Standard Chartered Plc · LSE:STAN
Standard Chartered — Investor Day (November 2013)
37 slides from Standard Chartered's investor day presentation, November 2013
Slide 1: Leading the way in Asia, Africa and the Middle East
Leading the way in Asia, Africa and the Middle East Steve Bertamini Group Executive Director and CEO Consumer Banking
Slide 2: Key messages
Key messages Macro trends support long term opportunities Resilient performance despite challenges Sharpening our strategic focus Continuing to invest for long term growth
Slide 3: Macro trends support sustained growth
Macro trends support sustained growth Private financial wealth (US$trn) Asia, Africa and the Middle East will contribute around 60% of total global revenue pool growth Asia, Africa and the Middle East 55 11% private wealth will surpass the US (32%) and Europe by 2017 33 (24%) SMEs are a leadin
Slide 4: Performance over last decade
Performance over last decade 2009-2012 CAGR Income: +9% Profit: +27% 2007-2009 CAGR Income: (2%) YoY Profit: (28%) Income: +7% Profit: (6%) 2002-2007 CAGR ex-Korea Income: +19% Income: +9% Profit: +22% Profit: +7% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 H1 13 Income Operating profit
Slide 5: Balance sheet momentum and shape
Balance sheet momentum and shape Customer loans and advances Well diversified balance sheet by Americas,UK and Africa Europe 4% market, product and customer base MESA 1% 5% Hong Kong India 26% 4% 72% of portfolio is secured, 9% partially secured and 19% unsecured Other APR 20% Focus on balance
Slide 6: Portfolio performance
Portfolio performance 72% portfolio concentrated in markets with less than 1% loss rates Residential mortgage portfolio average Loan to Value (LTV) is at 47% Unsecured strategy shifting towards cards and digital with increased High Value Segment (HVS) focus 30+ and 90+ dpd* trends Loan impairm
Slide 7: Competitor growth comparison
Competitor growth comparison Standard Chartered vs. Top local Standard Chartered vs. global peers competitors by country (income CAGR 2009-12) (income CAGR 2009-12) Hong Kong 9% Singapore UAE Global 4% competitor 1 Malaysia Indonesia Global 7% competitor 2 Nigeria China Global India competitor 3 5%
Slide 8: Progress update
Progress update What has gone well... ...and what has been more difficult Strong performance relative to Pace of Korea turnaround competition Volatility created by Credit Cards Balance across geographies, and Personal Loan impairment products and segments Pace of regulatory changes and M
Slide 9: Consumer Banking strategy
Consumer Banking strategy To be the world’s best international Consumer Bank in each of our chosen markets and segments Participation model Customer focus ‘Back to basics’ Focus on High Value Distinctive Customer Re-engineering and Segments* Value Propositions centres of excellence (CVP) and w
Slide 10: Target segments in key markets
Target segments in key markets Universal markets Focused and lean premium markets Private Banking SME Banking WM SME Priority Banking WM SME CASA & CCPL Personal Banking Mortgage CASA & CCPL Mortgage 90% of bankable population 15% of bankable population CB banks top ~20% of bankable households which
Slide 11: “Install” phase completed
“Install” phase completed Extended branch hours Breeze Service guarantees ATM Services Service Customer Charter Relationship Solutions Friendly, fast and accurate service Customer Value SCB Way Trusted advisor Proposition Solutions to your financial needs 360º Rewards Core bundles Recognition of you
Slide 12: “Tuning” strategic focus
“Tuning” strategic focus Where we are headed… Current focus… What we did… “Outperform” “Tune” “Install” Participation Participation models City focus Multi-channel experience model Hubbing Korea turnaround Digital Main Bank Customer High Value Segment Personal banking CVP* Brand &
Slide 13: Consumer Banking roadmap
Consumer Banking roadmap 1 Grow HVS customers High single digit income growth 2 Accelerate CASA growth Positive jaws Double digit operating profit growth 3 Become Digital main bank Operating profit RoRWA of 2.5% 4 Prove Here for good 5 Improve productivity
Slide 14: Strategic priorities for Wealth Management
Strategic priorities for Wealth Management 1 Proposition 2 Acquisition 3 Portfolio 4 People CVP & International banking Client coverage model Relationship manager positioning recognition Brand Channels & Contact strategy Training & awareness programmes career path
Slide 15: Strengthening the SME platform
Strengthening the SME platform Goal Become digital main bank for “your business, your family, your employees” Coverage model RM managed ME* “Discretionary lending” High value SB** High growth SB** Portfolio managed “Program lending” Mass market SB** Target market Focus on 8-10 industries specific to
Slide 16: Digital main bank focus
Digital main bank focus 1 Accelerate rollout of digital capability 2 Create “Digital First” solutions 3 Integrate multi-channel capability Extend Breeze Develop digital Leverage big data alliances analytics and digital marketing Eliminate paper + Launch mobile wallet solutions + Join pay
Slide 17: Investments
Investments Customer-focused systems Digital main bank
Slide 18: Our core competencies
Our core competencies High Value Segments focus Strong deposit franchise Well diversified Strong brand One Bank approach Digital main bank
Slide 19: Summary
Summary Macro trends support long term opportunities Resilient performance despite challenges Sharpening our strategic focus Continuing to invest for long term growth
Slide 20: Leading the way in Asia, Africa and the Middle East
Leading the way in Asia, Africa and the Middle East Vishu Ramachandran Chief Operating Officer, Consumer Banking
Slide 21: Key messages
Key messages Strong and resilient performance; dealing with Korea and impairment headwinds Sharpening strategy to build a diversified, advantaged and profitable consumer business Continuing to invest for long term growth
Slide 22: Performance over the last three years
Performance over the last three years CAGR % CAGR % 2009 2012 CAGR % (Underlying - ex (Underlying*) US$m Korea) Income 5,629 7,202 9 9 9 Expenses (3,709) (4,723) (8) (10) (11) Operating profit 1,920 2,479 9 7 6 before impairment Loan impairment (1,052) (697) 13 13 18 Other impairment (1) (4) (59) (5
Slide 23: Financial performance – H1 2013
Financial performance – H1 2013 YoY% Highlights YoY% H1 12 H2 12 H1 13 YoY% CCY* CCY* US$m ex. Korea Income momentum Income 3,429 3,592 3,683 7 7 10 despite headwinds across geographies and products Expenses (2,246) (2,350) (2,340) (4) (4) (5) Disciplined expense Operating profit 1,183 1,242 1,3
Slide 24: Income by geography and product
Income by geography and product Highlights By geography Diversified growth with strong underlying US$m H1 12 H1 13 YoY% CCY % momentum in key markets Hong Kong 674 780 16 16 16% Slower income growth in a few big markets – Singapore, Korea Singapore 479 493 3 2 Strong CCPL*, Mortgage, and Wealt
Slide 25: Balance sheet momentum
Balance sheet momentum Customer loans and advances Customer deposits H1 13 vs H2 12 H1 13 vs H2 12 US$bn H1 2013 YoY% % CCY % US$bn H1 2013 YoY% % CCY % Mortgages 70 (1) (3) 0 CASA* 97 10 0 2 CCPL 22 7 (3) 0 TD** 62 3 (2) 0 SME 20 9 2 6 Other 6 (31) (21) (19) Other 16 9 2 1 Total 128 3 (2) 1 Total 1
Slide 26: Portfolio performance
Portfolio performance Loan impairment trends Loan impairment by key products H1 12 H2 12 H1 13 120 115 Mortgages LI/ANR* (0.02%) 0.02% 0.02% 30dpd/ENR** 0.66% 0.68% 0.54% 80 Loan book (US$bn) 71 73 70 LI (US$m) (9) 8 6 67 SME 55 53 LI/ANR 0.51% 0.63% 0.45% 42 90dpd/ENR 0.53% 0.68% 0.77% Loan book (U
Slide 27: Loan impairment: Drivers of CCPL
Loan impairment: Drivers of CCPL 447 444 67 3 92 288 248 40 H1 12 Debt sales H1 12 Korea & Other H1 2013 Debt sales H1 13 (reported) (underlying) Thailand countries (underlying) (reported) Reported 79% growth Underlying 55% growth Underlying growth 35% excluding Korea & Thailand
Slide 28: Restoring Korea to profitability
Restoring Korea to profitability De-risk Personal Loan Balance portfolio sheet US$m H1 13 YoY% HoH% Exit savings bank and capital company CASA focus and Wealth Income 573 (3) (4) Management fee income growth Expenses (403) (3) nm Branch and in-house Distribution origination Accelerate digi
Slide 29: Creating a diversified, advantaged and profitable consumer franchise
Creating a diversified, advantaged and profitable consumer franchise 1 Focus on priority markets and mitigate Korea drag High single digit income growth 2 Sharpen resource allocation Positive jaws decisions Double digit operating profit growth 3 Improve productivity and strengthen the control
Slide 30: Focus on priority markets
1 Focus on priority markets 15.0 = US$0.5bn Priority markets (7markets) CCY 2009-2012 CAGR (%) 10.0 Grow or maintain (7 markets) 5.0 Reshape (5 markets) 0.0 Shrink and reshape (Korea) Review (5 markets) (5.0) (15.0) (1.0) 0.0 1.0 2.0 3.0 4.0 5.0 Operating profit RoRWA %* *H1 13 data shown on an annu
Slide 31: Sharpen resource allocation decisions
2 Sharpen resource allocation decisions Priority Grow or Maintain Reshape (7 markets) (7 markets) (5 markets) CB will disproportionately CB has attractive growth Attractive banking markets allocate RWA and expense and returns as well as capacity relevant scale Change CB’s business mix and in
Slide 32: Impact of 2013 resource allocation
2 Impact of 2013 resource allocation % of incremental % % of total in H1 13 Annualised (H1 13 vs H1 12) (H1 13 vs H1 12) OP RoRWA% Expenses RWA in H1 13 Expenses RWA Expenses RWA Priority 59 54 3.1 78 76 7 15 Grow or 10 11 2.6 7 15 4 15 maintain Reshape 12 15 0.8 4 6 2 4 Shrink and 17 19 -0.3 11 5 3
Slide 33: Improve productivity
3 Improve productivity Objectives Key initiatives Impact of 2013 actions Reduce rate of people cost Increase frontline productivity People Staff growth relative to income Rebase Head Office support expenses leverage ↑ 7% growth Spans and layers (Income / (ex-KR) ~50% Create investment capa
Slide 34: Reduce volatility
4 Reduce volatility Sources of volatility How we are responding High A Unsecured credit losses C Korea de-risking Control Single product, higher risk environment personal loans D Higher risk channels E Margins A Currency B Wealth Management fee income Unsecured Mix credit losses Banca and
Slide 35: Continuing to invest for long term growth
Continuing to invest for long term growth Estimated % of total investment Change (%) 10 Branding and marketing Flat 10 10 Mobile and online 10 20 15 Customer focused systems 10 25 25 Branch 20 5 35 Frontline staff 15 20 5 Regulatory and controls 15 20 2009-12 2013-17
Slide 36: Summary
Summary Despite challenges, our 2013 performance has been resilient We are confident in our markets and our competitive strengths We are sharpening our focus We still aspire to strong growth while protecting returns
Slide 37: Bringing it all together
Bringing it all together To be the world’s best international Consumer Bank in each of our chosen markets and segments across Asia, Africa and the Middle East Participation model Customer focus ‘Back to basics’ Customer Charter Our team is here to give you… Friendly, fast and accurate service SCB Wa