Slide 1: Half Year 2015 Results Presentation
Half Year 2015 Results Presentation 05 August 2015
Slide 2: Forward looking statement
Forward looking statement This document contains or incorporates by reference ‘forward-looking statements’ regarding the belief or current expectations of the Company, the Directors and other members of its senior management about the Group’s strategy, businesses, performance and the other matters d
Slide 3: Sir John Peace, Chairman
Sir John Peace Chairman Standard Qe Chartered Ss
Slide 4: Good progress on priorities – disappointing earnings performance
Good progress on priorities – disappointing earnings performance • Reflects continued adverse impairment trends, difficult market conditions and de-risking actions • Good progress on the priorities outlined at full year 2014 results • CET1 ratio improved 80 basis points to 11.5% since year end Exi
Slide 5: Aligning dividend to earnings
Aligning dividend to earnings Rebasing dividends • Performance reflects actions taken to 35 strengthen capital position and grow returns over time 30 28.8 25 • Aligning dividend to earnings capacity 20 • Dividend payout ratio more in line with (US cents) historical levels 14.4 15 10 5 0 Dividends pe
Slide 6: Raising the bar on regulatory issues
Raising the bar on regulatory issues • The board remains vigilant in confronting and addressing past issues • Priority to reduce financial crime risk and safeguard good conduct • Investing in our capabilities and systems • Working with regulators and relevant authorities • Taken action to reduce the
Slide 7: Future priorities
Future priorities Committed to • Capital and balance sheet strength • Improving shareholder returns • Making a meaningful contribution to the global fight against financial crime
Slide 8: Andy Halford, Group Chief Financial Officer
Andy Halford Group Chief Financial Officer
Slide 9: Good progress on priorities – disappointing earnings performance
Good progress on priorities – disappointing earnings performance • Actions improved the CET1 ratio 80 bps to 11.5% • Reduced Risk Weighted Assets by US$15bn since the year end • On track to deliver over US$400m of cost saves in 2015 • Exited or sold several non core businesses • Profits adversely im
Slide 10: Group performance summary
Group performance summary Better/ Better/ (Worse) US$m HY 14 HY 15 (Worse)% CCY % Income 9,274 8,495 (8) (6) Currency translation (277) Operating expenses (4,756) (4,554) 4 0 Divestments and exits (173) Regulatory expenses (283) (453) (60) (60) MTM2 valuations (263) Restructuring costs (44) (35) 20
Slide 11: Corporate and Institutional Clients – Reshaping to address challenges
Corporate and Institutional Clients – Reshaping to address challenges Better/ Performance summary US$m HY 14 HY 15 (Worse) % Income 5,334 4,806 (10) • Mark to market valuations impacting Capital Markets Of which client income 4,615 4,391 (5) • Continued weak commodity markets Expenses (2,546) (2,653
Slide 12: Commercial Clients – Creating the foundation for future growth
Commercial Clients – Creating the foundation for future growth Better/ Performance summary US$m HY 14 HY 15 (Worse) % Income 616 497 (19) • Impacted by internal client transfers Expenses (362) (324) 10 • Selected business and client exits Working profit 254 173 (32) • Lower corporate activity Total
Slide 13: Private Banking Clients – Underlying progress despite impairment
Private Banking Clients – Underlying progress despite impairment Better/ Performance summary US$m HY 14 HY 15 (Worse) % Income 314 304 (3) • Income up 4% from continuing operations Expenses (227) (208) 8 • AUM up 9% from continuing operations Working profit 87 96 10 • Added more relationship manager
Slide 14: Retail Clients – Changing business mix to drive improved returns
Retail Clients – Changing business mix to drive improved returns Better/ Performance summary US$m HY 14 HY 15 (Worse) % Income 3,010 2,888 (4) • Continued shift towards Priority and Business clients Expenses (1,948) (1,857) 5 • Wealth management growing strongly Working profit 1,062 1,031 (3) • Focu
Slide 15: Expenses excluding regulatory costs are flat
Expenses excluding regulatory costs are flat Operating expenses excluding regulatory spend (US$m) (182) (52) 158 (158) 32 4,756 4,522 4,554 H1 14 CCY impact Exits and H1 14 Inflation Efficiencies Other H1 15 disposals underlying • Efficiency saves offset by inflation Regulatory costs (US$m) • Headco
Slide 16: Portfolio credit quality
Portfolio credit quality Total impairment (US$m)1 Non-Performing Loans and cover ratio up +$225m 1,738 54% 54% 53% 1,513 52% 364 503 8,747 1,031 160 7,185 7,492 147 6,479 480 100 1,121 863 435 H1 14 H2 14 H1 15 H2 13 H1 14 H2 14 H1 15 CIC CC Retail PvB Gross Non-Performing Loans Cover ratio Retail P
Slide 17: Highly liquid balance sheet
Highly liquid balance sheet Total deposits (US$bn) Total loans and advances to customers (US$bn) 470 (2) 439 (3) 423 435 (1) (1) 200 213 180 201 289 282 215 227 238 236 FY 12 FY 13 FY 14 H1 15 FY 14 Retail Energy Mining and Other H1 15 CASA Time deposits Other deposits unsecured sector Quarrying • L
Slide 18: Prioritising actions that strengthen capital position
Prioritising actions that strengthen capital position H1 15 – CET1 % One-offs Underlying 0bps 80bps 0.5% (0.1%) 0.4% 11.5% (0.2%) 0.1% 0.2% 10.7% 10.7% (0.1%) FY 14 PVA Model changes Disposals Higher scrip CET1 post Profit Movement in Foreseeable CET1 HY 15 take-up one-offs RWA dividend and other H1
Slide 19: Disappointing results but initial progress on priorities
Disappointing results but initial progress on priorities • Actions improved the CET1 ratio 80 bps to 11.5% • Reduced Risk Weighted Assets by US$15bn since the year end • On track to deliver over US$400m of cost saves in 2015 • Exited or sold several non core businesses • Profits adversely impacted b
Slide 20: Bill Winters, Chief Executive Officer
Bill Winters Chief Executive Officer
Slide 21: Initial observations
Initial observations • Excited to represent and lead the Bank • Management actions underway are progressing well to address the Group’s challenges • We have great people, a strong brand and a strong core of businesses • We are working through a legacy of growth over risk discipline and returns • We
Slide 22: Strategic focus
Strategic focus Structure Costs Returns Portfolio Conduct quality Capital
Slide 23: Our primary focus is on improving returns
Our primary focus is on improving returns • Institutionalise improvements in risk and returns frameworks • Better focus on areas where we have an edge >10.0% • Accelerate exit of low-returning relationships 5.4% • Become more commercial in our mindset HY 2015 Target ROE • Simplify the organisation s
Slide 24: Organisation structure
Organisation structure Why the need for change? Guiding principles Actions taken • New Management Team • Kick start performance Local clients managed locally • Simplified the client facing structure • Reduce costs Global clients and businesses managed globally • Streamlined the geographies • Slash b
Slide 25: Asset quality review
Asset quality review Managing down concentration and commodities exposure Top 20 corporate net exposure Commodities net exposure (US$bn) Retail delinquency rates 61.8 60.7 54.9 48.8 H2 13 H1 14 H2 14 H1 15 H2 13 H1 14 H2 14 H1 15 H2 13 H1 14 H2 14 H1 15 Top 20 corporate exposure (US$bn) 30+ dpd deli
Slide 26: Capital and dividends
Capital and dividends Common Equity Tier 1 (%) Considerations for future capital needs • Output of strategic review • Bank of England stress test 11.5 • Ability to emerge from macro shocks in a 10.7 position of strength • Industry wide conduct related costs FY 14 HY 15 Common Equity Tier 1 (%)
Slide 27: Conduct
Conduct • Determined to make meaningful contribution Creating the to the global fight against financial crime right environment • Working closely with regulators • New organisation structure reinforces Effective Fair Financial accountability operation outcome crime of financial for clients preventio
Slide 28: Key questions for the strategic review
Key questions for the strategic review Competitive • How do we benchmark against evolving competition? environment • Where are we advantaged and where are we not? • How should we reshape our portfolios, business mix, and Business mix geographic presence? Digital agenda • How can we better invest in
Slide 29: Summary – what will success look like?
Summary – what will success look like? Standard Chartered will be a Bank that is • Well capitalised and able to navigate any future shocks • Delivering returns above the cost of capital • More efficiently structured and cost effective • Leading in the global fight against financial crime • Clearly f
Slide 30: Q&A
Q&A