Standard Chartered PLC

Good morning and good afternoon, everyone, and welcome to our first quarter 2025 results presentation. I'm joined here in London by Diego, and as usual, we'll first run through the presentation before taking your questions. We have delivered a strong set of results from the first quarter of 2025, with income up 12% year-on-year, excluding notable items, and earnings per share up 19%. This is driven by strong performance across wealth solutions, global markets, and global banking, continuing the positive trend of recent quarters. This momentum has continued into Q2, particularly in global markets. Our network business, which represents around 60% of our CIB income, is highly diversified, resilient, and it's agile. Clearly, there have been geopolitical developments and uncertainties since we last spoke to you. Notwithstanding some of the challenges which might arise, we are confident that our strategy and business is well positioned to face any headwinds in the current environment and into the future. Our cross-border strategy connects us with clients in the world's most dynamic markets, and our affluent business is capturing the huge opportunity that we see in the structural trends in wealth creation across our footprint. Both of these core growth engines have tremendous potential that will last beyond any near-term turbulence and position us well to benefit from structural changes should they arise. As a result, we're confident in our trajectory and in the long-term prospects for the group, whilst remaining watchful of the external environment. And before I pass to Diego to run through the financial performance for the quarter, I want to spend a couple of minutes talking about the network, including our cross-border U.S. footprint and the opportunities that we see. You will recall in our last presentation, we showed you this chart of our cross-border network income. Whilst an escalating trade war would impact global growth and our markets, we believe our network is a key distinctive and strategic advantage for the group. Geographically, the network is not overly reliant on any single bilateral trade relationship, and only seven corridors generate network income greater than $109 per annum. As a reminder, our network income is not just trade finance. We facilitate the flow of goods and services for our clients, generating income from transaction services, global markets, and global banking. This network income of $7.3 billion in 2024 has been growing strongly with a 9% CAGR since 2019, excluding the impact of rates. Our business is a very different bank to the one that I joined in 2015. It's far less capital intensive and is consequently higher returning. It's also less concentrated in any particular asset class and has higher quality credit exposures. We have materially increased our hedging to reduce interest rate sensitivity, and the bulk of our balance sheet is short-dated by nature. While there's a possibility that a prolonged period of uncertainty could have a direct impact on growth in our markets, we enter the current period of global volatility from a position of strength. And while there are many open questions regarding trade tariffs, it's very likely that our clients will continue to diversify their supply chains, creating growing opportunities for us to serve those clients profitably. Our network is agile. We follow our clients and we offer them compelling capabilities and services across our footprint. We've continued to adapt as our clients' needs have evolved. Two examples of this would be our recent investment acceleration in our affluent proposition and the shift in our CIB business towards financial institutions and large international corporates. I'd like to turn now to our U.S.-related network income. which, given recent events, is understandably in focus at the moment. Our U.S. network business is made up of both financial institutions and corporate clients. Financial institutions are primarily large banks and broker-dealers, and given the nature of cross-border financial flows, we remain confident that this business will continue to be resilient. Turning to corporate clients. First, if we focus on U.S. outbound, which is income generated from U.S. domiciled multinational corporates, into countries within our footprint, this represents around $400 million of income for us. Second, the income we generate from inbound flows from non-U.S. corporates into the U.S. is smaller, at under $100 million. We would expect to serve these clients to a greater degree should manufacturing investments move to the U.S. And third, we've reviewed the rest of our corporate clients, which do not have any inbound or outbound U.S. business through us, but do themselves have more than 10% of their total sales from exports to the US in sectors which could be impacted by tariffs. For example, this would include a corporate which is based in India, where we bank this corporate on its intra-Asia business, but they use another bank for the US banking business. These clients represent around $400 million of income for us. Putting these three together, we think around $900 million of network income is from corporate clients that may be exposed to the current turbulence. This income is diversified by product across cash, trade, global banking, and global markets. We believe that there are both risks and opportunities to this income as trade patterns are reconfigured. And while the US is an important contributor for us, the large majority of our income sits outside of the US. Despite potential headwinds, we think we're well positioned to capture opportunities across our footprint. So let me give you a few examples. In our CIB business, supply chain diversification could create new needs for our clients. As supply chains become more complex and adjust globally, we expect corporates will continue to redesign their treasury operations. Since the beginning of 2024, we have onboarded 10 new regional treasury centers and dedicated teams for our corporate clients. For financial institutions, we see further opportunities in the deepening of international capital markets outside of the US, including foreign exchange markets. We've invested heavily in both hardware and software of our FX platform. In WRB, our international proposition will be increasingly attractive and relevant to clients in today's environment. We believe these clients will seek further diversification and sophisticated hedging and investment products as markets remain volatile. We've been investing in the space, having opened six new international wealth centers across five markets since the beginning of 2024. All of these opportunities reinforce our confidence in delivering on our ambitions. So now, Diego, over to you to take us through the Q1 2025 results in more detail.

Thank you, Bill. Good morning and good afternoon, everyone. In my remarks, I will be comparing year on year on an underlying basis and speaking to constant currency unless otherwise stated. As a reminder, these results are now presented on the new basis as outlined in the press release we published on the 2nd of April. First, I will start with an overview of our Q1 performance and then go through each component in more detail. The group delivered operating income of $5.4 billion in the first quarter, with a headline growth of 7% or 12%, excluding the notable item of $234 million in the same period last year. Operating expenses were up 5%, and credit impairment was $219 million. This resulted in profit before tax of $2.3 billion, up 12% year on year. And thanks to the reduction in our share count, this represented 19% growth in earnings per share. Now, let's turn to each component in detail. On a quarter-on-quarter basis, NII was down 5% due to a particularly strong Q4, which benefited from assertive management of pass-through rates, and $147 million from deposit insurance reclassification, as well as a $65 million impact from lower take-count in Q1 2025. You will see on slide 19 that our currency weighted average interest rate outlook for 2025 is now 82 basis points lower than 2024 and down 6 basis points compared to when we last reported. You will also note that the 2026 headwind has increased by 31 basis points to 59 basis points versus 2025. And as highlighted in Q4, we expect there will be some reduction in deposit pass-through rates in 2025 and around 1% headwind to NII from the WRB transformation actions. Hence, our guidance remains that we think NII will be challenging to grow in 2025. Non-NII continues to be a strong growth driver and is up 7% or 18% excluding the notable item of $234 million in Q1 2024. This was largely driven by good momentum in both wealth solutions and global markets, which on a total income basis were up 28% and 14% respectively. I'll talk to these products in more detail when I cover the business segment's performance. Now turning to expenses. Operating expenses were up 5% year on year. This was driven by inflation and business growth initiatives to support our higher returning businesses, including frontline hires and the investment in technology. There was also $49 million of deposit insurance booked this quarter. And as you may recall, we highlighted that the deposit insurance cost is expected to be around $200 million each year with an offset in an AI. The Seed for Growth program has continued to progress well with annualized savings of around $400 million from actions executed since the start of the program. We have incurred $73 million of fit for growth restructuring charge in the quarter. We will continue to execute on this program, albeit the phasing of the cost to achieve can be hard to predict. We are still confident that 2026 total expenses will be below $12.3 billion on a constant currency basis, including the deposit insurance cost and around $100 million of UK bank levy as highlighted in Q4. Credit impairment was $219 million in the quarter, with the WRB charge of $179 million broadly in line with the prior quarters. CIB had a $30 million charge, the first quarterly net charge for a while, following significant recoveries recorded over the past few quarters. Our credit grade 12 balances increased this quarter due to the downgrade of some corporates within Stage 2 from early alerts. However, Overall high-risk assets were down around half a billion dollars quarter-on-quarter. Impairment in the venture segment was down $4 million quarter-on-quarter and down $18 million year-on-year, mainly from reduced delinquency rates in MOCs. In Q1, we increased the weighting of our tariff-related downside scenario, which led to a modest charge for the group in the quarter. Our Q1 loan loss rate of 25 basis points continued to benefit from low impairment levels in CIB, which, as previously highlighted, we do not expect to be repeated in the coming years. We are therefore maintaining our guidance for loan loss rate to normalize towards the historical through the cycle 30 to 35 basis points. While this would imply a pickup from current levels, our key risk indicators over the last 10 years have continued to improve. The proportion of our CIB corporate exposures that are investment grade has increased from 42% to 74%, reflecting the strength of our balance sheet and the group's measured approach to risk. In WRB, the portfolio has remained broadly resilient, with 83% of exposures fully secured. Given the recent news flow on tariffs, I want to emphasize that our exposure to ASEAN markets, excluding Singapore, is less than 4% of group exposures, 37% of which is to corporates, with 68% being investment grade. Underlying loans and advances to customers were up 3% in the quarter, mainly from global banking origination activity and some growth in secured wealth lending in WRB. Underlying customer deposits were up 5% in the quarter, mainly driven by the reversal of outflows in CIB deposits in Q4, as well as an increase from WRB term deposits. Turning now to RWA in capital. Risk-weighted assets were up around $7 billion in the quarter. Whilst credit risk-weighted assets went down due to optimization activities, we saw an $8 billion increase in market risk risk-weighted assets as we helped clients capture market opportunities. We expect market risk RWA to reduce in Q2. Operational risk RWA, which is mechanically calculated from the previous three years' income, also added $3 billion to RWA in the quarter. This is a usual one-off increase in the year. We continue to deliver strong capital accretion with a CET1 ratio of 13.8% in Q1. This translates to an increase of 21 basis points quarter on quarter after adjusting for the 61 basis points impact of the share buyback announced in February 2025. of which around 43% is now completed. Our TNAV per share was up 20 cents quarter on quarter and up 171 cents year on year. This includes the full deduction of the $1.5 billion buyback from equity, but only the shares bought back in Q1. Now let's take a look at our business segment performance. CIB income for the quarter was $3.3 billion, up 4%. Global market income was up 14%, driven by strong double-digit growth in flow income, which makes up around two-thirds of our global market business. This was as a result of increased client activity supported by our strategic initiatives and investments. Episodic income was up 7%, mainly from higher levels of volatility. Global banking income was up 17%, from increased capital market activity from higher bond issuance and deal executions. Transaction services income was down 4%, as growth in trade and security services was offset by rate-driven margin compression. Q2 has started positively in CAB, with momentum in client flows continuing from increased volatility, albeit high levels of uncertainty may delay pipeline execution. Just to remind you, we will be hosting an investor seminar on the 15th of May, where we will provide you a detailed update on our CAB segment. Turning to wealth and retail banking, Q1 income was up 12% to $2.1 billion, with another strong quarter in wealth solutions, which was up 28%. The 33% growth in investment products income was mainly driven by structured products. There has also been continued strong double-digit growth in bank assurance, which was up 15%. Our key leading indicators in affluent remain strong, with 72,000 new-to-bank clients onboarded in Q1. We also had $13 billion of affluent net new money in the quarter, with around 60% from wealth net new sales. Lastly, Q2 has started well for wealth solutions income, and net new money has been positive so far in the quarter, but it is too soon to say how recent volatility could impact customer behavior going forward. In conclusion, we have delivered another strong set of results in Q1, Our guidance for 2025 and 2026 remains unchanged, although, as Bill said, we remain watchful of the external environment. With that, I will hand back to the operator, and Bill and I will take your questions. Thank you.

Thank you, dear participants. As a reminder, if you wish to ask a question over the phone, please press star 1 1 on your telephone keypad and wait for your name to be announced. To withdraw a question, please press star 1 1 again. Alternatively, you can submit your questions via the webcast. Please stand by. We'll compile the Q&A roster. This will take a few moments. And now we're going to take our first question. And it comes to the line of Joseph Dickerson from Jefferies. Your line is open. Please ask your question.