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					            EAST ASIA SECURITIES COMPANY LIMITED
            9/F, 10 Des Voeux Road Central, Hong Kong.
            Dealing: 3608 8000 Research: 3608 8096 Facsimile: 3608 6132
                                                                                                      HONG KONG RESEARCH
                                                                                                               rd
Analyst: Stanley Lau                                                                                          3 March 2006


                             STANDARD CHARTERED PLC (渣打集團)
    Sector           :   Banking                                Chairman                        :    Bryan Sanderson CBE
    HKSE Code        :   2888
    Market Price     :   HK$207.4 (03/03/2006)                  Group Chief Executive           :    Mervyn Davies CBE
    Shares Issued    :   1,165.464 million
    Mkt. Cap.        :   HK$241,714 million                     Group Finance Director          :    Peter Sands
    52 weeks Hi/Lo   :   HK$209.0 / HK$136.0
    HSI              :   15,802.00 (03/03/2006)
    Main Business    :   Consumer and wholesale banking

             SUMMARY OF THE FINAL RESULTS FOR THE YEAR ENDED 31 ST DECEMBER 2005
Final Results Highlights
                                                                       US$ million      Vs FY2004 (%)          Vs 1H2005 (%)
•     Net interest income                                                    4,335            +36.2%
•     Non-interest income                                                    2,526            +14.8%
•     Total operating income                                                 6,861            +27.5%
•     Operating expenses                                                   (3,811)            +33.8%
•     Operating profit before provisions                                     3,050            +20.4%
•     Impairment losses on loans & advances                                  (319)            +49.1%
•     Pre-tax profit                                                         2,681            +19.1%
•     Attributable profit                                                    1,946            +23.3%
•     Total loans                                                         112,544             +55.2%                     +3.9%
•     Total deposits                                                      145,844             +51.8%                     +6.7%
•     Total assets                                                        215,096             +46.2%                     +5.5%
•     Basic EPS                                                         US¢148.5              +14.6%
•     Interim DPS                                                       US¢45.06              +11.4%
•     Final DPS                                                         US¢64.00              +11.3%

Selected Ratios                                                             FY2005                  FY2004             1H2005
• Net interest margin                                                         2.5%                    2.6%               2.6%
• Impaired loan ratio                                                         2.4%                    3.6%               2.6%
• Impaired loan coverage                                                     65.1%                   61.1%              72.2%
• Return on average equity – normalized *                                    18.0%                   18.6%              18.4%
• Loan-deposit ratio                                                         77.2%                   75.4%              79.2%
• Cost-income ratio – basic                                                  55.5%                   52.9%              52.8%
• Cost-income ratio – normalised *                                           54.5%                   54.0%              52.6%
• Tier 1 capital ratio                                                        7.7%                    8.6%               7.3%
• Total capital ratio                                                        13.6%                   15.0%              13.0%
*Results on a normalized basis reflect Standard Chartered PLC’s results excluding profits on disposal of subsidiary undertakings,
charges for restructuring and amortisation of goodwill.


•     FY2005 results topped forecasts Standard Chartered PLC (“StanChart”) reported a 23.3% y-o-y rise in
      net profit to US$1.95 billion for FY2005, fuelled by growth at its Asia-Pacific business and the 8-1/2 months’
      contribution from SC First Bank (“SCFB”) – formerly known as Korea First Bank and acquired by StanChart
      for US$3.3 billion in mid-April 2005. Pre-tax profit was up 19.1% y-o-y to US$2.68 billion, above a median
      forecast of US$2.65 billion.




This report has been prepared solely for information purposes and we are not soliciting any action based upon it. Neither
this document nor its contents shall be construed as an offer, invitation, advertisement, inducement or representation of
any kind or form whatsoever. The information is based upon information which we consider reliable, but accuracy or
completeness is not guaranteed. Opinions expressed herein are subject to change without notice. At time of this report,
East Asia Securities Company Limited has no position in securities of the company or companies mentioned herein, while
its group companies may from time to time have interests in securities of the company or companies mentioned herein.
            EAST ASIA SECURITIES COMPANY LIMITED

•     Net interest income grew despite lower NIM Net interest income grew 36.2% y-o-y to US$4.34 billion,
      with much of the expansion coming from the inclusion of SCFB. Excluding SCFB, the underlying growth
      was 11.7% y-o-y. Nonetheless, net interest margin shrank 10 bps to 2.5% from 2.6% in FY2004.

•     SCFB contributed US$31.2 billion to total loans With the inclusion of SCFB, total loans expanded 55.2%
      y-o-y to US$112.54 billion. In Consumer Banking, growth was resulted from increases in the mortgage book
      in Korea, India and the “Other Asia Pacific region”. In Wholesale Banking, growth was across most of the
      regions. As of 31/12/2005, approximately 61% of the loan portfolio relates to Consumer Banking,
      predominately in retail mortgages. With total deposits up 51.8% y-o-y, loan-to-deposit ratio rose to 77.2%
      from 75.4% in FY2004.

•     Solid growth in non-interest income Net fees and commissions rose 14.0% y-o-y to US$1.84 billion.
      Excluding SCFB, the underlying growth was 6.8% y-o-y, driven by higher volumes in wealth management,
      cash management and global markets products. Net trading income increased 18.1% y-o-y to US$769
      million with customer-led foreign exchange dealing propelling the underlying growth (+14.6% y-o-y).
      Meanwhile, other operating income increased 20.7% y-o-y to US$262 million, backed by structured
      transactions and sales of available-for-sale securities. Overall, non-interest income contributed 36.8% to the
      Group’s total operating income, versus 40.9% in FY2004.

•     Cost-to-income ratio at 54.5% Operating expenses increased 33.8% y-o-y to US$3.81 billion. Of which,
      US$579 million arose from the inclusion of SCFB. Excluding SCFB, the rise in underlying expense was
      13.4% y-o-y, which slightly outpaced the underlying operating income growth of 11.5% y-o-y. As such, the
      normalised cost-to-income ratio edged up to 54.5% from 54.0% in FY2004.

•     Loan impairment losses jumped Loan impairment losses jumped 49.1% y-o-y to US$319 million.
      Excluding SCFB (which accounted for US$53 million), the increase was mainly attributable to deterioration
      in the Taiwan consumer credit environment. The Consumer Banking loan impairment loss in Taiwan
      climbed to US$98 million from US$26 million in FY2004. As of 31/12/2005, gross impaired loans amounted
      to US$2.69 billion with an impairment loan coverage ratio of 65.1% (31/12/2004: 61.1%).

•     SCFB lift results in Consumer Banking Pre-tax profit from Consumer Banking was up 20.8% y-o-y to
      US$1.28 billion, representing 47.7% of the Group’s total (FY2004: 47.0%). Of the US$220 million increase,
      SCFB accounted for HK$137 million. Excluding SCFB, the underlying growth was supported by wealth
      management business stream.

•     Robust results from Wholesale Banking Pre-tax profit from Wholesale Banking was up 22.5% y-o-y to
      US$1.44 billion, with an underlying growth of 14.8% y-o-y to US$1.35 billion. Operating income from Global
      Markets grew 17.8% y-o-y to US$1.43 billion due to enhanced product set, while that of Cash Management
      and Custody was up 51.5% y-o-y to US$741 million, propelled by volume and margin growth. Meanwhile,
      trade and lending income was broadly flat at US$879 million.

•     Solid financial position As of 31/12/2005, the group’s total capital ratio was 13.6% (31/12/2004: 15.0%)
      and the tier 1 capital ratio was 7.7% (31/12/2004: 8.6%). The return on average equity (ROAE) was 18.0%,
      compared with 18.6% in FY2004.

Breakdown of pre-tax profit in FY2005 by geographical areas:

                                                      Pre-tax profit              y-o-y       Share of contribution
                                                      (US$ million)                 (%)                         (%)
    Hong Kong                                                  745              +20.0%                       27.8%
    Singapore                                                  221              -12.3%                        8.2%
    Malaysia                                                   153              +24.4%                        5.7%
    Korea                                                      261             +715.6%                        9.7%
    Other Asia Pacific                                         395              +68.1%                       14.7%
    India                                                      235              +21.1%                        8.8%
    Other Middle East & Other South Asia                       478              +27.1%                       17.8%
    Africa                                                       62             -70.8%                        2.3%
    Americas, UK & Group Head Office                           131              -36.4%                        4.9%




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          EAST ASIA SECURITIES COMPANY LIMITED

•   Hong Kong operations The Group’s Hong Kong operations posted a 20.0% y-o-y gain in pre-tax profit to
    US$745 million, largely driven by robust performance in non-interest income and tight expense control.
    Hong Kong remained the largest profit contributor across the regions (27.8%).
                                                                               US$ million       Vs FY2004 (%)
     •    Net interest income                                                          935               +4.0%
     •    Non-interest income                                                          577              +13.8%
     •    Total operating income                                                     1,512               +7.5%
     •    Operating expenses                                                         (649)               -1.7%
     •    Operating profit before provisions                                           863              +15.7%
     •    Impairment losses on loans & advances                                      (117)               -6.4%
     •    Pre-tax profit                                                               745              +20.0%
     •    Total loans                                                               21,584               -0.7%
     •    Total deposits                                                            33,883               +4.6%
     •    Total assets employed                                                     49,943               +3.0%

     Selected Ratios                                                               FY2005                FY2004
     • Net interest margin                                                           2.2%                  2.2%
     • Cost-income ratio                                                            42.9%                 46.9%
     • Average liquidity ratio *                                                    35.2%                 34.8%

                                                                                31/12/2005           31/12/2004
     •    Impaired loan ratio                                                       2.02%                 2.21%
     •    Loan-deposit ratio                                                        63.7%                 67.1%
    * For Standard Chartered Hong Kong branch
         Total operating income grew 7.5% y-o-y Net interest income rose 4.0% to US$935 million, on a net
         interest margin of 2.2% – the same level as in FY2004. Non-interest income grew 13.8% y-o-y to
         US$577 million, driven by more activities in wealth management business. As of 31/12/2005, non-
         interest income represented 38.2% of Hong Kong operation’s total operating income, versus 36.1% in
         FY2004.
         Cost-to-income ratio at 42.9% Operating expenses fell 1.7% y-o-y to US$649 million. With total
         operating income up 7.5% y-o-y, the cost-to-income ratio improved to 42.9% from 46.9% in FY2004.
         Lower loan-to-deposit ratio Total loans were down 0.7% y-o-y to US$21.58 billion, due to pressure on
         mortgage lending. Meanwhile, total deposits added 4.6% y-o-y to US$33.88 billion. As such, loan-to-
         deposit ratio edged down to 63.7% as of 31/12/2005 from 67.1% as of 31/12/2004.
         Reduction in loan impairment losses Loan Impairment losses dropped 6.4% y-o-y to US$117 million
         due to improving economic environment. As of 31/12/2005, gross impaired loans amounted to US$436
         million with an impairment loan coverage ratio of 64.0% (FY2004: 67.1%).

•   Other Middle East & Other South Asia (MESA) operations In the MESA region, pre-tax profit rose 27.1%
    y-o-y to US$478 million, led by segments in wealth management, credit cards and capital markets. MESA
    contributed 17.8% to the group’s total pre-tax profit (FY2004: 16.7%).

•   Malaysia and Other Asia Pacific operations Pre-tax profit in Malaysia rose 24.4% y-o-y to US$153 million
    (5.7% of the Group’s total, versus 5.3% in FY2004) as its Wholesale Banking business saw strong growth in
    global markets products. Meanwhile, the Other Asia Pacific region recorded a 68.1% rise in pre-tax profit to
    US$395 million, with significant contributions from China and Indonesia. However, impairment provisions
    increased US$100 million, of which US$72 million was in Taiwan.

•   Korea operations SCFB became EPS accretive in 2H2005. The unit contributed operating income of
    US$859 million and pre-tax profit of US$227 million to the Group since its acquisition in mid-April 2005. Net
    interest margin level in Korea improved to 2.0% from 1.1% in FY2004, reflecting significant post-acquisition
    progress.




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         EAST ASIA SECURITIES COMPANY LIMITED

•   Singapore operations Pre-tax profit was down 12.3% y-o-y to US$221 million, accounting for 8.2% of the
    Group’s total (FY2004: 11.2%). Despite a 6.6% y-o-y loan growth, net interest income declined 8.3% y-o-y
    amid a competitive environment in mortgage lending. Meanwhile, operating expenses grew 7.9% y-o-y to
    US$246 million, further dragging down the performance.

•   India operations India’s pre-tax contribution soared 21.1% y-o-y to US$235 million, representing 8.8% of
    the Group’s total. (FY2004: 8.2%). Strong performance in Global Markets products more than offset a 30-bp
    compression in net interest margin. Continued investment to expand market underpinned a 21.4% y-o-y rise
    in operating expenses.

•   Africa operations In Africa, pre-tax profit was 70.8% y-o-y lower at US$62 million (2.3% of the Group’s
    total, versus 9.4% in FY2004), due primarily to a marked deterioration in Zimbabwe that suffered from high
    inflation and very rapid currency depreciation. The difficult trading environment was further affected by
    compression on net interest margin, which fell 30 bps to 7.3% from 7.6% in FY2004.

•   The Americas, UK and Group Head Office The region saw a 36.4% y-o-y decline in pre-tax profit to
    US$131 million, as a result of lower operating income from asset and liability management.

Outlook & Prospects

•   Strong income growth but cost growth a concern Excluding the post-acquisition results of SCFB, we
    saw strong income growth in FY2005 across its Asia Pacific regions and in the Middle East. Given healthy
    economic growth and the pre-mature status of banking businesses in these markets, the outlook for the
    Group remains promising in FY2006. Meanwhile, cost management is a key factor as the rise in operating
    expenses outpaced the operating income growth.

•   Margin pressure We see the Group’s net interest margin shrink 10 bps to 2.5% from 2.6% in FY2004.
    Besides Hong Kong and Singapore, margin pressure was also seen in Malaysia and India. Any signs of
    further competitive pressure in these markets might weigh on the Group’s overall net interest margin.

•   SCFB’s performance well ahead of targets SCFB became EPS accretive with just 8-1/2 months of
    operation, contributing US$227 million to the Group’s pre-tax profit in FY2005. The results are well ahead of
    targets set earlier by management of the Group that the acquisition would be EPS accretive in FY2006.

•   Singapore, Africa & Taiwan – markets to watch Singapore and Africa are the main regions of
    weaknesses. Margin pressures in Singapore have intensified largely due to competition from domestic
    players, while profits in Africa are hit by inflationary pressure in Zimbabwe. Meanwhile, Taiwan, where the
    banking industry as a whole has been affected by significant increase in consumer default rates, should
    remain challenging through FY2006. Fortunately, we saw a strong pick-up in the Indian operations,
    especially in the area of wealth management. We are optimistic that the Group’s diversified profile should
    be able to withstand earnings instability in one or two particular markets.

•   Valuation at a premium Trading at 16.5x 2006E P/E and more than 2.0x 2006E P/B, the counter is at a
    premium above both the Hong Kong domestic peers and the emerging Asian industry average. While its
    regional growth prospects are likely to support the share price, we recommend a HOLD position on the
    counter given its valuation premium.



Recommendation: Hold




                                                       4
             EAST ASIA SECURITIES COMPANY LIMITED
                                                                                                 Appendix 1

I.         Impairment Provisions and Impaired Loans of Standard Chartered

As % of total customer                    Individual              Portfolio          Impaired
advances                                impairment             impairment               loans
                                           provision           provision **
As of 31/12/2005                              1.21%                 0.32%              2.39%
As of 30/06/2005                             1.48%                   0.32%             2.55%
As of 31/12/2004                             1.89%                   0.50%             3.94%
** General provision for 31/12/2004.

II.        Comparison of Standard Chartered’s loan book: 31/12/2005 Vs 31/12/2004
                                                st                              st
Loans-by industry                             31 Dec, 2005       Up/(down)    31 Dec 2004
                                               US$ million                     US$ million
Hong Kong                                         21,584          -0.7%          21,744
Singapore                                         12,541         +6.6%           11,765
Malaysia                                          7,613          +19.4%           6,374
Other Asia Pacific                                36,037        +4438.7%           794
India                                             11,210         +25.1%           8,961
UAE                                                5,017         +6.9%            4,692
Middle East & Other South Asia                    7,348          +5.4%            6,972
Africa                                             2,251         +11.8%           2,013
Americas, the UK & Group Head Office               8,943          -2.6%           9,179
                                                 112,544         +55.2%          72,494
                                                ========                        ========


III.       Standard Chartered’s Pre-tax profit by geographical areas

     Pre-tax profit by geographic areas                                                  Breakdown
     (US$ million)                               FY2005        FY2004    y-o-y (%)     FY2005    FY2004
     Hong Kong                                       745           621     +20.0%       27.8%     27.6%
     Singapore                                       221           252     -12.3%        8.2%     11.2%
     Malaysia                                        153           123     +24.4%        5.7%      5.5%
     Korea                                           261            32   +715.6%         9.7%      1.4%
     Other Asia Pacific                              395           235     +68.1%       14.7%     10.4%
     India                                           235           194     +21.1%        8.8%      8.6%
     Other Middle East & Other South Asia            478           376     +27.1%       17.8%     16.7%
     Africa                                           62           212     -70.8%        2.3%      9.4%
     Americas, UK & Group Head Office                131           206     -36.4%        4.9%      9.2%
     Total                                         2,681         2,251     +19.1%      100.0%    100.0%


IV.        Standard Chartered’s Pre-tax profit by businesses

     Pre-tax profit by businesses                                                         Breakdown
     (US$ million)                              FY2005         FY2004    y-o-y (%)     FY2005     FY2004
     Consumer Banking                             1,278          1,058     +20.8%       47.7%      47.0%
     Wholesale Banking                            1,439          1,175     +22.5%       53.7%      52.2%
     Corporate items not allocated                  (36)            18         N/A      (1.3%)      0.8%
     Total                                        2,681          2,251     +19.1%      100.0%     100.0%




                                                           5
          EAST ASIA SECURITIES COMPANY LIMITED
                                                                                                      Appendix II

Breakdown of loan book of Standard Chartered


                                    Breakdown of loan book as of 31/12/2005
                                  Total customer advances: US$112,544 million

       Middle East & Other                    Americas, UK & Group
           South Asia                             Head Office
                                         Africa
                                                     7.9%                 Hong Kong
              6.5%                       2.0%
                                                                            19.2%
                          India
                          4.5%
                                                                                          Singapore
                                                                                            11.1%



     Other Asia Pacific
          10.0%
                                                                                     Malaysia
                                                                                      6.8%
                                                      Korea
                                                      32.0%




                                       Breakdown of loan book as of 31/12/2004
                                      Total customer advances: US$72,494 million

                                        Americas, UK & Group
                                            Head Office
                                               12.7%
                             Africa
 Middle East & Other                                                               Hong Kong
                             2.8%
     South Asia                                                                      30.0%
        9.6%




                  India
                  6.5%
                 Other Asia Pacific                                         Singapore
                                              Korea
                      12.4%                              Malaysia             16.2%
                                              1.1%
                                                          8.8%




                                                                    6
         EAST ASIA SECURITIES COMPANY LIMITED

Important Disclosure / Analyst Certification / Disclaimer

This document is published by East Asia Securities Company Limited, a wholly-owned subsidiary of
The Bank of East Asia, Limited (BEA). At time of this report, East Asia Securities Company Limited
has no position in securities of the company or companies mentioned herein the report, while BEA
and / its associated or affiliated companies may from time to time have interests in securities of the
company or companies mentioned herein.

The research analyst primarily responsible for the content of this report, in part or in whole certifies
that the views on the companies and their securities mentioned in this report accurately reflect his/her
personal views. The analyst also certifies that no part of his/her compensation was, is, or will be,
directly, or indirectly, related to specific recommendations or views expressed in this report.

This report has been prepared solely for information purposes and has no intention whatsoever to
solicit any action based upon it. Neither this report nor its contents shall be construed as an offer,
invitation, advertisement, inducement or representation of any kind or form whatsoever. The
information is based upon information, which East Asia Securities Company Limited considers
reliable, but accuracy or completeness is not guaranteed. Opinions expressed herein are subject to
change without notice. Any recommendation contained in this report does not have regard to the
specific investment objectives, financial situation and the particular needs of any specific addressee.
This report is not to be taken in substitution for the exercise of judgment by respective readers of this
report, who should obtain separate legal or financial advice. East Asia Securities Company Limited
and / or The BEA Group accepts no liability whatsoever for any direct or consequential loss arising
from any use of this report or further communication given in relation to this report.

At time of this report, East Asia Securities Company Limited has no position in securities of the
company or companies mentioned herein the report, while BEA along with its affiliates and/or persons
associated with any of them may from time to time have interests in the securities mentioned in this
report. BEA and its associates, its directors, and/or employees may have positions in, and may effect
transactions in securities mentioned herein and may also perform or seek to perform broking,
investment banking and other banking services for these companies.

BEA and/or any of its affiliates may beneficially own a total of 1% or more of any class of common
equity securities of the subject company or companies mentioned in this report and may, within the
past 12 months, have received compensation and/or within the next 3 months seek to obtain
compensation for investment banking services from the subject company or companies mentioned in
the report.




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