Road to sustainable growth - Standard Chartered · Investor Day 2006 Wholesale Banking 22 November...
Transcript of Road to sustainable growth - Standard Chartered · Investor Day 2006 Wholesale Banking 22 November...
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Investor Day 2006Wholesale Banking22 November 2006
Road to sustainable growth
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Forward looking statements
It is possible that this presentation could or may contain forward-looking statements that arebased 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 tohistorical or current facts. Forward-looking statements often use words such as anticipate,target, expect, estimate, intend, plan, goal, believe, will, may, should, would, could or otherwords of similar meaning. Undue reliance should not be placed on any such statementsbecause, by their very nature, they are subject to known and unknown risks and uncertaintiesand can be affected by other factors that could cause actual results, and Standard Chartered’splans and objectives, to differ materially from those expressed or implied in the forward-lookingstatements.
There are several factors which could cause actual results to differ materially from thoseexpressed or implied in forward looking statements. Among the factors that could cause actualresults to differ materially from those described in the forward-looking statements are changesin the global, political, economic, business, competitive, market and regulatory forces, futureexchange and interest rates, changes in tax rates and future business combinations ordispositions.
Standard Chartered undertakes no obligation to revise or update any forward looking statementcontained within this presentation, regardless of whether those statements are affected as aresult of new information, future events or otherwise.
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Mike ReesChief Executive Officer, Wholesale Banking
Wholesale Banking
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Key messages
Good progress on our journey
Client-led strategy is providing significant opportunities
Good foundation for sustainable growth
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Operating profit
Wholesale Banking operating profit
US$m
1,316
835591
795933
1,175
1,444
950
0
500
1,000
1,500
H12006
2001 2002 2003 2004 2005
SCFB
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Client income
H1 02 H2 02 H1 03 H2 03 H1 04 H2 04 H1 05 H2 05 H1 06
SCFBClient income
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Awards
Euromoney
Best Debt House in Thailand
Awards for Excellence 2006
The Asset
Best StructuredTrade Finance BankThe Asset Triple A Asian
Awards 2006
The Asset
Best Cash Management Bank for South AsiaThe Asset Triple A Asian
Awards 2006
Euromoney
Best Project FinanceHouse in Asia
Awards for Excellence 2006
Global Finance
Global Custodian
Best Agent Bankin Asia
Global Custodian Agent Bank Survey 2005
Best Bank for Liquidity Management in Africa
Global Finance 2006
Trade Finance
Best Trade Finance Bank in Sub-Saharan
Africa 2005 & 2006
Finance Asia
Best SecuritisationHouse
of the Year 2005
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Hierarchy of client needs
Strategic
Value added
Transactional
Basic lending(or surplus deposit taking)
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18%
27%
47%
33%
12%6%
34%23%
U.S. Europe
6%
Standard Charteredmajor markets
50%
29%
15%Strategic
Value added
Transactional
Lending
$270bn $250bn $70bn
Global income pools
Potential CAGR range (2006-10), %
15-20%
15-20%
10-15%
5-10%
Note: 2005 Wholesale Banking income pools Source: Standard Chartered estimates
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0.456
Wholesale Banking Wallet 2005, (US$bn)
The growth opportunity
0.30.5
0.70.8
1.2
1.31.3
1.5
1.51.72.0
2.0
2.0
2.8
3.2
4.0
5.0
5.57.0
10.0
15.025.0
50.0JapanChinaKoreaIndia
TurkeyTaiwan
Saudi ArabiaIndonesia
South AfricaIran
Hong KongThailand
UAEMalaysiaPakistan
SingaporeNigeria
PhilippinesEgyptKuwait
BangladeshKazakhstan
VietnamQatar
CountryGDP 2005, (US$bn)
93
98
99
117
118
131
134
173
178
196
239
281
308
346
362
772
788
2,234
4,567
75
61
51
38
2 %9 %5 %6 %4 %3 %4 %5 %4 %6 %4 %5 %6 %4 %5 %4 %6 %4 %4 %7 %5 %
10 %7 %7 %
Real GDP Growth2000-2005, (% p.a.)
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World News Network October 25, 2006
Chinese company to acquire Nations Energy's Kazakhstan oil assets for US$1.9bn
Malaysia’s Maxis
strikes Aircel deal
Essar Seeks $530 Million Loan Backed by Mobile-Phone Unit Stake
Times News Network December 22, 2005
Bloomberg October 4, 2006
India Inc arriveswith Tata`s Corus
Business Standard October 21, 2006
Tata enters energy drinks
segment in US
India Infoline September 20, 2006
SSI Block 18debt allocated
Project Finance May 2006
Wholesale Banking makes headlines
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The Bank of Choice for Corporate and Institutional Clients
Responsive Trustworthy Creative International Courageousvalues
Strategic intent
brand promise
Asia, Africa and the Middle Eastfor and in
The Right Partner – Leading By Example
Wholesale Banking strategic intent
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David EdwardsChief Operating Officer, Wholesale Banking
Performance and Risk
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Strong growth
Profit before tax CAGR = 25%
1,444
591795 933
1,175
3,059
2,5742,2522,1232,183
0
1000
2000
3000
4000
2001 2002 2003 2004 2005
US$m
Total Income Profit before tax
Note: 2005 reported on IFRS basis including SC First Bank, 2004 reported on IFRS basis excluding IAS 32/39
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Investment for future growth5%
Regulatory / Control
11%
BAU / Volume4%
Components of expense growth2005 vs 2004
2%
US$m
2004
1,426
2005*
1,583Up 11%
1,250
2003
Wholesale Banking expenses
* excluding Korea
Average JAWS approximately 1%
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Infrastructure
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Loan impairment
US$m 2001 2002 2003 2004 2005
(539)
138
(401)
2.1%
(260)
151
(109)
0.9%
(250)
182
10
(58)
0.9%
(157)
159
26
28
0.4%
(168)
286
(12)
106
0.4%
Specific impairment provision
Recoveries
General / Portfolio provision
Total
Gross provision ofloans and advances (%)
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Asset distribution
2
6
8
4
CollateralisedLoan Obligation
US$bn
Credit Default Swap
Loan Sales
200520040
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Capital and income growth
2005 vs 2004
H1 06 vs H1 05
30%
27%
15%
26%
19%
15%
Client income
Total income
Risk weighted assets
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Client income growth
Client income growth (ex. Korea)Total income growth (ex. Korea)
0%
10%
20%
30%
2003 2004 2005 H1 06
Growth %
1416
1211
0
10
20
2003 2004 2005 H1 06
US$m
Average VaR
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Summary
Strong performance track record
Robust infrastructure
Disciplined expense, risk and capital management
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Alex ThursbyGroup Head, Client Relationships
Client Relationships
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Client income by product
2002 2005 H1 2006
CAGR2002 vs 2005
18%H1 2006 vs H1 2005
30%
22%Lending
Global Markets
28%
50%TransactionBanking
51%TransactionBanking
15%Lending
GlobalMarkets
34%
49% TransactionBanking
12%Lending
Global Markets
39%
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Client income by geography
2002 H1 2006
20% Hong Kong
2% Korea
8% India
7% Singapore
4%Malaysia
MESA 14%
Americas, UK& Group 20%
12%Other APR
13%Africa
16% Hong Kong
Korea11%
12% India
6% Singapore4%Malaysia
15%MESA
Americas, UK& Group 13%
Other APR 14%
Africa 9%
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Core bank
Note: Percentage represents share of customer wallet Source: Client interviews; Greenwich, Booz Allen Hamilton analysis
FixedIncome
CashManagement
Lending
Core Provider
Second
Fourth
Fifth
Third
FX
43%
25-35%
10%-25%
Negligible
Negligible
64%
22%
8%
Negligible
46%
21%
12%
Negligible
10%
33%
21%
14%
7%
Negligible
Negligible
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Client segmentation
Local Corporates
Middle Market
Local Corporates
Public Sector
Real Estate
Retail / Consumer Goods
Transportation & Infrastructure
Global Corporates
TMT
Industrial & Chemicals
Commodity Corporates
Energy
Traders / Agriculture
Metals & Mining
Financial Institutions
Banks
Funds
Securities
Insurance
Development Organisations
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Strategicpartner &Advisor
Value added
Transactional
Basic lending(or surplus deposit taking)
Senior Banker / Industry ExpertsTop GM / Transaction Banking ExpertsCustomised integrated technology solution
Senior Relationship ManagersAligned GM Sales / Transaction Banking SalesCustomised transaction & electronic solution
Relationship ManagersTransaction Banking SalesCustomer Service GroupStandardised electronic platform
Coverage
Hierarchy of client needs
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Income mix
2002 2005 H1 2006
CAGR2002 vs 2005
Strategic
Value added
Transactional
Lending
46%
24%
19%
4%
50%
25%
3%
22%12%
6%
33%
49%
6%
15%
28%
51%
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Cross-sell
+ 26 %*
3 to 5 products > 5 products
* Annualised percentage growth
Number of cross-sell clients Q2 2006 vs Q4 2005
+ 44 %*
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Global flows
Outward FDIfrom Asia
Commodity flowsRise of Asia-China & India
Johannesburg
LondonNew York
Seoul
Jakata
Shanghai Tokyo
Hong KongTaipeiMumbai
Singapore
DubaiSupply chain
Inter Asian flows
New capital /financial centres
Major centresFranchise client and product centres
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Summary
Wholesale Banking transformed — geographic and product diversity
Client centric model aiming to be core bank
Positioned to provide unique client solutions
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Tim HintonGlobal Head, Local Corporates
Local Corporates
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Local Corporates key indicators
Number of clients H1 2006 vs 2005: + 20%
Income H1 2006 vs H1 2005: + 30%
+ 22 %*3 to 5 products > 5 products
+ 110 %*
* Annualised percentage growth
Product cross sell Q2 2006 vs Q4 2005
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Client-centric, consistent strategy
VisionLead or core bank to our clients
Strong profitable returns
Common, disciplined approach in all markets and areas of the business
Clear client segmentation built around
two differentiated business models
Prioritised investment in key growth markets
Process Efficiency &
StandardisationRisk & Credit
Sales management
Talent
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Sustainable growth
2005 H1 2006
Income growth + 30%
9% Korea
UAE11%
3% Indonesia
5%Singapore33%
Greater China
Others27%
12% India
7% Korea
UAE11%
3% Indonesia
5%Singapore
30%Greater China
Others33%
11% India
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Maureen DeRooijGlobal Head, Commodity Corporates
Commodity Corporates
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Being present in markets where the business is transacted is a critical factor for superior client service and effective risk management
Traders
Producers
Buyers
Geneva
New York London
Singapore
Mumbai Shanghai
HK
Moscow
Trade flows
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Raw materialExtraction and
Production
ProcessorsCommodityTrading Companies
Buyers / End Users
Distribution and Warehousing Companies
Financial Services and Commodity Finance
Standard Chartered
Serving companies throughout the value chain…
Value chain
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Foundations for oursustainable performance
Projected commodity demand vs economic growth in China
Source: EIA, USDA
GDP
Oil Consumption
Soybean Consumption
Population
0.6
0.8
1
1.2
1.4
1.6
1.8
2
2.2
2.4
2003 2010 2015
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Karen FawcettGroup Head, Transaction Banking
Cash Management
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17 %
2002 2006
% Relationships whereStandard Chartered is Core Provider
27 %
Source: East & Partners
Core bank
CashManagement
Core Provider
Second
Fourth
Fifth
Third
64%
22%
8%
Negligible
Negligible
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Successful business model
Focus on our clients
Differentiation through distribution
Best Cash Management Bank for South Asia 2006, The AssetBest Bank for Liquidity Management in Africa 2006, Global Finance
External recognition
Euromoney
3rd Globally inInternational
Cash management
Deepening relationships
Working capital solutions
Innovative alliances
Integrated channels
“The Banker’s Bank”
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Investment focus
Efficient Processes
Product Integration
People
Leveraging on the success of our NETWORK
Open Connectivity
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Will RathvonGlobal Head, Project and Export Finance
Project and Export Finance
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Complementary success
Up-tier presence with clients
10
20
43
48 YTD
Complementary expertise
Project Finance added in 2003
2003 2004 2005 2006
Number of deals
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Market leading deals
Successful and sustainable business
Sinopec
Warid Telecom Renewable energy
IdeasBalance sheet / distribution
Relationships
Fits organisation based on:
Great external recognition
Deal of Year AwardsProject finance league tables
Top 10 in global PF advisory
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Future priorities
Leverage newbusiness ideas
US$1tn(8-10yrs)
US$100bn(5yrs)
US$960bn(4yrs)
Business sustainability
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Bala SwaminathamRegional Head, Client Relationships, India and South Asia
India
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2002 2005 H1 2006
CAGR2002 vs 2005
17%H1 2005 vs H1 2006
40%
Income diversification
Global Markets
50%
TransactionBanking34%
16%Lending
49% Global
Markets
TransactionBanking34%
17%Lending
56% Global
Markets 9%Lending
TransactionBanking35%
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+ 33 %*
3 to 5 products > 5 products
* Annualised percentage growth
+ 76 %*
Cross-sell
Number of cross-sell clients Q2 2006 vs Q4 2005
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2003US$m
Income
Expense
Loan impairment
Profit before tax
243
(87)
(5)
151
222
(70)
13
165
H1 20062001
165
(77)
(8)
80
2005
305
(127)
7
185
Transformational journey
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Key messages
Good progress on our journey
Client-led strategy is providing significant opportunities
Good foundation for sustainable growth
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Q&A