Annual Report 2010 Leading the way in Asia, Africa and the Middle East Here for good Business review Corporate governance Financial statements and notes Group overview 84 Board of directors 138 Independent auditor’s report IFC Financial highlights 87 Senior management 139 Consolidated income statement 01 About Standard Chartered 88 Corporate governance 140 Consolidated statement of 04 Chairman’s statement 106 Directors’ remuneration report comprehensive income 06 Group Chief Executive’s review 126 Report of the directors 141 Consolidated balance sheet 12 Our organisation and approach 134 Statement of directors’ responsibilities 142 Consolidated statement of changes in equity 14 Key performance indicators 143 Cash flow statement 16 Business environment 144 Company balance sheet 145 Company statement of changes in equity Operating and financial review 146 Notes to the financial statements 18 Our performance in our markets 20 The Group Supplementary information 26 Consumer Banking 224 Supplementary financial information 32 Wholesale Banking 240 Shareholder information 38 People 242 Glossary 42 Sustainability 246 Major awards 2010 48 Risk review 250 Index 78 Capital About Standard Chartered Consumer Banking Wholesale Banking The Group Helps meet the evolving financial needs Helps corporate and institutional clients We are headquartered in London and of Private, Small and Medium-sized facilitate trade and finance across the have operated for over 150 years in Enterprises (SMEs), Priority, Preferred world’s fastest-growing markets, some of the world’s most dynamic and Personal banking customers across leveraging our solutions and a delivery markets, leading the way in Asia, Africa our franchise. Our customer-focused footprint spanning our network. We are and the Middle East. and service approach enables our at the heart of international trade flows, staff to offer solutions from an offering the knowledge of a local bank Our income and profit streams are highly innovative range of products and with the capabilities of an international diversified with 15 of our markets now services to build stronger relationships financial institution. delivering over $100 million in profit. with our customers. Operating income Operating income Profit before taxation by region (% of $0,000m) 2010: $6,122m | 2009: $5,151m $6,079m $9,979m 18% Hong Kong 12% Singapore 2009: $5,629m | 2008: $5,952m 2009: $9,291m | 2008: $7,489m 6% Korea 18% Other Asia Pacific 20% India Total assets Total assets 14% Middle East and Other South Asia 9% Africa $126bn $389bn 3% Americas, UK and Europe 2009: $104bn | 2008: $86bn 2009: $331bn | 2008: $346bn Unless another currency is specified the word ‘dollar’ or Sri Lanka and UAE; and Other Asia Pacific includes: Brunei, symbol ‘$’ in this document means US dollar and the word China, Indonesia, Malaysia, Mauritius, the Philippines, ‘cent’ or symbol ‘c’ means one-hundredth of one US dollar. Taiwan, Thailand and Vietnam. Within this document, the Hong Kong Special Administrative Standard Chartered PLC is headquartered in London where Region of the People’s Republic of China is referred to as it is regulated by the UK’s Financial Services Authority. The Hong Kong; The Republic of Korea is referred to as Korea Group’s head office provides guidance on governance and or South Korea; Middle East and Other South Asia (MESA) regulatory standards. Standard Chartered PLC stock code: includes: Bangladesh, Bahrain, Jordan, Pakistan, Qatar, 02888. www.standardchartered.com Standard Chartered Annual Report 2010 01 02 Standard Chartered Annual Report 2010 www.standardchartered.com Business review Group overview IFC Financial highlights 01 About Standard Chartered 04 Chairman’s statement 06 Group Chief Executive’s review 12 Our organisation and approach 14 Key performance indicators 16 Business environment Operating and financial review 18 Our performance in our markets 20 The Group 26 Consumer Banking 32 Wholesale Banking 38 People 42 Sustainability 48 Risk review 78 Capital www.standardchartered.com Standard Chartered Annual Report 2010 03 Chairman’s statement Poised for further growth I am delighted to report that 2010 was the eighth consecutive year of record income and profits. Against an uncertain global recovery and despite the return of competition in many markets, Standard Chartered continued to perform strongly. Our performance in 2010 once again demonstrates our ability to deliver substantial, sustained value for our shareholders. • Income increased 6 per cent to $16.1 billion • Profit before taxation rose 19 per cent to $6.12 billion • Normalised earnings per share were up 14 per cent to 197.0 cents “2010 was another year of great performance. The Board is recommending a final dividend of 46.65 cents per share, making a total We have demonstrated we have the right annual dividend, on a post rights issue strategy, the right culture and the right basis, of 69.15 cents per share, up 9 per cent. For the many shareholders who participated geographical footprint to deliver consistent in our rights issue last October, the total and sustained value for our shareholders.” dividend received is up 15 per cent on the 2009 dividend payment. Normalised earnings per share We are proud of our long track record in creating shareholder value. Over recent years, we have simultaneously increased 197.0cents our income, earnings per share, capital ratio 2009: 173.2cents1 and total dividends paid out. Our investors helped us raise over $5 billion Dividend per share in our October rights issue. Earlier in 2010 we successfully listed our Indian Depository Receipts on the Bombay and National stock 69.15cents exchanges in India. I would like to thank 2009: 63.61cents1 our investors for their continued support throughout the year, and for the confidence they have shown in our future. This has given us excellent balance sheet strength as a foundation for further growth. Standard Chartered is positioned in some of the fastest-growing markets of the world, and has the strong capital base, liquidity and customer relationships required to make the most of this opportunity. 1 Restated as explained in note 47 to the financial statements 04 Standard Chartered Annual Report 2010 www.standardchartered.com Business review Chairman’s statement Total shareholder return Percentage change over five-year period 200 183.87 150.03 157.60 122.65 122.85 150 118.30 126.26 88.05 112.11 83.53 122.96 114.43 80.68 100 100 87.50 65.60 50 0 Jan 06 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Data provided by Thomson Reuters Standard Chartered FTSE 100 Comparator median We have broad based, diversified sources continue to meet the significantly enhanced of income growth Janin both 06 Jan Consumer 07 Jan 08 andJan 09 Janremuneration 10 Jan 11 codes of the Financial Wholesale Banking, and are committed Services Authority and the Financial to investing for long-term growth in both Stability Board, while ensuring that our businesses. Most importantly, we have a rewards remain competitive. cohesive, global culture with a consistent strategy focused on the basics of banking. Strong management and governance are key components of our business model. During recent times, this distinctive culture This year, we strengthened our Board by has emerged as a key differentiator appointing three non-executive directors: between us and other banks. Here for Dr Han Seung-Soo, KBE, former Prime good, our brand promise, powerfully Minister of the Republic of Korea; Richard captures who we are and what makes Delbridge, who draws on extensive financial us different. experience from a broad banking career; and Simon Lowth, currently executive Our performance in 2010 reflects the director and chief financial officer of continued success of our business model. AstraZeneca PLC. Our Asia CEO, Jaspal Once again, we have demonstrated our Bindra, who has wide-ranging international determination to stand by our customers experience, was appointed to the Board as and clients, using our capital and liquidity Group Executive Director. strength to support them in good times and bad. Our total lending to customers In the last two years, following an extensive and clients increased by nearly $45 billion, review, we have changed our board over 22 per cent. We continued to lend committee structure to reinforce the more to key sectors of the economy across highest standards of governance. These Asia, Africa and the Middle East, including changes take into account the governance home owners and small and medium-sized trends arising from the Walker and the UK enterprises (SMEs). Our mortgage lending Financial Reporting Council reviews. In increased by 23 per cent to $71 billion, with 2010, we created separate Audit and Risk SME lending at nearly $18 billion, up 32 per Committees to emphasise our focus on cent on 2009. risk management. We also established a Governance Committee and enhanced the While we continue to see a wealth of growth remit of the Brand and Values Committee. opportunities for Standard Chartered, we also see challenges, chief among In summary, 2010 was another year of great them regulatory risk. Inconsistent global performance. We have demonstrated we regulatory reform remains a concern. We have the right strategy, the right culture and continue to seek more global co-ordination the right geographical footprint to deliver on regulatory changes. consistent and sustained value for our shareholders. We enter 2011 in excellent At Standard Chartered we reward our staff shape and with strong growth momentum. for performance, not failure. Given our strong performance in 2010, the Board believes that annual performance awards to those employees who have performed well is appropriate. Against a profit increase of 19 per cent and a 9 per cent rise in headcount, our bonus pool costs have John Peace increased modestly on the 2009 levels. Chairman 2 March 2011 We remain satisfied that our remuneration policies encourage long-term performance, rather than short-term risk taking.