Slide 1: Half Year 2019 Results Presentation
Half Year 2019 Results Presentation 1 August 2019
Slide 2: Contents
Contents Bill Winters 2 and 18 Group Chief Executive Andy Halford 5 Group Chief Financial Officer Appendix 27 Macroeconomic outlook and interest rate sensitivity 28 Group financial analysis 31 Client segment financial analysis 35 Region financial analysis 43 Fixed income information 50 Definitions a
Slide 3: Bill Winters, Group Chief Executive
Bill Winters Group Chief Executive 2
Slide 4: From turnaround to transformation: 1H'2019
From turnaround to transformation: 1H’2019 Good progress; on track • We made good progress in the first half ▪ Income up 4% and profit up 13% at constant currency1 • Our focus on our clients and strategic priorities is paying off ▪ Network and affluent income grew; productivity is improving; multipl
Slide 5: Our strategic priorities and financial framework
Our strategic priorities and financial framework Strategic priorities Financial framework 2019-2021 RoTE1: > 10% by 2021 Deliver our network Income: 5-7% CAGR1 Transform Grow our and disrupt affluent with digital Purpose business Expenses: Cost growth < Inflation2 and people Positive jaws3 Optimise
Slide 6: Andy Halford, Group Chief Financial Officer
Andy Halford Group Chief Financial Officer 5
Slide 7: We delivered an encouraging financial performance in 1H'19
We delivered an encouraging financial performance in 1H’19 Financial framework Strategic priorities ($bn) 1H’18 1H’19 YoY1 Ccy2 Operating income 7.6 7.7 1% 4% • Income up 1%; 4% constant currency Operating expenses 5.1 5.0 3% (0)% • Operating expenses 3% lower; flat constant currency Pre-provision o
Slide 8: Our primary performance measure RoTE continues to improve
Our primary performance measure RoTE1 continues to improve Financial framework Strategic priorities RoTE increased 88bps driven by strongly positive jaws and improved impairment combined with lower equity 0.3% 0.2% 8.4% 0.7% 0.6% (0.3%) 7.5% (0.5%) NFI 1H’18 Net interest income Fees and Expenses Imp
Slide 9: 1H'19 income up 1%; 4% constant currency
1H’19 income up 1%; 4% constant currency Financial framework Strategic priorities 1H’19 YoY growth driven by Transaction Banking and Financial Markets, partially offset by Treasury Income ($m) +4% 7,696 7,649 7,425 (224) 1H’18 Foreign 1H’18 Transaction Financial Retail Wealth Lending & Corporate Tre
Slide 10: 2Q'19 income up 3%; 6% constant currency
2Q’19 income up 3%; 6% constant currency Financial framework Strategic priorities Income in 2Q’19 was up 6% on a constant currency basis Income ($m) +6% 3,883 3,776 3,669 (107) 2Q’18 Foreign 2Q’18 Financial Transaction Wealth Retail Corporate Lending & Treasury 2Q’19 exchange constant Markets Bankin
Slide 11: Every client segment generated positive jaws and improved RoTE
Every client segment generated positive jaws and improved RoTE1 in 1H’19 Financial framework Strategic priorities 3% growth in client segment income and 6% on a constant currency basis Corporate & Institutional Banking 1H YoY2 Retail Banking 1H YoY2 Income $3.6bn 5% 2Q = 6% Income $2.6bn (1)% 2Q = 4
Slide 12: Broad-based improvement in operating profit in most markets
We saw broad-based improvement in operating profit in most markets Financial framework Strategic priorities Strong profit improvement in ASEAN & South Asia and Africa & Middle East; Europe & Americas impacted by DVA2 Greater China & North Asia 1H YoY1 ASEAN & South Asia 1H YoY1 Income $3.1bn (1)% 2Q
Slide 13: Lower contribution from Central & other items
Lower contribution from Central & other items Financial framework Strategic priorities Segment Centrally managed Region Treasury Markets Treasury Capital Principal Finance Associates and Corporate Centre costs Joint Ventures Portfolio Management Strategic investments Other non-segment specific items
Slide 14: Tight control over expense growth is creating capacity to invest
Tight control over expense growth is creating capacity to invest Financial framework Strategic priorities Annual investment spend to continue at elevated FY’18 level of around $1.6bn Operating expenses1 ($bn) 9.9 10.1 5.1 5.0 • Operating expenses down 3%; flat constant currency ▪ Regulatory costs de
Slide 15: Credit quality has improved overall YoY
Credit quality has improved overall YoY1 Financial framework Strategic priorities Sustainable growth, solid foundations Loan / credit impairment ($m)2 583 -13% • Credit quality improved YoY 293 583 • Credit impairment down 13% 293 254 ▪ Includes $48m release in Private Banking 1H’17 1H’18 1H’19 ▪ 17
Slide 16: Balance sheet growth, NIM stable
Balance sheet growth, NIM stable1 Financial framework Strategic priorities Broad-based balance sheet growth… …with an improving mix Average assets ($bn)2 YoY1 1H’18 1H’19 YoY 129 112 116 Gross asset yield (bps) 299 339 40bps 253 260 266 5% Gross liability rate paid (bps) 160 207 47bps 6% 301 302 319
Slide 17: Strong capital is supporting both growth and share buy-backs
Strong capital is supporting both growth and share buy-backs Financial framework Strategic priorities CET1 ratio1 (%) -13bps 0.7 14.2 (0.2) • 60bps from buy-back2, entity restructuring and provisions (0.4) 13.6 13.5 • Underlying CET1 reduction of 13bps (0.2) (0.6) ▪ 73bps profit accretion offset by
Slide 18: Good early progress delivering the financial framework outcomes
Good early progress delivering the financial framework outcomes Financial framework Strategic priorities 2019-2021 target 1H’19 1 +88bps • 1H’19 RoTE 8.4% (2H includes levy) RoTE >10% by 2021 (YoY) • Continue to target >10% by 2021 • 4% in 1H’19 constant currency … 1 4% • … and 5% also excluding DVA
Slide 19: Bill Winters, Group Chief Executive
Bill Winters Group Chief Executive 18
Slide 20: Investing in our network continues to deliver income growth at premium returns
Investing in our network continues to deliver income growth at premium returns Financial framework Strategic priorities Clients 1H YoY1 ‘Next + New’ income2 +24% • Improving penetration of ‘Next and New’ clients2 ▪ Particularly with OECD-based clients Income 2.4 • Network income is growing relativel
Slide 21: Our affluent business showed resilience in less buoyant conditions
Our affluent business showed resilience in less buoyant conditions Financial framework Strategic priorities Clients 1H YoY1 • We are attracting new affluent clients … Number of Retail +14% Banking Priority clients2 • … that generate higher returns Private Banking Net New 1.7 +$1.7bn • Private Bankin
Slide 22: Returns in our four targeted markets improved in 1H'19
Returns in our four targeted markets improved in 1H’19 Financial framework Strategic priorities India Korea UAE Indonesia Income Reported / constant currency (YoY) 4% / 11% (5)% / 1% (8)% / (8)% 4% / 8% Profitability Cost-to-income ratio1 Underlying profit before tax1 24% (8)%2 34% 26% • Dig
Slide 23: Driving operational improvements to scale revenue and improve efficiency
We are driving operational improvements to scale revenue and improve efficiency Financial framework Strategic priorities Clients 1H YoY1 • Client onboarding turn-around-times are improving Retail Banking % 16% 21% 25% +350bps of digital sales2 • 3% (~2.5k) YoY reduction in full-time employees 16 Cor
Slide 24: Executing multiple digital initiatives to transform our business
We are executing multiple exciting digital initiatives to transform our business Financial framework Strategic priorities Retail Banking 1H YoY1 Greater China & North Asia Mobile adoption² 19% 26% 32% +541bps • Virtual bank preparations underway in Hong Kong • Launch of real-time FX trading via mobi
Slide 25: Our priorities are driven by our purpose and delivered by our people
Our priorities are driven by our purpose and delivered by our people Financial framework Strategic priorities Our purpose: Driving commerce and prosperity through our unique diversity We understand our We will lead We will maximise We support the responsibilities sustainable financing return from in
Slide 26: From turnaround to transformation: 1H'2019
From turnaround to transformation: 1H’2019 Good progress; on track • We made good progress in the first half ▪ Income up 4% and profit up 13% at constant currency1 • Our focus on our clients and strategic priorities is paying off ▪ Network and affluent income grew; productivity is improving; multipl
Slide 27: Standard Chartered
Standard Chartered & 26
Slide 28: Appendix
Appendix Standard Chartered
Slide 29: Appendix: Macroeconomic outlook and interest rate sensitivity
Appendix: Macroeconomic outlook and interest rate sensitivity 28
Slide 30: Macro fundamentals remain solid, but uncertainties are weighing on sentiment
Macro fundamentals remain solid, but uncertainties are weighing on sentiment Economic uncertainty remains high Our markets continue to grow, but at a slower rate Real GDP growth1 (%) 2018 2019e Potential headwinds Hong Kong 3.0 1.4 • GCNA Trade tensions China 6.6 6.5 • Slowing Chinese economy • Oil
Slide 31: Interest rate sensitivity to a 50bp parallel movement
Interest rate sensitivity to a 50bp parallel movement Estimate of banking book NII sensitivity to instantaneous +/(-) 50bps change in interest rates across all currencies1 Annualised benefit ($m) +50bps -50bps 210 210 Interest rate sensitivity in the banking book updated: • Sensitivity broadly uncha
Slide 32: Appendix: 1H'19 Group financial analysis
Appendix: 1H’19 Group financial analysis 31
Slide 33: Group financial summary
Group financial summary 1 1 1 ($m) 1H'19 1H'18 YoY % 2Q'19 1Q'19 2Q'18 QoQ % YoY % Operating income 7,696 7,649 1 3,883 3,813 3,776 2 3 Other operating expenses (4,969) (5,117) 3 (2,554) (2,415) (2,648) (6) 4 UK bank levy - - - - - - - - Operating profit before impairment and 2,727 2,532 8 1,329 1,3
Slide 34: Operating income by product
Operating income by product 1 ($m) 1H'19 1H'18 YoY % 2Q'19 1Q'19 4Q'18 3Q'18 2Q'18 Transaction Banking 1,952 1,840 6 990 962 942 936 924 Trade 559 589 (5) 282 277 257 277 285 Cash Management 1,223 1,081 13 621 602 604 577 553 Securities Services 170 170 0 87 83 81 82 86 Financial Markets 1,496 1,401
Slide 35: Ongoing business and liquidation portfolio
Ongoing business and liquidation portfolio 30.06.19 31.12.18 ($m) Ongoing Liquidation Total Total business portfolio 268,055 261,837 6,218 (4,460) (757) (3,703) 263,595 261,080 2,515 60 / 81 1,416 4,068 57 1. Includes reverse repurchase agreements and other similar secured lending held at amortised
Slide 36: Appendix: 1H'19 client segment financial analysis
Appendix: 1H’19 client segment financial analysis 35
Slide 37: Underlying performance by client segment
Underlying performance by client segment Corporate & Retail Commercial Private Central & Institutional Total Banking Banking Banking other items 1H'19 ($m) Banking Operating income 3,607 2,595 746 306 442 7,696 Operating expenses (2,124) (1,823) (425) (253) (344) (4,969) Operating profit before impa
Slide 38: Corporate & Institutional Banking
Corporate & Institutional Banking Financial analysis ($m) 1H'19 HoH % 1 YoY % 1 Progress Operating income 3,607 6 5 • Continued to deepen relationships with existing clients and new OECD- based clients. New OECD clients income rose 24 per cent Transaction Bank ing 1,519 4 6 • Quality of income conti
Slide 39: Retail Banking
Retail Banking Financial analysis Progress ($m) 1H'19 HoH % 1 YoY % 1 • Increased the share of income from Priority clients from 47 per cent in Operating income 2,595 7 (1) 2018 to 49 per cent as a result of strong Wealth Management and Deposit income growth and increasing client numbers Greater Chi
Slide 40: Retail Banking: Regional performance
Retail Banking Regional performance Greater China & ASEAN & Africa & Europe & Total North Asia South Asia Middle East Americas ($m) 1H'19 1H'18 YoY %1 1H'19 1H'18 YoY %1 1H'19 1H'18 YoY %1 1H'19 1H'18 YoY %1 1H'19 1H'18 YoY %1 Operating income 1,520 1,485 2 707 712 (1) 349 404 (14) 19 19 - 2,595 2,6
Slide 41: Commercial Banking
Commercial Banking Financial analysis ($m) 1H'19 HoH % 1 YoY % 1 Progress • Onboarded 3,100 new clients in H1 2019 while monetising 6,400 new Operating income 746 9 6 clients onboarded in 2018. These clients generated around $78 million of income and $3 billion in cash liabilities Greater China & No
Slide 42: Commercial Banking: Regional performance
Commercial Banking Regional performance Greater China & ASEAN & Africa & Total North Asia South Asia Middle East ($m) 1H'19 1H'18 YoY % 1 1H'19 1H'18 YoY % 1 1H'19 1H'18 YoY % 1 1H'19 1H'18 YoY % 1 Operating income 301 295 2 278 263 6 167 148 13 746 706 6 Operating expenses (177) (198) 11 (143) (160
Slide 43: Private Banking
Private Banking Financial analysis Progress ($m) 1H'19 HoH % 1 YoY % 1 • Drove sharper client segmentation to deliver our distinct advisory and Operating income 306 25 13 product proposition, and grow profitability Corporate Finance 2 - - • Deepened client engagement through stronger Relationship Ma
Slide 44: Appendix: 1H'19 region financial analysis
Appendix: 1H’19 region financial analysis 43
Slide 45: Underlying performance by region
Underlying performance by region Greater ASEAN & Africa & Europe & Central & 1H'19 ($m) China Total South Asia Middle East Americas other items & North Asia Operating income 3,080 2,136 1,340 794 346 7,696 Operating expenses (1,826) (1,292) (850) (715) (286) (4,969) Operating profit before impairmen
Slide 46: Greater China & North Asia
Greater China & North Asia Financial analysis ($m) 1H'19 HoH % 1 YoY % 1 Progress • Actively participated in the opening of China’s capital markets, helping Operating income 3,080 1 (1) overseas investors do business through channels such as Bond Connect, Stock Connect and the Qualified Domestic Ins
Slide 47: ASEAN & South Asia
ASEAN & South Asia Financial analysis Progress ($m) 1H'19 HoH % 1 YoY % 1 • Operating profit grew in all client segments and in nine out of 12 Operating income 2,136 13 3 markets • Double-digit growth in high-returning businesses such as Priority Singapore 870 24 3 Banking and Global Subsidiaries, a
Slide 48: Africa & Middle East
Africa & Middle East Financial analysis Progress ($m) 1H'19 HoH % 1 YoY % 1 • A number of marquee Corporate & Institutional Banking transactions Operating income 1,340 9 (3) across the region with sovereign clients in particular are reflective of the strong client franchise UAE 327 17 (8) • Network
Slide 49: Europe & Americas
Europe & Americas Financial analysis Progress ($m) 1H'19 HoH % 1 YoY % 1 • Good progress in improving the share of business from targeted Operating income 794 (1) (9) multinational corporate clients, with income up 25 per cent and 9 per cent from ‘New’ OECD and ‘Next’ client initiatives respectively
Slide 50: Performance by key markets
Performance by key markets Operating income Underlying profit / (loss) before taxation 1 1 ($m) 1H'19 1H'18 YoY % 1H'19 1H'18 YoY % Hong Kong 1,854 1,849 0 872 828 5 Korea 505 534 (5) 122 132 (8) China 445 422 5 232 236 (2) Singapore 871 845 3 380 267 42 India 502 482 4 133 107 24 UAE 327 357 (8) 91
Slide 51: Appendix: Fixed income information
Appendix: Fixed income information 50
Slide 52: Standard Chartered overview
Standard Chartered overview Over 160 years in some of the world's most dynamic markets 1H’19 Performance highlights 60 >80% 4 $7.7bn $2.6bn (1H’18: $7.6bn) (1H’18: $2.4bn) markets income from Asia, 4 client segments & Operating income Profit before taxation Africa & 4 regions Middle East 13.5% 8.4%
Slide 53: Balance sheet diversity
Balance sheet diversity 1H’19 Balance sheet assets 1H’19 Customer loans & advances by country and segment Hong Kong CIB 9% 18% Korea RB Loans & advances to customers 5%3% 24% 11% China CB Investment securities 9% 5% Singapore PB 43% Cash & balances at central banks 7% $307bn India $713bn 50% C&OI De
Slide 54: Liquid and resilient balance sheet
Liquid and resilient balance sheet Total customer deposits ($bn) 1 Liquidity Coverage Ratio ($bn) 388 398 408 154% 151% 139% 171 175 189 148 150 155 218 223 219 98 97 111 1H'18 FY'18 1H'19 1H'18 FY'18 1H'19 HQLA Net outflows Liquidity Coverage Ratio CASA Time deposits & other Advances to deposits ra
Slide 55: Customer Loan Portfolio: diverse & higher quality
Customer Loan Portfolio: diverse & higher quality Diverse loan book by industry Key indicators 2 1H’19 FY’18 19-18 FY’14 19-14 Customer loans and advances (gross) Stage 3 / NPL (IFRS 9) (IFRS 9) Mvt. (IAS 39) Mvt. 2% 1% IG % corp. 3 57% 62% 42% 7% 4% 8% 6% 13% 7% 9% Tenor profile % (<1 yr.) 5% 69% 7
Slide 56: Funding
Funding Currency mix ($bn) 1, 3 2019 SC PLC issuance of ~$3.9bn across 4 currencies 3 USD USD EUR GBP Other USD 2bn Senior – Dual tranche benchmark dollar Total • 6NC5 and 11NC10 Senior 12.4 3.4 0.8 3.3 19.9 • First >10Y senior from SC PLC since 2016 Tier 2 8.7 3.3 0.9 0.5 13.4 USD 100m Senior – For
Slide 57: MREL transition – well positioned
MREL transition – well positioned 26.2% 25.7% Combined Buffer PLC Senior 3.9% • At 30 June 2019, the Group’s end-point requirement ~14.6bn is 25.7% of RWA including the Combined Buffer Pillar 2A Recapitalisation 2.9% • The Group meets its expected 2022 MREL AT1 + Tier 2 requirement today ~$19.8bn Pi
Slide 58: Internal MREL
Internal MREL Group’s issuance framework External MREL • SC PLC is the sole issuer of external MREL • External MREL down-streamed to material SC PLC subsidiaries via internal issuance • Internal MREL required for the Group’s 5 material Internal MREL subsidiaries Material Subs • Internal MREL require
Slide 59: Capital requirements and distribution considerations
Capital requirements and distribution considerations • Strong CET1 ratio in the middle of 13-14% target range • A breach of the MDA ¹ threshold restricts discretionary distributions (dividends, variable compensation and AT1 coupons) • Combined Buffer comprises the G-SII buffer (G-SII), Countercyclic
Slide 60: Standard Chartered Group – simplified legal structure
Standard Chartered Group – simplified legal structure Standard Chartered PLC BBB+/A2/A (S&P/Moody’s/Fitch) Standard Chartered Bank Standard Chartered Bank Hong Kong A/A1/A+ A+/A1/- (S&P/Moody’s/Fitch) (S&P/Moody’s/Fitch) Principal Branches Principal Subsidiaries Principal Subsidiaries 100% UK Singap
Slide 61: Sustainability
Sustainability 60
Slide 62: Sustainable Finance where it matters most
Sustainable Finance where it matters most Our Sustainable Finance Philosophy Social Impact ESG Risk Filters Impact Driven Financing Collaboration with Development Corporate Governance, Finance Anti‐Corruption Institutions Funding Defined linked to taxonomy desired Climate linking finance social Labo
Slide 63: A unique opportunity to finance impact in some of the world's least developed countries
A unique opportunity to finance impact in some of the world’s least developed countries through a UK regulated institution… Serving clients and driving sustainable development in Asia, Africa and the Middle East OECD Development Footprint Markets in Markets in Assistance Committee markets Greater Ch
Slide 64: Impact driven financing – mitigating ESG risks
Impact driven financing – mitigating ESG risks Our main impact on the environment and society is through the business activities we finance. Our 7 Position Statements (5 sectors and 2 thematic) outline the standards we encourage and expect of our clients and ourselves. 63
Slide 65: Sustainable finance at Standard Chartered
Sustainable finance at Standard Chartered Green and Sustainable Product Frameworks • Sustainability Bond Framework maps our businesses against the UN Sustainable Development Goals to create a Sustainability Bond Framework • Aligned with the Green Bond Principles, Social Bond Principles and Sustainab
Slide 66: Appendix: Definitions and important notice
Appendix: Definitions and important notice 65
Slide 67: Definitions
Definitions Term Explanation Term Explanation Term Explanation AAME Asia, Africa & Middle East ETB Existing to bank OPAC Operating account AME Africa & Middle East FI Financial Institutions P.A. Per annum API Application Programming Interface FTE Full-time employee P&L Profit and loss (Income statem
Slide 68: Important notice
Important notice This document contains or incorporates by reference “forward-looking statements” regarding the belief or current expectations of Standard Chartered PLC (the “Company”), the board of the Company (the “Directors”) and other members of its senior management about the strategy, business