Investor Day 2006 Wholesale Banking 22 November Road to sustainable growth

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1 Investor Day 2006 Wholesale Banking 22 November 2006 Road to sustainable growth

2 2 Forward looking statements It is possible that this presentation could or may contain forward-looking statements that are based on current expectations or beliefs, as well as assumptions about future events. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements often use words such as anticipate, target, expect, estimate, intend, plan, goal, believe, will, may, should, would, could or other words of similar meaning. Undue reliance should not be placed on any such statements because, by their very nature, they are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results, and Standard Chartered s plans and objectives, to differ materially from those expressed or implied in the forward-looking statements. There are several factors which could cause actual results to differ materially from those expressed or implied in forward looking statements. Among the factors that could cause actual results to differ materially from those described in the forward-looking statements are changes in the global, political, economic, business, competitive, market and regulatory forces, future exchange and interest rates, changes in tax rates and future business combinations or dispositions. Standard Chartered undertakes no obligation to revise or update any forward looking statement contained within this presentation, regardless of whether those statements are affected as a result of new information, future events or otherwise.

3 3 Wholesale Banking Mike Rees Chief Executive Officer, Wholesale Banking

4 4 Key messages Good progress on our journey Client-led strategy is providing significant opportunities Good foundation for sustainable growth

5 5 Operating profit Wholesale Banking operating profit US$m 1,500 1,444 1, ,175 1, SCFB H1 2006

6 6 Client income H1 02 H2 02 H1 03 H2 03 H1 04 H2 04 H1 05 H2 05 H1 06 Client income SCFB

7 Awards Euromoney Global Custodian The Asset Trade Finance Best Debt House in Thailand Awards for Excellence 2006 Best Agent Bank in Asia Global

2005 & 2006 Global Finance The Asset Euromoney Finance Asia Best Bank for Liquidity Management in Africa Global Finance 2006 Best Cash Management Bank

7 7 Awards Euromoney Global Custodian The Asset Trade Finance Best Debt House in Thailand Awards for Excellence 2006 Best Agent Bank in Asia Global Custodian Agent Bank Survey 2005 Best Structured Trade Finance Bank The Asset Triple A Asian Awards 2006 Best Trade Finance Bank in Sub-Saharan Africa 2005 & 2006 Global Finance The Asset Euromoney Finance Asia Best Bank for Liquidity Management in Africa Global Finance 2006 Best Cash Management Bank for South Asia The Asset Triple A Asian Awards 2006 Best Project Finance House in Asia Awards for Excellence 2006 Best Securitisation House of the Year 2005

8 8 Hierarchy of client needs Strategic Value added Transactional Basic lending (or surplus deposit taking)

9 Global income pools Strategic $270bn $250bn $70bn 12% 6% 6% 15% 33% Potential CAGR range ( ), % 15-20% 15-20% Value added 47% 29% 10-15% 27% Transactional 18% 50% 5-10% Lending 23% 34% U.S. Europe Standard Chartered major markets Note: 2005 Wholesale Banking income pools Source: Standard Chartered estimates 9

10 10 The growth opportunity Real GDP Growth , (% p.a.) GDP 2005, (US$bn) Country Wholesale Banking Wallet 2005, (US$bn) 2 % 9 % 5 % 6 % 4 % 3 % 4 % 5 % 4 % 6 % 4 % 5 % 6 % 4 % 5 % 4 % 6 % 4 % 4 % 7 % 5 % 10 % 7 % 7 % 4,567 2, Japan China Korea India Turkey Taiwan Saudi Arabia Indonesia South Africa Iran Hong Kong Thailand UAE Malaysia Pakistan Singapore Nigeria Philippines Egypt Kuwait Bangladesh Kazakhstan Vietnam Qatar

11 Wholesale Banking makes headlines Times News Network December 22, 2005 Business Standard October 21, 2006 World News Network October 25, India Inc arrives with Tata`s Corus Malaysia s Maxis strikes Aircel deal India Infoline September 20, 2006 Tata enters energy drinks segment in US Chinese company to acquire Nations Energy's Kazakhstan oil assets for US$1.9bn Bloomberg October 4, 2006 Essar Seeks $530 Million Loan Backed by Mobile- Phone Unit Stake Project Finance May 2006 SSI Block 18 debt allocated

12 12 Wholesale Banking strategic intent Strategic intent brand promise values The Bank of Choice for Corporate and Institutional Clients for and inasia, Africa and the Middle East The Right Partner Leading By Example Responsive Trustworthy Creative International Courageous

13 13 Performance and Risk David Edwards Chief Operating Officer, Wholesale Banking

14 Strong growth US$m Profit before tax CAGR = 25% ,183 2,123 2,252 2,574 3,059 1, , Total Income Profit before tax Note: 2005 reported on IFRS basis including SC First Bank, 2004 reported on IFRS basis excluding IAS 32/39 14

15 Wholesale Banking expenses US$m 1,250 1,426 1,583 Up 11% Components of expense growth 2005 vs % Investment for future growth 4% BAU / Volume 2% Regulatory / Control 11% * Average JAWS approximately 1% * excluding Korea 15

16 Infrastructure 16

17 17 Loan impairment US$m Specific impairment provision (539) (260) (250) (157) (168) Recoveries General / Portfolio provision (12) Total (401) (109) (58) Gross provision of loans and advances (%) 2.1% 0.9% 0.9% 0.4% 0.4%

18 18 Asset distribution US$bn 8 6 Collateralised Loan Obligation 4 Credit Default Swap 2 Loan Sales

19 19 Capital and income growth 2005 vs 2004 H1 06 vs H1 05 Client income Total income 26% 19% 30% 27% Risk weighted assets 15% 15%

20 20 Client income growth 30% Growth % 20% 10% 0% H1 06 Total income growth (ex. Korea) Client income growth (ex. Korea) US$m H1 06 Average VaR

21 21 Summary Strong performance track record Robust infrastructure Disciplined expense, risk and capital management

22 22 Client Relationships Alex Thursby Group Head, Client Relationships

23 23 Client income by product H Global Markets 28% Global Markets 34% Global Markets 39% 22% Lending 50% Transaction Banking 15% Lending 51% Transaction Banking 12% Lending 49% Transaction Banking CAGR 2002 vs % H vs H %

24 24 Client income by geography 2002 H Americas, UK & Group 20% 20% Hong Kong Americas, UK & Group 13% 16% Hong Kong Africa 9% 2% Korea Korea 11% 13% Africa 8% India 15% MESA 7% Singapore 12% India MESA 14% 12% Other APR 4% Malaysia Other APR 14% 6% Singapore 4% Malaysia

25 25

26 Core bank Lending Cash Management FX Fixed Income Core Provider 43% 64% 46% 33% Second 25-35% 22% 21% 21% Third 10%-25% 8% 12% 14% Fourth Negligible Negligible Negligible 10% Fifth Negligible Negligible Negligible 7% Note: Percentage represents share of customer wallet Source: Client interviews; Greenwich, Booz Allen Hamilton analysis 26

27 27 Client segmentation Local Corporates Global Corporates Commodity Corporates Financial Institutions Local Corporates TMT Energy Banks Middle Market Industrial & Chemicals Traders / Agriculture Funds Transportation & Infrastructure Metals & Mining Securities Retail / Consumer Goods Insurance Public Sector Development Organisations Real Estate

28 28 Hierarchy of client needs Coverage Strategic partner & Advisor Value added Senior Banker / Industry Experts Top GM / Transaction Banking Experts Customised integrated technology solution Senior Relationship Managers Aligned GM Sales / Transaction Banking Sales Customised transaction & electronic solution Transactional Basic lending (or surplus deposit taking) Relationship Managers Transaction Banking Sales Customer Service Group Standardised electronic platform

29 Income mix Strategic 3% 6% 6% CAGR 2002 vs % Value added 25% 28% 33% 24% Transactional 50% 51% 49% 19% Lending 22% 15% 12% 4% H

30 Cross-sell Number of cross-sell clients Q vs Q to 5 products > 5 products + 26 %* + 44 %* * Annualised percentage growth 30

31 31

32 32 Global flows Outward FDI from Asia New capital / financial centres New York London Inter Asian flows Seoul Shanghai Tokyo Commodity flows Supply chain Dubai Mumbai Taipei Hong Kong Rise of Asia- China & India Singapore Jakata Johannesburg Franchise client and product centres Major centres

33 33 Summary Wholesale Banking transformed geographic and product diversity Client centric model aiming to be core bank Positioned to provide unique client solutions

34 34 Local Corporates Tim Hinton Global Head, Local Corporates

35 Local Corporates key indicators Number of clients H vs 2005: + 20% Income H vs H1 2005: + 30% Product cross sell Q vs Q to 5 products > 5 products + 22 %* %* * Annualised percentage growth 35

36 36 Client-centric, consistent strategy Vision Lead or core bank to our clients Strong profitable returns Clear client segmentation built around two differentiated business models Prioritised investment in key growth markets Process Efficiency & Standardisation Risk & Credit Sales management Talent Common, disciplined approach in all markets and areas of the business

37 37 Sustainable growth 2005 H Others 33% 11% India UAE 11% Others 27% 12% India UAE 11% 7% Korea 3% Indonesia 9% Korea 30% Greater China 5% Singapore 33% Greater China 3% Indonesia 5% Singapore Income growth + 30%

38 38 Commodity Corporates Maureen DeRooij Global Head, Commodity Corporates

39 39 Trade flows Moscow New York London Geneva Mumbai Shanghai HK Singapore Traders Producers Buyers Being present in markets where the business is transacted is a critical factor for superior client service and effective risk management

40 40 Value chain Raw material Extraction and Production Commodity Trading Companies Processors Buyers / End Users Standard Chartered Financial Services and Commodity Finance Distribution and Warehousing Companies Serving companies throughout the value chain

41 Foundations for our sustainable performance Projected commodity demand vs economic growth in China GDP Oil Consumption Soybean Consumption Population Source: EIA, USDA 41

42 42 Cash Management Karen Fawcett Group Head, Transaction Banking

43 Core bank Cash Management % Relationships where Standard Chartered is Core Provider Core Provider 64% Second 22% Third Fourth 8% Negligible Fifth Negligible 17 % 27 % Source: East & Partners 43

44 Successful business model Focus on our clients Euromoney Deepening relationships Working capital solutions 3 rd Globally in International Cash management Differentiation through distribution

44 44 Successful business model Focus on our clients Euromoney Deepening relationships Working capital solutions 3 rd Globally in International Cash management Differentiation through distribution Innovative alliances Integrated channels The Banker s Bank External recognition Best Cash Management Bank for South Asia 2006, The Asset Best Bank for Liquidity Management in Africa 2006, Global Finance

45 45 Investment focus Product Integration Open Connectivity Efficient Processes Leveraging on the success of our NETWORK People

46 46 Project and Export Finance Will Rathvon Global Head, Project and Export Finance

47 47 Complementary success Project Finance added in 2003 Number of deals YTD Up-tier presence with clients 20 Complementary expertise

48 48 Successful and sustainable business Market leading deals Sinopec Warid Telecom Renewable energy Fits organisation based on: Ideas Balance sheet / distribution Relationships Great external recognition Deal of Year Awards Project finance league tables Top 10 in global PF advisory

49 49 Future priorities Business sustainability Leverage new business ideas US$100bn (5yrs) US$1tn (8-10yrs) US$960bn (4yrs)

50 50 India Bala Swaminatham Regional Head, Client Relationships, India and South Asia

51 51 Income diversification H Global Markets 50% Transaction Banking 34% Transaction Banking 34% Transaction Banking 35% 16% Lending 49% Global Markets 17% Lending 56% Global Markets 9% Lending CAGR 2002 vs % H vs H %

52 Cross-sell Number of cross-sell clients Q vs Q to 5 products > 5 products + 33 %* + 76 %* * Annualised percentage growth 52

53 Transformational journey US$m 2001 2003 2005 H1 2006 Income 165 243 305 222

53 53 Transformational journey US$m H Income Expense (77) (87) (127) (70) Loan impairment (8) (5) 7 13 Profit before tax

54 54 Key messages Good progress on our journey Client-led strategy is providing significant opportunities Good foundation for sustainable growth

55 Q&A 55

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