Slide 1: Q2 and H1 2024 Results presentation
CONFIDENTIAL Q2 and H1 2024 Results presentation 30 July 2024
Slide 2: Opening remarks – Q2’24
CONFIDENTIAL Opening remarks – Q2’24 ▶ Overview Income Expenses Impairment Balance sheet Income Expenses Capital Continued positive momentum Guidance in Q2’24 • Income up 7% YoY at ccy • Fit for Growth programme execution in progress Business update Sustainability − NII up 6%, further benefitting fr
Slide 3: Financial performance
CONFIDENTIAL Financial performance Diego De Giorgi Group Chief Financial Officer 3
Slide 4: Positive momentum continued in Q2’24
CONFIDENTIAL Positive momentum continued in Q2’24 ▶ Overview Q2’24 performance ($m) Income • Operating income up 7% YoY at ccy Q2’23 Q2’24 YoY YoY ccy Expenses Impairment − NII further benefitting from short-term Net interest income (NII) 2,436 2,560 5% 6% Balance sheet hedge roll-off Capital Non NI
Slide 5: NII further benefitting from hedge roll-off and mix improvement
CONFIDENTIAL NII further benefitting from hedge roll-off and mix improvement Net Interest Income (NII) components Overview ▶ Income • Q2’24 NII of $2.6bn up 6% QoQ at ccy +5% / +6% ccy Expenses Impairment − Additional $84m benefit from short-term hedge 2,560 Balance sheet roll-off 2,436 2,419 Capita
Slide 6: Wealth Solutions and Global Banking driving Non NII growth in Q2’24
CONFIDENTIAL Wealth Solutions and Global Banking driving Non NII growth in Q2’24 Wealth Solutions ($m) Overview ▶ Income • Wealth Solutions income up 27% YoY at ccy +25% / +27% ccy Expenses Impairment − Strong growth in Investment Products1, up 32% 101 22 618 Balance sheet Capital − Bancassurance up
Slide 7: Expenses in line with business growth expectation
CONFIDENTIAL Expenses in line with business growth expectation Operating expenses1 movement ($m) Overview Income • Expenses1 up 2% or 4% YoY at ccy ▶ Expenses Impairment − Inflation2 of 3% +2% / +4% ccy Balance sheet − Business growth driven by continued focus on 30 2,887 Capital 84 Guidance revenue
Slide 8: Fit for Growth programme mobilised and progressing into execution
CONFIDENTIAL Fit for Growth programme mobilised and progressing into execution Programme levers and flagship projects Overview Income • Over 200 projects identified to date ▶ Expenses Impairment • Execution in progress Balance sheet • Project benefits range from $100k to >$50m, Removing Automating C
Slide 9: Credit quality remains resilient
CONFIDENTIAL Credit quality remains resilient Credit impairment ($m) / Loan-loss rate Overview Income • Q2’24 credit impairment down $73m YoY Expenses ($73m) ▶ Impairment − CIB benefitting from sovereign upgrades and low 294 30 Balance sheet levels of new impairments Capital 115 62 176 73 Guidance −
Slide 10: Underlying growth in loans to customers and customer deposits
CONFIDENTIAL Underlying growth in loans to customers and customer deposits Loans and advances to customers1 ($bn) Overview Income • Underlying L&A to customers up ~$1bn QoQ Expenses Impairment − Growth in CIB and others from increase in Global QoQ 283 +$1bn ▶ Balance sheet Banking and Global Markets
Slide 11: RWA actively managed; strong capital position
CONFIDENTIAL RWA actively managed; strong capital position Risk-weighted assets ($bn) Overview Income • Q2’24 RWA down $10bn QoQ Expenses ($10bn) QoQ Impairment − Asset growth and mix down $2bn; growth in CIB offset 252.1 Balance sheet by decline in WRB and Treasury activities ▶ Capital (2.2) Guidan
Slide 12: Shareholder distributions so far this year
CONFIDENTIAL Shareholder distributions so far this year Shareholder distributions announced ($bn) Overview Income • $2.7bn capital return to shareholders announced Expenses since full year 2023 results Impairment Balance sheet − $0.2bn 2024 interim dividend declared Share buyback 1.0 1.5 2.5 ▶ Capit
Slide 13: Upgrading 2024 income guidance
CONFIDENTIAL Upgrading 2024 income guidance Overview Income Expenses 2024 guidance and 2024-2026 financial framework Impairment Balance sheet Capital ▶ Guidance Business update Operating income to Sustainability Operating Return at least Conclusion increase above 7% in Positive jaws CET1 ratio expen
Slide 14: Business update
CONFIDENTIAL Business update Bill Winters Group Chief Executive Officer 14
Slide 15: CIB: Q2’24 performance
CONFIDENTIAL CIB: Q2’24 performance P&L ($m) Overview Income • Q2’24 CIB income down 1% YoY at ccy Expenses Q2’23 Q2’24 YoY ccy − Transaction Services broadly flat Impairment Transaction Services 1,608 1,593 (0%) Balance sheet − Global Markets down 7% against a strong Q2’23 Global Markets 877 796 (7
Slide 16: Global Markets flow income delivered ~9% CAGR since 2019
CONFIDENTIAL Global Markets flow income delivered ~9% CAGR since 2019 Overview Long-term growth driven by a combination of platform enhancements, improved product capability, and strategic focus across clients and geographies Income Expenses $m Impairment Egypt Balance sheet ESG Scaled up Structured
Slide 17: CIB: Strength of our cross-border corporate and investment bank
CONFIDENTIAL CIB: Strength of our cross-border corporate and investment bank CIB cross-border income as a % of total CIB income Overview CAGR2 Income • Cross-border (network) income is driving faster top line Expenses growth in CIB 11.2 11.4 +7% Impairment Total CIB income ($bn) 9.6 Balance sheet −
Slide 18: WRB: Q2’24 performance
CONFIDENTIAL WRB: Q2’24 performance P&L ($m) Overview • WRB income up 11% YoY at ccy Q2’23 Q2’24 YoY ccy Income Investment Products1 343 444 32% Expenses − Strong growth in Wealth Solutions, up 27% Impairment Bancassurance 152 174 15% • Income from Investment Products1 up 32% driven by Balance sheet
Slide 19: WRB: Wealth AUM and performance accelerating in 2024
CONFIDENTIAL WRB: Wealth AUM and performance accelerating in 2024 Total Wealth AUM4 trend ($bn) Overview Income • Long-term CAGR in total Wealth AUM of 9% since 2016 Expenses − 2016-2020 CAGR of 12%, pre COVID-19 Impairment +9% CAGR Balance sheet 135 − COVID-19 and border closure impacting 2021-2023
Slide 20: Ventures highlights
CONFIDENTIAL Ventures highlights Overview Income Expenses • Top rated digital banking app in Apple • Product range expanded to include • Partnered with NEXT176 to launch a wealth Impairment Store, Hong Kong three types of loans and mass affluent management platform accessible to all, Balance sheet p
Slide 21: Sustainability highlights
CONFIDENTIAL Sustainability highlights H1’24 performance Overview Income • H1’24 Sustainable Finance income up 18% YoY Expenses Sustainable Finance Income − Broad-based growth across products Impairment up 18% Balance sheet − On track to achieve 2025 income target of >$1bn H1’24 YoY Capital Guidance
Slide 22: Closing remarks
CONFIDENTIAL Closing remarks Overview Income Continue to drive sustainably higher returns Expenses Impairment Balance sheet • Strong performance in the first half of the year, with income up 13%, generating a RoTE of 14.0% Capital Guidance Business update • Delivering on strategy of being a cross-bo
Slide 23: Appendices
CONFIDENTIAL Appendices 23
Slide 24: 2024–2026 guidance
CONFIDENTIAL 2024–2026 guidance 2024 guidance at ccy 2025 and 2026 guidance at ccy Income • Income to increase 5-7% for 2024-2026; above 7% in 20241, excluding the two notable items2 • Net interest income of $10bn to $10.25bn in 2024 • Positive income-to-cost jaws in each year Expenses (ex bank levy
Slide 25: Q2’24 products performance
CONFIDENTIAL Q2’24 products performance Q2’24 income by products ($m) Q2’24 YoY ccy Q2’24 YoY YoY ccy Payments & Liquidity 1,139 (9) (1%) Transaction Services 1,605 - Securities & Prime Services 153 22 19% Trade & Working Capital 313 (28) (6%) Lending & Financial Solutions 422 26 9% Global Banking 4
Slide 26: Delivered strong performance in H1’24
CONFIDENTIAL Delivered strong performance in H1’24 H1’24 performance ($m) • Operating income up 13% YoY at ccy H1’23 H1’24 YoY YoY ccy − NII benefitting from short-term hedge Net interest income (NII) 4,777 4,979 4% 5% roll-off Non NII 4,174 4,979 19% 22% − Continued strong growth in Wealth Operatin
Slide 27: Interest rate assumptions
CONFIDENTIAL Interest rate assumptions Currency-weighted average1 (bps) USD SOFR O/N average (bps) 3M HIBOR average (bps) 532 532 528 505 454 453 532 530 530 523 520 450 428 497 453 493 495 535 446 479 440 440 429 465 466 500 419 417 449 448 461 473 459 464 391 386 408 442 428 423 360 406 2.1.24 Cha
Slide 28: Hedging strategy reducing NII volatility
CONFIDENTIAL Hedging strategy reducing NII volatility Interest rate risk in the banking book Structural hedging strategy Annualised impact to banking book NII from instantaneous -100bps parallel shift in interest rates across all currencies ($m) • H1’24 NII sensitivity has reduced in 2024 by $240m d
Slide 29: CIB: Cross-border network income corridors
CONFIDENTIAL CIB: Cross-border network income corridors H1’24 top-5 network income by geography ($) Key corridor opportunities • Connecting Western MNCs and FIs to our footprint China − Two-thirds of US network income is to Asia, up 6% US • US ↔ China corridor income only ~1% of total CIB income − E
Slide 30: Tangible net asset value per share details
CONFIDENTIAL Tangible net asset value per share details TNAV per Basic # of Tangible equity share ordinary shares3 ($m) (cents) (m) As of 31.3.24 36,282 1,390 2,610 Profit attributable to ordinary shareholders1 975 37 Dividends paid to: Ordinary shareholders (551) (21) Other equity holders (29) (1)
Slide 31: Global CRE portfolio continues to perform, despite ongoing pressures
CONFIDENTIAL Global CRE portfolio continues to perform, despite ongoing pressures Global CRE exposure3 ($bn) • CRE is <2% of total Group exposures1, no material adverse change to portfolio quality 8% Hong Kong − $1.3bn of CRE related balance sheet provisions, 91% of which relate to China CRE 3% 20%
Slide 32: Continued reduction in China CRE; asset quality broadly stable
CONFIDENTIAL Continued reduction in China CRE; asset quality broadly stable Exposure by booking location ($bn)5,6 • Continued support, including first nationwide purchase programme since 2021 4.0 − Relaxation of purchase eligibility & financing requirements and CNY300bn 46% reduction since 31.12.21
Slide 33: China portfolio resilient and CRE contagion risks limited
CONFIDENTIAL China portfolio resilient and CRE contagion risks limited China ultimate parent company exposure6 ($bn) • CIB is 94% of China portfolio and is resilient − Top exposures only with blue chip state- and privately-owned enterprises with financial resilience 3% Corporates 10% 3% − Growing ne
Slide 34: Information for fixed income investors
CONFIDENTIAL Information for fixed income investors 34
Slide 35: Strong performance founded on a diverse franchise
CONFIDENTIAL Strong performance founded on a diverse franchise 53 $10.0bn $4.0bn 57% 14.0% Markets Operating income PBT Cost income ratio RoTE (H1’23: $9.0bn) (H1’23: $3.3bn) (H1’23: 61%) (H1’23: 12.0%) Group income diversified by market and segment ($bn) Group income diversified by product $10.0bn
Slide 36: Strong foundations from a diversified balance sheet
CONFIDENTIAL Strong foundations from a diversified balance sheet Capital metrics Liquidity metrics 14.6% 35.4% 4.8% 148% 136% 53% CET1% MREL% Leverage ratio LCR1 NSFR2 Advances-to-deposits min. requirement: min. requirement: min. requirement: min. requirement: min. requirement: ratio 10.6% 28.4% 3.8
Slide 37: Balance sheet is conservatively positioned
CONFIDENTIAL Balance sheet is conservatively positioned Balance sheet • We have a highly liquid and flexible balance sheet Total equity Total assets & liabilities − 60% of total assets mature in under 1 year Movements since 30.6.24 Movements since 30.6.24 31.12.23 31.12.23 $835bn $835bn − High-quali
Slide 38: Strong and diverse deposit base; franchise delivers deposit quality
CONFIDENTIAL Strong and diverse deposit base; franchise delivers deposit quality Customer deposits by market3 ($bn) • Well-diversified deposit base across 53 markets Hong Kong India 12% − In Hong Kong & Singapore we are a Domestic SIB1 Singapore US 4% UK Taiwan • Long-term stable deposit growth at 4
Slide 39: High levels of liquid resources and stable funding
CONFIDENTIAL High levels of liquid resources and stable funding Components of Liquidity coverage ratio (LCR)1 • LCR of 148%1 up 3%pts YTD: no TLTRO and TFSME benefit in LCR 164% 145% 148% • Beyond what is captured in LCR the Group has total liquid resources of $238bn Other liquid − $173bn HQLA: 96%
Slide 40: Deposit mix within expectations
CONFIDENTIAL Deposit mix within expectations Transaction Services CASA% of CIB deposits1 ($bn) • Overall CASA% within expectations in Q2’24 61% 64% 64% 64% 59% − CIB broadly stable CASA % Other − Slight reduction for WRB as clients lock in higher TD rates liquid 318 306 resources 300 293 298 − Expec
Slide 41: CET1 strongly positioned relative to requirements
CONFIDENTIAL CET1 strongly positioned relative to requirements CET1 minimum requirement1 • Minimum CET1 requirement increased slightly to 10.6% 10.5% 10.6% − Modest changes to CCyB including ~7bps increase from Korea CCB 2.5% 2.5% CCyB 0.39% 0.43% G-SII 1.0% 1.0% Pillar 2A 2.1% 2.1% Pillar 1 4.5% 4.
Slide 42: MREL: Well-positioned for future growth and requirements
CONFIDENTIAL MREL: Well-positioned for future growth and requirements External MREL position versus requirements • MREL ratio of 35.4% meets requirements with a buffer of ~700bps 35.4% • Total Group MREL of ~$86bn $17bn • MREL requirement is higher of: 28.4% PLC Senior Combined Buffer 13.2% − 2 x (P
Slide 43: Good progress on delivery of funding programme
CONFIDENTIAL Good progress on delivery of funding programme Maturity and Call schedule of existing stock ($bn)2 • 2024 MREL issuance plan of ~$8bn to $9bn; near term focus on Holdco Senior 9.0 − Issued $7bn across various currencies in H1’24 including $1bn AT1 AT1 8.0 7.7 1.3 Tier 2 1.0 • Forecast i
Slide 44: Stronger risk foundations supporting resilient performance
CONFIDENTIAL Stronger risk foundations supporting resilient performance Risk indicators • Key portfolio indicators improved since FY’14 reflecting: H1’24 FY’14 − Strengthening the Group’s risk culture and tightened risk appetite (IFRS 9) (IAS 39) − Diverse by industry sector, product and geography I
Slide 45: Group strategy to support and, over time, improve credit ratings
CONFIDENTIAL Group strategy to support and, over time, improve credit ratings Senior long-term and short-term ratings • Well-rated with strong credit fundamentals, absolutely & relative to peers − Well-established network is a strength S&P Moody’s Fitch − Funding and liquidity are key strengths A+ A
Slide 46: Standard Chartered Group: simplified legal structure
CONFIDENTIAL Standard Chartered Group: simplified legal structure Standard Chartered PLC MREL: Holdco Senior, Tier 1 & AT1 BBB+/A3/A Equity (S&P/Moody’s/Fitch) CP / CDs Standard Chartered Bank Standard Chartered Bank (Hong Kong) Medium Term Notes A+/A1/A+ A+/A11/- Structured Products Principal Branc
Slide 47: Select technical and abbreviated terms
CONFIDENTIAL Select technical and abbreviated terms Term Definition Term Definition Adj. Adjustments FCY Foreign currency AIEA Average interest-earning assets FIs Financial Institutions ASEAN Association of Southeast Asian Nations FVOCI Fair value through other comprehensive income AT1 Additional Ti
Slide 48: Select technical and abbreviated terms
CONFIDENTIAL Select technical and abbreviated terms Term Definition Term Definition O/N Overnight Underlying EPS Represents the underlying earnings divided by the basic weighted average number of PAT Profit After Tax shares QoQ Quarter-on-quarter Underlying The ratio of the current year’s underlying
Slide 49: Important notice
CONFIDENTIAL Important notice Forward-looking statements This document may contain ‘forward-looking statements’ that are based upon current expectations or beliefs, as well as statements formulated with assumptions about future events. These forward-looking statements can be identified by the fact t