Standard Chartered 2010 operating profit up 19 percent

Standard Chartered PLC announced an eighth successive year of record income and operating profit, demonstrating the consistent and sustainable growth strategy of the Group. The group continues to invest selectively in the business, positioning it well to take advantage of the long-term growth opportunities across markets, while maintaining a strong focus on the fundamentals of the bank. Normalized earnings per share increased 14 percent and dividend per share was up nine percent, with RoE at 14.1 percent, as the group continues to deliver long-term value for shareholders.

The year 2010 delivered strong and diversified profit and income growth across markets in Asia, Africa and the Middle East. 23 markets delivered over US $ 100 million of income, with 11 contributing over US $ 500m. 15 markets delivered over US $ 100 million of profit, with India and Hong Kong both delivering over US $ 1 billion. The group continues to be in the right parts of the world, with strong long-term growth opportunities.

Wholesale banking and consumer banking saw business activity in a number of products grow strongly over the year, as the group took market share from our competitors across markets.

Wholesale banking saw income climb by seven percent to just under US $ 10 billion, with profit up 17 percent at US $ 4,770 million. Wholesale Banking has now achieved double-digit profit growth every year since 2002. Client income grew 17 percent on the back of growing trade and investment flows to and from our markets, with trade finance assets and contingents growing 28 percent, commodities by 66 percent, and FX by 14 percent.

Wholesale banking continues to see strong growth momentum as it deepens client relationships and invests in product and service sets to meet client demand, with corporate finance and financial markets growing income by 32 percent and 18 percent respectively. Income growth was underpinned by a strong increase in cash management volumes, up 21 percent.

Consumer banking continues to make strong progress in its transformation, with income up eight percent to just over US $ 6 billion, while profit climbed 51 percent to US $ 1.31 billion, despite ongoing margin compression. Income growth was driven by good volume growth in mortgages, credit cards and personal loans, alongside a recovery in wealth management revenues. The focus on the strong fundamentals of the consumer business continues, with a low average loan-to-value of around 51 percent on the mortgage book, and a well-diversified and strongly secured loan book.

The group continues to attract strong deposit growth, up 15 percent on 2009, with 59 percent of deposits now in current and savings accounts (CASA). The investment in the business continues as the group positions for long-term growth, with 113 new and refurbished branches in 2010, alongside 2,000 new frontline staff and an increase in technological innovations with an expansion of mobile and online banking offering, including the launch of ‘Breeze’, one of the first iPhone banking applications.

The group continued to maintain a strong focus on the fundamentals of the balance sheet, with the recent rights issue protecting the ability to meet Basel III capital requirements while simultaneously taking advantage of the growth opportunities in markets. The balance sheet remains conservative, highly liquid, with minimal refinancing requirements. Strong organic equity growth of over US $ 4.2 billion, supplemented by a successful capital raising, saw Core Tier 1 capital rise to 11.8 percent, up from 8.9 percent in 2009, with total capital up 1.9 percent to 18.4 percent. The normalized cost/income ratio rose slightly to 55.9 percent, reflecting the deliberate and strong investment across the group.

The advances to deposits ratio remains strong at 77.9 percent as the Group continues to grow both sides of the balance sheet. Customer deposits grew by 23 percent (US $ 60 billion) to US $ 317 billion, while customer assets were up 22 percent (US $ 45 billion).