First Quarter 2023 Results

Standard Chartered PLC
26 April 2023
 

 

 

 

 

Standard Chartered PLC

1Q'23 Results

26 April 2023

 

Registered in England under company No. 966425

Registered Office: 1 Basinghall Avenue, London, EC2V 5DD, UK

 


Table of contents

Performance highlights

1

Statement of results

3

Group Chief Financial Officer's review

4

Supplementary financial information

15

Underlying versus statutory results reconciliations

30

Risk review

36

Capital review

41

Financial statements

46

Other supplementary financial information

51

 

 

 

Unless another currency is specified, the word 'dollar' or symbol '$' in this document means US dollar and the word 'cent' or symbol 'c' means one-hundredth of one US dollar.

The information within this report is unaudited.

Unless context requires within the document, 'China' refers to the People's Republic of China and, for the purposes of this document only, excludes Hong Kong Special Administrative Region (Hong Kong), Macau Special Administrative Region (Macau) and Taiwan. 'Korea' or 'South Korea' refers to the Republic of Korea. Asia includes Australia, Bangladesh, Brunei, Cambodia, India, Indonesia, Laos, Malaysia, Myanmar, Nepal, Philippines, Singapore, Sri Lanka, Thailand, Vietnam, Mainland China, Hong Kong, Japan, Korea, Macau, Taiwan; Africa and Middle East (AME) includes Angola, Bahrain, Botswana, Cameroon, Côte d'Ivoire, Egypt, The Gambia, Ghana, Iraq, Jordan, Kenya, Lebanon, Mauritius, Nigeria, Oman, Pakistan, Qatar, Saudi Arabia, Sierra Leone, South Africa, Tanzania, UAE, Uganda, Zambia, Zimbabwe; and Europe and Americas (EA) include Argentina, Brazil, Colombia, Falkland Islands, France, Germany, Ireland, Jersey, Poland, Sweden, Turkey, the UK, and the US. Within the tables in this report, blank spaces indicate that the number is not disclosed, dashes indicate that the number is zero and nm stands for not meaningful.

Standard Chartered PLC is incorporated in England and Wales with limited liability and is headquartered in London. The Group's head office provides guidance on governance and regulatory standards. Standard Chartered PLC. Stock codes are: LSE STAN.LN and HKSE 02888.


Standard Chartered PLC - first quarter 2023 Results

All figures are presented on an underlying basis and comparisons are made to 2022 on a reported currency basis, unless otherwise stated. A reconciliation of restructuring and other items excluded from underlying results is set out on pages 30-35.

Bill Winters, Group Chief Executive, said:

"We have delivered another strong set of results in the first quarter of 2023, with income up 13 per cent year-on-year and underlying profit before tax up 25 per cent. Business performance continues to improve across our markets and products and has been achieved in what continues to be an uncertain environment. We remain highly liquid and strongly capitalised with a CET1 ratio towards the top of our target range. We remain optimistic about our continued strong performance and now expect 2023 income to grow around 10 per cent, the top end of our range, and remain confident in the delivery of all of our financial targets, including our return on tangible equity targets."

Update on strategic actions

•  Drive improved returns in CCIB: Income RoRWA of 8.0%, up 2%pts year-on-year (YoY); $0.9bn of RWA optimised in 1Q'23; $14.8bn since 1.1.22

•  Transform profitability in CPBB: Cost-to-income ratio of 58%, improved by 13%pts YoY; $0.3bn of gross expense savings since 2022 since 1.1.22

•  Seize China opportunity: China onshore income up 4% YoY; Offshore income up 67% YoY

•  Create operational leverage: $0.1bn of gross productivity saves in 1Q'23; $0.6bn since 1.1.22; Cost-to-income ratio improved by 2%pts to 61%

•  Deliver substantial shareholder returns: Current $1bn share buyback progressing well; $2.8bn of total returns announced since 1.1.22

Other highlights

•  Ventures: Onboarded around 1 million customers across our two digital banks, Mox and Trust since launch

•  Sustainability: In line with our earlier commitment, we will announce our Oil & Gas absolute emissions target ahead of our AGM in May 2023

Selected information concerning 1Q'23 financial performance

•  Return on tangible equity of 11.9%, up 170bps YoY

•  Income up 8% to $4.4bn, up 13% YoY at constant currency (ccy)

- Net interest income up 18% at ccy

- Net interest margin (NIM) up 5bps QoQ to 1.63%, with the benefit from rising interest rates partly offset by increased hedge losses and adverse liability and asset mix; Deposit balances stable in the quarter and deposit migration and betas performing as expected  

- Financial Markets down $0.1bn or 5% at ccy, up 1% ccy excluding $94m gain on mark-to-market liabilities in 1Q'22

- Wealth Management broadly flat at ccy, with a rebound in Hong Kong and China supported by positive leading indicators from China reopening

•  Expenses increased 5% YoY to $2.7bn, or up 10% at ccy

- Positive 3% income-to-cost jaws at ccy

- Increased expenses from supporting business initiatives and inflation

•  Credit impairment charge of $26m, down $172m YoY

- Net release of $23m from earlier downgraded sovereign exposures and an $2m net release on China CRE portfolio

- Remaining management overlay: COVID-19 of $9m and China CRE of $167m

- High-risk assets broadly flat in the quarter

•  Underlying profit before tax of $1.7bn, up 25% at ccy; Statutory profit before tax up 25% at ccy to $1.8bn

•  Tax charge of $464m: underlying effective tax rate of 26%

•  The Group's balance sheet remains strong, liquid and well diversified

- Customer loans and advances down $10bn or 3% to $301bn since 31.12.22; Down $2bn or 1% on an underlying basis

- Customer deposits stable at $462bn since 31.12.22; CPBB up $3bn offset by lower CASA in CCIB. No volume impact from recent banking stress

- Liquidity coverage ratio 161% (31.12.22: 147%)

- Advances-to-deposit ratio 56.2% (31.12.22: 57.4%)

 

Page 1

Standard Chartered PLC - first quarter 2023 Results

 

•  Risk-weighted assets (RWA) of $251bn, up 3% or $6.2bn since 31.12.22

- Credit RWA up $3.8bn, $4.3bn increase from asset growth and mix, $1.8bn increase from asset quality deterioration, partly offset by $1.8bn optimisation savings and $1.1bn reduction from FX movements

- Market RWA up $1.7bn and Operational RWA up $0.7bn

•  The Group remains strongly capitalised

- CET1 ratio 13.7% towards the top of the 13-14% target range (31.12.22: 14.0%); Profit accretion of $1.3bn more than offset by $1bn share buyback and 37bps reduction from higher RWA

•  Earnings per share increased 5.9 cents or 19% to 37.6 cents

Outlook

The strong first quarter performance together with a favourable trading outlook in our key markets gives us increased confidence we will deliver our financial targets.

Our liquidity profile remains strong, with deposit balances stable and deposit migration and betas performing as expected. We continue to actively manage our credit portfolio and closely monitor sovereign risks in markets that are most vulnerable. Capital levels remain robust.

Taken together our revised guidance is as follows:

Income to increase by around 10%, the top end of the 8-10% range at ccy in 2023 and in the 8-10% range at ccy in 2024

Full year average NIM of around 170bps in 2023 and around 175bps in 2024

Asset and RWA growth in the low single digit percentage range

Positive income-to-cost jaws of 3%, excluding UK bank levy at ccy in 2023 and 2024

Credit impairment to normalise towards the historic through the cycle loan-loss rate range of 30-35bps

Operate dynamically within the full 13-14% CET1 target range

Plan to return in excess of $5bn to shareholders by 2024

RoTE to be approaching 10% in 2023, and to exceed 11% in 2024, with further growth thereafter

 


Page 2

Statement of results


1Q'23
$million

1Q'22
$million

Change2
%

Underlying performance1




Operating income

4,396

4,076

8

Operating expenses (including UK bank levy)

(2,675)

(2,550)

(5)

Credit impairment

(26)

(198)

87

Other impairment

-

(1)

100

Profit from associates and joint ventures

11

63

(83)

Profit before taxation

1,706

1,390

23

Profit/(loss) attributable to ordinary shareholders3

1,076

965

12

Return on ordinary shareholders' tangible equity (%)

11.9

10.2

170bps

Cost to income ratio (excluding bank levy) (%)

60.9

62.6

170bps

Statutory performance




Operating income

4,560

4,292

6

Operating expenses

(2,750)

(2,665)

(3)

Credit impairment

(20)

(197)

90

Other impairment

-

(6)

100

Profit from associates and joint ventures

18

68

(74)

Profit before taxation

1,808

1,492

21

Taxation

(464)

(313)

(48)

Profit for the period

1,344

1,179

14

Profit/(loss) attributable to parent company shareholders

1,341

1,176

14

Profit/(loss) attributable to ordinary shareholders3

1,163

1,055

10

Return on ordinary shareholders' tangible equity (%)

13.0

11.1

190bps

Cost to income ratio (including bank levy) (%)

60.3

62.1

180bps

Balance sheet and capital




Total assets

820,678

839,117

(2)

Total equity

50,011

51,840

(4)

Average tangible equity attributable to ordinary shareholders

36,269

38,614

(6)

Loans and advances to customers

300,627

295,785

2

Customer accounts

462,169

456,404

1

Risk weighted assets

250,893

260,833

(4)

Total capital

52,318

55,036

(5)

Total capital (%)

20.9

21.1

(20)bps

Common Equity Tier 1

34,402

36,296

(5)

Common Equity Tier 1 ratio (%)

13.7

13.9

(20)bps

Net Interest Margin (%) (adjusted)

1.63

1.29

34bps

Advances-to-deposits ratio (%)4

56.2

60.0

(3.7)

Liquidity coverage ratio (%)

161

140

21

Leverage ratio (%)

4.7

4.4

30bps

Information per ordinary share

Cents

Cents

Cents

Earnings per share   - underlying5

37.6

31.7

5.9

                      - statutory5

40.7

34.6

6.1

Net asset value per share

1,505

1,460

45

Tangible net asset value per share6

1,297

1,276

21

Number of ordinary shares at period end (millions)

2,833

2,993

(5)

1   Underlying performance for relevant periods in 2022 has been restated for the removal of (i) exit markets and businesses in AME (ii) Aviation Finance and (iii) DVA. No change to statutory performance

2   Variance is better/(worse) other than assets, liabilities and risk-weighted assets. Change is percentage points difference between two points rather than percentage change for total capital ratio (%), common equity tier 1 ratio (%), net interest margin (%), advances-to-deposits ratio (%), liquidity coverage ratio (%), UK leverage ratio (%). Change is cents difference between two points rather than percentage change for earnings per share, net asset value per share and tangible net asset value per share

3   Profit/(loss) attributable to ordinary shareholders is after the deduction of dividends payable to the holders of non-cumulative redeemable preference shares and Additional Tier 1 securities classified as equity

4   When calculating this ratio, total loans and advances to customers excludes reverse repurchase agreements and other similar secured lending, excludes approved balances held with central banks, confirmed as repayable at the point of stress and includes loans and advances to customers held at fair value through profit and loss. Total customer accounts include customer accounts held at fair value through profit or loss

5   Represents the underlying or statutory earnings divided by the basic weighted average number of shares

6   Calculated on period end net asset value, tangible net asset value and number of shares


Page 3

Group Chief Financial Officer's review

 

The Group delivered a strong performance in the first quarter of 2023

Summary of financial performance


1Q'23
$million

1Q'223
$million

Change
%

Constant currency change¹
%

4Q'223
$million

Change
%

Constant currency change¹
%

Net interest income

2,007

1,783

13

18

2,023

(1)

(2)

Other income

2,389

2,293

4

9

1,742

37

35

Underlying operating income

4,396

4,076

8

13

3,765

17

15

Other operating expenses

(2,675)

(2,550)

(5)

(10)

(2,630)

(2)

2

UK bank levy

-

-

nm⁴

nm⁴

(107)

100

100

Underlying operating expenses

(2,675)

(2,550)

(5)

(10)

(2,737)

2

6

Underlying operating profit before impairment and taxation

1,721

1,526

13

17

1,028

67

76

Credit impairment

(26)

(198)

87

82

(340)

92

90

Other impairment

-

(1)

100

100

(38)

100

100

Profit from associates and joint ventures

11

63

(83)

(83)

(2)

nm⁴

nm⁴

Underlying profit before taxation

1,706

1,390

23

25

648

163

169

Restructuring5

48

17

182

nm⁴

(90)

153

155

Goodwill & other impairment

-

-

nm⁴

nm⁴

(322)

100

100

DVA

54

85

(36)

(35)

(133)

141

141

Other items

-

-

nm⁴

nm⁴

20

(100)

(100)

Statutory profit before taxation

1,808

1,492

21

25

123

nm⁴

nm⁴

Taxation

(464)

(313)

(48)

(65)

(387)

(20)

(15)

Profit / (loss) for the period

1,344

1,179

14

15

(264)

nm⁴

nm⁴

Net interest margin (%)2

1.63

1.29

34


1.58

5


Underlying return on tangible equity (%)2

11.9

10.2

170


2.7

922


Underlying earnings per share (cents)

37.6

31.7

19


7.7

nm⁴


1 Comparisons presented on the basis of the current period's transactional currency rate, ensuring like-for-like currency rates between the two periods

2 Change is the basis points (bps) difference between the two periods rather than the percentage change

3 Underlying performance for relevant periods in 2022 has been restated for the removal of (i) exit markets and businesses in AME (ii) Aviation Finance and (iii) DVA. No change to statutory performance

4 Not meaningful

5  Restructuring includes impacts to profit or loss from businesses that have been disclosed as no longer part of the Group's ongoing business, redundancy costs, costs of closure or relocation of business locations, impairments of assets and other costs which are not related to the Group's ongoing business. Restructuring in this context is not the same as a restructuring provision as defined in IAS 37.


Page 4

Group Chief Financial Officer's review continue

Statutory financial performance summary


1Q'23
$million

1Q'22
$million

Change
%

Constant currency change¹
%

4Q'22
$million

Change
%

Constant currency change¹
%

Net interest income

2,006

1,788

12

18

2,023

(1)

(2)

Other income

2,554

2,504

2

6

1,741

47

44

Statutory operating income

4,560

4,292

6

11

3,764

21

19

Statutory operating expenses

(2,750)

(2,665)

(3)

(8)

(2,889)

5

8

Statutory operating profit before impairment and taxation

1,810

1,627

11

16

875

107

118

Credit impairment

(20)

(197)

90

86

(346)

94

92

Goodwill & other impairment

-

(6)

100

100

(393)

100

100

Profit from associates and joint ventures

18

68

(74)

(73)

(13)

nm³

nm³

Statutory profit before taxation

1,808

1,492

21

25

123

nm³

nm³

Taxation

(464)

(313)

(48)

(65)

(387)

(20)

(15)

Profit/(loss) for the period

1,344

1,179

14

15

(264)

nm³

nm³

Statutory return on tangible equity (%)2

13.0

11.1

190


(3.2)

nm³


Statutory earnings per share (cents)

40.7

34.6

18


(10.1)

nm³


1 Comparisons presented on the basis of the current period's transactional currency rate, ensuring like-for-like currency rates between the two periods

2 Change is the basis points (bps) difference between the two periods rather than the percentage change

3 Not meaningful

The first quarter of 2023 was characterised by a period of significant uncertainty for the banking industry. The Group has successfully navigated this period delivering a strong operating performance whilst maintaining its robust liquidity and capital metrics.

The Group's underlying profit before tax of $1.7bn, was an increase of 23 per cent and the largest quarterly profit since the first quarter of 2014. Income grew 13 per cent on a constant currency basis with an 18 per cent increase in net interest income and a 9 per cent increase in other income. The net interest margin increased 5 basis points in the quarter as the Group continues to benefit from rising interest rates. Expenses increased 10 per cent at constant currency and the Group generated 3 per cent positive income-to-cost jaws. Credit impairment charges in the quarter were equivalent to an annualised loan loss rate of 7 basis points.

The Group remains well capitalised and highly liquid with a diverse and stable deposit base. The advances-to-deposits ratio of 56 per cent and a liquidity coverage ratio of 161 per cent both reflect disciplined asset and liability management. Deposit betas in all segments were in line with expectations as was the extent of migration from current and savings accounts (CASA) to time deposits. The CET1 ratio of 13.7 per cent has remained towards the top of the target range for several consecutive quarters allowing the Group to continue returning surplus capital to shareholders.

All commentary that follows is on an underlying basis and comparisons are made to the equivalent period in 2022 on a reported currency basis, unless otherwise stated. 

•       Operating income of $4.4 billion in the first quarter was the highest quarterly income since the first quarter of 2015, up 8 per cent and up 13 per cent on a constant currency basis, as the Group benefited from an expansion in net interest margin and increased trading income within Financial Markets

•       Net interest income increased 13 per cent, or 18 per cent on a constant currency basis. Excluding the increased interest expense of funding the trading book in a higher interest rate environment, adjusted net interest income increased 29 per cent as the net interest margin increased 26 per cent or 34 basis points. This was despite a year-on-year incremental 23 basis points drag from hedges. The Group increased its pricing on assets and its yield on its Treasury portfolio more quickly than it repriced its liability base, reflecting strong pricing discipline and passthrough rate management

•       Other income increased 9 per cent as Financial Markets other income increased 16 per cent on a constant currency basis despite the non-repeat of $94 million of gains on mark-to-market liabilities in the first quarter of 2022

•       Operating expenses increased 5 per cent and grew 10 per cent on a constant currency basis, reflecting the impact of inflation, post-COVID normalisation and additional headcount supporting business initiatives in Financial Markets, Consumer, Private and Business Banking ('CPBB') Relationship Managers and in China. Increased investment spend into transformational digital initiatives includes a double-digit percentage increase in amortisation charges and was offset by cost efficiency actions. The Group generated 3 per cent positive income-to-cost jaws while the cost-to-income ratio decreased 2 percentage points to 61 per cent

•       Credit impairment was a $26 million charge in the quarter, a $172 million reduction on the first quarter of 2022, with the loan loss rate in the quarter annualising to 7 basis points. Impairment charges in the CPBB portfolio were partly offset by net releases relating to the prior sovereign ratings downgrade of Ghana

 

Page 5

Group Chief Financial Officer's review continue

 

•       Profit from associates and joint ventures decreased $52 million to $11 million primary due to lower profits at China Bohai Bank, as reflected by the 2022 impairment.

•       The Group's underlying operating profit before taxation no longer includes movements in the debit valuation adjustment (DVA), the markets and businesses it intends to exit in the Africa & Middle East region and the Aviation Finance business and now reports them within restructuring and other items. Restructuring profits of $48 million primarily reflect the operating profit from the exit markets and Aviation Finance while DVA was a positive $54 million

•       Taxation was $464 million on a statutory basis, with an underlying year-to-date effective tax rate of 26.3 per cent compared to the prior year rate of 21.7 per cent reflecting a change in the geographic mix of profits and the non-repeat of a prior year credit

•       Underlying return on tangible equity increased by 170 basis points to 11.9 per cent due to higher profits and lower tangible equity reflecting shareholder distributions, including share buy-backs, and adverse movements in reserves during the course of 2022 due to movements in interest rates and FX. On a statutory basis, return on tangible equity increased 190 basis points to 13.0 per cent



 

Page 6

Group Chief Financial Officer's review continue

Operating income by product


1Q'23
$million

1Q'222
$million

Change
%

Constant currency change¹
%

4Q'222
$million

Change
%

Constant currency change¹
%

Transaction Banking

1,399

729

92

102

1,254

12

11

Trade & Working capital

331

356

(7)

(3)

316

5

3

Cash Management

1,068

373

186

nm³

938

14

14

Financial Markets

1,414

1,557

(9)

(5)

1,147

23

21

Macro Trading

830

939

(12)

(7)

628

32

30

Credit Markets

432

453

(5)

-

414

4

3

Credit Trading

172

105

64

76

147

17

15

Financing Solutions & Issuance

260

348

(25)

(22)

267

(3)

(4)

Financing & Securities Services

152

165

(8)

(6)

105

45

39

Lending & Portfolio Management

134

146

(8)

1

112

20

21

Wealth Management

511

528

(3)

-

358

43

40

Retail Products

1,212

837

45

53

1,147

6

5

CCPL & other unsecured lending

290

300

(3)

2

294

(1)

(3)

Deposits

771

241

nm³

nm³

805

(4)

(4)

Mortgage & Auto

114

246

(54)

(52)

12

nm³

nm³

Other Retail Products

37

50

(26)

(23)

36

3

(5)

Treasury

(233)

314

(174)

(177)

(173)

(35)

(40)

Other

(41)

(35)

(17)

(47)

(80)

49

42

Total underlying operating income

4,396

4,076

8

13

3,765

17

15

1 Comparisons presented on the basis of the current period's transactional currency rate, ensuring like-for-like currency rates between the two periods

2 Underlying income for relevant periods in 2022 has been restated for the removal of (i) exit markets and businesses in AME (ii) Aviation Finance and (iii) DVA. No change to statutory performance

3 Not meaningful

The operating income by product commentary that follows is on an underlying basis and comparisons are made to the equivalent period in 2022 on a constant currency basis, unless otherwise stated.

Transaction Banking income increased 102 per cent. Cash Management income nearly tripled reflecting strong pricing discipline and passthrough rate management to take advantage of a rising interest rate environment. Trade & Working Capital decreased 2 per cent reflecting lower balance sheet and contingent volumes.

Financial Markets income decreased 5 per cent compared to a record performance in the first quarter of 2022 but was up 1 per cent excluding the non-repeat of $94 million of gains on mark-to-market liabilities in the first quarter of 2022. Macro Trading had another strong quarter, albeit down 7 per cent against a record prior year comparative quarter, with strong double-digit growth in Rates partly offsetting a non-repeat of last year's record performance in FX and Commodities. Credit Markets income was flat with strong growth in Credit Trading income offset by lower Financing Solutions & Issuance income which was impacted by lower capital market issuances in a volatile interest rate environment. Excluding the non-repeat of the mark-to-market gains, Financing & Security Services income more than doubled as Securities Services income benefited from rising interest rates.

Lending and Portfolio Management income increased 1 per cent with an increase in fee income partly offset by lower volumes and increased cost of funding on undrawn commitments.

Wealth Management income recovered from a weak performance in the second half of 2022 to build back up to the strong performance in the first quarter of 2022 as strong double-digit growth in FX, fixed income and structured products was offset by lower managed investment income as transactional volumes were impacted by subdued equity markets across the footprint. Bancassurance income was broadly flat while Wealth Management secured lending income nearly halved on the back of customer deleveraging.

Retail Products income increased 53 per cent. Deposit income more than tripled due to low passthrough rates in a rising interest rate environment partly offset by migration from CASA into time deposits. Mortgages & Auto income decreased 52 per cent as the Best Lending Rate cap in Hong Kong restricted the ability to reprice mortgages despite an increase in funding costs from higher interest rates. Credit Cards & Personal Loans income increased 2 per cent reflecting growth in credit card balances and increased fee income.

Treasury income was a $233 million loss in the quarter primarily due to the $298 million loss from structural and short-term hedges in a rising interest environment which more than offset increased yields on the remainder of the Treasury portfolio and mark to market gains from FX swaps.

Page 7

Group Chief Financial Officer's review continue

Profit before tax by client segment and geographic region


1Q'23
$million

1Q'222
$million

Change
%

Constant currency change¹
%

4Q'222
$million

Change
%

Constant currency change¹
%

Corporate, Commercial & Institutional Banking

1,485

995

49

57

971

53

56

Consumer, Private & Business Banking

677

368

84

92

398

70

74

Ventures

(103)

(77)

(34)

(36)

(127)

19

20

Central & other items (segment)

(353)

104

nm³

nm³

(594)

41

39

Underlying profit before taxation

1,706

1,390

23

25

648

163

169

Asia

1,395

858

63

65

787

77

74

Africa & Middle East

304

280

9

31

91

nm³

162

Europe & Americas

(18)

469

(104)

(103)

(56)

68

74

Central & other items (region)

25

(217)

112

114

(174)

114

112

Underlying profit before taxation

1,706

1,390

23

25

648

163

169

1 Comparisons presented on the basis of the current period's transactional currency rate, ensuring like-for-like currency rates between the two periods

2 Underlying performance for relevant periods in 2022 has been restated for the removal of (i) exit markets and businesses in AME (ii) Aviation Finance and (iii) DVA. No change to statutory performance

3 Not meaningful

Corporate, Commercial & Institutional Banking (CCIB) profit increased 49 per cent. Income grew 27 per cent on a constant currency basis with Cash Management benefiting from disciplined pricing initiatives in a rising interest rate environment partly offset by a non-repeat of gains on mark-to-market liabilities within Financial Markets in the first quarter of 2022. Expenses were 18 per cent higher on a constant currency basis reflecting further investment in the business partly offset by a net $8 million credit impairment release.

Consumer, Private & Business Banking (CPBB) profit increased 84 per cent, with income up 31 per cent on a constant currency basis as the benefit from higher interest rates on Retail Deposit income was partly offset by lower Mortgage income negatively impacted by the Best Lending Rate cap in Hong Kong. Expenses increased 7 per cent on a constant currency basis while credit impairment was $27 million higher.

Ventures loss increased by over a third to $103 million, reflecting the Group's continued investment in transformational digital initiatives with expenses increasing $30 million while income was $17 million in the quarter, an increase of $16 million on the first quarter of 2022. The impairment charge increased $7 million to $10 million reflecting the build of expected credit loss provisions as the credit portfolios grow.

Central & other items (segment) recorded a loss of $353 million with negative income of $285 million including the $298 million loss from hedges. This was partly offset by lower expenses and a net release in credit impairment relating to sovereign downgrades.

Asia profits increased 63 per cent as income grew 23 per cent on a constant currency basis. Strong growth in Cash Management, Retail Deposits and Financial Markets income was offset by lower Mortgage income and a loss in Treasury Markets. Expenses increased 12 per cent on a constant currency basis with the credit impairment charge reducing by three-quarters. The profit share from China Bohai Bank reduced by $49 million.

Africa & Middle East (AME) profits increased 9 per cent but was up 31 per cent on a constant currency basis as income increased 26 per cent with strong growth in Cash Management and Retail Deposit income. This was partly offset by expenses increasing 14 per cent on a constant currency basis reflecting inflationary pressures in the region. Impairment charges was a net release of $26 million, a $18 million reduction on the prior year.

Europe & Americas recorded a loss of $18 million as income nearly halved, reflecting the increased cost of hedges within Treasury whilst strong growth in Transaction Banking income was partly offset by lower Financial Markets income. Expenses increased 15 per cent and there was a $36 million reduction in the credit impairment release booked in the quarter.

Central & other items (region) recorded a profit of $25 million compared to a $217 million loss in the first quarter of 2022. The return to profitability is mainly due to higher returns paid to Treasury on the equity provided to the regions in a rising interest rate environment.



 

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Group Chief Financial Officer's review continue

Adjusted net interest income and margin


1Q'23
$million

1Q'22
$million

Change¹
%

4Q'22
$million

Change¹
%

Adjusted net interest income2

2,340

1,809

29

2,256

4

Average interest-earning assets

582,557

569,220

2

568,302

3

Average interest-bearing liabilities

538,969

529,966

2

524,610

3







Gross yield (%)3

4.37

1.92

nm5

3.76

61

Rate paid (%)3

2.97

0.68

nm5

2.36

61

Net yield (%)3

1.40

1.24

16

1.40

-

Net interest margin (%)3,4

1.63

1.29

34

1.58

5

1 Variance is better/(worse) other than assets and liabilities which is increase/(decrease)

2 Adjusted net interest income is statutory net interest income less funding costs for the trading book and financial guarantee fees on interest-earning assets

3 Change is the basis points (bps) difference between the two periods rather than the percentage change

4 Adjusted net interest income divided by average interest-earning assets, annualised

5 Not meaningful

Adjusted net interest income increased 29 per cent due to a 26 per cent increase in the net interest margin which averaged 163 basis points in the quarter, increasing 34 basis points year-on-year and 5 basis points compared to the prior quarter:

•       Average interest-earning assets increased 3 per cent in the quarter with growth primarily from an increase in the Treasury Markets portfolio. Gross yields increased 61 basis points compared with the prior quarter due to the impact of rising interest rates on customer loan pricing and on Treasury portfolio yields partly offset by a 3 basis point quarter-on-quarter additional loss from hedges

•       Average interest-bearing liabilities increased 3 per cent in the quarter due to an increase in customer accounts and debt securities in issue. The increase in customer accounts reflects an increase in time deposits partly offset by a reduction in current and savings accounts (CASA). The rate paid on liabilities increased 61 basis points compared with the average in the prior quarter reflecting the impact of interest rate movements and a slight deterioration in the liability mix



 

Page 9

Group Chief Financial Officer's review continue

Credit risk summary

Income Statement


1Q'23
$million

1Q'222
$million

Change1
%

4Q'222
$million

Change1
%

Total credit impairment charge/(release)

26

198

(87)

340

(92)

Of which stage 1 and 2

6

(81)

(107)

235

(97)

Of which stage 3

20

279

(93)

105

(81)

1 Variance is increase/(decrease) comparing current reporting period to prior reporting periods

2 Underlying credit impairment for relevant periods in 2022 has been restated for the removal of (i) exit markets and businesses in AME and (ii) Aviation Finance. No change to statutory credit impairment

Balance sheet


1Q'23
$million

4Q'22
$million

Change1
%

1Q'22
$million

Change1
%

Gross loans and advances to customers2

305,975

316,107

(3)

301,066

2

Of which stage 1

286,335

295,219

(3)

280,021

2

Of which stage 2

12,216

13,043

(6)

13,823

(12)

Of which stage 3

7,424

7,845

(5)

7,222

3







Expected credit loss provisions

(5,348)

(5,460)

(2)

(5,281)

1

Of which stage 1

(507)

(559)

(9)

(475)

7

Of which stage 2

(446)

(444)

-

(430)

4

Of which stage 3

(4,395)

(4,457)

(1)

(4,376)

-







Net loans and advances to customers

300,627

310,647

(3)

295,785

2

Of which stage 1

285,828

294,660

(3)

279,546

2

Of which stage 2

11,770

12,599

(7)

13,393

(12)

Of which stage 3

3,029

3,388

(11)

2,846

6







Cover ratio of stage 3 before/after collateral (%)3

59 / 79

57 / 76

2 / 3

61 / 78

(2) / 1

Credit grade 12 accounts ($million)

1,642

1,574

4

988

66

Early alerts ($million)

5,351

4,967

8

6,653

(20)

Investment grade corporate exposures (%)3

75

76

(1)

69

6

1 Variance is increase/(decrease) comparing current reporting period to prior reporting periods

2 Includes reverse repurchase agreements and other similar secured lending held at amortised cost of $14,398 million at 31 March 2023, $24,498 million at 31 December 2022 and $12,571 million at 31 March 2022

3 Change is the percentage points difference between the two points rather than the percentage change

Asset quality remained resilient in the first quarter, with an improvement in a number of underlying credit metrics. However, the Group continues to remain alert to a volatile and challenging external environment which has led to idiosyncratic stress in a select number of markets and industry sectors.

Credit impairment was a $26 million charge in the quarter, a $172 million reduction year-on-year and down $314 million compared to the prior quarter. There was an ongoing $62 million charge relating to CPBB inclusive of a $12m reduction in the management overlay relating to COVID-19. There was a net release of $23 million relating to sovereign downgrades as a $14 million additional charge relating to Pakistan was more than offset by a net release relating to Ghana sovereign exposures. There was a $2 million net release relating to China commercial real estate sector, with further Stage 3 impairments offset by a $6 million reduction in the management overlay. The remaining China commercial real estate sector management overlay is now $167 million, and the COVID-19 remaining overlay is $9m, wholly in CPBB.

The credit impairment charge represents an annualised loan loss rate of 7 basis points, as the loan loss rate calculation references the $108 million impairment in relation to loans and advances partly offset by $46 million releases on financial guarantees, and loan commitments but excludes the impairment releases on debt securities.

Gross stage 3 loans and advances to customers of $7.4 billion were 5 per cent lower, as repayments, client upgrades, reduction in exposures and write-offs more than offset new inflows. Credit-impaired loans represented 2.4 per cent of gross loans and advances, a decrease of 5 basis points in the quarter.

 

Page 10

Group Chief Financial Officer's review continue

 

The stage 3 cover ratio of 59 per cent increased by 2 percentage points compared to 31 December 2022, while the cover ratio post collateral at 79 per cent increased by 3 percentage points due to the reduction in gross stage 3 balances.

Credit grade 12 balances increased $68 million to $1.6 billion in the quarter. Early Alert accounts of $5.4 billion have increased by 8 per cent from 31 December 2022, reflecting new inflows relating to a select number of clients. The Group is continuing to carefully monitor its exposures in vulnerable sectors and select markets, given the unusual stresses caused by the currently difficult macro-economic environment.

The proportion of investment grade corporate exposures has decreased by 1 percentage point to 75 per cent.

The above balance sheet disclosure relates to loans and advances to customers. The movement in high-risk assets (gross stage 3 loans and advances, credit grade 12 balances and early alert accounts) does not fully reflect the impact of the sovereign ratings downgrade of Ghana, Pakistan and Sri Lanka as it does not capture the impact of these downgrades on the Group's investment and debt securities portfolio. 

Restructuring, goodwill impairment and other items


1Q'23

1Q'221

4Q'221

Restructuring
$million

Goodwill & other impairment
$million

DVA
$million

Other items
$million

Restructuring
$million

Goodwill & other impairment
$million

DVA
$million

Other items
$million

Restructuring
$million

Goodwill & other impairment
$million

DVA
$million

Other items
$million

Operating income

110

-

54

-

131

-

85

-

112

-

(133)

20

Operating expenses

(75)

-

-

-

(115)

-

-

-

(152)

-

-

-

Credit impairment

6

-

-

-

1

-

-

-

(5)

-

-

-

Goodwill & other impairment

-

-

-

-

(5)

-

-

-

(33)

(322)

-

-

Profit from associates and joint ventures

7

-

-

-

5

-

-

-

(12)

-

-

-

Profit/(Loss) before taxation

48

-

54

-

17

-

85

-

(90)

(322)

(133)

20

1 Restructuring, DVA and other items for relevant periods in 2022 has been restated for the removal of (i) exit markets and businesses in AME (ii) Aviation Finance and (iii) DVA from underlying operating performance

The Group's statutory performance is adjusted for profits or losses of a capital nature, amounts consequent to investment transactions driven by strategic intent, other infrequent and/or exceptional transactions that are significant or material in the context of the Group's normal business earnings for the period and items which management and investors would ordinarily identify separately when assessing underlying performance period-by period.

The Group has announced that subject to regulatory approval, it intends to exit onshore operations in seven markets in the AME region and will focus solely on the CCIB segment in two more "exit markets". Additionally, the Group announced that it intends to explore alternatives for the future ownership of its Aviation Finance business. As a result of these announcements, effective 1st January 2023, the Group will no longer include the exit markets and the Aviation Finance business within the Group's underlying operating profit before taxation but will report them within restructuring.

The Group is also reclassifying movements in the debit valuation adjustment (DVA) out of its underlying operating profit before taxation and into other items.

To aid comparisons with prior periods the Group has removed the exit markets, Aviation Finance business and DVA from its underlying operating profit before taxation for 2022.

Restructuring profits of $48 million primarily reflect the profit from the exit markets and Aviation Finance businesses partly offset by losses on the remaining Principal Finance portfolio and redundancy charges.

DVA was a positive $54 million driven by the widening of Group's asset swap spreads on derivative liability exposures. The size of the portfolio subject to DVA did not change materially.



 

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Group Chief Financial Officer's review continue

Balance sheet and liquidity


31.03.23
$million

31.12.22
$million

Change
%

31.03.22
$million

Change1
%

Assets






Loans and advances to banks

38,216

39,519

(3)

35,638

7

Loans and advances to customers

300,627

310,647

(3)

295,785

2

Other assets

481,835

469,756

3

507,694

(5)

Total assets

820,678

819,922

-

839,117

(2)

Liabilities






Deposits by banks

26,889

28,789

(7)

28,930

(7)

Customer accounts

462,169

461,677

-

456,404

1

Other liabilities

281,609

279,440

1

301,943

(7)

Total liabilities

770,667

769,906

-

787,277

(2)

Equity

50,011

50,016

-

51,840

(4)

Total equity and liabilities

820,678

819,922

-

839,117

(2)







Advances-to-deposits ratio (%)2

56.2%

57.4%


60.0%


Liquidity coverage ratio (%)

161%

147%


140%


1 Variance is increase/(decrease)comparing current reporting period to prior reporting periods

2 The Group now excludes $24,173 million held with central banks (31.12.22: $20,798 million, 31.03.22: $11,970 million) that has been confirmed as repayable at the point of stress. Advances exclude repurchase agreement and other similar secured lending and include loans and advances to customers held at fair value through profit or loss. Deposits include customer accounts held at fair value through profit or loss.

The Group's balance sheet remains strong, liquid and well diversified:

•       Loans and advances to customers decreased by $10 billion or 3 per cent from 31 December 2022 to $301 billion. This includes a $6 billion reduction in Treasury and securities backed loans held to collect and a $2 billion reduction from the reclassification of Aviation Finance loans into Held for Sale assets. Excluding these items, there was an underlying $2 billion decrease in customer loans, with growth in corporate lending offset by a decline in retail mortgages reflecting in part tighter mortgage margins in key markets

•       Customer accounts of $462 billion were stable compared to 31 December 2022 with a temporary reduction in Corporate operating account deposits which partly reversed post 31 March 2023 offset by an increase in retail time deposits

•       Other assets increased 3 per cent in the first quarter of 2023 with an increase in cash and balances held at central banks, reverse repurchase agreements designated at fair value through profit or loss and assets classified as held for sale, partly offset by a reduction in derivative assets. Other liabilities increased 1 per cent with an increased in repurchase agreements and debt securities in issue partly offset by a reduction in derivative liabilities

The advances-to-deposits ratio declined to 56.2 per cent from 57.4 per cent at 31 December 2022. The point-in-time liquidity coverage ratio increased 14 percentage points in the quarter to 161 per cent and remains well above the minimum regulatory requirement.

 



 

Page 12

Group Chief Financial Officer's review continue

Risk-weighted assets


31.03.23
$million

31.12.22
$million

Change1
%

31.03.22
$million

Change1
%

By risk type






Credit risk

200,632

196,855

2

210,637

(5)

Operational risk

27,861

27,177

3

27,177

3

Market risk

22,400

20,679

8

23,019

(3)

Total RWAs

250,893

244,711

3

260,833

(4)

1 Variance is increase/(decrease) comparing current reporting period to prior reporting periods

Total risk-weighted assets (RWAs) of $250.9 billion increased $6.2 billion or 3 per cent since 31 December 2022:

•       Credit Risk RWA increased by $3.8 billion in the first quarter to $200.6 billion. There was a $4.3 billion increase from a combination of asset growth and mix, $1.8 billion increase from deterioration in asset quality reflecting the impact of sovereign downgrades and a $0.6 billion increase from a reversal of prior quarter derivative counterparty credit risk movements. This was partly offset by a $1.1 billion reduction from currency translation, a further $0.9 billion reduction in the CCIB low-returning portfolio targeted for optimisation and $0.9 billion from other efficiency actions

•       Operational Risk RWA increased $0.7 billion primarily due to an increase in average income as measured over a rolling three-year time horizon, with higher 2022 income replacing lower 2019 income

•       Market Risk RWA increased $1.7 billion to $22.4 billion reflecting a seasonally higher level of Financial Markets activity

Capital base and ratios


31.03.23
$million

31.12.22
$million

Change1
%

31.03.22
$million

Change1
%

CET1 capital

34,402

34,157

1

36,296

(5)

Additional Tier 1 capital (AT1)

5,492

6,484

(15)

5,235

5

Tier 1 capital

39,894

40,641

(2)

41,531

(4)

Tier 2 capital

12,424

12,510

(1)

13,505

(8)

Total capital

52,318

53,151

(2)

55,036

(5)

CET1 capital ratio (%)2

13.7

14.0

(0.3)

13.9

(0.2)

Total capital ratio (%)2

20.9

21.7

(0.8)

21.1

(0.2)

Leverage ratio (%)2

4.7

4.8

(0.1)

4.4

0.3

1 Variance is increase/(decrease) comparing current reporting period to prior reporting periods

2 Change is percentage points difference between two points rather than percentage change

The Group's CET1 ratio of 13.7 per cent was 25 basis points lower than as at 31 December 2022 as an increase in RWAs and the reduction in CET1 from shareholder distributions was partly offset by profit accretion. The CET1 ratio remains 3.3 percentage points above the Group's latest regulatory minimum of 10.4 per cent and towards the top of the 13-14 per cent target range.

The Group is part way through the $1 billion share buyback programme which it announced on 16 February 2023, and by 31 March 2023 had spent $501 million purchasing 58 million ordinary shares, reducing the share count by approximately 2 per cent. Even though the share buyback was still ongoing on 31 March 2023, the entire $1 billion is deducted from CET1 in the period, reducing the CET1 ratio by 40 basis points.

The Group is accruing a provisional interim 2023 ordinary share dividend over the first half of 2023, which is calculated formulaically at one third of the ordinary dividend paid in 2022 or 6 cents a share. Half of this amount was accrued in the first quarter and combined with payments due to AT1 and preference shareholders reduced the CET1 ratio by 8 basis points.

The $6.2 billion increase in RWAs in the first quarter accounted for a 37 basis points reduction in the CET1 ratio.

The above CET1 ratio headwinds were partly offset by 54 basis points uplift from profit accretion in the quarter and 13 basis points from an increase in reserves mainly relating to currency movements and a reversal of prior year unrealised losses on debt securities.

The Group's UK leverage ratio of 4.7 per cent is 10 basis points lower than at 31 December 2022. This is primarily driven by reduced Tier 1 capital following a call of $1.0 billion Additional Tier 1 securities, effective 4 April 2023 but impacting the regulatory ratio in March 2023. The Group's leverage ratio remains significantly above its minimum requirement of 3.7 per cent.



 

Page 13

Group Chief Financial Officer's review continue

Outlook

The strong first quarter performance together with a favourable trading outlook in our key markets gives us increased confidence we will deliver our financial targets.

Our liquidity profile remains strong, with deposit balances stable and deposit migration and betas performing as expected. We continue to actively manage our credit portfolio and closely monitor sovereign risks in markets that are most vulnerable. Capital levels remain robust.

Taken together our revised guidance is as follows:

•       Income to increase by around 10 per cent, the top end of the 8-10 per cent range at constant currency in 2023 and in the 8-10 per cent range at constant currency in 2024

•       Full year average net interest margin of around 170 basis points in 2023 and around 175 basis points in 2024

•       Asset and RWA growth in the low single digit percentage range

•       Positive income-to-cost jaws of 3 per cent, excluding UK bank levy at constant currency in 2023 and 2024

•       Credit impairment to normalise towards the historic through the cycle loan-loss rate range of 30-35 basis points

•       Operate dynamically within the full 13-14 per cent CET1 target range

•       Plan to return in excess of $5 billion to shareholders by 2024

•       RoTE to be approaching 10 per cent in 2023, and to exceed 11 per cent in 2024, with further growth thereafter

 

 

Andy Halford

Group Chief Financial Officer

26 April 2023


Page 14

Supplementary financial information

 

Underlying performance by client segment


1Q'23

Corporate, Commercial & Institutional Banking
$million

Consumer,
Private &
Business Banking
$million

Ventures
$million

Central &
other items
$million

Total
$million

Operating income

2,892

1,772

17

(285)

4,396

External

2,313

1,126

17

940

4,396

Inter-segment

579

646

-

(1,225)

Operating expenses

(1,415)

(1,033)

(102)

(125)

(2,675)

Operating profit/(loss) before impairment losses and taxation

1,477

739

(85)

(410)

1,721

Credit impairment

8

(62)

(10)

38

(26)

Profit from associates and joint ventures

-

-

(8)

19

11

Underlying profit/(loss) before taxation

1,485

677

(103)

(353)

1,706

Restructuring

39

(2)

-

11

48

DVA

54

-

-

-

54

Statutory profit/(loss) before taxation

1,578

675

(103)

(342)

1,808

Total assets

394,873

130,669

2,683

292,453

820,678

Of which: loans and advances to customers1

181,335

128,102

812

36,816

347,065

loans and advances to customers

134,927

128,079

812

36,809

300,627

loans held at fair value through profit or loss

46,408

23

-

7

Total liabilities

476,993

188,050

1,955

103,669

770,667

Of which: customer accounts1

335,996

182,856

1,767

5,792

526,411

Risk-weighted assets

148,550

50,621

1,627

50,095

250,893

Income return on risk-weighted assets (%)

8.0

14.1

5.5

(2.3)

7.1

Underlying return on tangible equity (%)

21.2

28.0

nm2

(25.7)

11.9

Cost to income ratio (excluding bank levy) (%)

48.9

58.3

nm2

nm2

60.9

1 Loans and advances to customers includes FVTPL and customer accounts includes FVTPL and repurchase agreements

2 Not meaningful

 



Page 15

Supplementary financial information continued

 


1Q'22²

Corporate, Commercial & Institutional Banking
$million

Consumer,
Private &
Business Banking
$million

Ventures
$million

Central &
other items
$million

Total
$million

Operating income

2,393

1,410

1

272

4,076

External

2,269

1,314

1

491

4,075

Inter-segment

124

96

-

(219)

1

Operating expenses

(1,252)

(1,006)

(72)

(220)

(2,550)

Operating profit/(loss) before impairment losses and taxation

1,141

404

(71)

52

1,526

Credit impairment

(146)

(35)

(3)

(14)

(198)

Other impairment

-

(1)

-

-

(1)

Profit from associates and joint ventures

-

-

(3)

66

63

Underlying profit/(loss) before taxation

995

368

(77)

104

1,390

Restructuring

13

(4)

-

8

17

DVA

85

-

-

-

85

Statutory profit/(loss) before taxation

1,093

364

(77)

112

1,492

Total assets

420,168

138,063

1,115

279,771

839,117

Of which: loans and advances to customers1

200,625

135,333

115

27,979

364,052

loans and advances to customers

135,704

135,279

115

24,687

295,785

loans held at fair value through profit or loss

64,921

54

-

3,292

68,267

Total liabilities

489,720

182,197

693

114,667

787,277

Of which: customer accounts1

329,206

177,953

621

10,277

518,057

Risk-weighted assets

156,753

53,463

876

49,741

260,833

Income return on risk-weighted assets (%)

5.9

10.6

1.6

2.0

6.1

Underlying return on tangible equity (%)

12.7

14.4

nm³

(0.1)

10.2

Cost to income ratio (excluding bank levy) (%)

52.3

71.3

nm³

80.9

62.6

1 Loans and advances to customers includes FVTPL and customer accounts includes FVTPL and repurchase agreements

2 Underlying performance for relevant periods in 2022 has been restated for the removal of (i) exit markets and businesses in AME (ii) Aviation Finance and (iii) DVA. No change to statutory performance

3 Not meaningful



 

Page 16

Supplementary financial information continued

Corporate, Commercial & Institutional Banking


1Q'23
$million

1Q'226
$million

Change2
%

Constant currency change1,2
%

4Q'226
$million

Change2
%

Constant currency change1,2
%

Operating income

2,892

2,393

21

27

2,467

17

17

Transaction Banking

1,356

703

93

103

1,216

12

11

Trade & Working Capital

320

340

(6)

(2)

305

5

3

Cash Management

1,036

363

185

nm⁷

911

14

14

Financial Markets

1,414

1,557

(9)

(5)

1,147

23

21

Macro Trading

830

939

(12)

(7)

628

32

30

Credit Markets

432

453

(5)

nm⁷

414

4

3

Credit Trading

172

105

64

76

147

17

15

Financing Solutions & Issuance

260

348

(25)

(22)

267

(3)

(4)

Financing & Securities Services

152

165

(8)

(6)

105

45

39

Lending & Portfolio Management

124

136

(9)

nm⁷

107

16

20

Other

(2)

(3)

33

33

(5)

60

78

Operating expenses

(1,415)

(1,252)

(13)

(18)

(1,352)

(5)

(1)

Operating profit before impairment losses and taxation

1,477

1,141

29

37

1,115

32

36

Credit impairment

8

(146)

105

102

(144)

106

102

Underlying profit before taxation

1,485

995

49

57

971

53

56

Restructuring

39

13

nm⁷

nm⁷

(34)

nm⁷

nm⁷

DVA

54

85

(36)

(35)

(133)

141

141

Statutory profit before taxation

1,578

1,093

44

52

804

96

101

Total assets

394,873

420,168

(6)

(4)

401,567

(2)

(1)

Of which: loans and advances to customers3

181,335

200,625

(10)

(7)

184,254

(2)

(1)

Total liabilities

476,993

489,720

(3)

(1)

479,981

(1)

(1)

Of which: customer accounts3

335,996

329,206

2

4

332,176

1

1

Risk-weighted assets

148,550

156,753

(5)

nm⁷

143,582

3

nm⁷

Income return on risk-weighted assets (%)4

8.0

5.9

210bps

nm⁷

6.7

130bps

nm⁷

Underlying return on tangible equity (%)4

21.2

12.7

850bps

nm⁷

13.6

760bps

nm⁷

Cost to income ratio (%)5

48.9

52.3

3.4

3.8

54.8

5.9

7.3

1 Comparisons presented on the basis of the current period's transactional currency rate, ensuring like-for-like currency rates between the two periods

2 Variance is better/(worse) other than risk-weighted assets, assets and liabilities which is increase/(decrease)

3 Loans and advances to customers includes FVTPL and customer accounts includes FVTPL and repurchase agreements

4 Change is the basis points (bps) difference between the two periods rather than the percentage change

5 Change is the percentage points difference between the two periods rather than the percentage change

6 Underlying performance for relevant periods in 2022 has been restated for the removal of (i) exit markets in AME (ii) Aviation Finance and (iii) DVA. No change to statutory performance

7 Not meaningful

Performance highlights

•       Underlying profit before tax of $1,485 million was up 49 per cent driven mainly by higher income and impairment releases partially offset by higher expenses

•       Underlying operating income of $2,892 million was up 21 per cent, up 27 per cent on constant currency basis. Cash Management income nearly tripled reflecting strong pricing discipline and passthrough rate management to take advantage of a rising interest rate environment. Trade & Working Capital decreased 2 per cent reflecting lower balance sheet and contingent volumes. Financial Markets income decreased 5 per cent compared to a record performance in the first quarter of 2022 and was up 1 per cent excluding the non-repeat of $94 million of gains on mark-to-market liabilities in the first quarter of 2022

•       Credit impairment was a net release of $8m for 1Q'23 mainly from stage 3 releases more than offsetting an increase in stage 1 and 2 assets

•       Risk-weighted assets of $149 billion were up $5 billion since 31 December 2022, mainly from asset growth and mix, partly offset by optimisation actions



 

•       RoTE increased to 21.2 per cent from 12.7 per cent  

Page 17

Supplementary financial information continued

Consumer, Private & Business Banking


1Q'23
$million

1Q'226
$million

Change2
%

Constant currency change1,2
%

4Q'226
$million

Change2
%

Constant currency change1,2
%

Operating income

1,772

1,410

26

31

1,533

16

14

Transaction Banking

43

26

65

72

38

13

8

Trade & Working Capital

11

16

(31)

(27)

11

-

(8)

Cash Management

32

10

nm⁷

nm⁷

27

19

14

Lending & Portfolio Management

10

10

-

25

5

100

25

Wealth Management

511

528

(3)

-

357

43

40

Retail Products

1,207

836

44

52

1,142

6

5

CCPL & other unsecured lending

275

299

(8)

(3)

284

(3)

(5)

Deposits

781

242

nm⁷

nm⁷

810

(4)

(3)

Mortgage & Auto

114

246

(54)

(52)

12

nm⁷

nm⁷

Other Retail Products

37

49

(24)

(20)

36

3

(3)

Other

1

10

(90)

(90)

(9)

111

108

Operating expenses

(1,033)

(1,006)

(3)

(7)

(1,030)

-

3

Operating profit before impairment losses and taxation

739

404

83

92

503

47

50

Credit impairment

(62)

(35)

(77)

(94)

(96)

35

35

Other impairment

-

(1)

100

nm⁷

(9)

100

100

Underlying profit before taxation

677

368

84

92

398

70

74

Restructuring

(2)

(4)

50

71

(17)

88

89

Statutory profit before taxation

675

364

85

96

381

77

82

Total assets

130,669

138,063

(5)

(3)

133,956

(2)

(2)

Of which: loans and advances to customers3

128,102

135,333

(5)

(2)

130,985

(2)

(2)

Total liabilities

188,050

182,197

3

6

185,396

1

2

Of which: customer accounts3

182,856

177,953

3

6

180,659

1

2

Risk-weighted assets

50,621

53,463

(5)

nm⁷

50,730

-

nm⁷

Income return on risk-weighted assets (%)4

14.1

10.6

350bps

nm⁷

12.0

210bps

nm⁷

Underlying return on tangible equity (%)4

28.0

14.4

1,360bps

nm⁷

16.1

1,190bps

nm⁷

Cost to income ratio (%)5

58.3

71.3

13.0

13.2

67.2

8.9

10.0

1 Comparisons presented on the basis of the current period's transactional currency rate, ensuring like-for-like currency rates between the two periods

2 Variance is better/(worse) other than risk-weighted assets, assets and liabilities which is increase/(decrease)

3 Loans and advances to customers includes FVTPL and customer accounts includes FVTPL and repurchase agreements

4 Change is the basis points (bps) difference between the two periods rather than the percentage change

5 Change is the percentage points difference between the two periods rather than the percentage change

6 Underlying performance for relevant periods in 2022 has been restated for the removal of exit markets and businesses in AME. No change to statutory performance

7 Not meaningful

Performance highlights

•       Underlying profit before tax of $677 million was up 84 per cent, with income up 31 per cent on a constant currency basis as the benefit from higher interest rates on Retail Deposit income was partly offset by lower Mortgage income negatively impacted by the Best Lending Rate cap in Hong Kong. Expenses increased 7 per cent on a constant currency basis while credit impairment was $27 million higher

•       RoTE increased from 14.4 per cent to 28.0 per cent



 

Page 18

Supplementary financial information continued

Ventures


1Q'23
$million

1Q'22
$million

Change2
%

Constant currency change1,2
%

4Q'22
$million

Change2
%

Constant currency change1,2
%

Operating income

17

1

nm⁶

nm⁶

14

21

21

Retail Products

5

1

nm⁶

nm⁶

4

25

25

CCPL & other unsecured lending

15

1

nm⁶

nm⁶

10

50

50

Deposits

(10)

(1)

nm⁶

nm⁶

(6)

(67)

(50)

Other Retail Products

-

1

-100⁷

nm⁶

-

nm⁶

nm⁶

Treasury

5

-

nm⁶

nm⁶

5

-

-

Other

7

-

nm⁶

nm⁶

5

40

40

Operating expenses

(102)

(72)

(42)

(44)

(103)

1

3

Operating Loss before impairment losses and taxation

(85)

(71)

(20)

(21)

(89)

4

7

Credit impairment

(10)

(3)

nm⁶

nm⁶

(9)

(11)

(11)

Other impairment

-

-

nm⁶

nm⁶

(24)

100

100

Profit from associates and joint ventures

(8)

(3)

(167)

(167)

(5)

(60)

(60)

Underlying loss before taxation

(103)

(77)

(34)

(36)

(127)

19

20

Restructuring

-

-

nm⁶

nm⁶

-

nm⁶

nm⁶

Other items

-

-

nm⁶

nm⁶

-

nm⁶

nm⁶

Statutory loss before taxation

(103)

(77)

(34)

(36)

(127)

19

20

Total assets

2,683

1,115

141

158

2,451

9

11

Of which: loans and advances to customers3

812

115

nm⁶

nm⁶

702

16

16

Total liabilities

1,955

693

182

183

1,658

18

18

Of which: customer accounts3

1,767

621

185

185

1,548

14

14

Risk-weighted assets

1,627

876

86

nm⁶

1,358

20

nm⁶

Income return on risk-weighted assets (%)4

5.5

1.6

390bps

nm⁶

5.5

-

nm⁶

Underlying return on tangible equity (%)4

nm⁶

nm⁶

nm⁶

nm⁶

nm⁶

nm⁶

nm⁶

Cost to income ratio (%)5

nm⁶

nm⁶

nm⁶

nm⁶

nm⁶

nm⁶

nm⁶

1 Comparisons presented on the basis of the current period's transactional currency rate, ensuring like-for-like currency rates between the two periods

2 Variance is better/(worse) other than risk-weighted assets, assets and liabilities which is increase/(decrease)

3 Loans and advances to customers includes FVTPL and customer accounts includes FVTPL and repurchase agreements

4 Change is the basis points (bps) difference between the two periods rather than the percentage change

5 Change is the percentage points difference between the two periods rather than the percentage change

6 Not meaningful

Performance highlights

•       Underlying loss before tax of $103 million reflecting the Group's continued investment in transformational digital initiatives with expenses increasing $30 million while income was $17 million in the quarter, an increase of $16 million on the first quarter of 2022. The impairment charge increased $7 million to $10 million reflecting the build of expected credit loss provisions as the credit portfolios grow

•       Loans and advances to customers increased 16 per cent since 31 December 2022, due to customer growth and additional credit product launches. Customer growth has also led to customer account liabilities increase by 14 per cent since 31 December 2022



 

Page 19

Supplementary financial information continued

Central & other items (segment)


1Q'23
$million

1Q'227
$million

Change2
%

Constant currency change1,2
%

4Q'227
$million

Change2
%

Constant currency change1,2
%

Operating income

(285)

272

nm⁸

nm⁸

(249)

(14)

-

Treasury

(238)

314

(176)

(179)

(178)

(34)

(39)

Other

(47)

(42)

(12)

(35)

(71)

34

17

Operating expenses

(125)

(220)

43

35

(252)

50

56

Operating (loss)/profit before impairment losses and taxation

(410)

52

nm⁸

nm⁸

(501)

18

19

Credit impairment

38

(14)

nm⁸

nm⁸

(91)

142

158

Other impairment

-

-

nm⁸

100

(5)

100

100

Profit from associates and joint ventures

19

66

(71)

(71)

3

nm⁸

nm⁸

Underlying profit/(loss) before taxation

(353)

104

nm⁸

nm⁸

(594)

41

39

Restructuring

11

8

38

nm⁸

(39)

128

134

Goodwill & other impairment3

-

-

nm⁸

nm⁸

(322)3

100

100

Other items

-

-

nm⁸

nm⁸

20

(100)

(100)

Statutory (loss)/profit before taxation

(342)

112

nm⁸

nm⁸

(935)

63

62

Total assets

292,453

279,771

5

6

281,948

4

4

Of which: loans and advances to customers4

36,816

27,979

32

36

41,789

(12)

(12)

Total liabilities

103,669

114,667

(10)

(10)

102,871

1

1

Of which: customer accounts4

5,792

10,277

(44)

(42)

5,846

(1)

(1)

Risk-weighted assets

50,095

49,741

1

nm⁸

49,041

2

nm⁸

Income return on risk-weighted assets (%)5

(2.3)

2.0

(430)bps

nm⁸

(1.9)

(40)bps

nm⁸

Underlying return on tangible equity (%)5

(25.7)

(0.1)

nm⁸

nm⁸

(38.4)

1,270bps

nm⁸

Cost to income ratio (%) (excluding UK bank levy)6

nm8

80.9

nm⁸

nm⁸

nm⁸

nm⁸

nm⁸

1 Comparisons presented on the basis of the current period's transactional currency rate, ensuring like-for-like currency rates between the two periods

2 Variance is better/(worse) other than risk-weighted assets, assets and liabilities which is increase/(decrease)

3 Goodwill and other impairment include $308 million impairment charge relating to the Group's investment in its associate China Bohai Bank (Bohai)

4 Loans and advances to customers includes FVTPL and customer accounts includes FVTPL and repurchase agreements

5 Change is the basis points (bps) difference between the two periods rather than the percentage change

6 Change is the percentage points difference between the two periods rather than the percentage change

7 Underlying performance for relevant periods in 2022 has been restated for the removal of (i) exit markets in AME and (ii) Aviation Finance. No change to statutory performance

8 Not meaningful

Performance highlights

•       Underlying loss before tax of $353 million compared to 1Q'22 profit of $104 million primarily due to lower net interest income from hedges as rates rose, and lower profit share from our associate Bohai, partially offset by lower expenses and lower impairments



 

Page 20

Supplementary financial information continued

Underlying performance by region


1Q'23

Asia
$million

 Africa &
Middle East
$million

Europe &
Americas
$million

Central &
other items
$million

Total
$million

Operating income

3,191

676

413

116

4,396

Operating expenses

(1,750)

(397)

(433)

(95)

(2,675)

Operating profit/(loss) before impairment losses and taxation

1,441

279

(20)

21

1,721

Credit impairment

(64)

26

2

10

(26)

Other impairment

1

(1)

-

-

-

Profit from associates and joint ventures

17

-

-

(6)

11

Underlying profit/(loss) before taxation

1,395

304

(18)

25

1,706

Restructuring

(7)

18

22

15

48

DVA

13

7

34

-

54

Statutory profit/(loss) before taxation

1,401

329

38

40

1,808

Total assets

488,860

52,124

270,332

9,362

820,678

Of which: loans and advances to customers1

259,161

24,334

63,570

-

347,065

loans and advances to customers

246,910

21,639

32,078

-

300,627

loans held at fair value through profit or loss

12,251

2,695

31,492

-

Total liabilities

441,492

39,606

222,235

67,334

770,667

Of which: customer accounts1

352,016

30,933

143,462

-

526,411

Risk-weighted assets

153,062

41,995

51,929

3,907

250,893

Income return on risk-weighted assets (%)2

8.4

6.7

3.2

14.2

7.1

Underlying return on tangible equity (%)2

19.6

15.1

(1.0)

nm⁵

11.9

Cost to income ratio (%)3

54.8

58.7

104.8

nm⁵

60.9


1Q'224

Asia
$million

 Africa &
Middle East
$million

Europe &
Americas
$million

Central &
other items
$million

Total
$million

Operating income

2,698

609

808

(39)

4,076

Operating expenses

(1,622)

(373)

(377)

(178)

(2,550)

Operating profit/(loss) before impairment losses and taxation

1,076

236

431

(217)

1,526

Credit impairment

(283)

44

38

3

(198)

Other impairment

-

-

-

(1)

(1)

Profit from associates and joint ventures

65

-

-

(2)

63

Underlying profit/(loss) before taxation

858

280

469

(217)

1,390

Restructuring

7

16

(1)

(5)

17

DVA

31

9

45

-

85

Statutory profit/(loss) before taxation

896

305

513

(222)

1,492

Total assets

475,917

55,458

298,207

9,535

839,117

Of which: loans and advances to customers1

263,871

26,175

74,006

-

364,052

loans and advances to customers

198,950

26,121

74,006

(3,292)

295,785

loans held at fair value through profit or loss

64,921

54

-

3,292

68,267

Total liabilities

424,264

43,287

252,035

67,691

787,277

Of which: customer accounts1

334,813

34,705

148,539

-

518,057

Risk-weighted assets

163,447

45,154

49,619

2,613

260,833

Income return on risk-weighted assets (%)2

6.4

5.2

6.4

(7.2)

6.1

Underlying return on tangible equity (%)2

10.7

12.3

19.2

nm⁵

10.2

Cost to income ratio (%)3

60.1

61.2

46.7

nm⁵

62.6

1 Loans and advances to customers includes FVTPL and customer accounts includes FVTPL and repurchase agreements

2 Change is the basis points (bps) difference between the two periods rather than the percentage change

3 Change is the percentage points difference between the two periods rather than the percentage change

4  Underlying performance for relevant periods in 2022 has been restated for the removal of (i) exit markets and businesses in AME (ii) Aviation Finance and (iii) DVA. No change to statutory performance

5 Not meaningful

Page 21

Supplementary financial information continued

Asia


1Q'23
$million

1Q'227
$million

Change2
%

Constant currency change1,2
%

4Q'227
$million

Change2
%

Constant currency change1,2
%

Operating income

3,191

2,698

18

23

2,682

19

16

Operating expenses

(1,750)

(1,622)

(8)

(12)

(1,692)

(3)

(1)

Operating profit before impairment losses and taxation

1,441

1,076

34

39

990

46

42

Credit impairment

(64)

(283)

77

75

(199)

68

68

Other impairment

1

-

nm⁸

nm⁸

(7)

114

113

Profit from associates and joint ventures

17

65

(74)

(74)

3

nm⁸

nm⁸

Underlying profit before taxation

1,395

858

63

65

787

77

74

Restructuring

(7)

7

nm⁸

nm⁸

(23)

70

70

Goodwill & other impairment3

-

-

nm⁸

nm⁸

(308)3

(100)

(100)

DVA

13

31

(58)

(58)

(45)

129

130

Other items

-

-

nm⁸

nm⁸

20

(100)

(100)

Statutory profit before taxation

1,401

896

56

59

431

nm⁸

nm⁸

Total assets

488,860

475,917

3

6

488,399

-

-

Of which: loans and advances to customers4

259,161

263,871

(2)

1

270,892

(4)

(4)

Total liabilities

441,492

424,264

4

7

441,349

-

-

Of which: customer accounts4

352,016

334,813

5

8

346,832

1

2

Risk-weighted assets

153,062

163,447

(6)

nm⁸

150,816

1

nm⁸

Income return on risk-weighted assets (%)5

8.4

6.4

200bps

nm⁸

6.9

150bps

nm⁸

Underlying return on tangible equity (%)5

19.6

10.7

890bps

nm⁸

10.9

866bps

nm⁸

Cost to income ratio (%)6

54.8

60.1

5.3

5.3

63.1

8.3

8.3

1 Comparisons presented on the basis of the current period's transactional currency rate, ensuring like-for-like currency rates between the two periods

2 Variance is better/(worse) other than risk-weighted assets, assets and liabilities which is increase/(decrease)

3 Goodwill and other impairment include $308 million impairment charge relating to the Group's investment in its associate China Bohai Bank (Bohai)

4 Loans and advances to customers includes FVTPL and customer accounts includes FVTPL and repurchase agreements

5 Change is the basis points (bps) difference between the two periods rather than the percentage change

6 Change is the percentage points difference between the two periods rather than the percentage change

7 Underlying performance for relevant periods in 2022 has been restated for the removal of (i) Aviation Finance and (ii) DVA. No change to statutory performance

8 Not meaningful

Performance highlights

•       Underlying profit before tax of $1,395 million was up 63 per cent, primarily with higher income and lower credit impairment partly offset by higher costs and lower profit share from China Bohai Bank, down $49 million

•       Underlying operating income of $3,191 million was up 18 per cent, up 23 per cent on a constant currency. Strong growth in Cash Management, Retail Deposits and Financial Markets income was offset by lower Mortgage income and a loss in Treasury Markets

•       Loans and advances to customers were down 4 per cent and customer accounts were up 1 per cent, up 2 per cent on a constant currency, since 31 December 2022

•       Risk-weighted assets broadly flat since 31 December 2022

•       RoTE increased from 10.7 per cent to 19.6 per cent



 

Page 22

Supplementary financial information continued

Africa & Middle East


1Q'23
$million

1Q'226
$million

Change2
%

Constant currency change1,2
%

4Q'226
$million

Change2
%

Constant currency change1,2
%

Operating income

676

609

11

26

642

5

6

Operating expenses

(397)

(373)

(6)

(14)

(407)

2

5

Operating profit before impairment losses and taxation

279

236

18

48

235

19

26

Credit impairment

26

44

(41)

(46)

(145)

118

121

Other impairment

(1)

-

nm⁷

nm⁷

1

nm⁷

nm⁷

Underlying profit before taxation

304

280

9

31

91

nm⁷

162

Restructuring

18

16

13

80

(14)

nm⁷

nm⁷

DVA

7

9

(22)

(13)

(13)

154

154

Other items

-

-

nm⁷

nm⁷

-

nm⁷

nm⁷

Statutory profit before taxation

329

305

8

31

64

nm⁷

nm⁷

Total assets

52,124

55,458

(6)

3

53,086

(2)

-

Of which: loans and advances to customers3

24,334

26,175

(7)

-

23,857

2

4

Total liabilities

39,606

43,287

(9)

(2)

40,902

(3)

(1)

Of which: customer accounts3

30,933

34,705

(11)

(4)

31,860

(3)

(1)

Risk-weighted assets

41,995

45,154

(7)

nm⁷

40,716

3

nm⁷

Income return on risk-weighted assets (%)4

6.7

5.2

150bps

nm⁷

6.1

60bps

nm⁷

Underlying return on tangible equity (%)4

15.1

12.3

277bps

nm⁷

4.8

1,031bps

nm⁷

Cost to income ratio (%)5

58.7

61.2

2.5

6.2

63.4

4.7

6.7

1 Comparisons presented on the basis of the current period's transactional currency rate, ensuring like-for-like currency rates between the two periods

2 Variance is better/(worse) other than risk-weighted assets, assets and liabilities which is increase/(decrease)

3 Loans and advances to customers includes FVTPL and customer accounts includes FVTPL and repurchase agreements

4 Change is the basis points (bps) difference between the two periods rather than the percentage change

5 Change is the percentage points difference between the two periods rather than the percentage change

6 Underlying performance for relevant periods in 2022 has been restated for the removal of (i) exit markets and businesses in AME and (ii) DVA. No change to statutory performance

7 Not meaningful

Performance highlights

•       Underlying profit before tax of $304 million, the highest quarterly profit since 2015, was 9 per cent higher and was up 31 per cent on constant currency basis, driven by higher income

•       Underlying operating income of $676 million was up 11 per cent and was up 26 per cent on a constant currency basis. Broad-based growth across products, led by Cash Management and Retail Deposits

•       Loans and advances to customers were up 2 per cent and customer accounts were down 3 per cent since 31 December 2022

•       Risk- weighted assets increased 3 per cent since 31 December 2022

•       RoTE increased from 12.3 per cent to 15.1 per cent, and was the highest quarterly ROTE since 2015



 

Page 23

Supplementary financial information continued

Europe & Americas


1Q'23
$million

1Q'226
$million

Change2
%

Constant currency change1,2
%

4Q'226
$million

Change2
%

Constant currency change1,2
%

Operating income

413

808

(49)

(48)

348

19

19

Operating expenses

(433)

(377)

(15)

(18)

(415)

(4)

(3)

Operating (loss)/profit before impairment losses and taxation

(20)

431

(105)

(104)

(67)

70

75

Credit impairment

2

38

(95)

(95)

13

(85)

(83)

Other impairment

-

-

nm⁷

nm⁷

(2)

100

100

Underlying (loss)/profit before taxation

(18)

469

(104)

(103)

(56)

68

74

Restructuring

22

(1)

nm⁷

nm⁷

(19)

nm⁷

nm⁷

DVA

34

45

(24)

(23)

(75)

145

145

Statutory profit before taxation

38

513

(93)

(92)

(150)

125

126

Total assets

270,332

298,207

(9)

(9)

268,960

1

1

Of which: loans and advances to customers3

63,570

74,006

(14)

(13)

62,981

1

3

Total liabilities

222,235

252,035

(12)

(12)

219,701

1

1

Of which: customer accounts3

143,462

148,539

(3)

(3)

141,537

1

1

Risk-weighted assets

51,929

49,619

5

nm⁷

50,174

3

nm⁷

Income return on risk-weighted assets (%)4

3.2

6.4

(320)bps

nm⁷

2.7

50bps

nm⁷

Underlying return on tangible equity (%)4

(1.0)

19.2

nm⁷

nm⁷

(2.2)

121bps

nm⁷

Cost to income ratio (%)5

104.8

46.7

(58.1)

(58.3)

119.3

14.5

16.1

1 Comparisons presented on the basis of the current period's transactional currency rate, ensuring like-for-like currency rates between the two periods

2 Variance is better/(worse) other than risk-weighted assets, assets and liabilities which is increase/(decrease)

3 Loans and advances to customers includes FVTPL and customer accounts includes FVTPL and repurchase agreements

4 Change is the basis points (bps) difference between the two periods rather than the percentage change

5 Change is the percentage points difference between the two periods rather than the percentage change

6 Underlying performance for relevant periods in 2022 has been restated for the removal of (i) Aviation Finance and (ii) DVA. No change to statutory performance

7 Not meaningful

Performance highlights

•       Underlying loss before tax of $18 million, down $487 million, driven by lower income, higher expenses and a reduction in the credit impairment release in the quarter

•       Underlying operating income down 49 per cent compared to 1Q'22 reflecting the increased cost of hedges within Treasury whilst strong growth in Transaction Banking income was partly offset by lower Financial Markets income

•       RoTE of negative 1.0 per cent down from 19.2 per cent in 1Q'22



 

•      

Page 24

Supplementary financial information continued

Central & other items (region)


1Q'23
$million

1Q'225
$million

Change2
%

Constant currency change1,2
%

4Q'225
$million

Change2
%

Constant currency change1,2
%

Operating income

116

(39)

nm⁶

nm⁶

93

25

26

Operating expenses

(95)

(178)

47

36

(223)

57

66

Operating (loss)/profit before impairment losses and taxation

21

(217)

110

112

(130)

116

113

Credit impairment

10

3

nm⁶

nm⁶

(9)

nm⁶

nm⁶

Other impairment

-

(1)

100

100

(30)

100

100

Profit from associates and joint ventures

(6)

(2)

nm⁶

(100)

(5)

(20)

(20)

Underlying (loss)/profit before taxation

25

(217)

112

114

(174)

114

112

Restructuring

15

(5)

nm⁶

nm⁶

(34)

144

144

Goodwill impairment

-

-

nm⁶

nm⁶

(14)

100

100

Statutory (loss)/profit before taxation

40

(222)

118

122

(222)

118

115

Total assets

9,362

9,535

(2)

(2)

9,477

(1)

(1)

Total liabilities

67,334

67,691

(1)

(3)

67,954

(1)

(1)

Risk-weighted assets

3,907

2,613

50

nm⁶

3,005

30

30

Income return on risk-weighted assets (%)3

14.2

(7.2)

nm⁶

nm⁶

13.9

30bps

nm⁶

Underlying return on tangible equity (%)3

nm⁶

nm⁶

nm⁶

nm⁶

nm⁶

nm⁶

nm⁶

Cost to income ratio (%) (excluding UK bank levy)4

nm⁶

nm⁶

nm⁶

nm⁶

nm⁶

nm⁶

nm⁶

1 Comparisons presented on the basis of the current period's transactional currency rate, ensuring like-for-like currency rates between the two periods

2 Variance is better/(worse) other than risk-weighted assets, assets and liabilities which is increase/(decrease)

3 Change is the basis points (bps) difference between the two periods rather than the percentage change

4 Change is the percentage points difference between the two periods rather than the percentage change

5 Underlying performance for relevant periods in 2022 has been restated for the removal of Aviation Finance. No change to statutory performance line

6 Not meaningful

Performance highlights



 

•       Underlying profit before tax of $25 million compared to a $217 million loss in the first quarter of 2022. The return to profitability is mainly due to higher returns paid to Treasury on the equity provided to the regions in a rising interest rate environment

 

 

Page 25

Supplementary financial information continued

Underlying performance by key market


1Q'23

Hong Kong
$million

Korea
$million

China
$million

Taiwan
$million

Singapore
$million

India
$million

Indonesia
$million

UAE
$million

UK
$million

US
$million

Operating income

1,036

312

283

146

638

311

52

214

77

234

Operating expenses

(485)

(179)

(222)

(80)

(290)

(208)

(45)

(95)

(203)

(170)

Operating profit before impairment losses and taxation

551

133

61

66

348

103

7

119

(126)

64

Credit impairment

(22)

(15)

(9)

(22)

17

(3)

(1)

2

3

7

Other impairment

-

-

-

-

-

-

-

(1)

(8)

-

Profit from associates and joint ventures

-

-

17

-

-

-

-

-

-

-

Underlying profit before taxation

529

118

69

44

365

100

6

120

(131)

71

Total assets employed

174,341

63,736

42,880

21,728

94,292

32,852

6,121

20,215

174,342

81,976

Of which: loans and advances to customers1

84,891

42,426

15,610

11,186

62,777

14,350

1,817

9,010

38,615

20,562

Total liabilities employed

165,874

54,131

34,713

20,171

103,860

25,798

5,088

15,201

138,910

67,774

Of which: customer accounts1

138,604

41,163

26,554

18,724

78,810

19,311

3,069

12,128

99,974

34,022

Underlying return on tangible equity (%)

25.0

16.5

9.0

20.4

33.9

9.8

4.6

25.2

(8.7)

8.3

Cost to income ratio (%)

46.8

57.4

78.4

54.8

45.5

66.9

86.5

44.4

263.6

72.6

 


1Q'222

Hong Kong
$million

Korea
$million

China
$million

Taiwan
$million

Singapore
$million

India
$million

Indonesia
$million

UAE
$million

UK
$million

US
$million

Operating income

783

318

291

124

452

344

62

158

483

268

Operating expenses

(448)

(181)

(200)

(88)

(254)

(182)

(45)

(88)

(175)

(149)

Operating profit before impairment losses and taxation

335

137

91

36

198

162

17

70

308

119

Credit impairment

(209)

(1)

(48)

(8)

15

4

2

11

8

(1)

Other impairment

-

-

-

-

-

-

-

-

-

-

Profit from associates and joint ventures

-

-

66

-

-

-

-

-

-

-

Underlying profit before taxation

126

136

109

28

213

166

19

81

316

118

Total assets employed

172,053

67,222

37,814

23,379

91,483

29,128

5,142

19,155

220,546

61,415

Of which: loans and advances to customers1

84,902

48,609

17,955

11,561

53,569

16,551

2,334

8,377

50,250

19,534

Total liabilities employed

160,099

58,248

33,918

21,986

92,828

21,252

3,988

16,805

159,270

76,831

Of which: customer accounts1

130,882

46,541

26,294

19,263

68,922

15,006

2,765

13,012

101,299

37,559

Underlying return on tangible equity (%)

5.8

17.0

9.9

11.6

18.1

15.3

12.4

14.3

19.6

17.2

Cost to income ratio (%)

57.2

56.9

68.7

71.0

56.2

52.9

72.6

55.7

36.2

55.6

1 Loans and advances to customers includes FVTPL and customer accounts includes FVTPL and repurchase agreements

2 Underlying performance for relevant periods in 2022 has been restated for the removal of (i) exit markets and businesses in AME (ii) Aviation Finance and (iii) DVA. No change to statutory performance



Page 26

Supplementary financial information continued


4Q'222

Hong Kong
$million

Korea
$million

China
$million

Taiwan
$million

Singapore
$million

India
$million

Indonesia
$million

UAE
$million

UK
$million

US
$million

Operating income

902

252

244

118

495

266

57

177

40

239

Operating expenses

(450)

(184)

(214)

(80)

(290)

(203)

(51)

(102)

(203)

(161)

Operating profit before impairment losses and taxation

452

68

30

38

205

63

6

75

(163)

78

Credit impairment

(128)

(27)

(48)

(6)

(6)

(19)

-

(1)

10

(7)

Other impairment

4

(1)

(1)

-

1

2

-

1

12

2

Profit from associates and joint ventures

-

-

3

-

-

-

-

-

-

-

Underlying profit before taxation

328

40

(16)

32

200

46

6

75

(141)

73

Total assets employed

171,086

68,903

39,508

21,919

97,914

30,412

5,237

19,624

187,832

67,019

Of which: loans and advances to customers1

85,359

49,264

15,652

11,283

59,872

15,025

2,403

7,913

39,356

19,951

Total liabilities employed

165,499

58,992

33,124

20,216

104,318

23,210

4,257

16,256

140,160

64,825

Of which: customer accounts1

138,713

43,620

24,347

18,509

79,409

15,199

2,924

12,710

104,482

28,424

Underlying return on tangible equity (%)

15.3

5.4

(1.7)

14.4

18.0

5.1

4.7

14.8

(9.2)

8.2

Cost to income ratio (%)

49.9

73.0

87.7

67.8

58.6

76.3

89.5

57.6

507.5

67.4

1 Loans and advances to customers includes FVTPL and customer accounts includes FVTPL and repurchase agreements

2 Underlying performance for relevant periods in 2022 has been restated for the removal of (i) exit markets and businesses in AME (ii) Aviation Finance and (iii) DVA. No change to statutory performance



 

Page 27

Supplementary financial information continued

Quarterly underlying operating income by product


1Q'23
$million

4Q'221
$million

3Q'221
$million

2Q'221
$million

1Q'221
$million

4Q'211
$million

3Q'211
$million

2Q'211
$million

Transaction Banking

1,399

1,254

1,067

824

729

718

722

699

Trade & Working capital

331

316

335

336

356

341

381

358

Cash Management

1,068

938

732

488

373

377

341

341

Financial Markets

1,414

1,147

1,386

1,255

1,557

900

1,170

1,156

Macro Trading

830

628

736

662

939

427

538

568

Credit Markets

432

414

435

372

453

358

511

477

Credit Trading

172

147

152

84

105

59

143

101

Financing Solutions & Issuance

260

267

283

288

348

299

368

376

Financing & Securities Services

152

105

215

221

165

115

121

111

Lending & Portfolio Management

134

112

164

136

146

183

212

186

Wealth Management

511

358

454

456

528

464

557

551

Retail Products

1,212

1,147

1,099

944

837

823

816

836

CCPL & other unsecured lending

290

294

298

310

300

311

311

317

Deposits

771

805

620

355

241

206

198

203

Mortgage & Auto

114

12

140

235

246

260

259

268

Other Retail Products

37

36

41

44

50

46

48

48

Treasury

(233)

(173)

(5)

201

314

150

147

135

Other

(41)

(80)

(27)

(33)

(35)

(54)

(30)

(14)

Total underlying operating income

4,396

3,765

4,138

3,783

4,076

3,184

3,594

3,549

1  Restatements relating to (a) exit of seven markets in AME (b) exit of Aviation Finance Business and (c) Reporting DVA outside of Underlying Income, have been made to reflect these items below the line

Earnings per ordinary share


1Q'23
$million

1Q'22¹
$million

Change
%

4Q'22¹
$million

Change
%

Profit/(loss) for the period attributable to equity holders

1,344

1,179

14

(264)

nm4

Non-controlling interest

(3)

(3)

-

36

nm4

Dividend payable on preference shares and AT1 classified as equity

(178)

(121)

(47)

(62)

(185)

Profit/(loss) for the period attributable to ordinary shareholders

1,163

1,055

10

(291)

nm4

Items normalised:






Restructuring1

(48)

(17)

(182)

90

nm4

Goodwill and other impairment2

-

-

nm4

322

nm4

DVA1

(54)

(85)

36

133

nm4

Other items

-

-

nm4

(20)

nm4

Tax on normalised items

15

12

25

(13)

nm4

Underlying profit/(loss)

1,076

965

12

221

nm4

Basic - Weighted average number of shares (millions)

2,860

3,047

nm4

2,890

nm4

Diluted - Weighted average number of shares (millions)

2,921

3,098

nm4

2,945

nm4

Basic earnings per ordinary share (cents)3

40.7

34.6

6.1

(10.1)

50.8

Diluted earnings per ordinary share (cents)3

39.8

34.1

5.7

(9.9)

49.7

Underlying basic earnings per ordinary share (cents)3

37.6

31.7

5.9

7.7

29.9

Underlying diluted earnings per ordinary share (cents)3

36.8

31.1

5.7

7.5

29.3

1 Underlying performance for relevant periods in 2022 has been restated for the removal of (i) exit markets and businesses in AME (ii) Aviation Finance and (iii) DVA. No change to statutory performance

2 Other Impairment includes nil (1Q 2023) (4Q 2022: $308 million) impairment charge relating to the Group's investment in its associate China Bohai Bank (Bohai).

3 Change is the percentage points difference between the two periods rather than the percentage change

4 Not meaningful

 



 

Page 28

Supplementary financial information continued

Return on Tangible Equity


1Q'23
$million

1Q'22¹
$million

Change
%

4Q'22¹
$million

Change
%

Average parent company shareholders' equity

43,643

45,595

(4)

43,145

1

Less: Preference share premium

(1,494)

(1,494)

-

(1,494)

-

Less: Average intangible assets

(5,880)

(5,487)

(7)

(5,695)

(3)

Average Ordinary Shareholders' Tangible Equity

36,269

38,614

(6)

35,956

-







Profit/(loss) for the period attributable to equity holders

1,344

1,179

14

(264)

nm3

Non-controlling interests

(3)

(3)

-

36

nm3

Dividend payable on preference shares and AT1 classified as equity

(178)

(121)

(47)

(62)

(187)

Profit/(loss) for the period attributable to ordinary shareholders

1,163

1,055

10

(291)

nm3






nm3

Items normalised:





nm3

Restructuring1

(48)

(17)

(182)

90

nm3

Goodwill and other impairment2

-

-

nm3

322

nm3

Other items

-

-

nm3

(20)

nm3

Ventures FVOCI unrealised gains/(losses) net of tax

(9)

6

nm3

21

nm3

DVA1

(54)

(85)

36

133

nm3

Tax on normalised items

15

12

25

(13)

nm3

Underlying profit for the period attributable to ordinary shareholders

1,067

971

10

242

nm3







Underlying Return on Tangible Equity

11.9%

10.2%

170bps

2.7%

920bps

Statutory Return on Tangible Equity

13.0%

11.1%

190bps

(3.2)%

1,620bps

1 Underlying performance for relevant periods in 2022 has been restated for the removal of (i) exit markets and businesses in AME (ii) Aviation Finance and (iii) DVA. No change to statutory performance

2 Other Impairment includes nil (1Q 2023) (4Q 2022: $308 million) impairment charge relating to the Group's investment in its associate China Bohai Bank (Bohai)

3 Not meaningful

 

Net Tangible Asset Value per Share


31.03.23
$million

31.03.22
$million

Change
%

31.12.22
$million

Change
%

Parent company shareholders' equity

44,125

45,177

(2)

43,162

2

Less Preference share premium

(1,494)

(1,494)

-

(1,494)

-

Less Intangible assets

(5,891)

(5,502)

(7)

(5,869)

-

Net shareholders tangible equity

36,740

38,181

(4)

35,799

3







Ordinary shares in issue, excluding own shares (millions)

2,833

2,993

(5)

2,867

(1)

Net Tangible Asset Value per share (cents)1

1,297

1,276

21

1,249

48

1 Change is cents difference between the two periods rather than the percentage change

 


Page 29

Underlying versus statutory results reconciliation

Reconciliations between underlying and statutory results are set out in the tables below:

Operating income by client segment


1Q'23

Corporate, Commercial & Institutional Banking
$million

Consumer,
Private &
Business Banking
$million

Ventures
$million

Central &
other items
$million

Total
$million

Underlying operating income

2,892

1,772

17

(285)

4,396

Restructuring

95

13

-

2

110

DVA

54

-

-

-

54

Statutory operating income

3,041

1,785

17

(283)

4,560

 


1Q'221

Corporate, Commercial & Institutional Banking
$million

Consumer,
Private &
Business Banking
$million

Ventures
$million

Central &
other items
$million

Total
$million

Underlying operating income

2,393

1,410

1

272

4,076

Restructuring

112

13

-

6

131

DVA

85

-

-

-

85

Statutory operating income

2,590

1,423

1

278

4,292

1 Underlying performance for relevant periods in 2022 has been restated for the removal of (i) exit markets and businesses in AME (ii) Aviation Finance and (iii) DVA. No change to statutory performance

Operating income by region


1Q'23

Asia
$million

 Africa &
Middle East
$million

Europe &
Americas
$million

Central &
other items
$million

Total
$million

Underlying operating income

3,191

676

413

116

4,396

Restructuring

52

35

19

4

110

DVA

13

7

34

-

54

Statutory operating income

3,256

718

466

120

4,560

 


1Q'221

Asia
$million

 Africa &
Middle East
$million

Europe &
Americas
$million

Central &
other items
$million

Total
$million

Underlying operating income

2,698

609

808

(39)

4,076

Restructuring

75

42

4

10

131

DVA

31

9

45

-

85

Statutory operating income

2,804

660

857

(29)

4,292

1 Underlying performance for relevant periods in 2022 has been restated for the removal of (i) exit markets and businesses in AME (ii) Aviation Finance and (iii) DVA. No change to statutory performance  



 

Page 30

Underlying versus statutory results reconciliations continued

Profit before taxation (PBT)


1Q'23

Underlying
$million

Restructuring2
$million

Other items
$million

DVA
$million

Statutory
$million

Operating income

4,396

110

-

54

4,560

Operating expenses

(2,675)

(75)

-

-

(2,750)

Operating profit/(loss) before impairment losses and taxation

1,721

35

-

54

1,810

Credit impairment

(26)

6

-

-

(20)

Profit from associates and joint ventures

11

7

-

-

18

Profit/(loss) before taxation

1,706

48

-

54

1,808

 


1Q'221

Underlying
$million

Restructuring2
$million

Other items
$million

DVA
$million

Statutory
$million

Operating income

4,076

131

-

85

4,292

Operating expenses

(2,550)

(115)

-

-

(2,665)

Operating profit/(loss) before impairment losses and taxation

1,526

16

-

85

1,627

Credit impairment

(198)

1

-

-

(197)

Other impairment

(1)

(5)

-

-

(6)

Profit from associates and joint ventures

63

5

-

-

68

Profit/(loss) before taxation

1,390

17

-

85

1,492

1 Underlying performance for relevant periods in 2022 has been restated for the removal of (i) exit markets and businesses in AME (ii) Aviation Finance and (iii) DVA. No change to statutory performance  

2  Restructuring includes impacts to profit or loss from businesses that have been disclosed as no longer part of the Group's ongoing business, redundancy costs, costs of closure or relocation of business locations, impairments of assets and other costs which are not related to the Group's ongoing business. Restructuring in this context is not the same as a restructuring provision as defined in IAS 37



 

Page 31

Underlying versus statutory results reconciliations continued

Profit before taxation (PBT) by client segment


1Q'23

Corporate, Commercial & Institutional Banking
$million

Consumer,
Private &
Business Banking
$million

Ventures
$million

Central &
other items
$million

Total
$million

Operating income

2,892

1,772

17

(285)

4,396

External

2,313

1,126

17

940

4,396

Inter-segment

579

646

-

(1,225)

Operating expenses

(1,415)

(1,033)

(102)

(125)

(2,675)

Operating profit/(loss) before impairment losses and taxation

1,477

739

(85)

(410)

1,721

Credit impairment

8

(62)

(10)

38

(26)

Profit from associates and joint ventures

-

-

(8)

19

11

Underlying profit/(loss) before taxation

1,485

677

(103)

(353)

1,706

Restructuring

39

(2)

-

11

48

DVA

54

-

-

-

54

Statutory profit/(loss) before taxation

1,578

675

(103)

(342)

1,808

 


1Q'221

Corporate, Commercial & Institutional Banking
$million

Consumer,
Private &
Business Banking
$million

Ventures
$million

Central &
other items
$million

Total
$million

Operating income

2,393

1,410

1

272

4,076

External

2,269

1,314

1

491

4,075

Inter-segment

124

96

-

(219)

1

Operating expenses

(1,252)

(1,006)

(72)

(220)

(2,550)

Operating profit/(loss) before impairment losses and taxation

1,141

404

(71)

52

1,526

Credit impairment

(146)

(35)

(3)

(14)

(198)

Other impairment

-

(1)

-

-

(1)

Profit from associates and joint ventures

-

-

(3)

66

63

Underlying profit/(loss) before taxation

995

368

(77)

104

1,390

Restructuring

13

(4)

-

8

17

DVA

85

-

-

-

85

Statutory profit/(loss) before taxation

1,093

364

(77)

112

1,492

1 Underlying performance for relevant periods in 2022 has been restated for the removal of (i) exit markets and businesses in AME (ii) Aviation Finance and (iii) DVA. No change to statutory performance  



 

Page 32

Underlying versus statutory results reconciliations continued

Profit before taxation (PBT) by region


1Q'23

Asia
$million

 Africa &
Middle East
$million

Europe &
Americas
$million

Central &
other items
$million

Total
$million

Operating income

3,191

676

413

116

4,396

Operating expenses

(1,750)

(397)

(433)

(95)

(2,675)

Operating profit/(loss) before impairment losses and taxation

1,441

279

(20)

21

1,721

Credit impairment

(64)

26

2

10

(26)

Other impairment

1

(1)

-

-

-

Profit from associates and joint ventures

17

-

-

(6)

11

Underlying profit/(loss) before taxation

1,395

304

(18)

25

1,706

Restructuring

(7)

18

22

15

48

DVA

13

7

34

-

54

Statutory profit/(loss) before taxation

1,401

329

38

40

1,808

 


1Q'221

Asia
$million

 Africa &
Middle East
$million

Europe &
Americas
$million

Central &
other items
$million

Total
$million

Operating income

2,698

609

808

(39)

4,076

Operating expenses

(1,622)

(373)

(377)

(178)

(2,550)

Operating profit/(loss) before impairment losses and taxation

1,076

236

431

(217)

1,526

Credit impairment

(283)

44

38

3

(198)

Other impairment

-

-

-

(1)

(1)

Profit from associates and joint ventures

65

-

-

(2)

63

Underlying profit/(loss) before taxation

858

280

469

(217)

1,390

Restructuring

7

16

(1)

(5)

17

DVA

31

9

45

-

85

Statutory profit/(loss) before taxation

896

305

513

(222)

1,492

1 Underlying performance for relevant periods in 2022 has been restated for the removal of (i) exit markets and businesses in AME (ii) Aviation Finance and (iii) DVA. No change to statutory performance



 

Page 33

Underlying versus statutory results reconciliations continued

Return on tangible equity (RoTE)


1Q'23

Corporate, Commercial & Institutional Banking
%

Consumer,
Private &
Business Banking
%

Ventures
%

Central &
Other Items
%

Total
%

Underlying RoTE

21.2

28.0

nm²

(25.7)

11.9

Restructuring






Of which: Income

1.8

0.7

-

0.1

1.4

Of which: Expenses

(1.1)

(0.8)

-

(0.2)

(0.8)

Of which: Credit impairment

-

-

-

0.2

0.1

Of which: Other impairment

(0.1)

-

-

0.1

-

Of which: Profit from associates and joint ventures

-

-

-

0.4

0.1

Ventures FVOCI Unrealised gains / (losses) net of Taxes

-

-

nm²

-

(0.1)

DVA

1.0

-

-

-

0.6

Tax on normalised items

(0.3)

-

0.4

0.4

(0.2)

Statutory RoTE

22.5

27.9

nm²

(24.7)

13.0

 


1Q'221

Corporate, Commercial & Institutional Banking
%

Consumer,
Private &
Business Banking
%

Ventures
%

Central &
Other Items
%

Total
%

Underlying RoTE

12.7

14.4

nm²

(0.1)

10.2

Restructuring






Of which: Income

1.9

0.7

-

0.4

1.4

Of which: Expenses

(1.6)

(1.0)

-

(0.3)

(1.2)

Of which: Credit impairment

-

-

-

-

-

Of which: Other impairment

(0.1)

-

-

0.1

(0.1)

Of which: Profit from associates and joint ventures

-

-

-

0.3

0.1

Ventures FVOCI Unrealised gains / (losses) net of Taxes

-

-

nm²

-

(0.1)

DVA

1.5

-

-

-

0.9

Tax on normalised items

(0.4)

0.1

-

0.5

(0.1)

Statutory RoTE

14.0

14.2

nm²

0.9

11.1

1 Underlying performance for relevant periods in 2022 has been restated for the removal of (i) exit markets and businesses in AME (ii) Aviation Finance and (iii) DVA. No change to statutory performance

2 Not meaningful



 

Page 34

Underlying versus statutory results reconciliations continued

Earnings per ordinary share (EPS)


1Q'23

Underlying
$ million

Restructuring
$ million

DVA
$ million

Tax on
normalised items
$ million

Statutory
$ million

Profit for the year attributable to ordinary shareholders1

1,076

48

54

(15)

1,163







Basic - Weighted average number of shares (millions)

2,860




2,860

Basic earnings per ordinary share (cents)

37.6




40.7

 


1Q'221

Underlying
$ million

Restructuring
$ million

DVA
$ million

Tax on
normalised items
$ million

Statutory
$ million

Profit for the year attributable to ordinary shareholders1

965

17

85

(12)

1,055







Basic - Weighted average number of shares (millions)

3,047




3,047

Basic earnings per ordinary share (cents)

31.7




34.6

1 Underlying performance for relevant periods in 2022 has been restated for the removal of (i) exit markets and businesses in AME (ii) Aviation Finance and (iii) DVA. No change to statutory performance


Page 35

Risk review

Credit quality by client segment

Amortised cost

31.03.23

Banks
$million

Customers

Undrawn commitments
$million

Financial Guarantees
$million

Corporate, Commercial & Institutional Banking
$million

Consumer, Private & Business Banking
$million

Ventures
$million

Central & other items
$million

Customer Total
$million

Stage 1

37,932

122,695

125,849

803

36,988

286,335

159,965

64,666

- Strong

27,368

88,974

121,764

796

36,988

248,522

146,786

44,743

- Satisfactory

10,564

33,721

4,085

7

-

37,813

13,179

19,923

Stage 2

267

9,938

2,055

25

198

12,216

9,136

2,627

- Strong

35

1,735

1,552

14

-

3,301

4,353

335

- Satisfactory

153

6,838

182

5

-

7,025

3,953

1,863

- Higher risk

79

1,365

321

6

198

1,890

830

429

Of which (stage 2):









- Less than 30 days past due

2

449

192

5

-

646

-

-

- More than 30 days past due

5

86

314

6

-

406

-

-

Stage 3, credit-impaired financial assets

36

5,826

1,407

4

187

7,424

1

627

Gross balance¹

38,235

138,459

129,311

832

37,373

305,975

169,102

67,920

Stage 1

(7)

(118)

(376)

(12)

(1)

(507)

(37)

(12)

- Strong

(3)

(25)

(332)

(12)

(1)

(370)

(23)

(3)

- Satisfactory

(4)

(93)

(44)

-

-

(137)

(14)

(9)

Stage 2

(10)

(324)

(118)

(4)

-

(446)

(42)

(30)

- Strong

-

(11)

(59)

(2)

-

(72)

(4)

-

- Satisfactory

(2)

(154)

(24)

(1)

-

(179)

(24)

(8)

- Higher risk

(8)

(159)

(35)

(1)

-

(195)

(14)

(22)

Of which (stage 2):









- Less than 30 days past due

-

(3)

(24)

(1)

-

(28)

-

-

- More than 30 days past due

-

(1)

(35)

(1)

-

(37)

-

-

Stage 3, credit-impaired financial assets

(2)

(3,602)

(777)

(3)

(13)

(4,395)

-

(109)

Total credit impairment

(19)

(4,044)

(1,271)

(19)

(14)

(5,348)

(79)

(151)

Net carrying value

38,216

134,415

128,040

813

37,359

300,627



Stage 1

0.0%

0.1%

0.3%

1.5%

0.0%

0.2%

0.0%

0.0%

- Strong

0.0%

0.0%

0.3%

1.5%

0.0%

0.1%

0.0%

0.0%

- Satisfactory

0.0%

0.3%

1.1%

0.0%

0.0%

0.4%

0.1%

0.0%

Stage 2

3.7%

3.3%

5.7%

16.0%

0.0%

3.7%

0.5%

1.1%

- Strong

0.0%

0.6%

3.8%

14.3%

0.0%

2.2%

0.1%

0.0%

- Satisfactory

1.3%

2.3%

13.2%

20.0%

0.0%

2.5%

0.6%

0.4%

- Higher risk

10.1%

11.6%

10.9%

16.7%

0.0%

10.3%

1.7%

5.1%

Of which (stage 2):









- Less than 30 days past due

0.0%

0.7%

12.5%

20.0%

0.0%

4.3%

0.0%

0.0%

- More than 30 days past due

0.0%

1.2%

11.1%

16.7%

0.0%

9.1%

0.0%

0.0%

Stage 3, credit-impaired financial assets (S3)

5.6%

61.8%

55.2%

75.0%

7.0%

59.2%

0.0%

17.4%

Cover ratio

0.0%

2.9%

1.0%

2.3%

0.0%

1.7%

0.0%

0.2%










Fair value through profit or loss









Performing

31,146

46,371

23

-

7

46,401

-

-

- Strong

27,894

34,830

23

-

-

34,853

-

-

- Satisfactory

3,252

11,514

-

-

1

11,515

-

-

- Higher risk

-

27

-

-

6

33

-

-

Defaulted (CG13-14)

-

37

-

-

-

37

-

-

Gross balance (FVTPL)2

31,146

46,408

23

-

7

46,438

-

-

Net carrying value (incl FVTPL)

69,362

180,823

128,063

813

37,366

347,065

-

-

1 Loans and advances includes reverse repurchase agreements and other similar secured lending of $14,398 million under Customers and of $1,451 million under Banks, held at amortised cost

2 Loans and advances includes reverse repurchase agreements and other similar secured lending of $40,485 million under Customers and of $29,079 million under Banks, held at fair value through profit or loss



 

Page 36

Risk review continued

Amortised cost

31.12.22

Banks
$million

Customers

Undrawn commitments
$million

Financial Guarantees
$million

Corporate, Commercial & Institutional Banking
$million

Consumer, Private & Business Banking
$million

Ventures
$million

Central & other items
$million

Customer Total
$million

Stage 1

39,149

126,261

129,134

691

39,133

295,219

162,958

56,683

- Strong

27,941

89,567

124,734

685

39,133

254,119

148,303

39,612

- Satisfactory

11,208

36,694

4,400

6

-

41,100

14,655

17,071

Stage 2

337

11,355

1,670

18

-

13,043

5,582

3,062

- Strong

148

2,068

1,215

10

-

3,293

1,449

522

- Satisfactory

119

7,783

146

4

-

7,933

3,454

2,134

- Higher risk

70

1,504

309

4

-

1,817

679

406

Of which (stage 2):









- Less than 30 days past due

5

109

148

4

-

261

-

-

- More than 30 days past due

6

23

310

4

-

337

-

-

Stage 3, credit-impaired financial assets

59

6,143

1,453

1

248

7,845

128

665

Gross balance1

39,545

143,759

132,257

710

39,381

316,107

168,668

60,410

Stage 1

(9)

(143)

(406)

(10)

-

(559)

(41)

(11)

- Strong

(3)

(43)

(332)

(10)

-

(385)

(28)

(3)

- Satisfactory

(6)

(100)

(74)

-

-

(174)

(13)

(8)

Stage 2

(3)

(323)

(120)

(1)

-

(444)

(53)

(28)

- Strong

-

(30)

(62)

(1)

-

(93)

(6)

-

- Satisfactory

(2)

(159)

(17)

-

-

(176)

(42)

(15)

- Higher risk

(1)

(134)

(41)

-

-

(175)

(5)

(13)

Of which (stage 2):









- Less than 30 days past due

-

(2)

(17)

-

-

(19)

-

-

- More than 30 days past due

-

(1)

(41)

-

-

(42)

-

-

Stage 3, credit-impaired financial assets

(14)

(3,662)

(776)

(1)

(18)

(4,457)

-

(147)

Total credit impairment

(26)

(4,128)

(1,302)

(12)

(18)

(5,460)

(94)

(186)

Net carrying value

39,519

139,631

130,955

698

39,363

310,647

-

-

Stage 1

0.0%

0.1%

0.3%

1.4%

0.0%

0.2%

0.0%

0.0%

- Strong

0.0%

0.0%

0.3%

1.5%

0.0%

0.2%

0.0%

0.0%

- Satisfactory

0.1%

0.3%

1.7%

0.0%

0.0%

0.4%

0.1%

0.0%

Stage 2

0.9%

2.8%

7.2%

5.6%

0.0%

3.4%

0.9%

0.9%

- Strong

0.0%

1.5%

5.1%

10.0%

0.0%

2.8%

0.4%

0.0%

- Satisfactory

1.7%

2.0%

11.6%

0.0%

0.0%

2.2%

1.2%

0.7%

- Higher risk

1.4%

8.9%

13.3%

0.0%

0.0%

9.6%

0.7%

3.2%

Of which (stage 2):









- Less than 30 days past due

0.0%

1.8%

11.5%

0.0%

0.0%

7.3%

0.0%

0.0%

- More than 30 days past due

0.0%

4.3%

13.2%

0.0%

0.0%

12.5%

0.0%

0.0%

Stage 3, credit-impaired financial assets (S3)

23.7%

59.6%

53.4%

100.0%

7.3%

56.8%

0.0%

22.1%

Cover ratio

0.1%

2.9%

1.0%

1.7%

0.0%

1.7%

0.1%

0.3%










Fair value through profit or loss









Performing

24,930

44,461

28

-

2,557

47,046

-

-

- Strong

21,451

36,454

27

-

2,409

38,890

-

-

- Satisfactory

3,479

8,007

1

-

148

8,156

-

-

- Higher risk

-

-

-

-

-

-

-

-

Defaulted (CG13-14)

-

37

-

-

-

37

-

-

Gross balance (FVTPL)2

24,930

44,498

28

-

2,557

47,083

-

-

Net carrying value (incl FVTPL)

64,449

184,129

130,983

698

41,920

357,730

-

-

1 Loans and advances includes reverse repurchase agreements and other similar secured lending of $24,498 million under Customers and of $978 million under Banks, held at amortised cost

2 Loans and advances includes reverse repurchase agreements and other similar secured lending of $40,537 million under Customers and of $23,954 million under Banks, held at fair value through profit or loss

Page 37

Risk review continued

Credit impairment charge


Q1'23

Q1'221

Stage 1 & 2
$million

Stage 3
$million

Total
$million

Stage 1 & 2
$million

Stage 3
$million

Total
$million

Ongoing business portfolio







Corporate, Commercial & Institutional Banking

24

(32)

(8)

(77)

222

145

Consumer, Private & Business Banking

13

49

62

8

26

34

Ventures

6

4

10

3

-

3

Central & other items

(37)

(1)

(38)

(15)

31

16

Credit impairment charge

6

20

26

(81)

279

198

Restructuring business portfolio







Others

1

(7)

(6)

(2)

1

(1)

Credit impairment charge

1

(7)

(6)

(2)

1

(1)

Total credit impairment charge

7

13

20

(83)

280

197

1 Underlying credit impairment has been restated for the removal of (i) exit markets and businesses in AME and (ii) Aviation Finance. No change to statutory credit impairment



 

Page 38

Risk review continued

Vulnerable and Cyclical Sectors

Maximum Exposure

Amortised Cost

31.03.23

Maximum on Balance Sheet Exposure
(net of credit impairment)
$million

Collateral
$million

Net On Balance Sheet Exposure
$million

Undrawn Commitments (net of credit impairment)
$million

Financial Guarantees (net of credit impairment)
$million

Net Off Balance Sheet Exposure
$million

Total On & Off Balance Sheet Net Exposure
$million

Industry:








Aviation1

1,225

503

722

1,828

669

2,497

3,219

Commodity Traders

8,668

217

8,451

2,624

7,048

9,672

18,123

Metals & Mining

4,486

291

4,195

3,306

1,344

4,650

8,845

Construction

2,791

447

2,344

2,709

5,783

8,492

10,836

Commercial Real Estate

16,046

6,665

9,381

6,562

178

6,740

16,121

Hotels & Tourism

1,657

797

860

1,755

141

1,896

2,756

Oil & Gas

7,120

835

6,285

8,017

6,575

14,592

20,877

Total

41,993

9,755

32,238

26,801

21,738

48,539

80,777

Total Corporate, Commercial & Institutional Banking

134,415

30,676

103,739

95,291

58,793

154,084

257,823

Total Group

338,843

131,660

207,183

169,023

67,769

236,792

443,975

1 In addition, the Group has classified as HFS $3.3 billion of aircraft under operating leases and $2.2 billion of Aviation loans

 

Amortised Cost

31.12.22

Maximum On Balance Sheet Exposure
(net of credit impairment)
$million

Collateral
$million

Net On
Balance Sheet Exposure
$million

Undrawn Commitments
(net of credit impairment)
$million

Financial Guarantees
(net of credit impairment)
$million

Net Off Balance Sheet Exposure
$million

Total On & Off Balance Sheet Net Exposure
$million

Industry:








Aviation1

3,072

1,597

1,475

1,762

632

2,394

3,869

Commodity Traders

7,571

341

7,230

2,578

6,095

8,673

15,903

Metals & Mining

4,754

321

4,433

3,425

852

4,277

8,710

Construction

2,909

552

2,357

2,762

5,969

8,731

11,088

Commercial Real Estate

15,916

7,205

8,711

6,258

224

6,482

15,193

Hotels & Tourism

1,741

919

822

1,346

138

1,484

2,306

Oil & Gas

6,643

806

5,837

7,630

7,158

14,788

20,625

Total

42,606

11,741

30,865

25,761

21,068

46,829

77,694

Total Corporate, Commercial & Institutional Banking

139,631

35,229

104,402

95,272

51,662

146,934

251,336

Total Group

350,166

141,715

208,451

168,574

60,224

228,798

437,249

1 In addition to the aviation sector loan exposures, the Group owns $3.2 billion of aircraft under operating leases



 

Page 39

Risk review continued

Loans and advances by stage

Amortised Cost

31.03.23

Stage 1

Stage 2

Stage 3

Total

Gross Balance
$million

Total Credit Impair-ment
$million

Net Carrying Amount
$million

Gross Balance
$million

Total Credit Impair-ment
$million

Net Carrying Amount
$million

Gross Balance
$million

Total Credit Impair-ment
$million

Net Carrying Amount
$million

Gross Balance
$million

Total Credit Impair-ment
$million

Net Carrying Amount
$million

Industry:













Aviation

938

-

938

243

(1)

242

47

(2)

45

1,228

(3)

1,225

Commodity Traders

8,367

(8)

8,359

127

(2)

125

619

(435)

184

9,113

(445)

8,668

Metals & Mining

3,942

-

3,942

341

(6)

335

366

(157)

209

4,649

(163)

4,486

Construction

2,355

(3)

2,352

346

(6)

340

439

(340)

99

3,140

(349)

2,791

Commercial Real Estate

12,892

(50)

12,842

2,822

(177)

2,645

1,339

(780)

559

17,053

(1,007)

16,046

Hotels & Tourism

1,460

(1)

1,459

99

(2)

97

127

(26)

101

1,686

(29)

1,657

Oil & Gas

5,932

(7)

5,925

715

(7)

708

879

(392)

487

7,526

(406)

7,120

Total

35,886

(69)

35,817

4,693

(201)

4,492

3,816

(2,132)

1,684

44,395

(2,402)

41,993

Total Corporate, Commercial & Institutional Banking

122,695

(118)

122,577

9,938

(324)

9,614

5,826

(3,602)

2,224

138,459

(4,044)

134,415

Total Group

324,267

(514)

323,753

12,483

(456)

12,027

7,460

(4,397)

3,063

344,210

(5,367)

338,843

 

Amortised Cost

31.12.22

Stage 1

Stage 2

Stage 3

Total

Gross Balance
$million

Total Credit Impair-ment
$million

Net Carrying Amount
$million

Gross Balance
$million

Total Credit Impair-ment
$million

Net Carrying Amount
$million

Gross Balance
$million

Total Credit Impair-ment
$million

Net Carrying Amount
$million

Gross Balance
$million

Total Credit Impair-ment
$million

Net Carrying Amount
$million

Industry:













Aviation

2,377

(1)

2,376

573

-

573

155

(32)

123

3,105

(33)

3,072

Commodity Traders

7,187

(6)

7,181

138

(2)

136

689

(435)

254

8,014

(443)

7,571

Metals & Mining

4,184

(1)

4,183

475

(4)

471

257

(157)

100

4,916

(162)

4,754

Construction

2,424

(2)

2,422

407

(5)

402

497

(412)

85

3,328

(419)

2,909

Commercial Real Estate

12,393

(43)

12,350

3,217

(195)

3,022

1,305

(761)

544

16,915

(999)

15,916

Hotels & Tourism

1,448

(2)

1,446

108

(1)

107

206

(18)

188

1,762

(21)

1,741

Oil & Gas

5,468

(4)

5,464

708

(6)

702

919

(442)

477

7,095

(452)

6,643

Total

35,481

(59)

35,422

5,626

(213)

5,413

4,028

(2,257)

1,771

45,135

(2,529)

42,606

Total Corporate, Commercial & Institutional Banking

126,261

(143)

126,118

11,355

(323)

11,032

6,143

(3,662)

2,481

143,759

(4,128)

139,631

Total Group

334,368

(568)

333,800

13,380

(447)

12,933

7,904

(4,471)

3,433

355,652

(5,486)

350,166


Page 40

Capital review

Capital ratios


31.03.23

31.12.22

Change3

31.03.22

Change3

CET1

13.7%

14.0%

(0.3)

13.9%

(0.2)

Tier 1 capital

15.9%

16.6%

(0.7)

15.9%

-

Total capital

20.9%

21.7%

(0.8)

21.1%

(0.2)

CRD Capital base1


31.03.23
$million

31.12.22
$million

Change4
%

31.03.22
$million

Change4
%

CET1 instruments and reserves






Capital instruments and the related share premium accounts

5,407

5,436

(1)

5,496

(2)

Of which: share premium accounts

3,989

3,989

-

3,989

-

Retained earnings

26,936

25,154

7

26,472

2

Accumulated other comprehensive income (and other reserves)

8,882

8,165

9

10,625

(16)

Non-controlling interests (amount allowed in consolidated CET1)

244

189

29

221

10

Independently reviewed interim and year-end profits

1,328

2,988

(56)

1,184

12

Foreseeable dividends

(659)

(648)

2

(524)

26

CET1 capital before regulatory adjustments

42,138

41,284

2

43,474

(3)

CET1 regulatory adjustments






Additional value adjustments (prudential valuation adjustments)

(801)

(854)

(6)

(672)

19

Intangible assets (net of related tax liability)

(5,859)

(5,802)

1

(5,430)

8

Deferred tax assets that rely on future profitability (excludes those arising from temporary differences)

(89)

(76)

17

(157)

(43)

Fair value reserves related to net losses on cash flow hedges

301

564

(47)

238

26

Deduction of amounts resulting from the calculation of excess expected loss

(739)

(684)

8

(773)

(4)

Net gains on liabilities at fair value resulting from changes in own credit risk

(186)

63

nm5

(92)

nm5

Defined-benefit pension fund assets

(144)

(116)

24

(173)

(17)

Fair value gains arising from the institution's own credit risk related to derivative liabilities

(146)

(90)

62

(27)

nm5

Exposure amounts which could qualify for risk weighting of 1,250%

(50)

(103)

(51)

(92)

(46)

Other regulatory adjustments to CET1 capital2

(23)

(29)

(21)

-

-

Total regulatory adjustments to CET1

(7,736)

(7,127)

9

(7,178)

8

CET1 capital

34,402

34,157

1

36,296

(5)

Additional Tier 1 capital (AT1) instruments

5,512

6,504

(15)

5,255

5

AT1 regulatory adjustments

(20)

(20)

-

(20)

-

Tier 1 capital

39,894

40,641

(2)

41,531

(4)







Tier 2 capital instruments

12,454

12,540

(1)

13,535

(8)

Tier 2 regulatory adjustments

(30)

(30)

-

(30)

-

Tier 2 capital

12,424

12,510

(1)

13,505

(8)

Total capital

52,318

53,151

(2)

55,036

(5)

Total risk-weighted assets (unaudited)

250,893

244,711

3

260,833

(4)

1   Capital base is prepared on the regulatory scope of consolidation

2 Other regulatory adjustments to CET1 capital includes insufficient coverage for non-performing exposures of $(23) million

3 Change is the percentage point difference between two periods, rather than percentage change

4 Variance is increase/(decrease) comparing current reporting period to prior periods

5 Not meaningful



 

Page 41

Capital review continued

Movement in total capital


3 months ended 31.03.23
$million

12 months ended 31.12.22
$million

CET1 at 1 January

34,157

38,362

Ordinary shares issued in the period and share premium

-

-

Share buy-back

(984)

(1,258)

Profit for the period

1,328

2,988

Foreseeable dividends deducted from CET1

(659)

(648)

Difference between dividends paid and foreseeable dividends

470

(301)

Movement in goodwill and other intangible assets

(57)

(1,410)

Foreign currency translation differences

11

(1,892)

Non-controlling interests

55

(12)

Movement in eligible other comprehensive income

243

(1,224)

Deferred tax assets that rely on future profitability

(13)

74

Decrease/(increase) in excess expected loss

(55)

(104)

Additional value adjustments (prudential valuation adjustment)

53

(189)

IFRS 9 transitional impact on regulatory reserves including day one

(106)

(146)

Exposure amounts which could qualify for risk weighting

53

(67)

Fair value gains arising from the institution's own Credit Risk related to derivative liabilities

(56)

(30)

Others

(38)

14

CET1 at 31 March/31 December

34,402

34,157




AT1 at 1 January

6,484

6,791

Net issuances (redemptions)

(984)

241

Foreign currency translation difference

(8)

9

Excess on AT1 grandfathered limit (ineligible)

-

(557)

AT1 at 31 March/31 December

5,492

6,484




Tier 2 capital at 1 January

12,510

12,491

Regulatory amortisation

1,844

778

Net issuances (redemptions)

(2,000)

(1,098)

Foreign currency translation difference

72

(337)

Tier 2 ineligible minority interest

(4)

102

Recognition of ineligible AT1

-

557

Other

2

17

Tier 2 capital at 31 March/31 December

12,424

12,510

Total capital at 31 March/31 December

52,318

53,151



 

Page 42

Capital review continued

Risk-weighted assets by business


31.03.23

Credit risk
$million

Operational risk
$million

Market risk
$million

Total risk
$million

Corporate, Commercial & Institutional Banking

112,534

18,083

17,933

148,550

Consumer, Private & Business Banking

41,838

8,783

-

50,621

Ventures

1,591

35

1

1,627

Central & other items

44,669

960

4,466

50,095

Total risk-weighted assets

200,632

27,861

22,400

250,893

 


31.12.22

Credit risk
$million

Operational risk
$million

Market risk
$million

Total risk
$million

Corporate, Commercial & Institutional Banking

110,103

17,039

16,440

143,582

Consumer, Private & Business Banking

42,091

8,639

-

50,730

Ventures

1,350

6

2

1,358

Central & other items

43,311

1,493

4,237

49,041

Total risk-weighted assets

196,855

27,177

20,679

244,711

 


31.03.22

Credit risk
$million

Operational risk
$million

Market risk
$million

Total risk
$million

Corporate, Commercial & Institutional Banking

120,626

17,038

19,089

156,753

Consumer, Private & Business Banking

44,824

8,639

-

53,463

Ventures

870

6

-

876

Central & other items

44,317

1,494

3,930

49,741

Total risk-weighted assets

210,637

27,177

23,019

260,833

Risk-weighted assets by geographic region


31.03.23
$million

31.12.22
$million

Change1
%

31.03.22
$million

Change1
%

ASIA

153,062

150,816

1

163,447

(6)

Africa & Middle East

41,995

40,716

3

45,154

(7)

Europe & Americas

51,929

50,174

3

49,619

5

Central & other items

3,907

3,005

30

2,613

50

Total risk-weighted assets

250,893

244,711

3

260,833

(4)

1 Variance is increase/(decrease) comparing current reporting period to prior reporting periods



 

Page 43

Capital review continued

Movement in risk-weighted assets


Credit risk

Operational risk
$million

Market risk
$million

Total risk
$million

Corporate, Commercial & Institutional Banking
$million

Consumer, Private & Business Banking
$million

Ventures
$million

Central & other items
$million

Total
$million

At 31 December 2021

125,813

42,731

756

50,288

219,588

27,116

24,529

271,233

At 1 January 2022

125,813

42,731

756

50,288

219,588

27,116

24,529

271,233

Asset growth & mix

(13,213)

(985)

594

(10,033)

(23,637)

-

-

(23,637)

Asset quality

(4,258)

431

-

7,344

3,517

-

-

3,517

Risk-weighted assets efficiencies

-

-

-

-

-

-

-

-

Model Updates

4,329

1,420

-

-

5,749

-

(1,000)

4,749

Methodology and policy changes

2,024

85

-

93

2,202

-

1,500

3,702

Acquisitions and disposals

-

-

-

-

-

-

-

-

Foreign currency translation

(4,883)

(1,591)

-

(3,376)

(9,850)

-

-

(9,850)

Other, Including non-credit risk movements

291

-

-

(1,005)

(714)

61

(4,350)

(5,003)

At 31 December 2022

110,103

42,091

1,350

43,311

196,855

27,177

20,679

244,711

Asset growth & mix1

2,548

(177)

241

472

3,084

-

-

3,084

Asset quality

(138)

69

-

1,865

1,797

-

-

1,797

Risk-weighted assets efficiencies

-

-

-

-

-

-

-

-

Model Updates

-

-

-

-

-

-

300

300

Methodology and policy changes

-

-

-

-

-

-

(200)

(200)

Acquisitions and disposals

-

-

-

-

-

-

-

-

Foreign currency translation

21

(146)

-

(979)

(1,104)

-

-

(1,104)

Other, Including non-credit risk movements

-

-

-

-

-

684

1,621

2,305

At 31 March 2023

112,534

41,838

1,591

44,669

200,632

27,861

22,400

250,893

1 Corporate, Commercial & Institutional Banking asset growth & mix includes optimisation initiatives of $(0.9) billion. Central & Other items asset growth & mix includes other efficiency actions, mainly relating to credit insurance of $(0.9) billion 



 

Page 44

Capital review continued

Leverage Ratio


31.03.23
$million

31.12.22
$million

Change2
%

31.03.22
$million

Change2
%

Tier 1 capital (transitional)

39,894

40,641

(2)

41,531

(4)

Additional Tier 1 capital subject to phase out

-

-

-

Tier 1 capital (end point)

39,894

40,641

(2)

41,531

(4)

Derivative financial instruments

48,089

63,717

(25)

62,360

(23)

Derivative cash collateral

11,392

12,515

(9)

11,307

1

Securities financing transactions (SFTs)

85,412

89,967

(5)

96,002

(11)

Loans and advances and other assets

675,785

653,723

3

669,448

1

Total on-balance sheet assets

820,678

819,922

-

839,117

(2)

Regulatory consolidation adjustments1

(85,553)

(71,728)

19

(61,820)

38

Derivatives adjustments






Derivatives netting

(35,561)

(47,118)

(25)

(35,936)

(1)

Adjustments to cash collateral

(7,533)

(10,640)

(29)

(9,070)

(17)

Net written credit protection

1,256

548

nm3

1,712

(27)

Potential future exposure on derivatives

39,409

35,824

10

44,305

(11)

Total derivatives adjustments

(2,429)

(21,386)

(89)

1,011

nm3

Counterparty risk leverage exposure measure for SFTs

10,654

15,553

(31)

20,152

(47)

Off-balance sheet items

121,268

119,049

2

144,398

(16)

Regulatory deductions from Tier 1 capital

(7,404)

(7,099)

4

(7,031)

5

Total exposure measure excluding claims on central banks

857,214

854,311

-

935,827

(8)

Leverage ratio excluding claims on central banks (%)

4.7%

4.8%

(0.1)

4.4%

0.3

Average leverage exposure measure excluding claims on central banks

866,944

864,605

-

927,282

(7)

Average leverage ratio excluding claims on central banks (%)

4.6%

4.7%

(0.1)

4.6%

0.0

Countercyclical leverage ratio buffer

0.1%

0.1%

-

0.1%

-

G-SII additional leverage ratio buffer

0.4%

0.4%

(0.1)

0.4%

(0.1)

1   Includes adjustment for qualifying central bank claims

2 Change is the percentage point difference two periods, rather than percentage change

3 Not meaningful


Page 45

Financial statements

Condensed consolidated interim income statement

For the three months ended 31 March 2023


3 months ended 31.03.23
$million

3 months ended 31.03.22
$million

Interest income

6,284

2,693

Interest expense

(4,278)

(905)

Net interest income

2,006

1,788

Fees and commission income

1,038

1,093

Fees and commission expense

(198)

(179)

Net fee and commission income

840

914

Net trading income

1,649

1,451

Other operating income

65

139

Operating income

4,560

4,292

Staff costs

(1,960)

(1,914)

Premises costs

(101)

(92)

General administrative expenses

(390)

(355)

Depreciation and amortisation

(299)

(304)

Operating expenses

(2,750)

(2,665)

Operating profit before impairment losses and taxation

1,810

1,627

Credit impairment

(20)

(197)

Goodwill, property, plant and equipment and other impairment

-

(6)

Profit from associates and joint ventures

18

68

Profit before taxation

1,808

1,492

Taxation

(464)

(313)

Profit for the period

1,344

1,179




Profit attributable to:



Non-controlling interests

3

3

Parent company shareholders

1,341

1,176

Profit for the period

1,344

1,179

 


cents

cents

Earnings per share:



Basic earnings per ordinary share

40.7

34.6

Diluted earnings per ordinary share

39.8

34.1

 



 

Page 46

Financial statements continued

Condensed consolidated interim statement of comprehensive income

For the three months ended 31 March 2023


3 months ended 31.03.23
$million

3 months ended 31.03.22
$million

Profit for the period

1,344

1,179

Other comprehensive income



Items that will not be reclassified to income statement:

264

137

Own credit gains on financial liabilities designated at fair value through profit or loss

293

128

Equity instruments at fair value through other comprehensive income

(22)

-

Actuarial gains on retirement benefit obligations

36

35

Taxation relating to components of other comprehensive income

(43)

(26)

Items that may be reclassified subsequently to income statement:

445

(1,345)

Exchange differences on translation of foreign operations:



Net losses taken to equity

(79)

(540)

Net gains on net investment hedges

79

212

Share of other comprehensive loss from associates and joint ventures

(9)

(82)

Debt instruments at fair value through other comprehensive income



Net valuation gain/(loss) taken to equity

157

(748)

Reclassified to income statement

60

(31)

Net impact of expected credit losses

(34)

(15)

Cash flow hedges:



Net movements in cash flow hedge reserve1

283

(240)

Taxation relating to components of other comprehensive income

(12)

99

Other comprehensive income for the period, net of taxation

709

(1,208)

Total comprehensive income for the period

2,053

(29)




Total comprehensive income attributable to:



Non-controlling interests

(13)

(13)

Parent company shareholders

2,066

(16)

Total comprehensive income for the period

2,053

(29)

1 This line item is represented in 2023 as a net balance of all movements in the cash flow hedge reserve



 

Page 47

Financial statements continued

Condensed consolidated interim balance sheet

As at 31 March 2023


31.03.23
$million

31.12.22
$million

Assets



Cash and balances at central banks

72,229

58,263

Financial assets held at fair value through profit or loss

112,836

105,812

Derivative financial instruments

48,089

63,717

Loans and advances to banks

38,216

39,519

Loans and advances to customers

300,627

310,647

Investment securities

169,047

172,448

Other assets

57,383

50,383

Current tax assets

445

503

Prepayments and accrued income

3,370

3,149

Interests in associates and joint ventures

1,747

1,631

Goodwill and intangible assets

5,891

5,869

Property, plant and equipment

2,289

5,522

Deferred tax assets

818

834

Assets classified as held for sale

7,691

1,625

Total assets

820,678

819,922




Liabilities



Deposits by banks

26,889

28,789

Customer accounts

462,169

461,677

Repurchase agreements and other similar secured borrowing

6,892

2,108

Financial liabilities held at fair value through profit or loss

87,457

79,903

Derivative financial instruments

52,660

69,862

Debt securities in issue

65,264

61,242

Other liabilities

48,348

43,527

Current tax liabilities

726

583

Accruals and deferred income

5,359

5,895

Subordinated liabilities and other borrowed funds

11,996

13,715

Deferred tax liabilities

755

769

Provisions for liabilities and charges

328

383

Retirement benefit obligations

120

146

Liabilities included in disposal groups held for sale

1,704

1,307

Total liabilities

770,667

769,906




Equity



Share capital and share premium account

6,901

6,930

Other reserves

8,882

8,165

Retained earnings

28,342

28,067

Total parent company shareholders' equity

44,125

43,162

Other equity instruments

5,512

6,504

Total equity excluding non-controlling interests

49,637

49,666

Non-controlling interests

374

350

Total equity

50,011

50,016

Total equity and liabilities

820,678

819,922

 



 

Page 48

Financial statements continued

Condensed consolidated statement of changes in equity

For the three months ended 31 March 2023


Ordinary share capital and share premium account
$million

Preference share capital and share premium account
$million

Capital and merger reserves1
$million

Own credit adjust-ment reserve
$million

Fair value through other compre-hensive income reserve - debt
$million

Fair value through other compre-hensive income reserve - equity
$million

Cash flow hedge reserve
$million

Translation reserve
$million

Retained earning
$million

Parent company shareholders' equity
$million

Other equity instru-ments
$million

Non-controlling interests
$million

Total
$million

As at 01 January 2022

5,528

1,494

17,246

(15)

103

249

(34)

(5,744)

27,184

46,011

6,254

371

52,636

Profit/(loss) for the period

-

-

-

-

-

-

-

-

2,948

2,948

-

(46)

2,902

Other comprehensive (loss)/income

-

-

-

(48)

(1,219)

(43)

(530)

(1,904)

82

(3,736)

-

(42)

(3,778)

Distributions

-

-

-

-

-

-

-

-

-

-

-

(31)

(31)

Other equity instruments issued, net of expenses

-

-

-

-

-

-

-

-

-

-

1,240

-

1,240

Redemption of other equity instruments

-

-

-

-

-

-

-

-

-

-

(999)

-

(999)

Treasury shares net movement

-

-

-

-

-

-

-

-

(203)

(203)

-

-

(203)

Share option expenses

-

-

-

-

-

-

-

-

163

163

-

-

163

Dividends on ordinary shares

-

-

-

-

-

-

-

-

(393)

(393)

-

-

(393)

Dividends on preference shares and AT1 securities

-

-

-

-

-

-

-

-

(401)

(401)

-

-

(401)

Share buy-back3,4

(92)

-

92

-

-

-

-

-

(1,258)

(1,258)

-

-

(1,258)

Other movements

-

-

-

-

-

-

-

125

196

31

95

987

138

As at 31 December 2022

5,436

1,494

17,338

(63)

(1,116)

206

(564)

(7,636)

28,067

43,162

6,504

350

50,016

Profit for the period

-

-

-

-

-

-

-

-

1,341

1,341

-

3

1,344

Other comprehensive income/(loss)

-

-

-

249

182

(17)

263

8

402

725

-

(16)

709

Redemption of other equity instruments

-

-

-

-

-

-

-

-

(8)

(8)

(984)

-

(992)

Treasury shares net movement

-

-

-

-

-

-

-

-

2

2

-

-

2

Share option expenses

-

-

-

-

-

-

-

-

65

65

-

-

65

Dividends on preference shares and AT1 securities

-

-

-

-

-

-

-

-

(178)

(178)

-

-

(178)

Share buy-back8

(29)

-

29

-

-

-

-

-

(984)

(984)

-

-

(984)

Other movements

-

-

-

-

-

-

-

35

(3)5

-

(8)5

379

29

As at 31 March 2023

5,407

1,494

17,367

186

(934)

189

(301)

(7,625)

28,342

44,125

5,512

374

50,011

1   Includes capital reserve of $5 million, capital redemption reserve of $251 million and merger reserve of $17,111 million

2   Comprises actuarial gain, net of taxation on Group defined benefit schemes

3   On 18 February 2022, the Group announced the buy-back programme for a share buy-back of its ordinary shares of $0.50 each. Nominal value of share purchases was $56 million, and the total consideration paid was $754 million (including $4 million of fees and stamp duty),the buy-back completed on 19 May 2022. The total number of shares purchased was 111,295,408 representing 3.61 per cent of the ordinary shares in issue. The nominal value of the shares was transferred from the share capital to the capital redemption reserve account

4   On 1 August 2022, the Group announced the buy-back programme for a share buy-back of its ordinary shares of $0.50 each. Nominal value of share purchases was $37 million, and the total consideration paid was $504 million (including $2.5 million of fees and stamp duty). The total number of shares purchased was 73,073,837 representing 2.5 per cent of the ordinary shares in issue. The nominal value of the shares was transferred from the share capital to the capital redemption reserve account

5   Movement related to Translation adjustment and AT1 Securities charges

6   Movements mainly related to $21 million non-controlling interest from Power2SME Pte Limited, $8 million on Currency Fair and $(9) million AT1 securities charges

7   Movements related to non-controlling interest from Mox Bank Limited ($39 million), Trust Bank Singapore Ltd ($47 million), Zodia Market Holdings Limited ($3 million) and Power2SME ($9 million)

8   On 16 February 2023, the Group announced the buy-back programme for a share buy-back of its ordinary shares of $0.50 each. As at Q1 2023 the buyback is ongoing, but the Nominal value of share purchases was $29 million, and the total consideration paid was $501 million (including $2.5 million of fees and stamp duty) and a further $483 million relating to irrevocable obligation to buy back shares under the currency buy-back programme has been recognised. The total number of shares purchased was 58,194,708 representing 2.01 per cent of the ordinary shares in issue. The nominal value of the shares was transferred from the share capital to the capital redemption reserve account

9   Movements related to non-controlling interest from Mox Bank Limited ($17 million), Trust Bank Singapore Ltd ($17 million) and Zodia Market Holdings Limited ($3 million)

Page 49

Financial statements continued

Basis of preparation

This statement covers the results of Standard Chartered PLC together with its subsidiaries and equity accounted interest in associates and jointly controlled entities (the Group) for the three months ended 31 March 2023. The financial information on which this statement is based, and the data set out in the appendix to this statement, are unaudited and have been prepared in accordance with the Group's accounting policies. The Group's significant accounting policies are described in the Annual Report 2022, which have been prepared in accordance with UK-adopted international accounting standards and International Financial Reporting Standards (IFRS) as adopted by the European Union (EU IFRS) and in conformity with the requirements of the Companies Act 2006. There are no significant differences between UK-adopted international accounting standards and EU IFRS. The Group's Annual Report 2023 will continue to be prepared in accordance with these frameworks.

The interim financial information does not constitute a full or condensed set of financial statements under IAS 34 'Interim Financial Reporting' as contained in UK-adopted international accounting standards or EU IFRS. The interim financial information has been prepared in accordance with the recognition and measurement principles, but not the disclosure requirements under UK-adopted international accounting standards and EU IFRS.

The information in this document does not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2022, which contained an unqualified audit report under Section 495 of the Companies Act 2006 (which did not make any statements under Section 498 of the Companies Act 2006) have been delivered to the Registrar of Companies in accordance with Section 441 of the Companies Act 2006.

Going concern

The Directors assessed the Group's ability to continue as a going concern, including a review of the Group's forecasts, Funding and Liquidity metrics, Capital and Liquidity plans, Legal and regulatory matters, Credit impairment, macroeconomic conditions and geopolitical headwinds, and confirm they are satisfied that the Group has adequate resources to continue in business for a period of twelve months from 26 April 2023. For this reason, the Group continues to adopt the going concern basis of accounting for preparing the interim financial information


Page 50

Other supplementary financial information

Average balance sheets and yields

Average assets

Average assets

3 months ended 31.03.23

Average
non-interest earning
balance
$million

Average
interest
earning
balance
$million

Interest
income
$million

Gross yield
%

Gross yield
total balance
%

Cash and balances at central banks

11,076

58,261

515

3.58

3.01

Gross loans and advances to banks

30,547

41,723

454

4.41

2.55

Gross loans and advances to customers

61,342

312,030

3,739

4.86

4.06

Impairment provisions against loans and advances to banks and customers

-

(6,086)

-

-

-

Investment securities - Treasury and Other Eligible Bills

6,800

37,808

407

4.37

3.70

Investment securities - Debt Securities

24,612

138,821

1,169

3.42

2.90

Investment securities - Equity Shares

3,329

-

-

-

-

Property, plant and equipment and intangible assets

9,273

-

-

-

-

Prepayments, accrued income and other assets

129,935

-

-

-

-

Investment associates and joint ventures

1,697

-

-

-

-

Total average assets

278,611

582,557

6,284

4.37

2.96

Average assets

3 months ended 31.12.22

Average
non-interest earning
balance
$million

Average
interest
earning
balance
$million

Interest
income
$million

Gross yield
%

Gross yield
total balance
%

Cash and balances at central banks

12,130

52,898

365

2.74

2.23

Gross loans and advances to banks

31,306

44,051

285

2.57

1.50

Gross loans and advances to customers

58,459

311,082

3,422

4.36

3.67

Impairment provisions against loans and advances to banks and customers

-

(7,363)

-

-

-

Investment securities - Treasury and Other Eligible Bills

7,077

28,779

250

3.45

2.77

Investment securities - Debt Securities

23,217

138,855

1,058

3.02

2.59

Investment securities - Equity Shares

3,716

-

-

-

-

Property, plant and equipment and intangible assets

8,889

-

-

-

-

Prepayments, accrued income and other assets

157,007

-

-

-

-

Investment associates and joint ventures

2,069

-

-

-

-

Total average assets

303,869

568,302

5,380

3.76

2.45

Average assets

3 months ended 31.03.22

Average
non-interest earning
balance
$million

Average
interest
earning
balance
$million

Interest
income
$million

Gross yield
%

Gross yield
total balance
%

Cash and balances at central banks

24,377

55,336

40

0.29

0.20

Gross loans and advances to banks

27,908

44,546

155

1.41

0.87

Gross loans and advances to customers

64,134

307,108

1,888

2.49

2.06

Impairment provisions against loans and advances to banks and customers

-

(5,697)

-

-

-

Investment securities - Treasury and Other Eligible Bills

4,727

21,666

93

1.74

1.43

Investment securities - Debt Securities

23,526

146,261

517

1.43

1.23

Investment securities - Equity Shares

5,558

-

-

-

-

Property, plant and equipment and intangible assets

8,689

-

-

-

-

Prepayments, accrued income and other assets

119,626

-

-

-

-

Investment associates and joint ventures

2,201

-

-

-

-

Total average assets

280,746

569,220

2,693

1.92

1.28

Page 51

Other supplementary financial information continued

Average liabilities

Average liabilities

3 months ended 31.03.23

Average
non-interest bearing
balance
$million

Average
interest
bearing
balance
$million

Interest
expense
$million

Rate paid
%

Rate paid
total balance
%

Deposits by banks

13,610

25,445

29

0.46

0.30

Customer accounts:






Current accounts

44,618

130,896

906

2.81

2.09

Savings deposits

-

114,478

436

1.54

1.54

Time deposits

13,595

184,692

1,772

3.89

3.62

Other deposits

54,853

4,584

45

3.98

0.31

Debt securities in issue

9,585

65,632

807

4.99

4.35

Accruals, deferred income and other liabilities

135,756

1,035

13

5.09

0.04

Subordinated liabilities and other borrowed funds

-

12,207

270

8.97

8.97

Non-controlling interests

324

-

-

-

-

Shareholders' funds

49,858

-

-

-

-


322,199

538,969

4,278

3.22

2.01







Adjustment for Financial Markets funding costs



(352)



Financial guarantee fees on interest earning assets



18



Total average liabilities and shareholders' funds

322,199

538,969

3,944

2.97

1.86

 

Average liabilities

3 months ended 31.12.22

Average
non-interest bearing
balance
$million

Average
interest
bearing
balance
$million

Interest
expense
$million

Rate paid
%

Rate paid
total balance
%

Deposits by banks

15,897

24,808

133

2.13

1.30

Customer accounts:






Current accounts

46,345

135,866

716

2.09

1.56

Savings deposits

-

118,411

360

1.21

1.21

Time deposits1

12,939

168,709

1,338

3.15

2.92

Other deposits

51,989

3,242

52

6.36

0.37

Debt securities in issue1

7,480

58,526

541

3.67

3.25

Accruals, deferred income and other liabilities

166,096

977

11

4.47

0.03

Subordinated liabilities and other borrowed funds1

-

14,071

206

5.81

5.81

Non-controlling interests

138

-

-

-

-

Shareholders' funds

46,677

-

-

-

-


347,561

524,610

3,357

2.54

1.53







Adjustment for Financial Markets funding costs



(250)



Financial guarantee fees on interest earning assets



16



Total average liabilities and shareholders' funds

347,562

524,610

3,123

2.36

1.42

1 Interest expense has been re-presented between account lines



 

Page 52

Other supplementary financial information continued

 

Average liabilities

3 months ended 31.03.22

Average
non-interest bearing
balance
$million

Average
interest
bearing
balance
$million

Interest
expense
$million

Rate paid
%

Rate paid
total balance
%

Deposits by banks

17,492

28,865

38

0.53

0.33

Customer accounts:






Current accounts

55,118

127,775

89

0.28

0.20

Savings deposits

-

144,591

149

0.42

0.42

Time deposits

10,573

141,944

352

1.01

0.94

Other deposits

55,479

7,841

13

0.67

0.08

Debt securities in issue

6,331

61,990

138

0.90

0.82

Accruals, deferred income and other liabilities

127,208

1,075

12

4.53

0.04

Subordinated liabilities and other borrowed funds

-

15,885

114

2.91

2.91

Non-controlling interests

391

-

-

-

-

Shareholders' funds

52,011

-

-

-

-


324,603

529,966

905

0.69

0.43







Adjustment for Financial Markets funding costs



(41)



Financial guarantee fees on interest earning assets



20



Total average liabilities and shareholders' funds

324,603

529,966

884

0.68

0.42

Net Interest Margin


1Q'23
$million

4Q'22
$million

1Q'22
$million

Interest income (statutory)

6,284

5,380

2,693

Average interest earning assets

582,557

568,302

569,220

Gross yield (%)

4.37

3.76

1.92





Interest expense (statutory)

4,278

3,358

905

Adjustment for Financial Markets funding costs

(352)

(250)

(41)

Financial guarantee fees on interest earning assets

18

16

20

Adjusted interest expense used to fund financial instruments held at fair value

3,944

3,124

884

Average interest-bearing liabilities

538,969

524,610

529,966

Rate paid (%)

2.97

2.36

0.68

Net yield (%)

1.40

1.40

1.24





Net interest income adjusted for Financial Markets funding costs and Financial guarantee fees on interest earning assets

2,340

2,256

1,809

Net interest margin (%)

1.63

1.58

1.29

 



 

Page 53

Other supplementary financial information continued

Important Notice - Forward-looking statements

This document may contain 'forward-looking statements' that are based on current expectations or beliefs, as well as assumptions about future events. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements often use words such as 'may', 'could', 'will', 'expect', 'intend', 'estimate', 'anticipate', 'believe', 'plan', 'seek', 'continue' or other words of similar meaning.

By their very nature, forward-looking statements are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results, and the Group's plans and objectives, to differ materially from those expressed or implied in the forward-looking statements.

Recipients should not place reliance on, and are cautioned about relying on, any forward-looking statements. There are several factors which could cause actual results to differ materially from those expressed or implied in forward-looking statements. The factors that could cause actual results to differ materially from those described in the forward-looking statements include (but are not limited to): changes in global, political, economic, business, competitive; market forces or condition; future exchange and interest rates; changes in environmental, social or physical risks; legislative, regulatory and policy developments; the development of standards and interpretations; the ability of the Group to mitigate the impact of climate change effectively; risks arising out of health crisis and pandemics, changes in tax rates, future business combinations or dispositions; and other factors specific to the Group. Any forward-looking statement contained in this document is based on past or current trends and/or activities of the Group and should not be taken as a representation that such trends or activities will continue in the future.

No statement in this document is intended to be a profit forecast or to imply that the earnings of the Group for the current year or future years will necessarily match or exceed the historical or published earnings of the Group. Each forward-looking statement speaks only as of the date of the particular statement. Except as required by any applicable laws or regulations, the Group expressly disclaims any obligation to revise or update any forward-looking statement contained within this document, regardless of whether those statements are affected as a result of new information, future events or otherwise.

Please refer to the Group's 2022 Annual Report for a discussion of certain risks and factors that could cause actual results, and the Group's plans and objectives, to differ materially from those expressed or implied in the forward-looking statements.

Financial instruments

Nothing in this document shall constitute, in any jurisdiction, an offer or solicitation to sell or purchase any securities or other financial instruments, nor shall it constitute a recommendation or advice in respect of any securities or other financial instruments or any other matter.

Caution regarding climate and environment related information

Some of the climate and environment related information in this document is subject to certain limitations, and therefore the reader should treat the information provided, as well as conclusions, projections and assumptions drawn from such information, with caution. The information may be limited due to a number of factors, which include (but are not limited to): a lack of reliable data; a lack of standardisation of data; and future uncertainty. The information includes externally sourced data that may not have been verified. Furthermore, some of the data, models and methodologies used to create the information is subject to adjustment which is beyond our control, and the information is subject to change without notice.

 

Page 54


CONTACT INFORMATION

Global headquarters
Standard Chartered Group
1 Basinghall Avenue

London, EC2V 5DD
United Kingdom

telephone: +44 (0)20 7885 8888
facsimile: +44 (0)20 7885 9999

Shareholder enquiries
ShareCare information

website: sc.com/shareholders
helpline: +44 (0)370 702 0138

ShareGift information
website:
ShareGift.org
helpline: +44 (0)20 7930 3737

Registrar information

UK

Computershare Investor Services PLC

The Pavilions
Bridgwater Road
Bristol, BS99 6ZZ

helpline: +44 (0)370 702 0138

Hong Kong

Computershare Hong Kong Investor Services Limited

17M Floor, Hopewell Centre
183 Queen's Road East

Wan Chai

Hong Kong

website: computershare.com/hk/investors

Chinese translation

Computershare Hong Kong Investor Services Limited

17M Floor, Hopewell Centre
183 Queen's Road East

Wan Chai

Hong Kong

Register for electronic communications
website: investorcentre.co.uk

For further information, please contact:

Gregg Powell, Head of Investor Relations

+44 (0) 20 7885 5172

LSE Stock code: STAN.LN
HKSE Stock code: 02888

 

Page 55

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