Standard Chartered Plc · LSE:STAN
Standard Chartered — Non-Deal Roadshow (February 2017)
46 slides from Standard Chartered's roadshow presentation, Feb 24, 2017
Slide 1: Full Year 2016 Results Roadshow Presentation
Full Year 2016 Results Roadshow Presentation 24 February 2017
Slide 2: Forward looking statements
Forward looking statements 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
Slide 3: Bill Winters, Group Chief Executive
Bill Winters Group Chief Executive 2
Slide 4: Opening Remarks
Opening Remarks • Encouraging progress in 2016 Strong foundations laid Business stabilised Organisation strengthened • Significant further improvement in financial performance is required • Long-term opportunities in our markets remain compelling • Focused on what we can control and demonstrat
Slide 5: Andy Halford, Group Chief Financial Officer
Andy Halford Group Chief Financial Officer 4
Slide 6: Financial Performance Summary
Financial Performance Summary YoY 2016 Better/(Worse) • Stable quarterly income Operating income $13.8bn (11)% Operating expenses1 $9.6bn 4% • Second successive year of cost reduction Loan impairment $2.4bn 41% • 50% increase increas in investment inv Underlying profit $1.1bn 31% Restructuring costs
Slide 7: Stable Income in the Year
Stable Income in the Year Income by quarter ($m) 2016 Income (11)% YoY 4,421 4,074 3,682 3,262 3,345 3,465 3,465 3,533 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Internal and external factors impacting income Quarterly trends stable through the year Principal Finance Divestments • Early progres
Slide 8: Maintained Tight Control of Expenses
Maintained Tight Control of Expenses1 Operating expenses (4)% $0.2bn $0.3bn $(1.2)bn $0.3bn $10.0bn $9.6bn 2015 Gross cost Compensation and Increase in Other items incl. 2016 efficiencies other inflation investment (P&L) currency translation On track to deliver 2018 expenses below 2015 • Operating e
Slide 9: Investing to Deliver Cost, Control & Profitability Transformation
Investing to Deliver Cost, Control & Profitability Transformation Cash investment 50% Strategic • ~$150m CIB – client platforms and ecosystem $1.4bn • ~$100m RB – digitisation and self-service capabilities • ~$100m WM and PB – technology investment $0.4bn • ~$50m Group functions – IT, C&CC and data
Slide 10: Overall Credit Quality has Improved
Overall Credit Quality has Improved Gross NPLs ($bn) and cover ratio (%) 25.0 67% 80% 20.0 52% 54% 53% 53% 70% 60% • Building resilience and actively managing 50% portfolios in challenging markets 15.0 12.7 12.8 40% 30% 8.8 9.7 7.5 6.8 10.0 20% 7.5 5.0 3.3 4.3 3.8 10% 0% • Significant reduction in l
Slide 11: Sharpened Business Focus
Sharpened Business Focus 1 Reduced liquidation portfolio RWA 3 Addressing underperforming businesses • Announced sale or closure of 12 non-strategic Exited >80% of $3.8bn businesses since November 2015 RWA in liquidation portfolio • Taking action on Principal Finance Exited • Stabilising Permata to
Slide 12: Client Segment Profit Progression
Client Segment Profit Progression YoY change in underlying profit before tax ($m) Key operational themes Corporate & Institutional Banking (67) • Lower income but improved costs (74) and LI • Principal Finance losses ~$650m 523 30 Retail Banking (153) • Better costs and LI • Income down Y YoY; oY; u
Slide 13: Geographic Region Profit Progression
Geographic Region Profit Progression YoY change in underlying profit before tax ($m) Key operational themes Greater China & North Asia 243 • Better costs and LI (464) • Income down YoY but up HoH ASEAN & South Asia (324) • Lower costs and significantly better 987 LI offset lower income • Impacted by
Slide 14: Restructuring Charges
Restructuring Charges Restructuring charges Restructuring progress $0.9bn • $855m of restructuring charges in 2016 $2.7bn ~$3.0bn Exited >80% of RWAs in liquidation portfolio $1.8bn Rationalised headcount and retail branches 2015 2016 Total since Remaining Estimated Wrote down legacy assets N
Slide 15: Higher Quality and More Liquid Balance Sheet
Higher Quality and More Liquid Balance Sheet Customer loans & advances ($bn) 600 Increasingly liquid balance sheet 500 (2)% 400 Customer loans & advances down 2% YoY 300 261 266 256 200 Customer deposits up 5% YoY 100 0 H2 15 H1 16 H2 16 68% advances-to-deposits ratio Customer deposits Mor
Slide 16: Strengthened Capital Position
Strengthened Capital Position CET 1 capital ratio 100bps • Group remains well capitalised 0.4% CET1 +50bps Q4 16; largely (0.1)% 0.1% 0.6% restructuring 13.6% Above 12-13% CET1 target range 12.6% • Issued further $1bn of AT1 2015 Profits after Credit Restructuring Currency 2016 distribution RWA
Slide 17: Summary
Summary • Encouraging early progress against the strategy • Ended the year with Income stability and lower costs Higher quality balance sheet Improved capital and liquidity • Investing to deliver cost, control and profitability transformation • Significant further improvement in financial perf
Slide 18: Standard @&
Standard @& Chartered &Q 17
Slide 19: Bill Winters, Group Chief Executive
Bill Winters Group Chief Executive 18
Slide 20: Strategic Performance Summary
Strategic Performance Summary • Early progress against strategic priorities in businesses, regions and functions Taking actions to address challenges Priority now to improve income trends • Significant progress on risk priorities • Advancing our conduct and control agendas • Some headwinds easin
Slide 21: Corporate & Institutional Banking
Corporate & Institutional Banking Focusing on our client needs Challenges • Difficult market conditions • Principal Finance losses • Impact of management actions on business momentum 2016 progres progress s • Restructured coverage model to improve efficiency • Significant action to improve risk prof
Slide 22: Retail Banking
Retail Banking Focused on affluent segments in core cities, enabled by digital Challenges • Planned investments increased near term cost-income ratio • Lower income, partly due to currency, divestments and product mix • Interest rates remained low through 2016 2016 progres progress • Improved Improv
Slide 23: Commercial Banking
Commercial Banking Repositioning business for sustainable and differentiated growth Challenges • Credit losses still elevated • Economic slowdown in some markets • Strong local competition, particularly at smaller end of client base 2016 progres progress s • Enhanced credit risk management and impro
Slide 24: Private Banking
Private Banking Year of transformation and investment Challenges • Income impacted by market volatility and actions to improve risk profile • Investment in people takes time to translate into top-line growth 2016 progress • Commenced multi-year Wealth Management technology overhaul • Installed new e
Slide 25: Regions
Regions Executing targeted segment plans, leveraging local expertise Europe & Americas Greater China & North Asia • Serve our clients better in our emerging markets • Capture China opening opportunities • Attract new International Corporate clients • Strengthen market position in Hong Kong • Enhance
Slide 26: Building Resilience and Actively Managing our Portfolios
Building Resilience and Actively Managing our Portfolios Significant progress on risk priorities Continuing to build on our risk culture Business plans fully End to end ownership of aligned with tightened End-to-end ownership of risk risk risk appetite Exited >80% Proactive of RWA in portfolio liqui
Slide 27: Conduct and Fighting Financial Crime
Conduct and Fighting Financial Crime Good conduct is integral to our business Essential for sustainable and safe growth Increasingly a competitive differentiator Why fighting financial crime matters Investing in people, systems and controls De-risking through education Correspondent Bankin
Slide 28: Some Headwinds Easing, but Uncertainty Remains
Some Headwinds Easing, but Uncertainty Remains Real GDP Region income growth (%) as % of Group1 2016 2017 • US and global protectionism Hong Kong 1.9 2.2 • Divergence in monetary policies GCNA South Korea 38% 2.7 2.3 • Political/regulatory uncertainties China 6.7 6.6 • Brexit Singapore 2.0 1.3 • EM
Slide 29: Summary
Summary • Encouraging progress in 2016 Strong foundations laid Business stabilised Organisation strengthened • Significant further improvement in financial performance is required • Long-term opportunities in our markets remain compelling • Focused on what we can control and demonstrating abil
Slide 30: Standard @&
Standard @& Chartered &Q 29
Slide 31: Fixed Income
Fixed Income S andard Chartered
Slide 32: Surplus over Future Requirements
Surplus over Future Requirements The Group is well positioned Capital surplus vs. known end-point requirements • CET1 of 13.6% and Total Capital of 21.3% > 1% • Above the Group’s CET1 target range of 12-13% • Current surplus to known 2019 requirements CET1 Maximum Distributable Amount (MDA) thresh
Slide 33: Balance Sheet Diversity
Balance Sheet Diversity Balance sheet assets Customer loans by country and segment Hong Kong CIB Loans to customers 19% 9% 24% Korea RB Investment securities 5% 2% 10% 9% China CB Cash 40% 5% Singapore PB Loans to banks 48% 11% $647bn $256bn India C&O Derivatives 12% 36% 11% UAE 11% Other assets UK
Slide 34: Funding Profile
Funding Profile Issuance Maturity Profile $4.4bn $2.0bn $3.6bn $3.0bn $2.3bn $1.3bn $3.6bn $3.9bn $2.8bn $3.4bn $2.0bn $1.8bn $2.0bn $1.0bn $0.5bn 2016 2016 2017 2018 2019 2020 2021 Tier 1 Tier 2 PLC Senior 1) As at 31 December 2016. The Group issued $1bn of AT1 in January 2017 2) Capital refinancin
Slide 35: Example Application of UK Resolution Waterfall
Example Application of UK Resolution Waterfall Once investments in OpCo • Internal Loss Absorbing “A” are written down or Capacity (LAC) is designed to converted to equity, losses recapitalise the OpCo, avoid OpCo losses follow are taken to HoldCo OpCo failure, and maintain OpCo creditor hierarchy c
Slide 36: MREL Transition – Well Positioned
MREL Transition – Well Positioned • BoE implementing TLAC through MREL > 26% 25.2% • G-SII status requires transitional MREL from 2019 Combined PLC Senior • MREL requirement to increase through to 1 January 2022 22.4% Buffer ~$14bn 3.6% • From 2022, expected minimum requirement = 2 x (Pillar 1 + Com
Slide 37: Standard Chartered Group – Simplified Legal Structure
Standard Chartered Group – Simplified Legal Structure Medium Term Senior Notes Standard Chartered PLC Tier-2 Benchmark Issuances BBB+/A1/A+ Legacy Tier-1 Securities and AT1 Securities (S&P/M/F) Equity Standard Chartered Holdings Limited Medium Term Senior Notes Standard Chartered Bank Structured Pro
Slide 38: Distribution Considerations
Distribution Considerations • A breach of the Combined Buffer¹ restricts discretionary distributions • Combined Buffer began to phase-in from 2016 and will include any future Countercyclical Capital Buffer (CCyB) • Discretionary distributions include dividends, variable compensation and AT1 coupons²
Slide 39: Appendix
Appendix Chartered
Slide 40: Group Financial Summary
Group Financial Summary 2016 vs Q4 16 vs Q4 16 vs ($m) 2016 2015 2015 %1 Q4 2016 Q3 2016 Q4 2015 Q3 16 %1 Q4 15 %1 Income 13,808 15,439 (11%) 3,533 3,465 3,262 2% 8% Operating expenses (8,466) (9,032) 6% (2,369) (2,109) (2,180) (12%) (9%) Regulatory expenses (1,127) (1,006) (12%) (303) (278) (316) (
Slide 41: Restructuring and Other Items
Restructuring and Other Items 2016 vs Q4 16 vs Q4 16 vs ($m) 2016 2015 2015 %1 Q4 2016 Q3 2016 Q4 2015 Q3 16 %1 Q4 15 %1 Underlying profit/(loss) before tax 1,093 834 31% (359) 458 (851) nm 58% Restructuring (855) (1,845) (599) (141) (1,845) Operating income (85) - (207) 11 - Operating expenses (236
Slide 42: By Client Segment
By Client Segment Retail Commercial Central & 2016 ($m) CIB Banking Banking Private Banking other items Total Operating income 6,472 4,669 1,295 496 876 13,808 Operating expenses (4,268) (3,413) (929) (463) (902) (9,975) Pre-provision operating profit 2,204 1,256 366 33 (26) 3,833 Loan impairment (1
Slide 43: By Geographic Region
By Geographic Region Greater China & ASEAN & South Africa & Europe & Central & 2016 ($m) North Asia Asia Middle East Americas other items Total Operating income 5,190 4,052 2,742 1,664 160 13,808 Operating expenses (3,546) (2,518) (1,730) (1,302) (879) (9,975) Pre-provision operating profit 1,644 1,
Slide 44: By Product
By Product 2016 vs Q4 16 vs Q4 16 vs ($m) 2016 2015 2015 %1 Q4 2016 Q3 2016 Q4 2015 Q3 16 %1 Q4 15 %1 Transaction Banking 2,884 3,250 (11%) 744 722 733 3% 2% Trade 1,199 1,481 (19%) 295 300 314 (2%) (6%) Cash Management and Custody 1,685 1,769 (5%) 449 422 419 6% 7% Financial Markets 2,729 2,921 (7%
Slide 45: Exited Over 80% of RWA in Liquidation Portfolio
Exited Over 80% of RWA in Liquidation Portfolio 31 Dec 16 31 Dec 15 Ongoing Liquidation Ongoing Liquidation ($m) business portfolio Total business portfolio Total Underlying loan impairment 2,382 - 2,382 2,381 1,627 4,008 Restructuring loan impairment - 409 409 - 968 968 Statutory loan impairment 2,
Slide 46: Glossary
Glossary Acronym/term Explanation Acronym/term Explanation A/D ratio Advances-to-deposits ratio EM Emerging markets AME Africa & Middle East Exposures Represent the amount lent to a customer, together with any undrawn commitments ASA ASEAN & South Asia GCNA Greater China & North Asia AT1 Additional
Standard Chartered — Non-Deal Roadshow (February 2017) on 6ix