Korea First Bank Results 2004

Standard Chartered PLC
21 March 2005

Standard Chartered PLC

21 March 2005

              Announcement by Korea First Bank of its 2004 Results

On 10 January 2005, Standard Chartered PLC ('the Company') announced that
Standard Chartered Bank had entered into an agreement to acquire the entire
share capital of Korea First Bank. The acquisition, which is subject to certain
conditions including regulatory consents, is expected to be completed by the end
of April 2005.

On 11 March 2005, Korea First Bank announced their unaudited Financial Results
for the twelve months ended 31 December 2004.

The following is a copy of a further announcement released by Korea First Bank
today.

The Company is issuing this announcement for information purposes only.



                 'Korea First Bank Reports Growth In Net Income
                               To KRW120 billion


  • Earnings before tax increases to KRW166.5 billion in 2004 from KRW93.1
    billion in 2003

  • NPL ratio stable at 1.5% at December 31, 2004

  • Maintains strong BIS capital ratio

  • Completes a year of highly successful capital market transactions

Korea First Bank today announced net income after tax of W120.0 billion for
2004, an improvement of W133.5 billion from the net loss of W13.5 billion in
2003. The 2004 results reflect an overall improvement in credit from 2003 with
the total credit charges improving W116.9 billion (see the analysis of the
credit performance presented below), and further growth in the loan portfolio,
which drove an increase in interest income of W65.8 billion.


Total revenues increased KRW59.4 billion, or 6.0%, from KRW988.3 billion in 2003
to KRW1,047.7 billion in 2004 driven by an increase of KRW5.9 trillion or 18.9%
increase in the average balance of interest earning assets which grew to KRW37.0
trillion in 2004. The effect of the increase in interest earning assets was
partially offset by a 21 basis point decrease in the net interest margin to
2.24% in 2004, from 2.45% in 2003, due primarily to the decreasing interest rate
environment. Operating margin increased by KRW25.4 billion, or 7%, to KRW389.6
billion in 2004 with the increase in revenue being partially offset by a modest
increase in operating expenses which grew 5.4%, to KRW 658.1 billion in 2004 of
which KRW11.4 billion is related to the change of control. Earnings before tax
increased by KRW73.4 billion, or 79%, to KRW166.5 billion in 2004 with an
improvement in credit losses on the sales of NPLs contributing most to this
improvement.


Growth in interest earning assets was driven by loan growth which continued to
be strong in 2004 despite the increased competition in the banking sector
coupled with a relatively weak economic environment. The declining interest rate
environment during the year put interest margins under pressure as the Bank's
assets reprice at a faster rate than its liabilities. However, with the advanced
corporate and consumer credit risk management methodologies, which include
focusing on pricing for risk, the Bank is well-positioned to manage the current
economic environment and realize benefits expected from a rising interest rate
environment with the predicted gradual economic improvement.


The Bank has continued its focus on mortgage lending with total mortgage loans
increasing by more than 55% in 2004 (including loans securitized in the Bank's
three mortgage-backed securities issuances during the year). This growth has
built a strong foundation for growth in profitability into the future.


KFB remains one of the best capitalized financial institutions in Korea with a
tier 1 capital ratio of 7.09% and a total capital adequacy ratio of 11.91%.
These levels are appreciably higher than the regulatory requirements for
well-capitalized institutions, notwithstanding the strong asset growth during
the year. The maintenance of appropriate levels of capital is a management
priority, particularly in these uncertain economic times, as capital provides a
solid foundation for the future anticipated asset growth and promotes depositor
and investor confidence.

The Bank completed a number of highly successful capital market transactions
during 2004 to support its loan growth. These include a hybrid tier I
subordinated debt issuance of USD300 million completed in March and three
mortgage loan securitization transactions totaling KRW1,930 billion in March,
July and December. The hybrid tier 1 deal received 'Best Asian Subordinated Bond
Deal' in 'Euroweek's' 2004 deal awards, and the bank's third mortgage-backed
securities issuance received 'Best Cross Border Securitization' from both
'Finance Asia' and 'The Asset Asia' as well as 'Best Securitization of Asian
Assets' from 'Structured Finance International'. These accomplishments in the
capital markets demonstrate the bank's recognition by the investor community and
its success in balance sheet efficiency and diversified funding.

Korea First Bank has total assets of KRW41.7 trillion at December 30, 2004. It
has over 3.5 million customers served through its nationwide network of 406
branches and 3 overseas units. The Bank is ranked BBB- by Standard & Poor's,
Baa3 by Moody's and BBB+ by Fitch.



BANKING ACCOUNTS
                                                                                           Better / (Worse)
Operating Results                                                     2004         2003         Amt           %
Net interest income                                                  830.8        765.0        65.8         8.6
Net fees and commissions                                             216.8        223.3       (6.5)       (2.9)
Total revenue                                                      1,047.7        988.3        59.4         6.0
Operating expense                                                    658.1        624.2      (33.9)       (5.4)
Operating margin                                                     389.6        364.2        25.4         7.0
Provisions for credit losses                                         150.3        113.9      (36.4)      (32.0)
Net operating income                                                 239.3        250.3      (11.0)       (4.4)
Net non-operating income / (expense)                                (72.8)      (157.2)        84.4         N/M
Income before income tax                                             166.5         93.1        73.4        78.8
Current income tax expense                                             1.1          0.4       (0.7)         N/M
Deferred income tax expense / (benefit)                               45.4        106.2        60.8        57.3
Income tax expense / (benefit)                                        46.5        106.6        60.1        56.4
Net income                                                           120.0       (13.5)       133.5         N/M
Loans net of loan provisions                                      30,419.0     26,790.7     3,628.3        13.5
Total assets                                                      41,712.7     39,480.7     2,232.0         5.7
Deposits                                                          27,488.1     27,196.9       291.2         1.1



The analysis of the credit performance for the past two years is presented as
follows:
                                                                                          Won in Billions / %
                                                                                           Better / (Worse)
                                                                      2004         2003         Amt          %
Provisions for credit losses                                         150.3        113.9      (36.4)      (32.0)
Loss on sale of NPLs (included in non-operating exps)                 98.6        251.2       152.6        60.7
Gain on sale of NPLs (included in non-operating income)              (0.7)          0.0         0.7         N/M
Total credit provisioning                                            248.2        365.1       116.9        32.0




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