK GAAP until the implementation of FRS 10 'Goodwill and intangible assets' in 1998, has not been reinstated nor will it be written back on disposal.
Amortisation of goodwill that has been charged up to 31 December 2003 has not been reversed and the deemed carrying value of the goodwill on transition to IFRS is equal to the net book value as at 31 December 2003.
Goodwill is tested annually for impairment. Any impairment losses recognised may not be reversed in subsequent accounting periods.
Indian GAAP (AS 14 Accounting for Amalgamations and AS 26 Intangible Assets)
Goodwill arising for amalgamations is capitalised and amortised over useful life not exceeding five years, unless a longer period can be justified.
For goodwill arising on acquisition of a subsidiary or a business, there is no specific guidance - in practice there is either no amortisation or amortisation not exceeding 10 years.
Goodwill is reviewed for impairment whenever an indicator of impairment exists. Impairment losses recognised may be reversed under exceptional circumstances only in subsequent accounting periods through the income statement.
Acquired and internally generated intangible assets
IFRS (IAS 38 Intangible Assets)
Intangible assets are recognised if the specific criteria are met. Assets with a finite useful life are amortised on a systematic basis over their useful life. An asset with an indefinite useful life and which is not yet available for use should be tested for impairment annually.
Indian GAAP (AS 26 Intangible Assets)
Intangible assets are capitalised if specific criteria are met and are amortised over their useful life, generally not exceeding 10 years. The recoverable amount of an intangible asset that is not available for use or is being amortised over a period exceeding 10 years should be reviewed at least at each financial year-end even if there is no indication that the asset is impaired.
I. Summary of significant differences between Indian GAAP and IFRS continued
Property, plant and equipment
IFRS (IAS 16 Property, Plant and Equipment, IAS 23 Borrowing Costs and IAS 39 Financial instruments - recognition and measurement)
Fixed assets are recorded at cost or revalued amounts. Under the transition rules of IFRS 1, the Group elected to freeze the value of all its properties held for its own use at their 1 January 2004 valuations, their 'deemed cost' under IFRS. They will not be revalued in the future.
Foreign exchange gains or losses relating to the procurement of property, plant and equipment, under very restrictive conditions, can be capitalised as part of the asset.
Depreciation is recorded over the asset's estimated useful life. The residual value and the useful life of an asset and the depreciation method shall be reviewed at least at each financial year-end.
The Group has the option to capitalise borrowing costs incurred during the period that the asset is getting ready for its intended use.
Indian GAAP (AS 10 Fixed Assets, AS 16 Borrowing Cost and AS 6 Depreciation Accounting)
Fixed assets are recorded at historical costs or revalued amounts.
Relevant borrowing costs are capitalised if certain criteria in AS-16 are met and depreciation is recorded over the asset's useful life. Schedule XIV of the Companies Act and Banking Regulations prescribe minimum rates of depreciation and these are typically used as the basis for determining useful life.
Recognition and measurement of financial instruments
IFRS (IAS 39 Financial Instruments: Recognition and Measurement)
IAS 39 requires all financial instruments to be initially measured at their fair value, which is usually to be the transaction price. In those cases where the initial fair value is based on a valuation model that uses inputs which are not observable in the market, the difference between the transaction price and the valuation model is not recognised immediately in the income statement but is amortised to the income statement until the inputs become observable, the transaction matures or is terminated.
At the time of initial recognition, IAS 39 requires all financial assets to be classified as either:
• held at fair value through profit or loss (as a trading instrument or as designated by management), with realised and unrealised gains or losses reflected in profit or loss; or
• available for-sale at fair value, with unrealised gains and losses reflected in shareholders' equity, and recycled to the income statement when the asset is sold or is impaired; or
• held-to-maturity at amortised cost, where there is the intent and the ability to hold them to maturity; or
• as loans and receivables at amortised cost.
At the time of initial recognition, IAS 39 requires all financial liabilities to be classified as either:
• held at fair value through profit or loss (as a trading instrument or as designated by management), with realised and unrealised gains or losses reflected in profit or loss; or
• at amortised cost.
A financial asset or financial liability, other than one held for trading, can be designated as being held at fair value through profit or loss if it meets the criteria set out below:
• the designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise from measuring assets or liabilities on a different basis, or
• a group of financial assets and/or liabilities is managed and its performance evaluated on a fair value basis, or
• assets or liabilities include embedded derivatives and such derivatives are not recognised separately.
The designation of a financial instrument as held at fair value through profit or loss is irrevocable in respect of the financial instruments to which it relates. Subsequent to initial recognition instruments cannot be classified into or out of this category.
Changes in the fair value of available for sale financial assets resulting from movements in foreign currency exchange rates are included in the income statement as exchange differences. Foreign currency exchange movements for available for sale equity securities is recognised in reserves.
For banks, there is guidance on measurement and accounting of IRS and FRA entered onto for hedging purposes.
Indian GAAP (AS 13 Investments)
AS 13 requires Investments to be categorised as follows:
• Current investments, which are those readily realisable and intended to be held for less than one year, are carried at the lower of cost and fair value, with changes in fair value taken directly to profit or loss;
• Long term investments, which are those investments not classified as current, are carried at cost unless there is a permanent diminution in value, in which case a provision for diminution is required to be made by the entity.
For investments, Reserve Banking India regulations require similar classifications to IFRS, but the classification criteria and measurement requirements differ from those set out in IFRS.
Financial liabilities are usually carried at cost. There is no ability to designate instruments at fair value.
AS 30 provides guidance on classification criteria and measurement requirements, however this is not mandatory.
I. Summary of significant differences between Indian GAAP and IFRS continued
IFRS (IAS 39 Financial Instruments: Recognition and Measurement)
IAS 39 requires that all derivatives be recognised on balance sheet at fair value. Changes in the fair value of derivatives that are not hedges are reported in the income statement. Changes in the fair value of derivatives that are designated as hedges are either offset against the change in fair value of the hedged asset or liability through earnings or recognised directly in equity until the hedged item is recognised in earnings, depending on the nature of the hedge. The ineffective portion of the hedge's change in fair value is immediately recognised in earnings. A derivative may only be classified as a hedge if an entity meets stringent qualifying criteria in respect of documentation and hedge effectiveness.
IAS 39 requires the separation of derivatives embedded in a financial instrument if it is not deemed to be closely related to the economic characteristics of the underlying host instrument.
Indian GAAP
Foreign exchange contracts held for trading or speculative purposes are carried at fair value, with gains and losses recognised in the income statement.
In the absence of specific guidance, equity options are carried at the lower of cost or market value.
There is no specific guidance on hedge accounting since Accounting Standard 30 is not mandatory. However, requirements of AS 30 with respect to hedge accounting are largely similar to that of IAS 39.
Disclosure of Notional
IFRS
A structured trade is a combination of individual trades. For IFRS reporting, notional value for structured trade is highest notional value amongst its individual trades as at Balance Sheet date.
Indian GAAP
Notional value for structured trade is cumulative notional values of all trades which makes a structured trade.
Impairment of financial assets
IFRS (IAS 39 Financial Instruments: Recognition and Measurement)
At each balance sheet date, an assessment is made as to whether there is any objective evidence of impairment. A financial asset is impaired and impairment losses are incurred if, and only if, there is objective evidence of impairment.
Assets held at amortised cost
If objective evidence of impairment exists, an assessment is made to determine what, if any, impairment loss should be recognised. The impairment loss is the difference between the asset's carrying amount and its estimated recoverable amount.
The recoverable amount is determined based on the present value of expected future cash flows, discounted at the instrument's original effective interest rate, either individually or collectively. Individually assessed assets for which there is no objective evidence of impairment are collectively assessed for impairment.
Available-for-sale assets
If objective evidence of impairment exists, the cumulative loss (measured as the difference between the acquisition cost and the current fair value, less any previously recognised impairment) is removed from equity and recognised in the income statement.
Market recoveries leading to a reversal of an impairment provision for available-for-sale debt securities are recognised in the income statement. Impairment losses for equity instruments classified as available-for-sale are not permitted to be reversed through profit or loss.
Indian GAAP (AS 13 Investments)
Long-term investments are written down when there is a decline in fair value which is deemed to be other than temporary. Impairments may be reversed through the income statement in subsequent periods if the investment rises in value, or the reasons for the impairment no longer exist.
Derecognition of financial assets
IFRS (IAS 39 Financial Instruments: Recognition and Measurement)
A financial asset is derecognised if substantially all the risks and rewards of ownership have been transferred. If substantially all the risks and rewards have not been transferred, the asset will continue to be recognised to the extent of any continuing involvement.
Indian GAAP (RBI Guidelines on Securitisation of Standard Assets)
There is limited guidance on derecognition of financial assets. Securitised financial assets can only be derecognised if the originator has surrendered control over the assets. Control is not surrendered where the securitised assets are not beyond the reach of the creditors of the originator or where the transferee does not have the right to pledge, sell, transfer or exchange the securitised asset for its own benefit, or where there is an option entitles the originator to repurchase the financial assets transferred under a securitisation transaction from the transferee.
I. Summary of significant differences between Indian GAAP and IFRS continued
Liabilities and equity
IFRS (IAS 39 Financial Instruments: Recognition and Measurement)
A financial instrument is classified as a liability where there is a contractual obligation to deliver either cash or another financial asset to the holder of that instrument, regardless of the manner in which the contractual obligation will be settled.
Preference shares, which carry a mandatory coupon or are redeemable on a specific date or at the option of the shareholder are classified as financial liabilities and are presented in other borrowed funds. The dividends on these preference shares are recognised in the income statement as interest expense on an amortised cost basis using the effective interest method.
Indian GAAP
Classification is based on the legal form rather than substance.
Provisions for liabilities and charges
IFRS (IAS 37 Provisions, Contingents Liabilities and Contingent Assets)
The amount recognised as a provision is the best estimate at the balance sheet date of the expenditure required to settle the obligation, discounted using a pre-tax market discount rate if the effect is material.
Indian GAAP (AS 29 Provisions, Contingents Liabilities and Contingent Assets)
Provisions are recognised and measured on a similar basis to IFRS, except that discounting is not permitted.
Pension obligations
IFRS (IAS 19 Employee Benefits)
The discount rate to be used for determining defined benefit obligations is established by reference to market yields at the balance sheet date on high quality corporate bonds of a currency and term consistent with the currency and term of the post employment benefit obligations.
Actuarial gains or losses are recognised in "Other Comprehensive Income" (retained earnings).
Under the transitional provisions of IFRS 1 'First time adoption of International Financial Reporting Standards' (IFRS 1) and in accordance with IAS 19, the Group elected to record all actuarial gains and losses on the pension surplus or deficit in the year in which they occur within the 'Consolidated statement of comprehensive income'.
Indian GAAP (AS 15 Employee Benefits)
The discount rate to be used for determining defined benefit obligations is established by reference to market yields at the balance sheet date on government bonds.
Actuarial gains or losses are recognised immediately in the statement of income.
In respect of termination benefits, the revised AS 15 (2005) specifically contains a transitional provision providing that where expenditure on termination benefits is incurred on or before 31 March 2009, the entities can choose to follow the accounting policy of deferring such expenditure over its pay-back period. However, any expenditure deferred cannot be carried forward to accounting periods commencing on or after 1 April, 2010. Therefore any expenditure deferred should be written off over the shorter of (a) the pay-back period or (b) the period from the date expenditure on termination benefits is incurred to 1 April, 2010.
Share based compensation
IFRS
IFRS 2 'Share based payment' requires that all share-based payments are accounted for using a fair value method.
The fair value of the employee services received in exchange for the grant of the options is recognised as an expense. For equity-settled awards, the total amount to be expensed over the vesting period must be determined by reference to the fair value of the options granted (determined using an option pricing model), excluding the impact of any non-market vesting conditions (for example, profitability and growth targets). Non-market vesting conditions must be included in assumptions about the number of options that are expected to become exercisable.
At each balance sheet date, the Group revises its estimates of the number of options that are expected to become exercisable. It recognises the impact of the revision of original estimates, if any, in the income statement, and a corresponding adjustment to equity over the remaining vesting period. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised.
Cash-settled awards must be revalued at each balance sheet date on an intrinsic value basis (being the difference between the market price of the share at the measurement date and the exercise price) with any changes in fair value charged or credited to staff costs in the income statement.
Deferred tax is recognised based on the intrinsic value of the award and is recorded in the income statement if the tax deduction is less than or equal to the cumulative share-based compensation expense or equity if the tax deduction exceeds the cumulative expense.
I. Summary of significant differences between Indian GAAP and IFRS continued
Indian GAAP
Entities may either follow the intrinsic value method or the fair value method for determining the costs of benefits arising from share based compensation plans. Although the fair value approach is recommended, entities may use the intrinsic value method and provide fair value disclosures.
Deferred tax is not recognised as it is not considered to represent a timing difference.
Entities are also permitted the option of recognising the related compensation cost over the service period for the entire award (that is, over the service period of the last separately vesting portion of the award), provided that the amount of compensation cost recognised at any date at least equals the fair value of the vested portion of the award at that date.
Deferred Taxation
IFRS
Deferred tax is determined based on temporary differences, being the difference between the carrying amount and tax base of assets and liabilities, subject to certain exceptions.
Deferred tax assets are recognised if it is probable (more likely than not) that sufficient future taxable profits will be available to utilise to deferred tax assets.
Indian GAAP
Deferred tax is determined based on timing differences, being the difference between accounting income and taxable income for a period that is capable of reversal in one or more subsequent periods.
Deferred tax assets are recognised where it is probable that future taxable profit will be available against which the temporary differences can be utilised.
Interest income and expense
IFRS (IAS 18 Revenue)
Interest income and expense is recognised in the income statement using the effective interest method. The effective interest rate is the rate that discounts estimated future cash payments or receipts through the expected life of the financial instrument. When calculating the effective interest rate, the Group estimates cash flows considering all contractual terms of the financial instrument but does not consider future credit losses. The calculation includes all fees and points paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts.
Indian GAAP (AS 9 Revenue Recognition)
In the absence of a specific effective interest rate requirement, premiums and discounts are usually amortised on a straight line basis over the term of the instrument.
Dividends
IFRS
Dividends to holders of equity instruments, when proposed or declared after the balance sheet date, should not be recognised as a liability on the balance sheet date. A company however is required to disclose the amount of dividends that were proposed or declared after the balance sheet date but before the financial statements were authorised for issue.
Indian GAAP
Dividends are reflected in the financial statements of the year to which they relate even if proposed or approved after the year end.
Standard Chartered PLC - Glossary
Advances-to-deposits ratio |
The ratio of total loans and advances to customers relative to total customer deposits. A low advances-to-deposits ratio demonstrates that customer deposits exceed customer loans resulting from emphasis placed on generating a high level of stable funding from customers. |
Asset Backed Securities (ABS) |
Securities that represent an interest in an underlying pool of referenced assets. The referenced pool can comprise any assets which attract a set of associated cash flows but are commonly pools of residential or commercial mortgages and in the case of Collateralised Debt Obligations (CDOs), the reference pool may be ABS. |
Advanced Internal Rating Based (AIRB) approach |
The AIRB approach under the Basel II framework is used to calculate credit risk capital based on the Group's own estimates of certain parameters. |
ASEAN |
Association of South East Asian Nations (ASEAN) which includes the Group's operation in Brunei, Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam. |
Attributable profit to ordinary shareholders |
Profit for the year after non-controlling interests and the declaration of dividends on preference shares classified as equity. |
Basel II |
The capital adequacy framework issued by the Basel Committee on Banking Supervision (BCBS) in June 2006 in the form of the 'International Convergence of Capital Measurement and Capital Standards'. |
Basel III |
In December 2010, the BCBS issued the Basel III rules text, which presents the details of strengthened global regulatory standards on bank capital adequacy and liquidity. The new requirements are being phased in from 1 January 2013 with full implementation by 31 December 2019. |
Basis point (bps) |
One hundredth of a per cent (0.01 per cent); 100 basis points is 1 per cent. Used in quoting movements in interest rates or yields on securities. |
CAD2 |
An amendment to Capital Adequacy Directive that gives national regulators the discretion to permit firms to use their own value at risk model for calculating capital requirements subject to certain criteria. |
Collateralised Debt Obligations (CDOs) |
Securities issued by a third party which reference ABS and/or certain other related assets purchased by the issuer. CDOs may feature exposure to sub-prime mortgage assets through the underlying assets. |
Collateralised Loan Obligation |
A security backed by the repayments from a pool of commercial loans. The payments may be made to different classes of owners (in tranches). |
Collectively assessed loan impairment provisions |
Also known as portfolio impairment provisions. Impairment assessment on a collective basis for homogeneous groups of loans that are not considered individually significant and to cover losses which have been incurred but have not yet been identified at the balance sheet date. Typically assets within the Consumer Banking business are assessed on a portfolio basis. |
Commercial Mortgage Backed Securities (CMBS) |
Securities that represent interests in a pool of commercial mortgages. Investors in these securities have the right to cash received from future mortgage payments (interest and/or principal). |
Commercial Paper (CP) |
An unsecured promissory note issued to finance short-term credit needs. It specifies the face amount paid to investors on the maturity date. |
Commercial real estate |
Includes office buildings, industrial property, medical centres, hotels, malls, retail stores, shopping centres, farm land, multifamily housing buildings, warehouses, garages, and industrial properties. Commercial real estate loans are those backed by a package of commercial real estate assets. |
Constant currency |
Constant currency change is derived by applying a simple translation of the previous period functional currency number in each entity using the current average and period end US dollar exchange rates to the income statement and balance sheet respectively. |
Contractual maturity |
Contractual maturity refers to the final payment date of a loan or other financial instrument, at which point all the remaining outstanding principal will be repaid and interest is due to be paid. |
Core Tier 1 Capital |
Core Tier 1 capital comprises called-up ordinary share capital and eligible reserves plus non-controlling interests, less goodwill and other intangible assets and deductions relating to excess expected losses over eligible provisions and securitisation positions as specified by the UK's Financial Services Authority (FSA). |
Core Tier 1 Capital ratio |
Core Tier 1 capital as a percentage of risk weighted assets. |
Cost to income ratio |
Represents the proportion of total operating expenses to total operating income. |
Cover ratio |
Represents the extent to which non-performing loans are covered by impairment allowances. |
Covered bonds |
Debt securities backed by a portfolio of mortgages that are segregated from the issuer's other assets solely for the benefit of the holders of the covered bonds. |
Credit Conversion Factor (CCF) |
CCF is an internally modelled parameter based on historical experience to determine the amount that is expected to be further drawn down from the undrawn portion in a committed facility. |
Credit Default Swaps (CDSs) |
A credit derivative is an arrangement whereby the credit risk of an asset (the reference asset) is transferred from the buyer to the seller of protection. A credit default swap is a contract where the protection seller receives premium or interest-related payments in return for contracting to make payments to the protection buyer upon a defined credit event. Credit events normally include bankruptcy, payment default on a reference asset or assets, or downgrades by a rating agency. |
Standard Chartered PLC - Glossary continued
Credit institutions |
An institution whose business is to receive deposits or other repayable funds from the public and to grant credits for its own account. |
Credit risk spread |
The credit spread is the yield spread between securities with the same coupon rate and maturity structure but with different associated credit risks, with the yield spread rising as the credit rating worsens. It is the premium over the benchmark or risk-free rate required by the market to take on a lower credit quality. |
Credit valuation adjustments (CVA) |
An adjustment to fair value primarily in respect of derivative contracts that reflects the possibility that the counterparty may default such that the Group would not receive the full market value of the transactions. |
Customer deposits |
Money deposited by all individuals and companies which are not credit institutions including securities sold under Repo. Such funds are recorded as liabilities in the Group's balance sheet under Customer accounts. |
Debt restructuring |
This is when the terms and provisions of outstanding debt agreements are changed. This is often done in order to improve cash flow and the ability of the borrower to repay the debt. It can involve altering the repayment schedule as well as debt or interest charge reduction. |
Debt securities |
Debt securities are assets on the Group's balance sheet and represent certificates of indebtedness of credit institutions, public bodies or other undertakings excluding those issued by central banks. |
Debt securities in issue |
Debt securities in issue are transferrable certificates of indebtedness of the Group to the bearer of the certificate. These are liabilities of the Group and include certificates of deposits. |
Delinquency |
A debt or other financial obligation is considered to be in a state of delinquency when payments are overdue. Loans and advances are considered to be delinquent when consecutive payments are missed. Also known as 'Arrears'. |
Deposits by banks |
Deposits by banks comprise amounts owed to other domestic or foreign credit institutions by the Group including securities sold under Repo. |
Dividend per share |
Represents the entitlement of each shareholder in the share of the profits of the company. Calculated in the lowest unit of currency in which the shares are quoted. |
Effective tax rate (ETR) |
The tax on profits on ordinary activities as a percentage of profit on ordinary activities before taxation. |
Expected loss (EL) |
The Group measure of anticipated loss for exposures captured under an internal ratings based credit risk approach for capital adequacy calculations. It is measured as the Group-modelled view of anticipated loss based on Probability of Default (PD), Loss Given Default (LGD) and Exposure at Default (EAD), with a one-year time horizon. |
Exposures |
Credit exposures represent the amount lent to a customer, together with an undrawn commitments. |
Exposure at default (EAD) |
The estimation of the extent to which the Group may be exposed to a customer or counterparty in the event of, and at the time of, that counterparty's default. At default, the customer may not have drawn the loan fully or may already have repaid some of the principal, so that exposure is typically less than the approved loan limit. |
Eurozone |
Represents the 17 European Union countries that have adopted the euro as their common currency. The 17 countries are Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, Netherlands, Portugal, Slovakia, Slovenia and Spain. |
Forbearance |
Arrangements initiated by customers, the Group or third parties to assist customers in financial difficulty where the Group agrees to accept less than the contractual amount due where financial distress would otherwise prevent satisfactory repayment within the original terms and conditions of the contract. Such arrangements include extended payment terms, a reduction in interest or principal repayments, approved external debt management plans, debt consolidations, the deferral of foreclosures, and loan restructurings. Forborne loans are a subset of impaired loans and are included within the definition of renegotiated loans. |
Foundation Internal Ratings |
A method of calculating credit risk capital requirements using internal PD models but with supervisory estimates of LGD and conversion factors for the calculation of EAD. |
Funded/unfunded exposures |
Exposures where the notional amount of the transaction is funded or unfunded. Represents exposures where there is a commitment to provide future funding is made but funds have been released / not released. |
Guaranteed mortgages |
Mortgages for which there is a guarantor to provide the lender a certain level of financial security in the event of default of the borrower. |
Impaired loans |
Loans where individual identified impairment provisions have been raised and also include loans which are collateralised or where indebtedness has already been written down to the expected realisable value. The impaired loan category may include loans, which, while impaired, are still performing. |
Impairment allowances |
Impairment allowances are a provision held on the balance sheet as a result of the raising of a charge against profit for the incurred loss. An impairment allowance may either be identified or unidentified and individual (specific) or collective (portfolio). |
Individually assessed loan impairment provisions |
Also known as specific impairment provisions. Impairment is measured individually for assets that are individually significant to the Group. Typically assets within the Wholesale Banking business of the Group are assessed individually. |
Innovative Tier 1 Capital |
Innovative Tier 1 capital consists of instruments which incorporate certain features, the effect of which is to weaken (but only marginally) the key characteristics of Tier 1 capital (that is, fully subordinated, perpetual and non-cumulative). Innovative Tier 1 capital is subject to a limit of 15 per cent of total Tier 1 capital. |
Internal Ratings Based (IRB) approach |
The IRB approach is used to calculate risk weighted assets in accordance with the Basel Capital Accord where capital requirements are based on a firm's own estimates of certain parameters. |
Investment grade |
A debt security, treasury bill or similar instrument with a credit rating measured by external agencies of AAA to BBB. |
Jaws |
The rate of income growth less the rate of expense growth, expressed as positive jaws when income growth exceeds expense growth (and vice versa for negative jaws). |
Leveraged finance |
Loans or other financing agreements provided to companies whose overall level of debt is high in relation to their cash flow (net debt : EBITDA (earnings before interest tax, depreciation and amortisation)) typically arising from private equity sponsor led acquisitions of the businesses concerned. |
Liquidity and credit enhancements |
Credit enhancement facilities are used to enhance the creditworthiness of financial obligations and cover losses due to asset default. Two general types of credit enhancement are third-party loan guarantees and self-enhancement through over-collateralisation. Liquidity enhancement makes funds available if required, for other reasons than asset default, e.g. to ensure timely repayment of maturing commercial paper. |
Liquid asset buffer |
These assets include high quality government or central bank securities, certain deposits with central banks and securities issued by designated multilateral development banks to meet the PRA's requirement for liquidity. |
Liquid asset ratio |
Ratio of total liquid assets to total assets. Liquid assets comprise cash (less restricted balances), net interbank, treasury bills and debt securities less illiquid securities. |
Loans and advances |
This represents lending made under bilateral agreements with customers entered into in the normal course of business and is based on the legal form of the instrument. An example of a loan product is a home loan. |
Loans to banks |
Amounts loaned to credit institutions including securities bought under Reverse repo. |
Loans to individuals |
Money loaned to individuals rather than institutions. The loans may be for car or home purchases, medical care, home repair, holidays, and other consumer uses. |
Loan-to-value ratio |
The loan-to-value ratio is a mathematical calculation which expresses the amount of a first mortgage lien as a percentage of the total appraised value of real property. The loan-to-value ratio is used in determining the appropriate level of risk for the loan and therefore the correct price of the loan to the borrower. |
Loans past due |
Loans on which payments have been due for up to a maximum of 90 days including those on which partial payments are being made. |
Loss given default (LGD) |
LGD is the percentage of an exposure that a lender expects to lose in the event of obligor default. |
Master netting agreement |
An agreement between two counterparties that have multiple derivative contracts with each other that provides for the net settlement of all contracts through a single payment, in a single currency, in the event of default on, or termination of, any one contract. |
Mezzanine capital |
Financing that combines debt and equity characteristics. For example, a loan that also confers some profit participation to the lender. |
Mortgage Backed Securities (MBS) |
Securities that represent interests in a group of mortgages. Investors in these securities have the right to cash received from future mortgage payments (interest and/or principal). |
Mortgage related assets |
Assets which are referenced to underlying mortgages. |
Medium term notes (MTNs) |
Corporate notes continuously offered by a company to investors through a dealer. Investors can choose from differing maturities, ranging from nine months to 30 years. |
Net asset value per share |
Ratio of net assets (total assets less total liabilities) to the number of ordinary shares outstanding at the end of a reporting period. |
Net interest income |
The difference between interest received on assets and interest paid on liabilities. |
Net interest margin |
The margin is expressed as net interest income divided by average interest earning assets. |
Net interest yield |
Interest income divided by average interest earning assets less interest expense divided by average interest bearing liabilities. |
Non-performing loans |
A non performing loan is any loan that is more than 90 days past due or is otherwise individually impaired, other than a loan which is: - renegotiated before 90 days past due, and on which no default in interest payments or loss of principal is expected; or - renegotiated at or after 90 days past due, but on which there has been no default in interest or principal payments for more than 180 days since renegotiation, and against which no loss of principal is expected. |
Normalised earnings |
Profit attributable to ordinary shareholders adjusted for profits or losses of a capital nature; amounts consequent to investment transactions driven by strategic intent; and other infrequent and/or exceptional transactions that are significant or material in the context of the Group's normal business earnings for the period. |
Over the counter (OTC) derivatives |
A bilateral transaction (e.g. derivatives) that is not exchange traded and that is valued using valuation models. |
Pre-provision profit |
Operating profit before impairment losses and taxation. |
Private equity investments |
Equity securities in operating companies generally not quoted on a public exchange. Investment in private equity often involves the investment of capital in private companies. Capital for private equity investment is raised by retail or institutional investors and used to fund investment strategies such as leveraged buyouts, venture capital, growth capital, distressed investments and mezzanine capital. |
Probability of default (PD) |
PD is an internal estimate for each borrower grade of the likelihood that an obligor will default on an obligation. |
Profit attributable to ordinary shareholders |
Profit for the year after non-controlling interests and dividends declared in respect of preference shares classified as equity. |
Renegotiated loans |
Loans and advances are generally renegotiated either as part of an ongoing customer relationship or in response to an adverse change in the circumstances of the borrower. In the latter case renegotiation can result in an extension of the due date of payment or repayment plans under which the Group offers a concessionary rate of interest to genuinely distressed borrowers. Such assets will be individually impaired where the renegotiated payments of interest and principal will not recover the original carrying amount of the asset and are defined as forborne loans. In other cases, renegotiation may lead to a new agreement, which would be treated as a new loan. |
Repo/Reverse repo |
A repurchase agreement or repo is a short term funding agreements which allow a borrower to sell a financial asset, such as ABS or Government bonds as collateral for cash. As part of the agreement the borrower agrees to repurchase the security at some later date, usually less than 30 days, repaying the proceeds of the loan. For the party on the other end of the transaction (buying the security and agreeing to sell in the future) it is a reverse repurchase agreement or reverse repo. |
Residential mortgage |
A loan to purchase a residential property which is then used as collateral to guarantee repayment of the loan. The borrower gives the lender a lien against the property, and the lender can foreclose on the property if the borrower does not repay the loan per the agreed terms. Also known as a Home loan. |
Residential Mortgage Backed Securities (RMBS) |
Securities that represent interests in a group of residential mortgages. Investors in these securities have the right to cash received from future mortgage payments (interest and/or principal). |
Return on equity |
Represents the ratio of the current year's profit available for distribution to ordinary shareholders to the weighted average ordinary shareholders equity for the reporting period. |
Risk weighted assets |
A measure of a bank's assets adjusted for their associated risks. Risk weightings are established in accordance with the Basel Capital Accord as implemented by the FSA. |
Seasoning |
The emergence of credit loss patterns in portfolio over time. |
Secured (fully and partially) |
A secured loan is a loan in which the borrower pledges an asset as collateral for a loan which, in the event that the borrower defaults, the Group is able to take possession of. All secured loans are considered fully secured if the fair value of the collateral is equal to or greater than the loan at the time of origination. All other secured loans are considered to be partly secured. |
Securitisation |
Securitisation is a process by which debt instruments are aggregated into a pool, which is used to back new securities. A company sells assets to a special purpose entity (SPE) who then issues securities backed by the assets based on their value. This allows the credit quality of the assets to be separated from the credit rating of the original company and transfers risk to external investors. |
Senior debt |
Senior debt, frequently issued in the form of senior notes, is debt that takes priority over other unsecured or otherwise more "junior" debt owed by the issuer. Senior debt has greater seniority in the issuer's capital structure after subordinated debt. In the event the issuer goes bankrupt, senior debt theoretically must be repaid before other creditors receive any payment. |
Sovereign exposures |
Exposures to central governments and central government departments, central banks and entities owned or guaranteed by the aforementioned. Sovereign exposures as defined by the European Banking Authority includes only exposures to central governments. |
Special purpose entities (SPEs) |
SPEs are entities that are created to accomplish a narrow and well defined objective. There are often specific restrictions or limits around their ongoing activities. Transactions with SPEs take a number of forms, including: - The provision of financing to fund asset purchases, or commitments to provide finance for future purchases. - Derivative transactions to provide investors in the SPE with a specified exposure. - The provision of liquidity or backstop facilities which may be drawn upon if the SPE experiences future funding difficulties. - Direct investment in the notes issued by SPEs. |
Standardised approach |
In relation to credit risk, a method for calculating credit risk capital requirements using External Credit Assessment Institutions (ECAI) ratings and supervisory risk weights. In relation to operational risk, a method of calculating the operational capital requirement by the application of a supervisory defined percentage charge to the gross income of eight specified business lines. |
Stressed value at risk |
A regulatory market risk measure based on potential market movements for a continuous one-year period of stress for a trading portfolio. |
Structured finance /notes |
A structured note is an investment tool which pays a return linked to the value or level of a specified asset or index and sometimes offers capital protection if the value declines. Structured notes can be linked to equities, interest rates, funds, commodities and foreign currency. |
Subordinated liabilities |
Liabilities which, in the event of insolvency or liquidation of the issuer, are subordinated to the claims of depositors and other creditors of the issuer. |
Sub-prime |
Sub-prime is defined as loans to borrowers typically having weakened credit histories that include payment delinquencies and potentially more severe problems such as court judgements and bankruptcies. They may also display reduced repayment capacity as measured by credit scores, high debt-to-income ratios, or other criteria indicating heightened risk of default. |
Tangible net asset value per share |
Ratio of parent shareholders' equity less preference shares classified as equity and goodwill and intangible assets to the number of ordinary shares outstanding at the end of the reporting period. |
Tier 1 capital |
Tier 1 capital comprises Core Tier 1 capital plus innovative Tier 1 securities and preference shares and tax on excess expected losses less material holdings in credit or financial institutions. |
Tier 1 capital ratio |
Tier 1 capital as a percentage of risk weighted assets. |
Tier 2 capital |
Tier 2 capital comprises qualifying subordinated liabilities, allowable portfolio impairment provision and unrealised gains in the eligible revaluation reserves arising from the fair valuation of equity instruments held as available-for-sale. |
UK bank levy |
A levy that applies to certain UK banks and the UK operations of foreign banks from 1 January 2011. The levy is payable each year based on a percentage of the chargeable liabilities of the Group as at 31 December. |
Value at Risk (VaR) |
Value at Risk is an estimate of the potential loss which might arise from market movements under normal market conditions, if the current positions were to be held unchanged for one business day, measured to a confidence level of 97.5 per cent. |
Working profit |
Operating profit before impairment losses and taxation. |
Write Downs |
After an advance has been identified as impaired and is subject to an impairment allowance, the stage may be reached whereby it is concluded that there is no realistic prospect of further recovery. Write downs will occur when and to the extent that, the whole or part of a debt is considered irrecoverable. |
Standard Chartered PLC - Financial calendar
Financial Calendar
Ex-dividend date |
14 August 2013 |
Record date |
16 August 2013 |
Expected posting to shareholders of 2013 Half Year Report |
6 September 2013 |
Payment date - interim dividend on ordinary shares |
17 October 2013 |
Copies of this statement are available from:
Investor Relations, Standard Chartered PLC, 1 Basinghall Avenue, London, EC2V 5DD or from our website on http://investors.standardchartered.com
For further information please contact:
Steve Atkinson, Group Head of Corporate Affairs
+44 20 7885 7245
James Hopkinson, Head of Investor Relations
+44 20 7885 7151
Edwin Hui, Head of Investor Relations, Asia
+852 2820 3050
Uttam Hazarika, Manager, Investor Relations, India
+91 22 61158643
Tim Baxter, Group Head of Corporate Communications
+44 20 7885 5573
The following information for the Half Year Results 2013 will be available on our website:
The video interviews with Peter Sands, Group Chief Executive and Richard Meddings, Group Finance Director
The analyst presentation in pdf format
The webcast of the live analyst presentation in London with Q&A
A podcast of the analyst presentation
Images of Standard Chartered are available for the media at
http://www.standardchartered.com/global/mc/plib/directors_p01.html
Information regarding the Group's commitment to Sustainability is available at
http://www.standardchartered.com/sustainability
Forward looking statements
It is possible that this document could or may contain forward-looking statements that are based on current expectations or beliefs, as well as assumptions about future events. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward looking statements often use words such as anticipate, target, expect, estimate, intend, plan, goal, believe, will, may, should, would, could or other words of similar meaning. Undue reliance should not be placed on any such statements because, by their very nature, they are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results, and the Group's plans and objectives, to differ materially from those expressed or implied in the forward-looking statements.
There are several factors which could cause actual results to differ materially from those expressed or implied in forward looking statements. Among the factors that could cause actual results to differ materially from those described in the forward looking statements are changes in the global, political, economic, business, competitive, market and regulatory forces, future exchange and interest rates, changes in tax rates and future business combinations or dispositions.
The Group undertakes no obligation to revise or update any forward looking statement contained within this document, regardless of whether those statements are affected as a result of new information, future events or otherwise.
Disclaimer
The securities referred to in this announcement have not been and will not be registered under the U.S. Securities Act of 1933 (the "U.S. Securities Act") and may not be offered, sold or transferred within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act. No public offering of the Placing Shares will be made in the United States.
Standard Chartered PLC - Index
|
Page |
|
Page |
Assets at fair value through profit or loss |
134 |
Industry concentration in loans and advances |
40,51 |
Asset backed securities |
66 |
Investment securities |
138 |
Balance sheet |
98 |
Liabilities at fair value through profit or loss |
135 |
Business combinations |
141 |
Liquidity risk |
79 |
Capital base and ratios |
90 |
Loans and advances |
138 |
Cash and cash equivalents |
148 |
Loans maturity analysis |
32 |
Cash flow statement |
100 |
Loans portfolio analysis |
30 |
Consumer Banking: |
|
Market risk |
75 |
· Financial review |
12 |
Non-controlling interests |
146 |
· Loan impairment coverage ratio |
61 |
Normalised earnings |
114 |
Contingent liabilities and commitments |
148 |
Operational risk |
87 |
Country cross-border risk |
74 |
Other assets |
141 |
Credit risk |
26 |
Other impairment |
112 |
Customer accounts |
143 |
Other liabilities |
143 |
Debt securities in issue |
143 |
Other operating income |
110 |
Deposits by banks |
143 |
Principal uncertainties |
23 |
Depreciation and amortisation |
112 |
Remuneration |
163 |
Derivatives |
136 |
Reputational risk |
89 |
Dividends |
113 |
Restatement of prior periods |
149 |
Earnings per share |
113 |
Retirement benefit obligations |
145 |
Eurozone |
67 |
Risk management framework |
25 |
Financial calendar |
186 |
Risk weighted assets |
93 |
Financial instruments: |
|
Segmental and entity-wide information: |
|
· Classification |
115 |
· By business |
102 |
· Valuation |
117 |
· By geography |
104 |
· Instruments carried at amortised cost |
130 |
· Net interest margin and yield |
105 |
· Reclassification |
131 |
· By structure of deposits |
106 |
Financial review of Group: |
|
Share capital |
145 |
· Operating income and profit |
10 |
Shares held by share scheme trust |
146 |
· Group summary consolidated balance sheet |
20 |
Special purpose entities |
159 |
Glossary |
181 |
Statement of changes in equity |
99 |
Goodwill and intangible assets |
142 |
Statement of comprehensive income |
97 |
Hedging |
137 |
Subordinated liabilities |
144 |
Highlights |
1 |
Summary of results |
3 |
Impairment losses on loans and advances: |
|
Taxation |
113 |
· Total individual impairment |
37 |
Trading income |
110 |
· Consumer Banking |
46 |
Wholesale Banking: |
|
· Wholesale Banking |
59 |
· Financial review |
15 |
Income statement |
96 |
· Loan impairment coverage ratio |
61 |
India listing additional information: |
|
|
|
· Condensed financial statements in Indian Rupees |
170 |
|
|
· Significant differences between Indian GAAP and IFRS |
175 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|