Standard Chartered PLC

Good morning and good afternoon, everyone. Thank you for joining us today. First, I will take you through our third quarter results. After this, I will be joined by Bill, who is dialing in from our Dubai office today, and we will be happy to take your questions. In my remarks, I will be comparing the third quarter underlying performance year on year at constant currency, unless otherwise stated. It has been another strong quarter. we delivered 9% growth in profit before tax on the back of a 5% increase in income. Our growth engines have continued to deliver consistently, with a record quarterly performance in wealth solutions and global banking. As a result, we are upgrading our 2025 income growth guidance to be towards the upper end of the 5-7% range at constant currency, excluding notable items. We had previously guided this to be at the lower end of the range. And more importantly, we now expect to deliver a return on tangible equity of around 13% in 2025. This exceeds our previous guidance of approaching 13% in 2026 and accelerates our delivery by a year. As we set out in the press release this morning, performance has been broad-based and is a testament to our sharper strategic focus on servicing our clients' cross-border and affluent banking needs. Looking now at the numbers for the quarter. The group delivered operating income of $5.1 billion, which was up 5%. This was underpinned by the strong performance in wealth solutions and global banking in the quarter. Operating expenses were up 4% and credit impairment was $195 million. As a result, Profit before tax was up 9% to $2 billion, and our tangible net asset value per share was up 175 cents year on year. Now, let me take you through the performance drivers in details. NII was up 1% on a quarter-on-quarter basis, largely driven by volume growth. Lower rates in Singapore led to a reduction in NII, but this was partly offset by improved WRB pass-through rates in Hong Kong as HIBOR rebounded. we have continued to manage our pass-through rates assertively, and although they remain above our medium-term expectations in CIB, we expect pass-through rates to reduce over time. Putting this all together, we still expect our 2025 NII to be down by a low single-digit percentage year-on-year. As usual, we have updated our currency-weighted average interest rate outlook in the appendices to this presentation. This shows that we now expect a 55 basis point headwind in 2026, slightly higher than the 44 basis points when we last reported. Our known NII engines continue to drive strong growth, and I will talk to each product driver in the segment section. Now turning to expenses. Operating expenses remained well controlled and were up 4% year on year, mainly driven by business growth initiatives and investments, which were partly funded by fit for growth and efficiency saves. We have achieved $566 million of run rate savings from our fit for growth program and have taken $454 million of restructuring charges since inception. Our 2026 total expense guidance remains unchanged at below $12.3 billion on a constant currency basis, which would be $12.4 billion at current FX forward rate. Credit impairment for the quarter was $195 million, with an annualized loan loss rate of 24 basis points. WRB impairment was down in the quarter, largely due to optimization actions in our unsecured portfolios. In CIB, we took an impairment charge of $64 million. Included within this is an additional precautionary $25 million overlay for clients who have exposure to Hong Kong commercial real estate. You will see more details in the appendices as usual, but nothing has materially changed since we last spoke to you. Our high-risk assets were up around $650 million quarter-on-quarter. This was driven by a sovereign downgrade into early alerts, partly offset by a reduction in the credit grade 12 portfolio. We continue to monitor our credit portfolio closely, and we are not seeing any new significant signs of stress emerging across the group. Underlying loans and advances to customers were up 1% or $2 billion quarter on quarter, with the increase largely coming from wealth lending and mortgages. We have seen 4% underlying growth year-to-date, driven broadly across global banking, wealth lending, and mortgages. We continue to guide to low single-digit percentage growth in underlying customer loans and advances. Underlying customer deposits were up 2%, or $11 billion quarter on quarter, with growth largely from WRP. turning now to capital. Risk-weighted assets were down $1 billion in the quarter. The increase in asset growth and mix was offset by a $1 billion reduction in market risk RWA and another $1 billion impact from FX. I would highlight that the annual operational risk RWA increase, which is mechanically calculated from historical income, will take place in Q4 2025 rather than Q1 2026. bringing us into line with most other UK banks. We closed the quarter with a CET1 ratio of 14.2%, up 32 basis points quarter on quarter, excluding the impact of the $1.3 billion share buyback we announced in July this year. Now, let's look at our business segment. CIB income for the quarter was $3 billion, up 2% year on year. This was driven by an impressive performance in global banking, with income up 23%, supported by strong origination and distribution volumes, and a solid performance in our financing, capital markets, and advisory businesses. Transaction services income was down 6% due to falling rates and margin compression in payments and liquidity, although it was up slightly when compared to the second quarter. Within our global market business, flow income was up 12% as we continued to support clients across the footprint. Episodic income was softer due to a lower level of market volatility relative to Q3 last year. On the next page, we have shown a long-term view of our flow and episodic income trend on a 12-month rolling basis since 2019. As a reminder, flow is a larger part of our global market's income and primarily relates to client hedging activity. As such, it tends to be recurrent and programmatic. You will see that our flow income is growing consistently at a double-digit CAGR, as we illustrated at our CIB seminar. This growth has been driven by the investments we have made over the years in digitizing and expanding our product and geographical offering in order to drive future opportunities. Episodic income, on the other hand, is less predictable quarter to quarter, as it tends to be event-driven. But as you can see from the chart, it has been a meaningful contributor to our global market's income over time. Looking forward, flow income will continue to be a larger contributor to our global markets income, and we will continue to support our clients episodically as market opportunities present themselves. Moving to WRB, Q3 income was up 7% to $2.3 billion, with another record quarter in wealth solutions, where income was up 27%. This was largely driven by structured products and managed investments. helping to increase investment products income by 35%. Bank assurance income was up 5%. Our affluent net new money in Q3 was $13 billion, with a higher proportion of wealth sales than in the previous quarter, as clients showed a higher propensity to buy wealth solutions given conducive markets. This brings total net new money year to date to $42 billion and puts us well on track to our $200 billion medium-term target for net new money. We onboarded 67,000 new-to-bank affluent clients in the quarter, continuing the trend of onboarding over 60,000 clients each quarter. Our affluent business benefits from our high levels of customer satisfaction, as demonstrated by the fact that we now rank number one in net promoter score across eight of our top nine affluent markets. as we continue to invest heavily within the affluent space. So to conclude, Q3 was another strong quarter, as we continue to deliver consistently. Q4 has also started positively. We are upgrading our 2025 income growth guidance to be towards the upper end of the 5-7% range at constant currency, excluding notable items. We continue to track towards the upper end of this range for the 2023 to 2026 income CAGR. We now expect our return on tangible equity in 2025 to be around 13%, reaching our target a year early. But there is still much more to do as we reinvest into our differentiated areas of strength, delivering income growth, and more importantly, improving returns. We will present updated 2026 return on tangible equity guidance at our full year results in February next year. And we will provide more details on our medium term financial framework at our investor seminar in May. With that, I will hand over to the operator and Bill and I can take your questions.

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

Thank you for taking my question. A great set of results here. Can you just discuss in the wealth business the type of, if you're able to, the type of margin pickup you get on the wealth investments? Because clearly that's, if you look at the year-on-year attribution of net new money, you're getting about 80% of the year-on-year growth now from wealth. I suppose some of that is, as you say, linked to the markets. But could you discuss the type of margin pickup there? And then secondly... on capital. I note the reduction in your capital requirement by 22 basis points. I presume that that's not going to change your operating range. number, but if you could comment on, you know, still the preference would be to do buybacks, or I guess, you know, how you think about returning excess capital, and then on the op risk point, I guess linked to that, is the op risk point going to have much of an impact on capital in Q4? Thanks.