Q2 2024 Standard Chartered PLC Earnings Call

William Winters: We delivered a strong financial performance and are very encouraged by the progress on our established strategy. We're delivering exceptional cross-border services to the world's most sophisticated entities and individuals across our corporate and investment banking and wealth business. Income of $4.8 billion was up 7% in constant currency, reflecting confidence in our performance. We're upgrading our income guidance. And we now expect growth for 2024 to be above 7%. We're maintaining strong discipline on costs with expenses of 4%, while asset quality has remained resilient.

William Winters: We've delivered a strong financial performance and are very encouraged by the progress on our established strategy. We're delivering exceptional cross-border services to the world's most sophisticated entities and individuals across our corporate and investment banking and wealth businesses. This has resulted in underlying profit before tax of $1.8 billion, which was up 15%. Our financial momentum, together with progress on key strategic drivers, leads us confident that we can consistently and sustainably drive towards higher returns.

Actual performance and are very encouraged by the progress on our established strategy.

We're delivering exceptional cross border services to the world's most sophisticated entities and individuals across our corporate and investment banking and wealth businesses.

Income of $4 $8 billion was up 7% in constant currency.

Reflecting confidence in our performance, we're upgrading our income guidance and we now expect growth for 2024 to be above 7%.

We're maintaining strong discipline on cost with expenses up 4%, while asset quality has remained resilient.

This has resulted in underlying profit before tax of $1 $8 billion, which was up 15%.

William Winters: This has resulted in underlying profit before tax of $1.8 billion, which was up 15%. Our financial momentum, together with progress on key strategic drivers, leaves us confident that we can consistently and sustainably drive higher returns. With our strong capital position, we're delighted to announce our largest ever share buyback of $1.5 billion, which will start imminently. Diego will now take you through the numbers in more detail, and I will cover the progress our businesses are making before we come back for the usual Q&A. So Diego, it's over to you.

Our financial momentum together with progress on key strategic drivers. These are confident that we can consistently and sustainably drive towards higher returns.

William Winters: With a strong capital position, we're delighted to announce our largest ever share buyback of $1.5 billion, which will start imminently.

With a strong capital position, we're delighted to announce our largest ever share buyback of $1 $5 billion, which will start imminently.

William Winters: Diego will now take you through the numbers in more detail, and I will cover the progress our businesses are making before we come back for the usual Q&A.

Gagan: Gagan will now take you through the numbers in more detail and I will cover the progress our businesses are making before we come back for the usual Q&A So diego over to you.

William Winters: So Diego, over to you.

Diego Giorgi: Thanks, Bill.

Diego De Giorgi: Thanks, Bill. Good morning and good afternoon to everyone on the call. In my remarks, I will be comparing year on year on an underlying basis and speaking in constant currency unless stated otherwise. The group delivered top-line growth of 7%, with operating income of $4.8 billion, in the second quarter, as the dynamics we saw at work in the last quarter continued into Q2. NII was $2.6 billion, up 6%. Wealth Solutions continues to drive the strong growth in non-NII, which was up 9%.

Diego Giorgi: Good morning and good afternoon to everyone on the call. In my remarks, I will be comparing year-on-year on an underlying basis and speaking to constant currency unless stated otherwise. The group delivered top-line growth of 7% with operating income of $4.8 billion in the second quarter, as the dynamics we saw at work in the last quarter continued into Q2. NII was $2.6 billion, up 6%. Well, solutions continues to drive the strong growth in non-NII, which was up 9%. Operating expenses were up 4% due to inflation and continued investment into business growth initiatives. Pre-provision operating profit was up 13% in the second quarter and was up 26% in the first half, demonstrating our strong progress towards sustainably higher profitability.

Gagan: Thanks, Bill good morning, and good afternoon to everyone on the call in my remarks, I will be comparing year on year on an underlying basis and speaking to constant currency unless stated otherwise.

Gagan: The group delivered topline growth of 7% with operating income of $4 $8 billion in the second quarter.

Gagan: What makes we saw it work in the last quarter continued into Q2.

NII was $2 $6 billion up 6%.

Gagan: <unk> solutions continues to drive the strong growth in non NII, which was up 9%.

Diego De Giorgi: Operating expenses were up 4% due to inflation and continued investment in business growth. Pre-provision operating profit was up 13% in the second quarter and was up 26% in the first half, demonstrating our strong progress towards sustainably higher profitability. Credit Impairment Provisions were just $73 million in the quarter, with the Wealth and Retail Bank in charge broadly in line with the recent run rate, offset by net releases elsewhere, mainly from sovereign.

Gagan: Operating expenses were up 4% due to inflation and continued investments into business growth initiatives.

Gagan: Pre provision operating profit was up 13% in the second quarter and was up 26% in the first half demonstrating our strong progress towards sustainably higher profitability.

Diego Giorgi: Credit impairment provisions were just 73 million dollars in the quarter, with the wealth and retail banking charge broadly in line with recent and rate of set by net releases elsewhere, mainly from sovereign upgrades. The 83 million dollar charge in other impairment is primarily related to the right half of software assets, which has no impact on capital. With modest credit impairments, pre-tax profits of $1.8 billion were up 15%. Restructuring in other charges of $250 million included $174 million primarily related to the disposal of our Zimbabwe business. The Zimbabwe charge relates to recycling of effects translation losses from reserves into the PNL, and so it has no impact on our capital or TNAF.

Gagan: Credit impairment provisions were just $73 million in the quarter with a wealth of retail banking charge broadly in line with the recent run rate offset by net releases elsewhere, mainly from sovereign upgrades.

Diego De Giorgi: The $83 million dollar charge in other impairment is primarily related to the write-off of software assets, which has no impact on, with modest credit impairments, pre-tax profits of $1.8 billion were up 15%; restructuring and other charges of $250 million dollars included $174 million dollars primarily related to the disposal of our Zimbabwean assets. The Zimbabwe charge relates to recycling of effects translation losses from reserves into the PNL, and so it has no impact on our capital or, if it's possible, there could be similar losses, albeit smaller, as we complete our market exits in the coming quarter. Taxes for the first six months of the year reflect an underlying effective tax rate of 30%, and we now expect the full-year 2024 underlying effective tax rate to be around this level.

Gagan: The $83 million charge. Another impairment is primarily related to the write off of software assets, which has no impact on capital.

Gagan: With modest credit impairments pretax profits of $1.8 billion.

Gagan: Was up 15%.

Gagan: Restructuring and other charges of $250 million included $174 million, primarily related to the disposal of our Zimbabwe business. That's.

Gagan: The Zimbabwe charge relates to recycling all the FX translation losses from resorts into the P&L and so it has no impact on our capital for Peanuts.

Diego Giorgi: If it's possible, there could be similar losses, albeit smaller, as we complete our market taxes in the coming quarters. Taxes for the first six months of the year reflect an underlying effective tax rate of 30%. And we now expect the full year 2024 underlying effective tax rate to be around this level.

Gagan: It is possible there could be similar losses, albeit smaller as we complete our market exits in the coming quarters.

Gagan: Taxes for the first six months of the year reflect an underlying effective tax rate of 30% and we now expect the full year 2024 underlying effective tax rate to be around this level.

Diego Giorgi: Our CET-1 ratio is well above the target range, and as a result, we are today announcing our largest ever share buyback of one and a half billion dollars, which takes our performance CET-1 ratio to 14%. Turning now to look at our performance in more detail, looking at the various components of income, NII was up 6% quarter on quarter to $2.6 billion, driven by a number of factors. There was an 84 million dollar additional benefit from the expiry of the short term hedge in February. There was also a $112 million increase from improvement in treasury asset and liability mix of set by higher pastures in CAB and lower volumes.

Diego De Giorgi: Our CET1 ratio is well above the target range, and as a result, we are today announcing our largest ever share buyback of $1.5 billion, which takes our performance CET1 ratio to 14%. Turning now to look at our performance in more detail, looking at the various components of it. NII was up 6% quarter-on-quarter to $2.6 billion, driven by a number of factors. Additionally, there was an $84 million additional benefit from the expiry of the short-term hedge in February.

Our CET one ratio is well above the target range and as a result, we are today announcing our largest ever share buyback of one and a half a billion dollars, which takes our pro forma CET one ratio to 14%.

Gagan: Turning now to look at our performance in more detail.

Gagan: Looking at the various components of income.

Gagan: It was up 6% quarter on quarter to $2 $6 billion driven by a number of factors. There was an $84 million additional benefit from the expiry of the short term hedge in February.

Diego De Giorgi: There was also a $112 million increase from improvement in the treasury asset and liability mix, offset by higher pass-throughs in CIB and lower volume. Average interest earning assets were down 4% in the quarter, primarily due to a reduction in the treasury. Looking forward to the remainder of the year, we continue to expect an I.I. of 10 to 10 and a quarter billion dollars in 2024. Whilst the higher-for-longer environment has reduced headwinds from rates since the start of the year, lower volumes and higher deposit pass-through rates in CID have held back NII. We show our latest currency-weighted forward curves in the appendices on slide 27.

Gagan: There was also a $112 million increase from improvement in treasury asset and liability mix offset by higher pass throughs in CIB and lower volumes.

Diego Giorgi: Average intersturning assets were down 4% in the quarter, primarily due to reduction in treasury. Looking forward to the remainder of the year, we continue to expect NII of 10 to 10 and a quarter billion dollars in 2024. While the higher-for-longer environment has reduced headwinds from rates since the start of the year, lower volumes and higher deposit pastures in CAB have held back NII. We show our latest currency weighted forward curves in the appendices on slide 27. It is worth noting that we expect an NII headwind from US dollar appreciation of around $100 million in 2024 versus 2023, but we are not adjusting our guidance for this.

Gagan: LNG interest, earning assets were down 4% in the quarter, primarily due to a reduction in treasury.

Gagan: Looking forward to the remainder of the year, we continue to expect the NII of 10% to 10, a quarter billion dollars in 2024.

Gagan: Whilst the higher for longer environment has reduced headwinds from rates since the start of the year lower volumes and higher deposit pass through rates in CIB have held back NII.

Speaker Change: We show our latest currency weighted forward curbs in Japan. This is on slide 27.

Diego De Giorgi: It is worth noting that we expect an NII headwind from US dollar appreciation of around $100 million in 2024 versus 2023, but we are not adjusting our guidance for that. Now, turning to our engines of non-NII growth. Wealth Solutions had a very strong second quarter, up 27%. You will see that we are now disclosing our Wealth Solutions income broken down into investment products and bank assurance, with investment products income growing strongly in the second quarter, up 32%. Global Markets was down 7% given the comparison with a particularly strong second quarter last year in macro trade, whilst credit trading was up 46%.

Speaker Change: It is worth noting that we expect in the NII headwind from U S. Dollar appreciation of around $100 million in 2024 versus 2023, but we are not adjusting our guidance for this.

Diego Giorgi: Now, turning to our engines of known NII growth. Well Solutions had a very strong second quarter, up 27%. You will see that we are now disclosing our wealth solutions income broken down into investment products and bank assurance, with investment products income growing strongly in the second quarter, up 32%. Global market was down 7%, given the comparison with a particularly strong second quarter last year in macro trading, while credit trading was up 46%. Global banking was up 11%, driven by higher origination and distribution volumes, continuing from the strong performance in the first quarter. We will continue to maintain discipline in managing expenses, which were up 4% year on year.

Speaker Change: Now turning to our engines of known NII growth.

Speaker Change: What solutions had a very strong second quarter up 27% you will see that we're now disclosing our wealth solutions income broken down into investment products and bank assurance with investment products income growing strongly in the second quarter up 32%.

Speaker Change: Global markets was down 7% given the comparison with a particularly strong second quarter last year in macro trading was credit trading was up 46%.

Diego De Giorgi: Global Banking was up 11%, driven by higher origination and distribution volumes. Continuing from the strong performance in the first quarter, we will continue to maintain discipline in managing expenses, which were up 4% year on year. This was driven by inflation of around 3% and investment into growth initiatives, primarily to support our higher-returning businesses in CIB and our affluent wealth proposition. This included hiring relationship managers for affluent clients in WRB and sector-focused expertise in our coverage teams in CIB.

Speaker Change: Global banking was up 11% driven by higher origination and distribution volumes continuing from the strong performance in the first quarter.

Speaker Change: We have continued to maintain discipline in managing expenses, which were up 4% year on year. This was driven by inflation of around 3% and investment into growth initiatives, primarily to support our higher returning businesses in CIB and our affluent wealth proposition.

Diego Giorgi: This was driven by inflation of around 3% and investment into growth initiatives, primarily to support our higher returning businesses in CAB and our affluent wealth proposition. This included hiring relationship managers for affluent clients in WRB and sector-focused expertise in our coverage teams in CAB. We expect the quarterly cost run rate to pick up slightly in the remainder of the year following our investment spend profile, which, as usual, is weighted toward the second half of the year. We remain committed to delivering on the absolute cost cap of $12 billion in 2026, which implies a 3% CAGR from the 2023 level.

Speaker Change: This included hiring relationship managers for affluent clients in wip and sector focused expertise in our coverage teams in CIB.

Diego De Giorgi: We expect the quarterly cost run rate to pick up slightly in the remainder of the year following our investment spend profile, which, as usual, is weighted towards the second half of the year. We remain committed to delivering on the absolute cost cap of $12 billion in 2026, which implies a 3% CAGR from the 2023 level. The targeted savings from the Fit for Growth program are expected to be realized in 2025 and 2026.

Speaker Change: We expect the quarterly cost run rate to pick up slightly in the remainder of the year following our investment spend profile, which as usual is weighted towards the second half of the year.

Speaker Change: We remain committed to delivering on the absolute cost couple of $12 billion in 2026, which implies a 3% CAGR from the 2023 11.

Diego Giorgi: The targeted savings from the Fit for Growth program are expected to be realized through 2025 and 2026. As a result, cost growth will be higher in 2024 but lower in the next two years. We expect a small part of the cost to achieve of around $200 million to be incurred in 2024, with a majority of the $1.5 billion to fall into next year and a meaningful tail into 2026.

Speaker Change: The targeted savings from the fit for growth program are expected to be realized through 2025 and 2026.

Diego De Giorgi: As a result, cost growth will be higher in 2024 but lower in the next two years. We expect a small part of the cost to achieve of around $200 million to be incurred in 2024, with the majority of the $1.5 billion to fall into next year and a meaningful tail into 2020, and I'll give you some more color on the progress we are making in our Fit4Growth program. Our colleagues at all levels are embracing the opportunity to transform the bank.

As a result of cost growth will be higher in 2024, but lower in the next two years.

Speaker Change: We expect a small part of the cost to achieve of around $200 million to be incurred in 2024 with a majority of the one $5 billion to fall into next year and a meaningful tail into 2026.

Diego Giorgi: And now give you some more color on the progress we are making in our Fit for Growth program. Our colleagues at all levels are embracing the opportunity to transform the bank. We have identified over 200 individual projects so far, and these projects deliver benefits ranging from a few hundred thousand dollars all the way to tens of millions of dollars. Scholars, 80% of the projects individually delivered less than 10 million dollars in estimated annual benefits, which reduces the execution risk. The program will simplify, standardize, and digitize the bank in four different ways: process simplification, organizational design, service delivery enhancement, and technology simplification.

Speaker Change: And that will give you some more color on the progress we are making in our fit for growth program.

Speaker Change: Our colleagues at all levels are embracing the opportunity to transform the bank. We have identified over 200 individual project, so far and these projects deliver benefits ranging from a few hundred thousand dollars all the way to tens of millions of dollars.

Diego De Giorgi: We have identified over 200 individual projects so far, and these projects deliver benefits ranging from a few hundred thousand dollars all the way to tens of millions of dollars. 80% of the projects individually deliver less than $10 million in estimated annual benefits, which reduces execution risk.

Speaker Change: 80% of the projects individually delivered less than $10 million in estimated annual benefits, which reduces the execution risk.

Diego De Giorgi: The program will simplify, standardize, and digitize the bank in four different ways: process simplification, organizational design, service delivery enhancement, and technology simplification. Let me give you a few examples of what is happening on the ground. We will remove over 100 applications across the group in a massive technology simplification drive. We are building and enhancing our digital client service experience in WRB, which we expect will meaningfully reduce average call handling time. And back in April, we announced the removal of the regional dimension of the organization, leading to more streamlined decision-making.

Speaker Change: Program will simplify standardize and digitize the bank in four different ways process simplification organizational design service delivery enhancement and technology simplification.

Diego Giorgi: Let me give you a few examples of what is happening on the ground. We will remove over 100 applications across the group in a massive technology simplification drive. We are building and enhancing our digital client service experience in WRB, which we expect will meaningfully reduce average call handling time. And back in April, we announced the removal of the regional dimension of the organization, leading to more streamlined decision-making. Through this project, we will fundamentally improve our productivity, make the organization a better place to work for our employees, and enhance our client experience.

Speaker Change: Let me give you a few examples of what is happening on the ground.

Speaker Change: We will remove over 100 applications across the group in a massive technology simplification drive we're building and enhancing our digital client service experience in W. R. B, which we expect will meaningfully reduce average call handling time.

Speaker Change: And back in April we announced the removal of the regional dimension of the organization leading to more streamlined decision making.

Diego De Giorgi: Through this project, we will fundamentally improve our productivity, make the organization a better place to work for our employees, and enhance our clients' experience. Turning now to credit impairment, which was down $73 million year on year. CID had a net release of $35 million, benefiting from sovereign upgrades and low levels of new impairments. In the China commercial real estate portfolio, there was a reduction in management overlay and total exposure in the second quarter, primarily due to repayment.

Speaker Change: Some of these projects, we will fundamentally improve our productivity make the organization a better place to work for our employees and enhance our clients' experience.

Diego Giorgi: Turning now to credit impairment, which was down 73 million dollars year on year. CAB had a net release of 35 million dollars, benefiting from sovereign upgrades and low levels of new impairment. In the China commercial real estate portfolio, there was a reduction in management overlay and total exposure in the second quarter primarily due to repayment. In WRB, the impairment charge of $146 million remains broadly in line with recent run rate. The action we have taken in Mox has led to a further reduction in the provisions for ventures, which held $215 million. Our high risk assets were broadly flat in the quarter.

Speaker Change: Turning now to credit impairment, which was down $73 million year on year.

Speaker Change: CIB had a net release of $35 million benefiting from sovereign upgrades and low levels of new impairment.

Speaker Change: In the China commercial real estate portfolio, there was a reduction in management overlay and total exposure in the second quarter, primarily due to repayments.

Diego De Giorgi: In WRB, the impairment charge of $146 million remains broadly in line with the recent run rate. The action we have taken in MOX has led to a further reduction in the provisions for ventures, which stood at $15 million. Our high-risk assets were broadly flat in the quarter. And since we have been in a period of higher for longer rates for some time, we're not seeing any new significant signs of stress emerging across the globe.

Speaker Change: In Abu Dhabi, the impairment charge of $146 million remains broadly in line with the recent run rate.

Speaker Change: The action we have taken in marks has led to a further reduction in the provisions for ventures, which held to $15 million.

Speaker Change: Our high risk assets were broadly flat in the quarter and.

Diego Giorgi: And once we have been in a period of higher-for-longer rates for some time, we are not seeing any significant signs of stress emerging across the group.

Speaker Change: And once we have been in a period of higher for longer rates for some time, we're not seeing any new significant signs of stress emerging across the globe.

Diego Giorgi: Touching briefly now on the balance sheet. We have seen marginal underlying growth in loans and advances to customers in the quarter, up $1 billion. The positive momentum that we saw in global banking in the first quarter continued. Our price discipline in mortgages led to a reduction in WRB assets of $1 billion. We continue to expect low single-digit percentage growth in underlying customer loans this year. Customer deposits were up $10 billion on an underlying basis in the quarter. CIB and others increased $4 billion, mainly in Casabalances, in part reversing the temporary outflows that we saw at the end of the first quarter.

Diego De Giorgi: Touching briefly now on the balance sheet, we've seen marginal underlying growth in loans and advances to customers in the quarter, up $1 billion. The positive momentum that we saw in global banking in the first quarter continues. Our price discipline in mortgages led to a reduction in WRB assets of $1 billion.

Speaker Change: Touching briefly now on the balance sheet.

Speaker Change: We've seen marginal underlying growth in loans and advances to customers in the quarter up $1 billion.

Speaker Change: The positive momentum that we saw in global banking in the first quarter continued our price discipline and mortgages led to a reduction in W. B assets of $1 billion.

Diego De Giorgi: We continue to expect low single-digit percentage growth in underlying customer loans; customer deposits were up $10 billion on an underlying basis in the quarter. CIB and others increased $4 billion, mainly in CASA balances, in part reversing the temporary outflows that we saw at the end of the first quarter, and WRB deposits increased $6 billion with CASA balances broadly unchanged. Turning to capital, risk-weighted assets of $242 billion declined $10 billion, or 4% quarter-on-quarter.

Speaker Change: We continue to expect low single digit percentage growth in underlying customer loans this year.

Customer deposits were up $10 billion on an underlying basis in the quarter.

Speaker Change: CIB and others increased $4 billion, mainly in Casa balances in part the reversing the temporary outflows that we saw at the end of the first quarter.

Diego Giorgi: In WRB, deposits increased $6 billion, with cash balances broadly unchanged. Turning to capital, risk weighted assets of $242 billion declined $10 billion, or 4% quarter on quarter. Underlying asset growth in CIB was offset by a reduction in WRB and the impact of treasury-related activities. Improvement in asset quality, mainly from sovereign upgrades, led to a $3 billion reduction. As previously guided, market risk RWA were down $2 billion in the quarter. Looking forward, we continue to guide to low single-digit percentage growth in overall RWA for full year 2024, as we expect client activity to continue to improve.

Speaker Change: And W will be deposits increased $6 million with Casa balances broadly unchanged.

Speaker Change: Turning to capital risk weighted assets of 242 billion declined $10 billion or 4% quarter on quarter.

Diego De Giorgi: Underlying Asset Growth in CIB was offset by a reduction in WRB and the impact of treasury-related activities. However, improvement in asset quality, mainly from sovereign upgrades, led to a $3 billion reduction. As previously guided, market risk RWA was down $2 billion in the quarter.

Speaker Change: Underlying asset growth in CIB was offset by a reduction in <unk> and the impact of treasury related activities.

Speaker Change: Improvement in asset quality, mainly from sovereign upgrades led to a 3 million dollar reduction.

Speaker Change: As previously guided the market III Scott W. A went down $2 billion in the quarter.

Diego De Giorgi: Looking forward, we continue to guide to low single-digit percentage growth in overall RWA for full year 2024 as we expect client activity to continue to improve. Our CET1 ratio for the quarter of 14.6% is well above the target range, driven by profit accretion and the positive impact of lower RWA. The one and a half million dollars share buyback we announced today will take our performance CT1 ratio to 14%. We remain committed to sharing the group's success with our shareholders.

Speaker Change: Looking forward, we continue to guide to low single digit percentage growth in overall <unk> for full year 2024, as we expect client activity to continue to improve.

Diego Giorgi: Our CT1 ratio for the quarter of 14.6% is well above the target range, driven by profit accretion and the positive impact of lower RWA. The $1.5 billion share buyback we announced today will take our performance CET-1 ratio to 14%. We remain committed to sharing the group's success with our shareholders. And as you can see on slide 12, since the full year 2023 results, we have announced $2.7 billion of shareholders' distributions. This includes $2.5 billion in share buybacks and a 2024 interim dividend of $230 million with an interim dividend per share of $0.9, up 50% year-on-year.

Speaker Change: Our CET one ratio for the quarter of 14, 6% is well above the target range driven by profit accretion and the positive impact of lower <unk>.

Speaker Change: The one and a half million dollars share buyback, we announced today will take our pro forma CET one ratio to 14%.

Speaker Change: We remain committed to sharing the group's success with our shareholders and as you can see on slide 12 since the full year 2023 results, we have announced $2 7 billion of shareholders' distributions.

Diego De Giorgi: And as you can see on slide 12, since the full year 2023 results, we have announced $2.7 billion in shareholders' distributions. This includes $2.5 billion in share buybacks and a 2024 interim dividend of $230 million, with an interim dividend per share of 9 cents, up 50% year on year. As a result of the series of share buybacks we have executed, our share count is down 17% since 2021, and the tangible net asset value per share is up $0.54 in the quarter.

This includes $2 $5 billion in share buybacks in 2024 interim dividend of $230 million with an interim dividend per share of <unk>.

Speaker Change: Up 50% year on year.

Diego Giorgi: As a result of the series of share buy-backs we have executed, our share count is down 17% since 2021. The tangible net asset value per share is up 54 cents in the quarter, and we have provided a more detailed breakdown of the Tina Walk in the appendices on slide 30.

Speaker Change: As a result of the series of share buybacks, we have executed our share count is down 17% since 2021.

Tina Walker: The tangible net asset value per share is up 54 cents in the quarter and we have provided a more detailed breakdown of the Tina Walker in the appendices on slide 30.

Diego De Giorgi: And we have provided a more detailed breakdown of the TNAV walk in the appendices on slide 30. Lastly, turning to our guidance. As Bill mentioned at the beginning of the call, we are upgrading our income guidance for 2024 to above 7% growth. All other key points of guidance remain unchanged.

Diego Giorgi: Lastly, turning to our guidance. As Bill mentioned at the beginning of the call, we are upgrading our income guidance for 2024 to above 7% growth. All other key points of guidance remain unchanged. We still expect ROTE to increase steadily, targeting 12% in 2026 and to progress thereafter.

Tina Walker: Lastly, turning to our guidance is.

Tina Walker: As Bill mentioned at the beginning of the call. We are upgrading our income guidance for 2024 to above 7% growth.

Tina Walker: All other key points of guidance remain unchanged, we still expect the <unk> to increase steadily targeting 12% in 2026 and to progress thereafter.

William Winters: With that, I'll hand back to Bill to give you an update on the performance of our business segment. Let's first take a look at performance at each business in turn, starting with Corporate and Investment Banking. CIP income was down 1% overall. Within this, transaction services was flat year-on-year, but Global Banking delivered a strong performance up 11%. This was driven by higher origination and distribution volumes. Global markets was down 7% in the face of a particularly strong comparator in the second quarter of last year, especially in episodic income. What's important, however, is that flow income continues to grow and was up 8% in the quarter from higher rates and credit trading.

William Winters: We still expect ROTE to increase steadily, targeting 12% in 2026, and to progress the, With that, I'll hand back to Bill to give you an update on the performance of our business. Let's first take a look at the performance of each business in turn, starting with corporate and investment banking. TIB income was down 1% overall. Within this, transaction services were flat year on year, but global banking delivered a strong performance of 11%. This was driven by higher origination and distribution volume. However, global markets were down 7% in the face of a particularly strong comparator in the second quarter of last year, especially in episodic.

Tina Walker: With that I'll hand back to Bill to give you an update on the performance of our business segments.

Bill: Let's first take a look at performance of each business in turn starting with corporate and investment banking.

Bill: IP income was down 1% overall within this transaction services was flat year on year, the global banking delivered a strong performance up 11%.

This was driven by higher origination and distribution volumes.

Bill: Global markets was down 7% in the face of a particularly strong comparator in the second quarter of last year, especially in episodic income.

William Winters: What is important, however, is that flow income continues to grow and was up 8% in the quarter from higher rates in credit trading. One of the great strengths of our global markets business is that it is largely comprised of recurring income. Over recent years, we've expanded the product offering across fixed income currencies and commodities, becoming more important to key clients and counterparties. As you can see on slide 16, such recurring flow income has been growing strongly since 2019, with a 9% K. This has been driven by a combination of platform enhancements. Proof of Product Capability, and Strategic Focus Across Clients and Geographies, examples of which you can see plotted on the chart.

Bill: What's important however is that flow income continues to grow and was up 8% in the quarter from higher rates and credit trading.

William Winters: One of the great strengths of our global markets business is that it is largely comprised of recurring income. Over recent years, we've expanded the product offering across six income currencies and commodities, becoming more important to key clients and counterparties. As you can see on slide 16, such recurring flow income has been growing strongly since 2019 with a 9% CAGR. This has been driven by a combination of platform enhancements, improved product capability, and strategic focus across clients and geographies, examples of which you can see plotted on the chart.

Bill: One of the great strengths of our global markets business is that it is largely comprised of recurring income.

Bill: In recent years, we've expanded the product offering across fixed income currencies and commodities, becoming more important to key clients and counterparties.

Bill: As you can see on slide 16, such recurring flow income has been growing strongly since 2019 with a 9% CAGR.

Bill: This has been driven by a combination of platform enhancements.

Bill: <unk> product capability and strategic focus across clients and geographies examples of which you can see plotted on the chart.

William Winters: The next slide looks at our CIP cross-border business in more detail. Cross-border income now accounts for the largest part of CIP at 62% compared to 50% in 2019. It's also been growing at a faster pace than the rest of CIP within 11% CAGR since 2019. It delivers premium returns with an income RORWA of 9.7% in the first half of the year, 160 basis points higher than the overall CIP. And it is broad-based in terms of product mix. Transaction services is the largest part, but the network also drives cross-border global markets as well as global backing income.

William Winters: The next slide looks at our CIP cross-border business in more detail. Cross-border income now accounts for the largest part of CIB at 62%, compared to 50% in 2019. It's also been growing at a faster pace than the rest of CIB, with an 11% CAGR since 2019. It delivers premium returns with an income RORWA of 9.7% in the first half of the year, 160 basis points higher than the overall CIB, and it is broad-based in terms of product.

The next slide looks at our CIP Cross border business in more detail Cross border income now accounts for the largest part of CIB at 62%.

Bill: Compared to 50% in 2019.

Bill: It's also been growing at a faster pace than the rest of the CIB with an 11% CAGR since 2019 it.

Bill: It delivers premium returns with an income ror W way of nine 7% in the first half of the year 160 basis points higher than the overall CIB.

Bill: And it is broad based in terms of product mix transaction services as largest part, but the network also drives cross border global markets as well as global banking income.

William Winters: Transaction services are the largest part, but the network also drives cross-border global markets, as well as global banking and Moreover, our cross-border business is uniquely positioned to capture the opportunities arising from the increasing fragmentation of supply, trade, and investment flows. For example, almost a third of our cross-border income is intra-Asian.

William Winters: Moreover, our cross-border business is uniquely positioned to capture the opportunities arising from increasing fragmentation of supply trade and investments.

Bill: Moreover, our cross border business is uniquely positioned to capture the opportunities arising from increasing fragmentation of supply trade and investment flows.

William Winters: Closed. For example, almost a third of our cross-border income is information. And we've seen particularly strong growth in income from China to ASEAN, up 11% in the first half. Our wealth solutions product line is almost all non-net interest income, with just a small amount of NII from wealth lending products. I remind you that the substantial NII generated from affluent deposits is reported in the deposits product line. When considered in aggregate, the affluent client franchise is extraordinarily valuable. We continue to onboard high levels of affluent new to bank clients, with a further 65,000 added in the second quarter, equivalent to around 10% annualized growth.

Bill: Simple almost a third of our cross border income is integration.

William Winters: And we've seen particularly strong growth in income from China to ASEAN, up 11% in the first half. Turning now to wealth and retail banking income, which was up 11%, driven by a very strong performance in Wealth Solutions. Investment products income was 32% with broad-based growth across products and markets. Affluent AUM of $294 billion was up 5% versus KeyOne, driven by wealth, net new sales of $6 billion, and $7 billion of new deposits. Our Wealth Solutions product line is almost all non-net interest income with just a small amount of NII from wealth lending products.

Bill: And we've seen particularly strong growth in income from China to ASEAN up 11% in the first half.

Bill: Turning now to wealth and retail banking income, which was up 11% driven by a very strong performance in both solutions.

Bill: Investment products income was 32% with broad based growth across products and markets.

Bill: Affluent AUM of $294 billion was up 5% versus Q1, driven by well net new sales of $6 billion and $7 billion of new deposits.

Bill: Our wealth solutions product line is almost all non net interest income with just a small amount of NII from wealth lending products.

William Winters: I'd remind you that the substantial NII generated from affluent deposits is reported in the deposits product line. When considered as an aggregate, the affluent client franchise is extraordinarily valuable. We continue to onboard high levels of affluent, new-to-bank clients with a further $65,000 added in the second quarter, equivalent to around 10% annualized growth. Now, let's take a longer-term perspective on our Wealth Solutions business. Since 2016, their wealth AUM has grown at 9%.

Bill: I would remind you that the substantial NII generated from Epsilon deposits is reported in the deposits product line when considered in aggregate the affluent client franchise is extraordinarily valuable.

Bill: We continue to onboard high levels of affluence new to bank clients with a further 65000 added in the second quarter equivalent to around 10% annualized growth.

William Winters: Now let's take a longer-term perspective on our wealth solutions business. Since 2016, wealth AUM has grown at a 9% cager. We saw strong growth up to 2021, followed by a slow down during the COVID years. We've now accelerated growth once more, driven by several factors. We're investing in new relationship managers, would to rub 9% year on year and at the same time improving RM productivity. We're continuing to innovate new product offerings across our footprint with best-in-class capital market solutions for our clients. And we're also providing a fully integrated digital wealth platform with personalized advice. We know that our wealth and affluent offerings are of interest to investors, and we plan to host a seminar later this year to provide you with more color on this business.

Bill: That looks like a longer term perspective on our wealth solutions business since 2016 wealth AUM has grown at a 9% CAGR.

William Winters: We saw strong growth up to 2021, followed by a slowdown during the COVID years. But we've now accelerated growth once more, driven by several factors. We're investing in new relationship managers, which are up 9% year on year, and at the same time, improving RM productivity. We're continuing to innovate new product offerings across our footprint with best-in-class capital market solutions for our clients. And we're also providing a fully integrated digital wealth platform with personalized advice.

Bill: We saw strong growth up to 2021, followed by a slow down during the Covid years, we've now accelerated growth once more driven by several factors.

Bill: We're investing in new relationship managers, which were up 9% year on year and at the same time, improving RM productivity.

Bill: We're continuing to innovate new product offerings across our footprint with best in class capital market solutions for our clients.

Bill: We're also providing a fully integrated digital wealth platform with personalized advice.

William Winters: We know that our wealth and affluent offerings are of interest to investors, and we plan to host a seminar later this year to provide you with more color on this business. Now, on to the progress we've made in the Ventures segment. We continue to see strong growth in customer numbers in MOX and TRUST. We currently have around 600,000 customers in MOX and around 800,000 in TRUST. TRUST is on track to be the fourth largest domestic retail bank in Singapore by customer numbers by the end of this year. Both Mocs and Trust are rated as the top digital banking apps in the Apple store in their respective markets.

Bill: We know that our wealth and affluent offerings are of interest to investors and we plan to host a seminar later this year to provide you with more color on this business.

William Winters: Turning out to the progress we've made in the venture segment. We continue to see strong growth in customer numbers and mocks and trust. We currently have around 600,000 customers and mocks, and around 800,000 in trust. It's on track to be the fourth largest domestic retail bank in Singapore by customer numbers by the end of this year. Both Mocks and Trust are rated as the top digital banking apps in the Apple Store and the respective markets.

Speaker Change: Turning now to the progress we've made in the venture segment, we continue to see strong growth in customer numbers and MX entrust. We currently have around 600000 customers and marks and around 800000 and trust.

Speaker Change: So on track to be the fourth largest domestic retail bank in Singapore by customer numbers by the end of this year.

Speaker Change: Both Matson trusts are rated as the top digital banking apps in the Apple store in their respective markets.

William Winters: In SD Ventures, we raised $55 million of external funds across two ventures in one fund and attract a multiple to our original cost in what continues to be a challenging environment. Lastly, we continue to see strong momentum in our sustainable finance franchise. Income in the first six months of the year was of 18%, and we remain on track to deliver over $1 billion of income by 2025. We've mobilized more than $105 billion of sustainable finance since the beginning of 2021, making good progress as we advance towards our $300 billion target by 2030. On the broader sustainability agenda, we continue to make progress on our net zero emissions, and in May, we announce the commitment that by 2025 will set a methane emission baseline and interim 2030 target.

William Winters: In SD Ventures, we've raised $55 million of external funds across two ventures in one fund and attracted multiples to our original cost in what continues to be a challenging environment. Lastly, we continue to see strong momentum in our sustainable finance franchise. Income in the first six months of the year was up 18%, and we remain on track to deliver over $1 billion of revenue by 2025. We've mobilized more than $105 billion of sustainable finance since the beginning of 2021, making good progress as we advance towards our $300 billion target by 2030. On the broader sustainability agenda, we continue to make progress on our net zero emissions, and in May, we announced the commitment that by 2025, we'll set a methane emission baseline and interim 2030 target.

Speaker Change: And S debentures, we raised $55 million of external funds across two ventures in one fund at attractive multiples to original cost and what continues to be a challenging environment.

Speaker Change: Lastly, we continue to see strong momentum in our sustainable finance franchise income in the first six months of the year was up 18% and we remain on track to deliver over $1 billion of income by 2025.

Speaker Change: We've mobilized more than a $105 billion of sustainable clients since the beginning of 2021, making good progress as we advance towards our $300 billion target by 2030.

Speaker Change: On the broader sustainability agenda, we continue to make progress on our net zero emissions and in May we announced the commitment that by 2025 will sort of methane emission baseline an interim 2030 target.

William Winters: In the first six months of the year, we also launched an innovative adaptation trade finance facility to protect businesses against extreme weather events.

William Winters: In the first six months of the year, we also launched an innovative adaptation trade finance facility to protect businesses against extreme weather events. So, to conclude, the group delivered a strong performance in the first half of the year, with income up 13%, generating an ROTE of 14%.

In the first six months of the year. We also launched an innovative patient trade finance facility to protect businesses against extreme weather events so to conclude.

William Winters: To conclude, the group delivered a strong performance in the first half of the year, with income up 13%, generating an ROTE of 14%. We've been executing well on our strategy of being a cross-border, corporate investment bank and leading wealth manager for affluent clients. The Fit for Growth program is progressing well, with the benefits expected through 2025 and 2026.

Speaker Change: The group delivered a strong performance in the first half of the year with income up 13% generating an Roe of 14%.

Unknown Executive: We've been executing well on our strategy of being a cross-border corporate investment bank and a leading wealth manager for affluent clients. The Fit for Growth program is progressing well, with benefits expected through 2025 and 2026. Our capital position remains strong, and today we've announced our largest ever share buyback of $1.5 billion. With this strong start to the year and confidence in our diverse franchise, we're upgrading our income guidance and now expect it to grow above 7% in 2024.

Speaker Change: We've been executing well on our strategy of being a cross border corporate investment bank, a leading wealth manager for Epsilon clients.

Speaker Change: The fit for growth program is progressing well with the benefits expected through 2025 and 2026, our capital position remains strong and today, we've announced our largest ever share buyback of $1 5 billion.

William Winters: Our capital position remains strong, and today we've announced our largest ever share buy back of $1.5 billion. With this strong start to the year, in confidence in our diverse franchise, we're upgrading our income guidance and now expect to grow above 7% in 2024. We have the right strategy, business model, and a vision to deliver our 2026 target of 12% ROTE and to progress thereafter.

Speaker Change: With this strong start to the year and confidence in our diverse franchise, we're upgrading our income guidance and now expect to grow above 7% in 2024.

Speaker Change: We have the right strategy business model and ambition to deliver our 2026 target of 12%, our LTE and to progress thereafter, so with that I'll hand back to the operator, and Diego and I will be happy to take questions.

Unknown Executive: We have the right strategy, business model, and ambition to deliver our 2026 target of 12% ROTE and to progress thereafter. So with that, I'll hand over to the operator and Diego, and I will be happy to take questions. Thank you. We will now begin the question and answer session. If you wish to ask a question via audio, please press stars 1 and 1 on your telephone keypad and wait for your name to be announced.

William Winters: So that I'll hand back to the operator, and Diego and I will be happy to take questions. Thank you.

Operator: We will now begin the question and answer session. If you wish to ask a question via audio, please press star one and one on your telephone keypad. I'll wait for your name to be announced. Alternatively, please use the question box available on your webcast page to submit your questions. We will now take your first question. One moment, please.

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

Unknown Executive: Alternatively, please use the question box available on your webcast page to submit your questions. We will now take your first question. One moment, please. And your first question comes from the line of Robin Down from HSBC. Please go ahead. Good morning and thank you for taking the questions. Can I ask you about a couple of the targets? that you've got. Firstly, the income target of greater than 7%. If my math is correct, are you hitting the interest income target for the full year? To do 7% revenue growth would require non-interest income to be down. H2 on H2, um, is that something you can give us a bit of? Color On.

Speaker Change: We will now take your first question.

One moment please.

Robin Down: And your first question comes from the line of robbing down from HSBC. Please go ahead. Good morning, and thank you for taking the questions.

And your first question.

Speaker Change: Comes from the line of Robin down from HSBC. Please go ahead.

Robin Down: Good morning, and thanks for taking the questions.

Robin Down: Can I assure you about a couple of the targets that you've got? Firstly, the income target of greater than 7%. If my mass is correct and you're catching the interesting income target for the full year, to do 7% revenue growth would require the non-interesting income to be down H2 on H2. Is that something you can give us a bit of color on? I'm guessing you've built a bit of momentum within the wealth management business and a very easy comparator in 23Q4. So I'm just trying to get a gauge for how far above 7%. We might be still thinking about here.

Robin Down: About a couple of targets.

Speaker Change: But you've got.

Robin Down: Firstly, the income target of greater than 7%.

Speaker Change: If my math is correct.

Speaker Change: As you are hedging the interest income.

Speaker Change: The target for the full year.

Speaker Change: To do 7% revenue growth would require the <unk>.

Speaker Change: Noninterest income to be down.

Speaker Change: H H.

Speaker Change: <unk>.

Speaker Change: Hoping you can give some.

Robin Down: I'm guessing you've got a bit of momentum within the wealth management business and a very easy comparator in 23Q4. So I'm just trying to get a gauge for how far above 7% we might still be thinking about here. And the second question, I guess, was slightly linked to that.

Speaker Change: Colorado, I guess, you could look a bit of momentum within the wealth management business.

Speaker Change: The easy comparison.

Speaker Change: 23, Q4, so I'm just trying to get a gauge for how far above 7%.

We might be thinking about here.

William Winters: And the second question, I guess, was slightly linked to that. But just the RWA guidance. I think you touched on it in the presentation. But given the sort of big shift down we've had in Q2 and the kind of lack of loan growth out there. I'm slightly surprised for you still talking single digit RWA growth. Again, I wonder if you can give us a bit more color there, whether there's any kind of regulatory changes or mobile changes you're expecting within that. Thanks. Great. Thanks, Robin. Good morning. Good afternoon, everybody. Thanks for joining us.

Speaker Change: And the second question I guess, it was slightly linked to that but just your <unk> guidance you touched on it in.

Speaker Change: In the presentation, but given the slower.

Speaker Change: Big shift we've had in Q2 and the kind of lack of loan growth out there.

Speaker Change: Surprise for you still talk to any single digit.

Speaker Change: So great growth.

Speaker Change: Okay wonderful.

Speaker Change: Give us a bit more color there, whether there's any kind of regulatory changes mobile changes youre expecting within that thanks.

Robin Down: But just the RWA guidance, I think you touched on it in the presentation, but given the sort of big shift down we've had in Q2 and the kind of lack of loan growth out there, I'm slightly surprised to see you still targeting single-digit RWA growth. Again, I wonder if you could give us a bit more color there, whether there's any kind of regulatory changes or model changes you're expecting within that. Thanks. Great, thanks Robin. Good morning, and good afternoon, everybody.

Rob: Great. Thanks, Rob and good morning, good afternoon, everybody and thanks for joining us on the straight to Diego for both those questions excellent. So on the income think about it think about it this way Robin we had 10% growth of the income ex notable items in the first half of them.

William Winters: I'll go straight to the eagle for both those questions.

William Winters: Excellent. So on the income. Think about it.

Unknown Executive: Thanks for joining us. I'll go straight to Diego on both those questions. So on the income, think about it this way, Robin. We have 10% growth in the income x notable items in the first half. If you put yourself anywhere on the metabolic rate that we always talk about, our 5% to 7% during the second half, you'll land north of 7%.

Diego Giorgi: Think about it this way, Robin. We have 10% growth of the income X notable items in the first half. If you put yourself anywhere on the metabolic rate that we always talk about, our 5 to 7% during the second half, you'll land north of 7%. How much north of 7% will depend on a number of things, which, by the way, are linked in parts to your second question, to which I will get in a second. But that's the way to think about it.

Speaker Change: If you put yourself anywhere on the metabolic rate that we always talk about our 5% to 7%.

Speaker Change: In the second half.

Speaker Change: Land north of 7%, how much north of 7% will depend on a number of things, which by the way are linked in part to your second question, which I will get in a second.

Diego De Giorgi: How much north of 7% will depend on a number of things, which, by the way, are linked in part to your second question, to which I will get in a second. But that's the way to think about it. There is a little bit of seasonality in the second half. Yes, of course, I would expect, as always. I would clearly say that with the kind of leading indicators that we have for wealth management, the performance we have shown, and the strength of our flow business in markets, definitely, non-net interest income is not going to be down year on year in the second half.

Diego Giorgi: There is a little bit of seasonality in the second half. Yes, of course. I would expect, as always. I would clearly say that with the kind of leading indicators that we have for wealth management, the performance we have turned out, the strength of our flow business in markets.

Speaker Change: But that's the way to think about it there is a little bit of seasonality in the second half. So yes of course I would expect that as always.

Speaker Change: I would clearly say that with the kind of the leading indicators that we have for wealth management and the performance. We have turned out the strength of our flow business in markets that definitely not net interest income is not going to be down year on year in the second half.

Diego Giorgi: It's definitely not an interesting thing. I mean, it's not going to be a down year-on-year industry.

William Winters: Con half. That is linked to the RWA question in the sense, not a matter of changes in regulatory or otherwise although we continue to be labor while waiting for Basel 3.1 clarity, which we hope will come shortly after the summer, hopefully. But the issue here is we are rate related in some way; we need to see that credit demand, of which we've seen some encouraging signs with the five billion of underlying customer loans and advances we have added during the first half, continue to show its effect. We believe it is entirely possible, and those green shoots seem to indicate that we are moving in the direction we are leaning into 150 clients in trade, as we have indicated before, and we have seen the results of that. We remain confident that it can be done, but it undoubtedly requires a little bit of tailwind from the market. So the other things that I would say also remember we don't need strictly, I mean we don't need to grow RWA to grow income. I think market performance is a good example, but there are many examples of that in our originate to distribute activities also. Excellent, thanks Robert. Can we take the next question please? Thank you.

Diego De Giorgi: There is a link to the RWA question, in the sense that it is not a matter of changes in the regulatory or otherwise, although we continue to belabor the point while waiting for Basel 3.1 clarity, which we hope will come shortly after the summer, hopefully.

Speaker Change: And that is linked to the R. W. A question and this is not a matter of the changes in the regulatory or otherwise, although we continue to belabor or while waiting.

Speaker Change: For about the Paypoint, one clarity, which we hope will come shortly after the summer hopefully, but the issue here is we are we are rate related in some way we need to see that created Amanda which we've seen some encouraging signs with a $5 billion of underlying customer loans and advances we have added during the first half.

Diego De Giorgi: But the issue here is that we are rate-related in some way. We need to see that credit demand, which we've seen some encouraging signs of with the five billion of underlying customer loans and advances we have added during the first half, continue to show its effect. We believe it is entirely possible, and those green shoots seem to indicate that we're moving in that direction.

Speaker Change: Continued to show its effect, we believe it is entirely possible in those green shoots seem to indicate that we're moving in the direction. We are leaning into 150 clients in trade as we have indicated before and we have seen the results of that.

Diego De Giorgi: We are leaning into 150 clients in trade, as we have indicated before, and we are seeing the results of that. We remain confident that it can be done, but it undoubtedly requires a little bit of tailwinds from the market. So the other thing that I would say, also remember, we don't need strictly – I mean, we don't need to grow RWA to grow income. I think market performance is a good example, but there are many examples of that in our originate-to-distribute activities. Excellent. Thanks, Robert. Can we take the next question, please? Thank you. Your next question comes from the line of Andrew Coombs from City. Please go ahead. Good morning.

Speaker Change: We remain confident that it can be done, but it's undoubtedly requires a little bit of tailwind from the.

Speaker Change: The market.

Speaker Change: No.

Speaker Change: The other thing that I would say also remember we don't need strictly I mean, we don't need to grow our <unk> to grow income I think market performance is a good example, but there are many.

Speaker Change: Examples of that in our originate to distribute activity results.

Speaker Change: Excellent. Thanks.

Speaker Change: Thanks, Operator can we take the next question please.

Andrew Coombs: Your next question comes from the line of Andrew CUNES from City. Please go ahead. Good morning, two questions please. That's reached on the larger buy back.

Speaker Change: Thank you.

Speaker Change: Your next question comes from the line of Andrew Coombs from Citi. Please go ahead.

Andrew Coombs: Two questions, please. Firstly, just on the larger buyback, it looks like that's been partly funded by the 4% RWA reduction QMQ. And some of those items are arguably unlikely to repeat and solve with upgrades and so forth.

Andrew Coombs: Alright, good morning.

Andrew Coombs: Questions very especially just on the large buyback it looks like that's been partly funded by 4%.

Andrew Coombs: It looked like I've been partly funded by the 4% RWA reduction Q and Q, and some of those items are largely unlikely to repeat and solve with an upgrade, so forth. So I guess two parts of the question is why you keep in the greater than 5 billion cumulative distribution guidance when you've already done a turn half buy back this year? And secondly, would you think the buy back is larger today than you'd expect to do going forward because of the RWA reduction that you've seen? And then the second question is just some treasury optimization, you know, that continues, if anything, is accelerated this quarter. And so perhaps you could just give us a feel for where we are in that process, how far through that treasury optimization we are, and what the incremental benefit potentially is going forward from here as well.

Andrew Coombs: Hey reduction Q on Q.

Speaker Change: And some of that demand.

Speaker Change: So were not great cycle.

Speaker Change: I guess two part question is one why are you keeping great alright.

Andrew Coombs: So I guess two parts of the question are, one is, why are you keeping the greater than five billion cumulative distribution guidance when you've already done a two and a half buyback this year? And secondly, would you think the buyback is larger today than you'd expect to do going forward because of the RWA reduction that you've seen? And then the second question is just on treasury optimisation, and if that continues, and if anything's accelerated this quarter, perhaps you could just give us a feel for where we are in that process, how far through that treasury optimisation we are, and what the incremental benefit potentially is going forward from here as well. Thank you. Great, Andrew.

Speaker Change: Distribution guidance, when you've already got it fair enough buyback this year.

Speaker Change: And secondly.

Speaker Change: Would you think the buyback is larger today than you would you expect to do going forward because it would be out of your reduction that you've seen.

Speaker Change: And then the second question is do some treasury optimization that continues thank you generated.

Speaker Change: Generated this quarter I would say, perhaps you could just give us some fail.

Speaker Change: We are in that process, how far through that treasury optimization, we are.

Speaker Change: The incremental benefit potentially is going forward from here as well.

William Winters: Thank you. Great, Andrew, thanks for the question. The obviously we're happy with the with the capital outturn for the quarter at 146 pre buy back, and that does reflect ongoing optimization. It reflects some tailwinds as well, some of the sovereign upgrades, as you mentioned. I won't say they can't be repeated; a number of our sovereign cons are still very lowly rated. But that said, these aren't things that we're predicting in the ordinary course. But what we said consistently is that we'll operate within dynamically within our 13 to 14% range and that we will return surplus capital above that range.

William Winters: Thanks for the question. Obviously, we're happy with the capital outturn for the quarter at 14.6 pre-buyback. And that does reflect ongoing optimization. It reflects some tailwinds as well, some of the sovereign upgrades, as you mentioned. I won't say they can't be repeated. A number of our sovereign counterparties are still very lowly rated.

Speaker Change: Yes, Andrew Thanks for the thanks for the question.

Speaker Change: Obviously, we're happy with the with the capital Outturn for the quarter with debt at 14, six pre buyback.

Speaker Change: And that does reflect ongoing optimization that reflects some some tailwind as well some of the sovereign upgrades as you mentioned.

Speaker Change: I won't say they can't be repeated a number of our sovereign clients are so very lowly rated but that said these aren't things that we're predicting in the ordinary course of what we've said consistently is that we'll operate within dynamically within our 13% to 14% range and that we will return surplus capital above that range. We've done that consistently we're doing that again in the first half of this year and we'll continue to do that so.

William Winters: But that said, these aren't things that we're predicting in the ordinary course. But what we've said consistently is that we'll operate dynamically within our 13% to 14% range and that we will return surplus capital above that range. We've done that consistently. We're doing it again in the first half of this year, and we'll continue to do that. So if we outperform for whatever reason, profit outperformance or RWA optimization outperformance, that will create surplus capital that we'll return. It's that straightforward.

Diego Giorgi: We've done that consistently. We're doing that again in the first half of this year, and we'll continue to do that. So if we perform, for whatever reason, profit out performance or RWA optimization out performance, that will create surplus capital that will return. It's that straightforward, and that we will assess each quarter and each period as the facts come in.

Speaker Change: If we outperform for whatever reason.

Speaker Change: Profit outperformance or <unk> optimization.

Speaker Change: Our outperformance that will create surplus capital that will return.

Speaker Change: It's that straightforward.

Speaker Change: Now, we'll assess each quarter and each period as the vaccine.

Diego Giorgi: Diego said anything like to that, and I'll take up the treasury question on nothing. Nothing to add, I would say on the first. On the second, look, optimization is an ever-ending game. We will continue to optimize RWA because that's what banks in 2024 have to do. So that will continue. I before on previous calls we discussed the concept of RWA density. I mean do we plan to affect radically our RWA density going forward? Absolutely not, but optimization has to continue and we have the opportunity to do it. We optimize 22 and a half billion of RWA in the two and a half years of the previous early years of the previous plan. It is going to be less, but it is going to be an ongoing activity.

William Winters: And we'll assess each quarter and each period as the facts come in. Diego, anything you'd like to add, and I'll just take up the Treasury question. No, nothing to add, I would say, on the first. On the second, look, optimization is a never-ending game.

Speaker Change: He said and then he like to that and I'll just pick up the Treasury question on no nothing nothing to add I would say on the first on the second look and optimization is a never ending game, we will continue to optimize that AWS because that's what the banks in 2024, a have to do so.

Diego De Giorgi: We will continue to optimize RWAs because that's what banks in 2024 have to do, so that will continue. Before, on previous calls, we discussed the concept of RWA density. I mean, do we plan to significantly affect our RWA density going forward? Absolutely not. But optimization has to continue, and we have the opportunity to do it. We optimized 22.5 billion RWAs in the early years of the previous plan.

Speaker Change: So that will continue.

Before on previous calls we've discussed the cost of golf R. W. A density I mean, do we plan to affect a.

Speaker Change: Radically our RW identity going forward absolutely not.

Speaker Change: But the optimization the has to continue and we have the opportunity to do it we optimized 'twenty two and a half a billion of ITW as in the two and a half years of the early years of the previous plan.

Diego De Giorgi: It is going to be less, but it is going to be an ongoing activity. We do not need it, strictly speaking, in order to fuel our WebEx, but obviously, it contributes. Good. Next question, please. Thank you.

Speaker Change: It is going to be less but it is going to be an ongoing activity.

Diego Giorgi: We do not need it, strictly speaking, in order to fuel our way back, but obviously it contributes, and it's an important part of what. Riddle.

Speaker Change: We do not need it strictly speaking in order to fuel our buy backs, but obviously it contributes anything important part of what we do.

Operator: Good, next question please. Thank you.

Speaker Change: Our next question please.

Aman Rakkar: Your next question comes from the line of Aman Rakkar from Barclays. Please go ahead.

Speaker Change: Thank you.

Aman Rakkar: Your next question comes from the line of Aman Rakkar from Barclays; please go ahead. Hi Bill, hello Diego, thanks for taking the questions. I had a two-part question on markets and then one on NII, if I may. On markets, I just wanted to kind of check in on what happened in the quarter. I think you, Diego, issued intra-quarter guidance that it might be flat markets year on year. So I think actually to have printed down seven Transcribed by https://otter.ai, June.

Speaker Change: Your next question comes from the line of <unk> <unk> from Barclays. Please go ahead.

Aman Rakkar: Hello, Bill. Hello, Diego. Thanks for taking the questions. I had a two-part question on markets and then one on NIO for me on markets.

Speaker Change: Hi, Bill Hello, Yeah, yeah, thanks for taking the questions.

Speaker Change: A two part question on markets and then one on NII if I may.

Aman Rakkar: I just wanted to kind of check in what happened in the course that I think you, Diego, you should intercourse the guidance that it might be flat markets year on year. So I think actually to have printed down seven percent year on year constant currency, you must have had a very, very weak June. So any colleague can give us, there would be helpful. The kind of second part of that question then would be just your response to that kind of operating environment. Because I think my understanding is that part of the average interest learning assets being down Q on Q is you effectively kind of allocating to trading assets to kind of bolster that line item.

Speaker Change: Our market so I just wanted to check.

Checking what happened in the quarter U G I, Joe issued intra quarter guidance.

Speaker Change: It might be flat markets year on year, So I think.

Speaker Change: Ashish.

ashish: Sit down seven.

Speaker Change: <unk>.

Speaker Change: Percent year on year constant currency, you must have had a very very weak.

Aman Rakkar: So, you know, any colleague can give us they'll be helpful. The kind of second part of that question then would be just your response to that kind of operating environment because I think my understanding is that part of the average interest earning assets being down q on q is you effectively kind of allocating to trading assets to kind of bolster that um that that line item so um yeah you know how can you just give us a bit more color on how you've responded to what looks like a difficult kind of end to Q2 and whether that's persisted into Q3 would be really helpful um and then the second question is around net interest income so kind of note that you've reduced your downside sensitivity which is great to see uh on an expanded structural hedge program yeah just keen to know whether there's more capacity for you to increase this hedge for me here and if there's a chance for you to kind of meaningfully reduce your downside sensitivity further from here thank you so much great uh thanks very much so nothing particularly concerning in markets in Q2 the uh what we had was a lack of episodic income and as we've as we call that as transparently as we possibly can we've got two major subdivisions of our business the flow business which continues to perform extremely well we gave a longer term uh time series and in the in the investor presentation to give an indication just how consistent that's been over time so volatile from quarter to quarter but uh but a very good nine percent compound growth uh over the past five years and i think if you went back further we don't have all that data further back but if you went back further you'd see similar trends and then we've had episodic which is much more volatile uh obviously it's a function of market events but also one-off client transactions, And we had a particularly strong episodic quarter in the second quarter of last year and a particularly weak episodic quarter in the second quarter of this year.

So any color you can give us that would be helpful to kind of second part of that question then would be.

Just your response to <unk>.

Speaker Change: Kind of operating environment, because I think.

Speaker Change: My understanding is that part of the.

Speaker Change: Average interest, earning assets being down Q on Q as you effectively kind of allocating to trading efforts to kind of bolster that.

Diego Giorgi: So yeah, you know, can you just give us a bit more color on how you've responded to what looks like a difficult kind of end to Q2 and whether that's persisted into Q3? That would be really helpful.

Speaker Change: But that line item so.

Yeah.

Speaker Change: Can you just give us a bit more color on how you've responded to what looks like a difficult kind of end of Q2 and whether that's persisted into Q3 would be really helpful.

Diego Giorgi: And then the second question is around an interesting comes to kind of note that you've reduced your downside sensitivity, which is great to see on an expanded structural hedge program. Yeah, just came to know whether there's more capacity for you to increase this hedge for me here. And if there's a chance for you to kind of meaningfully reduce your downside sensitivity further from there. Thanks so much.

Speaker Change: And then the second question is around net interest income. So you kind of know that you've reduced your downside sensitivity, which is great to see.

Speaker Change: On an expanded structural hedge program, yes, just keen to know whether there's more.

Speaker Change: Steve for you to increase this hedge for me here and if there's a chance for you to kind of meaningfully reduce shutdown such sensitivity further from here. Thanks.

Speaker Change: Thanks, so much Greg.

Diego Giorgi: Thanks very much. So nothing particularly concerning in markets in Q2. What we have was a lack of episodic income. And as we've called out as transparently as we possibly can, we've got two major subdivisions of our business: the flow business, which continues to perform extremely well. We gave a longer term time series, and in the investor presentation, to give an indication just how consistent that's been over time, is evolved from quarter to quarter, but a very good 9% compound growth over the past five years. And I think if you went back further, we don't have all that data further back, but if you went back further, you'd see similar trends.

Speaker Change: Thanks very much so.

Speaker Change: Nothing particularly concerning in markets in Q2, the what we have is the lack of episodic income and as we've as we called out as transparently as we possibly can we got two major subdivisions of our business the <unk> business, which continues to perform extremely well we gave.

Speaker Change: And longer term time series and the Investor presentation to give an indication just how consistent that's been overtime, so volatile from quarter to quarter.

But a very good 9% compound growth over the past five years and I think if you went back further.

We don't have all that data further back but if you went back further you would see similar trends and then we've had episodic which is much more volatile obviously, it's a function of market events, but also a one off client transactions.

Diego Giorgi: And then we've had episodic, which is much more vulnerable, obviously. It's a function of market events, but also one-off client transactions. And we had a particularly strong episodic quarter in the second quarter of last year, and a particularly weak episodic quarter in the second quarter of this year. Nothing at all concerning in terms of the structure of the business or the environment, for that matter. It's kind of performing the way that we would expect, which is what will, when the opportunities are there, we're in a good position to see them. And when they're not, we don't.

Speaker Change: And we had a particularly strong episodic quarter in the second quarter of last year, and a particularly weak episodic quarter in the second quarter of this year nothing at all concerning in terms of the structure of the business or the environment for that matter.

Aman Rakkar: Nothing at all concerning in terms of the structure of the business or the environment, for that matter. It's kind of performing the way that we would expect, which is when the opportunities are there, we're in a good position to seize them, and when they're not, we don't.

Speaker Change: It's kind of performing the way that we would expect which is when the opportunities are there. We're in a good position to seize them and whether or not we don't.

Diego Giorgi: I'll note that July has started fine, so there were no particularly adverse operating trends in June, and there are no adverse operating trends in July either. So all in all, I think that there's really not too much more to say about markets in the second quarter. To the point that trading assets have grown at a time when average interest trading assets, otherwise in other locations, have been a bit weaker, we definitely don't allocate capital to the trading book to massage the numbers. We book assets in the trading book if they're attractive to be booked there.

William Winters: I'll note that July has started fine. So, there were no particularly adverse operating trends in June, and there are no adverse operating trends in July either. So, all in all, I think that there's really not too much more to say about markets in the second quarter, to the point that trading assets have grown at a time when average interest trading assets in other locations have been a bit weaker. We definitely don't allocate capital to the trading book to massage the numbers.

Speaker Change: I'll note that July has started fine. So there was there were no particular adverse operating trends in June and there are no adverse operating trends in July either.

Speaker Change: So all in all I think that.

Speaker Change: And there's really not too much more to say about markets in the second quarter to the point that.

Speaker Change: Trading assets have grown at a time when when average interest earning assets otherwise other work in other locations have been a bit weaker than.

Speaker Change: We definitely don't allocate.

Speaker Change: Capital to the trading book too.

William Winters: We book assets in the trading book if they're attractive to be booked there and if we have attractive opportunities and if it suits our business strategy. And so we're perfectly happy to book assets into our trading book. We're perfectly happy to book assets into our banking book if that's where they belong, but it's driven by what makes sense for the business, not by trying to generate a particular set of numbers in a quarter. I just wanted to... And frankly, completely disabuse anyone of that notion. It actually hasn't crossed our minds. But maybe, maybe for the third quarter, Diego, we can look at some of these games.

Speaker Change: Massage the numbers.

Speaker Change: We book assets in their training because theyre attractive to be booked there and if we have if we have attractive opportunities and if it suits our business strategy and.

Diego Giorgi: And if we have, if we have attractive opportunities and if it suits our business strategy, and we're perfectly happy to book assets into our trading book. or Perfectly happy to bugassets into our banking book, if that's where they belong. But it's driven by what makes sense for the business, not by trying to generate a particular set of numbers in a quarter.

So we're perfectly happy to book assets into our trading book.

Speaker Change: Really happy to book assets into our banking book, if that's where they belong.

Speaker Change: But just driven by what makes sense for the business not by trying to generate a particular set of numbers in a quarter I just wanted to.

Diego Giorgi: I just wanted to, in fact, they completely disavise anyone at that notion, but actually has them crossed their mind. But maybe for the third quarter, Diego, we can look at some of these games. So it's certainly not what was going on in Q2. Now, I would say that also we have proven, I think this quarter proves another important point, which is we have grown the market balance sheet because there was demand from our customers. We have not necessarily, we have not necessarily grown. Actually, we have shrunk market rescuated assets, which proves to you that we can make good business and produce good income without necessarily leaning into the rescuated asset part of that equation.

Speaker Change: And frankly completely disabuse anyone of that notion.

Speaker Change: He hasn't crossed your mind, but maybe maybe for the third quarter Diego, we can look at some of these games.

Diego De Giorgi: It's not what was going on in Q2. Now, I would say that also. I think this quarter proves another important point, which is that we have grown the market balance sheet because there was demand from our customers. We have not necessarily necessarily grown; actually, we have shrunk market risk-weighted assets, which proves to you that we can make a good business and produce good income without necessarily leaning into the risk-weighted assets part of that equation. And that's important.

Diego: It's certainly not what was going on in Q2 now.

Speaker Change: I would say that also we have proven I think this quarter proves another important point, which is we have grown the market balance sheet.

Speaker Change: Because there was demand from our customers. So we have not necessarily we have not necessarily grown actually we had shrunk market risk weighted assets, which proves to you that we can make a good business and produce good income without necessarily leaning into the risk weighted asset part of that equation and thats important by the way that's a brand that as bill has mentioned continuous.

Diego Giorgi: And that's important, by the way. That's a trend that, as Bill has mentioned, continues well into July. And also in July, I would call out the fact that wealth management is continuing on exactly the same trends as it has done during Q1 and so for the banking business, where the pipeline is building. So all good on that front.

Diego De Giorgi: By the way, that's a trend that, as Bill has mentioned, continues well into July. And also, in July, I would call out the fact that wealth management is continuing on exactly the same trends as it did during Q1. And so for the banking business, where the pipeline is building. So all good on that front. On your second question, shall I take it?

Bill: Well into July and Ultra in July I would call out the fact that with management is continuing on exactly the same trends.

Bill: It's done.

Speaker Change: During Q1, and so far the banking business, where the pipeline is building. It. So all in all good on that front on your second question should I shall I take it.

Diego Giorgi: On your second question, shall I take it? So yes, we have reduced; we have reduced an interesting income sensitivity. It's something we've plugged before. The pace at which we are doing it is even faster than what we were thinking, frankly, at the beginning of this year. We have found ways of finding capacity in terms of the hedges, which are, if anything, maybe that's another aspect of that RWA optimization and optimization activity that we do furiously. And today, I would say that we will probably put in 2024, as many hedges, as many new hedges as we put in 2023, and in 2023, we put on $16 billion of hedges.

Diego De Giorgi: So yes, we have reduced our net interest income sensitivity, it's something we flagged before, and the pace at which we are doing it is even faster than what we were thinking, frankly, at the beginning of this year. We have found ways of finding capacity in terms of the hedges, which are, if anything, maybe that's another aspect of that RWA optimization and optimization activity that we do furiously. And today, I would say that we probably should put in as many hedges as we put in 2023. And in 2023, we will put on $16 billion of hedges.

Speaker Change: So yes, we have reduced we have reduced our net interest income sensitivity, it's something we flagged the we flagged the before the the pace at which we are doing it is even faster than what we were thinking frankly at the beginning of this year. We have found ways of all the finding capacity in terms of the hedges.

Speaker Change: Which IRA if anything maybe that's another aspect of that Oh W. A optimization and optimization activity that we do furiously.

Speaker Change: And today I would say that we will probably put in the 2024.

Speaker Change: Many hedges as many new hedges, we put in 2023 and in 2019, three we've put on $16 billion of hedges. So we are now at 61 billion only it will grow during the course of the year. If we continue to reduce the sensitivity to the sensitivities on net interest income.

Diego Giorgi: So we are now at 61 billion. It will grow during the course of the year. It will continue to reduce the sensitivity to that interesting income. And it's something that we will continue to work on also in the years to come. So all good from that point of view. Maybe we'll just explain a bit, Diego, on the fact that we're focusing on currency by currency. And that has been somewhat the determinant of how fast we can go. Very much so. And as we have pointed out in the past, we face limitations that sometimes the computing possibilities in terms of accessing certain currencies from a derivative point of view.

Diego De Giorgi: So we are now at 51 billion, and it will grow during the course of the year, and it will continue to reduce the sensitivity to the sensitivity to net interest income. And it's something that we will continue to work on also in the years to come. So it's all good from that point of view.

Speaker Change: And it's something that we will continue to work on also in the years to come so all the all good from the debt.

Diego De Giorgi: Maybe we're just expanding a bit Diego on the fact that we're focusing on currency by currency. And that has been somewhat the determinant of how fast we can go. Very, very much so. And, as we have pointed out in the past, we face limitations, sometimes competing possibilities, in terms of accessing certain currencies from a derivative point of view. But we have been managing very dynamically both our WOS portfolio and, to an extent, our value to OCI. And that allows us to really optimize the margin on some of the less liquid currencies, and we've managed to put on hedges there. Good. Next question, please. Thank you.

Speaker Change: That the point of view, maybe with just.

Spending a bit dig on the fact that we're focusing on on a currency by currency.

Speaker Change: That has been somewhat the determinant of how fast we can go very very myself and we and as we have pointed out in the past we face limitations that sometimes competing possibilities in terms of accessing certain currencies from a derivative point of view.

Diego Giorgi: But we have been managing very dynamically, both ours was portfolio and to extend our third value through OCI. And that allows us to really optimize the margins, some of the less liquid currencies. And we have managed to put on hedges there too.

Speaker Change: But we have been managing very dynamically both our swap portfolio.

Speaker Change: To an extent our fair value OCI and that allows us to really optimize the margin some of the less liquid currencies and we have managed to put on hedges there too.

Operator: Good. Next question, please. Thank you.

Speaker Change: Good next question please.

Joseph Dickerson: Your next question comes from the line of Joseph Dickerson from Jeffries. Please go ahead. Hi, guys.

Speaker Change: Thank you.

Joseph Dickerson: Your next question comes from the line of Joseph Dickerson from Jeffreys. Please go ahead. Hi guys, congrats on a great set of results in the buyback number. Just a quick question.

Speaker Change: Your next question comes from the line of Joseph Dickerson from Jefferies. Please go ahead.

Joseph Dickerson: Congrats on a great set of results in the buyback number. Just a quick question. I know it's a relatively small revenue line for you, but it's nevertheless actually quite vulnerable to the rest of your business, which is the securities and prime services line. Seems to have a bit of a step up in the quarterly run rate in the second quarter.

Joseph Dickerson: Hi, guys. Congrats on a great set of results in the buyback.

Speaker Change: <unk>.

Joseph Dickerson: I know it's a relatively small revenue line for you, but it's nevertheless actually quite fungible with the rest of your business, which is the securities and prime Services line seems to have a bit of a step up in the quarterly run rate in the second quarter. And I'm wondering if that's something that, in your view, can continue. Or was it just certain business activity in the quarter that drove that? That's my first question.

Joseph Dickerson: Just a quick question I know, it's a it's a relatively small revenue line for you, but it is nevertheless, actually quite fungible with the rest of your business, which is the securities in prime.

Speaker Change: Services line.

Speaker Change: It seems to have a bit of a step up.

Speaker Change: In the quarterly run rate in the second quarter and I'm wondering if that's something that in your view can continue or was it just certain.

Joseph Dickerson: And I'm wondering if that's something that, in your view, can continue, or was it just certain business activity in the quarter that? That's my first question.

Joseph Dickerson: And then my second question is on ventures, where if I look, the client liabilities are up, look about half this year on half last year, about 2x. And you referred to some of that in the slides on ventures. But I see that revenues are down. At what point do we inflect on the revenue performance in ventures, given some of the client franchise momentum you're seeing in the likes of Trust and Mox? Thanks. Good. Thanks, Joseph.

Speaker Change: Business activity in the quarter that drove that.

Speaker Change: My first question and then my second question is in ventures.

Joseph Dickerson: And then my second question is in ventures, where if I look at the client liabilities, it looks about half on half this year on half last year, about two acts, and you've referred to some of that in the slides on ventures. But I see that the revenues down. At what point do we inflect on the revenue performance in ventures given some of the client franchise momentum you're seeing in the likes of trust and mocks. Thanks.

Speaker Change: If I look at the client liabilities are up it looks about half on half this year half last year.

Speaker Change: About to ask and you referred to some of that in the slides on that.

Speaker Change: Adventures.

Speaker Change: But I see that the revenue is down it was at what point do we can inflect.

Speaker Change: On the revenue performance and ventures, given some of the client franchise momentum youre seeing in the likes of trust amongst banks.

William Winters: Let me take the second question first, so Diego can take the securities and prime question. So ventures obviously are dominated, certainly in the lines that you're mentioning, by Mox and Trust. We've had good steady growth in client numbers, which is obviously the best leading indicator we could have that leads directly to growth in liability numbers. We've had good steady growth numbers in assets in Trust. It obviously started later and is behind in terms of asset growth, but the trends are all very positive.

William Winters: Good. Thanks, Joseph.

William Winters: Let me take the second question first, Diego. It can take the securities and prime question. Ventures, obviously, is dominated, certainly in the lines that you're mentioning, by mocks and trust. We've had good study growth in client numbers, which is obviously the best thing, the indicator we could have that leads directly to growth in liability numbers. We've had good study growth numbers and assets in trust; obviously, started later and is behind in terms of asset growth, but the trends are all very positive. Mocks, as you may recall, we had strong asset growth. We ventured into higher risk portions of the Hong Kong market.

Speaker Change: Thanks, Joseph Let me take the second question first Diego can take the securities in Prime question.

Diego: Ventures, obviously is is dominated certainly underlines that youre mentioning by by marks and trust. We've had good steady growth in client numbers, which is obviously the diversity indicated we could have that leads directly to growth and liability numbers.

Diego: We've had good steady growth numbers and assets in trust, obviously started later and.

Diego: Is behind in terms of assets asset growth, but the trends are all very positive marks as you may recall, we had strong asset growth.

William Winters: Mox, as you may recall, we had strong asset growth. We ventured into higher-risk portions of the Hong Kong market. We made mistakes, and we had a substantial spike in loan and power. We pulled back substantially.

Diego: We ventured into higher risk portions of the of the Hong Kong market.

William Winters: We made mistakes, and we took. I had a substantial spike in order.

Diego: We made mistakes and we took had a substantial spike in loan impairments.

William Winters: We pulled back, so essentially, we have no new issues with, I should say, no issues out of the ordinary with the existing origination portfolio, but we definitely slowed down the rate of overall growth in the portfolio as we corrected for the underwriting errors that we made that led to that spike in loan impairments. The underlying trend, we're so perfectly comfortable with. Obviously, we've learned lessons about what we expose ourselves to in terms of fraud and credit loss, when you're the easiest to use digital bank in a market that's new to digital banking. And I'm sorry to say that we learned that lesson the hard way.

William Winters: We have no new issues with, I should say, no issues out of the ordinary with the existing Origination portfolio. But we definitely slowed down the rate of overall growth in the portfolio as we corrected for the underwriting errors that we made that led to that spike in loans. The underlying trend we're so perfectly comfortable with. Obviously, we've learned lessons about what we expose ourselves to in terms of fraud and credit loss when you're the easiest to use digital bank in a market that's new to digital banking. And I'm sorry to say that we learned that lesson the hard way.

Diego: We pull back substantially we have no new issues with it.

Diego: I should say no issues out of the ordinary with the existing origination portfolio, but we definitely slow down the rate of overall growth in the portfolio as we corrected for the the underwriting errors that we made that led to that spike in loan impairments.

Diego: The underlying trend, we're still perfectly comfortable with obviously, we've learned lessons about what it what we expose ourselves to in terms of fraud and credit loss. When you are the easiest to use digital bank in a market, that's new to digital banking and.

Diego De Giorgi: I'm happy to say that it was small in the overall scheme of things, and it benefits our broader business, starting with MOX, but the broader business, in terms of lessons learned, very, very substantially. So, in terms of an inflection point, I think we're well past the inflection point in terms of that particular episode of higher credit losses, and the underlying loan and liability growth continues unabated from here with ongoing projections of getting to good profitability in the medium term for both those banks. On security services, as you say, not the largest of lines, but one on which we are really focused and one on which we've been making serious investments in the past few years. No one-offs.

Diego: I'm, sorry to say that we learned that lesson the hard way I'm happy to say that it was small in the overall scheme of things and it benefits our broader business starting with marks but the broader business in terms of lessons learned are very very substantially.

William Winters: I'm happy to say that it was small and the overall scheme of things, and it benefits our broader business, starting with mocks, but the broader business, in terms of lessons learned, very, very substantially.

William Winters: So, in terms of infection point, I think we're well past the infection point in terms of that particular episode of higher credit losses. And the underlying loan and liability growth continues unabated from here, with ongoing projections of getting to good profitability in the medium term for both of those banks.

Diego: So in terms of inflection point I think we're well past the inflection point in terms of that particular episode of higher credit losses.

And the underlying loan and liability growth continues.

Diego: Unabated from here with ongoing predictions of getting to good profitability in the medium term for both those banks.

Diego Giorgi: Did you want to copy your services on security services, as you say, not the largest of lines, but one on which we are really focused and one on which we've been making serious investments in the past few years. There's no one opposite. It's the kind of business, by the way, that doesn't let me tell you much to one opposite. It's a steady, recurrent source of revenues. It's a matter of leaning more into it. Very mind that in many cases, we are one of the very few. And in some cases, almost the sole provider of those kinds of services in some of the markets where we operate.

Doug: Doug you want to pick up the series and Brian on the answer given your services as you say not the not the largest of lines, but one on which we are really focused there and one on which we'd be making serious investments in the past few years.

Diego De Giorgi: It's the kind of business, by the way, that doesn't lend itself as much to one-offs. It's a steady, recurrent source of revenue. It's a matter of leaning more into it. Bear in mind that, in many cases, we are one of the very few, and in some cases, almost the sole provider of those kinds of services in some of the markets where we operate. It's one of the two embodiments of the power of our local presence and the unique opportunities that it offers. It's a business that has always been run in close conjunction with our retail business. It is even more so in the last few quarters.

No one offs.

Doug: Business by the way that doesn't lend itself as much two one offs.

Doug: Steadier recurrent source of revenues.

Speaker Change: It's a matter of the leaning more into it they remind that in many cases, we are one of the very few and in some cases almost the sole provider of those kinds of services and some of the markets, where we operate it's one of the two embodiment of the of the power of our local presence and the unique opportunities that it offers us.

Diego Giorgi: It's one of the two embodiments of the power of our local presence and the unique opportunities that it offers us. It's a business that has always been running in close conjunction with our market business. It is even more so in the last few quarters. And we think that it's a business that has still a long way to go in terms of growth, and we have some ambitious targets there. Good.

Speaker Change: It's a business that has always been running close conjunction with our market business. It is even more so.

Diego De Giorgi: And we think that it's a business that has a long way to go in terms of growth, and we have some ambitious targets. Okay. Can we take the next question, please? Thank you. Your next question comes from the line of Edward Firth from KBW. Please go ahead. Morning, everybody.

Speaker Change: In the last few quarters, and we think that it's a business that has still a long way to go in terms of growth and we have some ambitious targets there.

Edward Firth: Can we take another question, please? Thank you. Your next question comes from the line of Edward Firth from KBW.

Speaker Change: Can we take the next question please.

Speaker Change: Thank you.

Speaker Change: Your next question comes from the line of Edward Firth from <unk>. Please go ahead.

Edward Firth: Please go ahead.

William Winters: Good morning, everybody. I just had two questions. One was really about Hong Kong, and I guess the environment there. If I take us back a couple of years ago, we were all getting very excited about the opening up of China, et cetera, and it doesn't appear to have come through really at all. And I'm just wondering, when you look forward, what should we look for as the sort of key capitalist, which might regenerate that environment, might start getting some of the excitement in Hong Kong, perhaps we had pre-pandemic. I don't know whether it's something about interest rates, whether it's something about regulations. What is the environment that you would be thinking, yes, this is exactly what we need, or what are the catalysts?

Edward Firth: I just have two questions. One was really about Hong Kong and, I guess, the environment there. If I take us back a couple of years ago, we were all very excited about the opening up of China, etc., and it doesn't appear to have come through really at all. And I'm just wondering, when we look forward, what should we look for as the sort of key catalyst that might, you know, regenerate that environment and start getting some of the excitement in Hong Kong that perhaps we had pre-pandemic?

Edward Firth: Yes, good morning, everybody.

Edward Firth: I just had two questions one was really about Hong Kong and I guess the environment there.

Edward Firth: And if I take us back a couple of years ago, we were.

Speaker Change: We're getting very excited about the opening up of China et cetera, and it doesn't appear to have come through really a tool.

Mike: And I'm just wondering when you look forward what should we look for as the key catalysts, which Mike.

Regenerate that environment might start getting some of the excitement in Hong Kong, but perhaps we will.

Speaker Change: We had pre pre pandemic.

Edward Firth: You know, I don't know whether it's something about interest rates, whether it's something about regulations, you know, what is the environment that you would be thinking, yes, this is exactly what we need, or what are the catalysts? So that's my first question. And then the second question: I'm just thinking about your return, Todd. I'll take a first pass, and I know Diego will have color to add.

Mike: I don't know, whether you're talking about interest rates, whether it's something about regulation.

Mike: What is the environment that you would be thinking yes. This is exactly what we need what are the catalysts.

William Winters: That's my first question. And then the second question: I'm just thinking about your return target, the 10 growing to 12. I mean, you're already making 14. It doesn't feel like those are particularly ambitious. And I get the sort of headwinds around the impairments, possibly, and lower rates. But, yeah, I just thought, yeah, any thoughts you've got about the sort of 12% longer term target, and the extent to which there might be potential to increase that over time.

Speaker Change: That's my first question.

Speaker Change: And then the second question I think.

Speaker Change: About your return targets.

Speaker Change: 10 growing to 12.

Speaker Change: Are you, making 14 it doesn't feel like those are particularly ambitious and I get the sort of headwinds.

Speaker Change: Around the impairments, possibly lower rates, but yeah.

Speaker Change: Any thoughts you have got about about the sort of 12% longer term target.

Speaker Change: The extent to which there might be potential to increase that over time.

William Winters: Thanks very much. Good. I'll take a first pass, and I know Deo will have color to add. I recognize your comments about Hong Kong, but I must say I don't share the sentiment. To us, Hong Kong is super exciting, and something about strong profit growth. An increasing power for wealth management center, increasing the important China offshore banking center generating record income and record profits, all feels pretty good to me. And there's nothing about the terms that we've seen post-pandemic or otherwise, that suggests that that's going to stop anytime soon. It's obviously been a very important driver, together with Singapore, of the growth in our wealth business, which is, I think, increasingly driving the earnings growth for the bank.

So much good I'll take a first pass and I know do you have color to add.

William Winters: I recognize your comments about Hong Kong, but I must say I don't share the sentiment. To us, Hong Kong is super exciting and something about strong profit growth. Increasingly Powerful Wealth Management Centers, and an increasingly Important China Offshore Banking Center Generating Record Income and Record Profits, all feel pretty good to me. And there's nothing about the trends that we've seen post-pandemic or otherwise that suggests that that's going to stop anytime soon. It's obviously been a very important driver, together with Singapore, of the growth in our wealth business, which is, I think, increasingly driving the earnings growth of the bank, together with everything that we do cross-border.

Speaker Change: I recognize your comments about Hong Kong, but I must say I don't share the sentiment towards Hong Kong is super exciting and something about.

Speaker Change: Strong profit growth.

Speaker Change: Increasingly powerful wealth management center are increasingly important.

Speaker Change: China offshore banking center generating record income and record profits.

Speaker Change #100: It's pretty good to me and and there is nothing about the trends that we've seen post pandemic or otherwise that suggest that that's going to stop anytime soon.

Speaker Change #100: It's obviously been a very important driver together with Singapore of the the growth in our wealth business, which is I think increasingly draw.

Speaker Change #100: Driving the earnings growth for the bank together with everything that we do this cross border. So.

William Winters: Everything together with everything that we do this cross-border. So I think overall Hong Kong is in good shape.

William Winters: So I think, overall, Hong Kong is in good shape. Now, that said, it's taken on a different complexion over the past couple of years, post-pandemic and post the changes in relationship vis-a-vis China. It's increasingly becoming an offshore financial center for China. And I think all the policy actions and rhetoric coming out of China support that view.

Speaker Change #100: I think overall Hong Kong is in good shape now that said.

William Winters: Now, that said, it's taken on a different complexion over the past couple of years post-pandemic and post the changes in relationship with China. It's ever more the offshore financial center for China. And I think all the policy actions and rhetoric coming out of China support that view. China itself, you mentioned, what are we going to get the excitement around opening up. China is opening up. It's opening up very fast. And that's what's driving our very, very substantial income and profit growth in China is everything that's cross-border in and out of China. So it's payments, it's financial markets and risk management activity.

Speaker Change #100: It's taken on a different complexion over the past couple of years post pandemic and post the change.

Speaker Change #100: Changes in relationship vis vis China.

Speaker Change #100: Evermore, the offshore financial center for China, and I think all the all the policy actions and rhetoric coming out of trying to support that view.

William Winters: China itself, you mentioned, when are we going to get the excitement around opening up? China is opening up. It's opening up very fast.

Speaker Change #101: China itself you mentioned, what are we going to get the excitement around opening up in China is opening up its opening up very fast and that's what's driving our very very substantial income and profit growth in China is everything that's cross border in and out of China. So it's payments, it's financial markets and risk management activity its capital raising.

William Winters: And that's what's driving our very, very substantial income and profit growth in China is everything that's cross-border in and out of China. So it's payments, it's financial markets, and risk management activity. It's capital raising, both money going into China and money coming out of China, whether it's Belt and Road related or sustainability related. All of those areas are generating very good, strong growth for Standard Chartered Bank. And it's on the back of China opening up.

William Winters: It's capital raising, both money going into China and money coming out of China, whether it's belts and roads related or sustainability related. All of those areas are generating very good, strong growth for the center of the bank. And it's on the back of China opening up. A lot of that opening up activity is going through Hong Kong. And so we feel that probably. So while I think if we focus a lot on some of the press narrative, you might think that Hong Kong is in the doldrums. And in terms of domestic economic activity, just some extent it is; in terms of the domestic real estate market, it's sluggish for sure.

Speaker Change #101: Money going into China, and money coming out of China, whether it's belt and road related or or sustainability related all of those areas are generating very good strong growth for centered her bank and it's on the back of China opening up a lot of that opening up activities going through Hong Kong and so we feel about probably so.

William Winters: A lot of that opening up activity is going on in Hong Kong, and so we feel that probably. So while I think if we focus a lot on some of the press narrative, you might think that Hong Kong is in the doldrums. And in terms of domestic economic activity, to some extent, it is. In terms of the domestic real estate market, it's sluggish, for sure, but that has relatively little impact on our business day to day. What drives our earnings and profits are China opening up and a lot of that opening up happening through Hong Kong, both of which we're perfectly positioned. On the...

Speaker Change #102: Well I think if we focus a lot on some of the press narrative you might think that Hong Kong is in the doldrums and in terms of domestic economic activity to some extent it is.

Speaker Change #102: In terms of the domestic real estate market its foundation for sure.

William Winters: That has relatively little impact on our business day to day. What drives our earnings and profits are China opening up. And a lot of that opening up happening through Hong Kong, both of which were perfectly positioned for.

Speaker Change #102: That has relatively little impact on our business day to day, what drives our earnings and profits are China opening up and a lot of that opening up happening through Hong Kong book of which we're perfectly positioned for.

William Winters: On the ROT guidance, we said 12% by 2026, progressing from there. And we don't think 12% is the end state for what this bank can deliver. I think this bank can deliver returns substantially in excess of cost of capital as that settles in itself over time. And all I can tell you is we're doing everything that we can in our performance in the first half of this year. I think make it clear that we're making good progress on delivering returns that are substantially in excess of our cost of capital over that period of time. So the 10 and the 12 are milestones along the way.

Speaker Change #103: On the.

William Winters: The ROT guidance, we said 12%, you know, in excess of 12% actually, well, 12% by 2026, progressing from there. And we don't think 12% is the end state for what this bank can deliver. I think this bank can deliver returns, you know, substantially in excess of the cost of capital, as that settles in itself over time. And all I can tell you is we're doing everything that we can, with our performance in the first half of this year, to make it clear that we're making good progress on delivering returns that are substantially in excess of our cost of capital over that period of time. So the 10 and the 12 are milestones along the way, but they're by no means the totality of our mission. And I had a boring CFO comment.

Speaker Change #104: The the <unk> guidance, we said, 12% to an excess of 12% actually.

Speaker Change #104: 12% by 2026.

Speaker Change #104: Progressing from there and we don't think 12% is the end state for what <unk> can deliver I think this bank can deliver returns substantially in excess of cost of capital as as that settles in itself overtime.

Speaker Change #104: All I can tell you is we're doing everything that we can and our performance in the first half of this year I think make it clear that we're making good progress on delivering returns that are substantially in excess of our cost of capital over that period of time, so that the 10 minute over our milestones along the way it's by no means the totality of our mission.

William Winters: It's by no means the totality of our mission. And I had a boring CFO, boring CFO comment. I mean, this is first half ROT. Second half is always slower, and we have the bank levy in there. So, I mean, by no means perish the thought that we wouldn't be optimistic. But we also need to realize some key characteristics of the business in the two hearts. Good question.

Speaker Change #104: Daniel can I add a boring CFO boring CFO comment I mean.

William Winters: I mean, this is the first half of ROT, the second half is always slower, and we have the bank levy in there. So, by all means, perish the thought that we wouldn't be optimistic, but we also need to realize some key characteristics of the business in the two halves. Question?

Daniel: Is it first half second half is always slower and we have the bank levy in there. So I mean by all means to finish that thought that we would then be optimistic.

Speaker Change #105: But we also need to realize that some key characteristics of the business in the two hubs.

William Winters: Next question. Thank you. As a reminder, if you wish to ask a question via the audio, please press star one and one on your telephone keypad and wait for your name to be announced.

Operator: Next question. Thank you.

Speaker Change #107: Good question next question.

Unknown Executive: Alternatively, please use the question box available on the webcast page to submit your questions. We will now go to your next question. And your next question comes from the line of Amit Goel from Mediobanker. Please go ahead. Hi, thank you for letting me ask my question. So, two for me.

Operator: As a reminder, if you wish to ask a question via the audio, please press star one and one on your telephone keypad and wait for your name to be announced. Alternatively, please use the question box available on the webcast page to submit your question.

Speaker Change #107: Thank you.

Speaker Change #115: Mind. It if you wish to ask a question why the ODI. Please press star one on one on your telephone keypad and wait for your name to be announced Alternatively. Please use the question box available on the webcast page to submit your question.

Operator: We'll now go to your next question.

Speaker Change #111: No now get your next question.

Amit Goel: And your next question is the line of Amit Goel from Media Banker; please go ahead. Hi, thank you for letting me ask my question. So, to, for me, firstly, just on payments and liquidity within CIB, I see that's kind of ticked down again a little bit. Just curious what you think the dynamics are for that business going forwards. You know, I think you have invested into it, so just wanted to understand that a bit better.

Aman Rakkar: And your next question comes from the line of Amit go from Mediobanca. Please go ahead.

Amit Goel: Firstly, just on payments and liquidity within CIB. I see that's kind of ticked down again a little bit. Just curious what you think the dynamics are for that business going forward, and you know I think you have invested in it, so just wanted to understand that a bit better and, secondly, just come back on ventures and just curious in terms of how confident you are in terms of that business becoming roti accretive by 2026 and, essentially, how significant is that within your plans to get to the 12% roti if that business isn' I'll take the second question, then hand it over to Diego for the first.

Speaker Change #107: Okay.

Aman Rakkar: Hi, Thank you and so that he may answer my questions.

And two from me.

Amit: Just on payments and liquidity within the CIB.

Speaker Change #111: And I'd say, that's kind of ticked down again, a little bit.

Speaker Change #113: Just curious what you think the dynamics are for that business going forward.

Speaker Change #112: And I think you have invest into it so I just wanted to understand that a bit better.

William Winters: And secondly, just come back on ventures and just curious in terms of how confident you are in terms of that business becoming relative to your creatives by 2026. And essentially how significant is that within your plans to get to the talks and ROT, if that business isn't quite as profitable? You know, where are the main areas of offset that you would see within the plan? Thank you. Good, thanks on it.

Speaker Change #111: And.

Speaker Change #114: Secondly, and just come back on benches.

Speaker Change #114: And just curious in terms of how confident you are in terms of that business, becoming where HCA creatives and by 2026 and.

Speaker Change #114: And essentially how significant is that within your plans to get to the top 10 <unk> and.

Speaker Change #114: If that business isn't quite as profitable.

Speaker Change #118: Where are the main areas of offset that you would see within the plan. Thank you.

William Winters: I'll take the second question and then hand over to Diego for the first. The, our guidance remains unchanged in terms of achieving a return that's to creatives to the group in 2026. And that will come through a combination of increasing profitability, or I should say establishment of profitability in ventures; it might interest in particular, but then increasing, once we've reached that breakeven point, combined with an ongoing series of asset sales of one descriptor or other. So we've solved over the past couple of years four ventures, I guess, and raised capital in another or five, all at a significant premium to our caring value.

Speaker Change #117: Good thanks.

Speaker Change #116: I'll take the second question and then hand over to Diego for the first.

William Winters: Our guidance remains unchanged in terms of achieving a return that's secretive to the group in 2026. And that will come to a combination of increasing profitability, or I should say, establishment of profitability in ventures, much in trust, in particular, but then increasing once we've reached that breakeven point, combined with an ongoing series of asset sales of one description or another. So we've sold over the past couple of years four ventures, I guess, and raised capital in another five, all at a significant premium to our carrying value.

Diego: Our guidance remains unchanged in terms of achieving a return that's accretive to the group in 2026 and that will come through a combination of increasing profitability or I should say establishment of profitability in.

Diego: <unk> ventures, and Matson trusts in particular, but then increasing.

Diego: Once we reach that breakeven point combined with ongoing series of asset sales of one description rather.

Diego: We sold over the past couple of years for ventures, I guess and raise capital and another five all at a significant premium to our carrying value.

William Winters: And it's not that we're building businesses with a view to selling them off of the gain three, four, five years later; we're very happy to do that. We're building businesses that where we think we've got a competitive insight. We've got either a competitive advantage in terms of the bank's position, or we've got some insight about a customer behavior or a problem that gives us an edge in terms of building adventure or attracting partners or both. Once we've built it and along the way, we're looking constantly at whether that venture belongs inside the bank, alongside the bank, or is best owned by somebody else.

Diego: And it's not that we're building businesses with a view to selling them off at again, three or four or five years later, we're very happy to do that.

Diego: We're building businesses that where we think we've got a competitive insights we've got either a competitive advantage in terms of the bank's position or we've got some insight about customer behavior or a problem.

Diego: It gives us an edge in terms of building a venture or attracting partners or both.

Diego: Once we built it and along the way we're looking constantly at when does that venture belongs inside the bank alongside the bank or is best owned by somebody else, we're not a venture capitalists. So when we sell something we're probably going to sell it at an earlier stage in its evolution than a typical venture capitalist wood.

William Winters: We're not a venture capitalist. So when we sell something, we're probably going to sell it at an earlier stage in this evolution than a typical venture capitalist would. But we will have benefited from the fact that we've got some strategic advantage from the outset that allows us to invest wisely in these ventures. So we've been at this business now for five years. We had our first monetization two years ago. We had several last year, and we'll have several more this year, partial or whole, generating capital gains. And those capital gains obviously are capital gains and that they contribute to our overall 12% ROTE and then in excess of that.

William Winters: And it's not that we're building businesses with a view to selling them off at a gain three, four, five years later; we're very happy to do that at an earlier stage in this evolution than a typical venture capitalist would.

William Winters: But we will have benefited from the fact that we've got some strategic advantage from the outset that allows us to invest wisely in these ventures. So we've been at this business now for five years; we had our first monetization two years ago, we had several last year, and we'll have several more this year, partial or whole, generating capital gains. And those capital gains, obviously, are capital gains, and they contribute to our overall 12% ROTE and then in excess of that.

Diego: But we will have benefited from the fact that we've got some strategic advantage from the outset that allows us to two.

Diego: To invest wisely in these centers. So we've been at this this business now for five years, we had our first monetization two years ago. We had several last year and we'll have several more this year partial or whole generating capital gains and those couple of games. That's obviously, our capital against them that they contribute to our overall, 12% R O T.

William Winters: So I hope that's clarified a little bit; we'll provide more detail on the ventures portfolio as we continue to mature the portfolio. But your question is, are we confident? The answer is yes. Yeah, we're perfectly confident. Maybe, Diego, you want to pick up the cash?

William Winters: So I hope that's clarified a little bit. We'll provide more detail on the ventures portfolio as we continue to mature the portfolio.

Diego: And then in excess of that so I hope that's clarified a little bit will provide more detail on the ventures portfolio as we continue to mature the portfolio.

William Winters: But your questions are we confident? The answer is yes. Yeah, we'll have to be confident.

Speaker Change #119: Your question is are we confident the answer is yes.

Speaker Change #120: Yeah, we're really confident.

Diego Giorgi: Maybe Jay, can you want to pick up the name and the liquidity cash? So, first of all, it's obviously somewhat rate dependent in terms of an answer. But what we are laser focused on is obviously the partial rate. And we've been managing them as aggressively as we can. We have been helped by the addition of new products, by increasing digitization of a lot of the activities that we are doing with clients that obviously help us on the margins. But it's clear that we are watching. We are at an inflection point where it's difficult to make great predictions about partial rates other than if they, when they reverse, there will be two factors at play: one time lag, which will happen in the first few quarters after the reverse, and we're probably more or less there in terms of this starting to happen.

Jay: Maybe Jay do.

Jay: You want to pick up the benefit of liquidity cash so I'm first of all it's it's obviously.

Diego De Giorgi: So, first of all, it's obviously somewhat rate-dependent in terms of an answer, but what we are laser focused on is obviously the pass through rates. And we've been managing them as aggressively as we can. We have been helped by the addition of new products and the increasing digitization of a lot of the activities that we do with clients, which obviously help us on the margins. But it's clear that we are watching; we're at an inflection point where it's difficult to make great predictions about pass-through rates, other than if when they reverse, there will be two factors at play.

Jay: Somewhat rate dependent in terms of an answer but what we are laser focused on is obviously the pass through rates and we've been managing them as aggressively as we can.

Jay: We have been helped by the addition of new products or by increasing Digitization of a lot of the activities that we're doing with clients that obviously help us on the margins.

Jay: But it's clear that we are watching we are at an inflection point, where it's difficult to make a great predictions about pass through rates other than if they when they reversed that will be two factors at play one time.

Diego De Giorgi: One, time lag, which will happen in the first few quarters after the reversal, and we're probably more or less there in terms of this starting to happen. And the second, which will be dependent a little bit on the level of competition.

Jay: Time lag, it which will which will happen in the first few quarters. After the reverse that and we're probably more or less there in terms of this starting to happen in the second of course, it will be if we'd be dependent a little bit on the level of competition as I said a lot of focus on this.

Diego Giorgi: And the second, of course, it will be dependent a little bit on the level of competition. As I said, a lot of focus on this as we recognize this is a very important part of our overall propositions of our client.

Diego De Giorgi: As I said, a lot of focus on this, as we recognize that this is a very important part of our overall proposition to our client. Next question, please. Thank you. Your next question comes from the line of Guy Stebbings from BFB Paribas. Please go ahead.

Jay: As we recognize that this is a very important part of our overall proposition with our clients.

Operator: Next question, please.

Speaker Change #122: Next question please.

Operator: Thank you.

Mick Lord: Your next question comes from the line of five sevens from B.A. B. Poreba, please go ahead.

Speaker Change #123: Thank you.

Speaker Change #124: Your next question comes from the line of high Sevens from beer people probably about please go ahead.

Mick Lord: Hi there, thanks for taking the questions. I should have a quick flop on RWA's and then a second question. So on RWA's, I think it was Robin that asked question earlier, just trying to really understand how much visibility you have on that pick up in the second half. Implicit in the guidance, is this more sort of uncertain, regulate your headwinds of possible uptick in organic loan growth and thus maybe quite conservative struggles or are there more mechanical headwinds that we should be mindful of? And then the second question was on China's CRE, which I guess reassuring isn't much of a focus today and far less the residual concern now than perhaps at times in the past, but it's still an area where we get lots of questions from investors on.

Guy Stebbings: Hi there, thanks for taking the questions. I'll just have a quick follow up on RWAs and then a second question. So on RWAs, I think it was Robin that asked the question earlier, just trying to really understand how much visibility you have in that pickup in the second half implicit in the guidance. Is this more sort of uncertain regulatory headwinds of a possible uptick in organic loan growth and thus maybe quite conservative guidance? Or are there more mechanical headwinds that we should be mindful of?

Hi Sevens: Hi, there thanks for taking the questions just had a quick follow up on <unk> and then the second question. So on AWS I think it was robin the ask a question I was just trying to really understand how much visibility do you have in that pickup in in the second half implicit in the guidance is this more sort of uncertain regulatory headwinds a possible uptick in organic loan growth.

Speaker Change #126: White Conservancy stroke, so although more mechanical headwinds, we should be mindful of.

Speaker Change #127: And then the second question was on on China, CRE, which I guess reassuring isn't much of a focus today.

Speaker Change #128: Fall is a residual concern now than perhaps at times in the past, but it's still an area. We got most of the questions from investors on so maybe you can just give us a bit more of an update on what youre seeing that conviction on coverage levels in the context of latest developments. Thank you. Good thanks very much guys.

William Winters: So maybe you can just give us a bit more of an update on what you're seeing there, conviction on coverage levels in the context of latest developments. Thank you. Good. Thanks very much, Guy.

Guy Stebbings: And then the second question was on China's CRE, which I guess, reassuringly, isn't much of a focus today. And far less of a residual concern now than perhaps at times in the past, but it's still an area we get lots of questions from investors on. So maybe you could just give us a bit more of an update on what you're seeing there, conviction on coverage levels in the context of recent developments. Thank you. Good. Thanks very much, Guy.

William Winters: I'll take the CRE question, and Diego will pick up the RWA question. You're right; we don't have a lot of residual exposure to China real estate. We're about 90% provided on the core part of that portfolio. And we don't see any material increase in risk in the non-distressed part of the portfolio. The dynamic in the market remains challenging. Impressions are still dropping in a number of markets, although there's some signs of stabilization in the tier one and two markets, in particular, in residential. But the challenges are there. It's the impact that we see from China real estate at this point in terms of impact on our business day to day, has much more to do with the consequence of this long malaise in the property market, which is a lower confidence than would otherwise be the case.

Speaker Change #128: This area question Diego will pick up the RVO question.

William Winters: I'll take the CRE question, and Diego will pick up the RWA question. You're right. We don't have a lot of residual exposure to Chinese real estate. We're about 90% provided for on the core part of that portfolio. And we don't see any material increase in risk in the non-distressed part of the portfolio. However, the dynamic in the market remains challenging. Prices are still dropping in a number of markets, although there are some signs of stabilization in the Tier 1 and 2 markets, in particular in residential. But the challenges are there.

Diego: You're right, we don't have a lot of residual exposure to China real estate, where we're about 90% provided on the core part of the of that portfolio.

Diego: And we don't see any any material increase in risk in the non distress.

Diego: Distressed part of the portfolio.

Speaker Change #129: The dynamic in the market remains challenging.

Speaker Change #129: Prices are still dropping in a number of markets. Although there are some signs of stabilization in the tier one or two markets in particular.

Residential.

Speaker Change #129: But the.

William Winters: The impact that we see from Chinese real estate at this point, in terms of impact on our business day to day, has much more to do with the consequence of this long malaise in the property market, which is lower confidence than would otherwise be the case. So we know that consumers are holding back on spending, and businesses are holding back on investing because it feels as though we have not bottomed out in terms of property prices.

Speaker Change #129: The challenges are there.

Speaker Change #130: The impact that we see from China real estate at this point and so in terms of impact on our business day to day is much more to do with the consequence of this this long malaise in the property market, which is a lower confidence than what otherwise be the case and so we know that consumers are holding back on spending.

William Winters: So we know that consumers are holding back on spending, businesses are holding back on investing because it feels that we have not bottled out in terms of property prices. The government has introduced a steady series of both fiscal policy and monetary actions to try to reinstate confidence. As we all noted and commented, they're not panicked and they've not gone over the top in any way. Some have argued that they've not gone far enough. That's what makes the market. This is a good debate on either side of that. Even today, Chinese authorities have rolled out another sort of moderate stimulus activities in terms of policies and other economic actions.

Speaker Change #131: Mrs are holding back on investing because it feels that that we.

Speaker Change #131: We have not bottomed out in terms of property prices.

William Winters: The government has introduced a steady series of both fiscal policy and monetary actions to try to reinstate confidence. As we've all noted and commented, they've not panicked, and they've not gone over the top in any way. Some have argued that they've not gone far enough. That's what makes a market. There's a good debate on either side of that.

Speaker Change #131: The government has introduced a steady series of books fiscal policy and monetary actions to to try to reinstate confidence as we all noted and commented.

Speaker Change #132: Not panicked and they've not gone over the top in any way.

Speaker Change #133: Some have argued that they've not gone far enough. That's what makes a market is that theres a good debate on either side of that.

William Winters: Even today, Chinese authorities have rolled out another set of moderate stimulus activities in terms of policies and other economic actions. I think we can continue to see some level of support in terms of policy focus to make sure that whatever correction is left to come in that market is done in a way that doesn't destabilize the market. Until the market turns around and we hit that inflection point, I don't think we're going to see the jump in confidence, which then in turn drives business investment and gets GDP growth reignited, obviously, then flowing through to the consumer.

Speaker Change #133: Even today the Chinese authorities have have rolled out another set of moderates a stimulus.

Speaker Change #133: The stimulus activities in terms of policies and other economic actions and I think we can continue to see some level of support in terms of of policy focus.

William Winters: And I think we can continue to see some level of support in terms of policy focus to make sure that whatever correction is left to come in that market is done in a way that doesn't destabilize the market. But until the market turns around and we hit that inflection point, I don't think we're going to see the jump in confidence, which then in turn drives business investment and gets GDP growth through ignited, obviously then flowing to the consumer. So the malaise we feel is in our domestic business. We see it in our business with SMEs and consumers.

Speaker Change #133: To make sure that whatever correction is left to come in that market is done in a in a way that that doesn't destabilize the market.

Speaker Change #133: But until the market turned around and we hit that inflection point I don't think were going to see the jump in confidence.

Speaker Change #133: Which then in turn drives our business investment and and gets GDP growth reignited, obviously, then flowing through to the consumer so the malaise, we feel it's in our domestic business.

William Winters: So the malaise, we feel it in our domestic business. We see it in our business with SMEs and consumers. There's no material increase in delinquencies, but we see slower activity, a slower pace of loan origination, and early signs of some credit stress, which is completely consistent with the broader economic picture. It doesn't all come from the property market, but the property market is certainly a major contributor to that.

Speaker Change #133: We see it in our business with Smes and consumers.

William Winters: There's no material increase in delinquencies, but we see slower activity, slower pace of loan origination, and early signs of some credit stress, which is completely consistent with the broader economic picture. It doesn't all come from the property market, but the property market is certainly a major contributor to that. And the sooner we can hit the bottom and bounce back up, the better off the Chinese economy will be. As I commented earlier, not only do we not have a lot of direct residual exposure to the industrial sector, we are much more exposed to the pace of opening up in China, which itself is moving at quite a good pace.

Speaker Change #134: There is no material increase in delinquencies, but we see slower activity slower pace of loan origination and and early signs of some credit stress, which is completely consistent with the broader economic picture. It doesn't all come from the property market, but the property market is certainly a major contributor to that and the sooner.

William Winters: And the sooner we can hit the bottom and bounce back up, the better off the Chinese economy will be. As I commented earlier, not only do we not have a lot of direct residual exposure to the distressed sector, but we are much more exposed to the pace of opening up in China, which itself is moving at quite a good pace. So this is not something that we're super preoccupied with, although as major players in China, we watch it very, very carefully. Diego, anything on that or RWAs?

Speaker Change #134: We can hit the bottom and bounced back up the better off the Chinese economy will be as I commented earlier.

Speaker Change #134: Not only do we not have a lot of direct residual exposure to this sector.

Speaker Change #134: We are much more exposed to the pace of opening up in China, which itself is moving at quite a good pace. So this is not something that we're super proud keypad with although as major players in China, We watch it very very carefully.

William Winters: So this is not something that we're super preoccupied with. Although, as major players in China, we watch it very, very carefully.

Diego De Giorgi: So on RWAs, first of all, there is lots of optimism here, and there are no reasons to be concerned. There are no model headwinds, there are no regulatory headwinds, other than the fact that we are waiting for Basel 3.1. But if anything, I would contend we have taken a pretty conservative approach, like in other fields, to guidance on this particular topic. So hopefully, we will see some upside to that. So nothing mechanical.

Diego Giorgi: Jacob, anything on that or out of your eyes? So on RWA's first of all there is lots of optimism here and there are no reasons to be concerned there are no model headwinds, there are no regulatory headwinds other than the fact that we are waiting for Basel 3.1. But if anything I would contend we have taken a pretty conservative approach like in other fields to guiding on this particular topic so hopefully we will see some upside to that. So nothing mechanical it's a story of growth obviously grow to a certain extent rate dependence but I think that one of the one of the things that we have proven with this quarter is that we are very very proactive. So we where we have the engines of capital generation that not extending we do continue to optimize and when we get the results that we get like this quarter in which we've done a lot of work and we've benefited from a number of positive tailwinds we then return capital to our shareholders. So I think that as a package that's that's the way to look at our risk weighted assets going forward.

Jacob: Jacob anything on that or our W. S. So not of the view as a first of all there is a lots of optimism here and there are no reasons to be concerned there are no more than the headwinds there are no regulatory headwinds other than the fact that we are waiting for a bunch of people in one but if anything I would contend we've taken a pretty conservative approach.

Speaker Change #136: The other fields.

Speaker Change #137: Guiding on this particular topic.

Speaker Change #137: So hopefully we will see some upside to that so nothing mechanical Ah. It's a story of growth obviously grow to a certain extent the rate dependent but I think that's one of the one of the things that we've proven that with this quarter is that we are very very proactive, but so we were we have the engines of the of capital generate.

Diego De Giorgi: It's a story of growth, obviously growth to a certain extent, and rate dependence. But I think that one of the things that we have proven with this quarter is that we are very, very proactive. So where we have engines of capital generation, that notwithstanding, we do continue to optimize. And when we get the results that we get, like this quarter, in which we've done a lot of work, and we've benefited from a number of positive tailwinds, we then return capital to our shareholders. So I think that, as a package, that's the way to look at our risk-weighted assets going forward. Very helpful.

Speaker Change #137: That notwithstanding we do continue to optimize it and when we get the results that we get like this quarter in which we've done a lot of work and we benefited from a number of the positive tailwind. So we then return capital to our shareholders. So I think that as a package. That's that's the way to look at our risk weighted assets going forward.

Diego Giorgi: Thank you. Thanks.

Diego De Giorgi: Thank you. Good. Thanks, Guy.

Speaker Change #138: Very helpful. Thank you good thanks.

Operator: Next question, please. Thank you.

Speaker Change #140: Thanks, Scott next question please.

Operator: Your next question comes from the line off.

Gurpreet Sahi: Next question, please. Thank you. Your next question comes from the line of Gurpreet Sahi from Goldman Sachs. Please go ahead.

Joe: Thank you Joe.

Operator: Please say from Goldman Sachs, please go ahead. Thank you for taking my question. Good morning. Good morning, Diego. So two quick ones. First is on loan growth. Mortgage is a big chunk of our book. And so I'm wondering what we are seeing and what would make us grow in that area, especially in Hong Kong, Korea and Singapore. In Hong Kong particularly, cost of funds for the industry has come down slightly. So does that improve the spread for us to kind of and loan yields have held constant, but does that improve the spread enough for us to enter into the market or are we concerned around credit risk etc.

Speaker Change #143: Next question comes from the line of <unk> from Goldman Sachs. Please go ahead.

Joe: Yeah.

Diego: Thank you for taking my question. Good morning, Bill Good morning, Diego. So two quick ones first is on loan growth mortgages, a big chunk of our book and so I'm wondering what we are seeing and what would make us grow in that area, especially in Hong Kong, Korea, and Singapore, and Hong Kong, particularly cost of funds for the <unk>.

Gurpreet Sahi: So two quick ones. First is on loan growth. Mortgage is a big chunk of our book. And so I'm wondering what we are seeing and what would make us grow in that area, especially in Hong Kong, Korea, and Singapore. In Hong Kong, particularly, the cost of funds for the industry has come down slightly.

Gurpreet Sahi: So does that improve the spread for us to kind of, and loan yields have held constant? So does that improve the spread enough for us to enter the market? Or are we concerned around credit risk, etc.?

Speaker Change #141: <unk> has come down slightly so it does that improve the spread for us to kind of and loan yields have held constant or does that improve the spread enough for us to.

Gurpreet Sahi: And then secondly on the software, CIB software impairment, I acknowledge it does not impact cash earnings or capital. But how much are we expecting to do over the foreseeable future? Because as much as we have done in the first half is what consensus had done in other impairments for three years. So any guidance there would be helpful.

Speaker Change #142: Turning to the market or be concerned around credit.

William Winters: And then second on the software CIB software impairment, I acknowledge it does not impact the cash earnings or the capital, but how much are we expecting to do over the foreseeable future because as much as we have done in the first half is what consensus had in other impairments for three years. So any guidance there would be helpful. Thank you.

Speaker Change #144: Risk et cetera, and then second on the software CIB software impairment.

Speaker Change #146: I acknowledge it does not impact the cash earnings or the capital, but how much are we expecting to do for the foreseeable future.

Speaker Change #145: Because as.

Speaker Change #148: Much as we have done in the first half is what consensus had another impairments for three years. So any guidance there would be helpful. Thank you.

Diego De Giorgi: Thank you. So, on loan growth and mortgages, a different story for different geographies. Singapore is doing fine, a smaller part though of our mortgage book. Korea, we are self-selecting away from writing much business there, a combination of competitive pressures, some government directives affecting the industry and also the slightly lower value in terms of mortgages in Korea, in terms of driving other, You're absolutely right, Gurpreet. Yes, it is getting better in Hong Kong.

Diego Giorgi: Let me point focus to questions about those to Diego very well. So on loan growth and mortgages, different story for the different geographies. Singapore doing fine, smaller part of our over our mortgage book. You're absolutely right. Will pretty yes, it is getting better in Hong Kong; we're coming closer. But we're not quite yet there to restart writing in meaningful sizes in that market; although the conditions are improving, we use mortgages these days as a leading to wealth management relationships. But we have other ways and other levers, and you have seen, for example, in the growth of some of the retail time deposits that we have other ways of attracting customers with attract.

Speaker Change #149: Because the question did we were supposed to Diego right away.

Speaker Change #150: So on the on loan growth and mortgages.

Speaker Change #147: Different story for the different geographies, a Singapore doing fine as smaller part though of our.

Speaker Change #147: Of our mortgage broker.

Speaker Change #147: Korea, we are self selecting away from writing a much business there a combination of competitive pressures.

Speaker Change #147: Some government directives the effect in the industry and also the slightly lower value in terms of mortgages in Korea in terms of driving the other business you're absolutely right. We will create the yes. It is getting better in Hong Kong, we're coming closer, but the but we're not quite yet.

Diego De Giorgi: We're coming closer, but we're not quite yet there to restart writing in meaningful sizes in that market. Although the conditions are improving, we use mortgages these days as a lead-in to wealth management relationships. But we have other ways and other levers than you have seen, for example, in the growth of some retail time deposits, we have other ways of attracting customers with attractive prices. If I could just add, Gurpreet, you asked whether there were credit concerns; the short answer is no.

Speaker Change #147: There to restart writing in in meaningful sizes.

Speaker Change #147: In that market, although the conditions are improving we used mortgages. These days as a leading to our wealth management relationships, but we have other ways of in other leavers than you've seen for example in the growth of some of the a of the <unk>.

Speaker Change #147: Retail term.

Speaker Change #147: And deposits that we have other ways of attracting customers with attractive propositions.

Diego Giorgi: David propositions. If I could just ask whether there were credit concerns, the short answer is no. That's not a consideration in terms of our mortgage market share. We see no credit issues in the existing portfolio, and we have no concerns about originating new mortgages from a credit perspective. It's all about margin. Definitely.

Speaker Change #151: If I could just add good.

Speaker Change #157: Good to hear you asked whether there were credit concerns the short answer is no. So that's.

William Winters: That's not a consideration in terms of our mortgage market share. We see no credit issues in the existing portfolio, and we have no concerns about originating new mortgages from a credit perspective. It's all about margins, definitely. And on software CID, yes, we would expect more to come. It's a bit difficult to put a number on it.

Speaker Change #152: That's not a consideration in terms of our mortgage market share, we see no credit issues in the existing portfolio and we have no concerns about originating new mortgages from a credit perspective, it's all about margin.

Diego Giorgi: And on software CAB, yes, we would expect more to come. It's a bit difficult to put a number on it. We'll be updating you in the quarters to come.

Definitely and the on them on a software CIB, yes, we would we would expect a more to come it's a bit difficult to put a number on it we'll be updating you in the quarters to come.

Diego De Giorgi: We'll be updating you in the quarters to come. Thank you.

Speaker Change #153: Thank you.

Mick Lord: Your next question comes from the line of Mick Lord from Morgan Stanley. Please go ahead. Hi, thanks for taking my question. I have two questions. The first is just on credit charge. Obviously, I think pretty clear guidance while it's happening on the retail bank side. You obviously benefited from very low charges, even X, sort of a baritone for right-backs in the wholesale bank. So are we expecting sort of similar trend in the second half? And therefore, can we expect a low-nose charge significantly below about 30 to 35 basis points before the end?

Speaker Change #154: Thank you.

Nicholas Lord: Your next question comes from the line of Nick Lord from Morgan Stanley. Please go ahead. Hi, thanks for taking my question. I have two questions.

Nicholas Lord: Your next question comes from the line of Nick <unk> from Morgan Stanley. Please go ahead.

Nicholas Lord: The first is just on credit charges. I mean, obviously, I think pretty clear guidance on what's happening on the retail bank side. You obviously benefited from very low charges, even X sort of write-off or write backs in the wholesale bank. So are we expecting sort of a similar trend in the second half?

Nick: Hi, Thanks for taking my question I've two questions.

Nick: First is just on credit charge I mean, obviously I think.

Speaker Change #160: Pretty clear guidance on what's happening.

Speaker Change #158: Retail bank side.

Speaker Change #158: You, obviously benefited from from very low charges.

Speaker Change #159: Sort of.

Speaker Change #159: Right So Brian box in the wholesale bank. So we are expecting sort of similar trend in the second half and therefore can we expect your loan loss charge significantly below about 30 to 35 basis points for the full year.

Nicholas Lord: And therefore, can we expect a loan loss charge significantly below about 30 to 35 basis points for the full year? And then, secondly, on costs, I mean, again, you can give guidance for your positive cost income jurors, obviously, quite wide in the first half. And that's quite broad guidance. So I just wonder if you could give us a little bit of a flavor of what could happen if I'm thinking about costs on a Q on Q basis.

Diego Giorgi: And then secondly, on costs. I mean, again, you can go ahead and see how positive cost income draws. Obviously, they're quite wide in the first half. And never that's quite wide. So I just wonder if you could give us a little bit of flavor of what could happen if I'm thinking on costs on a Q and Q basis who spoke about investment spend going up in the second half. We obviously have the bank lobby, but we're over any other sort of major moving parts in the cost line in the second half.

Speaker Change #163: Secondly on costs again.

Speaker Change #167: Guidance for you how positive cost income jaws, obviously about quite wide in the first half.

Speaker Change #161: No votes.

Speaker Change #162: What guidance so I just wonder if you could give us.

Speaker Change #164: Little bit of flavor of what could happen if im thinking on costs on a Q on Q basis with respect to that investment spend going up in the second half, where we should have the bank levy, but over any other sort of major moving parts in the cost line in the second half.

Nicholas Lord: You spoke about investment spend going up in the second half. We obviously have the bank lobby. But are there any other sort of major moving parts in the cost line in the second half? Yeah. Good. Thanks very much, Nick.

Diego Giorgi: Good. Thanks very much, Nick. We obviously had about is the nine environment as we could hope for on the on the corporate side. Retail, as you say, is pretty much in line with expectations and with recent history. Nothing much to comment on there on the CIV side. We've obviously benefited from some releases, and we've had no material losses along the way. Having had a spade of sovereign defaults a couple of years ago, the countries in which we operate that were on the watch list have generally improved. Obviously, it's on an impairment question, but it's an avoided an avoided impairment question if we could put it that way.

William Winters: We've obviously had about as benign an environment as we could hope for on the corporate side. Retail, as you say, is pretty much in line with expectations and with recent history. Nothing much to comment on there.

Speaker Change #162: Good thanks very much Nick.

Speaker Change #165: We've obviously had about as benign environment as we could hope for on the on the corporate side retail as you say is pretty much in line with expectations and with recent history.

Speaker Change #166: Nothing much to comment on there on the CRB side.

Speaker Change #168: We've obviously benefited from some releases and we've had no material losses.

Speaker Change #168: Along the way.

Speaker Change #168: We had a state of sovereign default to a couple of years ago.

Speaker Change #168: The.

Speaker Change #168: Countries in which we operate that were on the on the watch list have generally improved.

Speaker Change #168: Obviously it is on an impairment question, but it's an avoided and avoided impermanent question, if we could put it that way.

William Winters: On the CIV side, we've obviously benefited from some releases, and we've had no material losses. Along the way, having had a spate of sovereign defaults a couple of years ago, the countries in which we operate that we operate in have had a lot of losses, and we've had a lot of benefits from that. We also know that credit and credit losses in particular come episodically, and while we see nothing that's at all concerning in the portfolio right now, certainly nothing that we haven't shared perfectly transparently, we're not going to change our guidance on a through-the-cycle expected cost of credit based on a good first half of the year. You're asking about the second half of the year.

William Winters: So, but we also know that credit and credit losses, in particular, kind of episodically, and what we see nothing that's that's at all concerning in the portfolio right now, certainly nothing that we haven't shared perfectly transparently. We're not going to change our guidance on a through-the-cycle expected cost of credit based on a good first half of the year. You're asking about the second half of the year. If we saw anything that was particularly concerning, we'd be calling it out now, or you'd see it in our stage two and stage three impairment numbers. And obviously, you've noticed that there's nothing there.

Speaker Change #168: So, but we also know that the credit.

Speaker Change #168: Credit losses in particular come Episodically and what we see nothing that's that's at all concerning in the portfolio right now sort of nothing that we haven't shared.

Speaker Change #168: Perfectly transparently, we're not going to change our guidance.

Speaker Change #168: On a through the cycle.

Speaker Change #168: The expected cost of credits based on a good first half of the year.

William Winters: If we saw anything that was particularly concerning, we'd be calling it out now, or you would see it in our Stage 2 and Stage 3 impairment numbers. Obviously, you've noticed that there's nothing there of particular concern, so I'll let you draw your own conclusions, but the overall credit environment is quite benign. Vincenzo, you'll have some more thoughts on that, and I'm sure on cost.

Speaker Change #168: You are asking about the second half of the year. If we saw anything that was particularly concerning we'd be calling it out now or you'd see it in.

Speaker Change #168: And our stage two and stage three impairment numbers and obviously, if you've noticed that there's nothing there.

William Winters: That particular concern, so I'll let you draw your own conclusions, but the overall credit environment is quite the nine.

Speaker Change #168: So it's at a particular concerns I'll, let you draw your own conclusions, but.

Speaker Change #168: The overall credit environment is quite benign.

Diego Giorgi: Diego, you have some more thoughts on that, and I'm sure on cost. Sure. And it did not the only thing on the credit charges is I mean, our 3035 bips guidance, the remember is always through the cycle, right? I mean, it gets higher, but it also gets lower. We're clearly in a period of lower and long made. So on the jobs, just two considerations: one, do not over read, do not over read too much into our calling for some phasing in the second half of the year because we didn't want you to read too much into that phasing not having happened in the first part of the year.

Speaker Change #169: You'll have some more thoughts on that and I'm sure on costs sure.

Diego De Giorgi: Sure. The only thing on the credit charges is, I mean, our 30 to 35 BIPS guidance, remember, is always through the cycle, right? I mean, it gets higher, but it also gets lower.

Speaker Change #170: They're not the only the only thing on the credit charges is I mean, our 30 to 35.

Speaker Change #171: Bps guidance, but remember there's always a through the cycle right I mean, it gets higher but it also the floor. We're clearly in a period of lower and long may they sell them on the Joe's has just two considerations one do not over read the do not over read too much into our calling for some phasing in the second half of the year.

Speaker Change #171: Because we didn't want you to read too much into that that phasing not having that happened in the first part of the year, we're talking literally about a few tens of millions of dollars. So it's not the it's not a big number and as a consequence, I would say really no major moving parts and positive jaws are they important mantra for us, which I would reiterate that.

Diego De Giorgi: We're clearly in a period of lower inflation, and it may stay so for a long time. We're talking literally about a few tens of millions of dollars, so it's not a big number, and as a consequence, I would say really no major moving parts, and positive JOs are an important mantra for us, which I would reiterate are important only on a yearly basis, not on a quarterly basis, and only on a full group basis, and not on a single segment. Great, thanks very much. Thank you. That was the end of the audio questions.

Diego Giorgi: We are talking literally about a few tens of millions of dollars, so it's not a big number. And as a consequence, I would say really no major moving parts and positive jobs are an important mantra for us, which I would reiterate are important only on a yearly basis, not on a quarterly basis, and only on a full group basis and not on a single single segment. Thank you.

Speaker Change #171: The importance of only on a yearly basis not on a quarterly basis and only on a full group basis and not on a single.

Speaker Change #171: A single segment basis.

Speaker Change #172: Great. Thanks very much.

Operator: That was the end of the audio questions. I will now hand over to Manus for web questions. Thank you.

Speaker Change #173: Next question.

Speaker Change #174: Thank you that was the end of the audio questions I will now hand over to my Nashville web questions.

Unknown Executive: I will now hand over to Manas for web questions. Thank you. We have a couple of questions online. The first question comes from Catherine Lay at JP Morgan. Catherine says, please can you give us an update on your Bohai Bank investment, given the recent news highlighting the risk from smaller banks in China and Bohai's loan disposal in July? Yeah, thanks, Catherine.

Operator: We have a couple of questions online.

Speaker Change #175: Thank you we have a couple of questions online.

Catherine Lay: The first question comes from Catherine Lay at JP Morgan.

Speaker Change #176: First question comes from Katherine Lei of Jpmorgan. Katherine asks please can you give us an update on your BOE High Bank investment given the recent news highlighting the risks from smaller banks in China, and Bo highest loan disposal in July.

William Winters: Catherine asks, "Please can you give us an update on your Bow High Bank investment given the recent news highlighting the risk from smaller banks in China and Bow High's loan disposal in July?" Yeah, thanks, Catherine. So the buy is, you know, it's a bank that we helped us set up over 20 years ago. We treated a comfort on an associated basis. So we accumulated profits over that entire period. We've taken some central impairments over the past couple of years. We are very comfortable with the carrying value of the bank at this point relative to our outlook for earnings.

William Winters: So, Bohai, as you know, it's a bank that we helped to set up over 20 years ago. We treated account for it on an associate basis. So we accumulated profits. But over that entire period, we've taken substantial impairments over the past couple of years. We are very comfortable with the carrying value of the bank at this point relative to our outlook for earnings. Diego could comment on the specific impairment considerations, but obviously, we look at that regularly.

Catherine: Yeah. Thanks Catherine.

Speaker Change #178: But as you know is a bank that we helped to set up over 20 years ago.

Speaker Change #179: We treated a comfort on a an associates basis, we accumulated profits over that entire period, we've taken some central impairments over the past couple of years.

Speaker Change #179: We are very comfortable with the carrying value of the bank at this point relative to our outlook for earnings do you comment on the specific impairment considerations, but obviously, we look at that regularly.

William Winters: You can come along the specific impairment consideration. But obviously, we look at that regularly. While the profitability of the bank has been under pressure, there's the market price is quite low. It's very thinly traded. It's hard to read too much into that, but it is what it is. And the market has been concerned about asset quality. So to be able to execute this asset swap where there's a prospective transfer of underperforming assets for assets which are more straightforward to value. It doesn't in and of itself create value, but certainly in and of itself creates some clarity around the carrying value of our position.

William Winters: While the profitability of the bank has been under pressure, the market price is quite low, and it's very thinly traded, so it's hard to read too much into that, but it is what it is. And the market is concerned about asset quality. So to be able to execute this asset swap where there's a prospective transfer of underperforming assets for assets which are more straightforward to value doesn't, in and of itself, create value, but certainly, in and of itself, creates some clarity around the carrying value of our position.

Speaker Change #179: And while the profitability the profitability of the bank has been under pressure. There is the market price is quite low so if anything they traded so.

Speaker Change #179: Hard to read too much into that but it is what it is.

Speaker Change #179: And the market has been concerned about asset quality so.

Speaker Change #180: To be able to execute this this asset swap where theres a perspective transfer of of <unk>.

Speaker Change #180: Underperforming assets for four assets, which were more straightforward to value.

Speaker Change #180: That doesn't in and of itself create value, but certainly in and of itself creates some some clarity around the the carrying value of our position.

William Winters: So overall, it doesn't change the strategy of the bank or change our interaction with the bank, but it does provide the kind of reassurance that the market was looking for. And I think Chinese regulators are also looking for that this bank has a stable financial footing, which we will continue to participate in and contribute to in every way that we can. Anything you want to add to that one? Nothing we've run?

William Winters: So overall, doesn't change the strategy of the bank, doesn't change our interaction with the bank, but it does provide the kind of reassurance that the market was looking for. And I think probably Chinese regulators are also looking for that this bank has a stable financial footing, which we will continue to participate in and contribute to in every way that we can.

Speaker Change #180: So overall it doesn't change the strategy of the bank doesn't change our interaction with the bank, but it does provide.

Speaker Change #180: That kind of reassurance of the market was looking for and I think probably Chinese regulators are also looking for that this bank has a stable financial footing.

Speaker Change #180: We will continue to participate in and contribute to in every way that we can.

Diego Giorgi: Anything you want to add on that one? Nothing we've run. We've run, obviously, we've run the latest news through our value news model. We've been conservative for quite a few quarters. So we have a number of overlays there. There was no need for any agenda.

Speaker Change #181: Anything you want to add on that one nothing we've run that we've run obviously, we run the latest news through our value in use model, we've been conservative for quite a few quarters. So we have a number of overlays. There are there was no need for any adjustment.

Diego De Giorgi: We've run. Obviously, we've run the latest news through our value news model. We've been conservative for quite a few quarters, so we have a number of overlays there. But there was no need for any.

Grace Dagen: Thanks. And our last question comes from Grace Dagen at Barclays. Grace asks, what is the normalized level of growth to expect from wealth solutions from here? To what extent is this business experiencing a super normal growth rate or catch up post lockdown post lockdown in Hong Kong and elsewhere?

Diego De Giorgi: Thanks. And our last question comes from Grace Dargan at Barclays. Grace asks, what is the normalized level of growth to expect from wealth solutions from here? To what extent is this business experiencing a supernormal growth rate or catch up, post lockdowns in Hong Kong and elsewhere? So we're not going to provide new guidance, but we should give a bit of context. This business has grown broadly in the market, and Center Chartered has been broadly in line with the market for the better part of a decade in the high single digits, eight, nine, 10%.

Speaker Change #181: Thanks.

Grace Dagan: And our last question comes from Grace Dagan at Barclays. Great Socs, what is a normalized level of growth to expect from wealth solutions from here.

Grace Dagan: To what extent is this business experiencing a supernormal growth rates or catch up post locks down post lockdowns in Hong Kong and elsewhere.

William Winters: So we're not going to provide new guidance, but give a bit of context. This business has grown broadly in the market, and Senator Trotter has been broadly in line with the market for the better part of a decade in high single digits, eight, nine at 10%. It's somewhat valuable quarter to quarter, depending on market sentiment, market environment. Obviously, we had a substantial downturn during COVID for a bunch of obvious reasons, both investor sentiment and inability to visit branches, which in particular in China and Hong Kong is a relevant distribution channel. But the growth rate has taken back up again since the opening up of Hong Kong and China and the rest of the world.

Speaker Change #183: So we're not going to provide new guidance.

Speaker Change #184: Give it a bit of context.

Diego De Giorgi: It's somewhat volatile quarter to quarter depending on market sentiment and the market environment. Obviously, we had a substantial downturn during COVID for a bunch of obvious reasons, both investor sentiment and the inability to visit branches, which, in particular, in China and Hong Kong is a relevant distribution channel. But the growth rate has picked back up again since the opening up of Hong Kong and China to the rest of the world. Are we in a super normal growth period? I don't think so.

Speaker Change #185: This business has grown broadly in the market and center charter has been broadly in line with the market for the better part of a decade.

Speaker Change #186: In high single digits.

Speaker Change #187: At 10%.

Speaker Change #187: Somewhat volatile quarter to quarter, depending on markets.

Speaker Change #187: Market sentiment market environment, obviously, we had a substantial downturn during COVID-19 for a bunch of obvious reasons booked investor sentiment and inability to visit branches, which in particular in China and Hong Kong is irrelevant distribution channel, but the growth rate has picked back up again since.

William Winters: I think this is a structural growth opportunity, and I think our growth should accelerate at a rate that's faster than the market. Why?

Speaker Change #187: The opening up of Hong Kong, and China and.

William Winters: I mean, a super normal growth period. I don't think so. I think this is a structural growth opportunity. And I think our growth should accelerate at a rate that's faster than the market. Why? Because one we've established ourselves as a leading. Cross-border and affluent bank in everything that we do. We have a differentiated proposition as the only one of the top both managers in Asia that is completely open architecture. We are a distributor of choice for the best asset managers in the world because they won't see how effective we are, but to recognize that we're not offering a competing product off our own books.

Speaker Change #187: And the rest of the world.

Speaker Change #187: I ran the Super normal growth period, I don't think so I think this is a structural growth opportunity and I think our growth should accelerate.

Speaker Change #187: Accelerate at a rate that's faster than the market why because one we've established ourselves as a leading.

William Winters: cross-border and affluent bank in everything that we do. We have a differentiated proposition as the only one of the top wealth managers in Asia that is completely open architecture. We are a distributor of choice for the best asset managers in the world because they, one, see how effective we are, but two, recognize that we're not offering a competing product off our own books. I think we've got a brand that is that lovely combination of a strong, solid heritage brand, but also a brand that's increasingly seen as a very innovative bank, and we're very innovative in wealth and wealth solutions, in terms of our digital connectivity and the products and services that we provide.

Speaker Change #187: Cross border and affluent bank and everything that we do.

Speaker Change #187: We have a differentiated proposition as the only one of the top wealth managers in Asia that is completely open architecture.

Speaker Change #187: We are a distributor of choice for the best asset managers in the world because they want to see how effective we are.

Speaker Change #187: But to recognize that we're not offering a competing products of our own books.

William Winters: I think we've got a brand that is that lovely combination of a strong solid heritage-type brand, but also a brand that's increasingly seen as a very innovative bank. We're very innovative in wealth and wealth solutions in terms of our digital connectivity and the product and services that we provide. And obviously, that's a broader halo effect that comes from the success of our venture segment and many of the innovations that are happening inside our businesses. So I don't think the current growth we're experiencing is super normal. I think it is benefiting from a relatively benign environment for market sentiment.

Speaker Change #188: We've got a brand that is that that loves the combination of a strong solid heritage tie brand, but also a brand is increasingly seen as a very independent bank and we're very innovative in wealth wealth solutions in terms of our digital connectivity and in the products and services that we provide and obviously, there's a broader a broader halo effect that comes from the success of <unk>.

William Winters: And obviously, there's a broader, broader halo effect that comes from the success of our venture sector and many of the innovations that are happening inside our businesses. So, I don't think the current growth we're experiencing is supernormal.

Our of our venture segment.

Speaker Change #188: And many of the innovations that are happening inside our businesses. So.

Speaker Change #189: I don't think the current growth we're experiencing a supernormal I think it is benefiting from a relatively benign.

William Winters: I think it is benefiting from a relatively benign environment for market sentiment. But I think we can also expect to outperform ourselves relative to what should be a good market because of the investments that we've been making and the position that we enjoy today. I would just add that the confidence that we have is underlined by the fact that we have increased the level of disclosure that we're giving you about this business.

Speaker Change #188: Environment for market sentiment.

William Winters: But I think we can also expect to outperform ourselves relative to what should be a good market because of the investments we've been making in the position we enjoy today.

Speaker Change #188: But I think.

Speaker Change #188: We can also expect to outperform ourselves relative to what should be a good market.

Speaker Change #188: The investments we've been making in the position that we enjoy today.

Diego Giorgi: I would just add that the confidence that we have is underscored by the fact that we have increased the level of disclosure we're giving you about this business. We have shown you that we've shown you more on our investment management or on our net new sales, on our net new money, on the split between investment products and bank assurance. The objective is to really drive home the fact that we have really diversified source of revenues even within this segment. And that is one of the things that gives us strong confidence to achieve the results that will be outlined.

Speaker Change #188: I will just add that the confidence that we have is underscored by the fact that we have increased the level of disclosure, we're giving you about this business that we have the.

William Winters: We have shown you that we've shown you more on our assets under management, on our net new sales, on our net new money, on the split between investment products and bank assurance. The objective is to really drive home the fact that we have a really diversified source of revenues even within this segment. And that is one of the things that gives us strong confidence to achieve the results that will be allowed.

Speaker Change #188: <unk> that a we've shown you more on our assets under management or on our net new sales on our net new money.

Speaker Change #190: On the split between investment products and bank assurance. The objective is to really drive home. The fact that we have really diversified source of revenues even within this segment and that that is one of the things that gives us strong confidence to achieve the results that bill outlined.

William Winters: Good.

Diego De Giorgi: So if there are no further questions, either online or on the phone, then I will thank you all for taking this time with us for the ongoing support and coverage and look forward to following up on the many discussions that we'll have in the days, weeks, and months to come. Have a good rest of the week. Unknown Executive, Diego Giorgi, Kun Ma, StanChart, [inaudible] This recording may not be reproduced without Mooji Media Ltd.'s express consent.

William Winters: So if there are no further questions either online or on the phone, then I will thank you offer for taking this time with us for the ongoing support and the coverage and the forward to following up in the many discussions that will have in the days, weeks, and months to come. Have a good rest of the week.

Speaker Change #191: Good. So if there are no further questions either online or or on the phone then I will thank you all for for taking the time with us for their ongoing support and the coverage and look forward to following up in the many discussions that we'll have in the days weeks months to come.

Speaker Change #191: Have a good rest of the week.

Speaker Change #191: [music].

Operator: Thank you very much.

Speaker Change #191: Hum.

Hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey

Speaker Change #191: [music].

Speaker Change #191: