Interim Results 2014 Part 2

RNS Number : 3932O

Standard Chartered PLC

06 August 2014

Condensed consolidated interim income statement

For the six months ended 30 June 2014

			6 months ended	6 months ended	6 months ended
		Notes	30.06.14	30.06.13	31.12.13
		Notes	$million	$million	$million
Interest income			8,603	8,914	8,679
Interest expense			(2,999)	(3,316)	(3,121)
Net interest income			5,604	5,598	5,558
Fees and commission income			2,284	2,338	2,243
Fees and commission expense			(223)	(243)	(237)
Net trading income		3	954	1,685	829
Other operating income		4	635	610	396
Non-interest income			3,650	4,390	3,231
Operating income			9,254	9,988	8,789
Staff costs		5	(3,454)	(3,397)	(3,173)
Premises costs		5	(441)	(426)	(451)
General administrative expenses		5	(875)	(860)	(1,172)
Depreciation and amortisation		6	(313)	(351)	(363)
Operating expenses			(5,083)	(5,034)	(5,159)
Operating profit before impairment losses and taxation			4,171	4,954	3,630
Impairment losses on loans and advances and other credit risk provisions		7	(846)	(730)	(887)
Other impairment
Goodwill impairment		8	-	(1,000)	-
Other		8	(185)	(11)	(118)
Profit from associates and joint ventures			113	112	114
Profit before taxation			3,253	3,325	2,739
Taxation		9	(849)	(1,089)	(775)
Profit for the period			2,404	2,236	1,964


Profit attributable to:
Non-controlling interests		26	44	55	55
Parent company shareholders			2,360	2,181	1,909
Profit for the period			2,404	2,236	1,964

			cents	cents	cents
Earnings per share:
Basic earnings per ordinary share		11	94.6	88.1	76.5
Diluted earnings per ordinary share		11	94.0	87.3	75.7

Dividends per ordinary share:
Interim dividend declared		10	28.80	-	-
Interim dividend paid		10	-	28.80	-
Final dividend paid		10	-	-	57.20

			$million	$million	$million
Total dividend:
Total interim dividend payable ¹			710	-	-
Total interim dividend (paid 17 October 2013)			-	696	-
Total final dividend (paid 14 May 2014)			-	-	1,385

¹	Dividend declared/payable represents the interim dividend as declared by the Board of Directors on 6 August 2014 and is expected to be paid on 20 October 2014. This dividend does not represent a liability to the Group at 30 June 2014 and is a non-adjusting event as defined by IAS 10 Events after the reporting period

Condensed consolidated interim statement of comprehensive income

For the six months ended 30 June 2014

					6 months ended	6 months ended	6 months ended
					30.06.14	30.06.13	31.12.13
				Notes	$million	$million	$million
Profit for the period					2,404	2,236	1,964
Other comprehensive income:
	Items that will not be reclassified to Income statement:
		Actuarial (losses)/gains on retirement benefit obligations		24	(70)	44	35

	Items that may be reclassified subsequently to Income statement:
		Exchange differences on translation of foreign operations:
			Net gains/(losses) taken to equity		358	(1,112)	(94)
			Net (losses)/gains on net investment hedges		(58)	81	(116)
		Share of other comprehensive income from associates and joint ventures			6	(3)	(12)
		Available-for-sale investments:
			Net valuation gains/(losses) taken to equity		278	(115)	286
			Reclassified to income statement		(249)	(210)	(38)
		Cash flow hedges:
			Net gains/(losses) taken to equity		67	(161)	78
			Reclassified to income statement		3	(2)	8
		Taxation relating to components of other comprehensive income			(30)	64	(30)
	Other comprehensive income for the period, net of taxation				305	(1,414)	117
Total comprehensive income for the period					2,709	822	2,081

Total comprehensive income attributable to:
Non-controlling interests				26	29	39	40
Parent company shareholders					2,680	783	2,041
					2,709	822	2,081

Condensed consolidated interim balance sheet

As at 30 June 2014

	Notes	30.06.14	30.06.13	31.12.13
	Notes	$million	$million	$million
Assets
Cash and balances at central banks	12, 28	62,182	57,621	54,534
Financial assets held at fair value through profit or loss	12, 13	36,497	28,135	29,335
Derivative financial instruments	12, 14	48,105	54,548	61,802
Loans and advances to banks	12, 15	87,324	73,305	83,702
Loans and advances to customers	12, 16	299,209	285,353	290,708
Investment securities	12, 17	100,907	94,812	102,716
Other assets	12, 18	37,084	38,041	33,570
Current tax assets		290	198	234
Prepayments and accrued income		2,807	2,687	2,510
Interests in associates and joint ventures		1,932	1,819	1,767
Goodwill and intangible assets	20	6,200	5,943	6,070
Property, plant and equipment		6,967	6,759	6,903
Deferred tax assets		634	736	529
Total assets		690,138	649,957	674,380

Liabilities
Deposits by banks	2, 12	49,189	45,012	43,517
Customer accounts	2, 12	380,609	371,314	381,066
Financial liabilities held at fair value through profit or loss	12, 13	26,916	22,456	23,030
Derivative financial instruments	12, 14	47,785	53,781	61,236
Debt securities in issue	12, 21	71,272	58,690	64,589
Other liabilities	12, 22	34,006	28,719	27,338
Current tax liabilities		1,162	1,286	1,050
Accruals and deferred income		5,154	4,212	4,668
Subordinated liabilities and other borrowed funds	12, 23	24,691	18,393	20,397
Deferred tax liabilities		218	178	176
Provisions for liabilities and charges		102	147	107
Retirement benefit obligations	24	472	411	365
Total liabilities		641,576	604,599	627,539

Equity
Share capital	25	1,235	1,212	1,214
Reserves		47,042	43,556	45,032
Total parent company shareholders' equity		48,277	44,768	46,246
Non-controlling interests	26	285	590	595
Total equity		48,562	45,358	46,841
Total equity and liabilities		690,138	649,957	674,380

Standard Chartered PLC

Condensed consolidated interim statement of changes in equity

For the six months ended 30 June 2014

		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
		$million	$million	$million	$million	$million	$million	$million	$million	$million	$million	$million
At 1 January 2013		1,207	5,476	18	12,421	478	81	(885)	26,566	45,362	693	46,055
Profit for the period		-	-	-	-	-	-	-	2,181	2,181	55	2,236
Other comprehensive income		-	-	-	-	(277)	(132)	(1,023)	34²	(1,398)	(16)	(1,414)
Distributions		-	-	-	-	-	-	-	-	-	(38)	(38)
Shares issued, net of expenses		4	17	-	-	-	-	-	-	21	-	21
Net own shares adjustment		-	-	-	-	-	-	-	(129)	(129)	-	(129)
Share option expense, net of taxation		-	-	-	-	-	-	-	103	103	-	103
Capitalised on scrip dividend		1	(1)	-	-	-	-	-	-	-	-	-
Dividends, net of scrip		-	-	-	-	-	-	-	(1,372)	(1,372)	-	(1,372)
Other decreases³		-	-	-	-	-	-	-	-	-	(104)	(104)
At 30 June 2013		1,212	5,492	18	12,421	201	(51)	(1,908)	27,383	44,768	590	45,358
Profit for the period		-	-	-	-	-	-	-	1,909	1,909	55	1,964
Other comprehensive income		-	-	-	-	245	66	(198)	19²	132	(15)	117
Distributions		-	-	-	-	-	-	-	-	-	(39)	(39)
Shares issued, net of expenses		1	2	-	-	-	-	-	-	3	-	3
Net own shares adjustment		-	-	-	-	-	-	-	5	5	-	5
Share option expense, net of taxation		-	-	-	-	-	-	-	137	137	-	137
Capitalised on scrip dividend		1	(1)	-	-	-	-	-	-	-	-	-
Dividends, net of scrip		-	-	-	-	-	-	-	(696)	(696)	-	(696)
Other (decreases)/ increases		-	-	-	-	-	-	-	(12)	(12)	4	(8)
At 31 December 2013		1,214	5,493	18	12,421	446	15	(2,106)	28,745	46,246	595	46,841
Profit for the period		-	-	-	-	-	-	-	2,360	2,360	44	2,404
Other comprehensive income		-	-	-	-	(5)	59	323	(57)²	320	(15)	305
Distributions		-	-	-	-	-	-	-	-	-	(47)	(47)
Shares issued, net of expenses		3	6	-	-	-	-	-	-	9	-	9
Net own shares adjustment		-	-	-	-	-	-	-	(89)	(89)	-	(89)
Share option expense, net of taxation		-	-	-	-	-	-	-	135	135	-	135
Capitalised on scrip dividend		18	(18)	-	-	-	-	-	-	-	-	-
Dividends, net of scrip		-	-	-	-	-	-	-	(718)	(718)	-	(718)
Other increases/(decreases)⁴		-	-	-	-	-	-	-	14	14	(292)	(278)
At 30 June 2014		1,235	5,481	18	12,421	441	74	(1,783)	30,390	48,277	285	48,562

¹	Includes capital reserve of $5 million and capital redemption reserve of $13 million
²	For the period ended 30 June 2014, comprises actuarial loss, net of taxation and non-controlling interests of $57 million (30 June 2013: gain of $37 million and 31 December 2013: gain of $21 million) and share of comprehensive income from associates and joint ventures of $nil million (30 June 2013: $(3) million and 31 December 2013: $(2) million)
³	Relate to the impact of losing control in a subsidiary after divesting from the company
⁴	Further details are available in note 26

Standard Chartered PLC

Condensed consolidated interim cash flow statement

For the six months ended 30 June 2014

		6 months ended	6 months ended	6 months ended
	Notes	30.06.14	30.06.13	31.12.13
	Notes	$million	$million	$million
Cash flows from operating activities
Profit before taxation		3,253	3,325	2,739
Adjustments for:
Non-cash items and other adjustments included within income statement	27	1,540	2,041	2,080
Change in operating assets	27	(1,024)	(35,770)	(8,374)
Change in operating liabilities	27	7,835	26,942	18,310
Contributions to defined benefit schemes		(25)	(77)	(91)
UK and overseas taxes paid		(832)	(836)	(880)
Net cash from/(used in) operating activities		10,747	(4,375)	13,784
Net cash flows from investing activities
Purchase of property, plant and equipment		(74)	(89)	(116)
Disposal of property, plant and equipment		21	54	102
Acquisition of associates and joint ventures, net of cash acquired		-	-	(46)
Purchase of investment securities		(93,521)	(72,839)	(70,049)
Disposal and maturity of investment securities		96,450	74,828	62,335
Dividends received from associates and joint ventures		11	4	1
Net cash from/(used in) investing activities		2,887	1,958	(7,773)
Net cash flows from financing activities
Issue of ordinary and preference share capital, net of expenses		9	21	3
Purchase of own shares		(105)	(154)	-
Exercise of share options through ESOP		16	25	5
Interest paid on subordinated liabilities		(530)	(492)	(321)
Gross proceeds from issue of subordinated liabilities		4,056	2,750	2,698
Repayment of subordinated liabilities		(285)	(1,689)	(927)
Repayment to non-controlling interests		(300)	(104)	-
Interest paid on senior debts		(408)	(500)	(63)
Gross proceeds from issue of senior debts		3,394	4,252	2,564
Repayment of senior debts		(4,255)	(2,406)	(1,324)
Dividends paid to non-controlling interests and preference shareholders, net of scrip		(97)	(88)	(90)
Dividends paid to ordinary shareholders, net of scrip		(668)	(1,322)	(645)
Net cash from financing activities		827	293	1,900
Net increase/(decrease) in cash and cash equivalents		14,461	(2,124)	7,911
Cash and cash equivalents at beginning of the period		84,156	79,518	76,491
Effect of exchange rate movements on cash and cash equivalents		224	(903)	(246)
Cash and cash equivalents at end of the period	28	98,841	76,491	84,156

Standard Chartered PLC - Notes

1. Basis of preparation

The Group 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 2013, which were prepared in accordance with International Financial Reporting Standards (IFRS) and IFRS Interpretations Committee (IFRIC) interpretations as adopted by the EU.

The Risk Review and Capital sections form part of these interim financial statements as set out on page 28 and page 86.

These interim financial statements were approved by the Board of Directors on 6 August 2014. The Directors have assessed the ability of the Group to continue as a going concern. The Directors confirm they are satisfied that the Group has adequate resources to continue in business for the foreseeable future. For this reason the Group continues to adopt the "going concern" basis of accounting for preparing financial statements.

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 2013. The following accounting standards and amendments have been endorsed by the EU.

Accounting standards adopted for reporting periods beginning 1 January 2014

Amendment to IAS 32 Financial Instruments: Presentation clarifies the requirements for offsetting financial assets and liabilities and addresses inconsistencies noted in current practice when applying the offsetting criteria in IAS 32. These amendments require retrospective application.

Investment Entities (amendments to IFRS 10, IFRS 12 and IAS 27), requires entities meeting the definition of an investment entity to not consolidate its subsidiaries or apply IFRS 3 Business Combinations when it obtains control of another entity.

These amendments have been endorsed by EU and do not have a material impact on the Group.

IFRIC 21 Levies, an interpretation of IAS 37 Provisions, Contingent Liabilities and Contingent Assets, provides guidance when to recognise a liability for a levy imposed by a Government. IFRIC 21 identifies the obligating event for the recognition of a liability. If that obligating event occurs over a period of time, the levy is recognised proportionately. If it is a triggered by a minimum threshold, the liability is recognised when that threshold is reached. The impact of this Interpretation on the Group was not significant.

Amendments to IAS 39 Financial Instruments: Recognition and Measurement: Novation of Derivatives and Continuation of Hedge Accounting clarifies that there would be no need to discontinue hedge accounting if a hedging derivative was novated, provided certain criteria are met. The amendments did not have a significant impact on the Group's financial statements.

Amendments to IAS 36 Impairment of Assets modifies the disclosure of information relating to the recoverable amount of impaired assets, particularly if that amount is based on fair value less costs of disposal. The amendments did not have a significant impact on the Group's financial statements.

New standards and interpretations not yet adopted

A number of new standards and amendments to standards and interpretations are effective for periods beginning after 1 January 2015 and have not been applied in preparing these consolidated financial statements. These include:

IFRS 15 Revenue from contracts with customers which outlines a single comprehensive model of accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance. IFRS 15 is effective for reporting periods beginning on or after 1 January 2017, with earlier application permitted. The EU has not yet endorsed this standard. The Group is yet to assess IFRS 15's full impact but it is not expected to be significant.

IFRS 9 Financial Instruments which will replace IAS 39 and is effective for periods on or after 1 January 2018. IFRS 9 has three main components; Classification and Measurement, Impairment and Hedge accounting. The EU has not yet endorsed this standard. The Group is yet to assess IFRS 9's full impact.

Significant judgements

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 2013. A summary of the Group's significant accounting policies will be included in the 2014 Annual Report and Account.

Prior period restatements

In January 2014 the Group announced a change to its organisation structure. In accordance with IFRS 8, Segmental reporting, the presentation of the Group's interim results have been updated to reflect the Group's new client segments - Corporate & Institutional, Commercial, Private Banking and Retail.

While these restatements affect the reported results of the divisions that comprise the Group's business, it has no impact on the Group's overall income statement, balance sheet or reported metrics.

Change in accounting estimates

During the period the Group changed the useful economic life of technology assets from 3 to 5 years to better reflect the extended life of these assets. The change in accounting estimate has reduced amortisation costs for the 6 month period ended 30 June 2014 by $52 million relative to 30 June 2013. The expected full year impact is estimated to reduce by $110 million relative to 31 December 2013.

2. Segmental Information

The Group is organised on a worldwide basis for management and reporting purposes into four client segments: Corporate and Institutional, Commercial, Private Banking and Retail. The products offered to these client segments are summarised under 'Income by product' below. The focus is on broadening and deepening the relationship with clients, 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 needs and trends in the market place. The strategies adopted by the client segments 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 structure and is also used to evaluate performance and reward staff. Corporate items not allocated are not aggregated into the client segments 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 client 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 client 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.

Operating profit by client segment
	30.06.14
	Corporate and Institutional	Commercial	Private Banking	Retail	Total reportable Segments	Corporate items not allocated	Total
	$million	$million	$million	$million	$million	$million	$million
Internal income	(8)	11	(14)	11	-	-	-
Net interest income	2,986	365	187	2,066	5,604	-	5,604
Non-interest income¹	2,341	240	141	928	3,650	-	3,650
Operating income	5,319	616	314	3,005	9,254	-	9,254
Operating expenses	(2,546)	(362)	(227)	(1,948)	(5,083)	-	(5,083)
Operating profit before impairment losses and taxation	2,773	254	87	1,057	4,171	-	4,171
Impairment losses on loans and advances and other credit risk provisions	(266)	(100)	-	(480)	(846)	-	(846)
Other impairment	(169)	-	(16)	-	(185)	-	(185)
Profit from associates and joint ventures	90	11	-	12	113	-	113
Profit before taxation	2,428	165	71	589	3,253	-	3,253
Total assets employed	469,769	35,641	25,631	151,973	683,014	7,124	690,138
Of which: Loans to customers³	168,348	17,632	18,134	100,947	305,061	-	305,061
Total liabilities employed	414,709	43,261	37,554	144,672	640,196	1,380	641,576
Of which: Customer accounts	211,357	31,431	30,606	117,129	390,523	-	390,523
Other segment items:
Capital expenditure²	362	35	12	51	460	-	460
Depreciation	146	5	1	55	207	-	207
Interests in associates and joint ventures	1,137	459	20	316	1,932	-	1,932
Amortisation of intangible assets	73	3	2	28	106	-	106

¹Non-interest income includes an own credit adjustment of $(15) million

²Includes capital expenditure $216 million in respect of operating lease asset

³ The analysis is based on the location of the customers rather than booking location of the loan

Standard Chartered PLC - Notes continued

2. Segmental Information continued

Operating profit by client segment continued

	30.06.13
	Corporate and Institutional	Commercial	Private Banking	Retail	Total reportable Segments	Corporate items not allocated	Total
	$million	$million	$million	$million	$million	$million	$million
Internal income	(32)	19	(22)	35	-	-	-
Net interest income	2,947	378	173	2,100	5,598	-	5,598
Non-interest income¹	2,899	415	150	926	4,390	-	4,390
Operating income	5,814	812	301	3,061	9,988	-	9,988
Operating expenses	(2,500)	(374)	(213)	(1,947)	(5,034)	-	(5,034)
Operating profit before impairment losses and taxation	3,314	438	88	1,114	4,954	-	4,954
Impairment losses on loans and advances and other credit risk provisions	(197)	(43)	(8)	(482)	(730)	-	(730)
Other impairment
Goodwill impairment²	-	-	-	-	-	(1,000)	(1,000)
Other impairment	(28)	14	-	3	(11)	-	(11)
Profit from associates and joint ventures	79	17	1	15	112	-	112
Profit before taxation	3,168	426	81	650	4,325	(1,000)	3,325
Total assets employed	441,257	33,834	20,464	147,525	643,080	6,877	649,957
Of which: Loans to customers⁴	158,461	17,338	14,681	101,313	291,793	-	291,793
Total liabilities employed	387,884	43,429	35,349	136,473	603,135	1,464	604,599
Of which: Customer accounts	206,125	31,883	30,275	112,502	380,785	-	380,785
Other segment items:
Capital expenditure³	561	31	7	93	692	-	692
Depreciation	145	6	-	62	213	-	213
Interests in associates and joint ventures	965	472	36	346	1,819	-	1,819
Amortisation of intangible assets	91	7	4	36	138	-	138

¹Non-interest income includes an own credit adjustment of $237 million

²Relates to goodwill impairment charge on the Korea business

³Includes capital expenditure of $434 million in respect of operating lease assets

⁴ The analysis is based on the location of the customers rather than booking location of the loan

2. Segmental Information continued

		31.12.13
		Corporate and Institutional	Commercial	Private Banking	Retail	Total reportable segments	Corporate items not allocated	Total
		$million	$million	$million	$million	$million	$million	$million
Internal income		(21)	16	(22)	27	-	-	-
Net interest income		2,922	387	176	2,073	5,558	-	5,558
Non-interest income¹		2,047	296	131	757	3,231	-	3,231
Operating income		4,948	699	285	2,857	8,789	-	8,789
Operating expenses		(2,454)	(357)	(194)	(1,919)	(4,924)	(235)	(5,159)
Operating profit before impairment losses and taxation		2,494	342	91	938	3,865	(235)	3,630
Impairment losses on loans and advances and other credit risk provisions		(291)	(114)	-	(482)	(887)	-	(887)
Other impairment		(85)	(27)	-	(6)	(118)	-	(118)
Profit from associates and joint ventures		77	20	1	16	114	-	114
Profit before taxation		2,195	221	92	466	2,974^-	(235)	2,739
Total assets employed		456,068	35,729	23,637	152,113	667,547	6,833	674,380
Of which: Loans to customers³		160,906	17,802	17,159	100,148	296,015	-	296,015
Total liabilities employed		404,097	45,845	38,191	138,180	626,313	1,226	627,539
Of which: Customer accounts		211,051	33,705	32,212	114,003	390,971	-	390,971
Other segment items:
Capital expenditure²		592	46	4	117	759	-	759
Depreciation		150	5	-	65	220	-	220
Interests in associates and joint ventures		982	417	36	332	1,767	-	1,767
Amortisation of intangible assets		83	7	4	49	143	-	143
¹	Non-interest income includes an own credit adjustment of $(131) million
²	Includes capital expenditure of $440 million in respect of operating lease assets
³	The analysis is based on the location of the customers rather than booking location of the loan

The following table details entity-wide operating income by product:
		6 months ended	6 months ended	6 months ended
		30.06.14	30.06.13	31.12.13
		$million	$million	$million
Transaction Banking		1,918	1,964	1,947
Trade		999	1,042	1,027
Cash Management and Custody		919	922	920
Financial Markets¹		1,765	2,449	1,513
Corporate Finance		1,241	1,238	1,281
Wealth Management		817	755	694
Retail Products		2,435	2,588	2,458
Cards, Personal Loans and Unsecured Lending		1,315	1,401	1,387
Deposits		598	605	588
Mortgage & Auto		474	519	478
Other Retail Products		48	63	5
Others		1,078	994	896
Asset and Liability Management		420	305	243
Lending and Portfolio Management		529	522	543
Principal Finance		129	167	110

Total operating income		9,254	9,988	8,789
¹	Includes $(15) million (June 2013: $237 million and December 2013: $(131) million) relating to an own credit adjustment

2. Segmental Information continued

Operating profit by geographic regions and key countries

Entity-wide information

The Group manages its reportable client segments on a global basis. The Group's operations are based in the eight main geographic regions presented below, information is also provided for key countries the Group operates. The UK is the home country of the Company.

	30.06.14
	Greater China	North East Asia	South Asia	ASEAN	MENAP	Africa	Americas	Europe	Total
	$million	$million	$million	$million	$million	$million	$million	$million	$million
Internal income	9	(38)	17	48	53	43	1	(133)	-
Net interest income	1,506	631	624	1,101	471	484	195	592	5,604
Fees and commissions income, net	646	114	143	489	216	201	168	84	2,061
Net trading income	456	(31)	118	130	158	107	37	(21)	954
- Underlying	423	(31)	118	157	158	107	37	-	969
- Own credit adjustment	33	-	-	(27)	-	-	-	(21)	(15)
Other operating income	201	33	57	125	53	43	13	110	635
Operating income	2,818	709	959	1,893	951	878	414	632	9,254
Operating expenses	(1,410)	(616)	(379)	(1,030)	(482)	(467)	(300)	(399)	(5,083)
Operating profit before impairment losses and taxation	1,408	93	580	863	469	411	114	233	4,171
Impairment losses on loans and advances and other credit risk provisions	(212)	(209)	(61)	(215)	(27)	(94)	-	(28)	(846)
Other impairment	(95)	-	-	(3)	-	-	-	(87)	(185)
Profit from associates and joint ventures	84	-	-	29	-	-	-	-	113
Profit/(loss) before taxation	1,185	(116)	519	674	442	317	114	118	3,253
Total assets employed³	209,019	68,880	38,617	158,437	43,056	27,788	68,228	146,430
Of which: Loans to customers²	95,848	29,626	24,324	86,561	23,941	13,766	11,277	19,718
Capital expenditure¹	237	14	16	155	7	17	1	13	460

	30.06.14
	Hong Kong	Singapore	Korea	India	UAE	China	UK
	$million	$million	$million	$million	$million	$million	$million
Net interest income	948	589	568	520	316	420	394
Fees and commissions income, net	511	299	105	108	138	62	56
Net trading income	396	61	(35)	86	103	10	(30)
- Underlying	364	81	(36)	86	103	9	(9)
- Own credit adjustment	32	(20)	1	-	-	1	(21)
Other operating income	169	66	32	45	39	24	94
Operating income	2,024	1,015	670	759	596	516	514
Operating expenses	(866)	(551)	(587)	(308)	(286)	(371)	(308)
Operating profit before impairment losses and taxation	1,158	464	83	451	310	145	206
Impairment losses on loans and advances and other credit risk provisions	(163)	(28)	(209)	(56)	(21)	(35)	(26)
Other impairment	(95)	(1)	-	-	-	-	(87)
Profit from associates and joint ventures	-	-	-	-	-	84	-
Profit/(loss) before taxation	900	435	(126)	395	289	194	93
Total assets employed³	151,672	117,708	57,397	33,101	27,890	36,819	146,612
Of which: Loans to customers²	66,979	61,481	28,835	21,415	15,256	16,467	16,441
Capital expenditure	230	144	14	14	1	3	10
¹Includes capital expenditure in Hong Kong of $216 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
²The analysis is based on the location of the customers rather than booking location of the loan
³Includes intra-group assets

2. Segmental Information continued

Operating profit by geographic regions and key countries continued

Entity-wide information

	30.06.13
	Greater China	North East Asia	South Asia	ASEAN	MENAP	Africa	Americas	Europe	Total
	$million	$million	$million	$million	$million	$million	$million	$million	$million
Internal income	43	(36)	47	41	48	63	(1)	(205)	-
Net interest income	1,412	663	625	1,112	469	489	189	639	5,598
Fees and commissions income, net	563	143	168	506	220	201	176	118	2,095
Net trading income	518	69	126	399	198	99	72	204	1,685
- Underlying	511	67	126	306	198	99	72	69	1,448
- Own credit adjustment	7	2	-	93	-	-	-	135	237
Other operating income	130	99	133	121	36	1	7	83	610
Operating income	2,666	938	1,099	2,179	971	853	443	839	9,988
Operating expenses	(1,384)	(585)	(425)	(1,069)	(493)	(421)	(278)	(379)	(5,034)
Operating profit before impairment losses and taxation	1,282	353	674	1,110	478	432	165	460	4,954
Impairment losses on loans and advances and other credit risk provisions	(127)	(193)	(117)	(172)	(34)	(75)	(7)	(5)	(730)
Other impairment	6	(1,019)	-	1	-	-	-	1	(1,011)
Profit from associates and joint ventures	73	-	-	38	-	-	-	1	112
Profit/(loss) before taxation	1,234	(859)	557	977	444	357	158	457	3,325
Total assets employed³	192,557	66,232	40,799	152,220	42,540	23,589	68,772	134,511
Of which: Loans to customers²	86,411	32,587	26,109	82,259	23,322	12,600	9,286	19,219
Capital expenditure¹	463	8	18	158	7	19	2	17	692

	30.06.13
	Hong Kong	Singapore	Korea	India	UAE	China	UK
	$million	$million	$million	$million	$million	$million	$million
Net interest income	911	533	609	558	325	381	376
Fees and commissions income, net	434	290	132	140	153	67	88
Net Trading income	444	233	60	90	129	20	182
- Underlying	442	169	58	90	129	15	47
- Own credit adjustment	2	64	2	-	-	5	135
Other operating income	142	131	99	120	24	(15)	55
Operating income	1,931	1,187	900	908	631	453	701
Operating expenses	(826)	(614)	(549)	(356)	(290)	(383)	(297)
Operating profit before impairment losses and taxation	1,105	573	351	552	341	70	404
Impairment losses on loans and advances and other credit risks provisions	(70)	(39)	(193)	(113)	(17)	(27)	(3)
Other impairment	(2)	10	(1,019)	-	-	6	1
Profit from associates and joint ventures	-	-	-	-	-	73	1
Profit/(loss) before taxation	1,033	544	(861)	439	324	122	403
Total assets employed³	140,620	108,411	56,477	35,935	26,870	31,551	131,128
Of which: Loans to customers²	57,645	55,334	31,681	23,512	14,657	16,293	16,071
Capital expenditure	448	143	9	10	2	14	17
¹Includes 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
²The analysis is based on the location of the customers rather than booking location of the loan
³Includes intra-group assets

2. Segmental Information continued

Operating profit by geographic regions and key countries continued

Entity-wide information

	31.12.13
	Greater China	North East Asia	South Asia	ASEAN	MENAP	Africa	Americas	Europe	Total
	$million	$million	$million	$million	$million	$million	$million	$million	$million
Internal income	42	(37)	10	42	48	66	5	(176)	-
Net interest income	1,450	649	642	1,063	479	503	204	568	5,558
Fees and commissions income, net	566	112	158	470	199	216	180	105	2,006
Net trading income	276	19	98	198	140	85	24	(11)	829
- Underlying	284	19	98	246	140	85	24	64	960
- Own credit adjustment	(8)	-	-	(48)	-	-	-	(75)	(131)
Other operating income	197	(40)	33	104	28	28	2	44	396
Operating income	2,531	703	941	1,877	894	898	415	530	8,789
Operating expenses	(1,388)	(601)	(398)	(1,006)	(467)	(441)	(258)	(600)	(5,159)
Operating profit before impairment losses and taxation	1,143	102	543	871	427	457	157	(70)	3,630
Impairment losses on loans and advances and other credit risk provisions	(115)	(234)	(98)	(224)	(13)	(195)	(4)	(4)	(887)
Other impairment	(5)	(10)	(105)	1	-	-	-	1	(118)
Profit from associates and joint ventures	73	-	-	40	-	-	-	1	114
Profit/(loss) before taxation	1,096	(142)	340	688	414	262	153	(72)	2,739
Total assets employed³	206,332	67,159	39,700	159,346	42,430	24,892	71,380	134,249
Of which: Loans to customers²	89,846	30,618	25,608	82,852	23,535	13,122	10,429	20,005
Capital expenditure ¹	481	20	13	186	4	26	3	26	759

	31.12.13
	Hong Kong	Singapore	Korea	India	UAE	China	UK
	$million	$million	$million	$million	$million	$million	$million
Net interest income	924	539	590	534	327	407	331
Fees and commissions income, net	441	289	104	124	138	62	73
Net trading income	278	78	13	69	104	(33)	(21)
- Underlying income	280	113	14	69	104	(27)	54
- Own credit adjustment	(2)	(35)	(1)	-	-	(6)	(75)
Other operating income	151	39	(43)	28	22	44	26
Operating income	1,794	945	664	755	591	480	409
Operating expenses	(840)	(515)	(571)	(328)	(283)	(370)	(515)
Operating profit before impairment losses and taxation	954	430	93	427	308	110	(106)
Impairment losses on loans and advances and other credit risk provisions	(65)	(49)	(234)	(82)	(35)	(31)	(3)
Other impairment	(2)	-	(10)	(105)	-	(2)	1
Profit from associates and joint ventures	-	-	-	-	-	73	1
Profit/(loss) before taxation	887	381	(151)	240	273	150	(107)
Total assets employed³	149,318	115,561	55,921	34,470	28,813	35,128	132,162
Of which: Loans to customers²	61,173	57,540	29,760	22,767	15,734	15,489	16,543
Capital expenditure	457	177	18	16	1	12	24
¹ Includes capital expenditure in Hong Kong of $440 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 The analysis is based on the location of the customers rather than booking location of the loan
³Includes intra-group assets

2. Segmental Information continued

Net interest margin and yield
								6 months ended		6 months ended	6 months ended
								30.06.14		30.06.13	31.12.13
								$million		$million	$million
Net interest margin (%)								2.1		2.2	2.1
Net interest yield (%)								2.0		2.1	2.0
Average interest-earning assets								543,173		512,250	530,172
Average interest-bearing liabilities								512,566		477,113	499,699

Net interest margin by geography
	30.06.14
	Greater China	North East Asia	South Asia	ASEAN	MENAP	Africa	Americas		Europe	Intra-group/ tax assets	Total
	$million	$million	$million	$million	$million	$million	$million		$million	$million	$million
Average interest-earning assets	173,336	58,554	32,663	125,702	35,524	22,652	63,303		89,870	(58,431)	543,173
Net interest income	1,517	594	643	1,154	522	530	196		448	-	5,604
Net interest margin (%)	1.8	2.0	4.0	1.9	3.0	4.7	0.6		1.0	-	2.1

	30.06.13
	Greater China	North East Asia	South Asia	ASEAN	MENAP	Africa	Americas	Europe	Intra-group/ tax assets	Total
	$million	$million	$million	$million	$million	$million	$million	$million	$million	$million
Average interest-earning assets	158,644	58,121	34,436	123,006	35,072	21,137	55,596	80,733	(54,495)	512,250
Net interest income	1,453	628	673	1,157	519	554	188	426	-	5,598
Net interest margin (%)	1.8	2.2	3.9	1.9	3.0	5.3	0.7	1.1	-	2.2


	31.12.13
	Greater China	North East Asia	South Asia	ASEAN	MENAP	Africa	Americas	Europe	Intra-group/ tax assets	Total
	$million	$million	$million	$million	$million	$million	$million	$million	$million	$million
Average interest-earning assets	166,369	57,500	32,967	123,922	35,771	19,013	63,558	86,799	(55,727)	530,172
Net interest income	1,494	612	653	1,113	527	569	208	382	-	5,558
Net interest margin (%)	1.8	2.1	3.9	1.8	2.9	5.9	0.6	0.9	-	2.1

2. Segmental Information continued

Deposits structure by geographic regions and key countries

The following tables set out the structure of the Group's deposits by principal geographic regions and key countries:
	30.06.14
	Greater China	North East Asia	South Asia	ASEAN	MENAP	Africa	Americas	Europe	Total
	$million	$million	$million	$million	$million	$million	$million	$million	$million
Non-interest bearing current and demand accounts	12,156	318	2,927	9,826	10,038	6,401	2,814	2,523	47,003
Interest bearing current accounts and savings deposits	75,679	21,401	2,777	41,637	4,605	2,635	20,737	20,347	189,818
Time deposits	58,498	15,690	8,971	51,386	10,996	3,370	11,316	32,063	192,290
Other deposits	2,687	1,036	809	2,206	374	129	466	4,080	11,787
Total	149,020	38,445	15,484	105,055	26,013	12,535	35,333	59,013	440,898
Deposits by banks	8,670	4,472	501	7,096	1,777	822	18,128	8,909	50,375
Customer accounts	140,350	33,973	14,983	97,959	24,236	11,713	17,205	50,104	390,523
	149,020	38,445	15,484	105,055	26,013	12,535	35,333	59,013	440,898
Debt securities in issue:
Senior debt	1,465	3,856	-	-	53	6	-	19,203	24,583
Other debt securities	5,657	7,521	39	3,662	-	136	16,205	22,521	55,741
Subordinated liabilities and other borrowed funds	1,712	366	-	-	25	50	-	22,538	24,691
Total	157,854	50,188	15,523	108,717	26,091	12,727	51,538	123,275	545,913
The above table includes financial instruments held at fair value (see note12).

			30.06.14
			Hong Kong	Singapore	Korea	India	UAE	China	UK
			$million	$million	$million	$million	$million	$million	$million
Non-interest bearing current and demand accounts			11,286	7,733	61	2,193	6,785	723	450
Interest bearing current accounts and savings deposits			59,216	32,188	20,065	1,679	2,065	7,024	18,361
Time deposits			37,230	41,151	11,698	7,620	9,393	13,179	29,283
Other deposits			569	1,298	445	615	331	2,107	4,080
Total			108,301	82,370	32,269	12,107	18,574	23,033	52,174
Deposits by banks			4,413	5,217	1,426	405	1,479	3,772	8,074
Customer accounts			103,888	77,153	30,843	11,702	17,095	19,261	44,100
			108,301	82,370	32,269	12,107	18,574	23,033	52,174
Debt securities in issue:
Senior debt			10	-	3,856	-	-	818	19,202
Other debt securities			4,862	3,392	3,829	39	-	-	22,521
Subordinated liabilities and other borrowed funds			1,377	-	365	-	-	-	22,538
Total			114,550	85,762	40,319	12,146	18,574	23,851	116,435

2. Segmental Information continued

Deposits structure by geographic regions and key countries continued

	30.06.13
	Greater China	North East Asia	South Asia	ASEAN	MENAP	Africa	Americas	Europe	Total
	$million	$million	$million	$million	$million	$million	$million	$million	$million
Non-interest bearing current and demand accounts	10,088	297	2,985	10,004	8,922	3,626	2,745	5,197	43,864
Interest bearing current accounts and savings deposits	71,346	19,207	2,618	41,990	4,072	3,101	14,730	14,967	172,031
Time deposits	59,951	18,221	7,968	47,173	10,649	4,149	14,015	41,121	203,247
Other deposits	1,218	596	1,830	1,012	244	169	-	1,964	7,033
Total	142,603	38,321	15,401	100,179	23,887	11,045	31,490	63,249	426,175
Deposits by banks	6,548	4,545	496	4,890	1,514	611	15,777	11,009	45,390
Customer accounts	136,055	33,776	14,905	95,289	22,373	10,434	15,713	52,240	380,785
	142,603	38,321	15,401	100,179	23,887	11,045	31,490	63,249	426,175
Debt securities in issue:
Senior debt	2,442	3,625	-	-	69	6	-	15,606	21,748
Other debt securities	2,509	6,306	75	3,737	-	242	15,603	15,304	43,776
Subordinated liabilities and other borrowed funds	1,707	587	-	-	25	50	-	16,024	18,393
Total	149,261	48,839	15,476	103,916	23,981	11,343	47,093	110,183	510,092
The above table includes financial instruments held at fair value (see note 12)

			30.06.13
			Hong Kong	Singapore	Korea	India	UAE	China	UK
			$million	$million	$million	$million	$million	$million	$million
Non-interest bearing current and demand accounts			9,277	7,486	63	2,198	6,236	676	3,118
Interest bearing current accounts and savings deposits			55,767	32,741	17,927	1,686	1,689	6,900	12,952
Time deposits			37,982	35,413	13,705	6,609	8,615	12,667	38,173
Other deposits			1,165	158	565	1,707	173	49	1,964
Total			104,191	75,798	32,260	12,200	16,713	20,292	56,207
Deposits by banks			3,788	2,505	2,493	474	1,142	1,772	10,440
Customer accounts			100,403	73,293	29,767	11,726	15,571	18,520	45,767
			104,191	75,798	32,260	12,200	16,713	20,292	56,207
Debt securities in issue:
Senior debt			408	-	3,625	-	-	815	15,606
Other debt securities			1,915	2,767	3,717	75	-	-	15,295
Subordinated liabilities and other borrowed funds			1,370	-	586	-	-	-	16,012
Total			107,884	78,565	40,188	12,275	16,713	21,107	103,120

2. Segmental Information continued

Deposits structure by geographic regions and key countries continued

	31.12.13
	Greater China	North East Asia	South Asia	ASEAN	MENAP	Africa	Americas	Europe	Total
	$million	$million	$million	$million	$million	$million	$million	$million	$million
Non-interest bearing current and demand accounts	10,022	409	3,093	10,815	9,696	5,465	3,513	2,469	45,482
Interest bearing current accounts and savings deposits	77,075	20,258	2,484	40,253	3,915	2,429	18,173	16,572	181,159
Time deposits	62,479	16,090	9,119	49,198	11,197	3,985	10,825	37,249	200,142
Other deposits	351	1,023	1,364	2,426	181	207	-	3,162	8,714
Total	149,927	37,780	16,060	102,692	24,989	12,086	32,511	59,452	435,497
Deposits by banks	4,652	3,719	542	6,917	1,491	566	17,739	8,900	44,526
Customer accounts	145,275	34,061	15,518	95,775	23,498	11,520	14,772	50,552	390,971
	149,927	37,780	16,060	102,692	24,989	12,086	32,511	59,452	435,497
Debt securities in issue:
Senior debt	2,187	4,094	-	-	53	6	-	18,839	25,179
Other debt securities	2,848	6,069	46	2,961	-	214	14,450	19,645	46,233
Subordinated liabilities and other borrowed funds	1,696	635	-	-	24	51	-	17,991	20,397
Total	156,658	48,578	16,106	105,653	25,066	12,357	46,961	115,927	527,306
The above table includes financial instruments held at fair value (see note 12)

			31.12.13
			Hong Kong	Singapore	Korea	India	UAE	China	UK
			$million	$million	$million	$million	$million	$million	$million
Non-interest bearing current and demand accounts			9,166	8,654	50	2,314	6,835	696	988
Interest bearing current accounts and savings deposits			59,348	30,851	19,157	1,604	1,709	7,813	14,484
Time deposits			39,476	38,020	12,096	7,606	9,255	13,321	34,004
Other deposits			214	1,482	541	1,241	145	129	3,153
Total			108,204	79,007	31,844	12,765	17,944	21,959	52,629
Deposits by banks			2,091	4,792	1,479	457	1,180	1,888	8,309
Customer accounts			106,113	74,215	30,365	12,308	16,764	20,071	44,320
			108,204	79,007	31,844	12,765	17,944	21,959	52,629
Debt securities in issue:
Senior debt			144	-	4,094	-	-	818	18,839
Other debt securities			2,167	2,621	3,215	46	-	-	19,645
Subordinated liabilities and other borrowed funds			1,359	-	635	-	-	-	17,991
Total			111,874	81,628	39,788	12,811	17,944	22,777	109,104

3. Net trading income
		6 months ended	6 months ended	6 months ended
		30.06.14	30.06.13 ²	31.12.13 ²
		$million	$million	$million
Gains less losses on instruments held for trading:
Foreign currency¹		58	563	555
Trading securities		146	(544)	341
Interest rate derivatives		871	997	(108)
Credit and other derivatives		(35)	420	213
		1,040	1,436	1,001
Gains less losses from fair value hedging:
Gains less losses from fair value hedged items		(280)	818	489
Gains less losses from fair value hedged instruments		267	(819)	(503)
		(13)	(1)	(14)
Gains less losses on instruments designated at fair value:
Financial assets designated at fair value through profit or loss		(7)	47	50
Financial liabilities designated at fair value through profit or loss		(382)	163	9
Own credit adjustment		(15)	237	(131)
Derivatives managed with financial instruments designated at fair value through profit or loss		331	(197)	(86)
		(73)	250	(158)
		954	1,685	829
¹	Includes foreign currency gains and losses arising on the translation of foreign currency monetary assets and liabilities
²	Amounts reclassified for consistent presentation
	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
	30.06.14	30.06.13	31.12.13
	$million	$million	$million
Other operating income includes:
Gains less losses on disposal of financial instruments:
Available-for-sale	249	210	38
Loans and receivables	2	5	-
Dividend income	64	64	40
Rental income from operating lease assets	247	239	246
Gain on disposal of property, plant and equipment	19	31	71
Fair value loss on business classified as held for sale	(5)	-	(49)

5. Operating expenses
	6 months ended	6 months ended	6 months ended
	30.06.14	30.06.13	31.12.13
	$million	$million	$million
Staff costs:
Wages and salaries	2,596	2,574	2,408
Social security costs	89	84	76
Other pension costs (note 24)	170	168	168
Share based payment costs	143	154	110
Other staff costs	456	417	411
	3,454	3,397	3,173

Variable compensation is included within wages and salaries. Other staff costs primarily include training and travel costs.

5. Operating expenses continued

The following tables summarise the number of employees within the Group:

	Business	Support services	Total
At 30 June 2014	48,794	39,892	88,686
Average for the 6 months ended 30 June 2014	47,564	39,827	87,391

	Business	Support services	Total
At 30 June 2013	48,545	39,645	88,190
Average for the 6 months ended 30 June 2013	49,621	39,569	89,190

	Business	Support services	Total
At 31 December 2013	46,892	39,748	86,640
Average for the 6 months ended 31 December 2013	47,618	39,698	87,316

	6 months ended	6 months ended	6 months ended
	30.06.14	30.06.13	31.12.13
	$million	$million	$million
Premises and equipment expenses:
Rental of premises	230	220	220
Other premises and equipment costs	199	193	222
Rental of computers and equipment	12	13	9
	441	426	451
General administrative expenses:
UK bank levy	-	-	235
Other general administrative expenses	875	860	937
	875	860	1,172

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 2014 is 0.156 per cent for chargeable short-term liabilities, with a lower rate of 0.078 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 2013 was 0.13 per cent for qualifying liabilities, with a long-term rate of 0.065 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 2014 would be between $350 million and $380 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:

	30.06.14		30.06.14
	(Excluding UK bank Levy)	UK bank Levy Impact	(Including UK bank Levy)
Profit before tax ($million)	3,253	(183)	3,070
Normalised earnings per share (cents)	96.5	(7.5)	89.0
Normalised return on equity (per cent)	10.4	(0.8)	9.6

6. Depreciation and amortisation
	6 months ended	6 months ended	6 months ended
	30.06.14	30.06.13	31.12.13
	$million	$million	$million
Premises	49	54	54
Equipment:
Operating lease assets	107	100	106
Others	51	59	60
Intangibles:
Software	85	108	118
Acquired on business combinations	21	30	25
	313	351	363

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
	30.06.14	30.06.13	31.12.13
	$million	$million	$million
Net charge against profit on loans and advances:
Individual impairment charge	819	692	905
Portfolio impairment charge/(release)	28	34	(19)
	847	726	886
Provisions release related to credit commitments	(1)	-	-
Impairment charges relating to debt securities classified as loans and receivables	-	4	1
	846	730	887

An analysis of impairment provisions by geography and client segments is set out within the Risk review on page 50.

8. Other impairment
		6 months ended	6 months ended	6 months ended
		30.06.14	30.06.13	31.12.13
		$million	$million	$million
Impairment losses on available-for-sale financial assets:
- Asset backed securities		-	(1)	(1)
- Other debt securities		55	2	54
- Equity shares		4	39	51
		59	40	104
Impairment of associates		16	-	-
Impairment of goodwill		-	1,000	-
Impairment of commodity assets		113	-	-
Other		-	-	14
		188	1,040	118
Recovery of impairment on disposal of instruments¹		(3)	(29)	-
		185	1,011	118
¹	Relates to investment securities 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
	30.06.14	30.06.13	31.12.13
	$million	$million	$million
The charge for taxation based upon the profits for the period comprises:
Current tax:
United Kingdom corporation tax at 21.5 per cent (30 June 2013 and 31 December 2013: 23.25 per cent):
Current tax on income for the period	53	136	3
Adjustments in respect of prior periods (including double taxation relief)	(3)	(2)	(1)
Double taxation relief	(4)	(5)	(4)
Foreign tax:
Current tax on income for the period	873	961	633
Adjustments in respect of prior periods	(5)	-	(37)
	914	1,090	594
Deferred tax:
Origination of temporary differences	(50)	(11)	176
Adjustments in respect of prior periods	(15)	10	5
	(65)	(1)	181
Tax on profits on ordinary activities	849	1,089	775
Effective tax rate	26.1%	32.8%	28.3%

The UK corporation tax rate was reduced from 23 per cent to 21 per cent with an effective date of 1 April 2014, giving a blended 21.5 per cent for the year.

Foreign taxation includes current taxation on Hong Kong profits of $113 million (30 June 2013: $134 million, 31 December 2013: $108 million) provided at a rate of 16.5 per cent (30 June 2013 and 31 December 2013: 16.5 per cent) on the profits assessable in Hong Kong.

Deferred taxation includes origination/reversal of temporary differences on Hong Kong profits of $(1) million (30 June 2013: $(2) million, 31 December 2013: $3 million) provided at a rate of 16.5 per cent (30 June 2013 and 31 December 2013: 16.5 per cent) on the profits assessable to Hong Kong.

10. Dividends
Ordinary equity shares		30.06.14		30.06.13		31.12.13
		cents per share	$million	cents per share	$million	cents per share	$million
2013/2012 Final dividend declared and paid during the period¹		57.20	1,385	56.77	1,366	-	-
2013 Interim dividend declared and paid during the period¹		-	-	-	-	28.80	696
		57.20	1,385	56.77	1,366	28.80	696
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 2014 and 2013. Interim 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 2013 interim dividend of 28.80 cents per ordinary share ($696 million) was paid to eligible shareholders on 17 October 2013 and the final dividend of 57.20 cents per ordinary share ($1,385 million) was paid to eligible shareholders on 14 May 2014.

2014 recommended interim dividend

The 2014 interim dividend of 28.80 cents per share ($710 million) will be paid in either pounds sterling, Hong Kong dollars or US dollars on 20 October 2014 to shareholders on the UK register of members at the close of business in the UK (10:00 pm London time) on 15 August 2014, 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 15 August 2014. The 2014 interim dividend will be paid in Indian rupees on 20 October 2014 to Indian Depository Receipt holders on the Indian register at the close of business in India on 14 August 2014.

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 5 September 2014. Indian Depository Receipt holders will receive their dividend in Indian rupees only.

10. Dividends continued
Preference shares
			30.06.14	30.06.13	31.12.13
			$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 each^1,3	-	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
³	These preference shares were redeemed on 27 November 2013

11. Earnings per ordinary share
	6 months ended 30.06.14			6 months ended 30.06.13
	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	2,310	2,441,899	94.6	2,131	2,418,845	88.1
Effect of dilutive potential ordinary shares:
Options²	-	16,259	-	-	22,637	-
Diluted earnings per ordinary share	2,310	2,458,158	94.0	2,131	2,441,482	87.3

				6 months ended 31.12.13
				Profit¹	Weighted average number of shares	Per share amount
				$million	('000)	cents
Basic earnings per ordinary share				1,858	2,429,428	76.5
Effect of dilutive potential ordinary shares:
Options²				-	25,833	-
Diluted earnings per ordinary share				1,858	2,455,261	75.7

¹The 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)
²The impact of anti-dilutive options has been excluded from this amount as required by IAS 33
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.

11. Earnings per ordinary share continued
The Group measures earnings per share on a normalised basis. This differs from earnings defined in IAS 33 Earnings per share. The table below provides a reconciliation:
		30.06.14	30.06.13	31.12.13
		$million	$million	$million
Operating income as reported		9,254	9,988	8,789
Items normalised:
Fair value movements on own credit adjustment		15	(237)	131
Gain on disposal of property		(19)	(20)	(57)
Fair value loss on business classified as held for sale		5	-	49
		1	(257)	123
Normalised operating income		9,255	9,731	8,912

Operating expenses as reported		(5,083)	(5,034)	(5,159)
Items normalised:
Amortisation of intangible assets arising on business combinations		21	30	25
Normalised operating expenses		(5,062)	(5,004)	(5,134)

Other impairment as reported		(185)	(1,011)	(118)
Items normalised:
Impairment of associates		16	-	-
Impairment of property		-	-	9
Impairment of goodwill		-	1,000	-
		16	1,000	9
Normalised other impairment		(169)	(11)	(109)

Taxation as reported		(849)	(1,089)	(775)
Tax on normalised items ²		9	45	(14)
Normalised taxation		(840)	(1,044)	(789)

Profit as reported¹		2,310	2,131	1,858
Items normalised as above:
Operating income		1	(257)	123
Operating expenses		21	30	25
Other impairment		16	1,000	9
Taxation		9	45	(14)
		47	818	143
Normalised profit		2,357	2,949	2,001

Normalised basic earnings per ordinary share (cents)		96.5	121.9	82.4
Normalised diluted earnings per ordinary share (cents)		95.9	120.8	81.5
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	No tax is included in respect of the impairment of goodwill as no tax relief is available

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	Held-to- maturity	Non-financial assets	Total
Assets		$million	$million	$million	$million	$million	$million	$million	$million
Cash and balances at central banks		-	-	-	-	62,182	-	-	62,182
Financial assets held at fair value through profit or loss
Loans and advances to banks¹		3,843	-	253	-	-	-	-	4,096
Loans and advances to customers¹		4,695	-	1,157	-	-	-	-	5,852
Treasury bills and other eligible bills		3,307	-	-	-	-	-	-	3,307
Debt securities		19,282	-	-	-	-	-	-	19,282
Equity shares		3,134	-	826	-	-	-	-	3,960
		34,261	-	2,236	-	-	-	-	36,497
Derivative financial instruments		45,756	2,349	-	-	-	-	-	48,105
Loans and advances to banks¹		-	-	-	-	87,324	-	-	87,324
Loans and advances to customers¹		-	-	-	-	299,209	-	-	299,209
Investment securities
Treasury bills and other eligible bills		-	-	-	22,928	-	30	-	22,958
Debt securities		-	-	-	72,792	2,556	66	-	75,414
Equity shares		-	-	-	2,535	-	-	-	2,535
		-	-	-	98,255	2,556	96	-	100,907
Other assets		-	-	-	-	29,886	-	7,198	37,084
Total at 30 June 2014		80,017	2,349	2,236	98,255	481,157	96	7,198	671,308


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		-	-	-	-	32,446	-	5,595	38,041
Total at 30 June 2013		79,861	1,434	1,388	90,866	452,671	-	5,595	631,815
¹	Further analysed in Risk review on pages 28 to 83

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	Held-to- maturity	Non-financial assets	Total
Assets		$million	$million	$million	$million	$million	$million	$million	$million
Cash and balances at central banks		-	-	-	-	54,534	-	-	54,534
Financial assets held at fair value through profit or loss
Loans and advances to banks¹		2,221	-	246	-	-	-	-	2,467
Loans and advances to customers¹		4,411	-	896	-	-	-	-	5,307
Treasury bills and other eligible bills		5,161	-	-	-	-	-	-	5,161
Debt securities		12,407	-	292	-	-	-	-	12,699
Equity shares		2,932	-	769	-	-	-	-	3,701
		27,132	-	2,203	-	-	-	-	29,335
Derivative financial instruments		59,765	2,037	-	-	-	-	-	61,802
Loans and advances to banks¹		-	-	-	-	83,702	-	-	83,702
Loans and advances to customers¹		-	-	-	-	290,708	-	-	290,708
Investment securities
Treasury bills and other eligible bills		-	-	-	26,243	-	-	-	26,243
Debt securities		-	-	-	70,546	2,828	-	-	73,374
Equity shares		-	-	-	3,099	-	-	-	3,099
		-	-	-	99,888	2,828	-	-	102,716
Other assets		-	-	-	-	27,435	-	6,135	33,570
Total at 31 December 2013		86,897	2,037	2,203	99,888	459,207	-	6,135	656,367
¹	Further analysed in Risk review on pages 28 to 83

	Liabilities at fair value
Liabilities	Trading	Derivatives held for hedging	Designated at fair value through profit or loss	Amortised cost	Non-financial liabilities	Total
Liabilities	$million	$million	$million	$million	$million	$million
Financial liabilities held at fair value through profit or loss
Deposits by banks	-	-	1,186	-	-	1,186
Customer accounts	-	-	9,914	-	-	9,914
Debt securities in issue	-	-	9,052	-	-	9,052
Short positions	6,764	-	-	-	-	6,764
	6,764	-	20,152	-	-	26,916
Derivative financial instruments	47,117	668	-	-	-	47,785
Deposits by banks	-	-	-	49,189	-	49,189
Customer accounts	-	-	-	380,609	-	380,609
Debt securities in issue	-	-	-	71,272	-	71,272
Other liabilities	-	-	-	32,387	1,619	34,006
Subordinated liabilities and other borrowed funds	-	-	-	24,691	-	24,691
Total at 30 June 2014	53,881	668	20,152	558,148	1,619	634,468

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
Liabilities	$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	-	-	-	27,405	1,314	28,719
Subordinated liabilities and other borrowed funds	-	-	-	18,393	-	18,393
Total at 30 June 2013	58,530	1,024	16,683	520,814	1,314	598,365


Financial liabilities held at fair value through profit or loss
Deposits by banks	-	-	1,009	-	-	1,009
Customer accounts	-	-	9,905	-	-	9,905
Debt securities in issue	-	-	6,823	-	-	6,823
Short positions	5,293	-	-	-	-	5,293
	5,293	-	17,737	-	-	23,030
Derivative financial instruments	60,322	914	-	-	-	61,236
Deposits by banks	-	-	-	43,517	-	43,517
Customer accounts	-	-	-	381,066	-	381,066
Debt securities in issue	-	-	-	64,589	-	64,589
Other liabilities	-	-	-	26,008	1,330	27,338
Subordinated liabilities and other borrowed funds	-	-	-	20,397	-	20,397
Total at 31 December 2013	65,615	914	17,737	535,577	1,330	621,173

Details on valuation and levelling, together with descriptions of the main types of financial instruments in each level are set out in the Group's 2013 Annual report. There have been no significant changes from that detailed in the Annual report.

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 the accounting requirements. In total, the Group has made $420 million (30 June 2013: $372 million, 31 December 2013: $421 million) of valuation adjustments in determining fair value for financial assets and financial liabilities.

Valuation adjustments	30.06.14	30.06.13	31.12.13
Bid-offer	73	81	69
Credit¹	165	135	187
Model	14	16	15
Funding	80	63	84
Others (including Day 1)	88	77	66
Total	420	372	421

¹Includes own debit valuation adjustments on derivatives

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 2014, 30 June 2013 and 31 December 2013.
	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	253	3,843	-	4,096
Loans and advances to customers	-	5,002	850	5,852
Treasury bills and other eligible bills	3,116	191	-	3,307
Debt securities	9,886	9,210	186	19,282
Of which:
Government bonds	9,570	1,659	-	11,229
Issued by corporates other than financial institutions	54	3,449	168	3,671
Issued by financial institutions	262	4,102	18	4,382

Equity shares	3,258	-	702	3,960

Derivative financial instruments	557	47,014	534	48,105
Of which:
Foreign exchange	63	29,557	352	29,972
Interest rate	-	14,540	62	14,602
Commodity	493	2,171	-	2,664
Credit	-	557	11	568
Equity and stock index	1	189	109	299
Investment securities
Treasury bills and other eligible bills	19,223	3,697	8	22,928
Debt securities	27,738	44,393	661	72,792
Of which:
Government bonds	16,176	6,200	81	22,457
Issued by corporates other than financial institutions	8,751	8,740	482	17,973
Issued by financial institutions	2,811	29,453	98	32,362

Equity shares	1,576	15	944	2,535

Total at 30 June 2014	65,607	113,365	3,885	182,857
Liabilities
Financial instruments held at fair value through profit or loss
Deposits by banks	-	1,186	-	1,186
Customer accounts	-	9,911	3	9,914
Debt securities in issue	-	8,976	76	9,052
Short positions	6,192	572	-	6,764

Derivative financial instruments	641	46,784	360	47,785
Of which:
Foreign exchange	70	29,816	301	30,187
Interest rate	-	14,159	18	14,177
Commodity	568	1,012	-	1,580
Credit	-	1,414	1	1,415
Equity and stock index	3	383	40	426

Total at 30 June 2014	6,833	67,429	439	74,701
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	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

Total 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	244	2,223	-	2,467
Loans and advances to customers	-	4,587	720	5,307
Treasury bills and other eligible bills	4,904	257	-	5,161
Debt securities	6,596	5,944	159	12,699
Of which:
Government bonds	6,396	1,220	-	7,616
Issued by corporates other than financial institutions	79	3,211	159	3,449
Issued by financial institutions	121	1,513	-	1,634

Equity shares	2,797	-	904	3,701

Derivative financial instruments	323	60,881	598	61,802
Of which:
Foreign exchange	56	41,942	366	42,364
Interest rate	-	16,013	53	16,066
Commodity	267	2,104	-	2,371
Credit	-	573	13	586
Equity and stock index	-	249	166	415
Investment securities
Treasury bills and other eligible bills	22,701	3,523	19	26,243
Debt securities	24,445	45,493	608	70,546
Of which:
Government bonds	14,513	5,451	64	20,028
Issued by corporates other than financial institutions	6,480	7,314	493	14,287
Issued by financial institutions	3,452	32,728	51	36,231

Equity shares	1,635	8	1,456	3,099

Total at 31 December 2013	63,645	122,916	4,464	191,025
Liabilities
Financial instruments held at fair value through profit or loss
Deposits by banks	-	1,009	-	1,009
Customer accounts	-	9,897	8	9,905
Debt securities in issue	7	6,777	39	6,823
Short positions	4,917	376	-	5,293
Derivative financial instruments	420	60,375	441	61,236
Of which:
Foreign exchange	84	41,738	315	42,137
Interest rate	-	15,863	24	15,887
Commodity	336	1,500	-	1,836
Credit	-	874	-	874
Equity and stock index	-	400	102	502

Total at 31 December 2013	5,344	78,434	488	84,266
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	Derivative financial instruments	Treasury Bills	Debt securities	Equity shares	Total
Assets	$million	$million	$million	$million	$million	$million	$million	$million
At 1 January 2014	720	159	904	598	19	608	1,456	4,464
Total (losses)/gains recognised in income statement	(44)	3	(22)	19	-	(37)	126	45
Total gains/(losses) recognised in other comprehensive income	-	-	-	-	-	2	(89)	(87)
Purchases	11	27	34	6	-	38	5	121
Sales	-	(4)	(65)	(1)	-	(26)	(558)	(654)
Settlements	(27)	(4)	-	(87)	(11)	(13)	-	(142)
Transfers out	(15)	-	(149)	(3)	-	(71)	-	(238)
Transfers in	205	5	-	2	-	160	4	376
At 30 June 2014	850	186	702	534	8	661	944	3,885
Total (losses)/gains recognised in the income statement relating to assets held at 30 June 2014	(33)	-	(6)	19	-	-	-	(20)

	Held at fair value through profit or loss			Derivative financial instruments	Investment securities
Assets	Loans and advances to customers	Debt securities	Equity shares	Derivative financial instruments	Treasury Bills	Debt securities	Equity shares	Total
Assets	$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	Derivative financial instruments	Treasury bills	Debt securities	Equity shares	Total
Assets	$million	$million	$million	$million	$million	$million	$million	$million
At 1 July 2013	500	157	723	634	28	584	1,455	4,081
Total (losses)/gains recognised in income statement	(89)	59	31	(43)	-	(18)	(8)	(68)
Total gains recognised in other comprehensive income	-	-	-	-	-	11	88	99
Purchases	-	17	200	18	(15)	(226)	116	110
Sales	-	(7)	(51)	(9)	(36)	(19)	(38)	(160)
Settlements	(20)	(36)	-	(16)	(3)	(13)	4	(84)
Transfers out	327	(44)	1	-	45	(37)	(161)	131
Transfers in	2	13	-	14	-	326	-	355
At 31 December 2013	720	159	904	598	19	608	1,456	4,464
Total (losses)/gains recognised in the income statement relating to assets held at 31 December 2013	(86)	3	16	24	-	-	3	(40)

Transfers in during the period primarily relate to investment in structured notes, corporate debt securities and loans and advances where the valuation parameters become unobservable during the period.
Transfers out during the period primarily relate to certain equity loans and advances and corporate debt securities where the valuation parameters became observable during the period and were transferred to Level 1 and Level 2 financial assets.

12. Financial instruments continued

Level 3 movement tables - Financial liabilities

	30.06.14				30.06.13
Liabilities	Customer accounts	Debt securities in issue	Derivative financial instruments	Total	Customer accounts	Debt securities in issue		Derivative financial instruments	Total
	$million	$million	$million	$million	$million	$million		$million	$million
At 1 January	8	39	441	488	-	114		563	677
Total losses/(gains) recognised in income statement	-	1	(13)	(12)	-	(39)		(53)	(92)
Issues	-	21	4	25	-	320		6	326
Settlements	(5)	(16)	(72)	(93)	-	(134)		(86)	(220)
Transfers out	-	-	-	-	-	(12)		(33)	(45)
Transfers in	-	31	-	31	-	6		21	27
At 30 June	3	76	360	439	-	255		418	673
Total losses/(gains) recognised in the income statement relating to liabilities held at the end of the period	-	-	15	15	-	(16)		6	(10)

					31.12.13
Liabilities					Customer accounts	Debt securities in issue	Derivative financial instruments			Total
					$million	$million	$million			$million
At 1 July					-	255	418			673
Total (gains)/losses recognised in income statement					-	42	107			149
Issues					9	186	(5)			190
Settlements					(3)	(356)	(58)			(417)
Transfers out					-	(87)	-			(87)
Transfers in					2	(1)	(21)			(20)
At 31 December					8	39	441			488
Total losses recognised in the income statement relating to liabilities held at the end of the period					-	4	37			41

Transfers in during the period primarily relate to certain financial instruments for which parameters became unobservable during the period.
Transfers out during the period primarily relate to certain financial instruments where the valuation parameters became observable during the period and were transferred to Level 2 financial liabilities.

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 2014
Instrument	Assets $million	Liabilities $million	Principal valuation technique	Significant unobservable inputs		Range¹	Weighted average²
Loans and advances to/from customers	850	3	Comparable pricing	Yield		4.1% to 19.9%	11.5%
Debt securities	524	-	Comparable pricing	Yield		5.6% to 44.4%	10.6%
			Internal pricing model	Equity correlation		-35.0% to 97.0%	N/A
Asset backed securities	242	-	Discounted cash flows	Yield		0.4% to 3.3%	1.2%
			Discounted cash flows	Discount Margin		15.5%	15.5%
Government bonds	89	-	Discounted cash flows	Yield		2.4% to 14.1%	4.7%
Debt securities in issue	-	76	Discounted cash flows	Credit correlation		80%	80%
			Internal pricing model	Equity correlation		-35.0% to 97.0%	N/A
Derivative financial instruments of which
Foreign exchange	352	301	Option pricing model		Foreign exchange option implied volatility	0.7% to 8.5%	3.4%
Interest rate	62	18	Discounted cash flows		Interest rate curves	0.1% to 11.4%	8.7%
			Spread option model		Interest rate correlation	97.9% to 98.3%	98.1%
Credit	11	1	Discounted cash flows		Credit correlation	80%	80%
			Discounted cash flows		Credit spreads	0.4% to 2.0%	1.0%
			Option pricing model		Bond price volatility	24%	24%
Equity	109	40	Internal pricing model		Equity correlation	-35.0% to 97.0%	N/A
Equity shares	1,646	-	Comparable pricing		EV/EBITDA multiples	9.1x to 21.0x	9.3x
(includes private equity					P/B multiples	1.0x to 3.5x	2.2x
investments)					P/E multiples	14.3x to 19.0x	16.1x
					Liquidity discount	10.0% to 30.0%	14.7%
Total	3,885	439
¹The 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 2014. 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 after tax. 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 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

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.

	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
Debt securities	186	189	183	661	697	624
Equity shares	702	772	630	944	1,038	851
Loan and advances	847	878	821	-	-	-
Treasury Bills	-	-	-	8	8	8
Derivative financial instruments	174	238	107	-	-	-
Debt securities in issue	(76)	(71)	(80)	-	-	-
At 30 June 2014	1,833	2,006	1,661	1,613	1,744	1,483
Financial instruments held at fair value
Debt securities	157	160	154	584	587	579
Equity shares	723	796	650	1,455	1,628	1,282
Loan and advances	500	511	489	-	-	-
Treasury Bills	-	-	-	28	28	28
Derivative financial instruments	216	276	164	-	-	-
Debt securities in issue	(255)	(255)	(255)	-	-	-
At 30 June 2013	1,341	1,488	1,202	2,067	2,243	1,889
Financial instruments held at fair value
Debt securities	159	162	156	608	628	587
Equity shares	904	996	815	1,456	1,602	1,310
Loan and advances	712	734	683	-	-	-
Treasury Bills	-	-	-	19	19	19
Derivative financial instruments	157	269	111	-	-	-
Debt securities in issue	(39)	(39)	(39)	-	-	-
At 31 December 2013	1,893	2,122	1,726	2,083	2,249	1,916

12. Financial instruments continued

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. As certain categories of financial instruments are not traded there is a significant level of management judgement involved in calculating the fair values.

Details of the basis used by the Group to establish fair values of amortised cost financial instruments and their valuation hierarchy can be found in the Group's 2013 Annual report. There have been no significant changes from that detailed in the Annual report.

The following table summarises the carrying amounts and incorporates the Group's estimate of fair values of those financial assets and liabilities not presented on the Group's balance sheet at fair value. The fair values in the table below may be different from the actual amount that will be received/paid on the settlement or maturity of the financial instrument. For certain instruments, the fair value may be determined using assumptions for which no observable prices are available.


				Carrying value		Fair Value
				$million		$million
Assets
Cash and balances at central banks¹				62,182		62,182
Loans and advances to banks				87,324		87,139
Loans and advances to customers				299,209		298,818
Investment securities				2,652		2,689
Other assets¹				29,886		26,129
At 30 June 2014				481,253		476,957

Liabilities
Deposits by banks				49,189		49,045
Customer accounts				380,609		380,740
Debt securities in issue				71,272		71,993
Subordinated liabilities and other borrowed funds				24,691		25,183
Other liabilities¹				24,162		22,994
At 30 June 2014				549,923		477,962
¹The carrying amount of these financial instruments is considered to be a reasonable approximation of fair value as they are short-term in nature or reprice to current market rates frequently
	30.06.13		31.12.13
	Carrying value	Fair value	Carrying value		Fair value
	$million	$million	$million		$million
Assets
Cash and balances at central banks¹	57,621	57,621	54,534		54,534
Loans and advances to banks	73,305	73,201	83,702		83,585
Loans and advances to customers	285,353	284,803	290,708		290,476
Investment securities	3,946	3,625	2,828		2,885
Other assets¹	30,123	30,123	26,351		26,350
	450,348	449,373	458,123		457,830

Liabilities
Deposits by banks	45,012	45,011	43,517		43,518
Customer accounts	371,314	370,709	381,066		381,292
Debt securities in issue	58,690	58,820	64,589		64,688
Subordinated liabilities and other borrowed funds	18,393	18,116	20,397		20,499
Other liabilities¹	23,526	23,526	21,894		21,901
	516,935	516,182	531,463		531,898
¹The carrying amount of these financial instruments is considered to be a reasonable approximation of fair value as they are short-term in nature or reprice to current market rates frequently

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 2014 to 30 June 2014 that would have been recognised within
For assets reclassified:	Carrying amount at 30 June 2014	Fair value at 30 June 2014	Income	AFS reserve	Income recognised in income statement	Effective interest rate at date of reclassification	Estimated amounts of expected cash flows
For assets reclassified:	$million	$million	$million	$million	$million	%	$million
From trading to AFS	50	50	3¹	-	-	7.7	135
From trading to loans and receivables	130	130	6	-	4	6.3	149
From AFS to loans and receivables	307	331	-	7	13	5.5	401
	487	511	9	7	17
Of which asset backed securities:
reclassified to AFS	50	50	3¹	-	-
reclassified to loans and receivables	409	436	6	7	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 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
For assets reclassified:	$million	$million	$million	$million	$million	%	$million
From trading to AFS	98	98	24¹	-	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	11¹	-	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 July 2013 to 31 December 2013 that would have been recognised within
For assets reclassified:	Carrying amount at 31 December 2013	Fair value at 31 December 2013	Income	AFS reserve	Income recognised in income statement	Effective interest rate at date of reclassification	Estimated amounts of expected cash flows
For assets reclassified:	$million	$million	$million	$million	$million	%	$million
From trading to AFS	46	46	5¹	-	6	8.8	123
From trading to loans and receivables	183	179	20	-	12	6.2	214
From AFS to loans and receivables	486	520	-	12	21	5.5	626
	715	745	25	12	39
Of which asset backed securities:
reclassified to AFS	46	46	7¹	-	6
reclassified to loans and receivables	614	647	-	33	33

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 transactions

The Group enters into collateralised repurchase agreements (repos) and securities borrowing and lending transactions. These transactions typically entitle the Group and its 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. Assets sold under repurchase agreements are considered encumbered as the group cannot pledge these to obtain funding.

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	489	199	-	688
Debt securities	1,779	3,129	89	4,997
Loan and advances to banks and customers	-	-	3,934	3,934
Off balance sheet
Repledged collateral received	362	-	652	1,014
At 30 June 2014	2,630	3,328	4,923	10,633

Balance sheet liabilities - Repurchase agreements
Deposits by banks				7,828
Customer accounts				1,454
At 30 June 2014				9,282

	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
Off balance sheet
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	391	256	-	647
Debt securities	1,706	1,163	-	2,869
Loan and advances to banks and customers	-	-	2,714	2,714
Off balance sheet
Repledged collateral received	257	-	1,547	1,804
At 31 December 2013	2,354	1,419	4,261	8,034

Balance sheet liabilities - Repurchase agreements
Deposits by banks				4,330
Customer accounts				1,732
At 31 December 2013				6,062

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 2014, 30 June 2013 and 31 December 2013 are set out in the table below:
Balance sheet assets - Reverse repurchase agreements
	30.06.14	30.06.13	31.12.13
	$million	$million	$million
Loans and advances to banks	15,288	6,139	12,887
Loans and advances to customers	5,617	3,637	4,538
	20,905	9,776	17,425
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:
	30.06.14	30.06.13	31.12.13
	$million	$million	$million
Securities and collateral received (at fair value)	21,530	9,832	17,835
Securities and collateral which can be repledged or sold (at fair value)	17,029	8,710	15,906
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)	1,014	1,161	1,804

Securitisation transactions

The Group has also entered into a number of securitisation transactions where the underlying loans and advances have been transferred to Structured Entities (SEs) 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 SEs. The holders of the liability instruments have recourse only to the assets transferred to the SEs.

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 2014, 30 June 2013 and 31 December 2013 respectively.

	30.06.14		30.06.13		31.12.13
	Carrying value	Fair value	Carrying value	Fair value	Carrying value	Fair value
	$million	$million	$million	$million	$million	$million
Loans and advances to customers	696	694	1,034	1,032	779	778
Securitisation liability	378	378	833	833	502	502
Net	318	316	201	199	277	276

The Group did not undertake any transactions that required the recognition of an asset representing continuing involvement in financial assets.

12. Financial instruments continued

Financial instruments subject to offsetting, enforceable master netting arrangements and similar agreements

Impact of offset in the balance sheet

In accordance with IAS 32 Financial Instruments: Presentation the Group is permitted to offset assets and liabilities and present these net on the Group's balance sheet, only if there is a legally enforceable right to set off and the Group intends to settle on a net basis or realise the asset and liability simultaneously.

Amounts not offset in the balance sheet

In practice the Group is able to offset assets and liabilities which do not meet the IAS 32 netting criteria set out above. Such arrangements include master netting arrangements for derivatives and global master repurchase agreements for repurchase and reverse repurchase transactions. These agreements generally allow that all outstanding transactions with a particular counterparty can be offset but only in the event of default or other predetermined events.

In addition the Group also receives and pledges readily realisable collateral for derivative transactions to cover net exposure in the event of a default. Under repurchase and reverse repurchase agreements the Group pledges (legally sell) and obtain (legally purchase) respectively, highly liquid assets which can be sold in the event of a default.

The following tables set out the following:

Impact of netting on the balance sheet - This comprises derivative transactions settled through an enforceable netting agreement where we have the intent and ability to settle net and which are offset on the balance sheet.

Related amounts not offset in the balance sheet. This comprises:

· Financial instruments not offset in the balance sheet, but covered by an enforceable netting arrangement. This comprises master netting arrangements held against derivative financial instruments and excludes the effect of over collateralisation

· Financial collateral - This comprises cash collateral pledged and received for derivative financial instruments and collateral bought and sold for reverse repurchase and repurchase agreements respectively and excludes the effect of over collateralisation

	30.06.14
				Related amount not offset in the balance sheet
	Gross amounts of recognised financial instruments	Impact of offset in the balance sheet	Net amounts of financial instruments presented in the balance sheet	Financial instruments	Financial collateral	Net amount
	$million	$million	$million	$million	$million	$million
Assets
Derivative financial instruments	54,373	(6,268)	48,105	(34,437)	(3,961)	9,707
Reverse repurchase agreements	20,905	-	20,905	-	(20,905)	-
At 30 June 2014	75,278	(6,268)	69,010	(34,437)	(24,866)	9,707

Liabilities
Derivative financial instruments	54,053	(6,268)	47,785	(34,437)	(6,205)	7,143
Sale and repurchase liabilities	9,282	-	9,282	-	(9,282)	-
At 30 June 2014	63,335	(6,268)	57,067	(34,437)	(15,487)	7,143

		30.06.13
					Related amount not offset in the balance sheet
		Gross amounts of recognised financial instruments	Impact of offset in the balance sheet	Net amounts of financial instruments presented in the balance sheet	Financial instruments	Financial Collateral	Net amount
		$million	$million	$million	$million	$million	$million
Assets
Derivative financial instruments		59,650	(5,102)	54,548	(37,379)	(3,241)	13,928
Reverse repurchase agreements		9,776	-	9,776	-	(9,776)	-
At 30 June 2013		69,426	(5,102)	64,324	(37,379)	(13,017)	13,928

Liabilities
Derivative financial instruments		58,883	(5,102)	53,781	(37,379)	(7,563)	8,839
Sale and repurchase liabilities		4,396	-	4,396	-	(4,396)	-
At 30 June 2013		63,279	(5,102)	58,177	(37,379)	(11,959)	8,839

	12. Financial instruments continued Financial instruments subject to offsetting, enforceable master netting arrangements and similar agreements Amounts not offset in the balance sheet continued
		31.12.13
					Related amount not offset in the balance sheet
		Gross amounts of recognised financial instruments	Impact of offset in the balance sheet	Net amounts of financial instruments presented in the balance sheet	Financial instruments	Financial collateral	Net amount
		$million	$million	$million	$million	$million	$million
Assets
Derivative financial instruments		67,369	(5,567)	61,802	(46,242)	(5,147)	10,413
Reverse repurchase agreements		17,425	-	17,425	-	(17,425)	-
At 31 December 2013		84,794	(5,567)	79,227	(46,242)	(22,572)	10,413

Liabilities
Derivative financial instruments		66,803	(5,567)	61,236	(46,242)	(9,240)	5,754
Sale and repurchase liabilities		6,062	-	6,062	-	(6,062)	-
At 31 December 2013		72,865	(5,567)	67,298	(46,242)	(15,302)	5,754

13. Financial instruments held at fair value through profit or loss

Loans and advances held at fair value through profit or loss

The maximum exposure to credit risk for loans designated at fair value through profit or loss was $1,410 million (30 June 2013: $480 million and 31 December 2013: $1,142 million).

The net fair value loss on loans and advances to customers designated at fair value through profit or loss was $(130.6) million (30 June 2013: $2.1 million, 31 December 2013: $(3.3) million). Of this, $nil million (30 June 2013: $nil million, 31 December 2013: $nil million) relates to changes in credit risk. The cumulative fair value movement relating to changes in credit risk was $3.4 million (30 June 2013: $3.4 million, 31 December 2013: $3.4 million).

The changes in fair value attributable to credit risk has been determined by comparing fair value movements in risk-free bonds with similar maturities to the changes in fair value of loans designated at fair value through profit or loss.

Debt securities, equity shares and treasury bills held at fair value through profit or loss
		30.06.14
		Debt Securities	Equity Shares	Treasury bills	Total
		$million	$million	$million	$million
Issued by public bodies:
	Government securities	11,339
	Other public sector securities	41
		11,380
Issued by banks:
	Certificates of deposit	2,693
	Other debt securities	1,017
		3,710
Issued by corporate entities and other issuers:
	Other debt securities	4,192
Total debt securities		19,282
Of which:
	Listed on a recognised UK exchange	175	-	-	175
	Listed elsewhere	10,262	3,013	1,646	14,921
	Unlisted	8,845	947	1,661	11,453
		19,282	3,960	3,307	26,549
Market value of listed securities		10,437	3,013	1,646	15,096

		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

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

		31.12.13
		Debt Securities	Equity Shares	Treasury bills	Total
		$million	$million	$million	$million
Issued by public bodies:
	Government securities	7,763
	Other public sector securities	76
		7,839
Issued by banks:
	Certificates of deposit	292
	Other debt securities	457
		749
Issued by corporate entities and other issuers:
	Other debt securities	4,111
Total debt securities		12,699
Of which:
	Listed on a recognised UK exchange	144	21	-	165
	Listed elsewhere	8,017	2,741	1,646	12,404
	Unlisted	4,538	939	3,515	8,992
		12,699	3,701	5,161	21,561
Market value of listed securities		8,161	2,762	1,646	12,569

Financial liabilities held at fair value through profit or loss

The net fair value gain on liabilities designated at fair value through profit or loss was $397 million for the period (30 June 2013: gain of $400 million, 31 December 2013: loss of $304 million). Of this, $32 million (30 June 2013: $nil million, 31 December 2013: $106 million relates to changes in credit risk. The cumulative fair value movement relating to changes in credit risk was a loss of $63.6 million (30 June 2013: $10 million, 31 December 2013: $95.6 million). The change in fair value attributable to credit risk was determined by comparing fair value movements in risk-free debt instruments with similar maturities, to the changes in fair value of liabilities designated at fair value through profit or loss.

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.

	30.06.14			30.06.13
Total derivatives	Notional principal amounts	Assets	Liabilities	Notional principal amounts	Assets	Liabilities
Total derivatives	$million	$million	$million	$million	$million	$million
Foreign exchange derivative contracts:
Forward foreign exchange contracts	1,550,176	11,429	12,554	1,358,712	17,260	17,543
Currency swaps and options	1,186,857	18,543	17,633	1,067,827	17,044	16,892
Exchange traded futures and options	90	-	-	8,747	-	-
	2,737,123	29,972	30,187	2,435,286	34,304	34,435
Interest rate derivative contracts:
Swaps	2,155,533	13,833	13,580	1,438,134	15,176	14,840
Forward rate agreements and options	190,101	769	597	85,468	955	701
Exchange traded futures and options	1,026,331	-	-	1,046,902	-	-
	3,371,965	14,602	14,177	2,570,504	16,131	15,541
Credit derivative contracts	39,413	568	1,415	57,696	885	1,192
Equity and stock index options	16,173	299	426	16,753	395	518
Commodity derivative contracts	204,630	2,664	1,580	163,113	2,833	2,095
Total derivatives	6,369,304	48,105	47,785	5,243,352	54,548	53,781

	31.12.13
Total derivatives	Notional principal amounts	Assets	Liabilities
Total derivatives	$million	$million	$million
Foreign exchange derivative contracts:
Forward foreign exchange contracts	1,303,103	17,213	17,490
Currency swaps and options	1,086,784	25,151	24,647
Exchange traded futures and options	340	-	-
	2,390,227	42,364	42,137
Interest rate derivative contracts:
Swaps	1,974,451	15,295	15,241
Forward rate agreements and options	236,646	771	646
Exchange traded futures and options	694,212	-	-
	2,905,309	16,066	15,887
Credit derivative contracts	40,981	586	874
Equity and stock index options	15,684	415	502
Commodity derivative contracts	162,858	2,371	1,836
Total derivatives	5,515,059	61,802	61,236

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 38.

The Derivatives and Hedging sections of the Risk review on page 71 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.

	30.06.14			30.06.13
	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	47,431	842	426	35,639	857	498
Forward foreign exchange contracts	218	5	4	369	-	6
Currency swaps	24,216	1,408	134	18,436	482	409
	71,865	2,255	564	54,444	1,339	913
Derivatives designated as cash flow hedges:
Interest rate swaps	15,067	20	15	16,504	21	25
Forward foreign exchange contracts	2,617	58	14	3,636	1	78
Currency swaps	6,658	16	12	7,106	16	8
	24,342	94	41	27,246	38	111
Derivatives designated as net investment hedges:
Forward foreign exchange contracts	1,048	-	63	1,042	57	-
Total derivatives held for hedging	97,255	2,349	668	82,732	1,434	1,024

	31.12.13
	Notional principal amounts	Assets	Liabilities
	$million	$million	$million
Derivatives designated as fair value hedges:
Interest rate swaps	41,598	756	589
Forward foreign exchange contracts	199	7	-
Currency swaps	22,026	1,190	169
	63,823	1,953	758
Derivatives designated as cash flow hedges:
Interest rate swaps	20,564	22	19
Forward foreign exchange contracts	2,150	42	38
Currency swaps	7,169	20	15
	29,883	84	72
Derivatives designated as net investment hedges:
Forward foreign exchange contracts	981	-	84
Total derivatives held for hedging	94,687	2,037	914

15. Loans and advances to banks
	30.06.14	30.06.13	31.12.13
	$million	$million	$million
Loans and advances to banks	91,526	74,982	86,271
Individual impairment provision	(104)	(100)	(100)
Portfolio impairment provision	(2)	(2)	(2)
	91,420	74,880	86,169
Of which: loans and advances held at fair value through profit or loss (note 12)	(4,096)	(1,575)	(2,467)
	87,324	73,305	83,702

Analysis of loans and advances to banks by geography as set out in the Risk review on page 42

16. Loans and advances to customers
	30.06.14	30.06.13	31.12.13
	$million	$million	$million
Loans and advances to customers	308,814	294,963	299,460
Individual impairment provision	(3,021)	(2,433)	(2,749)
Portfolio impairment provision	(732)	(737)	(696)
	305,061	291,793	296,015
Of which: loans and advances held at fair value through profit or loss (note 12)	(5,852)	(6,440)	(5,307)
	299,209	285,353	290,708

The Group has outstanding residential mortgages and loans to Korea residents of $12.2 billion (30 June 2013: $13.9 billion, 31 December 2013: $12.8 billion) and Hong Kong residents of $24.7 billion (30 June 2013: $22.9 billion, 31 December 2013: $23.4 billion).

Analysis of loans and advances to customers by geography and client segments and related impairment provisions as set out within the Risk review on pages 42 to 56.

17. Investment securities
			30.06.14
			Debt securities
		Held-to- maturity	Available- for-sale	Loans and receivables	Equity shares	Treasury bills	Total
		$million	$million	$million	$million	$million	$million
Issued by public bodies:
Government securities		24	27,949	-
Other public sector securities		-	974	-
		24	28,923	-
Issued by banks:
Certificates of deposit		-	7,662	-
Other debt securities		-	21,846	16
		-	29,508	16
Issued by corporate entities and other issuers:
Other debt securities		42	14,361	2,540
Total debt securities		66	72,792	2,556
Of which:
Listed on a recognised UK exchange		-	5,841	100¹	70	-	6,011
Listed elsewhere		-	28,148	311¹	1,512	10,081	40,052
Unlisted		66	38,803	2,145	953	12,877	54,844
		66	72,792	2,556	2,535	22,958	100,907
Market value of listed securities		-	33,989	411	1,582	10,081	46,063
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

17. Investment securities continued

30.06.13

Debt securities

Held-to- maturity

Available- for-sale

Loans and receivables

Equity shares

Treasury bills

Total

$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

28,703

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

181¹

5,226

Listed elsewhere

24,556

385¹

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

These debt securities listed or registered on a recognised UK exchange or elsewhere are thinly traded or the market for these securities is illiquid

31.12.13

Debt securities

Held-to- maturity

Available- for-sale

Loans and receivables

Equity shares

Treasury bills

Total

$million

Issued by public bodies:

Government securities

26,111

Other public sector securities

928

27,039

Issued by banks:

Certificates of deposit

6,476

Other debt securities

24,897

31,373

Issued by corporate entities and other issuers:

Other debt securities

12,134

2,779

Total debt securities

70,546

2,828

Of which:

Listed on a recognised UK exchange

5,563

113¹

5,741

Listed elsewhere

26,091

619¹

1,545

10,480

38,735

Unlisted

38,892

2,096

1,489

15,763

58,240

70,546

2,828

3,099

26,243

102,716

Market value of listed securities

31,654

732

1,610

10,480

44,476

These debt securities listed or registered on a recognised UK exchange or elsewhere are thinly traded or the market for these securities is illiquid

17. Investment securities continued

The change in the carrying amount of investment securities comprised:
	30.06.14				30.06.13
	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	73,374	3,099	26,243	102,716	69,207	3,278	26,740	99,225
Exchange translation differences	298	8	289	595	(1,554)	(16)	(859)	(2,429)
Additions	64,897	77	28,547	93,521	52,917	82	19,840	72,839
Maturities and disposals	(63,465)	(703)	(32,282)	(96,450)	(50,832)	(498)	(23,498)	(74,828)
Impairment, net of recoveries on disposal	(52)	(4)	-	(56)	(5)	(10)	1	(14)
Changes in fair value (including the effect of fair value hedging)	315	58	19	392	18	(133)	(6)	(121)
Amortisation of discounts and premiums	47	-	142	189	(12)	-	152	140
Balances held at 30 June	75,414	2,535	22,958	100,907	69,739	2,703	22,370	94,812

	31.12.13
	Debt securities	Equity shares	Treasury bills	Total
	$million	$million	$million	$million
Balances held at 1 July	69,739	2,703	22,370	94,812
Exchange translation differences	(280)	7	293	20
Additions	40,219	133	29,697	70,049
Maturities and disposals	(36,122)	(35)	(26,178)	(62,335)
Impairment, net of recoveries on disposal	(54)	(51)	(1)	(106)
Changes in fair value (including the effect of fair value hedging)	(109)	342	(23)	210
Amortisation of discounts and premiums	(19)	-	85	66
Balances held at 31 December	73,374	3,099	26,243	102,716

The analysis of unamortised premiums and unamortised discounts on debt securities and income on equity shares held for investment purposes is provided below:
	30.06.14	30.06.13	31.12.13
	$million	$million	$million
Debt securities:
Unamortised premiums	507	589	605
Unamortised discounts	278	229	425
Income from listed equity shares	51	47	20
Income from unlisted equity shares	13	17	20

18. Other assets
	30.06.14	30.06.13	31.12.13
	$million	$million	$million
Financial assets held at amortised cost (note 12)
Hong Kong SAR Government certificates of indebtedness (note 22)¹	4,652	4,341	4,460
Cash collateral	6,205	7,563	9,240
Acceptances and endorsements	5,326	5,320	5,501
Unsettled trades and other financial assets	13,703	15,222	8,234
	29,886	32,446	27,435
Non-financial assets
Commodities	5,046	4,516	3,965
Assets held for sale²	1,477	16	1,623
Other assets	675	1,063	547
Total other assets	37,084	38,041	33,570
¹The Hong Kong SAR Government certificates of indebtedness are subordinated to the claims of other parties in respect of bank notes issued
²Includes assets held for sale of $1,414 million (December 2013: $1,563 million) in respect of the Group's realignment of the business in Korea. The disposal group consists of Standard Chartered Capital (Korea) Company Limited and Standard Chartered Savings Bank Korea Company Limited. The Group announced its intention to dispose these businesses on 14 June 2014 and expects to conclude the transaction before the end of 2014.

19. Business Combinations

2014 acquisitions

There have been no acquisitions during the period.

2013 acquisitions

On 2 December 2013 the Group completed the acquisition of the South African custody and trustee business of Absa Bank for a consideration of $36 million recognising goodwill of $16 million. The net assets acquired primarily comprised customer relationships that have been recognised as intangible assets of the Group. Goodwill arising on the acquisition is attributable to the synergies expected to arise from their integration with the Group. The primary reason for this acquisition was to enhance capability.


20. Goodwill and intangible assets
	30.06.14				30.06.13
	Goodwill	Acquired intangibles	Software	Total	Goodwill	Acquired intangibles	Software	Total
	$million	$million	$million	$million	$million	$million	$million	$million
Cost at 30 June	5,269	685	1,236	7,190	6,169	650	976	7,795
Provision for amortisation	-	(559)	(431)	(990)	-	(499)	(353)	(852)
Impairment charge	-	-	-	-	(1,000)	-	-	(1,000)
Net book value at 30 June	5,269	126	805	6,200	5,169	151	623	5,943

					31.12.13
					Goodwill	Acquired intangibles	Software	Total
					$million	$million	$million	$million
Cost at 31 December					5,207	678	1,103	6,988
Provision for amortisation					-	(530)	(388)	(918)
Net book value at 31 December					5,207	148	715	6,070

The Group performs an annual goodwill impairment review in September each year, and at each reporting date, assesses whether there is any objective evidence of impairment. 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 26 of the Group's 2013 Annual Report and Accounts.

At 30 June 2014, we assessed whether there was an objective evidence of impairment of goodwill, and this assessment did not indicate any goodwill impairment.

It continues to be possible that certain scenarios (to which Korea is more sensitive than other CGUs) could be construed where a combination of a material change in the discount rate coupled with a reduction in current business plan forecasts or the GDP growth rate, would potentially result in the carrying amount of the goodwill exceeding the recoverable amount in the future.

21. Debt securities in issue
		30.06.14			30.06.13
		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		25,984	45,288	71,272	22,097	36,593	58,690
Debt securities in issue included within:
	Financial liabilities held at fair value through profit or loss (note 12)	138	8,914	9,052	156	6,678	6,834
Total debt securities in issue		26,122	54,202	80,324	22,253	43,271	65,524

					31.12.13
					Certificates of deposit of $100,000 or more	Other debt securities in issue	Total
					$million	$million	$million
Debt securities in issue					21,082	43,507	64,589
Debt securities in issue included within:
	Financial liabilities held at fair value through profit or loss (note 12)				141	6,682	6,823
Total debt securities in issue					21,223	50,189	71,412

22. Other liabilities
	30.06.14	30.06.13	31.12.13
	$million	$million	$million
Financial liabilities held at amortised cost (note 12)
Notes in circulation¹	4,652	4,341	4,460
Acceptances and endorsements	5,356	5,269	5,501
Cash collateral	3,961	3,241	5,147
Unsettled trades and other financial liabilities	18,418	14,554	10,900
	32,387	27,405	26,008
Non-financial liabilities
Cash-settled share based payments	60	74	73
Liabilities held for sale²	298	-	344
Other liabilities	1,261	1,240	913
Total other liabilities	34,006	28,719	27,338

¹Hong Kong currency notes in circulation of $4,652 million (30 June 2013: $4,341 million, 31 December 2013: $4,460 million) which are secured by the government of Hong Kong SAR certificates of indebtedness of the same amount included in other assets (note 18)

²Liabilities held for sale of $298 million (December 2013: $344 million) is in respect of the Group's realignment of the business in Korea, the disposal group consists of Standard Chartered Capital (Korea) Company Limited and Standard Chartered Savings Bank Korea Company Limited. The assets are disclosed in note 18

23. Subordinated liabilities and other borrowed funds
	30.06.14
	USD	GBP	Euro	Others	Total
	$million	$million	$million	$million	$million
Fixed rate subordinated debt	11,944	5,515	4,543	2,360	24,362
Floating rate subordinated debt	238	52	-	39	329
Total	12,182	5,567	4,543	2,399	24,691

	30.06.13
	USD	GBP	Euro	Others	Total
	$million	$million	$million	$million	$million
Fixed rate subordinated debt	9,766	3,709	2,577	2,018	18,070
Floating rate subordinated debt	238	46	-	39	323
Total	10,004	3,755	2,577	2,057	18,393

	31.12.13
	USD	GBP	Euro	Others	Total
	$million	$million	$million	$million	$million
Fixed rate subordinated debt	9,663	3,922	4,426	2,060	20,071
Floating rate subordinated debt	238	50	-	38	326
Total	9,901	3,972	4,426	2,098	20,397

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 23 January 2014, Standard Chartered PLC (the Company) issued SGD700 million 4.4 per cent fixed interest rate notes due January 2026.

On 26 March 2014, the Company issued $2 billion 5.7 per cent fixed interest rate notes due March 2044.

On 6 June 2014, the Company issued £900 million 5.125 per cent fixed interest rate notes due June 2034.

Redemptions

On 13 March 2014, Standard Chartered Bank Korea Limited exercised its right to redeem its KRW300 billion 7.05 per cent subordinated debt in full on the first optional call date.

24. Retirement benefit obligations
Retirement benefit obligations comprise:
	30.06.14	30.06.13	31.12.13
	$million	$million	$million
Total market value of assets	2,671	2,302	2,585
Present value of the schemes' liabilities	(3,119)	(2,696)	(2,926)
Defined benefit schemes obligation	(448)	(394)	(341)
Defined contribution schemes obligation	(24)	(17)	(24)
Net obligation	(472)	(411)	(365)

Retirement benefit charge comprises:
	6 months ended	6 months ended	6 months ended
	30.06.14	30.06.13	31.12.13
	$million	$million	$million
Defined benefit schemes	56	58	61
Defined contribution schemes	114	110	107
Charge against profit (note 5)	170	168	168

The pension cost for defined benefit schemes was:
	6 months ended 30.06.14	6 months ended 30.06.13	6 months ended 31.12.13
	$million	$million	$million
Current service cost and administrative expenses	49	50	50
Past service cost and curtailments	-	-	4
Interest income on pension scheme assets	(53)	(46)	(47)
Interest on pension scheme liabilities	60	54	54
Total charge to profit before deduction of tax	56	58	61
Return on plan assets excluding interest income	(22)	(11)	(58)
Loss/(gain) on liabilities	92	(33)	23
Total loss/(gain) recognised directly in statement of comprehensive income before tax	70	(44)	(35)
Deferred taxation	(14)	6	15
Total loss/(gains) after tax	56	(38)	(20)

25. Share capital, reserves and own shares
	Number of ordinary shares	Ordinary share capital	Preference share capital	Total
	millions	$million	$million	$million
At 1 January 2013	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
Capitalised on scrip dividend	2	1	-	1
Shares issued	1	1	-	1
At 31 December 2013	2,427	1,214	-	1,214
Capitalised on scrip dividend	36	18	-	18
Shares issued	7	3	-	3
At 30 June 2014	2,470	1,235	-	1,235

2014

On 14 May 2014, the Company issued 36,260,040 new ordinary shares instead of the 2013 final dividend.

During the period 6,480,832 shares were issued under employee share plans at prices between nil and 1,463 pence.

2013

On 13 May 2013, the Company issued 1,727,682 new ordinary shares instead of the 2012 final dividend and on 17 October 2013 the Company issued 2,081,685 new ordinary shares instead of the 2013 interim dividend.

During the year 10,542,375 new ordinary shares were issued under employee share plans at prices between nil and 1,463 pence.

25. 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, the deferred bonus arrangements and fixed pay allowances delivered in shares 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	30.06.14	30.06.13	31.12.13	30.06.14	30.06.13	31.12.13	30.06.14	30.06.13	31.12.13
Shares purchased during period	4,090,094	4,855,145	-	1,050,401	790,829	-	5,140,495	5,645,974	-
Market value of shares purchased ($ million)	84	133	-	21	21	-	105	154	-
Shares held at end of period	5,392,574	5,866,347	5,575,821	5,807	141,160	141,160	5,398,381	6,007,507	5,716,981
Maximum number of shares held during period							8,591,232	7,278,439	6,007,507

26. Non-controlling interests
	$300m 7.267% Hybrid Tier 1 securities	Other non-controlling interests	Total
	$million	$million	$million
At 1 January 2013	320	373	693
Expenses 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	(11)	(27)	(38)
Other decreases	-	(104)	(104)
At 30 June 2013	320	270	590
Income in equity attributable to non-controlling interests	-	(15)	(15)
Other profits attributable to non-controlling interests	11	44	55
Comprehensive income for the period	11	29	40
Distributions	(11)	(28)	(39)
Other increases	-	4	4
At 31 December 2013	320	275	595
Expense in equity attributable to non-controlling interests	-	(15)	(15)
Other profits attributable to non-controlling interests	4	40	44
Comprehensive income for the period	4	25	29
Distributions	(11)	(36)	(47)
Other (decreases)/increase	(313)	21	(292)
At 30 June 2014	-	285	285

The $300 million 7.267% Hybrid Tier 1 securities issued by Standard Chartered Bank Korea Limited, a wholly owned subsidiary of the Group were redeemed during the year. The Group had no interest in the securities

27. Cash flow statement
Adjustment for non-cash items and other adjustments included within the income statement
	30.06.14	30.06.13	31.12.13
	$million	$million	$million
Amortisation of discounts and premiums of investment securities	(189)	(140)	(66)
Interest expense on subordinated liabilities	384	330	325
Interest expense on senior debt liabilities	231	217	275
Other non-cash items (including own credit adjustment)	(8)	(161)	334
Pension costs for defined benefit schemes	56	58	61
Share based payment costs	143	108	156
UK bank levy	-	-	55
Impairment losses on loans and advances and other credit risk provisions	846	730	887
Other impairment	185	1,011	118
Loss on business classified as held for sale	5	-	49
Profit from associates and joint ventures	(113)	(112)	(114)
	1,540	2,041	2,080
Change in operating assets
	30.06.14	30.06.13	31.12.13
	$million	$million	$million
Decrease/(increase) in derivative financial instruments	14,048	(5,858)	(7,207)
(Increase)/decrease in debt securities, treasury bills and equity shares held at fair value through profit or loss	(3,376)	547	4,673
Net increase in loans and advances to banks and customers	(6,491)	(19,520)	(10,398)
(Increase)/decrease in prepayments and accrued income	(287)	(188)	180
(Increase)/decrease in other assets	(4,918)	(10,751)	4,378
	(1,024)	(35,770)	(8,374)
Change in operating liabilities
	30.06.14	30.06.13	31.12.13
	$million	$million	$million
(Decrease)/increase in derivative financial instruments	(13,821)	7,430	7,374
Net increase in deposits from banks, customer accounts, debt securities in issue, Hong Kong notes in circulation and short positions	14,529	16,243	12,753
Increase/(decrease) in accruals and deferred income	452	(504)	465
Increase/(decrease) in other liabilities	6,675	3,773	(2,282)
	7,835	26,942	18,310

28. 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.
	30.06.14	30.06.13	31.12.13
	$million	$million	$million
Cash and balances at central banks	62,182	57,621	54,534
Less restricted balances	(10,557)	(9,663)	(9,946)
Treasury bills and other eligible bills	7,191	1,331	6,561
Loans and advances to banks	35,906	24,551	29,509
Trading securities	4,119	2,651	3,498
	98,841	76,491	84,156

29. Restatement of prior periods

In January 2014 the Group announced a change to its organisation structure effective 1 April 2014. In accordance with IFRS 8 Segmental reporting, the presentation of the Group's interim results have been updated to reflect the Group's new client segments - Corporate and Institutional, Commercial, Private Banking and Retail.

On 29 May 2014, the Group announced the restated segmental information for Half Year and Full Year 2013 under the new client segments and global product groups and the new geographic regions. The table below shows the changes in these accounts to the restatements announced for the new client segments to enhance the comparability of information presented.

While these restatements affect the reported results of the divisions that comprise the Group's business, it has no impact on the Group's overall income statement, balance sheet or reported metrics.

	30.06.13
	Corporate and Institutional	Commercial	Private Banking	Retail	Total reportable Segments	Corporate items not allocated	Total
	$million	$million	$million	$million	$million	$million	$million
Loans to customers - as announced	157,398	18,396	14,754	101,245	291,793	-	291,793
Loans to customers - as restated	158,461	17,338	14,681	101,313	291,793	-	291,793
Restatement	1,063	(1,058)	(73)	68	-	-	-

Total assets employed - as announced	441,203	33,760	20,464	147,496	642,923	7,034	649,957
Total assets employed - as restated	441,257	33,834	20,464	147,525	643,080	6,877	649,957
Restatement	54	74	-	29	157	(157)	-


	31.12.13
	Corporate and Institutional	Commercial	Private Banking	Retail	Total reportable Segments	Corporate items not allocated	Total
	$million	$million	$million	$million	$million	$million	$million
Loans to customers - as announced	159,894	19,025	17,208	99,888	296,015	-	296,015
Loans to customers - as restated	160,906	17,802	17,159	100,148	296,015	-	296,015
Restatement	1,012	(1,223)	(49)	260	-	-	-

30. Contingent liabilities and commitments
The table below shows the contract or underlying principal amounts and risk-weighted 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.
	30.06.14	30.06.13	31.12.13
	$million	$million	$million
Contingent liabilities
Guarantees and irrevocable letters of credit	36,409	38,061	36,936
Other contingent liabilities	8,973	9,533	10,002
	45,382	47,594	46,938
Commitments
Documentary credits and short term trade-related transactions	8,160	8,171	7,409
Forward asset purchases and forward deposits placed	26	852	459
Undrawn formal standby facilities, credit lines and other commitments to lend:
One year and over	43,617	43,894	43,294
Less than one year	15,466	15,941	17,983
Unconditionally cancellable	111,080	116,441	123,481
	178,349	185,299	192,626

The Group's share of contingent liabilities and commitments relating to joint venture is $353 million (June 2013: $358 million, December 2013: $388 million).

Contingent liabilities

Where the Group undertakes to make a payment on behalf of its customers for guarantees issued such as for performance bonds or as irrevocable letters of credit as part of the Group's transaction banking business for which an obligation to make a payment has not arisen at the reporting date those are included in these financial statements as contingent liabilities.

Other contingent liabilities primarily include revocable letters of credit and bonds issued on behalf of customers to customs officials, for bids or offers and as shipping guarantees.

Commitments

Where the Group has confirmed its intention to provide funds to a customer or on behalf of a customer in the form of loans, overdrafts, future guarantees whether cancellable or not or letters of credit and the Group has not made payments at the balance sheet date, those instruments are included in these financial statement as commitments.

31. Legal and regulatory matters

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.

Further details on regulatory compliance, reviews, request for information, investigation and risk of fraud and other criminal acts are set out in pages 30 and 31 of the Risk Review.

In addition to these matters, 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 claims as material. 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.

32. Post balance sheet events

There are no post balance sheet events to disclose.

33. Related party transactions

Directors, connected persons or officers

As at 30 June 2014, Standard Chartered Bank had created a charge over $74 million (30 June 2013: $55 million; 31 December 2013: $60 million) of cash assets in favour of the independent trustee of its employer financed retirement benefit scheme.

Other than those disclosed in the accounts, 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 $1 million at 30 June 2014 (30 June 2013: $16 million; 31 December 2013: $20 million) and amounts payable of $17 million (30 June 2013: $14 million; 31 December 2013: $20 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 $17 million at 30 June 2014 (30 June 2013: $23 million; 31 December 2013: $31 million), and deposits of $43 million (30 June 2013: $61 million; 31 December 2013: $31 million).

The Group has an investment in subordinated debt issued by PT Bank Permata Tbk of $114 million (30 June 2013: $128 million and 31 December 2013: $114 million).

34. 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 2014. The statutory accounts for the year ended 31 December 2013 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.

35. 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.

As previously announced Mr Richard Meddings stepped down from the Board as Group Finance Director on 30 June 2014, Mr Andy Halford was appointed as Group Finance Director on 1 July 2014 and Dr Byron Grote joined the Board as an Independent Non-Executive Director on 1 July 2014. Since 31 December 2013 the membership of a number of committees has changed resulting in a change in the emolument of a number of Independent Non-Executive Directors. A list of the committee's membership can be found at www.sc.com. In compliance with Rule 13.51B(1) of the Hong Kong Listing Rules, Mr Naguib Kheraj was appointed as a member of the Audit and Risk Committees on 1 January 2014 and to the Nomination Committee and Chairman of the Audit Committee on 1 May 2014. Mrs Christine Hodgson was appointed to the Brand and Values Committee on 1 February 2014 and to the Audit Committee on 1 May 2014. Dr Lars Thunell was appointed to the Audit Committee and Chairman of the Risk Committee on 1 April 2014 and to the Nomination Committee on 1 May 2014. Dr Byron Grote was appointed to the Audit and Brand and Values Committees with effect from 1 July 2014. The fee for sitting on the Audit, Brand and Values, Remuneration and Risk Committees is GBP 30,000 per committee, a member of the Nomination Committee receives a fee of GBP 15,000 and the fee for Chairing the Audit or Risk Committee is GBP 70,000.

In compliance with Rule 13.51B (1) of the Hong Kong Listing Rules, the Company confirms that Mr Jaspal Bindra, Group Executive Director and Chief Executive Officer, Asia was appointed as an Independent Non-Executive Director of Reckitt Benckiser Group plc with effect from 1 July 2014 and that Sir John Peace, Chairman stepped down from the Board of Experian plc with effect from 16 July 2014.

36. 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

A Halford

Group Finance Director

6 August 2014

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 2014 set out on pages 97 to 151, 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 2014 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 2014

Standard Chartered PLC - Additional information

A. Remuneration

Performance and reward philosophy and principles

Our approach to performance, reward and benefits supports and drives our business strategy and reinforces our values in the context of a clearly articulated risk appetite.

Our approach:

• supports a strong performance-oriented culture, ensuring that individual reward and incentives relate directly to: (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 we recruit from a global marketplace

• encourages an appropriate mix of fixed and variable compensation based on (i) the individual's responsibility and (ii) the individual's risk profile and that of the business

Total remuneration is typically delivered via a combination of base salary and benefits plus variable compensation. Consistent with our pay for performance culture, our discretionary variable compensation incentives play an integral role in enabling us to recognise and reward superior performance and behaviour that support our values.

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. Share awards are a key part of both executive directors' and senior management's variable compensation and their significance as a proportion of 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 (RoRWA). 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 for years up to and including 2013 are 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. For 2013 awards, these 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 as part of a buy-out are provided as restricted shares under the 2011 Plan. These awards typically 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 seven 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. 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. There are no outstanding awards under this plan.

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 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.

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 outstanding vested awards 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.

All Employee Sharesave Plan (2004 International Sharesave, 2004 UK Sharesave and 2013 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 2004 Sharesave plans are now closed and no further awards will be granted under these plans.

The Standard Chartered 2013 Sharesave Plan was approved by Shareholders in May 2013 and all future sharesave invitations are made under this plan. The remaining life of the 2013 Sharesave Plan is nine years.

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 2013 Annual Report and Accounts.

Reconciliation of option movements for the 6 months to 30 June 2014

	2011 Plan ¹		PSP ¹	RSS ¹	SRSS ¹	ESOS²	Weighted average exercise price (£)	Sharesave	Weighted average exercise price (£)
	Performance Shares	Deferred / Restricted shares	PSP ¹	RSS ¹	SRSS ¹	ESOS²	Weighted average exercise price (£)	Sharesave	Weighted average exercise price (£)
Outstanding at 1 January	13,315,596	15,493,384	535,629	7,091,740	980,352	36,156	7.89	14,596,338	11.62
Granted	4,815,979³	8,322,192⁴	-	147,942⁵	-	-	-	-	-
Lapsed	(2,693,436)	(246,168)	(1,321)	(172,442)	(3,299)	-	-	(2,172,978)	13.42
Exercised	(827,481)	(4,818,051)	(248,260)	(4,291,332)	(261,880)	(36,156)	7.89	(313,403)	10.82
Outstanding at 30 June	14,610,658	18,751,357	286,048	2,775,908	715,173	-	-	12,109,957	11.31
Exercisable at 30 June	463,702	1,628,033	286,048	2,775,908	715,173	-	-	-	-
Range of exercise prices (£)	-	-	-	-	-	-	-	10.65 to 14.63	-
Intrinsic value of vested but not exercised options ($ million)	0.3	2.1	0.6	3.4	0.7	-	-	-	-
Weighted average contractual remaining life (years)	8.6	5.9	4.1	2.9	2.4	-	-	1.9	-
Weighted average share price for options exercised during the period (£)	12.74	12.29	12.77	12.47	12.39	12.57	-	12.99	-

¹ Employers do not contribute towards the cost of these awards

² The closing balance in the 2013 accounts was understated by 12,547 shares and the opening balance for 2014 has been restated

³ 4,687,363 granted on 13 March 2014 and 128,616 granted on 18 June 2014

⁴ 268,035 granted on 11 March 2014, 7,969,321 granted on 13 March 2014, 81,432 granted on 18 June 2014, 263 granted on 19 June 2014, 3,101 granted on 20 June 2014 and 40 granted on 22 June 2014

⁵ Granted on 10 March 2014 and relates to notional dividend applied to unvested portion of awards

C. Non-Executive Directors' interests in ordinary shares^{1, 2, 3} as at 30 June 2014

	At 1 January 2014 total interests	Personal interests	Family interests	At 30 June 2014 total interests
Chairman :
Sir John Peace	7,543	18,185	-	18,185
Independent non-executive directors :
O P Bhatt	2,000	2,000	-	2,000
Dr K M Campbell⁴	2,000	-	-	-
Dr L C Y Cheung	2,000	2,000	-	2,000
J F T Dundas⁵	3,141	3,141	-	3,141
C Hodgson	2,000	2,000	-	2,000
N Kheraj⁶	-	2,000	-	2,000
S J Lowth	10,313	10,561	-	10,561
R H P Markham⁵	4,390	4,390	-	4,390
R Markland	3,978	4,093	-	4,093
J G H Paynter	10,000	12,500	-	12,500
Dr Han Seung-soo KBE	2,465	2,536	-	2,536
P D Skinner	16,005	16,467	-	16,467
O H J Stocken	17,915	17,915		17,915
Dr L H Thunell	6,411	6,598	-	6,598

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 Shareholders approved to disapply the shareholding qualification in relation to Dr Kurt Campbell at the Company's 2014 Annual General Meeting

⁵ Jamie Dundas and Rudy Markham stepped down from the Board on 1 May 2014. Their total interests represent their holding as at 1 May 2014

⁶ Naguib Kheraj joined the Board on 1 January 2014

Share awards

Sharesave

Director	Plan	Grant date	As at 1 January 2014	Exercise Price (Pence)	Exercised	Lapsed	As at 30 June 2014	Period of exercise
P A Sands	Sharesave	01-Oct-12	789	1,140	-	-	789	2015-2016
S P Bertamini¹	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 Meddings²	Sharesave	04-Oct-10	614	1,463	-	614	-	2013-2014
R H Meddings³	Sharesave	09-Oct-13	764	1,178	-	764	-	2016-2017

¹ Steve Bertamini stepped down from the Board on 31 March 2014. Figures shown are as at 31 March 2014

² The Group's share price remained below the 2010 Sharesave exercise price throughout the six month exercise period. Unexercised awards lapsed and savings contributions were returned following the end of the exercise period

³ Richard Meddings stepped down from the Board on 30 June 2014. Savings contract terminated and savings returned following withdrawal from the Plan

Share awards continued

Scheme interest awarded during the year

Director	Scheme	Face Value (GBP)¹	Percentage vesting at threshold²	Number of shares^3,4	Performance period end date⁵
P A Sands	PSA	2,504,517	30%	201,166	31-Dec-16
	DRSA	905,240	100%	72,710	N/A
S P Bertamini⁶	PSA	1,291,488	30%	103,734	31-Dec-16
	DRSA	452,620	100%	36,355	N/A
J S Bindra	PSA	1,363,910	30%	109,551	31-Dec-16
	DRSA	506,939	100%	40,718	N/A
R H Meddings⁷	PSA	1,689,789	30%	135,726	31-Dec-16
	DRSA	624,617	100%	50,170	N/A
A M G Rees	PSA	2,413,993	30%	193,895	31-Dec-16
	DRSA	2,353,648	100%	189,048	N/A
V Shankar	PSA	1,538,920	30%	123,608	31-Dec-16
	DRSA	539,521	100%	43,335	N/A

¹ Face value calculated based on share value at date of grant 13 March 2014 GBP 12.45

² DRSA are not subject to performance conditions

³ DRSA are subject to notional dividend payments at the date of vesting

⁴ DRSA were awarded in respect of 2013 performance and part of 2013 total variable compensation decisions disclosed in the 2013 Annual Report and Accounts

⁵PSA are exercisable between 2017 and 2024 and DRSA are exercisable between 2015 and 2021with the exception of Steve Bertamini whose conditional rights are automatically exercised on vesting

⁶ Steve Bertamini stepped down from the Board on 31 March 2014

⁷ Richard Meddings stepped down from the Board on 30 June 2014

Executive Directors' Shareholdings

						Additional shares from unvested awards
Director	Shareholding Requirement as at 30 June 2014	Shares held beneficially as at 30 June 2014¹	Met requirements as at 30 June 2014	Fixed Pay Allowance Shares beneficially held²	Vested but unexercised awards as at 30 June 2014	Subject to deferral but not performance conditions	Subject to performance conditions
P A Sands	250,000	293,846	Met	14,621	-	150,269	626,622
S P Bertamini³	120,000	126,490	Met	-	-	79,049	373,656
J S Bindra	150,000	187,095⁴	Met	12,257	-	82,529	329,856
R H Meddings⁵	120,000	132,686	Met	-	48,022	103,353	425,355
A M G Rees	200,000	200,835	Met	13,292	56,197	410,646	537,129
V Shankar	150,000	150,539	Met	14,421	-	100,483	323,355

¹ Excludes shares received from Fixed Pay Allowance

² Fixed Pay Allowance Shares are beneficially held by each Director but do not count immediately for the purposes of the meeting their shareholding requirement

³ Steve Bertamini stepped down from the Board on 31 March 2014. Figures shown are as at 31 March 2014

⁴ 153,000 of these shares are subject to a charge from 28 December 2011

⁵ Richard Meddings stepped down from the Board on 30 June 2014. Figures shown are as at 30 June 2014

D. Share price information

The middle market price of an ordinary share at the close of business on 30 June 2014 was 1,194 pence. The share price range during the first half of 2014 was 1,184.50 pence to 1,360 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 2014 have been prepared in accordance with the Code's principles.

G. Shareholder information

2014 interim dividend
Ex-dividend date	13 August 2014
Record date for dividend	15 August 2014
Dividend payment date	20 October 2014

2014 final dividend	(provisional only)
Results and dividend announcement date	3 March 2015
Preference shares	Next half-yearly dividend
7 ³/₈ per cent Non-Cumulative Irredeemable preference shares of £1 each	1 October 2014
8 ¼ per cent Non-Cumulative Irredeemable preference shares of £1 each	1 October 2014
6.409 per cent Non-Cumulative preference shares of $5 each	30 July 2014
7.014 per cent Non-Cumulative preference shares of $5 each	30 July 2014

Previous dividend payments (not adjusted for rights issue)

Dividend and financial year	Payment date	Dividend per ordinary share	Cost of one new ordinary share under the share dividend scheme
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
Interim 2013	17 October 2013	28.80c/17.8880256p/HK$2.233204992/INR1.6813*	£15.362/$24.07379
Final 2013	14 May 2014	57.20c/33.9211444p/HK$4.43464736/INR3.354626*	£11.949/$19.815

* 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.sc.com/en/resource.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 or 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, or contact the 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.

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.

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 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 consolidated interim financial statements on pages 97 to 101 are presented in Indian rupees (INR) using a US dollar / Indian rupee exchange rate of 60.0933 as at 30 June 2014 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 2014
	6 months ended	6 months ended	6 months ended
	30.06.14	30.06.13	31.12.13
	Rs. million	Rs. million	Rs. million
Interest income	516,983	535,672	521,550
Interest expense	(180,220)	(199,269)	(187,551)
Net interest income	336,763	336,402	333,999
Fees and commission income	137,253	140,498	134,789
Fees and commission expense	(13,401)	(14,603)	(14,242)
Net trading income	57,329	101,257	49,817
Other operating income	38,159	36,657	23,797
Non-interest income	219,341	263,810	194,161
Operating income	556,103	600,212	528,160
Staff costs	(207,562)	(204,137)	(190,676)
Premises costs	(26,501)	(25,600)	(27,102)
General administrative expenses	(52,582)	(51,680)	(70,429)
Depreciation and amortisation	(18,809)	(21,093)	(21,814)
Operating expenses	(305,454)	(302,510)	(310,021)
Operating profit before impairment losses and taxation	250,649	297,702	218,139
Impairment losses on loans and advances and other credit risk provisions	(50,839)	(43,868)	(53,303)
Other impairment
Goodwill impairment	-	(60,093)	-
Other	(11,117)	(661)	(7,091)
Profit from associates and joint ventures	6,791	6,730	6,851
Profit before taxation	195,484	199,810	164,596
Taxation	(51,019)	(65,442)	(46,572)
Profit for the period	144,464	134,369	118,023

Profit attributable to:
Non-controlling interests	2,644	3,305	3,305
Parent company shareholders	141,820	131,063	114,718
Profit for the period	144,464	134,369	118,023

	Rupees	Rupees	Rupees
Earnings per share:
Basic earnings per ordinary share	56.8	52.9	46.0
Diluted earnings per ordinary share	56.5	52.5	45.5

Dividends per ordinary share:
Interim dividend declared	17.31	-	-
Interim dividend paid	-	17.31	-
Final dividend paid	-	-	34.37

	Rs. million	Rs. million	Rs. million
Total dividend:
Total interim dividend payable	42,666	-	-
Total interim dividend (paid 17 October 2013)	-	41,825	-
Total final dividend (paid 15 May 2014)	-	-	83,229

Condensed consolidated interim statement of comprehensive income (Translated to INR)
For the six months ended 30 June 2014
			6 months ended	6 months ended	6 months ended
			30.06.14	30.06.13	31.12.13
			Rs.million	Rs.million	Rs.million
Profit for the period			144,464	134,369	118,023
Other comprehensive income :
Items that will not be reclassified to Income statement:

	Actuarial (losses)/gains on retirement benefit obligations		(4,207)	2,644	2,103

Items that may be reclassified subsequently to Income statement:
	Exchange differences on translation of foreign operations:
		Net gains/(losses) taken to equity	21,513	(66,824)	(5,649)
		Net (losses)/gains on net investment hedges	(3,485)	4,868	(6,971)
	Share of other comprehensive income from associates and joint ventures		361	(180)	(721)
	Available-for-sale investments:
		Net valuation gains/(losses) taken to equity	16,706	(6,911)	17,187
		Reclassified to income statement	(14,963)	(12,620)	(2,284)
	Cash flow hedges:
		Net gains/(losses) taken to equity	4,026	(9,675)	4,687
		Reclassified to income statement	180	(120)	481
	Taxation relating to components of other comprehensive income		(1,803)	3,846	(1,803)
Other comprehensive income for the period, net of taxation			18,328	(84,972)	7,031
Total comprehensive income for the period			162,793	49,397	125,054

Total comprehensive income attributable to:
Non-controlling interests			1,743	2,344	2,404
Parent company shareholders			161,050	47,053	122,650
			162,793	49,397	125,054

Condensed consolidated interim balance sheet (Translated to INR)
As at 30 June 2014
	30.06.14	30.06.13	31.12.13
	Rs.million	Rs.million	Rs.million
Assets
Cash and balances at central banks	3,736,722	3,462,636	3,277,128
Financial assets held at fair value through profit or loss	2,193,225	1,690,725	1,762,837
Derivative financial instruments	2,890,788	3,277,969	3,713,886
Loans and advances to banks	5,247,587	4,405,139	5,029,929
Loans and advances to customers	17,980,456	17,147,803	17,469,603
Investment securities	6,063,835	5,697,566	6,172,543
Other assets	2,228,500	2,286,009	2,017,332
Current tax assets	17,427	11,898	14,062
Prepayments and accrued income	168,682	161,471	150,834
Interests in associates and joint ventures	116,100	109,310	106,185
Goodwill and intangible assets	372,578	357,134	364,766
Property, plant and equipment	418,670	406,171	414,824
Deferred tax assets	38,099	44,229	31,789
Total assets	41,472,670	39,058,061	40,525,720

Liabilities
Deposits by banks	2,955,929	2,704,920	2,615,080
Customer accounts	22,872,051	22,313,484	22,899,513
Financial liabilities held at fair value through profit or loss	1,617,471	1,349,455	1,383,949
Derivative financial instruments	2,871,558	3,231,878	3,679,873
Debt securities in issue	4,282,970	3,526,876	3,881,366
Other liabilities	2,043,533	1,725,819	1,642,831
Current tax liabilities	69,828	77,280	63,098
Accruals and deferred income	309,721	253,113	280,516
Subordinated liabilities and other borrowed funds	1,483,764	1,105,296	1,225,723
Deferred tax liabilities	13,100	10,697	10,576
Provisions for liabilities and charges	6,130	8,834	6,430
Retirement benefit obligations	28,364	24,698	21,934
Total liabilities	38,554,419	36,332,349	37,710,889

Equity
Share capital	74,215	72,833	72,953
Reserves	2,826,909	2,617,424	2,706,121
Total parent company shareholders' equity	2,901,124	2,690,257	2,779,075
Non-controlling interests	17,127	35,455	35,756
Total equity	2,918,251	2,725,712	2,814,830
Total equity and liabilities	41,472,670	39,058,061	40,525,720

Condensed consolidated interim statement of changes in equity (Translated to INR)
For the six months ended 30 June 2014
		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 2013		72,533	329,071	1,082	746,419	28,725	4,868	(53,183)	1,596,439	2,725,952	41,645	2,767,597
Profit for the period		-	-	-	-	-	-	-	131,063	131,063	3,305	134,369
Other comprehensive income		-	-	-	-	(16,646)	(7,932)	(61,475)	2,043²	(84,010)	(961)	(84,972)
Distributions		-	-	-	-	-	-	-	-	-	(2,284)	(2,284)
Shares issued, net of expenses		240	1,022	-	-	-	-	-	-	1,262	-	1,262
Net own shares adjustment		-	-	-	-	-	-	-	(7,752)	(7,752)	-	(7,752)
Share option expense, net of taxation		-	-	-	-	-	-	-	6,190	6,190	-	6,190
Capitalised on scrip dividend		60	(60)	-	-	-	-	-	-	-	-	-
Dividends, net of scrip		-	-	-	-	-	-	-	(82,448)	(82,448)	-	(82,448)
Other decreases³		-	-	-	-	-	-	-	-	-	(6,250)	(6,250)
At 30 June 2013		72,833	330,032	1,082	746,419	12,079	(3,065)	(114,658)	1,645,535	2,690,257	35,455	2,725,712
Profit for the period		-	-	-	-	-	-	-	114,718	114,718	3,305	118,023
Other comprehensive income		-	-	-	-	14,723	3,966	(11,898)	1,142²	7,932	(901)	7,031
Distributions		-	-	-	-	-	-	-	-	-	(2,344)	(2,344)
Shares issued, net of expenses		60	120	-	-	-	-	-	-	180	-	180
Net own shares adjustment		-	-	-	-	-	-	-	300	300	-	300
Share option expense, net of taxation		-	-	-	-	-	-	-	8,233	8,233	-	8,233
Capitalised on scrip dividend		60	(60)	-	-	-	-	-	-	-	-	-
Dividends, net of scrip		-	-	-	-	-	-	-	(41,825)	(41,825)	-	(41,825)
Other (decreases)/increases		-	-	-	-	-	-	-	(721)	(721)	240	(481)
At 31 December 2013		72,953	330,092	1,082	746,419	26,802	901	(126,556)	1,727,382	2,779,075	35,756	2,814,830
Profit for the period		-	-	-	-	-	-	-	141,820	141,820	2,644	144,464
Other comprehensive income		-	-	-	-	(300)	3,546	19,410	(3,425)²	19,230	(901)	18,328
Distributions		-	-	-	-	-	-	-	-	-	(2,824)	(2,824)
Shares issued, net of expenses		180	361	-	-	-	-	-	-	541	-	541
Net own shares adjustment		-	-	-	-	-	-	-	(5,348)	(5,348)	-	(5,348)
Share option expense, net of taxation		-	-	-	-	-	-	-	8,113	8,113	-	8,113
Capitalised on scrip dividend		1,082	(1,082)	-	-	-	-	-	-	-	-	-
Dividends, net of scrip		-	-	-	-	-	-	-	(43,147)	(43,147)	-	(43,147)
Other increases/(decreases)⁴		-	-	-	-	-	-	-	841	841	(17,547)	(16,706)
At 30 June 2014		74,215	329,371	1,082	746,419	26,501	4,447	(107,146)	1,826,235	2,901,124	17,127	2,918,251
¹	Includes capital reserve of Rs.300 million and capital redemption reserve of Rs.781 million
²	For the period ended 30 June 2014, comprises actuarial loss, net of taxation and non-controlling interests of Rs.3,425 million (30 June 2013: gain of Rs.2,223 million and 31 December 2013:gain of Rs 1,262 million) and share of comprehensive income from associates and joint ventures of Rs.nil million (30 June 2013: Rs.(180) million and 31 December 2013: Rs.(120) million)
³	Relate to the impact of losing control in a subsidiary after divesting from the company
⁴	Relate to the redemption of $300 million 7.267% Hybrid Tier 1 securities issued by Standard Chartered Bank Korea Limited

Condensed consolidated interim cash flow statement (Translated to INR)
For the six months ended 30 June 2014
	6 months ended	6 months ended	6 months ended
	30.06.14	30.06.13	31.12.13
	Rs.million	Rs.million	Rs.million
Cash flows from operating activities
Profit before taxation	195,484	199,810	164,596
Adjustments for:
Non-cash items and other adjustments included within income statement	92,544	122,650	124,994
Change in operating assets	(61,536)	(2,149,537)	(503,221)
Change in operating liabilities	470,831	1,619,034	1,100,308
Contributions to defined benefit schemes	(1,502)	(4,627)	(5,468)
UK and overseas taxes paid	(49,998)	(50,238)	(52,882)
Net cash from/(used in) operating activities	645,823	(262,908)	828,326
Net cash flows from investing activities
Purchase of property, plant and equipment	(4,447)	(5,348)	(6,971)
Disposal of property, plant and equipment	1,262	3,245	6,130
Acquisition of associates and joint ventures, net of cash acquired	-	-	(2,764)
Purchase of investment securities	(5,619,986)	(4,377,136)	(4,209,476)
Disposal and maturity of investment securities	5,795,999	4,496,661	3,745,916
Dividends received from associates and joint ventures	661	240	60
Net cash from/(used in) investing activities	173,489	117,663	(467,105)
Net cash flows from financing activities
Issue of ordinary and preference share capital, net of expenses	541	1,262	180
Purchase of own shares	(6,310)	(9,254)	-
Exercise of share options through ESOP	961	1,502	300
Interest paid on subordinated liabilities	(31,849)	(29,566)	(19,290)
Gross proceeds from issue of subordinated liabilities	243,738	165,257	162,132
Repayment of subordinated liabilities	(17,127)	(101,498)	(55,706)
Repayment to non-controlling interests	(18,028)	(6,250)	-
Interest paid on senior debts	(24,518)	(30,047)	(3,786)
Gross proceeds from issue of senior debts	203,957	255,517	154,079
Repayment of senior debts	(255,697)	(144,584)	(79,564)
Dividends paid to non-controlling interests and preference shareholders, net of scrip	(5,829)	(5,288)	(5,408)
Dividends paid to ordinary shareholders, net of scrip	(40,142)	(79,443)	(38,760)
Net cash from financing activities	49,697	17,607	114,177
Net increase/(decrease) in cash and cash equivalents	869,009	(127,638)	475,398
Cash and cash equivalents at beginning of the period	5,057,212	4,778,499	4,596,597
Effect of exchange rate movements on cash and cash equivalents	13,461	(54,264)	(14,783)
Cash and cash equivalents at end of the period	5,939,682	4,596,597	5,057,212

I. Summary of significant differences between Indian GAAP and IFRS

The consolidated financial statements of the Group for the period ended 30 June 2014 with comparatives as at 30 June 2013 and 31 December 2013 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 2014, 31 December 2013 and 30 June 2013 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 2014. 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 controls an entity. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the investee. This includes entities where control is not derived through voting rights such as structured entities.

Indian GAAP (AS 21 Consolidated Financial Statements)

Guidance is based on the power through the ability to govern the financial and operating policies of an entity so as to obtain benefits while not taking into consideration potential voting rights.

Indian GAAP (Consolidated of Structured Entities)

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. Depreciation is recorded over the asset's useful life. Schedule II (Part C) of the Companies Act 2013 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

• 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

• Held-to-maturity at amortised cost, where there is the intent and the ability to hold them to maturity

• 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

• 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

• 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 (RBI) outlines 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

Derivatives

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.

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)

Held to maturity (HTM) 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.

In accordance with RBI regulations, in respect of Available for sale (AFS) investments, impairments are required to be reversed through Investment Reserve Account (equity reserve) if the investment rises in value or the reasons for the impairment no longer exist.

For loans and advances, the RBI regulations additionally require banks to hold provisions in respect of standard assets and for specific country risk exposures.

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.

The expected return on plan assets is based on market expectation for the returns over the entire life of the related obligation.

Actuarial gains or losses are recognised immediately in the statement of income.

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 (IAS 12 Income Taxes)

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 (AS 22 Accounting for Taxes on Income)

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 (IAS 10 Events After Balance Sheet date)

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

Additional Value Adjustment

See "Prudent valuation adjustment"

Additional Tier 1 Capital

Additional Tier 1 Capital consists of Instruments issued by the bank and related share premium that meet the criteria for inclusion in Additional Tier 1 capital (and are not included in Common Equity Tier 1/(CET1), and. Regulatory adjustments required in the calculation of AT1 Capital.

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 2.5

In 2009 the European Commission proposed further changes to CRD 3 to address the lessons of the financial crisis. These changes reflected international developments and follow the agreements reached by the Basel Committee on Banking Supervision (BCBS). They included higher capital requirements for re-securitisations, upgrading disclosure standards for securitisation exposures and strengthening market risk capital requirements.

Basel III

In December 2010, the BCBS issued the Basel III rules text, which were updated in June 2011, and represents the details of strengthened global regulatory standards on bank capital adequacy and liquidity. The new requirements will be phased in and fully implemented by 1 January 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.

BIPRU

The PRA's Prudential Sourcebook for Banks, Building Societies and Investment Firms.

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.

Capital resources

Sum of Tier 1 and Tier 2 capital after regulatory adjustments.

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
(CLO)

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 Retail clients 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.

Common Equity Tier 1 capital

Common Equity Tier 1 capital consists of the common shares issued by the bank and related share premium, retained earnings, accumulated other comprehensive income and other disclosed reserves, eligible non-controlling interests and regulatory adjustments required in the calculation of Common Equity Tier 1.

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 PRA.

Core Tier 1 Capital ratio

Core Tier 1 capital as a percentage of risk weighted assets.

Counterparty credit risk	The risk that a counterparty defaults before satisfying its obligations under a contract.
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.
CRD 3	See Basel 2.5
CRD IV	Represents the Capital Requirements Directive (CRD) and Capital Requirements Regulation (CRR) that implement the Basel III proposals in Europe.
Credit Conversion Factor (CCF)	Either prescribed by BIPRU or modelled by the bank, an estimate of the amount the Group expects a customer to have down further on a facility limit at the point of default.
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.
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 mitigation (CRM)	Credit risk mitigation is a process to mitigate potential credit losses from any given account, customer or portfolio by using a range of tools such as collateral, netting agreements, credit insurance, credit derivatives and other guarantees.
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 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.
External Credit Assessment Institutions (ECAI)	For the Standardised Approach to credit risk for sovereigns, corporates and institutions, external ratings are used to assign risk-weights. These external ratings must come from PRA approved rating agencies, known as External Credit Assessment Institutions (ECAI); namely Moody's, Standard & Poor's and Fitch.
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	Forbearance takes place when a concession is made to the contractual terms of a loan in response to an obligor's financial liabilities.
Foundation Internal Ratings Based Approach	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.
Free Deliveries	A transaction in which securities, foreign currencies or commodities have been paid for before receiving them or where securities, foreign currencies or commodities have been delivered before receiving payment for them.
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.
General Prudential Sourcebook(GENPRU)	The PRA's General Prudential Sourcebook for Banks, Building Societies, Insurers and Investment Firms.
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.
High Quality Liquid Assets (HQLA)	Assets that are unencumbered, liquid in markets during a time of stress and, ideally, be central bank eligible. These include, for example, cash and claims on central governments and central banks. The Basel 3 Rules require this ratio to be at least 100% and it's expected to apply from 2015.
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).
Individual liquidity guidance	Guidance given to the Group about the amount, quality and funding profile of liquidity resources that the PRA has asked the Group to maintain.
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 Corporate and Institutional client segment 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.
Internal Capital Adequacy Assessment Process (ICAAP)	A requirement on institutions under Pillar 2 of the Basel II framework to undertake a comprehensive assessment of their risks and to determine the appropriate amounts of capital to be held against these risks where other mitigants are not available.
Internal Model Approach (IMA)	The approach used to calculate market risk capital and RWA with an internal market risk model approved by the PRA under the terms of CRD IV/CRR. Formerly referred to as CAD2.
Interest rate risk (IRR)	Interest rate risk arises due to the investment of equity and reserves into rate-sensitive assets, as well as some tenor mismatches between debt issuance and placements.
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.
Leverage ratio	A ratio introduced under CRD IV that compares Tier 1 capital to total exposures, including certain exposures held off balance sheet as adjusted by stipulated credit conversion factors. Intended to be a simple, non-risk based backstop measure.
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.
Liquid cover ratio (LCR)	A short-term liquidity measure that considers a 30 day period of liquidity stress
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.
Net Stable Funding Ratio (NSFR)	The ratio of available stable funding to required stable funding over a one year time horizon, assuming a stressed scenario. It is a longer term liquidity measure designed to restrain the amount of wholesale borrowing and encourage stable funding over a one year time horizon
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.
Prudent Valuation Adjustment	A deduction from common equity tier 1 capital, to reflect the difference between fair value and prudent value positions, where the application of prudent results in a lower absolute carrying value than recognised in the financial statements.
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.
Risks-not-in-VaR (RNIV)	A framework for identifying and quantifying marginal types of market risk that are not captured in the Value at Risk (VaR) measure for any reason, such as being a far-tail risk or the necessary historical market data not being available.
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 include only exposures to central governments.
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	13 August 2014
Record date	15 August 2014
Expected posting to shareholders of 2014 Half Year Report	5 September 2014
Payment date - interim dividend on ordinary shares	20 October 2014

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.sc.com

For further information please contact:

Stephen Atkinson, Group Head, Corporate Affairs
+44 20 7885 7245

James Hopkinson, Global Head, 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, Global Head, Communications
+44 20 7885 5573

The following information for the Half Year Results 2014 will be available on our website:

The video interviews with Peter Sands, Group Chief Executive and Andy Halford, 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.sc.com/global/mc/plib/directors_p01.html

Information regarding the Group's commitment to Sustainability is available at
http://www.sc.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	136	Industry concentration in loans and advances	43
Asset backed securities	63	Investment securities	140
Balance sheet	99	Liabilities at fair value through profit or loss	137
Business combinations	143	Liquidity risk	72
Capital base and ratios	86	Loan impairment coverage ratio	51
Cash and cash equivalents	148	Loans and advances	140
Cash flow statement	101	Loans maturity analysis	45
Contingent liabilities and commitments	149	Loans portfolio analysis	41
Country cross-border risk	66	Market risk	67
Credit risk	34	Non-controlling interests	147
Customer accounts	110	Normalised earnings	118
Debt securities in issue	144	Operational risk	84
Deposits by banks	110	Other assets	142
Depreciation and amortisation	114	Other impairment	115
Derivatives	138	Other liabilities	144
Dividends	116	Other operating income	113
Earnings per share	117	Principal uncertainties	29
Eurozone	64	Remuneration	154
Financial calendar	178	Reputational risk	85
Financial Review:		Restatement of prior periods	149
· Group summary	10	Retirement benefit obligations	146
· Client segment and products	12	Risk management framework	31
Financial instruments:		Risk weighted assets	93
· Classification	119	Segmental and entity-wide information:
· Valuation	121	· By client segment	103
· Instruments carried at amortised cost	130	· By geography	106
· Reclassification	131	· Net interest margin and yield	109
Financial review of Group:		· By structure of deposits	110
Operating income and profit	11	Share capital	146
Group summary consolidated balance sheet	26	Shares held by share scheme trust	147
Glossary	172	Statement of changes in equity	100
Goodwill and intangible assets	143	Statement of comprehensive income	98
Hedging	139	Subordinated liabilities	145
Highlights	1	Summary of results	3
Impairment losses on loans and advances:		Taxation	116
· Total individual impairment	56	Trading income	113
· Impairment by geography	50
Income statement	97
Indian Listing additional information:
· Condensed financial statements in Indian Rupees	161
· Significant differences between Indian GAAP and IFRS	166

This information is provided by RNS

The company news service from the London Stock Exchange

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