Interim Results - Part 1

Standard Chartered PLC 1 August 2001 Part 1 Standard Chartered's results - Profit before taxation up 16 per cent to $651 million from $559 million to 30 June 2000 (31 December 2000: $879 million). - Operating profit before goodwill and restructuring up 23 per cent to $719 million from $584 million to 30 June 2000 (31 December 2000: $716 million). - Net revenue up 11 per cent to $2,187 million from 30 June 2000 ($1,968 million) and up 3 per cent from 31 December 2000 ($2,122 million). - Ongoing costs excluding goodwill and restructuring ($1,199 million) up 6 per cent from 30 June 2000 ($1,127 million) and 1 per cent from 31 December 2000 ($1,193 million). - Provisions up 5 per cent at $269 million from 30 June 2000 ($257 million) and 26 per cent from 31 December 2000 ($213 million). - Normalised earnings per share up 16 per cent to 40.2 cents from 30 June 2000 (34.8 cents) and up 11 per cent from 31 December 2000 (36.2 cents). - Interim dividend per share increased by 10 per cent to 12.82 cents. Commenting on these results, the Chairman of Standard Chartered PLC, Sir Patrick Gillam, said: 'Our focus this year is on delivering value from the strategic moves we made in 2000. The results for the first six months show that we are making good progress. They demonstrate our ability to achieve growth even against the backdrop of difficult economic conditions in many of our markets'. STANDARD CHARTERED PLC SUMMARY OF RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2001 6 months 6 months 6 months ended ended ended 30.06.01 30.06.00 31.12.00 $m $m $m RESULTS Net revenue 2,187 1,968 2,122 Provisions for bad and doubtful debts and (269) (257) (213) contingent liabilities Operating profit after goodwill and provisions but before restructuring 651 559 670 charge Restructuring charge - - (323) Profit on disposal of subsidiary - - 532 undertakings Profit before taxation 651 559 879 Profit attributable to shareholders 404 363 663 BALANCE SHEET Total assets 109,681 90,438 102,280 Shareholders funds: Equity 6,235 5,222 6,053 Non-equity 1,251 302 300 Capital resources 13,025 9,609 10,990 INFORMATION PER ORDINARY SHARE Cents Cents Cents Normalised earnings per share 40.2 34.8 36.2 Dividends per share 12.820 11.651 26.454 Net asset value per share 552.5 486.1 537.2 RATIOS % % % Post-tax return on ordinary shareholders funds - normalised basis 14.8 14.3 14.3 Cost to income ratio - normalised basis 55.0 57.4 56.4 Capital ratios: Tier 1 capital 8.8 9.3 7.0 Total capital 16.2 15.9 14.0 Results on a normalised basis reflect the Group's results excluding profits on disposal of subsidiary undertakings and the charges for restructuring (see note 9). CHAIRMAN S STATEMENT In 2000 we transformed our business. It was a year when we made the two largest acquisitions in our history and announced a major programme to boost productivity. Our focus this year is on delivering value from the strategic moves we made in 2000. The results for the first six months show that we are making good progress. They demonstrate our ability to achieve growth even against the backdrop of difficult economic conditions in many of our markets. Profit before taxation up 16 per cent to $651 million. Net revenue increased by 11 per cent to $2,187 million. Costs increased 10 per cent ($1,267 million). Excluding goodwill of $68 million, the cost increase was held at 6 per cent. Provisions up 5 per cent at $269 million, reflecting a larger Consumer Banking business and tougher economic conditions. Normalised earnings per share increased 16 per cent to 40.2 cents. Tier 1 capital ratio stands at 8.8 per cent. As the Group's results are now stated in US dollars, the dividend will also be declared in US dollars. It will continue to be paid in Sterling with an option to receive US dollars. In setting the dividend we have balanced the desire to share our good performance against our concerns regarding continuing uncertain economic conditions. We are therefore declaring a dividend of 12.82 cents for the half year, an increase of 10 per cent. Business Progress We have continued to expand our existing business. I am delighted that we have achieved particular progress in credit cards, wealth management, global markets and cash management. These are all high return businesses. We have made substantial progress and are ahead of plan on integrating the acquisitions of Chase in Hong Kong and Grindlays. Both of these have given us leadership positions in key markets. Our business in India is now our third largest profit generator. As a result we now have a better balanced business, both across products and countries. At the same time, we have made big steps forward with our productivity programme. The first global processing hub in Chennai is now operational with the hub in Kuala Lumpur opening today. In addition, we have a number of separate productivity projects underway throughout the Group. We are already seeing cost savings from these. In Singapore, one of our largest markets, we were delighted with the new privileges announced under our Qualifying Full Bank Licence. This liberalisation will allow us to broaden our product offering and, for the first time, have access to pension fund investment accounts. Capital Strategy In the first half of this year we have raised over $2 billion of Tier 1 and 2 capital. For the first time we accessed US institutional investors using the 'Rule 144A' process and, separately, retail investors in Asia. We believe that this was well timed. Our Tier 1 capital ratio is now at the upper end of our target range. We have recently filed an application with the Hong Kong Stock Exchange to list the Company s shares on the main board of the Exchange by way of a dual primary listing in addition to its existing primary listing in London. Subject to the approval of the Listing Committee of the Hong Kong Stock Exchange and market conditions, the listing is expected to take place in the fourth quarter of 2001. We expect that the listing will be accompanied by a retail offering in Hong Kong and a placing of new shares to international and professional investors. The offering will not be greater than 5 per cent of the issued share capital of the Company. This listing will give us access to an enlarged shareholder base and further demonstrates the Group's commitment to Hong Kong and the rest of Asia. The net proceeds from the share offering will help to support the ongoing growth of the Group. Outlook The first half of this year has been dominated by a major slowdown in the US economy. There are also continuing concerns about Japan and evidence that European growth has slowed. This has impacted negatively on economic performance in many of our markets. Some countries, such as Malaysia, Taiwan and Singapore, are suffering because of weak export demand, notably in the electronics sector, and low commodity prices have affected many of the countries in which we operate. However, China continues to do well and Hong Kong is still growing but at a lower rate than expected. In India the rate of economic expansion has been sustained at 5 to 6 per cent. Also certain other countries in the Middle East, South Asia and Africa, are less affected by the slowdown and provide a balance. However, the outlook for several of our markets is still uncertain which may impact revenues and bad debts in the second half. Despite the tougher economic outlook in the short term, I am confident that we can deliver on our overall growth strategy. The transformation of our Group has given us a bigger and more balanced business that strengthens our position as the world s leading emerging markets bank. Sir Patrick Gillam Chairman 1 August 2001 GROUP CHIEF EXECUTIVE S REVIEW The first six months of 2001 demonstrate the benefits of our growth strategy and of the transformation of the Group over the past two years. We have continued to strengthen our franchise and have achieved growth in both revenues and profits. These are good results in a tough trading environment. Revenue growth has exceeded cost growth, both before and after the impact of the acquisitions and disposals we made last year. The benefits of the re- engineering and productivity programmes we announced last year are being realised and have funded investment in strengthening our franchise. In line with our commitment, we have also paced discretionary expenditure to keep in line with the slower rate of economic growth in our major markets. Bad debts have increased, reflecting the impact of the slowdown in the major world economies and the growth of the Consumer Banking book. Our growth strategy remains on course. This set of results demonstrates that, with our long experience in the emerging markets, we can perform well in a difficult economic environment. This combination of our growth in market share and revenues, of effective cost management and of control of bad debts has resulted in a 23 per cent increase in pre-tax profits before goodwill amortisation. If goodwill is included, the increase is 16 per cent. Our current priorities are: 1. To deliver growth and improved profitability by growing market share and revenues in our key businesses, while investing for the future; 2. To integrate successfully the acquisitions of the past two years; 3. To drive forward with our productivity programme. Increasing Growth Momentum In Consumer Banking we have seen strong progress in building our revenue base across a broad range of products, specifically in cards, personal loans and wealth management where we have increased market share in all our major markets. In credit cards we have increased outstanding balances - the key driver of profitability - by 78 per cent. We now have around 5 million cards in issue. In addition we have also changed the geographic balance to tap the larger, fast-growing markets. Hong Kong remains our largest credit card market. Taiwan and India have also become major markets for us and are now in our top three. With the volume growth in this business, provisions have also increased as expected but, critically, revenue growth continues to outstrip growth in provisions. We continue to be the largest independent distributor of unit trusts in Asia. We have diversified our wealth management business to include a range of retail foreign exchange products. We are also seeing good growth in the distribution of insurance products. The growth in both credit cards and wealth management provides us with a more stable business mix. This is particularly important at a time when our largest mortgage market, in Hong Kong, has seen continued pressure on margins. Mortgages remain an important and attractive product for us and we continue to increase market share to help offset the reduction in pricing. Consumer Banking is a high return business and we are intensifying our focus on areas within this business, such as credit cards and wealth management, which offer the best returns. Overall this has been a very good performance in a period of slow economic growth. The integration of corporate banking and treasury into a single Wholesale Banking business has created greater opportunities for cross-selling. As part of this integration and to meet changing customer needs, we are broadening our range of products and services. We are, for example, building an Asian fixed income and syndications capability to complement our strength in foreign exchange and local currency money markets. We are already seeing greater customer volumes in our Global Markets business. We have continued to invest in regional cash management products. As a result we are winning regional mandates from some of the world s top corporations against stiff competition from global competitors. Within Wholesale Banking, we are realigning our business to gain improved returns through focus on less capital intensive products. Lending continues to be a very important part of our business but is not the sole driver behind a corporate relationship. We are placing increasing emphasis on cross-selling and leading with higher value products, in order to increase the overall value of the relationship. Corporate relationships are being assessed individually to monitor their value contribution. We are portfolio managing or exiting low value accounts. Integrating Acquisitions The successful integration of recent acquisitions remains a high priority for us. The integration of Nakornthon Bank in Thailand is largely complete. In a country where we had just one branch until two years ago, we now have one of the most recognised financial services brands. Even though the Thai economy is still sluggish, which is holding back revenue growth, we are well positioned for growth in the medium term. The integration of Grindlays is ahead of target. The necessary legal and regulatory approvals have been obtained and synergies are now being seen in both Consumer Banking and Wholesale Banking. Consumer Banking has attained an impressive scale with the coming together of the two banks. In India alone we now have a customer base in excess of two million and credit cards in issue have crossed the one million mark. In Wholesale Banking our customers are also reaping the benefits. Since the two banks have operated together, we have completed several transactions of much larger magnitude than either of the banks could have undertaken on their own. This growth has been achieved alongside a complex integration and cost reduction programme. This progress is reflected in the Group's financial performance in these markets. In Hong Kong, we have completed the back office integration of the Chase consumer banking business. This is ahead of schedule and the expected cost synergies are being exceeded. We are already cross-selling between the two card portfolios, which is having a positive effect on revenues. We estimated that the benefits of the integration of the acquisitions would deliver $50 million of cost savings in 2001. We are ahead of schedule and have already achieved $36 million of cost savings and headcount reduction of nearly 600. Voluntary retirement schemes, currently in progress, will drive further reductions. Driving Forward On Productivity A year ago, I announced a major productivity programme to improve our efficiency and our competitive position. This included building an operational platform to support our growth ambitions. Total cost savings of $21 million out of a total target for 2001 of $58 million have now been achieved, excluding the above integration benefits. Including the reduction in headcount associated with the integration of the acquisitions, we have already attained a reduction in total Group headcount of 2,800 people of our previously announced target of 6,200 by the end of 2003. The majority of this has been through operational efficiencies in our existing businesses which resulted in job reductions of around 1,800 people. An important component of our productivity drive is the consolidation of processing into two global hubs in Chennai and Kuala Lumpur. This has already resulted in additional staff reductions of around 400 people mainly in high cost locations offset by the creation of new jobs in Chennai. The Chennai hub is already operational and handling a number of data centre and trade processing functions for markets such as Singapore and Hong Kong and for our African operations. A number of other process functions will be migrated to Chennai during the second half. The Kuala Lumpur hub has opened today. The transfer of a number of Global Markets operations into these low cost centres will be completed by the end of 2002. The benefits of the productivity programme are reflected in these results. Well Positioned Standard Chartered is an extraordinary organisation. We operate in the emerging markets of the world where, with increasing levels of affluence, literally millions of new potential consumers, both personal and corporate, join our target market each year. Three years ago we were largely dependent on three countries for our earnings. Today, through organic growth and acquisition, we are now much more diversified and have a significant presence in well over double that number. At the same time we have broadened the range of products and services we offer to customers, having identified those which can make a real contribution to Group profits. This is a major achievement and demonstrates that we have a management team in place that understands our markets and can deliver. These are the key factors underlying development of our strategy as the world s leading emerging markets bank. We regard these results as being very good in a difficult environment. The global economic outlook continues to be uncertain and inevitably will have an impact on our customers and therefore our business. I remain confident however that we are well positioned to benefit over time as the economies in which we operate grow and prosper. Rana Talwar Group Chief Executive 1 August 2001 OPERATING AND FINANCIAL REVIEW With effect from 1 January 2001 the Group changed its reporting currency from pounds sterling to US dollars. Since most of the Group's business is in US dollars or currencies linked to the US dollar it is considered most appropriate for the Group to prepare its accounts in US dollars. Comparative figures have been translated from pounds sterling into US dollars as outlined on page 15. Trading conditions during the first half of 2001 were overshadowed by the slowdown of the US economy and competitive pressures on mortgage margins. Against this background, the Group has achieved a robust performance with a profit before tax of $651 million, up 16 per cent compared to the first half of 2000. This is the first reporting period to reflect the full impact of the acquisitions of Grindlays and the Chase Hong Kong consumer banking business ('Chase HK'), and the disposal of Chartered Trust. During the first half of 2001, Grindlays and Chase HK contributed a net profit to the Group of $18 million, after bearing the full funding costs and amortisation of goodwill relating to the two acquisitions. The underlying profit before tax of the Group, excluding the acquisitions and disposal, increased by 20 per cent. 6 months to 30.06.01 As Reported Acquisitions Underlying $m $m $m Net revenue 2,220 290 1,930 Est. net funding cost of acquisitions (33) (33) - Net revenue after cost of funding 2,187 257 1,930 Operating costs (excl. goodwill) (1,199) (163) (1,036) Amortisation of goodwill (68) (49) (19) Profit before provns 920 45 875 Charge for debts (269) (27) (242) Profit before tax 651 18 633 6 months to 30.06.00 As Reported Acquisition/ Disposal Underlying $m $m $m Net revenue 1,968 145 1,823 Est. net funding cost of acquisitions - - - Net revenue after cost of funding 1,968 145 1,823 Operating costs (excl. goodwill) (1,127) (80) (1,047) Amortisation of goodwill (25) (8) (17) Profit before provns 816 57 759 Charge for debts (257) (27) (230) Profit before tax 559 30 529 The acquisitions of Grindlays and Chase HK were expected to yield combined synergistic benefits of at least $50 million during 2001. Benefits of $36 million have already been achieved and both businesses are ahead of expectations at this point in the year. Both integration projects are proceeding well without disruption to the Group and with very little attrition of profitable customers. The Group's net revenue rose by 11 per cent to $2,187 million in the first half of 2001, compared with the equivalent period last year. The underlying growth rate, excluding the acquisitions and disposal, was 6 per cent. The substantial fall in US dollar interest rates during the first half of the year has reduced the Group's income from capital and non-interest bearing deposits, but has enhanced the net interest margin from other products and created opportunities for the treasury business to earn income from asset and liability management ('ALM'). The Group has also suffered from the substantial (and probably permanent) realignment of mortgage margins in Hong Kong. Taking these factors into account, there has still been strong underlying revenue growth in many of the Group's core products. Net interest income rose 7 per cent in the first half, with an underlying growth rate of 6 per cent. Although the US slowdown has held back the demand for trade finance business, the Group has achieved significant volume growth in credit cards, mortgages and other personal lending products. As a result, the average interest bearing assets of the Group have grown by 16 per cent. Net interest margins have contracted, from 3.3 per cent to 3.0 per cent, mainly due to intense competitive pressures in mortgages, but volume increases and changes to the product mix have off-set this to yield a positive overall growth rate. Fees and commissions rose by 16 per cent with an underlying fall of around 4 per cent, reflecting the sluggish demand for trade finance and the depressed state of the Asian stock markets. However, dealing profits and exchange rose 38 per cent as the Group expanded its customer driven treasury business while, at the same time, enhancing its product offering. The Group's total operating expenses rose by 10 per cent to $1,267 million in the first half of 2001 but the underlying cost base, excluding the acquisitions, disposal and goodwill amortisation, fell by 1 per cent. This reflects tight cost control in response to the slower trading conditions that have existed during the first half of the year in some Asian markets. In addition, the benefits of the productivity improvement programme initiated in 2000 have begun to flow through during the first half of 2001, and have enabled the Group to maintain an appropriate level of new investment into its key value generating businesses. The net charge for debts rose by $12 million or 5 per cent to $269 million in the first half of 2001. This is partly due to underlying volume growth in personal lending but also reflects the overarching impact of the US slowdown on the consumer and wholesale banking businesses. Nevertheless, in key stressed economies such as Indonesia and Zimbabwe, the Group's response to the worsening economic and political situation has been effective. It has rapidly scaled down its lending exposure in these two territories and their impact on the overall debt charge for the first half of the year has not been significant. Consumer Banking The profit before tax of the Consumer Banking business fell by 10 per cent to $347 million in the first half of 2001, primarily because of severe margin pressure on mortgages in Hong Kong. Net revenue rose by 8 per cent to $1,084 million but the underlying growth rate, excluding the acquisitions and disposal, was around 3 per cent. During the last 12 months, Consumer Banking has been actively re-balancing its product portfolio. Intense price competition in the Hong Kong mortgage market has reduced the average portfolio yield by over 100 bps compared with the first half of 2000 and this has reduced mortgage revenue by approximately $60 million. In response, the Group has successfully grown its credit card outstandings, personal lending and wealth management products, all of which are high value adding products and these have off-set the loss of mortgage revenue. Mortgages remain important and in Hong Kong, for example, the Group has grown its mortgage outstandings by 13 per cent, pushing the Group's market share up from 13.0 per cent to 14.3 per cent. Nevertheless, the new product balance provides a much sounder and more secure basis for revenue growth in the future. Costs rose by 16 per cent to $614 million but the underlying growth rate, excluding the acquisitions and disposal, was lower at around 6 per cent. Consumer Banking is a key engine of growth for the whole Group and a conscious effort has been made to maintain the necessary level of investment to grow this business. Cost control and productivity improvements remain very important - for example, in Hong Kong 85 per cent of branch counter transactions have now been migrated to automated and self-service channels - but new investment has also been a priority, targeted at higher value generating activities. The net charge for debts from Consumer Banking has risen from $88 million in the first half of 2000 to $123 million this year. Underlying volume growth has contributed to this increase but a more difficult economic risk climate across many of the Group's major markets has also been a factor. Notwithstanding this, the consumer risk profile of Standard Chartered remains very low; for example, in Hong Kong the mortgage delinquency rates remain significantly better than the industry average. Wholesale Banking The profit before tax from the Wholesale Banking business rose by 71 per cent to $372 million in the first half of 2001. Net revenue rose substantially by 14 per cent to $1,103 million, with underlying growth of 7 per cent excluding the acquisitions. The treasury business made a considerable contribution with the recent US dollar interest rate cuts creating opportunities for significant ALM earnings, and a general growth in the level of customer driven business increasing earnings from foreign exchange and related products. Strengthened dealing teams and an enhanced product offering also contributed to this growth. Trade and lending volumes were hit by the US slowdown, resulting in lower revenue. Custody fees were impacted by the depressed state of the Asian stock markets which caused a modest fall in revenue. Cash management made excellent advances with a significant increase in the number of new mandates producing a healthy increase in fee income and a rise in the volume of deposits generating additional interest income, despite the fall in US dollar interest rates. Costs were held flat at $585 million, but the underlying costs fell by 4 per cent. This reflects a deliberate move to improve the returns from this business as a whole, and to focus investment upon the key areas that generate most value. The net charge for debts during the first half of 2001 was $146 million. This is lower than the $169 million charged in the first half of 2000 but higher than the $119 million charged in the second half. The US slowdown has had a direct impact on credit quality in several Asian markets and is clearly the main driver behind this number. Nevertheless, it must be emphasised that there are still many parts of the Group, such as India, China, the Middle East and Africa, where the economic drivers are different and the impact has been much more muted. Key Territories Standard Chartered operates in approximately 50 countries but a large proportion of its profit is derived from a relatively small number of territories. These core territories are crucial to the success of the Group and have traditionally included Hong Kong, Singapore and Malaysia. With the acquisition of Grindlays, India has now joined this core group and, in the first half of 2001, was the third largest profit contributor to the Group as a whole. Hong Kong delivered a 7 per cent increase in profit before tax to $271 million though profits were flat after excluding Chase HK. This was achieved against a background of fierce margin pressure on mortgages. Net revenue was up 24 per cent and costs 27 per cent, with the inclusion of Chase HK. However there was also strong underlying volume growth and a good treasury performance. Singapore recorded a 13 per cent fall in profit before tax to $97 million. Despite slower economic growth and sluggish loan demand, revenue increased by 8 per cent as a result of a good performance from treasury products. Costs increased by 13 per cent largely as a result of the restoration of statutory employer pension contributions. The charge for debts rose significantly from $8 million in the first half of 2000 to $26 million this year, mainly due to the impact of the economic slowdown on our corporate customers. India more than doubled its profit before tax as the acquisition of Grindlays transformed the business. Underlying revenue growth (excluding Grindlays) was around 13 per cent, driven by strong growth in credit cards where the number of cards in issue has now reached 1.12 million, a 11 per cent increase in the last six months alone. Treasury earnings, particularly ALM, have also made a significant contribution. The underlying cost base rose by about 15 per cent reflecting continuing investment in the Consumer business. The charge for debts fell significantly, mainly because of a large provision in the first half of 2000. Malaysia suffered a significant fall in profit before tax in the first half of 2001. Flat loan demand and compressed margins contributed to a 4 per cent fall in revenue with costs rising 5 per cent. The charge for debts rose from $3 million last year to $51 million this year as the US slowdown made itself felt. Sentiment in the KL Stock Exchange remained weak, which put further pressure on corporate customers seeking longer term finance. The rest of the Group has generally had a satisfactory first half. The Middle East and South Asia (excluding India) delivered a very good result with profit before tax up 50 per cent. Strong revenue growth, particularly in consumer banking, coupled with tight cost control, were the main reasons. The business in Africa has had to contend with difficult political and economic conditions in Zimbabwe and very significant currency devaluation in Ghana. Against this background, the profit before tax has held up quite well, rising 64 per cent to $64 million compared with the same period last year, when significant debt provisions were taken. The businesses in the UK and Americas are primarily focused on supporting the needs of the Group's multinational corporates and institutions. As such, they have suffered from the general slowdown in the US economy but have benefited from the ALM opportunities provided by the large fall in US dollar interest rates. Summary The Group has performed well in a difficult economic climate. Its underlying business continues to advance with significant revenue growth in key product areas. The productivity programme is gathering pace and is already producing efficiency improvements, as evidenced by the low underlying rate of cost increase and the strong differential between revenue and cost growth. The integration of Grindlays and Chase HK is progressing well and are beginning to deliver the expected financial benefits. The outlook for the trading climate in the Group's key markets during the second half of the year remains cautious but the Group is on track to deliver its growth strategy. STANDARD CHARTERED PLC CONSOLIDATED PROFIT AND LOSS ACCOUNT For the six months ended 30 June 2001 6 months 6 months 6 months ended ended ended 30.06.01 30.06.00 31.12.00 Notes $m $m $m Interest receivable 3,400 3,203 3,702 Interest payable (1,972) (1,867) (2,329) Net interest income 1,428 1,336 1,373 Fees and commissions receivable, 477 411 477 net Dealing profits and exchange 4 249 180 197 Other operating income 5 33 41 75 759 632 749 Net revenue 2,187 1,968 2,122 Administrative expenses: Staff (617) (595) (792) Premises (150) (137) (165) Other (348) (309) (419) Depreciation and amortisation, of (152) (111) (186) which: Amortisation of goodwill (68) (25) (46) Other (84) (86) (140) Total expenses: - ongoing (1,267) (1,152) (1,239) - restructuring - - (323) Total operating expenses (1,267) (1,152) (1,562) Operating profit before provisions 920 816 560 Provisions for bad and doubtful 1,2,12 (269) (257) (205) debts Provisions for contingent - - (8) liabilities and commitments Operating profit 651 559 347 Profit on disposal of subsidiary - - 532 undertakings Profit before taxation 1,2 651 559 879 Taxation 6 (218) (179) (198) Profit after taxation 433 380 681 Minority interests (equity) (6) (6) - Minority interests (non-equity) (23) (11) (18) Profit for the period attributable 404 363 663 to shareholders Dividends on non-equity preference 7 (12) (12) (12) shares Dividends on ordinary equity 8 (145) (126) (298) shares Retained profit 247 225 353 Refer to note on comparative figures on page 15. An analysis of results between acquisitions, disposals and underlying business is given in Note 3. STANDARD CHARTERED PLC SUMMARISED CONSOLIDATED BALANCE SHEET As at 30 June 2001 30.06.01 30.06.00 31.12.00 Notes $m $m $m Assets Cash, balances at central banks and cheques in course of 1,172 1,931 895 collection Treasury bills and other eligible 3,227 3,763 3,962 bills Loans and advances to banks 1 26,967 20,086 23,759 Loans and advances to customers 1 52,927 48,113 51,882 Debt securities and equity shares 14,393 9,147 9,949 Intangible fixed assets 2,342 560 2,327 Tangible fixed assets 970 917 977 Prepayments, accrued income and 7,683 5,921 8,529 other assets Total assets 109,681 90,438 102,280 Liabilities Deposits by banks 14,771 11,922 11,103 Customer accounts 66,884 57,157 65,037 Debt securities in issue 4,983 4,459 4,533 Accruals, deferred income and other 10,018 7,291 10,617 liabilities Subordinated liabilities: Undated loan capital 1,788 1,527 1,818 Dated loan capital 2,811 1,975 2,257 Minority interests: Equity 80 112 76 Non-equity 860 471 486 Shareholders funds 11 7,486 5,524 6,353 Total liabilities and shareholders 109,681 90,438 102,280 funds Comparative figures With effect from 1 January 2001 the Group changed its reporting currency from pounds sterling to US dollars. Since most of the Group's business is in US dollars or currencies linked to the US dollar it is considered that it is most appropriate for the Group to prepare its accounts in US dollars. The comparative figures have been translated from pounds sterling into US dollars using the following principles: Assets and liabilities have been translated at the rate of exchange ruling on the date of the comparative balance sheet. Profits and losses for the six months ended 30 June 2000 have been translated at the average sterling exchange rate against the US dollar during that period. Profits and losses for the six months ended 31 December 2000 have been derived by deducting the profits and losses for the six months ended 30 June 2000 translated at the average sterling exchange rate against US dollars during that period from the profits and losses for the year ended 31 December 2000 translated at the full year average sterling exchange rate against the US dollar. STANDARD CHARTERED PLC CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES For the six months ended 30 June 2001 6 months 6 months 6 months ended ended ended 30.06.01 30.06.00 31.12.00 $m $m $m Profit attributable to shareholders 404 363 663 Exchange translation differences: Arising from change in reporting - (358) (76) currency Other (98) 55 (164) Total recognised gains and losses 306 60 423 HISTORICAL COST PROFITS AND LOSSES For the six months ended 30 June 2001 There is no material difference between the results as reported and the results that would have been reported on a historical cost basis. Accordingly, no note of historical cost profits and losses has been included. STANDARD CHARTERED PLC CONSOLIDATED CASH FLOW STATEMENT For the six months ended 30 June 2001 6 months 6 months 6 months ended ended ended 30.06.01 30.06.00 31.12.00 $m $m $m Net cash inflow from operating activities 1,230 1,296 2,338 (see note 14) Returns on investment and servicing of finance Interest paid on subordinated loan capital (128) (92) (110) Subordinated loan capital issue expenses (13) (14) (15) Dividends paid to minority shareholders of (3) (3) (18) subsidiary undertakings Dividends paid on preference shares (11) (13) (11) Net cash outflow from returns on investment (155) (122) (154) and servicing of finance Taxation UK taxes paid (52) (3) (44) Overseas taxes paid (198) (93) (159) Total taxes paid (250) (96) (203) Capital expenditure and financial investment Purchases of tangible fixed assets (115) (107) (131) Acquisitions of treasury bills held for (4,043) (3,981) (6,402) investment purposes Acquisitions of debt securities held for (13,427) (4,487) (7,903) investment purposes Acquisitions of equity shares held for (8) (9) (53) investment purposes Disposals of tangible fixed assets 16 16 16 Disposals and maturities of treasury bills 4,735 4,375 6,167 held for investment purposes Disposals and maturities of debt securities 8,756 3,653 7,729 held for investment purposes Disposals of equity shares held for 13 2 6 investment purposes Net cash outflow from capital expenditure and (4,073) (538) (571) financial investment Net cash (outflow)/inflow before acquisitions and disposals, equity dividends paid and (3,248) 540 1,410 financing Acquisitions and disposals Purchases of interests in subsidiary - (17) (2,496) undertakings Purchase of subordinated debt in subsidiary - - (186) undertaking Disposals of interests in subsidiary and 2 - 934 associated undertakings Net cash inflow/(outflow) from acquisitions 2 (17) (1,748) and disposals Equity dividends paid to members of the (298) (132) (108) Company Financing Gross proceeds from issue of ordinary share 15 22 701 capital Issue expenses related to ordinary share - - (8) issue Gross proceeds from issue of preference share 1,000 - - capital Issue expenses related to preference share (31) - - issue Gross proceeds from issue of preferred 418 482 (21) securities Gross proceeds from issue of subordinated 700 537 629 loan capital Repayment of subordinated liabilities (3) (17) (1) Net cash inflow from financing 2,099 1,024 1,300 (Decrease)/increase in cash in the period (1,445) 1,415 854 MORE TO FOLLOW

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