Retail Banking Investor seminar 30 May 2018
Seminar summary Webcast session Introduction Bill Winters Group Chief Executive Retail Banking Ben Hung CEO, Retail Banking and Wealth Management Focus on: • Digital Aalishaan Zaidi Global Head, Digital Banking • Wealth Management Didier von Daeniken Global Head, Private and Wealth Management • Greater China & North Asia Samir Subberwal Regional Head, Retail Banking, GCNA • ASEAN & South Asia Sebastian Arcuri Regional Head, Retail Banking, ASA • Africa & Middle East Jaydeep Gupta Regional Head, Retail Banking, AME • Products and Segments Fernando Morillo Global Head, Retail Products and Segments 1
Introduction Bill Winters
Retail Banking Ben Hung
Retail Banking investment case Attractive footprint Clear market strategy Markets generating ~2/3 of income in aggregate • Over 99% of our income from Asia, Africa • already delivering a mid-teen RoE and the Middle East • • Pivoting towards affluent and Revenue pools across our markets forecast RoE to double in the next decade emerging affluent clients >8% plans to deliver Investing in our future Distinctive differentiators mid-teen RoE • Self-funded targeted investments since 2015 in Recognised as best-in-class international • Digital, Wealth and infrastructure bank in 7 of our 8 top markets for Priority clients • • Digital transformation improving client experience Distinctive open architecture wealth proposition driving double digit income and AUM CAGR and delivering efficiency over the past decade 4 All financial information on this slide based on performance for the year ended 31 December 2017
What you will hear today • Shape of our business today • Progress on our strategic priorities • Confidence in sustainably improving our returns • Our focus in Digital and Wealth Management • Future shape of our business and how to measure progress 5
We serve 4 client groups with 4 product areas across 30 markets Our clients and products Our business • >9m clients: ~2m in Priority, Premium and Business 45% Priority • Less than 1,000 branches and around 30,000 staff Premium 10% Clients • Increasingly predictable, high returning earnings Personal 34% Retail • Significant net liquidity provider for the Group Banking Business 11% >8% RoE Operating income by region Wealth 30% Management GCNA ` Deposits 26% 56% ASA 17% Products CCPL 28% AME 27% Mortgage, EA 16% Auto & other 6 x% Contribution to 2017 Retail Banking income CCPL = Credit Cards, Personal Loans and other unsecured lending
We have distinctive propositions in Priority and Wealth Net promoter score for Priority clients 1 Why clients choose Standard Chartered • Trusted international bank, aspirational brand Best-in-class YoY change Market international bank in NPS • ▲ 16 Strong Priority CVPs and cross-border capabilities Hong Kong Standard Chartered ▲ 11 Singapore Global peer • Unbiased open architecture Wealth platform ▲ 8 Taiwan Standard Chartered • Relationship management based approach ▼ 3 Korea Standard Chartered ▲ 9 China Standard Chartered • Compelling digital, product and payments capabilities ▲ 6 India Standard Chartered ▲ 9 Malaysia Standard Chartered ▼ 1 UAE Standard Chartered CVP = Customer value proposition 7 1. ‘Net Promoter Score’ and ‘NPS’ are trademarks of Satmetrix Systems Inc., Bain & Company, and Fred Reichheld. Standard Chartered uses Bain methodology recalibrated for financial services to calculate NPS
We are increasingly serving our clients digitally Adapting to our clients’ changing behaviours… …early stage but encouraging results 2014 versus 2017 Increasingly how Digital Cost effectiveness and time efficiency +28 % +2 x +2 clients are engaging Digitise client journey Banking made easier # of digitally active # of sales clients digitally sourced Contact Centre Expand accessibility +19 +19 % -22 22 % Enabling higher value client solutions # of Contact Centre # of Contact Centre sales transactions call volumes Branches Fewer / smaller Our direction Advisory business -20 20 % -59 59 % of migration For more complex transactions Reduction in branch Reduction in # of square footage branch transactions Investment spend 8
We have progressed well on our priorities… more to do Further action 2015 strategic priorities Progress Priority client income share (%) Focus on affluent and 2014 27 • Continue to drive growth in Priority emerging affluent clients 2017 45 Branches (#) 2014 1,190 Deliver on cost efficiencies • Leverage digital to drive efficiencies 2017 984 Cost of risk 1 (bps) • Resume targeted growth in CCPL 2014 91 Reset risk tolerances • Continued focus on conduct and control 2017 38 Digitally active clients (%) • Invest in digital to improve Improve customer experience and 2014 33 sales through digital channels customer service/efficiency 2017 45 • Turn China and Korea profitable Loss before tax in China & Korea ($m) Turn around performance in • 2014 (367) Improve returns in India, Indonesia, challenged markets Malaysia and UAE 2017 (69) 9 1. Loan impairment for the ongoing business as a percentage of average gross loans and advances to customers
We have repositioned for sustainable profitable growth $bn 2014 2015 2016 2017 Q1 18 • Income 5.7 5.1 4.7 4.8 1.3 Driving higher quality income • Created capacity to invest Expenses (3.9) (3.5) (3.4) (3.6) • Significantly de-risked portfolio (0.9) (0.7) (0.5) (0.4) Impairment Underlying • 0.9 0.9 0.8 0.9 >0.3 Maintained profitability on lower RWA profit before tax • Reduced low-value CCPL RWA 56 48 42 44 • Underlying RoRWA 1.5% 1.8% 1.7% 2.0% >2.5% Higher, more sustainable return 10
We are confident we can sustainably improve RoE 1 We are in economies with structural growth drivers 6 2 We are self-funding We are focused on substantial, targeted areas of strongest investments differentiation Sustainable mid-teen RoE in the medium term 5 3 We have multiple Each market has a new growth initiatives clear strategy and in flight tailored priorities 4 Our network creates valuable opportunities 11
1 We are in economies with structural growth drivers AAME Retail Banking revenue pools 3 ($bn) ~1,500 Rise of urban middle class 1 CAGR (%), 2010 – 2030 Affluent and • By 2030, over 2bn will join the middle class in AAME emerging AAME 8 ~750 affluent • Estimated ~$750bn of new Retail Banking wallet ~350 EuAm 2-3 Other 2010A 2020F 2030F Life insurance premium growth 4 Growth of emerging affluent 2 Growth (%) 2016 2017 • Our footprint markets outpace the developed economy on affluent growth Emerging Asia and 19 17 Middle East • AAME expected to be the largest source of wealth creation in next 5-10 years World 2 3 1. Source: The Brookings Institution 2. Source: Global Data, Affluent defined as individuals with liquid financial assets between $100K and $1m 12 3. Source: McKinsey, Standard Chartered estimates 4. Source: Swiss Re Institute
We are focused on areas of strongest differentiation (1/2) 2 Income mix by product Segment Income Wealth / (Definition) 1 per client Mortgages 2 Our approach Deposits CCPL • Invest to build differentiated propositions Priority • Focused on Wealth, Deposit and Mortgage >10x ~80% ~15% ~5% (>$100k) • Deepen and continue to win market share • Launching Premium in top markets Premium >3x ~30% ~50% ~20% • Digital convenience with ‘expert on demand’ (>$10k) • Leverage employee banking and alliances • Targeted growth in markets with scale Personal 1x ~30% ~10% ~60% • Leverage EB to build affluent pipeline (<$10k) • Relentless focus on efficiency via digital • Expand supply chain ecosystem Business >8x ~50% ~30% ~20% • Build sales force capabilities (Companies) • Automate to build scale EB = Employee Banking 13 1. Required funds under management in US$ on a per client basis, varies by individual market 2. Includes mortgages, auto and other
We are focused on areas of strongest differentiation (2/2) 2 27% 35% 39% 45% Priority Income by • 55% of income now from segment Premium 2 10% Priority and Premium clients 56% 52% 50% 34% • Personal Expect growth in Priority and Premium to outpace Personal 11% 10% 11% 11% Business 6% 1 2014 2015 2016 2017 20% 25% 26% 30% Wealth Income by 19% 21% • 56% of income now from product 24% Deposits 26% 17% Wealth Management and Deposits 17% 17% Mortgages 3 16% • Less capital intensive, higher return 44% 37% 33% 28% CCPL 2014 2015 2016 2017 1. Primarily Consumer Finance, which was exited in May 2015 14 2. Premium Banking includes select Personal Banking clients 3. Includes mortgages, auto and other
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