Full Year 2020 Standard Chartered PLC Earnings Call

[music].

Welcome to standard chartered the Pnc's 'twenty 'twenty full year today's presentation is being hosted by Bill Winters Group, Chief Executive and Andy Halfords Group Chief Financial Officer. Once the opening remarks has finished the will be an opportunity to sort of question.

And on says to ask a question over the phone. Please press star one on your telephone keypad at any point during the presentation.

Alternatively, please use the question box available on your webcast page to submit your questions. The presentation will begin with the short video followed by built opening remarks.

Okay.

Okay.

Okay.

Okay.

Okay. Good morning, good afternoon, everybody I hope you're all hungry.

But people are cautious.

Understood.

The Bronx that could add up to any of the go through the details of our 2020 results of the bank with a review of the bar strategic themes.

The way forward.

All in all of 2020 for US has been a tale of two size range.

On one hand, yes.

We had from truck in Europe, we had a relatively strong finish of the year in those areas that have begun their recovery.

We know long weighted we had it.

We absorbed the the transitory impacts of higher credit costs.

The economic slowdown, which clearly led to a reduction in cross border trade and investment.

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In the to the the higher credit provision, which was obviously better on the sugar from the first part of the year.

We also have the structural and the those are all transitory, but the real versus structural challenges.

And the particular lower interest rates, which we think is going to be with us for some time on that.

Which created the requires an ongoing.

Calibration of our of our visit volume.

He will be talking about the detail here, but the overall, we demonstrated strong related I think we are as convinced as ever as of the strategic path that we run is one that makes sense with a good ongoing market share increases and better penetration and better customer service and our network businesses.

And with the network of he is as relevant as ever in particular around the needs of the broadly defined China trading ecosystem.

Our affluent client population.

The need to growth over the journey is the 10% growth of the number of clients.

Well the other day the earnings line itself is volatile with Martin settlements and we clearly had down downdraft strained at the peak of the coking times, we're back to full strength in terms of growth in our key markets.

We can talk a little bit about the at the mass market and the things that we've been doing that digitization data analytics and otherwise.

And I will go into some detail on our sustainability agenda of the obligations that we feel the rehab, but also the tremendous opportunities negative we think that as we execute this strategy.

Evidence that we are on track to execute the strategy.

We can continue to grow our income in that 5% to 7% we can continue to do.

<unk> expenses running at low inflation that we can do that in a disciplined weighted it is.

Really the piece of the our capital position and we can get to that 10% plus return on tangible equity the medium term, we put on the 7% milestone along the way in three years.

Which is sort of I understand of whether you guys think recognition of AT&T.

You will see steady progress from the 3% range this year due to 10%.

In the in the medium term and we will get these milestones along the way, but with that I will the I'll handover of any of the methods more comments on the strategy there.

Okay. Thank you very much bill and thank you all for joining.

Just a few ACG coins and then all of the agency a little bit more detail over the life of this.

As Bill said it does feel like because of the story of C. Pulse, we came into the year of the pretty good trend the increase to the right C. One percentage points of year, we had the strong third quarter and.

And then as we all know Covid came in and it had two particular the consequences for US what was the impact of interest rate on the top line and the of the walls of the platform credit impaired loans.

If you look at the key numbers here the operating income at $14 8 billion was down 2% of VAT.

The plant is the offset of some very strong performance, particularly in the financial products area on etch market share it offsetting what would the significant in terms of drops on the interest of all told that puts the base in the business.

Operating expenses, we cited the takes at the times of Covid or are starting to have the impact that we would tightly control of those we helped on that base of slightly down year on year.

This impairment has doubled.

I think the testament to the actions we've taken over the last several years to improve the quality of the balance sheet as reasonable on true and the good news here is the two thirds of backfill the HR injection wells in the third top and the charges. We took in the third and fourth quarter with pretty much the same again it will be.

Hello, ladies and of items together on underlying profit was $2 5 billion, which was down 40%. We took some restructuring charges from the state with the exit of legacy businesses on let's deal with the predominant say and we had the goodwill impairment from earlier in the year the.

The the racy fully at 3% call. It from the previous year very much impacted by Covid, obviously, the CET one ratio of hydro 14.4% was the highest we've had it from the grid, while and off the back of asset yields of seats like we've announced the recommencement of dividend and the completion.

Of the previous probably of that program.

Let's move on to slide six this is showing the work all of the top half between our full year 2019, absolutely a transfer of income and on the bus parts of the fourth quarter on the phone calls that comparison.

We have normalized for currency and stripped out DVA sites of the like for like comparison on the full year. We were down 400 million April of income advanced on the.

The right hand side, you can see the interest rates affected products, obviously top of it but on the left hand side of the we had the good performance in five markets wealth management.

Cash market, particularly on the rate side and in the electric cost of the year on the credit and capital market So items and.

And wealth management I think is interesting the second quarter of technicals and all of this but heavily backwards, but by the fourth quarter full of cold from Coca Cola said, we were about 5% up year on year say the momentum of world punishment, clearly picking up quite nicely the.

The fourth quarter, which did not get the benefit both of the higher interest rates at any point in that we sold the income come down 11%.

If it meets all of the seed slide set them just to give a little bit more insight as to what happened on the interest rate effects quite look north of us here, but on the top left you can see on price yield our use of.

The year actually reduced by 100 basis points year on year, we managed to save about 70 basis points through reduction in the right to the penny, but nonetheless, the average NIM for the year came down by 31 basis points, which is about 19% of favorable for the year.

In the Middle chart, you can see the progression of that by quarter and we had indicated that we would see it coming down to roughly where we came out in the fourth quarter said what type of control. This about two basis points of one of another.

But nonetheless actually the name has leased as we had predicted and all of you is that as we look forwards to trade. The Chinese one that we would see the full year average the March eight below that of fault colt hub level.

It's the remedies on and see the other income line not the directly balance sheet interest related income. This was 2% up year on year and is now six full percentage of our total income.

It's particularly important in a lot of interest rate environment that we are pricing. This it was a performance that was helped by the strong set of salt thoughts as you can see from the chart here.

And on the right you can see the script, but the green.

Is the net fees and commissions sales were down 10% of those primarily in the corporate space, but in the pollute the net trading and other income was up 12% year on year or 9%, excluding DPI and that was particularly the benefiting from the strong financial markets performance.

We believe that on to slide nine and just looking at the business by customer segment. The Sematic here on surprisingly is that the segments that have a higher proportion of their activity in the financial marketplace. The stomach that won't punishment did better and they did not did less well say copper.

The institutional banking $7 2 billion of income so pretty much half the group had a I think of the circumstance of very good yet 2% of all the income and the site in time, a control costs, which were 3% down at all said the impairment charges, whilst we took impairment charges of 70% of those were in the third of tall.

And actually the second half day were much more moderated.

Retail banking is about 30% wealth management product, 70% retail product cycle that the pick up the full buck, but largely the rate effect on the laptop and hence why the top line was held back will be the again, we took cost out all of his commensurate with that reduction in the the income and it was the year when we.

Particularly focused on parliament, the visualization and the push out of the box business and the push on Nexus platform, which bill referred to later on.

Total banking has the much lower financial markets makes it said he past quarter. It take account of heads of the top line that was held back because of consequence of the bat at private banking again in the periods when the faceplate protests more difficult journey of the early part of the yet that made the private banking will difficult that having been said all of assets under management year on year.

It's actually up by 9%.

So on the slide Japan. This is the second comparison, but now located by geographic region. You can see the biggest top line growth result was Europe parts of town fulsome again surprisingly.

Because of this as a corporate business and the second the biggest growth. We got was in STM and South Asia, which was up 4%.

The walls, Singapore was impacted call rights, we had on the other countries in the region did particularly well.

India I think was of particular stab of that 26% decrease in income on a four fold increase.

In operating profit.

It's an H F, 16% et cetera say quite broad based.

Improvement in several of the markets in that region.

Greater China, and North Asia, 40% will say tightened prepaid income 6 billion again, the big market Hong Kong held back by Reits, but other markets in the region did pretty well and consistent with the sentence. The mill nature is 23 of this quick cash we had the crib business spirits describes the top by 9%.

Right.

And is now almost approaching $300 million of operating profit out of fault price from where it was a while ago.

We had strong reported China as well so of the income in China was up 6% and without hedging tool. Its affiliates all of the same talent from our business in the China and hence the effects of fleet continued to make that added to the great Bay area I forgot the lease was more digital peer insight essentially zero on the profit before tax.

The income down 8%, the 8% actually per lives a lot of currency mix movement. So if you take care of Etsy out of do it on the constant currency basis, we were actually on the down 3% average.

Relative to the middle East is more difficult with the impacts of pulp tourism other things of the quarters. The African business is actually.

All of my stable on a constant currency basis.

So on the slide 11.

We have got sensor and alpha.

Put simply the story here is the vast majority of all business the treasury activity and.

On the coastal the reduction of interest rates it reduce the yields we are.

Receipts in the Treasury space, we offset some of that with cost reduction, but net net there was the three to 500 million drag on the profit depending upon the segment of the region did and the segment T. The was all set of its slight impact of bite of high wet places of the IP.

We have a slightly lower stake in that business and also because of the IPO as we flagged at the start of Kuletuk, we've actually booked 10 months of results in the <unk>.

The 20 year, whereas we will resume the full 12 pumps in 2021.

On slide 12.

So of course, we said at the time the Covid came in the but we would take the cripple notice we referred to opportunities to reduce variable compensation, which we did fleets referred to opportunities to reduce travel well of juices that happened anyway and travel costs came down obviously of law. We said we would look.

Cash from elements of our investment spend what actually happened because we decided that we should continue to spend all of the investments at the same level as we had talked in the previous yet that put a little bit more cost into the fourth quarter, but that was very conscious decision to take that bill referred to the lot of the things we are doing it in the space.

But all of a stroke view is the as we build school the period post Covid. It is absolutely volatile that we have this many of these initiatives fly as we possibly can do.

We have six of 20 to 21 previously of the game is to keep costs on a constant currency basis.

Out of that below 10 billion and we said that there will be some restructuring costs of about half of it in a periods of time on some in 'twenty 'twenty growth to achieve that some of that the redundancy on some of that will be about space management and property costs.

On slide 13 impairments.

Mentioned earlier that the impairment charge has just about doubled the $2 3 billion of the yet in the Middle chart on the top you can see the party falling by cool tuck the the.

The largest part of cut in the first half of the year and in the last two quarters sweeping span the colds, but on the P&L hit.

I think the encouraging taken all of the warehouses with T. I told on this but is the lead indicators say on the boats from Brian chart. The Blue line that is the trend of the early alerts the ones on.

I'll get the problem that could become up and place that you can see all of 3 billion level of Wednesday, where at the peak.

We had items I think this is include the dependencies, but we have focused called the sectors. The base vulnerable aviation et cetera, and the the equation in the is actually has come down again by about $3 billion just quarter on quarter.

We're tracking countries, where people have been April suite the repayments.

On the later subject to relief has also come down <unk> 3 billion on we've seen the vast majority of customers recommencing with the previous type of important for a follow up.

The investment Craig put up 30% since the <unk> team I think actual numbers that something like 42% of up of investment grade in 2014 is now 62% and I think that is just really good evidence of the steps we have taken over the last several years of having cushion of what could otherwise the bigger players in the space.

So looking forward I think the indicators here of a post the night shut that clearly some way to run yet.

Sighful team risk weighted assets and the capital the risk weighted assets overall were up 2% to the yet so just under 5 billion. Obviously that was helped by the disposal of Plaza, which cases anointed. The independent said if you separate that out we saw asset quality.

The deterioration of increasing the out of the rays of hope. This consequence of Covid, but we saw a significant offset to that to an asset mix. They quite the multiple seek liquidity from the golf is now in our treasury space ready to be deployed on that tends to be lower risk weighted asset growth was good.

Good and impacts of as you can see to the balance sheet. We had led to the bulk of the decreased by six of the supporting price clearly that add to that we strongly believe we will continue safety.

C. P. One ratio of 14.4 that includes places.

For the software quick fix which the PRA on how do you look at.

But all of the facts, we had the benefit from cost of sales of active.

The basis points at the.

The combined effect of the increase of the respected assets on the profit contribution quarters of the 14th tour with the Colts clips that the dividend Breakmate says on the buyback recommence is.

Slide 15, I think is a really important chart, we had coming into the 2020, yet in a range could position. The strategy was paying off you can see that the income was broadly within the range that the expenses were increasing jewels add the rates equals.

Principally improving and then to the early points of that's real no COVID-19 capable.

That has set us back of periods of time, but we really do height. The over a period of getting towards the more blue Couldnt get out of it back here, we'll start to see Greens repairing and look back the thing look of this curve as big of a slew of temporary dip in an otherwise of longer term strategy deliberate.

On slide 16, the outlook for 2021.

First of all we are pretty much of the view that the asset price is out there and we will continue to take that that will happen in Asia.

The fact of the matter all but the interest rate impact rolling fully through the boat will reduce the name of year on year on when you put the volume and the NIM together that it's likely to be at the constant currency rate.

Black ish, yet in 2020 work, but the underlying growth in assets, we see part of much continuing.

We see the expenses again constant currency at about 10 billion of display of 10 billion and we just put here of sort of indicator. If you take the FX rates out of it.

The end of December then that base would actually have increased by the income out of the cost by about call. It 4 billion. So we usually fairly operating profit neutral on FX, but just to be clear that the numbers. The next year. If the prices continue throughout this year they would half of that sort of the consequence, we expect the credit impairment precious.

To be reducing difficult to predict accurately how much but we do see things coming down and then the reaffirmation of the 30% to 40% range and the full patents to return capital to be within that range.

So the last couple of slides slide 17, the overall financial framework.

Bill will talk about where we are putting more sites at the bottom.

Broadly this is similar to the frame of what would have the full we do believe it's working albeit with the select COVID-19 related to light we deeply type of 7% income off the chart. The 'twenty. One year is fully achievable. We are confident we can keep expense growth downplayed the rates of inflation that we intend to operate for the say within the C. T bolt on range.

And with all of 30 clear that's to get the right up we need to work the E in a routine.

And finally slide 18 day and that is just the walk from where we will.

'twenty 'twenty on the right team kits of the 10% as you would expect some of this is coming from income that card of strike pads will detail in the appendix the wood.

<unk> growth in the regions and the products that we have now got that we should be able to achieve that if expenses growth legislation of that has led the REIT income. So that gives us that bridge that impairment suite of assuming that the normalized in the city type of 40 basis point area I think of it blood, where they are vibrant UK banks of that becomes of Tcf had asked.

Our profit growth, we see our effective tax rate slightly reduced pay per periods of time, we will keep all of the beauty of cordis. The laid the right of ASIC Rice and then find the on equity we are on top of our target range of getting into the range on buybacks should give us some on the system side instead of around that 10% type of patient type.

With that let me hand, it back to Victor.

Great. Thanks, Eddie as you see the the schematic of the the four pillars of our strategy as it lapped the.

The context against which we are breaking of that strategy is is pretty uniformly positive whether it's that GDP growth in Asia and the excellent population, both stock and flow of growing the revenue pool in mass market and the.

The the perceived the challenges around sustainable EBIT challenges in our markets in particular, but also the opportunities at the.

The question that we get the regular this is.

What makes you think you can do this event the transformation for awhile on why do you think you can growth by the 7% at the top line.

Extensive capital profile, but any just went through the.

The the furniture is because that's what we've been doing is certainly up until the point of the pandemic as Debbie indicated and decided a couple of earlier.

Because we've done what we said we were going to do at each day shall we took we would clean up the balance sheet skepticism of the time, we did that very quickly. We said that we were going to reinvest and reposition of our financial markets business for for the current environment and we've done that I think we saw that very clearly of truth of our performance of 'twenty 'twenty and into 'twenty and 'twenty one.

We said that we were going to pursue an aggressive digitization of it.

None that we've now got best in class applications in the market, whether its our digital bank in Hong Kong or many of the efforts that we've taken internally.

These are true we said we could do this flow while substantially increasing investments, but also keeping expenses.

Relatively flat.

Precisely plan, we've done that so we have a high degree of confidence of this team can execute against the things that we say that.

Unfortunately, we can't control of Pandemics or the level of interest rates and that is clearly set of stack that we acknowledge.

And all of that and that requires some fine tuning, but which will which will go through as we discussed strategy, but the discipline remains confident that we can deliver on that medium term objectives that we set and we think the got pretty good evidence of support that and an extremely attractive market backdrop. So if we move to page 21, I'll take the strategy pillars in terms of versus our is our network strategy.

Just this remains very consistent with what you've seen in the past the.

The CDR theres been a change with the <unk>.

The interest rate on the Ultrashape environment has taken a pretty healthy dose out of our cash management business and other deposit sensitive businesses at the flipside is market volatility and the and the quest for yield. So it's not just the volatility of this boy are our financial markets. It's also the fact that investors are increasingly shifting to the market.

At one of our growing too.

Two of them getting stronger and tree in many cases still has some yield.

And we're very well positioned as we grow our credit business of two to pick up net debt yield seeking in our markets, where we have a clear competitive advantage. The network business. It's over two thirds of our of our corporate business.

Continues to generate very strong returns, but we.

We've got of a well diversified portfolio of products and services net that means that the true different market departments through the over the next 357 years and we would expect there to be secular growth in this business, but also our locations from the one part together as economic conditions warrant, Colombia, we will be investing heavily to continue to focus on these low returning.

Client relationships.

The focus on building our non financing income line of particular reported in a low rate environment.

And then very importantly, focusing on on.

Establishing a best in class set of capabilities around our kind of kidney in terms of digital agenda each of the our corporate clients alone or in some cases with partners, especially as we build out our supply chain financing business.

If we move on to the the excellent strategy page page 22.

But it would have been an excellent repositioned affluent client business.

Investing heavily in the products and customer service over the past five years, we now have a best in class designation in six of our top markets.

It's out of service and to be precise on.

That is measured by net promoter score, but also by the by a separate surveys that we've done the judge our customer satisfaction of the products and services.

So we haven't this is the high recurring business for US we know that it's grown secondly to independent of of our efforts over the past 10 years, we know the we've matched market growth and we think that we can actually continue to match or exceed market growth against the very very attractive underlying dynamic. So we will continue to focus on the affluent client segment in the in everything.

That we do.

We look to lots of the mixed nature ex.

Page 23 the.

You have heard us talk so much about the mass market business in the mass part of businesses.

For years the Senate chartered.

On the leg art, we hadn't invested in it materially.

Had the credit problems of being treated went back to the.

The early part of the of the last decade into the middle part of the last decade, we had a series of accidents in different markets, which I can undermine our confidence that we could execute the credit leg of mass market strategy effectively.

Moving on now what we've done this to invest heavily in two things first is data analytics to significantly improve the quality of our credit decision, but also the.

The focused nature of our marketing and second is to invest in digitalization. So we now have a an operation of its getting closer to I would say normal or industry benchmarks in terms of our end to end cost of service.

We've got completely digital operations of for example of digital banks in Africa.

Or in the recently launched <unk> in Hong Kong.

Got where at the lower end of the cost ratio of trips into the cost of Onboarding clients and cost of kind of going through its do we have more to do in terms of creating a truly seamless end to end flow.

But we're now positioned to the scale that business on both on the lending side as well as on the on the on the servicing side using digital tools leveraging these data analytics capabilities, we will do that on our own in the core bank and we'll do that through partners as we have with our digital banks in Hong Kong and Indonesia, with our <unk> program.

Our banking as a service model of at home and it's important as we rollout of the digital bank there.

And so that the combination of of operating alone with EBITDA and aggressive digitization.

The agenda and the partnership will get us growth and that growth will be profitable assets will be a contributor to our 10% of <unk> progression in the coming years.

We move on to the sustainability agenda again, you've heard us talk about sustainability for years I think we'd been at EBIT thought leader in.

The interstate ability of preferred reversal of the markets, where we operate.

The most of the packet already are the most impacted by climate change because the risk of greatest in our markets, but also of the need and the opportunity to transition to a net zero economy is the greatest in our markets and the impact of we can add by providing transition financing to the of the companies and countries and our footwork footprint will have a.

More material impact than the.

A similar number of dollars spent anywhere else in the world, where the sustainability agenda is already more advanced the.

There are risks on the sustainability of fronts.

Our markets will be more packet, there's tremendous opportunities of our $75 million of financing required to meet the sustainable development goals over the next 10 years.

Of the 10% of that is funded in our emerging markets. So that the remainder of has to the pound on our very very strong project finance capabilities and some simple plan in particular.

It is an excellent position to earn a billion dollars of it.

From and growing and.

This will be a business line of book growth for some time.

Backing that with our own internal commitments.

Been very clear that we will achieve a net zero positioned for standard chartered bank, including financed emissions.

By 2015.

We're very clear that the at least the requirement to make significant progress against that objective. It is one of we have undertaken.

The significant progress by 2030.

The actions that we've taken over the past 345 years in terms of the of <unk>.

Exiting.

Any business financing coal fired power plants or coal production is.

I think this market leading continues to the market leading with.

We've continued to add to that by making clear that hour.

Our clients will need to have their own transition plans. The net zero by 2050 and that they will need to demonstrate significant progress by 2030, and we're there to help them do that so there is both.

A bit of of stake, but much more importantly, there's the carrot because I think of what we're seeing from more as our clients. Once you until the Egypt, I think the transition and they're leaning on us to provide the help and we're in an excellent position to that.

So if we can move on to the.

The the underlying sets of skills and capabilities.

It will be necessary for us to deliver on those four strategic pillars. These are compelled of internally our neighbors versus the division.

We have a great record.

The recent track record of innovation inside the bank that we have.

Intrapreneur program, where we solicit ideas from our after market leagues and.

Essent to effectively compete for support and funding. We've had 2300 idea of 2300 ideas, we got into a coaching and approval of funnel that the had narrowed that down to dozens now of debentures that have been funded internally some of which are reaching the point of of commercialization of delinquent, but more importantly, it's changing the mindset.

The organization around the innovation to the point, where we when we look at our plans over the next five years of service. If we can generate $5 billion is half of our income from.

From things of where activities or ways of doing business that are fundamentally different than what we're doing today as it is of great exciting prospect for all of us, but it's also manifests itself in a number of of ventures, which are discrete.

Starting with the marks our digital banking and Hong Kong.

But she's been at which is market, beating in the Hong Kong market. We now have almost 3% of the population of Hong Kong has signed up the core of amongst accounts.

The vast majority of it does have actually funded the accounts and are using it.

The App store ratings have continued to be at the top of the of the tier in and amongst the very best of the world.

So what is the same set of cutter knows how to build digital applications and.

And we know how to build digital businesses are African digital banks fairly leader in digital banking across the African continent.

Evidences to US net it's not all of that getting the latest and Sexiest technology of I'd, rather have the company that's appropriate for the market and deliver to the tightened way.

It goes on from there we've now.

The announced the launch of our Nexus platform. These niche at this day.

The first truly scaled banking as a service model coming out of a large bank.

We will be delivering the full range of banking products to two of our Indonesian ore to Indian customers via E. Commerce platforms first partners. The glove backwards at the 100 million customers in Indonesia, very very exciting proposition as that advanced testing now as that rolls out of global look of how we can roll that out of other markets, but it goes on and on we are leader of in digit.

Assets, we've announced the launch of Zodiac, which is digital asset custodian.

During this together with.

We know the trust income trust is coming to ticket to take a small stake on the back of something that we build the standard chartered the did.

Of the opportunities to capitalize on the market and you can see net I would say that in terms of institutional interest in digital assets the Mark Hughes additive.

So the opportunity to take a leading position there is very exciting for all of US. The Center chart of the list goes on we moved two of page 26 the.

<unk>.

This can only be driven by the.

The the.

The people and by the way is that we work. So we've had a fundamental program manny's referred to it regularly.

Round, our new ways of working this is a fundamentally client focused end to end approach without the productivity gains that we have already generated two RV ways of working but more importantly will generate in the in the years to come we can't maintain the high investment base that we have been undertaking while at the same time, keeping expenses well below our income growth.

So this new way of working again, so it's something that I think is familiar across the industry at standard chartered we're actually doing it and it's making a difference and it is what's allowing us to achieve the <unk> to make the strength that we have.

Plenty to move to the to the next of our of our key enablers of people.

On the.

We focused very heavily on developing our people we changed our incentive mechanisms to incentivize the kind of behavior that we're talking about today, whether thats, the innovation or the ways of working agile leadership skills.

In addition to coping which would be the.

The sorts of things of how to deal with the 2020 in terms of flexible working and like.

The EBITDA I think the result of a lot of that re skilling has been a much better qualified workforce from what we're trying to do.

Obviously prepared to the higher external leases on those gaps and we continue to be an attracted a higher so if people want to work percentage on it very very importantly on the supplement that the day as we inevitably have to also go away as we automate and we've been able to reposition those colleagues as a result of being the skills inside the organization. So I think of as we look at the.

The ongoing automation, we should be able to place somewhere between 25 and 50% of our colleagues internally, obviously from the financial perspective, avoiding some of the restructuring cost of but more importantly, all from Kerr options to the colleagues, which becomes a big drop where people into in the center turn banks.

Let me just wrap up quickly on page 28, we are fundamentally a purpose led organization I think everybody will say that especially since at some large investors center at the calling for every organization to repurpose that with the purpose of it for some time on.

The purpose of driving commerce and prosperity through or do you need diversity.

Much informs our strategy informs the way that we focus on our business has.

Or certainly from my comment Center chart, and it will no doubt for years to come what we talked about though is how we can take this purpose and go beyond the the one year budget or the three year five year pulp.

Corporate planning and strategy the strategic plan and turn it into a set of aspirations that can be kidney things outside.

Side of our comfort zone fundamentally and get us to the position of where we can make material contributions to the societies in which we operate.

She will in turn improve our financial performance of structurally and over the long term.

You'll hear more from us about the the three broad buckets of aspirations that we were setting out.

First is is in and around the agenda to reset globalization of globalization of Dirty words, everybody hates it because because of the KED had terrible economic and political consequences of over the past several years.

All of which is correct on the globalization is also the billions.

Billions of people out of poverty and can continue to do and in fact is continuing in many of our markets, but it needs to be reset to be fair and equitable across all the stakeholders in the global economy et cetera chartered is in a very strong position to our global network.

Both on our wholesale and retail side to deliver a set of products and services and ideas that can help the world recyclable I shouldn't get the benefits outlaw of addressing some of the underlying challenges.

It is lifting participation in the financial of economy.

We recognize that the the bulk of the growth in many of our markets comes from small business, but small businesses are structured underbanked. Many of our many of our markets the opportunity for us to step up with a very sophisticated corporate lending approach as well as our very well established retail position on the ground should allow us to finance the small businesses to a far greater degree.

We will have the particular focus on lifting of the participation of women.

In the in the financial economy Y one of their underrepresented today, they're under bank today in many markets. They are the economic driver in the mill.

This untapped resource that's available to us so we will focus more and more how we can get to hundreds of millions of people with the disproportionate share of women and third and finally is sustainability. The sustainability is that I've talked about already booked in terms of.

The obligations, we have but also of the opportunities that we have and we will be coming back with the series of aspirational goals or how we can transform our global climate agenda.

<unk> 2015, and but obviously with the very important progress along the way so.

What can we do this the Senate chartered can get to this 10% plus return on tangible yes, absolutely no doubt that we can.

A little bit better if we get the debt debt, but the interest rates that seem to boost of right now, but otherwise we were on track on <unk>.

<unk> is delivering the performance of <unk> and 'twenty 'twenty and engineered part of 2021 supports the confidence.

I would like to hand, it back to the moderator to take some questions.

Thank you we will now begin the question and answer session. If you wish to ask a question via audio Please press star and one on the telephone keypad and wait for the name to be announced to cancel your request. Please press the husky. Alternatively. Please use the question box available on your webcast page.

To submit your questions.

Your first question comes from the line from Ronit Ghose from Citigroup. Your line is open.

Great. Thank you. Good morning, good afternoon, Bill of Andy a couple of questions. Please one on.

The financial market performance in Q1 that you called out in the second one on capital return. Please so on.

On the financial markets, you've pulled out of good stuff. The could you just give us a bit more color. Please in terms of.

Is this would.

Which parts of Asia is being driven by its mainly FX or is it also right steeping of the yield curve, helping any sort of color on that would be awesome.

The second question is on capital return sort of.

The buyback did.

Dividends split for all of that you've just announced it's almost 50 50 and I understand why because of in the last year the buyback being completed.

Any kind of thinking ahead for the next couple of years, given where the share price is the price to book, obviously buybacks Super accretive should we assume a quite a high mix of buybacks in the.

The coming years.

Or should I not read too much into the current set of buyback Debbie announcement.

The follow up on that.

How much scope do you have for sort of follow on buyback post stress tests later in the of the U K stress tests. Thanks, guys.

Thanks, Ron.

I'll I'll take a stab of the DFM question in the annual Pik.

So the the trends for our financial markets business over the past three years has been a strong investment in our local market capabilities. The.

The most I would say the standout performer during that period has been everything around China and the army.

We are I'll say, a or the leading bank in terms of of cross border payments and associated FX flows in China. That's been a it's been a key driver of our of our overall CIB income.

The broad theme and it's been a key driver of our financial markets income as well.

So that the step up of China is has been exceptional and of course, we're very differentiated in the South Asia and Africa as well, which has also been an important contributor of that's cross rates.

And FX and credit.

The area, we were probably furthest behind historically has been on the credit side. So we've we had a relatively undeveloped credit origination and in credit distribution set of capabilities. We've been building that out I would say that we've gone from from being <unk>.

Substantially subscale in terms of of the credit flow to being okay.

Now that's a good improvements on.

Up to the team, but we have much of their that we can go and as I mentioned in my opening comments in the context, where global investors are getting more and more comfortable with the markets, where we operate and.

First of all of your in first year for yield, which should position us very well to have an ever more balanced business between that rates FX and in the broader capital markets such credits you mentioned.

Andy.

So you're on.

On the capital returns as you've seen today, we've put.

For the Gulf of 50, 50 that we designed it to be 50, 50, but we all of completing the pre existing share buyback and then the rest of it back by way of dividend.

Think it's fair to say in all volumes of you employ this on your question or set of your question that with the share price being by historic standards is pretty low.

Actions of buoyed by all of pretty strong.

And therefore sort of the lot of the share price of the more I guess on mines will be focused on having buybacks in the us a reasonably significant part of the theater growth. So it's part of pulp going forwards.

The dividend set at the level of tax at the moment with IMAX peak with like a degree of predictability about dividends getting towards the.

The sort of modest space, which we should be able to increase over time.

I think youll see some of those as we get towards the.

Particularly with an eye to bypass the walls of the price of the share is low.

Post the stress test, let let's wait to see where we get to what we have said very clearly is that we do not intend to specifics of pulse of 13 to 14 per cent range on necessarily.

We have to go profitable ways to deploy excess capital, we will cut off the profitable ways.

To use it.

We haven't because then we are pretty comfortable being within that 30%, 40% range, obviously subject to regulatory approval per se.

Of the repairs of Todd, we do understand that getting the right. The optics as I said is yes. It is of course, when we get to the equity down and therefore, we will not and I think our track record over the last two of three is being witnessed of it.

The adult shy of the return of capital the way, we can set the split for the two questions.

Thanks, guys.

Thank you.

The next question comes from the line from Nick <unk> from Morgan Stanley. Your line is open.

Thanks very much on that thank you for taking my question.

I just wanted to question Bill a little bit more on what he was saying on the mass affluent strategy.

Could you give us a little bit more on the sort of what markets you think he'll geographic markets in terms of attacking.

What sort of products you'd be using.

How important all of those.

Sort of partnerships.

From this expansion.

You made me think of your broadening it through partnerships he using marks a bit more of a branding or is it traditional standard chartered broadening it and then just finally on but if you could maybe talk about what sort of income levels youre thinking of targeting or you're thinking of moving right down the income scale or you're going to stay sort of mid <unk> and the.

Yes.

Great. Thanks for the question.

The markets that will focus on our will be our core markets.

Obviously, Max is targeted at Hong Kong Interestingly in Hong Kong, while it's our biggest business is profitable et cetera.

We only have about a 2% market share in mass market, whereas we have a double digit market share in the asking the market.

Extremely happy with our excellent market position will continue to invest and grow on that but matsui is targeting both of.

Younger population, where we were also underway.

And in that mass market and I must say the reception has been extremely positive.

Which means that we should be able to establish a very important total.

The market segment in Hong Kong. In addition to what we had in the second half of Senator Bank itself necessarily the for two reasons. One is we think it will be profitable on its own right and second of course it is peter into the the the BDC to today's millennial as market participants will be tomorrow's absolutes as they accumulate savings over time, So we're building a pipeline for the.

Future.

Within box and then also back in the Central Bank.

We would hope to.

Regulatory permissions on our forthcoming to have a similar sort of partnership based model and Singapore over the course of this year and you noted the notice.

We think that given the status as a significantly reduced foreign bank.

With that comes the entitlement to a second bank license.

I would hope that we could get to the point, where we've got a digital bank in Singapore the.

It's modeled much on the on the box basis.

<unk> partnered with Hong Kong tail.

And the trip Dot com.

Perhaps a similar structure makes sense in Singapore as well.

In the in Africa, we've gone under our under our own bet, so raising existing center kind of infrastructure structure to be when the wind.

So the the partnerships or are more tactical very important partnerships with telcos and got some very interesting arrangements with our total of Orange and Vodafone.

In different markets, but the three big mobile carriers.

The continued to build out that partnership model.

And in Indonesia.

We had a lot of mass market stake in Indonesia two per month.

When we sold that who are enough to quite a small net market that question on retail business from Indonesia.

The opportunity to get to.

Access to 100 million customers in partnership with Google Admob and been with other social media platforms.

It's very exciting so the nose in those markets that did the the partnership you mentioned.

We're using the the partner is a fundamental distributor for our products is extremely important.

So I think we're we can we will cover the Ed will cover the B of the spectrum in terms of the structure of our of our entry into the mass market.

Obviously, it starts with the deposit and payment products and will quickly moving to credit products in each case and clearly that's what that's where a lot of the opportunity for growth and returns come from what must be done safely.

So we've done an extensive extensive amount net of experimenting and learning in terms of using our our data both from our own sources, but also from third party sources of.

We see of offering credit product in Indonesia, physical go off on a platform with the book club on data E. Commerce data is extremely powerful.

It's also the relatively new so.

So we'll be cautious in terms of the how we roll that out we think the opportunities is very substantial.

And the in terms of of target range of it the the natural place for us to be will be at the top of the mill.

Elements of the of the mass of the mass market on this.

By constructing the financial inclusion of play although I will say that once we got to be the digital operations up and running a highly mobile from base and.

Very very accessible.

And then, especially as we get into the distribution through mass market.

Distribution platforms to Mike Mclaughlin of core others in other markets the opportunity to get closer to or into the actual inclusion will be there, but we'll do that in a minute.

Good day.

Thank you very much thank you.

Thank you. Your next question comes from the line from Tom Rayner from Numis.

Line is open.

Yes, good morning.

Two questions.

Firstly on.

On the sort of the title.

Revenue from you guys. In 2021, you indicated obviously flattish on a constant currency basis for the full year, but down.

In the first half in the coming in the second half I Wonder if you could give us an idea of what Daniel.

Your line pace of revenue growth, you're expecting by the end of 2021 place.

Second question is on the on <unk> guidance of at least 7% by 2022, a obviously you went up.

Synthetic detailed modeling of alternative outcomes here I Wonder if you could give us an indication on.

On the sort of 7% the bottom end of the <unk> range of July where youll pitching revenue within the 5% to 7%.

Impairments within the 35 to 40, and and where you'll sort of modeling the equity tier one way shape of debate within Youll start seeing the ports.

<unk> line.

Good day of an idea about Sam.

The 17, 7% assumption thank you.

Yes, Okay. So let me take.

The quarter.

Hey, Caribbean I think the important thing, which I'm sure. Most of you. Appreciate is that we sort of call of two things going on in total <unk>. One one is the underlying asset growth has been strong loans of advances dropped 5% last year and if anything COVID-19 picking up that should be at least the of that run rate guidance. This year.

So.

On that side of it I think it should be running out of pretty strong what we all want. It can you did just how is the interest rate impact of parliament the NIM.

The chart on that I showed on interest rates.

In the first quarter, particularly last year, we had the name of 152 and if we are talking about a number of its appreciate the level of 24 at this time round. Then you can sort of what the numbers out of the second quarter becomes more normalized move on 28 last year the Duluth.

But to give the and then the second half of the year should be steady case on the NIM from last year.

Two to help youll sort of modeling if you look at the volume growth that is more progressive and you just actually Fei you expect NIM, China Gen Youll get fairly close to the numbers that we were talking about at RBC. As we have highlighted the guidance was on a constant currency basis, but if you applied more up to date currency you would put about point from.

On the income on point for all of the costs.

In terms of <unk> employees, and getting to the 7% pricing in 2023 of them.

Sure.

You will be modeling this and there will be various iterations around the theme, but I think if you take something around the midpoint of the 5% to 7%.

Income range. If you work on the basis that the expenses will be in 'twenty sort of volume and a little bit of inflation in the couple of years thereafter, but we would see the credits impairment moderating towards that 35, 40%, but obviously there'll be a period before it can get to that.

On top of the adult.

You you get to.

I should add also and assumptions of the CET. One is in the range to the Midland range might be relevant sitting at or above the top of the range.

You get pretty much to 7% number.

On you will work out but it has been plugged returns number in there of two and a half 3 billion of something rather it depends on exactly how you're modeling over the periods of time, So I think directionally that payments of the shape of how that sort of the 7% comp.

The structured what I personally in each of the complaint of pulse of that is perfectly achievable, but of course, it's very the markets interest rates are holding it back because the grades does that cost of control credit compatible well time will tell but the indicators might look pretty reasonable and obviously the capital as you move towards at the moment we built.

The the regulators obviously on careful on that front, but I think because we'd be the three cases into the zone.

Sort of coincidence of what we as of now.

From Sidoti.

Person simple regulates to come up with.

I think the institution should align.

Okay. Thank you very much of that just the very final quick follow up on maybe the five to seven is a nice as it is the character, but I mean, I think that does imply that you're modeling for the 22 will be on a minimum of five.

It's not like it.

The expected much stronger revenue in the low <unk>.

To get you that.

Yes, I think that is a fair assumption I think to the gifting switches is on average, but we're kind of half the pacing it as quickly as you kind of do we proposed the hitting in the nearer term.

The because of the reasons that go into that will be more challenging, but yes, I think thats the reasonable assumption.

Thank you.

Thank you. The next question comes from the line from Manus Costello from autonomous.

Your line is open.

Good morning, everyone.

Just following up on the seven percentage point in the Investor pointed out to me. This morning that go.

7% ratio target is the same as that set by commodity bank kind of this month.

I think most people would agree the combat spaces.

Tough domestic outlook when you show the new local market focus.

The question arises from the is it the fundamental level what is it the constraining youll returns relative to peers do you think.

We were also dealing with the low rate environment that you talk about.

If you haven't been able to drive it beyond the 7% level in the acceptable time frame.

Have you decided against taking any bold steps to improve that rate more quickly.

Yes.

That is thanks, thanks for the question.

So that is sort of the the question and.

I think we can answer it in a few parts on it now and you will have plenty of on.

This is well you have of when we got a similar question at three years back.

In particular around the bold steps the suggestion was that that we abandoned markets and.

You've talked about India, Indonesia, Korea, UAE being the drags on your returns why are you still there.

If this is such a big big drag.

We resisted the temptation to to exit in fact have done the opposite which is to focus very much on how we can improve those markets.

We had a dramatic improvements last year and we had of further dramatic improvement this year of 34% increase in operating profit after provisions and these are markets that had kind of rough rough on them this year with.

As Andy mentioned.

The substantial income growth in India, we can throw China in there as well, which had a stellar year in 2023 of these markets that have been have been big drags on our R. A T.

Are actually now consolidated into the profit zone and are growing very very nicely.

So that's that's that's the that's the hence the resistance of the other day.

Patient just attacking the strategy the pieces in order to hit.

That's what we think are much better achieved an achievable through a different route.

Yes.

Maybe taking the question from the from the other side the.

We know the we have a a returns model is very leveraged.

Got a relatively high expense base that is measured by our cost income ratio.

Relative to peers and outright.

That's the way to get to essentially improved returns is out of our income growing faster than our expenses.

Unable to do that in 2020 for obvious reasons of the reasons that we've explained.

We don't think will make tremendous progress in 2021 for the same reasons, but we think we are starting in 2020 to get back to that substantially positive jobs that has characterized as Andy pointed out on the slides that has characterized our business over over the last several quarters pre pandemic.

And if you believe that we can deliver on the income agenda and you believe that we can deliver on the expense of agenda than that 10% becomes confirming the into line.

Mathematically as a percentage of someplace between three of pen so.

At which point along the way you want to say you're going across a percent, but we will cross it.

So that's.

Obviously, not going to comment on Commerce I had no idea of what the what they are.

Go ahead of your plan is relative to ours, but I didn't know for us.

Evidence over the past several years that we can generate this growth we've evidenced that we can do it in the control of labels in terms of expenses of capital we.

We demonstrated that the the turnaround in big markets and do that in a.

Fundamentals on sustainable way.

And we've repositioned the bank fundamentally.

The strategic pillars, including having a strong digital operation.

Repositioning our our capabilities of the drug market. So.

It wasn't the question is the the question that I suspect it will remainder of the question but.

But I think the the evidence of liver.

It will become repeat of overtime.

Many of them.

Now on.

A replay of the adds to that that if you.

Look back 2015, we will monetize all of the spectrum rights we've.

We have of six 5% of a year ago, we got seven percentage points of four years, we will on a <unk>.

Good trends of the subject you towards paying off.

If you take what happened to us in 2020, you look at the impact of the NIM on the interest line you look of the credit impairments relative to what they might otherwise the debate I don't think it's too difficult to get two of the kind of a full percentage point of it that we have taken all of the rating in that year as a consequence of Covid now some.

All of that is credit department should do pipe will unwind itself of therefore that will give us the benefit the interest rates I think as the World Cup the co.

Cash suite of given the year has a very bold assumption of interest rates.

To put the periods of time.

If we were to see more of a pick up the pace of that occurred in three years I hope, it's obviously quite a long time.

So the point, the billings might sort of leverage off of.

The co space it will come through very quickly from a top line pulse on volume.

So I do think we don't see the right things of do you think the markets that were a drag for us growth, particularly in our credit loss of $200 million type of years ago, now, making $300 million in.

India Quadrupling of profit the area, where we have focused on the really has been an improvement I think we just need to give the frustrating as it is a little bit of time to work through.

On the after effects of Covid. So I think many of the things within the business, all working well and I'll take that and he is on visiting hit with a pretty confident in sort of the set of numbers I'm trying we are now looking at pure growth.

On the interest held back rate of growth.

Okay. Thank you very much so just the follow up on the comment you made the R&D. You said you are assuming rate rises through the period could you give us the details of what youre thinking on that please.

Yes, I think in the.

Kind of always actually on the Charles there's about 30 basis points say growth three full year periods of time.

It's on the very very bold of standard of the range.

Got it thank you very much kind of.

Thank you. The next question comes from the line from guys Stabbings from Exane BNP Paribas. Your line is now open.

Good morning afternoon, everyone. Thanks for taking the questions.

The last one was on <unk>.

So the the 15th day, an increase from asked the court deterioration in 2021, I'm, just wondering whether you'd think about part of the bulk of the negative credit migration or what do you expect to see a small component still coming through again in 2022 and as we look further ahead.

I presume, we should be thinking about sort of low single digit on a growth just coming from the loan book growth.

Perhaps tiny bits of negative negative credit migration, you talked to the circa 5% Basel headwinds plus the currency headwind busting stands just wondering of that sort of points to up.

And all of the rate base by the end of the twin country could you get three sorry somewhat north of 310 billion I was wondering if that sounds reasonable or is there more optimization you can do maybe robust when the negative credit migration by that point in time to bring it back down near to consensus, which I think is just a shade over 300 billion.

And then just a quick.

Question on restructuring charges.

Phrased the half a billion may need to be taken in 2021, I'm just wondering how many years.

The spread that he brings that sort of three or 402021, and then it drops down to under 200, and maybe thats the sort of sensible run rate thereafter, any sort of guidance that'd be very useful. Thank you.

Yes, So let me let me type items.

The also view I use the 15 billion, we saw in 2000 and trading space.

The logic would say that is a pretty high type volume equal to the year, but almost of the changed very dramatically and I would think on an underlying basis, but what we will see some at some of the incremental I think of even much lower than that.

The 22 once you go on what we are also be doing is focusing clearly on the mix of the assets that we have got and the knowledge that the.

At the heart of rate.

We're going to get into level of returns we will be working per reacted like the law ritu.

Returning risk weighted assets relationships during the course of the year.

It is difficult to sort of just sort of it's simple to say, yes to your question of will it be low single digit, but it doesn't depend on to cobalt macro breakthrough sales.

At least the REIT profitable growth from the asset side I would hate to have the odd up you guys of constraining it better I think part of the better way to look at it it's appropriate that we would aim to try to keep the right price from the odds of the guidance down.

Below the rate of asset growth.

That will enable some flexing of quarterly how much active.

Activity is out of that.

Whether that gets you to 300 of intangible something of the order it depends a little bit of call. It your growth assumptions.

On the restructuring I think of that as sort of the three year period something of that sort of dealt with.

The rate of weighting more towards the first year.

What the peso with the number of the property relate to the sort of initiatives because of.

Obviously, the time is right now before of it but he returns back that we are starting to show the new ways of working as big as north of getting towards.

There'll be some redundancy costs, but then we've had some redundancy cost of repair at the time and thus we re skill of the business falls, we have tried to redeploy a bunch of the candidates.

Inevitably there'll be some of it is not achievable through redeployment per site.

Think of it as sort of being three years will thereabouts with the prototype loading.

Thank you.

Thank you. The next question comes from the line from I'm on the <unk> from Barclays. Your line is open.

Hi, good morning, good afternoon.

Bill on Andy Thanks for taking my questions.

Can I just come back to the income.

Guidance for 2021.

And most of that non interest income.

Just interested in to what extent, you think kind of what.

What's your assumption around financial markets.

Revenue of 2021, do you see that being down year on year.

And kind of all of the assumptions that have gone into that.

What extent of you benefited from a point of market backdrop versus.

The market share gains that you think of that business can deliver.

Secondly would be around wealth management of night that you say that.

The wealth ex bank assurance I think was up 14% I think it implies the rest of wealth management is actually down a.

The decent chunk in 2020, presumably as a result, the the lockdowns and the the lack of face to face.

Interaction of Yoki markets can I ask you. If you are to estimate how much kind of lost revenue wealth management and cut.

I mean, how much revenue did you miss out on.

In 2020 from from from Lockdowns, and the lack of face to face just trying to think of.

Hope to reclaim as things open up this year.

And I guess the final one was on your excess liquidity positions on it.

You're a deal or is it is very very low at 61.

I think your loan to deposit ratio of 64, presumably you've got a lot of high quality lower yielding assets.

Is there a temptation or is there an opportunity for you guys to kind of invest that deploy that and benefit from some of the steepening of the yield curve that you've seen in.

Some of the U S. U S markets is there any reason why you wouldn't do that and is any of that kind of captured in your your income you on.

Thank you.

Okay.

Okay.

So we're trying to pick this up to the financial markets clearly did have the good year last year.

We are sincerely, hoping we're targeting of the team that they will replicate that performance April this year the effects of shape of it may change a bit the EBIT, but lead up to it may change a bit but we do believe there will still be volatility that we do believe the spill. It set but the engine is running most dropping out of that actually the product range that we have.

Of course, the capability, we've got that.

As good of the suite doesn't have that the involves several years so.

We would very much be hoping that set of <unk>.

<unk> markets income on approval will be up with what happened in 2020.

Wealth management of you Couldnt, you can sort of companies in different directions, we balance the second course of very tough and as you cite type size of contact with very difficult during that period of time, what I think has happened. Since then two of three things one confidence come back, particularly the equity markets rising of therefore clients being more prepared.

To get back and suite of products.

Secondly, we have availed ourselves far more of the normal face to face contact and we have improved the digital capabilities and I think people are progressively getting more use of accident. She will come from school with bass.

As I said earlier I think the overall wealth management was down probably about 15% of starting the second quarter, but by the fourth quarter actually we were up 5% over the fourth quarter of year ago.

I think the trend that is looking good and in January certainly on both.

It's actually financial markets on wealth management, we had.

We have the strong performance.

On the excess liquidity the store.

Last year really and I'm sure we will not the annual to say this was both the bulk of liquidity out there.

To improve the mix of the liabilities, but we have got quite significantly secured the year. We have deployed some of those commercially but some of the base offsetting with the tertiary growth.

And the latest fully capable of being deployed so the encouragement to the commercial teams actually two to find opportunities outlet.

We make more money when we all of them to get commercially in the having it sitting from the center.

And therefore, I think the shape of the balance sheet within the overall numbers it will be interesting to watch as we go through the course of the ship.

Just a quick follow up on that day.

Do you have any exposure to the kind of 510 year part of the U S curve.

What are you seeing the Steepening and recently does that is that something we should think about being opposed to evolve.

Is it not.

It is a small part of the portfolio and obviously, we all know of a pretty closely as we go through and.

Can you give us a little bit of upside as we move towards.

Isn't it that the obvious would be.

The monetized quite of bit of the gain last year. So that's.

That's that's evident.

We're still some gains left in the portfolio some of that was duration.

That's much much later than it was a year ago.

Okay. Thank you.

Thank you.

Next question comes from the line from <unk> <unk> from Redburn.

Your line is open.

Hi, Good morning afternoon, everyone. Thanks for taking my questions just a couple of.

One was on the the conference NIM stability for the kind of Q4 that was one of the talking about it.

On the shape of the being the difference.

One of your peers was talking about commercial asset repricing.

Are you seeing anything similar or into the repricing activity on the commercial book in the kind of Asia Pacific region.

The second question was just kind of back on that.

7% Alrighty grocers payers on I guess, one of the things that's confusing because you've got to know of.

Very low loan to deposit ratio, but a very high funding costs of a scarce.

And there wasn't optimization program, which it feels like the Glen. It's of course is there not more you can do on the liquidity management side too to drive returns higher.

I would've thought of as rates fell the higher funding costs with many of its all anticipating the yen I guess that didn't really help too much on the reason I ask the question is one of the things that gets pushed back the law.

Got.

It's evidenced that you've got to extend the franchise of close to many countries.

How are you thinking about that liquidity management on the high funding costs. Thank you.

That maybe on the corporate from pricing.

I think the short answer is no we're not seeing the wholesale repricing I thought would the thought very sort of consistent margin compression going into the pandemic.

We saw.

Certainly.

I've been in the recruitment and liability of margins as we as we got into the into the pandemic periods.

Coming out.

Very high quality end of the of the spectrum, we're seeing repricing, but that's not that's not the bulk of our book.

We should be able to offset the the underlying margin compression in the corporate book.

Going on mix shifts.

Could you sort of positioned to distribute much more of the of the lower margin or higher.

Higher quality.

On a credit risk on our portfolio.

And our balance sheet will keep focus on things, where we can estimate of value, we should have a little bit of incremental returns on.

See its a structural accounts coming from ongoing.

Corporate the pricing per week.

We look at the volume times margin.

Yes on only the 7% sort of number of I guess for part of last year weighted we're very happy to GAAP liabilities, just because of the unpredictability of of what was happening out in the market.

Got to the back end of the closing we have built up.

A more quality of liabilities from the mix change in the access improved a lot and therefore the focus is now much more of a call on on how we monetize the by way of lending on the commercial side.

That will be the focus there is growth out in the market due to COVID-19 legs of the boxes were up 5% last year for us.

There's no lack of volume appetite output.

The engaged with many markets for operating the equity coming through Covid.

Although the markets will.

We will be able to ship some old glass from the low.

With such pulp of balance sheet, the hard returning about one of the parts of the income story here.

The opposite.

Alex This is kind of how that's been treated though in the 7% alrighty out to 2023.

Yes. It is yes, it is absolutely the.

There are many component parts of it yes.

Perfect. Thank you.

Thank you. The next question comes from the line from Ed Firth from K B W.

Line is open.

Hey, good morning, everybody.

Can I just bring you back just slightly go to question on not so much the.

But more apt to sort of 2023 of them be all because.

When I look at your key dynamics at the moment I mean, your capital ratios the towards the low end of peers.

Your growth prospects Youll signaling.

With the high end of peers, probably off the top at the at the high end of peers.

I think the profitability of the love it.

Hi.

We're trying to square all of that at the same time, it's talking about buybacks.

I really don't understand why the substantial with buying back shares. When you. If you really believe you can deliver 5% to 7% growth and I accept we can play around with the risk weighted assets and stuff, but if.

If we all coming out of the pandemic and there's massive growth opportunities and you were right in the center of it.

Why would you risk missing that in order to buy back.

The 250 million of shares of whatever.

Please go ahead.

For the question.

The first of all of our capital is not at the low end I think if you look at our capital relative to our regulatory minimums, we are sort of middle of the pack.

Well capitalized we certainly think we're very well capitalized and when we look at the.

Certainly the stress tests that were done pre pandemic RPC drop drawdown is extremely manageable relative to either outright or of relative to peers.

So we're not we're not low capital.

Second the profitability of snow that we've talked a fair amount about the about the.

Reasons for that being our relative leverage business model with the significant challenges we added net income and obviously loan impairments.

The provisioning during 2020.

We think we can grow our way out of that.

As we have in the past and that we have.

Do you ever setting from the lower level of another.

We're not obsessed with buybacks, maybe some people aren't.

The.

We have excess capital right now and we've got a very we have maintained a very healthy investment program up to pursue including the fourth quarter of 2020.

And we did that because we do believe in our business, but we believe that the investments that we are the types of programs that we're executing right now.

As of the appropriately sized program for proof of what we can absorb also what we what we need to do on what we have what we want to do.

All of a sense, if we had the investment opportunities.

Our.

It themselves because of <unk>.

Prior an increase.

They are true the attracted the spend will be that that would come at the expense of buybacks or other distributions.

Equally said once we've satisfied the needs to fund the the growth in our business net the surplus will return to shareholders. We're absolutely committed to that we demonstrated that we reaffirm that the connection in terms of our proposals for for the.

The final dividend of 2020 and in terms of our statements that you've heard from <unk>.

So.

Theres nothing Thats really changed in that regard, but I think overall we're.

We're very comfortable with the capital position.

We're comfortable we've got a good plan to deal with our profit challenges, but I guess you also mentioned that we've got growth. That's ahead of peers less because we're in a much more attractive markets and then I think the people that you are thinking about when you talk about peers.

If you look at the our peers in our markets Asia Africa, and the Middle East.

Net did the growth forecast that we're showing our of probably consistent with what youre seeing from others in those in those markets.

And we think that the pit.

We have what it takes to deliver that kind of growth rate.

It just seems to me that if you kind of deliver 5% to 7% growth in a sustainable manner.

It's absolutely imperative to you, it's not like an option to get to 10% if you'd call day, youre not going to be able to generate enough capital to support it.

Yes, that's right.

That's right.

You pointed out of couple of times frankly until the of the deployment of the pandemic, we were growing the five to centers.

And thats, having come off of a pretty pretty.

The fundamental transformation.

It sometimes harder to growth when you kind of the repositioning that we went through that transformation is very well the embedded at this point of the industrial completion, making the productivity investment scheme.

The digital tools and digital capabilities are very well established at this point, so we feel more comfortable the comfortable about our ability to hit.

Sort of market norm in terms of of growth.

Then we have at any time of the past.

Got some sort of of.

Macro economic.

Support I E. In the hopefully we can avoid that we can get out of this pandemic and that flow into the next one out of it we can avoid the kind of geopolitical tensions will repeat of last year. It looked like it might be rail our art business growth as it turns out of it didn't.

But it might have.

We'll need and avoidance of headwinds if we can put it that way, we don't actually need to be tailwind relative to what we've got right now.

Okay. Thanks very much.

Thank you the net.

Next question comes from the line from Joseph Dickerson from Jefferies. Your line is open.

Hi, guys. Thank you for taking my question most has been addressed already but I guess, if you're looking for growth in the financial markets and it sounds like.

Possibly growth in our wealth management, particularly of bank assurance can you can pick up if I'm not mistaken of large factor there is the border between Hong Kong and.

China being closed presumably.

I guess are you more cautious on the transaction banking outlook.

Get me back to the flat.

Revenue growth given that the the NII looks like based on the guidance for the full year. The we can get you to kind of flat $6 9 billion.

Without assuming any.

Higher margin on the incremental growth. So that's that's I guess the.

The first question and then.

On the 13th or 14th.

The range on targeted common equity tier one versus your base.

Requirement of 10% I guess, why couldnt that be 100 basis points, lower, particularly given you're sitting here with the 31%.

M morale and it sounds like you've got a bit more visibility on where of the three loans were waiting for the Basel III refinements or is this gonna be on a longer on target or or do you kind of need that.

Level to what the pre.

The question to absorb.

The growth of you're putting through why they are aro still of lot of subpart. Thanks.

Yes.

And maybe just a quick comment on the growth question and then you will have more on the growth was closely.

On the capital.

The if we look back through the years the.

The wealth management product line that has been able to deliver growth in the high single digits from a double digit level, it's been quite volatile around that.

Including for the reasons, we've mentioned the bank assurance to Covid.

The extent that really for two reasons one is of the Hong Kong kind of physical of order being of being closed and second the the need even Hong Kong, where within a second floor of a kind of on.

For medical checks and people who work for all of the of his reasons, we're reluctant to get net ex.

During the during the Covid period.

That's beginning to return so we're seeing some pickup in bancassurance activities, the Hong Kong, China order remains close although.

We haven't talked much about the greater bay area on the opportunities of it.

The opportunities that are presented to us I think our strong position in Guangdong Province, Shenzhen in particular, and our strong position in Hong Kong.

To capitalize on what seems to be a pretty well established trend now of China opening up the capital account opening up the the border cross border investments the minimum.

The obviously opening up the border from for physical travel is extremely encouraging and then particularly encouraging for our wealth business, where we've just started in an excellent position on both sides of the order.

Especially the Chinese Sabres are able to perfectly legitimate Lee invest more in international assets of international funds of which is which is our sweet spot if I could be the preparing for this.

One of the better part of six seven years in terms of having a very strong brand in China for international.

The investment product, which has largely been unsatisfied for the reasons of the currency controls and replace the extent of those loosen up over the coming years, that's underlying very strong.

The source of growth.

It's the notion of Marcus I wasn't sure I got kind of put your question was really the.

But maybe any opinion on it.

The extent of that.

Certainly we have opportunities to do structurally grow our <unk> business, but it's going to be volatile from quarter to quarter of with an element of seasonality as well.

Yes, I think you of sort of thing around financial markets wealth management book stroke, but the April it's been the basis was flat.

Employer transaction banking et cetera kind of below on that.

The reality is probably.

The coast not least as I said earlier in Q1, we have the huge NIM normalization of its still going on.

Particularly the first cohorts that going from mobile and fixed as of today, but about 22 seats of near 20.

20% reduction and therefore, the interest rate sensitive products will be the weapons the top yet to come sort of way down the curve.

What would sort of of that.

Probably the half year of that hopefully will more normalized on year on year comparisons, but the buckets. The reason for that and also on your.

The question of the vessel of capital level.

The of an interesting board.

On the 13% to 14% of the range, we put for periods of time of obviously the top end of it at the moment.

If you compare this with U K banks, which isn't necessarily the best point of comparison, but if you do we are around four percentage points above the declared break a true minimum but it's very much in the pack most of the other UK banks sort of in that sort of right. So it's not abnormal.

The reason that everybody just fit that much above it is because of its a variety of factors go into the decision as to where what should the targets to be on the capital from some of it is what the regulators are requiring some of the is what rating agencies of requiring some of it is what we feel comfortable with stress tests on the solid taking the extra on the environment.

Into account, but we are comfortable with and I think of this point in time for the Covid has worked its way through in a sort of substantial weight, but yes, the yet to complete white.

We've said the big pack in the 13, 14 branches, where you want to be relative sitting above it.

So I think that gives you a pretty strong indication.

All very mindful of the fact of the more we can what's the lower end of that range or even below the it would be great to the robotic on that point is not lost of polymers.

So that's sort of how we look at it but the 30 to 40 range.

At some point you can talk to get to the lower end of that range that would be great.

Yes.

They were moving onto questions from the webcast then.

They're all asking the questions of scimitar.

The sustainability thing.

We try and condense them into one.

The time of crisis is devastating hundreds of kind of any changes around the world. So what steps you're taking on climate change on gentlemen that the particular invitation to financing the <unk> activities.

It's a huge question and one that I'm, not very happy and very very proud of our interest.

We have been clear that we will we.

We are on a transition path to get to net zero by 2050.

The work that we've done in terms of our scope one and two in our controllable scope three emissions of for example of flights.

Is he has already had substantial improvements the even independent of the Covid effect.

We've made we've made tremendous progress.

We will.

We'll certainly be acquiring carbon offsets to get to net zero for our scope one two and total scope three emissions the Nazis the.

But the big one is financed emissions and.

He gets to the point of.

Question, which is.

It kind of changes.

Is in some cases already demonstrating the communities in which we operate and certain pools at the safety of the planet. If we don't get the right over the next.

20 to 30 years, and we need to we need to begin now and make more progress by 2030 to have any hope of getting to the ex U.

Got to walk on by 2050 assets.

As I mentioned earlier, we've got a.

<unk> been on the path to net zero and we've been on the path to complete alignment with parents for several years now.

It started with our cessation of all financing of the coal fired.

Power plants or the whole industry itself.

It goes on to the.

The very clear statements, we made in the discussions we're having with our clients that day.

It will need to basically straight line reduce their dependence on coal between now and 2030.

In order to continue banking with us.

And Theres no question, but we will begin the process, whether that'd be the income hit or we can end of exiting a lot of clients you can see if aguila grow unable to accommodate the need the possibility that some of our clients will be unwilling or unable to of course is there of the vast majority of our clients of responded by saying, yes, we know we have to.

<unk> of our dependence on coal and we know we're going to have to reduce our dependents completely over time that we know the fossil fuels will be the next other fossil fuels will be the Mexico.

Can you work with us on on developing our our alternative.

This is models of manufacturing processes or sources of power and that will allow us to meet the our own net.

Net share position plans.

And that said Theres.

The challenge of there is also of great opportunity because of every one of those transitions here everyone of our clients is a financing opportunity and an area, where we have the real competitive advantage.

Really I would say that in particular in emerging markets.

Sure the objective of the questioner questioners.

To get to a net zero.

Planet by 2050, we're absolutely committed to that we're committed to delivering a very detailed roadmap for how we're going to get there between now and 2015 with clear milestones on the way.

We will be sharing that over the course of this year of the later part of the year.

And we're talking now with our shareholders about how we can put that plan do of shareholder advisory votes at the 'twenty 'twenty two AGM.

So that we can both hold ourselves, but also hold our owners through accounts were holding us to accounts.

To deliver on the commitments.

Thank you Bill.

So if there are no more questions.

No more questions that the thank you everybody for joining us and the.

We are seeing in the in the morning on Thursday.

In London, and the United sitting in the boardroom of one base of 11, I'm happy to be back.

Looking forward to be back here, a little bit more regularly with our colleagues and people were to having a chance to meet with all of you face to face on the time to come.

Stay safe and healthy.

That concludes the presentation for today. Thank you all for participating.

Now disconnect.

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