Standard Chartered Bahrain income accelerates 10 percent to BHD 45.6 million and Profit Climbs 16 percent to BHD 28.3 million

The Bank maintains excellent momentum into 2009 with focused strategy

22 March 2009 – Standard Chartered Bank Bahrain today delivered another strong performance for the year ended 31 December 2008 with operating income increasing to BHD45.6 million from BHD41.6 million and profit before tax rising to BHD28.3 million from BHD24.5 million. Both Wholesale and Consumer Banking showed strong income momentum across all customer segments and product categories. Bahrain remains a key market for Standard Chartered Bank, based on its contribution to the Middle East and North Africa Region.

Commenting on Bahrain results, Jonathan Morris, Chief Executive Officer, Bahrain said:

"2008 represents a record year for Standard Chartered Bahrain both in terms of income and profitability. This is a very strong performance which further builds on our growth story of the past several years. We have had an excellent start to 2009 and are seeing many opportunities to grow our business in Bahrain. We have a clear and consistent strategy and will continue to invest for growth.

"We plan to open more branches in 2009, we will be re-launching our SME business, which is a hugely important sector in the Bahrain economy, and we have recently launched Standard Chartered Saadiq, our global Islamic Banking brand. The Bank remains in excellent shape and we are very much open for business to support our customers.

Standard Chartered PLC recently announced another exceptional performance for 2008 with income rising 26 per cent to US$13.97 billion and operating profit before tax (OPBT) 13 per cent to $4.57 billion, in what was a difficult operating environment particularly in the second half. Almost 80 per cent of the income growth came from organic businesses.

The first half of 2008 saw strong economic growth across key markets driven by strong regional trade flows but performance in the second half was dampened as the financial crisis began to have an impact on the real economy across the world.

The Group managed to significantly build on its reputation as a flight to quality institution with customer deposits rising 31 per cent during 2008, most of it coming in the last quarter as confidence in financial institutions declined. Enhanced liquidity and an even stronger balance sheet, following Standard Chartered's successful rights issue in December, places the Group in an excellent strong position to support clients and capture market share.

Most of Standard Chartered's key geographies delivered strong performance with seven of the nine geographic regions recording income of over $1 billion in 2008. Singapore saw OPBT rise 67 per cent, India by 37 per cent, Middle East and Other South Asia (MESA) by 25 per cent, Korea by 10 per cent and Africa by five per cent. Despite an excellent first half, Hong Kong reported OPBT decline of 15 per cent as the macroeconomic environment worsened in the latter half.

Group performance was driven by Wholesale Banking which had an outstanding year with income growing 43 per cent to $7.49 billion and OPBT by 28 per cent to $3 billion. Growth was broad-based across all product categories and geographies, with Global Markets reporting a 60 per cent jump in income and Transaction Banking 31 per cent. The strategy of deepening client relationships paid off with revenues from the top 50 clients rising 45 per cent, while the number of clients with revenues of over $10 million rose 88 per cent.

Consumer Banking delivered a three per cent growth in income but OPBT declined 33 per cent as the Wealth Management business slowed sharply in the second half following the slump in Asian equity markets. Overall, Wealth Management reported a six per cent income growth in 2008, while SME, another key focus for the business, saw income rising eight per cent. Consumer Banking is repositioning its Wealth Management offerings and, across the business, improving productivity and customer service through a series of reengineering projects, including call centre consolidation, and by standardising system platforms, processes and products.

In the second half, the credit environment became increasingly challenging for both corporate and retail customers leading to an increase in delinquencies. As a result, from a very low base, loan impairment rose 74 per cent to $1.3 billion. The Group has been taking proactive risk management initiatives which include tightening underwriting criteria, seeking more collateral on loans and improving collections activity.

Focus on balance sheet management has been a key priority for the year. Following the $2.7 billion rights issue in December 2008, tier I capital ratio improved to 10.1 per cent while total capital stood at 15.6 per cent, both above the Group's target ranges. Improved deposit gathering led to the Asset-Deposit ratio improving to 75 per cent from 84 per cent at half year.