Standard Chartered PLC

Standard Chartered PLC

3Q'23 Results

LONDON, UK / ACCESSWIRE / October 26, 2023 /

Registered in England under company No. 966425

Registered Office: 1 Basinghall Avenue, London, EC2V 5DD, UK

Table of contents

Performance highlights	1
Statement of results	3
Group Chief Financial Officer's review	4
Supplementary financial information	14
Underlying versus reported results reconciliations	29
Risk review	35
Capital review	39
Financial statements	44
Other supplementary information	49

Unless another currency is specified, the word 'dollar' or symbol '$' in this document means US dollar and the word 'cent' or symbol 'c' means one-hundredth of one US dollar.

The information within this report is unaudited.

Unless context requires within the document, 'China' refers to the People's Republic of China and, for the purposes of this document only, excludes Hong Kong Special Administrative Region (Hong Kong), Macau Special Administrative Region (Macau) and Taiwan. 'Korea' or 'South Korea' refers to the Republic of Korea. Asia includes Australia, Bangladesh, Brunei, Cambodia, India, Indonesia, Laos, Malaysia, Myanmar, Nepal, Philippines, Singapore, Sri Lanka, Thailand, Vietnam, Mainland China, Hong Kong, Japan, Korea, Macau, Taiwan; Africa and Middle East (AME) includes Angola, Bahrain, Botswana, Cameroon, Côte d'Ivoire, Egypt, The Gambia, Iraq, Kenya, Lebanon, Mauritius, Nigeria, Oman, Pakistan, Qatar, Saudi Arabia, Sierra Leone, South Africa, Tanzania, UAE, Uganda, Zambia, Zimbabwe; and Europe and Americas (EA) include Argentina, Brazil, Colombia, Falkland Islands, France, Germany, Ireland, Jersey, Poland, Sweden, Turkey, the UK, and the US.

Within the tables in this report, blank spaces indicate that the number is not disclosed, dashes indicate that the number is zero and nm stands for not meaningful.

Standard Chartered PLC is incorporated in England and Wales with limited liability, and is headquartered in London. The Group's head office provides guidance on governance and regulatory standards. Standard Chartered PLC. Stock codes are: LSE STAN.LN and HKSE 02888.

Standard Chartered PLC - results for the third quarter ended 30 September 2023

All figures are presented on an underlying basis and comparisons are made to 2022 on a reported currency basis, unless otherwise stated. A reconciliation of restructuring and other items excluded from underlying results is set out on pages 29-34.

Bill Winters, Group Chief Executive, said:

"We have continued to make strong progress in the third quarter against the five strategic actions outlined last year, delivering a solid set of results. Wealth Management has continued its recovery with double digit income growth and the Financial Markets performance has been resilient against a strong comparator period. We remain highly liquid, and well capitalised, with a CET1 ratio towards the top of our target range and confident in the delivery of our 2023 financial targets, including a return on tangible equity of 10%."

Selected information on 3Q'23 financial performance with comparisons to 3Q'22 unless otherwise stated

• Return on tangible equity ("RoTE") of 7.0%, down 2%pts year-on-year ("YoY"), primarily due to a higher tax charge in 3Q'23

• Income up 6% to $4.4bn, up 7% YoY at constant currency ("ccy")

- Net interest income ("NII") up 20% at ccy to $2.4bn; Other income down 5% at ccy to $2.0bn

- Normalised net interest margin ("NIM") 1.67%, a transient reduction of 4bps since 2Q'23; reported NIM 1.63%, including 4bps from one-offs

- Financial Markets ("FM") down 8% at ccy, down 6% excluding $28m gain on mark-to-market ("MTM") liabilities in 3Q'22

- Wealth Management ("WM") up 18% at ccy, supported by continued strong Affluent client onboarding

• Expenses increased 8% YoY at ccy to $2.8bn; down $56m or 2% quarter-on-quarter ("QoQ")

- Increase due to inflation, business growth and targeted investments, partially funded by productivity saves

• Credit impairment charge of $294m, up $62m YoY, up $148m QoQ; includes China Commercial Real Estate (CRE) charge of $186m, of which $42m related to the management overlay, now $178m

• Underlying profit before tax of $1.3bn, down 2%

• Reduction in China Bohai Bank ("Bohai") value-in-use calculation led to an impairment charge of $0.7bn reflecting subdued 2Q'23 Bohai earnings and challenging macroeconomic outlook; 18bps impact on the CET1 ratio

• Tax charge of $494m: underlying effective tax rate of 38%, up 14%pts reflecting profit mix and increased losses in the United Kingdom where we cannot recognise a tax benefit

• The Group's balance sheet remains strong, liquid and well diversified

- Customer loans and advances of $281bn, down $9bn or 3% since 30.06.23; up $2bn or 1% on an underlying basis

- Customer deposits of $453bn, down $17bn or 3% since 30.06.23; down $14bn or 3% at ccy; managing liquidity coverage ratio (LCR) and business as usual outflows in Transaction Banking Cash

- LCR 156% (30.06.23: 164%); Advances-to-deposit ratio 54.5% (30.06.23: 53.6%)

• RWA of $242bn, down $8bn or 3% since 30.06.23

- Credit risk RWA down $9bn, primarily from optimisation and efficiency actions, and China Bohai Bank impairment

- Market risk RWA up $1bn and Operational RWA stable

• The Group remains strongly capitalised

- CET1 ratio 13.9% (30.06.23: 14.0%), towards the top end of 13-14% target range

- ~$1.8bn of the $2bn buy-backs announced in 2023 completed

Selected information on YTD'23 financial performance with comparisons to YTD'22 unless otherwise stated

• RoTE of 10.4%, up 1%pt YoY

• Income up 11% to $13.4bn, up 15% YoY at ccy

- NII up 30% at ccy to $7.2bn; Other income up 1% to $6.2bn

- NIM up 30bps YoY to 1.66% YTD'23

- FM flat at ccy, up 7% excluding non-repeat of $244m gain on MTM liabilities in YTD22; WM up 9% at ccy

Standard Chartered PLC - results for the third quarter ended 30 September 2023

• Expenses up 8%, 11% at ccy; increase due to inflation, business growth and targeted investments partially funded by gross productivity saves

- Positive 4% income-to-cost jaws YTD, with cost-to-income ratio improving 2% pts to 62%

• Credit impairment charge of $466m, down $30m YoY

- Annualised loan-loss loss rate of 20bps, down 2bps YoY

- China CRE portfolio Expected Credit Loss provisions $1.1bn on Stage 3 exposures of $1.4bn; cover ratio including collateral 88%

• Underlying profit before tax of $4.6bn, up 19% at ccy

• Underlying earnings per share (EPS) increased from 89.6 cents or 10% to 98.4 cents; Reported EPS down 21% to 74.9 cents

Update on strategic actions for YTD'23 unless otherwise stated

• Drive improved returns in CCIB: Income RoRWA of 7.9%, ahead of 2024 target of 6.5%; ~ $22bn RWA optimised since 1.1.22, nearly achieved $22bn target over a year ahead of plan

• Transform profitability in CPBB: Cost-to-income ratio of 58%, improved by 11%pts YoY, ahead of 2024 target of 60%; $0.3bn of gross expense savings since 1.1.22

• Seize China opportunity: China onshore and offshore profit before tax up ~3x YoY to $1.0bn

• Create operational leverage: $0.7bn gross productivity saves since 1.1.22; Cost-to-income ratio improved by 2%pts YoY to 62%

• Deliver substantial shareholder returns: $3.9bn of total returns announced since 1.1.22

Other highlights

• Aviation exit: announced the sale of our global aviation business in August, with the transaction expected to be completed by the end of the year and increase CET1 ratio by 19bps in the fourth quarter

Outlook

We remain confident in the delivery of our RoTE targets, supported by continued strong progress on our five strategic actions.

For 2023 our guidance is as follows:

• Income to increase in the 12-14% range at ccy

• Full year average NIM to approach 170bps

• Underlying asset growth in the low single digit percentage range in 2H'23 (from 30.6.23)

• RWA to be similar to 31.12.22

• Positive income-to-cost jaws of around 4%, excluding the UK bank levy at ccy

• Full year loan loss rate to be in the range of 17-25 bps

• Underlying effective tax rate expected to be around 30%

• Operate dynamically within the full 13-14% CET1 target range

• RoTE of 10%

All 2024 guidance remains unchanged. We continue to expect income growth to be in the 8-10% range at ccy and we remain confident of achieving greater than 11% RoTE.

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SOURCE: Standard Chartered PLC

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