Annual Report and Accounts 2005 Leading the way in Asia, Africa and the Middle East Contents Leading the way Business highlights 1 Group at a Glance 2 in Asia, Africa and Chairman’s Statement 4 Chief Executive’s Review 6 Business Review 12 Financial Review 22 the Middle East Board of Directors 38 Senior Management 40 Report of the Directors 41 Drawing on over 150 years of international Corporate Governance 44 Directors’ Remuneration Report 49 banking experience, Standard Chartered is Statement of Directors’ actively driving value creation in its markets Responsibility 62 with the right strategy for growth. Auditor’s Report 63 Income Statement 64 Combining deep local knowledge with Balance Sheet 65 global capability, Standard Chartered offers Notes to the Accounts 69 Supplementary Financial innovative, award-winning financial products Information 136 and services, in many of the world’s fastest Principal Group Addresses 140 growing markets. Shareholder Information 142 Index 144 Awards 145 Employing almost 44,000 people, representing 89 nationalities in over 1,200 locations and engaged in a broad range of Comsumer and Wholesale Banking activities, Standard Chartered’s strength lies in breadth, diversity and balance. Standard Chartered is committed to being The Right Partner to all its stakeholders. Across its network the Bank is trusted for its outstanding standards of governance and its commitment to making a difference to the communities in which it operates. The Business Review section of this Report combines information on corporate responsibility and people strategies, along with operating highlights, into a balanced account of the year at Standard Chartered. From our earliest branches in Africa, to our state-of-the-art priority banking centre in Taipei, our commitment to the customers, employees and communities in the markets in which we operate makes us one of the world’s best international banks. www.standardchartered.com 1 Business Highlights Income Profit before taxation Total assets up 27% up 19% up 46% to $6,861m to $2,681m to $215bn 2004 $5,382m 2004 $2,251m 2004 $147bn Normalised earnings per share Normalised return on ordinary Dividend per share up 23% shareholders’ equity up 11% to 153.7cents 18.0% to 64.0cents 2004 $124.6c 2004 18.6% 2004 57.5 cents Employees Countries and territories Nationalities 43,899 56 89 2004 33,323 2004 56 2004 80 Five Year Review BalanceBalance Shsheeteet IncomeIncome ProfitProfit Befbeforeore Taxtaxation DividendDividend Perper Shshareare $ billion $ million $ million Centscents 7 2 0 1 4 8 8 1 , 0 6 3 , 0 1 4 . 0 2 9 5 5 4 5 0 0 . 0 2 0 6 4 , , 0 8 1 7 0 0 6 . 7 2 3 7 8 5 2 0 6 2 1 , 3 2 5 1 . 3 2 4 , 5 0 8 2 4 2 , 8 5 8 7 2 , 9 3 1 2 2 5 2 . 2 1 , 4 , 1 2 7 , 7 2 5 , 1 2 , 2 2 6 2 9 4 1 2 8 , 0 8 1 , 6 4 2 3 1 3 3 3 01 02 03 04* 05* 01 02 03 04*^ 05*^ 01 02 03 04* 05* 01 02 03 04 05* Wholesale Banking Consumer Banking Wholesale Banking Consumer Banking * restated for IFRS * restated for IFRS * restated for IFRS * restated for IFRS ^ excludes corporate items not allocated $108m What We Stand For Strategic Intent The world’s best international bank Leading the way in Asia, Africa and the Middle East Brand Promise The Right Partner – Leading by Example Values ResponsiveTrustworthy Creative International Courageous Approach Participation Competitive Positioning Management Discipline Focusing on attractive, growing markets Combining global capability, deep local Balancing the pursuit of growth with firm where we can leverage our customer knowledge and creativity to outperform our control of costs and risks relationships and expertise competitors Commitment to Customers Our People Communities Investors Regulators stakeholders Passionate about our Helping our people to Trusted and caring, A distinctive investment Exemplary governance customers’ success grow, enabling individuals dedicated to making a delivering outstanding and ethics wherever delighting them with the to make a difference and difference performance and we are quality of our service teams to win superior returns Unless another currency is specified the word ‘dollar’ or symbol ‘$’ in this document means United States dollar. 2 Standard Chartered Annual Report and Accounts 2005 Group at a Glance Leading the way Hong Kong Korea Singapore Standard Chartered's business in The Group acquired Korea First Standard Chartered continues to Asia Hong Kong delivered strong profits Bank (KFB) in April 2005, completing stay ahead in this competitive in 2005. The Bank has continued to the rebranding as SC First Bank in market, leading the way with invest in its branch network and September. Branch integration was innovative deals and delivering products, resulting in strong growth completed in November, ahead of outstanding client experience by in Wholesale Banking, SME schedule. We intend to lead by combining our global expertise with Banking and Wealth Management. providing innovative products and local knowledge. We were named The consumer finance business services for Consumer Banking the Best Retail Bank in Asia Pacific PrimeCredit also performed well. customers, and allowing Wholesale by Retail Banker International. The Bank acts as a hub for Greater Banking clients to take advantage China, focusing particularly on the of our international network and growing integration between Hong products. We opened Korea’s Kong and the Pearl River Delta. largest dealing room in October. 4,025 5,775 2,818 • Record financial Employees Employees Employees performance in Hong Kong and 70 407 19 Malaysia Branches/corporate offices Branches/corporate offices Branches/corporate offices • Other APR – performance driven by strong balance $1,512m $954m $510m sheet growth IncomeIncome Income Income • India – double $ million digit growth in 5 0 9 8 2 3 3 0 6 2 2 0 1 3 4 3 client income 3 4 3 4 9 3 0 1 4 4 5 , 0 8 0 5 5 , 9 1 0 , 9 9 9 1 Korea was only 5 • Korea – successful 1 recognised as a 2 0 8 3 9 integration and 2 8 8 separate geographic 8 1 7 1 3 1 5 1 2 9 1 1 rebranding 6 segment from 2004 2 5 3 5 0 1 3 0 0 2 4 4 6 4 and was previously 4 included in Other APR 7 01 02 03 04 05 04 05 01 02 03 04 05 Wholesale Banking Consumer Banking Wholesale Banking Consumer Banking Wholesale Banking Consumer Banking Africa Americas and the UK Africa continues to deliver solid In these sophisticated markets, the Africa performance. As an international Americas Bank focuses on serving clients bank in Africa with a strong Asian with needs in Asia, Africa and the presence, we are well placed to Middle East, offering specialised leverage growing tradeflows and the products to multinational between the two continents. The organisations. In New York the Bank won many awards in 2005, United Bank is one of the leading foreign including Best Bank in Sub-Saharan clearers of US dollar payments. Africa from Euromoney, Best Trade Standard Chartered London is the Finance Bank in Sub-Saharan Africa Kingdom Group Head Office, providing from Trade Finance magazine, and governance and regulatory six Best Bank awards from The standards across the network, and Banker magazine. employs more than 52 nationalities. 4,893 1,804 Employees Employees • Excellent Consumer Banking 131 16 performance in Branches/corporate offices Branches/corporate offices all markets • Strategic value remains strong as $551m • Ranked 8th largest $549m Asia becomes major IncomeIncome US$ clearing bank IncomeIncome trading partner $ million in the world $ million • Focus on the 6 • Originators of 6 8 0 6 3 2 8 1 0 5 support of business 8 4 5 5 7 4 9 3 4 7 2 7 4 sustainable 5 opportunities 2 4 2 8 2 1 5 2 economic 2 to all our markets 9 0 1 7 5 1 7 3 8 1 9 9 1 3 3 development worldwide 8 7 6 6 1 1 01 02 03 04 05 01 02 03 04 05 Wholesale Banking Consumer Banking Wholesale Banking Consumer Banking www.standardchartered.com 3 Awards Wholesale Banking Malaysia Other APR India Standard Chartered Malaysia We are well positioned across key Standard Chartered reinforced its Asia Risk Awards recorded strong growth in 2005. growth markets in the Asia Pacific position as the largest international Standard Chartered was In 2006, we will strengthen region. In 2005, we purchased a bank in India and Nepal in 2005, named Interest Rate infrastructure, product innovation minority stake in Asia Commercial adding five new branches and Derivatives House of the Year and service enhancement and Bank in Vietnam. Our business entering four new cities in India, for 2005 by Asia Risk leverage further liberalization of the in China continues to expand and adding three branches, all in magazine. The Bank has Malaysian banking sectors. rapidly with 10 branches, two sub- new cities, in Nepal. The Group played a key role in opening Malaysia also supports the Group branches and four representative strengthened its commitment to the up new derivatives markets with a Global Shared Service Centre offices. We were among the first country by launching a consumer and delivering groundbreaking with 1,000 employees. foreign banks to receive a Yuan finance business. India also structured solutions to clients market-making licence, and we are supports the Group with a Global in the Asian region. the sole strategic foreign investor in Shared Service Centre in Chennai China Bohai Bank. with 4,100 employees. 2,942 7,305 10,097 Employees Employees Employees Consumer Banking 32 407 102 Retail Banker International Branches/corporate offices Branches/corporate offices Branches/corporate offices Awards Standard Chartered won the award for Best Retail Bank in $333m $1,054m $590m Asia Pacific 2005.