Slide 1: Final Results 2002
Final Results 2002 19 February 2003 1
Slide 2: Good progress - Chairman
Good progress Sir Patrick Gillam Chairman 2
Slide 3: Growth in our markets
Growth in our markets GDP Growth % 2002F* 2003F* Hong Kong 1.5 3.5 Singapore 2.2 5.2 India 5.2 5.5 UAE 2.7 5.0 Malaysia 4.0 6.0 Kenya 0.8 2.3 Thailand 3.8 3.5 China 8.0 7.5 *Standard Chartered forecasts 3
Slide 4: Performance highlights
Performance highlights Revenue 4,539m 3% Trading Profit 1,262m 16% Dividend 47.0c 12.1% (per share) 4
Slide 5: Value over ten years
Value over ten years TSR since 1993 Dividends since 1993 cents 10 50 8 40 6 30 4 20 2 10 Standard Chartered Average peer group 0 0 93 95 97 99 01 03 93 96 99 02 5
Slide 6: Our 150th anniversary
Our 150th anniversary • Celebrating cultural diversity • Launching community campaigns 6
Slide 7: The road ahead
The road ahead • Balanced portfolio of core markets • Well positioned in China and India • Growth through Consumer Banking • Dynamism of our people • Strong leadership and management 7
Slide 8: Good progress - Group Finance Director
Good progress Peter Sands Group Finance Director 8
Slide 9: Group results
Group results Change US$m 2001 2002 (%) Revenue 4,405 4,539 3 Cost (incl goodwill) (2,585) (2,557) -1 Profit before provisions 1,820 1,982 9 Debt charge (732) (712) -3 Trading profit 1,089 1,262 16 9
Slide 10: Performance highlights
Performance highlights Normalised metrics 2001 2002 Management levers Cost to income ratio 55.8% 53.6% • Focus on returns • Prioritised investment EPS 66.3c 74.9c • Tight cost control ROE 12.0% 13.4% • Vigorous risk management • Active capital management 10
Slide 11: Group results – impact of one-off items
Group results – impact of one-off items Latin America Preference US$m Strategy Zimbabwe Share Combined Revenue (64) 57 (7) Cost (21) 14 (7) Goodwill (20) (20) Pre-tax profit (41) (50) 57 (34) 11
Slide 12: Group results
Group results US$m H1 2002 H2 2002 Key actions Revenue 2,285 2,254 • Traded Cost 1,176 1,225 revenue for risk Goodwill 68 88 Profit before provisions 1,041 941 • Accelerated investment Debt charge 407 305 Trading profit 634 628 12
Slide 13: Results by geography
Results by geography Trading profit US$m 2001 2002 Hong Kong 506 366 Singapore 184 235 Malaysia (24) 78 Other APR 39 105 India 119 166 MESA 190 292 Africa 116 101 Americas, UK & Group (41) (81) Total 1,089 1,262 13
Slide 14: Consumer banking results
Consumer banking results US$m 2001 2002 Revenue 2,222 2,416 Cost (excl goodwill) (1,254) (1,190) Profit before provisions 968 1,226 Debt charge (330) (603) Trading profit 638 623 14
Slide 15: Consumer banking revenue
Consumer banking revenue Change Revenue US$m 2001 2002 (%) Hong Kong 1,040 1,013 -3 Singapore 250 313 25 Malaysia 139 156 12 Other APR 210 285 36 India 190 204 7 MESA 179 213 19 Africa 131 137 5 Americas, UK & Group 83 95 14 Total 2,222 2,416 9 15
Slide 16: Consumer banking debt charge
Consumer banking debt charge US$m 2001 2002 Rest of the world 104 169 Hong Kong 226 434 Total 330 603 16
Slide 17: Hong Kong bankruptcy
Hong Kong bankruptcy Petition rate October 2001 - December 2002 10 day moving average (market) 200 Indexed 100 Bankruptcy charge off $66m $83m $74m $64m •0 Q4 01 Q1 02 Q2 02 Q3 02 Q4 02 17
Slide 18: Wholesale banking results
Wholesale banking results US$m 2001 2002 Revenue 2,183 2,123 Cost (excl goodwill) (1,191) (1,219) Profit before provisions 992 912 Debt charge (401) (109) Trading profit 591 795 18
Slide 19: Wholesale banking debt charge
Wholesale banking debt charge US$m 2001 2002 Malaysia 119 (9) Argentina 35 75 Rest of the world 247 43 Total 401 109 19
Slide 20: Efficiency programme
Efficiency programme Year 2000 efficiency Focus of ongoing programme efficiency initiatives 2002 • Accelerating centralisation US$m Actual Target through hubbing • Re-engineering and Total cost savings 265 244 standardising core processes Implementation (110) (114) • Redesigning support spend functi
Slide 21: Capital management
Capital management Tier 2 Other Tier 1 Key actions % 18 Core Equity • HK Listing Total 16.2% 16 Total 14.5% and equity 14 raising 12 • Preference 10 8 Tier 1 Tier 1 shares buy 6 9% 8.6% back 4 Core Core • Subordinated 2 Equity Equity 5.7% 6.1% debt buy back 0 2001 2002 21
Slide 22: Good progress
Good progress • Revenue growth despite • Strong challenging environment profit growth • Cost reduction whilst accelerating investment • Reduced cost • Vigorous risk control income ratio • Improved capital management • Improved ROE 22
Slide 23: Good progress - Group Chief Executive
Good progress Mervyn Davies Group Chief Executive 23
Slide 24: 2002 management agenda
2002 management agenda • Build market share in Consumer Banking ü • Increase focus on value creation in Wholesale Banking ü • Capture profitable growth in India and China ü • Transition Thailand and Taiwan to profitability ü • Deliver efficiency and flexibility in technology and operations ü • Ratio
Slide 25: Managing our performance
Managing our performance Performance communication Strategy Control 25
Slide 26: Consumer banking – strength in depth
Consumer banking – strength in depth • Winning share in multiple markets • Investing in brand new products and sales capability • Driving efficiencies - cost Growing income ratio below 50% consumer • Tapping revenue pool business… 26
Slide 27: Wholesale banking – good progress
Wholesale banking – good progress • 35% increase in trading profit • Held economic capital flat • Traded revenue for risk reduction • Built Global Markets product Driving capability returns • Restructured Latin America 27
Slide 28: Hong Kong – a challenging year
Hong Kong – a challenging year • Pearl River Delta opportunity • Resilience in tough operating environment • Bankruptcies stabilising • Reshaping our business model 28
Slide 29: Malaysia – back on track
Malaysia – back on track • New management team • Major risk reduction in wholesale book • Good growth in consumer banking • Positive momentum restored 29
Slide 30: India – delivering today
India – delivering today • No.1 foreign bank in India • Second most profitable MNC • Fast growing economy • Aggressive branch expansion plan • Strong brand, reach and scale 30
Slide 31: MESA – outstanding growth
MESA – outstanding growth • Tremendous growth in profit “Best Bank in emerging • Number 1 or 2 foreign African/Middle Eastern currencies” bank in UAE, Bangladesh, Pakistan, Bahrain and Sri Lanka • Strong wholesale business • Growing consumer banking revenues 31
Slide 32: Enabling growth
Enabling growth Technology & Operations Risk Management Brand & Values Leadership & Talent 32
Slide 33: Technology and operations
Technology and operations Centralisation • Hubs now supporting 50 countries Standardisation Re-engineering • 2,200 people in hubs growing by up to 50% by end 2003 • Systems development outsourcing • New sales platforms 33
Slide 34: Risk management
Risk management Wholesale Bank Consumer Bank • Reduced risk in portfolio • Revising score cards • Limited OECD exposures • Enhanced collection • Reduced exposure and training to low grade credits • Improved risk framework • Improved debt recoveries • Strengthened • Enhanced pricing for risk manageme
Slide 35: Banking environment 2003
Banking environment 2003 Banking environment Our position • Over capacity • Winning market share • Regulatory intervention • Close relationships • Political instability • Strong management • Turbulent markets • Strong balance sheet • Corporate failures • Robust risk management 35
Slide 36: 2003 management agenda
2003 management agenda • Drive returns in wholesale banking • Drive technology improvements • Grow consumer banking revenue • Accelerate India growth • Leverage the China opportunity 36
Slide 37: The outlook
The outlook • Delivering on agenda “Best Retail Bank in Asia” “Best Retail Bank • Growing markets in Singapore” • Improving shareholder Building a returns culture of service excellence 37
Slide 38: Final Results 2002
Final Results 2002 19 February 2003 38