Company Announcements

Third Quarter 2022 Results

Source: RNS
RNS Number : 1155E
Standard Chartered PLC
26 October 2022
 

 

 

 

 

Standard Chartered PLC

3Q'22 Results

26 October 2022

 

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

2

Group Chief Financial Officer's review

3

Supplementary financial information

12

Underlying versus statutory results reconciliations

27

Risk review

31

Capital review

36

Financial statements

41

Other supplementary information

46

 

 

 


 

 


 

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 the context requires, within this 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, Mainland China, Hong Kong, India, Indonesia, Japan, Korea, Laos, Macau, Malaysia, Myanmar, Nepal, Philippines, Singapore, Sri Lanka, Taiwan, Thailand and Vietnam; Africa & Middle East (AME) includes Angola, Bahrain, Botswana, Cameroon, Cote d'Ivoire, Egypt, The Gambia, Ghana, Iraq, Jordan, Kenya, Lebanon, Mauritius, Nigeria, Oman, Pakistan, Qatar, Saudi Arabia, Sierra Leone, South Africa, Tanzania, the United Arab Emirates (UAE), Uganda, Zambia and Zimbabwe; and Europe & Americas (EA) includes 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. Standard Chartered PLC 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 - third quarter 2022 Results

 

 

All figures are presented on an underlying basis and comparisons are made to 2021 on a reported currency basis, unless otherwise stated. A reconciliation of restructuring and other items excluded from underlying results is set out on pages 27-30.

Bill Winters, Group Chief Executive, said:

"We have posted a strong set of results in the third quarter, with income up 22 per cent on a normalised basis and profit before tax up 35 per cent year on year. We also continue to make significant progress against the five strategic actions outlined in February, including the completion of the $500m share buy-back announced at the 2Q'22 results, taking total shareholder distributions announced this year to $1.4bn. We remain confident in the delivery of our 2024 financial targets"

Update on strategic actions

•  CCIB: drive improved returns: Income RoRWA of 6.3% year-to-date (YTD), up 140bps on FY'21; $10.5bn of RWA optimisation initiatives delivered so far this year

•  CPBB: transform profitability: Cost-to-income ratio of 69% YTD, down 4%pts from FY'21; $173m of gross expense savings delivered YTD; well on track to deliver $200m target in 2022

•  Seize China opportunity: China YTD on-shore income up 11% YoY at constant currency (ccy); off-shore income up 16% YoY

•  Cost discipline to create operational leverage: $330m of total gross structural cost savings delivered YTD

•  Substantial shareholder distributions: $1.4bn of total shareholder distributions announced so far this year

Other highlights

•  Ventures: Launched the Singapore digital bank, Trust, in partnership with FairPrice Group; ~200k accounts already opened

•  Sustainability: Sustainable Finance income up 33% YoY; leading in product innovation with >30 product variants live

Selected information concerning 3Q'22 financial performance

•  Return on tangible equity of 10.1%, up 380bps year-on-year (YoY)

•  Income up 15% to $4.3bn, up 22% at ccy, on a normalised basis (excluding the debit valuation adjustment (DVA) and the 2021 IFRS9 interest income adjustment)

Net interest income up 24% at ccy on a normalised basis

Record third quarter in Financial Markets up 21%, at ccy on a normalised basis

Wealth Management down 15% at ccy, with the largest market, Hong Kong also down 15% at ccy

Net interest margin (NIM) up 8bps QoQ to 1.43%, due to rising interest rates partly offset by product mix change and hedges

•  Expenses increased 3% YoY to $2.7bn, or up 9% at ccy

Increased investment spend, salary inflation and performance-related pay accruals

Positive 10% income-to-cost jaws at ccy and excluding DVA; cost-to-income ratio down to 62% (3Q'21: 69%)

•  Credit impairment charge of $227m, up $120m YoY; up $160m QoQ

Includes $130m for China CRE exposures and $96m from sovereign downgrades relating to Pakistan and Ghana

Total management overlay now $204m; COVID-19 overlay down $39m to $51m and China CRE overlay up $27m to $153m

High-risk assets down $2.0bn QoQ, mainly driven by a reduction in Early Alert accounts

Loan-loss rate of 18bps year-to-date annualised

•  Underlying profit before tax up 35% at ccy to $1.4bn; statutory profit before tax up 43% at ccy to $1.4bn

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

Customer loans and advances up $5bn or 2% since 30.06.22; up 1% on an underlying basis

Advances-to-deposit ratio 58.1% (30.06.22: 59.6%); liquidity coverage ratio 156% (30.06.22:142%)

•  Risk-weighted assets (RWA) of $252bn down $3bn since 30.06.22

Credit RWA down $3bn, Market risk RWA broadly flat and no change to Operational risk RWA

•  The Group remains strongly capitalised

CET1 ratio 13.7% (30.06.22: 13.9%); in the upper half of the 13 to 14% target

•  Earnings per share increased 10 cents or 43% to 33.1 cents

Outlook

Our performance this year has been strong, and the pace of economic recovery in many of our footprint markets is encouraging, notwithstanding increasing recessionary pressures in certain western markets. Consequently, for full year 2022:

•  Income (ex-DVA at ccy) is now expected to grow around 13%, in-line with the year-to-date growth

•  Full year average NIM is expected to be around 140bps

•  Expenses ex-UK bank levy are expected to be around $10.6bn

•  Credit impairment is expected to be slightly above the year-to-date annualised loan-loss rate of 18bps

•  We intend to operate dynamically within the full 13-14% CET1 target range

We now expect greater NIM progression to average around 165bps in 2023, which combined with continued strong business momentum and positive income-to-cost jaws, means we remain on-track to deliver our 10% RoTE target in 2024, if not earlier.

 

 

 

Page 1


Statement of results

 


3 months ended 30.09.22
$million

3 months ended 30.09.21
$million

Change¹
%

Underlying performance




Operating income

4,318

3,765

15

Operating expenses (including UK bank levy)

(2,659)

(2,594)

(3)

Credit impairment

(227)

(107)

(112)

Other impairment

(32)

(35)

9

Profit from associates and joint ventures

16

46

(65)

Profit before taxation

1,416

1,075

32

Profit/(loss) attributable to ordinary shareholders²

976

716

36

Return on ordinary shareholders' tangible equity (%)

10.1

6.3

380bps

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

61.6

68.9

730bps

Statutory performance




Operating income

4,329

3,764

15

Operating expenses

(2,696)

(2,647)

(2)

Credit impairment

(227)

(108)

(110)

Other impairment

(31)

(59)

47

Profit from associates and joint ventures

16

46

(65)

Profit before taxation

1,391

996

40

Taxation

(313)

(229)

(37)

Profit for the period

1,078

767

41

Profit/(loss) attributable to parent company shareholders

1,087

763

42

Profit/(loss) attributable to ordinary shareholders2

964

644

50

Return on ordinary shareholders' tangible equity (%)

10.5

6.4

410bps

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

62.3

70.3

800bps

 

Balance sheet and capital

30.09.22
$million

30.09.21
$million

Change
%

Total assets

864,435

817,102

6

Total equity

50,003

53,335

(6)

Average tangible equity attributable to ordinary shareholders2

36,569

39,948

(8)

Loans and advances to customers

298,390

302,493

(1)

Customer accounts

447,259

453,260

(1)

Risk-weighted assets

252,293

267,555

(6)

Total capital

53,491

58,871

(9)

Total capital (%)

21.2

22.0

(80)bps

Common Equity Tier 1

34,504

39,167

(12)

Common Equity Tier 1 ratio (%)

13.7

14.6

(90)bps

Net Interest Margin (%) (adjusted)

1.43

1.23

20bps

Advances-to-deposits ratio (%)3

58.1

61.9

(3.8)

Liquidity coverage ratio (%)

156

145

11

Leverage ratio (%)

4.8

5.1

(30)bps

Information per ordinary share

Cents

Cents

Cents

Earnings per share - underlying4

33.1

23.1

10

                - statutory4

32.7

20.7

12

Net asset value per share5

1,433

1,468

(35)

Tangible net asset value per share5

1,243

1,294

(51)

Number of ordinary shares at period end (millions)

2,905

3,078

(6)

1   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 (%), 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

2   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

3   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

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

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

 

 

 

 

Page 2


Group Chief Financial Officer's review

 

 

The Group delivered a strong performance in the third quarter of 2022

Summary of financial performance


3Q'22
$million

3Q'21
$million

Change
%

Constant currency change¹
%

2Q'22
$million

Change
%

Constant currency change¹
%

YTD'22
$million

YTD'21
$million

Change
%

Constant currency change¹
%

Net interest income

1,933

1,735

11

19

1,852

4

7

5,575

5,110

9

14

Other income

2,385

2,030

17

23

2,074

15

18

6,943

6,273

11

14

Underlying operating income

4,318

3,765

15

21

3,926

10

13

12,518

11,383

10

14

Other operating expenses

(2,659)

(2,594)

(3)

(9)

(2,636)

(1)

(4)

(7,931)

(7,680)

(3)

(8)

UK bank levy

-

-

nm³

nm³

5

(100)

(100)

5

(6)

183

200

Underlying operating expenses

(2,659)

(2,594)

(3)

(9)

(2,631)

(1)

(5)

(7,926)

(7,686)

(3)

(8)

Underlying operating profit before impairment and taxation

1,659

1,171

42

47

1,295

28

30

4,592

3,697

24

27

Credit impairment

(227)

(107)

(112)

(147)

(67)

nm³

(194)

(494)

(60)

nm³

nm³

Other impairment

(32)

(35)

9

12

(1)

nm³

nm³

(34)

(60)

43

43

Profit from associates and joint ventures

16

46

(65)

(67)

90

(82)

(84)

169

180

(6)

(5)

Underlying profit before taxation

1,416

1,075

32

35

1,317

8

10

4,233

3,757

13

15

Restructuring

(25)

(99)

75

76

(37)

32

35

(70)

(222)

68

69

Other items

-

20

(100)

(100)

-

nm³

nm³

-

20

(100)

(100)

Statutory profit before taxation

1,391

996

40

43

1,280

9

11

4,163

3,555

17

19

Taxation

(313)

(229)

(37)

(52)

(371)

16

9

(997)

(860)

(16)

(23)

Profit for the period

1,078

767

41

41

909

19

19

3,166

2,695

17

18

Net interest margin (%)2

1.43

1.23

20


1.35

8


1.36

1.23

13


Underlying return on tangible equity (%)2

10.1

6.3

380


8.9

120


10.1

8.7

140


Underlying earnings per share (cents)

33.1

23.1

43


28.2

17


96.5

81.4

19


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

Statutory financial performance summary


3Q'22
$million

3Q'21
$million

Change
%

Constant currency change¹
%

2Q'22
$million

Change
%

Constant currency change¹
%

YTD'22
$million

YTD'21
$million

Change
%

Constant currency change¹
%

Net interest income

1,932

1,733

11

19

1,850

4

7

5,570

5,102

9

14

Other income

2,397

2,031

18

23

2,083

15

18

6,984

6,290

11

15

Statutory operating income

4,329

3,764

15

21

3,933

10

13

12,554

11,392

10

14

Statutory operating expenses

(2,696)

(2,647)

(2)

(8)

(2,663)

(1)

(5)

(8,024)

(7,868)

(2)

(7)

Statutory operating profit before impairment and taxation

1,633

1,117

46

51

1,270

29

30

4,530

3,524

29

32

Credit impairment

(227)

(108)

(110)

(145)

(66)

nm³

(194)

(490)

(57)

nm³

nm³

Other impairment

(31)

(59)

47

49

(9)

nm³

nm³

(46)

(99)

54

54

Profit from associates and joint ventures

16

46

(65)

(65)

85

(81)

(81)

169

187

(10)

(9)

Statutory profit before taxation

1,391

996

40

43

1,280

9

11

4,163

3,555

17

19

Taxation

(313)

(229)

(37)

(52)

(371)

16

9

(997)

(860)

(16)

(23)

Profit for the period

1,078

767

41

41

909

19

19

3,166

2,695

17

18

Net interest margin (%)2

1.43

1.23

20


1.35

8


1.36

1.23

13


Statutory return on tangible equity (%)2

10.5

6.4

410


8.7

180


10.1

7.9

220


Statutory earnings per share (cents)

32.7

20.7

58


27.2

20


94.8

75.6

25


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

 

 

Page 3

Group Chief Financial Officer's review continued

 

 

The Group delivered a strong performance in the third quarter of 2022, generating an underlying return on tangible equity of 10.1 per cent with underlying profit before tax increasing 32 per cent. Income grew 22 per cent on a constant currency basis and excluding normalisation adjustments, with a continued strong performance in Financial Markets, with Cash Management and Retail Deposits benefitting from rising interest rates, which resulted in the net interest margin increasing 8 basis points in the quarter. Loans and advances to customers increased 1 per cent on an underlying basis in the quarter. Expenses increased 9 per cent at constant currency, due to investment spend, salary inflation, and performance-related pay accruals. The credit impairment charges in the quarter of $227 million included further charges relating to the China Commercial Real Estate sector and the impact of sovereign-related downgrades. The Group remains well capitalised and highly liquid with a CET1 ratio of 13.7 per cent, an advances-to-deposits ratio of 58 per cent, and a liquidity coverage ratio of 156 per cent.

All commentary that follows is on an underlying basis and comparisons are made to the equivalent period in 2021 on a reported currency basis, unless otherwise stated.

•       Operating income increased 15 per cent, or 22 per cent on a constant currency basis, normalising for a $56 million positive movement in DVA and a non-repeat of the prior-year $64 million IFRS9 interest income catch-up adjustment (IFRS9 adjustment). A strong Financial Markets performance and an expansion in the net interest margin benefitting Cash Management and Retail Deposits was partly offset by lower Wealth Management income and negative Treasury income

•       Net interest income increased 11 per cent, or 24 per cent on a constant currency basis and excluding the IFRS9 adjustment. The net interest margin increased 23 per cent, or 27 basis points excluding the IFRS9 adjustment, offset in part by a year-on-year 7 basis points impact from hedges, as the Group took advantage of rising interest rates.

•       Other income increased 17 per cent, or 15 per cent excluding the positive impact of movements in DVA, with continued strong Financial Markets performance partly offset by lower Wealth Management income

•       Operating expenses were up 3 per cent, or up 9 per cent on a constant currency basis, reflecting the impact of inflation as well as an increase in performance-related pay accruals and headcount. Increased investment spend on transformational digital initiatives includes a double-digit percentage increase in amortisation charges. The Group generated a 10 per cent positive income-to-cost jaws at constant currency excluding DVA, while the cost-to-income ratio excluding the UK bank levy decreased 7 percentage points to 62 per cent

•       Credit impairment charges increased by $120 million to $227 million and were $160 million higher than in the prior quarter. There was a $130 million charge relating to the China Commercial Real Estate portfolio, including a $27 million increase in the management overlay, and a $96 million charge relating to the sovereign ratings downgrade of Ghanaian and Pakistani exposures. The year-to-date loan-loss rate annualises to 18 basis points

•       Other impairment was a $32 million charge reflecting the impact of a higher interest rate environment on the discount rate used to value the aviation lease portfolio

•       Profit from associates and joint ventures reduced $30 million to $16 million due to lower profits at China Bohai Bank

•       Charges relating to restructuring and other items decreased $74 million to $25 million, reflecting an increase in restructuring income and a non-repeat of prior-year impairment of property

•       Taxation was $313 million on a statutory basis, with an underlying year-to-date effective tax rate of 24.0 per cent compared to the prior-year rate of 23.5 per cent reflecting a change in the geographic mix of profits

•       Underlying return on tangible equity increased by 380 basis points to 10.1 per cent due to higher profits and lower tangible equity, reflecting shareholder distributions, including share buy-backs, and adverse movements in reserves due to movements in interest rates and currency translation

 

 

 

 

Page 4

Group Chief Financial Officer's review continued

 

Operating income by product


3Q'22
$million

3Q'21
$million

Change
%

Constant currency change¹
%

2Q'22
$million

Change
%

Constant currency change¹
%

YTD'22
$million

YTD'21
$million

Change
%

Constant currency change¹
%

Transaction Banking

1,082

734

47

55

835

30

32

2,657

2,156

23

28

Trade & Working Capital2,3

344

389

(12)

(5)

343

-

4

1,049

1,099

(5)

(1)

Cash Management

738

345

114

124

492

50

52

1,608

1,057

52

57

Financial Markets3

1,540

1,311

17

22

1,373

12

15

4,636

3,887

19

22

Macro Trading

734

540

36

43

664

11

14

2,338

1,783

31

35

Credit Markets3

440

516

(15)

(13)

374

18

20

1,274

1,429

(11)

(9)

Credit Trading

156

144

8

12

87

79

83

353

377

(6)

(5)

Financing Solutions & Issuance3

284

372

(24)

(22)

287

(1)

2

921

1,052

(12)

(11)

Structured Finance3

116

159

(27)

(27)

102

14

15

312

387

(19)

(19)

Financing & Securities Services

195

97

101

113

198

(2)

1

537

290

85

90

DVA

55

(1)

nm4

nm4

35

57

60

175

(2)

nm4

nm4

Lending & Portfolio Management2,3

166

214

(22)

(20)

136

22

21

448

575

(22)

(20)

Wealth Management

455

559

(19)

(15)

458

(1)

2

1,443

1,759

(18)

(16)

Retail Products

1,109

828

34

44

955

16

19

2,913

2,523

15

22

CCPL & other unsecured lending

301

316

(5)

3

313

(4)

(1)

919

956

(4)

1

Deposits

625

205

nm4

nm4

363

72

76

1,236

647

91

104

Mortgage & Auto

141

260

(46)

(41)

235

(40)

(37)

623

775

(20)

(15)

Other Retail Products

42

47

(11)

(7)

44

(5)

(4)

135

145

(7)

(4)

Treasury

(4)

149

(103)

(98)

205

(102)

(99)

518

543

(5)

-

Other3

(30)

(30)

-

47

(36)

17

50

(97)

(60)

(62)

6

Total underlying operating income

4,318

3,765

15

21

3,926

10

13

12,518

11,383

10

14

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      Following a reorganisation, there has been a reclassification of balances from Lending & Portfolio Management into Trade & Working Capital including prior period numbers. Prior periods have been re-presented and there is no change in the total income

3      Income related to Group Special Asset Management, the Group's specialist recovery unit previously reported in Other products has been allocated to the relevant products. Prior periods have been re-presented and there is no change in total income

4      Not meaningful

Transaction Banking income increased 47 per cent. Cash Management income increased 114 per cent reflecting strong pricing discipline to take advantage of a rising interest rate environment. Trade & Working Capital decreased 12 per cent or 4 per cent on a constant currency basis excluding the IFRS9 adjustment, with balance sheet growth offset by margin compression. The margin compression reflects greater distribution activities and a shift in product mix towards lower margin but more RWA-efficient products.

Financial Markets income increased 17 per cent and was up 21 per cent on a constant currency basis and excluding normalisation adjustments. Macro Trading delivered another strong quarter, up 36 per cent, benefitting from wider bid-offer spreads, trading gains from elevated volatility, and increased client flow on the back of rising interest rates and demand for energy hedging. Credit Markets income decreased 15 per cent, with Financing Solutions & Issuance impacted by lower capital market issuances and non-repeat of the IFRS9 adjustment. Structured Finance income declined 27 per cent due to lower Aviation Finance income, while Financing & Security Services income doubled, including a further $27 million from gains on mark to market liabilities, and a 17 per cent increase in Securities Services income on the back of rising interest rates.

Lending and Portfolio Management income decreased 22 per cent due to the impact of the IFRS9 adjustment and increased cost of funds.

Wealth Management income declined 19 per cent as major equity markets remained subdued across the footprint reducing transaction volumes, as well as from the impact of COVID-19 restrictions in key markets. Bancassurance income was down 15 per cent due to continued COVID-19 related restrictions while Wealth Management secured lending income nearly halved on the back of client deleveraging.

Retail Products income increased 34 per cent and was 44 per cent higher on a constant currency basis. Deposit income more than tripled due to active passthrough rate management in a rising interest rate environment, partly offset by migration from CASA to time deposits. On a constant currency basis, Mortgages & Auto income decreased 41 per cent due to margin compression as mortgages in Hong Kong reached the Best Lending Rate cap. Credit Cards & Personal Loans income decreased 5 per cent but was up 3 per cent on a constant currency basis reflecting a growth in credit card balances and increased fee income. 

Treasury income was a $4 million loss in the quarter primarily due to the $97 million loss from structural and short-term hedges, which offset increased yields on the remainder of the Treasury portfolio and mark-to-market gains from FX swaps.

 

 

 

 

Page 5

Group Chief Financial Officer's review continued

 

Profit before tax by client segment and geographic region


3Q'22
$million

3Q'21
$million

Change
%

Constant currency change²
%

2Q'22
$million

Change
%

Constant currency change²
%

YTD'22
$million

YTD'21
$million

Change
%

Constant currency change²
%

Corporate, Commercial & Institutional Banking

1,285

868

48

53

868

48

51

3,252

2,689

21

24

Consumer, Private & Business Banking1

478

293

63

75

348

37

41

1,198

1,146

5

9

Ventures1

(85)

(62)

(37)

(41)

(74)

(15)

(18)

(236)

(185)

(28)

(30)

Central & other items (segment)1

(262)

(24)

nm³

nm³

175

nm³

nm³

19

107

(82)

(94)

Underlying profit before taxation

1,416

1,075

32

35

1,317

8

10

4,233

3,757

13

15

Asia

1,063

927

15

19

955

11

15

2,925

3,166

(8)

(5)

Africa & Middle East

163

222

(27)

(11)

279

(42)

(34)

744

697

7

14

Europe & Americas

293

161

82

92

192

53

54

997

498

100

103

Central & other items (region)

(103)

(235)

56

38

(109)

6

(21)

(433)

(604)

28

18

Underlying profit before taxation

1,416

1,075

32

35

1,317

8

10

4,233

3,757

13

15

1      Following the increased strategic importance and reporting of Ventures to management, this has been established as a separate operating segment in 2022. Prior periods have been restated

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

3      Not meaningful

Corporate, Commercial & Institutional Banking profit increased 48 per cent, or 42 per cent excluding DVA. Income grew 21 per cent excluding DVA with Cash Management benefitting from rising interest rates and strong Financial Markets activity partly offset by 3 per cent higher expenses and a $58 million increase in credit impairments.

Consumer, Private & Business Banking profit increased 75 per cent on a constant currency basis, with income up 18 per cent as the benefit from higher interest rates was partly offset by subdued Wealth Management. Expenses increased 3 per cent while credit impairments were 24 per cent higher.

Ventures losses increased by over a third to $85 million, reflecting the Group's continued investment in transformational digital initiatives with expenses increasing 45 per cent, while income was $10 million in the quarter compared to zero in the same quarter last year.

Central & other items (segment) recorded a loss of $262 million with an income loss of $37 million reflecting the negative impact from hedges and lower profit share from China Bohai Bank. Expenses increased 15 per cent while credit impairments were $45 million higher.

Asia profits increased 19 per cent on a constant currency basis as income grew 19 per cent, partly offset by 9 per cent growth in expenses with credit impairments increasing by $109 million and China Bohai Bank profit share lower by $25 million.

Africa & Middle East profits decreased 11 per cent on a constant currency basis as impairment charges have more than doubled reflecting the impact of sovereign downgrades. Income increased 8 per cent which was partly offset by expenses increasing 10 per cent.

Europe & Americas profit increased 82 per cent as income grew 23 per cent, or 17 per cent excluding positive movements in DVA, due to strong Financial Markets and Cash Management performance partly offset by losses in Treasury. Expenses increased 7 per cent while there was an increase in the credit impairment release.

Central & other items (region) recorded a loss of $103 million, which is less than half the loss in the same quarter in 2021, with a $85 million increase in income and $35 million lower expenses.

 


 

 

Page 6

Group Chief Financial Officer's review continued

 

Adjusted net interest income and margin


3Q'22
$million

3Q'21
$million

Change¹
%

2Q'22
$million

Change¹
%

YTD'22
$million

YTD'21
$million

Change¹
%

Adjusted net interest income2

2,023

1,732

17

1,888

7

5,720

5,107

12

Average interest-earning assets

562,509

557,416

1

561,493

-

564,382

557,283

1

Average interest-bearing liabilities

522,641

512,406

2

524,273

-

525,600

513,333

2










Gross yield (%)3

2.88

1.84

104

2.21

67

2.34

1.85

49

Rate paid (%)3

1.57

0.66

91

0.92

65

1.06

0.68

38

Net yield (%)3

1.31

1.18

13

1.29

2

1.28

1.17

11

Net interest margin (%)3,4

1.43

1.23

20

1.35

8

1.36

1.23

13

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

Adjusted net interest income increased 17 per cent due to a 19 per cent increase in the net interest margin which averaged 143 basis points in the quarter, increasing 27 basis points year-on-year excluding the IFRS9 adjustment, and 8 basis points compared to the prior quarter:

•  Average interest-earning assets were flat in the quarter with underlying asset growth offset by risk-weight asset optimisation actions and currency translation. Gross yields increased 67 basis points compared with the prior quarter due the impact of rising interest rates on customer loan pricing and on Treasury portfolio yields partly offset by a 11 basis point quarter-on-quarter impact from hedges

•  Average interest-bearing liabilities were flat in the quarter. The rate paid on liabilities increased 65 basis points compared with the average in the prior quarter reflecting the impact of interest rate movements and migration from CASA to time deposits

Credit risk summary

Income statement


3Q'22
$million

3Q'21
$million

Change1
%

2Q'22
$million

Change1
%

YTD'22
$million

YTD'21
$million

Change1
%

Total credit impairment charge/(release)

227

107

112

67

239

494

60

723

Of which stage 1 and 2

178

30

493

71

151

168

(75)

(324)

Of which stage 3

49

77

(36)

(4)

(1,325)

326

135

141

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

 


 

 

Page 7

Group Chief Financial Officer's review continued

 

Balance sheet


30.09.22
$million

30.06.22
$million

Change1
%

31.12.21
$million

Change1
%

30.09.21
$million

Change1
%

Gross loans and advances to customers2

303,538

298,728

2

304,122

-

308,083

(1)

Of which stage 1

284,877

279,136

2

279,178

2

284,140

-

Of which stage 2

11,460

12,539

(9)

16,849

(32)

15,759

(27)

Of which stage 3

7,201

7,053

2

8,095

(11)

8,184

(12)









Expected credit loss provisions

(5,148)

(5,220)

(1)

(5,654)

(9)

(5,590)

(8)

Of which stage 1

(497)

(502)

(1)

(473)

5

(411)

21

Of which stage 2

(434)

(385)

13

(524)

(17)

(535)

(19)

Of which stage 3

(4,217)

(4,333)

(3)

(4,657)

(9)

(4,644)

(9)









Net loans and advances to customers

298,390

293,508

2

298,468

-

302,493

(1)

Of which stage 1

284,380

278,634

2

278,705

2

283,729

-

Of which stage 2

11,026

12,154

(9)

16,325

(32)

15,224

(28)

Of which stage 3

2,984

2,720

10

3,438

(13)

3,540

(16)









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

59 / 77

61 / 80

(2) / (3)

58 / 75

1 / 2

57 / 77

2 / 0

Credit grade 12 accounts ($million)

1,140

835

37

1,730

(34)

2,175

(48)

Early alerts ($million)

4,957

7,524

(34)

5,534

(10)

7,478

(34)

Investment grade corporate exposures (%)3

75

71

4

69

6

68

7

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 $18,032 million at 30 September 2022, $7,894 million at 30 June 2022, $7,331 million at 31 December 2021 and $8,836 million at 30 September 2021

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

Asset quality remained resilient in the third quarter, despite a year-on-year increase in the credit impairment charge. However, the Group continues to remain alert to a volatile and challenging external environment including the pressures in the China Commercial Real Estate sector, continued impact of COVID-19 in a reducing number of key markets, commodity price volatility and the impact of the Russia/Ukraine war. This war in part contributed to both commodity price volatility and the accelerated trajectory of inflation and interest rate rises across our footprint, which in turn have driven a sustained appreciation of the US dollar versus the majority of developed and emerging market currencies. These factors have led to increased sovereign credit stress in a handful of our markets.

Credit impairment was a $227 million charge in the quarter, a $120 million increase, and represents an annualised year-to-date loan-loss rate of 18 basis points which is below the Group's medium-term guidance of 30-35 basis points.

The Stage 1 and 2 impairment charge of $178 million includes $96 million relating to the sovereign downgrade of Pakistan and Ghana and an additional $14 million modelled impairment charges relating to the China Commercial Real Estate sector. There was a net $12 million release from the management overlay; with a $39 million release in the element relating to COVID-19, while the element relating to China Commercial Real Estate sector increased by $27 million. The management overlay totals $204 million as at 30 September 2022, with the COVID-19 element totalling $51 million and $153 million relating to the China Commercial Real Estate sector. 

Stage 3 impairments of $49 million include $89 million relating to China Commercial Real Estate exposures and higher charge-offs in Consumer, Private and Business Banking partly offset by releases in Corporate, Commercial & Institutional Banking.

Gross Stage 3 loans and advances to customers of $7.2 billion were 2 per cent higher compared to 30 June 2022 primarily due to the downgrade of select China Commercial Real Estate clients and the sovereign ratings downgrade of Sri Lankan local currency exposures. These credit-impaired loans represented 2.4 per cent of gross loans and advances, an increase of 1 basis points compared to 30 June 2022.

The Stage 3 cover ratio of 59 per cent decreased 2 percentage points compared with the position as at 30 June 2022, and the cover ratio post collateral of 77 per cent decreased by 3 percentage points, with both ratios decreasing due to lower coverage on new inflows into Stage 3.

Credit grade 12 balances have increased 37 per cent since 30 June 2022 reflecting the impact of the sovereign ratings downgrade of Ghanaian exposures into credit grade 12 as well as credit deterioration of select China Commercial Real Estate clients. This is partly offset by outflows into Stage 3 of Sri Lankan local currency exposures and specific China Commercial Real Estate exposures.

Early Alert accounts of $5.0 billion have decreased by $2.6 billion since 30 June 2022, due to client regularisations out of Early Alert and downgrades into credit grade 12. The Group is continuing to carefully monitor its exposures in vulnerable sectors and select markets, given the unusual stresses caused by the currently challenging macro-economic environment.

The proportion of investment grade corporate exposures has increased 4 percentage points since 30 June 2022 to 75 per cent, partly as a result of the increase in reverse repurchase agreement balances in the quarter.

 

 

 

Page 8

Group Chief Financial Officer's review continued

 

Restructuring, goodwill impairment and other items


3Q'22

3Q'21

2Q'22

Restructuring
$million

Goodwill Impairment
$million

Other items
$million

Restructuring
$million

Goodwill Impairment
$million

Other items
$million

Restructuring
$million

Goodwill Impairment
$million

Other items
$million

Operating income

11

-

-

(21)

-

20

7

-

-

Operating expenses

(37)

-

-

(53)

-

-

(32)

-

-

Credit impairment

-

-

-

(1)

-

-

1

-

-

Other impairment

1

-

-

(24)

-

-

(8)

-

-

Profit from associates and joint ventures

-

-

-

-

-

-

(5)

-

-

Loss before taxation

(25)

-

-

(99)

-

20

(37)

-

-

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.

Restructuring charges of $25 million primarily reflect expenses relating to redundancies partly offset by income from the Principal Finance and Ship Leasing portfolios.

The Group has announced the exit of seven markets in the Africa and Middle East region and will focus solely on the Corporate, Commercial & Institutional Banking segment in two more. It is expected that the results from the markets and businesses being exited will be reported in restructuring from 1 January 2023.

Balance sheet and liquidity


30.09.22
$million

30.06.22
$million

Change
%

31.12.21
$million

Change1
%

30.09.21
$million

Change1
%

Assets








Loans and advances to banks

43,315

36,201

20

44,383

(2)

45,754

(5)

Loans and advances to customers

298,390

293,508

2

298,468

-

302,493

(1)

Other assets

522,730

506,208

3

484,967

8

468,855

11

Total assets

864,435

835,917

3

827,818

4

817,102

6

Liabilities








Deposits by banks

27,728

31,173

(11)

30,041

(8)

34,480

(20)

Customer accounts

447,259

453,742

(1)

474,570

(6)

453,260

(1)

Other liabilities

339,445

301,310

13

270,571

25

276,027

23

Total liabilities

814,432

786,225

4

775,182

5

763,767

7

Equity

50,003

49,692

1

52,636

(5)

53,335

(6)

Total equity and liabilities

864,435

835,917

3

827,818

4

817,102

6









Advances-to-deposits ratio (%)2

58.1%

59.6%


59.1%


61.9%


Liquidity coverage ratio (%)

156%

142%


143%


145%


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

2      The Group now excludes $21,683 million held with central banks (30.06.22: $16,918 million, 31.12.21: $15,168 million, 30.09.21: $16,986 million) that has been confirmed as repayable at the point of stress

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

•       Loans and advances to banks increased 20 per cent or by $7 billion from 30 June 2022 to $43 billion reflecting an increase in money market loans and Financial Institutions Trade loans

•       Loans and advances to customers grew 2 per cent from 30 June 2022 to $298 billion with a $10 billion increase in reverse repurchase agreements held to collect in the quarter. There was underlying growth of $2 billion (1 per cent) in the quarter, primarily in Trade, excluding the increase in reverse repurchase agreements and central bank placements, as well as a $2 billion reduction from risk-weight asset optimisation actions and the impact of currency translation which reduced balances by $7 billion

•       Customer accounts of $447 billion decreased 1 per cent from 30 June 2022 but increased 1 per cent excluding the impact of currency translation

•       Other assets increased 3 per cent in the third quarter of 2022 with increased derivative balances partly offset by reductions in investment securities and unsettled trade balances.

•       Other liabilities increased 13 per cent with increased derivative liabilities and repurchase agreements

 

 

 

Page 9

Group Chief Financial Officer's review continued

 

The advances-to-deposits ratio declined to 58.1 per cent from 59.6 per cent at 30 June 2022. The point-in-time liquidity coverage ratio remains well above the minimum regulatory requirement of 100 per cent at 156 per cent, increasing 14 percentage points in the quarter due to higher medium-term and structured note issuance supporting a reduction in shorter term wholesale funding and some period end inflows of corporate term deposits in some markets.

Risk-weighted assets


30.09.22
$million

30.06.22
$million

Change1
%

31.12.21
$million

Change1
%

30.09.21
$million

Change1
%

By risk type








Credit risk

202,523

205,179

(1)

219,588

(8)

219,628

(8)

Operational risk

27,177

27,177

-

27,116

-

27,116

-

Market risk

22,593

22,726

(1)

24,529

(8)

20,811

9

Total RWAs

252,293

255,082

(1)

271,233

(7)

267,555

(6)

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

Total risk-weighted assets (RWAs) of $252.3billion decreased 1 per cent or $2.8 billion from 30 June 2022:

•       Credit Risk RWA decreased by $2.7 billion in the third quarter to $202.5 billion. There was a $2.9 billion increase from negative credit migration reflecting the impact of sovereign downgrades and a $4.0 billion increase from a combination of asset growth and mix. This was more than offset by a $5.6 billion reduction from currency translation, a further $3.6 billion reduction in the Corporate, Commercial & Institutional Banking low-returning portfolio targeted for optimisation and $0.5 billion from other RWA efficiency actions 

•       Operational Risk RWA was flat at $27.2 billion

•       Market Risk RWA decreased $0.1 billion to $22.6 billion

Capital base and ratios


30.09.22
$million

30.06.22
$million

Change1
%

31.12.21
$million

Change1
%

30.09.21
$million

Change1
%

CET1 capital

34,504

35,373

(2)

38,362

(10)

39,167

(12)

Additional Tier 1 capital (AT1)

6,485

5,244

24

6,791

(5)

6,791

(5)

Tier 1 capital

40,989

40,617

1

45,153

(9)

45,958

(11)

Tier 2 capital

12,502

13,020

(4)

12,491

-

12,913

(13)

Total capital

53,491

53,637

-

57,644

(7)

58,871

(9)

CET1 capital ratio (%)2

13.7

13.9

(0.2)

14.1

(0.4)

14.6

(0.9)

Total capital ratio (%)2

21.2

21.0

0.2

21.3

(0.1)

22.0

(0.8)

Leverage ratio (%)2

4.8

4.5

0.3

4.9

(0.1)

5.1

(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 19 basis points lower than at 30 June 2022. The CET1 ratio remains 3.5 percentage points above the Group's regulatory minimum of 10.2 per cent and in the upper half of the 13 to 14 per cent medium-term target range.

As of 30 September 2022, the Group was partway through the $500 million share buyback programme it announced on 1st August 2022 and had spent $432 million purchasing 63 million ordinary shares, reducing the share count by approximately 2 per cent. Even though the share buyback was still ongoing on 30 September 2022, the entire $500 million is deducted from CET1 in the period, reducing the ratio by 20 basis points.

The Group is accruing a foreseeable dividend in respect of the final 2022 ordinary share dividend in the third quarter. This is not an indication of the Group's final 2022 ordinary share dividend, which will be proposed by the Board at the presentation of the 2022 full year results. The increase in the foreseeable dividend for ordinary dividend and AT1 coupons reduced the CET1 ratio by 18 basis points

The CET1 ratio was reduced by a further 11 basis points, with 3 basis points from a reduction in reserves mainly relating to a reversal of prior year unrealised gains on debt securities as a result of higher market yields, and 8 basis points from movements in FX reducing both the translation reserve and RWAs. The Group has reduced its sensitivity to higher market yields as a result of hedging and other mitigation strategies.

Excluding the impact of currency translation, RWAs increased by an underlying $2.6 billion during the quarter, reducing the CET1 ratio by 14 basis points

The above CET1 ratio headwinds were partly offset by 44 basis points uplift from profit accretion in the quarter.

The Group's leverage ratio of 4.8 per cent is 22 basis points higher than as at 30 June 2022. This reflects increased Tier 1 capital from a $1.25 billion issuance of AT1 balances as well as decreased leverage exposures driven by leverage optimisation initiatives. The Group's leverage ratio remains significantly above its minimum requirement of 3.7 per cent.

 

 

 

 

Page 10

Group Chief Financial Officer's review continued

 

Outlook

Our performance this year has been strong, and the pace of economic recovery in many of our footprint markets is encouraging, notwithstanding increasing recessionary pressures in certain western markets. Consequently, for full year 2022:

•       Income (ex-DVA at ccy) is now expected to grow around 13 per cent, in-line with the year-to-date growth

•       Full year average net interest margin is expected to be around 140 basis points

•       Expenses ex-UK bank levy are expected to be around $10.6 billion

•       Credit impairment is expected to be slightly above the year-to-date annualised loan-loss rate of 18 basis points

•       We intend to operate dynamically within the full 13 to 14 per cent CET1 target range

We now expect greater net interest margin progression to average around 165 basis points in 2023, which combined with continued strong business momentum and positive income-to-cost jaws, means we remain on-track to deliver our 10 per cent RoTE target in 2024, if not earlier.

 

 

 

Andy Halford

Group Chief Financial Officer

26 October 2022

 

 


 

Page 11


Supplementary financial information

 

Underlying performance by client segment


3Q'22

Corporate, Commercial & Institutional Banking
$million

Consumer,
Private &
Business
Banking
$million

Ventures
$million

Central &
other items
$million

Total
$million

Operating income

2,745

1,600

10

(37)

4,318

2,405

1,287

10

616

4,318

340

313

-

(653)

-

Operating expenses

(1,347)

(1,035)

(87)

(190)

(2,659)

Operating profit/(loss) before impairment losses and taxation

1,398

565

(77)

(227)

1,659

Credit impairment

(82)

(87)

(4)

(54)

(227)

Other impairment

(31)

-

-

(1)

(32)

Profit from associates and joint ventures

-

-

(4)

20

16

Underlying profit/(loss) before taxation

1,285

478

(85)

(262)

1,416

Restructuring

2

(22)

-

(5)

(25)

Other items

-

-

-

-

-

Statutory profit/(loss) before taxation

1,287

456

(85)

(267)

1,391

Total assets

453,985

129,698

1,574

279,178

864,435

Of which: loans and advances to customers2

190,782

126,961

480

35,388

353,611

138,017

126,927

480

32,966

298,390

52,765

34

-

2,422

55,221

Total liabilities

534,469

176,087

981

102,895

814,432

Of which: customer accounts2

332,833

171,730

886

6,517

511,966

Risk-weighted assets

149,779

50,923

1,158

50,433

252,293

Underlying return on tangible equity (%)

17.5

19.2

nm³

(15.6)

10.1

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

49.1

64.7

nm³

nm³

61.6

 


3Q'21

Corporate, Commercial & Institutional Banking1
$million

Consumer,
Private &
Business
Banking1
$million

Ventures1
$million

Central &
other items1
$million

Total
$million

Operating income

2,226

1,431

-

108

3,765

2,115

1,349

-

301

3,765

111

82

-

(193)

-

Operating expenses

(1,304)

(1,065)

(60)

(165)

(2,594)

Operating profit/(loss) before impairment losses and taxation

922

366

(60)

(57)

1,171

Credit impairment

(24)

(73)

(1)

(9)

(107)

Other impairment

(30)

-

-

(5)

(35)

Profit from associates and joint ventures

-

-

(1)

47

46

Underlying profit/(loss) before taxation

868

293

(62)

(24)

1,075

Restructuring

(32)

(10)

-

(57)

(99)

Other items

-

-

20

-

20

Statutory profit/(loss) before taxation

836

283

(42)

(81)

996

Total assets

390,770

138,109

774

287,449

817,102

Of which: loans and advances to customers2

197,121

135,333

42

31,272

363,768

137,936

135,251

42

29,264

302,493

59,185

82

-

2,008

61,275

Total liabilities

468,431

179,423

794

115,119

763,767

Of which: customer accounts2

320,516

175,278

721

16,477

512,992

Risk-weighted assets

161,915

52,583

608

52,449

267,555

Underlying return on tangible equity (%)

10.6

11.2

nm³

(5.6)

6.3

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

58.6

74.4

nm³

152.8

68.9

1      Following the increased strategic importance and reporting of Ventures to management, this has been established as a separate operating segment in 2022. Prior period has been restated

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

3      Not meaningful

 

 

Page 12

Supplementary financial information continued

 

Corporate, Commercial & Institutional Banking1


3Q'22
$million

3Q'21
$million

Change5
%

Constant currency change4,5
%

2Q'22
$million

Change5
%

Constant currency change4,5
%

YTD'22
$million

YTD'21
$million

Change5
%

Constant currency change4,5
%

Operating income

2,745

2,226

23

28

2,305

19

22

7,622

6,518

17

20

Transaction Banking

1,050

712

47

56

810

30

32

2,574

2,089

23

28

Trade & Working Capital2,3

332

375

(11)

(5)

328

1

5

1,006

1,057

(5)

(1)

Cash Management

718

337

113

123

482

49

51

1,568

1,032

52

57

Financial Markets

1,540

1,311

17

22

1,373

12

15

4,636

3,887

19

22

Macro Trading

734

540

36

43

664

11

14

2,338

1,783

31

35

Credit Markets3

440

516

(15)

(13)

374

18

20

1,274

1,429

(11)

(9)

Credit Trading

156

144

8

12

87

79

83

353

377

(6)

(5)

Financing Solutions & Issuance3

284

372

(24)

(22)

287

(1)

2

921

1,052

(12)

(11)

Structured Finance

116

159

(27)

(27)

102

14

15

312

387

(19)

(19)

Financing & Securities Services3

195

97

101

113

198

(2)

1

537

290

85

90

DVA

55

(1)

nm9

nm9

35

57

60

175

(2)

nm9

nm9

Lending & Portfolio Management2,3

156

206

(24)

(22)

124

26

23

418

550

(24)

(22)

Wealth Management

1

1

-

nm9

-

nm9

nm9

1

1

-

(100)

Retail Products

1

-

nm9

nm9

-

nm9

nm9

1

-

nm9

nm9

Deposits

1

1

-

nm9

-

nm9

nm9

1

1

-

nm9

Other Retail Products3

-

(1)

100

nm9

-

nm9

nm9

-

(1)

100

nm9

Other

(3)

(4)

25

33

(2)

(50)

33

(8)

(9)

11

11

Operating expenses

(1,347)

(1,304)

(3)

(7)

(1,388)

3

1

(4,061)

(3,886)

(5)

(8)

Operating profit before impairment losses and taxation

1,398

922

52

58

917

52

55

3,561

2,632

35

39

Credit impairment

(82)

(24)

nm9

nm9

(49)

(67)

(68)

(278)

112

nm9

nm9

Other impairment

(31)

(30)

(3)

(3)

-

nm9

nm9

(31)

(55)

44

44

Underlying profit before taxation

1,285

868

48

53

868

48

51

3,252

2,689

21

24

Restructuring

2

(32)

106

106

(2)

200

167

(2)

(70)

97

99

Statutory profit before taxation

1,287

836

54

59

866

49

52

3,250

2,619

24

27

Total assets

453,985

390,770

16

19

427,483

6

8

453,985

390,770

16

19

Of which: loans and advances to customers6

190,782

197,121

(3)

1

192,439

(1)

1

190,782

197,121

(3)

1

Total liabilities

534,469

468,431

14

18

500,400

7

9

534,469

468,431

14

18

Of which: customer accounts6

332,833

320,516

4

8

321,517

4

5

332,833

320,516

4

8

Risk-weighted assets

149,779

161,915

(7)

nm9

154,177

(3)

nm9

149,779

161,915

(7)

nm9

Underlying return on risk-weighted assets (%)7

3.4

2.0

140bps

nm9

2.2

120bps

nm9

2.8

2.1

70bps

nm9

Underlying return on tangible equity (%)7

17.5

10.6

690bps

nm9

11.4

610bps

nm9

14.3

11.0

330bps

nm9

Cost to income ratio (%)8

49.1

58.6

9.5

9.6

60.2

11.1

11.1

53.3

59.6

6.3

6.2

1      Following the increased strategic importance and reporting of Ventures to management, this has been established as a separate operating segment in 2022. Prior period has been restated

2      Following a reorganisation, there has been a reclassification of balances from Lending & Portfolio Management into Trade & Working capital including prior period numbers. Prior periods have been re-presented and there is no change in the total income

3      Income related to Group Special Asset Management, the Group's specialist recovery unit previously reported in Other products has been allocated to the relevant products. Prior periods have been re-presented and there is no change in total income

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

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

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

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

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

9      Not meaningful

 

 

 

 

Page 13

Supplementary financial information continued

 

Performance highlights

•       Underlying profit before tax of $1,285 million was up 48 per cent driven mainly by higher income, partially offset by higher expenses and credit impairment

•       Underlying operating income of $2,745 million was up 23 per cent (up 30 per cent ccy excluding a positive DVA and the IFRS9 adjustments) primarily due to strong performance across Transaction Banking Cash revenue supported by higher interest rates and strong Macro Trading Income in Financial Markets

•       Higher credit impairment primarily from charges on China Commercial Real Estate exposures and the sovereign ratings downgrade in some of our footprint markets

•       Risk-weighted assets down $13 billion since 31 December 2021, mainly as a result of optimisation initiatives and favourable FX movements, partly offset by business growth and regulatory impact

•       RoTE increased to 17.5 per cent from 10.6 per cent

 


 

Page 14

Supplementary financial information continued

 

Consumer, Private & Business Banking1


3Q'22
$million

3Q'21
$million

Change4
%

Constant currency change3,4
%

2Q'22
$million

Change4
%

Constant currency change3,4
%

YTD'22
$million

YTD'21
$million

Change4
%

Constant currency change3,4
%

Operating income

1,600

1,431

12

18

1,448

10

13

4,471

4,402

2

6

Transaction Banking

32

22

45

50

25

28

32

83

67

24

26

Trade & Working Capital2

12

14

(14)

(7)

15

(20)

(13)

43

42

2

5

Cash Management

20

8

150

150

10

100

100

40

25

60

60

Lending & Portfolio Management2

10

8

25

25

12

(17)

(9)

30

25

20

20

Wealth Management

454

558

(19)

(15)

458

(1)

2

1,442

1,758

(18)

(16)

Retail Products

1,104

829

33

43

951

16

19

2,903

2,528

15

21

CCPL & other unsecured lending

295

316

(7)

1

308

(4)

(1)

907

957

(5)

(1)

Deposits

626

205

nm8

nm8

363

72

76

1,238

649

91

104

Mortgage & Auto

141

260

(46)

(41)

235

(40)

(37)

623

775

(20)

(15)

Other Retail Products

42

48

(13)

(7)

45

(7)

(4)

135

147

(8)

(4)

Other

-

14

(100)

(100)

2

(100)

(100)

13

24

(46)

(38)

Operating expenses

(1,035)

(1,065)

3

(3)

(1,054)

2

(1)

(3,106)

(3,090)

(1)

(4)

Operating profit before impairment losses and taxation

565

366

54

65

394

43

47

1,365

1,312

4

9

Credit impairment

(87)

(73)

(19)

(24)

(45)

(93)

(93)

(166)

(166)

-

(5)

Other impairment

-

-

nm8

nm8

(1)

100

100

(1)

-

nm8

nm8

Underlying profit before taxation

478

293

63

75

348

37

41

1,198

1,146

5

9

Restructuring

(22)

(10)

(120)

(120)

(14)

(57)

(57)

(43)

(32)

(34)

(39)

Statutory profit before taxation

456

283

61

73

334

37

40

1,155

1,114

4

8

Total assets

129,698

138,109

(6)

2

134,979

(4)

-

129,698

138,109

(6)

2

Of which: loans and advances to customers5

126,961

135,333

(6)

2

132,275

(4)

-

126,961

135,333

(6)

2

Total liabilities

176,087

179,423

(2)

5

179,637

(2)

1

176,087

179,423

(2)

5

Of which: customer accounts5

171,730

175,278

(2)

4

175,747

(2)

-

171,730

175,278

(2)

4

Risk-weighted assets

50,923

52,583

(3)

nm8

52,518

(3)

nm8

50,923

52,583

(3)

nm8

Underlying return on risk-weighted assets (%)6

3.7

2.2

150bps

nm8

2.5

120bps

nm8

3.0

2.8

20bps

nm8

Underlying return on tangible equity (%)6

19.2

11.2

800bps

nm8

13.6

560bps

nm8

15.7

14.3

140bps

nm8

Cost to income ratio (%)7

64.7

74.4

9.7

10.0

72.8

8.1

8.0

69.5

70.2

0.7

0.9

1      Following the increased strategic importance and reporting of Ventures to management, this has been established as a separate operating segment in 2022. Prior period has been restated

2      Following a reorganisation, there has been a reclassification of balances from Lending & Portfolio Management into Trade & Working capital including prior period numbers. Prior periods have been re-presented and there is no change in the total income

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

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

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

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

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

8      Not meaningful

Performance highlights

•       Underlying profit before tax of $478 million was up 63 per cent, mainly driven by higher income partly offset by higher expenses. Overall Impairments trend remain stable

•       Underlying operating income of $1,600 million was up 12 per cent (up 18 per cent on a constant currency basis) as higher income in Retail due to volume growth across most products, in addition to interest rate benefits within Deposits, partly offset by Wealth management which continues to face headwinds due to market volatility

•       RoTE increased from 11.2 per cent to 19.2 per cent

 

 

 

 

Page 15

 

Supplementary financial information continued

 

Ventures1


3Q'22
$million

3Q'21
$million

Change3
%

Constant currency change2,3
%

2Q'22
$million

Change3
%

Constant currency change2,3
%

YTD'22
$million

YTD'21
$million

Change3
%

Constant currency change2,3
%

Operating income

10

-

nm7

nm7

4

150

80

15

(3)

nm7

nm7

Retail Products

4

(1)

nm7

nm7

4

0

(20)

9

(5)

nm7

nm7

CCPL & other unsecured lending

6

-

nm7

nm7

5

20

20

12

(1)

nm7

nm7

Deposits

(2)

(1)

(100)

(100)

-

nm7

nm7

(3)

(3)

-

-

Other Retail Products

-

-

nm7

nm7

(1)

100

nm7

-

(1)

100

nm7

Other

6

1

nm7

nm7

-

nm7

nm7

6

2

200

200

Operating expenses

(87)

(60)

(45)

(49)

(74)

(18)

(19)

(233)

(178)

(31)

(34)

Operating loss before impairment losses and taxation

(77)

(60)

(28)

(34)

(70)

(10)

(14)

(218)

(181)

(20)

(24)

Credit impairment

(4)

(1)

nm7

nm7

-

nm7

nm7

(7)

(1)

nm7

nm7

Loss from associates and joint ventures

(4)

(1)

nm7

(200)

(4)

-

25

(11)

(3)

nm7

(175)

Underlying loss before taxation

(85)

(62)

(37)

(41)

(74)

(15)

(18)

(236)

(185)

(28)

(30)

Restructuring

-

-

nm7

nm7

(1)

100

100

(1)

-

nm7

nm7

Other items

-

20

(100)

(100)

-

nm7

nm7

-

20

(100)

(100)

Statutory loss before taxation

(85)

(42)

(102)

(110)

(75)

(13)

(16)

(237)

(165)

(44)

(47)

Total assets

1,574

774

103

105

1,371

15

15

1,574

774

103

105

Of which: loans and advances to customers4

480

42

nm7

nm7

342

40

40

480

42

nm7

nm7

Total liabilities

981

794

24

25

770

27

28

981

794

24

25

Of which: customer accounts4

886

721

23

24

689

29

29

886

721

23

24

Risk-weighted assets

1,158

608

90

nm7

1,043

11

nm7

1,158

608

90

nm7

Underlying return on risk-weighted assets (%)5

nm7

nm7

nm7

nm7

nm7

nm7

nm7

nm7

nm7

nm7

nm7

Underlying return on tangible equity (%)5

nm7

nm7

nm7

nm7

nm7

nm7

nm7

nm7

nm7

nm7

nm7

Cost to income ratio (%)6

nm7

nm7

nm7

nm7

nm7

nm7

nm7

nm7

nm7

nm7

nm7

1      Following the increased strategic importance and reporting of Ventures to management, this has been established as a separate operating segment in 2022. Prior period has been restated

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

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

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      Not meaningful

Performance highlights

•       Underlying loss before tax of $85 million was up $23 million, driven mainly by higher expenses as we continue to invest in new and existing Ventures

•       Loans and advances to customers increased almost 40 per cent since 30 June 2022, due to customer growth, higher utilisation and additional credit product being launched

•       Risk weighted assets of $1,158 million have increased $550 million mainly due to continued investment in new and existing Ventures and minority interests

 


 

Page 16

Supplementary financial information continued

 

Central & other items (segment)1


3Q'22
$million

3Q'21
$million

Change3
%

Constant currency change2,3
%

2Q'22
$million

Change3
%

Constant currency change2,3
%

YTD'22
$million

YTD'21
$million

Change3
%

Constant currency change2,3
%

Operating income

(37)

108

(134)

(118)

169

(122)

(111)

410

466

(12)

2

Treasury

(4)

149

(103)

(98)

205

(102)

(99)

518

543

(5)

-

Other

(33)

(41)

20

52

(36)

8

42

(108)

(77)

(40)

8

Operating expenses

(190)

(165)

(15)

(58)

(115)

(65)

(92)

(526)

(532)

1

(22)

Operating loss before impairment losses and taxation

(227)

(57)

nm7

nm7

54

nm7

nm7

(116)

(66)

(76)

nm7

Credit impairment

(54)

(9)

nm7

nm7

27

nm7

nm7

(43)

(5)

nm7

nm7

Other impairment

(1)

(5)

80

100

-

nm7

nm7

(2)

(5)

60

60

Profit from associates and joint ventures

20

47

(57)

(62)

94

(79)

(81)

180

183

(2)

(1)

Underlying profit/(loss) before taxation

(262)

(24)

nm7

nm7

175

nm7

nm7

19

107

(82)

(94)

Restructuring

(5)

(57)

91

93

(20)

75

79

(24)

(120)

80

81

Other items

-

-

nm7

nm7

-

nm7

nm7

-

-

nm7

nm7

Statutory loss before taxation

(267)

(81)

nm7

nm7

155

nm7

nm7

(5)

(13)

62

(182)

Total assets

279,178

287,449

(3)

3

272,084

3

5

279,178

287,449

(3)

3

Of which: loans and advances to customers4

35,388

31,272

13

23

29,418

20

26

35,388

31,272

13

23

Total liabilities

102,895

115,119

(11)

(9)

105,418

(2)

(1)

102,895

115,119

(11)

(9)

Of which: customer accounts4

6,517

16,477

(60)

(59)

9,058

(28)

(27)

6,517

16,477

(60)

(59)

Risk-weighted assets

50,433

52,449

(4)

nm7

47,344

7

nm7

50,433

52,449

(4)

nm7

Underlying return on risk-weighted assets (%)5

(2.0)

(0.2)

(180)bps

nm7

1.4

(340)bps

nm7

-

0.3

(30)bps

nm7

Underlying return on tangible equity (%)5

(15.6)

(5.6)

(1,000)bps

nm7

(0.3)

(1,530)bps

nm7

(5.2)

(3.7)

(150)bps

nm7

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

nm7

152.8

nm7

nm7

71.0

nm7

nm7

129.5

112.9

(16.6)

(24.4)

1      Following the increased strategic importance and reporting of Ventures to management, this has been established as a separate operating segment in 2022. Prior period has been restated

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

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

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      Not meaningful

Performance highlights

•       Underlying loss before tax of $262 million compared to 3Q'21 loss of $24 million primarily due to lower net interest income from hedges as rates rise, lower profit share from China Bohai Bank. Expenses increased 15 per cent while credit impairments were $45 million higher

•       Underlying operating income from Treasury was down to $4 million, $153 million worse than prior year primarily due to lower net interest income from hedges

•       Treasury risk-weighted assets down $6 billion since 31 December 2021, due to management actions, mostly portfolio optimisation and the purchase of credit insurance for higher risk weighted central bank cash balances

 

 

 

 

Page 17

Supplementary financial information continued

 

Underlying performance by region


3Q'22

Asia
$million

 Africa &
Middle East
$million

Europe &
Americas
$million

Central &
other items
$million

Total
$million

Operating income

2,984

652

632

50

4,318

Operating expenses

(1,715)

(423)

(374)

(147)

(2,659)

Operating profit/(loss) before impairment losses and taxation

1,269

229

258

(97)

1,659

Credit impairment

(193)

(68)

34

-

(227)

Other impairment

(33)

2

1

(2)

(32)

Profit from associates and joint ventures

20

-

-

(4)

16

Underlying profit/(loss) before taxation

1,063

163

293

(103)

1,416

Restructuring

(18)

(1)

(2)

(4)

(25)

Other items

-

-

-

-

-

Statutory profit/(loss) before taxation

1,045

162

291

(107)

1,391

Total assets

497,193

54,724

303,617

8,901

864,435

Of which: loans and advances to customers1

258,911

24,705

69,995

-

353,611

loans and advances to customers

242,700

23,644

32,046

-

298,390

loans held at fair value through profit or loss

16,211

1,061

37,949

-

55,221

Total liabilities

452,959

41,116

249,771

70,586

814,432

Of which: customer accounts1

334,954

31,697

145,315

-

511,966

Risk-weighted assets

156,553

42,746

50,779

2,215

252,293

Underlying return on risk-weighted assets (%)2

2.7

1.5

2.3

nm4

2.2

Underlying return on tangible equity (%)2

14.2

7.8

12.1

nm4

10.1

Cost to income ratio (%)3

57.5

64.9

59.2

nm4

61.6

 


3Q'21

Asia
$million

 Africa &
 Middle East
$million

Europe &
Americas
$million

Central &
other items
$million

Total
$million

Operating income

2,629

657

514

(35)

3,765

Operating expenses

(1,661)

(401)

(350)

(182)

(2,594)

Operating profit/(loss) before impairment losses and taxation

968

256

164

(217)

1,171

Credit impairment

(84)

(33)

11

(1)

(107)

Other impairment

(2)

(1)

(14)

(18)

(35)

Profit from associates and joint ventures

45

-

-

1

46

Underlying profit/(loss) before taxation

927

222

161

(235)

1,075

Restructuring

(36)

(7)

(27)

(29)

(99)

Other items

-

-

-

20

20

Statutory profit/(loss) before taxation

891

215

134

(244)

996

Total assets

475,407

56,609

275,427

9,659

817,102

Of which: loans and advances to customers1

263,296

28,415

72,057

-

363,768

loans and advances to customers

246,226

25,914

30,353

-

302,493

loans held at fair value through profit or loss

17,070

2,501

41,704

-

61,275

Total liabilities

428,911

40,276

228,363

66,217

763,767

Of which: customer accounts1

343,425

33,307

136,260

-

512,992

Risk-weighted assets

172,205

49,040

48,476

(2,166)

267,555

Underlying return on risk-weighted assets (%)2

2.1

1.7

1.3

nm4

1.6

Underlying return on tangible equity (%)2

11.1

9.1

6.7

nm4

6.3

Cost to income ratio (%)3

63.2

61.0

68.1

nm4

68.9

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      Not meaningful

 

 

Page 18

Supplementary financial information continued

 

Asia1


3Q'22
$million

3Q'21
$million

Change2
%

Constant currency change 1, 2
%

2Q'22
$million

Change2
%

Constant currency change 1, 2
%

YTD'22
$million

YTD'21
$million

Change²
%

Constant currency change ¹
%

Operating income

2,984

2,629

14

19

2,725

10

12

8,506

8,092

5

9

Operating expenses

(1,715)

(1,661)

(3)

(9)

(1,746)

2

(1)

(5,132)

(4,959)

(3)

(7)

Operating profit before impairment losses and taxation

1,269

968

31

38

979

30

33

3,374

3,133

8

11

Credit impairment

(193)

(84)

(130)

(168)

(113)

(71)

(57)

(591)

(131)

nm6

nm6

Other impairment

(33)

(2)

nm6

nm6

(2)

nm6

nm6

(35)

(17)

(106)

(94)

Profit from associates and joint ventures

20

45

(56)

(59)

91

(78)

(79)

177

181

(2)

(2)

Underlying profit before taxation

1,063

927

15

19

955

11

15

2,925

3,166

(8)

(5)

Restructuring

(18)

(36)

50

45

(10)

(80)

(64)

(37)

(63)

41

39

Other items

-

-

nm6

nm6

-

nm6

nm6

-

-

nm6

nm6

Statutory profit before taxation

1,045

891

17

21

945

11

15

2,888

3,103

(7)

(4)

Total assets

497,193

475,407

5

12

477,485

4

7

497,193

475,407

5

12

Of which: loans and advances to customers3

258,911

263,296

(2)

6

259,484

-

3

258,911

263,296

(2)

6

Total liabilities

452,959

428,911

6

12

431,424

5

8

452,959

428,911

6

12

Of which: customer accounts3

334,954

343,425

(2)

3

332,705

1

3

334,954

343,425

(2)

3

Risk-weighted assets

156,553

172,205

(9)

nm6

160,345

(2)

nm6

156,553

172,205

(9)

nm6

Underlying return on risk-weighted assets (%)4

2.7

2.1

60bps

nm6

2.3

40bps

nm6

2.4

2.4

-

nm6

Underlying return on tangible equity (%)4

14.2

11.1

310bps

nm6

12.3

190bps

nm6

12.6

12.6

-

nm6

Cost to income ratio (%)5

57.5

63.2

5.7

5.7

64.1

6.6

6.6

60.3

61.3

1.0

1.0

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      Not meaningful

Performance highlights

•       Underlying profit before tax of $1,063 million was up 15 per cent, primarily from higher income partly offset by higher credit impairment from charges on China Commercial Real Estate exposures and the sovereign ratings downgrade of Sri Lanka

•       Underlying operating income of $2,984 million was up 14 per cent (up 19 per cent on a constant currency), mainly driven by a strong Financial Markets momentum and Cash Management and Retail Deposits, both benefiting from the hike in interest rates. This was partially offset by lower Lending and Wealth Management income as market conditions reduced transaction volumes, as well as the impact of COVID-19 restrictions impacting in our key markets, Hong Kong and China

•       Loans and advances to customers and customer accounts were down 2 per cent (up 6 per cent on a constant currency) since 31 December 2021

•       Risk-weighted assets were down $14 billion since 31 December 2021 as we continue to focus on RWA optimisation

•       RoTE increased from 11.1 per cent to 14.2 per cent

 

 


 

 

Page 19

Supplementary financial information continued

 

Africa & Middle East


3Q'22
$million

3Q'21
$million

Change2
%

Constant currency change 1, 2
%

2Q'22
$million

Change2
%

Constant currency change 1, 2
%

YTD'22
$million

YTD'21
$million

Change²
%

Constant currency change ¹
%

Operating income

652

657

(1)

8

632

3

10

1,943

1,907

2

7

Operating expenses

(423)

(401)

(5)

(10)

(405)

(4)

(9)

(1,231)

(1,216)

(1)

(5)

Operating profit before impairment losses and taxation

229

256

(11)

5

227

1

12

712

691

3

11

Credit impairment

(68)

(33)

(106)

(127)

53

nm6

nm6

31

7

nm6

182

Other impairment

2

(1)

nm6

nm6

(1)

nm6

nm6

1

(1)

200

200

Underlying profit before taxation

163

222

(27)

(11)

279

(42)

(34)

744

697

7

14

Restructuring

(1)

(7)

86

100

(8)

88

100

(8)

(10)

20

20

Statutory profit before taxation

162

215

(25)

(7)

271

(40)

(31)

736

687

7

15

Total assets

54,724

56,609

(3)

4

57,859

(5)

(2)

54,724

56,609

(3)

4

Of which: loans and advances to customers3

24,705

28,415

(13)

(8)

28,003

(12)

(9)

24,705

28,415

(13)

(8)

Total liabilities

41,116

40,276

2

9

42,672

(4)

(1)

41,116

40,276

2

9

Of which: customer accounts3

31,697

33,307

(5)

2

33,480

(5)

(3)

31,697

33,307

(5)

2

Risk-weighted assets

42,746

49,040

(13)

nm6

43,613

(2)

nm6

42,746

49,040

(13)

nm6

Underlying return on risk-weighted assets (%)4

1.5

1.7

(20)bps

nm6

2.5

(100)bps

nm6

2.2

1.8

40bps

nm6

Underlying return on tangible equity (%)4

7.8

9.1

(130)bps

nm6

13.0

(520)bps

nm6

11.4

9.5

190bps

nm6

Cost to income ratio (%)5

64.9

61.0

(3.9)

(1.1)

64.1

(0.8)

0.5

63.4

63.8

0.4

1.1

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      Not meaningful

Performance highlights

•       Underlying profit before tax of $162 million was 25 per cent lower (7 per cent lower on constant currency basis), primarily due to higher provisions related to country downgrades

•       Underlying operating income of $652 million was 1 per cent lower (up 8 per cent on a constant currency basis); Broad-based growth across products, led by Transaction Banking, offset by grow-over impact of a IFRS9 accounting adjustment last year and impact of currency devaluation

•       Loans and advances to customers were down 10 per cent (6 per cent down on constant currency basis) and customer accounts were down 9 per cent (3 per cent down on constant currency basis) since 31 December 2021

•       Risk-weighted assets were down $6 billion since 31 December 2021

•       RoTE decreased from 9.1 per cent to 7.8 per cent; Q3 YTD RoTE at 11.4%

 

 

 

Page 20

 

Supplementary financial information continued

 

Europe & Americas


3Q'22
$million

3Q'21
$million

Change2
%

Constant currency change 1, 2
%

2Q'22
$million

Change2
%

Constant currency change 1, 2
%

YTD'22
$million

YTD'21
$million

Change²
%

Constant currency change ¹
%

Operating income

632

514

23

27

588

7

9

2,077

1,507

38

41

Operating expenses

(374)

(350)

(7)

(10)

(390)

4

3

(1,145)

(1,075)

(7)

(10)

Operating profit before impairment losses and taxation

258

164

57

65

198

30

31

932

432

116

118

Credit impairment

34

11

nm6

nm6

(7)

nm6

nm6

63

73

(14)

(13)

Other impairment

1

(14)

107

108

1

-

-

2

(7)

129

143

Underlying profit before taxation

293

161

82

92

192

53

54

997

498

100

103

Restructuring

(2)

(27)

93

93

(9)

78

75

(8)

(47)

83

83

Statutory profit before taxation

291

134

117

133

183

59

59

989

451

119

123

Total assets

303,617

275,427

10

11

291,264

4

5

303,617

275,427

10

11

Of which: loans and advances to customers3

69,995

72,057

(3)

(1)

66,987

4

5

69,995

72,057

(3)

(1)

Total liabilities

249,771

228,363

9

11

243,877

2

3

249,771

228,363

9

11

Of which: customer accounts3

145,315

136,260

7

8

140,826

3

4

145,315

136,260

7

8

Risk-weighted assets

50,779

48,476

5

nm6

50,038

1

nm6

50,779

48,476

5

nm6

Underlying return on risk-weighted assets (%)4

2.3

1.3

100bps

nm6

1.5

80bps

nm6

2.6

1.4

120bps

nm6

Underlying return on tangible equity (%)4

12.1

6.7

540bps

nm6

8.0

410bps

nm6

13.7

7.0

670bps

nm6

Cost to income ratio (%)5

59.2

68.1

8.9

9.2

66.3

7.1

6.9

55.1

71.3

16.2

15.8

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 profit before tax of $293 million was 82 per cent higher, driven by increased income slightly offset by higher expenses

•       Underlying operating income of $632 million was up 23 per cent with growth driven by Financial Markets

•       RoTE double digit at 12.1 per cent from 6.7 per cent

 

 


Page 21

Supplementary financial information continued

 

Central & other items (region)


3Q'22
$million

3Q'21
$million

Change²
%

Constant currency change 1, 2
%

2Q'22
$million

Change²
%

Constant currency change 1, 2
%

YTD'22
$million

YTD'21
$million

Change²
%

Constant currency change 1, 2
%

Operating income

50

(35)

nm5

nm5

(19)

nm5

nm5

(8)

(123)

93

94

Operating expenses

(147)

(182)

19

(11)

(90)

(63)

(99)

(418)

(436)

4

(21)

Operating loss before impairment losses and taxation

(97)

(217)

55

35

(109)

11

(16)

(426)

(559)

24

12

Credit impairment

-

(1)

100

nm5

-

nm5

nm5

3

(9)

133

138

Other impairment

(2)

(18)

89

94

1

nm5

(200)

(2)

(35)

94

91

Profit from associates and joint ventures

(4)

1

nm5

nm5

(1)

nm5

nm5

(8)

(1)

nm5

nm5

Underlying loss before taxation

(103)

(235)

56

38

(109)

6

(21)

(433)

(604)

28

18

Restructuring

(4)

(29)

86

87

(10)

60

56

(17)

(102)

83

85

Other items

-

20

(100)

(100)

-

nm5

nm5

-

20

(100)

(100)

Statutory loss before taxation

(107)

(244)

56

39

(119)

10

(15)

(450)

(686)

34

26

Total assets

8,901

9,659

(8)

(7)

9,309

(4)

(4)

8,901

9,659

(8)

(7)

Total liabilities

70,586

66,217

7

7

68,252

3

3

70,586

66,217

7

7

Risk-weighted assets

2,215

(2,166)

nm5

nm5

1,086

104

104

2,215

(2,166)

nm5

nm5

Underlying return on risk-weighted assets (%)3

nm5

nm5

nm5

-

nm5

nm5

-

nm5

nm5

nm5

-

Underlying return on tangible equity (%)3

nm5

nm5

nm5

nm5

nm5

nm5

nm5

nm5

nm5

nm5

nm5

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

nm5

nm5

nm5

nm5

nm5

nm5

nm5

nm5

nm5

nm5

-

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      Not meaningful

Performance highlights

•       Underlying loss before tax of $103 million, 56 per cent better than prior year primarily from higher returns paid to Treasury on the equity provided to the regions in a higher interest rate environment

 

 


 

Page 22

Supplementary financial information continued

 

Underlying performance by key market


3Q'22

Hong Kong
$million

Korea
$million

China
$million

Taiwan
$million

Singapore
$million

India
$million

Indonesia
$million

UAE
$million

UK
$million

US
$million

Operating income

1,020

292

315

120

545

296

48

158

273

266

Operating expenses

(514)

(179)

(213)

(82)

(263)

(188)

(41)

(90)

(176)

(146)

Operating profit before impairment losses and taxation

506

113

102

38

282

108

7

68

97

120

Credit impairment

(145)

(18)

(53)

(2)

65

(11)

3

25

10

12

Other impairment

(37)

-

(1)

-

(2)

(2)

-

(1)

11

(2)

Profit from associates and joint ventures

-

-

19

-

-

-

-

-

-

-

Underlying profit before taxation

324

95

67

36

345

95

10

92

118

130

Total assets employed

177,682

65,950

40,772

24,660

98,714

31,817

5,868

20,160

220,271

68,973

Of which: loans and advances to customers1

86,348

39,854

15,211

10,938

60,136

15,029

2,185

8,186

46,182

19,962

Total liabilities employed

167,509

56,038

36,599

23,529

109,115

23,998

4,702

16,035

162,730

72,122

Of which: customer accounts1

132,780

39,297

26,339

19,507

77,179

14,577

3,219

12,569

105,413

31,136

Underlying return on tangible equity (%)

15.0

12.7

6.9

16.1

29.4

9.8

6.1

17.7

7.9

16.6

Cost to income ratio (%)

50.4

61.3

67.6

68.3

48.3

63.5

85.4

57.0

64.5

54.9

 


2Q'22

Hong Kong
$million

Korea
$million

China
$million

Taiwan
$million

Singapore
$million

India
$million

Indonesia
$million

UAE
$million

UK
$million

US
$million

Operating income

883

285

306

110

419

325

48

139

253

263

Operating expenses

(510)

(189)

(215)

(84)

(274)

(191)

(44)

(87)

(188)

(147)

Operating profit before impairment losses and taxation

373

96

91

26

145

134

4

52

65

116

Credit impairment

(98)

(8)

(51)

1

10

(5)

(1)

46

8

8

Other impairment

(1)

-

(1)

-

-

(1)

-

-

13

-

Profit from associates and joint ventures

-

-

91

-

-

-

-

-

-

-

Underlying profit before taxation

274

88

130

27

155

128

3

98

86

124

Total assets employed

170,036

65,985

38,548

22,780

95,651

30,613

5,492

20,929

213,255

61,700

Of which: loans and advances to customers1

84,187

43,499

16,688

11,227

58,445

16,624

1,938

9,351

43,445

19,179

Total liabilities employed

161,158

56,681

33,636

21,889

99,231

22,862

4,346

16,472

150,249

77,142

Of which: customer accounts1

133,000

43,900

24,159

18,915

71,765

14,621

2,815

12,330

95,933

35,475

Underlying return on tangible equity (%)

12.7

11.6

12.4

11.6

13.2

12.6

2.1

17.4

5.6

16.9

Cost to income ratio (%)

57.8

66.3

70.3

76.4

65.4

58.8

91.7

62.6

74.3

55.9

 

 



 

Page 23

Supplementary financial information continued

 


3Q'21

Hong Kong
$million

Korea
$million

China
$million

Taiwan
$million

Singapore
$million

India
$million

Indonesia
$million

UAE
$million

UK
$million

US
$million

Operating income

846

270

271

126

435

392

51

144

190

214

Operating expenses

(507)

(173)

(184)

(91)

(264)

(186)

(44)

(90)

(163)

(126)

Operating profit before impairment losses and taxation

339

97

87

35

171

206

7

54

27

88

Credit impairment

(4)

(15)

(4)

(2)

21

(20)

(1)

1

11

3

Other impairment

-

-

-

-

(1)

-

-

-

22

-

Profit from associates and joint ventures

-

-

46

-

-

-

-

-

(1)

-

Underlying profit before taxation

335

82

129

33

191

186

6

55

59

91

Total assets employed

177,271

65,976

36,182

23,634

92,456

29,200

4,947

18,896

185,498

75,029

Of which: loans and advances to customers1

88,452

45,993

17,698

11,673

57,575

16,234

2,038

9,373

49,901

17,478

Total liabilities employed

167,434

57,062

33,501

21,258

90,726

21,144

3,794

14,462

138,547

76,600

Of which: customer accounts1

138,644

44,687

25,566

19,918

69,508

15,597

2,583

11,542

84,562

43,502

Underlying return on tangible equity (%)

15.1

9.3

12.2

12.9

14.4

15.0

3.7

9.4

3.8

12.8

Cost to income ratio (%)

59.9

64.1

67.9

72.2

60.7

47.4

86.3

62.5

85.8

58.9

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

Quarterly underlying operating income by product


3Q'22
$million

2Q'22
$million

1Q'22
$million

4Q'21
$million

3Q'21
$million

2Q'21
$million

1Q'21
$million

4Q'20
$million

Transaction Banking

1,082

835

740

730

734

709

713

707

Trade & Working capital 1, 2

344

343

362

348

389

363

347

304

Cash Management

738

492

378

382

345

346

366

403

Financial Markets

1,540

1,373

1,723

1,012

1,311

1,268

1,308

949

Macro Trading

734

664

940

433

540

571

672

435

Credit Markets2

440

374

460

361

516

484

429

404

Credit Trading

156

87

110

60

144

102

131

119

Financing Solutions & Issuance2

284

287

350

301

372

382

298

285

Structured Finance

116

102

94

104

159

128

100

102

Financing & Securities Services2

195

198

144

97

97

86

107

77

DVA

55

35

85

17

(1)

(1)

-

(69)

Lending & Portfolio Management1,2

166

136

146

184

214

188

173

168

Wealth Management

455

458

530

466

559

554

646

442

Retail Products

1,109

955

849

835

828

846

849

848

CCPL & other unsecured lending

301

313

305

316

316

320

320

303

Deposits

625

363

248

213

205

209

233

271

Mortgage & Auto

141

235

247

261

260

268

247

234

Other Retail Products

42

44

49

45

47

49

49

40

Treasury

(4)

205

317

155

149

137

257

92

Other2

(30)

(36)

(31)

(52)

(30)

(13)

(17)

(7)

Total underlying operating income

4,318

3,926

4,274

3,330

3,765

3,689

3,929

3,199

1      Following a reorganisation, there has been a reclassification of balances from Lending & Portfolio Management into Trade & Working capital including prior period numbers. Prior periods have been re-presented and there is no change in the total income

2      Income related to Group Special Asset Management, the Group's specialist recovery unit previously reported in Other products has been allocated to the relevant products. Prior periods have been re-presented and there is no change in total income.

 

 



 

Page 24

Supplementary financial information continued

 

Earnings per ordinary share


3Q'22
$million

3Q'21
$million

Change
%

2Q'22
$million

Change
%

YTD'22
$million

YTD'21
$million

Change
%

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

1,078

767

41

909

19

3,166

2,695

17

Non-controlling interest

9

(4)

nm¹

4

125

10

(18)

nm¹

Dividend payable on preference shares and AT1 classified as equity

(123)

(119)

(3)

(94)

(31)

(339)

(315)

(8)

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

964

644

50

819

18

2,837

2,362

20










Items normalised:









Restructuring

25

99

(75)

37

(32)

70

222

(68)

Net (gains) / losses on sale of Businesses

-

(20)

nm¹

-

nm¹

-

(20)

nm¹

Tax on normalised items

(13)

(7)

(86)

(5)

(160)

(21)

(22)

5

Underlying profit/(loss)

976

716

36

851

15

2,886

2,542

14










Basic - Weighted average number of shares (millions)

2,949

3,105

nm¹

3,014

nm¹

2,992

3,124

nm¹

Diluted - Weighted average number of shares (millions)

3,011

3,152

nm¹

3,069

nm¹

3,050

3,174

nm¹

Basic earnings per ordinary share (cents)²

32.7

20.7

12

27.2

5.5

94.8

75.6

19.2

Diluted earnings per ordinary share (cents)²

32.0

20.4

11.6

26.7

5.3

93.0

74.4

18.6

Underlying basic earnings per ordinary share (cents)²

33.1

23.1

10

28.2

4.9

96.5

81.4

15.1

Underlying diluted earnings per ordinary share (cents)²

32.4

22.7

9.7

27.7

4.7

94.6

80.1

14.5

1      Not meaningful

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

 




 

Page 25

Supplementary financial information continued

 

Return on Tangible Equity


3Q'22
$million

3Q'211
$million

Change
%

2Q'22
$million

Change
%

YTD'22
$million

YTD'211
$million

Change
%

Average parent company Shareholders' Equity

43,592

46,709

(7)

44,617

(2)

44,600

46,399

(4)

Less Preference share premium

(1,494)

(1,494)

-

(1,494)

-

(1,494)

(1,494)

-

Less Average intangible assets

(5,529)

(5,267)

(5)

(5,519)

-

(5,511)

(5,155)

(7)

Average Ordinary Shareholders' Tangible Equity

36,569

39,948

(8)

37,604

(3)

37,595

39,750

(5)










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

1,078

767

41

909

19

3,166

2,695

17

Non-controlling interests

9

(4)

nm²

4

125

10

(18)

nm²

Dividend payable on preference shares and AT1 classified as equity

(123)

(119)

(3)

(94)

(31)

(339)

(315)

(8)

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

964

644

50

819

18

2,837

2,362

20










Items normalised:









Restructuring

25

99

(75)

37

(32)

70

222

(68)

Net gain on sale of businesses

-

(20)

nm²

-

nm²

-

(20)

nm²

Ventures FVOCI unrealised gains/(losses) net of tax

(49)

(78)

37

(15)

nm²

(57)

38

nm²

Tax on normalised items

(13)

(7)

(86)

(5)

(160)

(21)

(22)

5

Underlying profit for the period attributable to ordinary shareholders3

927

638

45

836

11

2,829

2,580

10










Underlying Return on Tangible Equity

10.1%

6.3%

380bps

8.9%

120bps

10.1%

8.7%

140bps

Statutory Return on Tangible Equity

10.5%

6.4%

410bps

8.7%

180bps

10.1%

7.9%

220bps

1      Comparatives have been restated to include unrealised gains/(losses) from Ventures FVOCI

2      Not meaningful

3      Includes unrealised gains/(losses) from Ventures FVOCI

Net Tangible Asset Value per Share


30.09.22
$million

30.09.21
$million

Change
%

30.06.22
$million

Change
%

31.12.21
$million

Change
%

Parent company shareholders' equity

43,127

46,666

(8)

44,055

(2)

46,011

(6)

Less Preference share premium

(1,494)

(1,494)

-

(1,494)

-

(1,494)

-

Less Intangible assets

(5,520)

(5,347)

(3)

(5,537)

-

(5,471)

(1)

Net shareholders tangible equity

36,113

39,825

(9)

37,024

(2)

39,046

(8)

Ordinary shares in issue, excluding own shares (millions)

2,905

3,078

(6)

2,967

(2)

3,057

(5)

Net Tangible Asset Value per share (cents)1

1,243

1,294

(51)

1,248

(5)

1,277

(34)

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

 



 

Page 26

Underlying versus statutory results reconciliations

 

 

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

Operating income by client segment


3Q'22

Corporate, Commercial & Institutional Banking
$million

Consumer,
Private &
Business
Banking
$million

Ventures
$million

Central &
other items
$million

Total
$million

Underlying operating income

2,745

1,600

10

(37)

4,318

Restructuring

10

-

-

1

11

Other items

-

-

-

-

-

Statutory operating income

2,755

1,600

10

(36)

4,329

 


3Q'21 (Restated)¹

Corporate, Commercial & Institutional Banking¹
$million

Consumer,
Private &
Business
Banking¹
$million

Ventures¹
$million

Central &
other items¹
$million

Total
$million

Underlying operating income

2,226

1,431

-

108

3,765

Restructuring

(12)

-

-

(9)

(21)

Other items

-

-

20

-

20

Statutory operating income

2,214

1,431

20

99

3,764

1      Following the increased strategic importance and reporting of Ventures to management, this has been established as a separate operating segment in 2022 Prior periods have been restated

Operating income by region


3Q'22

Asia
$million

 Africa &
Middle East
$million

Europe &
Americas
$million

Central &
other items
$million

Total
$million

Underlying operating income

2,984

652

632

50

4,318

Restructuring

5

-

-

6

11

Other items

-

-

-

-

-

Statutory operating income

2,989

652

632

56

4,329

 


3Q'21

Asia
$million

 Africa &
Middle East
$million

Europe &
Americas
$million

Central &
other items
$million

Total
$million

Underlying operating income

2,629

657

514

(35)

3,765

Restructuring

-

-

-

(21)

(21)

Other items

-

-

-

20

20

Statutory operating income

2,629

657

514

(36)

3,764

 



 

Page 27

Underlying versus statutory results reconciliations continued

 

Profit before taxation (PBT)


3Q'22

Underlying
$million

Restructuring
$million

Net gain on businesses disposed/
held for sale
$million

Statutory
$million

Operating income

4,318

11

-

4,329

Operating expenses

(2,659)

(37)

-

(2,696)

Operating profit/(loss) before impairment losses and taxation

1,659

(26)

-

1,633

Credit impairment

(227)

-

-

(227)

Other impairment

(32)

1

-

(31)

Profit from associates and joint ventures

16

-

-

16

Profit/(loss) before taxation

1,416

(25)

-

1,391

 


3Q'21

Underlying
$million

Restructuring
$million

Net gain on businesses disposed/
held for sale
$million

Statutory
$million

Operating income

3,765

(21)

20

3,764

Operating expenses

(2,594)

(53)

-

(2,647)

Operating profit/(loss) before impairment losses and taxation

1,171

(74)

20

1,117

Credit impairment

(107)

(1)

-

(108)

Other impairment

(35)

(24)

-

(59)

Profit from associates and joint ventures

46

-

-

46

Profit/(loss) before taxation

1,075

(99)

20

996

Profit before taxation (PBT) by client segment


3Q'22

Corporate, Commercial & Institutional Banking
$million

Consumer,
Private &
Business
Banking
$million

Ventures
$million

Central &
other items
$million

Total
$million

Operating income

2,745

1,600

10

(37)

4,318

External

2,405

1,287

10

616

4,318

Inter-segment

340

313

-

(653)

-

Operating expenses

(1,347)

(1,035)

(87)

(190)

(2,659)

Operating profit/(loss) before impairment losses and taxation

1,398

565

(77)

(227)

1,659

Credit impairment

(82)

(87)

(4)

(54)

(227)

Other impairment

(31)

-

-

(1)

(32)

Profit from associates and joint ventures

-

-

(4)

20

16

Underlying profit/(loss) before taxation

1,285

478

(85)

(262)

1,416

Restructuring

2

(22)

-

(5)

(25)

Other items

-

-

-

-

-

Statutory profit/(loss) before taxation

1,287

456

(85)

(267)

1,391

 

 

 

 

Page 28



 

Underlying versus statutory results reconciliations continued

 


3Q'21 (Restated)¹

Corporate, Commercial & Institutional Banking1
$million

Consumer,
Private &
Business
Banking1
$million

Ventures1
$million

Central &
other items1
$million

Total
$million

Operating income

2,226

1,431

-

108

3,765

External

2,115

1,349

-

301

3,765

Inter-segment

111

82

-

(193)

-

Operating expenses

(1,304)

(1,065)

(60)

(165)

(2,594)

Operating profit/(loss) before impairment losses and taxation

922

366

(60)

(57)

1,171

Credit impairment

(24)

(73)

(1)

(9)

(107)

Other impairment

(30)

-

-

(5)

(35)

Profit from associates and joint ventures

-

-

(1)

47

46

Underlying profit/(loss) before taxation

868

293

(62)

(24)

1,075

Restructuring

(32)

(10)

-

(57)

(99)

Other items

-

-

20

-

20

Statutory profit/(loss) before taxation

836

283

(42)

(81)

996

1   Following the increased strategic importance and reporting of Ventures to management, this has been established as a separate operating segment in 2022. Prior periods have been restated

Profit before taxation (PBT) by region


3Q'22

Asia
$million

 Africa &
Middle East
$million

Europe &
Americas
$million

Central &
other items
$million

Total
$million

Operating income

2,984

652

632

50

4,318

Operating expenses

(1,715)

(423)

(374)

(147)

(2,659)

Operating profit/(loss) before impairment losses and taxation

1,269

229

258

(97)

1,659

Credit impairment

(193)

(68)

34

-

(227)

Other impairment

(33)

2

1

(2)

(32)

Profit from associates and joint ventures

20

-

-

(4)

16

Underlying profit/(loss) before taxation

1,063

163

293

(103)

1,416

Restructuring

(18)

(1)

(2)

(4)

(25)

Other items

-

-

-

-

-

Statutory profit/(loss) before taxation

1,045

162

291

(107)

1,391

 


3Q'21

Asia
$million

 Africa &
Middle East
$million

Europe &
Americas
$million

Central &
other items
$million

Total
$million

Operating income

2,629

657

514

(35)

3,765

Operating expenses

(1,661)

(401)

(350)

(182)

(2,594)

Operating profit/(loss) before impairment losses and taxation

968

256

164

(217)

1,171

Credit impairment

(84)

(33)

11

(1)

(107)

Other impairment

(2)

(1)

(14)

(18)

(35)

Profit from associates and joint ventures

45

-

-

1

46

Underlying profit/(loss) before taxation

927

222

161

(235)

1,075

Restructuring

(36)

(7)

(27)

(29)

(99)

Other items

-

-

-

20

20

Statutory profit/(loss) before taxation

891

215

134

(244)

996

 

 

 

Page 29

Underlying versus statutory results reconciliations continued

 

Return on tangible equity (RoTE)


3Q'22

Corporate, Commercial & Institutional Banking
%

Consumer,
Private &
Business
Banking
%

Ventures
%

Central &
Other Items
%

Total
%

Underlying RoTE

17.5

19.2

nm

(15.6)

10.1

Restructuring






Of which: Income

0.2

-

-

0.1

0.1

Of which: Expenses

(0.2)

(1.2)

-

(0.2)

(0.4)

Of which: Credit impairment

-

-

-

-

-

Of which: Other impairment

-

-

-

(0.1)

-

Of which: Profit from associates and joint ventures

-

-

-

0.01

-

Ventures FVOCI Unrealised gains/(losses) net of taxes

-

-

nm

-

0.5

Tax on normalised items

0.1

0.3

-

0.5

0.2

Statutory RoTE

17.6

18.3

nm

(15.2)

10.5

 


3Q'21 (Restated)¹

Corporate, Commercial & Institutional Banking1
%

Consumer,
Private &
Business
Banking1
%

Ventures1
%

Central &
Other Items
%

Total
%

Underlying RoTE

10.6

11.2

nm

(5.6)

6.3

Restructuring






Of which: Income

(0.2)

-

-

(0.5)

(0.2)

Of which: Expenses

(0.4)

(0.5)

-

(1.1)

(0.5)

Of which: Credit impairment

-

-

-

-

-

Of which: Other impairment

-

-

-

(1.4)

(0.2)

Of which: Profit from associates and joint ventures

-

-

-

-

-

Ventures FVOCI Unrealised gains/(losses) net of taxes

-

-

nm

-

0.8

Tax on normalised items

0.2

0.2

nm

-

-

Statutory RoTE

10.2

10.7

nm

(8.5)

6.4

1   Following the increased strategic importance and reporting of Ventures to management, this has been established as a separate operating segment in 2022. Prior periods have been restated

Earnings per ordinary share (EPS)


3Q'22

Underlying
$ million

Restructuring
$ million

Net gain on sale
of business
$ million

Tax on
normalised items
$ million

Statutory
$ million

Profit for the year attributable to ordinary shareholders

976

(25)

-

13

964

Basic - Weighted average number of shares (millions)

2,949

-

-

-

2,949

Basic earnings per ordinary share (cents)

33.1

-

-

-

32.7

 


3Q'21

Underlying
$ million

Restructuring
$ million

Net gain on sale
of business
$ million

Tax on
normalised items
$ million

Statutory
$ million

Profit for the year attributable to ordinary shareholders

716

(99)

20

7

644

Basic - Weighted average number of shares (millions)

3,105

-

-

-

3,105

Basic earnings per ordinary share (cents)

23.1

-

-

-

20.7

 

 

  

 

Page 30

Risk review

 

Credit quality by client segment

Amortised cost

30.09.22


Customers



Banks
$million

Corporate, Commercial & Institutional Banking
$million

Consumer, Private & Business Banking
$million

Ventures
$million

Central & other items
$million

Customer Total
$million

Undrawn commitments
$million

Financial Guarantees
$million

Stage 1

42,846

127,006

124,804

476

32,591

284,877

159,356

51,280

- Strong

30,815

88,408

120,676

473

32,591

242,148

141,763

36,981

- Satisfactory

12,031

38,598

4,128

3

-

42,729

17,593

14,299

Stage 2

431

9,478

1,972

10

-

11,460

4,359

2,718

- Strong

204

1,339

1,386

6

-

2,731

1,340

315

- Satisfactory

193

7,033

272

2

-

7,307

2,479

1,989

- Higher risk

34

1,106

314

2

-

1,422

540

414

Of which (stage 2):









- Less than 30 days past due

-

468

272

2

-

742

-

-

- More than 30 days past due

6

56

314

2

-

372

-

-

Stage 3, credit-impaired financial assets

60

5,565

1,396

1

239

7,201

-

585

Gross balance¹

43,337

142,049

128,172

487

32,830

303,538

163,715

54,583

Stage 1

(6)

(145)

(348)

(4)

-

(497)

(44)

(20)

- Strong

(4)

(50)

(285)

(4)

-

(339)

(23)

(13)

- Satisfactory

(2)

(95)

(63)

-

-

(158)

(21)

(7)

Stage 2

(2)

(294)

(139)

(1)

-

(434)

(46)

(18)

- Strong

-

(11)

(52)

(1)

-

(64)

(4)

-

- Satisfactory

(2)

(167)

(51)

-

-

(218)

(24)

(8)

- Higher risk

-

(116)

(36)

-

-

(152)

(18)

(10)

Of which (stage 2):









- Less than 30 days past due

-

(5)

(38)

-

-

(43)

-

-

- More than 30 days past due

-

-

(36)

-

-

(36)

-

-

Stage 3, credit-impaired financial assets

(14)

(3,455)

(744)

(1)

(17)

(4,217)

-

(137)

Total credit impairment

(22)

(3,894)

(1,231)

(6)

(17)

(5,148)

(90)

(175)

Net carrying value

43,315

138,155

126,941

481

32,813

298,390



Stage 1

0.0%

0.1%

0.3%

0.8%

0.0%

0.2%

0.0%

0.0%

- Strong

0.0%

0.1%

0.2%

0.8%

0.0%

0.1%

0.0%

0.0%

- Satisfactory

0.0%

0.2%

1.5%

0.0%

0.0%

0.4%

0.1%

0.0%

Stage 2

0.5%

3.1%

7.0%

10.0%

0.0%

3.8%

1.1%

0.7%

- Strong

0.0%

0.8%

3.8%

16.7%

0.0%

2.3%

0.3%

0.0%

- Satisfactory

1.0%

2.4%

18.8%

0.0%

0.0%

3.0%

1.0%

0.4%

- Higher risk

0.0%

10.5%

11.5%

0.0%

0.0%

10.7%

3.3%

2.4%

Of which (stage 2):









- Less than 30 days past due

0.0%

1.1%

14.0%

0.0%

0.0%

5.8%

0.0%

0.0%

- More than 30 days past due

0.0%

0.0%

11.5%

0.0%

0.0%

9.7%

0.0%

0.0%

Stage 3, credit-impaired financial assets (S3)

23.3%

62.1%

53.3%

100.0%

7.1%

58.6%

0.0%

23.4%

Cover ratio

0.1%

2.7%

1.0%

1.2%

0.1%

1.7%

0.1%

0.3%










Fair value through profit or loss









Performing

25,049

52,713

34

-

2,422

55,169

-

-

- Strong

21,529

43,265

34

-

2,408

45,707

-

-

- Satisfactory

3,520

9,448

-

-

14

9,462

-

-

- Higher risk

-

-

-

-

-

-

-

-

Defaulted (CG13-14)

-

52

-

-

-

52

-

-

Gross balance (FVTPL)2

25,049

52,765

34

-

2,422

55,221

-

-

Net carrying value (incl FVTPL)

68,364

190,920

126,976

481

35,235

353,612

-

-

1      Loans and advances includes reverse repurchase agreements and other similar secured lending of $18,032 million under Customers and of $861 million under Banks, held at amortised cost

2      Loans and advances includes reverse repurchase agreements and other similar secured lending of $47,264 million under Customers and of $20,620 million under Banks, held at fair value through profit or loss

 

 

Page 31

Risk review continued

 

Amortised cost

30.06.22

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

35,779

121,965

130,104

340

26,727

279,136

157,596

54,991

- Strong

24,145

79,442

125,633

339

26,628

232,042

140,232

40,220

- Satisfactory

11,634

42,523

4,471

1

99

47,094

17,364

14,771

Stage 2

371

10,488

1,894

5

152

12,539

5,245

2,781

- Strong

34

1,614

1,299

3

-

2,916

1,475

347

- Satisfactory

337

8,191

278

1

-

8,470

3,213

2,146

- Higher risk

-

683

317

1

152

1,153

557

288

Of which (stage 2):









- Less than 30 days past due

-

54

278

1

-

333

-

-

- More than 30 days past due

-

8

317

1

-

326

-

-

Stage 3, credit-impaired financial assets

78

5,552

1,500

1

-

7,053

-

643

Gross balance1

36,228

138,005

133,498

346

26,879

298,728

162,841

58,415

Stage 1

(7)

(141)

(359)

(2)

-

(502)

(37)

(16)

- Strong

(4)

(49)

(272)

(2)

-

(323)

(22)

(8)

- Satisfactory

(3)

(92)

(87)

-

-

(179)

(15)

(8)

Stage 2

(5)

(253)

(130)

-

(2)

(385)

(42)

(16)

- Strong

-

(13)

(53)

-

-

(66)

(6)

(1)

- Satisfactory

(5)

(201)

(37)

-

-

(238)

(32)

(9)

- Higher risk

-

(39)

(40)

-

(2)

(81)

(4)

(6)

Of which (stage 2):









- Less than 30 days past due

-

-

(37)

-

-

(37)

-

-

- More than 30 days past due

-

-

(40)

-

-

(40)

-

-

Stage 3, credit-impaired financial assets

(15)

(3,575)

(758)

-

-

(4,333)

-

(190)

Total credit impairment

(27)

(3,969)

(1,247)

(2)

(2)

(5,220)

(79)

(222)

Net carrying value

36,201

134,036

132,251

344

26,877

293,508

-

-

Stage 1

0.0%

0.1%

0.3%

0.6%

0.0%

0.2%

0.0%

0.0%

- Strong

0.0%

0.1%

0.2%

0.6%

0.0%

0.1%

0.0%

0.0%

- Satisfactory

0.0%

0.2%

1.9%

0.0%

0.0%

0.4%

0.1%

0.1%

Stage 2

1.3%

2.4%

6.9%

0.0%

1.3%

3.1%

0.8%

0.6%

- Strong

0.0%

0.8%

4.1%

0.0%

0.0%

2.3%

0.4%

0.3%

- Satisfactory

1.5%

2.5%

13.3%

0.0%

0.0%

2.8%

1.0%

0.4%

- Higher risk

0.0%

5.7%

12.6%

0.0%

1.3%

7.0%

0.7%

2.1%

Of which (stage 2):









- Less than 30 days past due

0.0%

0.0%

13.3%

0.0%

0.0%

11.1%

0.0%

0.0%

- More than 30 days past due

0.0%

0.0%

12.6%

0.0%

0.0%

12.3%

0.0%

0.0%

Stage 3, credit-impaired financial assets (S3)

19.2%

64.4%

50.5%

0.0%

0.0%

61.4%

0.0%

29.5%

Cover ratio

0.1%

2.9%

0.9%

0.6%

0.0%

1.7%

0.0%

0.4%










Fair value through profit or loss









Performing

26,439

58,280

42

-

2,639

60,961

-

-

- Strong

22,848

51,561

42

-

2,638

54,241

-

-

- Satisfactory

3,591

6,655

-

-

1

6,656

-

-

- Higher risk

-

64

-

-

-

64

-

-

Defaulted (CG13-14)

-

5

-

-

-

5

-

-

Gross balance (FVTPL)2

26,439

58,285

42

-

2,639

60,966

-

-

Net carrying value (incl FVTPL)

62,640

192,321

132,293

344

29,516

354,474

-

-

1      Loans and advances includes reverse repurchase agreements and other similar secured lending of $7,894 million under Customers and of $795 million under Banks, held at amortised cost

2      Loans and advances includes reverse repurchase agreements and other similar secured lending of $52,521 million under Customers and of $21,877 million under Banks, held at fair value through profit or loss

 

 

Page 32

Risk review continued

 

Credit impairment charge


9 months ended 30.09.22

9 months ended 30.09.21 (Restated)¹

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

32

246

278

(51)

(61)

(112)

Consumer, Private & Business Banking

104

62

166

(31)

197

166

Ventures1

6

1

7

1

-

1

Central & other items

26

17

43

6

(1)

5

Credit impairment charge

168

326

494

(75)

135

60

Restructuring business portfolio







Others

(4)

-

(4)

(3)

-

(3)

Credit impairment charge

(4)

-

(4)

(3)

-

(3)

Total credit impairment charge

164

326

490

(78)

135

57

1      Following the increased strategic importance and reporting of Ventures to management, this has been established as a separate operating segment in 2022. Prior period has been restated.

COVID-19 relief measures

Segment

Total1

Outstanding
$million

% of
portfolio2

Credit card & Personal loans

5

0.0%

Mortgages & Auto

73

0.1%

Business Banking

131

1.3%

Total Consumer, Private & Business Banking at 30 September 2022

209

0.2%

Total Consumer, Private & Business Banking at 30 June 2022

280

0.2%

1      All of the outstanding COVID-19 payment-related measures at 30 September 2022 and 30 June 2022 are within the Asia region, mainly in Hong Kong, China and India

2      Percentage of portfolio represents the outstanding amount as a percentage of the gross loans and advances to customers by product and segment

 

 


 

 

Page 33

Risk review continued

 

Vulnerable and cyclical sector

Maximum exposure

Amortised Cost

30.09.22

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

2,867

1,654

1,213

1,420

620

2,040

3,253

Commodity Traders

8,880

180

8,700

2,466

6,172

8,638

17,338

Metals & Mining

4,338

320

4,018

3,180

788

3,968

7,986

Construction

2,719

516

2,203

2,207

5,861

8,068

10,271

Commercial Real Estate

15,511

6,715

8,796

6,418

243

6,661

15,457

Hotels & Tourism

2,124

602

1,522

1,282

137

1,419

2,941

Oil & Gas

6,424

744

5,680

7,745

6,071

13,816

19,496

Total

42,863

10,731

32,132

24,718

19,892

44,610

76,742

Total Corporate, Commercial & Institutional Banking

138,155

31,770

106,385

95,513

47,343

142,856

249,241

Total Group

341,705

135,274

206,431

163,625

54,408

218,033

424,464

 

Amortised Cost

30.06.22

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

3,114

1,648

1,466

1,445

735

2,180

3,646

Commodity Traders

8,575

332

8,243

3,094

8,745

11,839

20,082

Metals & Mining

4,061

385

3,676

3,271

729

4,000

7,676

Construction2

3,100

609

2,491

2,115

6,036

8,151

10,642

Commercial Real Estate

16,601

7,118

9,483

6,618

249

6,867

16,350

Hotels & Tourism

2,087

812

1,275

1,564

137

1,701

2,976

Oil & Gas

7,379

902

6,477

8,214

7,321

15,535

22,012

Total

44,917

11,806

33,111

26,321

23,952

50,273

83,384

Total Corporate, Commercial & Institutional Banking

134,036

24,522

109,514

97,559

51,066

148,625

258,139

Total Group

329,709

132,910

196,799

162,762

58,193

220,955

417,754

1      In addition to the aviation sector loan exposures, the Group owns $3.2 billion (30 June 2022: $3.4 billion) of aircraft under operating leases.

2      Included cyclical sector and represented

 

 

 

 

 

 

 

Page 34

 

Risk review continued

 

Loans and advances by stage

Amortised Cost

30.09.22

Stage 1

Stage 2

Stage 3

Total

Gross Balance
$million

Total Credit Impairment
$million

Net Carrying Amount
$million

Gross Balance
$million

Total Credit Impairment
$million

Net Carrying Amount
$million

Gross Balance
$million

Total Credit Impairment
$million

Net Carrying Amount
$million

Gross Balance
$million

Total Credit Impairment
$million

Net Carrying Amount
$million

Industry:













Aviation

2,110

(1)

2,109

605

(3)

602

195

(39)

156

2,910

(43)

2,867

Commodity Traders

8,454

(5)

8,449

331

(6)

325

598

(492)

106

9,383

(503)

8,880

Metals & Mining

3,973

(2)

3,971

287

(4)

283

231

(147)

84

4,491

(153)

4,338

Construction

2,122

(12)

2,110

522

(8)

514

486

(391)

95

3,130

(411)

2,719

Commercial Real Estate

13,204

(80)

13,124

1,849

(117)

1,732

1,259

(604)

655

16,312

(801)

15,511

Hotels & Tourism

1,539

(4)

1,535

397

(4)

393

249

(53)

196

2,185

(61)

2,124

Oil & Gas

5,755

(8)

5,747

435

(7)

428

695

(446)

249

6,885

(461)

6,424

Total

37,157

(112)

37,045

4,426

(149)

4,277

3,713

(2,172)

1,541

45,296

(2,433)

42,863

Total Corporate, Commercial & Institutional Banking

127,006

(145)

126,861

9,478

(294)

9,184

5,565

(3,455)

2,110

142,049

(3,894)

138,155

Total Group

327,724

(503)

327,221

11,891

(436)

11,455

7,261

(4,231)

3,030

346,875

(5,170)

341,705

 

Amortised Cost

30.06.22

Stage 1

Stage 2

Stage 3

Total

Gross Balance
$million

Total Credit Impairment
$million

Net Carrying Amount
$million

Gross Balance
$million

Total Credit Impairment
$million

Net Carrying Amount
$million

Gross Balance
$million

Total Credit Impairment
$million

Net Carrying Amount
$million

Gross Balance
$million

Total Credit Impairment
$million

Net Carrying Amount
$million

Industry:













Aviation

2,193

(2)

2,191

758

(1)

757

213

(47)

166

3,164

(50)

3,114

Commodity Traders

8,012

(6)

8,006

254

(3)

251

866

(548)

318

9,132

(557)

8,575

Metals & Mining

3,624

(2)

3,622

353

(11)

342

212

(115)

97

4,189

(128)

4,061

Construction1

2,540

(2)

2,538

425

(6)

419

539

(396)

143

3,504

(404)

3,100

Commercial Real Estate

14,196

(63)

14,133

2,212

(82)

2,130

841

(503)

338

17,249

(648)

16,601

Hotels & Tourism

1,463

(2)

1,461

430

(5)

425

262

(61)

201

2,155

(68)

2,087

Oil & Gas

6,413

(6)

6,407

718

(12)

706

506

(240)

266

7,637

(258)

7,379

Total

38,441

(83)

38,358

5,150

(120)

5,030

3,439

(1,910)

1,529

47,030

(2,113)

44,917

Total Corporate, Commercial & Institutional Banking

121,965

(138)

121,827

10,488

(256)

10,232

5,552

(3,575)

1,977

138,005

(3,969)

134,036

Total Group

314,915

(509)

314,406

12,910

(390)

12,520

7,131

(4,348)

2,783

334,956

(5,247)

329,709

1   Included cyclical sector and represented

 

 

 

 

 

 

 

Page 35


Capital review

 

Capital ratios


30.09.22

30.06.22

Change4

31.12.21

Change4

CET1

13.7%

13.9%

(0.2)

14.1%

(0.4)

Tier 1 capital

16.2%

15.9%

0.3

16.6%

(0.4)

Total capital

21.2%

21.0%

0.2

21.3%

(0.1)

Capital base1


30.09.22
$million

30.06.22
$million

Change5
%

31.12.21
$million

Change5
%

CET1 instruments and reserves






Capital instruments and the related share premium accounts

5,441

5,472

(1)

5,528

(2)

Of which: share premium accounts

3,989

3,989

-

3,989

-

Retained earnings2

25,435

26,266

(3)

24,968

2

Accumulated other comprehensive income (and other reserves)

7,617

8,837

(14)

11,805

(35)

Non-controlling interests (amount allowed in consolidated CET1)

208

188

11

201

3

Independently reviewed interim and year-end profits

3,214

2,092

54

2,346

37

Foreseeable dividends

(509)

(303)

68

(493)

3

CET1 capital before regulatory adjustments

41,406

42,552

(3)

44,355

(7)

CET1 regulatory adjustments






Additional value adjustments (prudential valuation adjustments)

(826)

(766)

8

(665)

24

Intangible assets (net of related tax liability)

(5,458)

(5,468)

-

(4,392)

24

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

(106)

(120)

(12)

(150)

(29)

Fair value reserves related to net losses on cash flow hedges

682

475

44

34

nm6

Deduction of amounts resulting from the calculation of excess expected loss

(663)

(702)

(6)

(580)

14

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

(106)

(100)

6

15

nm6

Defined-benefit pension fund assets

(124)

(184)

(33)

(159)

(22)

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

(214)

(165)

30

(60)

257

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

(76)

(138)

(45)

(36)

111

Other regulatory adjustments to CET1 capital3

(11)

(11)

-

-

-

Total regulatory adjustments to CET1

(6,902)

(7,179)

(4)

(5,993)

15

CET1 capital

34,504

35,373

(2)

38,362

(10)

Additional Tier 1 capital (AT1) instruments

6,505

5,264

24

6,811

(4)

AT1 regulatory adjustments

(20)

(20)

-

(20)

-

Tier 1 capital

40,989

40,617

1

45,153

(9)







Tier 2 capital instruments

12,532

13,050

(4)

12,521

-

Tier 2 regulatory adjustments

(30)

(30)

-

(30)

-

Tier 2 capital

12,502

13,020

(4)

12,491

-

Total capital

53,491

53,637

-

57,644

(7)

Total risk-weighted assets (unaudited)

252,293

255,082

(1)

271,233

(7)

1   Capital base is prepared on the regulatory scope of consolidation

2   Retained earnings includes IFRS9 capital relief (transitional) of $106 million

3   Other regulatory adjustments to CET1 capital includes Insufficient coverage for non-performing exposures of -$11 million

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

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

6      Not meaningful

 

 

 

 

 

 

 

 

 

Page 36

Capital review continued

 

Movement in total capital


9 months ended 30.09.22
$million

Year ended
31.12.21
$million

CET1 at 1 January

38,362

38,779

Ordinary shares issued in the period and share premium

-

-

Share buy-back

(1,258)

(506)

Profit for the period

3,214

2,346

Foreseeable dividends deducted from CET1

(509)

(493)

Difference between dividends paid and foreseeable dividends

(239)

(303)

Movement in goodwill and other intangible assets

(1,066)

(118)

Foreign currency translation differences

(2,362)

(652)

Non-controlling interests

7

21

Movement in eligible other comprehensive income

(1,129)

(306)

Deferred tax assets that rely on future profitability

44

(12)

Decrease/(increase) in excess expected loss

(83)

121

Additional value adjustments (prudential valuation adjustment)

(161)

(175)

IFRS 9 transitional impact on regulatory reserves including day one

(146)

(142)

Exposure amounts which could qualify for risk weighting

(40)

(10)

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

(154)

(12)

Other

24

(176)

CET1 at 30 September/31 December

34,504

38,362




AT1 at 1 January

6,791

5,612

Net issuances (redemptions)

251

1,736

Foreign currency translation difference

-

(2)

Excess on AT1 grandfathered limit (ineligible)

(557)

(555)

AT1 at 30 September/31 December

6,485

6,791




Tier 2 capital at 1 January

12,491

12,657

Regulatory amortisation

331

(1,035)

Net issuances (redemptions)

(298)

573

Foreign currency translation difference

(680)

(181)

Tier 2 ineligible minority interest

94

(81)

Recognition of ineligible AT1

557

555

Other

7

3

Tier 2 capital at 30 September/31 December

12,502

12,491

Total capital at 30 September/31 December

53,491

57,644

 

 


 

 

 

Page 37

Capital review continued

 

Risk-weighted assets by business


30.09.22

Credit risk
$million

Operational risk
$million

Market risk
$million

Total risk
$million

Corporate, Commercial & Institutional Banking

114,519

17,038

18,222

149,779

Consumer, Private & Business Banking

42,284

8,639

-

50,923

Ventures

1,150

6

2

1,158

Central & other items

44,570

1,494

4,369

50,433

Total risk-weighted assets

202,523

27,177

22,593

252,293

 


30.06.22

Credit risk
$million

Operational risk
$million

Market risk
$million

Total risk
$million

Corporate, Commercial & Institutional Banking

117,789

17,038

19,350

154,177

Consumer, Private & Business Banking

43,879

8,639

-

52,518

Ventures

1,034

6

3

1,043

Central & other items

42,477

1,494

3,373

47,344

Total risk-weighted assets

205,179

27,177

22,726

255,082

 


31.12.21

Credit risk
$million

Operational risk
$million

Market risk
$million

Total risk
$million

Corporate, Commercial & Institutional Banking1, 2

125,813

16,595

20,789

163,197

Consumer, Private & Business Banking1, 2

42,731

8,501

-

51,232

Ventures1

756

5

-

761

Central & other items1

50,288

2,015

3,740

56,043

Total risk-weighted assets

219,588

27,116

24,529

271,233

1      Following the increased strategic importance and reporting of Ventures to management, this has been established as a separate operating segment in 2022. Prior periods have been re-stated

2      Following the Group's change in organisational structure in 2021, certain clients have been moved between the two new client segments, Corporate, Commercial & Institutional Banking and Consumer, Private & Business Banking. Prior period has been restated

Risk-weighted assets by geographic region


30.09.22
$million

30.06.22
$million

Change1
%

31.12.21
$million

Change1
%

ASIA

156,553

160,345

(2)

170,381

(8)

Africa & Middle East

42,746

43,613

(2)

48,852

(12)

Europe & Americas

50,779

50,038

1

50,283

1

Central & other items

2,215

1,086

104

1,717

29

Total risk-weighted assets

252,293

255,082

(1)

271,233

(7)

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

 

 

 

 

Page 38

Capital review continued

 

Movement in risk-weighted assets


Credit risk

Operational risk
$million

Market risk
$million

Total risk
$million

Commercial, Corporate & Institutional Banking
$million

Consumer, Private & Business Banking1
$million

Ventures1
$million

Central & other items1
$million

Total
$million

31 December 2020

127,663

44,755

-

48,023

220,441

26,800

21,593

268,834

1 January 2021

127,581

44,755

289

47,816

220,441

26,800

21,593

268,834

Asset growth & mix

2,270

3,611

467

3,894

10,242

-

-

10,242

Asset quality

(1,537)

(662)

-

13

(2,186)

-

-

(2,186)

Risk-weighted assets efficiencies

(415)

(30)

-

(657)

(1,102)

-

-

(1,102)

Model updates

-

(3,701)

-

-

(3,701)

-

-

(3,701)

Methodology and policy changes

-

-

-

-

-

-

2,065

2,065

Acquisitions/disposals

-

-

-

-

-

-

-

-

Foreign currency translation

(2,086)

(1,242)

-

(1,106)

(4,434)

-

-

(4,434)

Other, including non-credit risk movements

-

-

-

328

328

316

871

1,515

31 December 2021

125,813

42,731

756

50,288

219,588

27,116

24,529

271,233

Asset growth & mix

(3,347)

148

394

(3,640)

(6,445)

-

-

(6,445)

Asset quality

(5,809)

141

-

2,692

(2,976)

-

-

(2,976)

Risk-weighted assets efficiencies

-

-

-

-

-

-

-

-

Model Updates

2,520

2,017

-

-

4,537

-

(1,000)

3,537

Methodology and policy changes

2,024

85

-

38

2,147

-

1,100

3,247

Acquisitions/disposals

-

-

-

-

-

-

-

-

Foreign currency translation

(6,973)

(2,838)

-

(3,803)

(13,614)

-

-

(13,614)

Other, including non-credit risk movements

291

-

-

(1,005)

(714)

61

(2,036)

(2,689)

30 September 2022

114,519

42,284

1,150

44,570

202,523

27,177

22,593

252,293

1   Following the increased strategic importance and reporting of Ventures to management, this has been established as a separate operating segment in 2022. Prior periods have been re-stated.

 


 

 

 

Page 39





Capital review continued

 

Leverage ratio


30.09.22
$million

30.06.22
$million

Change2
%

31.12.21
$million

Change2
%

Tier 1 capital (transitional)

40,989

40,617

1

45,153

(9)

Additional Tier 1 capital subject to phase out

-

-

-

(557)

(100)

Tier 1 capital (end point)

40,989

40,617

1

44,596

(8)

Derivative financial instruments

108,182

76,676

41

52,445

106

Derivative cash collateral

13,984

11,459

22

9,217

52

Securities financing transactions (SFTs)

86,777

83,087

4

88,418

(2)

Loans and advances and other assets

655,492

664,695

(1)

677,738

(3)

Total on-balance sheet assets

864,435

835,917

3

827,818

4

Regulatory consolidation adjustments1

(71,781)

(70,350)

2

(63,704)

13

Derivatives adjustments






Derivatives netting

(78,671)

(56,040)

40

(34,819)

126

Adjustments to cash collateral

(12,736)

(9,831)

30

(17,867)

(29)

Net written credit protection

119

128

(7)

1,534

(92)

Potential future exposure on derivatives

38,787

41,103

(6)

50,857

(24)

Total derivatives adjustments

(52,501)

(24,640)

113

(295)

17,697

Counterparty risk leverage exposure measure for SFTs

14,126

13,318

6

13,724

3

Off-balance sheet items

112,807

146,745

(23)

139,505

(19)

Regulatory deductions from Tier 1 capital

(6,582)

(6,856)

(4)

(5,908)

11

Total exposure measure excluding claims on central banks

860,504

894,134

(4)

911,140

(6)

Leverage ratio excluding claims on central banks (%)

4.8%

4.5%

0.3

4.9%

(0.1)

Average leverage exposure measure excluding claims on central banks

875,125

918,391

(5)

897,992

(3)

Average leverage ratio excluding claims on central banks (%)

4.7%

4.4%

0.3

5.0%

(0.3)

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

 



 

 

Page 40


Financial statements

 

Condensed consolidated interim income statement

For the nine months ended 30 September 2022


9 months ended 30.09.22
$million

9 months ended 30.09.21
$million

Interest income

9,872

7,704

Interest expense

(4,302)

(2,601)

Net interest income

5,570

5,103

Fees and commission income

3,062

3,432

Fees and commission expense

(538)

(583)

Net fee and commission income

2,524

2,849

Net trading income

4,128

2,762

Other operating income

332

678

Operating income

12,554

11,392

Staff costs

(5,724)

(5,670)

Premises costs

(296)

(282)

General administrative expenses

(1,118)

(1,025)

Depreciation and amortisation

(886)

(891)

Operating expenses

(8,024)

(7,868)

Operating profit before impairment losses and taxation

4,530

3,524

Credit impairment

(490)

(57)

Goodwill, property, plant and equipment and other impairment

(46)

(99)

Profit from associates and joint ventures

169

187

Profit before taxation

4,163

3,555

Taxation

(997)

(860)

Profit for the period

3,166

2,695




Profit attributable to:



Non-controlling interests

(10)

18

Parent company shareholders

3,176

2,677

Profit for the period

3,166

2,695

 


cents

cents

Earnings per share:



Basic earnings per ordinary share

94.8

75.6

Diluted earnings per ordinary share

93.0

74.4

 

 

 


Page 41

Financial statements continued

 

Condensed consolidated interim statement of comprehensive income

For the nine months ended 30 September 2022


9 months ended 30.09.22
$million

9 months ended 30.09.21
$million

Profit for the period

3,166

2,695

Other comprehensive income



Items that will not be reclassified to income statement:

88

227

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

145

7

Equity instruments at fair value through other comprehensive income

(78)

152

Actuarial gains on retirement benefit obligations

39

128

Taxation relating to components of other comprehensive income

(18)

(60)

Items that may be reclassified subsequently to income statement:

(4,407)

(896)

Exchange differences on translation of foreign operations:



Net losses taken to equity

(3,338)

(781)

Net gains on net investment hedges

906

151

Share of other comprehensive (loss)/gain from associates and joint ventures

(82)

3

Debt instruments at fair value through other comprehensive income:



Net valuation losses taken to equity

(1,460)

(202)

Reclassified to income statement

53

(164)

Net impact of expected credit losses

33

8

Cash flow hedges:



Net (losses)/gains taken to equity

(761)

15

Reclassified to income statement

3

17

Taxation relating to components of other comprehensive income

239

57

Other comprehensive income for the period, net of taxation

(4,319)

(669)

Total comprehensive income for the period

(1,153)

2,026




Total comprehensive income attributable to:



Non-controlling interests

(64)

14

Parent company shareholders

(1,089)

2,012

Total comprehensive income for the period

(1,153)

2,026

 

 

 

 

 

Page 42

Financial statements continued

 

Condensed consolidated interim balance sheet

As at 30 September 2022


30.09.22
$million

31.12.21
$million

Assets



Cash and balances at central banks

66,521

72,663

Financial assets held at fair value through profit or loss

110,510

129,121

Derivative financial instruments

108,182

52,445

Loans and advances to banks

43,315

44,383

Loans and advances to customers

298,390

298,468

Investment securities

160,891

163,437

Other assets

57,720

49,932

Current tax assets

547

766

Prepayments and accrued income

2,637

2,176

Interests in associates and joint ventures

2,066

2,147

Goodwill and intangible assets

5,520

5,471

Property, plant and equipment

5,398

5,616

Deferred tax assets

879

859

Assets classified as held for sale

1,859

334

Total assets

864,435

827,818




Liabilities



Deposits by banks

27,728

30,041

Customer accounts

447,259

474,570

Repurchase agreements and other similar secured borrowing

3,332

3,260

Financial liabilities held at fair value through profit or loss

87,892

85,197

Derivative financial instruments

106,590

53,399

Debt securities in issue

56,655

61,293

Other liabilities

63,036

44,314

Current tax liabilities

449

348

Accruals and deferred income

4,721

4,651

Subordinated liabilities and other borrowed funds

14,196

16,646

Deferred tax liabilities

779

800

Provisions for liabilities and charges

350

453

Retirement benefit obligations

165

210

Liabilities included in disposal groups held for sale

1,280

-

Total liabilities

814,432

775,182




Equity



Share capital and share premium account

6,935

7,022

Other reserves

7,617

11,805

Retained earnings

28,576

27,184

Total parent company shareholders' equity

43,128

46,011

Other equity instruments

6,505

6,254

Total equity excluding non-controlling interests

49,633

52,265

Non-controlling interests

370

371

Total equity

50,003

52,636

Total equity and liabilities

864,435

827,818

 

 


 

Page 43

Financial statements continued

 

Condensed consolidated interim statement of changes in equity

For the nine months ended 30 September 2022


Ordinary share capital and share premium account
$million

Preference share capital and share premium account
$million

Capital and merger reserves1
$million

Own credit adjustment reserve
$million

Fair value through other comprehensive income reserve - debt
$million

Fair value through other comprehensive income reserve - equity
$million

Cash flow hedge reserve
$million

Translation reserve
$million

Retained earning
$million

Parent company shareholders' equity
$million

Other equity instruments
$million

Non-controlling interests
$million

Total
$million

As at 01 January 2021

5,564

1,494

17,207

(52)

529

148

(52)

(5,092)

26,140

45,886

4,518

325

50,729

Profit/(loss) for the period

-

-

-

-

-

-

-

-

2,315

2,315

-

(2)

2,313

Other comprehensive income/(loss)

-

-

-

37

(426)

101

18

(662)

1752

(757)

-

(15)

(772)

Distributions

-

-

-

-

-

-

-

-

-

-

-

(31)

(31)

Other equity instruments issued, net of expenses

-

-

-

-

-

-

-

-

-

-

2,728

-

2,728

Redemption of other equity instruments

-

-

-

-

-

-

-

-

(51)

(51)

(992)

-

(1,043)

Treasury shares purchased

-

-

-

-

-

-

-

-

(242)

(242)

-

-

(242)

Treasury shares issued

-

-

-

-

-

-

-

-

7

7

-

-

7

Share option expenses

-

-

-

-

-

-

-

-

147

147

-

-

147

Dividends on ordinary shares

-

-

-

-

-

-

-

-

(374)

(374)

-

-

(374)

Dividends on preference shares and AT1 securities

-

-

-

-

-

-

-

-

(410)

(410)

-

-

(410)

Share buy-back3,4

(39)

-

39

-

-

-

-

-

(506)

(506)

-

-

(506)

Other movements

3

-

-

-

-

-

-

10

(17)5

(4)

-

946

90

As at 31 December 2021

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

-

-

-

-

-

-

-

-

3,176

3,176

-

(10)

3,166

Other comprehensive income/(loss)

-

-

-

121

(1,328)

(58)

(648)

(2,376)

242

(4,265)

-

(54)

(4,319)

Distributions

-

-

-

-

-

-

-

-

-

-

-

(25)

(25)

Other equity instruments issued, net of expenses

-

-

-

-

-

-

-

-

-

-

1,241

-

1,241

Redemption of other equity instruments

-

-

-

-

-

-

-

-

-

-

(999)

-

(999)

Treasury shares issued

-

-

-

-

-

-

-

-

12

12

-

-

12

Share option expenses

-

-

-

-

-

-

-

-

145

145

-

-

145

Dividends on ordinary shares

-

-

-

-

-

-

-

-

(393)

(393)

-

-

(393)

Dividends on preference shares and AT1 securities

-

-

-

-

-

-

-

-

(339)

(339)

-

-

(339)

Share buy-back7

(87)

-

87

-

-

-

-

-

(1,258)

(1,258)

-

-

(1,258)

Other movements

-

-

-

-

-

-

-

145

258

39

99

8810

136

As at 30 September 2022

5,441

1,494

17,333

106

(1,225)

191

(682)

(8,106)

28,576

43,128

6,505

370

50,003

1   Includes capital reserve of $5 million, capital redemption reserve of $217 million and merger reserve of $17,111 million

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

3   On 25 February 2021, 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 $19 million, and the total consideration paid was $255 million (including $2 million of fees and stamp duty). The total number of shares purchased was 37,148,399 representing 1.18 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 3 August 2021, 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 $20 million, and the total consideration paid was $251 million (including $1 million of fees and stamp duty). The total number of shares purchased was 39,914,763 representing 1.28 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 related to non-controlling interest from Mox Bank Limited ($21 million), Trust Bank Singapore Ltd ($70 million) and Zodia Markets Holdings Ltd ($3 million)

7   On 1st August 2022, the Group announced the buy-back programme for a share buy-back of its ordinary shares of $0.50 each. As at Q3 2022 the buyback is ongoing, but the total number of shares purchased was 62,541,043 representing 2.1 per cent of the ordinary shares in issue, the total consideration paid was $432 million (including $2.2 million of fees and stamp duty), and a further $128 million relating to irrevocable obligation to buy back shares under the currency buy-back programme has been recognised.  The nominal value of the shares was transferred from the share capital to the capital redemption reserve account

8   Movement mainly related to $21 million NCI on Power2SME Pte Limited and $8 million on Currency fair Limited

9   $9 million relates to fees paid on redemption on AT1 securities

10     Movements related to non-controlling interest from Mox Bank Limited ($29 million), Trust Bank Singapore Ltd ($47 million), Zodia Markets Holdings Limited ($3 million), Power2SME ($9 million)

 

 

 

Page 44

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 nine months ended 30 September 2022. 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 2021, 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 2022 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 2021, 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, the impact of COVID 19, 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 October 2022. For this reason, the Group continues to adopt the going concern basis of accounting for preparing the interim financial information.

 

 

 


 

 

Page 45


Other supplementary financial information

 

Average balance sheets and yields

Average assets


9 months ended 30.09.22

Average
non-interest earning balance
$million

Average
interest
earning balance
$million

Interest income
$million

Gross yield interest
earning balance
%

Gross yield
total balance
%

Cash and balances at central banks

22,251

55,044

400

0.97

0.69

Gross loans and advances to banks

28,993

42,583

568

1.78

1.06

Gross loans and advances to customers

62,498

305,464

6,746