Full Year 2024 Standard Chartered PLC Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Joseph Dickerson - Jefferies - Analyst : Hi. Good morning. Thanks for taking my questions and congrats on the very consistent delivery over the course of this year with the results. Just on a couple of questions. First, on the commentary around 2025 revenue being below the 5% to 7% CAGR. I think we expected that out of Q3, but it looks like there's been a pretty significant step-up quarter-on-quarter in terms of volume and mix effect in NII such that, that is annualising now at about $10.9 billion. So what's the pass-through dynamic there that you seem to be calling out because it seems to also come up against positive commentary on the non-II aspects for the start of the year. And then the second question is just more high level. Thinking beyond 2026, do you think the bank is capable of delivering more in the mid-teens type of return, i.e. above 13% as Fit For Growth kicks in and you continue to leverage wealth opportunities in the footprint? Many thanks.

Question: Joseph Dickerson - Jefferies - Analyst : That's very helpful. Thank you.

Question: Robin Down - HSBC - Analyst : Good morning. We've all got questions on NII, but I'm going to leave that for some of the other analysts to explore deposit migration, et cetera. Can I ask you two quicker questions? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 21, 2025 / 8:00AM, STAN.L - Full Year 2024 Standard Chartered PLC Earnings Call One on the start you've made to 2025, I think CIB, in particular, you are calling out you had a good start there in Markets and Banking. Is that a comment that basically implies a year-on-year increase? Or is it just a good start in absolute terms? I appreciate it's only 21st February, but good to kind what you mean by a good start? And then the second question, probably slightly kind of esoteric question, but the software write-downs that you've taken to get rid of dormant products et cetera, I think last time we spoke at the sell-side round table, I think you were flagging up that they were part of the CTA, so part of the restructuring going forward and would involve a lot of de-duplication of systems. So is that process now all done and captured in the software

Question: Andrew Coombs - Citi - Analyst : Good morning. I will take up the opportunity to go back to NII and then one other question as well. On the NII, just on slide 5. Can you unpack the $153 million improvement that's in there for mix, volume and other because that's obviously quite a bit higher than consensus was expecting and just trying to work how much of that relates to the big step down in term CIB deposits that's probably not likely to continue. So anything you can say on that would be helpful. And then second on related to NII. In your Early Alerts, you've seen quite a big increase, 5.1% to 5.6%, which you earmark is due to Hong Kong commercial real estate state. There's obviously no charge today for that. But at what point would you potentially have to take a provision there? Thank you.

Question: Perlie Mong - BofA Global Research - Analyst : Just a couple, one is restructuring. So this year we are looking at somewhere like maybe $440 million of restructuring. So Fit For Growth aside, I think there is still maybe like $200 million to $300 million restructuring charge. I know when you operate in 60 markets, it's always difficult to forecast what's going to be in this line; but, if I look back at the last seven, eight years, it looks like there's a sort of a run rate for lack of a better phrase, of maybe somewhere between $200 million to $400 million. Is that the right way of thinking about it? That's number one. And number two is, what about $300 million of notable items in non-interest income to do with Ghana and Egypt. So how do you think about what do you put in restructuring and other? And what do you leave in the non-interest income line? Because it obviously affects some of the growth rates and forecast that we are looking at. Well, noting that your guidance is not on notable items, but obviously, it is part of the number that we have to strip out and adjust for.

Question: Kunpeng Ma - China Merchants Securities Co. Ltd - Analyst : Hi. Good morning, Bill and Diego. Thank you for taking my question. This is Kunpeng of China Securities. I've got two questions. The first is on Hong Kong CRE, because some of the ECL has been charged in Q4. So if we look forward, because we know HK CRE is still under pressure. So for simplicity, should we assume that the majority of the Hong Kong CRE is in trouble or from my mind, it's not a big deal because it's a very small amount or is there another story about Hong Kong CRE trajectory going forward? The second one is about Africa because you have heard a lot from the Chinese companies. The next target beyond ASEAN and the Middle East, is Africa. But Standard Chartered is having some headaches in some of African countries. But if we look forward, do you view Africa as a potential to become another big corridor business for Standard Chartered going forward? I only have these two questions. Thank you.

Question: Gurpreet Sahi - Goldman Sachs - Analyst : Congratulations on a good set of numbers. Can I have two quick ones, please. First is, Bill, really on the supply change shifts as they're happening, especially this year with some policy moves from the US. How are clients adjusting to these tariff changes? Then how does it play to your strengths of being a bank, which is, as you say, following global standards, but present in Asia, Africa and Middle East, with respect to advising the clients? And then second quick one is on slide 39. I do see that the CASA ratios in both of your key businesses have moved up quarter-on-quarter. Do we see it as sustainable from your discussions with clients or the treasuries? And can we say that the CASA ratio has kind of bottomed out in third quarter of last year. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 21, 2025 / 8:00AM, STAN.L - Full Year 2024 Standard Chartered PLC Earnings Call

Question: Aman Rakkar - Barclays - Analyst : I had a question on net interest income. Two questions on net interest income actually. So one is around your pass-throughs. So you're talking about not being able to execute pass-throughs as assertively going forward as you did in Q4, so presumably lower pass-throughs on the way down. I just want to confirm in your updated rate sensitivity disclosure, roughly speaking, are you able to put any numbers on what you're assuming there and how that compares? I think directionally, I get that it's less of the pass-through that you're modelling in your go forward. But can you help us to any number? And then the second question is the outlook for deposits. There's a lot of focus on lending, and the outlook for that continues to be below where you'd like it to be in the long term, but deposits are a bigger number to your average interest earning assets anyway. So I'm interested in what your take is on deposit formation in your markets because I look at places like Hong Kong, and money supply is growing very strongly there despite subdued lending. And the reason I'm asking these questions, maybe it's the third part of the question, but we are really struggling to make sense of your NII commentary for 2025. It's coming across the various questions that are being asked, but the idea that you don't grow net interest income when you're annualising so strongly, you're actually not very rate-sensitive anymore, you're executing pass-throughs really well. You would expect some balance sheet momentum, it just does not stack up at all. So I know it's probably the fourth or fifth time you're being asked that kind of question. But if there's anything we're missing around that, please, can you let at us know?

Question: Aman Rakkar - Barclays - Analyst : Thank you, guys. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 21, 2025 / 8:00AM, STAN.L - Full Year 2024 Standard Chartered PLC Earnings Call

Question: Rob Noble - Deutsche Bank - Analyst : Good morning. Thanks for taking my questions. It's another one on the software impairment charge. Can you give us an idea of what the useful life of software that you use within the model? And is that something that you changed with the charge? And if you did, should I not expect higher amortisation and cost inflation from this going forwards? And then the other side of that, I think you spend about $1 billion a year in software. Is that the same level that we should expect to continue in capital expenditure on software?

Question: Rob Noble - Deutsche Bank - Analyst : Good. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 21, 2025 / 8:00AM, STAN.L - Full Year 2024 Standard Chartered PLC Earnings Call

Question: Jeremy Hou - China International Capital Corporation - Analyst : Thank you for taking up my question. Two questions. The first one is on costs. So I appreciate your commitment to cost discipline, like the cost savings, positive jaws and then WRB transformation, et cetera. So from another angle, the Asian market is optimistic and is also highly competitive. So what is the reasonable underlying cost growth for you to capture the opportunities without under-investing in it? And is it possible that we may see the cost growth materially to pick up after the Fit for Growth program ends, i.e., after 2026. And the second question is on the buybacks. I know you never want to guide this but is the $1.5 billion like a new run rate that we can refer to and as the bulk of the CTA will happen in 2025, so is there a major concern when you do buybacks later this year?

Question: Jeremy Hou - China International Capital Corporation - Analyst : Thank you so much.

Question: Alastair Warr - Autonomous Research - Analyst : I've just got a follow-up on the capital return, if I may. You said over $8 billion, but I think consensus in the market were already quite a long way ahead of that during the second half of last year. So if you just take pro forma 13.6% after your buyback, for capital generation, you have been running at the higher end or above your range. Should we just on a two-, three-, four-year view be thinking about you trying to manage the CET1 towards the lower end of what you talked about as the comfort range there or more hovering, if you like?

Question: Kian Abouhossein - JPMorgan - Analyst : Yes. Thank you very much for taking my question. I have a question on transaction services income, and in particular, the Payments & Liquidity line, which has hasn't been growing. I'm just trying to understand, normally, I would expect this line to grow more or less with GDP, maybe even higher, and we haven't seen any growth. I'm just trying to understand a little bit how we should think about the revenue line going forward? And secondly, I have a question regarding Mox and Trust. Clearly, these are becoming more seasoned business. They're becoming profitable in 2026. How should we think about the end-game of these two assets?