Standard Chartered Annual Report 2014
Driving investment, trade and the
creation of wealth across Asia, Africa
and the Middle East
Taking action to deliver sustainable, profitable growth
2014 was a tough year and our performance was disappointing. We faced a perfect storm: negative sentiment towards emerging markets, a sharp drop in commodity prices, persistent low interest rates and surplus liquidity, low volatility, and a welter of regulatory challenges. We have taken a range of actions in response to the way our world has changed. I am confident that the way we are reshaping the Group will get us back to a trajectory of sustainable, profitable growth.
Who we are
We are a leading international banking group, with more than 90,000 employees and a 150-year history in some of the world’s most dynamic markets. We bank the people and companies driving investment, trade and the creation of wealth across Asia, Africa and the Middle East, where we earn around 90 per cent of our income and profits. Our heritage and values are expressed in our brand promise, Here for good.
With more than
Our business model
We build deep relationships
with our clients
Individuals and small businesses
Private Banking Clients
High net worth individuals
Corporate & Institutional Clients
Large companies and financial institutions
We provide solutions that meet their evolving needs
Deposits, savings, mortgages, credit cards and personal loans, and other retail banking products
Investment, portfolio management, and advice and planning services
Cash management, transactions, securities holdings and trade finance products
Financing, strategic advice, mergers and acquisitions, and equity and principal financing
Investment, risk management and debt capital services
Through our activities, we generate income, profits and return on equity
Net interest income, fee income and trading income
Income gained from providing our products and services minus expenses, impairment and taxes
Return on equity
Profit generated relative to the equity invested
We create long-term value for a broad range of stakeholders
Enabling individuals to grow and protect their wealth, and helping businesses to invest, trade and expand
Delivering long-term sustainable value for investors
Providing a great place to work
Supporting growth and job creation, delivering financial innovation and helping to address the most pressing challenges facing the communities in which we work
We add value for our clients by using our distinctive strengths
We have a 150-year history in some of the world’s most dynamic markets and our Here for good brand promise captures what we stand for
We are strongly capitalised and highly liquid, allowing us to support our clients for the long term
We draw upon deep local knowledge and experience in the markets in which we operate
We collaborate to support clients across our client segments, product groups and geographies
Our diverse and inclusive workforce is committed to the highest standards of conduct and integrity
We ensure that the value we create is sustainable by focusing on three key priorities
Being a responsible company
Managing our operations to deliver long-term value for our stakeholders
Contributing to sustainable economic growth
Ensuring that our core business of banking supports sustainable growth and job creation
Investing in communities
Working with local communities to promote social and economic development
Normalised return on equity1
Profit before taxation2
Normalised earnings per share1
Dividend per share3
- Standard Chartered uses non-generally accepted accounting principles (GAAP) measures, where these are not defined under International Financial Reporting Standards (IFRS) or they have been adjusted
- Operating income includes own credit adjustment (OCA) benefit of $106 million and $100 million for 2013 and 2014 respectively. Profit before taxation for 2013 and 2014 include OCA and goodwill impairment. 2014 also includes $300 million in respect of the civil monetary penalty. 2012 included $667 million due in respect of settlements with the US authorities
- Represents the recommended final dividend per share for the respective years together with the interim dividend per share declared and paid in those years
Operating income by client segment
Operating income by product group
Operating income by region
- Others include Lending and Portfolio Management ($1,026 million), Asset and Liability Management ($653 million) and Principal Finance ($325 million)
Key performance indicators
Normalised earnings per share
To deliver earnings per share (EPS) growth.
EPS declined 28 per cent compared to 2013, reflecting a challenging market environment and significant restructuring actions.
Normalised return on equity
To deliver return on equity of over 10 per cent in the medium term while balancing the long-term objective of having strong yet efficient levels of capital.
Returns declined 30 per cent compared to 2013, reflecting a challenging market environment and significant restructuring actions.
Net Promoter Score (NPS)1 relative to market average
To increase customer satisfaction with our products and services and to become the bank that clients recommend.
Our relative global NPS in 2014 was four points above the market average.
Corporate & Institutional Clients
Depth of client relationships
To leverage our network and product capabilities to increase the average number of markets and products per client.
We continued to drive deeper and broader client use of our products and markets.
- ‘Net Promoter Score’ and ‘NPS’ are trademarks of Satmetrix Systems Inc., Bain & Company, and Fred Reichheld. Standard Chartered uses Bain methodology recalibrated for financial services to calculate NPS
To maintain a strong capital base and accrete capital to a Common Equity Tier 1 (CET1) ratio of between 11 and 12 per cent in 2015 and thereafter.
The Group remains strongly capitalised, with a transitional CET1 ratio of 10.5 per cent, or 10.7 per cent on an end-point basis. The Group has continued to manage its balance sheet proactively and with discipline, focusing on deployment of risk-weighted assets.
Private Banking Clients
To grow and deepen client relationships and add new clients.
We added 1,310 new clients compared to 1,658 in 2013 and increased assets under management (AUM) by 3 per cent.
Total Scope 1, 2 and 3 Greenhouse Gas emissions/$million operating income
Tonnes CO2 equivalent/$million operating income
To reduce Greenhouse Gas emissions arising from our operations.
We reduced Greenhouse Gas emissions relative to operating income for the past three years. Starting in 2014, we have included Scope 3 emissions arising from air travel in the KPI. Air travel emissions data is collected from 41 countries and based on seating class and distance flown.
My Voice employee survey gap score
To continually align the aspirations of our people with those of the Group, encouraging a performance-oriented culture and a place where people love to work.
Using a new employee survey, My Voice, we are gaining an understanding of our core strengths and opportunities to improve, including a new gap score. In 2014, our overall My Voice gap score was 0.36. Areas that need attention include collaboration and clarity around growth opportunities and career paths. Strong scores were registered for the Group’s brand, strategy and culture, with particularly positive results on individual commitment, conduct and job engagement.