Standard Chartered PLC

Good morning and good afternoon, everyone, and welcome to our 2025 interim results call. I'm joined here in London by Diego, and as usual, we'll run through the presentation before taking your questions. We've delivered a strong set of results in the second quarter of 2025. Despite the uncertainties in the period, our performance has demonstrated how much our clients value our services and our truly distinctive network. Key to income was up 15% year-on-year, excluding notable items, driven by double-digit growth across global banking, global markets, and wealth solutions, and with record net new money in our affluent business. This income growth, which generated a significant improvement in ROTE, is testament to our ability to deliver exceptional services in support of our clients' needs, and it is clear that our strategy is working. With our strong capital position, we're announcing a further share buyback of $1.3 billion, which will start imminently. This takes our total distribution since full year 2023 results to $6.5 billion, towards our target of at least $8 billion between 2024 and 2026. Diego will now take you through the performance in detail, and I will then come back to talk about how we're continuing to support clients and how we're creating opportunities across our business segments, after which Diego and I will take your questions. So, Diego, over to you.

Thank you, Bill. Good morning and good afternoon, everyone. In my remarks today, I will be comparing the second quarter year-on-year on an underlying basis and speaking to constant currency, unless otherwise stated. The group delivered operating income of $5.5 billion, which was up 14% or 15% excluding notable items. This reflects strong underlying performance of our businesses in CIB and WRB, further supported by the gain associated with the solved transaction in the quarter. Operating expenses were up 3% and credit impairment was subdued again at $117 million, mainly due to net recoveries in CIB. As a result of the strong top-line and lower impairments, profit before tax for the quarter was $2.4 billion, up 34%, with a return on tangible equity of 19.7%. Now, let's turn to each component in detail. On a quarter-on-quarter basis, NII was down 4%. While US dollar rates were stable in the quarter, there was a sharp drop in HIBOR as well as lower rates in Singapore and India. Given the pace and magnitude of moves in some of those rates, our ability to pass through to customers was somewhat limited. This margin pressure was partly offset by volume growth, where we saw a 2% increase in average interest earning assets. We have increased our structural hedge to $75 billion as at the end of the quarter, hitting our full-year target six months early. We will continue to increase the hedges in the second half, though at a reduced pace. You will see on page 28 that our currency-weighted average interest rate outlook for 2025 is now 110 basis points lower than 2024, and down 28 basis points since we last reported. Note that our outlook is based on forward rates, which imply a recovery in HIBOR later this year. As a result, we now expect our 2025 NII to be down by a low single-digit percentage year-on-year. Non-NII has continued its momentum in the second quarter, with 31% growth year-on-year, driven by the impressive performance in global markets and wealth solutions. excluding the sold gain and notable items, known NII was still up strongly at 22%. We previously guided that we expect total income in 2025 to be below the 5-7% CAGR we are targeting between 2023 and 2026. Given the strong performance year-to-date, we are upgrading our 2025 income growth guidance to be around the bottom of the 5-7% range at constant currency, excluding notable items. I will talk to the specific product drivers in the segment commentary shortly. Now, turning to expenses. Q2 operating expenses were up 3% year-on-year, largely driven by business growth initiatives, partly offset by efficiency saves and fit for growth. The fit for growth program continues to progress well and we have achieved $500 million of run rate savings from actions in progress. This is in line with our plan and we are pleased with how we continue to simplify, standardize and digitize the bank. With regards to the cost to achieve or CTA, we noted in the recent past that it is hard to predict the phasing of spending as we are disciplined in our approach to execution. As a result, We are revising the phasing of the 2025 CTA to be between 35% to 45% versus previous guidance of around 50%. To be clear, we will spend the remainder of the CTA in 2026 with no spillover into 2027. We remain confident that 2026 total expenses will be below $12.3 billion on a constant currency basis. We note that current FX forward rates would add around $100 million to the 2026 targets. Credit impairment for the quarter was $117 million, significantly lower quarter on quarter. Our loan loss rate of 12 basis points in Q2 benefited from net recoveries in CAB, which we do not expect to continue to repeat consistently. We are therefore maintaining our guidance for the loan loss rate to normalize towards the historical through the cycle 30 to 35 basis points. WRB impairment came down in the quarter to $153 million as a result of reduced exposure in our unsecured portfolio, in line with our plan, as well as a one-off recovery from the sale of non-performing loans in Korea. Our overall credit portfolio remained resilient and we are not seeing any new significant sign of stress emerging across the group. Underlying loans and advances to customers were up slightly quarter-on-quarter and we continue to expect low single-digit percentage growth in underlying customer loans and advances for the year. Underlying customer deposits were up 4% or $19 billion in the quarter. We attracted good net new money from affluent clients, whilst the growth in CIB was mainly from transaction services CASA. Turning now to capital. Risk-weighted assets were up $6 billion in the quarter, with over half coming from FX impacts. We saw $1.7 billion from asset growth and mix, and the $1.6 billion increase from asset quality was mainly due to a sovereign downgrade. These were partly offset by a $1 billion reduction in market risk RWA, as well as CIB optimization activities. We continue to guide to low single-digit percentage growth in RWA. We would highlight that our Basel 3.1 Day 1 impact is expected to be close to neutral, and we do not expect the output floor to be a binding constraint. We delivered robust capital generation with our CET1 ratio of 14.3% up 50 basis points quarter on quarter. As Bill said, we are announcing a new $1.3 billion share buyback to commence imminently. This will take our pro forma CET1 ratio to 13.8%. At $6.5 billion in distributions since our full year 2023 results, we are well on track to achieve our guidance to exceed $8 billion of capital returns from 2024 to 2026. Our TNAV per share of $16.80 was up 16% year-on-year. Our earnings per share for the first half was up 41% year-on-year. Both of these metrics demonstrated our strong profit accretion is augmented by the reduction in our share count, which was down 9% year-on-year. Now, let's take a look at our business segments. CIB income for the quarter was $3.3 billion, up 9%. This was driven by exceptional performance in global markets, where income was up 47%. we saw increased demand for our services in our Asia footprint markets. Flow income was up 22% on the back of higher rates and FX income, and episodic income was driven by market-making activities from elevated volatility. While it is still early in the quarter, client flow momentum has continued from Q2. Global banking income was up 12%, driven by an increase in corporate lending and higher origination volumes year on year. Transaction services income was down 8% year-on-year, driven by lower income in our payments and liquidity product line due to margin compression from lower interest rates. In wealth and retail banking, Q2 income was up 4% to $2.1 billion, with another excellent quarter in wealth solutions, where income was up 20%. The growth in wealth solutions was broad-based across geographies and products. Investment products income was up 22%, with particularly good growth in structured products, thanks to our product innovation and open architecture approach. We also continue to see good momentum in bank assurance, with income up 14%. Our key performance indicators in Affluent have continued their upward trajectory, as we delivered record net new money of $16 billion in Q2. This was skewed toward deposits, as clients await investment opportunities. We onboarded 64,000 new-to-bank affluent clients in the quarter, bringing the total clients onboarded to 135,000 year-to-date. We have also uptiered over 150,000 clients across the continuum, resulting in a larger pool of affluent clients driving wealth activities. Lastly, within our venture segment, our income from Oxen Trust was up 48%, and they are showing strong operating leverage with expenses down 3% in Q2. This income growth was driven by product innovation and volume growth, with MOX and Trust growing their deposits by over 30% and 40% respectively. Our SE Ventures portfolio recorded a gain of $238 million from the Solve India transaction. Following this transaction, SE Ventures will retain a non-controlling ownership interest in the acquiring entity. We have provided more detail in the appendices on the accounting approach for our venture sector. So, to conclude, We're maintaining our income guidance of 5% to 7% CAGR in 2023 to 2026 at constant currency, excluding the impact of deposit insurance, and we continue to track towards the upper end of this range. Based on the strong performance year to date, we are upgrading our income growth guidance in 2025 to be around the bottom of the 5% to 7% range at constant currency, excluding notable items. Within this, NII is expected to be down by a low single-digit percentage year on year. The rest of our guidance remains unchanged. With that, I will hand back to Bill. Thank you.

Thank you, Diego. At Q1, we told you that our network business, which represents around 60% of our CIV income, is highly diversified, resilient, and agile. While, of course, we monitor geopolitical developments, we remain focused on delivering our cross-border strategy in support of our clients' needs. Network income in the first half was up 4% year-on-year, or up 9%, excluding the impact of rates, which is in line with the longer-term trend we showed you at our recent CIB investor seminar. And I would remind you that our network income is well diversified as we facilitate the flow of goods and services for our clients with income across transaction services, global markets, and global banking. With continuing shifts in supply chains, we saw a 17% increase in intra-Azian corridor income. This was driven by increased FX in commodity trading, as well as financing solution activities for our corporate clients. I want to provide a few examples of how we're helping our clients navigate the current environment. Amongst our corporate clients, we've seen increased demand for a range of services. For example, We bank a Chinese electronics firm as their sole partner in India, and we recently helped them expand to set up a production facility in Vietnam, displacing an existing competitor relationship. And at the same time, we're seeing more FX hedging from this client. Clients value our expertise and speed of execution, especially at times of increased volatility. Another recent example of where we help multinational corporate clients is the support we've given to a major U.S. technology company in hedging their FX risk, resulting in ASEAN FX volumes more than doubling for this client. We're also seeing progress across our financial institution client base, which you know is a key area of focus for us. We've run a number of mandates as our clients continue to diversify their relationships. We recently won an exclusive sub-custodian bank mandate from a major Chinese bank across eight markets spanning Asia and Africa, and additional markets are expected to be implemented at a later stage. In global banking, origination volumes in the first half grew 30% year on year. The pipeline remains strong, and the business is in good shape. Though we remain watchful of the macro outlook, a lower interest rate environment could increase the demand for origination in the future. Our wealth and affluent engine has continued its strong momentum. Our franchise now ranks as the number three affluent wealth manager in Asia, and our affluent AUM has demonstrated impressive growth over the long term with an 11% CAGR since 2016 and AUM of $420 billion at the end of the first half of 2025. Our wealth solutions income grew strongly across asset classes, particularly in capital markets, driven in part by our success in structured products. Our product innovation and advisory capabilities, coupled with our open architecture platform, put us in a great position to capture market opportunities and cater to changing client preferences. Moreover, our success in generating strong net new money throughout the first half represents a very solid start against our ambition to deliver $200 billion of net new money from 2025 to 2029. Next, I want to take a moment to talk to you about our digital asset strategies. We act as a conduit between clients and financial markets across all of the services we offer. Our clients increasingly expect digital asset solutions, and as such, we expect digital assets to be an important part of the future of financial services. We're at the forefront of innovation in the institutional adoption of digital assets, and we are well-placed to offer services through our regulated platforms. In embracing this adoption, we're creating both services for clients and future revenue opportunities for the bank. We are acting as a bridge from traditional finance to digital assets for our clients. For example, we're seeing interest in the use of stablecoins by logistics operators to provide real-time payments for their customers and suppliers. And this year, we supported China AMC in launching the first tokenized retail fund in Asia, providing asset servicing to both digital and real-world assets. Importantly, we welcome the fact that regulators in our markets are taking a leading role in building digital asset infrastructure, and we're excited to be playing our part in this journey. A key example is a joint venture we recently announced with Animoca Brands and Hong Kong Telecom to apply for a license to issue a Hong Kong dollar-backed stablecoin. Once executed, this will make us the only Hong Kong note-issuing bank which is also an issuer of the stablecoin. We're also creating future revenue opportunities. We're currently the only G-SIB that is offering trading in deliverable spot Bitcoin and Ether, a service we launched just this month. We've also granted a license in Luxembourg to offer digital asset custody services to EU clients. Our ventures portfolio further enhances and complements our digital asset offering. Zodiac Custody is now operating in eight markets across Asia, Europe, and the Middle East, and has grown its assets under custody 10 times in the last 18 months. Zodium Markets recently announced its Series A fundraising, with Circle investing in the company. Zodium Markets' notional trading volume has almost tripled year-on-year, and based on our estimation, it has been responsible for over 20% of net minting of Circle's USDC stablecoin over the last 18 months. Turning to sustainable finance, our income for the first half was up 5% year-on-year, and we are very well on the way to achieve our target of at least $1 billion by 2025. We've seen broad-based growth across our products, and with $136 billion mobilized since the beginning of 2021, we're making good progress towards our commitment to mobilize $300 billion in sustainable finance by 2030. Highlights in the first half of the year include our first-ever social bond of €1 billion, the announcement of the first Indonesia Just Energy Transition Partnership solar project, and the closing of a landmark £2.5 billion carbon capture and storage transaction in the U.K., We're committed to our sustainable finance agenda, and we will be staying the course. So, to conclude, we have delivered a strong set of results in the first half of the year, and we're upgrading our full-year 2025 income growth guidance to be at the bottom of the 5% to 7% range. We're announcing a new share buyback of $1.3 billion today and are well on track to achieve our distribution target. We set ourselves clear and ambitious transformation goals that will continue to structurally improve our profitability and help us to deliver our strategy at a greater pace and scale, and I'm encouraged by the progress we're making. We know that our clients truly value our service and our distinctive network, and the performance in this period of uncertainty really does demonstrate the important role Standard Chartered plays for our customers. So with that, I'll hand over to the operator, and Diego and I can take your questions. Thank you.