Standard Chartered Plc · LSE:STAN
Standard Chartered — Investor Day (November 2006)
55 slides from Standard Chartered's investor day presentation, Nov 22, 2006
Slide 1: Investor Day 2006 Wholesale Banking: Road to sustainable growth
Investor Day 2006 Wholesale Banking 22 November 2006 Road to sustainable growth
Slide 2: Forward looking statements
Forward looking statements It is possible that this presentation 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
Slide 3: Wholesale Banking
Wholesale Banking Mike Rees Chief Executive Officer, Wholesale Banking 3
Slide 4: Key messages
Key messages Good progress on our journey Client-led strategy is providing significant opportunities Good foundation for sustainable growth 4
Slide 5: Operating profit
Operating profit Wholesale Banking operating profit US$m 1,500 1,444 1,175 1,316 1,000 933 950 795 591 835 500 0 2001 2002 2003 2004 2005 H1 2006 SCFB 5
Slide 6: Client income
Client income H1 02 H2 02 H1 03 H2 03 H1 04 H2 04 H1 05 H2 05 H1 06 Client income SCFB 6
Slide 7: Awards
Awards Euromoney Global Custodian The Asset Trade Finance Best Debt House Best Agent Bank Best Structured in Thailand in Asia Trade Finance Bank Best Trade Finance Awards for Excellence 2006 Global Custodian Agent The Asset Triple A Asian Bank in Sub-Saharan Bank Survey 2005 Awards 2006 Africa 2005
Slide 8: Hierarchy of client needs
Hierarchy of client needs Strategic Value added Transactional Basic lending (or surplus deposit taking) 8
Slide 9: Global income pools
Global income pools Potential CAGR $270bn $250bn $70bn range (2006-10), % 6% 6% 15-20% Strategic 12% 15% 15-20% 33% Value added 47% 29% 10-15% 27% Transactional 18% 50% 5-10% 34% Lending 23% U.S. Europe Standard Chartered major markets Note: 2005 Wholesale Banking income pools Source: Standard Chart
Slide 10: The growth opportunity
The growth opportunity Real GDP Growth 2000-2005, (% p.a.) GDP 2005, (US$bn) Country Wholesale Banking Wallet 2005, (US$bn) 2% 4,567 Japan 50.0 9% 2,234 China 25.0 5% 788 Korea 15.0 6% 772 India 7.0 4% 362 Turkey 5.5 3% 346 Taiwan 10.0 4% 308 Saudi Arabia 4.0 5% 281 Indonesia 2.0 4% 239 South Africa
Slide 11: Wholesale Banking makes headlines
Wholesale Banking makes headlines Times News Network December 22, 2005 Business Standard October 21, 2006 M a xi s India Inc a la ys i a’s l r r iv e s Ma l d e a with Tata` e s A irce s Corus strik World News Network October 25, 2006 India Infoline September 20, 2006 Chinese co en erg y drinks s Na
Slide 12: Wholesale Banking strategic intent
Wholesale Banking strategic intent Strategic The Bank of Choice for Corporate and Institutional intent Clients for and in Asia, Africa and the Middle East brand promise The Right Partner – Leading By Example values Responsive Trustworthy Creative International Courageous 12
Slide 13: Performance and Risk
Performance and Risk David Edwards Chief Operating Officer, Wholesale Banking 13
Slide 14: Strong growth
Strong growth Profit before tax CAGR = 25% US$m 4000 3,059 3000 2,574 2,183 2,123 2,252 1,444 2000 1,175 933 1000 795 591 0 2001 2002 2003 2004 2005 Total Income Profit before tax Note: 2005 reported on IFRS basis including SC First Bank, 2004 reported on IFRS basis excluding IAS 32/39 14
Slide 15: Wholesale Banking expenses
Wholesale Banking expenses US$m Up 11% Components of expense growth 1,583 2005 vs 2004 1,426 5% Investment for future growth 1,250 4% BAU / Volume 2% Regulatory / Control 11% 2003 2004 2005* Average JAWS approximately 1% * excluding Korea 15
Slide 16: Infrastructure
Standard @&@° Chartered & ~
Slide 17: Loan impairment
Loan impairment US$m 2001 2002 2003 2004 2005 Specific impairment provision (539) (260) (250) (157) (168) Recoveries 138 151 182 159 286 General / Portfolio provision 10 26 (12) Total (401) (109) (58) 28 106 Gross provision of loans and advances (%) 2.1% 0.9% 0.9% 0.4% 0.4% 17
Slide 18: Asset distribution
Asset distribution US$bn 8 Collateralised 6 Loan Obligation 4 Credit Default Swap 2 Loan Sales 0 2004 2005 18
Slide 19: Capital and income growth
Capital and income growth 2005 vs H1 06 vs 2004 H1 05 Client income 26% 30% Total income 19% 27% Risk weighted assets 15% 15% 19
Slide 20: Client income growth
Client income growth 30% 20% Growth % 10% 0% 2003 2004 2005 H1 06 Total income growth (ex. Korea) Client income growth (ex. Korea) 20 16 14 12 11 US$m 10 0 2003 2004 2005 H1 06 Average VaR 20
Slide 21: Summary
Summary Strong performance track record Robust infrastructure Disciplined expense, risk and capital management 21
Slide 22: Client Relationships
Client Relationships Alex Thursby Group Head, Client Relationships 22
Slide 23: Client income by product
Client income by product 2002 2005 H1 2006 Global Markets Global Global 28% Markets Markets 34% 39% 50% 51% 49% Transaction Transaction Transaction Banking Banking Banking 22% Lending 15% 12% Lending Lending CAGR 2002 vs 2005 H1 2006 vs H1 2005 18% 30% 23
Slide 24: Client income by geography
Client income by geography 2002 H1 2006 Americas, UK Americas, UK & Group 13% & Group 20% 20% Hong Kong 16% Hong Kong Africa 9% 2% Korea Korea 11% 13% 8% India Africa 15% MESA 7% Singapore 12% India MESA 14% 4% Malaysia Other APR 14% 6% Singapore 12% 4% Other APR Malaysia 24
Slide 25: Standard @&@°
Standard @&@° Chartered &
Slide 26: Core bank
Core bank Lending Cash FX Fixed Management Income Core Provider 43% 64% 46% 33% Second 25-35% 22% 21% 21% Third 10%-25% 8% 12% 14% Fourth Negligible Negligible Negligible 10% Fifth Negligible Negligible Negligible 7% Note: Percentage represents share of customer wallet Source: Client interviews; Gre
Slide 27: Client segmentation
Client segmentation Local Global Commodity Financial Corporates Corporates Corporates Institutions Local TMT Energy Banks Corporates Industrial & Traders / Middle Market Funds Chemicals Agriculture Transportation & Metals & Mining Securities Infrastructure Retail / Consumer Insurance Goods Developme
Slide 28: Hierarchy of client needs
Hierarchy of client needs Coverage Strategic Senior Banker / Industry Experts partner & Top GM / Transaction Banking Experts Customised integrated technology solution Advisor Senior Relationship Managers Value added Aligned GM Sales / Transaction Banking Sales Customised transaction & el
Slide 29: Income mix
Income mix CAGR 2002 vs 2005 Strategic 3% 6% 6% 46% Value added 25% 28% 33% 24% Transactional 50% 51% 49% 19% Lending 22% 15% 12% 4% 2002 2005 H1 2006 29
Slide 30: Cross-sell
Cross-sell Number of cross-sell clients Q2 2006 vs Q4 2005 3 to 5 products > 5 products + 26 %* + 44 %* * Annualised percentage growth 30
Slide 31: Standard @&@°
Standard @&@° Chartered &
Slide 32: Global flows
Global flows Outward FDI New capital / from Asia financial centres Inter Asian flows London Seoul New York Shanghai Tokyo Commodity flows Supply chain Mumbai Taipei Dubai Hong Kong Rise of Asia- China & India Singapore Jakata Johannesburg Franchise client and product centres Major centres 32
Slide 33: Summary
Summary Wholesale Banking transformed — geographic and product diversity Client centric model aiming to be core bank Positioned to provide unique client solutions 33
Slide 34: Local Corporates
Local Corporates Tim Hinton Global Head, Local Corporates 34
Slide 35: Local Corporates key indicators
Local Corporates key indicators Number of clients H1 2006 vs 2005: + 20% Income H1 2006 vs H1 2005: + 30% Product cross sell Q2 2006 vs Q4 2005 3 to 5 products > 5 products + 22 %* + 110 %* * Annualised percentage growth 35
Slide 36: Client-centric, consistent strategy
Client-centric, consistent strategy Vision Lead or core bank to our clients Strong profitable returns Process Efficiency & Clear client Standardisation segmentation Prioritised built around investment in key Risk & Credit two differentiated growth markets Sales business models management Talent Comm
Slide 37: Sustainable growth
Sustainable growth 2005 H1 2006 11% India 12% India Others Others UAE 27% 33% UAE 11% 11% 7% Korea 9% Korea 3% Indonesia 5% 3% Indonesia Singapore 5% 33% Singapore 30% Greater China Greater China Income growth + 30% 37
Slide 38: Commodity Corporates
Commodity Corporates Maureen DeRooij Global Head, Commodity Corporates 38
Slide 39: Trade flows
Trade flows Moscow London Geneva New York Shanghai Mumbai HK Singapore Traders Producers Buyers Being present in markets where the business is transacted is a critical factor for superior client service and effective risk management 39
Slide 40: Value chain
Value chain Raw material Commodity Processors Buyers / End Extraction and Trading Companies Users Production Standard Chartered Financial Services and Commodity Finance Distribution and Warehousing Companies Serving companies throughout the value chain… 40
Slide 41: Foundations for our sustainable performance
Foundations for our sustainable performance Projected commodity demand vs economic growth in China 2.4 2.2 GDP 2 Oil Consumption 1.8 1.6 Soybean Consumption 1.4 1.2 1 Population 0.8 0.6 2003 2010 2015 Source: EIA, USDA 41
Slide 42: Cash Management
Cash Management Karen Fawcett Group Head, Transaction Banking 42
Slide 43: Core bank
Core bank Cash % Relationships where Management Standard Chartered is Core Provider Core Provider 64% Second 22% Third 8% 2002 2006 Fourth Negligible Fifth Negligible 17 % 27 % Source: East & Partners 43
Slide 44: Successful business model
Successful business model Euromoney Focus on our clients Deepening relationships Working capital solutions 3rd Globally in International Cash management Differentiation through distribution External recognition Innovative alliances Best Cash Management Bank for South Asia 2006, The Asset I
Slide 45: Investment focus
Investment focus Product Integration Open Connectivity Leveraging on the success of our NETWORK Efficient Processes People 45
Slide 46: Project and Export Finance
Project and Export Finance Will Rathvon Global Head, Project and Export Finance 46
Slide 47: Complementary success
Complementary success Number of deals Project Finance added in 2003 48 YTD 43 Up-tier presence with clients 20 10 Complementary expertise 2003 2004 2005 2006 47
Slide 48: Successful and sustainable business
Successful and sustainable business Market leading deals Sinopec Warid Telecom Renewable energy Fits organisation based on: Ideas Balance sheet / distribution Relationships Great external recognition Deal of Year Awards Project finance league tables Top 10 in global PF advisory 48
Slide 49: Future priorities
Future priorities Business sustainability US$1tn (8-10yrs) US$960bn (4yrs) Leverage new US$100bn (5yrs) business ideas 49
Slide 50: India
India Bala Swaminatham Regional Head, Client Relationships, India and South Asia 50
Slide 51: Income diversification
Income diversification 2002 2005 H1 2006 Global Transaction Transaction Transaction Markets Banking Banking Banking 50% 34% 34% 35% 49% 56% Global Global Markets Markets 9% 16% 17% Lending Lending Lending CAGR 2002 vs 2005 H1 2005 vs H1 2006 17% 40% 51
Slide 52: Cross-sell
Cross-sell Number of cross-sell clients Q2 2006 vs Q4 2005 3 to 5 products > 5 products + 33 %* + 76 %* * Annualised percentage growth 52
Slide 53: Transformational journey
Transformational journey US$m 2001 2003 2005 H1 2006 Income 165 243 305 222 Expense (77) (87) (127) (70) Loan impairment (8) (5) 7 13 Profit before tax 80 151 185 165 53
Slide 54: Key messages
Key messages Good progress on our journey Client-led strategy is providing significant opportunities Good foundation for sustainable growth 54
Slide 55: Q&A
Q&A Standard @&@° Chartered &