Slide 1: Full Year 2017 Results Presentation
Full Year 2017 Results Presentation 27 February 2018
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: Bill Winters, Group Chief Executive
Bill Winters Group Chief Executive
Slide 4: A year of progress on a path that is now clear
A year of progress on a path that is now clear • Transformation of the Group continued in 2017 ▪ We have significantly improved our client focus and financial performance ▪ 13% YoY income growth in key investment areas ▪ We now have a platform of much greater strength • We remain focused on realisin
Slide 5: We have rebased income on more secure foundations
We have rebased income on more secure foundations Income ($bn) Deliberate actions to secure the foundations ~(0.5) Higher quality business ~(0.7) momentum recovering 15.4 ~(0.3) ~0.1 ~(0.0) ~0.4 ~(0.1) 14.3 13.8 2015 Business De-risking 2 Others3 Net 2016 Business De-risking Net 2017 exits 1 busines
Slide 6: We are building a higher quality portfolio
We are building a higher quality portfolio Income ($bn) YoY HoH 13.8 14.3 Targeted investments Core strengths delivering sustainable growth • Transaction Banking • Mortgages & Auto 6.5 7.3 +13% +6% • Wealth Management • Deposits Return optimisation Actions that improve returns but impacted income •
Slide 7: We are committed to delivering a sustainably higher RoE
We are committed to delivering a sustainably higher RoE… Strategic initiatives Strengthen foundations in risk Medium-term targets and control • Reiterating >8% Return on Equity • Positive operating leverage Invest in people, Focus on clients ▪ Income CAGR of 5-7% strengthen culture and growth and co
Slide 8: …with good visibility on what will drive improvement
…with good visibility on what will drive improvement Building blocks of higher underlying RoE Underlying business growth >8% 3.5% 2017 Income Costs Interest rates / Regulatory cost Lower UK bank Medium Cost of funds efficiencies levy and effective term management tax rate 7
Slide 9: Andy Halford, Group Chief Financial Officer
Andy Halford Group Chief Financial Officer
Slide 10: We significantly improved our financial performance in 2017
We significantly improved our financial performance in 2017 Better / ($bn) 2017 2016 (Worse) • 3% income growth despite a 4% drag from FM Operating income 14.3 13.8 3% Other operating expenses (8.6) (8.5) (2)% • Q4 / Q3 impact due partly to the early achievement Regulatory costs (1.3) (1.1) (15)% of
Slide 11: Encouraging year-on-year momentum in liability-led products
Encouraging year-on-year momentum in liability-led products Income ($m) Growth of $1,095m Drag of $(697)m 137 1 (101) (106) 243 (490) 269 445 217 (134) ✓ Improving volumes and liability NIMs Low market volatility 14,289 ✓ Building higher quality liability balances NIM compression 13,808 13,891 ✓
Slide 12: We are maintaining discipline on costs to fund investments
We are maintaining discipline on costs to fund investments Operating expenses ($m) 220 • Tightly managing cost base to fund investments 383 +15% 1,301 1,127 UK bank levy • Other expenses higher primarily due to variable pay and asset depreciation Regulatory costs 8,465 8,599 • Regulatory costs rose
Slide 13: The benefits of our investments are coming through
The benefits of our investments are coming through Increasing cash investment ($bn) Retail Banking Commercial Banking Digitally active clients (%) Active Straight2Bank clients (%) 45 45 42 1.5 40 1.4 36 38 0.4 Strategic 0.4 Systems 2015 2016 2017 2015 2016 2017 0.9 0.4 enhancements 0.1 0.3 Corporate
Slide 14: Overall credit quality has improved year-on-year
Overall credit quality has improved year-on-year Reduced ongoing loan impairment ($m) Portfolio indicators H1 16 H2 16 H1 17 H2 17 Group ongoing business 50% Credit grade 12 ($bn) 1.2 1.5 1.3 1.5 2,382 Gross NPLs ($bn) 6.0 5.9 6.3 6.5 Cover ratio 62% 69% 67% 63% 489 Cover ratio with collateral 73% 7
Slide 15: Balance sheet momentum is returning with an improved NIM
Balance sheet momentum is returning with an improved NIM Net interest margin improved Overall credit quality improved NIM (%) and Net interest income ($m) Performing loans ($bn) 1.53% 1.55% +17% 7,794 8,181 171 201 +5% 79 79 2016 2017 Credit grades 1-5 Credit grades 6-11 Net interest income Net inte
Slide 16: Our capital remains strong and IFRS 9 / Basel III manageable
Our capital remains strong and IFRS 9 / Basel III manageable CET1 ratio (%) • CET1 ratio strong at 13.6% (0.2) • IFRS 9 from 1 Jan 2018 0.5 (0.2) 0.1 ▪ Increases credit provisions (0.1) by $1.2bn 13.6 13.6 ▪ Negligible day-one impact on CET1 ratio under transitional rules 1 • Finalisation of Basel I
Slide 17: Focus on our businesses that serve corporate clients
Focus on our businesses that serve corporate clients Corporate & Institutional Banking Commercial Banking ($m) 2017 2016 YoY%1 ($m) 2017 2016 YoY% Operating income 6,496 6,472 0 Operating income 1,333 1,295 3 Underlying profit before tax 1,261 435 190 Underlying profit before tax 282 (120) nm Perfor
Slide 18: Focus on our businesses that serve individuals
Focus on our businesses that serve individuals Retail Banking Private Banking ($m) 2017 2016 YoY% ($m) 2017 2016 YoY% Operating income 4,834 4,669 4 Operating income 500 496 1 Underlying profit before tax 873 766 14 Underlying profit before tax (1) 32 nm Performance Performance • Income +7% YoY excl
Slide 19: Focus on Greater China & North Asia and ASEAN & South Asia
Focus on Greater China & North Asia and ASEAN & South Asia Greater China & North Asia ASEAN & South Asia ($m) 2017 2016 YoY% ($m) 2017 2016 YoY% Operating income 5,616 5,190 8 Operating income 3,833 4,052 (5) Underlying profit before tax 1,942 1,340 45 Underlying profit before tax 492 629 (22) Perfo
Slide 20: Focus on Africa & Middle East and Europe & Americas
Focus on Africa & Middle East and Europe & Americas Africa & Middle East Europe & Americas ($m) 2017 2016 YoY% ($m) 2017 2016 YoY% Operating income 2,764 2,742 1 Operating income 1,601 1,664 (4) Underlying profit before tax 642 431 49 Underlying profit before tax 71 (148) nm Performance Performance
Slide 21: Focus on Central & other items
Focus on Central & other items Segment Both Region Treasury Markets Treasury Capital Principal Finance Associates and Corporate Centre costs Joint Ventures Portfolio Management Strategic investments Other non-segment specific items UK bank levy Other global items Central & other items (segment) Cent
Slide 22: Concluding remarks
Concluding remarks • Nearly half way to initial 8% RoE target • Consistent focus on delivering the strategy set out in 2015 • 2017 top-line held back by Financial Markets, but encouraging start to 2018 • Investments are starting to make a difference • Regulatory capital uncertainties now much cleare
Slide 23: Bill Winters, Group Chief Executive
Bill Winters Group Chief Executive
Slide 24: 2018 priorities to take us closer to our potential
2018 priorities to take us closer to our potential Focus on clients • Deliver client growth in target segments and growth • Improve client satisfaction ratings Improve efficiency, • Deliver cost efficiency targets productivity and service quality • Improve productivity Strengthen • Ensure effective
Slide 25: We are innovating in the fight against financial crime
We are innovating in the fight against financial crime New ways of fighting financial crime Engaging our people The right controls • Launch of the Fighting • Continued investment Financial Crime website in people, processes ✓✓ Ambition to make financial system a • Mandatory and specialist and system
Slide 26: Driving technological change – moving from follower to leader
Driving technological change – moving from follower to leader Secure the foundations Deliver scale efficiency • Compliance and security – Investing in • Improved systems resilience, fewer outages information and cyber-defence • Continuously building new ways to • Improving data integrity and availab
Slide 27: Transitioning to a high performance culture
Transitioning to a high performance culture Valued behaviours Based on feedback from over 70,000 employees, our valued behaviours demand that we do things differently in order for us to Purpose succeed. Only then will we realise our true potential and be Here for good. Human Driving commerce Human a
Slide 28: Concluding remarks
Concluding remarks We can We are We are We are grow with improving our focused on making our markets productivity covering our progress and then and returns capital cost beyond 27
Slide 29: Q&A
Q&A
Slide 30: Appendix: Group financial analysis
Appendix: Group financial analysis
Slide 31: Group financial summary
Group financial summary 2017 vs Q4 17 vs Q4 17 vs ($m) 2017 2016 2016 %1 Q4 2017 Q3 2017 Q4 2016 Q3 17 %1 Q4 16 %1 Income 14,289 13,808 3 3,478 3,589 3,533 (3) (2) Other operating expenses (8,599) (8,465) (2) (2,283) (2,146) (2,368) (6) 4 Regulatory expenses (1,301) (1,127) (15) (366) (336) (303) (9
Slide 32: Income by product
Income by product 2017 vs ($m) 2017 2016 2016 % Q4 2017 Q3 2017 Q2 2017 Q1 2017 Q4 2016 Transaction Banking 3,329 2,884 15 876 856 812 785 744 Trade 1,197 1,199 (0) 298 306 296 297 295 Cash Management and Custody 2,132 1,685 27 578 550 516 488 449 Financial Markets 2,544 3,035 (16) 536 663 637 708 7
Slide 33: Group credit quality and liquidation portfolio
Group credit quality and liquidation portfolio 2017 2016 Ongoing Liquidation Ongoing Liquidation ($m) business portfolio Total business portfolio Total Underlying loan impairment 1,200 - 1,200 2,382 - 2,382 Restructuring loan impairment 42 120 162 - 409 409 Statutory loan impairment 1,242 120 1,362
Slide 34: Interest rate sensitivity
Interest rate sensitivity Estimate c.$200m of NII benefit in 2017, mostly in GCNA NII sensitivity to +50bps rise in global interest rates1 Transmission from USD rates to LCY2 2.0 c.$330m annualised NII benefit 1.8 1.6 USD 1.4 1.2 1.0 HKD 0.8 SGD 0.6 KRW 0.4 0.2 0.0 Dec-15 Dec-16 Dec-17 Mar-16 Jun-16
Slide 35: Appendix: Client segment financial analysis
Appendix: Client segment financial analysis
Slide 36: Underlying performance by client segment
Underlying performance by client segment Corporate & Institutional Retail Commercial Private Central & 2017 ($m) Banking Banking Banking Banking other items Total Operating income 6,496 4,834 1,333 500 1,126 14,289 Operating expenses (4,409) (3,585) (881) (500) (745) (10,120) Operating profit before
Slide 37: Corporate & Institutional Banking
Corporate & Institutional Banking Financial analysis ($m) 2017 2016 YoY %1 Income performance Operating income 6,496 6,472 0 • CIB income flat YoY. Excluding Principal Finance losses in Transaction Banking 2,564 2,168 18 2016, income down 3% YoY Financial Markets 2,266 2,771 (18) • Transaction Banki
Slide 38: Retail Banking
Retail Banking Financial analysis ($m) 2017 2016 YoY %1 Income performance Operating income 4,834 4,669 4 • Retail Banking income was up 4% YoY. Excluding the impact Greater China & North Asia 2,684 2,445 10 of business exits in Thailand and the Philippines, income was ASEAN & South Asia 1,302 1,381
Slide 39: Commercial Banking
Commercial Banking Financial analysis ($m) 2017 2016 YoY %1 Income performance Operating income 1,333 1,295 3 • Commercial Banking income was up 3% YoY, driven by Greater China & North Asia 527 522 1 positive improvement across all regions and strong balance sheet momentum. Income in H2 17 was up 2%
Slide 40: Private Banking
Private Banking Financial analysis ($m) 2017 2016 YoY %1 Income performance Operating income 500 496 1 • Private Banking income was up 1% YoY. Excluding an Wealth Management 299 280 7 insurance recovery in the first half of 2016 income was up 6% YoY, led by growth in Hong Kong, Singapore and the UAE
Slide 41: Appendix: Region financial analysis
Appendix: Region financial analysis
Slide 42: Underlying performance by region
Underlying performance by region Greater China ASEAN & Africa & Europe & Central & 2017 ($m) & North Asia South Asia Middle East Americas other items Total Operating income 5,616 3,833 2,764 1,601 475 14,289 Operating expenses (3,681) (2,654) (1,819) (1,407) (559) (10,120) Operating profit before im
Slide 43: Greater China & North Asia
Greater China & North Asia Financial analysis ($m) 2017 2016 YoY %1 Income performance Operating income 5,616 5,190 8 • GCNA income was up 8% YoY and 1% HoH, driven by broad- Hong Kong 3,384 3,138 8 based growth across markets and segments Korea 967 881 10 • Hong Kong income was up 8% YoY. Income gr
Slide 44: ASEAN & South Asia
ASEAN & South Asia Financial analysis ($m) 2017 2016 YoY %1 Income performance Operating income 3,833 4,052 (5) • ASA income was down 5% YoY impacted by decisions to exit Singapore 1,419 1,489 (5) RB in Thailand and the Philippines in 2016 and low market India 1,008 960 5 volatility impacting Financ
Slide 45: Africa & Middle East
Africa & Middle East Financial analysis ($m) 2017 2016 YoY %1 Income performance Operating income 2,764 2,742 1 • AME income was 1% higher YoY, despite local currency Africa 1,480 1,430 3 depreciation and weak market conditions Middle East 1,284 1,313 (2) • On a constant currency basis, income rose
Slide 46: Europe & Americas
Europe & Americas Financial analysis ($m) 2017 2016 YoY %1 Income performance Operating income 1,601 1,664 (4) • EA income fell 4% YoY as higher balances and margins in UK 747 791 (6) Cash Management and higher transaction volumes were more US 675 661 2 than offset by continued pressures on margins
Slide 47: Appendix: Glossary
Appendix: Glossary Standard Chartered &
Slide 48: Glossary
Glossary Acronym / Acronym / Acronym / term Explanation term Explanation term Explanation ABC Anti-bribery and corruption CB Commercial Banking NII Net interest income Association of Certified Anti-Money CIB Corporate & Institutional Banking NIM Net interest margin ACAMS Laundering Specialists Repre