Standard Chartered Plc · LSE:STAN
Standard Chartered — Investor Day (November 2017)
54 slides from Standard Chartered's investor day presentation, Nov 21, 2017
Slide 1: Delivering sustainable growth
Delivering sustainable growth Corporate & Institutional Banking Investor Seminar 21 November 2017 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: Seminar summary
Seminar summary Webcast Introduction Bill Winters Group Chief Executive Corporate & Institutional Simon Cooper CEO, CIB Banking (CIB) Clients • Global Banking • Focus: the Americas Product Groups • Transaction Banking • Financial Markets • Corporate Finance Balance Sheet Optimisation • Credit and Po
Slide 4: Introduction
Introduction Bill Winters S andard @& Chartered Ss
Slide 5: Corporate & Institutional Banking at Standard Chartered
Corporate & Institutional Banking at Standard Chartered We have over 150 years’ experience in some of Group Income by the world's most dynamic economies Client Segment CIB RB CB PvB C&OI 9% 33% 45% CIB Operating CIB Underlying Profit Income (H1’17) +2% Before Tax (H1’17) +171% $3.2bn YoY $648m YoY C
Slide 6: Corporate & Institutional Banking
Corporate & Institutional Banking Simon Cooper 5
Slide 7: What you will hear today
What you will hear today • Our differentiation • Our progress securing the foundations and improving the business • Our revised approach to capital allocation • Our plan to deliver sustainably higher returns 6
Slide 8: We are uniquely positioned to facilitate trade, capital and investment flows
We are uniquely positioned to facilitate trade, capital and investment flows in and for our footprint Our clients and products Our differentiation Well positioned to capture opportunities from key corridors International 57% Corporates Clients Financial 43% Institutions Corporate & Transaction Insti
Slide 9: We have taken significant actions to improve the business
We have taken significant actions to improve the business What needed fixing Actions so far Good progress… more to do Risk-adjusted revenue1 ($bn, HoH %) “Take and hold” mentality New team in place to continue transformation Uncoordinated client strategy Completely overhauled client -5% +8%
Slide 10: We have rebased income on more secure foundations
We have rebased income on more secure foundations Income ($bn) Deliberate actions to secure foundations 8.6 c.(0.6) c.(0.8) c.(0.2) c.(0.5) 6.5 20141 Business De-risking3 Unprofitable Others4 2016 exits2 transactions exited 1. Restated to reflect the current client segmentation of the Bank 2. Includ
Slide 11: We are allocating capital differently
We are allocating capital differently Analytics Distribution Client level MI – Risk-weighted assets risk / return / liquidity Pillar 2 Relationship optimisation economics economics Credit migration Risk distribution Client Tax decision Risk framework Forward looking Thematic risk portfolio views red
Slide 12: We are confident we can deliver sustainably higher returns
We are confident we can deliver sustainably higher returns 1 We are in economies that are growing 2 We have differentiated positions of strength Operating 3 We see substantial opportunities with new and existing clients income 4 We have launched a number of new growth initiatives 5 We are focused on
Slide 13: We are in economies that are growing
1 We are in economies that are growing 2016-2020 wholesale payments volume 2016-2022 real GDP CAGR (%) 2016-2022 trade CAGR (%) CAGR (%) Americas 3.1 4.0 5.4 Europe 2.2 4.0 5.3 Asia, Africa and the 4.8 4.0 9.2 Middle East 12 Source: IMF, World Payments Report
Slide 14: We have differentiated positions of strength (1/2)
2 We have differentiated positions of strength (1/2) We have leading market positions where our clients need expertise Debt Capital Markets Trade Finance #3 in Asia ex-Japan G3 currency bond issuances1 Leader in Global Trade2 Volume ($bn) In Asia #2 Strength greatest where we are most relevant 2
Slide 15: We have differentiated positions of strength (2/2)
2 We have differentiated positions of strength (2/2) Products where we have a Top 5 market share drive 75% of our income Income by market share in our footprint1 (%) c.10 100 c.15 c.45 c.30 Top 3 Top 4 - 5 Top 6 - 10 Out of Top 10 Total 14 1. Source: Dealogic, CHIPS, Oliver Wyman Transaction Banking
Slide 16: We see substantial opportunities with new and existing clients
3 We see substantial opportunities with new and existing clients We are improving the share of wallet from targeted clients Revenue multiplier Distribution of number of clients Number of products or countries >=11 11% >=11 18.0x Number of products 6-10 31% 6-10 4.0x <=5 58% <=5 1.0x <=5 6-10 >=11 Nu
Slide 17: We have launched a number of new growth initiatives
4 We have launched a number of new growth initiatives OECD • Revitalised Global Subsidiaries team to deliver our network to multinational corporates MNCs • 80 of our target “New 90” clients have already been on-boarded this year Global • We are helping global investors access the China Interbank Bon
Slide 18: We are focused on higher quality income growth
5 We are focused on higher quality income growth Increasing the proportion of network income Optimising the funding mix Network income1 to total income (%) Net operating account balances2 to total liabilities (%) 62% 58% 55% 54% 44% 47% 43% 39% 2015 H1 16 H2 16 H1 17 2015 H1 16 H2 16 H1 17 Reducing
Slide 19: We are adapting to tailwinds and headwinds
6 We are adapting to tailwinds and headwinds Rising and synchronising interest rates Potential Transformational technology improving capability and efficiency tailwinds Recovery in global trade Asset margin compression Potential Fintech disintermediation headwinds Regulatory capital and
Slide 20: We are investing to become simpler, faster and better
7 We are investing to become simpler, faster and better Operating cost ($bn) 2.3 2.1 2.1 H1 15 Cost Investments H1 2016 Cost Aircraft Investments Investments H1 17 efficiency efficiency depreciation - regulatory - strategic • We are investing to become simpler, faster and better • We have been fundi
Slide 21: We will reduce the proportion of low returning client assets
8 We will reduce the proportion of low returning client assets Client risk-weighted asset optimisation ($bn) Our approach going forward • We have optimised three-quarters of the low returning RWAs identified in November 2015 • This was more than offset by conscious client actions, market pressures,
Slide 22: We are confident we can deliver sustainably higher returns
We are confident we can deliver sustainably higher returns 1 We are in economies that are growing 8 2 We will reduce the We have proportion of low differentiated returning client positions of Targeting in the medium term: assets strength • CIB income CAGR of 5-7% 7 3 We see We are investing to becom
Slide 23: Scorecard: focus on higher quality growth and efficiency
Scorecard: focus on higher quality growth and efficiency 1 Prioritise growth and new client acquisition: Clients OECD clients and consumption-led industries who truly value our network Investors and Financial Institutions Growth Strengthen leadership in cash, trade, rates and FX Products D
Slide 24: Summary
Summary 1. Growth trends in our economies remain strong and are highly relevant to our equity story • 85% of the Group’s income is generated in Asia, Africa and the Middle East • Regional connectivity is increasing 2. Our strategy is focused sharply on capturing the opportunities • We are delivering
Slide 25: Clients: Global Banking
Financial Transaction Markets Banking Client Global Corporate Industry Finance Group Clients Global Banking 24
Slide 26: What do we do in Global Banking?
What do we do in Global Banking? Target clients Shift in our coverage model since 2015 Old model Actions Aligned client focus and improved ownership of risk Global MNCs Product- RM at the Client-led led centre Large footprint Global Industry Group corporates Global Banks Banking Multiple RCAF / Simp
Slide 27: Why do clients choose us?
Why do clients choose us? Large China-based construction contractor Why did we win this mandate? We have the broadest One Belt One Road (OBOR) coverage One Belt ‒ Key partner for client’s rapid One Road corridor expansion along OBOR ‒ Main bank in 16 countries outside Greater China China & North A
Slide 28: Why do clients choose us?
Why do clients choose us? Private Equity investors Why did we win this mandate? Emerging markets footprint expertise and opportunities for global investors ‒ Structured and financed acquisition of FSIG1 a leading enterprise-focused fixed Financial telecom operator in Hong Kong Strategic relationsh
Slide 29: How are we going to improve our Global Banking business?
How are we going to improve our Global Banking business? 1 Focus around distinct client segments where our network differentiates us OECD MNCs who operate actively in Asia, Africa and the Middle East Institutions who invest in footprint assets (e.g. RMB) Growth Clients Focus on Top 100, Next
Slide 30: Clients: Focus: Americas
Financial Transaction Markets Banking Client Global Corporate Industry Finance Group Clients Focus: Americas 29
Slide 31: What do we do in the Americas?
What do we do in the Americas? 17% of income is originated from Major origination center with a diverse client base covering Corporates and Financial Institutions clients with headquarters in the Americas (only 37% of this income is booked domestically) Strong credit quality with an investment g
Slide 32: Why do clients choose us in the Americas?
Why do clients choose us in the Americas? Multinational medical devices and pharma company in the US Why did we win this mandate? Greater China Coordinated RMs at client HQ and & North Asia clients’ international locations TB FM ‒ Client serviced locally in c.10 markets L Local capabilities and
Slide 33: Why do clients choose us in the Americas?
Why do clients choose us in the Americas? Global life insurance and financial services provider in Canada Why did we win this mandate? Greater China Expertise in Asian DCM and access to & North Asia a large and diverse investor base TB FM ‒ Client’s first choice lead arranger for debt capital issu
Slide 34: Product Groups: Transaction Banking
Financial Transaction Markets Banking Client Global Corporate Industry Finance Group Product Groups Transaction Banking 33
Slide 35: What do we do in Transaction Banking?
What do we do in Transaction Banking? Clients Products Role of Transaction Banking 77% 54% Foundation of client relationships - provides Corporates and Institutions Cash ‘stickier’, flow-based annuity business Payments, collections, International corporates, account services, treasury banks, inves
Slide 36: Why do clients choose us in Transaction Banking?
Why do clients choose us in Transaction Banking? Banking the ecosystem success stories What differentiates us? Overall client franchise across Business / 300+ spokes1 Commercial Banking and CIB, with TB as American core product platform Conglomerate Asia, Africa and the Middle East network from
Slide 37: How are we going to improve our Transaction Banking business?
How are we going to improve our Transaction Banking business? 1 We will bank more of the ecosystems of our clients Clients We will increase the focus on Securities Services for investors and insurance clients Growth We are building an open banking platform Products We are innovating alongsid
Slide 38: How are we measuring progress in Transaction Banking?
How are we measuring progress in Transaction Banking? Cash: Increasing OPAC1 mix Trade: 7 consecutive quarters of growth Securities Services: Strong AuM growth OPAC liabilities to total liabilities (%) Trade assets and contingents ($bn) YoY growth in AuM (%) 47% 26% 44% 103 111 94 -5% 2016 H1 17 Jun
Slide 39: Product Groups: Financial Markets
Financial Transaction Markets Banking Client Global Corporate Industry Finance Group Product Groups Financial Markets 38
Slide 40: What do we do in Financial Markets?
What do we do in Financial Markets? Facilitate clients’ risk management needs in FX, Rates, Macro products are the Credit and Commodities, specialising in EM largest contributor to Financial Markets income Significant financing franchise to meet clients’ needs, while giving investors access to o
Slide 41: Why do clients choose us in Financial Markets?
Why do clients choose us in Financial Markets? Example: OECD Corporate Client increasingly sells products in EM economies Client’s FX flow converted into US dollars by SCB Large and diverse client base Leveraging SCB’s local knowledge, ability to execute and service Provide daily insight int
Slide 42: How are we going to improve our Financial Markets business?
How are we going to improve our Financial Markets business? 1 We are focusing on Top 100, Next 100 and New 90 client initiatives Clients We will target OECD investor clients with a 24-hour service in world class products We are coordinating sales efforts globally, mapping sales force more tigh
Slide 43: How are we measuring progress in Financial Markets?
How are we measuring progress in Financial Markets? We have strong positions in FICC with room to regain share We are shifting away from mono-product relationships FICC market share in Asia ex Japan & Australia1 (%) Cross-sell 13% 11% 10% 51% of FM clients deal 2+ products 8% 8% Target improved cros
Slide 44: Product Groups: Corporate Finance
Financial Transaction Markets Banking Client Global Corporate Industry Finance Group Product Groups Corporate Finance 43
Slide 45: What do we do in Corporate Finance?
What do we do in Corporate Finance? Client Relationship Manager Portfolio of specialised financing and advisory businesses Global Industry Corporate Finance Corporate Origination, Group Footprint economies continue to see Finance Sector support and investment flows and require capital to grow in
Slide 46: Why do clients choose us in Corporate Finance?
Why do clients choose us in Corporate Finance? European client’s transformative energy project in Africa 1 2 Refocus to Enhanced Sole adviser on a complex hybrid structure support Strong oil and gas expertise structuring OECD and Ability to draw and channel liquidity from client into Africa
Slide 47: How are we going to improve our Corporate Finance business?
How are we going to improve our Corporate Finance business? 1 We are aligning to our priority clients: Top 100, Next 100, New 90 Clients We are improving idea generation - combining product and industry expertise Growth We will build on our strong debt advisory capabilities (infrastructure and
Slide 48: Balance sheet optimisation: Credit and Portfolio Management
Balance sheet optimisation Credit and Portfolio Management 47
Slide 49: What do we do in Credit and Portfolio Management?
What do we do in Credit and Portfolio Management? Mandate Improved Reinforce 1st line returns ownership of risk and origination discipline Credit and Portfolio Reduce P&L volatility Liability optimisation Asset optimisation Distribution Management while improving returns Cost of funds – improve
Slide 50: How are we measuring balance sheet optimisation?
How are we measuring balance sheet optimisation? Distribution of exposure Risk-adjusted revenue1 ($bn, HoH %) 53% 48% 46% 59% -5% +8% 47% 52% 54% 41% 2014 2015 2016 H1 17 Investment grade Non-investment grade 2.8 2.7 2.6 Loan impairments (bps) 171bps 115bps 59bps 40bps H1 16 H2 16 H1 17 2014 2 2015
Slide 51: How do we allocate capital in CIB?
How do we allocate capital in CIB? Client decision framework Analytics Distribution Client level MI – Pillar 2 Relationship risk / return / economics economics RWA optimisation liquidity Regional and Credit migration Tax Global Capital Risk Risk distribution Allocation Forums Forward looking Themati
Slide 52: How are we changing behaviour?
How are we changing behaviour? Liability optimisation Asset optimisation Distribution Align scorecards Incentivising quality liability Balanced incentives across Managing credit migration generation revenue, returns, NFI and LI through distribution Manage perennially low CSDG – fee based s
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Slide 54: Glossary
Glossary Acronym / term Explanation Acronym / term Explanation AAME Asia, Africa and the Middle East FXRC Foreign Exchange, Rates and Credit BoE Bank of England GCAF Global Capital Allocation Forum Bond Connect China-Hong Kong bond connect GCNA Greater China & North Asia CAGR Compound annual growth