Slide 1: Full Year 2014 Results Presentation
Full Year 2014 Results Presentation 04 March 2015
Slide 2: Forward looking statement
Forward looking statement This document contains or incorporates by reference ‘forward-looking statements’ regarding the belief or current expectations of the Company, the Directors and other members of its senior management about the Group’s strategy, businesses, performance and the other matters d
Slide 3: Sir John Peace, Chairman
Sir John Peace Chairman Standard Chartered &
Slide 4: Programme of actions
Programme of actions Significant leadership changes CET1 target of 11-12% in 2015 and thereafter Return on Equity target >10% in the medium term US$1.8bn of cost savings over the next 3 years US$25-30bn in Risk Weighted Assets savings over the next 2 years Sustain momentum on raising the
Slide 5: Stakeholder interests
Stakeholder interests 3,000 2014 total variable compensation for the Group is down 9% from 2013 2,500 25% 2,062 2,095 Dividend per share held at 2013 2,000 1,866 level (27%) 1,675 1,499 1,425 1,500 Over the last 3 years 1,208 1,098 1,000 Total variable compensation is down 27% 500 Dividend
Slide 6: Driving value for our shareholders
Driving value for our shareholders Our Ambition The world’s best international bank Our Strategy We bank the people and companies driving investment, trade and the creation of wealth across Asia, Africa and the Middle East Our Brand Promise Here for good Relationships Investment Trade Wealth Relevan
Slide 7: Andy Halford, Group Finance Director
Andy Halford Group Finance Director 6
Slide 8: Introductory comments
Introductory comments Our people are very proud of the Bank and determined to restore performance The Bank is executing on the strategies we outlined in November last year We have listened to shareholder concerns I have spent considerable time with risk to deeply understand our positioning
Slide 9: Performance summary
Performance summary Better/ Robust income performance US$m FY 13 FY 14 (Worse)% despite significant de-risking Income 18,671 18,234 (2) Expenses (9,946) (10,198) (3) Tight underlying cost control Restructuring costs (12) (181) nm Significant increase in Bank levy (235) (366) (56) regulatory sp
Slide 10: Key performance indicators
Key performance indicators Key performance indicators FY 13 FY 14 Strong capital position – flat in H2 despite headwinds Normalised return on equity 11.2% 7.8% Taking action on costs to protect returns Common Equity Tier 1 (transitional) ratio 10.9% 10.5% Maintained dividend per share Common E
Slide 11: Income down 2% partly due to de-risking actions
Income down 2% partly due to de-risking actions US$m FY 13 FY 14 Better/(Worse)% Corporate and Institutional Clients 10,656 10,431 (2) Commercial Clients 1,511 1,182 (22) Private Banking Clients 586 612 4 Retail Clients 5,918 6,009 2 Total operating income 18,671 18,234 (2) US$m Lending (39) Financi
Slide 12: Product income
Product income US$m FY 13 FY 14 Better/(Worse)% Transaction Banking 3,911 3,802 (3) Financial Markets 3,856 3,400 (12) Corporate Finance 2,519 2,487 (1) Wealth Management 1,449 1,701 17 Retail Products 5,046 4,840 (4) Others* 1,890 2,004 6 Total operating income 18,671 18,234 (2) US$m FX (92) Capita
Slide 13: Cost savings offset by regulatory and other inflation
Cost savings offset by regulatory and other inflation Underlying expenses up 3% YoY or US$252m, impacted by Increases in regulatory and compliance costs ~5% inflation across our footprint US$201m in cost savings YoY cost movements US$m (73) (201) 394 (117) 12 237 10,198 9,946 FY 13 Regulator
Slide 14: Impairment
Impairment Loan impairment US$m Other impairment US$m 2,141 403 1,617 638 139 459 565 194 150 129 964 938 90 47 39 67 FY 13 FY 14 FY 13 FY 14 Retail Other Commodities Private Equity Impairment of strategic and associate investments Other China warehouse fraud Retail impairment down 3% benefitting
Slide 15: Actively managing our commodity credit exposure
Actively managing our commodity credit exposure1 Commodities – US$bn Producers (19%) 30.1 (14%) (24%) 28.1 (11%) 24.3 15.2 14.6 13.1 (24%) 12.7 12.0 9.7 61.8 60.7 2.1 1.5 1.6 54.9 Dec 13 Jun 14 Dec 14 Energy Agriculture Metals & Mining Traders (3%) Dec 13 Jun 14 Dec 14 31.7 32.6 30.6 YoY% Dec 13 Jun
Slide 16: Asset quality
Asset quality Pillars Key attribute Metric 2013 2014 Well diversified across industries Largest industry concentration % Loans Diversification 17% 16% CIC and Commercial and advances to customers Tenor Short tenor portfolio CIC and Commercial <1year 64% 65% Collateral Collateralisation remains stron
Slide 17: Well-structured and liquid balance sheet
Well-structured and liquid balance sheet Total deposits US$bn Total loans and advances to customers US$bn 470 423 435 441 (3.3) (3.3) 200 192 213 201 (3.2) 2.8 296 289 215 227 237 238 FY 12 FY 13 HY 14 FY 14 FY 13 Retail Energy Mining and Supporting FY 14 unsecured sector Quarrying customer CASA Tim
Slide 18: Strong headline capital despite headwinds
Strong headline capital despite headwinds H2 14 – CET1 % (30bps) 30bps 0.3% 0.2% 0.2% 0.4% 0.2% 0.1% 10.7% 10.5% 0.1% 10.5% 0.1% 10.2% B3 CET1 Model Foreseeable Other B3 CET1 Profits Asset Dividend Currency B3 CET1 AFS gains B3 CET1 HY 14 changes dividend one-offs (post one- reduction translation/ F
Slide 19: Financial priorities
Financial priorities Priorities Goals Delivering returns above CET1 target of 11-12% in 2015 our cost of and thereafter capital Deliver Return on Equity of over Restoring 10% in the medium term sustainable, profitable growth Note: Based on our current best understanding of future regulatory requirem
Slide 20: Programme of actions
Programme of actions Significant leadership changes CET1 target of 11-12% in 2015 and thereafter Return on Equity target >10% in the medium term US$1.8bn of cost savings over the next 3 years US$25-30bn in Risk Weighted Assets savings over the next 2 years Sustain momentum on raising the
Slide 21: Peter Sands, Chief Executive Officer
Peter Sands Chief Executive Officer 20
Slide 22: Performance
Performance Group income and operating profit (US$bn and CAGR) 2010-2012 CAGR 2012-2014 CAGR Income: +8% Income: (1.5)% Profit: +11% Profit: (17)% 18.8 18.7 18.2 17.6 2002-2010 CAGR Income: +17% 16.1 Profit: +22% 8.6 7.5 7.0 6.8 6.1 5.2 4.5 3.2 1.3 2002 2006 2010 2011 2012 2013 2014 Income Operating
Slide 23: Programme of actions
Programme of actions Significant leadership changes CET1 target of 11-12% in 2015 and thereafter Return on Equity target >10% in the medium term US$1.8bn of cost savings over the next 3 years US$25-30bn in Risk Weighted Assets savings over the next 2 years Sustain momentum on raising the
Slide 24: Financial priorities
Financial priorities Priorities Goals Delivering returns above CET1 target of 11-12% in 2015 our cost of and thereafter capital Deliver Return on Equity of over Restoring 10% in the medium term sustainable, profitable growth Note: Based on our current best understanding of future regulatory requirem
Slide 25: Capital
Capital RWA initiatives 12.0% Low returning relationships in Corporate and Institutional Clients 11.0% Business disposals Sub-scale Retail and non-core businesses 10.5% 10.7% Cost savings US$1.8bn over the next 3 years 2014 CET1 Jan 2015 2015 and (transitional) (end-point) thereafter 24
Slide 26: Costs
Costs Underlying Exits Corporate and Retail Clients Institutional Clients / product groups Support functions 15 Re-design of sales Headcount reductions Headcount relocation Total number of force Rationalisation of sales and reduction businesses 2015 2015 Branch rationalisations forces Hu
Slide 27: Asset quality
Asset quality Pillars Key attribute Metric 2013 2014 Well diversified across industries Largest industry concentration % Loans Diversification 17% 16% CIC and Commercial and advances to customers Tenor Short tenor portfolio CIC and Commercial <1year 64% 65% Collateral Collateralisation remains stron
Slide 28: Impact of exits and de-risking
Impact of exits and de-risking Exits in 2014/2015 – completed SME business run down in UAE Exit of Institutional Cash Equities business 15 ~US$300m Total number income impact Sale of retail business in Germany of businesses from de-risking Sale of retail securities business in Taiwan exited
Slide 29: Client segments
Client segments Income Income RWA Cost income Operating profit 2014 US$bn growth YoY% US$bn ratio % RoRWA % Corporate and Institutional Clients 10.4 (2) 245 50 1.8 Commercial Clients 1.2 (22) 25 63 0.9 Private Banking 0.6 4 7 73 2.3 Retail Clients 6.0 2 65 67 1.6 Total Group 18.2 (2) 342 59 1.6 Note
Slide 30: Retail Clients
Retail Clients Financial performance priorities in 2015 Drive efficiency towards 55% cost-income ratio target Continue shift towards Priority and Business clients (income contribution 38% in 2014 to 43%) IMAGE TBC Accelerate standardisation and digitisation 29
Slide 31: Private Banking
Private Banking Financial performance priorities in 2015 Drive growth in new clients (>2000) AUM growth of over 10% Build relationship manager numbers and capabilities Reinforce infrastructure and controls 30
Slide 32: Commercial Clients
Commercial Clients Financial performance priorities in 2015 Grow client base (3000 new-to-bank clients) Deepen existing client relationships IMAGE TBC Build relationship manager numbers and capabilities Leverage the network more effectively Reinforce infrastructure and controls 31
Slide 33: Corporate and Institutional Clients
Corporate and Institutional Clients Financial performance priorities in 2015 Leverage network more effectively Deepen client relationships Multi market ratio 2.8 to over 3 Multi product ratio 6.3 to 6.5 Drive non financing revenue contribution up from 41% to over 43% Redeploy RWA from lo
Slide 34: Conduct
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Slide 35: Programme of actions
Programme of actions Significant leadership changes CET1 target of 11-12% in 2015 and thereafter Return on Equity target >10% in the medium term US$1.8bn of cost savings over the next 3 years US$25-30bn in Risk Weighted Assets savings over the next 2 years Sustain momentum on raising the
Slide 36: Q&A
Q&A 35