Full Year 2021 Standard Chartered PLC Earnings Call

Speaker 1: And.

Okay.

[music].

Speaker 1: ACHSE

Speaker 1: Salt.

Good morning, and good afternoon, everybody and thank you for joining us for today's full year results and Investor update. So we posted a strong set of results for 2021, having navigated the second year of the pandemic well and we've entered this year with sound business momentum.

Speaker 2: Good morning and good afternoon everybody and thank you for joining us for today's full year results and investor update. So we posted a strong set of results for 2021, having navigated the second year of the pandemic well, and we've entered this year with sound business momentum and a strong execution.

And our strong execution plan.

Speaker 2: We'll review last year's performance and the momentum we're seeing going into this year, and then we'll go through the actions we announced this morning following a bottom-up review of our strategy. The COVID pandemic has delayed the realization of our previous financial goals, but I believe that the financial crisis is a real challenge for us.

We'll review last year's performance and the momentum we're seeing going into this year and then we'll go through the actions we announced this morning, following our bottom up review of our strategy.

The Covid pandemic has delayed the realization of our previous financial goals, but I believe that we are now entering a fundamentally new era.

Speaker 2: The steps we've taken over recent years to improve the very fabric of our business gives us a great platform of which to work. Quality assets, good capital, liquidity, fantastic colleagues, and a formidable client base, I can name just a few.

Steps, we've taken over recent years to improve the very fabric of our business gives us a great platform of which to work quality assets. Good capital liquidity fantastic colleagues and a formidable client base to name just a few.

We won't be spending much time today on the things that are going pretty well specifically the great progress in our network affluent and sustainable finance businesses.

Speaker 2: We won't be spending much time today on the things that are going pretty well, specifically the great progress in our network, affluent and sustainable finance.

Speaker 2: We've never been more confident that these are the right areas of focus and that our progress is firmly on track. We concluded, therefore, that the core pillars of our strategy are still right, but that we need to accelerate our execution and sharpen focus even further. The actions we're taking to do that, which will be the main focus for today, will make a profound difference and should enable us to hit our 10% ROTE target in just two further years.

We've never been more confident that these are the right areas of focus and that our progress is firmly on track. We concluded therefore that the core pillars of our strategy are still right, but that we need to accelerate our execution and sharpen focus even further.

Actions, we're taking to do that which will be the main focus for today, we will make a profound difference and should enable us to hit our 10% rote target in just two further years.

So I'll come back and go through the details of those actions together with Simon Judy and Ben After Andy has talked us through our 2021 results so Andy over to you.

Speaker 2: I'll come back and go through the details of those actions together with Simon, Duty, and Ben after Andy has talked us through our 2021 results. So, Andy, over to you.

Thank you Bill and good morning, and good afternoon to everybody I will start with the 2021 highlights before providing more color. The full year operating income of $14 $7 billion was as anticipated this time last year.

Speaker 3: Thank you, Bill. And good morning and good afternoon to everyone.

Speaker 3: I'll start with the 2021 highlights before then providing more colour. The fully operating income of $14.7 billion was, as anticipated this time last year, broadly flat on 2020.

We're broadly flat on 2020.

Speaker 3: This is despite us having to absorb a further $700 million of interest rate headwinds in 2021.

This is despite us having to absorb a sort of a $700 million of interest rate headwinds in 2021.

These headwinds were largely offset by an encouraging 6% growth in asset volumes and a record wealth management performance also very encouragingly, we returned to topline growth in the second half up 4%, excluding DVA on a constant currency basis.

Speaker 3: These headwinds were largely offset by an encouraging 6% growth in asset volumes and a record wealth management performance. Also, very encouragingly, we returned to top-line growth in the second half, up 4% excluding DVA on a constant currency basis.

Speaker 3: and as expected the normalized net interest margin has now stable.

And as expected the normalized net interest margin has now stabilized expenses of $10 $3 billion was 3% higher than the prior year on a constant currency basis due almost entirely to performance related pay cost normalizing after the unusually low level as the previous year.

Speaker 3: Expenses at $10.3 billion were 3% higher than the prior year on a constant currency basis due almost entirely to performance-related pay costs normalizing after the unusually low level at the previous year.

Credit impairments of the year remained very low by historic standards of $263 million. We have also made a provision of $300 million against our investment in China BOE High Bank, which we have taken in the light that most recent published results.

Speaker 3: Credit impairment for the year remained very low by historic standards at $263 million. We have also made a provision of $300 million against our investment in China Buhai Bank, which we have taken in the light of the most recent published results.

The resultant underlying operating profit for the year was therefore $3 $9 billion, an increase of 61% on a constant currency basis restructuring charges was slightly over $500 million, mainly comprising redundancy costs. For example, those we took in Korea in the fourth quarter all of this led to.

Speaker 3: The resultant underlying operating profit for the year was therefore $3.9 billion, an increase of 61% on a constant currency basis. Restructuring charges were slightly over $500 million mainly comprising redundancy costs, for example those we took in Korea in the fourth quarter. All this led to a return on tangible equity of $6.5 billion.

Our return on tangible equity of 6% doubled versus the prior year I'm very close to what we delivered in 2019 immediately prior to Covid <unk> continued to be tightly managed growing at only 1% over the course of the year compared with a 6% increase in customer loans and advances as a result, our CET one ratio remain.

Speaker 3: double that of the prior year and very close to what we delivered in 2019 immediately prior to Covid. RWAs continue to be tightly managed growing at only 1% over the course of the year compared with a 6% increase in customer loans and advances. As a result our C2-1 ratio remains strong at 14.1% slightly above our 13-14% target.

Strong at 14, 1% slightly above our 13% to 14% target range. However, once certain regulatory changes effected in January this year are taken into account our pro forma CET. One is 13, 5% in the middle of our target range.

Speaker 3: However, once certain regulatory changes affected in January this year are taken into account, our pro forma CT1 is 13.5% in the middle of our target rate.

The strength in our capital liquidity positions has enabled us to increase our full year ordinary dividend to <unk> 12 cents per share of one third increase.

Speaker 3: The strength in our capital liquidity positions has enabled us to increase our full year ordinary dividend to 12 cents per share, a one third increase in capital liquidity positions.

Speaker 3: and we have also announced a further share buyback of $750 million.

And we've also announced a further share buyback a $750 million.

Speaker 3: As we said before, we intend to operate dynamically within our target 13 to 14% CT1 range.

As we have said before we intend to operate dynamically within our target 13% to 14% CET one range now looking at the key profit and loss lines in more detail overall income was north point $1 billion lower in 2021 than in the previous year, a reduction of 1% on a call.

Speaker 3: Now, looking at the key profit loss lines in more detail. Overall income was $0.1 billion lower in 2021 than in the previous year, a reduction of 1% on a constant currency base.

Instant currency basis as I mentioned this was despite the significant headwinds arising from interest stripes, the effects of which reduced markedly over the course of the year rates aside many of our product lines showed encouraging growth <unk>.

Speaker 3: As I mentioned this was despite the significant headwinds arising from interest rates.

Speaker 3: the effects of which reduced markedly over the course of the year. Rates aside, many of our product lines showed encouraging growth.

Speaker 3: Income from mortgages, credit cards and personal loans increased $300 million primarily driven by Hong Kong and South Korea, where low interest rates led to higher refinancings and robust transaction volumes. And wealth management had a very strong year, with income up over $200 million, or 11%. More about this.

Income from mortgages credit cards, and personal loans increased $300 million, primarily driven by Hong Kong, and South Korea, where low interest rates led to higher refinancings and robust transaction volumes and wealth management had a very strong year with income up over $200 million or 11%.

More about this shortly on the corporate side, we were pleased to see trade income continues to recover with 16% growth and lending also increased in double digits.

Speaker 3: On the corporate side, we were pleased to see trade income continue to recover with 16% growth and lending also increased in double digits.

Speaker 3: The income from rate sensitive products like transaction banking cash and retail deposits declined 22 and 35% respectively. The full year pattern was largely replicated in the fourth quarter, albeit the interest rate headwind impact declined to only $70 million. Financial markets was down about 2% year on year in the fourth quarter, outperforming many of our competitors.

The income from rate sensitive products like transaction banking cash and retail deposits declined 22% and 35% respectively. Full year patent was largely replicated in the fourth quarter, albeit the interest rate headwind impacts declined to only $70 million financial markets was down about two.

Year on year in the fourth quarter outperforming many of our competitors, let me provide a little more color on the 45% of our income that is interest rate dependent.

Speaker 3: Let me provide a little more colour on the 45% of our income that is interest rate dependent.

Whilst it was down 2% for the year as a whole because of the reduction in rates. It was encouraging to see the 6% volume growth, particularly in the context of the significant challenges being faced by our clients as a consequence of Covid.

Speaker 3: Whilst it was down 2% for the year as a whole because of the reduction in rates, it was encouraging to see the 6% volume growth, particularly in the context of the significant challenges being faced by our clients as a consequence of COVID-19.

Speaker 3: On its interest margin for the year as a whole, was 8% lower compared with 2020, albeit with a lessening effect as the year progressed.

Our net interest margin for the year as a whole was 8% lower compared with 2020, albeit with a lessening effect as the year progressed indeed.

Indeed that margin actually bottomed out in the third quarter with the fourth quarter, increasing on a normalized basis by three basis points to 119 basis points benefiting from the early impact of our structural hedge program and an increase in high ball, we expect the NIM to gradually increase through 2022.

Speaker 3: Indeed that margin actually bottomed out in the third quarter, with the fourth quarter increasing on a normalized basis by three bases.

Speaker 3: to 119 basis points, benefiting from the early impact of our structural hedge program and an increase in high bore. We expect the NIM to gradually increase through 2022 as interest rates increase. And finally, the other 55% of our income, fees and other income, which was flat year on year. This has two component parts which moved in opposite direction.

As interest rates increase and finally, the other 55% of our income fees and other income which was flat year on year. This has two component parts, which moved in opposite directions net.

Speaker 3: Net trading at other income which was down 12% excluding DVA due mainly to lower treasury realization gains and lower financial markets trading income. But net fees and commissions was up 18% year on year due largely to wealth management which continued its double digit growth kega of the last decade.

Net trading and other income, which was down 12%, excluding DVA due mainly to lower treasury realization gains and lower financial markets trading income, but net fees and commissions was up 18% year on year due largely to wealth management, which continued its double digit growth CAGR of the last decade.

And we now have record assets under management for affluent clients up over $14 billion over the course of the year.

Speaker 3: And we now have record assets under management for affluent clients, up over $14 billion over the course of the year.

Speaker 3: Moving on to how our client segments performed, I'll keep this reasonably high level. Last year we started reporting our businesses to customer segments Corporate CCIV and Consumers CPB.

Moving onto how all client segments performed I'll keep this reasonably high level last year, we started reporting our business has two customer segments corporate CCI V and consumers CPP.

C C. Ibs income was down 1% in line with the group picture almost exclusively due to the cash management business, which was adversely impacted by interest rates.

Speaker 3: CCIB's income was down 1% in line with the group picture almost exclusively due to the cash management business Which was adversely impacted by interest rates the rest of the corporate

The rest of the corporate products showed steady progress.

Speaker 3: On the consumer side, income was up 1%, with increases in wealth management and retail products offset by lower deposit income due to the low interest.

On the consumer side income was up 1% with increases in wealth management and retail products offset by lower deposit income due to the low interest rates.

Speaker 3: Looked at instead by geographic region, our largest region Asia had a steady performance despite the impact of the pandemic right across our key markets.

Looked at in stage by geographic region, our largest region Asia had a steady performance. Despite the impact of the pandemic rights across our key markets income was up 1%. The operating profit was $3 $1 billion and returns were up about 150 basis points to nine 5%.

Speaker 3: Income was up 1%, the operating profit was $3.1 billion and returns were up about 150 basis points to 9.5%.

Speaker 3: In the Africa and Middle East region, income was up 3% led by the African market.

In the Africa, and Middle East region income was up 3% led by the African markets, but.

Speaker 3: But more importantly, with exceptionally tight cost control and low impairments, the region's profits at $0.9 billion were the highest since 2015, with the roti not far off that of the Asia region.

But more importantly, with exceptionally tight cost control and blow and patterns. The region's profit not point 9 billion were the highest since 2015 with the routing not far off that alter the Asia region.

Speaker 3: And finally, in Europe and Americas, we saw income increase 4% and operating profits were up 67%, a significant increase on 2020. Looking at some of our larger markets, it was most encouraging to see the progress across Korea, Indonesia, UAE, and India. Collectively, their operating profit broke through the $1 billion barrier, almost tripling their collective performance since 2018.

And finally in Europe , and Americas, we saw income increased 4% and operating profits were up 67% a significant increase on 2020 looking at some of our larger markets. It was most encouraging to see the progress across Korea, Indonesia, UAE and India collectively that operating profit broke through the one.

Dollar pyorrhea almost tripling their collective performance since 2018. These markets have really turned around and are now much better positioned more efficient and with lower risk profile, it's driving better returns China, excluding China Boohai Bank delivered income growth of 11% on a constant currency basis in 2021.

Speaker 3: These markets have really turned around and are now much better positioned, more efficient, and with lower risk profiles driving better returns.

Speaker 3: China, excluding China's Buhai Bank, delivered income growth of 11% on a constant currency basis in 2021. It used to be very much corporates-led, but it is now also a strong affluent platform with high levels of client engagement through our digital channel.

It used to be very much corporate slide but this is now also a strong affluent platform with high levels of client engagement through our digital channels. China's Rowsey was up 400 basis points in 2021% to 9%.

Speaker 3: China's roti was up 400 basis points in 2021 to 9%.

Speaker 3: Turning to expenses, as I mentioned, we have printed $10.3 billion for the year, which is up 3% at constant currency, and very consistent with what we guided back in the middle of 2020.

Turning to expenses as I mentioned, we have printed $10 $3 billion for the year, which is up 3% at constant currency I am very consistent with what we guided back in the middle of 2020.

Speaker 3: As I said earlier, expenses are flat at constant currency and excluding performance-related pay normalization.

As I said earlier expenses are flat at constant currency and excluding performance related pay normalization.

Speaker 3: This was enabled by a $0.5 billion gross efficiency savings from various optimization initiatives.

This was enabled by $8 5 billion dollar gross efficiency savings from various optimization initiatives, such as branch closures property rationalization and head count reductions. This created capacity to fund the incremental costs to make increased investments in our digital ventures and to offset inflation.

Speaker 3: such as branch closures, property rationalization, and headcount reductions. This created capacity to fund the incremental cost to make increased investments in our digital ventures and to offset inflation.

A return to topline growth in the second half together with tight cost discipline enable positive income to cost jaws of 260 basis points in the second half of the year.

Speaker 3: A return to top-line growth in the second half, together with tight cost discipline, enable positive income-to-cost draws of 260 bases.

Speaker 3: in the second half of the year. As I said earlier, there's been a significant reduction in credit impairment charges year on year to $263 million. This reflects a $285 million net impairment charge in CPBB, offset by a $44 million release in CCI.

As I said earlier, there's been a significant reduction in credit impairment charges year on year, it's $263 million. This reflects a $285 million net impairment charge in <unk> offset by a $44 million release in CCI.

Speaker 3: This CCIB release would have been larger if not for certain China real estate provisions that we booked in the fourth quarter with associated increases in RWA.

The CCI be release would have been larger if not for certain China real estate provisions that we booked in the fourth quarter with associated increases in our Wi.

Our management overlay increased by $37 million in the fourth quarter to $343 million. There are two parts to this.

Speaker 3: Our management overlay increased by $37 million in the fourth quarter to $343 million.

Speaker 3: we released a further $58 million of our existing COVID overlay.

We released a further $58 million of our existing Covid overlay.

Speaker 3: but we decided it would be prudent to create a $95 million overlay in relation to the China commercial real estate sector until the recent uncertainty settled. This is in addition to the provision of the Chinese

But we decided it would be prudent to create a $95 million overlay in relation to the China commercial real estate sector until the recent uncertainties settle this is in addition to the provisions I just mentioned.

Speaker 3: Overall, Group-wide credit quality has improved again to the sixth successive quarter, and early alerts are now back to pre-COVID levels.

Overall group wide credit quality has improved again for the sixth successive quarter and early alerts are now back to pre COVID-19 levels at <unk> are up 1% in the year, which is well below the rate of growth of loans and advances in line with our target of growing assets faster than RW Ives.

Speaker 3: RWAs are up 1% in the year, which is well below the rate of growth of loans and advances, in line with our target of growing assets faster than RWA.

Speaker 3: We continue to focus our efforts to maximize returns on RWA and model related optimization.

We continue to focus our efforts to maximize returns on our Wi and multiple related optimizations.

Turning to capital C. T. One at 14, 1% is down slightly year on year with profit generation, largely being offset by distributions out of <unk> and foreign exchange.

Speaker 3: Turn into capital, CT1 at 14.1% is down slightly year on year, with profit generation largely being offset by distributions, RWAs and foreign exchange.

Speaker 3: On a pro forma basis, we have started this year with a CT1 of 13.5%. This is after adjusting for the 30 basis point software reversal that we have previously referred to.

On a pro forma basis, we have started this year with the CET. One of 13, 5%. This is after adjusting for the 30 basis point software reversal that we have previously referred to.

Speaker 3: and after applying other regulatory adjustments amounting to 40 basis points primary relating to the impact of the IRB repair program now that we are able to quantify.

And after applying also regulatory adjustments amounting to 40 basis points, primarily relating to the impact of the ILB repair program now that we are able to quantify them.

Speaker 3: And finally, as I mentioned, we are increasing the full year dividend per share by a third and announcing our fourth share buy buyback in this many years.

And finally as I mentioned, we are increasing the full year dividend per share by a third and announcing our fourth share by buyback in many years.

Speaker 3: The buyback will reduce the Q1 CT1 by 30 basis points which will be replenished through underlying profit generation enabled by the commercial actions that Simon, Judy and Ben will be talking to short.

The buyback will reduce the Q1 <unk>, one by 30 basis points, which will be replenished through underlying profit generation enabled by the commercial actions that Simon Judy and Ben will be talking to shortly.

Speaker 3: To sum up overall, we have returned to top line growth in the second half, client demand remains strong and we continue to manage cost type.

To sum up overall, we have returned to topline growth in the second half cotton demand remained strong and we continue to manage costs tightly.

Strong equity generation has enabled us to announce a buyback and an increased dividend, whilst ensuring that we retain enough capital to fund future investment opportunities.

Speaker 3: Strong equity generation has enabled us to announce a buyback and an increased dividend whilst ensuring that we retain enough capital to fund future investment opportunities.

Speaker 3: We have made a solid start to 2022 in financial markets and wealth management, albeit the comparable period a year ago was particularly strong, and of course we are only one month into the year.

We have made a solid start to 2022 in financial markets and wealth management, albeit the comparable period, a year ago was particularly strong and of course, we're already one month into the year.

Speaker 3: There remain uncertainties, including the current geopolitical situation in Europe and the fast changing Covid switch.

There remain uncertainties, including the current geopolitical situation in Europe , and the fast changing COVID-19 situation with Hong Kong and the most recent four markets to experience an uptick in cases, and we are keeping a close eye on the impact on our clients employees and businesses looking ahead for the rest.

Speaker 3: with Hong Kong, the most recent of our markets, to experience an uptick in cases of COVID-19.

Speaker 3: and we are keeping a close eye on the impact on our clients, employees and...

Speaker 3: Looking ahead for the rest of the year, 2022 income is expected to grow in the 5 to 7% range, with mid-single digit asset growth and an increasing likelihood of some support from interest rates, which should help to support margins, particularly in the latter part of the year.

For the year 2022 income is expected to grow in the 5% to 7% range with mid single digit asset growth and an increasing likelihood of some support from interest rates, which should help to support margins, particularly in the latter part of the year.

Expenses are expected to grow around $4 billion to $10 7 billion, excluding the impact of currency movements, driven by slightly higher inflation and continued investment in strategic initiatives to ensure we continue to create exciting growth opportunities for the future.

Speaker 3: Expenses are expected to grow around $0.4 billion to $10.7 billion, excluding the impact of currency movements, driven by slightly higher inflation and continued investment in strategic initiatives to ensure we continue to create exciting growth opportunities for the future.

Speaker 3: Whilst we acknowledge that there's still uncertainty out there, the direction of travel for our book looks good, and barring major negative surprises, we'd expect impairments to slowly increase from the exceptionally low levels in 2021, as they start normalising over the medium term towards around 30 to 35 basis.

Whilst we acknowledge there's still uncertainty out there the direction of travel for our book looks good and barring major negative surprises, we'd expect impairments to slowly increase from the exceptionally low levels in 2021.

They start normalizing over the medium term towards around 30 to 35 basis points.

Speaker 3: Lastly, as we are now demonstrating, we fully intend to operate dynamically within the 13% to 14% range. With that, I'll hand back to Bill.

Lastly, as we are now demonstrating we fully intend to operate dynamically within the 13% to 14% range with that I'll hand back to bill.

Thanks, Andy.

Speaker 2: The actions we announced this morning address the opportunities we have to accelerate our delivery and improve our returns beyond the levels we set out in 2019 before the pandemic set us back.

The actions, we announced this morning addressed the opportunities we have to accelerate our delivery and improve our returns beyond the levels. We set out in 2019 before the pandemic set us back.

Speaker 2: Rising interest rates will likely help materially, but our plan is not anchored on this externality. The steps we're setting out today seek to change the way we manage our capital, the way we manage our expenses, and the way we manage our organization. In light of this, we conducted a bottom-up review of what's working well and what has worked less well over the past several years.

Rising interest rates will likely help materially but our plan is not anchored on this externality. The steps we're setting out today seek to change the way we manage our capital the way, we manage our expenses and the way we manage our organization in light of this we conducted a bottoms up review of what's working well and what does work less well over the past several years.

Speaker 2: So there are many areas where we've made good progress, but there is also opportunity to fundamentally improve. For example, we steadily reduced our low-returning RWAs in the CCIB business, but we will do more, dispassionately assessing where we can go further and fast.

So there are many areas, where we've made good progress, but there's also opportunity to fundamentally improve for example, we steadily reduced our low returning our W. As in the CIB business, but we will do more dispassionately assessing where we can go further and faster.

Speaker 2: Next, we have gone some way in transforming the culture of our bank, but we have further to go in simplifying the way we operate in every regard.

We have gone some way in transforming the culture of our bank, but we have further to go and simplifying the way we operate in every regard.

Speaker 2: And we've demonstrated consistent discipline in the management of our cost base. But we need to be even more aggressive in transforming our core business processes and generating additional savings.

And we demonstrated consistent discipline in the management of our cost base, but we need to be even more aggressive in transforming our core business processes and generating additional savings but.

Speaker 2: But we have managed the seismic changes over the last two years with our core franchise intact, and these external challenges have helped us understand how we can accelerate our progress.

But we have managed the size of the changes over the last two years with our core franchise intact and these external challenges have helped us understand how we can accelerate our progress.

Speaker 2: Our strategic focus on our cross-border network business, affluent client offering, digitized mass retail segment, and sustainability remains unchanged. And our focus on innovation and digitization is even more valid than before the pandemic.

Our strategic focus on our cross border network business affluent client offering digitize mass retail segment and sustainability remains unchanged and our focus on innovation and Digitization is even more valid than before the pandemic.

Speaker 2: Beyond that, though, we concluded that we must make changes to accelerate our path to double-digit ROTE by 2024, and that the time for a step change is now. We're ready and the imperative to simplify, focus, and accelerate is clear.

Beyond that though we concluded that we must make changes to accelerate our path to double digit rote.

By 2024 and at the time for a step change is now we are ready and the imperative to <unk>.

Simplify focus and accelerate is clear.

Speaker 2: The action we'll take to achieve this by 2024 include, first, driving improved returns in CCIB, targeting a 160 basis point improvement in income return on RWAs, through more aggressive capital optimization. Simon will discuss...

Action will take to achieve this by 2024 include first driving improved returns and CCI be targeting a 160 basis point improvement in income return on our debut as through more aggressive capital optimization Simon will discuss this in more detail second transforming the profitability and CPB and reducing the cost income ratio.

Speaker 2: Second, transforming the profitability of CPPB and reducing the cost-income ratio to around 60% from 76% today through accelerated digitization and associated productivity action.

To around 60% from 76% today to accelerated digitization and associated productivity action GTO.

Judy will go through this in a moment.

Speaker 2: Third, seizing the opportunity in China through a step up in investment into both our onshore and offshore related businesses and capabilities with the ambition to double its profit contribution to the group.

Third seizing the opportunity in China to a step up in investment into both our onshore and offshore related businesses and capabilities with the ambition to double its profit contribution to the group.

Speaker 2: We have never been better positioned in China, and the opportunities never greater. In this despite the current credit related challenges we all see.

We have never been better positioned in China, and the opportunities never greater and this despite the current credit related challenges, we all see.

Ben will share more on this shortly.

Speaker 2: Next, improving efficiency and operational leverage with a gross cost savings of $1.3 billion to maintain positive Jaws of 2% per year on average before the impact of interest rate rise.

Next improving efficiency and operational leverage with a gross cost savings of $1 $3 billion to maintain positive jaws of 2% per year on average before the impact of interest rate rises.

Speaker 2: And finally, delivering substantial shareholder returns by continuing to manage our capital actively within our target range.

And finally, delivering substantial shareholder returns by continuing to manage our capital actively within our target rich.

Speaker 2: We're starting today by announcing a $750 million share buyback, which is part of a plan to return in excess of $5 billion in the coming years. Andy will review the entirety of our financial framework in a moment.

Starting today by announcing a $750 million share buyback, which is part of our plan to return in excess of $5 billion in the coming years.

He will review the entirety of our financial framework in a moment.

Speaker 2: So as well as these spied measures, we have an overarching objective: to improve returns in markets and business lines which are not meeting our financial objectives and to simplify management of the group.

As well as these five measures we have an overarching objective to improve returns in markets and business lines, which are not meeting our financial objectives and to simplify management of the group.

We review these questions regularly and will take actions as appropriate every business every client segment in every market must pay their way.

Speaker 2: We review these questions regularly and will take actions as appropriate. Every business, every client segment, and every market must pay their way.

Speaker 2: This is the right time for us to have challenged all our assumptions down to the core. The actions we are announcing today, along with our intentions and expectations from the ongoing reviews, will have a profound impact on our bank. As a result of making these changes, we are very confident we can accelerate delivery of our financial and strategic targets.

This is the right time for us to have challenged all our assumptions down to the core the actions, we're announcing today, along with our intentions and expectations from the ongoing reviews will have a profound impact on our bank as a result of making these changes we are very confident we can accelerate delivery of our financial and strategic targets.

Speaker 2: Now the macroeconomic environment remains important to the delivery of our financial ambition.

The macroeconomic environment remains important to the delivery of our financial ambitions.

Speaker 2: We continue to believe our underlying income run rate before the benefit of rising interest rates is around 5 to 7%

We continue to believe our underlying income run rate before the benefit of rising interest rates is around 5% to 7%.

Given the high growth client segments in parts of the world in which we're focused.

Speaker 2: given the high growth client segments and parts of the world on which we're focused.

Speaker 2: To that point, we expect Asia GDP growth to outpace growth rates for the rest of the world by about 200 basis points over the next three years.

To that point, we expect Asia GDP growth to outpace growth rates for the rest of the world by about 200 basis points over the next three years.

Along with this growth, we expect to see increasing levels of trade, particularly within our markets and also increasing cross border investment. This further favors our footprint markets and products.

Speaker 2: Along with this growth, we expect to see increasing levels of trade, particularly within our markets, and also increasing cross-border investment. This further favors our footprint markets and products.

Speaker 2: In addition, the current interest rate market suggests that we should expect a further 3% of income growth above the 5-7% range.

In addition, the current interest rate market suggests that we should expect a further 3% of income growth above the $5 to 7% range. So income growth out to 2024 could be 8% to 10% if rates move as the market currently expects and.

Speaker 2: So, income growth out to 2024 could be 8% to 10% if rates move as the market currently expects.

Speaker 2: In addition, the specific profit pools we're targeting are growing with Asia affluent assets expected to grow by 9% CAGR up to 2025 and 6% for the rest of the world. And finally, the aggregate mass retail banking revenue pool in Africa, Asia and Middle East is forecast to grow by around 7% CAGR to 2025 versus growth of 5% for the rest of the world.

In addition, the specific profit pools were targeting are growing with Asia affluent assets expected to grow by 9% CAGR up to 2025% and 6% for the rest of the world and finally, the aggregate mass retail banking revenue pool in Africa, Asia, and Middle East is forecast to grow by around 7% CAGR to 2025 versus growth of 5%.

<unk> for the rest of the world So.

Speaker 2: So we know that uncertainty persists in relation to COVID-19 and other geopolitical issues which are developing, but we also see significant and compelling opportunities emerging. Shifting government and central bank policies are generating strong financial markets and wealth opportunities.

So we know that uncertainty persists in relation to COVID-19, and other geopolitical issues, which are developing well.

We also see significant and compelling opportunities emerging shifting government and central bank policies are generating strong financial markets and wealth opportunities.

And accelerated trade flow and supply chain shift in and around our footprint markets is driving up the demand for trade.

Speaker 2: An accelerated trade flow and supply chain shift in and around our footprint markets is driving up the demand for trade.

Speaker 2: Sustainability remains both an imperative and a great opportunity to help our clients to transition.

Sustainability remains both an imperative and a great opportunity to help our clients to transition.

Speaker 2: Clients and competitors are accelerating their pivot to digital, supporting the investments we have been making for years.

Lyons, who the competitors are accelerating their pivot to digital supporting the investments we have been making for years.

Speaker 2: And China is opening up at an accelerating pace, supporting the opportunities for which we have positioned for the past decade.

And China is opening up at an accelerating pace supporting the opportunities for which we have positioned <unk> for the past decade.

Now more from Simon on the exciting opportunities in the <unk> business and the actions. He is taking to drive an improvement in returns seven.

Speaker 2: Now more from Simon on the exciting opportunities in the CCIB business and the actions he is taking to drive an improvement in returns. Simon? Thank you Bill.

Thank you Bill Hello, everyone.

Speaker 4: Over the last five years, we've substantially changed our business model. We've exited a number of non-strategic businesses, tightened risk appetite, and begun tackling low-returning risk-weighted assets within CCIB. At the same time, we've also been focused on building our high-returning client sector.

Over the last five years, we have substantially changed our business model, we've exited a number of non strategic businesses tightened risk appetite and began tackling low returning risk weighted assets will ensue CIB.

At the same time, we've also been focused on building a high returning client segments.

Speaker 4: investing in digitally transforming the core bank and growing the returns on risk-weighted assets. I'll come back to the focus on our client segments in a moment, but first I want to update you on the actions we'll be taking on risk-weighted assets which have been a drag on our returns. We reduced risk-weighted assets by 17 billion dollars over the last five years including exiting 14 billion dollars of low returning risk-weighted assets over the last three years.

Investing in digitally transforming the core bank and growing the returns on risk weighted assets will come back to the focus on our client segments in a moment, but first I want to update you on the actions, we'll be taking on risk weighted assets, which had been a drag on our returns.

We reduced risk weighted assets by $17 billion over the last five years.

<unk> exiting $14 billion of low returning risk weighted assets over the last three years.

Speaker 4: Our return on risk weighted assets consequently improved by 80 basis points in that 3 year period to 4.9%. However we recognize that there is more we can do and need to do. We're therefore going to accelerate actions to reduce low returning risk weighted assets by a further $22 billion over the next 3 years. These actions will include 1. More aggressive exiting of sub-optimal portfolios, selling stressed assets, obtaining collateral upgrades and secure tiling assets.

Our return on risk weighted assets, Consequently, improved by 80 basis points in that three year period to four 9%. However, we recognize that there is more we can do and need to do we are therefore going to accelerate actions to reduce low returning risk weighted assets by a further $22 billion over the next three years. These actions will include.

One more aggressive exiting of suboptimal portfolios selling stressed assets, obtaining collateral upgrades and securitizing assets too.

Speaker 4: and two, repurposing of low returning assets to high returning business, namely our international network and our financial institutions.

Two repurposing of low returning assets to high returning business, namely our international network and our financial institution segment.

Speaker 4: This will enable us to reduce 50% more low returning risk weighted assets than we've achieved in the last three years.

This will enable us to reduce 50% more low returning risk weighted assets than we've achieved in the last three years the reduction of $22 billion will create capacity to grow our business and allow us to hold risk weighted assets flat to 2021 levels. Importantly, this will not have a negative impact on our network income, which is a much more capital.

Speaker 4: The reduction of $22 billion will create capacity to grow our business and allow us to hold risk-weighted assets flat to 2021 levels. Importantly, this will not have a negative impact on our network income, which is a much more capital-efficient business.

Efficient business as.

Speaker 4: As well as taking out suboptimal risk-weighted assets, we've been applying a greater returns mindset to the entire asset portfolio.

As well as take out suboptimal risk weighted assets, we've been applying a greater returns mindset to the entire asset portfolio.

Speaker 4: from more disciplined internal capital allocation and incentive mechanisms, to raising the level that we consider to be low return.

We're more disciplined internal capital allocation and incentive mechanisms to raising the level that we consider to be low returning.

Speaker 4: In 2022, we increased our minimum return threshold at a client level by an additional 50 basis.

In 2022, we increased our minimum return threshold at a client level by an additional 50 basis points.

Speaker 4: We've said for some time that our network business, both for multinationals and financial institutions, generates about 100 basis points more return than our domestic business.

We've said for some time that our network business, both multinationals and financial institutions generates about 100 basis points more return than our domestic business.

Speaker 4: Our financial institution segment actually generates 400 basis points more return than our corporate...

Our financial institution segment actually generates 400 basis points more return than our corporate segments.

Speaker 4: We spent the last year aligning our financial institution's coverage model with our existing financial markets watch.

We spent the last year aligning our financial institutions coverage model with our existing financial market as well.

Speaker 4: Part of this has involved building an originate-to-distribute model for financial institutions, as well as corporate clients.

Part of this has involved building an originate to distribute model for financial institutions as well as corporate clients.

Speaker 4: This end-to-end approach results in higher balance sheet velocity and therefore higher return.

End to end approach results in high balance sheet velocity, and therefore high returns.

Speaker 4: So, financial institutions are already our highest returning clients, generating over 40% of CCIB's income. We're targeting that this client segment will make up more than 50% of CCIB revenue and produce double digit return on risk-weighted assets by 2024. This will also give CCIB a more balanced business mix and keep us resilient through the cycle.

Financial institutions are already our highest returning clients generating over 40% of CCI abuse income. We're targeting this client segment will make up more than 50% of <unk> revenue and produced double digit return on risk weighted assets by 2024. This will also give CCI be a more balanced business mix and keep us resilient through this.

Speaker 4: Finally, I should point out that we're investing in products such as our custody business, our sustainable finance franchise, our risk management capabilities, and new trading businesses such as carbon and digital currencies, all of which will cater to both our financial institution and multinational corporate clients.

Finally, I should point out that we're investing in products such as our custody business are sustainable finance franchise, our risk management capabilities, a new trading businesses, such as carbon and digital cancers, all of which will cater to both our financial institution, a multinational corporate clients. The planned growth of the financial institution client segment within them.

Speaker 4: The planned growth of the financial institutions' clients within our network, in conjunction with the actions on low-returning risk-weighted assets, means that by 2024 the return on risk-weighted assets will increase by 160 basis points to 6.5%, so a doubling of the increase that we achieved in the last three years.

Network in conjunction with the actions on low returning risk weighted assets means that by 2020 for the return on risk weighted assets increased by 160 basis points to six 5%. So a doubling of the increase that we achieved in the last three years.

Speaker 4: I'm confident that this continued shift in the business model for CCIB, alongside the redeployment of risk-weighted assets and the further reduction in sub-optimal risk-weighted assets, will generate a sustainable double-digit return on tangible equity in CCIB. Now I'd like to hand over to Judy, who's going to talk about improving the operational efficiency within CPBB. Thank you, Simon. Good morning and good afternoon everyone.

I am confident this continued shift in the business model for CCI be alongside the redeployment of risk weighted assets and the further reduction in suboptimal risk weighted assets will generate a sustainable double digit return on tangible equity in CCI be now I'd like to hand over to Judy who's going to talk about improving the operational efficiency within CP.

Thank you Simon good morning, and good afternoon, everyone.

As Bill mentioned, we will significantly improve <unk> profitability and <unk>.

Speaker 5: As Bill mentioned, we will significantly improve CPBB's profitability and drive down our cost income ratio to around 60% by 2024. Over the last three years, we have kept costs flat in the main bank, despite investments of around a billion dollars in digital channels, wealth propositions, and talent. This has enabled us to expand our affluent wealth franchise and build outstanding digital assets.

<unk>, our cost income ratio to around 60% by 'twenty 'twenty four over the last three years, we have kept costs flat in the main bank despite investments of around $1 billion digital channels wealth propositions and talent. This has enabled us to expand our affluent wealth franchise and built outstanding digital capability.

Speaker 5: But our cost income ratio, currently around 76%, remains high and we know we have to do more. Now, what do we mean by that? Well, it means we will be taking substantial costs out, aiming at a gross reduction of at least $500 million over three years, with $200 million in-year improvement in 2020.

Cost income ratio currently around 76% remains high and we know we have to do more now what do we mean by that well it means who will be taking substantial costs out aiming at a gross reduction of at least $500 million over three years with $200 million in your improvement in 'twenty two.

Due to the.

Speaker 5: The savings will fund investments where we can truly scale and differentiate to generate income growth as well as mitigate inflation. We will focus on four main areas.

The savings will find investments, where we can truly scale and differentiate to generate income growth as well as mitigate inflation. We will focus on four main areas one accelerate the migration of our sales and service to digital channels. We have invested in building end to end digitization across client journeys.

Speaker 5: One, accelerate the migration of our sales and service to digital channels. We have invested in building end-to-end digitalization across client journeys, and clients are also increasingly shifting to these channels. So this is the right time to fully pivot our business model, which will lead to a different cost base and help speed up the reduction of our physical...

And clients are also increasingly shifting to these channels. So this is the right time to fully pivot our business model, which will lead to a different cost base.

Help speed up the reduction of our physical channels.

Speaker 5: So specifically, what do we mean by that? We will serve our mass retail clients digitally, acquiring them through partnerships and leveraging analytics and digital marketing to engage with them and grow our relationship.

Specifically, what do we mean by that we will serve our mass retail clients digitally acquiring them through partnerships and leveraging analytics and digital marketing to engage with them and grow our relationships currently around 50% of our direct acquisition and servicing a fully digital we aim to move to more than 80%.

Speaker 5: Currently, around 50% of our direct acquisition and servicing are fully digital. We aim to move to more than 80% of our digital

Speaker 5: For our affluent clients, we will offer a digitally-led experience with a human touch. To improve productivity, we are pulling relationship managers or RMs to wealth hubs and shifting to a higher share of remote servicing supported by digitalization of both client and RM journeys.

For affluent clients, we will offer a digitally led experience with a human touch to improve productivity, we are pulling relationship managers or our Ams to Wildcats and shifting to our highest share of remote servicing supported by digitalization of both client and RM change.

Speaker 5: 2, increasing straighter processing to at least 90%. This includes redesigning and automating our more complex processes, such as mortgage onboarding, which currently is still highly manual. We are digitizing these complex journeys as much as possible.

Two increasing straight through processing to at least 90%. This includes redesigning and automating our more complex processes, such as mortgage Onboarding, which currently is still highly manual we are digitizing. These complex journey as much as possible.

Speaker 5: Three, simplifying our operating model to drive better synergy and lower overheads. These include streamlining our country and central organizations and harmonizing applications and platforms.

Three simplifying our operating model to drive better synergy and lower overheads. This include streamlining our country and central organizations and harmonizing applications and platforms.

Speaker 5: before sharpening our participation. As you heard from Bill, we're reviewing our businesses and we'll optimize or exit segments and products in markets where we can differentiate, scale or generate appropriate financial.

Sure sharpening our participation as you heard from Bill we are reviewing our businesses and we'll optimize or exit segments and products in markets, where we can differentiate scale or generate appropriate financial returns looking forward. In addition to benefiting from a more favorable interest rate environment. We will continue to focus on our two.

Speaker 5: Looking forward, in addition to benefiting from a more favorable interest rate environment, we will continue to focus on our two strategic pillars.

Strategic pillars affluent and mass retail outflow will continue to be our growth engine leveraging on our strength in international banking and our affluent client continue on growth will be driven by seamless cross border digital capabilities and your personal isolation, upskilling, our RMS, which altogether will enable that.

Speaker 5: affluent and mass retail. Affluent will continue to be our growth engine, leveraging on our strength in international banking and our affluent client continuum. Growth will be driven by seamless cross-border digital capabilities, new personalized solutions, and upskilling our RMs, which all together will enable us to tap deeper into the growing wealth opportunity, including China, which then will...

To tap deeper into the growing wealth opportunity, including China, which Ben will speak to we target to grow our offering to more than 300 billion by 'twenty 'twenty. Four match retail also made solid progress in 2021 does your MTS continues to see steady increase and credit card fee income grew by high <unk>.

Speaker 5: We target to grow our affluent AEM to more than $300 billion by 2021.

Speaker 5: Match Retail also made solid progress in 2021. Digital NPS continues to see steady increase and credit card income grew by high single digits. We will grow digital sales at the primary channel along with the right product suite to deepen client penetration.

Our digit we won't grow digital sales as the primary channel along with the right product suite to deepen client penetration. We have launched several new digital partnerships and are working on a strong partnership pipeline, we aim to almost double our mass retail clients by 'twenty 'twenty four with that I will hand over to Dan who.

Speaker 5: We have launched several new digital partnerships and are working on a strong partnership pipeline. We aim to almost double our mass retail clients by 2020.

Speaker 5: With that, I will hand over to Ben who will talk about how we are seizing the opportunities in China.

We'll talk about how we are seizing the opportunity in China.

Thank you Judy and good morning, good afternoon.

Speaker 6: I'd like to talk briefly about our China-related business and to share what we are doing to capture the significant opportunities arising from the opening up of China's financial and capital markets. Specifically, we see a number of structural trends over the next few years.

I'd like to talk briefly about our China related business and to share what we are doing to capture the significant opportunities arising from the opening up of China's financial and capital markets, specifically, we see a number of structural trends over the next few years.

Speaker 6: These include acceleration of global asset redenomination to RMB related assets, shifts in

These include acceleration of global asset really nomination to RMB related assets.

Shifts in supply chain flows.

Speaker 6: continued strong growth in mainland wealth creation, and the need for offshore diversification.

Continued strong growth in mainland wealth creation, and the need for offshore diversification and.

Speaker 6: and further domestic and offshore growth of Chinese corporates.

And further domestic and offshore growth of Chinese corporates, we fully recognize that some near term challenges in China. Most noticeably in the commercial real estate sector, where we have taken some impairments and are actively managing we are of the view that our fundamental shifts I mentioned over the medium term is set to continue.

Speaker 6: We fully recognize that there are some near-term challenges in China.

Speaker 6: most noticeably in the commercial real estate sector where we have taken some impairments and are actively managing, we are of the view that the fundamental shift that I mentioned over the medium term is set to continue. We also believe we are in a unique position to capitalize on these opportunities.

We also believe we are in a unique position to capitalize on these opportunities.

Speaker 6: being a very well-trusted brand in mainland China and Hong Kong, where we have one of the broadest spectrums of licenses and product capabilities, alongside a network footprint that is complementary to Chinese corporate overseas expansion plans.

A very well trusted brand in mainland, China, and Hong Kong, where we have one of the broadest spectrum of licenses and product capabilities alongside our network footprint that is complementary to Chinese corporates overseas expansion plans.

Speaker 6: We look at these business opportunities across a number of ripple components, starting with our China onshore franchise at the centre, and extending offshore in multiple dimensions, with Hong Kong as a key capabilities hub. Our Greater Bay Area business represents one of the most dynamic and fastest growing subset of these opportunities.

We're not gonna be spaces opportunities across a number of ripple components, starting with our China onshore franchise at a center and extending offshore in multiple dimensions with Hong Kong is a key capabilities hub, a greater bay area business represents one of the most dynamic and fastest growing subset of these opportunities.

Speaker 6: This broader onshore and offshore China-related business is already a significant contributor to the overall group today, generating around 15% of total income and around 20% of group's profit.

This brought our onshore and offshore China related business is already a significant contributor to the overall group today generating around 15% of total income and around 20% of group's profits delivering double digit returns and growing strongly.

Speaker 6: delivering double digit returns and growing strongly.

Speaker 6: So what are our plans for the future? We will invest in China further, with $300 million of incremental investment spent and a sharpened focus on a few key areas.

So what are our plans for the future we will invest in China further with $300 million of incremental investment spend and a sharpened focus on a few key areas.

Speaker 6: We will accelerate growth in our offshore network business, onboarding new economy clients.

We will accelerate growth in our offshore network business Onboarding, new economy clients strengthening our financial institutions propositions Assembly referred to an increasing a corridor coverage with specific focus on core dose like China, ASEAN, where our trade volumes were up almost 50%.

Speaker 6: strengthening our financial institutions propositions, as Simon referred to, and increasing our corridor.

Speaker 6: with specific focus in corridors like China ASEAN, where our trade volumes were up almost 50% last year. We will also seek to enhance our financial markets, trade and payment clearing solutions, and we are in the process of applying for a securities license in China with a view of offering further capital market solutions to our clients.

Last year, we will also seek to enhance our financial market trade and payment clearing solutions and we are in the process of applying for a securities license in China with a view offering further capital market solutions to our clients for CPB, we will continue to strengthen our affluent sales digital and product proposition as well as cap.

Speaker 6: For CPBB, we will continue to strengthen our affluent sales, digital and product proposition, as well as capturing the growing GPA Wealth Connect opportunity.

The growing GBA wealth connect opportunities.

Speaker 6: growth in our onshore wealth management income. Last year was up 27%, supported by Strong Client Acquisition and AUM growth.

Growth in our onshore wealth management income last year was up 27% supported by strong client acquisition and AUM growth.

Speaker 6: For domestic business, we will leverage the use of digital partnerships to build scale profitably.

For our domestic business, we will leverage the use of digital partnerships to build scale profitably.

Speaker 6: having already launched five partnerships with different client segment propositions and a further two being in top launch as we speak. In the Greater Bay Area, we opened late last year a new GBA center in Guangzhou, which operates as a key business operations and technology hub. Lastly, Hong Kong is a key part of a growth plan.

<unk> already launched five partnerships with different client segment propositions and a further two being in soft launch as we speak in the Greater Bay area. We opened late last year, a new GBA center in Guangzhou, which operate as a key business operations and technology hub Lastly, Hong Kong was a key part of our growth plan here.

Speaker 6: Here we will strengthen our product proposition, particularly in strategic growth areas including the facilitation of global flows into China.

Here, we will strengthen our product proposition, particularly in strategic growth areas, including the facilitation of global flows into China wealth offerings for the Avalon and innovative digital capabilities for the mass as well as capital raising Treasury and RMB solutions, which is an area we've seen significant growth with cross.

Speaker 6: wealth offerings for the affluent, and innovative digital capabilities for the mass.

Speaker 6: as well as capital raising, treasury and R&B solutions, which is an area we've seen significant growth with cross-border R&B clearing volume up by almost 80% last year. So in closing, we are investing in our business and I'm particularly excited about the unique competitive advantage in capturing China's further opening. The prospects we see span multiple...

Border RMB clearing volume up by almost 80% last year. So in closing we are investing in our business and I'm, particularly excited about the unique competitive advantage in capturing China's further opening.

The prospects, we see span multiple years.

Speaker 6: And whilst the growth trajectory may not always be linear, the opportunities are very sizable. I am confident that we can double our broader China onshore and related offshore profits in the coming years.

And whilst the growth trajectory may not always be linear the opportunities are very sizable.

I am confident that we can double our broader China onshore and related offshore profits and the coming years.

Speaker 6: I will now hand over to Andy, who will talk about the group's refreshed financial framework and related targets. Andy?

I'll hand over to Andy who will talk about our group's refreshed financial framework and related targets Andy.

Thank you Ben.

Speaker 3: As Bill mentioned earlier, we are now obsessively focusing all our efforts on delivering the 10% return on equity the year after next, i.e. by 2024. Not in the median term, but instead the year after.

As Bill mentioned earlier, we are now obsessives really focusing all our efforts on delivering a 10% return on equity the year after next or E. By 2024, not in the medium term, but instead the year. After next interest rates should thankfully at last start to help us, but the delivery of this ambition will be equally.

Speaker 3: Interest rates should thankfully at last start to help.

Speaker 3: But the delivery of this ambition will be equally dependent on the execution of all the initiatives that you have just heard Simon, Judy and Ben so eloquently outline. Let me now pull them all together for you in one overall financial framework, clearly articulating the component parts.

Dependent on the execution of all the initiatives that you've just heard Simon Judy and Ben So eloquently outlined let.

Let me now pull them all together for you in one overall financial framework clearly articulating the component parts.

Firstly income.

Speaker 3: We've increased our target to an 8 to 10% CAGR for the overall period to 2024. This is best looked at as four separate buildings.

We've increased our target to an 8% to 10% CAGR for the overall period to 2024.

This is best looked campus four separate building blocks.

Speaker 3: Firstly, we expect to get around three percentage points of growth from underlying client activity driven by GDP growth, with a small offset for the impact of the RWA actions that Simon referred to earlier.

Firstly, we expect to get around three percentage points of growth from underlying client activity driven by GDP growth with a small offset for the impacts of the art of UA actions that Simon referred to earlier.

Speaker 3: Secondly, as you heard from Ben, we are investing for further strong growth in our China-related businesses, which adds around another 2% to our growth.

Secondly, as you heard from Ben we are investing to further strong growth in our China related businesses, which adds around another two percentage points.

Speaker 3: Thirdly, our new ventures businesses including Mox in Hong Kong, SC Bank Solutions in Singapore and Solve in India are expected to increase income by around $0.5 billion in the next three years from scratch adding a further percentage point to our overall growth.

Thirdly, our new ventures businesses, including box in Hong Kong SC Bank solutions in Singapore, and solve in India are expected to increase income by around <unk> $5 billion in the next three years from scratch, adding a further percentage point to our overall growth.

Speaker 3: These three blocks together make up the 5% to 7% underlying growth target. This has not changed from our previous guidance. I talked earlier about the $700 million net interest income lost to falling rates in 2021. We have now lost over $2 billion of net interest income cumulatively since COVID started, most of which adversely impacted profit.

These three blocks together make up the 5% to 7% underlying growth target. This has not changed from our previous guidance I talked earlier about the $700 million net interest income loss to falling rates in 2021, we have now lost over $2 billion of net interest income cumulatively.

Lee since Covid started most of which adversely impacted profit.

Speaker 3: The fourth block is the lift to income that we expect to get from interest rates rising back to nearer pre-COVID levels.

The fourth block is the lift to income that we expect to get from interest rates rising back to near pre COVID-19 levels, which together with the into the any balance sheet growth should over the next three years reversed the decline that we have recently experienced.

Speaker 3: which together with the intervening balance sheet growth should over the next three years reverse the decline that we have recently experienced.

Speaker 3: In forming this view, we have endeavoured to take account of likely forward rate differences by current

Informing this view, we have endeavored to take account of likely forward rate differences by currency different deposit betas across products and markets and different pieces at different points on the rates curve. Overall, we believe that this will add a further three percentage points to our income growth based on our 170 basis point expected.

Speaker 3: different deposit betas across products and markets, and different betas at different points on the rate.

Speaker 3: Overall, we believe that this will add a further three percentage points to our income growth based on a 170 basis point expected increase in rates between now and 2024, which will substantially flow through to the bottom line. This is slightly more cautious than the current market view, which if right would provide some further modest upside to our target.

The increase in rates between now and 2024, which will substantially flow through to the bottom line. This is slightly more cautious than the current market view, which if right would provide some further modest upside to our targets.

Speaker 3: Switching gears now to creating operational leverage and targeting positive joy.

Switching gears now to creating operational leverage and targeting positive jaws.

Speaker 3: We will aggressively pursue gross structural cost savings of $1.3 billion over the three years with further restructuring costs of around $500 million over that period. In other words, a two to three year pay...

We will aggressively pursue gross structural cost savings of $1 $3 billion over the three years with further restructuring costs of around $500 million over that period in other words, a two to three year payback.

Speaker 3: This will include a wide range of initiatives across CCIB and CPBB to further digitise the client's experience.

This will include a wide range of initiatives across <unk> and CPB to further digitize the client experience.

Speaker 3: We will also reduce our office space by a third, our branch network by 40%, and continue to consolidate our platforms and optimize our data centers.

We will also reduce our office space by third our branch network by 40% and continues to consolidate our platforms and optimize our data centers.

Speaker 3: These actions will enable us to continue to invest at scale and pace, prioritizing initiatives that we believe will deliver the best customer outcomes and shareholder returns in the near term. As previously communicated, we intend to double our strategic investment spend to $1 billion per year within the current quantum of our overall cash investments of $2 billion.

These actions will enable us to continue to invest at scale and pace prioritizing initiatives that we believe will deliver the best customer outcomes and shareholder returns in the near term as.

As previously communicated we intend to double our strategic investment spend to $1 billion per year within the current quantum of our overall cash investments with $2 billion per year. This will result in an overall $1 3 billion dollar increase in P&L investment spend over the next three years the $1 three.

Speaker 3: This will result in an overall $1.3 billion increase in P&L investment spend over the next three years.

Speaker 3: The $1.3 billion efficiency program will enable us to target an average annual two percentage point improvement in JAWS before the impact of interest rate rises on income as we target a cost to income ratio of around 60% by 2024.

The efficiency program will enable us to target an average annual two percentage points improvements in jaws before the impacts of interest rate rises on income as we target a cost to income ratio of around 60% by 2024 in other words, we do not plan to increase our levels of expenditure just because.

Speaker 3: In other words, we do not plan to increase our levels of expenditure just because we're getting the benefit in the top line from rising rates. We expect the majority of interest rate rises to income will fall through to the bottom line. This means we will be able to continue investing at pace to ensure we lay the foundations for future growth.

We're getting the benefit in the top line from rising rates. We expect the majority of interest rate rises to income will fall through to the bottom line. This means we will be able to continue investing at pace to ensure we laid the foundations for future growth.

Speaker 3: And then turning to capital returns, over the last three years, the group has returned $2.6 billion of capital to shareholders in the form of $0.9 billion of dividends and $1.7 billion in share buybacks. Despite the suspension of returns in 2020 due to the pandemic, the share buybacks have led to a 6% reduction in our shares in issue since the end of 2017.

And then turning to capital returns over the last three years. The group has returned $2 $6 billion of capital to shareholders in the form of North point $9 billion of dividends and $1 $7 billion in share buybacks. Despite the suspension of returns in 2020 due to the pandemic the share buybacks have led to a <unk>.

6% reduction in our shares in issue since the end of 2017.

Speaker 3: As I mentioned earlier, we will continue to operate dynamically within our 13% to 14% CTO on target range whilst delivering sustainable shareholder distribution.

As I mentioned earlier, we will continue to operate dynamically within our 13% to 14% CET one target range, whilst delivering sustainable shareholder distributions. We will review these conclusions regularly and very our capital positioning Accordingly, we plan to return in aggregate in excess of $5 billion over the next three years.

Speaker 3: We will review these conclusions regularly and vary our capital positioning accordingly. We plan to return in aggregate in excess of $5 billion over the next three years, which is likely to be more than double the levels returned to shareholders over the previous three years, or about 20% of our current market capitalization. Today's buyback announcement is the first part of this.

Which is likely to be more than double the levels returned to shareholders over the previous three years or about 20% of our current market capitalization. Today's buyback announcement is the first part of this the consequence of all of the both management actions and interest rate effects, plus a tax rate, which is likely to normalize.

Speaker 3: The consequence of all of the above management actions and interest rate.

Speaker 3: plus a tax rate which is likely to normalise towards the mid 20%

Towards the mid 20% range should see the bank returning to a double digit return on tangible equity the year. After next.

Speaker 3: should see the bank returning to a double-digit return on tangible equity the year after next

Speaker 3: Let me now hand back to Bill for his closing remarks. Bill. Thanks again, Andy. Go, please.

Let me now hand back to Bill for his closing remarks, Bill Thanks again any.

So please allow me to sum up what we've covered.

Speaker 2: The group has delivered Brazilian performance in 2021, returning to top-line growth in the second half of the year.

The group has delivered a resilient performance in 2021, returning to topline growth in the second half of the year.

Speaker 2: Our income outlook is good supported by strong competitive positioning, and our investments are paying off and position us well for the post-pandemic environment.

Our income outlook is good supported by strong competitive positioning and our investments are paying off and position us well for the post pandemic environment.

Speaker 2: Expense actions are necessary and impactful to allow for this ongoing investment and improvement of our profitability. And we are committed to delivering all of these. We have set out the things we can and need to change operationally to be better. And you've heard today about some very specific areas of differentiation on which we are laser focused. Underneath all of these actions and commitments lies our dedication to our clients, whose demand for our services remains amazingly strong even during the toughest periods of the pandemic, a luxury that few other sectors enjoy.

Expense actions are necessary and impactful to allow for this ongoing investment and improvement of our profitability and we are committed to delivering all of these we have set out the things, we can and need to change operationally to be better and you've heard today about some very specific areas of differentiation and which we are laser focused underneath all of these actions.

And commitment slides, our dedication to our clients, whose demand for our services remains amazingly strong even during the toughest periods of the pandemic a luxury that few other sectors enjoyed.

Speaker 2: As economies progressively recover, particularly in parts of the world in which we operate, that should strongly underpin our prospects for future growth.

As economies progressively recover particularly in parts of the world in which we operate.

That should strongly underpinned our prospects for future growth.

And then Theres interest rates. These are undeniably hit our bottom line hard as we are highly operationally geared but the good news is that the envision reversion to near pre COVID-19 levels should significantly amplify the positive financial impacts of the actions we're announcing today.

Speaker 2: These have undeniably hit our bottom line hard as we are highly operationally geared. But the good news is that the envisioned reversion to near pre-COVID levels should significantly amplify the positive financial impacts of the actions we're announcing today. So put it all together.

So put it all together.

Our solid core to our business instead of targeted management actions and commitments and upside from rates.

Speaker 2: a set of targeted management actions and commitments, and upside from rates. I have never been more confident that double-digit returns are now firmly within our sights, by the year after next.

I have never been more confident the double digit returns are now firmly within our sites by the year. After next so thanks again for spending this time with us and will open to Q&A shortly but first we'd like to show a short video that reminds us of standard chartered purpose to drive commerce and prosperity through our unique diversity. This.

Speaker 2: But thanks again for spending this time with us and we'll open to Q&A shortly. But first we'd like to show a short video that reminds us of Standard Tartar's purpose to drive commerce and prosperity through our unique diversi-

Speaker 2: This is Our North Star. We're committed to shaping our business to unlock value over the long term for our shareholders and for the clients and communities we serve.

This is our Northstar, we're committed to shaping our business to unlock value over the long term for our shareholders and for the clients and communities we serve.

Speaker 2: Andy, Judy, Ben Simon, and I will come back shortly after the...

Andy Judy Ben Simon and I will come back shortly after the video.

Yes.

Thanks.

Yes.

Sure.

Okay.

Yes.

Yes.

Yes.

Yes.

Okay.

Yes.

Yes.

Thanks.

Okay.

Okay.

Okay.

Yes.

[music].

Yes.

Okay.

Okay.

Okay.

Thank you.

[music].

Hello, everyone and thanks very much for joining us I hope you enjoyed our little interested in the discussion beforehand I'm joined here by Andy Obviously, we've got Simon and Judy in Singapore, and then in Hong Kong, Let's just go straight into questions and.

Speaker 2: Hello everyone, and thanks very much for joining us. I hope you enjoyed our little interlude and the discussion beforehand. I'm joined here by Andy, obviously. We've got Simon and Judy in Singapore, and Ben in Hong Kong. Let's just go straight into questions, and we will allocate those out as appropriate. We've got plenty of time for Q&A to dig into what we recognize was a lot of information that we passed out this morning. So please, handing over to the moderator for the first question.

We will allocate those out as appropriate we've got plenty of time for Q&A to dig into what we recognize there's a lot of information that we passed out this morning.

Please heading over to the moderator for the first question.

Thank you we will now begin the question and answer session. If you wish to ask a question via O. J. Please press star one on your telephone keypad and wait for your 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 question Joe.

Speaker 7: Thank you. We will now begin the question and answer session. If you wish to ask a question via audio, please press star one on your telephone keypad and wait for your name to be announced. To cancel your request, please press the hash key. Alternatively, please use the question box available on your webcast page to submit your question. Your first question today comes from Joseph Pickerson from Jefferies. Please go ahead, your line is open.

Your first question today comes from Joseph Dickerson from Jefferies. Please go ahead. Your line is open.

Speaker 8: Hi, good morning. Just a couple of questions, very clear forward guidance here. Andy, you rattled off a few things when you were talking about the 1.3 billion reduction. Maybe you can repeat those. I think I heard a 30 percent branch reduction. If you could repeat those, that would be helpful. And I guess the question that I have is, you know, what do you assume about the trajectory of...

Hi, good morning.

Just to just a couple of questions very very clear forward.

What guidance here Andy.

Andy you rattled off a few a few things when you were talking about the $1 3 billion reduction maybe you can repeat those I think I heard at 30%.

Branch reduction.

If you could repeat those that would be helpful and I guess the question that I have is what what do you assume about the trajectory of your staff costs between now and 2024, because some of your competitors in the region are talking about some pretty punchy numbers on on on growth. There. So that was question number one.

Speaker 8: your staff costs between now and 2024 because some of your competitors in the region are talking about some pretty punchy numbers on.

Speaker 8: on growth there. So that was question number one. And then the second question is...

And then the second question is can you just try to help us dimension, either the size or the contribution from the hedge. So you had I think you called out a basis point contribution to the underlying NIM improvement in Q4, I guess, how should we expect that to evolve for us globally. Since I believe you started to deploy the hedge Martin.

Speaker 8: Can you just try to help us dimension either the size or the contribution from the hedge? So you had, I think you called out a basis point contribution to the underlying NIM improvement in Q4. I guess how should we expect that to evolve, presumably since I believe you started to deploy the hedge more in the back end of the year, in the back end of Q4, that is. So is there going to be much more of a benefit in the first couple of quarters of this year in basis points terms?

The back end of the year and the back end of Q4 that is so high.

Theyre going to be much more of a benefit.

In the first couple of quarters.

This year in basis points terms. Thanks.

Yeah. Okay. Thank you Joseph for those questions. So first of all on the cost one and there is I think can you tell on the slides you can see that in as well. So what we're saying is that over the next three years, we intend to take about $1 3 billion out of the cost space, that's the continuation of <unk>.

Speaker 3: Yeah, okay. Thank you, Joseph, for those questions. So, first of all, on the cost one, there is, I think, detail on the slide, so hopefully you can see that as well. So, what we're saying is that over the next three years, we intend to take about $1.3 billion out of the cost base. That's the continuation of the programme we've had in the past, but comes from the Eking new areas.

The program, we've had in the past, but constantly he qing new areas we.

Speaker 3: We see about a one-third reduction in floor space in the property area. We see about a 40% reduction in the number of retail branches. We are constantly focusing upon IT systems and simplification of the processes and systems there. Data sensors rationalizing the number of applications, putting more of them into the cloud. So all of those are contributing features to the 1.3 billion.

We see about a one third reduction in floor space in the property area, we see about a 40% reduction in the number of retail branches. We are constantly focusing upon our it systems and simplification of the processes and systems there.

Data centers rationalizing the number of applications, putting more of them into the cloud. So all of those are contributing features for the one 3 billion.

Speaker 3: We said that over the next three years we do see overall costs increasing slightly. That's recognizing the fact that there is inflation out there, a $0.4 billion increase subject to currency movements, but for the 2022 year. And obviously within that we've taken a view on staff costs and other related costs as we move forward. But hopefully it's given a little bit more clarity on the direction of travel on the cost front. And I would observe that the 10.3% for last year actually was pretty much on the nose of what we said in the middle of 2020 would be about $10 billion plus FX movement. That's pretty much how it has panned out.

<unk> always said that over the next three years, we do see overall cost increasing slightly that's recognizing the fact that there is inflation out there.

<unk> 4 billion increase subject to currency movements, both for the 2022, yeah, and obviously within that we've taken a view on the staff cost and other related costs as we move forward, but hopefully its getting a little bit more clarity on the direction of travel on the cost front and I would observe that the $10 three D printed for last year actually.

It was pretty much on the notice of what we said in the middle of 2020, we'd be about $10 billion, plus FX move, but that's pretty much how it is.

Has panned out.

Speaker 3: On your second question, we did start some of the hedging program in the latter part of last year, which we talked about. We've been a little thoughtful about that because obviously with rates continuing to move upwards, we've not wanted to rush into that. So we have done some hedging in the back end of last year that has had a small underpinning to this year's, will have a small underpinning to this year's results.

On your second question, we did start some of the hedging program in the latter part of last year, which we talked about we've been a little thoughtful about that because obviously with rates continuing to move up which we've not wanted to rush into that so we have done some hedging in the backend of last year that has had a small underpinning to this year's.

We'll have a small underpinning for this year's results.

Speaker 3: We are monitoring that quite carefully, looking at rates as they settle at the moment and deciding whether we'll do more of that as obviously rates are now a huge part of the overall story for us as we move forwards on top of all the actions that you've just heard Simon Ben-Juice talk about.

We are monitoring that quite carefully looking at the rates as they settle at the moments and deciding whether we'll do more of that.

I was hoping to see right now a huge part of the overall story for US as we're moving forward on top of all the actions that you've just.

From a balance sheet and talk about.

Speaker 2: Joseph, you talked about staff levels as well, and I might turn to Judy quickly on that. We clearly got some diverging underlying trends. On the one hand, there's the productivity undertakings that Judy's mentioned that, of course, Andy has covered across the whole group as well, and that would have headcounts reducing.

Just can you talk about the staff levels as well and I might turn it to Julie correctly on that and we've clearly got some some diverging underlying trends on the one hand, there's the productivity undertakings that Judy mentioned that of course, Andy has covered across the whole group as well and that would have head count reducing theres, an ongoing simplification drive which is to continue with.

Speaker 2: There's an ongoing simplification drive, which is to continue with our pretty aggressive digitization and automation end-to-end.

It was pretty aggressive digitization and automate automation end to end, which would also have created.

Speaker 2: which would also have, would create a downward trend. Now the flip side is that we're investing heavily in a number of our areas, whether that's in our wealth management area where we've managed to maintain this very strong level of growth.

Create a downward trend and the flip side is that we're investing heavily in a number of areas whether that's in our wealth management area, where we've managed to maintain this very strong level of growth.

Speaker 2: in some of the technical supporting areas and protective areas like cybersecurity data analytics where headcount is increasing. So overall, we don't see a dramatic change in headcount, but below the surface there will be some big shifts. But I don't know if this is a good chance to bring Judy in, maybe just to make a couple of comments about the CPPV, cost drive and headcount trends.

And some of the technical supporting areas and protective areas like cyber security data data analytics, where head count is increasing.

Overall, we don't see a dramatic change in head count, but below the surface there will be some big shifts, but I don't know if this is a catastrophe Julian maybe just to make a couple of comments about the CPD cost drive in head count trends.

Yeah.

Speaker 5: As you heard earlier, I talk about our target to reduce our cost income ratio from 76% towards 60% by 2024.

As you heard earlier I talked about our target to reduce our cost income ratio.

From 76% towards 60% by 2024.

Speaker 5: How are we going to do that? First, if I look at our CIR trend in the last couple of years, it's been pretty flat. But the underlying...

How are we going to do that first.

If I look at our cir trend in the last couple of years, it's been pretty flat.

But the underlying if we excluded interest rates, which declined quite significantly RCI or could have declined by about nine percentage points and we see that trend obviously been very soon.

Speaker 5: If we excluded interest rates, which declined quite significantly, our CIR could have declined by about 9 percentage points. And we see that trend obviously reverse.

Speaker 5: Earlier, Andy talked about our branch reduction. We have been reducing our branches. We're going to step that up.

Earlier.

Andy talked about our branch reduction, we happy with reducing our branches, we're going to step that up.

Speaker 5: As we have invested quite a lot into our digital capabilities, we are going to accelerate our migration to digital.

We have invested quite a lot into our digital capability, we are going to accelerate our migration traditional and when we do that we can take out more physical touch point I'm going to step up.

Speaker 5: And when we do that, we can take up more physical touch points. And we're going to step up.

Physical branch reduction and we anticipate to reduce that by about 40% over the next few years now what that does is obvious can reduce head count in the branch and if I look at the last three years, we've reduced our head count on a branch by about 30% so that while controlling and of course, one of the things that we're doing is growing mass market and tube.

Speaker 5: years we've reduced our headcount on the branch by about 30% so that will continue. And of course, you know, one of the things that we're doing is growing mass market and through growing mass market we're actually acquiring through digital partnerships rather than feed on street. So that is a big shift in terms of our headcount as well and we will be able to acquire mass market clients much more efficiently. So these are the things that are going to help us grow, help us invest in areas that we can grow in mass market as well as in affluent wealth at the same time being able to do that much more efficiently. Back to you Bill. Great, thanks very much Judy. Can we take the next question please? Thank you. Your next question comes from the line of Jason Napier from UBS.

The growing mass market, we are actually acquiring through digital partnerships rather than feet on street. So that is a big shift in terms of our head count as well and we will be able to acquire mass market clients much more efficiently. So these are the things that are going to help us grow help us invest in areas that we can grow in my pocket a solid asset.

At the same time be able to do that much more efficiently.

Speaker 2: Back to you Bill. Great, thanks very much Judy. Can we take the next question please?

Great. Thanks, very much Julie can we take the next question. Please.

Speaker 7: Thank you. Your next question comes from the line of Jason Napier from UBS. Please go ahead, your line is open.

Thank you.

Next question comes from the line of Jason Napier from UBS. Please go ahead. Your line is open.

Good morning can you hear me okay.

Speaker 5: All good. Can you hear me? That's good to hear. Thank you. Thank you. The first question is around the RWA trajectory for the group.

All good.

Jimmy that's good thank you.

Thank you. The first question is around E. W. A trajectory for the group.

I guess.

Speaker 9: There'd be several ways that you could attack this, but effectively the bank in 2024 ends up being meaningfully smaller than I guess Consensus would have had. And the work that's been done in CCIB to make sure that capital is being deployed in the right places may be a cause for that. But I guess one of your competitors is moving enough capital to Asia to grow its business by a third.

There'll be separate ways.

Texas, but effectively the bank in 2024 ends up being.

So there are meaningfully smaller than I guess consensus would've head.

And so the work that's being done in CCI it'd be too to make sure that capital is being deployed in the right places maybe close to that but I guess one of your competitors is moving enough capital to Asia to grow its business.

<unk>.

Speaker 5: And I just wondered how in the bottom up review you came to such low RWA growth, surely better operating leverage and general improvement in operating dynamics attends faster balance sheet growth than you're guiding to. So maybe the first sort of question is why don't you budget for faster RWA growth over the next three years than you're allowing yourself.

And I just wanted to tell and the bottom after the U K to such low <unk> right.

Surely.

Adding leverage in.

All right.

And operating dynamics attends talks to balance sheet growth and then you're guiding to so that'd be the first question is why don't you budget for faster that'd be like extremely is then you are allowing themselves.

Speaker 2: Thanks Jason, I'll turn to Simon since he's doing the heavy lifting on RWA. I'll just say you use the word smaller, actually our business is going to be a lot bigger in 2024, just with flat RWAs. And that obviously reflects a change in the underlying composition of our business in favor of higher returning, less capital intensive businesses. Thankfully that's where our growth has been coming from consistently. But I'll turn to Simon to dig into the depths of that question.

Great. Thanks, Jason I'll turn to silence since he is doing the heavy lifting out of the way I'll. Just say you used the word smaller actually are our business is going to be a lot bigger in 2024, just with flat our W. S.

And that obviously reflects a change in the underlying composition of our business in favor of higher returning less capital intensive businesses, frankly, that's where our growth has been coming from consistently but I'll turn to Simon.

To dig into the depths of that question.

Great. Thanks, very much so yes.

Speaker 4: Great, thanks very much. So yeah, Bill, as you say, the intention is to keep our RWA flat in CCIB.

The intention is to keep our Wi flat CIB.

Speaker 4: But that has an underlying change in terms of the way we allocate those risk-based assets. Now, we've said over that period, we're going to optimize another 22 billion. And that means shifting that from low returning to the higher returning segments. Remember, we've said that network income generates about 100 basis points more than domestic. And we've said that FI generates about 400 basis points more than corporate.

So that has an underlying change in terms of the way we allocate those risk weighted assets. We've said over that period, we're going to optimize another 22 billion and that means shifting that from low returning to the higher returning segments. Remember we've said the network income generates about 100 basis points more than domestic.

We've said that <unk> generates about 400 basis points more around corporate so the optimization sees us reallocate $22 billion towards that higher returning business. So that's how we're able to keep although you are flat, but at the same time generate increase revenue and increase returns.

Speaker 4: So the optimization sees us reallocate $22 billion towards that higher returning business. So that's how we're able to keep RWA flat, but at the same time generate increased revenue.

Okay.

Speaker 2: Thanks very much, Simon. I think it's probably also worth noting that we do, we are allocating incremental capital into some key areas in the CPPB area, specifically around consumer credit. As Judy mentioned in her comments, being driven by some of the partnerships that we've entered into, as well as our own digital banking operations. I don't know, Judy, if you want to just quickly comment on the capital allocation into the region on the retail side.

Thanks, very much Simon.

It's probably also worth noting that we do we are allocating incremental capital into some key areas in the <unk> area specifically around.

Consumer credit as Judy mentioned in her comments.

Driven by some of the partnerships that we've entered into as well as our own digital banking operations I don't know Judy if you want to just quickly comment on the capital allocation into the region on the on the retail side.

Speaker 10: Yeah, I mean, currently, if you look at our RWA in the retail business, we're clearly very, very efficient because most of our assets are predominantly in the wealth space.

Yeah I mean currently if you look at our R. W E and the retail business with clean very very efficient because most of our assets are predominantly in the wealth space, but we see an opportunity right in our markets to grow our last week Hal do partnerships. So that we can acquire much more efficiently.

Speaker 10: But we see an opportunity in our markets to grow our mass retail through partnerships so that we can acquire much more efficiently and grow our CCPL book, of course growing it very safely. So we do anticipate to grow our CCPL book by around 6% TIGER and we will be allocating capital to that side of the balance sheet. And the return on that obviously will improve our overall CPPB ROTE.

And grow our <unk> book of course flowing at very safely. So we do anticipate to grow our CPL book by around 6%, 6% CAGR.

Well be allocating capital to that side of the that side of the balance sheet and the return on that.

We'll improve our overall.

<unk>.

Speaker 2: If I could, Ben, maybe you could just comment a little bit on the recent trends in Hong Kong and China, which have been quite encouraging in terms of loan volumes in particular.

If I could then maybe you could just comment a little bit on the recent trends in Hong Kong, and China, which have been quite encouraging in terms of our loan volumes in particular.

Yeah, I mean in China. For example, we have been actively working with different partners. I did mentioned that we have been working with around five point has already launched in two others actually which is a soft launch.

Speaker 6: Yeah, I mean in China for example we have been actively working with different partners. I did mention that we have been working with around five partners already launched and two others actually which is a soft launch. So if you look at China our revenue coming from partnerships or digital partnerships master have gone up by over 70%.

Launched so if you look at China, our revenue coming from partnership or digital partnerships last year have gone up by over 70%.

Speaker 6: Likewise, in Hong Kong last year, we ended the year with loan growth of 14%.

Likewise.

In Hong Kong last year, we ended the year with loan growth of 14%.

Speaker 6: So that is a combination of obviously a secured assets or mortgages, unsecured, and obviously in trade. These are all very, very high returning. And obviously we're also working with our partners through ventures like Mox, which we're seeing very, very good intake of credit applications. So all in all, it's quite all encompassing in terms of how we want to grow our balance sheet through a more digitally oriented and more cost effective way of acquisition. So back to you Bill.

So that is a combination of both the peak of secured assets of mortgages unsecured.

And obviously in trade. These are all very very high returning and obviously, we're also working with our partners through our branches like box, which we're seeing very very good intake all credit applications. So all in all it's all encompassing in terms of how we want to grow our balance sheet through a more digitally oriented and more cost effective way of.

So back to you Bill.

Speaker 2: Thanks, Ben. Jason, you mentioned you had two questions. I don't know if you had a second coming or whether we should move on.

And then Jason you mentioned you had two questions I don't know if you had a second coming or whether we should move on.

Speaker 5: I did. Thank you. And that was really helpful. The second question may well pertain to Simon's business again, but it comes back to the 1.3 billion in gross cost savings that you're targeting.

Thank you and that was that was really helpful.

Second question Mehdi.

Well.

Hassan introduces again, but it comes back to the $1 3 billion in gross cost savings that you're targeting with this 500 in.

Speaker 5: If there's 500 in the retail and business banking, and this is a big chunk in Group Central, feels like Simon's gonna have to do a lot of work on the cost base. So I wonder whether he could talk about the opportunities there clearly he's not affected by things like branches. And if he'd be willing to share, you know, his view on whether 2020 forecast will be meaninglessly different from where we are now, given the size of the opportunity that it looks like he's been tasked with attacking.

And so retail and business banking and this is a big chunk in group central.

It was like Simon is going to have to do a lot of work on the cost base. So I wonder whether you could talk about the opportunities that it clearly is not affected by things like branches and if you'd be willing to share.

And his view on where the 2020 forecast will be meaningfully different from where we are now given the size of the opportunity that it looks like he's been tasked with.

Speaker 2: I'll turn to Simon now, but then I'll turn to Andy to make sure that we're looking at each of the businesses in the context of the overall $1.3 billion. So, Simon. Whoa, whoa, whoa, whoa, whoa, whoa.

I'll turn to Simon now, but then I'll turn to Andy to to make sure that we're looking at each of the businesses in the context of the overall $1 3 billion. So Simon.

Thank you.

Speaker 4: Thank you. And I think the main theme that's going to support the cost efficiency in CCIB is that of digitization. Now, as Judy's already said, for the retail business, we're seeing the wholesale business rapidly advance in terms of the way we're digitizing our interaction with clients, both in terms of client onboarding and in terms of client servicing. That has a benefit of improving our customer experience. But it also means that over time, we can take out costs as we get efficiencies coming through the business.

The main theme that's going to support that.

Cost efficiency in CCI Bay is that of Digitization.

I already said for the retail business, we're seeing the wholesale business rapidly advance in terms of the way with digitizing.

Interaction with clients both in terms of client on boarding and in terms of client servicing.

That has a benefit of improving our customer experience.

That means that over time, we can take out costs as we've got efficiencies coming through the business.

Speaker 4: We've seen that having put together the digital channels and data analytics team, we've seen the benefit of that coming through in client acquisition. We saw a client today award us a big mandate in India for cash, trade and foreign exchange, really on the back of that digital platform that we're building. As we get more and more traction with clients, we see more and more ability to be more efficient and to take costs out at the same time.

We've seen that having put together the digital channels and data analytics team, we've seen the benefit of that coming through in client acquisition. We saw a client today award is a big mandate in India.

Cash trade and foreign exchange, mainly on the back of that digital platform that we're building.

As we get more and more traction with clients, we see more and more ability to be more efficient.

Cost out at the same time.

Okay. Thanks, Amit and I think I'll pass it back to you Yeah. I mean, if you take the $1. Three overall does roughly half a billion that is CPB specific there's about <unk> three that we're doing on central data centers central property costs et cetera.

Speaker 3: take the 1.3 overall there's roughly half a billion that is CPVB specific there's about 0.3 that we're doing on central data centres, central property costs etc about another 0.5 that's sitting with Simon's Business. Simon's Business has a bigger cost space so proportionally I guess the challenge there is a little bit less.

The 0.5 fitting with Simons business on this business has a bigger coal space. So proportionately I guess the challenge there is little bit less.

Speaker 3: As we all know, the CPPB business has been the one where we have had a higher cost base for some period of time than some of our competitors. We have been making good progress. And I do think, to Judy's point earlier, that the cost-income ratio unfortunately has a cost bit and an income bit. And therefore, when the income has been coming down because of rates, actually, it slightly distorts what's going on underneath the scale of it. If you took the CPPB business today with the sort of rates we had a couple of years ago, actually, it would be nine percentage points down, as Judy has said, on a cost-income ratio. What we're saying is we need to actually keep that momentum going and drive further efficiencies and further savings from it. We've also, I think, made significant inroads markets like Korea on the consumer side, used to be loss-making in a now profitable China, ditto. So over a period of time, we really have made progress there. But we do think there is a lot more that we can still do.

You'll notice the <unk> business has been the one where we have had a higher cost base for some period of time than some of our competitors, we have been making good progress and I do think to Julie's point earlier.

The cost income ratio. Unfortunately has a cost but they can come back and therefore, when the income has been coming down because the rates actually it's slightly distorts, what's going on underneath the scale of it. If you took the CPP business today with the sort of rates. We had a couple of years Scotch will be nine percentage points down as Judy has said on a cost income ratio, what we're saying is we need to add.

Actually keep that momentum going and drive further efficiencies and further savings from it. We've also I think made significant inroads markets like career on the consumer side used to be loss, making in a profitable China data. So over periods of time, we really have made pretty close to that but we do think there is a lot more that we can still do.

Speaker 2: Thanks, and thanks for the question, Jason. Can we take the next question?

Great. Thanks, Thanks for the question Jason can we take the next question. Please.

Speaker 7: Thank you. Your next question comes from the line of Martin Leibgeb, Goldman Sachs. Please go ahead, your line is open. Good morning. Thank you for the presentation and for taking my question. Could I have the first one please on NI and…

Thank you. Your next question comes from the line of Martin <unk> Goldman Sachs. Please go ahead. Your line is open.

Good morning. Thank you. Thank you for the presentation.

Taking my question.

Because I have to first one please.

And what's.

Speaker 5: With the prospect of our Fed funds rate hike in March in a month's time, I was just wondering if you could help us...

What's the prospect.

Fed funds rate hike in March in a month's time I was just wondering if you could help us understand the phasing of the beneficial impact of the rate hike on your P&L.

Speaker 5: understand the phasing of the beneficial impact of the rate hike on your P&L.

Speaker 5: And I guess this is really related to two subtopics. One is the high-ball transmission. I think historically there has been a one or two quarter delay in high ball rates picking up. And secondly, the absence of major structural hedging. How quickly would you expect to see the majority of the benefit of a rate hikes in the US to come through in the PML? Could we already see a big chunk coming through in the second quarter also with that?

And I guess this is really related to two sub topics one.

The hydro transmission I think historically, that's been a one or two quarter delay in hydro rates picking up.

Secondly, the absent of major structural hedging.

How quickly would you expect to see the majority of the benefit of the rate hikes in the U S to come through in the P&L It could be a very big chunk of coming through in the second quarter, so with that.

Speaker 5: with the July reporting date and maybe related to the question if you could update us on how the hedge notion is now and what the potential total scope for the hedge notion is going forward. And the second question, Mr. Fondong, in Korea, you made substantial progress with regards to improving the terms since the restructuring started back at the end of 2015. I think at some point Korea was seen as providing strategic optionality.

With the July reporting date, and maybe related to that question. If you could update us from probably catch those generally smell and toward the potential total scope.

So the hedge notional is going forward.

And the second question I was just wondering in Korea.

Made substantial progress.

Regards to improving the terms.

So restructuring started back at the end of 2015 I.

I think at some point.

Korea was seen as providing strategic optionality, if and when they.

Speaker 5: returns improve, which now appears to have happened. What are your objectives as Korea going forward? How strategic is it to the group? And do you see maybe some further opportunity arising within Korea with some of the competitors for branching there? Thank you.

Turns improve which now appears to have happened.

What are your objectives as Korea going forward, how strategic is it to the group, but you'll see maybe some further opportunity arising within Korea was some of the competitors.

Competitors retrenching them. Thank you.

Speaker 2: Do you want to kick off on the NIIs questions, Andy? Yeah, let me do that. So Martin, to your question, clearly the NII outlook is sort of particularly interesting at the moment. I mean, if I just sort of broaden it, the start of this year, we've had, okay, we're only one and a half months into the year, but we've had a good start in financial markets, transaction banking, trade. Wealth management has been good, albeit, probably slightly more so, Southern Asia and Africa, Northern Asia markets, particularly with Hong Kong and the COVID sort of spike there is there, a little bit more muted. But if you put all of that together, I think the first quarter actually should be well up with the first quarter of last year, which if you recall was our highest quarter of income for the group overall. So I think it's a reasonable start to the year. What will then I think become more interesting is A, the business momentum going forwards, plus the impact of the rates that you're referring to. So we have got a little bit of benefit in Q4 from the structural hedging, a little bit of benefit from high ball picking up. I think over the course of this year, we will see the rates impacts of progressively pick up during the remaining quarters of the year. So it's not like we can just straight line it for quarters two, three, and four. I think we would see quarter two, then quarter three, quarter four picking up.

Do you want to kick off on the NII question Denny Yeah, Let me, let me tell you that so lots in St.

Your question clearly the NII outlook is sort of particularly interested in the value, but I mean, if I just sort of broad night at the start of this year, we've had okay, where only one and a half months into the year.

We've had a good start in financial markets transaction banking trade wealth.

Wealth management has been good, albeit probably slightly but also something that Asia and Africa.

And Asia markets, particularly with Hong Kong, and the Covid sort of Spike there isn't there a little bit more muted, but if you put all of that together I think the first quarter actually should be well up with the first quarter of last year, which if you recall was our highest quarter of income.

For the group overall.

Overall, so I think it's a reasonable start to the year well then I think become more interesting is the business momentum going forward plus the impact all the rights that you were referring to so we have got a little bit of benefit in Q4 from the structural hedging a little bit of benefit from high both picking up I think over the.

Course of this year, we will see the rates impacts a progressive pickup.

Pick up during the remaining quarters of the year. So it's not like we can just straight line. It for quarters, two three and four I think we would see quarter to quarter three quarter four picking up.

In our own projections, and we've said and I think it's on slide 31. The assumptions we have made about rate increases roughly we've put on average about a 50 basis point increase in rates compared with last year.

What we have actually seen the market pricing is nearer to double that.

So that actually may provide some sort of support I think for five to seven of our top of the range over the course of the year.

But Q1 fairly similar to last year.

Over the balance of you would probably see some of the Reits benefits starting to come through more substantive life.

Speaker 2: On the career question, thanks for noting the really strong progress that we made. And it is really strong progress, I think probably in excess of what anybody imagined when we...

Good.

Great question, Thanks for noting the they're really strong progress that we've made and it is really strong progress I think probably in excess of what anybody imagined when we identified the problems a few years back.

Speaker 2: identified the problems a few years back. Korea is strategic for us, right? It's a core market, it's extremely important in terms of trade flows. We've got a good, strong local position, as you point out.

Strategically, it's Korea is strategic for us.

It's a core market.

Extremely important in terms of trade flows we've got a good strong local position and as you point out.

Speaker 2: our largest foreign competitors has or is withdrawing from the market and we clearly expect to benefit from that in terms of the accelerating the pivot into

Our largest foreign competitors <unk>.

Withdrawing from the market and we clearly expect to benefit from that in terms of accelerating the pivot into in particular, the affluent client segment that let me turn event has been who has been leading this four hour from the beginning of the transformation take to offer some more comments.

Speaker 2: Let me turn to Ben, who's been leading this for, well, from the beginning of the transformation, to author some more comments.

Speaker 6: Thank you, Bill. We've done a lot of hard work over the last five, six years, thanks to the team on the ground. I mean, strategically, first thing, Korea has a huge amount of spills to interconnectiveness with the rest of the markets, particularly what we saw, the biggest trade corridor between Korea and China and Korea and ASEAN are very, very substantial. We're talking about in excess of 200, 250 million of network income deriving from Korea, and those are very returns of visa. That's point number one. Point number two is last year, it delivered in excess of 300 million of profit and ROT around 8%.

Thank you Bill we've done a lot of hard work over the last five six years, thanks to the team on the ground.

Speaker 6: first thing, Korea has a huge amount of spills that interconnectedness with the rest of the markets, particularly what we saw the biggest trade corridor between Korea and China and Korea and ASEAN are very, very substantial. We're talking about in excess of 200, 250 million of net worth income deriving from Korea, and those are very, very return to thesis. That's point number one. Point number two is last year, it delivered in excess of 300 million of profit and ROT around 8%, and that is before the likely savings with...

<unk> first thing Korea has a huge amount as bill said interconnectedness with the rest of the markets, particularly what we saw the biggest trade corridor between Korea, and China, and Korea, and ASEAN very very substantial where we're talking about an access up to 200 250 million of net income deriving from Korea.

And those out there better returns a pizza that's point number one point number two is last year it.

It's a little bit in excess of $300 million appropriate royalty around 8%.

Speaker 6: And that is before the likely savings we're getting from restructuring more than 500 of our headcount, which has been exited at the end of October . So we expect roughly around $60 of cost savings, the bulk of which will accrue to our CPB business, which currently is making a profit, but there's more work to be done. And my final point is, with the hopes of Korean interest rates also on the rise, they started actually in Q4 last year, we're seeing some of the benefits. So I do think Korea has within reach about 10% ROT if not more, and we're confident that there are more work to be done, but we can get there. So thank you and get back to you, Bill. That's great, Ben. Maybe anticipating some of the other questions that might come, we look very hard at what's gone right in Korea.

As before.

The likely savings, we would be getting from restructuring more than 500 of our head count which has been exited at the end of October So we expect roughly around $60 of.

Cost savings, the bulk of which will accrue to our <unk> business, which currently is making a profit, but there's more work to be done.

And my final point is with.

With the hopes of Korean interest rates also on the rise they start that actually in Q4 last year, we're seeing some of the benefits. So I do think Korea has within reach about 10% royalty if not more and we are confident that theyre more work to be done, but we can get there. So thank you.

Back to you Bill.

That's great maybe anticipating some of the other questions that might come we look very hard at what's what's gone right in Korea.

Speaker 2: It's not just Korea, as we pointed out in Andy's comment.

Not just Korea is as we've pointed out in his comments.

Speaker 2: Four of the markets that we called out for improvement have improved dramatically, Korea being a good case study. And the question is how do we extend that to every market, every client, every portfolio, every business line in which we operate. And there's some good learnings from what goes right. Obviously, we also learn from what goes wrong. But Korea is definitely a good story. So thanks, Martin, for the question. We move to the next question.

For the markets that we called out for improvement have improved dramatically Caribbean being a good case study and that of course is that the question is how do we extend that to every market every client every.

Portfolio every business line in which we operate and there's some good learnings from what goes right. Obviously, we also learned from what goes wrong of the Korea is definitely a good story so.

Thanks, Martin for the question.

Can we move to the next question.

Speaker 7: Thank you. Your next question comes from the line of Guy Stelings from Exant. Please go ahead, your line is open.

Thank you.

Next question comes from the line of Guy stemming from Exxon. Please go ahead. Your line is open.

Speaker 11: Hi, good morning and afternoon everyone. The first question is on distributions. Thanks for the five billion plus guidance running. If you could help us think about the phasing of that guidance. If I take your pro forma 1st of January 2022, cap to ratio of 13.5%, adjust for the buyback, we're down at 13.2, so towards the bottom end of the guided range. I appreciate you got some other reactions, but by the way, it's still going to grow.

Hi, good morning, and afternoon, everyone I am the first question was on distributions. Thanks for the <unk> 5 billion plus but I was wondering if you could help us think about the phasing of that guidance.

Take your price on the first of January 20th Secrets ratio does all of a sudden.

Just with the buyback we were down at $13 two so towards the bottom end of the guided range I appreciate you've got some other reactions, but otherwise you're still going to grow so.

Speaker 11: distributions from here need to be funded out of profits and profits are going to grow year over year based on plans. So should we think about that 5 billion as being slightly back end loaded or any colour you can share there would be useful. And then the second question was just around costs. You talked to the 2% JAWS and the 5 to 7% revenue and high like 3% rates tail into revenue.

Distributions from here needs to be funded out of profits.

Profits are going to grow year over year basically plan. So you should think about that 5 billion is being slightly backend loaded or any color you can share that would be useful and then the second question was just around costs.

Towards the 2% chose in 5% to 7% net unit highlights the 3% rates tailwind to revenue.

Speaker 11: So if that 3% means we're talking 8 to 10% on revenue, can I just double check that cost growth, you're still talking to 3 to 5% range and you wouldn't use any of that additional revenue support to resorbing flash through pressures or invest more in the business. I guess given some of your comments on rates flowing to the bottom line and in order to hit your 6% cost income guidance, I presume you wouldn't use any of that additional revenue to have a high cost but any colour there again would be very helpful. Thank you.

If not 3% means we're talking 8% to 10% on revenue can I, just double check that cost growth, you'll still talking two 3% to 5% range and you wouldnt use any of that additional revenue sport to resolve inflationary pressures or invest more in the business and I.

I guess given some of your comments on rates flowing to the bottom line.

60% cost income guidance I assume you wouldn't use any of that additional revenue.

But any color there again it would be very helpful. Thank you.

Speaker 3: Yeah, let me let me address both of those. So we have as you know, over the last couple of years being up with a 14% plus capital ratio. I think during the course of COVID-19 or the main part of COVID-19 that was sort of prudent and was wise. But as we've said before quite regularly our intent overall is that we should operate more within the 13 to 14% rate and we should operate dynamically within that.

Yeah, Let me let me address both of those so we have as you know the last couple of years being with a 14% plus capital ratio I think during the course of Covid or the main part of Covid that was sort of a prudent was wise.

<unk> said before quite regulate our intent overall this what we should operate more within the 13%, 14% and we should operate dynamically within that so as you quite rightly observe our pro forma Q1, starting here at 13.5, when the three course pavilion buyback is done that takes us to a pro forma 13 point too.

Speaker 3: So as you quite rightly observed, our pro forma CTO on start of the year 13.5, when the three quarters of a billion buyback is done, that takes us to a pro forma 13.2. However, over the balance of the year, we've then got profit generation, a little bit of RWA offset, but as you've heard, we're going to be focusing upon essentially maximising the RWA efficiencies, particularly the corporate side of the business.

The balance of year. We then got profit generation, a little bit of all of it up to you all set but as you've heard we're going to be focusing upon essentially maximizing the efficiencies, particularly on the corporate side of the business. So I would look at the overall three year trend being warm wet backend loaded I don't know, but it probably is slightly more.

Speaker 3: So I would look at the overall three year trend as being one where.

Progressive and certainly front end loaded, albeit three course civilian out the block in the first quarter is quite a good start in that but I think if you model. It you can see with a sort of income growth and I'll come on to your second question, we are profiling, particularly with the right support helping in that regard.

Speaker 3: loaded, albeit three quarters of a billion out the block in the first quarter is quite a good start in that. But I think if you model it, you can see with the sort of income growth and I'll come on to your second question that we are profiling, particularly with the rate support helping in that regard. That five billion number, you know, we think is a very solid number. It's about 20 percent of our market cap. That's on top of the six percent of the market cap that we've bought back in the last three years. So as an aggregate, that is really significant and if we exit the three year period at that rate, then in the next three year period, hopefully we will be doing more. On the cost side of things. So you're absolutely right.

5 billion number.

We think is a very solid number it's about 20% of our market cap.

On top of the 6% of the market cap that we bought back in the last three years. So as an aggregate that is really significant and typically if we exit sort of you have heard that right. Then in the next three year period, hopefully we will be doing more.

Speaker 3: On the cost side of things, so you're absolutely right, what we've done, hopefully the slide makes it clear, is we've said underlying excluding rates, we think 5-7% growth for this business is perfectly achievable. The 3% on the rates, actually the market at the moment would say it maybe could be a little bit more than that, but we've put that in as our sort of placeholder. Within the 5-7 we have split that out.

On the cost side of things, so you're absolutely right. What we've done hopefully this slide makes it clear as we've said underlying excluding rights, we think probably 5% to 7% growth for this business is perfectly achievable the 3% on the rates actually the market in a moment, we'd say it maybe it could be a little bit more than that but we put that in it's also the place holder within the 5%.

We have split that out hopefully you heard the comments earlier two of it coming from the push on the China front, one of it coming from new ventures, the underlying three if anything maybe against the GDP growth in the markets. We're in it's slightly on the conservative side time will tell we will see a little bit of income gave all and they are the right management, although largely north from international.

Speaker 3: Hopefully you heard the comments earlier, two of it coming from the push on the China front, one of it coming from New Ventures. The underlying three, if anything, may be against the GDP growth in the markets we're in, you know, slightly on the conservative side. Time will tell. We'll see a little bit of income give on the RWA management, although largely not on the international clients. So that's sort of why we put the numbers there.

So that's sort of why we put the numbers there.

Speaker 3: two percentage points on the Jaws, mathematically takes you into the 3-5% range on the cost.

Percentage points on the jaws mathematically takes you into the 3% to 5% range on the cost and that is sort of where our minds are now obviously, if we thought the business underperformed against some of the things we have got the time to go and course, correct, but as a core.

Speaker 3: And that is sort of where our minds are. Now, obviously, if we find a business over or underperformed against other things, we have got the time to go and course correct. But as a core focus, the core structure, if you like, for how we think about the economics of the business, then that is where we're at.

So close to the core structure, if you'd like for how we think about the economics of the business that is where we're at a combination of that is essentially the 2 billion of income loss, we suffered from the rights over the last two years pretty much reversing over the next three years I think forward right three years at roughly the same as the rate we were at pre.

Speaker 3: The combination of that is essentially the $2 billion of income loss that we suffered from the rate.

Speaker 3: over the last two years, pretty much reversing over the next three years. I think the forward rate three years out, roughly the same as the rate we were at pre-COVID and two billion going on to a bottom line of four billion. And with business momentum on the top of it, that's sort of why you get to a 10% number the year after next. So I think, you know, it's a cogent model and we'll manage the costs actively within that and make sure that we're both investing for future, but taking enough cost out as we go along.

And 2 billion going onto a boat and run a $4 billion and with business momentum on the top of that that's sort of why you get to a 10% number a year. After next so I think it's a cogent model and we will manage the cost either actively within that and make sure that we're both investing for future, but taking up cost out as we go along.

Speaker 2: Can I just go back to the capital question? In each of these discussions, we've explained why we think the capital level we're operating at is appropriate. And when we were up at the top end or above the top end of the range, we identified uncertainties and remaining concerns that caused us to want to be prudent. Obviously, we're now operating on a pro forma basis post buyback towards the bottom end of the range. Why are we comfortable? It's pretty straightforward. Every observation that we've got of asset quality is that it remains very good.

Can I just go back to the to the capital question in each of these discussions we've explained why we think the capital level were operating at as appropriate and when we were up at the top end or above the top end of the range we identified uncertainties.

And remaining concerns that caused us to want to be prudent.

Obviously, we are now operating on a pro forma basis post buyback towards the bottom end of the range why are we comfortable it's pretty straightforward. One is every observation that we've got a asset quality is that it remains very good.

Speaker 2: The earnings momentum that we've generated is good, and the earnings outlook is very good. And on the back of all that...

The earnings momentum that we've generated.

Is good and the the earnings outlook is very good and on the back of all that Andy and I and our board have been comfortable going down towards the towards the bottom end of our range as Andy said, we'll manage this dynamically, but we always said that we'd be prepared to go down towards the bottom end of the range and here. We are and you can expect us to continue to review this in a very regular.

Speaker 2: Andy and I and our board have been comfortable going down towards the bottom end of our range.

Speaker 2: As Andy said, we'll manage this dynamically, but we always said that we'd be prepared to go down towards the bottom end of the range, and here we are. And you can expect us to continue to review this in a very regular way. I hope if there's any takeaway from all of this, it's that we're quite confident about our business, both in terms of the quality of our balance sheet and the quality of the earnings outlook. Hence, we're prepared to run a little bit closer to the bottom of our range. Good. With that said, can we...

Way I hope if there's any takeaway from from all of this it's that we're quite confident about our business. Both in terms of the quality of our balance sheet and the quality of the earnings outlook, Hence we're prepared to run a little bit closer to the bottom of orange.

With that said can we move to the next question.

Speaker 7: Thank you. Your next question comes from the line of Manus Costello from Autonomous. Please go ahead, your line is open.

Thank you. Your next question comes from the line of Manus Costello from Autonomous. Please go ahead. Your line is open.

Speaker 12: I have a couple of questions on revenues, please, one general and one specific. The general question is, if we look back to the previous rate hiking cycle, your peak rate of revenue growth was 5%, but you're now telling us you can do double that in this rate hiking cycle. So what's changed to give you the confidence that you can do double what you did last time? And the specific questions relate to...

Oh, hi, Thanks, very much I had a couple of questions on revenues. Please one general one specific the general question is.

The previous rate hiking cycle.

Your peak rates of revenue growth was 5%.

I'm not telling anything you can do double that interest rate hiking cycle.

What's changed to give you the confidence that you can do double what you did last time.

Specific questions relate to how you strike.

Speaker 12: how you strike the NII sensitivity, which has been moving around the place over the years. You look like you've restated the 2020 numbers quite materially by about 30 percent. What was going on there? And can you also explain your deposit beta assumptions in retail in particular, that they're quite low, and I think you've cut them year over year. So more cover around that would be helpful to give us some confidence. Thank you.

Sensitivity, which has been moved.

Around the place over the years.

But you have restated the 'twenty 'twenty numbers quite materially by about 30%.

What was that.

And can you also explain your deposit beta assumptions.

We've had in particular.

And I think you've cut them year over year.

More color on that would be helpful to give us some confidence thank you.

Speaker 2: Thank you very much, Manas. Let me give a high level answer on the revenue. We've been pretty steadily changing the nature of our business over the past several years and focusing on, as we said, over and over and over again, our network income, the affluent client population, and then of course, for the mass market digitizing the bulk of our business.

Thanks, very much matters.

Let me give a high level answer on the on the revenue.

We've been pretty steadily changing the nature of our business over the past several years.

Focusing on as we said over and over and over again, our network income the affluent client population and of course for the mass market digitizing the bulk of our business we've been demonstrating consistently.

Speaker 2: We've been demonstrating consistently growth rates for that part of our business, which is now the majority of our business at or above the top end of that five to seven percent range. So as we continue to shift the business mix very, very consistently and very deliberately, it gives us ever more confidence that we can generate that five to seven percent underlying call it organic growth that.

Growth rates for that part of our business, which is now the majority of our business.

At or above the top end of that that 5% to 7% range. So as we continue to shift the business mix very very consistently and very deliberately it gives us ever more confidence that we can generate that 5% to 7% underlying call. It.

Organic growth that.

Speaker 2: that we've indicated we can maintain. The rate impact is on top of that. We've also improved the quality of our liabilities, right? We've improved the quality of the liabilities materially. So we would expect to be able to capture some more of that rate benefit increase and to capture that a little bit sooner. But I'll leave the details on that to Andy when he addresses deposit beta and II.

That.

We've indicated we can maintain the rates in impact is on top of that we've also improved the quality of our liabilities and we've improved the quality of the liabilities materially. So we would expect to be able to capture some more of that that rate benefit increase and capture that a little bit sooner, but I'll leave the details on that Randy when he addresses deposit beta NII.

Speaker 2: Maybe I could just very quickly turn to Judy and Simon to give a little bit more color on why we're confident that we can generate the income growth rates that we've indicated this month.

I could just very quickly turned to Judy and Simon to give a little bit more color on why we're confident that we can generate the income growth rates that we've indicated this morning.

Eddie.

Speaker 10: Yeah we're absolutely confident. You know if we look at our wealth distance right. It's been growing.

Yeah, we're absolutely confident.

If I look at our wealth business right it's been growing.

Speaker 10: high single digit, double digit, over a few cycles over the last decade.

High single digit double digit over a cycle over the last decade.

Speaker 10: That gives us a very strong confidence. Our wealth business, our wealth platform is very strong. Last year, we added more than 400,000 customers to our platform. We more than double our net new money. That's an area we're investing behind. We expect to grow, continue to grow at that double digit. You also hear about our strategy to expand our partnership for mass retail business.

That gives us very strong confidence our wealth business. Our platform is very strong last year, we added more than 400000 customers to our platform.

More than double our that new money, that's an area. We're investing behind we expect to grow continue to grow that double digit you also hear about our strategy to expand our partnership for a mass retail business.

Speaker 10: we threw a lot of the partnerships you heard from Ben and that's going to grow as well. Let me just make a quick comment on CASA or on the deposit mix. If you look at the retail deposit mix, yes it's low single digit growth but what's...

We are through a lot of the partnerships you heard from that and Thats going well as well.

Let me just make a quick comment on Casa.

The deposit mix, if you look at the retail deposit mix, yes, it's low single digit growth, but what we're really focused on is growing cough out what was the last few years <unk>.

Speaker 10: What we're really focused on is growing CASA. Over the last few years, we've grown CASA double digit about 12 percentage growth. So that is very linked to our ability to help clients do payments, invest in wealth management. So that's the quality of the business that we're growing. Last year, we also grew assets by high single digits. So we're very confident that the quality of our business, the quality of our franchise will continue to generate that 5 to 7 percent growth underlying.

Double digit at about 12 percentage growth. So that is very linked to our ability to help clients through payments investor wealth management. So that's the quality of your business that would probably last year. We also accessed by high single digits. So we're very confident that the quality of our business. The quality of our franchise will continue to generate 5% to 7% underlying.

Speaker 4: Thank you very much. Thanks, Judy. So yeah, Bill, I'm absolutely confident. I'm confident, I think, for a number of reasons. The first, and picking up the point on rates, when you look back to our balances in 2018, they're about $125 billion.

Yeah.

Thank you very much thanks, Jamie so.

So I would say, yes, absolutely content.

I think for a number of reasons.

The first and pick up the point on rates now when you look back to our balances in 2019 or about $175 billion.

Speaker 4: We closed 2021 at $200 billion. So that fundamental shift in the quality and the volume of our liabilities gives me great confidence in terms of the cash business and that ability to have sustainable growth.

We're close to 'twenty to 'twenty, one, but $200 billion it's not.

Fundamental shift in the quality and the volume of our liabilities gives me great confidence in terms of the cash business.

Sustainable growth.

Speaker 4: Sticking with transaction banking, we saw trade volumes come to the end of last year back to pre-COVID levels. And that ability to monetize our network for our trade finance business, I think remains strong.

Taking with transaction banking, we saw trade volumes come to the end of last year back to pre COVID-19 levels and the ability to monetize our network drove announced business I think remains strong.

Speaker 4: Third, I mentioned it a little bit in terms of RWA, you know, shifting that mix of putting corporate finance together with financial markets, creating that ability to have a real need to distribute, generating the asset class that institutional clients want to invest in and participate in.

So I think I mentioned, it a little bit in terms of out of your way.

Shifting that mix of putting cohort finance together with financial markets, creating the ability to have really a night to distribute generating asset class.

Institutional clients wanted to invest in and participating and.

Speaker 4: That's what's going to help take us from 40% of our revenues coming from FIs today to 50% going forward. So there are a lot of components that when you bring them together are absolutely confident going forward.

That's what's going to help take us 40% of.

Revenues coming from <unk> today to 50%.

Going forwards.

There are a lot of a lot of components, but when you bring them together.

Okay.

Speaker 2: I'll pass back to you, Bill. Great. Thanks very much, Simon and Judy. Andy, you want to pick up the NII questions? Yeah, let me pick up the sensitivity question, Manus. The sensitivity area is inherently complex.

I'll pass back to you Bill great. Thanks, very much Simon and Judy and you only pick up the NII questions. Yeah, Let me, let me pick up the sensitivity question modest.

The sensitivity area is inherently complex.

Speaker 3: We are looking across, as you well know, many many geographers. We're looking at different asset liability classes. We're having to second guess how competitors will react. So it is a complex area.

We are looking across as you well know many many geographies, we're looking at different asset liability costs as we're having to second guess how competitors will react. So it is a complex area now youre right, but we have increased the sensitivity as compared with what we were showing a year ago.

Speaker 3: Now you're right that we have increased the sensitivities compared with what we were showing a year ago.

Biggest part of that was surpluses in our banking book that were being managed in the trading book when we do get benefits were actually being excluded from the previous calculation. So I think six months ago, you probably have heard to that so we've now got those in the numbers. They are real they are evidentiary happening and then secondly, we have particular learnings I think from COVID-19 being going through.

Speaker 3: where we do get benefits, we're actually being excluded from the previous calculations. I think six months ago, we probably referred to that. So we've now got those in the numbers. They are real, they are evidentially happening. And then secondly, we have particular learnings, I think from COVID, being going through various parts of our book much more closely to understand behaviorally what has been going on. And that has caused us to refine some of the models that we have got and hence give you those numbers. Now the 1.3 billion, it is a first year effect. It is an all currency effect.

Various parts of our book much more closely to understand behaviorally, what has been going on and that has caused us to refine some of the multiples that we've got and hence give you those numbers now the $1 3 billion. It is the first year effect. It has on all currency effects clearly all currencies don't all move together, but secondly, it is the first year effect. So some.

The assets liabilities don't reprice within the first year that would require a second or third tier and some of them will only reprice within the first year for the first year benefit is yet to flow through so there's about 30% to 40% uplift over and above that one three number that we've disclosed we've broken it down more by current says isopod disclosures or if it will pull some of it will helpful.

Speaker 3: In terms of the betas, we have got up to 20 basis points. In general, this is a sweeping average across the CPBB businesses and about double that in the CCIB business. That is the mix across many, many...

One round.

In terms of elevators, we have got up to 20 basis points.

Speaker 3: across the CPBB businesses and about double that in the CCIB business. That is the mix across many, many products. Hopefully it's on the cautious side, but we will see over a period of time. But those are, if you have to sort of aggregate it in this area that's quite difficult to aggregate, those would be sort of indicative ranges that we have used in arriving at that 1.3 billion, 100 basis point all currency number. Good. Thanks Andy.

General this is a sweeping average across the <unk> business system about double that in the CIB business that is the mix across many many products hopefully it's on the cautious side, but we will see over a period of time, but those are if you have to sort of aggregated Sara it's quite difficult to aggregate those would be.

Speaker 3: Hopefully it's on the cautious side, but we will see over a period of time, but those are, if you have to sort of aggregate it, and in this area it's quite difficult to aggregate, those would be sort of indicative ranges that we have used in arriving at that 1.3 billion 100 basis point all currency number.

Indicative ranges, but we have used in arriving at that $1 3 billion, a 100 basis points all currency number.

Speaker 2: Good. Thanks, Andy. Can we move to the next question, please?

Good Thanks, Andy can be moved to the next question. Please.

Speaker 7: Thank you. Your next question comes from the line of Amandla Carr from Barclays. Please go ahead, your line is open.

Thank you. Your next question comes from the line of them on the call from Barclays. Please go ahead. Your line is open.

Speaker 13: Good morning Bill, good morning Andy, good morning Tim. A couple of questions. First one was actually to build on Maness's question, which I guess Bill you partly addressed. But I guess in a word, what's different this time around?

Good morning, Bill Good morning, Andy Good morning, Tim.

A couple of questions first one was actually to build on <unk> question.

Which I guess you partly addressed I guess.

In a word whats different this time around I guess.

Speaker 13: We are reintroducing the 10% ROT target. I appreciate rates are a tailwind, but we're perhaps returning to a rate environment that's not too dissimilar to pre-COVID.

We are reintroducing the <unk> I appreciate rates are a tailwind, but we are perhaps returning to a rate environment, that's not too dissimilar to pre COVID-19 .

Speaker 13: And I think that was at a time when the group was perhaps not able to generate a 10% ROTE. So I'd be really interested to hear kind of in your own words.

And I think that was a time when the group was perhaps not able to generate 10% <unk>. So I'd be very interested to hear kind of in your own words.

Speaker 13: what you think is different this time around and why actually, you know...

Do you think is different this time around and why actually.

Speaker 13: we should be confident that 10% is the right number and it's gonna happen in the foreseeable future. I guess one additional question would just be a point of clarification around the RWA and cost saves that you're targeting. Are you able to help us understand some of the revenue attrition that might be associated with that piece? Thank you.

We should be confident in that 10% is the right number and it is going to happen in the foreseeable future.

I guess, one additional question would just be appointing a clarification around the.

The <unk> cost.

Saves that you're targeting are you able to help us understand some of the revenue attrition that might be associated with that page. Thank you. Good great. Thanks very much for the questions.

Speaker 2: Good. Great. Thanks very much for the questions. What's different? You asked for it in a word. I think in a word, the difference is discipline. I think what you're seeing through the actions that we're announcing today is discipline on every front. That's capital discipline. It's cost discipline. It's discipline in terms of how we're investing in our business, how we're managing the business.

What's different I mean, you asked for in a word I think in a word the difference is is discipline.

What youre seeing through the actions that we're announcing today as disciplined on every front that's capital discipline, it's cost discipline.

It's disciplined in terms of how we're investing in our business, how we're managing the business.

Speaker 2: If you ask for a slightly more expensive action, I think we've been building the capability to generate a cost of capital plus return for five or six years. I mean, clearly the early time of my and Andy's time in the bank was much more focused on remediation, but for five or six years now, we've been building that set of core capabilities around our building out the network business, building out our affluent client proposition.

If you ask for a slightly more expensive action I think we've been building on we've been building the capability to generate a cost of capital plus return for five or six years, but I mean, clearly that the early time of my time.

The bank was much more focus on remediation, but for five or six years that we've been building that set of core capabilities around our building out the network business building out our affluent client proposition.

Speaker 2: slightly more recently building out that digital offering and that ability to be automated end-to-end and much more efficient. Those investments are paying off. Obviously, we all know how investments work. It's cash out in exchange for cash back later. And we've had the cash out phase. We will continue to invest in the business.

Slightly more recently building out that digital offering and that ability to be automated end to end and much more efficient are those investments are paying off and obviously, we all know how investments work its cash out and exchange for Cashback later, and we've had the cash out phase we will continue to invest in the business, but we're harvesting those gains.

Speaker 2: but we're harvesting those gains. So the focus of everything from our RMs in our retail and uhh

The focus of everything from our RMS and our and our retail and <unk>.

Speaker 2: and wholesale business, from the way that we're allocating the capital to those clients, to the underlying systems investments that we've made, have in fact generated the network growth that we've been targeting, the affluent population growth that we're targeting, and we feel very well positioned.

<unk>.

In wholesale business.

From the way that we're allocating the capital to those clients to the underlying systems investments that we've made has in fact generated the networks network growth that we've been targeting the affluent population.

The relation growth that we're targeting and we feel very well positioned to fundamentally improve our cost income ratio on retail driven both by the income increases, but also by the cost actions that we can take on the retail side. So as I said.

Speaker 2: to fundamentally improve our cost-income ratio on retail, driven both by the income increases, but also by the cost actions that we can take on the retail side. So what's different is bringing an extraordinary level of focus now, but on the back of several years of migration where the evidence in terms of what works and what doesn't work to us has come through pretty clearly.

What's different what's different is bringing an extraordinary level of focus now but on the back of several years of migration, where we're the evidence in terms of what works and what doesn't work.

To us has come through pretty clearly.

<unk>.

I will.

Speaker 2: Rather than kick to Simon, Judy, and Ben, let's take the RWA and cost questions. I'll direct that to Andy. And then maybe we can start with Simon, and then we'll go to Ben and Judy just to comment on both questions together, any additional points we want to make.

Rather than then kicked to Simon Julien and then let's take the <unk> cost.

Questions are directed to Andy and then maybe we can start with Simon.

And then we'll go to Ben and Judy just to comment on both questions together with any any additional points I want to make.

Speaker 3: Yeah, so on the RWAs, as Simon has said, what we're seeking to do is to essentially redeploy into higher returning areas. So we get higher returns, as Simon said earlier, on our network, our sort of multinational client activity. So whilst there will be some redeployment, it will be into areas where hopefully the returns can be bigger. And also we have got that in other parts of the financial institutions segment.

Yes, so on the art of delays as Simon has said what we're seeking to do is to essentially redeploy into higher returning areas. So we.

We get higher returns as Simon said earlier on our network also the multinational type two so whilst there will be some redeploy that it will be into areas, where I hope for the returns could be bigger and also.

We have got that.

In other parts of the financial institutions segment.

Speaker 3: I would look at this in terms of the income and the cost, it's not being huge, being more about redeployment, albeit, as I just said, in the buildup of that 8% to 10% income, the underlying bit, the 3%, probably is a little bit on the low side relative to GDP growth, maybe an opportunity to slightly outperform on that front. But I think you should look at this more as redeployment into higher returning areas rather than absolute reductions on either front. I know, Simon, I probably badly describe that. But anyway, you're correct me where I've gone wrong.

I would look at this in terms of the income of the cost it's not being huge being more about redeployment, albeit as I just said in the buildup of that 8% to 10% income the underlying 3% probably is a little bit on the low side relative to GDP growth may be an opportunity to slot.

The outperform on that front, but I think you should look at it as more of a redeployment into high returning areas rather than absolute reductions on either front.

Simon I've, probably partly describe that but anyway, Youre correct me, where I've gone wrong.

Speaker 4: Sounded pretty good to me, hadn't it?

It sounded pretty good demand.

Speaker 4: So I think just to pick up a few things. The first, this isn't new as Bill says, we've taken out $14 billion of low returning RWA over the last few years, so we know we can do it. And we have built up that core competency in terms of our risk management, in terms of securitization, in terms of our mitigation programs and use of insurance, etc. to package it. We've built up the toolkit to do it.

Hello, I think just just to pick up a few things first of all this isn't near as Bill says, we've taken out $14 billion of low returning all the way over the last few years. So we know we can do it and we have built up that core competency in terms of our risk management in terms of securitization in terms of our mitigation program and use of insurance et cetera.

So what are we built up the toolkit to vote. We are also now as I said I keep coming back to originate and distribute we've built up our ability to originate assets that are sellable and to distribute those assets. So we have changed our competency.

Speaker 4: We've also now, as I said, I keep coming back to that originate and distribute. We've built up our ability to originate assets that are sellable and to distribute those assets. So we have changed our competency that we didn't have a few years ago. But exactly to what Andy said, what you should be thinking about is, you know, revenue attrition, I think, will be marginal. The real focus should be on the fact that return on risk weight assets will go up 160 basis points. It's going to go up 160 basis points. We're going to reallocate.

But we didn't have a few years ago.

Exactly to what I can say, what you should be thinking about.

Revenue attrition I think would be marginal, but real focus should be on the return on risk weighted assets will go up 160 basis points, that's going to go up 160 basis once begun to reallocate not.

Speaker 4: that optimise risk-based asset portfolio towards the network business, which as we know generates significantly higher returns, and the financial institutions business, which again generates significantly higher returns.

Optimized.

Asset portfolio towards.

Our business generates very high returns on the financial institutions business, which again generate significantly higher returns.

Speaker 10: Yeah, just to add a point. One of the things I haven't talked about is, and aligned to what Bill had mentioned earlier about reviewing some of our portfolios and where we can optimize or get it to a scale where it delivers that appropriate returns, we would have to take bolder actions. And I think that boldness or that speed to take that action is something we are doing. It is.

Yeah, I'd just add a 0.1 of the things I haven't talked about is and align to what bill had mentioned earlier about.

Some of our portfolios.

And where we can optimize when we get to a scale where it delivers that appropriate returns we would have to take all the actions and I think that both nets or that speed to take that action. If it's something we are doing it is something we have done in the past the wounds like salary and I think if I think about the whole <unk>.

Speaker 10: something we have done in the past, but we need to accelerate. And I think if I think about the whole scaling up of our mass market business, on the other hand, we do have portfolios which are quite traditional, where we have to look at whether that traditional models at that cost can persist. So that's what's really going to drive our ROT and drive that difference in driving a different business model.

Scaling up of our mass market business on the other hand, we do have portfolios, which are quite traditional.

I'll have to look at whether that traditional models at that cost, 10%. So that's what's really going to drive our RT and drive that difference in driving different business model.

Speaker 2: Thank you, Ben. Thanks, Judy. Ben, any rough-up comments on this?

Okay.

Right.

Thanks, Ben any any wrap up comments on this.

Speaker 6: No, other than, I just want to make the point that this is not something new. We have to be working on this around RWA, around cost, and this is just an acceleration of further movement. I want to echo the point around discipline.

No other than.

Just want to make the point that this is not something we have it working on this around or there'll be a brown on costs and this is just an acceleration of that movement and I want to echo the point around discipline.

Speaker 6: particularly around how we focus allocation segments and Simon talked about great allocation towards the FM side of things. And obviously from a duty perspective the FM side and we must only buy a digital run through traditional bricks and mortar ways.

Particularly around how we focus allocations to segments and Simon talked about great allocations towards the FM side of things.

And obviously from duty perspective, we'd be affluent side and the mosque only by a digital robbing through traditional bricks and mortar ways.

Speaker 6: And also, product-wise, focusing more around the kind of financial markets, wealth, and geographically, the discipline around – obviously, we talked about China, but I also want to mention the vast opportunities arising from ASEAN business, which we have a very, very strong position there. We own the banks in all 10 markets, and also India is also a strong engine. So it's all about discipline and how we allocate our finite capital, RWA, and cost resources, and making sure that they develop.

And also our product wise, focusing more around the kind of financial markets wealth and geographically the discipline around obviously, we talked about China, but I also want to mention that.

The vast opportunities arising from ASEAN business, which we are very very strong position. There we only bank in northern markets and also India. Also is also strong engine. So it's all about discipline in how we allocate a finite capital ought to be in cost resources, and making sure that the biblical so back to you Bob.

Speaker 2: So back to you, Bill. Thanks, guys. Part of the question was also what the income impact is of the RWA actions. And Simon commented on that in his.

Thanks, guys I guess the part of the question was also what the income impact is of the RW reactions and Simon to comment on that in his in.

Speaker 2: in his speech, but if we could just reiterate, of course there will be some income impact if we get to the point where clients are being exited. That's fully factored into the 5-7% guidance that we've offered for 2022.

The speech, but if we can just reiterate.

Of course, there will be some income impact if we get to the point where clients are being exited but that's fully factored into the 5% to 7% guidance that we've offered for 2022 and over the medium term in terms of our underlying metabolic rate of growth. So.

Speaker 2: and over the medium term in terms of our underlying metabolic rate of growth. So we've assumed some of that. But of course, that income reduction, which will be absorbed by the other growth areas that we're talking about, is returns accretive. And to the extent that the number one priority is to get to that 10% return on tangible equity by 2024.

We've assumed some of that but of course that income reduction, which will be absorbed by the other growth areas that we're that we're talking about is returns accretive and to the extent that the number one priority is to get to that 10% return on tangible equity by 2024.

Speaker 2: believe what the markets think about interest rates. Obviously that makes it a little bit easier. But to get there, we're going to have to take some concrete actions in terms of optimizing our returns. That's exactly what we're focused on.

If you believe what what the market's thing about interest rates.

Obviously that makes it a little bit easier.

But to get there.

We're going to have to take some concrete actions in terms of optimizing our returns that's exactly what we're focused on.

So it is a matter of can we go to the next question.

Speaker 7: Thank you. Your next question comes from the line of Tom Rayner from Newmas. Please go ahead. Your line is open.

Thank you. Your next question comes from the line of Tom Rayner from Numis. Please go ahead. Your line is open.

Speaker 11: Yes, hi everybody. Could I have a couple questions, please? And the first just on the dividend, I think the final dividend of nine cents was about five cents.

Yes.

And there are a couple of questions. Please.

Just on the dividend I think the final dividend of nine <unk> was about <unk>.

Five lower than consensus was looking for.

Speaker 11: consensus was looking for, wondering if that might have something to do with the disappointing share price reaction today. But obviously, there's a 750 million dollar share buyback announced. I mean,

David.

So disappointing share price reaction today, but obviously, there's a $750 million share buyback announced I mean I'll be looking forward to be thinking about lower dividend payouts, perhaps than we were offset by higher share buybacks I guess it comes back to this sort of the <unk>.

Speaker 11: looking forward going to be thinking about lower dividend payouts perhaps than we were offset by higher share buybacks. I guess it comes back to this sort of the mix of this five billion return over the next few years. So that's my first question and we'll have another on RWA optimisation please. I don't know if you want to take that first.

Mix of this 5 billion with total over the next few years.

My first question and then I have another one on <unk> optimization. Please.

Yes.

You want me to comment on the dividend, yes. So let me let me look at it this way so.

Speaker 3: Yeah, so let me look at it this way. So the dividend full year dividend increase year on year is a third. So it's 33%, it is pretty chunky.

The dividend full year's dividend increase year on year is a third sort of 33% is pretty chunky.

Speaker 3: We have secondly looked clearly, as you know, at the current share price and the buyback opportunity and our view at this point in time when the share price is still so low relative to where it has been and where we hope it will be. We do feel that at this point in the cycle that the better thing to do is to have a good amount of it, a good proportion of it on the buyback.

We have secondly look clearly as you know.

Current share price and the buyback opportunity, let's say and argue at this point in time when the share price is still so low relative to where it has been the way we hope it will be we do feel that at this point in the cycle, but the better thing to do is to have a good amount of it a good proportion of it on the buybacks over.

Speaker 3: Over the course of the three-year period, we will continue to increase the dividend. Each year, we have said that that will be our endeavour. The lower the share price is, then I suppose the more buyback, so in other respects, then if the share price over time does pick up, then maybe we will moderate that mix back again a little bit. But it's largely a feature of the share price being very low at the moment, and we think that by buying essentially value back through that route at this point in time makes sense.

Over the course of the three year period, we will continue to increase the dividend each year, we have said that that will be our endeavor.

The lower the share price is then I suppose the more buyback so in other respects than the past.

<unk>, probably say if it's hard to just pick up that maybe we will moderate that mix back again, a little bit, but it's largely a feature of the share price being very low.

We think but by buying essentially by value back through that route at this point in time make sense, but I think you should look at the total committed that's hardly affiliate as being what it is but we're setting out soon as the site is 20% and a market cap at what we've done the last three years, it's almost a one quarter reduction in the share count for the business.

Speaker 3: But I think you should look at the total commitment, the 5 billion as being what it is that we're setting out to do. And as I say, it's 20% in the market cap. And what we've done in the last three years, it's almost a one-quarter reduction in the share count for the business.

Speaker 2: Good. Tom, do you want to come back with your RWA optimization question?

Tom do you want to come back with your out of UA optimization question.

Speaker 11: Yes please, that's very clear on the dividend, thanks for that. The $22 billion reduction in CCIB, if we go back to November 2015, I think we flagged back then $40 billion in what was then CIB.

Yesterday here that that's very clear on the dividend thanks for that David.

$2 billion.

So the reduction in CCI, we go back to something other than the 2015, I think you flagged that $40 billion and what was what was then CIB.

Speaker 11: And by sort of late 2017, you'd already done about 30 billion of that 40 in terms of optimizing, most of which I think was sort of reduced and exited. So obviously things reversed, progress reversed since then. And then I guess a big part of that was the pandemic. It wasn't anything else.

By sort of late 2017.

<unk> done about $30 billion 40 in terms of optimizing most of which I think was sort of reduced next.

Obviously things with us.

Hi, its actually less than that and then I guess, a big part of that with the pandemic, but it wasn't anything else sort of outside of the pandemic, which caused that sort of positive.

Speaker 11: sort of outside of the pandemic which caused that sort of positive momentum to sort of reverse and how if there was can we be confident that we're not going to see something else sort of crop up that prevents the you know the 22 billion optimization that you're now flagging being fully achieved.

Mentioned to sort of it and how can we be confident that we're not going to see you.

Something else sort of crop up that.

The 22 billion optimization, you'll know that I can bring some pretty cheap.

Speaker 2: I will clearly turn to Simon for that question, but just a couple of comments for me. First, the focus and I say the momentum has been consistent. Absolutely. We had we had credit rating downgrades and credit migration during the pandemic, which obviously inflated the volume of low returning assets. And we'll have to form a view now how much of that will revert as we get economic activity going strong.

Clearly turned to Simon for that question, but just a couple of comments from me.

First.

The the focus and I would say the momentum has been consistent.

Absolutely we had we had credit rating downgrades and credit migration during the pandemic, which obviously inflated the volume of low returning assets and we will have to form a view now how much of that will revert as we get economic activity going strong, but we've also and this is this is to the disciplined point that I mentioned earlier, we've increased the threshold right we set out.

Speaker 2: But we've also, and this is to the discipline point that I mentioned earlier, we've increased the threshold. We set a higher bar than we did before. We've redefined a bunch of our businesses that were returning that wasn't returning yesterday. Why did we do that? Because we want to get to 10% plus faster. It's as simple as that. But Simon, you've commented on all this, so please give your color.

Bar than we did before we've redefined a bunch of our businesses are returning there wasn't low returning yesterday why did we do that because we want to get to 10% plus faster, it's as simple as that but Simon you. You've commented on all of a sudden please give a give you a color.

Speaker 4: I mean Bill again right like enemy. You've hit it on the head I think. And this is it's a very disciplined program we've set out. We have now got a track record of achieving this. We have changed our return totals.

But again like all of it.

On the head I think this is.

Our disciplined program we've shut out we have now got a track record of achieving this we have changed our return hurdles.

Speaker 4: and we're very confident that we're going to do it. Just to make one more point, Tom, that you didn't ask, but I think people may ask, this isn't a back-ended plan. This is not taking out RWA at the end of three years. You should be thinking about this as phased throughout three years, and if anything, walk forward to the front end of that.

We're very confident that we're going to do.

Just to make one more point.

But I think people may ask this isn't a back ended plan.

This is not take out at the end of three years.

If we think about this as phase dropped three years and if anything <unk>.

The front end of that so.

Speaker 4: So a linear trajectory would be a sensible thing if you plug into your model.

Linear trajectory would be a sensible thing to plug into your model.

Speaker 2: Bill, back to you. Good. Thanks, Simon. And Tom, thanks for the question. Can we move to the next?

Back to you.

Thanks Alan.

Thanks for the question.

Can we can we move to the next question. Please.

Thank you.

Speaker 7: Your next question comes from the line of Edward Furf from KBW. Please go ahead, your line is open.

Your next question comes from the line of Edward <unk> from.

K B W. Please go ahead your line is open.

Speaker 14: Yeah, morning, everybody. I just had two questions. One was on cost.

Yes, good morning, everybody I just had two questions one was on costs.

Speaker 14: I get to what you're saying about the 2% JAWS. But if we're looking at 2022, not over the plan of the whole horizon, I think the 10.7 is about 4% cost growth, which I guess equates to 6% underlying revenue at X rate rises. So if we see that coming in lower this year, would we, does that 2% JAWS thing still hold? Would we expect you to come in under the 10.7? I suppose that would be my first question. Shall I find the next question as well at the same time? Sure. Please.

I I I I get what you're saying about the 2% jaws.

But if we're looking at 2022 over the plan at the whole horizon I think the $10 seven it's about 4% cost growth, which I guess equates to 6% underlying revenue ex great prices. So if we see that coming in lower this year would does that 2% jaws things still hold.

Just come in under the $10 seven and I'd say that that would be my first question. Sharpened next question is about the same time.

Sure.

Please yes, and then the next question I guess.

Speaker 14: Looking at your guidance around the margin, if I've got my maths right, it looks like you're thinking about a margin of about 145 basis points or something like that in the new world.

Looking at your guidance around the margin I mean, if I've got my math right. It looks like you are thinking about it like you have about 145 basis points or something like that in the sort of new world.

Speaker 14: That looks to me some way below where we were in 2019. 2019, you were more like 160 basis points. And I know there's been a little bit of a mixed shift around unsecured, but...

That looks to be some way below where we were in 2019 2019, you were more like 160 basis points.

I know, it's been a little bit of a mix shift around unsecured, but that's like a 10% loss of NII over that period for given average interest earning assets. So I'm just trying to think what might have driven that.

Speaker 14: that's like a 10% loss of NII over that period for a given average interest earning asset. So I'm just trying to think what might have driven that or what might be missing in terms of the gap there. Thanks very much. Okay.

What might be missing in terms of that the gap there. Thanks so much.

Okay.

It's like all of us.

Speaker 3: Yup, okay. So if the costs undershoot in 2022, I will be pleased that we have had tight cost management again, so long as we've not been starving ourselves of the investment that we need for the longer term.

Okay.

So if the cost on the shoot in 2022 and I will be pleased that we have had tight cost management again, so long as we have not been starving yourself of the investment that we need for the longer term. The two percentage points jaws improvement. We said is a sort of average through this four year period, we will try to deliver each pair it but.

Speaker 3: The two percentage points Jaws improvement we said is a sort of average through the three-year period. We will try to deliver each period, but we're not going to be able to land it every single quarter and throughout a whole of the time period. So we will be very focused upon it. Obviously, economically, if we can achieve that, then it opens up the profit a lot over that period of time, particularly when you put the rates effects on top of it. But let's see how we go through this year. What I want is efficiency, but what I don't want is to be starting the business of the investment that it needs to grow new areas of opportunity.

You know, we're not going to be able to land. It every single quarter.

Oh hold of a time period. So we will be very focused upon it obviously economically if we can achieve that then it opens up the profit a lot over that period of time, particularly when you put the rates effects on top of it but let's see how we go through this year.

Is efficiency, but what they want is to be starving the business all the investment that it needs to grow new areas of opportunity.

Speaker 3: On the NIM, so pre-Covid we were about 160 level, we've come down to about 120 level, we've not explicitly put a number on the NIM, you've put a number on it, I think that is low side, I think we'll get the NIM back over the three-year period to nearer where we were immediately pre-Covid and then I think the numbers, you know, do all flow at that point in time. But certainly just to reiterate the point, we have lost a lot of income, we've lost a lot of profit, we do see the real opportunity for a lot of that to be reversing over the next three years and that plus all the things which we're doing operation within the business is why we're much more optimistic about the next two years, three years in this business as we get back to the returns that, you know, we know we need to make and we will make.

On the name so pre Covid, we were about 160 level, we've come down to about 120 level, we've not explicitly put a number on the name you've put a number on it I think that his low side I think we will get to the NIM back over the three year period to narrow web we will immediately pre COVID-19 and then I think the numbers all flow at that point in time.

But certainly just to reiterate the point, we have lost a lot of it can we have lost a lot of profit we do see the real opportunity for a lot of that to be reversing over the next three years and that plus all the other things, which we're doing operationally within the business is why we're much more optimistic about the next two years three years in this business as we get back to returns.

We need to make and we will make.

Speaker 2: I'll just add, back on the cost point, we're all very focused on delivering our targets in 2022. We're not setting out a three-year plan where we're perfectly comfortable sort of strolling through 2022 and then picking up the hard work next year. It's the opposite.

Yes.

I'll just add back on the cost point, we're all very focused on delivering our targets in 2022, we're not sending out a three year plan.

Were perfectly comfortable sort of strolling through 2022, and then picking up the hard work next year, that's it's the opposite.

Speaker 2: So you could construct scenarios where there's an income shortfall, especially if it happens later in the year, where it would be difficult to take the expense actions to offset that. But we're extremely focused on that and extremely focused on sizing our business and the cost of our business to be consistent with what we see to be the income outlook in the media.

So you can you can you could construct scenarios.

Where there is an income shortfall, especially if it happens later in the year would be difficult to take the expense actions to offset that but we're extremely focused on that and extremely focused on sizing our business and the cost of our business to be consistent with what we see to be the income outlook in the medium term and the long term not necessarily day after tomorrow, but in the medium to long term and I wouldn't be.

Speaker 2: not necessarily the day after tomorrow, but in the medium to long term. And I wouldn't want there to be any illusion whatsoever about the fact that that's a top area of focus and priority for us.

There to be any illusion whatsoever about the fact that that's a top area of focus and priority for us.

Can we go to the next question.

Speaker 7: Thank you. Your next question comes from the line of Omar Keenan from Credit Suisse. Please go ahead, your line is open.

Thank you. Your next question comes from the line of <unk> <unk> from Credit Suisse. Please go ahead. Your line is open.

Speaker 15: Good morning. Thank you for the presentation and for taking the questions. I've got three questions, please. My first question was just a follow-up on Manis' question. So just on the, if I understand the deposit beta for the retail business of 0 to 20% for the hiking cycle, just wonder how that compares to historical experience, because that seems quite different to what other banks seem to be messaging.

Good morning, Thank you for the presentation and for taking the questions I've got three questions. Please.

My first question was just a follow up from minus this question.

So just on the.

I understand the deposit beta for the retail business.

Zero to 20% for the hiking cycle.

I just wonder how that compares to historical experience because.

That seems quite different to what other banks seem to be messaging.

Speaker 15: And then secondly, can I just check that I understood the revenue guidance correctly? That the first quarter is going to be sort of flat year over year against the strong comp.

And then secondly can I just check the understood the revenue guidance correctly.

The first quarter is going to be sort of flat year over year against a strong comp.

Speaker 15: And then my last question is, just given the China-Bohai write-down, what sort of contribution should we expect for 2022? Thank you.

And then my last question is just given the China high write down.

What sort of contribution should we expect for 'twenty two.

<unk>.

Speaker 12: Andy, you want to kick off and then we'll... Well, yeah, I mean, I can do. I don't know, Judy, whether maybe you want to talk also about the CPBB sort of betas. You know, as I said earlier, we've been through this sort of major market by major market. We're trying to learn from coming down the curve with Covid, etc. I think hopefully we've been a bit on the cautious side. But, Judy, I don't know if there's anything you'd particularly add on that front.

And if you're going to kick off some level.

I can do it Judy maybe you want to talk also about the C. P. P P sort of theaters.

As I said earlier, we've been through this sort of major market by major market.

Trying to learn program coming down the curve with Covid et cetera.

I think hopefully we've been a bit on the cautious side, but didn't know if there's anything you'd particularly add on that front.

Well look I think you know.

Speaker 10: Part of it is market, but a lot of it is also our strategy as we grow our deposit base, right? There's definitely going to be some beta historically, as you pointed out, about 20%. That's what Andy said. But ultimately, what we're doing is driving more main accounts, more affluent clients where they use their main accounts to trade with us. So I think overall, you know, our deposit pace also changed with the nature of our underlying business.

Part of it is market a lot of it is also our strategy as we grow our deposit base right.

There's definitely going to be some data historically as you pointed out 20%, that's what Andy said, but ultimately what we're doing it's driving more mega accounts more affluent clients, where they use their accounts to trade with us So I think overall.

Our deposit base also change with the nature of our of our underlying business. So I.

Speaker 10: So I'm very positive that this deposit base will continue to grow in line with our overall strategy, which is going to be predominantly on CAFAS and some on time deposit.

I I I'm very positive that deposit base will continue to to grow in line with our overall strategy, which is going to be predominantly on Panther and some on time deposits.

Speaker 3: On the second question, the first quarter, yeah, I said sort of flat against a high point of comparison last year. The first quarter last year was actually the highest income print in the whole year. Whereas I think if you actually look at the forward rates particularly for this year, then we should actually be seeing a progression upwards on quarterly income. And particularly the 5 to 7% for the year as a whole, obviously a flat first quarter implies that we'll be higher in the other quarters. But the key point being it was a very, very buoyant first quarter last year and therefore being up with the flat quarter, I don't think is actually a bad start to the year at all.

Okay.

Second question, the first quarter, I said sort of flat against a high point of comparison last year. The first quarter last year was actually the highest income print in the whole year, whereas I think if you actually look at the forward rates, particularly for this year, then we should actually be seeing a progression upwards on quarterly income.

And particularly the 5% to 7% for the year as a whole obviously, a flat first quarter implies, but it will be higher than the other quarters, but the key point being it was very very poor at first quarter last year, and therefore being up with the flight courtyard.

I think is actually a bad start for you at all.

Speaker 3: The third one on Bohai, so as you've seen, we've taken, we've essentially got a share of its profits this year and then we've taken the 300 impairment charge. In the 2022 year, we will continue to take share of profits. The issue on future impairments will be entirely about long-term prospects for the Bohai business. If they remain broadly as we now envisage, then the chance of impairment reduced. If we think they deteriorate, they go out of the way. I think we can actually have a reversal of the charge we've made if the performance long-term looks as if it will improve. So I'd look at them as being related but two slightly different points. The core profit will be there. We'll take a view as we go through the year on the outlook for Bohai, in particular as it prints for the results, publishes for the results itself.

So it's one on blue high so as you've seen we've taken we've essentially got a share of its profits. This year and then we've tightened the 300 impairment charge.

In the 2022, yet we will continue to take share of profits the issue on future impairments will be entirely about long term prospects thought the hod business, if everybody broadly as we now envisage that the chance of impairment reduced deteriorate. They go away.

We can actually have a reversal of the charge. We've made if the performance long term looks if they improve so I'd look at them as being related but two slightly different points. The core profit will be that we will take a view as we go through the year on the outlook for both high and particularly as it pertains to us.

<unk> publishes the results itself.

Speaker 2: Good. Thanks, guys. Thanks very much for the question. Can we move to the next question?

Good. Thanks, guys. Thanks very much for the question can we move to the next question.

Speaker 7: Thank you. Your next question comes from the line of Nick Lord, Morgan Stanley . Please go ahead, your line is open. Thank you very much, and thanks for taking my question. Two questions for me. The first is just on tax. Can I just confirm that you said that you thought the tax rate would normalise to sort of mid-20s percent, and is the driver of that purely and simply that you expect profitability to improve in lower tax markets like Hong Kong, or is there something else that is driving that? And then the second question is just on sort of the experience of what you're seeing in terms of loan repricing. I mean, there's clearly a lot of liquidity in the region at the moment. There's a lot of people looking to deploy that liquidity. So I just wonder if you're expecting any spread compression on the loan side, which may impact your ability to pass on rate increases.

Thank you. Your next question comes from the line of Nick Lord Morgan Stanley . Please go ahead. Your line is open.

Thank you very much and thanks for taking my question two questions for me. The first is just on tax can I just confirm that you said that you thought the tax rate would normalize to sort of mid 20% and is the driver that purely and simply that you expect profitability to improve and in lower tax markets like Hong Kong or is there something else that is.

That is driving that.

And then the second question is just on sort of the experience of what Youre seeing in terms of loan repricing and then there's clearly a lot of liquidity in the region at the moment, there's a lot of people looking to deploy that liquidity. So I was just wondering if you're expecting any spread compression on the loan side, which may impact your ability to pass on rate increases.

Speaker 3: So on the first question on the tax, yes, that is what I said, we expect that we would be heading towards the mid-twenties over the three-year period.

Okay. Yeah. Okay. So on the first question on the tax yes that is what I said, we expect that we would be heading towards the mid <unk> over the three year period.

Speaker 3: The biggest factor around actually in that is that the proportion of non-tax allowable costs, being the bank levy being an example, as a proportion of our total profit pool diminishes over that period of time as the profits overall grow and therefore the mathematical consequence of that is that it actually is helpful to the tax rate overall. So there's a little bit about where we make the profits, in which country is what tax rates, but it's more just about the growth of the overall profit relative to non-tax allowable expense.

Science around actually and that is that the proportion of non tax level cost to be in the bank Levy being an example, as a proportion of our total profit pool diminishes over that period of time because of the profit overall grow and therefore, the mathematical consequence of that is that it actually is helpful to the tax rate overall, so there's a little bit about why we make the profit to which countries.

Right, but it's more just about the growth of the overall profit relative to non tax level expenses.

Speaker 2: Do you want to pick up the memory pricing? And then I'm going to turn to Simon first. And Judy, it goes right to Simon.

Did you want to pick up the.

Then refreshing and I'm going to turn to Simon first and Judy we go straight to Simon.

The only pricing.

Speaker 4: So I think there does remain a lot of liquidity in the market and that's clearly chasing attractive assets.

So sorry.

I think that doesn't mean, a lot of liquidity in the market.

That's clearly chasing attractive assets.

Speaker 4: But you've got to think that we should remember that we've moved away from being a lending bank. We're now looking much more at increased velocity of our balance sheet. So we're much less dependent on that net interest income on our asset side. We're not seeing any repricing issues in the market today.

But you've got to think of it.

Remember that we've moved away from being a lending bank.

We're now looking much more increased velocity of our boundaries. So a lot less dependent on that.

The income on the asset side.

We're not seeing any repricing issues in the market today.

Speaker 4: What we are seeing though, I think is a potential on the liabilities. I've actually said to be a strong tailwind. So at the moment I'm not worried about that.

What we are saying, though I think there's a potential on the liability side for us.

To be a strong tailwind so at the moment.

Speaker 10: Judy, do you want to add? Yeah, for us, we've grown our mortgage business very well over the last year. I do see that in some markets, it's possible that with industry moving up, that may have some margin compression on the mortgage business, as clients want to turn to more fixed type of mortgage. But other than that, we're not seeing any margin compression.

Yeah for.

We've grown our mortgage business very well over the last year.

I do see that.

Some markets right it's possible that.

With interest rates moving up that may have some margin compression on the mortgage business.

You know client wanted to turn to more fixed type of.

Our mortgage so but other than that we're not seeing any margin compression.

Elsewhere.

Speaker 2: Obviously lots of focus on on the China China credit stresses. Can you. You can comment as broadly on that as you'd like. But specifically on loan repricing and returns.

Obviously lots of focus on the China, China credit stresses can you if you can.

And as broadly as you'd like but specifically on the loan re pricing and returns.

Speaker 6: I just want to ask, firstly, what Simon Cooley said, that the bulk of the assets within our footprint would be around mortgages.

Well I just want to echo firstly.

Simon can you said that the bulk of the assets.

Within within our footprint.

It would be around.

Speaker 6: and around some trade loans and all, both counts, I don't necessarily see a material, I would say, much compression there.

Mortgages.

And around some of the trade loans or no on both counts I don't necessarily see a material I would say margin compression there.

Speaker 6: And Bill, when you mention China, China, if anything, what we have seen, the policy makers in Q1 have

And Bill when you mentioned, China, China, if anything what we have seen the policymakers in Q1.

Speaker 6: decidedly gone to a more dovish tone, a more accommodative kind of macro monetary policy. We do see that there are elements of pricing downwards.

Decided literally have gone to a more dovish tone more competitive.

Kind of a macro monetary policy, we do see that theres, an element of pricing downwards.

Speaker 6: But from our perspective in China, our ron shou business is a fraction.

But from our perspective in China.

<unk> business is a fraction.

Speaker 6: of the vast China market and our value add it's not necessary to compete with the likes of the big four banks etc on loans but rather their overseas capital markets and networks some of the RMB related activity so we tend to use quite minimal level of capital as much as possible.

Although the boss, China market and our value add it's not necessary to compete with the likes of the big four banks et cetera on loans, rather than overseas capital markets and network.

RMB really back to be so we tend to use quite minimal level of capital as much as possible to generate that kind of returns we want but certainly we do see some near term pressures.

Speaker 6: to generate the kind of returns we want. But certainly, we do see some near-term pressures in China, and particularly some of the greater side of things, commercial real estate, etc., etc. But I think over the course of this year, next year, we do think that see some of the areas, hopefully, to ease directionally and gradually.

In China, particularly with some of the credit side of things, our commercial real estate et cetera, et cetera, but I would think over the course of this year next year, we do think that I see some of the areas hopefully two to ease.

Gradually.

Speaker 2: Thanks Ben and thanks for the question Nick. Can we move to the next question?

Thanks, Ben and thanks for the question Nick.

Can we move to the next question.

Speaker 7: Thank you. Your last question from the phone lines comes from the line of Raul Sinha from JP Morgan. Please go ahead, your line is open.

Thank you.

Your last question from the phone lines comes from the line of <unk> from J P. Morgan. Please go ahead. Your line is open.

Speaker 16: Hi, good morning, everyone. I've got three follow-ups, if that's okay. Two on the same issue, which is just your investment plan on the cost side on slide 32, where you talk about the walkout 2024. First question really is simple one. I'm just trying to understand.

Hi, good morning, everyone.

Three follow ups, if that's okay too.

Same issue, which is just your investment plan on the cost side.

On slide 32, where you talk about the work.

Our 2024.

First question really but what I'm just trying to understand.

Speaker 16: out of the 1.3 billion of efficiency that you're realizing it seems like a lot is coming from digitalization and tech and change. And then when we look at how much technology investment you're actually planning to do going forward, actually technology investment seems like it's quite a small amount. So is it a fair conclusion that you're actually now reducing your technology spend in terms of investment dollars?

You know how did the $1 3 billion of efficiencies that you're realizing it seems like the losses coming from digitalization and tech and change and then when we look at how much technology investment you're actually planning to do going forward actually technology. It seems like it's quite a small amount. So does it affect conclusion that you're actually now that you have.

And your technology spend in terms of investment dollars.

Speaker 16: given the sort of significant build-out that you've put through on the digital banks in the last few years. That's the first one.

Given the sort of significant jump out at you.

Put through on the digital banks in the last few years, that's the first one.

Speaker 16: The second one is just related to this investment slide.

The second one is related to this to this investment slide.

Speaker 16: Obviously, you've made it very clear the plan doesn't just rely on rates going up, but given the volatility of rate expectations, I think there's going to be a fair degree of pushback on just assuming that the tailwind from interest rates completely materializes. So, I guess the question is, if

Obviously, you've made there.

The plan doesn't just rely on rates going up but given the volatility of rate expectations.

There's going to be a strategy of pushback on.

You know just.

That the tailwind from interest rates completely materializes. So I guess the question is.

Speaker 16: for whatever reason, the pick up from interest rates is less than you expect in your plan. Is there any flex within the investment span?

For whatever reason.

They pick up some interest rates is less than you expected in your plan is there any flex.

Within the investment spend.

Speaker 16: that would allow management to sort of, you know, adjust the returns profile going forward.

That would allow management to sort of you know.

Adjusted returns profile going forward.

Speaker 16: And if there is, perhaps if you could talk to us about business, strategic and other.

If that is perhaps if you could talk to us about business strategic and other and then just last one.

Speaker 16: And then this last one, from my side, just on Hong Kong wealth management in Q1, just given some of the trends on the ground, are you seeing any weakness? Are you expecting wealth to be weak in the first half of the year? And if you can comment on the outlook, that'd be great. Thanks.

For myself, just on Hong Kong wealth management in Q1.

Just given some of the trends on the ground are you seeing any weakness are you expecting to be weak in the first half.

And if you can comment on the outlook that'd be great. Thanks.

Speaker 2: And you want to take the first question, I'll take a stab at the question. The second, then we'll go to Ben.

And do you want to take the first question I'll take a stab at the question. The second and then we'll go to Ben Yeah. Okay.

Speaker 3: Yeah, okay. So there will be no let up in the investment in the IT space. It is very integral to what we're doing. It's very integral to what a lot of banks are doing.

So there will be no letup in the investments in the it space. It is very integral to what we're doing it's very integral to what a lot of banks are doing.

Speaker 3: That chart, I think, is making visible actually that the pure benefit from the rationalization of the IT system is probably less predominant than the consequential improvement in the business processes that those systems are enabling. We have done a lot with rationalizing the number of core systems, with rationalizing the number of data centers. We'll continue, but the larger part of that's been done. The big issue now is actually how do we get the core processes within the business to operate more efficiently? And hence, I think you need to sort of look at the two together, although the charts suggest they're separate things. It is the collective of those two. But core investment in IT is gonna be significant. I'd also, again, like most businesses, that the proportion of the spend that is actually going on cloud-related activities where actually there's a sort of all-in-one solution being provided and there's less upfront, but there is more of a sort of solution being paid for on a sort of annuity basis that also, over a period of time, will also become slightly more prevalent.

That chart I think is making visible actually thought the pure benefit from the rationalization of the <unk> system is probably less predominant van the consequential improvement in the business processes that those systems are enabling them. We have done a lot of rationalizing the number of core systems with rationalized the number of data centers.

And we will continue but the larger part of that it's being done the big issue now is actually how do we get to the core processes within the business.

To operate more efficiently and hence I think you need to sort of look at the two together all those charts suggest the separate segments. It is the collective of phase two.

The core investment.

It's going to be significant at all sorts of again like most businesses. The proportion of the spend that is actually going on cloud related activities were actually there is a sort of all in one solution. They provided in this less upfront, but there is more of a suite of solutions.

We are being paid for on a on a sort of annuity basis that also over a period of time will also become slightly more prevalent.

Great. Thanks, and thanks for all for the questions. So your second question was on.

Speaker 2: Thanks, Andy, and thanks, Joel, for the questions. So your second question was on if the interest rate increases don't materialize, what are we going to do about it? As we develop our plans...

If the interest rate increases don't materialize, what are we going to do about it.

As we develop our plans.

Speaker 2: regularly and certainly formally once a year and informally pretty much every day, we're looking at what's going well and what's not going well. And if the only thing that has changed is that interest rate outlook has changed.

Regularly I'm certainly formally once a year and informally pretty much every day, we're looking at what's going well and what's not going well.

If the only thing that has changed is that the interest rate outlook has changed.

Speaker 2: then that clearly is going to put pressure on our expense base across the board in order to maintain the momentum that we've got towards this double-digit ROTE.

And that clearly is going to put pressure on our expense base across the board in order to to maintain the momentum that we've got towards this double digit <unk>.

Speaker 2: If, in contrast, that lower interest rate outlook has a disproportionate effect on one business versus another, which it almost certainly will, we'll focus on how we can scale back our exposure to the business that's most affected.

If in contrast that the lower interest rate outlook has a disproportionate effect on one business versus another it which it almost certainly will will focus on how we can scale back our exposure to the businesses most affected.

Speaker 2: All of which is to say we will approach the way that we allocate our costs, the way that we allocate our capital very dynamically with a view to getting to this 10% target as quickly as we possibly can. And there's nothing that's off the table. So I referred in my earlier comments to the ongoing reviews that we do where we look with a heightened level of discipline at every market in which we operate, every client segment that we cover, every product line. And those reviews throw up.

All of which is to say we will approach the that the way that we allocate our costs the way that we allocate our capital very dynamically with a view to getting to this 10% target as quickly as we possibly can and theres nothing thats off the table. So I referred in my in my earlier comments to the ongoing reviews that we do where we look.

With a heightened level of discipline at every market in which we operate every client segment.

We cover every product line and those reviews throw up.

Speaker 2: concrete changes that we may make, restructuring, repositioning, or in extremis exit of particular client segments or particular product lines or individual markets. We've done that in the past. We're doing that now in an even more disciplined and more focused way. We have a change in the interest rate outlook or the interest rate deliveries, then obviously that makes those reviews ever more acute and impactful.

Concrete changes that we may make restructuring repositioning or extremists exited a particular client segments or particular.

Product lines or individual markets, we've done that in the past.

Doing that now in an even more disciplined and more focused way.

A change in the interest rate outlook or the interest rate deliveries, then obviously that makes those those reviews evermore ever more acute and impactful.

Speaker 2: Third question was on Hong Kong. I'll just go straight to Ben on Hong Kong impact on wealth in particular, but obviously it's coming up more broadly.

Third question was on the on Hong Kong I'll, just go straight to Ben.

Hong Kong impact on wealth in particular, but obviously, it's kind of at my brother.

Speaker 6: Thank you Bill. Obviously, Covid cases in Hong Kong have been at a rise of late and therefore you look at industry-wide, we're talking about plus or minus anywhere between 30-35% of the industry-wide, the branch is being closed. So it does have an impact on face-to-face related sales activities around wealth management.

Okay. Thank you Bill obviously.

Called the cases in Hong Kong has been on the rise of late and therefore, you've looked at industry wide, we are talking about plus or minus anywhere between 30% to 35% of the industry wide.

Branches being closed so it does have an impact on space. So basically the sales that can be around wealth management.

Speaker 6: That is also decked against an environment which is on the balance, on the risk-off mode compared with Q1 last year, it was pretty much on the risk-on mode. Now, all that means is we have to shift some of our activities towards offline sales to digital sales and the fact that we've invested.

That is also decked against an environment, which is on the balance on a risk off mode. If you compare with Q1 last year it was pretty much on a risk on mode.

Now that all that means is we have to shift some of our activities towards offline sales to be little sales and the fact that we've invested quite a lot into online mutual funds on FX on the equities that helped a bit but obviously that also dealing with a big comparable last year. However outside of wealth because I said earlier, we did exit the year with.

Our strong asset growth around 14% last year, our financial markets business would remain strong our trade activities remain good overall balance sheet 80 ratios around 60%, so very very well geared towards an interest rate increases obviously somebody you commented that the high bar may lag LIBOR, a little bit about that.

True, but we.

Speaker 6: amount of high ball, for example, edging up around 25 basis points over the last three months, that's positive news. So all in all, I think against a sharp comparable last year, we will see that impact particularly around wealth, but the underlying business itself is actually quite strong. And we're still seeing some good volume growth year on year. So back to you, Bill. Yeah, I think it's really worth amplifying that Hong Kong has had a pretty torrid couple of years since 2019. The performance of our team has been very, very resilient, both absolutely, but extremely strong relatively, which obviously we're not in a relative game, we're in an absolute game, but we're encouraged that we can that we can see through this

I've seen a few months a high bar for example.

Around 2025 basis points over last three months.

Speaker 6: So all in all, I think against a sharp comparable last year, we will see that impact particularly around wealth, but the underlying business itself is actually quite strong and we're still seeing some good volume growth year on year. So back to you Bill.

The renewed.

So all in all I think I can say.

Shop comparable last year, we will see that impact to go round wealth, but the underlying business itself is actually quite strong and we are still seeing some good volume growth year on year. So thanks for your Bill I think it's really worth amplifying that Hong Kong has had a pretty toward a couple of years.

Speaker 2: I think it's really worth amplifying that Hong Kong has had a pretty torrid couple of years since 2019. The performance of our team has been very, very resilient, both absolutely, but...

Since 2019.

Performance of our team has been very very resilient, both absolutely but extremely strong relatively.

Speaker 2: extremely strong relatively, which obviously we're not in a relative game, we're in an absolute game, but we're encouraged that we can see through this COVID period, which if the rest of the world was anything to go by, it will not be very long term, but it's certainly impactful in the short term.

Which obviously, we're not in a relative game or in an absolute game, but we're encouraged that we can that we can see through this this COVID-19 period.

Which if the rest of the world is anything to go by we will not be very long term, but it's certainly impactful in the short term, but we're very encouraged that the momentum that we've got the resilience that we've shown and the relative outperformance that we've generated consistently.

Speaker 2: But we're very encouraged that the momentum that we've got, the resilience that we've shown, and the relative outperformance that we've generated consistently, send us in good stead as we go into the rest of 2022. And obviously full credit to Ben and the team for all that.

Stand us in good stead as we go into the rest of 2022.

Honestly for credits to depend on the team for all that.

Speaker 2: Now, I think I think we heard that was the last question, so unless there are any other questions.

No I think I think we heard that was the last question. So unless there are any other questions.

A quick check.

Speaker 17: Phil, we have a question on the webcast from Rob Noble of Deutsche Bank. His question is, how much revenue did the new ventures you highlight contribute to income in 2021? And how quickly should this grow?

We have a question on the webcast and Rob Noble of Deutsche Bank. His question is how much revenue did the new ventures, you highlight contribute to income in 2021, and how quickly should this girl.

Speaker 2: As Andy indicated on his slide, we think that the new ventures can generate approximately an incremental 1% of growth over the three-year period. That's off a base of approximately zero. Obviously it wasn't zero, but for the purposes of...

As Andy indicated on his slides, we think that the new ventures can generate approximately an incremental 1% of growth over the three year period, that's off a base of approximately zero.

Obviously, it wasn't zero, but for the purposes of.

Speaker 2: of doing the math, let's call it zero. And that's, you know, Mox was up and running for a year, obviously in a...

Doing the math, let's call it zero and.

March was up and running for a year, obviously and are starting with the deposit platform in a zero interest rate environment.

Speaker 2: starting with a deposit platform in a zero interest rate environment. There's not a lot of income thrown off there. But as Ben mentioned, very strong early interest in the credit card and we would expect similarly personal loan programs. And at some point, Hong Kong residents will be able to travel again and we will see the effects and related travel propositions coming.

Not a lot of income thrown up there.

But as Ben mentioned very strong early interest in the in the credit card and we would expect similarly personal loan programs and at some point.

Hong Kong residents will be able to travel again, and we will see the FX and related travel propositions coming through.

Speaker 2: Our Singapore Virtual Bank will launch this year. Nexus is launching, which is our Indonesian satellite.

For a virtual bank will launch this year.

Nexus is launching which is our Indonesian.

Speaker 2: partnership via distribution of bank product via Bukalopok, largest e-commerce platform, is launching more or less now. The various other digital partnerships that we've got that Ben's mentioned in China, that Judy mentioned in other markets, some on the back of our investment in Atome, some have kicked in in the early part of this year, others will kick in over the course of this year. So, not zero, but it's close enough to zero. What we are seeing right now is products that we would then expect to launch online.

Partnership via distribution to bank product by Abu Clawback, Florida ecommerce platform is launching more or less now.

The various other digital partnerships that we've got that Denis mentioned in China that Judy mentioned in <unk> and.

Other markets some on the back of our our investment in <unk> will also some have kicked in in the early part of this year others will kick in over the course of this year. So.

It's not zero, but it's close enough to zero, but we are seeing.

Speaker 2: very concrete traction right now on these things that we've been investing in for the past two or three years. Thank you, Bill.

And very concrete traction right now on these things that we've been investing in for the past two or three years.

Thank you Bill and I guess with that we can drill into Q&A to Atlas over to you Bill good well. He is from that for me, obviously, Andy Simon and Judy for taking interest in excellent questions as always and as always very happy to follow up on more detailed questions either through.

Speaker 2: Good. Well, huge thanks for me, obviously, Andy, Simon, Ben, and Judy for taking the interest, some excellent questions, as always. And as always, very happy to follow up on more detailed questions either through the conversations that we'll each be having with many of you and our shareholders, and of course through IR. Thanks again, and hope to see you in person.

So the conversations that we will need to be having with with many of you and our shareholders and of course through IR. Thanks, again and hope to see you in person soon.

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