Investment Rating - The report maintains an "Outperform" rating for Standard Chartered PLC (2888 HK) with a target price of 88.16 [46]. Core Insights - The company's Q4 2023 earnings report showed a pre-tax profit increase of 824.4% year-on-year, exceeding Bloomberg consensus expectations of 766.8% [2][5]. - Net interest income grew by 6.0% year-on-year, surpassing the consensus forecast of 5.7% [2][5]. - The Common Equity Tier 1 (CET1) ratio increased to 14.10%, higher than the expected 13.95% [2][5]. Summary by Sections Earnings Performance - Q4 2023 revenue growth was 6.9% year-on-year, below the consensus estimate of 10.9% [2]. - Underlying profit before taxation was reported at 1.16 billion USD, reflecting a 63.0% year-on-year increase [4]. - The statutory profit before taxation reached 1.14 billion USD, marking an 824.4% increase year-on-year [4]. Asset Quality - Credit impairment losses were reported at 62 million USD, significantly lower than the consensus estimate of 474 million USD [2][4]. - The non-performing loan (NPL) ratio decreased by 15 basis points to 2.47%, higher than the expected 2.03% [2][4]. Capital and Dividends - The CET1 ratio improved by 0.1 percentage points year-on-year to 14.10%, exceeding the consensus forecast [2][4]. - The company announced a 50% increase in annual dividends and a 1 billion USD share buyback plan [2][4].

Financial Data and Key Metrics Changes - The company achieved a return on tangible equity (RoTE) of 10.1% in 2023, marking the first time it surpassed the double-digit target since 2014 [27][18] - Total income increased by 13% year-on-year, with adjusted net interest income growing by 23% [27][24] - Operating profit before tax rose to $5.7 billion, up 27% from the previous year [27][28] Business Line Data and Key Metrics Changes - Financial Markets (FM) income was $5.1 billion, down 2%, but up 3% when adjusted for non-repeating gains from structured notes in 2022 [34][27] - Wealth Management income increased by 10% to $1.9 billion, with significant growth in treasury products and bancassurance [36][38] - The Corporate, Commercial, and Institutional Banking (CCIB) segment delivered an income return on risk-weighted assets of 7.8% [12][27] Market Data and Key Metrics Changes - Cross-border income reached nearly $7 billion, up 31%, with significant growth in the ASEAN and AME corridors [40][41] - The China franchise operating profit was under $100 million short of the target of $1.4 billion, reflecting challenges in the commercial real estate sector [14][27] - Customer deposits increased by $10 billion in the quarter, driven by successful deposit campaigns [49][27] Company Strategy and Development Direction - The company aims to target a RoTE of 12% by 2026, focusing on income growth, expense discipline, and capital management [18][55] - A new $1.5 billion "Fit for Growth" program is being launched to simplify and digitize operations, aiming for $1.5 billion in savings [66][70] - The strategy includes a commitment to return at least $5 billion to shareholders between 2024 and 2026 [70][68] Management's Comments on Operating Environment and Future Outlook - Management noted a strong start to 2024, particularly in wealth management and financial markets, supported by previous investments [11][29] - The company is well-positioned to capture growth opportunities in Asia, with GDP growth expected to be around 5% over the next three years [72][73] - The focus will be on enhancing operational leverage and maintaining cost discipline to achieve sustainable growth [70][68] Other Important Information - The company has returned $5.5 billion to shareholders since January 2022, exceeding its three-year distribution target in just two years [68][70] - Credit impairments were significantly lower, with a loan loss rate of 17 basis points, well below the expected range [44][27] - The company has reduced its exposure to China commercial real estate by around 40% since the end of 2021 [44][27] Q&A Session Summary Question: How much of the trajectory to the 12% return on tangible equity is idiosyncratic versus requiring improvement in the market backdrop? - Management indicated that the trajectory to 12% is largely structural, driven by income growth in wealth and financial markets, with some elements being market-sensitive [92][93] Question: Can you provide more detail on the Fit for Growth restructuring program? - The program aims to address structural inefficiencies and complexities within the business, focusing on technology evolution and operational effectiveness [104][106] Question: What are the constraints on the shareholder distribution target of greater than $5 billion? - Management acknowledged that while they aim to exceed the $5 billion target, they are also cautious about potential RWA inflation and credit impairments [97][99]

Financial Performance - Standard Chartered PLC reported its financial results for the year ending December 31, 2023, with a focus on maintaining compliance with international accounting standards[2]. - The group's absolute pre-tax profit for 2023 was 78%, a decrease from 82% in 2022[11]. - The group's absolute operating income for 2023 was 87%, compared to 89% in 2022[11]. - The company's profit before tax was 5,093 million, up from 4,286 million in 2022, marking a growth of 18.9%[37]. - The net profit for the year was 3,462 million, an increase from 2,902 million in 2022, which is a rise of 19.3%[37]. - Basic earnings per share rose to 108.6 cents, compared to 85.9 cents in the previous year, indicating a growth of 26.4%[37]. - The company reported a significant recovery in other comprehensive income, totaling 801 million compared to a loss of 3,778 million in 2022[38]. - The total comprehensive income for the year was 4,263 million, compared to a loss of 876 million in the previous year[38]. Audit and Compliance - The audit covered complete financial data from 10 entities across 8 countries, representing 78% of pre-tax profit, 87% of operating income, and 94% of total assets[9]. - The audit opinion confirmed that the financial statements present a true and fair view of the group's financial position as of December 31, 2023[4]. - The company emphasized the importance of assessing external risks, including geopolitical factors, in its ongoing operations and financial reporting[8]. - The company is committed to transparency and adherence to the UK Corporate Governance Code in its financial reporting practices[8]. - The company has established internal controls to ensure the accuracy of financial reporting[32]. - The audit committee's work and effectiveness of risk management and internal control systems were described in the annual report[32]. - The company confirmed that the strategic report and board report provided information consistent with the financial statements[30]. Credit Risk and Impairment - Key audit matters included credit impairment, accounting treatment for investments in joint ventures, and valuation of high-risk financial instruments[9]. - As of December 31, 2023, the company reported a credit impairment provision of 5.601 billion (compared to 6.075 billion in 2022)[18]. - The expected credit loss (ECL) is influenced by factors such as the Chinese commercial real estate (CRE) investment portfolio, sovereign downgrades, high interest rates, inflation, and geopolitical uncertainties[20]. - The company reported a credit impairment of 508 million, down from 836 million in 2022, showing a decrease of 39.1%[37]. - The company assessed credit risk based on borrower credit ratings, with significant changes in ratings indicating increased credit risk[90]. - The total credit impairment decreased to 508 million in 2023 from 836 million in 2022, marking a decline of approximately 39.2%[95]. Climate Risk Management - Climate risk management is integrated into the group's risk framework, reflecting increasing stakeholder concern about climate change impacts[15]. - The company is committed to aligning its financial reporting with climate change impacts, aiming for net-zero emissions by 2050[16]. - The group assesses climate risk impacts on financial reporting, aligning disclosures with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations[50]. - The expected credit loss calculation has been slightly increased due to climate risk assessments, but this will not be recorded as additional provisions at the end of 2023[50]. - The group has set net-zero targets for 11 out of 12 high-carbon industries as part of its strategy to manage transition risks[50]. Strategic Initiatives - The company plans to continue its strategic initiatives, including market expansion and potential acquisitions, to enhance growth prospects[2]. - The company plans to continue its market expansion and product development strategies in the upcoming fiscal year[40]. - The company has initiated new strategies focusing on technology development and market expansion, particularly in the Asia region[68]. Financial Position and Assets - Total assets for the group in 2023 accounted for 94%, slightly down from 95% in 2022[11]. - The fair value of financial assets measured at fair value as of December 31, 2023, is 301.976 billion, an increase from 282.263 billion in 2022, while financial liabilities measured at fair value are 139.157 billion, down from 149.765 billion in 2022[24]. - The company reported a total of 139 million in other temporary differences in 2023, compared to (11) million in 2022[103]. - The total amount of issued debt securities was 10,817 million[126]. Governance and Risk Management - The company is committed to enhancing its governance and compliance measures to mitigate risks associated with fraud and regulatory breaches[34]. - The company conducted a robust assessment of emerging and principal risks[32]. - The company has sufficient capital and liquidity to meet minimum regulatory capital and liquidity requirements, as confirmed by stress testing and recovery plans[53]. - The company has implemented remedial measures to address significant deficiencies in special access rights management controls, resulting in a decrease in risk compared to the previous year[25]. Taxation - The current tax expense for the year was 1,631 million, with an effective tax rate of 32.0%[98]. - The total pre-tax profit for the year was 5,093 million, leading to a tax expense of 1,197 million calculated at the UK corporate tax rate of 23.5%[100]. - The company recorded a tax loss of 1.4 billion related to the impairment of its investment in Bohai Bank[99]. Shareholder Returns - The proposed final dividend for ordinary shares for 2023 is 21 cents per share, which will be recorded as retained earnings distribution in the financial statements for the year ending December 31, 2023[107]. - The company paid dividends to ordinary shareholders amounting to 568 million, compared to 393 million in the previous year, indicating a 44.5% increase[42]. - The interim dividend declared for 2023 is 6,167 million, compared to 4,119 million for 2022, reflecting an increase of approximately 49.8%[106]. Financial Instruments and Valuation - The company utilizes valuation techniques to determine fair value for financial instruments in inactive markets, ensuring accurate financial reporting[119]. - The fair value of financial instruments is determined using valuation techniques that rely on observable market inputs, with significant judgment involved in estimating the fair value of level 3 assets[135]. - The company has a strategy for acquiring non-trading equity instruments at fair value through other comprehensive income for strategic purposes rather than capital gains[114]. - The company has established robust risk management strategies to mitigate adverse outcomes related to the cessation of interbank offered rates[127].

Credit Risk Management - The overall credit risk management framework is based on International Financial Reporting Standards (IFRS) 9, which includes expected credit loss models [4]. - The financial instruments are categorized into three stages based on credit risk and impairment [5]. - The company reported a stable Stage 1 coverage ratio of 0.2% [8]. - The risk management section includes a comprehensive overview of credit risk and capital review [2]. - The expected credit loss coverage ratio is reported, indicating the proportion of expected credit losses to total loan balances [19]. - The bank's internal credit rating system categorizes loans into 14 grades, with grades 1 to 12 for performing loans and grades 13 to 14 for impaired loans [18]. - The expected credit loss provisions are segmented by business category and stage, providing insights into risk management strategies [19]. - The company employs various risk mitigation tools, including collateral and credit insurance, to reduce potential credit losses [49]. Customer Loans and Advances - The total amount of customer loans and advances is HKD 2,740 billion, with 94% classified in Stage 1, reflecting a focus on high-quality lending [7]. - Customer loans and advances amount to 286,975 million yuan, with a net risk exposure of 168,483 million yuan, down from 310,647 million yuan in the previous year [15]. - Total loans and advances amounted to 292.145 billion, with a breakdown of 273.692 billion in customer loans and 182.390 billion in unused commitments [20]. - The total amount of unused commitments is 182,390 million yuan, with a net risk exposure of 179,450 million yuan [15]. - The total amount of customer loans classified as high risk in 2023 were 8 million in China, while Hong Kong reported 0 million, maintaining a stable risk profile [78]. Credit Impairment - The credit impairment charge was a net expense of 508 million, down from 836 million as of December 31, 2022 [11]. - The total credit impairment amounted to 5.170 billion, with 1.215 billion attributed to the second stage of loans [20]. - The total credit impairment for the first stage is 44,384 million yuan, while the second stage shows a credit impairment of 540 million yuan [16]. - The total credit impairment for the year shows a decrease of 3,533 million compared to the previous year, indicating improved credit quality overall [22]. - The total credit impairment provisions for 2023 amount to (4.320) billion, compared to (4.457) billion in 2022, indicating a decrease of about 3.1% [46]. Coverage Ratios - The company maintains a stable overall coverage ratio of 76% after accounting for collateral [8]. - The provision coverage ratio increased to 72% for credit impairment in Chinese commercial real estate, up from 56% [13]. - The expected credit loss provisions based on model predictions were 1,071 million for 2023, down from 1,267 million in 2022, reflecting a reduction of approximately 15.4% [84]. - The coverage ratio for expected credit losses was 1% overall, with higher risk categories showing a coverage of 2% [27]. Economic Outlook and Projections - The global GDP growth forecast for 2024 is slightly below 3%, indicating a slowdown compared to the average growth of 3.7% from 2010 to 2019 [88]. - China's GDP growth is expected to slow from over 5% in 2023 to 4.8% in 2024, reflecting ongoing challenges in the real estate sector and declining consumer confidence [89]. - The projected GDP growth for China in 2024 is 4.8% [103]. - The company is utilizing Monte Carlo simulations to assess a range of 50 economic scenarios for expected credit losses, reflecting inherent uncertainties in economic forecasts [89]. Sector-Specific Insights - The total amount of loans in the higher risk category (15.751–99.999% probability of default) is 917 million, with a significant increase in credit impairment of 60 million [22]. - The total amount of loans classified as defaulted is 5,508 million, highlighting the need for ongoing risk management strategies [22]. - The total credit impairment for the third stage amounted to 2.499 billion, reflecting a decrease of 2.529 billion from the previous period [75]. - The total expected credit loss for satisfactory loans in 2023 was (149) million, compared to (119) million in 2022, indicating an increase in expected losses [78]. Risk Exposure - The total risk exposure in high-risk and cyclical industries decreased by 3 billion to 29 billion, mainly due to the exit from the aviation sector [12]. - The total risk exposure in Chinese commercial real estate decreased by 800 million to 2.6 billion, with the credit impairment ratio rising to 58% [13]. - The total maximum credit risk on the balance sheet as of December 31, 2023, is 1,055,148 million yuan, with a net risk exposure of 799,808 million yuan [15]. - The total net risk exposure (on and off-balance sheet) was 96,720 million in 2023, down from 99,807 million in 2022, indicating a decrease of approximately 3.1% [72].

Financial Performance - Standard Chartered PLC reported a full-year revenue of $19.2 billion, representing a 10% increase compared to the previous year[8]. - The bank's net profit for the fourth quarter was $1.5 billion, up 15% year-over-year[8]. - Operating income rose by 10% to $17.4 billion for the year, with net interest income increasing by 23% to $9.6 billion[9]. - The company achieved a tangible shareholder return of 10.1% for 2023, an increase of 2 percentage points[9]. - The company reported a basic earnings per share of $128.9 for 2023, compared to $97.9 in 2022, reflecting a significant increase[13]. - The pre-tax profit for Q4 was $5.7 billion, up 27% on a constant currency basis[10]. - The company reported a pre-tax profit of 5,678 million for 2023, compared to 4,645 million in 2022, showing an increase of about 22.2%[97]. - The net profit for the full year 2023 reached 3,462 million, an increase of 19% from 2,902 million in 2022[86]. Customer Growth and Deposits - Customer deposits increased by 8% to $300 billion, reflecting strong growth in retail banking[8]. - The retail banking customer base grew by over 1 million to 9.5 million, with 224,000 retail customers promoted to affluent status in 2023[20]. - The number of affluent customers increased to 2.3 million, contributing to a net inflow of new funds of $29 billion, a 50% year-on-year increase[20]. - Customer deposits reached HKD 155,446 million in Hong Kong, up from HKD 138,713 million in Q4 2022, reflecting a growth of 12%[84]. Operational Efficiency - The bank's cost-to-income ratio improved to 54%, down from 56% in the previous year, indicating better operational efficiency[8]. - The cost-to-income ratio (excluding bank levies) improved to 63.4% in Q4 2023 from 65.4% in Q4 2022[13]. - The cost-to-income ratio improved to 55.1% in Q4 2023, compared to 54.8% in Q4 2022, indicating better operational efficiency[49]. - The cost-to-income ratio improved to 49.9% in Q4 2023 from 58.6% in Q4 2022, indicating better operational efficiency[84]. Strategic Initiatives - Standard Chartered expects a revenue growth of 8-10% for the upcoming fiscal year, driven by increased demand in Asia[8]. - The bank plans to invest $1 billion in technology and digital transformation over the next three years to enhance customer experience[8]. - The company has initiated a strategic partnership with fintech companies to enhance its digital offerings and streamline operations[8]. - The company is focused on becoming a leading digital and data-driven bank, enhancing customer experience through product innovation and sustainable finance[51]. Sustainability and ESG Goals - The bank is committed to achieving net-zero carbon emissions by 2050, aligning with its ESG goals[8]. - The company is committed to supporting the development of renewable energy and electric vehicle industries for sustainable economic growth[18]. - The company has adopted the Taskforce on Nature-related Financial Disclosures to enhance sustainability efforts in diverse markets[16]. - The company is closely monitoring regulatory developments related to sustainable finance and ESG, responding through industry organizations[124]. Shareholder Returns - The company announced a 50% increase in annual dividends, totaling $728 million for the year[10]. - The company aims to return at least $5 billion to shareholders from 2024 to 2026 and plans to continue increasing the annual dividend per share[12]. - The company has committed to returning over $5 billion to shareholders by the end of 2024, with a $1 billion share buyback announced[20]. - The annual dividend has been increased to 27 cents per share, alongside a share buyback program of $1 billion[15]. Credit Quality and Impairment - Credit impairment charges decreased to $62 million in Q4, down from $232 million in the previous quarter[9]. - The credit impairment charge significantly improved by 82% to $62 million in Q4 2023 from $340 million in Q4 2022[28]. - Total credit impairment charges, including restructured businesses, amounted to 508 million, a decrease from 836 million in the previous year[134]. - The overall credit quality metrics indicate a shift towards higher risk categories, particularly in the second stage[133]. Market Expansion - Standard Chartered aims to expand its presence in the African market, targeting a 20% increase in customer base by 2025[8]. - The company is investing in high-growth markets, particularly in Asia, Africa, and the Middle East, with new digital products for SMEs[18]. - The company plans to exit markets in Africa and the Middle East, focusing on enhancing its core business segments[48]. Risk Management - The company is actively monitoring geopolitical risks and has conducted additional reviews of its portfolios in response to macroeconomic challenges[106]. - The group is committed to mitigating information and cybersecurity risks to protect against significant operational and reputational damage[113]. - The group acknowledges the interconnectedness of geopolitical risks and their potential effects on financial performance and reputation[115]. - The company is focused on maintaining sufficient capital and liquidity to support operations and manage interest rate risks[113].

Financial Data and Key Metrics Changes - Third quarter income reached $4.4 billion, up 7% year-on-year, primarily due to higher interest rates [13] - Net interest income (NII) was $2.4 billion, reflecting a 20% increase, driven by strong performances in cash management and retail deposits [13] - Normalized net interest margin (NIM) increased by 24 basis points to 167 basis points after adjustments [13] - Year-to-date income is up 15%, with full-year growth expected in the range of 12% to 14% [17] - Credit impairments rose to $294 million, up $62 million, mainly due to charges related to China commercial real estate exposures [15][43] Business Line Data and Key Metrics Changes - Cash management income surged 61%, and deposits increased by 50% due to higher interest rates [27] - Trade income decreased by 2% due to lower volumes, particularly in China and Hong Kong [27] - Lending income fell by 26%, primarily due to lower origination volumes [28] - Wealth Management income rose 18%, with all main product lines showing growth [33] - Financial Markets income was down 8% year-on-year, attributed to lower market volatility compared to a strong prior year [30] Market Data and Key Metrics Changes - Income from the China business was $2.5 billion, up 25%, with nearly 50% growth from offshore activities [39] - Year-to-date income in Singapore and Hong Kong increased by 31% and 25%, respectively [36] - Income in Africa and the Middle East rose by 30%, with operating profit up 54% year-to-date [37] Company Strategy and Development Direction - The company aims to capture trade investment and wealth flows from the ongoing opening of China's economy [8] - Focus areas include cross-border flows and new economy industries, particularly in Greater Bay areas [8] - The strategy emphasizes sustainable finance and digital banking initiatives to support future growth [3][42] Management's Comments on Operating Environment and Future Outlook - The macroeconomic environment remains mixed, with volatility in markets and shifting inflation expectations [4] - The company remains confident in achieving a 10% return on tangible equity (RoTE) for 2023 despite challenges in the commercial real estate sector [2][55] - Management expressed optimism about growth prospects in Asia, expecting GDP growth above 5% [9] Other Important Information - The company took a $697 million impairment charge related to its investment in Bohai Bank due to reduced net interest income [16] - The effective tax rate is expected to be around 30% for the full year, influenced by increased rates-driven losses [15] Q&A Session Summary Question: Inquiry on net interest margins and LCR management - Management explained that LCR was normalized to around 156% and will continue to be adjusted [58][59] - They expect higher yields in asset markets due to the "higher for longer" interest rate environment [60][61] Question: Clarification on NIM adjustments and hedging policy - A one-off adjustment in NIM was due to a system migration that corrected prior quarter data [65] - Management discussed their hedging strategy, indicating plans to replace retiring hedges to lock in higher rates [66][67] Question: Loan growth outlook and corporate center loans - The decline in loans was primarily due to treasury positions, with underlying growth of 2% [73][74] - Management anticipates increased demand for credit over the next 15 months [75] Question: Concerns about Ventures generating negative deposit income - Negative deposit income is attributed to promotional efforts to attract customers, expected to improve over time [78] Question: Increase in early alerts and NIM trajectory - Early alerts increased due to sovereign concerns, but overall credit quality remains stable [81] - NIM is expected to trend slightly higher in Q4, with guidance for 2024 remaining at around 175 basis points [82][83]

standard chartered l 3Q'23 Results 26th October 2023 Contents Bill Winters Andy Halford Appendix Group Chief Executive Opening remarks . Group Chief Financial Officer Group performance . Strategic actions progress; macroeconomic variables; interest rate assumptions; China CRE; China and Hong Kong portfolio; sovereigns; Bohai; guidance details Liquidity and balance sheet information Notes, abbreviated terms and important notice W 3 4 20 29 35 2 Opening remarks | --- | --- | |-------|------------------------- ...

Financial Performance - Revenue increased by 18% year-on-year to $3.3 billion for the first half of 2023, with a pre-tax profit rise of 29%[5] - Total income for the first half of 2023 was $9 billion, with net interest income up 35% to $4.8 billion[5] - Operating income for the first half of 2023 reached HKD 8,951 million, a 14% increase from HKD 7,859 million in the same period of 2022[9] - The group reported a profit before tax of HKD 3,323 million, representing a 20% increase from HKD 2,772 million in the previous year[21] - The net profit before tax for the first half of 2023 was 3,306 million, compared to 2,651 million in the same period of 2022, indicating an increase of 24.7%[67] - The company reported a net profit of 2,145 million for Q2 2023, reflecting a 15% increase from 1,873 million in Q2 2022[62] - The pre-tax profit before tax increased by 50% to HKD 2,949 million compared to HKD 1,960 million in the first half of 2022[42] Shareholder Returns - The company announced a new share buyback program worth $1 billion to return additional value to shareholders[5] - The bank announced a 50% increase in interim ordinary share dividends, amounting to HKD 168 million[6] - The company aims to return over $5 billion to shareholders from 2022 to 2024, with a total shareholder return of $3.9 billion since early 2022, including a $1 billion share buyback announced recently[17] - The tangible shareholder equity return is targeted to reach 10% for the year[39] Customer Loans and Deposits - Customer loans and advances decreased by $10 billion or 3% since March 31, 2023, totaling $290 billion[5] - Customer deposits increased by $7 billion or 2% since March 31, 2023, reaching $470 billion[5] - Customer loans and advances decreased by HKD 21 billion or 7% to HKD 2,900 billion since December 31, 2022, while customer deposits increased by HKD 8 billion or 2% to HKD 4,700 billion[6] - Total customer loans and advances amounted to 295,508 million, a decrease of 3% from 305,975 million in the previous quarter[31] Credit Quality and Impairments - Credit impairment charges for Q2 2023 were $146 million, an increase of $80 million year-on-year[5] - Credit impairment charges decreased by HKD 92 million year-on-year to HKD 172 million, with a loan loss rate of 11 basis points compared to 15 basis points in the same period last year[6] - Credit impairment decreased by 35% to HKD 172 million from HKD 264 million year-on-year, contributing to a pre-tax profit increase of 29% to HKD 3,300 million[10] - The annualized loan loss rate increased by 12 basis points to 2.6%, indicating a faster reduction in total customer loans compared to the third stage loans[32] Operating Expenses and Efficiency - Operating expenses rose by 8% year-on-year to $5.5 billion, with a cost-to-income ratio improving by 3 percentage points to 61%[5] - The cost-to-income ratio for personal, private, and SME banking improved by 14 percentage points year-on-year to 58%, aligning with the target of 60% by 2024[6] - The cost-to-income ratio improved to 48.4% in the first half of 2023, down from 58.4% in the same period last year[40] - The total operating expenses for the first half of 2023 were 5,504 million, compared to 5,096 million in the same period of 2022, reflecting an increase of 8%[67] Capital and Liquidity - The common equity tier 1 capital ratio remained strong at 14.0%, reaching the top end of the 13-14% target range[6] - The liquidity coverage ratio remained high at 164%, well above the minimum regulatory requirement, indicating strong capital and liquidity positions[22] - The liquidity coverage ratio improved to 164% as of June 30, 2023, up from 147% at the end of 2022, indicating strong liquidity management[78] Market and Regional Performance - The Asia region contributed 2,749 million to pre-tax profit, reflecting a 55% increase[26] - The bank's sustainable finance business grew with a 37% year-on-year increase in revenue and an 8% increase in assets since December 31, 2022[7] - The cross-border income from corporate, commercial, and institutional banking increased by 44%, with significant growth in China at 59%[11] - The bank's financial markets business reported a loss of 393 million, impacted by structural and short-term hedging losses[25] Strategic Initiatives and Future Outlook - The company plans to open an office in Egypt in the second half of the year, pending regulatory approval, and has seen over 140% revenue growth in Saudi Arabia's corporate banking since opening its first branch in June 2021[18] - The company is positioned as a leading offshore RMB bank and a major USD settlement bank in New York, reflecting its strong ties to rapidly growing markets in Asia, Africa, and the Middle East[19] - The company expects tangible shareholder equity returns to reach 10% in 2023 and exceed 11% in 2024, with continued growth anticipated thereafter[20] - The company plans to continue expanding its market presence and investing in new technologies to drive future growth[60]

Financial Data and Key Metrics Changes - Total income for Q2 2023 was $4.6 billion, up 24% year-on-year on a constant currency basis, marking the eighth consecutive quarter of top-line growth [3][4] - Underlying profit before tax for Q2 was $1.6 billion, up 32% year-on-year, with a return on tangible equity (RoTE) of 12.1% [5][8] - For the first half of 2023, total income increased by 18% to $9 billion, with a RoTE of 12.0%, up three percentage points year-on-year [6][8] Business Line Data and Key Metrics Changes - Wealth Management income was up 10% year-on-year in Q2, marking the first quarter of growth after five quarters of declines [4] - Financial Markets delivered record income of $2.8 billion in Q2, up 15% year-on-year [4][17] - CCIB (Corporate, Commercial & Institutional Banking) income was $5.8 billion, up 33%, while CPBB (Consumer, Private & Business Banking) income rose 30% to $3.6 billion [24] Market Data and Key Metrics Changes - The China offshore business saw strong growth, up around 60% in the first half of 2023 [7] - Cross-border income in CCIB was up 44% to $3.4 billion, with significant growth in Asia and Europe [25] - The Asia region delivered record first-half income and a RoTE of 19%, with 11 markets achieving record income [27] Company Strategy and Development Direction - The company is focused on capturing structural growth opportunities in Asia, with GDP growth in the region expected to exceed 5% [49][50] - Strategic investments in Financial Markets and Wealth Management are expected to drive long-term growth [30][69] - The company aims to mobilize $300 billion of sustainable finance by 2030, with $65 billion delivered so far [70][71] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the outlook for most markets despite recent challenges, particularly in Asia [48] - The company expects to see continued growth in regional trade flows and a reconfiguration of supply chains [51] - Credit impairment charges are expected to remain low, with a full-year loan loss rate projected between 17 and 25 basis points [46] Other Important Information - The CET1 ratio was 14.0%, at the top of the target range, with a $1 billion share buyback announced [9][43] - The company upgraded its 2023 income growth guidance to 12% to 14% at constant FX [45] - The Ventures portfolio, including digital banks Mox and Trust, is on a strong growth trajectory, with profitability expected in 2024 and 2025 respectively [67][68] Q&A Session Summary Question: Full-year 10% RoTE guidance and moving parts for Q4 - Management acknowledged the strong first half but noted that the second half typically sees lower RoTE due to seasonal factors and potential credit impairments [76][79] Question: Expectations for 2024 guidance based on deposit performance - Management expressed satisfaction with deposit growth and noted that while they do not provide specific guidance for 2024, the current performance suggests a positive outlook [81][82] Question: Sustainability of Financial Markets revenue growth - Management highlighted structural investments that support steady growth in Financial Markets, with a focus on flow income and the ability to capitalize on market volatility [90]

Financial Performance - Standard Chartered PLC reported a significant increase in net income for the first half of 2023, reaching $2.5 billion, a 20% increase compared to the same period last year[1]. - The bank's total assets grew to $800 billion, reflecting a 10% year-over-year increase, driven by strong customer deposits and loan growth[1]. - The bank's return on equity (ROE) improved to 10.2%, up from 8.5% in the previous year, reflecting enhanced profitability[1]. - The bank's outlook for the second half of 2023 remains positive, with expected revenue growth of 8-10% driven by strong demand in Asia and Africa[1]. - Standard Chartered PLC has initiated a share buyback program worth $1 billion, aimed at returning capital to shareholders[1]. Credit Quality and Impairment - The credit impairment charges decreased by 15% to $300 million, indicating improved credit quality and risk management[5]. - The credit quality analysis indicates that all loans are assigned a credit rating, with regular reviews based on borrower behavior changes[15]. - The internal risk pairing for credit quality categorizes loans into various risk levels, with the highest quality loans rated from 1A to 5B[17]. - The bank's credit quality for corporate, commercial, and institutional banking shows a range of regulatory default probabilities from 0% to 0.425% for high-quality loans[17]. - The total credit impairment amounted to 5.4 billion, with a net book value of 290.1 billion[19]. Customer Loans and Advances - Customer loans and advances decreased by HKD 20.5 billion to HKD 290 billion, primarily due to a reduction in reverse repos by HKD 13.5 billion to HKD 11 billion[8]. - The total amount of customer loans, excluding reverse repos, decreased by HKD 7 billion to HKD 279 billion[8]. - Total customer loans amounted to 316,107 million, with 295,219 million in the first stage and 13,043 million in the second stage[20]. - The total amount of loans classified as "high risk" reached 1.504 billion, with a credit impairment of 1.450 billion[22]. - The total amount of loans in the "high risk" category decreased by 10% compared to the previous period[22]. Market Expansion and Digital Services - Standard Chartered PLC plans to expand its digital banking services, aiming for a 25% increase in digital customer engagement by the end of 2024[1]. - The bank's market expansion strategy includes entering two new markets in Africa, projected to contribute an additional $500 million in revenue by 2025[1]. - The company plans to enhance its market expansion strategies and focus on new product development to drive future growth[19]. Risk Management and Provisions - The company reported a total of 36.6 billion in fair value through profit or loss, with quality loans at 29.7 billion[19]. - The total expected credit loss for the profit and loss account was $1.1 billion[28]. - The company reported a total of $720.1 million in net risk exposure as of January 1, 2023[28]. - The total expected credit loss provisions for June 30, 2023, amounted to 1,285 million, a decrease from 1,580 million on December 31, 2022[64]. - The management anticipates that future credit risk loss provisions will depend on the current economic health and potential changes in the economic environment[65]. Economic Outlook - The global GDP growth forecast for 2023 is less than 3%, a slowdown compared to the average growth of 3.7% from 2010 to 2019[65]. - China's GDP growth is projected to accelerate from approximately 3% in 2022 to nearly 6% in 2023, supported by favorable base effects and economic reopening[67]. - The US and European economic growth is anticipated to slow significantly this year due to high inflation, tightening monetary policy, and increased financial stability risks[67]. - The average price of Brent crude oil is expected to be around $89 in 2023, down from approximately $100 in 2022[67]. Liquidity and Funding - As of June 30, 2023, the liquidity coverage ratio is 164%, up from 147% as of December 31, 2022[86]. - Customer deposits increased to 484,593 million as of June 30, 2023, compared to 473,383 million as of December 31, 2022, reflecting a 2% growth[89]. - The loan-to-deposit ratio decreased to 53.6% as of June 30, 2023, down from 57.4% as of December 31, 2022, due to a 4% reduction in customer loans[89]. - The liquidity buffer increased to 197,035 million as of June 30, 2023, from 177,037 million as of December 31, 2022[87]. - The group maintains a strong liquidity position despite challenging macroeconomic conditions, focusing on improving the quality and diversification of its funding portfolio[86].