Interim Results - Part 3
STANDARD CHARTERED PLC
4 August 1999
Part 3
2. Segmental information
By class of business
6 months 6 months 6 months
ended ended ended
30.6.99 30.6.98 31.12.98
£m £m £m
Consumer Banking
Profit before provisions 269 213 267
New provisions (98) (61) (84)
Recoveries/provisions no longer required 25 11 14
Net charge (73) (50) (70)
Trading profit 196 163 197
Corporate and Institutional Banking
Profit before provisions 158 203 180
New provisions (185) (81) (208)
Recoveries/provisions no longer required:
Emerging Markets Debt Unit 2 3 10
Other 17 7 32
Net charge (166) (71) (166)
Trading (loss)/profit (8) 132 14
Treasury
Profit before provisions 114 223 129
New provisions (1) (18) (11)
Trading profit 113 205 118
Year 2000 costs (30) (34) (42)
Profit before general debt provision 271 466 287
General debt provision - (50) -
Profit before taxation 271 416 287
a) Operating expenses are attributed to classes of business on an
appropriate basis. Group central expenses have been distributed
between classes of business in proportion to their direct costs.
The benefit of the Group s capital has been distributed between
classes of business in proportion to their risk weighted assets.
b) See Note c) on Year 2000 costs on page 13.
2. Segmental information
By class of business (continued)
30.6.99 30.6.98 31.12.98
£m £m £m
Total assets employed:
Consumer Banking 20,225 17,186 19,907
Corporate & Institutional Banking 21,012 22,697 19,455
Treasury 25,841 20,484 20,811
67,078 60,367 60,173
c) Total assets employed include intra-group items of £11,636 million
(30 June 1998: £10,305 million; 31 December 1998: £11,160 million)
and balances which are netted in the Summarised Consolidated Balance
Sheet of £735 million (30 June 1998: £1,635 million; 31 December
1998: £1,155 million).
d) Assets held at the centre have been distributed between classes of
business in proportion to their total assets employed.
3. Dealing profits and exchange
6 months 6 months 6 months
ended ended ended
30.6.99 30.6.98 31.12.98
£m £m £m
Income from foreign exchange dealing 114 228 158
Profits less losses on dealing securities 11 (3) 8
Other dealing profits and exchange 7 13 14
132 238 180
4. Other operating income
6 months 6 months 6 months
ended ended ended
30.6.99 30.6.98 31.12.98
£m £m £m
Other operating income includes:
Share of profits arising on securitised
instalment credit agreements 7 1 4
Profits less losses on disposal of
investment securities 2 - 1
Dividend income - - 5
5. Taxation
6 months 6 months 6 months
ended ended ended
30.6.99 30.6.98 31.12.98
£m £m £m
United Kingdom corporation tax at 30.25%
(30 June 1998: 31.0%; 31 December 1998: 56 95 45
31.0%)
Relief for overseas tax (27) (47) (39)
29 48 6
Overseas tax 51 98 75
80 146 81
Effective tax rate 29.5% 35.1% 28.2%
6. Dividends on preference shares
6 months 6 months 6 months
ended ended ended
30.6.99 30.6.98 31.12.98
£m £m £m
Non-cumulative irredeemable preference
shares:
73/8% preference shares of £1 each 4 4 4
81/4% preference shares of £1 each 4 4 4
8 8 8
7. Dividends on ordinary shares
6 months ended 6 months ended
30.6.99 30.6.98
Pence per Pence per
share £m share £m
Dividend 6.75 71 6.25 62
6 months ended
31.12.98
Pence per
share £m
Dividend 14.50 145
The 1999 interim dividend of 6.75 pence per share will be paid on 15
October 1999 to shareholders on the register at close of business on 20
August 1999. Shareholders will be entitled, if they wish, to elect to
receive shares credited as fully paid instead of the interim dividend (or
part thereof). Details will be sent to shareholders on or around 2
September 1999.
8. Earnings per ordinary share
6 months ended 30.6.99
Average
number of Per share
Profit shares amount
£m ( 000) Pence
Basic EPS
Profit attributable to ordinary
shareholders 177 1,032,200 17.1
Effect of dilutive potential
ordinary shares
Options - 9,465 -
Diluted EPS 177 1,041,665 17.0
6 months ended 30.6.98
Average
number of Per share
Profit shares amount
£m ( 000) Pence
Basic EPS
Profit attributable to ordinary
shareholders 256 994,578 25.7
Effect of dilutive potential
ordinary shares
Options - 8,874 -
Diluted EPS 256 1,003,452 25.5
6 months ended 31.12.98
Average
number of Per share
Profit shares Amount
£m ( 000) Pence
Basic EPS
Profit attributable to ordinary
shareholders 191 999,716 19.1
Effect of dilutive potential
ordinary shares
Options - 6,617 -
Diluted EPS 191 1,006,333 19.0
Headline earnings per ordinary share
The Institute of Investment Management and Research Statement of
Investment Practice No 1 provides a definition of headline earnings. As
this differs from earnings defined in Financial Reporting Standard 14 the
table below provides a reconciliation.
6 months 6 months 6 months
ended ended ended
30.6.99 30.6.98 31.12.98
£m £m £m
Profit attributable to shareholders after
preference dividends 177 256 191
Amortisation of goodwill 8 1 6
Profits less losses on disposal of
investment securities (2) - (1)
Tax charge relating to the above items - - -
Headline earnings 183 257 196
Headline earnings per ordinary share 17.7p 25.8p 19.6p
9. Called up share capital
30.6.99 30.6.98 31.12.98
£m £m £m
Equity capital
Ordinary shares of 25p each 265 249 250
Non-equity capital
Non-cumulative irredeemable preference
shares:
73/8% preference shares of £1 each 100 100 100
81/4% preference shares of £1 each 100 100 100
465 449 450
10. Shareholders funds
Share Premises Profit Total
Share premium revaluat and loss sharehol
capital account ion account ders
£m £m reserve £m funds
£m £m
At 1 January 1999 450 428 50 1,892 2,820
Exchange translation
differences - - 1 51 52
Shares issued 15 374 - 58 447
Retained profit - - - 106 106
Capitalised on exercise
of share options - 3 - (3) -
At 30 June 1999 465 805 51 2,104 3,425
On 5 March 1999, £380 million, net of expenses, was raised by way of a
placing for cash of 49 million new ordinary shares with institutional
investors. The net proceeds of the placing have been used partly to
finance the acquisition from UBS of their global trade finance business
outside Switzerland, and the balance to provide additional capital to
back customer assets.
11. Provisions for bad and doubtful debts
Loans and advances are stated after deducting the following provisions
for bad and doubtful debts:
6 months ended 6 months ended
30.6.99 30.6.98
Specific General Specific General
£m £m £m £m
Provisions held at beginning of
period 641 269 338 218
Exchange translation 29 12 (11) (5)
differences
Amounts written off (133) - (67) -
Recoveries of amounts
previously written off 16 - 9 -
Other (11) - 17 -
New provisions 284 - 160 50
Recoveries/provisions no longer
required (44) - (21) -
Net charge against profit 240 - 139 50
Provisions held at period end 782 281 425 263
Total provisions held at period
end against:
Loans and advances to banks 4 - 13 -
Loans and advances to customers 778 281 412 263
782 281 425 263
6 months ended
31.12.98
Specific General
£m £m
Provisions held at beginning of
period 425 263
Exchange translation 22 2
differences
Amounts written off (90) -
Recoveries of amounts
previously written off 24 -
Other 13 4
New provisions 303 -
Recoveries/provisions no longer
required (56) -
Net charge against profit 247 -
Provisions held at period end 641 269
Total provisions held at period
end against:
Loans and advances to banks 19 -
Loans and advances to customers 622 269
641 269
Specific provisions for bad and doubtful debts include £84 million (30
June 1998: £60 million; 31 December 1998: £81 million) of provisions
against enhanced and other performing emerging markets debt.
12. Cross border assets
The following table shows the Group s cross border assets, including
acceptances, where they exceed 1 per cent of the Group s total assets.
Cross border assets exclude facilities provided within the Group. They
comprise loans and advances, interest bearing deposits with other banks,
trade and other bills, acceptances, amounts receivable under finance
leases, certificates of deposit and other negotiable paper and investment
securities where the counterparty is resident in a country other than
that where the cross border asset is recorded. Cross border assets also
include exposures to local residents denominated in currencies other than
the local currency.
30.6.99
Public
sector Banks Other Total
£m £m £m £m
China 25 85 470 580
France 57 817 40 914
Germany - 1,721 10 1,731
Hong Kong 8 120 1,385 1,513
Italy 184 626 15 825
Japan 1 783 41 825
Korea - 517 74 591
Singapore 54 127 523 704
USA 1,042 195 455 1,692
31.12.98
Public
sector Banks Other Total
£m £m £m £m
China - 193 554 747
France 92 509 28 629
Germany - 710 - 710
Hong Kong 7 67 1,389 1,463
Singapore 20 191 505 716
USA 723 264 283 1,270
13. Net interest margin and interest spread
6 months 6 months 6 months
ended ended ended
30.6.99 30.6.98 31.12.98
% % %
Net interest margin 3.5 3.4 3.5
Interest spread 2.9 2.6 2.8
£m £m £m
Average interest earning assets 46,444 44,416 43,870
Average interest bearing liabilities 40,535 38,531 39,251
14. Capital ratios
30.6.99 30.6.98 31.12.98
£m £m £m
Tier 1 capital 3,174 2,709 2,668
Tier 2 capital 2,260 1,464 1,469
5,434 4,173 4,137
Less supervisory adjustments (20) (10) (6)
Adjusted capital base 5,414 4,163 4,131
Risk weighted assets 28,321 25,502 25,851
Risk weighted contingents 7,177 6,717 6,647
Total risk weighted assets and contingents 35,498 32,219 32,498
Capital ratios % % %
Tier 1 capital 8.9 8.4 8.2
Total capital 15.3 12.9 12.7
15. 1998 restated at June 1999 exchange rates
The restatement of 1998 results below has been made by translating them
at the average exchange rates used in the translation of the results for
the period ended 30 June 1999, and the restatement of the 1998 balance
sheets has been made by translating them at the closing exchange rates as
at 30 June 1999.
6 months 6 months 6 months
ended ended ended
30.6.99 30.6.98 31.12.98
£m £m £m
Results
Net revenue 1,178 1,221 1,191
Total operating expenses (667) (599) (640)
Profit before provisions 511 622 551
Provisions for bad and doubtful debts (240) (199) (259)
Profit before taxation 271 423 292
Balance sheet
Loans and advances to banks 12,616 11,704 9,825
Loans and advances to customers 28,406 27,262 27,138
Total assets 54,707 51,074 49,594
Shareholders funds 3,425 2,800 2,850
Capital resources 5,410 4,058 4,105
16. Accounting policies
Accounting policies are unchanged from those set out in the 1998 Annual
Report.
17. Supplementary information on Hong Kong
The following table includes the results of all the Group s activities in
Hong Kong. It has been prepared using the same principles as those used
to prepare the geographical segmental information included in Note 1.
6 months 6 months 6 months
ended ended ended
30.6.99 30.6.98 31.12.98
HKDm HKDm HKDm
Net revenue 4,394 4,050 4,168
Total operating expenses (2,021) (1,919) (1,843)
Profit before provisions 2,373 2,131 2,325
Provisions for bad and doubtful debts (1,356) (332) (824)
Profit before taxation 1,017 1,799 1,501
The information below is extracted from the financial information
required by the Hong Kong Monetary Authority to be disclosed by
authorised institutions incorporated outside Hong Kong. It excludes
subsidiaries of Standard Chartered Bank in Hong Kong. It should be noted
that definitions used by the Hong Kong Monetary Authority differ from
those used by the Group.
30.6.99 30.6.98 31.12.98
HKDm HKDm HKDm
Advances to customers (including trade 135,209 128,215 129,104
bills)
Other assets 91,133 85,845 76,399
Total assets 226,342 214,060 205,503
Analysis of advances to customers
Mortgages 74,892 61,395 68,400
Other consumer 10,905 11,579 11,297
Trade finance 13,024 15,818 14,564
Trade bills 2,364 6,669 3,293
Financial concerns 9,894 10,123 10,593
Other* 24,130 22,631 20,957
Provisions (2,211) (510) (1,122)
Net advances to customers 132,998 127,705 127,982
* Includes HKD4,071 million (30.6.98: HKD3,564 million; 31.12.98:
HKD3,987 million) reported as mortgages in Note 1.
Gross non-performing advances to customers 5,717 1,530 2,717
Suspended interest (485) (177) (262)
Specific provisions (2,211) (510) (1,122)
3,021 843 1,333
Gross non-performing advances as a
percentage of gross advances to customers 4.2% 1.2% 2.1%
18. Supplementary information on Singapore
The following table includes the results of all the Group s activities in
Singapore. It has been prepared using the same principles as those used
to prepare the geographical segmental information included in Note 1.
6 months 6 months 6 months
ended ended ended
30.6.99 30.6.98 31.12.98
SGDm SGDm SGDm
Net revenue 368 383 386
Total operating expenses (129) (145) (133)
Profit before provisions 239 238 253
Provisions for bad and doubtful debts (86) (54) (109)
Profit before taxation 153 184 144
The information below is provided in the same format as the financial
information given for Hong Kong, but has been prepared using the same
definitions as those used for the Group.
30.6.99 30.6.98 31.12.98
SGDm SGDm SGDm
Advances to customers (net) 10,493 9,749 9,767
Other assets 14,835 11,022 11,853
Total assets 25,328 20,771 21,620
Analysis of advances to customers
Mortgages 4,464 4,026 4,231
Other consumer 1,596 1,745 1,616
Trade finance 629 816 694
Other 4,032 3,241 3,392
Provisions (228) (79) (166)
Net advances to customers 10,493 9,749 9,767
Gross non-performing advances to customers 496 331 538
Suspended interest (46) (19) (34)
Specific provisions (182) (60) (132)
268 252 372
Gross non-performing advances as a
percentage of gross advances to customers 4.6% 3.4% 5.4%
19. Supplementary information on Malaysia
The information below is derived from the 1998 Half Year and 1998 Annual
Reports of Standard Chartered Bank Malaysia Berhad which were filed with
Bank Negara Malaysia and from the 1999 Half Year Report which will be
filed with Bank Negara Malaysia.
6 months 6 months 6 months
ended ended ended
30.6.99 30.6.98 31.12.98
MYRm MYRm MYRm
Net revenue 448 568 466
Total operating expenses (171) (174) (212)
Profit before provisions 277 394 254
Provisions for bad and doubtful debts (163) (190) (193)
Profit before taxation 114 204 61
30.6.99 30.6.98 31.12.98
MYRm MYRm MYRm
Advances and financing (net) 11,780 10,640 11,150
Other assets 5,223 4,726 4,861
Total assets 17,003 15,366 16,011
Analysis of loans and advances and
financing
Mortgages (excluding MYR 888 million of
loans sold to Cagamas (30.6.98: MYR 904
million; 31.12.98: MYR 786 million)) 4,743 4,194 4,720
Other consumer 885 954 844
Trade finance 1,443 1,554 1,794
Other 5,592 4,429 4,489
Provisions (883) (491) (697)
Net advances to customers 11,780 10,640 11,150
Gross non-performing advances to customers 1,554 718 1,262
Suspended interest (198) (106) (156)
Specific provisions (471) (179) (328)
885 433 778
Gross non-performing loans and advances as
a percentage of gross loans and advances 11.5% 6.0% 10.0%
Independent review report by KPMG Audit Plc to Standard Chartered PLC
Introduction
We have been instructed by the company to review the financial information set
out on pages 10 to 27 and we have read the other information contained in the
press release and considered whether it contains any apparent misstatements or
material inconsistencies with the financial information.
Directors responsibilities
The press release, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The Listing
Rules of the London Stock Exchange require that the accounting policies and
presentation applied to the interim figures should be consistent with those
applied in preparing the preceding annual accounts except where they are to be
changed in the next annual accounts, in which case any changes and the reasons
for them are to be disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin
1999/4: Review of interim financial information issued by the Auditing
Practices Board. A review consists principally of making enquiries of Group
management and applying analytical procedures to the financial information and
underlying financial data and, based thereon, assessing whether the accounting
policies and presentation have been consistently applied unless otherwise
disclosed. A review is substantially less in scope than an audit performed in
accordance with Auditing Standards and therefore provides a lower level of
assurance than an audit. Accordingly, we do not express an audit opinion on
the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 1999.
KPMG Audit Plc
Chartered Accountants 4 August 1999
The financial information included herein has been derived from the audited
and unaudited information contained in the Group s Report and Accounts for the
year ended 31 December 1998. Statutory accounts for 1998 have been delivered
to the Registrar of Companies. The auditors have reported on these accounts;
their report was unqualified and did not contain a statement under Section
237(2) (accounting records or returns inadequate or accounts not agreeing with
records and returns) or 237(3) (failure to obtain necessary information and
explanation) of the Companies Act 1985.
Copies of this statement are available from Investor Relations, Standard
Chartered PLC, 1 Aldermanbury Square, London, EC2V 7SB or from our website on
www.standardchartered.com.
For further information please contact:
Tim Halford, Director of Corporate Affairs
on 0171 280 7159
or
Pamela McGann, Group Investor Relations Manager
on 0171 280 7164
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