Half Year 2020 Standard Chartered PLC Earnings Call Transcript

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

Question: Jennifer Alexandra Cook - Exane BNP Paribas, Research Division - Analyst : A couple of questions from me, please. Firstly, on RWAs. You look to have been impacted by about $5 billion of negative credit migration in Q2, which comes on an ongoing basis seems to be maybe a little bit above where you're guiding at Q1. Should we be thinking about this as the ongoing run rate? Or was Q2 particularly impacted by downgrades in some of the vulnerable sectors maybe? And have you seen any lengthening of the behavioral maturity for customers experiencing stress? And then secondly, coming to Andy's good story, just on the costs. A very simple annualization of the H1 cost print would seem to point to a number much better than consensus for FY '20. What should we be expecting regarding any bonus true-up later in the year, given that H1 staff costs were

Question: Jennifer Alexandra Cook - Exane BNP Paribas, Research Division - Analyst : Okay. And just to make sure I heard you correctly. You said $800 million would be your guess if you had to kind of mark-to-market today run rate.

Question: Thomas Andrew John Rayner - Numis Securities Limited, Research Division - Analyst : Bill, Andy, can I just ask, please, on the question about the sustainability of revenue growth when looking beyond 2020? If I take your guidance for the second half, I think it's fair to assume that the current consensus of around $15 billion for this year is still intact, but the mix of that looks like being a much lower net interest margin, probably less smaller contribution from Wealth Management and Transaction Banking and a much bigger contribution from Financial Markets. Consensus has revenue growing next year by about 1.5% and then picking up to 4% growth in 2022, which, based on your cost guidance, et cetera, gets you to a return on tangible equity of 7%, bearing in mind your other sort of overriding target. So I guess the question is, are you still sort of comfortable with that sort of consensus view of where revenue is going? How dependent is that now on a recovery in NIM at some point? Do you need Financial Markets to continue making a bigger contribution than historically? Or are there other drivers with new clients, et cetera, that you think can pick up some slack? I'm just trying to get to understand of how comfortable you are really with current market consensus.

Question: Thomas Andrew John Rayner - Numis Securities Limited, Research Division - Analyst : Okay. I kind of have a very few quick follow-up on the cost. Sorry, can you hear me okay? Hello?

Question: Thomas Andrew John Rayner - Numis Securities Limited, Research Division - Analyst : So sorry. Yes. Just a quick follow-up on the cost guidance. I mean $10 billion or below $10 billion for 2021, I mean, that gives you versus where consensus is today, wiggle room of about $50 million. I guess, when you target below $10 billion, you're thinking something a bit more comfortable than $50 million. Is that a fair assessment of how you think about your guidance?

Question: Martin Leitgeb - Goldman Sachs Group, Inc., Research Division - Analyst : Yes. I just wanted to follow up firstly on the various comments you made on the outlook. And it seems like Asia was first impacted by the pandemic. And from your comments, they obviously got a -- from what you see on the ground, in particular in North Asia, you can see it evolving quicker out in terms of recovery. Is that something you see across your footprint in terms of client activity, that activity levels in -- particularly in Asia, picking up faster than elsewhere? And should that give -- I mean, if I read your comment right or just to follow up on that underlying asset growth, loan growth from here could essentially accelerate, and that's despite, obviously, the tensions in Hong Kong. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 30, 2020 / 7:00AM, STAN.L - Half Year 2020 Standard Chartered PLC Earnings Call The second question, just briefly to follow up on your NII comment. And I was just wondering if you could help us how to think about the NIM progression from here. I appreciate the comment on the higher rate sensitivity as to one of the earlier questions. I was just wondering in terms of the moving parts here, HIBOR being down in the quarter and ending much lower at the end of the second quarter. Should we expect NIM here to continue to drop a little bit? Or are there still benefits from the legal entity restructuring, which could essentially lead to the kind of a stabilization of NIM from here? And then finally, just on capital. Just to confirm, so on Slide 16, I think you called out a 15 basis points impact from COVID relief regulatory changes. Does that essentially imply that your fully loaded common equity Tier 1, so fully loaded for IFRS 9 transitional, is essentially not that much different as to the 14.3% you print that as of the end of the second quarter? And how should we think about scope of capital return from here? Are there any material headwinds outside of the RWA migration we flagged earlier, which we should be aware of?