Standard Chartered Plc · LSE:STAN
Standard Chartered — Investor Day (May 2017)
55 slides from Standard Chartered's investor day presentation, May 25, 2017
Slide 1: Seizing the China opportunity
Seizing the China opportunity Greater China & North Asia investor day Document Title 0
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: Benjamin Hung
Benjamin Hung Regional CEO, Greater China & North Asia Document Title 2
Slide 4: Agenda
Agenda 1:00pm Introduction 1:05pm Region overview and key trends 1:30pm China macro: transitioning towards a more balanced economy 1:45pm Initial Q&A 2:00 – 4:30pm Split into 4 groups to each cover 4 topics (30min + 10min break per topic) • China: reforming at pace, creating new opportunities • Hong
Slide 5: What you will hear today
What you will hear today • GCNA is core to the Group - strong domestic and network value generator • Region is highly interconnected, with China at the core • Positive progress on strategic priorities, strengthening franchise further • China’s opening brings new opportunities, notwithstanding challe
Slide 6: Standard Chartered overview
Standard Chartered overview Over 150 years in some of the world's most dynamic markets Group income by region GCNA ASA AME EA C&OI 70 c. 90% 4 markets income from 4 client 20% Asia, Africa & segments and 29% Middle East 4 regions 12% 2016 performance highlights 38% Operating Profit before GCNA incom
Slide 7: GCNA consists of five sizeable markets with varying degrees of maturity
GCNA consists of five sizeable markets with varying degrees of maturity GCNA snapshot by market (2016) Hong Kong China Taiwan Korea Japan GCNA Group Income ($m) 3,138 696 407 881 68 5,190 13,808 Profit before tax ($m) 1,111 108 69 35 17 1,340 1,093 No. of employees ~6,000 ~5,000 ~3,200 ~4,700 ~150 ~
Slide 8: Highly interconnected region with China at the core
Highly interconnected region with China at the core GCNA region highlights Key trading partners (by rank) #1: China #3: Japan ~1/4 of world GDP and world trade #2: HK #5: HK #3: Japan #6: Taiwan #4: Korea #5: Taiwan ~36% of world GDP growth Over 60% of China’s FDI and ODI via HK Korea Japan #1: Chin
Slide 9: Positive progress on strategic priorities in the region
Positive progress on strategic priorities in the region Stabilised income momentum… •Secured foundations… Income ($m) Headcount Expenses 1,391 1,381 -18% -6% 1,310 1,329 1,298 1,274 1,277 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Jan' 15 Dec' 16 2015 2016 … and improved quality and mix of portfolio
Slide 10: China's opening brings further significant opportunities
China’s opening brings further significant opportunities Five key trends around China’s opening 2016 income: ~$1bn 1 RMB 2 China capital account internationalisation opening and capital RMB internationalisation • 6th most used markets liberalisation currency globally • 3rd largest bond market • SDR
Slide 11: China's determination and pace of reform
China’s determination and pace of reform 2009 Now Onshore liberalisation • Loan interest rate Policy driven Liberalised • Deposit interest rate Policy driven Liberalised • Deposit protection insurance No protection Deposit protection scheme in place RMB internationalisation • Payment #351 #6 • Trade
Slide 12: Near-term risks exist but long term opportunities compelling
Near-term risks exist but long term opportunities compelling • Uncertainties and headwinds Opportunities Slowing GDP growth More sustained, higher quality GDP Capital outflows and devaluation Opening up of China Over leveraged banking system Intra-regional trade and investment Asset prices Financial
Slide 13: Secured foundations, building momentum in GCNA
Secured foundations, building momentum in GCNA Strategic priorities GCNA performance 2016 % of Q1 17 momentum1 $m Group (Better / Worse) Capture opportunities from 1 China’s opening Income 5,190 Income 38% Q1 17: $1,381m 2 Strengthen market position in HK Expenses (3,546) Expenses 36% Deliver networ
Slide 14: China macro: Transitioning towards a more balanced economy
China macro Transitioning towards a more balanced economy Shuang Ding Head, Greater China Economic Research Document Title 13
Slide 15: Despite slowdown, China contributed 1/3 of global growth
Despite slowdown, China contributed 1/3 of global growth Growth slowed since Global Financial Crisis Working age population peaked, dependency rising % YoY Person in millions (LHS); % (RHS) 16 1,050 20 14 1,000 18 12 950 16 900 10 850 14 8 800 12 6 750 10 4 700 2 650 8 0 600 6 1991 1993 1995 1997 19
Slide 16: Economy is less dependent on exports and investment
Economy is less dependent on exports and investment Consumption now biggest GDP contributor Service sector accounts for over half of the economy Contribution, ppt % 20 55 52 15 50 10 45 5 40 0 35 33 (5) 30 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 1990 1992 1994 1996 1998
Slide 17: Risks: worry about the right things
Risks: worry about the right things Corporate leverage Home prices to annual income Debt / GDP ratio, % Ratio 300 30 250 25 20 200 15 150 10 100 5 50 0 Wuhan Beijing Tianjin Taiyuan Dalian Ningbo Shijiazhua Zhengzhou Lanzhou Haikou Shenzhen Xiamen Hangzhou Fuzhou Nanjing Nanning Shanghai Hefei Nanch
Slide 18: Opportunities: too big to ignore
Opportunities: too big to ignore Urbanisation ratio continues to rise Demographic dividend: from quantity to quality % (LHS); person in millions (RHS) Person in millions 70 30 8 60 7 25 50 6 20 5 40 15 4 30 3 10 20 2 10 5 1 0 0 0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016
Slide 19: Transitioning towards a more balanced economy
Transitioning towards a more balanced economy • Despite slowdown, China contributed one-third of global growth in 2016 • Expect government’s annual GDP growth target of ~6.5% to be maintained for the next few years • Rebalancing towards a consumption- and service-based economy • While overcapacity e
Slide 20: China: Reforming at pace, creating new opportunities
China Reforming at pace, creating new opportunities Jerry Zhang CEO, China Document Title 19
Slide 21: Top three foreign bank, 159 years of unbroken history
Top three foreign bank, 159 years of unbroken history • Growing relevance to China’s strategic reform plans 101 outlets across 29 cities Harbin • Onshore performance only part of total picture Shenyang Hohhot Beijing Tianjin Dalian • Secured foundations, vigilant to the challenges Taiyuan Jinan Qing
Slide 22: Our footprint distinguishes us as a top three foreign bank
Our footprint distinguishes us as a top three foreign bank Branch network highly relevant to the franchise… …supporting a comprehensive set of capital markets licenses Bank Bank Bank Bank A B C D Bond underwriting – CGB One of largest foreign bank networks in China primary dealership Overseas direct
Slide 23: China onshore financial results only part of total picture
China onshore financial results only part of total picture China onshore financial performance Also a significant (top two) network contributor • Impacted by economic slowdown, de-risking actions • Servicing Chinese corporates “going out” and… • Delivered cost efficiencies to invest for growth • …Mu
Slide 24: Secured foundations: significant actions on risk and cost
Secured foundations: significant actions on risk and cost De-risking largely complete, remain vigilant Delivered cost efficiencies to invest for growth Pivoting to “New China” industries • Materially de-risked portfolio over past 2 years • Optimising branch network, focusing on core cities • Focused
Slide 25: China's opening presents growing income opportunities
China’s opening presents growing income opportunities 1. Banking the new economy 2 • Pivoting to “New China” industries 3 China capital account • Targeting “internationally oriented” Chinese clients RMB Internationalisation opening and liberalisation of onshore capital markets 2. Capital Markets and
Slide 26: Well placed to capture opportunities
Well placed to capture opportunities Core advantages Strategic priorities CIB and Commercial Banking 1 • History, presence and brand Connect China to network with enhanced capabilities • Global and regional network Grow portfolio through city and industry focus 2 (particularly along Belt & Road)
Slide 27: Hong Kong: The super-connector for the region
Hong Kong The super-connector for the region Mary Huen CEO, Hong Kong Document Title 26
Slide 28: Largest market for the Group with attractive returns
Largest market for the Group with attractive returns Deep-rooted franchise in an attractive market Key contributor to the Group Financial performance Hong Kong: vibrant market with a large banking and financial sector Income: $3.1bn Customer deposits: $102bn Hong Hong Kong Kong Oldest bank operating
Slide 29: Encouraging progress in transformation
Encouraging progress in transformation Stabilised income momentum, quality improving Income, $m 1,517 1,540 1,598 Fit-for-growth with foundations secured • Reshaped core and de-emphasised non-core businesses H2 15 H1 16 H2 16 Q1 17 • Attacked cost base and invested in strengths Delivering improved p
Slide 30: Headroom for sustainable growth
Headroom for sustainable growth 1 Grow main bank and market share 2 Super-connector for China’s opening 1 2 Strong market position RMB internationalisation China capital account and onshore capital • 1.6 million Retail clients: markets opening ~25% of Hong Kong’s bankable population ~30% share of Pr
Slide 31: Grow main bank and market share
1 Grow main bank and market share Segment profile Strategic priorities • Largest income and profits generator • Acquire ‘right’ target clients through Retail • Priority Banking main income driver alliances and Employee Banking Banking • >60% income from Wealth and Deposits • Deepen relationships and
Slide 32: Super-connector for China's opening
2 Super-connector for China’s opening Gateway into and out of China – last stop in, first stop out Conducive environment Depth of liquidity China Largest RMB pool Rule of law; robust Hong Kong regulatory environment Unique access (e.g. Stock Connect, Bond Connect, Mutual Funds Recognition)
Slide 33: Key messages
Key messages • Key local player with scale • Encouraging progress in transformation • Headroom to grow • Capture main bank and market share • Be the super-connector for China’s opening • Investing to further strengthen our market position • Competitively advantaged to capture opportunities Document
Slide 34: Corporate & Institutional Banking: Network linkages, RMB internationalisation and Belt & Road
Corporate & Institutional Banking Network linkages, RMB internationalisation and Belt & Road Darcy Lai Carmen Ling Regional Head of Global Banking Head of Global RMB Corporate & Institutional Banking, GCNA Corporate & Institutional Banking Document Title 33
Slide 35: Strong franchise - key origination and destination region
Strong franchise - key origination and destination region China and Korea as major origination centres • Valuable franchise with strong client Hong Kong as capability anchor for region relationships GCNA CIB income (2016) Onshore income Hong Kong • Network a true differentiator Japan Taiwan Korea Ch
Slide 36: A balanced portfolio positioned for growth
A balanced portfolio positioned for growth 1 Stabilised income momentum… 2 …with a focus on returns Income, $m Income RoRWA, % 600 8% 6% 400 4% 200 2% 0 0% Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 3 Balanced product mix… 4 …driven by a more diversified portfolio Income
Slide 37: Strategic priorities to further strengthen our franchise
Strategic priorities to further strengthen our franchise International investment Top Chinese conglomerate Leverage Hong Kong as a capability anchor management company Transaction: Our role: Regional treasury centre (RTC) set-up Appointed as bond settlement agent to in HK support the client’s direct
Slide 38: Unique footprint with broadest coverage along Belt & Road
Unique footprint with broadest coverage along Belt & Road Strong network and value proposition • Robust presence with over 150 years history in Africa, ASEAN, South Asia • Expertise in project finance, M&A, leveraged finance, capital markets • Thought leadership to promote RMB adoption in Belt & Roa
Slide 39: RMB internationalisation: significant potential
RMB internationalisation: significant potential China capital markets opening FX and Risk management Rising global RMB usage Foreign holdings of % of China’s cross-border goods trade FX still in its infancy stages onshore bonds1 denominated in RMB3 RMB 4-7tn Average daily transaction volume, Apr 201
Slide 40: Realising the potential with our leading RMB capabilities
Realising the potential with our leading RMB capabilities One-stop shop Onshore/Offshore leader First mover FX and CIBM RMB RMB access clearing bond 1 of 5 foreign bond Onshore Settlement settlement agents • Top 3 foreign bank for FX volume • Market first corporate CNY payment using CIPS Only foreig
Slide 41: Retail Banking: GCNA transformation, capturing mainland wealth
Retail Banking GCNA transformation, capturing mainland wealth Samir Subberwal Regional Head of Retail Banking, GCNA Document Title 40
Slide 42: Key messages
Key messages Vision • Vision: Become best bank for affluent, emerging affluent and business clients • Full relationship approach, digital end-to-end, focus on core cities Progress • 2 years into transformation with encouraging progress • Improved share of income from Priority clients to 46% (2014: 3
Slide 43: GCNA Retail Banking is a core contributor to the Group
GCNA Retail Banking is a core contributor to the Group, consisting of four sizeable markets % of Group FY16 Retail Banking Attractive returns – double digit RoE in 2016 $m Operating income 2,445 52% Strong position in Hong Kong Profit before tax 551 72% Well positioned to capture mainland wealth flo
Slide 44: Hong Kong – strong business with room to grow
Hong Kong – strong business with room to grow • Focus on affluent and • Leverage alliances and • Build digital capabilities emerging affluent Employee Banking Priority driven business Leverage Employee Banking channel Increase sales via digital channels Income mix Priority Banking new-to-bank client
Slide 45: Addressing retail performance in Korea and China
Addressing retail performance in Korea and China Focus on target segments in Drive productivity, focus on affluent core cities Profit / (loss) before tax ($m) Profit / (loss) before tax ($m) 150 150 0 0 (150) (150) 2015 2016 2015 2016 Challenges Strategic priorities Challenges Strategic priorities •
Slide 46: Well positioned to capture mainland wealth flows
Well positioned to capture mainland wealth flows Opportunity Rising middle class seeking further investment channels Increasingly international by nature Over 3.6m millionaires1 in our core cities in China Strategic enablers Targeted proposition for “international” Chinese clients Leverage
Slide 47: Digital transformation
Digital transformation • Retail Workbench for fully digital On-boarding on-boarding experience • Self-Bank in Korea Activation • First to launch Touch Login in key markets • First banking partner for Alipay and O!ePay in Hong Kong Alliances • First batch of banks for Apple Pay, Android Pay, Samsung
Slide 48: Benjamin Hung
Benjamin Hung Regional CEO, Greater China & North Asia Document Title 47
Slide 49: Uniquely positioned for China's opening
Uniquely positioned for China’s opening Our differentiators in GCNA Top three foreign bank across all Presence across Asia, Africa and major GCNA markets the Middle East Broadest coverage along Leader in Differentiated Comprehensive product suite Belt & Road economies targeted Differentiated network
Slide 50: Q&A
Q&A Standard @& Chartered &Q 49
Slide 51: Speaker biographies
Speaker biographies Benjamin Hung Pi Cheng BBS JP Gregg Powell Regional Chief Executive Officer Regional Chief Financial Officer Greater China & North Asia Greater China & North Asia Standard Chartered Bank Standard Chartered Bank Ben is the Regional CEO for Greater China & North Asia for Standard G
Slide 52: Speaker biographies
Speaker biographies Mary Huen Jerry Zhang Chief Executive Officer Executive Vice Chairman Standard Chartered Bank (Hong Kong) Limited Chief Executive Officer Standard Chartered Bank (China) Limited Mary is the CEO of Standard Chartered Bank (Hong Kong) Limited Jerry is the Executive Vice Chairman an
Slide 53: Speaker biographies
Speaker biographies Darcy Lai Carmen Ling Managing Director Managing Director Regional Head of Global Banking Head, Global RMB Corporate & Institutional Banking Corporate & Institutional Banking Greater China & North Asia Darcy is the Regional Head of Global Banking, Corporate & Institutional Carmen
Slide 54: Speaker biographies
Speaker biographies Samir Subberwal Shuang Ding Managing Director Head, Greater China Economic Research Regional Head of Retail Banking Greater China & North Asia Samir is the Regional Head of Retail Banking for Greater China & North Asia. Shuang joined the Bank as Head of Greater China Economic Res
Slide 55: Glossary
Glossary Acronym / term Explanation Acronym / term Explanation ABS Asset backed securities GCNA Greater China & North Asia AIIB Asian Infrastructure Investment Bank HK Hong Kong HKMA Hong Kong Monetary Authority AME Africa & Middle East LGB Local government bonds ASA ASEAN & South Asia LHS Left hand