Standard Chartered PLC Q1 2025 Earnings Call Transcript

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

Question: Joseph Dickerson - Jefferies International Ltd. - Analyst : Just a quick one on the risk-weighted assets. So clearly, the aggregate number, I think, was about ballpark with where we were thinking. But you've had a nice contraction in the credit number of just under $5 billion quarter-on-quarter. Could you discuss the optimization effects that you're seeing coming from the CIB still? Because I know this has been an ongoing area of improvement. And I guess, how much further optimization do you see? And then in terms of the market RWAs, similarly, the other direction, the magnitude was large. It sounds like it's coming back down in Q2. But I guess what's the -- do you have kind of an optimal level in the mix of overall RWAs that market risk consumes? Because I think it's about 14% in Q1. Is there an optimal mix? Or is it really dependent on opportunities at any given time in the client footprint?

Question: Kunpeng Ma - China Securities Co., Ltd - Analyst : Thank you for the introduction on tariffs. Just now, I fully understand the diversification of Standard Chartered network. But let's say, if there is a general increase in tariffs globally, and maybe there are some negative consequences on global economy, so I'm wondering if you have any kind of stress conditions or stress scenarios to share with us about your thinking on the future performance of Standard Chartered.

Question: Andrew Coombs - Citi - Analyst : So I'll stay on the same theme, if I may, please. So three parts, all related to tariffs. The first thing is that HSBC talked about a plausible low-single-digit impact to their revenues based on future tariff downside risk. So anything you can say around the revenue outlook attached to the current set of events would be useful. Secondly, could you just elaborate a bit more on what you're seeing in terms of client activity post the events in April, both on the corporate side and on the private banking side? And then finally, on your IFRS 9 assumptions, you've only taken a 5 percentage point change in your downside scenario, whereas some of your peers have taken much larger adjustments through. So what was the rationale and thought process behind that?

Question: Andrew Coombs - Citi - Analyst : Can you hear me?

Question: Andrew Coombs - Citi - Analyst : Okay. Perfect. Let me repeat the question. So I was saying it's all related to tariffs, three parts. The first of which is that HSBC gave some revenue guidance based on a plausible downside scenario relating to the tariff environment and talked about a low-single-digit impact on revenue. So anything you'd like to say about your future revenue outlook based on the range of tariff outcomes would be appreciated. Second and kind of linked to that is, can you talk a bit more about the client activity you're seeing post the events in April, particularly around the corporate client base and also your private banking client base? And then the final question was on the IFRS 9 assumptions. You've only taken a 5 percentage point change in the weighting towards your downside scenario, which is less than what some of the peers have done. So what was the rationale and any slightly changing the weighting on the downside?

Question: James Invine - Redburn Atlantic - Analyst : I was wondering if you could just give us your thoughts about how loan growth will unfold over the rest of the year, please? I know there's a lot of macro turbulence at the moment, but I was also just noting, I think in your appendix, you talked about building term liabilities to fund the pipeline. So does that mean you've got a bit more growth coming than we would might otherwise be expecting? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 7:00AM, STAN.L - Q1 2025 Standard Chartered PLC Earnings Call

Question: Amit Goel - Mediobanca Bank - Analyst : So just a couple of vague follow-up. One is, so I guess, is the right way to understand the potential impact from tariffs more kind of a volume thing rather than an asset quality issue given the structure of your relationships and the exposures that you have? And within that, I appreciate the color in terms of network CAGR since 2019, so the 9% CAGR. I'm just curious then within the 5% to 7% revenue growth target, what kind of network CAGR had you factored in? And how are you thinking about that this year and in the next couple of years? And then outside of that, I was just kind of curious just on the net interest income. I know you said, obviously, it would be challenging to get to the level that you achieved last year. I think consensus has got like a very small decline. I just want to check that you're comfortable with the kind of $11 billion or so that consensus is reflecting for this year.

Question: Perlie Mong - Bank of America Merrill Lynch - Analyst : Diego, I'm so sorry to be asking yet another tariff-related question. You're probably bored of them. So just on the scenario that you talked about, I think it's called the global trade and tension scenario. I think you said it's very severe. But what type of -- in plain English, what does that sound like? Because I guess the reason I ask this is because unlike a lot of other banks, there's a downside 1, downside 2 scenario. You haven't done that. So I'm just trying to understand like what is that scenario looking at? I guess HSBC talks about a plausible downside being one that is worse than where we are. But equally, I guess one could also make the argument that with 100% tariffs, US-China is already pretty severe. So just what is that scenario capturing? It's the number one question. And secondly, as a follow-up to the NII question. So I guess pass-through rates have again stayed relatively strong this quarter. We are now looking at maybe 3 more rate cuts this year on US dollars. So just wondering, any expectation as to how that might change off the back of that? I know you've given medium-term guidance through the cycle, but just wondering sort of maybe in the next 6 months in the near-term cuts, what are we expecting? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 7:00AM, STAN.L - Q1 2025 Standard Chartered PLC Earnings Call

Question: Nick Lord - Morgan Stanley - Analyst : Okay. Two questions from me. The first is just back on tariffs and two questions. The first is -- I mean, you presented obviously about split of your network income. And a large chunk of that is China to Hong Kong and obviously ASEAN to ASEAN and China to ASEAN and things like that. Have you done any work to estimate how much that could be impacted or how much of that flow is related to products that are sent to the US as an end destination and therefore, what may happen to those lines. So a little bit more detail on that. Just the other thing is you've pulled out on your credit quality slide exposure to ASEAN ex-Singapore or just less than 4%, sorry. Just any reason why you've pulled that out as an area of particular concern and why you might be concerned there? And then finally, just on Wealth. I wonder if you could just give us any indication as to what's happening in terms of product mix on wealth and therefore, if we're seeing some pressure on margins as a percentage of AUM in wealth as a result of product mix changes.

Question: Alastair Warr - Bernstein Autonomous LLP - Analyst : Congratulations on the results. Just wanted to quickly return to some of the asset quality lead indicators you touched on in the presentation. You've had a $950 million-or-so bump in Stage 2 stuff, the higher-risk credits in CIB are similar to looking at $800 million increase in the credit grade 12. Could you just give a bit more color on what sectors they're coming from and what you think the outlook could be? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 7:00AM, STAN.L - Q1 2025 Standard Chartered PLC Earnings Call

Question: Aman Rakkar - Barclays Investment Bank - Analyst : I had two questions, please. One was on the outlook for deposits. I was interested in your best guess on the outlook for deposits here. There's multiple cross currents, I guess, washing through your business. I think we've seen pretty decent liquidity formation in some of your key markets, most notably places like Hong Kong. But I guess I'm also interested if you think your corporate customers' appetite for liquidity might be a bit different from here. So it's a complex question, but I was just interested in what your best guess was on the outlook for deposits and perhaps whether you think it could grow even if lending is subdued from here. The second question is two-part on capital. One is around RWA procyclicality. I wondered if you -- is that something that you're anticipating from credit migration perhaps if we do get some kind of crystallizing economic concerns across your footprint? And related to that then, are you inclined to operate any differently around capital? So could we expect you to operate at the top end of your target range through a period of economic uncertainty? And I'm thinking specifically in relation to buybacks. I think most people are probably expecting you to come back to the market at H1 with a decent buyback. I'm just interested in how recent developments might affect your thinking there.

Question: Chris Hallam - Goldman Sachs - Analyst : Just two. First, on the modeling side, the Fit for Growth restructuring charge of $73 million in the quarter, how should we think about that phasing through the rest of the year and then perhaps just to check in on the balance between '25 and '26? And then secondly and a bit more broadly on client perspective. So clearly, obviously, we've talked about this, a lot of elevated uncertainty on the macro side, perhaps a little bit less elevated than a couple of weeks ago, but clearly still higher than it was in the quarter. Just interested to hear, how consistent is the mood or the feedback from your corporate clients in terms of how they're reacting to the situations? So if you think about all the conversations you've had with CEOs over the past few weeks, is that a reasonably consistent picture or message? Or are you starting to see some nuances emerge either by industry type or by geography?