Standard Chartered Plc · LSE:STAN
Standard Chartered — 1H 2023 Earnings Presentation
57 slides from Standard Chartered's earnings presentation, Jul 28, 2023
Slide 1: 2Q'23 / 1H'23 Results
standard chartered 2Q'23 / 1H’23 Results 28th July 2023
Slide 2: Contents
Contents Bill Winters Group Chief Executive * Summary * Strategy update Andy Halford Group Chief Financial Officer * Financial performance Appendix Strategic actions progress; macroeconomic variables; interest rate assumptions; IRRBB; sovereigns; China CRE; reconciliation to reporting definitions; g
Slide 3: Summary
QJ Summary < SS Strong set of 1H’23 results; making excellent progress on our strategic actions + First half income, up 18% YoY at ccy and profit, up 29% YoY at ccy, highest since 2015 + Upgraded income, jaws and RoTE guidance for FY’23 potcoUma nce * Strongly profitable, highly liquid and well capi
Slide 4: Financial Performance
< standard rN chartered e Financial Performance Andy Halford Group Chief Financial Officer
Slide 5: CONFIDENTIAL o o
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Slide 7: Strong income growth from rate rises and business momentum
Strong income growth from rate rises and business momentum Th 2Q’23 vs 2Q’22! - Product view ($m) Overview ap = Income 7 46 10 3 | Segments 501 — — Network Ha (180) | 4,562 Regions / Markets 653 (G29) Expenses Risk 3,681 || Balance Sheet Capital Guidance Strategy 2Q22 ccy Transaction Retail: Financi
Slide 8: Rising rates and reduced hedge impact driving NIM expansion
Rising rates and reduced hedge impact driving NIM expansion Net Interest Mai (NIM) components 163 wn as 13 158 NIM! (%) Net Interest Income (NIP) Sm) 1H'22 1H'23 2Q22 3Q'22 4Q'22 583 568, 1Q23 2Q'23 570 Average Interest Earning Assets (AIEA) (Sbn) 563 B 565 B 561 B Average Interest BearingLiabilitie
Slide 9: Financial Markets growth driven by higher flow income
Financial Markets growth driven by higher flow income S Half-yearly income trend ($m) 1H'9 1H'20 1H21 HM Macro Trading Ml Credit Markets Ill FSS excluding MTM Ill MIM Flow & episodic view ($m) Rug Il Episodic Hi Flow 1H'20 1H21 1H'22 1H'23 Footnotes on page 51-54; Glossary on page 55-57 Overview — I
Slide 10: CONFIDENTIAL o o
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Slide 11: Client segments are delivering strong growth
Client segments are delivering strong growth Corporate, Commercial & Institutional Banking ~ ge uJ ~ oe 1H22 1H'23 1H'22 1H'23 Consumer, Private & Business Banking Footnotes on page 51-54; Glossary on page 55-57 1H22 1H23 Cash Management and record Macro and Credit Trading in FM supporting strong in
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Slide 13: Broad-based strong performance across regions and markets
Broad-based strong performance across regions and markets Africa & Middle East (AME) 16.5% 2 fm RoTE Bo Income = 1H22 1H23 Europe & Americas 13.3% RoTE 03% Income 1H22 1H23 Footnotes on page 51-54; Glossary on page 55-57 Select markets ($bn, YoY % ccy) Hong Kong Income growth 30% 32% 2Q23 123 YoY Yo
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Slide 15: Credit impairment low, mainly China CRE
Credit impairment low, mainly China CRE Cres impairment ($m) / Loan-loss rate (bps) Loan-loss rate! I Ventures + C&O (segment) mm CPBB Mm cc = (8) 122 123 2Q22. 3Q22 -4Q22. 1Q23. 292 I Early Alerts? Ml Credit Grade 12 HM Net Stage 3 99 94 0 Oo 3.0 3.0 34 30.622 30.623 6. 30922 311222 313.23 © 30623
Slide 16: Customer assets broadly stable in a low growth environment
Customer assets broadly stable in a low growth environment Loans and advances to customers ($bn) 301 1 — @ Y bel o oo mm »~ u 270 © B B 31323 Aviation FX Treasury Optimisation Proforma Underlying 306.23 reclassification &FMSBL to HFS 31.12.22 30.6.23 tI 0) ©) 0) © 290 0 290 Underlying growth by prod
Slide 17: Customer deposits remain strong and well diversified
Customer deposits remain strong and well diversified NS e Customer deposits - Group view (Sbn) Overview Income Segments 1 470 Network 462. Regions / Markets — 458 | . . Expenses 177) * Customer deposits excluding FX up $Tlbn Risk - — Balance Sheet reflecting strong second quarter Capital Guidance o
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Slide 19: 2023 guidance
2023 guidance NS Overview Income Segments Network Regions / Markets . a . . , Expenses + Low single digit percentage growth in assets in 2H’23 Risk Balance Sheet Capital — Guidance + Positive income-to-cost jaws of around 4%, excluding UK bank levy at ccy in 2023 Grategy ‘onclusion * Income to incre
Slide 20: Strategy Update
< standard rN chartered e Strategy Update Bill Winters Group Chief Executive
Slide 21: CCIB: Accelerated delivery of returns and optimisation targets
CCIB: Accelerated delivery of returns and optimisation targets Performance vs 2024 Targets Key highlights Overview 5 Income 80% Segments Th a Oo 65% . , Ce Network Income RoRWA' oe i am + Income RoRWA of 8.0% in 1H’23; significantly Regions / Markets (%) ahead of 2024 target Expenses . Balance Sheet
Slide 22: CPBB: On track to deliver cost-to-income ratio target
CPBB: On track to deliver cost-to-income ratio target Performance vs 2024 Targets 74% 69% n 58% ~60% Cos! ome ro--l ratio || | | (%) L \ Gross expense savings ($m) Affluent AUM! (Sbn) Mass Retail Clients? (#m) Straight-through Processing (STP?) Rate (%) 254 256 252 _---* eT 301220 311222 300623 2024
Slide 23: China: Good progress; on track to deliver 2024 profit target
China: Good progress; on track to deliver 2024 profit target S e Income YoY%ccy . . 5 Segments China onshore and * Record China onshore income, up 5% ccy to ~$0.6bn in Network, Markets offshore income 6 1H'23 Expenses (S20) * China offshore income, up 59% YoY to ~$1.1bn Balance Sheet a o Driven by s
Slide 24: Capital: $3.9bn distributions announced since 1.1.22
Capital: $3.9bn distributions announced since 1.1.22 NS e Ordinary Dividend (paid / declared $bn) Share buy-back (paid Sbn) 2022 Interim 2022 Final 2023 Interim 10 2023 2023 announced in-progress Number of ordinary shares? (#m) 31.12.21 Footnotes on page 51-54; Glossary on page 55-57 31.12.22 Announ
Slide 25: Additional management actions accelerating path to returns
Th Additional management actions accelerating path to returns Key highlights Overviow Segments . . . eas Network * Signed agreements for sale of Jordan and Zimbabwe businesses in 1H’23 Regions / Markets Markets Expenses * Announced in July agreement for sale of a further five markets!; Angola, Camer
Slide 26: Sustainability: Sustainable Finance central to our growth ambitions
Sustainability: Sustainable Finance central to our growth ambitions S e Key highlights Mobilise capital SF income approaching $1bn by 2024 $300bn in sustainable finance between 2021-2030 Accelerate new solutions Lead and drive industry dialogue and practice, and support our clients Reduce emissions
Slide 27: In conclusion
In conclusion . § Overview Income Segments Network Regions / Markets * The Group delivered a very strong performance in 1H’23 Expenses Balance Sheet A . . , Capital Summary * Making excellent progress on our five strategic actions Guidance Strategy — Conclusion * Well positioned with a robust balanc
Slide 28: Appendix
Appendix Strategic actions progress; macroeconomic variables; interest rate assumptions; IRRBB; sovereigns; China CRE; reconciliation to reporting definitions; guidance details ¢ Information for fixed income investors ¢ Notes, abbreviated terms and important notice Th
Slide 29: CONFIDENTIAL
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Slide 30: CONFIDENTIAL
CONFIDENTIAL
Slide 31: Interest rate assumptions
Interest rate assumptions NS e FY Avg FY Avg asat14..23 PPS as.at14.6.23 PPS FY'22 165 FY'22 212 FY23 «497 FY23 440 FY24 443 FY24 423 108 -2QB—3QB. QB. 1QMH.~=— QM. BQN. «AQ 1B 203 3QB. QB 1QNH. «= QM 3Q7H— AQ = = Market implied average rates as at 310323 — Market implied average rates as at 14.623
Slide 32: Interest Rate Risk in the Banking Book
Interest Rate Risk in the Banking Book Th Annualised benefit to banking book NIl from instantaneous parallel shifts terest rates across all currencies ($m)!2 * 1H’23 Nil sensitivity is applied to projected USD short-term interest rates of ~5% for the next 12 months * — Reported NIl sensitivity has i
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Slide 35: Reconciliation to reporting definitions
Reconciliation to reporting definitions Sbn FY'22 — 2Q'23 Lava] FY'22 2Q'23 liza] Statutory Net InterestIncome _ 7,593 1,978 Statutory Other Income 8,725 2,589 Statutory Operating Income Trading Book Funding Cost Trading Book Funding Cost Trading Book Funding Cost Adjustment 463-470 Adjustment (463)
Slide 36: CONFIDENTIAL
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Slide 37: Appendix
Appendix Strategic actions progress; macroeconomic variables; interest rate assumptions; IRRBB; sovereigns; China CRE; reconciliation to reporting definitions; guidance details * Information for fixed income investors ¢ Notes, abbreviated terms and important notice
Slide 38: Strong performance founded on a unique franchise
Strong performance founded on a unique franchise NS za af, e r. 57 87% Income from | $9.0bn 444 $3.3bn 0 61% BY” 12.0% Markets Asia and AME Operating income PBT Cost income ratio RoTE (1H'22: $7.9bn1) (1H'22: $2.8bn') (1H22: 65%!) (1H'22: 9.3%!) rsified by market and segment Group income diversified
Slide 39: Balance sheet strength provides resilience and capacity for growth
Balance sheet strength provides resilience and capacity for growth Capital metrics 321% 32.1% mmm CETI (Min requirement: 10.4%) mmm MREL (Min requirement: 27.3%) —#-Leverage Ratio (Min requirement: 37%) 30.6.22 30.6.23 Liquidity metrics 164% 31.12.22 mm ADR a Ler’ 59.6% 57.4% (Min requirement: 100%)
Slide 40: Balance sheet is conservatively positioned and tightly managed
Balance sheet is conservatively positioned and tightly managed S Total assets Total equity & liabilities $839bn $839bn 30.6.23 30.6.23 Derivatives & Other Derivatives & Other assets 135 liabilities 132 L&A to banks 453 Cash 1117 Footnotes on page 51-54; Glossary on page 55-57 Highly liquid and flexi
Slide 41: Strong and diverse deposit base
Strong and diverse deposit base NS Customer deposits by market! ($bn) mHong Kong Singapore United Kingdom mSouth Korea = USA = China = Taiwan India UAE m Others Footnotes on page 51-54; Glossary on page 55-57 Unique footprint and deposit base in 57 markets o No single market >30% o In ourtwo largest
Slide 42: Deposit migration and betas managed within expectations
Deposit migration and betas managed within expectations TB CASA % of Total CCIB Deposits! ($bn) 66% 65% 60% 60% 59% 59% FY'23/FY'24 CASA% = — 55-65% “Y 321 308 3m woes 268 TD & Others? 311219311221 306.22 3112.22 313.23 30.6.23 CPBB Top 4 markets? CASA % of CPBB Deposits 83% 789 , a FY'23/FY'24 . 67
Slide 43: CONFIDENTIAL o o
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Slide 44: CET1 strongly positioned relative to requirements
CET1 strongly positioned relative to requirements CET1 minimum requirement! Th 10.4% 10.4% + Minimum CET1 requirement broadly unchanged at 10.4% CCB o UK CCyB? rate expected to increase to 2% in 3Q’23... = CCB aG-SIl © ... expected to increase Group's CCyB buffer by ~8bps Pillar 24 Pillar 1 31.12.22
Slide 45: MREL: Well positioned for future growth and requirements
MREL: Well positioned for future growth and requirements External MREL position versus requirements 321% PLC Senior 10.7% Tier 2 RWA based. Headroom above 30.6.23 min requirement Internal MREL met via internal issuance External non-equity MREL vig SC PLC Leverage based D) vedhed UK HK ($25.6bn) ($6.
Slide 46: Good progress on delivery of Funding programme
Good progress on delivery of Funding programme Recent and indicative MREL Issuance ($bn)1 10.8 wATI Planned issuance Tier 2 mSenior + USD 5.0bn across tenors + EUR1.0bn 8NC7 + HKD 0.8bn 3NC2 2021 2022 2023 * 2023 MREL issuance plan of $7bn to $9bn with focus on Hold Co Senior + Forecast issuance vol
Slide 47: Group strategy to support and improve credit ratings
Group strategy to support and, over time, improve credit ratings Standard Chartered Bank Standard Chartered PLC Tier 2 ATI Standard Chartered Bank (Hong Kong) Standard Chartered Bank (Singapore) Footnotes on page 51-54; Glossary on page 55-57 erm and short-term ratings S&P Stable Stable Moody’s Al P
Slide 48: Stronger risk foundations supporting resilient performance
Stronger risk foundations supporting resilient performance Key risk indicators ares) cas 39) CCIB Investment grade as a % of corporate exposure Th te 42% Top 20 corporates as a % of Tier 1 capital 62% 83% Total cover ratio (excl / incl collateral)? 59% / 78% 52% / 62% CPBB Loan-to-value of mortgage
Slide 49: Standard Chartered Group: simplified legal structure
Standard Chartered Group: simplified legal structure Standard Chartered PLC BBB+/A3/A (S&P/Moody’s/Fitch) Standard Chartered Bank Standard Chartered Bank (Hong Kong) A+/AI/At Principal Branches 100% 100% 100% Korea A3/A2/A+ UK 100% Singapore A+/AI/At us 99.87% Thailand -/Baat/A- UAE , 100% Malaysia
Slide 50: Appendix
Appendix ¢ Strategic actions progress; macroeconomic variables; interest rate assumptions; IRRBB; sovereigns; China CRE; reconciliation to reporting definitions; guidance details * Information for fixed income investors ¢ Notes, abbreviated terms and important notice
Slide 51: Notes
Notes S These notes refer to the metrics and defined terms on the following pages Explanatory note or defi ion Explanatory note or definition 5 |. YoY = year-on-year variance is better/(worse) other than assets and liabilities Income growth on a constant currency basis, presented on the basis of the
Slide 52: Notes
Notes These notes refer to the metrics and defined terms on the following pages Explanatory note or definition 18 21 22 23 24 25 , Around $0.9bn of buy-back announced in Feb’23 completed as at 26.7.23 RW. thers’ include incremental Operational risk RWA +$0.7bn, Market risk RWA_ Model +$0.7bn and Mod
Slide 53: Notes
Notes These notes refer to the metrics and defined terms on the following pages Explanatory nate or dafnton Swen nit 34 38 39 Net Nominal basis (see selected technical and abbreviated terms page 55 and 56): based on where the ultimate parent entities and credit responsibility is Booking location inc
Slide 54: Notes
Notes These notes refer to the metrics and defined terms on the following pages Explanatory note or definition ae ordefinition 1. Point in time Standard Chartered PLC only as at 10.7.23. Includes the $2.5bn issued on 067.23 2. Average of four preceding quarters 2. Standard Chartered PLC as at 10,7.2
Slide 55: Selected technical and abbreviated terms
Selected technical and abbreviated terms ‘ADR AIBL AIEA AU AUM BNPL bps CASA CBD cey CCB CCPL CDP CET CcG12 CGB CIPS CIR C&O CPBB CRE cTC CvP DPD DVA EA (NPP) / Early Alerts ion Advances-to-Deposits ratio Average interest-bearing liabilities Average interest-earning assets Assets Under Influence Ass
Slide 56: Selected technical and abbreviated terms
Selected technical and abbreviated terms NPS Net Promoter Score The a 's Wealth Management business NSFR Net Stable Funding Ratio Venbaes SC Ventures + Mox + Trust NTB New to bank clients Vix Volatility Index NZBA Net-Zero Banking Alliance YoY Year-on-Year change 02D Originate to Distribute YTD Year
Slide 57: Important notice
Important notice The information included in this document may contain “forward-looking statements” based upon current expectations or beliefs aswell as statements formulated with assumptions about future events. Forward-looking statements include, without limitations, projections, estimates, commit