Slide 1: 1H'22 / 2Q'22 Results Presentation
CONFIDENTIAL 1H’22 / 2Q’22 Results Presentation 29 July 2022
Slide 2: Contents
CONFIDENTIAL Contents Bill Winters 3 Group Chief Executive and 16 Andy Halford 5 Group Chief Financial Officer Appendix Various 26 Information for fixed income investors 36 Ventures 48 Notes, abbreviated terms and important notice 52 2
Slide 3: Opening remarks
CONFIDENTIAL Opening remarks • A strong performance in a challenging environment → Introduction o Total income up 10% at constant currency (ccy) on a normalised basis1… Income Segment/region o … with continued positive momentum in 2Q’22, up 11% Expenses Risk Capital o Return on Tangible Equity of 10
Slide 4: Andy Halford, Group Chief Financial Officer
CONFIDENTIAL Andy Halford Group Chief Financial Officer 4
Slide 5: Strong top line growth, positive jaws and a strong capital position
CONFIDENTIAL Strong top line growth, positive jaws and a strong capital position ($bn) 1H’21 1H’22 YoY1 ccy1 • Income up 9% ex-DVA at ccy; up 10% normalised4 Net interest income 3.4 3.6 8% 12% → Introduction Income Other income (ex-DVA) 4.2 4.4 5% 7% o Record FM5; NII up 12% at ccy Segment/region Op
Slide 6: Strong rate of income growth sustained throughout the first half
CONFIDENTIAL Strong rate of income growth sustained throughout the first half Income 1H’22 vs 1H’211 – Product view ($m) Introduction 9% → Income Segment/region Expenses Risk 175 127 13 Capital 189 8,080 451 (14) 2022 Guidance 7,399 (69) (191) 14.7 Strategy Conclusion 18% 37% 25% 39% 2% (1)% (20% (1
Slide 7: Strong NII growth, up 13% ccy, driven by volumes and margin expansion
CONFIDENTIAL Strong NII growth, up 13% ccy, driven by volumes and margin expansion Statutory adjusted basis Gross yield (bps) 185 206 186 184 178 192 221 Introduction Rate paid → Income 69 80 69 66 65 68 92 (bps) Segment/region • 1H’22 NII up 10% YoY, up 13% at ccy (FX Expenses impact ~$100m) Risk 1
Slide 8: 1H'22 Other income ex-DVA up 7% ccy on strong FM performance
CONFIDENTIAL 1H’22 Other income ex-DVA up 7% ccy on strong FM performance Introduction Other income ($m) → Income Segment/region Expenses Risk 4,438 2,399 Capital 4,245 • Net fees and commissions down 9% YoY at 2022 Guidance Strategy 1,978 2,031 2,039 ccy Conclusion Net fees and commissions 1,719 91
Slide 9: Increased returns driven by strong CCIB performance
CONFIDENTIAL Increased returns driven by strong CCIB performance Segments Regions 1H’22 1H’22 vs 1H’21 (inc/(dec)) YoY ccy1 1H’22 1H’22 vs 1H’21 (inc/(dec)) YoY ccy1 Introduction Income Corporate, Commercial & Institutional Banking Asia → Segment/region Expenses Income2 $4.9bn 16% Income3 $5.5bn 4%
Slide 10: Strong performance in four of the top five markets, Hong Kong resilient
CONFIDENTIAL Strong performance in four of the top five markets, Hong Kong resilient YoY 1H’22 YoY 1H’22 change Income ccy % RoTE %pts Introduction Income Hong Kong $1,737m (5)% 10% (10)%pts → Segment/region Expenses Risk Capital Singapore $875m 10% 16% 1%pts 2022 Guidance Strategy Conclusion India
Slide 11: Expense discipline with efficiency savings delivered positive jaws
CONFIDENTIAL Expense discipline with efficiency savings delivered positive jaws Total operating expenses 2Q’21 to 2Q’22 ($m) 2,592 2,594 2,595 2,636 2,636 • Expenses 4% higher YoY; Flat QoQ Introduction Investment P&L Income charge ($m) o Up 6% at ccy and excluding higher Segment/region → Expenses p
Slide 12: 1H credit impairment is low, however uncertainties remain
CONFIDENTIAL 1H credit impairment is low, however uncertainties remain Credit impairment ($m) 267 Introduction Ventures + C&O (segment) 79 203 200 • Credit impairment $267m vs $47m 1H’21 release Income Segment/region CPBB 19 34 19 o $237m related to China CRE exposures Expenses 107 → Risk 116 196 10
Slide 13: CET1 13.9%, remains towards top of the guidance range; RWA down $16bn
CONFIDENTIAL CET1 13.9%, remains towards top of the guidance range; RWA down $16bn Risk-weighted assets (RWA) ($bn) • RWA down $16bn (6%) from 31.12.21 o $14bn of increases Introduction Income 8.1 $(16.1)bn ▪ $6bn from impact of regulatory changes Segment/region 271.2 5.8 ▪ $8bn asset growth & mix E
Slide 14: 2022 Guidance
CONFIDENTIAL 2022 Guidance • The start to 2022 has been strong, albeit external conditions remain difficult to predict Introduction • Taking account of current performance and the external environment, our updated Income Segment/region guidance for FY’22 is that we expect: Expenses Risk o Income ex-
Slide 15: Bill Winters, Group Chief Executive
CONFIDENTIAL Bill Winters Group Chief Executive 15
Slide 16: Recap: Strategic actions outlined at FY'21
CONFIDENTIAL Recap: Strategic actions outlined at FY’21 2024 Targets CCIB Income RoRWA Introduction CCIB Drive improved returns Income up ~160bps to ~6.5% Segment/region Expenses Risk Capital 2022 Guidance CPBB Transform profitability CPBB CIR → Strategy Conclusion ~60% from 76% Double China 10% RoT
Slide 17: CCIB: Drive improved returns
CONFIDENTIAL CCIB: Drive improved returns Performance vs 2024 Targets Key highlights 6.0% 6.5% 4.9% Introduction Income RoRWA • Income RoRWA of 6.0% up 110bps in the first six Income (%) months of the year Segment/region Expenses Risk 2021 1H’22 2024 Target o Driven by income growth in Financial Mar
Slide 18: CPBB: Transform profitability
CONFIDENTIAL CPBB: Transform profitability Performance vs 2024 Targets Key highlights 74% 72% Cost-to-income ~60% Introduction ratio • Cost-to-income ratio improved 2%pts to 72%... Income (%) Segment/region 2021 1H’22 2024 Target Expenses Risk • … continued cost discipline, with $98m of gross Capita
Slide 19: Seizing the China Opportunity: Fundamentals intact; focused execution delivering results
CONFIDENTIAL Seizing the China Opportunity: Fundamentals intact; focused execution delivering results Structural trends of China’s opening …we are making good progress on … despite recent headwinds… remain… our strategic priorities Introduction • Largest network income Income contributor +8%, with A
Slide 20: Focus on Network: Maximising the value of our footprint
CONFIDENTIAL Focus on Network1: Maximising the value of our footprint Key highlights E&A Network!: Asia Network1: • Through our unique network, we facilitate cross-border income cross-border income investment, trade and capital flows Introduction $1.0bn, +10% YoY Income $1.1bn, +14%YoY Segment/regio
Slide 21: Sustainability and Sustainable Finance central to our growth ambitions
CONFIDENTIAL Sustainability and Sustainable Finance central to our growth ambitions Our aims 1H’22 Achievements (unless otherwise stated) Mobilise capital • Sustainable Finance income up 43% and Assets up 11% YoY1 Introduction Income • $1bn SF income in the medium-term • Facilitated $3.4bn of Green
Slide 22: Ventures: Strong progress with promising future potential
CONFIDENTIAL Ventures: Strong progress with promising future potential >30 ventures; # Customers Introduction Income 20+ investments ~ 1.2m Segment/region Expenses Risk Capital 2022 Guidance → Strategy Conclusion Customer assets1 Transaction flows2 ~ $2.5bn ~$8bn nexus … launching imminently … launc
Slide 23: Conclusion
CONFIDENTIAL Conclusion 23
Slide 24: In conclusion – disciplined delivery and a confident outlook
CONFIDENTIAL In conclusion – disciplined delivery and a confident outlook • A strong performance in the first six months of the year Introduction Income Segment/region • Capital remains strong with CET1 ratio towards the top of the target range at 13.9% Expenses Risk Capital 2022 Guidance o $1.4bn t
Slide 25: Appendix
CONFIDENTIAL Appendix • Various • Information for fixed income investors • Ventures • Notes, abbreviated terms and important notice 25
Slide 26: 1H'22 scorecard against 2024 targets
CONFIDENTIAL 1H’22 scorecard against 2024 targets Description 2024 targets 1H’22 result • CCIB Income RoRWA: 160bps improvement from 4.9% in 2021 to 6.5% 6.5% 6.0% CCIB • RWA reduction of $22bn by 2024 $22bn (2022 to 2024) $7bn Drive improved returns • Hold RWA flat to $163bn $163bn $154bn • Financi
Slide 27: Economic outlook: GDP growth rate forecast
CONFIDENTIAL Economic outlook: GDP growth rate forecast1 Real GDP growth rates (%)1 5.4% 4.8% 2.3% 2.1% 1.3% 1.0% 2022 2023-24E (average) Asia US Euro area 27 Footnotes on pages 52-56; Glossary on page 57
Slide 28: Changes to baseline forecasts for key footprint markets
CONFIDENTIAL Stage 1 and 2 credit impairments Changes to baseline forecasts1 for key footprint markets 1Q’22 2Q’221 Crude price China Hong Kong Korea Singapore India Brent, bbl GDP (YoY): 2022 Forecast 5.3% 4.1% 1.2% 0.2% 2.9% 2.7% 4.1% 3.8% 8.0% 7.7% $94.2 $104.6 GDP (YoY): 2023 Forec
Slide 29: Interest Rate Risk in the Banking Book
CONFIDENTIAL Interest Rate Risk in the Banking Book NII Sensitivity reduces as the hiking cycle evolves Annualised benefit to banking book NII from instantaneous parallel shifts in interest rates across all currencies ($m)1, 2 • NIM guidance on slide 14 reflects expected NII outcome at +50bps (50)bp
Slide 30: Interest rate increase outlook has continued to strengthen
CONFIDENTIAL The interest rate increase outlook has continued to strengthen since we outlined our 2024 financial targets at our FY’21 results on the 17th February, 2022 3-month USD rate (LIBOR)1 (bps) 350 329 354 300 226 231 233 229 226 184 192 153 128 68 65 16 2018 2019 2020 2021 2022 2023 2024 Mar
Slide 31: Central & other items, supportive interest rate environment
CONFIDENTIAL Central & other items, supportive interest rate environment 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 Corpora
Slide 32: Commodity related sectors: resilient & well-positioned
CONFIDENTIAL Commodity related sectors: resilient & well-positioned Net nominal1 ($bn) • Portfolios expected to be resilient to higher, more volatile commodity prices 25.0 30.06.15 23.9 ▪ Portfolios significantly de-risked since 2015: now focused on larger clients… 30.06.20 19.1 18.9 30.06.22 16.9 ▪
Slide 33: China exposure
CONFIDENTIAL China exposure China ultimate parent company Resilient China book exposure1 ($bn) • 78% of CCIB exposure is investment grade Corporates • 74% of corporate exposure is <1 year tenor 3% Banks • 85% of bank exposures to top 5 banks3; 84% <1 year tenor 4% 19% NBFIs • 92% of bank and non-ban
Slide 34: Summary of guidance
CONFIDENTIAL Summary of guidance 2022 Guidance 2021 - 2024 Guidance (unless otherwise stated) Income • Income ex-DVA expected to grow around 10% at constant currency; • Income is expected to grow 8-10% CAGR over the next three years, 5-7% adverse currency translation impact currently estimated at $0
Slide 35: Appendix
CONFIDENTIAL Appendix • Various • Information for fixed income investors • Ventures • Notes, abbreviated terms and important notice 35
Slide 36: Resilient performance founded on a unique franchise
CONFIDENTIAL Resilient performance founded on a unique franchise Over 160 years in some of the world's most dynamic markets 59 >80% $8.1bn $2.8bn (1H’21: $7.6bn) (1H’21: $2.7bn) Markets Income from Asia, Operating income ex-DVA Profit before taxation1 Africa & Middle East 65% 10.1% (1H’21: 67%) (1H’
Slide 37: Balance sheet strength through volatile times
CONFIDENTIAL Balance sheet strength through volatile times CET1 14.1% 13.9% 14.1% • CET1 capacity to support shareholder distributions and growth Min requirement 10.2% 1H'21 FY'21 1H'22 MREL 31.7% 31.7% 31.0% • MREL issuance of $4.0bn in 1H’22 across capital structure. Material Min requirement 27.4%
Slide 38: Progress on improving capital deployment and funding quality
CONFIDENTIAL Progress on improving capital deployment and funding quality More efficient use of capital Funding quality Improving returns despite interest rate headwinds via Stable high-quality liabilities despite market volatility capital efficiencies and prudent risk management 6.5 1 50 6.3 47 48
Slide 39: Stronger foundations supporting resilient performance
CONFIDENTIAL Stronger foundations supporting resilient performance 1H’22 FY’14 1H’21-FY’14 Key risk indicators (IFRS 9) (IAS 39) Movement • Key portfolio indicators improved since FY’14 Investment grade as a % of corporate exposure 71% 42% reflecting: Top 20 corporates as a % of Tier 1 capital 66% 8
Slide 40: Balance sheet: Business and geography diversity underpins resilience
CONFIDENTIAL Balance sheet Business and geography diversity underpins resilience Balance sheet assets1 Customer loans & advances1,2 by market and segment Hong Kong CCIB 10% Loans & advances to customers 1 18% Singapore 7% 8% 24% CPBB Investment securities UK 3% Korea 8% 42% Derivatives C&O and 3% US
Slide 41: The Group's liquidity position remained resilient
CONFIDENTIAL Funding and Liquidity The Group’s liquidity position remained resilient Liquidity coverage ratio ($bn) 146% • LCR resilient: well above minimum regulatory requirements 143% 142% 168 115 172 121 180 127 • Market volatility currently not impacting Group’s ability to fund itself 30.06.21 3
Slide 42: CET1: Strongly positioned relative to requirements
CONFIDENTIAL CET1 Strongly positioned: relative to requirements1 CET1 minimum requirement slightly increased in the period 10.1% 10.2% CCB • Minimum CET1 requirement increased by 15bps, 2.5% 2.5% CCyB largely driven by higher P2A (P2A is a nominal $ 0.20% 0.17% 1.0% 1.0% G-SII amount so it increases
Slide 43: MREL: Well positioned for future growth and requirements
CONFIDENTIAL MREL Well positioned for future growth and requirements External MREL position versus requirements 31.0% • 1H’22 MREL position of 31.0% of RWA meets MREL 26.9% 27.4% Combined Buffer Combined Buffer PLC Senior 3.7%1 3.7%1 9.8% requirement with a buffer of ~370bps Tier 2 5.3% • MREL requi
Slide 44: 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) 1H’22 Issuance by tenor & currency 7.6 8.0 0.6 1.0 10.8 1.6 2.1 5.4 5.1 AT1 1.0 1.2 3.3 2.0 2.8 1.0 5.4 None 4.9 3.9 2.4 2.4 Tier 2 FY'22 FY'23 FY'24 FY'25 FY'26
Slide 45: 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 • Well-rated with strong credit fundamentals, absolutely S&P Moody’s Fitch and relative to peers: A+ A1 A+ o Well-established ne
Slide 46: Standard Chartered Group Simplified legal structure
CONFIDENTIAL Standard Chartered Group Simplified legal structure Medium Term Senior notes Standard Chartered PLC Tier 2 securities BBB+/A3/A Tier 1 securities (S&P/Moody’s/Fitch) Equity Standard Chartered Bank Standard Chartered Bank Hong Kong CP / CDs A+/A1/A+ A+/A1/- Medium Term Notes (S&P/Moody’s
Slide 47: Appendix
CONFIDENTIAL Appendix • Various • Information for fixed income investors • Ventures • Notes, abbreviated terms and important notice 47
Slide 48: Ventures: Progress Update
CONFIDENTIAL Ventures: Progress Update Launched ventures gaining traction as reflected in client adoption and flows Venture Description Progress / Update KPI 362 Mox is a cloud-native, mobile only, • Customers now over 350k, Q1 2022 ~260k Customers (‘000s) 257 213 342 digital bank 175 • Processing 1
Slide 49: Ventures: Progress Update continued
CONFIDENTIAL Ventures: Progress Update continued Expanding portfolio with a number of newly announced ventures Venture Description Progress / Update Expected launch A bank agnostic supply chain finance platform that unlocks significant • $8bn+ of GTV (Gross Transaction Volume). Live value for organi
Slide 50: Summary of portfolio of ventures and investments across six high conviction themes
CONFIDENTIAL Summary of portfolio of ventures and investments across six high conviction themes Theme Ventures Minority Investments Individual consumers need to integrate finance into their digital lifestyles for finance to be effective at helping them Digital banking address their needs and lifesty
Slide 51: Appendix
CONFIDENTIAL Appendix • Various • Information for fixed income investors • Ventures • Notes, abbreviated terms and important notice 51
Slide 52: Notes: Referring to the metrics and defined terms
CONFIDENTIAL Notes: Referring to the metrics and defined terms on the following pages Page Explanatory note or definition 1. Normalised basis: excluding DVA and excluding income in 2Q’21 in relation to interest earned on impaired assets as required by IFRS9 Financial Instruments: 3 Recognition and M
Slide 53: Notes: Referring to the metrics and defined terms
CONFIDENTIAL Notes: Referring to the metrics and defined terms on the following pages Page Explanatory note or definition 1. 1H’22 year-on-year variances are increase/(decrease) on a constant currency basis; change rate for RoTE is %pts change year-on-year 9 2. Corporate, Commercial & Institutional
Slide 54: Notes: Referring to the metrics and defined terms
CONFIDENTIAL Notes: Referring to the metrics and defined terms on the following pages Page Explanatory note or definition 1. Active mass retail partnership clients are new clients originated and onboarded through Group’s various partnerships over the last 6 months and existing 18 partnership clients
Slide 55: Notes: Referring to the metrics and defined terms
CONFIDENTIAL Notes: Referring to the metrics and defined terms on the following pages Page Explanatory note or definition 1. Net Nominal basis (see selected technical and abbreviated terms page 57) 32 2. Investment grade % is on a net nominal basis 3. High-risk assets in this context means exposures
Slide 56: Notes: Referring to the metrics and defined terms
CONFIDENTIAL Notes: Referring to the metrics and defined terms on the following pages Page Explanatory note or definition 1. FY’14 includes both individual and portfolio impairment provisions. 1H’22 includes Stage 3 provisions. Following adoption of IFRS9, the definition of 39 nonperforming loans an
Slide 57: 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 58: 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