Slide 1: Full Year 2013 Results Presentation
Full Year 2013 Results Presentation 05 March 2014
Slide 2: Forward looking statement
Forward looking statement This presentation contains or incorporates by reference ‘forward-looking statements’ regarding the belief or current expectations of Standard Chartered, the Directors and other members of its senior management about the Group’s businesses and the transactions described in t
Slide 3: Sir John Peace, Chairman
Sir John Peace Chairman Standard S Chartered &Q
Slide 4: Strategy
Strategy Our Ambition The world’s best international bank Our Strategy We bank the people and companies driving investment, trade and the creation of wealth across Asia, Africa and the Middle East Our Brand Promise Here for good Our Our Our Aspirations Values = 5 & € = 3 6 Relationships Build truste
Slide 5: Stakeholder interests
Stakeholder interests Allocation of the Group’s earnings (%) 100% 90% 18.4 20.4 Dividends paid 22.7 28.0 80% 70% 40.3 Earnings retained 60% 39.6 37.7 30.1 50% 40% Corporate taxation + UK Bank levy 30% 22.8 24.4 27.8 25.0 20% Cost of variable 10% 18.5 15.6 14.5 14.1 compensation 0% 2010 2011 2012 201
Slide 6: Driving value for our shareholders
Driving value for our shareholders
Slide 7: Richard Meddings, Group Finance Director
Richard Meddings Group Finance Director
Slide 8: Performance highlights
Performance highlights Challenging year both for us and for the industry Korea remains a challenge Margin and spread compression Volatile Financial Markets Responded to challenges Managing costs and risk tightly Consistently supporting customers’ growth Sharpened strategic focus and
Slide 9: Group performance
Group performance (US$m) FY 12 FY 13 YoY%2 Income 18,783 18,671 (1) Net interest income 10,781 11,156 3 Non interest income 8,002 7,515 (6) Expenses (10,055) (10,193) (1) Operating profit before impairment 8,728 8,478 (3) Loan impairment (1,196) (1,617) (35) Other impairment (196) (129) 34 Profit fr
Slide 10: Consumer Banking performance
Consumer Banking performance (US$m) FY 12 FY 13 YoY% Income 7,021 7,179 2 Expenses (4,596) (4,632) (1) Operating profit before impairment 2,425 2,547 5 Loan impairment (674) (1,034) (53) Other impairment (45) (7) 84 Profit from associates 43 44 2 Operating profit 1,749 1,550 (11) Operating profit ex
Slide 11: Consumer Banking income
Consumer Banking income YoY H2 13 vs H1 13 Mortgages 10% (4)% (4)% (1)% 14bps 0bps Deposits (7)% (2)% 1% 3% (12)bps (3)bps Wealth Management 2% (11)% 12% 8% 1 CCPL 5% (1)% (6)% (4)% (26)bps (15)bps 2,3 SME 3% (0)% (2)% 2% 2bps (2)bps Change in income Change in footings Change in margin 1) CCPL: Cred
Slide 12: Consumer Banking – Impairment trend
Consumer Banking – Impairment trend FY 12 HY 13 FY 13 Mortgages LI/ANR1 (0.00%) 0.02% 0.01% 30dpd/ENR2 0.68% 0.54% 0.59% Loan book (US$bn) 73 70 70 LI (US$m)3 (1) 6 6 SME LI/ANR 0.56% 0.45% 0.56% 90dpd/ENR 0.68% 0.77% 0.82% Loan book (US$bn) 20 20 21 LI (US$m) 110 46 114 CCPL LI/ANR 2.71% 4.05% 4.20
Slide 13: Wholesale Banking performance
Wholesale Banking performance1 (US$m) FY 12 FY 13 YoY% Income 11,672 11,492 (2) Expenses (5,285) (5,326) (1) Profit before impairment 6,387 6,166 (3) Loan impairment (522) (583) (12) Other impairment (151) (122) 19 Profit from associates 139 182 31 Operating profit 5,853 5,643 (4) 1) Excludes Own Cr
Slide 14: Wholesale Banking – Diversified income streams
1 Wholesale Banking – Diversified income streams (US$m) FY 12 FY 13 YoY% Lending and Portfolio Management 837 818 (2) Transaction Banking 3,636 3,474 (4) Trade 1,915 1,845 (4) Cash Management and Custody 1,721 1,629 (5) Global Markets 7,199 7,200 0 Financial Markets 3,657 3,650 (0) Asset and Liabili
Slide 15: Wholesale Banking – Financial Markets income
1 Wholesale Banking – Financial Markets income (US$m) FY 12 FY 13 YoY% Foreign Exchange 1,277 1,413 11 Rates 965 917 (5) Commodities and Equities 521 507 (3) Capital Markets 591 558 (6) Credit and other1 303 255 (16) Total Financial Markets 3,657 3,650 (0) Of which client income 2,821 3,022 7 % of t
Slide 16: Wholesale Banking – Impairment
Wholesale Banking – Impairment Wholesale Banking non-performing loans (US$m) FY 12 FY 13 YoY% 6.0 3.0% 5.2 5.0 4.5 2.5% 4.3 Loan impairment (522) (583) (12) 3.5 4.0 2.0% 3.1 (US$bn) 2.1% 3.0 1.9% 1.9% 1.9% 1.5% 1.4% 2.0 1.0% Other impairment (151) (122) 19 1.0 0.5% 0.0 0.0% 2010 2011 2012 2013 H1 20
Slide 17: Risk management
Risk management Consumer Banking – 82% fully or partially secured with Wholesale Banking – Loans and advances to average Mortgage LTV1 of 48% customers Americas, UK Hong Kong Wholesale Banking – 64% less than 1 year maturity and Europe 15% 30% Stick positions down by 26% to $1.5bn, less than 1
Slide 18: Group balance sheet – Liabilities
Group balance sheet – Liabilities Customer deposit funded franchise – with 52% Total deposits (US$bn) 1 of deposits in CASA 423 426 435 201 203 200 Liquid asset ratio of 30% with US$201bn in cash or near cash 215 216 227 FY 12 HY 13 FY 13 Low refinancing requirements CASA Time deposits Other d
Slide 19: Group balance sheet – Assets
Group balance sheet – Assets Well diversified by product, industry and geography Group – Customer loans and advances Energy, our largest Wholesale Banking industry Americas, UK & Europe 18% Hong Kong 20% concentration, is around 20% of our Corporate exposures Africa 3% No direct sovereign expo
Slide 20: Capital – Basel II
Capital – Basel II Capital ratios (%) and total capital (US$bn) Self funded balance sheet growth and continued payment of a growing dividend 58.0 54.7 52.7 47.5 Core Tier 1 of 11.8% – the same as in 2010 45.1 37.9 35.3 36.8 From 2010 to 2013 31.8 28.9 23.0 Generated organic equity – Core Tie
Slide 21: Capital – Basel III Standard Chartered “Above the stack”
Capital – Basel III Standard Chartered “Above the stack” Standard Chartered CET1 today Standard Chartered CET1 “capital stack” 0.3 0.3 250bps – 280 bps above the “capital stack” 2.5 0.4 1.0 2.5 Capital 10.9 11.2 conservation buffer 8.4 4.5 Minimum CET1 Standard CRDIV phasing Standard Minimum common
Slide 22: Capital – requirements vary by bank
Capital – requirements vary by bank Estimated UK banks CET1 “capital stack” requirements > 1.0 0.4 c. 10 – 11% ?? 0 – 2.5 7.0 1.0 2.5 Capital conservation buffer 8.4 4.5 Minimum CET1 Minimum common to all banks GSIB/DSIB/Vickers Capital Pillar 2A guidance Potential range of known requirements minimu
Slide 23: Capital summary
Capital summary Self funded balance sheet growth and payment of a growing dividend Flexed financial framework to drive capital accretive profitable growth Assertive RWA tail management in Wholesale Banking Divesting non-core businesses – c.10-15 basis points Basel II and III capital positi
Slide 24: Outlook
Outlook Outlook Outlook for the year is for modest growth Market and trading conditions are more volatile and difficult than first half of 2013 Current performance momentum ahead of second half of 2013 Performance will remain challenged in this first half at both an income and profit level
Slide 25: Peter Sands, Group Chief Executive
Peter Sands Group Chief Executive
Slide 26: 2013 performance
2013 performance Income Profit (US$m) FY12 FY13 YoY% FY12 FY13 YoY% Hong Kong 3,348 3,725 11 1,660 1,920 16 Singapore 2,203 2,103 (5) 966 896 (7) Korea 1,852 1,563 (16) 514 (13) (103) Other APR 3,672 3,457 (6) 1,217 1,145 (6) India 1,585 1,696 7 676 697 3 MESA 2,234 2,209 (1) 786 1,058 35 Africa 1,5
Slide 27: Our markets
Our markets 2012–2018 forecast GDP and trade growth (CAGR%) Hong Kong China Taiwan Europe 7.9% 7.2% 6.9% 4.9% 4.2% 4.1% 1.2% GDP Trade GDP Trade GDP Trade GDP UAE Malaysia 9.2% 5.1% 5.4% 3.6% US GDP Trade GDP Trade 1.0% Nigeria India Singapore Indonesia 7.7% 7.2% 6.8% GDP 6.0% 6.0% 6.0% 4.3% 3.8% GD
Slide 28: Prudential regulation
Prudential regulation q Financial Services Bill \ . EXPLANATORY Nores a aneey "1 the Ba prepared by the =F 2000 EL — 7 Standard Qs Chartered Py
Slide 29: Raising the bar on conduct
Raising the bar on conduct 66 We've told the world that — BURA we're Here for good... 66 S2/_ A AIZAOAd T sae ie , we need to prove it in 2 Fhe 1 AIAG ° He every interaction we have eee! ellall LE ad aa pete eLeS we oa] b, FEZAR + E— WR and every decision aad! Lila ia” SAIOILICE SEA]OE ASB ARR we ma
Slide 30: Technology driven innovation
Technology driven innovation
Slide 31: The core of our strategy
The core of our strategy “We bank the people and companies driving investment, trade and the creation of wealth across Asia, Africa and the Middle East.”
Slide 32: Making the strategy happen
Making the strategy happen “We bank the people and companies driving investment, trade and the creation of wealth across Asia, Africa and the Middle East.” Reorganisation of our regions, business and functions Five tests “Flexed” financial framework Five aspirations Five priorities for 2014
Slide 33: Our aspirations
Our aspirations Relationships ► Build trusted relationships with the people, companies and institutions shaping our markets’ future Investment ► Play a leading role in facilitating investment and deepening financial markets in our economies Trade ► Become the undisputed leader in commercial payment
Slide 34: Corporate and Institutional client relationships
Corporate and Institutional client relationships Improving client returns Next 500 clients RoRWA uplift from product depth Continued income growth 6.5% 6.9% RoRWA 4.9% 16% <3 3-5 >5 Number of products per client RoRWA uplift from geographic breadth 6.5% 5.6% RoRWA 5.2% 2012 2013 Deeper relationshi
Slide 35: Changing the way we work: Commercial & Private Banking Clients
Changing the way we work: Commercial & Private Banking Clients Peter Sands Group Chief Executive Geographies Business Functions Jaspal Bindra V. Shankar Mike Rees Richard Meddings1 Greater China, ASEAN, MENAP, Africa, Europe, Deputy Group Chief Executive Group Finance Director Tracy Clarke North Eas
Slide 36: Commercial Banking opportunity
Commercial Banking opportunity SMEs contribution to GDP and exports in SCB priority Asia, Africa and the Middle East (ex-Japan) markets 2012 revenue pool % of GDP % of Exports China 60% 62% 2017F AAME (ex-Japan) Indonesia 59% 16% ~US$600bn1 Singapore 50% 20% 2012 Korea 49% 32% AAME (ex Japan) ~US$30
Slide 37: Private Banking opportunity
Private Banking opportunity Asia, Africa and the Middle East (ex-Japan) high Drivers of growth net worth financial wealth Significant opportunity with existing Commercial 2017F AAME (ex-Japan) Banking clients US$21tn Extensive revenue pools 2012 AAME (ex Japan) US$10tn Unrivalled network Str
Slide 38: Changing the way we work: Wealth Management
Changing the way we work: Wealth Management Peter Sands Group Chief Executive Geographies Business Functions Jaspal Bindra V. Shankar Mike Rees Richard Meddings1 Greater China, ASEAN, MENAP, Africa, Europe, Deputy Group Chief Executive Group Finance Director Tracy Clarke North East Asia, South Asia
Slide 39: Wealth Management opportunity
Wealth Management opportunity 1 % of global middle class living in Asia Our aspiration is to > double AUM by 2020 80 2020F 66 US$300bn 60 40 2013 28 US$137bn 20 0 2009 2030 1) World Bank
Slide 40: Trade
Trade Trade growth volume 2013 (%) Our global market position and share (%) 21% #2 #7 10% 9% #2 6% 6% 3% Global Emerging Asia Standard Trade US$ Clearing Offshore RMB Chartered1 1) Growth in average trade assets in 2013 Source: Market research, CHIPS data
Slide 41: Internationalisation of the RMB
Internationalisation of the RMB China’s % of RMB trade to double by 2020 (US$bn) Standard Chartered RMB Globalisation Index (RGI) 12,000 1,500 10,000 8,000 1,000 6,000 4,000 500 2,000 0 0 2013 2014 2015 2016 2017 2018 2019 2020 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 RMB Other currencies HK
Slide 42: Reinforcing the core – Five tests
Reinforcing the core – Five tests Here for good Actions include Is the business consistent with Here for good? Clients Korea: Sale of Consumer Finance business Does this business bank the people, companies and institutions that shape our markets’ future? Korea: Sale of Savings Bank Activitie
Slide 43: Korea
Korea (US$m) FY 12 FY 13 YoY% Actions taken in 2013 Income 1,852 1,563 (16) RWA reduced by 7% Expenses (1,081) (1,120) (4) Staff numbers down by ~400 Profit before impairment 771 443 (43) Loan impairment (249) (427) (71) 24 fewer branches Other impairment1 (8) (29) nm Focusing RWA deployment
Slide 44: Financial framework
Financial framework Double digit income growth Neutral cost – income jaws (with positive bias) Double digit Earnings per Share (EPS) growth Mid-teens Return on Equity (ROE) over the medium term
Slide 45: 2014 Priorities
2014 Priorities Performance Deliver profitable and capital accretive growth Aspirations Make tangible progress on our five strategic aspirations (relationships, investment, trade, wealth, relevant scale) Delivery Innovate, digitise and simplify as one bank to improve productivity and effectiveness C
Slide 46: Q&A
Standard @& Chartered &Q Q&A Here for good