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It is important to focus on the aspects of banking that are absolutely vital to the economy"
John Peace, Chairman


From the Chairman and Group Chief Executive

In 2009, we maintained our commitment to building a sustainable business as a bank, simultaneously creating value for our shareholders, supporting our customers and contributing to the communities in which we live and work. This has underpinned our strategy and success for over 150 years across Asia, Africa and the Middle East; and it will be the foundation for our future.

Our commitment to building a sustainable business has, broadly, three positive outcomes: contributing to the real economy; promoting sustainable finance; and leading the way in communities.

Contributing to the real economy+

While the worst of the global financial crisis appears to be over, the real economy is clearly still suffering the impact. Unemployment has increased sharply in most parts of the world and the global economy is still afflicted by macroeconomic imbalances that will be difficult and painful to unwind. Also it is far from certain that the economic recovery can be sustained without the extraordinary – but unsustainable - levels of monetary and fiscal stimulus from governments and central banks we have seen since the crisis broke. Given the uncertainties about the prospects for sustainable growth, it is hardly surprising that confidence is fragile. In this context we know we must play our part in restoring trust in the financial system and in supporting recovery in the real economy.

This requires honesty and rigour in acknowledging what has gone wrong; it requires a clear articulation of the essential role banks play in the economy; and it requires carefully prioritised actions by regulators and banks themselves. We must move swiftly to re-establish confidence and trust in banks. We must get credit flowing.

In 2009, we increased lending to our customers and clients by $23 billion. We increased mortgage lending by $10 billion, allowing thousands more people to buy their homes, without compromising on our risk standards. The average loan-to-value in our portfolio is 52 per cent. We also increased lending to small and medium sized enterprises to $13.3 billion, an increase of over 14 per cent in our support for what is probably the most important sector of the economy from the perspective of job creation.

Another aspect of making a positive contribution to developing economies relates to financial inclusion. There are many people in the world who do not have access to finance at all, or do not know enough about it. Three years ago we made a Clinton Global Initiative commitment to provide $500 million to microfinance institutions in Asia and Africa by 2011, to enable individuals in our core markets to pull themselves out of poverty, as agents of economic growth. This year we achieved our target, two years ahead of schedule and we will continue to increase our support.

Yet provision of credit is not the only way we add value to the broader economy and society. We play other crucial roles, such as enabling trade and investment flows around the world, in making markets in commodities and financial instruments, and in helping our clients manage the risks they face in an ever more volatile world.

For example, as one of the world’s leading trade banks we stepped up to the challenge of supporting our clients, many of which were confronted with collapsing demand and increasing difficulty in securing trade finance. We worked with the International Financial Corporation (IFC), part of the World Bank Group to devise an innovative scheme, the Global Trade Liquidity Programme, to ease the liquidity constraints impeding trade finance provision in developing countries, and signed a $1.25 billion partnership with the IFC under this arrangement. We also signed a $500 million risk participation program with the OPEC fund for International Development with the same fundamental objective. Overall, we executed 4.9 million trade transactions in 2009, playing our part in sustaining world trade, which is vital to recovery in the global economy.

Making a positive contribution to the real economy means we have to take risks. When we lend we take risks. When we make markets we take risks. Perhaps the most misunderstood risk that banks take is “mismatch risk”, the fact that we borrow short and lend long. This is intrinsically risky, but it is also one of the most powerful ways in which we contribute to the real economy. Because banks borrow short and lend long, the rest of the economy can do the opposite. This fuels companies, enabling them to invest and grow, and empowers consumers.

Trying to take the risk out of banking would be a mistake. Banks can only support the real economy if they take risks. What matters is that these risks are understood and capital and liquidity resources of a bank are appropriate to the risks it takes. This was not the case with the banks that failed in the crisis. There were flaws in the way they were managed, and there were flaws in the regulatory framework. We fully support the drive for better governance and better regulation.

Promoting sustainable finance +

The financial crisis was a dramatic demonstration of how interdependent the world has become. The same is true of climate change and environmental challenges more broadly. No one country can solve these problems alone; and none is immune. In our markets, air, water, food and energy problems are having a direct impact on the health and prosperity of communities. Also, increasingly erratic weather conditions are impeding development and taking lives.

We believe we can play our part in addressing these issues by ensuring environmental issues are taken into account in the projects we finance, and by making finance available for environmental solutions. For example, our commitment to the Equator Principles, and our own sector position statements, are ways of ensuring that finance is deployed responsibly, taking account of the broader social and environmental impact. Our desire to support potential solutions to environmental issues is why we have committed with the Clinton Global Initiative to facilitate $8 to 10 billion financing of clean and renewable energy projects.

However, we must also recognize that we cannot avoid difficult tradeoffs in deciding what we will support. Projects that carry environmental risk might also provide lots of jobs in poor communities. Initiatives that provide low carbon energy can also have negative environmental impact in the local area. Schemes that fall short of global best practice might be a substantial advance on the current situation. We do not expect everyone to agree with all the decisions we make, since some of these judgments and trade offs are inherently difficult and uncertain and people come at them from different perspectives. However, we take such decisions with great care and are prepared to be held accountable for them.

Leading the way in our communities +

One decision we made early in the financial crisis was that we would not let the turmoil divert or distract us from our commitments to our community programmes, such as Seeing is Believing, Nets for Life and Living with HIV. In fact, we stepped up these commitments, improved our delivery and have achieved a great deal in the last twelve months. We raised $5m for Seeing is Believing, our campaign against avoidable blindness. We hit our target of 1 million pledges to educate people about how to avoid HIV infection and are well advanced on delivering on these pledges. We distributed over 0.6 million nets to help fight malaria. Following the success of our pilot scheme Goal, our programme to educate under privileged girls in developing countries in financial literacy and other life skills through engagement with netball, we are expanding this programme to 100,000 girls in Bangladesh, Jordan, Nigeria and Indonesia.

By encouraging and empowering our people to focus on not just ‘what’ they deliver, but also on ‘how’ they deliver it, we have sought to foster a culture in which individuals think about the way their role in the bank has an impact on the community in which they live and work, and what they can do as an individual to make a difference. This may mean volunteering as a champion for our Living with HIV programme, getting involved in local environmental initiatives or speaking up when a transaction does not seem to fit our commitment to tackling financial crime.

In seeking to effect positive change in our markets, we understand we cannot act alone. We see our partnerships with non-governmental organisations, governments and other companies, as crucial to the success of our community investment programmes and environmental protection initiatives.

Being the right partner to the communities in which we live and work is a powerful reason for people to want to work for us and underpins our clients’ and customers’ confidence that we are a bank that they can trust.

We are proud of our achievements in 2009. We once again demonstrated our strength and resilience. We delivered record profits on the back of record income. We continued to reinforce our capital and liquidity. We expanded our lending to our clients and customers. We have not been unscathed by the crisis, but we have come out of it stronger.

We attribute our success to three reasons: first, we stuck to our core strategy of focusing on markets we know intimately, clients and customers with whom we have deep relationships, and products we understand completely; second, we always kept focused on the basics of banking, on how we manage capital, liquidity, risk and our cost base; and third, we stayed true to our culture and values. With a clear strategy and a strong balance sheet, we kept open for business.

However we recognise that we always have more to learn and that we can always do better. That’s why we always review our performance rigorously and set new targets for continuous improvement.

For a bank, the crisis we have just been through means that taking sustainability seriously is no longer optional. We have to prove that our business model is sustainable. We have to demonstrate that we make a positive contribution to sustainable growth and development. We have to show that awareness of sustainability issues is deeply embedded in the way we run the business. We have taken on these challenges. Banking is vital to restoring a vibrant global economy. Banks can be powerful contributors to economic and social progress. Our commitment, to our clients and customers, to our investors, to our regulators, to other stakeholders in our markets and to our staff, is to be Here for good.

John Peace signature

John Peace


John Peace signature

Peter Sands

Group Chief Executive

Here for good

Our commitment: Here for good

Standard Chartered will launch its new brand promise – Here for good – in 2010. On the back of robust and sustained performance, we will use our history, tradition, performance, and culture to significantly increase awareness and knowledge of the Bank, across our footprint and beyond, to drive business growth.

Here for good embodies all that Standard Chartered was, is and will be. It’s about our commitment to our footprint – Here for the long run: continually leading the way in Asia, Africa and the Middle East and delivering the benefit of that knowledge and experience to our customers and clients; our commitment to responsible conduct – Here for progress: consistently striving to do the right thing and maintaining a high standard of conduct; and lastly, our commitment to our customers and clients – Here for people: genuinely committing to long-term relationships with people and businesses.

Here for good will launch globally in major media and together with our sponsorship of Liverpool Football Club, we expect a robust return on investment; for many more people to know and understand how we deliver to our customers and clients; and for the brand to play an ever stronger role in delivering our strategic agenda.

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Annual Report and Accounts 2009