Slide 1: FY'21 and 4Q'21 Results and Investor Update
CONFIDENTIAL FY’21 and 4Q’21 Results and Investor Update 17 February 2022
Slide 2: Contents
CONFIDENTIAL Contents Bill Winters, Group Chief Executive • Strategy update 15 • Conclusion 37 Andy Halford, Group Chief Financial Officer • FY’21 and 4Q’21 Performance 4 • Financial framework 29 Simon Cooper, CEO, Corporate, Commercial & Institutional Banking, and CEO, Europe & Americas • Strategy
Slide 3: FY'21 and 4Q'21 Performance
CONFIDENTIAL FY’21 and 4Q’21 Performance 3
Slide 4: A resilient FY'21 performance returning to top line growth in 2H'21
CONFIDENTIAL A resilient FY’21 performance returning to top line growth in 2H’21, an increased dividend and a buyback ($bn) FY’20 FY’21 YoY1 ccy1 • FY’21 income was broadly flat YoY with a return to top Net interest income 6.9 6.8 (1)% (2)% line growth in 2H’21, up 4% ex-DVA at ccy → Introduction Ot
Slide 5: Full year income down 1%; returned to growth of 4% in the second half
CONFIDENTIAL Full year income down 1%; returned to growth of 4% in the second half Income FY’21 vs FY’20 1 – Product view ($bn) Introduction (1)% → Income Segment/region Expenses Risk 0.2 0.1 0.0 Capital 0.2 0.3 Summary 14.9 (0.0) (0.4) 14.7 Strategy update (0.6) Financial framework Conclusion 15% 1
Slide 6: NII down 2% as asset growth of 6% more than offset by 10bps NIM decline
CONFIDENTIAL NII down 2% as asset growth of 6% more than offset by 10bps NIM decline Gross yield (bps) 234 183 199 185 186 184 178 Introduction → Income Rate paid (bps) 112 67 82 69 69 66 65 • NII2 down 2% YoY Segment/region Expenses 1.31 o AIEA up $33bn / 6% more than offset by… Risk 1.24 1.22 1.22
Slide 7: FY'21 Other income ex-DVA was flat YoY
CONFIDENTIAL FY’21 Other income ex-DVA was flat YoY1 Other income, statutory basis ($m) Introduction → Income Segment/region Expenses Risk 7,889 7,888 2,281 • Net fees and commissions up 18% YoY Capital Summary 2,032 o CPBB up 17% YoY driven by Wealth Strategy update 1,978 Management Financial frame
Slide 8: Increased returns driven by lower impairments and resilient income
CONFIDENTIAL Increased returns driven by lower impairments and resilient income Segments Regions FY’21 FY’21 vs FY’20 (inc/(dec)) YoY1 Introduction FY’21 FY’21 vs FY’20 (inc/(dec)) YoY1 Income Asia → Segment/region Corporate, Commercial & Institutional Banking Expenses Income $10.4bn 1% Risk Income2
Slide 9: Large market progress: Top markets delivering around 10%+ RoTE
CONFIDENTIAL Large market progress: Top 5 markets delivering around 10%+ RoTE; Optimisation markets PBT up ~3X since 2018 YoY FY’21 YoY FY’21 change Income ccy % RoTE %pts Introduction Income Hong Kong $3,440m (2)% 14% (0)%pts → Segment/region Expenses Risk Capital Singapore $1,608m 2% 12% 10%pts Su
Slide 10: Expenses flat after normalising for performance related pay and at constant currency
CONFIDENTIAL Expenses flat after normalising for performance related pay and at constant currency Total operating expenses FY’20 to FY’21 ($bn) Introduction • FY’21 expenses $10.3bn, up 5% YoY; 3% ccy Income Segment/region Flat o Performance-related pay (PRP) has → Expenses Risk 0.3 10.3 0.3 10.3 in
Slide 11: FY'21 Credit Impairment remains low and high-risk assets decline further
CONFIDENTIAL FY’21 Credit Impairment remains low and high-risk assets decline further Credit impairment ($m) / Loan-loss rate Introduction • FY’21 credit impairment of $263m, down Income Loan-loss rate1 27bps 66bps 7bps $2,031m Segment/region Expenses o CCIB net releases $(44)m offset by CPBB → Risk
Slide 12: RWA up 1%, CET1 strong enabling shareholder returns
CONFIDENTIAL RWA up 1%, CET1 strong enabling shareholder returns Risk-weighted assets (RWA) ($bn) Introduction $2bn Income 3.7 • RWA up $2bn, 1% in 2021 to $271bn Segment/region 10.2 0.9 Expenses (2.2) 6.4 276.6 o Client led asset growth $10bn and Structural Risk (5.3) 271.2 → Capital 268.8 (4.9) (1
Slide 13: A resilient 2021 performance, positive action on capital and good momentum into 2022
CONFIDENTIAL A resilient 2021 performance, positive action on capital and good momentum into 2022 Introduction • We have returned to top line growth in the second half of 2021 Income Segment/region Expenses • We continue to manage costs tightly and have taken further restructuring Risk Summary actio
Slide 14: Strategy Update
CONFIDENTIAL Strategy Update 14
Slide 15: We have conducted a bottoms-up review of the business
CONFIDENTIAL We have conducted a bottoms-up review of the business… and identified areas where we can do more Introduction Income Progress Made Future Focus Segment/region Expenses Risk Capital RWA Reduction of CCIB Further reductions Summary → Strategy update Optimisation low-returning RWA and fast
Slide 16: Actions to deliver a return on tangible equity of 10 per cent by 2024
CONFIDENTIAL Actions to deliver a return on tangible equity of 10 per cent by 2024 CCIB Income RoRWA Introduction CCIB Drive improved returns Income up ~160bps to ~6.5% Segment/region Expenses Risk Capital Summary CPBB Transform profitability CPBB CIR → Strategy update Financial framework ~60% from
Slide 17: We continue to expect strong growth across our footprint
CONFIDENTIAL We continue to expect strong growth across our footprint… Asia real GDP growth1 (%) Asia Affluent Liquid AAME Mass Retail Introduction Income Assets2 ($tn) Revenue Pool3 ($bn) Segment/region 7.2% Expenses +9% CAGR +7% CAGR Risk 5.4% Capital 5.0% Summary 21.5 252 → Strategy update 2.8% F
Slide 18: …and see exciting opportunities emerging, albeit COVID-19 risks remain
CONFIDENTIAL …and see exciting opportunities emerging, albeit COVID-19 risks remain ~25% Introduction Income Segment/region Government and Central Bank policies generating Financial Markets and Wealth Management Expenses Risk opportunities Capital Summary → Strategy update Financial framework Accele
Slide 19: Actions to deliver a return on tangible equity of 10 per cent by 2024
CONFIDENTIAL Actions to deliver a return on tangible equity of 10 per cent by 2024 CCIB Income RoRWA Introduction Income CCIB Drive improved returns up ~160bps to ~6.5% Segment/region Expenses Risk Capital Summary CPBB CIR → Strategy update CPBB Transform profitability Financial framework ~60% from
Slide 20: Sharpen focus on RWA optimisation
CONFIDENTIAL Sharpen focus on RWA optimisation Income RoRWA1 4.9% ~105 bps ~60 bps ~6.5% Introduction (%) Income Segment/region Expenses Flat Risk Capital Summary → Strategy update Financial framework $163bn $163bn Conclusion Risk-weighted assets (RWA)2 ($bn) RWA reduction: $22bn FY’21 Business grow
Slide 21: Drive growth in high returning Financial Institutions segment
CONFIDENTIAL Drive growth in high returning Financial Institutions segment Good trajectory in high-returning …which we will further boost in the coming Financial Institution (“FI”) clients… years Introduction 3.3 Income 3.0 ▪ Key focus on Investors and Banks clients as growth drivers FI segment Segm
Slide 22: Actions to deliver a return on tangible equity of 10 per cent by 2024
CONFIDENTIAL Actions to deliver a return on tangible equity of 10 per cent by 2024 CCIB Income RoRWA Introduction Income CCIB Drive improved returns up ~160bps to ~6.5% Segment/region Expenses Risk Capital Summary CPBB CIR → Strategy update CPBB Transform profitability Financial framework ~60% from
Slide 23: Efficiency actions creating investment capacity and improving CIR to ~60%
CONFIDENTIAL Efficiency actions creating investment capacity and improving CIR to ~60% Cost Income Introduction 76% Income Segment/region Expenses Cost to income ~60% Risk ratio % Capital Summary → Strategy update Financial framework FY’21 Efficiency & Investments Inflation & Income growth FY’24 Con
Slide 24: Drive growth in Affluent and Wealth and scale up Mass Retail profitably
CONFIDENTIAL Drive growth in Affluent and Wealth and scale up Mass Retail profitably Strong momentum in 2021… ...with competitive differentiators... ...that will drive future growth FY’21 YoY FY’18-’21 • International brand with pan-Asia, AME & UK • Enhanced cross-border digital channels Introductio
Slide 25: Actions to deliver a return on tangible equity of 10 per cent by 2024
CONFIDENTIAL Actions to deliver a return on tangible equity of 10 per cent by 2024 CCIB Income RoRWA Introduction Income CCIB Drive improved returns up ~160bps to ~6.5% Segment/region Expenses Risk Capital Summary CPBB Transform profitability CPBB CIR → Strategy update Financial framework ~60% from
Slide 26: Our China business is well positioned for structural changes
CONFIDENTIAL Our China business is well positioned for structural changes Structural shifts are driving significant opportunity Uniquely positioned with China at the core and HK as capabilities hub… Introduction Income Segment/region Expenses Risk Capital • Global asset redenomination to RMB and Sum
Slide 27: We will further invest in China, one of our key markets for growth
CONFIDENTIAL We will further invest in China, one of our key markets for growth Investing a further $300m in growth opportunities and strategic …building on our strong leadership positions priorities in our China-related business… and capabilities to date Introduction • Strengthen financial institut
Slide 28: Financial Framework
CONFIDENTIAL Financial Framework 28
Slide 29: Refreshed Financial Framework: targeting 10% RoTE by 2024
CONFIDENTIAL Refreshed Financial Framework1: we are now targeting 10% RoTE by 2024, enabled by series of management actions, underpinned by rising interest rates • Income growth: 8-10% CAGR target range Introduction o 5-7% underlying Income Income Segment/region o 3% impact of rising interest rates
Slide 30: We expect income to grow 8-10% CAGR over the next three years
CONFIDENTIAL We expect income to grow 8-10% CAGR over the next three years, 5-7% underlying and 3% from rising rates Operating income: expected contribution to 2021-2024 income growth CAGR Introduction Rising Total: Income Underlying Growth: 5-7% Rates 8-10% CAGR Segment/region ~3%pts Expenses Risk
Slide 31: Significant income opportunity from rising interest rates
CONFIDENTIAL Significant income opportunity from rising interest rates 3-month USD rate (LIBOR)1 (bps) Introduction 230 233 229 226 Interest rate assumptions in our targets Income 184 • Our targets assume a more cautious view than the Segment/region Expenses 153 current market outlook on interest ra
Slide 32: Targeting ~2% average positive income-to-cost jaws before the impact of rising rates
CONFIDENTIAL Targeting ~2% average positive income-to-cost jaws before the impact of rising rates Operating expenses1 ($bn) Introduction Income $1.3bn Efficiency $1.3bn P&L effect of Segment/region Programme2 Investment Spend Expenses Risk Capital Summary Strategy update → Financial framework Conclu
Slide 33: We aim to more than double shareholder distributions over the next 3 years
CONFIDENTIAL We aim to more than double shareholder distributions over the next 3 years Ordinary dividend Share buy-back (paid/declared $bn) (paid $bn) Introduction • Over the last 3 years the Group has Income Segment/region Shareholder 0.4 1.0 returned $2.6bn of capital to shareholders Expenses Dis
Slide 34: We have a clear and actionable path to deliver 10% RoTE by 2024
CONFIDENTIAL We have a clear and actionable path to deliver 10% RoTE by 2024 Underlying RoTE FY’21 to FY’24 (%) Introduction Income Segment/region Expenses Risk 10% Capital Net interest income RoTE Summary Strategy update → Financial framework Conclusion 6% FY’21 NII (excl. rate NII - Rate Fees and
Slide 35: Conclusion
CONFIDENTIAL Conclusion 35
Slide 36: In conclusion
CONFIDENTIAL In conclusion • Resilient FY’21 performance Introduction Income Foundations • Income outlook is good Segment/region Expenses and momentum Risk are strong • Expense actions enable strategic investment Capital Summary • Underlying economic and interest rate outlook supportive Strategy Fin
Slide 37: Appendix
CONFIDENTIAL Appendix Macroeconomic indicators, Interest rate sensitivity, Strategic priorities, Central & Others, Digital Ventures, China exposure Information for fixed income investors Sustainability Notes, abbreviated terms and important notice 37
Slide 38: Changes to baseline forecasts for key footprint markets
CONFIDENTIAL Stage 1 and 2 credit impairments Changes to baseline forecasts1 for key footprint markets 3Q’21 4Q’211 Crude price China Hong Kong Korea Singapore India Brent, bbl GDP (YoY): 2022 Forecast 5.6% 5.6% 3.0% 3.0% 2.9% 2.7% 3.6% 3.6% 8.0% 6.9% $58.5 $66.6 GDP (YoY): 2023 Foreca
Slide 39: Interest Rate Risk in the Banking Book
CONFIDENTIAL Interest Rate Risk in the Banking Book Significant income exposure to rising interest rates Annualised benefit to banking book NII from instantaneous parallel shifts in interest rates across all currencies ($m)1, 2, 3 • >50% of Group sensitivity to rising interest rates +50bps (50)bps +
Slide 40: We continue to make good progress on our strategic priorities
CONFIDENTIAL We continue to make good progress on our strategic priorities Network Sustainability FY’21 FY’21 YoY1 YoY1 4.9 Reduction in 4.6 carbon footprint5 -2% 4.4 N/A Network income2 YoY (%) 3% -27% ($bn) -37% FY’19 FY’20 FY’21 93% 83% 78% 51% % sustainability % of CCIB 36% 41% aspirations 4%pts
Slide 41: Central & other adversely impacted by interest rate reductions
CONFIDENTIAL Central & other adversely impacted by interest rate reductions Items excluded from Items excluded from both Items excluded from Client Segments Client Segments and Regions Regions Centrally managed Treasury Markets Treasury Capital Portfolio Management Associates and Joint Ventures Corp
Slide 42: We are launching new digital ventures with significant value creation opportunities
CONFIDENTIAL We are launching new digital ventures with significant value creation opportunities 300k+ Achieved #1 app ranking in Singapore Google / Targets Total Downloads Apple App Store in the Lifestyle category 140k + / $106m + Over $100m Gross Transaction Value (GTV) YTD Scaling By Total SME’s
Slide 43: China Exposure
CONFIDENTIAL China Exposure China ultimate parent company Resilient China book exposure1 ($bn) • 78% of CCIB exposure is investment grade 3% Corporates • 73% of corporate exposure is <1 year tenor 4% Banks • 90% of bank exposures to top 5 banks3; 89% <1 year tenor 19% 44% NBFIs • 92% of bank and non
Slide 44: Appendix
CONFIDENTIAL Appendix Macroeconomic indicators, Interest rate sensitivity, Strategic priorities, Central & Others, Digital Ventures, China exposure Information for fixed income investors Sustainability Notes, abbreviated terms and important notice 44
Slide 45: Resilient performance founded on a unique franchise
CONFIDENTIAL Resilient performance1 founded on a unique franchise Over 160 years in some of the world's most dynamic markets 59 >85% $14.7bn $3.9bn (FY’20: $14.8bn) (FY’20: $2.5bn) Markets Income from Asia, Operating income Profit before taxation Africa & Middle East 70% 6.0% (FY’20: 67%) (FY’20: 3.
Slide 46: Balance sheet strength through volatile times
CONFIDENTIAL Balance sheet strength through volatile times CET1 14.4% 14.1% 14.1% Min requirement • CET1 capacity to support shareholder distributions and growth 10.1% FY'20 1H'21 FY'21 MREL 30.9% 31.7% 31.7% Min requirement • MREL issuance of $10.8bn in FY’21 across capital structure, strong 26.4%1
Slide 47: Progress on improving capital deployment and funding quality
CONFIDENTIAL Progress on improving capital deployment and funding quality More efficient use of capital Continued improvement to funding quality Improving returns despite interest rate headwinds via Significant increase in high-quality liabilities driving a capital efficiencies and prudent risk mana
Slide 48: Balance sheet: Business and geography diversity underpins resilience
CONFIDENTIAL Balance sheet Business and geography diversity underpins resilience FY’21 Balance sheet assets 1 FY’21 Customer loans & advances 1,2 by market and segment 1 Hong Kong CCIB 8% Loans & advances to customers 17% 6% Singapore CPBB Investment securities 7% 24% UK 8% 2% C&O 45% Cash & balance
Slide 49: Stronger foundations supporting resilient performance
CONFIDENTIAL Stronger foundations supporting resilient performance Key risk indicators FY’21 FY’14 1H’21-FY’14 • Key portfolio indicators improved since (IFRS 9) (IAS 39) Movement FY’14 reflecting: Investment grade as a % of corporate exposure 69% 42% Top 20 corporates as a % of Tier 1 capital 61% 8
Slide 50: The Group's liquidity position remained resilient in FY'21
CONFIDENTIAL Funding and Liquidity The Group’s liquidity position remained resilient in FY’21 Liquidity coverage ratio ($bn) 143% 146% 143% • LCR has remained resilient during FY’21: well above regulatory minimum requirements 176 168 172 123 115 121 • Continued focus on managing LCR with better FY'2
Slide 51: CET1 strongly positioned: absolutely and relative to requirements
CONFIDENTIAL CET1 Strongly positioned: absolutely and relative to requirements1 CET1 minimum requirement slightly increased in the period 10.0% 10.1% CCB • Minimum CET1 requirement increased by 10bps 2.5% 2.5% 0.17% CCyB due to new P2A guidance 0.14% G-SII 1.0% 1.0% Pillar 2A • P2A now reflects move
Slide 52: Bank of England Stress Test results
CONFIDENTIAL Bank of England Stress Test (BoE ST) Results demonstrate continued capital strength and resilience to stress CET1 capital ratio - BoE ST results (transitional)1 13.6% 14.4% • Strong capital position in 2021 test with CET1 350bps 600bps Stress drawdown 10.9% 7.6% Surplus to 380bps well a
Slide 53: Well positioned for future growth and requirements (MREL)
CONFIDENTIAL MREL transition Well positioned for future growth and requirements External MREL position ahead of known 2022 requirement 31.7% 26.4% PLC Senior • FY’21 MREL position of 31.7% of $271bn RWA 9.6% Combined Buffer 3.7%1 meets expected 2022 MREL requirement with a Loss absorption Recapitali
Slide 54: Debt Issuance: Good progress on delivery of funding programme
CONFIDENTIAL Debt Issuance Good progress on delivery of funding programme Maturity profile of existing stock ($bn)1 Recent Issuance ($bn) 2021 and 2022 YTD Issuance by 7.5 tenor & currency 0.6 6.3 10.8 5.4 1.6 1.0 5.1 AT1 4.5 1.0 2.1 1.2 1.0 2.0 2.8 $1.25bn PerpNC10 1.0 5.3 $1.5bn PerpNC7 3.9 2.6 3.
Slide 55: Strong credit ratings maintained through COVID
CONFIDENTIAL Strong credit ratings maintained through COVID Delivery of Group strategy to defend and, over time, improve credit ratings Senior long- and short-term ratings S&P Moody’s Fitch • Well-rated with strong credit fundamentals, absolutely Standard A+ A1 A+ and relative to peers: A-1 P-1 F1 C
Slide 56: Standard Chartered Group: Simplified legal structure
CONFIDENTIAL Standard Chartered Group Simplified legal structure, completion of ASEAN hub Standard Chartered PLC Medium Term Senior notes • Completion of the ASEAN hub based Tier 2 securities BBB+/A3/A Tier 1 securities in Singapore in December 2021 (S&P/Moody’s/Fitch) Equity o follows full subsidia
Slide 57: Appendix
CONFIDENTIAL Appendix Macroeconomic indicators, Interest rate sensitivity, Strategic priorities, Central & Others, Digital Ventures, China exposure Information for fixed income investors Sustainability Notes, abbreviated terms and important notice 57
Slide 58: We will lead with a differentiated sustainability offering
CONFIDENTIAL We will lead with a differentiated sustainability offering… … making a difference in the world where it matters most Our impact • EM are most at risk from climate change… o … but have the biggest opportunity to move to low carbon o Average CO2 avoided per dollar of financing is 7x highe
Slide 59: We are part of the solution
CONFIDENTIAL We are part of the solution Our plan 2021 achievements • Net zero by 2050 for financed emissions • SF income up 146% YoY, SF Assets up 62% YTD Dec’21 • $1bn SF income in the medium-term • Facilitated $9.6bn for sustainable infrastructure and • Financing commitments $22bn for renewable e
Slide 60: Our roadmap to net zero financed emissions by 2050
CONFIDENTIAL Our roadmap to net zero financed emissions by 2050 Recognising the pivotal role we can play in the transition • Catalyse finance and partnerships to scale impact, capital Definition and climate solutions to where they are needed most Achieving net zero financed emissions by 2050, defini
Slide 61: Appendix
CONFIDENTIAL Appendix Macroeconomic indicators, Interest rate sensitivity, Strategic priorities, Central & Others, Digital Ventures, China exposure Information for fixed income investors Sustainability Notes, abbreviated terms and important notice 61
Slide 62: Notes
CONFIDENTIAL Notes These notes refer to the metrics and defined terms on the following pages Page Explanatory note or definition 1. YoY = year-on-year variance is better/(worse) other than for RWA, CET1 ratio and LCR, which is increase/(decrease) / Ccy = constant currency / Nm = Not 4 meaningful; ch
Slide 63: Notes
CONFIDENTIAL Notes These notes refer to the metrics and defined terms on the following pages Page Explanatory note or definition 1. RWA FX & Others include FX of $(4.4)bn, RWA efficiencies of $(1.1)bn, software relief of +$0.3bn and Operational RWA of +$0.3bn 12 2. AT1/Dividend includes a foreseeabl
Slide 64: Notes
CONFIDENTIAL Notes These notes refer to the metrics and defined terms on the following pages Page Explanatory note or definition 1. Income return on risk weighted assets (IRoRWA) % are based upon average RWA balances 20 2. Risk weighted assets ($ billions) are period end balances, not average balanc
Slide 65: Notes
CONFIDENTIAL Notes These notes refer to the metrics and defined terms on the following pages Page Explanatory note or definition 1. Forward rates sourced from Cortex as at 26.1.22 31 2. NII sensitivity estimate based on instantaneous parallel shift (increase or decrease) across all currencies. Estim
Slide 66: Notes
CONFIDENTIAL Notes These notes refer to the metrics and defined terms on the following pages Page Explanatory note or definition 1. YoY = year-on-year variance is better/(worse) 40 2. Network income : CCIB income generated outside of a client’s headquarter country (excluding risk management, trading
Slide 67: Notes
CONFIDENTIAL Notes These notes refer to the metrics and defined terms on the following pages Page Explanatory note or definition 1. Statutory basis 47 2. In FY’19, the Group began to recognize all gains and losses on financial assets and liabilities held at fair value through profit or loss, includi
Slide 68: Notes
CONFIDENTIAL Notes These notes refer to the metrics and defined terms on the following pages Page Explanatory note or definition 1. Absolute buffers are as at 31.12.21. The MDA thresholds assume that the maximum 2.1% of the Pillar 1 and Pillar 2A requirement has been met with AT1 51 2. As PRA’s capi
Slide 69: Selected technical and abbreviated terms
CONFIDENTIAL Selected technical and abbreviated terms Term Definition Term Definition Affluent Loan-loss rate Total credit impairment for loans and advances to customers over average loans and advances to Personal banking services offered to affluent and emerging affluent customers (LLR) customers a
Slide 70: Important Notice
CONFIDENTIAL 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 strat