35153 StanChart R&A 2004 C copy 8/3/05 10:01 AM Page 1 Annual Report and Accounts 2004 Standard Chartered Chartered Standard Annual Report and Accounts 2004 ds Leading the way ing ugh in Asia, Africa and – the andard of eye the Middle East rence. ct: ered.com 35153 StanChart R&A 2004 C copy 8/3/05 9:59 AM Page 2 Front Cover: Standard Chartered employs 33,000 people in over Thomas Migwi Kamau breaks the tape 550 locations serving 56 countries and territories to win the 2004 Standard Chartered Hong Kong Marathon across the Asia Pacific region, South Asia, the Middle Mr Kamau, from Kenya, set a personal best time in the 8th annual Standard Chartered Hong Kong East, Africa, the United Kingdom and the Americas. Marathon. The event, which hosted a record 24,000 runners in 2004, is a signature international sporting It is one of the world’s most international banks with event, attracting world-class runners from all corners employees representing 80 nationalities. of the globe. Standard Chartered serves both Consumer and Wholesale Banking customers, is well established in growth markets and aims to be The Right Partner for its customers. The Bank is trusted across its network for its standards of governance and its commitment to making a difference in the communities in which it operates. Leading the Way Leading the Way represents our strategic intent. It is the framework within which we make our strategic and operational decisions. In the context of this framework, each country and business decides its role and determines what actions are required to achieve the Strategic Intent. Strategic Intent The world’s best international bank Leading the way in Asia, Africa and the Middle East Brand promise The Right Partner – Leading by Example Values Responsive Trustworthy Creative International Courageous Approach Participation Competitive Positioning Management Discipline Focusing on attractive, growing Combining global capability, deep Balancing the pursuit of growth markets where we can leverage local knowledge and creativity to with firm control of costs and risks our customer relationships outperform our competitors Design and expertise Rare C Printed on tota Commitment to Customers Our People Communities Investors Regulators which stakeholders Passionate about Helping our people Trusted and caring, A distinctive Exemplary post c our customers’ to grow, enabling dedicated to making investment delivering governance and from m success, delighting individuals to make a a difference outstanding ethics wherever biodeg them with the quality difference and teams performance and we are This do of our service to win superior returns Strategic Highlights 1 Strategic Highlights A very successful year 2 Group at a Glance 4 Chairman’s Statement 6 Group Chief Executive’s Review 18 Our People • Profit before tax up 39 per cent. 20 Our Approach to Corporate Responsibility 26 Financial Review • Net revenue up 13 per cent to $5.37 billion. 43 Senior Management 44 Board of Directors 46 Report of the Directors • Normalised Earnings Per Share up 48 Corporate Governance 54 Directors’ Remuneration Report 40 per cent. 68 Directors’ Responsibility Statement 69 Independent Auditor’s Report • Normalised Return on Equity increased to 70 Consolidated Profit and Loss Account 20.1 per cent. 71 Consolidated Balance Sheet 72 Consolidated Statement of Total Recognised Gains and Losses • Expanded in key markets – China, 72 Note of Consolidated Historical Cost Profits and Losses South Korea, India and Indonesia. 73 Consolidated Cash Flow Statement 74 Company Balance Sheet 75 Principal Accounting Policies 77 Notes to the Accounts 121 Supplementary Financial Information Unless another currency is specified, the word ‘dollar’ 125 Principal Group Addresses or symbol ‘$’ in this document means United States dollar. 127 Shareholder Information Balance sheet Profit before taxation $71.6 bn $70.1 bn $2.16 bn Loans and advances to customers All other assets Net revenue Dividend per share $3,168 m $2,199 m 57.5 cents Net interest income Other revenue Balance sheet Net revenue Profit before taxation Dividend per share $ billion $ million $ million Cents 70.1 2,199 2,158 57.50 1,772 52.00 60.5 1,505 1,476 56.0 1,381 47.00 50.4 54.4 1,550 41.92 1,409 38.11 3,063 2,968 3,168 1,262 71.6 2,680 2,900 1,089 59.7 51.9 53.0 57.0 00 01 02 03 04 00 01 02 03 04 00 01 02 03 04 00 01 02 03 04 Other assets Other revenue Loans and advances to customers Net interest income Annual Report and Accounts 2004 Standard Chartered 1 Group at a Glance Standard Chartered is one of the world’s best international banks. In all our markets we are committed to being The Right Partner to our customers, employees and the communities in which we operate. Africa continues to be an important Africa region for the Group, benefiting in Middle East and 2004 from strong commodity prices, a more favourable currency South Asia (MESA) situation and economic stability. Standard Chartered led the way in Africa, winning The Banker magazine’s awards for Best Bank in Ghana, Sierra Leone, Tanzania and Zambia. Employees Branches/offices 4,707 148 Net Revenue $584 million 366 273 209 224 195 218 159 170 131 137 00 01 02 03 04 Wholesale Banking Consumer Banking Asia Hong Kong Singapore Standard Chartered’s business in Standard Chartered continues to Hong Kong delivered strong deliver in this competitive market, profits in 2004 and is well placed where we have been named to benefit from a revival in the Best Retail Bank in Asia Pacific by economy. Hong Kong is playing an the Asian Banker Journal for three increasing role as a regional hub for consecutive years. We continue Greater China. We incorporated to invest in sales and service locally in July 2004 in preparation excellence and in our growth for the economic growth generated businesses – Small and Medium by closer integration with China’s Enterprises (SME), middle market Pearl River Delta region. and financial institutions. Employees Branches/offices Employees Branches/offices 3,984 72 2,481 20 Net Revenue Net Revenue $1,408 million* $513 million 402 403 183 401 418 172 158 360 200 190 1040 1013 954 954 328 330 836 313 236 250 00 01 02 03 04 00 01 02 03 04 Wholesale Banking Wholesale Banking Consumer Banking Consumer Banking 2 Standard Chartered Annual Report and Accounts 2004 United Arab Emirates Other MESA Americas In these sophisticated markets, the The UAE delivered excellent The MESA region, including Qatar, Bank focuses on serving clients business performance and growth Bahrain, Pakistan and Bangladesh, and the with needs in Asia, Africa and the in 2004. Revenue grew 16 per cent, delivered another strong financial Middle East. Standard Chartered outperforming the market. We won performance with double-digit United Kingdom New York has one of the largest the exclusive banking licence for revenue growth and robust cost US Dollar Clearing businesses in Dragonmart – the largest Chinese management. Investment in new the USA. In 2004, the Bank was commercial, economic and trade products, including Corporate named Best Trade Bank in the UK mart outside China, launched Finance, Structured Products, by Global Finance magazine. The Islamic Banking and sponsored Debt Capital Markets and Islamic UK is the Head Office location for the Dubai Marathon. Banking is changing the shape of Group functions, providing revenue streams. governance and regulatory standards across the network. Employees Branches/offices Employees Branches/offices Employees Branches/offices 1,001 9 2,193 79 1,634 17 Net Revenue Net Revenue Net Revenue $271 million $377 million $663 million* 147 205 476 134 132 177 528 510 128 499 154 447 88 129 124 172 102 86 138 258 83 92 121 96 66 This region also includes our offices 63 95 in Jersey, the Falkland Islands 83 78 69 00 01 02 03 04 00 01 02 03 04 and Turkey. 00 01 02 03 04 Wholesale Banking Wholesale Banking Wholesale Banking Consumer Banking Consumer Banking Consumer Banking Malaysia Other Asia Pacific India Region Standard Chartered Malaysia 2004 was a transformational year Standard Chartered reinforced its recorded strong growth in 2004. In across the Asia Pacific region. The position as the largest international 2005, we will increase penetration investment in the new national Bohai bank in India and Nepal, adding into the middle market, SME and Bank in China, the purchase of a 10 branches and entering three new consumer finance sectors, grow controlling stake, in a consortium cities in India in 2004. The Group Islamic Banking and complete with PT Astra International Tbk, in underlined its leadership position by preparations for the anticipated PT Bank Permata Tbk in Indonesia, transacting the first Real Time Gross liberalisation of the Malaysian and most recently, the acquisition, Settlement with State Bank of India financial sector. Malaysia also subject to regulatory approval, of and the Indian subsidiary of Unilever. supports the Group with a Global Korea First Bank, give the Bank a Standard Chartered India also supports Shared Service Centre in Kuala strong position across many key the Group with a Global Shared Service Lumpur with 1,000 employees. growth markets. Centre in Chennai with 3,500 employees. Employees Branches/offices Employees Branches/offices Employees Branches/offices 2,476 30 6,077 95 8,769 82 Net Revenue Net Revenue Net Revenue $270 million $815 million† $466 million* 121 95 422 243 231 98 78 73 348 190 287 165 175 338 319 156 162 141 142 139 258 393 223 333 204 285 190 132 *includes one-off items from corporate 179 210 activity (see page 26).