Slide 1: Half Year 2017 Results Presentation
Half Year 2017 Results Presentation 2 August 2017
Slide 2: 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
Slide 3: Bill Winters, Group Chief Executive
Bill Winters Group Chief Executive 2
Slide 4: Opening remarks
Opening remarks • Encouraging start to the year Significant improvement in financial performance Business quality getting better Progress on client, operational and digital initiatives • Investing in people and culture: becoming simpler, faster and better • Continuing the fight against financi
Slide 5: Andy Halford, Group Chief Financial Officer
Andy Halford Group Chief Financial Officer 4
Slide 6: Financial performance summary
Financial performance summary H1 17 YoY HoH Better/(Worse) • Continuing progress on income Operating income1 $7.2bn 6% 3% Operating expenses2 $(4.8)bn (5)% 6% • Efficiency objectives on track Loan impairment $(0.6)bn 47% 55% Profit from associates nm nm • Investing in people and culture $0.1bn and j
Slide 7: Improving performance, heading in right direction
Improving performance, heading in right direction Operating income1 ($m) Operating expenses2 ($m) 3,345 3,465 3,465 3,533 3,608 3,614 2,671 2,391 2,249 2,285 2,387 2,378 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Loan impairment ($m) and cost of risk (%)3 Underlying prof
Slide 8: Continuing progress on income
Continuing progress on income 8,000 Operating income1 ($m) • Income up 4% YoY excluding Principal Finance +6% YoY Includes divestments and currency impact 7,000 Seeing early progress from investments… 7,222 …and across liabilities-led businesses 6,998 6,810 c. $80m interest rate benefit 6,00
Slide 9: Efficiency objectives on track
Efficiency objectives on track Operating expenses1 ($m) 5,058 4,769 • Expenses up 5% YoY, but down 6% HoH 4,534 581 599 546 Timing of investments and higher staff costs 1,559 1,250 1,330 Partly offset by business efficiencies 2,658 2,918 2,920 • Managing cost base to create investment capacity H
Slide 10: Improved credit quality YoY, but remain vigilant
Improved credit quality YoY, but remain vigilant Loan impairment ($m) 2,356 • Overall credit quality improved YoY 1,652 1,286 Stable HoH 1,096 583 • Significant progress on risk priorities Improving risk infrastructure H1 15 H2 15 H1 16 H2 16 H1 17 CIB Retail Banking Commercial Banking Private B
Slide 11: H1 17 profit contribution by client segments
H1 17 profit contribution by client segments Underlying profit before tax ($m) Key operational themes (1) Corporate & Institutional Banking 188 • Improved income and balance sheet quality • Drag from low volatility and asset margin compression 501 Retail Banking • Strong performance in Priority, WM
Slide 12: H1 17 profit contribution by region
H1 17 profit contribution by region Underlying profit before tax ($m) Key operational themes 66 Greater China & North Asia • Broad-based income growth 369 • Hong Kong strong; Korea and China profitable in H1 17 ASEAN & South Asia 400 • Good progress in key markets 1,919 • Impacted by business exits
Slide 13: NIMs broadly stable, early balance sheet momentum
NIMs broadly stable, early balance sheet momentum 1 Group NIMs broadly stable 3 Shift to higher credit grade clients NIM (%) and Net interest income ($m) Performing loans by credit grade ($bn) 300 6,000 2.00% 1.58% 1.48% 1.55% +7% 5,000 250 1.50% 4,000 200 3,000 1.00% 150 3,992 +1% 2,000 3,802 3,966
Slide 14: Strong capital position
Strong capital position CET 1 capital ratio (%) +20bps (0.2) 0.1 0.4 (0.2) 13.8 13.6 2016 Profit after afte tax idends1 Dividends Div Credit R RWA WA Market and Currency HY 17 Operational RWA & other Risk-weighted assets ($bn) +$5bn • CET1 up 20bps from FY 16 to 13.8% • Driven mainly by profit in th
Slide 15: Bill Winters, Group Chief Executive
Bill Winters Group Chief Executive 14
Slide 16: Corporate & Institutional Banking
Corporate & Institutional Banking Substantial progress on key priorities, but more to do H1 17 progress Leverage advantage in network Network income ($bn) • Improved profitability, higher quality income and balance sheet • Selectively added to, and diversified client base +12% • New CSDG1 to improve
Slide 17: Retail Banking
Retail Banking Pivoting to affluent clients in core cities, enabled by digital H1 17 progress Focus on Priority segment Income mix (%) • Strong growth in Priority with share of income increased to 44% • Commenced end-to-end digital transformation in main markets Priority 38% 44% • Improved profitabi
Slide 18: Commercial Banking
Commercial Banking Good progress on a multi-year turnaround H1 17 progress Returned to profitability, broad-based Underlying profit before tax ($m) • Returned to profitability on improved LI and cost base GCNA ASA AME • Non-financing income grew across markets 85 • Asset momentum returned in some pr
Slide 19: Private Banking
Private Banking Investing for long-term transformation H1 17 progress Growth in NNM, but need to accelerate Net new money (NNM) ($bn) • New hires integrated, delivering to targets • GCNA growth has accelerated 0.3 0.6 • ASA has stabilised after multiple quarters of decline • Multiple technology proj
Slide 20: Regions: GCNA and ASA
Regions: GCNA and ASA Greater China & North Asia (GCNA) ASEAN & South Asia (ASA) Progress Progress • Encouraging momentum across segments and markets • Significant progress securing foundations • Positive progress in Korea and China turnaround • Pockets of momentum in key markets Priorities Prioriti
Slide 21: Regions: AME and EA
Regions: AME and EA Africa & Middle East (AME) Europe & Americas (EA) Progress Progress • Steady performance in Retail Banking • Significant improvement in underlying profitability and growth in network income • Building momentum in CIB; Returned CB to profitability • Good progress on CIB initiative
Slide 22: Investing selectively
Investing selectively Strategic and system enhancements Cash investment ($m) +25% • CIB – e-connectivity with clients • Targeted investment to ~280 Increase income growth potential • RB – digitisation, alliances and ~230 increased sales Accelerate technology enhancement Improve productivity an
Slide 23: Continuing the fight against financial crime
Continuing the fight against financial crime Fighting financial crime matters Engaging our people The right controls Investing in people, processes and systems • The Whole Story: • Continued investment in multi-year campaign people, processes and • Mandatory and specialist training systems on AML,
Slide 24: Summary
Summary • Began year with a strong balance sheet and need to improve earnings Good progress in H1 17; clearly plenty of capacity to improve further Becoming leaner, more resilient and more profitable Investing to leverage core advantages in network and local capabilities Confidence returning
Slide 25: Q&A
Q&A 24
Slide 26: Appendix
Appendix Chartered
Slide 27: Group financial summary
Group financial summary H1 17 vs H1 17 vs Q2 17 vs Q2 17 vs ($m) H1 17 H2 16 H1 16 H2 16 %1 H1 16 %1 Q2 17 Q1 17 Q2 16 Q1 17 %1 Q2 16 %1 Operating income 7,222 6,998 6,810 3% 6% 3,614 3,608 3,465 0% 4% Operating expenses (4,170) (4,477) (3,988) 7% (5%) (2,101) (2,069) (1,982) (2%) (6%) Regulatory co
Slide 28: Performance by client segments
Performance by client segments Retail Commercial Central & other H1 17 ($m) CIB Banking Banking Private Banking items (segment) Total Operating income 3,218 2,396 660 242 706 7,222 Operating expenses (2,123) (1,723) (427) (243) (253) (4,769) Pre-provision operating profit 1,095 673 233 (1) 453 2,453
Slide 29: Performance by region
Performance by region Greater China & ASEAN & Africa & Europe & Central & other H1 17 ($m) North Asia South Asia Middle East Americas items (region) Total Operating income 2,791 1,964 1,387 809 271 7,222 Operating expenses (1,759) (1,250) (887) (680) (193) (4,769) Pre-provision operating profit 1,03
Slide 30: Performance by product
Performance by product H1 17 vs H1 17 vs Q2 17 vs Q2 17 vs ($m) H1 17 H2 16 H1 16 H2 16 %1 H1 16 %1 Q2 17 Q1 17 Q2 16 Q1 17 %1 Q2 16 %1 Transaction Banking 1,597 1,466 1,418 9% 13% 812 785 702 3% 16% Trade 593 595 604 (0%) (2%) 296 297 299 (0%) (1%) Cash Management and Custody 1,004 871 814 15% 23%
Slide 31: Ongoing business and liquidation portfolio
Ongoing business and liquidation portfolio 6 months ended 6 months ended 6 months ended 30 Jun 17 31 Dec 16 30 Jun 16 Ongoing Liquidation Ongoing Liquidation Ongoing Liquidation ($m) business portfolio Total business portfolio Total business portfolio Total Gross loans and advances 271,795 3,643 275
Slide 32: Restructuring charges
Restructuring charges Restructuring charges ($m) 855 165 2,865 Restructuring progress 1,845 • $165m of restructuring charges in H1 17 2015 2016 H1 17 Total since Relating to liquidation portfolio and N 15 Nov Principal Finance Impact of Principal Finance ($m)1 0 • Cumulative restructuring charges
Slide 33: Interest rate sensitivity
Interest rate sensitivity Estimate ~$80m of NII benefit in H1 17, in line with current estimate NII sensitivity to +50bps rise in global interest rates1 Transmission from USD rates to LCY so far limited2 $300-400m 2.0 annualised NII benefit 1.8 1.6 USD 1.4 1.2 HKD 1.0 HKD 0.8 SGD SGD KRW 0.6 KRW 0.4
Slide 34: Glossary
Glossary Acronym/term Explanation Acronym/term Explanation A/D ratio Advances-to-deposits ratio FX Foreign Exchange ABC Anti-Bribery and Corruption GCNA Greater China & North Asia ACAMS Association of Certified Anti-Money Laundering HoH Half-on-half Specialists ICC International Chamber of Commerce