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Business review

Our markets

Highlights in 2008

Strong economies in our markets underpin the Group’s businesses

Standard Chartered is well positioned to capitalise on international trade flows, as a result of our broad geographical footprint, the depth of our customer relationships, delivery of our product capabilities and the expertise of our people.

World map showing international trade flows

2008 GDP Growth*

China

9.0%

India

6.3%

UAE

4.8%

Nigeria

5.4%

Standard Chartered’s core markets in Asia, Africa and the Middle East were amongst the last to be impacted by the global financial turmoil. Business conditions became challenging in the last quarter of 2008. The strong foundations of most of these economies, with deep foreign currency reserves, low levels of debt, relatively high growth rates and stronger corporate and bank balance sheets, shielded our markets from the worst of the crisis through most of last year.

Two of Asia’s biggest economies, China and India, grew at around 9.0 and 6.3 per cent respectively. However, macroeconomic conditions deteriorated in the last quarter as a sharp drop in trade and exports to the US and Europe and declining industrial production impacted GDP growth rates across the region.

Against this challenging backdrop, income and profit for the Group remained strong and broad-based. Standard Chartered’s four biggest markets, Hong Kong, India, Korea and Singapore, each reported income in excess of $1 billion in 2008. A strong liquidity and capital position enabled Standard Chartered not only to continue doing business with existing clients but also to increase market share and improve margins.

Hong Kong

Hong Kong, the Group’s largest market, saw operating income rise 10 per cent to $2.3 billion. Operating profits fell 15 per cent due to increased loan impairments in the deteriorating economic environment.

As in most markets, the Wealth Management business came under pressure, although opportunities emerged to increase volume in mortgages and in loans to companies. Our financial strength helped the Bank attract depositors in Hong Kong, with customer deposits rising $15 billion during the year.

Other Asia Pacific

Income for the region grew by 16 per cent to $2.4 billion. Operating profit fell 19 per cent to $463 million.

Income in China continued to grow rapidly, up 27 per cent to $632 million. The Group continued to invest in products and channel distribution, expanding outlets from 38 to 54 across 17 cities. As a result of these investments, operating profit in China fell 62 per cent. The Bank cut back spending in the second half as the economy slowed.

In Taiwan, a 35 per cent growth in Wholesale Banking revenues was offset by a sharp drop in the Wealth Management business in the second half, causing overall operating profit to fall 7 per cent. The external environment remained challenging due to weak domestic demand, falling exports and subdued equity markets.

India

In India, the Group’s business continued to thrive as a result of targeted investments made in both Wholesale Banking and Consumer Banking in recent years. Operating profit rose 37 per cent, driven by very strong income growth of 33 per cent to $1.75 billion and gains from the sale of the asset management company.

The strength and sustainability of our Indian franchise is demonstrated by the 58 per cent compound annual growth rate in operating profit generated by the business over the past three years.

Singapore

Singapore operating income was up 60 per cent year on year, with strong contributions from both businesses. Operating profit rose 67 per cent. Income and operating profit have doubled in Singapore since 2006 as the business expanded market share in strategic areas such as Corporate Finance and added product capabilities.

Malaysia

Income from Malaysia rose 12 per cent to $515 million as a result of a strong growth in sales of structured finance, foreign exchange and derivatives products to Wholesale Banking customers. Consumer Banking income declined because of lower mortgage margins due to increased competition and a decline in Wealth Management income. As a result, operating profit was little changed, at $235 million.

Korea

Securities launch in Korea

Securities launch in Korea We have increased our international securities capabilities, including the launch of Standard Chartered Securities Korea. As a result, we have expanded our financial markets business and broadened our product offering to global and local clients.

Korea was an area of considerable focus during 2008 as the Group continued to reshape the business to good effect. Income grew by 1 per cent on a dollar basis or 18 per cent in Korean won, which devalued during the year. Momentum was good and operating profit grew over 10 per cent as expenses fell.

The Bank has invested in measures to boost productivity and efficiency, refurbished and relocated branches and broadened the Wholesale Banking product suite.

Middle East

Middle East and Other South Asia, or MESA, which includes Pakistan, had strong operating income growth of 21 per cent. Both UAE and Bahrain saw income growth of over 35 per cent. Pakistan income fell as the Group reduced its risk appetite in Consumer Banking because of heightened political and economic uncertainties.

Amid the downturn, Standard Chartered took emerging opportunities to deepen existing client relationships. The growth of the Islamic Banking franchise in the region is one such example, which saw revenues rise 83 per cent in 2008. The commodities business has also developed into a core revenue stream which will complement Shariah-compliant products.

Africa

Operating income from the Africa region rose 14 per cent, driven by increased sales of treasury products to Wholesale Banking customers. Nigeria retained its position as our biggest market in Africa, with operating income increasing 30 per cent. The Bank increased the number of branches in Nigeria from 12 to 18, increased the number of ATMs to 25 and launched internet banking.

Americas, UK and Europe

Income from the Americas, UK and Europe expanded significantly as a result of the integration of American Express Bank, which also increased the Group’s footprint across these regions. Standard Chartered serves some of its top global corporate customers from its Group headquarters in London, helping them expand their businesses in our key markets in Asia, Africa and the Middle East.

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Number of branches and outlets

1,600



Number of ATMs

5,500