Reference Number ZC18
Directors’ Report and Financ
ial Statements
31 December 2022
Incorporated in England with lim
ited l
iab
il
Princ
ipal Office: 1 Bas
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
Contents
Page
Strategic report
01–55
Our business
01
Market environment
08
Business model
11
Our strategy
14
Client segment reviews
17
Regional reviews
18
Financ
ial rev
iew
20
Underlying versus statutory results reconcil
iat
ions
25
Risk review
31
Stakeholders and responsib
il
it
ies
40
Directors’ report
56–61
Statement of directors’ responsib
il
it
ies
62
Risk review and Capital review
63–153
Financ
ial Statements and Notes
154–327
Independent auditors’ report
154–166
Consolidated income statement
167
Consolidated statement of comprehensive income
168
Balance sheets
169
Consolidated statement of changes in equity
170
Cash flow statements
172
Company statement of changes in equity
172
Notes to the financial statements
173–327
Glossary
328–337
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
1
Strategic report
Our business
Our purpose to drive commerce and prosperity through our unique divers
ity
We have built a strong presence in the world’s most dynamic and influent
ial markets. The bus
inesses we serve, connect
and partner with are the engines of trade and innovat
ion, and central to the trans
it
ion to a fa
ir, sustainable future.
We are at the frontline of today’s biggest challenges and are taking a stand on key issues such as climate change,
economic partic
ipat
ion and globalisat
ion. Our collaborat
ive approach to innovat
ion and dr
ive to be diverse and inclus
ive
means we can do more, better and faster.
Our heritage and values are expressed in our brand promise, Here for good.
The following are company designat
ions as descr
ibed in the document:
Standard Chartered Bank Group (Group) – being Standard Chartered Bank and its subsid
iar
ies
Standard Chartered PLC Group (PLC Group) – being the ultimate parent and its subsid
iar
ies
Standard Chartered Bank (Company) – being the standalone Bank legal entity
About this report
Sustainab
il
ity reporting – We adopt an integrated approach to corporate reporting, embedding non-financ
ial
informat
ion throughout our Annual Report.
Alternative performance measures – The Group uses a number of alternative performance measures in the discuss
ion of
its performance. These measures exclude
certain items which management believe are not representative of the underlying performance of the business and which distort period-on-period comparison.
They provide the reader with ins
ight
into how management measures the performance of the business.
For more informat
ion please v
is
it sc.com
linked
in.com/company/standard-chartered-bank
facebook.com/standardchartered
Unless another currency is specif
ied, 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.
All disclosures in the Strategic Report Directors’ Report and the Risk Review and Capital Review are unaudited unless otherwise stated.
Unless the context requires, with
in th
is document, ‘China’ refers to the People’s Republic of China and, for the purposes of this document only, excludes Hong Kong
Special Admin
istrat
ive Region (Hong Kong), Macau Special Admin
istrat
ive Region (Macau) and Taiwan. ‘Korea’ or ‘South Korea’ refers to the Republic of Korea.
Greater China & North Asia (GCNA) includes Mainland China, Hong Kong, Japan, Korea, Macau and Taiwan; ASEAN & South Asia (ASA) includes Australia, Bangladesh,
Brunei, Cambodia, India, Indonesia, Laos, Malaysia, Myanmar, Nepal, Phil
ipp
ines, Singapore, Sri Lanka, Thailand and Vietnam; and Africa & Middle East (AME) includes
Angola, Bahrain, Botswana, Cameroon, Cote d’Ivoire, Egypt, The Gambia, Ghana, Iraq, Jordan, Kenya, Lebanon, Maurit
ius, N
iger
ia, Oman, Pak
istan, 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., Sweden, Turkey, the UK and the US
With
in the tables
in this report, blank spaces ind
icate that the number
is not disclosed, dashes ind
icate that the number
is zero and nm stands for not meaningful.
Standard Chartered Bank is incorporated in England and Wales with lim
ited l
iab
il
ity and is headquartered in London. The Group’s head office provides guidance
on governance and regulatory standards.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
2
Strategic report continued
Our business
We are a leading internat
ional cross-border bank
Standard Chartered is a bank like no other. Our unique footprint, diverse experience, capabil
it
ies and culture set us apart.
They enable us to capital
ise on opportun
it
ies for our bus
iness, our customers, and the communit
ies we serve. Gu
ided by our
Purpose – to drive commerce and prosperity through our unique divers
ity connect
ing the world’s most dynamic markets,
backing the people and businesses who are the engines of global growth.
Together, we are developing new economies that can deliver sustained prosperity in the decades ahead. As our brand
promise makes clear, we are Here For Good.
FINANCIAL KPIs AND MEASURES
Underlying basis
Statutory basis
Return on tangible equity
9.1%
226bps
Read more on (page 29)
Return on tangible equity
8.8%
329bps
Read more on (page 29)
Operating income
$10,193m
14%
Read more on (page 20)
Operating income
$10,234m
16%
Read more on (page 21)
Profit before tax
$3,579m
30%
Read more on (page 20)
Profit before tax
$3,474m
46%
Read more on (page 21)
CAPITAL KPIs
Common Equity Tier 1 ratio
12.3%
2bps
Read more on (page 20)
NON-FINANCIAL KPIs
Divers
ity and
inclus
ion: Women
in senior roles
28.3%
0.4ppt
1
Basis point (bps) and per centage movements are in relation to 31 December 2021, with brackets representing negative movements
2
Reconcil
iat
ions from underlying to statutory and defin
it
ions of alternative performance measures can be found on pages 25 to 29
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
3
Strategic report continued
Our business
Standard Chartered Bank is authorised by the Prudential Regulation Authority (PRA) and regulated by the PRA and by
the Financ
ial Conduct Author
ity (FCA). The PRA is the consolidated supervisor in respect of the Group (of which PLC is the
ultimate parent).
Standard Chartered Bank is a material subsid
iary of the PLC Group for the purposes of the Bank of England led s
ingle point
of entry preferred resolution strategy for the PLC Group. The Group is a core part of, and crit
ical prov
ider of essential services
to the PLC Group and is fundamental to the delivery of the PLC Group’s purpose, franchise and strategy. The formation of an
ASEAN hub was completed in 2021, following the transfers of Malaysia, Thailand and Vietnam subsid
iar
ies under our exist
ing
Singapore subsid
iary ent
ity, which itself remains under Standard Chartered Bank.
Clients
•
The Group remains the largest CCIB orig
inat
ion hub supporting a sign
ificant part of CCIB revenues and
is key to
the global network proposit
ion
•
The Group is the relationsh
ip hub for the majority of key CCIB cl
ients, particularly Organisat
ion for Econom
ic
Co-operation and Development (OECD) clients
•
The Group holds the majority of the PLC Group’s corporate and financial
inst
itut
ions deposits, a sign
ificant part of
the PLC Group’s USD funding base
Capabil
it
ies
•
The Group holds key licenses and hosts infrastructure vital for the global franchise such as global USD & EUR clearing
•
The Group is the main Financ
ial Markets (FM) book
ing centre supporting the major
ity of global FM revenues
•
The Group remains a main access point to high quality USD funding
Crit
ical
infrastructure
•
The Group is the key liqu
id
ity management centre: holding the major
ity of the PLC Group’s h
igh-quality liqu
id assets
for regulatory purposes
•
The Group provides functional support on a global basis
•
The Group operates global business services hubs for the benefit of the PLC Group includ
ing shared serv
ice centres
and centres of excellence
Investors
•
The Group’s UK domic
ile underp
ins a unique investor proposit
ion: emerg
ing markets access from a UK
regulated platform
•
A sign
ificant number of PLC Group’s equ
ity and debt investors are based in the Group’s footprint
Recovery and
resolution
•
Standard Chartered Bank is the largest material subsid
iary for the purposes of m
in
imum requ
irement for own
funds and elig
ible l
iab
il
it
ies (MREL) and total loss-absorb
ing capital (TLAC)
•
The Group is crit
ical to the del
ivery of capital and liqu
id
ity generating management actions in PLC Group’s
recovery planning
•
The Group houses various crit
ical serv
ices and crit
ical funct
ions in resolution and resolution management
The Group’s Credit Ratings
The Group remains a highly rated inst
itut
ion (in both absolute and relative terms) with the following long and short-term
issuer ratings all with a stable outlook. S&P upgraded Standard Chartered Bank in December 2021 to A+ from A. The upgrade
was driven by a methodology change, supported by strengthened risk management, COVID-19 resil
ience and an
increase in
loss-absorbing capacity. Fitch outlook revis
ion to stable
in July 2022 reflects their expectations of improved profitab
il
ity,
mit
igat
ing pressures from higher operating costs and heightened macroeconomic risks.
S&P
Moody’s
Fitch
Long Term
A+
A1
A+
Short Term
A-1
P-1
F1
Outlook
Stable
Stable
Stable
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
4
Our business
Who we are and what we do
Our Purpose is to drive commerce and prosperity through our unique divers
ity. We serve two cl
ient segments in three regions,
supported by eight global functions.
Our client segments
Corporate, Commercial & Institut
ional Bank
ing
Corporate, Commercial and Institut
ional Bank
ing
supports clients with their transaction banking, financ
ial
markets, corporate finance and borrowing needs across
our markets. We provide solutions to our clients in some
of the world’s fastest-growing economies and most
active trade corridors.
Operating income
$7,024m
$7,043m
Underlying basis
Statutory basis
Consumer, Private and Business Banking serves
ind
iv
iduals and small businesses, with a focus on
affluent and emerging affluent in many of the
world’s fastest growing cit
ies.
Operating income
$2,875m $2,875m
Underlying basis
Statutory basis
Ventures
Ventures promotes innovat
ion,
invests in
disrupt
ive financial technology and explores
alternative business models.
Operating income
$3m
$3m
Underlying basis
Statutory basis
Central & other items
Operating income
$291m
$313m
Underlying basis
Statutory basis
Total operating income
Operating income
$10,193m $10,234m
Underlying basis
Statutory basis
Strategic report continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
5
Our business
Our regions
Asia
Our largest markets by income are Singapore and India.
Operating income
$4,631m
$4,652m
Underlying basis
Statutory basis
Europe & Americas
Centred in London, with a growing presence across
continental Europe, and New York, with presence in
both North America and several markets in Latin
America. A key income generator for the Group.
Operating income
$2,587m
$2,586m
Underlying basis
Statutory basis
Africa & Middle East
Present in 25 markets, of which the most sizeable by
income are UAE, Niger
ia, Pak
istan, Kenya, Niger
ia,
South Africa and Ghana.
Operating income
$2,582m $2,584m
Underlying basis
Statutory basis
Central & other items (region)
Operating income
$393m
$412m
Underlying basis
Statutory basis
Total operating income
Operating income
$10,193m $10,234m
Underlying basis
Statutory basis
Strategic report continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
6
Global functions
Enabling and supporting our businesses
Our client-facing businesses are supported by our global functions, which work together to ensure the Group’s operations
run smoothly and consistently
Transformation, Technology & Operations
Responsible for leading bank-wide transformation and for reshaping the Group’s systems and technology platforms to
ensure we support the Bank with robust, responsive, and innovat
ive technology d
ig
ital solut
ions. Also manage all client
operations where we seek to provide an optimal client service and experience across the board. The function’s strategy is
supported by consistent performance metrics, standards and practices aligned to successful client and business outcomes.
Legal
Enables sustainable business and protects the Group from legal-related risk.
Human Resources
Maxim
ises the value of our
investment in people through recruitment, development and employee engagement.
Risk
Responsible for the overall second line of defence responsib
il
it
ies related to r
isk management, which involves oversight
and challenge of risk management actions of the first line
Group Chief Financ
ial Officer
Comprises seven support functions: Finance, Treasury, Strategy, Investor Relations, Corporate Development, Supply Chain
and Property. The leaders of these functions report directly to the Group Chief Financ
ial Officer.
Corporate Affairs & Brand and Marketing
Manages the Group’s communicat
ions and engagement w
ith stakeholders to protect the Group’s reputation, brand
and services.
Group Internal Audit
An independent function whose primary role is to help the Court and Executive Management to protect the assets,
reputation and sustainab
il
ity of the Group.
Conduct, Financ
ial Cr
ime and Compliance
Deliver
ing the r
ight outcomes for the Bank, its clients and communit
ies by partner
ing internally and externally to achieve
the highest standards in conduct and compliance to enable a sustainable business and fight financ
ial cr
ime.
Valued behaviours
We are developing a future ready workforce built on good conduct and our valued behaviours.
Never settle
• Continuously improve and innovate
• Simpl
ify
•
Learn from your successes and failures
Better together
• See more in others
• “How can I help?”
•
Build for the long term
Do the right thing
• Live with integr
ity
• Think client
•
Be brave, be the change
Strategic report continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
7
Strategic report continued
Where we operate
We operate in the world’s most dynamic markets which set the pace for global growth. Our unique footprint connects
emerging and high-growth markets in Asia, Africa and the Middle East with more established economies, allowing us to
channel capital where it’s needed most. For over 160 years, we have used the power of our network to maxim
ise opportun
it
ies
for people and businesses who trade, operate or invest in these regions. Our diverse experience, capabil
it
ies and culture sets
us apart.
We are present in 57 markets.
Asia
We have a long-standing and deep franchise across some of the world’s fastest-growing economies in Asia. The two markets
contribut
ing the h
ighest income are Singapore and India.
Australia
Laos
Singapore
Bangladesh
Macau
Sri Lanka
Brunei
Mainland China
Taiwan
Cambodia
Malaysia
Thailand
India
Myanmar
Vietnam
Indonesia
Nepal
Japan
Phil
ipp
ines
Africa & Middle East
We have a deep-rooted heritage in Africa & Middle East and have been present in the region for more than 160 years.
We are present in the largest number of sub-Saharan African markets of any internat
ional bank
ing group.
Angola
Jordan
Sierra Leone
Bahrain
Kenya
South Africa
Botswana
Lebanon
Tanzania
Cameroon
Maurit
ius
UAE
Cote d’Ivoire
Niger
ia
Uganda
Egypt
Oman
Zambia
The Gambia
Pakistan
Zimbabwe
Ghana
Qatar
Iraq
Saudi Arabia
Europe & Americas
We support clients in Europe & Americas through hubs in London and New York and also have a strong presence in several
European and Latin American markets.
Argentina
France
Poland
Brazil
Germany
Sweden
Colombia
Ireland
Turkey
Falkland Islands
Jersey
UK
US
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
8
Market environment
Macroeconomic factors affecting the global landscape
Global macro trends
Trends in 2022
•
Global GDP growth slowed sharply in 2022 , likely to 3.4%, following the 6.0% expansion in 2021, as inflat
ion soared,
and central banks were forced to tighten policy aggressively.
•
MENAP was the best-performing region, recording growth of 6.2%, supported by elevated commodity prices; Asia recorded
growth of 4.2%, down from 7.1% in 2021, primar
ily dr
iven by the slowdown in China, with growth falling to 3.0% in 2022 from
8.1% in 2021.
•
Among the majors, despite a technical recession in the first half of the year, the US recorded annual growth of 2.0% on
the back of resil
ient domest
ic demand while the UK likely grew by over 4.0%
•
The euro-area economy likely grew by 3.5% in 2022 following 5.3% growth in 2021; while the recovery was strong in
H1 due to COVID reopening effects, H2 was held back by ris
ing energy costs related to the Russ
ia-Ukraine conflict
•
In most majors, labour markets showed signs of further tighten
ing desp
ite slowing growth.
•
Central banks began to unwind support, at first gradually and then more rapidly as the year progressed and inflat
ionary
pressures built. Fiscal support continued in the euro area as governments sought to shield households and businesses
from elevated energy costs but provided less of a tailw
ind
in the US as COVID support measures were unwound.
Outlook for 2023
•
Global growth is expected to weaken to 2.5% in 2023, as central banks focus on bring
ing
inflat
ion back under control
•
Asia will likely be the fastest-growing region in the world and will continue to drive global growth, expanding by 5.3%.
Among the majors, the US is expected to witness a mild contraction of 0.2% in 2023, the UK a larger contraction of
0.5%, while the euro area is likely to see an overall modest expansion of 0.4%
•
2023 will be a tale of two halves, with global growth likely to pick up in H2-2023 as the US and euro area recover from
mild recessions and a more sign
ificant open
ing up of the China economy from COVID restrict
ions helps boost demand
and growth.
•
Tight global liqu
id
ity condit
ions are l
ikely to make it diff
icult for some emerg
ing markets to access internat
ional financing,
forcing them to seek multilateral support.
•
Downside risks to this outlook include sustained inflat
ionary pressures, slower-than-expected Ch
ina reopening and
another flare-up of geopolit
ical tens
ions, includ
ing the Russ
ia-Ukraine war
Medium and long-term view
Stagflation risks
•
Tight labour markets and the broadening of inflat
ionary pressures to the serv
ices sector is likely to keep stagflation a key
concern for central banks over the coming quarters.
•
The need to meet ESG targets could also prove inflat
ionary
in the medium term as the cost of using fossil fuels during the
transit
ion per
iod rises due to a combinat
ion of taxes, carbon pr
ic
ing and external tar
iffs.
•
As companies aim to reduce concentration risks and move towards onshore/near-shore production, the risk is a lowering
of efficiency ga
ins that might push up consumer prices
•
However, easing of supply-chain bottlenecks is likely to help dampen some of these pressures.
•
Fiscal policy might also turn from a tailw
ind to a headw
ind for growth. High public debt and government defic
its also
means that most economies are looking to tighten fiscal policy over the medium term.
Strategic report continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
9
Strategic report continued
Broader global trends
•
The world economy could see a permanent loss of economic output or ‘scarring’ due to the recession that followed the
pandemic. This would make it harder for emerging markets to catch up with developed markets.
•
Long-term growth in the developed world is constrained by ageing populations and high levels of debt, exacerbated
by the policy response to COVID-19.
•
Ris
ing nat
ional
ism, ant
i-globalisat
ion and protect
ion
ism are threats to long-term growth prospects
in emerging markets.
•
However, there are potential offsets. Higher capex to meet sustainab
il
ity targets and moves towards dig
ital
isat
ion could
boost productiv
ity growth, prov
ing an antidote to economic scarring concerns. With
in emerg
ing markets, countries in
Asia are best placed to take advantage of dig
ital
isat
ion.
•
Relatively younger populations, as well as the adoption of dig
ital technology, w
ill allow emerging markets to become
increas
ingly
important to global growth
Regional outlooks
Actual and projected growth by country in 2022 and 2023 per cent
2023
2022
Asia
China
5.8 per cent
3.0 per cent
Hong Kong
3.2 per cent
-3.5 per cent
India
5.5 per cent
7.0 per cent
Indonesia
5.1 per cent
5.4 per cent
Singapore
2.0 per cent
3.8 per cent
Africa & Middle East
Niger
ia
3.5 per cent
3.1 per cent
UAE
4.5 per cent
6.9 per cent
Europe & Americas
UK
-0.5 per cent
4.3 per cent
US
-0.2 per cent
2.1 per cent
Trends and outlook for our three regions
Asia
•
China’s GDP growth slowed to 3.0% in 2022 from 8.4% in 2021, falling short of the 5.5% target. Weak consumption
and property investment were the main drag on the economy, due to the stringent zero-COVID policy and ongoing
housing-market correction. We forecast 2023 growth at 5.8%, as the government appears more determined after the
conclusion of the Party Congress in October to address the two headwinds. China scrapped the COVID-zero policy sooner
than expected. Recent measures aimed at supporting property financ
ing w
ill likely stabil
ise home sales and
investment in
H2-2023. In addit
ion, the regulatory storm target
ing internet platforms will likely give way to more normalised regulation.
Consumption is likely to become a key growth driver and property investment less of a drag.
•
Monetary policy is likely to remain accommodative near-term, diverg
ing from major econom
ies, to curb the downside
risk that may linger in early 2023. However, China’s growth will likely rebound sign
ificantly
in Q2 following the expected
reopening, driv
ing
inflat
ion h
igher and prompting the central bank to shift to a more neutral policy stance to stabil
ise
the total debt-to-GDP ratio. The broad budget defic
it
is likely to be scaled back in 2023 on sustainab
il
ity concerns.
•
We expect Hong Kong’s economy to grow 3.2% in 2023 following a 3.5% contraction in 2022. While there are some
domestic bright spots, includ
ing a much-
improved labour market and relaxation of travel curbs, external drags will likely
be substantial, with tradit
ional export markets l
ike the US and euro area experienc
ing recess
ion at the start of 2023.
We expect South Korea’s economy to grow just 1.7% on concerns about weaker external demand and slowing domestic
consumption amid ris
ing
interest rates and tighter fiscal policy.
•
In India, recovery momentum remains robust, driven by firmer reopening in the services sector. Nevertheless, we expect
FY24 (year beginn
ing Apr
il 2023) GDP growth to moderate to 5.5%, from 7.0% in the current financ
ial year, g
iven
moderating global growth, erosion of real purchasing power and high domestic interest rates. Easing inflat
ion, back to
the comfort threshold of 2-6%, in FY24 should also lead to a prolonged pause from the MPC after the terminal repo rate
hits 6.5% by February 2023. The external sector will remain in focus amid the likel
ihood of st
ill-elevated crude oil prices
and relatively better economic activ
ity
in India. Ample FX reserves, however, are likely to remain a strong buffer for the
economy. The central bank is likely to focus on rebuild
ing FX reserves, although th
is might remain challenging amid a
still-wide current account defic
it. The central government budget presentat
ion in February 2023 will be closely watched
for any growth-supportive measures ahead of national elections in mid-2024. We believe the government will stay focused
on narrowing the fiscal defic
it, wh
ich is already sign
ificantly w
ider relative to the pre-pandemic phase.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
10
Strategic report continued
•
ASEAN as a region grew 5.9% in 2022, recovering strongly from a Delta-hit 2021. We expect ASEAN growth to ease
to its long-term average of 5.0% in 2023. As well as high base effects, external demand for ASEAN exports may soften
due to global synchronised monetary policy tighten
ing and the electron
ic cycle peak. Domestic demand may ease as
COVID-induced pent-up demand normalises, while local monetary policy tighten
ing may re
in in overall consumer and
investment impetus. However, stable labour markets will help support spending. The recovery in the tourism sector,
which is a large growth contributor for the region, will also help drive growth. In addit
ion,
investments may be boosted
by FDI seeking divers
ification and alternat
ive production capacity.
•
We expect inflat
ion to be m
ilder in 2023 due to high base effects. External prices may be more manageable, while tighter
monetary policy should help. While monetary policy tighten
ing may pause by early 2023 any eas
ing might not be
forthcoming amid potentially sticky inflat
ion, unless growth deter
iorates sign
ificantly.
Africa & Middle East
•
After a robust post-COVID recovery in early 2022 on ris
ing global demand and econom
ic reopening, includ
ing the
re-establishment of internat
ional travel, Sub-Saharan Afr
ican economies are now set to see a growth moderation.
Notwithstand
ing global trends, r
is
ing food and fuel pr
ices are still pressuring domestic inflat
ion, w
ith transmiss
ion often
exacerbated by FX weakness. The impact of 2022’s monetary policy tighten
ing w
ill be felt with a lag, with a number of
central banks still expected to raise interest rates further.
•
In Niger
ia, pres
ident
ial and general elect
ions in February/March 2023 will be a key focus, with the likel
ihood of FX and
fuel subsidy reforms potentially establish
ing cond
it
ions for more robust med
ium-term investment and growth. While
load-shedding will dampen near-term growth prospects in South Africa, a faster embrace of renewables and increased
corporatisat
ion of South Afr
ica’s rail and port infrastructure, could unlock a greater private-sector contribut
ion to growth.
In Kenya, efforts to boost lending to SMEs, and the increased adoption of dig
ital channels for financial
intermed
iat
ion,
should help lift loan growth.
•
Across the SSA space, monetary tighten
ing w
ill drive healthier net interest margins. However, internat
ional cap
ital market
access is likely to remain constrained for a number of sovereigns, rais
ing doubts over the easy refinancing of external
debt obligat
ions. The t
imely conclusion of debt restructurings in Zambia and Ghana could help boost investor sentiment
towards the SSA region. A pause in Fed tighten
ing, wh
ile not suffic
ient
in itself to trigger new inflows to all SSA markets,
may nonetheless help to reduce investor demand for higher risk premia.
•
A supportive energy price environment will likely provide continued benefit to GCC growth. The focus is once again on the
region as a provider of capital, as Gulf economies proceed with longer-term economic divers
ification plans, seek to reduce
the tradit
ional pro-cycl
ical
ity of spend
ing, and invest strategically in green technology. In the UAE and Saudi Arabia, we
expect the continuat
ion of robust growth, dr
iven by strong investment across both the hydrocarbon and non-hydrocarbon
sectors. For smaller GCC economies such as Oman, higher oil prices will drive a reduction in accumulated debt levels. For the
non-GCC MENAP region, condit
ions rema
in challenging. Pakistan’s abil
ity to reassure on
its external debt commitments,
amid dwindl
ing FX reserves, w
ill remain a key focus. In Egypt, recent currency depreciat
ion and a more accommodat
ive risk
backdrop globally could see the return of the carry trade. But economic condit
ions rema
in diff
icult am
id higher inflat
ion,
and the authorit
ies’ comm
itment to FX flexib
il
ity will be closely monitored.
Europe & Americas
•
We see a high risk of contraction in the US in H1 2023; in the euro area, we expect annual growth to decline sharply in
2023 as high inflat
ion and central bank t
ighten
ing we
igh on economic activ
ity.
•
The peak for consumer price inflat
ion
is likely behind us for both the US and Euro area, but will take time to return to target.
Central banks will remain alert to any signs of inflat
ion expectat
ions becoming unanchored or wage pressures build
ing
over the medium term.
•
The Fed is likely to stop hik
ing rates by Q1-2023, w
ith the Federal funds rate peaking at 4.75%, before beginn
ing to gradually
cut rates (by 25bps per quarter) from Q3-2023. The ECB is likely to hike its main refinanc
ing rate to a peak of 3.75% by
Q2-2023, but not start cutting rates until 2024 as inflat
ion proves st
icky on the downside.
•
Fiscal support is likely to remain focused on supporting households and businesses struggling with elevated energy
costs in Europe, but otherwise we can expect the tailw
ind from fiscal support to ease
in both the Euro area and US.
•
In Latin America, we expect a sign
ificant growth slowdown
in 2023 following a strong 2022. The delayed impact of
aggressive monetary tighten
ing and other
id
iosyncrat
ic issues are likely to weigh on domestic demand; external
headwinds and looming recession risks in the US are likely to drag down the region’s growth.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
11
Business model
We help internat
ional compan
ies to connect across our global network and help ind
iv
iduals and local business grow
their wealth.
Our business
Corporate, Commercial and Institut
ional Bank
ing (CCIB)
We support companies across the world, from small and medium-sized enterprises to large corporates and inst
itut
ions,
both dig
itally and
in person.
Consumer, Private and Business Banking (CPBB)
We support small businesses and ind
iv
iduals, from mass retail clients to affluent and high-net-worth ind
iv
iduals, both dig
itally
and in person.
Ventures
We promote innovat
ion,
invest in disrupt
ive financial technology and explore alternat
ive business models. Our pipel
ine
includes our cloud native dig
ital bank
in Singapore.
Our products and services
Financ
ial Markets
•
Macro, commodit
ies and cred
it trading
• Financ
ing and secur
it
ies serv
ices
• Sales and structuring
•
Debt capital markets and leveraged finances
• Project and transportation finance
Transaction Banking
• Cash management
• Trade finance
• Working capital
Wealth Management
• Investments
• Insurance
• Wealth advice
• Portfolio management
Retail Products
• Deposits
• Mortgages
• Credit cards
• Personal loans
How we generate returns
We earn net interest on the margin for loans and deposit products, fees on the provis
ion of adv
isory and other
services, and trading income from provid
ing r
isk management in financ
ial markets.
Income
• Net interest income
• Fee income
• Trading income
Profits
•
Income gained from provid
ing our products and serv
ices minus expenses and impa
irments
Return on tangible equity
•
Profit generated relative to tangible equity invested
Strategic report continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
12
Strategic report continued
What makes us different
Our purpose is to drive commerce and prosperity through our unique divers
ity – th
is is underpinned by our brand promise,
Here for good. Our stands – aimed at tackling the world’s biggest issues – Accelerating Zero, Lift
ing Part
ic
ipat
ion and
Resetting Globalisat
ion (see pages 15-16 for more), challenge us to use our un
ique posit
ion to help.
Client focus
Our clients are our business. We build long-term client relationsh
ips through trusted adv
ice, expertise and best-in-class
capabil
it
ies.
Dist
inct propos
it
ion
Our understanding of the markets and our extensive internat
ional network allow us to offer a ta
ilored proposit
ion to our
clients, combin
ing global expert
ise and local knowledge.
Robust risk management
We are here for the long-term. Effective risk management allows us to grow a sustainable business.
Sustainable and responsible business
We’re committed to sustainable social and economic development across our business, operations and communit
ies.
How we are shaping our future
We remain committed to executing against our strategy to drive returns and accretive growth
We are committ
ing resources to grow our franch
ise in large and high-returns markets, and accelerating progress in
markets being optim
ised. We cont
inue to review our business models to drive performance.
In 2022, we refocused our resources in the Africa and Middle-East (AME) region into exist
ing and new markets w
ith the
greatest scale and growth potential, provided further clarity on how we will achieve net zero in financed emiss
ions by
2050, and successfully launched Trust, a dig
ital bank
in Singapore.
In addit
ion,
in April 2022, we expanded our reporting structure with the creation of Ventures. The increased reporting
transparency for Ventures reflects the growing sign
ificance of the Group’s
investment in technology and innovat
ion.
Over the medium term, we will continue to relentlessly transform and innovate to become a leading cross-border bank
which bridges east and west, while deeply rooted in our core markets, and supports a sustainable future.
The sources of value we rely on
We aim to use resources in a sustainable way, to achieve the goals of our strategy.
Human capital
Divers
ity d
ifferent
iates us. Del
iver
ing our Purpose rests on how we cont
inue to invest in our people, the employee experience
we further enhance and the culture we strengthen.
How we’re enhancing our resources
•
We continue to create a work environment that supports resil
ience,
innovat
ion and
inclus
ion, w
ith ongoing focus on
mental, physical, social and financ
ial well-be
ing. This includes further rolling out hybrid-working across our markets.
•
Colleagues are encouraged and enabled to build the future skills that we need – includ
ing analyt
ics, data, dig
ital,
cyber security, sustainable finance and leadership
Strong brand
We are a leading internat
ional bank
ing group with more than 160 years of history. In many of our markets we are a
household name.
How we’re enhancing our resources
•
In 2022 we evolved our brand ident
ity to become a d
ig
ital-first brand, reflect
ing the innovat
ion that dr
ives our business
forward. The refreshed Standard Chartered ident
ity
is modern, dynamic and agile, adapted for the dig
ital world and
representing our commitment to stay relevant to our clients and their evolving needs
•
We have been successful in leveraging brand and ins
ights to support bus
iness growth. The PLC Group successfully
improved its reputation in 2022, exceeding the average score for the banking sector and ranking top three in the
majority of our key markets
in 2022
International network
We have an unparalleled internat
ional network, connect
ing companies, inst
itut
ions, and ind
iv
iduals to, and in, some of
the world’s fastest growing and most dynamic regions.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
13
Strategic report continued
How we’re enhancing our resources
•
We continue to invest in transforming our core business into a leading dig
ital first and data-dr
iven platform, posit
ion
ing
us to deliver superior client experiences, access new high-growth segments, grow wallet with exist
ing cl
ients and create
new business model opportunit
ies
•
Our network remains one of our key competit
ive advantages and we cont
inue to leverage our network to drive growth
in Trade from corridors and Financ
ial Markets solut
ions for our clients
Local expertise
We have a deep knowledge of our markets and an understanding of the drivers of the real economy, offering us ins
ights
that help our clients achieve their ambit
ions.
How we’re enhancing our resources
•
We continue to support small and medium businesses (SMEs), provid
ing them w
ith much needed funding to restart
and grow their businesses amid the re-opening of economies.
•
We increased our focus on SMEs partic
ipat
ing in the New Economy, in particular those who are part of e-commerce
ecosystems
Financ
ial strength
With $551 bill
ion
in assets on our balance sheet, we are a strong, trusted partner for our clients.
How we’re enhancing our resources
•
Stronger capital and much more resil
ient balance sheet w
ith growth in high quality deposits.
•
Common Equity Tier 1 (CET1) ratio at 12.3 per cent, above the Group target of 12 per cent
Technology
We possess strong dig
ital foundat
ions and leading technological capabil
it
ies to enable data-driven dig
ital bank
deliver
ing world class cl
ient service.
How we’re enhancing our resources
•
We are leveraging partnerships to create market leading dig
ital platforms
includ
ing D
ig
ital Banks and Bank
ing
as a Service, util
is
ing next generation technologies to service our clients
•
We continue to invest in our engineer
ing capab
il
it
ies, provid
ing best
in class tools, growing our engineer
ing talent,
and creating an automated and scalable technology stack able to continuously deliver value to our clients
The value we create
We aim to create long-term value for a broad range of stakeholders in a sustainable way
Clients
We want to deliver easy, everyday banking solutions to our clients in a simple and cost-effective way, and with a great
customer experience. We enable ind
iv
iduals to grow and protect their wealth; we help businesses trade, transact, invest,
and expand; and we also help a variety of financ
ial
inst
itut
ions, includ
ing banks, publ
ic sector and development
organisat
ions, w
ith their banking needs.
Employees
We believe great employee experience drives great client experience. We want all our people to pursue their ambit
ions,
deliver with purpose and have a rewarding career enabled by great people leaders.
Society
We strive to operate as a sustainable and responsible company, driv
ing prosper
ity through our core business, and
collaborating with local partners to promote social and economic development.
Suppliers
We engage diverse suppliers, both locally and globally, to provide effic
ient and susta
inable goods and services for
our business.
Regulators and governments
We engage with relevant public authorit
ies to play our part
in supporting the effective function
ing of the financial
system and the broader economy.
Investors
We aim to deliver robust returns and long-term sustainable value for our investors.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
14
Our strategy
To become a leader in global finance
We will continue to focus on:
•
Four strategic prior
it
ies: Wholesale Network business, Affluent client business, Mass Retail business and Sustainab
il
ity
•
Three crit
ical enables: People and Culture, Ways of Work
ing and Innovation
Over the past several years, we have conducted a bottom-up review of our strategy. While we could have done more in
a few areas, such as faster tackling of low returning risk weighted assets (RWA) in CCIB, further simpl
ify
ing the way we
operate, and being even more aggressive in transforming our business processes and generating addit
ional sav
ings, we still
believe our strategy is the right one. We have made good progress in the year, and are on track to deliver our object
ives.
We remain committed to achieve PLC Group’s ambit
ions by 2025:
•
To be the number one wholesale dig
ital bank
ing platform
•
To be among the top three affluent brands
• Double our mass presence
•
Become a market leader in sustainab
il
ity We will continue to focus on:
Going forward, our strategic prior
it
ies and enablers will continue to be anchored in our three Stands: Accelerating Zero;
Lift
ing Part
ic
ipat
ion and Resetting Globalisat
ion. More deta
ils on our Stands are described on pages 15-16.
Strategic prior
it
ies
Wholesale network business
Through our unique network, we facil
itate
investment, trade and capital flows, provid
ing a start
ing point in achiev
ing our
stand of resetting globalisat
ion. We have also started on our journey towards our stand of accelerat
ing zero, by focusing
on sustainable finance.
We are one of the leading internat
ional wholesale banks
in our emerging markets footprint through:
•
Taking leading posit
ions
in high-returning, high-growth sectors
•
Deliver
ing a market-lead
ing dig
ital platform by cont
inu
ing to
invest in core dig
ital capab
il
it
ies
•
Speeding up growth in large markets while expanding in growing markets and corridors e.g. intra-Asia and East-West
Affluent client business
We offer outstanding personalised advice and exceptional experiences for our Private, Prior
ity and Prem
ium Banking
clients to help them grow and prosper internat
ionally and at home. Prov
id
ing access to susta
inable investments is a key
different
iator, support
ing our Stand of Accelerating Zero.
As a leading internat
ional wealth manager
in Asia across the Affluent continuum, we are:
•
Unlocking the value of the Affluent client continuum across Asia, Africa and the Middle East, with suitable client
proposit
ions, coverage models and adv
isory capabil
it
ies
•
Maxim
is
ing the reach of our diverse network through internat
ional bank
ing, complemented by a strong focus on
developing Singapore as key internat
ional wealth centres
Mass retail business
We help our clients prosper and deliver everyday banking solutions by integrat
ing our serv
ices into their dig
ital l
ives.
New dig
ital solut
ions, strategic partnerships and advanced analytics are instrumental to our business, enabling us
to sign
ificantly
increase our reach and relevance to serve clients in a meaningful way, supporting our stand of lift
ing
partic
ipat
ion. We are:
•
Transforming to a dig
ital first model and bu
ild
ing enablers to be the partner of cho
ice to leading global and
regional companies
•
Enhancing our value proposit
ion and deepen
ing our capabil
it
ies across dig
ital sales and market
ing as well as
data and analytics
•
Growing the share of our mass retail client income from new innovat
ive bus
iness models
Strategic report continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
15
Sustainab
il
ity
In Sustainab
il
ity, in line with our stands, we continue to focus on sustainable and transit
ion finance, ach
iev
ing net zero carbon
emiss
ions from both our operat
ions and financ
ing. We prov
ide access to finance, networks and train
ing to young people,
and support companies in improv
ing env
ironmental, social and governance standards.
We strive to be a leading private sector catalyser of finance for the UN Sustainable Development Goals (SDGs) where it
matters most – in Asia, Africa, and the Middle-East. We are:
•
Leveraging climate risk management to support clients in managing climate risk and ident
ify
ing transit
ion opportun
it
ies
e.g. mobil
ise green and trans
it
ion finance
•
Integrating sustainable finance as a core component of our customer value proposit
ion and del
iver
ing susta
inable
finance solutions
•
Promoting economic inclus
ion to tackle
inequal
ity
in our footprint through Futuremakers by Standard Chartered
•
Targeting net zero carbon emiss
ions from our operat
ions by 2025, and from our financ
ing by 2050
People and culture
We are continu
ing to
invest in our people to build future-ready skills, provide them a different
iated exper
ience and
strengthen our culture of innovat
ion and
inclus
ion. Th
is includes:
•
Embedding our refreshed approach to performance, reward and recognit
ion that puts greater focus on outperformance
through collaboration and innovat
ion
•
Increasing re-skill
ing and upsk
ill
ing opportun
it
ies towards future roles that are al
igned with the business strategy and
ind
iv
iduals’ aspirat
ions
•
Expanding hybrid working across our footprint, with 78% of colleagues across 43 markets on hybrid-working
New ways of working
We continue to be client-centric, improve our operating rhythm in organisat
ional ag
il
ity and empower our people to
continuously improve the way we work. We are working on ident
ify
ing ways to track derived value and enhance our
speed of decis
ion-mak
ing and delivery, as a key source of competit
ive advantage.
Innovation
We have a three-pronged innovat
ion approach to transform the bank, to ach
ieve our goal of 50 per cent income from
new businesses.
•
Transform our core via dig
it
izat
ion
•
Leverage partnerships to drive scale and extend reach
•
Build new business models to create value
We have established Ventures as a separate client segment.
Our Stands
The severe impacts of climate change, stark inequal
ity and unfa
ir aspects of globalisat
ion
impact everyone on the planet.
We are taking a stand, setting long-term ambit
ions for our role on these
issues where they matter most. This works in unison
with our strategy, stretching our think
ing, our act
ion and our leadership to accelerate our growth.
•
We have defined three ‘stands’ – which is our name for long-term ambit
ions on soc
ietal challenges
•
These are not separate from our strategy. They are integral to deliver
ing and accelerat
ing our strategy, because they
will stretch our think
ing, our act
ion and our leadership
•
We will use our unique abil
it
ies to connect the capital, people and ideas needed to address the sign
ificant soc
io-economic
challenges and opportunit
ies of our t
ime
•
Each of these stands will impact how we engage with our clients and define the future of our societ
ies
•
We already have sign
ificant progress to show
in each area. And we will be setting long-term goals as we deliver
near term change
•
This is not philanthropy: we will drive scalable, sustainable commercial growth and transform our franchise. You will see
us increas
ingly act
ive in these areas
Strategic report continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
16
Strategic report continued
Accelerating Zero
We’re helping emerging markets in our footprint reduce carbon emiss
ions as fast as poss
ible, without slowing development,
putting the world on a sustainable path to net zero by 2050. We stand for a rapid, just transit
ion to net zero where
it matters
most. Our plan to achieve net zero targets has three aims: reduce emiss
ions, catalyse finance and partnersh
ips, and
accelerate new solutions.
•
The world needs to reach net zero by 2050 or face a climate catastrophe with increas
ing extreme weather events and
climate-induced migrat
ion
•
We have a unique role to play in facil
itat
ing a just transit
ion to net zero carbon where
it matters most: across Asia,
Africa and the Middle East
•
We aim to reduce the emiss
ions assoc
iated with PLC Group’s financ
ing act
iv
it
ies to net zero by 2050, with 2030 inter
im
targets in our most carbon-intens
ive sectors
•
We aim to reduce absolute financed thermal coal-min
ing em
iss
ions for PLC Group by 85 per cent by 2030,
in addit
ion
to a prohib
it
ion on financ
ing new or expand
ing coal-fired power plants, and revenue-based carbon-intens
ity of 63 per cent
for power, 33 per cent respectively for steel and min
ing (exclud
ing thermal coal min
ing), 30 per cent for o
il and gas
•
We aim to catalyse finance and partnerships to scale impact, capital and climate solutions to where they are needed
most, includ
ing a plan for PLC Group to mob
il
ise USD300 b
ill
ion
in green and transit
ion finance between 2022 and 2030
•
We aim to accelerate new solutions to support a just transit
ion
in our markets, includ
ing a new ded
icated Transit
ion
Acceleration Team to support clients in high-emitt
ing sectors, and launch susta
inable products
•
We aim to reach net zero carbon emiss
ions from PLC Group’s own operat
ions by 2025
Lift
ing Part
ic
ipat
ion
PLC Group is determined to improve the lives of 1 bill
ion people and the
ir communit
ies by unleash
ing the financ
ial potent
ial
of women and small businesses in our core markets. We stand for equitable access to financ
ial support for women and
small business.
•
Inequality, along with gaps in economic inclus
ion
in our key markets, means that many young people, women and small
businesses struggle to gain access to the financ
ial system to save for the
ir futures and grow their businesses. We want
to democratise wealth management and make it easily accessible to the mass segment at low cost
•
Through partnerships and technology, we can expand the reach and scale of financ
ial serv
ices – driv
ing access
ible banking
at scale and connecting clients to opportunit
ies that promote access to finance and econom
ic inclus
ion. By develop
ing
new dig
ital bus
iness models, we’re able to grow our business while unleashing opportunity for mill
ions more people
Resetting Globalisat
ion
It is PLC Group’s goal to support 500,000 companies to improve working and environmental standards and give everyone
the chance to partic
ipate
in the world economy, so growth becomes fairer and more balanced. We stand for a new model
of globalisat
ion based on transparency,
inclus
ion and d
ialogue.
Globalisat
ion has l
ifted mill
ions out of poverty, but too many people have been left beh
ind, and div
is
ion and inequal
ity
have grown, along with negative impacts on our planet.
We believe in the potential of globalisat
ion to enable econom
ic growth and increase partic
ipat
ion in the world economy –
but in its current form, it must be reimag
ined to ensure that
it best serves all people, everywhere.
We advocate a new, more inclus
ive model of global
isat
ion based on transparency and fa
irness, build
ing trust, and promot
ing
the exchange of views and innovat
ion to solve the world’s toughest problems.
As a leading trade bank, we can connect the capital, expertise and ideas needed to drive new standards and create
innovat
ive solut
ions for more equitable and sustainable growth.
Specif
ically, we a
im to:
•
Increase transparency across supply chains to enable consumer choice and drive responsible trade
•
Bring enhanced levels of security, tracking and confidence to financ
ial act
iv
ity
•
Provide access to the best and most innovat
ive solut
ions to both private and public sector
•
Support several companies to improve working and environmental standards and giv
ing everyone the chance to
partic
ipate
in the world economy, so growth becomes fairer and more balanced
•
Make global trade more equitable by improv
ing access to finance for smaller suppl
iers who often lack adequate financ
ing
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
17
Client segment reviews
Corporate, Commercial & Institut
ional Bank
ing
Profit before taxation
$3,389m $3,346m
Underlying basis
Statutory basis
Segment overview
Corporate, Commercial & Institut
ional Bank
ing supports local and large corporations, governments, banks and investors
with their transaction banking, financ
ial markets and borrow
ing needs. We provide solutions to clients in some of the world’s
fastest-growing economies and most active trade corridors.
Our strong and deep local presence enables us to help co-create bespoke financing solut
ions and connect our clients
multilaterally to investors, suppliers, buyers and sellers, enabling them to move capital, manage risk and invest to create
wealth. Our clients represent a large and important part of the economies we serve. Corporate, Commercial and Institut
ional
Banking is at the heart of the Group’s shared Purpose to drive commerce and prosperity through our unique divers
ity.
We are also committed to promote sustainable finance in our markets and channelling capital to where the impact will be
greatest. We are deliver
ing on our amb
it
ion to support susta
inable economic growth, increas
ing support and fund
ing for
financial offer
ings that have a posit
ive
impact on our communit
ies and env
ironment.
Performance highl
ights
•
Underlying operating profit before taxation of $3,389 mill
ion up 48 per cent, pr
imar
ily dr
iven by higher income partly
offset by higher expenses
•
Underlying operating income of $7,024 mill
ion was up 23 per cent pr
imar
ily due to h
igher Transaction Banking
income (primar
ily cash) on account of h
igher interest margins, and stronger Financ
ial Markets performance
(largely Macro Trading) on the back of increased market volatil
ity, partly offset by lower lend
ing income due to
RWA optim
isat
ion in
it
iat
ives.
•
Credit impa
irment
is a net writeback, due to sign
ificant releases
in Stage 3 and release of covid-19 overlays, partly
offset by impa
irments from sovere
ign downgrades of some key markets.
•
Risk-weighted assets is largely flat against prior year as impact of business growth has been offset by optim
isat
ion
in
it
iat
ives and favourable currency movements.
Consumer, Private & Business Banking
Profit before taxation
$933m
$900m
Underlying basis
Statutory basis
Segment overview
Consumer, Private and Business Banking serves ind
iv
iduals and small businesses, with a focus on affluent and emerging
affluent in many of the world’s fastest-growing cit
ies. We prov
ide dig
ital bank
ing services with a human touch to our clients,
with services spanning across deposits, payments, financ
ing products and Wealth Management. We also support our cl
ients
with their business banking needs. Private Banking offers a full range of investment, credit and wealth planning products to
grow, and protect, the wealth of high net-worth ind
iv
iduals. We also support our small businesses clients with their business
banking needs. We are closely integrated with the Group’s other client segments; for example, we offer employee banking
services to Corporate, Commercial & Institut
ional Bank
ing clients, and Consumer, Private and Business Banking also provides
a source of high-quality liqu
id
ity for the Group. Increasing levels of wealth across Asia, Africa and the Middle East support our
opportunity to grow the business sustainably. We aim to continuously uplift client experience and improve productiv
ity by
driv
ing end-to-end d
ig
ital
isat
ion and process s
impl
ification.
Performance highl
ights
•
Underlying profit before taxation of $933 mill
ion up $365m dr
iven by higher income, lower cost and lower credit
impa
irments.
•
Underlying operating income of $2,875 mill
ion was up 7 per cent, due to strong performance
in Retail deposits on the
back of improved interest margins, partly offset by lower Wealth Management income.
•
Expenses were down 1 per cent year-on-year due to currency movements.
•
Credit impa
irment dropped 89 per cent due to lower charge-offs from unsecured and bus
iness banking portfolios,
improved delinquency flows and Covid-19 overlay release
Strategic report continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
18
Strategic report continued
Ventures
Profit before taxation
$(277)m $(278)m
Underlying basis
Statutory basis
Segment overview
As part of the ongoing execution of its refreshed strategy, the Group has expanded and reorganised its reporting structure
with the creation of Ventures, effective on 1 January 2022. Ventures is a consolidat
ion of SC Ventures and
its related entit
ies
as well as the Group’s majority-owned d
ig
ital bank: Trust
in Singapore.
SC Ventures
is the platform and catalyst for the Group to promote innovat
ion,
invest in disrupt
ive financial technology and
explore alternative business models.
Trust Bank
was launched in Singapore, in a partnership with Fairpr
ice Group, the nat
ion’s leading grocery retailer,
in September 2022.
Performance highl
ights
•
Underlying loss before tax of $277 mill
ion was up $89 m
ill
ion dr
iven mainly by higher expenses as we continue to invest
in new and exist
ing Ventures
•
Total assets of $900 mill
ion have
increased $496 mill
ion ma
inly due to continued investment in new and exist
ing ventures
and minor
ity
interests.
Regional reviews
Asia
Profit before taxation
$2,033m $2,024m
Underlying basis
Statutory basis
Region overview
The Asia region has a long-standing and deep franchise across the markets and some of the world’s fastest-growing
economies. The region generated 45 per cent of the Group’s income benefitt
ing from our extens
ive network of markets.
Of these, Singapore and India contributed the highest income, underpinned by a divers
ified franch
ise and deeply
rooted presence.
The region is highly interconnected, with China’s economy at its core. Our global footprint and strong regional presence,
dist
inct
ive proposit
ion and cont
inued investment posit
ion us strongly to capture opportun
it
ies as they ar
ise from the
continu
ing open
ing up of China’s economy.
The region is benefit
ing from r
is
ing trade flows, cont
inued strong investment, and a ris
ing m
iddle class which is driv
ing
consumption growth and improv
ing d
ig
ital connect
iv
ity.
Performance highl
ights
•
Underlying operating profit before tax of $2,033 mill
ion was up 33 per cent due to h
igher income and lower
credit impa
irment.
•
Underlying operating income of $4,631 mill
ion up 8 per cent, due to h
igher TB and Retail Products income benefit
ing
from interest rate rise, partially offset by lower Wealth Management and Lending income.
•
Credit impa
irment down 154 per cent, due to reduced
impa
irments and release of ECL overlays
•
Total assets and liab
il
it
ies down 7 per cent and 8 per cent respect
ively since 31 December 2021 largely due to
FX depreciat
ion.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
19
Strategic report continued
Africa & Middle East
Profit before taxation
$828m
$799m
Underlying basis
Statutory basis
Region overview
We have a deep-rooted heritage in Africa & Middle East and are present in 25 markets, of which the UAE, Niger
ia, Pak
istan,
Kenya, and Ghana are the largest by income. We are present in the largest number of sub-Saharan African markets of any
internat
ional bank
ing group.
A rich history, deep client relationsh
ips and a un
ique footprint in the region, as well as across centres in Asia, Europe and
the Americas enable us to seamlessly support our clients. Africa & Middle East is an important element of global trade and
investment corridors, includ
ing those on Ch
ina’s Belt and Road in
it
iat
ive and we are well placed to fac
il
itate these flows.
Posit
ive macro-trends (o
il, commodity and UAE property prices) are driv
ing market opportun
it
ies, but challenges and
uncertaint
ies ex
ist in the near term. We’re confident that the opportunit
ies
in the region will support long-term sustainable
growth for the Group. We continue to invest selectively and drive effic
ienc
ies. We have strengthened our footprint with a
branch set-up in Saudi in 2021. Posit
ive macro-tends (o
il, commodity and UAE property prices) & market opportunit
ies,
but challenges and uncertaint
ies rema
in. We’re confident that the opportunit
ies
in the region will support long-term
sustainable growth for the Group. We continue to invest selectively and drive effic
ienc
ies.
Performance highl
ights
•
Underlying operating profit before tax of $828 mill
ion was down 4 per cent dr
iven by higher credit impa
irments and
expenses, partly offset by higher income
•
Underlying operating income of $2,582 mill
ion was up 6 per cent ma
inly due to growth in Transaction Banking and
Financ
ial Markets
income, partly offset by lower Lending income.
•
Total assets were 35 per cent lower than 31 December 2021 due to continu
ing RWA opt
im
izat
ion activ
it
ies and de-risk
ing
in markets with elevated macro-economic risk.
Europe & Americas
Profit before taxation
$1,204m
$1,192m
Underlying basis
Statutory basis
Region overview
The Group supports clients in Europe & Americas through hubs in London, Frankfurt and New York as well as a presence in
several other markets in Europe and Latin America. Our expertise in Asia, Africa and the Middle East allows us to offer our
clients in the region unique network and product capabil
it
ies.
The region generates sign
ificant
income for the Group’s Corporate, Commercial & Institut
ional Bank
ing business. In addit
ion
to being a key orig
inat
ion centre for Corporate, Commercial & Institut
ional Bank
ing, the region offers local, on-the-ground
expertise and solutions to help internat
ionally m
inded clients grow across Europe & Americas. The region is home to the
Group’s two biggest payment clearing centres and the largest trading floor. More than 80 per cent of the region’s income
derives from Financ
ial Markets and Transact
ion Banking products.
Our Private Banking business focuses on serving clients with links to our footprint markets.
Performance highl
ights
•
Underlying operating profit before taxation of $1,204 mill
ion
improved 68 per cent driven by higher income, partly offset
by higher costs and impa
irments
•
Underlying operating income of $2,587 mill
ion was up 29 per cent largely due to h
igher Financ
ial Markets (largely Macro
trading) and Transaction Banking (Cash), partly offset by Treasury income due to lower accrual income and structural
hedge losses
•
Expenses increased 2 per cent due to increased investment spend and higher performance related pay
•
Total assets and liab
il
it
ies grew 13 per cent and 7 percent from 31 December 2021
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
20
Financ
ial rev
iew
Summary of financial performance
2022
$mill
ion
2021
$mill
ion
Change
%
Net Interest income
4,452
4,056
10
Other income
5,741
4,858
18
Underlying operating income
10,193
8,914
14
Other underlying expenses
(6,437)
(6,104)
(5)
UK bank levy
(102)
(100)
(2)
Underlying operating expenses
(6,539)
(6,204)
(5)
Underlying operating profit before impa
irment and taxat
ion
3,654
2,710
35
Credit impa
irment
22
28
(21)
Other impa
irment
(84)
9
nm
1
Profit from associates and jo
int ventures
(13)
1
nm
1
Underlying profit before taxation
3,579
2,748
30
Restructuring
(115)
(325)
65
Goodwill and other Impairment
(10)
–
nm
1
Other items
20
(42)
nm
1
Statutory profit before taxation
3,474
2,381
46
Taxation
(1,122)
(743)
(51)
Profit after tax
2,352
1,638
44
Underlying return on tangible equity (%)
9.1
6.9
Common Equity Tier 1 (%)
12.3
12.3
1
Not meaningful
Operating income
increased 14 per cent or 16 per cent, normalis
ing for a non-repeat of pr
ior year $163 mill
ion IFRS9
interest
income catch-up adjustment. Operating income growth was driven by double-dig
it growth
in both net interest income
and other income, on the back of higher net interest margins and strong financ
ial markets performance respect
ively.
Net interest income
increased 10 per cent or 14 per cent when adjusted for prior year IFRS9 adjustment. Net interest margin
averaged 137 basis points and is 14 basis points higher year-on-year benefit
ing from r
is
ing
interest rates.
Other income
increased 18 per cent, due to higher Financ
ial Markets (largely Macro trad
ing), partly offset by lower
Wealth Management income.
Operating expenses
excluding the UK bank levy are up 5 per cent primar
ily reflect
ing the impact of a high-inflat
ion
environment, includ
ing salary
increases, addit
ional
investment in transformational dig
ital capab
il
it
ies and post-covid
normalisat
ion of cost l
ines. The cost-to-income ratio (excluding the UK bank levy) decreased 5 percentage points to
63 per cent.
Credit impa
irment
is a net credit of $22 mill
ion. Th
is is driven primar
ily by s
ign
ificant releases and repayments
in Stage 3
from a few clients and release of covid-19 overlays, partly offset by sovereign downgrades of some key markets.
Other impa
irment
is a net charge of $84m and primar
ily relates to software
Charges relating to
restructuring and other items
reduced by $210 mill
ion and $62 m
ill
ion respect
ively, partly offset
by a $10 mill
ion goodw
ill write off relating to Bangladesh.
Taxation
of $1,122 mill
ion for the year represents an effect
ive tax rate of 32 per cent and is higher than FY2022’s effective
tax rate of 31 per cent.
Underlying
Return on tangible equity
increased by 226 basis points to 9.1 per cent driven by higher profits and lower
tangible equity.
Strategic report continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
21
Strategic report continued
Statutory financial performance summary
2022
$mill
ion
2021
$mill
ion
Change
%
Net Interest income
4,451
4,052
10
Other income
5,783
4,808
20
Statutory operating income
10,234
8,860
16
Statutory operating expenses
(6,662)
(6,480)
(3)
Statutory operating profit before impa
irment and taxat
ion
3,572
2,380
50
Credit impa
irment
22
30
nm
1
Goodwill and other impa
irment
(107)
(30)
(257)
(Loss)/profit from associates and jo
int ventures
(13)
1
nm
1
Statutory profit before taxation
3,474
2,381
46
Taxation
(1,122)
(743)
(51)
Profit after tax
2,352
1,638
44
Statutory return on tangible equity (%)
8.8
5.5
1
Not meaningful
Underlying profit/(loss) before tax by client segment and geographic region
2022
$mill
ion
2021
(Restated)¹
$mill
ion
Change
%
Corporate, Commercial & Institut
ional Bank
ing
1
3,389
2,289
48
Consumer, Private & Business Banking
1
933
568
64
Ventures
2
(277)
(188)
(47)
Central & other items (segment)
(466)
79
nm
3
Underlying profit before taxation
3,579
2,748
30
Asia
2,033
1,527
33
Africa & Middle East
828
858
(3)
Europe & Americas
1,204
715
68
Central & other items (region)
(486)
(352)
(38)
Underlying profit before taxation
3,579
2,748
30
1
Following the increased strategic importance and reporting of Ventures to management, this has been established as a separate operating segment from
1 January 2022. Prior period has been restated
2
Ventures is comprised of Trust Bank Singapore & SC Ventures
3 Not meaningful
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
22
Strategic report continued
Net Interest Margin
2022
$mill
ion
2021
(restated)
5
$mill
ion
Change
1
$mill
ion
Adjusted net interest income
2
4,695
4,074
15
Average interest-earning assets
343,947
330,185
4
Average interest-bearing liab
il
it
ies
316,964
298,221
6
Gross yield (%)
3
2.84
1.87
97
Rate paid (%)
3
1.60
0.71
89
Net interest margin (%)
3,4
1.37
1.23
14
1
Variance is better/(worse) other than assets and liab
il
it
ies wh
ich is increase/(decrease)
2
Adjusted net interest income is statutory net interest income less funding costs for the trading book and financ
ial guarantee fees on
interest earning assets
3
Change in the basis points (bps) difference between two periods rather than the percentage change
4
Adjusted net interest income div
ided by average
interest-earning assets, annualised
5
Prior year adjusted net interest income has been restated for to reflect impact of funding costs for the trading book and financ
ial guarantee fees on
interest
earning assets
Adjusted net interest income was up 15 per cent driven by higher net interest margin which increased 14 basis point
year-on-year, and 16bps year-on-year when prior year benefit of $163 mill
ion from IFRS9
income adjustments is excluded,
reflecting the impact of higher interest rates.
Average interest-earning assets increased 4 per cent driven by higher trade and treasury assets, partially offset by lower
lending assets on the back of optim
isat
ion in
it
iat
ives. Gross y
ields increased 97 basis points compared to the average in
2021 predominantly reflecting the impact of increase of key interest rates.
Average interest-bearing liab
il
it
ies
increased 7 per cent driven by growth in financ
ial markets assets and reta
il term deposits.
The rate paid on liab
il
it
ies
increased by 97 basis points year-on-year reflecting impact of interest rate hikes in key markets.
Credit quality
Asset quality remains strong, with an improvement in a number of underlying credit metrics. However, the Group continues to
remain alert to an unpredictable and challenging external environment includ
ing commod
ity price volatil
ity and the
impact
of the Russia-Ukraine war. This war in part contributed to both commodity price volatil
ity and the accelerated trajectory of
inflat
ion and
interest rate rises across our footprint, which in turn have supported both an increased risk of global recession
and the appreciat
ion of the US dollar versus the majority of developed and emerg
ing market currencies. These factors have
led to increased sovereign credit stress in a handful of our markets
Credit impa
irment was a net release of $22 m
ill
ion, reflect
ing the impact of sign
ificant releases and repayments
in stage 3
from few clients and full release of COVID-19 overlay, partly offset by sovereign downgrades of Sri Lanka, Ghana and
Pakistan.
Balance Sheet
2022
$mill
ion
2021
$mill
ion
Change
1
%
Gross loans and advances to customers
2
162,158
149,672
8
Of which stage 1
148,213
129,990
14
Of which stage 2
7,743
12,741
(39)
Of which stage 3
6,202
6,941
(11)
Expected credit loss provis
ions
(4,032)
(4,873)
(17)
Of which stage 1
(268)
(266)
1
Of which stage 2
(187)
(381)
(51)
Of which stage 3
(3,577)
(4,226)
(15)
Net loans and advances to customers
158,126
144,799
9
Of which stage 1
147,945
129,724
14
Of which stage 2
7,556
12,360
(39)
Of which stage 3
2,625
2,715
(3)
Cover ratio of stage 3 before/after collateral (%)
3
58/74
61/78
(3)/(4)
Credit grade 12 accounts ($mill
ion)
1,282
1,639
(22)
Early alerts ($mill
ion)
3,143
4,285
(27)
Investment grade corporate exposures (%)
3
79
71
8
1
Variance is increase/(decrease) comparing current reporting period to prior reporting period
2
Includes reverse repurchase agreements and other sim
ilar secured lend
ing held at amortised cost of $15,586 mill
ion at 31 December 2022 (2021: $3,764 m
ill
ion)
3
Change is the percentage points difference between the two points rather than the percentage change
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
23
Strategic report continued
Restructuring and other items
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 sign
ificant or mater
ial in
the context of the Group’s normal business earnings for the period and items which management and stakeholders would
ordinar
ily
ident
ify separately when assess
ing underlying performance period-by period.
Restructuring charges of $115 mill
ion for 2022 reflect the
impact of actions to transform the organisat
ion to
improve
productiv
ity, pr
imar
ily redundancy related charges.
Goodwill impa
irment of $10 m
ill
ion relates to Bangladesh pr
imar
ily due to lower econom
ic growth forecasts and higher
discount rates.
Other items include a $20 mill
ion fa
ir value gain relating to the sale of a property in Thailand.
The Group has announced that it is exploring the exit of seven markets in the AME region and will focus solely on the
CCIB 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.
Restructuring, goodwill impa
irment and other
items
2022
$mill
ion
2021
$mill
ion
Restructuring
Goodwill
and other
Impairment
Other items
Restructuring
Goodwill
and other
Impairment
Other items
Operating income
21
–
20
(74)
–
20
Operating expenses
(123)
–
–
(214)
–
(62)
Credit impa
irment
–
–
–
2
–
–
Other impa
irment
(13)
(10)
–
(39)
–
–
(Loss)/profit before taxation
(115)
(10)
20
(325)
–
(42)
Balance sheet and liqu
id
ity
2022
$mill
ion
2021
$mill
ion
Assets
Loans and advances to banks
27,383
29,999
Loans and advances to customers
158,126
144,799
Other assets
365,225
369,993
Total assets
550,734
544,791
Liab
il
it
ies
Deposits by banks
24,150
25,205
Customer accounts
243,075
242,331
Other liab
il
it
ies
249,366
241,818
Total liab
il
it
ies
516,591
509,354
Equity
34,143
35,437
Total equity and liab
il
it
ies
550,734
544,791
Advances-to-deposits ratio (%)
1
50%
52%
SC Bank is not regulated for Liqu
id
ity Coverage Ratio (LCR), however, the bank and material subsid
iar
ies in the consolidat
ion have standalone LCR rat
ios above
100 per cent.
1
In calculating the advances-to-deposits ratio, the Group now excludes $20,798 mill
ion held w
ith central banks (2021: $15,168 mill
ion) that have been confirmed
as repayable at the point of stress
The Group’s balance sheet is strong, highly liqu
id and d
ivers
ified.
Loans and advances to customers increased 9 per cent since December 2021 to $158 bill
ion dr
iven mainly by growth in
Financ
ial Markets, partly offset by reduct
ion from risk-weighted asset optim
isat
ion actions undertaken by CCIB.
Customer accounts of $243 bill
ion
increased slightly by 0.3 per cent since December 2021 driven largely by an increase in
retail term deposits, partly offset by lower cash management volumes
Other assets decreased 1 percent since December 2021, driven by reduction in reverse repurchase agreement designated
at fair value through profit or loss partly offset by an increase in derivat
ive balances.
Other liab
il
it
ies were 3 percent h
igher since December 2021, reflecting an increase in derivat
ive balances
The advances-to-deposits ratio decreased to 50 per cent from 52 per cent at 31 December 2021 reflecting a reduction in loans
and advances to customers excluding reverse repurchase agreement as a result of risk-weighted asset optim
isat
ion actions.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
24
Strategic report continued
Capital base and ratios
2022
$mill
ion
2021
$mill
ion
CET1 capital
21,746
23,884
Addit
ional T
ier 1 capital (AT1)
5,403
5,872
Tier 1 capital
27,149
29,756
Tier 2 capital
12,439
12,075
Total capital
39,588
41,831
CET1 capital ratio (%)
12.3%
12.3%
Total capital ratio (%)
22.4%
21.6%
Leverage ratio (%)
4.8%
4.5%
Standard Chartered Bank is authorised by the PRA and regulated by the Financ
ial Conduct Author
ity and the PRA as
Standard Chartered Bank (Solo Consolidated).
Standard Chartered Bank continues to operate through its branches and a number of subsid
iar
ies, all of which remain
well capital
ised
in line with their applicable Court-approved Risk Appetites which takes into account local regulations,
Pillar 1 and 2 requirements and regulatory and management buffers as applicable.
The Group’s CET1 capital ratio remained strong at 12.3 per cent at FY2022 with leverage at 4.8 per cent. The Group
mainta
ins h
igh levels of loss absorbing capacity. Compared to 31 December 2021, the Group’s CET1 capital ratio remained
largely flat. RWAs decreased by $17.6 bill
ion to $176.4 b
ill
ion. CET1 cap
ital decreased by $2.1 bill
ion as profits of $2.4 b
ill
ion
were more than offset by distr
ibut
ions of $0.9 bill
ion, a fore
ign currency translation impact of $1.2 bill
ion, movement
in other
comprehensive income of $1.0 bill
ion, removal of software benefit $0.7 b
ill
ion and an
increase in regulatory deductions and
other movements of $0.7 bill
ion. On 9 July 2021, the PRA publ
ished a policy statement on implement
ing Basel standards
which confirmed that qualify
ing software assets would need to be deducted from CET1 cap
ital from January 2022 with
impact of 32 bps to CET1 ratio. From 1 January 2022 RWA increases due to post model adjustments following new PRA rules
on IRB models and the introduct
ion of standard
ised rules for counterparty credit risk on derivat
ives and other
instruments.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
25
Strategic report continued
Underlying versus statutory results reconcil
iat
ions
Reconcil
iat
ions between underlying and statutory results are set out in the tables below:
Operating income by client segment
2022
Corporate,
Commercial &
Institut
ional
Banking
$mill
ion
Consumer,
Private &
Business
Banking
$mill
ion
Ventures
$mill
ion
Central &
other items
$mill
ion
Total
$mill
ion
Underlying operating income
7,024
2,875
3
291
10,193
Restructuring
19
–
–
2
21
Other items
–
–
–
20
20
Statutory operating income
7,043
2,875
3
313
10,234
2021 (Restated)
1
Corporate,
Commercial &
Institut
ional
Banking
$mill
ion
Consumer,
Private &
Business
Banking
$mill
ion
Ventures
$mill
ion
Central &
other items
$mill
ion
Total
$mill
ion
Underlying operating income
5,703
2,680
(21)
552
8,914
Restructuring
(33)
–
–
(41)
(74)
Other items
–
–
20
20
20
Statutory operating income
5,670
2,680
(1)
511
8,860
1
Following the increased strategic importance and reporting of Ventures to management, this has been established as a separate operating segment from 1 January
2022. Prior period has been restated
Operating income by region
2022
Asia
$mill
ion
Africa &
Middle East
$mill
ion
Europe &
Americas
$mill
ion
Central &
other items
$mill
ion
Total
$mill
ion
Underlying operating income
4,631
2,582
2,587
393
10,193
Restructuring
21
2
(1)
(1)
21
Other items
–
–
–
20
20
Statutory operating income
4,652
2,584
2,586
412
10,234
2021
Asia
$mill
ion
Africa &
Middle East
$mill
ion
Europe &
Americas
$mill
ion
Central &
other items
$mill
ion
Total
$mill
ion
Underlying operating income
4,274
2,435
2,006
199
8,914
Restructuring
(11)
3
(31)
(35)
(74)
Other items
–
–
–
20
20
Statutory operating income
4,263
2,438
1,975
184
8,860
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
26
Strategic report continued
Profit before taxation (PBT)
2022
Underlying
$mill
ion
Regulatory
Fine
$mill
ion
Restructuring
$mill
ion
Net gain on
businesses
disposed/held
for sale
$mill
ion
Gains aris
ing on
repurchase of
senior and
subordinated
liab
il
it
ies
$mill
ion
Goodwill and
impa
irment
$mill
ion
Statutory
$mill
ion
Operating income
10,193
–
21
20
–
–
10,234
Operating expenses
(6,539)
–
(123)
–
–
–
(6,662)
Operating profit/(loss)
before impa
irment losses
and taxation
3,654
–
(102)
20
–
–
3,572
Credit impa
irment
22
–
–
–
–
–
22
Other impa
irment charge
(84)
–
(13)
–
–
(10)
(107)
Loss from associates and jo
int
ventures
(13)
–
–
–
–
–
(13)
Profit/(loss) before taxation
3,579
–
(115)
20
–
(10)
3,474
2021
Underlying
$mill
ion
Regulatory Fine
$mill
ion
Restructuring
$mill
ion
Net gain on
businesses
disposed/held
for sale
$mill
ion
Losses aris
ing
on repurchase
of senior and
subordinated
liab
il
it
ies
$mill
ion
Goodwill and
other
Impairment
$mill
ion
Statutory
$mill
ion
Operating income
8,914
–
(74)
20
–
–
8,860
Operating expenses
(6,204)
(62)
(214)
–
–
–
(6,480)
Operating profit/(loss)
before impa
irment losses
and taxation
2,710
(62)
(288)
20
–
–
2,380
Credit impa
irment
28
–
2
–
–
–
30
Other impa
irment release/
(charge)
9
–
(39)
–
–
–
(30)
Profit from associates and
joint ventures
1
–
–
–
–
–
1
Profit/(loss) before taxation
2,748
(62)
(325)
20
–
–
2,381
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
27
Strategic report continued
Profit before taxation (PBT) by client segment
2022
Corporate,
Commercial &
Institut
ional
Banking
$mill
ion
Consumer,
Private &
Business
Banking
$mill
ion
Ventures
$mill
ion
Central &
other items
$mill
ion
Total
$mill
ion
Operating income
7,024
2,875
3
291
10,193
External
6,428
2,321
3
1,441
10,193
Inter-segment
596
554
–
(1,150)
–
Operating expenses
(3,813)
(1,917)
(242)
(567)
(6,539)
Operating profit/(loss) before impa
irment losses and taxat
ion
3,211
958
(239)
(276)
3,654
Credit impa
irment
186
(19)
(2)
(143)
22
Other impa
irment charge
(8)
(6)
(20)
(50)
(84)
Loss/(profit) from associates and jo
int ventures
–
–
(16)
3
(13)
Underlying profit/(loss) before taxation
3,389
933
(277)
(466)
3,579
Restructuring
(43)
(33)
(1)
(38)
(115)
Goodwill impa
irment and other
items
–
–
–
10
10
Statutory profit/(loss) before taxation
3,346
900
(278)
(494)
3,474
2021 (Restated)¹
Corporate,
Commercial &
Institut
ional
Banking
$mill
ion
Consumer,
Private &
Business
Banking
$mill
ion
Ventures
$mill
ion
Central &
other items
$mill
ion
Total
$mill
ion
Operating income
5,703
2,680
(21)
552
8,914
External
5,560
2,323
(21)
1,052
8,914
Inter-segment
143
357
–
(500)
–
Operating expenses
(3,591)
(1,943)
(167)
(503)
(6,204)
Operating profit before impa
irment losses and taxat
ion
2,112
737
(188)
49
2,710
Credit impa
irment
216
(169)
–
(19)
28
Other impa
irment (charge)/release
(39)
–
–
48
9
Profit from associates and jo
int ventures
–
–
–
1
1
Underlying profit/(loss) before taxation
2,289
568
(188)
79
2,748
Restructuring
(108)
(47)
–
(170)
(325)
Goodwill impa
irment and other
items
–
–
20
(62)
(42)
Statutory profit/(loss) before taxation
2,181
521
(168)
(153)
2,381
1
Following the increased strategic importance and reporting of Ventures to management, this has been established as a separate operating segment from 1 January
2022. Prior period has been restated
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
28
Strategic report continued
Profit before taxation (PBT) by region
2022
Asia
$mill
ion
Africa &
Middle East
$mill
ion
Europe &
Americas
$mill
ion
Central &
other items
$mill
ion
Total
$mill
ion
Operating income
4,631
2,582
2,587
393
10,193
Operating expenses
(2,655)
(1,638)
(1,473)
(773)
(6,539)
Operating profit/(loss) before impa
irment losses and taxat
ion
1,976
944
1,114
(380)
3,654
Credit impa
irment
61
(118)
87
(8)
22
Other impa
irment (charge)/release
(4)
2
3
(85)
(84)
Loss from associates and jo
int ventures
–
–
–
(13)
(13)
Underlying profit/(loss) before taxation
2,033
828
1,204
(486)
3,579
Restructuring
(9)
(29)
(12)
(65)
(115)
Goodwill impa
irment and other
items
–
–
–
10
10
Statutory profit/(loss) before taxation
2,024
799
1,192
(541)
3,474
2021
Asia
$mill
ion
Africa &
Middle East
$mill
ion
Europe &
Americas
$mill
ion
Central &
other items
$mill
ion
Total
$mill
ion
Operating income
4,274
2,435
2,006
199
8,914
Operating expenses
(2,635)
(1,610)
(1,444)
(515)
(6,204)
Operating profit/(loss) before impa
irment losses and taxat
ion
1,639
825
562
(316)
2,710
Credit impa
irment
(112)
34
120
(14)
28
Other impa
irment (charge)/release
–
(1)
33
(23)
9
Profit from associates and jo
int ventures
–
–
–
1
1
Underlying profit/(loss) before taxation
1,527
858
715
(352)
2,748
Restructuring
(84)
(26)
(89)
(126)
(325)
Goodwill impa
irment and other
items
–
–
–
(42)
(42)
Statutory profit/(loss) before taxation
1,443
832
626
(520)
2,381
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
29
Strategic report continued
Return on tangible equity (RoTE)
2022
$mill
ion
2021
$mill
ion
Average parent company Shareholders’ Equity
28,858
29,204
Less Preference share premium
(1,500)
(1,500)
Less Average intang
ible assets
(3,847)
(3,618)
Average Ordinary Shareholders’ Tangible Equity
23,511
24,086
Profit for the year attributable to equity holders
2,352
1,638
Non-controlling interests
18
(29)
Div
idend payable on preference shares and AT1 class
if
ied as equ
ity
(311)
(292)
Profit for the year attributable to ordinary shareholders
2,059
1,317
Items normalised:
Regulatory Fine
–
62
Restructuring
115
325
Goodwill Impairment
10
–
Net gains on sale of Businesses
(20)
(20)
Tax on normalised items
(16)
(27)
Underlying profit for the year attributable to ordinary shareholders
2,148
1,657
Underlying Return on Tangible Equity
9.1%
6.9%
Statutory Return on Tangible Equity
8.8%
5.5%
Return on tangible equity (RoTE) continued
2022
%
2021
%
Underlying RoTE
9.1
6.9
Regulatory Fine
–
(0.3)
Restructuring
Of which: Income
0.1
(0.3)
Of which: Expenses
(0.5)
(0.9)
Of which: Credit impa
irment
–
0.0
Of which: Other impa
irment
(0.1)
(0.1)
Net gains on disposal of available for sale instruments
0.1
0.1
Goodwill impa
irment
(0.0)
–
Unrealised gain/loss on FVOCI
–
–
Tax on normalised items
0.1
0.1
Statutory RoTE
8.8
5.5
Net charge-off ratio
2022
2021
Credit
impa
irment
(charge)/
release for the
year/period
$mill
ion
Net average
exposure
$mill
ion
Net
Charge-off
Ratio
%
Credit
impa
irment
(charge)/
release for the
year/period
$mill
ion
Net average
exposure
$mill
ion
Net
Charge-off
Ratio
%
Stage 1
68
162,956
0.04
18
157,023
0.01
Stage 2
(7)
9,235
(0.08)
73
12,631
0.57
Stage 3
57
2,440
2.34
(61)
3,232
(1.89)
Total exposure
118
174,631
0.07
30
172,886
0.02
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
30
Strategic report continued
Alternative performance measures
An alternative performance measure is a financ
ial measure of h
istor
ical or future financial performance, financial pos
it
ion, or
cash flows, other than a financial measure defined or spec
if
ied
in the applicable financ
ial report
ing framework. The following
are key alternative performance measures used by the Group to assess financ
ial performance and financial pos
it
ion.
Measure
Definit
ion
Constant
currency basis
A performance measure on a constant currency basis (ccy) is presented such that comparative periods are
adjusted for the current year’s functional currency rate. The following balances are presented on a constant
currency basis when described as such:
• Operating income
• Operating expenses
• Profit before tax
•
RWAs or Risk-weighted assets
Underlying/
Normalised
A performance measure is described as underlying/normalised if the statutory result has been adjusted for
restructuring and other items representing profits or losses of a capital nature; amounts consequent to investment
transactions driven by strategic intent, excluding amounts consequent to Ventures transactions, as these are
considered part of the Group’s ordinary course of business; and other infrequent and/or exceptional transactions
that are sign
ificant or mater
ial in the context of the Group’s normal business earnings for the period, and items
which management and investors would ordinar
ily
ident
ify separately when assess
ing performance period-by-
period. A reconcil
iat
ion between underlying/normalised and statutory performance is contained in Note 2 to the
financial statements. The follow
ing balances and measures are presented on an underlying basis when described
as such:
• Operating income
• Operating expense
• Profit before tax
•
Earnings per share (basic and diluted)
• Cost-to-income ratio
• Jaws
•
RoTE or Return on tangible equity
Advances-to-
deposits/customer
advances-to-
deposits (ADR) ratio
The ratio of total loans and advances to customers relative to total customer accounts, excluding approved
balances held with central banks, confirmed as repayable at the point of stress. A low advances-to-deposits
ratio demonstrates that customer accounts exceed customer loans resulting from emphasis placed on
generating a high level of stable funding from customers.
Cost-to-income ratio
The proportion of total operating expenses to total operating income.
Cover ratio
The ratio of impa
irment prov
is
ions for each stage to the gross loan exposure for each stage.
Cover ratio after
collateral/cover ratio
includ
ing collateral
The ratio of impa
irment prov
is
ions for Stage 3 loans and real
isable value of collateral held against these
non-performing loan exposures to the gross loan exposure of Stage 3 loans.
Gross yield
Statutory interest income div
ided by average
interest earning assets.
Jaws
The difference between the rates of change in revenue and operating expenses. Posit
ive jaws occurs when the
percentage change in revenue is higher than, or less negative than, the corresponding rate for operating
expenses.
Loan loss rate
Total credit impa
irment for loans and advances to customers over average loans and advances to customers.
Net charge-off ratio
Net credit impa
irment charge or release to average outstand
ing net exposures
Net tangible asset
value per share
Ratio of net tangible assets (total tangible assets less total liab
il
it
ies) to the number of ord
inary shares
outstanding at the end of a reporting period.
Net yield
Gross yield less rate paid.
NIM or Net
interest margin
Net interest income adjusted for interest expense incurred on amortised cost liab
il
it
ies used to fund the F
inanc
ial
Markets business, div
ided by average
interest-earning assets excluding financ
ial assets measured at fa
ir value
through profit or loss.
RAR per FTE or Risk
adjusted revenue per
full-time equivalent
Risk adjusted revenue (RAR) is defined as underlying operating income less underlying impa
irment over the
past 12 months. RAR is then div
ided by the 12 month roll
ing average full-time equivalent (FTE) to determine
RAR per FTE.
Rate paid
Statutory interest expense adjusted for interest expense incurred on amortised cost liab
il
it
ies used to fund
financial
instruments held at fair value through profit or loss, div
ided by average
interest bearing liab
il
it
ies.
RoE or Return
on equity
The ratio of the current year’s profit available for distr
ibut
ion to ordinary shareholders to the weighted average
ordinary shareholders’ equity for the reporting period.
RoTE or Return on
ordinary shareholders’
tangible equity
The ratio of the current year’s profit available for distr
ibut
ion to ordinary shareholders, to the weighted average
tangible equity, being ordinary shareholders’ equity less the average goodwill and intang
ible assets for the
reporting period. Where a target RoTE is stated, this is based on profit and equity expectations for future periods.
Underlying ROTE
The ratio of the current year’s profit for distr
ibut
ion to ordinary shareholders plus fair value on OCI equity
movement relating to Ventures segment to the weighted average ordinary shareholders’ equity for the
reporting period.
TSR or Total
shareholder return
The total return of the Group’s equity (share price growth and div
idends) to
investors.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
31
Risk Review
Resil
ience desp
ite adverse macroeconomic environment and volatile
global markets
The macroeconomic environment was challenging throughout the year for a number of markets in which the PLC Group
operates. February 2022 saw Russia’s invas
ion of Ukra
ine, impact
ing financial markets, commod
ity prices and supply chains.
The PLC Group had very lim
ited d
irect exposure to either country and we proactively managed risks that we faced through
ind
irect exposure and second order
impacts, such as increased energy and food prices or disrupted gas supplies for our clients
and customers, the impact from sanctions on asset values and investments some of our clients have in Russia. The PLC Group
also managed the increase in traded risks following increased volatil
ity
in other markets especially credit and commodit
ies.
Regular stress tests were performed during 2022 to assess the impact of the war across the PLC Group’s portfolio.
In China, growth forecasts were revised downwards as it followed its ‘zero-COVID’ stance, exacerbating global supply chains
bottlenecks. Pressures in China’s commercial real estate industry remain with the tim
ing of recovery st
ill uncertain amidst
recent government measures to support the sector. In the US, the Federal Reserve announced consecutive interest rate hikes
to counter inflat
ionary pressures and h
inted at more tapered rate rises in 2023. This poses challenges to some emerging
markets, as their currencies weaken relative to the strength of the US dollar, by ris
ing commod
ity prices, stagflation and
tighter liqu
id
ity.
The impact from the war, tighten
ing of global financing cond
it
ions and
id
iosyncrat
ic domestic polit
ical and pol
icy issues,
have placed pressure on sovereign credit ratings during 2022. With
in the PLC Group’s footpr
int, Sri Lanka and Ghana
have embarked on sovereign debt restructuring operations, while Pakistan has been adversely impacted by flooding and
continues to face external financ
ing r
isks in light of large external payments coming due, while foreign exchange reserves
have declined. The Country Risk Early Warning System (CREWS) is the princ
ipal process for track
ing a deteriorat
ion
in risk
ind
icators and has worked effect
ively during the year. CREWS is a triage system which categorises countries based on a
combined assessment of the likel
ihood of a downgrade and the financial
impact of a potential downgrade. Markets in the
highest risk category are subject to enhanced monitor
ing of qual
itat
ive and quant
itat
ive r
isk triggers and The PLC Group
has exposure management strategies in place for the highest risk markets.
The PLC Group continues to scan the horizon for topical and emerging risks and collaborate with internal and external
partners to mit
igate r
isks as they are ident
ified. Further deta
ils on how topical and emerging risks are managed can be found
on pages 35 to 39.
Asset quality has been mainta
ined though we rema
in vig
ilant
in the face of volatile global markets. The PLC Group continues
to demonstrate resil
ience as ev
idenced by strong capital and liqu
id
ity metrics. Non-financ
ial r
isks areas such as Fraud,
Data Management, Information and Cyber Security, Third Party, Technology, People and Change Management remain
heightened. The PLC Group continues to enhance the operational resil
ience and defences aga
inst these risks through
vigorous enhancement programmes. The Group remains vig
ilant of sovere
ign risks and acute challenges in the property
sector in China and we continue to closely monitor and manage these across the PLC Group.
For PLC Group’s Corporate, Commercial and Institut
ional Bank
ing (CCIB) business, the PLC Group has ident
ified vulnerable
sovereigns with triggers and action plan for exposure management based on such triggers. We have closely monitored our
clients which may face diff
icult
ies on account of increas
ing
interest rate, foreign exchange movements, commodity volatil
ity
or increase in price of essential goods. Stress tests and portfolio reviews are also done to ident
ify vulnerable exposures.
These exposures are then tracked through our well-established Early Alert monitor
ing process. Act
ions which may be
required if geo-polit
ical r
isks occur are also tracked so that the Bank could act quickly if these events do occur.
For the PLC Group’s Consumer, Private and Business Banking (CPBB) business, the key focus in 2022 was on the potential
wider effects of the deteriorat
ing econom
ic condit
ions across our markets. Wh
ile CPBB conducts its business mainly in local
currency, the continued strength of the US dollar has an impact in our markets across Asia, Africa and the Middle East and
the PLC Group is monitor
ing the potent
ial secondary impacts of a decline in sovereign credit quality in some of our markets.
For the PLC Group’s consumer credit portfolios, we are analysing and monitor
ing the
impact on customer affordabil
ity
through interest rate sensit
iv
ity analysis and tracking Consumer Price ind
ices across our key markets. In the PLC Group’s
Business Banking portfolios, we have been focused on the risks to our clients associated with vulnerabil
ity to commod
ity
supply chain issues, spikes in input costs and the effect of an overall decline in global demand. For Wealth Lending, which is
secured by a largely liqu
id collateral pool, we have been proact
ively managing the portfolio through the continued market
volatil
ity mon
itor
ing for hor
izon risks to the collateral, such as reduced corporate earnings in the event of recession. Where
appropriate, the PLC Group has tightened underwrit
ing pol
ic
ies and collateral acceptance cr
iter
ia.
Strategic report continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
32
Strategic report continued
An update on our key risk prior
it
ies
2022 continued to present a challenging risk landscape, however we faced this from an intr
ins
ically strong posit
ion. Our r
isk
management approach is at the heart of our business and is core to us achiev
ing susta
inable growth and performance.
We have made progress on our key prior
it
ies, these being:
Strengthening the PLC Group’s risk culture and conduct:
We remain committed to promoting a healthy risk culture and
driv
ing the h
ighest standards of conduct. Both risk culture and conduct are integral components of our Risk Management
Framework (RMF). Our RMF sets out the guid
ing pr
inc
iples for our colleagues, enabl
ing us to have integrated and holist
ic
risk conversations across the PLC Group and the three lines of defence. It underpins an enterprise level abil
ity to
ident
ify and
assess, openly discuss, and take prompt action to address exist
ing and emerg
ing risks. Senior management across the PLC
Group promote a healthy risk culture by rewarding risk-based think
ing (
includ
ing
in remuneration decis
ions), challeng
ing
the status quo, and creating a transparent and safe environment for employees to communicate risk concerns. We strive to
uphold the highest standards of conduct through delivery of conduct outcomes, acknowledging that while inc
idents cannot
be entirely avoided, the PLC Group has no appetite for wilful or negligent misconduct. More broadly, we are continu
ing to
focus on strengthening first-line Conduct Risk ownership, drawing enhanced Conduct Risk ins
ights through the development
of conduct analytics as part of the new Conduct Risk management standard. Furthermore, we have uplifted the PLC Group’s
Conduct Risk Management approach which has been achieved through a combinat
ion of prov
id
ing better tools to enable
consistent Conduct Risk oversight, increased engagement with the first and second line and targeted campaigns to improve
Conduct Risk awareness across the PLC Group. As Conduct Risk may arise from anywhere in the PLC Group at any time,
conduct outcomes should always be considered when material strategic decis
ions are made that may
impact clients,
investors, shareholders, counterparties, employees, markets, competit
ion and the env
ironment. The PLC Group is also working
towards complying with the UK Consumer Duty requirements for in-scope clients; these requirements set higher and clearer
standards of consumer protection.
Continuous enhancement of our informat
ion and cyber secur
ity (ICS) capabil
it
ies and governance:
We have refreshed the
PLC Group’s ICS Risk Strategy by updating our ICS Target Operating Model to increase focus on accountabil
ity, r
isk ownership,
change management and executive empowerment. Senior management is regularly engaged on our approach to
managing ICS Risks and we have appointed an ICS Risk Special Advisor. We also perform table-top cyber cris
is test
ing
exercises to ensure a consistent view on how to respond to cyber inc
idents.
To assess the security of our ICS systems and processes, our ICS capabil
it
ies include a formal process for internal controls
testing, vulnerabil
ity assessments and penetrat
ion testing (an authorised simulated attack on a computer system,
performed to evaluate the security of the system). The PLC Group continues to deploy the Threat Scenario-led Risk
Assessment which enables a more dynamic threat-led ident
ification and management of ICS R
isk by our businesses.
Our ICS polic
ies and standards are also al
igned to a number of best practice global guidance, and we remain watchful
on proposed new guidance.
Our ICS train
ing programme
includes annual mandatory learning and phish
ing read
iness exercises, along with ongoing
thematic campaigns which highl
ight the most prevalent threats and r
isks that colleagues face. We also deliver regular
train
ing on ICS r
isks. In addit
ion to general ICS awareness, colleagues
in roles ident
ified as cr
it
ical have add
it
ional tra
in
ing
linked to their responsib
il
it
ies.
Managing Climate Risk:
Managing the risks from climate change is a core element of our strategy and stands. The PLC Group
has made good progress this year in embedding Climate Risk considerat
ions across the
impacted Princ
ipal R
isk Types, and
by using the results from our scenario analysis, we are build
ing a good understand
ing of the markets and industr
ies where
the effects of climate change will have the greatest impact. Climate Risk assessments are now considered as part of
Reputational and Sustainab
il
ity transaction reviews for impacted clients in high-carbon sectors, and integrated into the
credit applicat
ion process for approx
imately 70 per cent of our corporate client exposure and the physical risk ident
ification
of our CPBB mortgage portfolios in our largest markets. As part of our ongoing academic partnership with Imperial College
London, we supported new climate research on the range of opportunit
ies that ex
ist for private investors in nature related
investments and cross-sectoral impl
icat
ions of electrif
icat
ion of transport in India. Key focus areas for 2023 include
establish
ing and clar
ify
ing the l
inkages between Net Zero portfolio management across high transit
ion r
isk sectors and the
impact thereof on Credit risk parameters, build
ing and embedd
ing our in-house Climate risk models, train
ing and educat
ion,
and working with our data providers and clients. All of these support the PLC Group’s commitments made as part of
Accelerating Zero.
> More details can be found at sc.com/sustainab
il
ity and
sc.com/tcfd
> Further details on our overall approach to net zero can be found at
sc.com/netzero
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
33
Strategic report continued
Managing our environmental, social and governance (ESG) risk:
The PLC Group continues to advance risk management
across the organisat
ion
in both our CCIB and CPBB client segments with end-to-end reviews of inherent risks and controls
in line with our internal Environmental and Social Risk Catalogue. In keeping with our sustainable and transit
ion finance
goals our risk management approach seeks to ensure that our Green, Sustainable and Transit
ion F
inance labels reflect the
standards set out in our Green and Sustainable Product Framework, Transit
ion F
inance Framework and Task Force on
Climate-related Financ
ial D
isclosures (TCFD).
Managing Financ
ial Cr
ime Risk:
The PLC Group is managing its financ
ial cr
ime risk with
in acceptable levels as assessed
under the PLC Group’s risk assessment measures, includ
ing the F
inanc
ial Cr
ime Risk Type Framework, Risk and Control
Self-Assessments and assurance reviews. However, some issues in 2022 have required remedial actions in order to avoid
an unacceptable increase in Financ
ial Cr
ime Risk in certain areas. Russia-related sanctions have continued to escalate and
are increas
ingly complex
in nature to operational
ise. Wh
ilst the PLC Group has lim
ited d
irect exposure to Russia-related
sanctions, we continue to monitor and respond to changing sanctions requirements. The PLC Group continues to build and
mainta
in partnersh
ips with industry, government and the third sector to build consensus on effective efforts to combat
financial cr
ime and the damages it causes.
> More informat
ion about the PLC Group’s comm
itment to fight
ing financial cr
ime can be found at
sc.com/
fightingfinancialcr
ime
Technology and Innovation:
The PLC Group’s technology capabil
it
ies are deliver
ing our strategy of be
ing a dig
ital dr
iven
second-line of defence function, supporting first-line driven risk management processes. We have expanded our Climate
Risk reporting capabil
it
ies and integrated ESG factors to help streamline risk assessment across the client lifecycle. We have
automated the model development lifecycle with a dig
it
ised model inventory and approval workflow and have deployed
a single platform to support standardised model creation, review and validat
ion. We have cont
inued to expand our
Enterprise Governance, Risk and Compliance with automated workflows in Operational Risk, Business Continu
ity, Assurance,
and BCBS 239 assessments and peer reviews. Policy documentation management has been transit
ioned to a new platform
and a sign
ificantly
improved user experience. The PLC Group Risk assessment process has been transit
ioned to a B
ig Data
technology stack that util
ises data more effect
ively and improves turnaround time. We continue to build more intell
igence
into our self-service and case management tooling. The ASK Compliance platform serves as a single portal, where the first
line of defence and our employees get answers to simple compliance queries using self-service tools, with an enhanced
user experience launched in 2022. We will prior
it
ise integrat
ing relevant r
isk use cases into the exist
ing self-serv
ice tools in
2023. Advisor Connect which is a configurable case management framework launched in Q3 2022 provides an auditable,
consolidated view of cases and serves as a knowledge repository for the advisory teams. Advisor Connect is planned to be
rolled out to prior
it
ised group and country CFCC teams in 2023.
We continuously enhanced the country regulatory obligat
ion management to
improve the user experience and util
ised the
platform capabil
it
ies to deliver the Rules interpretat
ion management system. We cont
inue to explore the applicat
ion of
emerging technologies such as Artif
ic
ial Intelligence, Machine Learning and Applicat
ion bu
ild through configurat
ion and
remain focused on streamlin
ing the
ident
ification of new regulat
ions through horizon scanning, tracking amendments to
exist
ing regulat
ions, and automating the mapping and impact analysis to polic
ies and processes. Surve
illance platforms
are continuously enhanced with supervised model-based monitor
ing and vo
ice and multil
ingual mon
itor
ing capab
il
it
ies.
Dig
ital
isat
ion and technolog
ical development remain key items on the PLC Group’s agenda as we pursue the execution of
the PLC Group’s strategy. We continue to ensure that our control frameworks and risk appetite evolve accordingly to keep
pace with new business developments and asset classes.
Embedding and strengthening Dig
ital Asset r
isk management capabil
it
ies:
The PLC Group recognises the increas
ing
prevalence of dig
ital asset act
iv
ity and assoc
iated risks. At present, the PLC Group has very lim
ited, and
immater
ial, d
irect
exposure to dig
ital asset related act
iv
ity. Any potent
ial increase in activ
ity or exposures w
ill be subject to detailed review
and enhanced due dil
igence
in accordance with the PLC Group’s Dig
ital Asset R
isk Management Approach. Notwithstand
ing
the lim
ited exposure, as a regulated global Bank w
ith dig
ital asset capab
il
it
ies, we continue to strengthen our Dig
ital Asset
Risk management capabil
it
ies under the PLC Group’s ERMF with considerat
ion g
iven to learnings from exist
ing
in
it
iat
ives as
well as external market developments.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
34
An update on our risk management approach
Our Risk Management Framework (RMF) outlines how we manage risk across the Group, consistent with the PLC Group’s
risk management and governance approach. It gives us the structure to manage exist
ing r
isks effectively in line with our
Risk Appetite, as well as allowing for holist
ic r
isk ident
ification. The RMF also sets out the roles and respons
ib
il
it
ies and
min
imum governance requ
irements for the management of Princ
ipal and Integrated R
isks.
Princ
ipal and Integrated R
isk Types
Princ
ipal r
isks are risks inherent in our strategy and business model. These are formally defined in our RMF, which provides
a structure for monitor
ing and controll
ing these risks through the Court-approved Risk Appetite. We will not compromise
adherence to our Risk Appetite in order to pursue revenue growth or higher returns. The table below provides an overview
of the Group’s princ
ipal and
integrated risks and risk appetite statement. In addit
ion to pr
inc
ipal r
isks, the Group has defined
a Risk Appetite Statement for Climate Risk.
Further details can be found on pages 134 to 151 of our 2022 Annual Report.
Princ
ipal R
isk Types
Risk Appetite Statement
Credit Risk
The Group manages its credit exposures following the princ
iple of d
ivers
ification across products, geograph
ies,
client segments and industry sectors.
Traded Risk
The Group should control its financ
ial markets act
iv
it
ies to ensure that Traded Risk losses do not cause material
damage to the Group’s or the PLC Group’s franchise.
Treasury Risk
The Group should mainta
in sufficient cap
ital, liqu
id
ity and funding to support its operations, and an interest
rate profile ensuring that the reductions in earnings or value from movements in interest rates impact
ing bank
ing
book items does not cause material damage to the Group’s franchise. In addit
ion, the Group should ensure
its
pension plans are adequately funded.
Operational and
Technology Risk
The Group aims to control Operational and Technology Risks to ensure that operational losses (financ
ial or
reputational), includ
ing any related to conduct of bus
iness matters, do not cause material damage to the
Group’s or the PLC Group’s franchise.
Information and
Cyber Security Risk
The Group has zero appetite for very High ICS residual risks and low appetite for High ICS residual risks which
result in loss of services, data or funds. The Group will implement an effective ICS control environment and
proactively ident
ify and respond to emerg
ing ICS threats in order to lim
it ICS
inc
idents
impact
ing the Group’s
or the PLC Group’s franchise.
Compliance Risk
The Group has no appetite for breaches in laws and regulations related to regulatory non-compliance,
recognis
ing that wh
ilst inc
idents are unwanted, they cannot be ent
irely avoided.
Financ
ial Cr
ime Risk
The Group has no appetite for breaches in laws and regulations related to financ
ial cr
ime, recognis
ing that
whilst inc
idents are unwanted, they cannot be ent
irely avoided.
Model Risk
The Group has no appetite for material adverse impl
icat
ions aris
ing from m
isuse of models or errors in the
development or implementat
ion of models, wh
ilst accepting model uncertainty.
Reputational and
Sustainab
il
ity Risk
The Group aims to protect the franchise from material damage to its reputation by ensuring that any business
activ
ity
is satisfactor
ily assessed and managed by the appropr
iate level of management and governance
oversight. This includes a potential failure to uphold responsible business conduct or lapses in our commitment
to do no sign
ificant env
ironmental and social harm.
Integrated Risk Types
Risk Appetite Statement
Climate Risk
The Group aims to measure and manage financ
ial and non-financial r
isks from climate change, and reduce
emiss
ions related to our own act
iv
it
ies and those related to the financ
ing of cl
ients, in alignment with the
Paris Agreement.
Dig
ital Asset R
isk
This IRT is currently supported by Risk Appetite metrics embedded with
in relevant Pr
inc
ipal R
isk Types.
Third Party Risk
This IRT is currently supported by Risk Appetite metrics embedded with
in relevant Pr
inc
ipal R
isk Types.
Strategic report continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
35
Topical and Emerging Risks
In addit
ion to our Pr
inc
ipal R
isk Types that we manage in line with the PLC Group Risk Type Frameworks, polic
ies and the
Court approved Risk Appetite, we also mainta
in an
inventory of Topical and Emerging risks.
Topical Risks refer to themes that may have emerged but are still evolving rapidly and unpredictably, whilst Emerging
Risks refer to unpredictable and uncontrollable outcomes from certain events which may have the potential to adversely
impact our business.
As part of our continuous risk ident
ification process, we have updated the PLC Group’s Top
ical and Emerging Risks (TERs)
from those disclosed in the 2021 Annual Report. We summarise these below, outlin
ing the r
isk trend changes since the end
of 2021, and the mit
igat
ing actions we are taking based on our current knowledge and assumptions. This reflects the latest
internal assessment as performed by senior management.
The TER list is not exhaustive and there may be addit
ional r
isks which could have an adverse effect on the PLC Group.
Our mit
igat
ion approach for these risks may not elim
inate them but shows the PLC Group’s awareness and attempt to
reduce or manage the risk. As certain risks develop and material
ise over t
ime, management will take appropriate steps
to mit
igate the r
isk based on its impact on the PLC Group.
The key changes to the TERs since the 2021 Annual Report are as follows.
•
The PLC Group has added two new TERs: “High inflat
ion and US dollar strength” and “Global econom
ic downturn risk”.
This reflects that continued inflat
ion and consequent rate h
ikes will impact global growth, with a chance of global
recession in 2023.
•
“Energy Security” has been broadened to “Energy security and shift
ing pol
it
ical all
iances” to reflect those practical
it
ies
around energy security, that may reshape some polit
ical relat
ionsh
ips, w
ith a shift in power towards exporters
•
“Supply chain dislocat
ions” has been renamed as “Extended supply cha
in issues and key material shortages” due to
continu
ing supply shortages and restr
ict
ions of some exports, the
impact of Russia-Ukraine war and China-US rivalry,
and the push for sustainable alternative supply chains
•
“Social unrest” and “Adapting to endemic COVID-19 and a K-shaped recovery” are no longer presented as independent
TERs; rather they are now considered as drivers for other overarching themes
Macroeconomic and Geopolit
ical Cons
iderat
ions
There is interconnectedness between risks due the importance of US dollar financ
ing cond
it
ions for global markets, and
the global or concentrated nature of key supply chains for energy, food, semiconductors and rare metals. The PLC Group is
exposed directly through investments, or ind
irectly through
its clients to these risks. While the main risk impacts are financ
ial,
other ramif
icat
ions may exist for example reputational, compliance or operational considerat
ions.
High inflat
ion and US dollar strength
Inflation is now a global concern and a top policy issue in many countries which are experienc
ing the h
ighest inflat
ion
levels in decades. Prices have surged due to a combinat
ion of customer demand and supply shortages.
The Federal Reserve’s sustained fight against US inflat
ion has led to US dollar apprec
iat
ion aga
inst many other global
currencies. This increases global import costs and debt servic
ing costs on US dollar denom
inated debt. There have been
widespread price corrections for some asset classes. Some markets, especially emerging markets, have lim
ited opt
ions to
defend their currencies without causing other detrimental effects.
The operating environment is likely to be testing for the Non Bank Financ
ial Inst
itut
ions (NBFI) sector; segments w
ith
in
it could find it challenging to manage liqu
id
ity, credit, refinanc
ing and market r
isk. The Archegos collapse of 2021 and the
liab
il
ity-driven investments volatil
ity are the most notable recent examples. There are he
ightened expectations from
major regulators with regard to the management of NBFI risks.
Price inflat
ion for essent
ial goods, such as food and fuel has prompted a cost-of-liv
ing cr
is
is across both developed and
emerging markets in which the PLC Group operates. This has sparked social unrest in some countries, with a heightened risk in
emerging markets which experience disproport
ionate effects. However, the
impact is felt across a wider bracket, includ
ing
the vast global middle class, which raises the threat of instab
il
ity even in tradit
ionally less volat
ile countries.
Global economic downturn risk
Continued tighten
ing of monetary pol
icy to combat inflat
ion
in developed markets has contributed to the possib
il
ity of a
global recession in 2023. Higher rates could increase debt distress levels across both developed and emerging economies.
Global growth slowed to 3.4 per cent in 2022, with the outlook for 2023 growth remain
ing muted at 2.9 per cent. Although
China’s reopening could lead to a faster than expected recovery, supply chain bottlenecks remain and severe COVID-19
outbreaks could lead to a reversal. Geopolit
ical escalat
ion could also lim
it the speed of recovery, and supply cha
in
restrict
ions may lead to deglobal
isat
ion and less efficient
internat
ional trade.
The PLC Group is exposed to downturns in China, such as observed turbulence in the property development sector.
Strategic report continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
36
Strategic report continued
Expanding array of global tensions
The Russia-Ukraine war has catalysed a fundamental shift in power dynamics with a demarcation of underlying
polit
ical all
iances. Pressure is mounting on Russia, which may lead to increas
ingly desperate m
il
itary and pol
it
ical act
ions.
Relations between China and other developed markets, particularly in the West, remain fragile, with sanctions being
imposed by both sides. Increasing technological restrict
ions and potent
ial escalations in relation to Taiwan’s sovereignty
are among a number of flashpoints. Economic geopolit
ical act
ions could also escalate distrust, decoupling, and increase
ineff
ic
ient production, potentially generating further inflat
ionary pressures.
Election wins for extremist parties in a number of countries are adding to increased vulnerabil
ity and volat
il
ity – espec
ially
as economics is becoming subservient to polit
ics. Volat
il
ity
in tradit
ionally stable econom
ies could cause further disrupt
ion.
Rivalry between the US and China may have structural, operational and strategic impacts on business models for companies
that straddle both.
Emerging markets sovereign risk
Emerging markets have been squeezed by escalating oil and food prices, high interest rates and the legacy of COVID-19
on key industr
ies such as tour
ism.
Distress has already been observed across several of the Group’s footprint markets, includ
ing defaults
in Sri Lanka and
Ghana, polit
ical
instab
il
ity in Pakistan, high inflat
ion
in Turkey, and issues across Africa, particularly economies that are
sensit
ive to fuel pr
ices.
For some countries with fragile governance frameworks, there is a heightened risk of failure to manage social demands
which might culminate in increased polit
ical vulnerab
il
ity. Furthermore, food and energy secur
ity challenges have the
potential to drive other social impacts.
Tighten
ing of financial cond
it
ions
in developed markets has also led to local currency depreciat
ions aga
inst the US dollar,
increas
ing debt serv
ic
ing costs, and potent
ially restrict
ing debt re-financing. Fore
ign Exchange reserves have already
been sign
ificantly depleted
in some markets, and local monetary policy may undermine already weak growth.
Extended supply chain issues and key material shortages
Demand and supply imbalances in global supply chains have become persistent as they are increas
ingly structural
in
nature. The main dislocat
ions are l
inked to conflict and polit
ical restr
ict
ions on trade or
investment. Repercussions range
from companies which are a party in the particular supply chain, to end consumers and sovereigns.
Concentrated impacts to specif
ic key
industr
ies such as sem
i-conductors can have contagion effects. Polit
ical wrangl
ing
over technological supremacy further increases the risk of market disrupt
ion and a retreat from global
isat
ion. Potent
ial
targeted restrict
ions on sem
iconductors could lead to complete restructuring of global supply chains, impact
ing most sectors.
This could lead to a shift in supply chains for the future, with increased contingency costs and production potentially
moving closer to consumers. This is further compounded by increased scrutiny around the environmental and social impacts
of supply chains.
Energy security and shift
ing pol
it
ical all
iances
The Russia-Ukraine war has exacerbated an already strained energy supply model in developed markets, spurring a rapid
pivot away from tradit
ional supply l
ines. This came amid already increased tensions between nations as negotiat
ing power
shifted towards energy exporters.
Ris
ing energy pr
ices and potential supply shortfalls may cause a rise in social unrest, especially in countries where there is
high dependence on energy imports.
In the wake of the conflict, a trade-off between pragmatism and environmentalism has material
ised, w
ith sign
ificant
divergence as some countries have embraced the renewables opportunity while others have reversed, with rollbacks of
green polic
ies observed
in some markets. Policymakers must balance supply and price pressures with climate goals, with a
heightened risk of short-term crises divert
ing attent
ion and resources away from longer term required climate action.
Ris
ing mater
ial costs will also impact renewable energy development, potentially slowing the transit
ion. The PLC Group’s
plans for sustainable finance business growth could be achieved slower than expected.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
37
How these risks are mit
igated/next steps
•
The PLC Group conducts thematic stress tests and portfolio reviews at a Group, country, business and subsid
iary level
to assess the impact of extreme but plausible events and manage the portfolio accordingly
•
Sensit
ive sectors are regularly rev
iewed and exposures to these sectors are managed as part of Credit Risk reviews
•
Sovereign ratings, exposures, outlooks and country risk lim
its are regularly mon
itored, and mit
igat
ing actions taken
as required
•
Exposures that may result in material credit impa
irment and
increased risk-weighted assets are closely monitored
and managed.
•
The PLC Group util
ises Cred
it Risk mit
igat
ion techniques includ
ing cred
it insurance and collateral.
•
The PLC Group tracks the partic
ipat
ion of our footprint countries in G20’s Common Framework Agreement and
Debt Service Suspension Init
iat
ive for Debt Treatments and the associated exposure.
•
We remain vig
ilant
in monitor
ing geopol
it
ical relat
ionsh
ips. Increased scrut
iny is applied when onboarding clients in
sensit
ive
industr
ies and
in ensuring compliance with sanctions.
Environmental and Social Considerat
ions
ESG stakeholder expectations
Environmental targets are becoming embedded in global business models, with increased pressure to set ambit
ious
sustainab
il
ity goals or apply more restrict
ions on financing to sens
it
ive sectors.
There is also an increase in stakeholder expectations around fair and balanced disclosures, includ
ing market
ing
campaigns. Scrutiny around greenwashing has accelerated with various regulatory developments, such as the
Financ
ial Conduct Author
ity’s consultation on anti-greenwashing rules.
There is fragmentation in the pace and scale of adoption and regulation around the world, which adds complexity in
managing a global business. Fragmentation in ESG taxonomies may also lead to unintended consequences, includ
ing
misallocat
ion of cap
ital, polit
ical and l
it
igat
ion risks.
Human rights concerns are increas
ing
in focus with scope expanding beyond direct abuses to cover other areas such
as data management, technological advancement, and supply chains.
There are risks if the PLC Group is required to adapt to new fragmented regulations quickly, as well as meeting publicly
stated sustainab
il
ity goals and helping clients transit
ion.
How these risks are mit
igated/next steps
•
Increased scrutiny is applied to environmental and social standards when provid
ing serv
ices to clients.
•
The PLC Group monitors regulatory developments in relation to sustainable finance and ESG risk management and
provide feedback on consultations bilaterally and through industry groups on emerging topics.
•
The PLC Group focuses on min
im
is
ing our env
ironmental impact and embedding our values through our strengthened
Posit
ion Statements for sens
it
ive sectors and a l
ist of prohib
ited act
iv
it
ies that the PLC Group will not finance.
•
The PLC Group is integrat
ing the management of greenwash
ing risks into our Reputational and Sustainab
il
ity Risk
Type Framework, polic
ies and standards. Green, Susta
inable and Transit
ion F
inance labels for products, clients and
transactions reflect the standards set out in our Green and Sustainable Product Framework, Transit
ion F
inance
Framework and TCFD reporting.
•
The PLC Group regularly reviews these frameworks and annually obtain external verif
icat
ion on the Sustainable Finance
asset pool.
•
The PLC Group is committed to respecting universal human rights while assessing its clients and suppliers against various
internat
ional pr
inc
iples, as well as through
its social safeguards and supplier charter. More details can be found in the
PLC Group’s Modern Slavery Statement and Human Rights Posit
ion Statement.
•
Detailed portfolio reviews and stress tests are conducted to test resil
ience to cl
imate-related risks, in line with applicable
regulatory requirements.
•
Work is underway to embed Climate Risk considerat
ions across all relevant Pr
inc
ipal R
isk Types. This includes stress testing/
scenario analysis, integrat
ion of cl
ient climate risk assessments with
in the Cred
it process, build
ing an
internal modelling
capabil
ity and l
inkages with our Net Zero targets to understand the financ
ial r
isks and opportunit
ies from cl
imate change.
Strategic report continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
38
Strategic report continued
Technological Considerat
ions
Data and Dig
ital
Regulatory requirements and client expectations relating to data management and quality, includ
ing data protect
ion and
privacy, data sovereignty, the use of Artif
ic
ial Intelligence (AI) and the ethical use of data are increas
ing. Regulat
ion is also
becoming more fragmented and complex, requir
ing more resources to ensure ongo
ing compliance.
Geopolit
ical tens
ions have added impetus to data sovereignty legislat
ion, somet
imes extraterritor
ial
in nature. There can
also be conflict
ing gu
idance with
in the same jurisd
ict
ion. There
is heightened focus on economic sanctions and financ
ial
crime controls, reinforc
ing the need for robust control frameworks.
Data protection risks are increas
ingly dr
iven by highly organised and sophist
icated threat actors, w
ith developments such
as ransomware available as a service.
Data is becoming more concentrated in the hands of governments and big private companies, with relatively few providers
of new technologies such as cloud services. Some third parties are reluctant to disclose AI model details, cit
ing
intellectual
property, which increases model risk.
A balance between resil
ience and ag
il
ity
is required, as new technologies are onboarded while exist
ing systems are
mainta
ined. Clear ownersh
ip, frameworks and oversight of new technologies is also required.
How these risks are mit
igated/next steps
•
The PLC Group monitors regulatory developments in relation to all aspects of data management, taking into account
country specif
ic requ
irements. We take a holist
ic v
iew across data risks to facil
itate an efficient and
comprehensive risk control environment.
•
The PLC Group has established a Data Management and Privacy Operations team to assist with compliance with data
management regulations. This includes a dedicated AI governance forum which includes review of third party solutions.
•
The PLC Group has an infl
ight programme of work to dr
ive compliance to BCBS 239 requirements on effective risk data
aggregation and risk reporting.
•
The PLC Group continues to deliver new controls and capabil
it
ies to increase our abil
ity to
ident
ify, detect, protect and
respond to ICS threats.
New business structures, channels and competit
ion
Failure to harness new technologies and new business models would place banks at a competit
ive d
isadvantage.
However, these innovat
ions requ
ire special
ist sk
ills, present new vectors for threats to material
ise and requ
ire robust risk
assessment accordingly. Differ
ing access to new developments w
ill also cause divergence and inequal
ity to grow across
countries and social groups.
Dig
ital assets are ga
in
ing adopt
ion and linked business models continue to increase in prominence. These present material
opportunit
ies for bus
inesses and consumers, as well as potential risks as the space evolves, as evidenced by the recent
collapse of Futures Exchange (FTX) and other recent events, further exacerbating dig
ital asset market volat
il
ity.
Increasing use of partnerships and alliances increases exposure to third-party risk. There is also risk of inadequate risk
assessments of new and unfamil
iar act
iv
it
ies.
How these risks are mit
igated/next steps
•
The PLC Group monitors emerging trends, opportunit
ies and r
isk developments in technology that may have impl
icat
ions
for the banking sector.
•
Enhanced dig
ital capab
il
it
ies have been rolled out in CPBB, particularly around onboarding, sales, and marketing.
•
A Dig
ital Asset R
isk Management Approach and policy has been implemented. This is regularly updated in response to
evolving dig
ital assets market act
iv
ity.
•
Strategic partnerships and alliances are being set up with Fintechs to enhance our competit
iveness.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
39
Strategic report continued
People Considerat
ions
Talent pool of the future
The expectations of the workforce, especially skilled workers, are sign
ificantly sh
ift
ing. The COVID-19 pandem
ic accelerated
changes on how people work, connect and collaborate, with expectations on flexible working now a given. The focus is
increas
ingly on ‘what’ work people do and ‘how’ they get to del
iver it, which are becoming different
iators
in the war for
future skills. There is greater desire to seek meaning and personal fulfilment at work that is aligned to ind
iv
idual purpose.
These trends are even more dist
inct amongst M
illenn
ials and Gen Zs who make up an
increas
ing proport
ion of the global
talent pool, and as dig
ital nat
ives also possess the attributes and skills we seek to pursue our strategy.
With attrit
ion
increas
ing year on year, to susta
inably attract, grow and retain talent, the PLC Group must continue to
invest in and further strengthen our Employee Value Proposit
ion (EVP), through both firm-w
ide intervent
ions as well as
targeted action.
How these risks are mit
igated/next steps
•
The PLC Group’s culture and EVP work is designed to address the emerging expectations of the diverse talent we seek.
The quarterly Brand and Culture Dashboard monitors our D&I Index and colleagues’ perceptions of our EVP and whether
we are liv
ing our Valued Behav
iours. Local Management teams discuss the dashboard to ident
ify act
ions, supported
by a central library of intervent
ions from across the PLC Group.
•
The PLC Group’s Future Workplace Now programme formalises hybrid working where suitable with flexi-working
arrangements. We continue to monitor for potential people risks, and mit
igat
ing actions include hybrid learning festivals,
watercooler moments toolkits, a social connections platform and people leader guidance.
•
We are undertaking a multi-year journey of developing future-skills amongst colleagues by creating a culture of continuous
learning, to balance appropriately between ‘build
ing’ and ‘
induct
ing’ sk
ills. We are deploying technology that democratises
access to learning content and developmental experiences.
•
To address our talent pool’s increased expectations of us being purpose-led, the PLC Group has published the Stands
(Accelerating Zero, Lift
ing Part
ic
ipat
ion, Resetting Globalisat
ion) wh
ich guide our Strategy.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
40
Strategic report continued
Stakeholders and responsib
il
it
ies
As an internat
ional bank operat
ing in 57 markets, stakeholder engagement is crucial in ensuring we understand local,
regional and global perspectives and trends that inform how we do business.
This section forms our
Section 172
disclosure, describ
ing how the d
irectors considered the matters set out in section 172(1)(a)
to (f) of the Companies Act 2006. It also forms the directors’ statement required under section 414CZA of the Act.
This section sets out how:
•
we engage stakeholders to understand their interests
•
we engage employees and respond to their interests
•
we respond to stakeholder interests through sustainable and responsible business.
This section also forms our key non-financ
ial d
isclosures in relation to sections 414CA and 414CB of the Companies Act.
Our non-financial
informat
ion statement can be found at the end of th
is section.
Princ
ipal Court dec
is
ion – market entr
ies and exits
We are accelerating our strategy to deliver effic
ienc
ies, reduce complexity and drive scale. In April 2022, the Court approved
a set of actions to focus resources with
in
its AME region to those areas where it can have the greatest scale and growth
potential, for the benefit of our shareholders, employees and customers. Subject to regulatory approval, we intend to exit
onshore operations in seven markets in AME and in a further two markets focus solely on its CCIB business. The Group has
invested heavily in recent years in the AME region, includ
ing fundamentally transform
ing its dig
ital capab
il
it
ies in its African
markets. It has also been expanding its footprint to cover some of the largest and fastest growing economies, having recently
opened its first branch in the Kingdom of Saudi Arabia and obtained prelim
inary approval for a bank
ing license in the Arab
Republic of Egypt. The seven markets where there will be a full exit of operations are Angola, Cameroon, Gambia, Jordan,
Lebanon, Sierra Leone and Zimbabwe. In Tanzania and Cote d’Ivoire, the Consumer, Private and Business Banking businesses
will be exited and the focus will turn solely to CCIB.
As part of the Court’s decis
ion-mak
ing, it recognised that there were a number of potential challenges, risks, costs and
sign
ificantly
impacted stakeholders to consider, which management was also acutely aware of. Carefully designed and
executed engagement with regulators, governments and employees, as well as with other key stakeholder groups, was
and continues to be crucial. The Court has received regular progress updates on these exists since the decis
ion was made.
Engaging stakeholders
Listen
ing and respond
ing to stakeholder prior
it
ies and concerns is crit
ical to ach
iev
ing our Purpose and del
iver
ing on
our brand promise, Here for good. We strive to mainta
in open and construct
ive relationsh
ips w
ith a wide range of
stakeholders includ
ing regulators, lawmakers, cl
ients, investors, civ
il soc
iety, and community groups.
In 2022, we made improvements to some of our feedback processes, so that client needs could be addressed by relationsh
ip
managers as they emerged. Our engagement took many forms, includ
ing one-to-one sess
ions using online channels and
calls, virtual roundtables, written responses and targeted surveys. These conversations, and the issues that underpin them,
help inform our business strategy and enable us to operate as a responsible and sustainable business. Stakeholder feedback
is communicated internally to senior management through the relevant forums and governing committees such as the
Sustainab
il
ity Forum, and to the Board’s Culture and Sustainab
il
ity Committee (CSC) which oversees the Group’s approach
to its main relationsh
ips w
ith stakeholders. We communicate progress regularly to external stakeholders through channels
such as sc.com, established social media platforms and this report. More detailed informat
ion on mater
ial sustainab
il
ity
topics can be found in our sustainable and responsible business section
Clients
How we create value
We want to deliver easy, everyday banking solutions to our clients in a simple and cost-effective way with a great customer
experience. We enable ind
iv
iduals to grow and protect their wealth; we help businesses trade, transact, invest and expand;
and we help a variety of financ
ial
inst
itut
ions, includ
ing banks, publ
ic sector and development organisat
ions, w
ith their
banking needs.
How we serve and engage
In 2022, Corporate, Commercial & Institut
ional Bank
ing (CCIB) strengthened its annual feedback process by capturing
how clients feel about what we offer includ
ing adv
ice, customer service and dig
ital channels. CCIB also focused on bu
ild
ing
a consistent dig
ital exper
ience and accelerated delivery through Cash, Trade, Financ
ial Markets and Data Solut
ions.
We drove dig
ital transformat
ion and leveraged networks in service to our clients on our proprietary platform across our
markets. This was further enabled with self-serve dig
ital tools and capab
il
it
ies such as chatbot, our mobile banking app,
applicat
ion programm
ing interface (API) connectiv
ity and data analyt
ics, which reduced operating costs and improved
client experience. Our agile working practices have also accelerated our speed of decis
ion-mak
ing and change delivery
to meet client needs faster. Refin
ing our processes through cont
inuous improvement has also enabled us to achieve benefits
in revenue and costs savings by creating capacity and reducing client wait
ing t
imes.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
41
Strategic report continued
We also focused on deliver
ing a cons
istent global experience for larger clients across our proprietary platforms, includ
ing
dig
ital and data
in
it
iat
ives across our markets. We have processes and gu
idel
ines
in place, specif
ic to each of our cl
ient
businesses, to understand and respond to issues and promptly resolve complaints. Meanwhile, we continued to engage with
our clients to help them expand across borders, using our internat
ional network to help them access ex
ist
ing and new trade
corridors –. Our presence in high-growth markets – and ongoing roll-out of dig
ital platforms – helps connect our cl
ients to the
global engines of trade and innovat
ion. As part of our efforts to reach net-zero carbon em
iss
ion by 2050, we have also been
working closely with our clients in hard-to-abate sectors on their own transit
ion plann
ing. This is in addit
ion to Group PLC’s
plan to mobil
ise $300 b
ill
ion
in green and transit
ion finance between 2021 and 2030.We have also deployed a Trans
it
ion
Acceleration Team which is focused on launching new products and partnerships.
In Consumer, Private and Business Banking (CPBB), we take our responsib
il
ity to support all our clients includ
ing the more our
responsib
il
ity to support all our clients includ
ing the more vulnerable ones, ser
iously. A global framework is in place to help
ensure the fair treatment of vulnerable clients in product development and throughout the whole client journey. Train
ing
is
provided to frontline staff across our branches, contact centres and dig
ital channels to
ident
ify and appropr
iately handle
vulnerable clients, and we have also implemented an educational train
ing programme for those cl
ients who require
assistance in navigat
ing onl
ine and mobile channels. Innovative products and dig
ital stra
ight through services underpin the
push for best-in-class client experience. This includes build
ing capab
il
ity to protect our cl
ients against evolving risks in the
ecosystem like Fraud and Cyber security and comes with education and increased client communicat
ion. In order to act
in
the best interests of our clients, we use our client ins
ights alongs
ide our robust polic
ies, procedures and the Group’s R
isk
Appetite to design and offer products and services which meet client needs, regulatory requirements and Group
performance targets, while contribut
ing to a susta
inable and resil
ient env
ironment. Wealth and Personal Banking
products have increased sustainable product options for distr
ibut
ion to our clients.
We now offer Sustainable deposits, green mortgages, sustainable investments and carbon neutral cards in some markets,
All new products are subjected to a comprehensive approval process to test design effectiveness and robustness of the
implementat
ion process. For
investment products sold to ind
iv
iduals, this includes risk scores which aid our assessment of
client suitab
il
ity. We consider each client’s financ
ial needs and personal c
ircumstances to assist us in offering suitable product
recommendations. We achieve this using a globally consistent methodology that takes into considerat
ion local regulatory
requirements to review product risks against the client’s risk appetite, consider
ing financial objectives, financial ab
il
ity, and
knowledge. Clients are also provided with clear and simple documentation that outlines key product features and risks prior
to executing a transaction. Fees and charges are disclosed to clients in line with regulatory requirements and industry best
practice, and where available, benchmarked against competitors. For Personal and Business Banking products, agreed
interest rates, fees and other charges as billed to clients are monitored and assessed locally, with global oversight. Triggers
for outlier fees and charges are defined and subject to annual review. A process is in place to review complaints prior to
amendments to annual interest, fees and charges. We also continuously assess our product portfolio for new risks to
ensure they remain appropriate for client needs and aligned to emerging regulation. These quantitat
ive and qual
itat
ive
assessments includ
ing Per
iod
ic Product Rev
iews enable a complete view of whether to continue, enhance, grow or
retire products. Throughout 2022, we also mainta
ined our sharp focus on
improv
ing cl
ient experience across the Bank.
We engaged with clients to show them the opportunit
ies trade corr
idors could bring and how using our network could
help them flourish.
Our focus on Partnerships in CPBB is showing results with new Partnerships launched in Vietnam, Indonesia and more recently
Singapore. These partnerships have incrementally acquired 1.2 mill
ion cl
ients, many of whom have the potential to avail the
full suite of other CPBB products. 2022 saw a sign
ificant
increase in our dig
ital wealth capab
il
it
ies with the delivery of Online
Equity platforms in Malaysia and the UAE. In 2023, we will continue to listen and respond to stakeholder prior
it
ies and
concerns, addressing feedback as it emerges, strengthen our dig
ital transformat
ion and innovat
ion capab
il
it
ies and
support our clients as they transit
ion to net zero.
Their interests
•
Different
iated product and serv
ice offering
•
Dig
itally enabled and pos
it
ive exper
ience
• Sustainable finance
• Access to internat
ional markets
Regulators and Governments
How we create value
We engage with public authorit
ies to play our part
in supporting the effective function
ing of the financial system and the
broader economy.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
42
Strategic report continued
How we serve and engage
We actively engage with governments, regulators and policymakers at a global, regional and national level to share ins
ights
and support the development of best practice and adoption of consistent approaches across our markets.
In 2022, we engaged with regulators, government offic
ials and trade assoc
iat
ions on a broad range of top
ics that
included internat
ional trade, susta
inab
il
ity, data, cyber security, dig
ital adopt
ion, and innovat
ion. We also engaged
with offic
ials on the financial serv
ices regulatory environment, in particular on prudential, financ
ial markets, conduct and
financial cr
ime frameworks.
In support of this, we have a Group Public and Regulatory Affairs team responsible for engagement as well as ident
ify
ing
and analysing relevant polic
ies, leg
islat
ion and regulat
ion. This work is overseen by various governance forums with
in the
Bank which comprise senior executives representing business and control functions to ensure alignment between advocacy
and business strategies.
Their interests
•
Strong capital base and liqu
id
ity posit
ion
•
Robust standards for conduct and financial cr
ime
•
Healthy economies and competit
ive markets
• Posit
ive susta
inable development
•
Dig
ital
innovat
ion
in financ
ial serv
ices
Investors
How we create value
We aim to deliver robust returns and long-term sustainable value for our investors.
How we serve and engage
We rely on capital from debt and equity investors to execute our business model. Whether they have short- or long-term
investment horizons, we provide our investors with informat
ion about all aspects of progress aga
inst our strategic and
financial frameworks.
Our footprint and the impact we can have where it matters the most through the execution of our sustainab
il
ity agenda,
provide our investors with exposure to opportunit
ies
in emerging markets. We believe that our integrated approach to
ESG issues, as well as a strong risk and compliance culture, are key different
iators
The Group has delivered a strong performance in 2022, with Return on Tangible Equity back above pre-pandemic levels.
We are executing well against the five strategic actions we set out earlier in the year whilst navigat
ing through a challeng
ing
external environment. Our aim is to accelerate the delivery of our ambit
ion of double-d
ig
it return on tang
ible equity.
Regular and transparent engagement with our investors, and the wider market, helps us understand investors’ needs
and tailor our public informat
ion accord
ingly. In addit
ion to d
irect engagement from our Investor Relations team, we
communicate through quarterly, half and full-year results, conferences, roadshows, investor days and media releases.
There was continued adoption of virtual mediums during the year, coupled with a growing number of face-to-face
interact
ions from the very low levels seen
in the last two years. We hosted two capital market days focusing on our
Financ
ial Markets bus
iness and Consumer, Private & Business Banking Affluent Clients in June and November respectively.
Investor feedback, recommendations and requests are considered by the Court, whose members keep abreast of current
topics of interest. The PLC Group Chairman, alongside some members of the Board, hosted a ‘hybrid’ stewardship event for
inst
itut
ional investors in November which provided a platform for shareholders to receive an update on a number of topics,
which included sustainab
il
ity, net zero and governance matters. The event included an open question and answer session
across a range of key issues. An external Investor Sentiment survey was also conducted on an anonymous basis during the
year with the intent
ion of seek
ing ins
ight
into how the PLC Group was perceived, to ident
ify areas of focus for
investors
and understand how the PLC Group could improve its investor communicat
ions. Th
is was particularly important given
the changes in the external environment and the evolution of the Group’s strategy. The PLC Group Board discussed key
areas which it should focus to address concerns which investors had highl
ighted and emerged from the report.
We continue to respond to growing interest from a wide range of stakeholders on ESG matters, includ
ing
investors.
We sought shareholder endorsement for our net zero pathway at the AGM intended as a means by which we will
measure progress, through which we engage and gather views. We also work with sustainab
il
ity analysts and partic
ipate
in sustainab
il
ity ind
ices that benchmark our performance,
includ
ing the Carbon D
isclosure Product (CDP) Climate Change
survey and Workforce Disclosure Init
iat
ive. In 2023, we will continue to engage with investors on progress against our
strategic prior
it
ies and actions, and our financ
ial framework as we progress
ively advance to our returns target.
Their interests
•
Safe, strong and sustainable financ
ial performance
•
Facil
itat
ion of sustainable finance to meet the UN Sustainable Development Goals
•
Progress on ESG matters, includ
ing advanc
ing our net-zero agenda
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
43
Strategic report continued
Suppliers
How we create value
We engage sustainable and diverse suppliers, both locally and globally, to provide effic
ient and susta
inable goods and
services for our business
How we serve and engage
We follow a comprehensive and transparent supplier selection, due dil
igence and contract management process, gu
ided
by our Third-Party Risk Management Policy and Standards. In 2022 we further strengthened our supplier governance given
potential increased risk and regulatory scrutiny. Our Supplier Charter sets out our aspirat
ions
in relation to ethics, human
rights, divers
ity and
inclus
ion (D&I), and env
ironmental performance. The Charter is embedded in our supplier contract
templates and we further encourage alignment to this by sending an annual letter to all our active suppliers that also
includes guidance regarding our technology platforms, sustainab
il
ity aspirat
ions, payment processes and other relevant
princ
iples such as Ant
i Bribery and Corruption. We select and work with suppliers to ensure we provide effic
ient and value
adding goods and services to our businesses both globally and locally. For example, during 2022, our PLC Group partnered
closely with our credit/debit card manufacturing supplier Thales, who went the extra mile to accommodate our larger than
antic
ipated demand am
idst a scarcity of chips, etc. This resulted in the Bank being able to successfully fulfil the spike on
demand, due to the very successful launch of our Singapore dig
ital only bank – Trust, secur
ing our market posit
ion
ing and
fulfilling customer expectat
ions.
In 2022, we continued to make progress on our Supply Chain Sustainab
il
ity agenda. In pursuit of our ambit
ion of net zero
in our operations, we continued to offset emiss
ions from our bus
iness flights. In partnership with an independent climate
consultancy, we continued refin
ing the Scope 3 upstream em
iss
ions measurement methodology wh
ich was used to estimate
our supplier emiss
ions. Our Stands have served to further embed our suppl
ier D&I approach. In 2022, we started to report
and monitor supplier D&I ind
icators across our footpr
int, and most of our core markets now have supplier D&I programmes
to help accelerate progress and impact in our local communit
ies. So far more than 1,500 employees w
ith
in our PLC Group
have been trained internally to build capabil
ity to del
iver our supplier D&I aims. In addit
ion, we cont
inue to partner with
multiple local and global non-governmental organisat
ions (NGOs) to
ident
ify and onboard more susta
inable and
diverse-owned suppliers across our core markets.
In Kenya we work with ‘An-Nisa’ Taxi Lim
ited, who prov
ide self-employed female driven taxi services to the Bank. This provides
women employees and clients in Kenya, the option to work and travel in a safe environment. An-Nisa’s overall vis
ion
is to
increase employment opportunit
ies for women
in what is currently a male dominated sector. Working with An-Nisa means
Standard Chartered can directly contribute to posit
ively
impact
ing the l
ife of women who own and drive the taxi vehicles.
In 2023, supply chain sustainab
il
ity will continue to be a primary focus. We will progress integrat
ion of env
ironmental and
social risks into our Third-Party Risk Management Framework. Also, we will roll out new in
it
iat
ives to help create soc
ial impact
and further reduce carbon emiss
ions w
ith
in our own operat
ions and supply chain.
Their interests
• Sustainab
il
ity and divers
ity
•
Open, transparent and consistent tendering process
•
Will
ingness to adopt suppl
ier-driven innovat
ions
• Accurate and on-time payments
Society
How we create value
We strive to operate as a sustainable and responsible company, working with local partners to promote social and
economic development.
How we serve and engage
We engage with a wide range of civ
il soc
iety and internat
ional and local NGOs, from those focused on env
ironmental
and public policy issues to partners deliver
ing our commun
ity programmes. To shape our strategy, we aim for constructive
dialogue that helps ensure we understand alternative perspectives and that our approach to doing business is understood.
This includes working with NGOs that approach us about a specif
ic cl
ient, transaction or policy. In 2022, climate change,
our net zero pathway, human rights and biod
ivers
ity continued to underpin many of our conversations. We primar
ily
received NGO feedback via our public inbox and responded to queries in line with our Reporting & Engagement Standard.
For complex issues such as climate change, we held bilateral virtual meetings with NGOs to exchange perspectives in greater
depth. In advance of PLC Group’s AGM, we commiss
ioned GlobeScan, a lead
ing market research provider, to conduct
20 stakeholder interv
iews w
ith leaders across NGOs, academia, business and specialty research inst
itutes from seven
countries to analyse how our net zero pathway aligns to external expectations. In 2023, we antic
ipate mapp
ing our NGO
relationsh
ips to
ident
ify top
ics and geographies where we can strengthen our engagement. We hosted a third edit
ion of
the Futuremakers Forum, bring
ing together over 1,700 cl
ients, employers, NGOs, employees and project partic
ipants from
61 markets in PLC Group to build partnerships and create economic opportunit
ies focused on young people. Through the
two-day virtual event, we deepened our understanding of financ
ial products and serv
ices young people want and need to
unleash their full potential. To increase employee engagement, we launched Mentors Den for colleagues across some of
our markets to provide career advice and support to Futuremakers partic
ipants.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
44
Strategic report continued
Their interests
• Climate change and decarbonisat
ion
• Biod
ivers
ity and animal welfare
• Human rights
• Financ
ial
inclus
ion
• Social impact
Employees
How we create value
We recognise that our workforce is key to driv
ing our performance and product
iv
ity and that the d
ivers
ity of our people,
cultures and networks sets us apart. To lead the way in addressing the evolving needs of our clients and the advances in
technology, we are developing a workforce that is futureready and are co-creating with our employees an inclus
ive,
innovat
ive and cl
ient-centric culture that drives ambit
ion, act
ion and accountabil
ity.
How we serve and engage
By engaging employees and fostering a posit
ive exper
ience for them, we can better serve our clients and deliver on
our Purpose and Stands. A culture of inclus
ion and amb
it
ion enables us to unlock
innovat
ion, make better dec
is
ions,
deliver our business strategy, live our valued behaviours and embody our brand promise: Here for good. We proactively
assess and manage people-related risks, for example, organisat
ion, capab
il
ity and culture, as part of our PLC Group r
isk
management framework.
Our People Strategy, which was approved by the PLC Board in mid-2019, stays relevant and future-focused, with the
pandemic having accelerated many of the future of work trends which informed our approach.
Their interests
Translating our Here for good brand promise and purpose of ‘Driv
ing commerce and prosper
ity through our unique
divers
ity’
into our colleagues’ day to day experience is crit
ical to cont
inue to be an employer of choice across our footprint.
The research we have on our Employee Value Proposit
ion (EVP) tells us that our employees, or potent
ial employees, want to:
have interest
ing and
impactful jobs; innovate with
in a un
ique set of markets and clients; cultivate a brand that sustainably
drives commerce and offers enrich
ing careers and development; and be supported by great people leaders. They want these
elements to be anchored in competit
ive rewards and a pos
it
ive work–l
ife balance. The employment proposit
ion
is a key
input to our People Strategy which supports the delivery of our business strategy.
Listen
ing to employees
Frequent feedback from employee surveys helps us ident
ify and close gaps between colleagues’ expectat
ions and their
experience. In addit
ion to our annual survey, we use cont
inuous listen
ing mechan
isms that capture colleague sentiment
more frequently, through a rolling culture survey and through surveys at key moments for our employees such as when they
join us, when they leave and when they return to work after parental leave.
This year our annual My Voice survey was conducted in May and June. Key measures of employee satisfact
ion have stayed
stable in 2022, with an increase in employee Net Promoter Score (NPS) (which measures whether employees would
recommend working for the us) and a slight drop in the employee engagement index. We are encouraged to see that
96 per cent of employees feel committed to doing what is required to help the Group succeed, 89 per cent feel proud about
working for the Group and 82 per cent say that the Group meets or exceeds their expectations. The scores ind
icate that
we have continued to improve as a place to work. In addit
ion to leverag
ing inputs from employee surveys, the Court and
Management also engage with and listen to the views of colleagues through interact
ive sess
ions.
Externally our PLC Group Glassdoor rating (out of five) has increased from 3.7 in 2019 to 3.9 in 2022, and 79 per cent would
recommend working with us to friends. We also continue to be recognised as an employer of choice – in 2022, we ranked as
one of the World’s Best Employers in Forbes for the second time; ranked as a Divers
ity Leader for the th
ird consecutive year in
the Financ
ial T
imes report on Divers
ity and Inclus
ion in Europe; ranked for the second time with
in the Top 100 organ
isat
ions
in
the Refinit
iv Divers
ity and Inclus
ion Index; and were also recognised in the Bloomberg Gender Equality Index for the seventh
consecutive year.
All of this is ind
icat
ive of our progress in further strengthening our employee value proposit
ion to attract, reta
in and grow the
skills and talent that are crit
ical to del
iver
ing our strategy and outcomes for cl
ients.
The health, safety, and resil
ience of our colleagues (
includ
ing
in worsening pandemic condit
ions
in some markets or other
cris
is s
ituat
ions) cont
inues to be a key prior
ity. We are m
indful that the levels of stress felt by employees increased in the 2022
My Voice survey from previous years. At the same time, the survey data also ind
icates that they feel more supported on the
ir
wellbeing needs, especially around their mental and physical health. Globally we offer colleagues access to a mental health
app, a physical wellbeing online platform, an employee assistance programme, wellbeing toolkits, learning programmes on
resil
ience as well as a grow
ing network of trained Mental Health First Aiders. We also continue to aim to mit
igate the causes
of work-related stress, encourage focus on supportive behaviours with
in ex
ist
ing processes and dec
is
ion-mak
ing, and seek to
insert wellbeing skills-build
ing across learn
ing intervent
ions.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
45
Strategic report continued
Adapting to a hybrid world-of-work
2022 saw renewed optim
ism as pandem
ic-related restrict
ions eased
in many of our markets, creating opportunit
ies for
employees to increas
ingly engage w
ith clients, colleagues and communit
ies
in-person. We continue to implement the
flexi-working model that was in
it
iated in 2021, combin
ing flex
ib
il
ity in working patterns and locations. The model has
now been rolled out in 40 of our markets with 87 per cent of employees in these markets on agreed flexi-working
arrangements. This has been a sign
ificant step towards leverag
ing the posit
ive lessons learnt from the pandem
ic around
productiv
ity and employee exper
ience. The model is enabling us to be more inclus
ive of the d
iverse needs of our workforce
and support their wellbeing, and at the same time, consciously balance ind
iv
idual choice and flexib
il
ity with business
prior
it
ies and client needs. Hybrid workers have expressed higher overall employee experience and work-life balance in
the 2022 My Voice survey in comparison to employees working fully remotely or fully in the office.
As employees have started to experience their agreed hybrid working arrangements with the easing of pandemic-related
restrict
ions, they have also been requ
ired to explore and adopt ways of working in a ‘new normal’ that balances the benefits
of remote working with face-to-face interact
ions. Toolk
its and guidance have been provided to ind
iv
iduals and leaders
to help navigate hybrid working, includ
ing support on how to organ
ise team and ind
iv
idual work in ways that maxim
ise
productiv
ity and wellbe
ing; on leading in key moments such as onboarding new team members, returning from parental
leave and during performance conversations; and on recreating ‘water cooler’ moments in hybrid work environments.
We continue to imag
ine our phys
ical workspaces with the relevant infrastructure and technology to provide hubs for
teamwork, collaboration and learning.
> Read about our approach to hybrid working at
sc.com/hybridwork
ing
Strengthening our culture of high performance
As the Group transforms to achieve our strategic ambit
ions, we have refreshed the way we manage, recogn
ise and reward
performance (launched as myPerformance in 2022). We are build
ing a strong culture of amb
it
ion, act
ion and accountabil
ity
by focusing on continuous feedback, coaching, and balanced two-way performance and development conversations.
As we place even greater emphasis on recognis
ing outperformance that
is driven by collaboration and innovat
ion, and
encourage more flexib
il
ity and aspirat
ion dur
ing goal-setting, we have removed ind
iv
idual performance ratings for all
employees. Behavioural changes are already vis
ible and we w
ill further embed the cultural shift through a multi-year journey.
Strengthening leadership capabil
ity, spec
if
ically
in our people leaders who are most directly responsible for the development
of their teams, is a key enabler of our performance and culture. People leaders stepped up throughout the pandemic and
we saw manager NPS continue to increase to 28.38 in 2022 (+3.36 points year-on-year). As the expectations that employees
have of their people leaders continue to grow and evolve, we are also re-imag
in
ing how we embed leadership deep into
the organizat
ion. W
ith inputs from our colleagues, we have captured in our Leadership Agreement what we believe it takes
to lead at Standard Chartered. We are asking each of us to Aspire, Inspire and Execute to take us from where we are today
to where we have committed to be and to deliver on our Purpose. We are embedding this standard of leadership into
how we induct, develop, measure and recognise our leaders. Our Leadership Agreement forms the foundation for a
modernized leadership development offering that all people leaders will complete over the next three years. We are also
encouraging leadership capabil
ity bu
ild
ing across all employees through the Leadersh
ip Academy on our online learning
platform diSCover, at our annual Global Learning Week, and through a 60-day Leadership Health journey of regular
micro-learning activ
it
ies.
> Read our Leadership Agreement at
sc.com/leadershipagreement
Developing skills of future strategic value
The rapid changes in the world of work demand that our employees strengthen a combinat
ion of human and techn
ical
skills to keep pace. We are build
ing a culture of cont
inuous learning that empowers employees to grow and follow their
aspirat
ions. We are help
ing them to build the skills needed for high performance today, to re-skill and up-skill for tomorrow
and to be global cit
izens who understand the chang
ing nature of the world in which we operate.
We have continued to balance learning in classrooms with learning through our online learning platform diSCover,
which is also accessible via a mobile app. Colleagues are using our Future Skills Academies to build skills in Data & Analytics,
Dig
ital, Cyber, Cl
ient Advisory, Sustainable Finance and Leadership, amongst others. Employees also have the opportunity
to learn and practice new skills on-the-job through projects (often cross-functional and cross-location) and mentoring made
available through our AI-enabled Talent MarketPlace platform.
We have further scaled the design and deployment of targeted upskill
ing and re-sk
ill
ing programmes d
irected towards
crit
ical ‘future’ roles where our strateg
ic workforce planning analysis has predicted the increas
ing need for talent,
includ
ing un
iversal banker, data translator, cloud security engineer and cyber security analyst. This approach has united
our recruitment, talent management and learning efforts to target, upskill and deploy employees into new roles. We are
strengthening and scaling our work on sustainab
il
ity, innovat
ion, performance, d
ig
ital and leadersh
ip skills-build
ing both
across and with
in roles.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
46
Strategic report continued
Creating an inclus
ive workplace
We believe that inclus
ion
is how we will enable our diverse talent to truly deliver impact. Our progress in this space is reflected
in our annual My Voice survey, where 82 per cent of employees reported posit
ive sent
iments around our culture of inclus
ion,
which is higher than last year. This has been enabled by increas
ing awareness around d
ivers
ity and
inclus
ion pr
inc
iples,
unconscious bias and micro behaviours as well as emphasis
ing the
importance of creating an inclus
ive env
ironment –
aspects that are covered in the ‘When we’re all included’ learning programme.
Colleagues are also encouraged to join employee resource groups (ERG) al
igned to shared characterist
ics or l
ife experiences
(includ
ing gender, ethn
ic
ity and nat
ional
ity, generat
ions, sexual orientat
ion, and d
isab
il
ity). ERGs across our markets provide
addit
ional learn
ing, development and networking opportunit
ies, espec
ially for underrepresented populations, and are a
valuable source for better understanding the lived experience of our workforce. This has already resulted in improvement
through actions, such as the expansion of more accessible and assist
ive technology to support better access to necessary
tools for work, launch of our SC Pride Charter to cultivate a respectful and safe work environment, and the release of an
inclus
ive language gu
ide to promote psychological safety and review business terms to be more inclus
ive.
> Read our inclus
ive language gu
ide at
sc.com/inclus
ivelanguagegu
ide
Our gender divers
ity cont
inues to grow with more women leaders moving up to more senior roles. By the numbers, women
currently represent 54 per cent of the Court, and representation of women in senior leadership roles is at 28.3 per cent at
the end of 2022. We are committed to continuous improvement in this area and aspire to have 35 per cent representation
of women at the senior level across PLC Group by 2025. This aspirat
ion
is further supported by programmes such as our
IGNITE Coaching programme, which develops our exist
ing women talent
in preparation for future roles.
We remain focused on build
ing a workforce that
is truly representative of our client base and footprint. We continue to work
towards achiev
ing our 2025 UK and US ethn
ic
ity sen
ior leadership aspirat
ions,
includ
ing by develop
ing strategic partnerships
and extending our Futuremakers RISE programme to increase the divers
ity of our talent p
ipel
ines. We are also focuss
ing on
nurturing local talent in markets across Asia, Africa and the Middle East. We provide employees, where legally permiss
ible,
the abil
ity to self-
ident
ify ethn
ic
ity data through our onl
ine systems and are increas
ing awareness on the value and purpose
of collecting this informat
ion.
We recognise six key D&I
1
dates across the year and use these as focal points to facil
itate open d
ialogue on inclus
ion
internally and externally. Through these global campaigns we engage and strengthen relationsh
ips w
ith clients and external
stakeholders, collectively rais
ing awareness, promot
ing best practices and committ
ing to take pract
ical steps to advance
the D&I agenda in the community.
Driv
ing a susta
inable future
Creating our inaugural Chief Sustainab
il
ity Office
Achiev
ing econom
ic, social and environmental sustainab
il
ity is one of the greatest challenges of our generation and a prior
ity
for the Group. In 1987, the United Nations Brundtland Commiss
ion defined susta
inab
il
ity as “meeting the needs of the present
without compromis
ing the ab
il
ity of future generat
ions to meet their own needs.” Here at Standard Chartered, we are
undertaking efforts to realise this defin
it
ion and translate it into implementable investments and actions across the Group.
Our Purpose is to drive commerce and prosperity through our unique divers
ity. Through our valued behav
iours to never settle,
be better together, and do the right thing, we intend to truly live our brand promise to be here for good.
However, being ‘here for good’ just got harder. We are faced with worsening climate impacts, stark inequal
ity, and unfa
ir
aspects of globalisat
ion. Nowhere
is this felt more keenly than in our core markets of Asia, Africa and the Middle East.
We are taking a stand to combat these challenges and setting long-term ambit
ions to help address the most press
ing
issues we face today when seeking to deliver sustainable, social and economic development across our business, operations
and communit
ies.
In 2021, we formally recognised Sustainab
il
ity as a core component of our strategy, elevating it to a pillar of our PLC’s Group
Strategy. In July 2022, we took this a step further and appointed Marisa Drew as our Chief Sustainab
il
ity Officer (CSO), to help
drive our sustainab
il
ity agenda and bring together our exist
ing Susta
inable Finance, Net Zero Programme Management and
Sustainab
il
ity Strategy Teams. The dedicated CSO office harmonises our exist
ing efforts
in sustainab
il
ity and is responsible
for creating and executing the PLC’s Group-wide sustainab
il
ity strategy, includ
ing del
ivery against our net zero pathway.
With a presence in parts of the world where sustainable finance can have the greatest impact, and a wealth of experience
across the team in sustainable finance and environmental and social risk management, our CSO office is well placed to
support our clients in their transit
ion to net zero, mob
il
ise cap
ital at scale and help develop solutions.
We want to make the world a better, cleaner and safer place. We also want to contribute towards enabling a just transit
ion
– one where climate object
ives are met w
ithout depriv
ing emerg
ing markets of their opportunity to grow and prosper.
1
International Day Against Homophobia, Transphobia and Biphob
ia, Internat
ional Day of Persons with Disab
il
it
ies, Internat
ional Men’s Day, International Women’s Day,
and World Day for Cultural Divers
ity for D
ialogue and Development, World Mental Health Day
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
47
Strategic report continued
Measuring what matters most – understanding our material
ity
Since 2016, our approach to striv
ing towards a susta
inable and responsible business has been underpinned by our suite of
Sustainab
il
ity Aspirat
ions. These set out how we a
im to promote social and economic development and deliver sustainable
outcomes in the areas in which we believe we can make the most material contribut
ion to the del
ivery of the UN Sustainable
Development Goals (UN SDGs). We measure progress against the targets set out in our Sustainab
il
ity Aspirat
ions and
incorporate selected Aspirat
ions
into the PLC’s Group Scorecard to ensure consistent measurement, drive widespread
awareness and subsequently support delivery.
‘Material
ity’
is considered to be the threshold for sign
ificance of report
ing ESG issues for users of financ
ial statements:
investors and other stakeholders. We take into considerat
ion the gu
idance as provided by the IFRS Foundation Standards,
understanding that material issues are those which could reasonably be expected to influence decis
ions of those users.
We also note that material
ity for ESG cons
iders both quantitat
ive aspects as well as qual
itat
ive
informat
ion,
includ
ing a
regard for sustainable social and economic development. This will evolve over time, and we plan to continue to assess our
approach and reporting based on relevance to our users. This will evolve over time, and we plan to continue to assess our
approach and reporting based on relevance to our users.
Further detail on our forward-looking targets will be announced during 2023.
Accelerating zero: Our approach to climate change
We believe that climate change is one of the greatest challenges facing the world today and that its impact will hit hardest
in the markets where we operate, namely Asia, the Middle East and Africa. Many of these markets are currently reliant on
carbon-intens
ive
industr
ies for the
ir continued economic growth. Achiev
ing a just trans
it
ion – one where cl
imate object
ives
are met without depriv
ing develop
ing countries of their opportunity to grow and prosper – will require care, capital and
special
ised support. We are well placed to help by d
irect
ing cap
ital to emerging markets that have both the greatest
opportunity to adopt low-carbon technology and some of the toughest transit
ion-financing and cl
imate challenges.
In recognit
ion of the
important role, we can play in the transit
ion, and
in line with our Stand to Accelerate Zero, in October
2021 we announced our roadmap to reach net zero across our operations, supply chain and financed emiss
ions by 2050,
as well as our plan to set ambit
ious
inter
im targets to substant
ially reduce our financed carbon emiss
ions by 2030. As a UK
headquartered bank, our pathway is in line with the UK’s commitment under the Paris Agreement to reduce GHG emiss
ions
by at least 100 per cent of 1990 levels by 2050, and to reduce economy-wide GHG emiss
ions by at least 68 per cent by 2030.
However, we are applying these targets and ambit
ions across our global footpr
int, despite a number of our footprint markets
not having a commitment in place to reach net zero with
in th
is timel
ine at the t
ime of our PLC group-wide net zero pathway
publicat
ion “Wh
itepaper” in October 2021. See here – https://av.sc.com/corp-en/content/docs/SC-net-zero-whitepaper.pdf
Our net zero plan aims to accelerate new solutions to reduce our emiss
ions, catalyse susta
inable finance and partnerships,
and mit
igate the financial and non-financial r
isks associated with climate change.
Since 2018 we have been working on align
ing our own operat
ional and financed emiss
ions act
iv
it
ies to the Paris Agreement’s
goal of well below two degrees celsius of global warming by the end of the century. We focus on three areas with
in our
strategy to reduce direct and financed emiss
ions: our operat
ions, those associated with our supply chain (ind
irect
impacts in
value chain) and our financed emiss
ions assoc
iated with our clients.
Our operations- reducing our environmental footprint
We are mindful of the direct environmental impact of our branches and offices and are determined to reduce their impact.
We have measured and reduced our GHG emiss
ions s
ince 2008 and since 2018 we have been actively targeting a reduction
in our Scope 1 and 2 emiss
ions
in line with a well-below two degrees Celsius scenario. In 2021, we enhanced this ambit
ion,
setting out targets to achieve net zero in our operations by 2025.
Our approach is simple. We intend to optim
ise our office and branch network, ret
ir
ing unused and
ineffect
ive space to
retain a working environment in line with modern requirements for home- and hybrid-working solutions.
In partnership with our long-term strategic real estate suppliers such as CBRE and JLL, we are continually working to
maxim
ise efficiency wh
ile leveraging clean and renewable power where appropriate, in line with our commitment to the
global corporate renewable energy in
it
iat
ive, RE100, and to help us meet our own challeng
ing targets.
While new ways of working have led to a direct reduction in our property requirements and associated emiss
ions, we
recognise that these emiss
ions have s
imply been shifted. Throughout 2022, we have begun measuring addit
ional categor
ies
of Scope 3 emiss
ions
includ
ing waste, employee commut
ing and downstream leased assets.
We are also committed to reducing waste in all its forms. In 2022, we reduced our overall waste and our waste per employee
achiev
ing our target to reduce waste to 40kg per employee per year – three years ahead of schedule. Th
is was primar
ily
due to new ways of working reducing employee presence in our build
ings.
Recycling programmes remains a challenge in some of our markets, however we continue to work towards our PLC Group
target to recycle 90 per cent of our waste by 2025. We have commenced the True Zero Waste programme across our top
twenty build
ings by s
ize and expect to see the first results next year.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
48
Strategic report continued
Water availab
il
ity is a growing challenge in many of our markets. Although we did not face any issues sourcing potable water
in 2022, we continue to take a responsible approach to managing water across the Group.
During 2023, we will continue to accelerate our True Zero Waste certif
icat
ion programme across more offices. This certif
ies
90 per cent of waste diverted from landfill or inc
inerat
ion and will require further investment and education in waste
management and avoidance. Addit
ionally, we w
ill certify more single-use-plastic free build
ings and promote more
sustainable practices.
Our suppliers – reducing Scope 3 upstream
We recognise our contribut
ion to cl
imate impacts through the goods and services we procure and understand that
severe weather events could result in material disrupt
ions to our supply cha
in that may potentially impact our abil
ity to
serve our clients.
From 1 April 2022 all new and renewing material third-party corporate services arrangements in-scope for Business Continu
ity
Management controls are subject to climate risk assessment as part of third-party continu
ity plans.
Through our Supplier Charter, we encourage our suppliers to support and promote standards in environmental protection
and to manage and mit
igate env
ironmental risks.
In 2022, we continued to make progress against our supply chain sustainab
il
ity agenda. We saw a decrease in our flight
emiss
ions
in the period from October 2021 to September 2022, against our PLC Group-wide target to achieve and mainta
in
flight emiss
ions at 28 per cent lower than our October 2018 to September 2019 basel
ine and continued to offset these.
In partnership with an independent climate consultancy, we continued improv
ing the accuracy of our methodology and
estimated our supplier emiss
ions. Due to a l
im
ited number of suppl
iers able to report emiss
ion figures to the PLC Group, our
methodology relies primar
ily on em
iss
ion factors comb
ined with an increas
ing volume of data reported by suppl
iers via CDP
climate change survey and emiss
ions figures reported by suppl
iers to the PLC Group. We expect that both supplier emiss
ion
calculations and our methodology will continue to evolve over time. Using these ins
ights, we
ident
ified and engaged our key
highest-emitt
ing suppl
iers to better understand and align on sustainab
il
ity actions, metrics and goals.
The process for Scope 3 upstream supplier emiss
ions measurement
is being embedded into our wider annual reporting
process and is expected to be executed in the first quarter of each year based on the previous year’s vendor spend.
It is noted that there is a lag on data obtained for vendor emiss
ions. Th
is is a result of necessary time taken for our suppliers
to calculate and report their own carbon emiss
ion
informat
ion.
Furthermore, we launched a global project to define strategies to address emiss
ions related to Scope 3 Categor
ies 1
(Purchased goods and services), 2 (Capital goods), 4 (Upstream transportation and distr
ibut
ion) and 6 (Business travel). Our
internal targets cover reducing our emiss
ions related to Upstream transportat
ion and distr
ibut
ion and Business travel by 28
per cent against 2019 levels over the next seven years. Simultaneously, for Purchased goods and services and Capital goods
categories, we plan to engage our suppliers to set science-based targets in the next five years.
In 2022, to build internal understanding of our supply chain sustainab
il
ity aspirat
ions and dr
ive united engagement for our
net zero goals, we delivered train
ing and awareness sess
ions which were attended by partic
ipants from across the
organisat
ion.
Our clients – reducing our financed emiss
ions
We are committed to supporting our clients in their own transit
ions to net zero and see our role
in driv
ing th
is alignment to
the Paris Agreement goal as a crit
ical part of our cl
imate response plans. We aim to become net zero in our financ
ing by
2050, with inter
im 2030 targets for our h
ighest-emitt
ing sectors.
In 2022, we made strong progress towards this goal, and set out to measure, manage and reduce emiss
ions assoc
iated with
our financing v
ia the implementat
ion of our net zero roadmap. In 2021, we announced that we expect all cl
ients (beginn
ing
with those in high-carbon sectors) to have a strategy to transit
ion to a low-carbon bus
iness model. Since then, we have
focused on assessing clients in sectors where we have set 2030 net zero targets (Oil and Gas, Metals and Min
ing and Power).
In 2021, we measured the baseline and set targets for three sectors: Oil and Gas, Coal Min
ing, Steel, Other Metals and
Min
ing and Power. In 2022 we added a further three sectors cover
ing Automotive manufacturers, Aviat
ion and Sh
ipp
ing.
These targets have 2030 reduction targets, with the plan to be net zero by 2050.
The PLC Group has also developed an in
it
ial methodology for assessing the credib
il
ity of client transit
ion plans throughout
the PLC Group, though we expect this to evolve quickly.
Our methodology draws on informat
ion gathered from our cl
ient Climate Risk Assessments and considers the guidance
on Credible Transit
ion Plans by the Glasgow F
inanc
ial All
iance for Net Zero (GFANZ) and the UK’s Transit
ion Plan Taskforce.
In 2022, we tracked the existence of a transit
ion plan for our corporate cl
ients, and by the end of 2023 intend to have a view
of credib
il
ity for our largest exposures. But we know that achiev
ing net zero w
ill not be a linear pathway; target-setting will
evolve over time as methodologies are enhanced and the necessary data required to measure our emiss
ions footpr
int
becomes refined and available.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
49
Strategic report continued
Catalysing finance and partnerships for transit
ion
In recent years, sustainab
il
ity has moved from a predominantly risk-based in
it
iat
ive to become a value dr
iver for many
banks as they seek to capital
ise on the opportun
it
ies to finance the m
it
igat
ion of the impact of climate change and tackle
social issues.
Our Opportunity 2030 report (www.sc.com/opportunity2030, published in 2020) ident
ified a USD 10 tr
ill
ion
investment
opportunity in contribut
ing to the SDGs,
includ
ing clean energy. It
is this opportunity which we are seeking to capital
ise
on through our low carbon products and services.
Being present in both developed markets and emerging markets, we recognise the unique role we have to play in
deliver
ing a just trans
it
ion, d
irect
ing cap
ital and special
ised support to the reg
ions that need it most to drive sustainable
economic growth.
We have focused on strengthening our capabil
it
ies in transit
ion finance throughout 2022,
includ
ing deploy
ing a dedicated
Transit
ion Accelerat
ion Team with
in the CSO organ
isat
ion to support cl
ients in high-carbon sectors. This team includes
special
ists w
ith industry knowledge to advise our clients in their ind
iv
idual sustainable finance journeys.
We have set ourselves a PLC Group-wide target to mobil
ise $300bn of Susta
inable Finance by 2030. This includes the
facil
itat
ion of green and social bond rais
ing, prov
is
ion of fund
ing commitments to green and social causes as outlined below,
advisory services to support our clients on their own journeys to net zero and facil
itat
ion of Sustainab
il
ity Linked Loans.
We continued to expand and develop our suite of sustainable products in line with our Sustainable Finance product
frameworks. These frameworks, developed in collaboration with Sustainalyt
ics, a lead
ing provider of ESG and corporate
governance research, are reviewed annually.
In 2022, we updated our Green and Sustainable Product Framework to update and expand the list of elig
ible act
iv
it
ies.
In CCIB, new product launches included Sustainable Fiduc
iary Depos
its, sustainab
il
ity-linked sale and leaseback for aviat
ion
finance, impact subscript
ion finance fac
il
it
ies, and ESG structured products with rates underlying.
With
in CPBB, we connected reta
il clients with access to sustainable finance offerings, launching new products includ
ing
structured notes, sustainable deposits and Green Mortgages. Throughout 2022, we increased the number of markets
where we offer Green Mortgages through successful product launches.
A shared ambit
ion – work
ing in partnership
We have ident
ified opportun
it
ies for the Group to play an act
ive role in shaping global standards – ranging from net zero to
carbon markets. Along these lines, we are actively involved in the leadership of several standard-setting or standard-
influenc
ing efforts.
For instance, we are part of the Glasgow Financ
ial All
iance for Net Zero (GFANZ) Princ
iples Group, an amb
it
ious programme
to generate the commitment, investment and alignment needed to drive forward the transit
ion to net zero. Our Group CEO
is the Co- Chair of the GFANZ Working Group on Capital Mobil
isat
ion to Emerging Markets and Developing Economies,
and throughout 2022, our PLC Group Head, Conduct and Financ
ial Cr
ime and Compliance has chaired the Net Zero Banking
Alliance (NZBA) – the industry-led banking element of GFANZ
Our PLC Group Chairman has co-chaired the United Nations’ Global Investors for Sustainable Development (GISD) Alliance,
which has set ambit
ious objectives to scale up long-term finance and
investment in sustainable development; and our
Global Head, Sustainable Finance has continued to hold the posit
ion of Cha
ir of the Equator Princ
iples Assoc
iat
ion. In 2023,
we intend to support the Equator Princ
iples Steer
ing Committee as our term as Chair comes to an end. We are also jo
in
ing
the Roundtable on Sustainable Palm Oil as a member of the Board of Governors.
In addit
ion, we are members of the UNEP F
inance Init
iat
ive and the Climate Bonds Init
iat
ive, as well as one of the in
it
ial
members of the Taskforce on Climate-Related Financ
ial D
isclosures (TCFD) and signator
ies of the Pose
idon Princ
iples, a
global framework for assessing and disclos
ing the cl
imate alignment of financ
ial
inst
itut
ions’ shipp
ing portfol
ios. Our PLC
Group’s Global Head of Sustainab
il
ity Strategy and Net Zero represents the Group on the Financ
ial Net-Zero Expert Adv
isory
Group (EAG).
Our PLC Group’s Head of Carbon Markets Development is a Board member of the Integrity Council for the Voluntary Carbon
Markets (IC-VCM), which is focused on developing a high-quality internat
ional carbon market. The IC-VCM carr
ied out a
consultation on its Core Carbon Princ
iples over the summer, rece
iv
ing over 350 responses and 5000
ind
iv
idual comments.
We have been an integral player in the set-up of the IC-VCM and will remain involved in the development and trading of
carbon markets around the world. Our Group CEO sits on the Dist
ingu
ished Advisory Group.
Meanwhile, we increased our representation at COP27 and the G20 and were actively involved in the launch of several
groundbreaking in
it
iat
ives on the marg
ins of each; these include the launch of the Africa Carbon Markets Init
iat
ive (ACMI)
and Egypt’s Nexus for Water, Food & Energy (NWFE) at COP27, the $20Bill
ion USD comm
itment to advance Indonesia’s
Just Energy Transit
ion Partnersh
ip (JETP) at the G20, and the $15.5Bill
ion USD comm
itment to the Vietnam JETP.
The PLC Group partic
ipates
in various industry in
it
iat
ives, forums and roundtables,
includ
ing the Cl
imate Financ
ial R
isk Forum
(CFRF) and Global Associat
ion of R
isk Professionals (GARP) roundtable, to ensure we benchmark our risk management
capabil
it
ies and stay abreast of changes.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
50
Strategic report continued
Sim
ilarly, we are engaged at local and reg
ional levels to share ins
ights, comment on regulatory consultat
ions, and better
understand the regulatory landscape and practices across our footprint.
Investing in Climate Research
Our four-year partnership with Imperial College London covers long-term research on Climate Risk, advisory on shorter-term,
internally focused projects to enhance Climate Risk capabil
it
ies and train
ing of our colleagues, Group Management Team
and PLC Board.
In 2022, we sponsored a research project on ‘Investing in Nature to Tackle Biod
ivers
ity Loss and Enhance Food Security’,
which explored the risks and opportunit
ies fac
ing the global agricultural sector from climate change.
•
Part 1 expanded on the known risks of climate change on the agriculture sector by examin
ing the fa
il
ings of major
climate models, as well as the immed
iacy of the s
ign
ificant
impacts of climate change upon the agriculture sector.
•
Part 2 explored the potential for Nature based Solutions to tackle the interl
inkages between agr
iculture, land-use,
and climate change.
•
Part 3 focused on the financial opportun
it
ies surround
ing natural assets and sustainable agriculture.
In addit
ion, we worked w
ith Imperial College on three advisory projects during 2022, to develop a methodology to assess
the impact of Climate Risk on sovereign ratings; develop Physical Risk report cards for sovereigns; and enhance the energy
consumption calculation methodology and emiss
ion factor database for mortgage portfol
ios in our key markets.
Mit
igat
ing Environmental and Social Risk
While transit
ion
ing to a net zero economy creates clear opportunity, it also comes with risk. But before we can manage
the risk, first we must be able to ident
ify, assess
its size and monitor it.
In the front line, our Environmental and Social Risk Management team with
in the Ch
ief Sustainab
il
ity Office aims to drive
growth while managing the environmental and social (E&S) risks associated with our financ
ing. Our approach
is embedded
directly into our credit approval process and supports us to work with our stakeholders to ident
ify, manage, m
it
igate and
monitor the potential impacts that stem from our financ
ing dec
is
ions.
Our Posit
ion Statements, approved by the PLC Group Respons
ib
il
ity and Reputational Risk Committee (GRRRC), outline
the standards we encourage and expect of ourselves and our clients and help us to ident
ify and assess E&S r
isks related to
our CCIB clients.
We use these statements – which draw on International Finance Corporation (IFC) Performance Standards, the Equator
Princ
iples (EP) and global best pract
ice – to assess whether to provide financ
ial serv
ices to clients operating in sensit
ive
(includ
ing h
igh-carbon) business sectors. In addit
ion, we have spec
if
ic gu
idance for clients operating in sectors with a
high potential environmental or social impact.
In 2022, we reviewed clients and transactions that presented potential E&S risks. If we find a material E&S issue, we take
steps to proactively engage the client to mit
igate
ident
ified r
isks and impacts, and support and guide our clients to improve
their E&S performance over time.
In relation to climate, we expect all clients in the power generation, min
ing and metals, and o
il and gas sectors to have a
strategy to transit
ion the
ir business, in line with the goals of the Paris Agreement. We review a client’s approach to transit
ion
using the output from our client Climate Risk assessments. In particular, we util
ise a cl
ient’s Transit
ion R
isk mit
igat
ion score,
which considers both quantitat
ive
inputs (e.g. emiss
ions measurement data and reduct
ion targets), and qualitat
ive overlays
through direct client conversations to confirm management focus and commitment.
We have a responsib
il
ity to support and guide our clients to a low-carbon pathway and offer them green and transit
ion
financing as the ma
in levers to help us achieve our net zero targets. We will also be assessing our exposure to emiss
ions
intens
ive cl
ients and/or assets and will seek to replace these over time by adding new low carbon intens
ity cl
ients and/or
assets to our portfolio.
This does not mean walking away from our exist
ing cl
ients, but instead working with them to finance investment in low
carbon methods and technologies, particularly across Asia, Africa and the Middle East where investment could have the
biggest impact. However, for clients who do not align with our Posit
ion Statements, we may look to w
ithdraw financ
ial
services and exit the relationsh
ip
if we cannot work with them to align over time.
We recognise just how important it is to get this right, so in support of our Sustainab
il
ity Aspirat
ions, we updated our E&S R
isk
Management Framework by introduc
ing t
ighter restrict
ions based on our 2021 Pos
it
ion Statement refresh, and we expanded
our capacity, establish
ing a team w
ith
in our Global Bus
iness Service centre in Warsaw to conduct enhanced E&S due
dil
igence on cl
ients. In addit
ion, all relat
ionsh
ip managers and cred
it officers are offered train
ing
in assessing E&S risk,
as well as having access to detailed online resources.
In 2022, we prior
it
ised our approach to biod
ivers
ity by undertaking a pilot biod
ivers
ity risk assessment. This included a loan
book analysis to ident
ify
impacts and dependencies from biod
ivers
ity-related risks at a sector, country and financ
ial serv
ices
level. We are continu
ing to develop our approach to b
iod
ivers
ity, expanding on the review conducted this year to gain a
clearer view of the biod
ivers
ity risk associated with the PLC Group’s activ
it
ies.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
51
In 2023, we plan to update our Posit
ion Statements cover
ing all sensit
ive sectors, w
ith the enhanced requirements to become
effective the following year
Supporting our front line teams, we have a dedicated second line Climate Risk team. Our Climate Risk Appetite Statement
(RAS) is approved annually by the PLC Board and is supported by the PLC Board and Management Team level risk appetite
metrics, covering Credit – CCIB and CPBB, Reputational and Sustainab
il
ity Risk (RSR), Traded Risk and Country Risk.
The metrics are approved by the PLC’s Group Risk Committee (GRC) (for MT level risk appetite metrics) and the PLC Board
(for Board level risk appetite metrics) annually. Monitor
ing of adherence to r
isk appetite metrics commenced in January 2022
and any breaches are reported to the GRC and BRC.
We are continuously expanding the scope and coverage of our risk appetite metrics for enhanced risk ident
ification and
management. Addit
ional metr
ics to address our public targets across key sectors and a stress loss metric built on scenario
outcomes have been ident
ified and are be
ing monitored for inclus
ion
in risk appetite reporting in 2023. The focus for 2023
will be to increase the coverage of exist
ing metr
ics and introduce new risk appetite metrics.
The uncertaint
ies surround
ing how and when Physical and Transit
ion R
isk will impact mean that no tool or methodology is
perfectly able to estimate risks from climate change now or in the future. However, we need to move quickly so we are
developing methodologies, engaging with clients and integrat
ing Cl
imate Risk into our mainstream risk management
activ
it
ies and assessments. We will adapt our approach as the impact from Climate Risk becomes clearer and the tools
and methodologies to gather reliable data mature.
We have toolkits to quantitat
ively measure cl
imate-related Physical and Transit
ion R
isk and in 2022, we continued to
enhance our understanding of climate-related risks, and sign
ificantly strengthened our stress test
ing and scenario analysis
capabil
it
ies for a range of management scenarios that are more plausible. We continue to engage with our corporate
clients to understand their Transit
ion and Phys
ical Risks, as well as their plans to prepare for climate change.
The data we captured helped us develop our own client-level climate-risk assessments for both exist
ing and new cl
ients,
improve our internal climate modelling capabil
it
ies and strengthen the risk measurement and monitor
ing of the portfol
ios.
Education and Train
ing
Understanding Sustainab
il
ity
We are encouraging all employees across our footprint to grow their understanding of sustainab
il
ity and climate, how we
embed it into our business, operations and communit
ies, and how they can act
ively play their part in this journey. In April 2022,
we launched our ‘Understanding Sustainab
il
ity’ online learning with colleagues voluntarily completing this programme
during the year.
To recognize their engagement, we planted a tree for each employee completing the train
ing
in our ‘Standard Chartered
Forest’, which spans seven of our footprint markets and is tended by local NGOs.
Climate-related financ
ial and non-financial r
isk train
ing
For Climate Risk specif
ically, the PLC’s Board were g
iven train
ing that prov
ided an overview of how Climate Risk is being
embedded across the three lines of defense, as well as what this means for our clients and colleagues.
In addit
ion, we launched R
isk-wide mandatory e-learnings, and provided bespoke classroom-based train
ing for colleagues
across CCIB, CPBB, Risk and Audit. Recordings of these sessions are available to all staff to access as convenient.
In Q1 2023, we intend to embed Climate Risk-related credit train
ing mater
ial into both our first and second line Credit Risk
curricula. In addit
ion,
in partnership with our academic partner, Imperial College London, we also aim to launch a detailed
online train
ing programme ava
ilable to all impacted staff.
Sustainable Finance and ESRM train
ing
In 2022, we focused on educating colleagues across all levels of the PLC Group on our net zero pathway and Sustainable
Finance in
it
iat
ives. We launched foundat
ional sustainab
il
ity and Sustainable Finance curricula across the PLC Group;
provided dedicated train
ing on our Susta
inable Finance product suite and Posit
ion Statements; hosted panel d
iscuss
ions
on key themes includ
ing greenwash
ing risk and ESG ratings and held topical sessions on net zero and Transit
ion F
inance
concepts, such as carbon capture, util
izat
ion and storage, and decarbonizat
ion market trends.
In 2023, our Sustainable Finance education programmes will accelerate. This will include the rollout of a tiered practit
ioner-
level learning curriculum, and further modularisat
ion of our Susta
inable Finance train
ing to help us
improve knowledge and
awareness across our network.
Incentive Structure
Variable remuneration is applicable to employees through the PLC Group Scorecard and the Long-Term Incentive Plan (LTIP).
This is overseen by the PLC’s Board-level Remuneration Committee.
Selected sustainab
il
ity targets, includ
ing those w
ith a climate change dimens
ion, are
incorporated into our annual PLC Group
Scorecard which informs variable remuneration for all colleagues under our Target Total Variable Compensation plan,
includ
ing execut
ive directors, PLC Group MT and Group MT.
Strategic report continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
52
Strategic report continued
In addit
ion to the PLC Group Scorecard and LTIP performance measures, ded
icated climate and sustainab
il
ity related
objectives apply across funct
ional and regional scorecards includ
ing the R
isk function, and ind
iv
idual object
ives add a
further link between sustainab
il
ity and reward. Specif
ically,
in relation to the delivery of core aspects of our climate change
approach, several ind
iv
iduals and teams have object
ives wh
ich impact variable remuneration.
Social Sustainab
il
ity
While it’s clear that our main impact on society and the environment is through the businesses we finance, we’re determined
to be a force for good for our clients, people and communit
ies. To us, that not only means ensur
ing that we are min
im
is
ing
our own environmental impact, but also striv
ing to be a respons
ible company: util
is
ing our skills, experience and network to
fight financial cr
ime, embedding our values across the markets where we operate, and invest
ing
in our people and
communit
ies.
Driv
ing Good Conduct and Eth
ics
Good conduct is crit
ical to del
iver
ing pos
it
ive outcomes for our cl
ients, markets and stakeholders. It’s fundamental to
achiev
ing our brand prom
ise, Here for good.
Our Conduct Risk management approach has been strengthened since 2021 through several in
it
iat
ives,
includ
ing launch
ing
a new annual Conduct Risk management effectiveness review, which increased our abil
ity to
ident
ify and m
it
igate aga
inst
Conduct Risk and re-energis
ing our engagement strategy.
Our Speaking Up whistleblow
ing programme
is essential to upholding our Here for good brand promise and valued
behaviours. The early disclosure of concerns reduces the risk of financ
ial and reputat
ional loss caused by misconduct.
We encourage colleagues, contractors, clients, suppliers and members of the public to use our Speaking Up programme
which offers secure, independent and confident
ial channels to report known or suspected m
isconduct without fear of
retaliat
ion. Examples of wh
istleblow
ing concerns
include breaches of regulatory requirements, breaches of PLC Group
policy or standards, or behaviour that has adverse effects on colleagues and/or our reputation.
The Speaking Up programme continues to be util
ised across all Countr
ies, Businesses, and Functions and our 2022 My Voice
survey found that felt comfortable rais
ing concerns through the channels. COVID-19 pandem
ic continued to influence
internal reporting trends.
Throughout 2022, we hosted a series of awareness campaigns to ensure that our colleagues understand the importance
of upholding our conduct standards and know how, and when, to Speak Up. To celebrate Whistleblowers’ Day on 23 June,
we held a month-long global campaign themed around ‘Doing the Right Thing One Speak Up at a Time’, and in October
colleagues in Africa and the Middle East region ran a regional Conduct Week. In December we celebrated Conduct Month
and UN Anti-Corruption Day, under the theme ‘The Stands, Conduct and Me’, highl
ight
ing the link between the day-to-day
conduct of ind
iv
idual colleagues and the Bank’s Stands. All campaigns included interact
ive messages from our sen
ior leaders
and live panel discuss
ions des
igned to both set the tone from the top and nurture it from with
in.
The PLC’s Group Code of Conduct (the Code) remains the primary tool through which we set our conduct expectations: it
supports all our polic
ies, sett
ing min
imum standards and re
inforc
ing our valued and expected behav
iours. It also outlines a
framework to help colleagues make good decis
ions. To re
inforce our shared commitment to the highest possible standards
of conduct, each year we ask our colleagues to reconsider what the Code means to them through a refresher e-learning,
and to reaffirm their commitment. In 2022, 99.4 per cent of our colleagues completed the mandatory train
ing and
affirmation. Colleagues who are overdue w
ithout a valid reason (i.e. for which they are given an exemption) are subject
to a 40 per cent reduction in their annual variable compensation for the year they failed to attest.
In 2023, we plan to refresh the Code to improve alignment with our Stands, strengthen the link between ethics, culture and
conduct, and intertw
ine the Code w
ith the PLC’s Group strategy. We also intend to take steps to make the Code more
accessible and relatable to all colleagues.
Fight
ing F
inanc
ial Cr
ime
Access to the financial system helps transform l
ives around the world, helping to reduce poverty and spur economic
development. But the financial system
is also used by those involved in some of today’s most damaging crimes – from human
trafficking to terror
ism, corruption and the drug trade. Our ambit
ion
is to help tackle these crimes by making the financ
ial
system a hostile environment for crim
inals and terror
ists. We have no appetite for breaches in laws and regulations related
to Financ
ial Cr
ime.
Our Conduct, Financ
ial Cr
ime & Compliance (CFCC) team sets our financ
ial cr
ime risk management framework. We seek
to safeguard our clients and communit
ies aga
inst money laundering (AML), terrorist financ
ing, sanct
ions, fraud and other
risks, applying core controls such as client due-dil
igence, screen
ing and monitor
ing, and engag
ing our people. In addit
ion,
anti-bribery and corruption (ABC) controls aim to prevent colleagues, or third parties working on our behalf, from engaging
in bribery.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
53
A particular focus of our financ
ial cr
ime invest
igatory teams
is the use of data analytics to ident
ify those cl
ients and cases
which generate the greatest financ
ial cr
ime risk. In 2022, we increased coordinat
ing and streaml
in
ing the work carr
ied out
by these ind
iv
idual teams. This has strengthened the second line of defence in support of colleagues in business lines and
country teams across the PLC Group.
To mit
igate the r
isk of financ
ial cr
ime, particularly laundering the proceeds of corruption, in the lead-up to, during and after
major polit
ical elect
ions in footprint markets, the PLC Group conducts enhanced monitor
ing des
igned to ident
ify and
invest
igate transact
ions of potential concern. In 2022, enhanced monitor
ing was conducted dur
ing major elections and
times of polit
ical trans
it
ion or confl
ict, for example in Kenya, Angola, Nepal, Phil
ipp
ines and Sri Lanka.
Since the beginn
ing of the war
in Ukraine on 24 February 2022, the authorit
ies of the European Un
ion, United Kingdom,
United States, and several other nations have imposed multiple rounds of sanctions against Russia by targeting a wide range
of Russian entit
ies (state-owned and pr
ivate) and a large number of Russian elites, oligarchs, polit
ical leaders, and officials.
While the pace of change and the complexity of these sanctions against Russia are unprecedented and had the potential to
create areas of uncertainty as to the scope of some of the regulatory prohib
it
ions, we have sought to comply with these
requirements fully and promptly. This work has been a sign
ificant area of focus for F
inanc
ial Cr
ime Compliance teams during
2022.
We have invested sign
ificantly to ensure our employees are properly equ
ipped to combat financ
ial cr
ime. In 2022, colleagues
and governance body members completed financial cr
ime e-learnings which cover ABC, AML, sanctions and fraud topics.
For those in high-risk roles and functions, addit
ional targeted ABC tra
in
ing, masterclasses and forums were held to deepen
understanding. We also shared our Supplier Charter, which sets out our aspirat
ions and prov
ides guidance related to ABC.
This was supported by our PLC Group-wide communicat
ion campa
ign, ‘The whole story’ which aimed to raise employee
awareness of the real-life impact of financ
ial cr
ime and highl
ight the work we are do
ing ind
iv
idually and collectively to build a
robust Risk Culture and lead in the fight against financ
ial cr
ime. In 2022, the theme for The Whole Story was ‘Connecting the
Dots’ and focused on our efforts to fight crime by ‘Connecting, Collaborating and Communicat
ing’, and bu
ild
ing partnersh
ips
with government bodies, regulators and other global banks to strengthen our collective defences.
These public-private partnerships include in
it
iat
ives w
ith the International Center for Miss
ing & Explo
ited Children which
focuses on the use of crypto assets in the trade of child exploitat
ion and abuse mater
ial; the National Cyber Forensics and
Train
ing All
iance which assists law enforcement in ident
ify
ing sign
ificant organ
ised groups engaged in business email
compromise schemes; and US Customs and Border Protection which focuses on economic security, trade security, forced
labour and other risk areas, such as Trade Based Money Laundering. These partnerships are producing material new
ins
ights about var
ious crim
inal typolog
ies and advances in how we collectively combat financ
ial cr
ime in an increas
ing
number of jurisd
ict
ions.
Throughout 2022, we also engaged with peers in contribut
ing to the ongo
ing dialogue to advance effectiveness in
combating financ
ial cr
ime through our active partic
ipat
ion in several of the leading industry groups, includ
ing the
Wolfsberg Group of global Banks (Including our Global Head of FCC serving as co-chair and hosting the September
meeting of the organisat
ion), Mad
ison Group and UK Finance. We also partic
ipated
in discuss
ions and forums w
ith
many external thought leaders includ
ing the World Econom
ic Forum’s Partnering Against Corruption Init
iat
ive (PACI).
Respecting Human Rights
We strive to be a responsible company and safeguard human rights across our business. We recognise that the global nature
of our business may expose us to the risk of modern slavery and human traffick
ing (MSHT)
in our operations, supply chain
and customer and client relationsh
ips, and we are comm
itted to ident
ify
ing and mit
igat
ing these risks.
Our approach is guided by our Environment and Social Risk Management Framework and Posit
ion Statement on Human
Rights. These documents outline the cross-sector standards that we expect of ourselves and our clients. They are informed
by internat
ional best pract
ice and the International Finance Corporation’s Environmental and Social Performance Standards.
Our Modern Slavery Statement details our actions to tackle MSHT across our client base, supply chain and workforce.
In 2022, we enhanced our human rights due dil
igence by requ
ir
ing cl
ients to provide evidence of their polic
ies and processes
to manage potential human rights risks in their operations or supply chains. We also developed more detailed guidance
for clients on grievance mechanisms in line with IFC guidel
ines and UN Gu
id
ing Pr
inc
iples for Bus
iness and Human Rights.
We continued to work with third parties, such as the Thun Group and Sustainable Shipp
ing In
it
iat
ive, to promote coordinated
action against MSHT.
We completed a risk review of our supply chain and supplemented our MSHT assessment questionna
ire w
ith geopolit
ical
analysis. As a result of the latter in
it
iat
ive, we are more closely scrut
in
is
ing five markets for MSHT risk.
For our workforce, we introduced a refreshed set of Industrial Relations princ
iples that take
into considerat
ion the
fundamental ILO conventions. We also expanded pay gap reporting to include ethnic
ity data. Our ethn
ic
ity pay gap
reporting this year covers the United Kingdom and United States of America, having achieved the min
imum requ
ired levels
of self-declaration of ethnic
ity
in these regions to make pay gap analysis possible. This reporting will support our external
commitment on ethnic
ity representat
ion in these markets
Strategic report continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
54
Strategic report continued
Impact in our communit
ies
Young people across the world – women and girls in particular – continue to face barriers to economic inclus
ion. Many fall
short of their potential and become stuck in low-income poverty. The future of work also presents challenges – an estimated
50 per cent of employees worldwide will need reskill
ing by 2025
2
, as adoption of technology increases. Accessing the relevant
train
ing w
ill be vital for young people.
We amplify our social impact and continue to support communit
ies through Futuremakers, our global
in
it
iat
ive to tackle
youth economic inclus
ion. Futuremakers supports d
isadvantaged young people, especially girls and people with visual
impa
irments, to learn new sk
ills and improve their chances of getting a job or starting their own business.
With our internat
ional and local partners
includ
ing the Standard Chartered Foundat
ion, in 2022 we continued to reach
young people through Futuremakers, includ
ing prov
id
ing financial educat
ion to unbanked or young people. In India, we
continue to support eye health and water, sanitat
ion and hyg
iene education (WASHE) in alignment with development
prior
it
ies in the market.
Collective effort is needed to accelerate progress in tackling inequal
ity and promot
ing economic growth. In 2022,
we published ins
ights from our partnersh
ip with Unilever supporting over 25,000 small-scale retailers affected by
COVID-19 to build more resil
ient bus
inesses through dig
it
isat
ion. We joined the UK Fore
ign and Commonwealth Development
Office led Girls’ Education Skills Partnership alongside ten other companies and agreed a partnership with Primark to
design solutions to support the financ
ial health of garment sector workers.
To inform access to finance solutions for young people, young people from our markets partic
ipated
in research conducted
with Business Fights Poverty and Cambridge Univers
ity. The Futuremakers Ins
ights Paper 2022 provided informat
ion and
data for the third edit
ion of the Futuremakers Forum. Stakeholders across our markets part
ic
ipated
in this two-day virtual
event to hear first-hand from Futuremakers partic
ipants, and to explore how to advance
inclus
ive finance.
Our IGNITE programme aims to unlock the potential of female talent across the PLC Group. In 2022, we partnered with
IGNITE to extend this coaching support to Futuremakers partic
ipants to help them change, challenge and stretch themselves
in pursuit of their goals. We hosted Mentor’s Den sessions across our markets, supporting young people with strategic advice
on personal brand, future skills and banking services. We mobil
ised our colleagues to support fam
il
ies affected by the floods
in Pakistan and increased our provis
ion of three volunteer
ing days annually to five per colleague in the Europe region to help
support displaced people from Ukraine.
In 2023, we will set up a women entrepreneurs’ network involv
ing alumn
i of Futuremakers and expand our women’s
entrepreneurial support further across our footprint markets. Furthermore, in alignment with our commitment to the
UN Princ
iples for Respons
ible Banking, we will final
ise our
impact analysis to better understand our broader impact.
This work will support us to shape our onwards Futuremakers strategy and further increase employee volunteering
support for communit
ies.
2
World Economic Forum, The Future of Jobs Report 2020, Page 6
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
55
Strategic report continued
Non-financial
informat
ion statement
This table sets out where shareholders and stakeholders can find informat
ion about key non-financial matters
in this report,
in compliance with the non-financ
ial report
ing requirements contained in sections 414CA and 414 CB of the Companies Act
2006. Further disclosures are available on sc.com and in our 2022 ESG reporting index at sc.com/esgreport in Q1 2023.
Reporting requirement
Where to read more in this report about polic
ies,
impact
(includ
ing r
isks, policy embedding, due dil
igence and outcomes)
Business model
Pages 11 to 13
Non-financial KPIs
Page 2
Risk Review (princ
ipal r
isks)
Pages 134 to 151
Environment
•
Sustainable & Responsible Business Pages 46 to 54
•
Directors Report
Pages 56 to 62
Employees
Pages 44 to 46
Human rights
Page 53
Social matters
Page 43 to 44
Anti-corruption and anti-bribery
Page 144
Authority
The strategic report up to page 55 has been issued by order of the Court.
Bill Winters
Director
16 February 2023
Company Reference Number: ZC18
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
56
Directors’ Report
The directors present their report and the audited financ
ial statements of Standard Chartered Bank and
its subsid
iar
ies
(the ‘Group’) and Standard Chartered Bank (the ‘Company’) for the year ended 31 December 2022. The Company has chosen
in accordance with Schedule 7 of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations
2008 (the Regulations), to include certain matters in its Strategic report (see pages 1 - 55) that would otherwise be disclosed
in this Directors’ report as required by paragraphs 2,6,10,11,12 of the Regulations.
Activ
it
ies
The activ
it
ies of the Group are banking and provid
ing other financial serv
ices. The Group comprises a network of branches
and offices in 57 markets. The Financ
ial Rev
iew on pages 20 to 24 contains a review of the business during 2022.
Key stakeholders
The long-term success of the Group is dependent on its relationsh
ips w
ith its key stakeholders. On pages 40 to 54
we outline the ways in which we have engaged with key stakeholders, the material issues that they have raised with us,
and how these issues have been taken into account in the Court’s decis
ion-mak
ing processes.
Results and div
idends
The results for the year are given in the income statement on page 167.
Div
idends of $575 m
ill
ion were pa
id during the year to ordinary shareholders (2021 $1,511 mill
ion).
Share capital
Details of the Company’s share capital are given in Note 27 to the accounts.
Loan capital
Details of the loan capital are given in Note 26 to the accounts.
Property, plant and equipment
Details of the property, plant and equipment of the Company are given in Note 17 to the accounts.
Financ
ial
instruments
Details of financ
ial
instruments are given in Note 12 to the accounts.
Details of exposure to credit, traded, liqu
id
ity and funding risk can be found in the Risk profile section (page 65 to 119)
of the accounts.
Post balance sheet events
Details of post balance sheet events are given in Note 36 to the accounts.
Research and development
During the year, the Group invested in research and development, primar
ily relat
ing to the planning, analysis, design,
development, testing, integrat
ion, deployment and
in
it
ial support of technology systems.
Future developments in the business of the Group
An ind
icat
ion of likely future developments in the business of the Group is provided in the Strategic report.
Directors and their interests
The directors of the Company during the year were as follows:
Mr A N Halford
Mr M Smith (Resigned 31 December 2022)
Mr W T Winters, CBE
Mr D P Conner (Resigned 8 December 2022)
Mrs C M Hodgson, CBE (Appointed 21 September 2022. Resigned 31 January 2023)
Ms J Hunt (Appointed 1 October 2022)
Ms G Huey Evans, CBE
Mr N Kheraj (Resigned 30 April 2022)
Ms R Lawther, CBE (Appointed 8 December 2022)
Mr D Tang
Mr C Tong (Resigned 8 December 2022)
Dr J Viñals
Ms J M Whitbread
Mr P Rivett
Ms M Ramos
Ms A McFadyen
Mr Shir
ish Apte and Dr L
inda Yueh, CBE were appointed directors of the Company on 1 January 2023.
None of the directors have a benefic
ial or non-beneficial
interest in the shares of the Company or in any of its
subsid
iary undertak
ings.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
57
Directors’ Report continued
Details of directors’ pay and benefits are disclosed in Note 38 to the accounts.
All of the directors as at 31 December 2022, except Ms McFadyen are directors of the Company’s ultimate holding company,
Standard Chartered PLC. Mrs Hodgson, CBE stepped down from the Group on 31 January 2023.
Director train
ing
The induct
ion programmes of Court d
irectors are undertaken as part of Group level in
it
iat
ives, wh
ich includes ongoing
train
ing and development and
is tailored depending on their roles and responsib
il
it
ies.
Going concern
In consider
ing the go
ing concern status of the Group, the directors have assessed the key factors, includ
ing the current and
antic
ipated
impact of COVID-19 likely to affect the Group’s business model and strategic plan, future performance, capital
adequacy, solvency and liqu
id
ity taking into account the emerging risks as well as the princ
ipal r
isks.
This year, the primary focus has been on the evolving macro-financ
ial stress caused by the response of governments,
businesses and ind
iv
iduals to COVID-19, with scenario analysis focused on mild, moderate, severe and extreme variants
across the Group’s footprint markets to ensure that the Group has suffic
ient cap
ital to withstand this shock.
Under this range of scenarios, the results of these stress tests demonstrate that the Company and the Group as a
whole have sufficient cap
ital and liqu
id
ity to continue as a going concern and meet regulatory min
imum cap
ital and
liqu
id
ity requirements.
Having made appropriate enquir
ies, the Court
is satisf
ied that the Company and the Group as a whole have adequate
resources to continue operational businesses for a period of at least 12 months from the date of this report and therefore
continue to adopt the going concern basis in preparing the financ
ial statements.
Polit
ical donat
ions
The Group has a policy in place which prohib
its donat
ions being made that would: (i) improperly influence legislat
ion or
regulation, (i
i) promote pol
it
ical v
iews or ideolog
ies, (
i
i
i) fund polit
ical causes. In al
ignment to this, no polit
ical donat
ions
were made in the year ended 31 December 2022.
Qualify
ing Th
ird Party Indemnit
ies
The Company has granted indemn
it
ies to all of its directors on terms consistent with the applicable statutory provis
ions.
Qualify
ing th
ird-party indemn
ity prov
is
ions for the purposes of sect
ion 234 of the Companies Act 2006 were accordingly
in force during the course of the financ
ial year ended 31 December 2022 and rema
in in force at the date of this report.
Qualify
ing Pens
ion Scheme Indemnit
ies
Qualify
ing pens
ion scheme indemn
ity prov
is
ions (as defined by sect
ion 235 of the Companies Act 2006) were in force during
the course of the financial year ended 31 December 2022 for the benefit of the d
irectors of the UK’s pension fund corporate
trustee (Standard Chartered Trustees (UK) Lim
ited) and rema
in in force at the date of this report.
Areas of operation
The Company operates through branches and subsid
iar
ies in 57 markets across Asia, the Middle East, Africa, Europe and
the Americas.
Related party transactions
Details of transactions with directors and officers and other related parties are set out in Note 35 to the financ
ial statements.
Corporate governance statement
Following the consolidat
ion of the Greater Ch
ina and North Asia Hub (“GCNA”) and the ASEAN and South Asia Hub (“ASA”)
which formed Asia, these countries operate under the Asia governance model. As the Group continues to cover the vast
majority of PLC Group’s total footpr
int, the governance arrangements of the Company and PLC sim
ilarly reflect th
is overlap
and is represented by a predominately mirrored board structure between PLC and the Company.
As a wholly-owned subsid
iary of a l
isted PLC and its governance structure as a company established by Royal Charter, the
Company complies with expectations set for premium listed companies with respect to board leadership, responsib
il
it
ies,
composit
ion (
includ
ing success
ion and evaluation) to ensure that the Group is well managed, with appropriate oversight
and control. Certain matters, such as remuneration, values, and external audit, are set at PLC Group level and considered or
approved, if appropriate, by the Court. It is considered more appropriate for the purposes of Group wide consistency that
princ
iples are set at PLC Board level and then d
issem
inated through the Group to be approved by subs
id
iary boards.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
58
Directors’ Report continued
The Court is supported by 4 primary committees: Audit Committee; Board Risk Committee; Nominat
ion Comm
ittee; and US
Risk Committee. Each of the primary committees and the Court have implemented clear lines of responsib
il
ity and polic
ies to
support the Court in its effective decis
ion mak
ing. The Court also has a Standing Committee with a remit to approve matters,
on behalf of the Court, where a formal resolution is required for legal and regulatory purposes. The Court, and its Audit and
Risk Committees have sim
ilar membersh
ip as the Board of PLC and its Audit and Risk Committees, with the appropriate
balance, skills, background and experience to make a valued contribut
ion. For further
informat
ion on how the Aud
it
Committee and Risk Committee operate, please see pages 163 to 169 and 170 to 175 of PLC’s 2022 Annual Report.
The Court, together with the PLC Group, are committed to high standards of engagement with employees, suppliers and
other stakeholders. For a descript
ion of how the d
irectors engaged with stakeholders, includ
ing as to how such engagement
has been considered in the Court’s decis
ion mak
ing, please refer to page 40.
Employee polic
ies and engagement
We work hard to ensure that our employees are kept informed about matters affecting or of interest to them, and more
importantly have the opportunit
ies to prov
ide feedback and engage in a dialogue.
We continue to listen and act on feedback from colleagues to ensure internal communicat
ions are t
imely, informat
ive,
meaningful, and in support of our strategy and transformation. In addit
ion to the Br
idge (our primary internal
communicat
ions platform) wh
ich allows colleagues to receive key updates, exchange ideas and provide feedback,
we also leverage a range of channels includ
ing ema
il, dig
ital newsletters w
ith customised content for each employee
segment, audio and video calls, virtual and face-to-face town halls, and other staff engagement and recognit
ion events.
To continue to improve the way we communicate and ensure our employee communicat
ions rema
in relevant, we also
period
ically analyse and measure the
impact of our communicat
ions through a range of survey and feedback tools.
We are currently assessing our suite of communicat
ion channels as we prepare to launch
improved solutions and
discont
inue those that are less effect
ive.
Our senior leaders and people leaders continue to play a crit
ical role
in engaging our teams across the network, ensuring
that they are kept up to date on key business developments related to our performance and strategy. We provide addit
ional
support to our people leaders with specif
ic calls and commun
icat
ions packs to help them prov
ide context and guidance to
their team members to better understand their role in executing and deliver
ing our strategy.
Across the organisat
ion, regular team meet
ings with people leaders, one-to-ones and various management meetings
provide an important platform for colleagues to discuss and clarify key issues. Regular performance conversations
provide the opportunity to discuss how ind
iv
iduals, the team and the business area have contributed to our overall
performance and how any compensation awards relate to this. Senior leadership also regularly share global, business,
function, region and market updates on performance, strategy, structural changes, HR programmes, community
involvement and other campaigns.
The Court engages with and listens to the views of the workforce through several sources, includ
ing through
interact
ive
engagement sessions.
Employees, past, present and future can follow our progress through the PLC Group’s LinkedIn network and Facebook
page, as well as other social network channels includ
ing Instagram, wh
ich collectively have over 2.4 mill
ion followers.
The diverse range of internal and external communicat
ion tools and channels we have put
in place ensure that all our
colleagues receive timely and relevant informat
ion to support the
ir effectiveness.
The wellbeing of our employees is central to our think
ing about benefits and support, so that they can thr
ive at work and in
their personal lives. Our Group min
imum standards prov
ide employees with a range of flexible working options, in relation
to both location and working patterns. In terms of leave, at least thirty days’ leave (through annual leave and public holidays),
a min
imum of twenty calendar weeks’ fully pa
id maternity leave, a min
imum of two calendar weeks of leave for spouses or
partners, and two calendar weeks for adoption leave are provided. Combined, this is above the International Labour
Organisat
ion m
in
imum standards.
We seek to build productive and enduring partnerships with various employee representative bodies (includ
ing un
ions and
work councils). In our recognit
ion and
interact
ions, we are heav
ily influenced by the 1948 United Nations Universal Declaration
of Human Rights (UDHR), and several International Labour Organisat
ion (ILO) convent
ions includ
ing the R
ight to Organise
and Collective Bargain
ing Convent
ion, 1949 (No. 98) and the Freedom of Associat
ion and Protect
ion of the Right to Organise
Convention, 1948 (No. 87).
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
59
Directors’ Report continued
The PLC Group Grievance Standard provides a formal framework for dealing with concerns that employees have in
relation to their employment or another colleague, which affects them directly, and cannot be resolved through informal
mechanisms, such as counselling, coaching or mediat
ion. Th
is can include concerns related to bullying, harassment,
discr
im
inat
ion and v
ict
im
isat
ion, as well as concerns regard
ing condit
ions of employment (for example, health and safety,
new working practices or the working environment). Employees can raise grievances to their People Leader or a Human
Resources (HR) representative. The global process for addressing grievances involves an HR representative and a member
of the business review
ing the gr
ievance, conducting fact find
ing
into the grievance and provid
ing a wr
itten outcome to the
aggrieved employee. If a grievance is upheld, the next steps might include remedying a policy or process, or in
it
iat
ing a
disc
ipl
inary review of the conduct of the colleague who is the subject of the grievance. The PLC Group Grievance Standard
and accompanying process is reviewed on a period
ic bas
is in consultation with stakeholders across HR, Legal, Compliance
and Shared Investigat
ive Serv
ices. Grievance trends are reviewed on a quarterly basis and action is taken to address any
concerning trends.
There is a dist
inct PLC Group Speak
ing Up Policy which covers instances where an employee wishes to ‘blow the whistle’ on
actual, planned or potential wrongdoing by another employee or the Group.
The Group is committed to creating a fair, consistent, and transparent approach to making decis
ions
in a disc
ipl
inary
context. This commitment is codif
ied
in our Fair Accountabil
ity Pr
inc
iples, wh
ich underpin our PLC Group Disc
ipl
inary
Standard. Dism
issals due to m
isconduct issues and/or performance (where required by law to follow a disc
ipl
inary process)
are governed by the PLC Group Disc
ipl
inary Standard. Where local law or regulation requires a different process with
regards to dism
issals and other d
isc
ipl
inary outcomes, we have country variances in place.
Divers
ity and Inclus
ion
Our PLC Group Divers
ity and Inclus
ion Standard has been developed to ensure a respectful workplace, with fair and equal
treatment, divers
ity and
inclus
ion, and the prov
is
ion of opportun
it
ies for employees to part
ic
ipate fully and reach the
ir full
potential in an appropriate working environment. The Group aims to provide equality of opportunity for all, protect the
dign
ity of employees and promote respect at work. All
ind
iv
iduals are entitled to be treated with dign
ity and respect,
and to be free from harassment, bullying, discr
im
inat
ion and v
ict
im
isat
ion. Th
is helps to support productive working
condit
ions, decreased staff attr
it
ion, pos
it
ive employee morale and engagement, ma
inta
ins employee wellbe
ing, and
reduces people-related risk. All employees and contractors are required to take personal responsib
il
ity to comply with the
Standard, includ
ing conduct
ing themselves in a manner that demonstrates appropriate, non-discr
im
inatory behaviours.
The Group is committed to provide equal opportunit
ies and fa
ir treatment in employment. We do not accept unlawful
discr
im
inat
ion
in our recruitment or employment practices on any grounds includ
ing but not l
im
ited to: sex, race, colour,
national
ity, ethn
ic
ity, nat
ional or ind
igenous or
ig
in, d
isab
il
ity, age, marital or civ
il partner status, pregnancy or matern
ity,
sexual orientat
ion, gender
ident
ity, express
ion or reassignment, HIV or AIDS status, parental status, mil
itary and veterans
status, flexib
il
ity of working arrangements, relig
ion or bel
ief. We strive for recruitment, appraisals, pay and condit
ions,
train
ing, development, success
ion planning, promotion, grievance/disc
ipl
inary procedures and employment terminat
ion
practices that are inclus
ive and access
ible; and that do not directly or ind
irectly d
iscr
im
inate. Recruitment, employment,
train
ing, development and promot
ion decis
ions are based on the sk
ills, knowledge and behaviour required to perform the
role to the Group’s standards. Implied in all employment terms is the commitment to equal pay for equal work. We will also
make reasonable workplace adjustments (includ
ing dur
ing the hir
ing process) to ensure all
ind
iv
iduals feel supported and
are able to partic
ipate fully and reach the
ir potential. If employees become disabled, we will proactively seek to support
them with appropriate train
ing and workplace adjustments where poss
ible and explore every opportunity to ensure their
employment continues.
Health and safety
Our Health, Safety and Wellbeing (HSW) programme covers both mental and physical health and wellbeing. The Group
complies with both external regulatory requirements and internal policy and standards for HSW in all markets. It is Group
policy to ensure that the more stringent of the two requirements is always met, ensuring our HSW practices meet or exceed
the regulatory min
imum. Compl
iance rates are reported at least biannually to each country’s Management Team.
HSW performance and risks are reported annually to the PLC Group Risk Committee and Board Risk Committee. We use
a health and safety management system across all countries to ensure a consistently high level of health and safety
reporting for all our colleagues and clients.
The Bank sponsors medical and healthcare services for all employees, except in markets where cover is provided through
State-mandated healthcare, which represent less than 0.5 per cent of the PLC Group’s employees. All staff also have access
to professional counselling via our Employee Assistance Program, as well as to more proactive mental health support through
our holist
ic wellbe
ing app and platform.
Furthermore, we consider and treat mental health in the same way that we would treat physical health. Our global Mental
Health First Aid (MHFA) program offers help to someone developing a mental health problem, experienc
ing a worsen
ing of
an exist
ing mental
illness or a mental health cris
is. The mental health support
is given until appropriate professional help is
received, or the cris
is resolved.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
60
Directors’ Report continued
In 2022, we recorded no work-related fatalit
ies or ser
ious long-term work-related health issues in our staff. Whilst not
mandatory, we ‘strongly encourage’ vaccinat
ion aga
inst COVID-19 for employees and have held vaccinat
ion dr
ives
where possible to assist colleagues and their famil
ies to access vacc
inat
ions.
Over 100 of our largest premises were certif
ied w
ith the WELL Health & Safety Rating; an evidence-based, third-party
certif
icat
ion that validates our efforts to address the hygiene and safety of our workspaces during COVID-19 and prepare
our build
ings for re-entry post-pandem
ic.
Throughout 2022, the COVID-19 pandemic reduced its impact, with lockdowns and restrict
ions eas
ing across most markets
and staff returning to the office in greater numbers. Although we still encourage flexible and hybrid work arrangements
as part of our Future Work Now program.
A H&S online assessment tool is available for staff to assess their home working area for hazards, through a virtual
assessment of the ind
iv
idual’s work environment. All staff opting to work flexibly received an allowance to purchase
ergonomic office equipment. Our work injury insurance also covers all staff working from home.
Health, Safety & Security train
ing
is mandatory for all colleagues train
ing, and 2022 saw both our
in
it
ial and annual refresher
train
ing packages completely updated and refreshed, w
ith emphasis on mental health and wellbeing, as well as work
from home aspects.
Supply Chain Management
To support the operation of our businesses we source a variety of goods and services governed through a third-party
risk management framework which ensures that we follow the highest standards in terms of vendor selection, due dil
igence,
and contract management.
For informat
ion about how the PLC Group engages w
ith suppliers on environmental and social matters, please see our
Supplier Charter and Supplier Divers
ity and Inclus
ion Standard.
As set out under the UK Modern Slavery Act 2015, the PLC Group is required to publish a Modern Slavery Statement annually.
The PLC Group’s 2022 Modern Slavery Statement will be issued at the same time as the Annual Report. This document will
give further detail on how the PLC Group has prevented modern slavery and human traffick
ing
in its operations, financ
ing
and supply chain during 2022.
> Our Supplier Charter and Supplier Divers
ity and Inclus
ion standard can be viewed at
sc.com/suppliers/
Product responsib
il
ity
We aim to design and offer products based on client needs to ensure fair treatment and outcomes for clients.
The PLC Group has in place a risk framework, compris
ing pol
ic
ies and standards, to support these objectives
in alignment
with our Conduct Risk Framework. This framework covers sales practices, client communicat
ions, appropr
iateness and
suitab
il
ity, and post-sales practice. There are controls across all activ
it
ies above and the controls as tested on a regular basis
to provide assurance on the framework. As part of this, we ensure products sold are suitable for clients and comply with
relevant laws and regulations. We also review our products on a period
ic bas
is and refine them keeping them relevant to
the changing needs of clients and regulators
We have processes and guidel
ines spec
if
ic to each of our cl
ient businesses, to promptly resolve client complaints, understand
and respond to client issues. Conduct considerat
ions are g
iven sign
ificant we
ight
ing
in front-line incent
ive structures to dr
ive
the right behaviours.
For more informat
ion on our approach to product des
ign, product pric
ing, treat
ing customers fairly and protecting vulnerable
customers, and incent
iv
is
ing our frontl
ine employees, see pages 40 and 45. For more informat
ion on fraud
ident
ification see
page 52.
Environmental impact of our operations
We aim to min
im
ise the environmental impact of our operations as part of our commitment to be a responsible company.
We report on energy, water and non-hazardous waste data which become the basis of our Greenhouse Gas (GHG)
emiss
ions management, as well as the targets we have set to reduce energy, water and waste consumpt
ion.
Our reporting methodology is based upon the World Resources Institute/ World Business Council for Sustainable
Development Greenhouse Gas Protocol Corporate Accounting and Reporting Standard (Revised Edit
ion). We report on
all emiss
ion sources requ
ired under the Companies Act 2006 (Strategic Report and Directors’ Reports) Regulations.
Using conversion factors from the International Energy Agency 2021 Emiss
ions Factors and the UK Government’s Department
for Business, Energy & Industrial Strategy, emiss
ions are reported
in metric tonnes of carbon diox
ide equ
ivalent (CO
2
e),
encompassing the six Kyoto gases.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
61
Reporting period
The reporting period of our Scope 1 and 2, Scope 3 Category 6 (business flights), Scope 3 Category 1 (data centres) and
environmental resource effic
iency data
is from 1 October 2021 to 30 September 2022. This allows suffic
ient t
ime for
independent assurance to be gained on our Scope 1 and 2 emiss
ions pr
ior to the publicat
ion of results. Our Scope 1 and 2
emiss
ions are assured by an
independent body, Global Documentation, against the requirements of ISO14064. Accordingly,
the operating income used in this inventory corresponds to the same time period rather than the calendar year used in
financial report
ing.
Auditor
The Audit Committee reviews the appointment of the Group statutory auditor, its effectiveness and its relationsh
ip w
ith the
Group, which includes monitor
ing our use of the aud
itors for non-audit services and the balance of audit and non-audit fees
paid. Each director believes that there is no relevant informat
ion of wh
ich our Group statutory auditor is unaware. Each has
taken all reasonable steps necessary as a director to be aware of any relevant audit informat
ion and to establ
ish that Ernst &
Young LLP (EY) is made aware of any pertinent informat
ion. A resolut
ion to re-appoint EY as auditor will be proposed at the
2023 PLC Annual General Meeting.
By order of the Court
Bill Winters
Director
16 February 2023
Company Reference Number: ZC18
Directors’ Report continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
62
Directors’ Report continued
Statement of directors’ responsib
il
it
ies
The directors are responsible for preparing the Directors’ Report and the Group and Company Financ
ial Statements
in
accordance with applicable law and regulations.
Company law requires the directors to prepare Group and Company financ
ial statements for each financial year. Under
that law they are required to prepare the Group financ
ial statements
in accordance with internat
ional account
ing standards
in conformity with the requirements of the Companies Act 2006 and with International Financ
ial Report
ing Standards
adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union (EU IFRS) and applicable law,
and the Company financial statements
in accordance with internat
ional account
ing standards in conformity with the
requirements of the Companies Act 2006.
Under company law the directors must not approve the financ
ial statements unless they are sat
isf
ied that they g
ive a true
and fair view of the state of affairs of the Group and Company and of their profit or loss for that period. In preparing each
of the Group and Company financial statements, the d
irectors are required to:
•
Select suitable accounting polic
ies and then apply them cons
istently;
•
Make judgements and estimates that are reasonable, relevant and reliable;
•
State whether they have been prepared in accordance internat
ional account
ing standards in conformity with the
requirements of the Companies Act 2006 and with EU IFRS;
•
Assess the Group and the Company’s abil
ity to cont
inue as a going concern, disclos
ing, as appl
icable, matters related
to going concern; and
•
Use the going concern basis of accounting unless they either intend to liqu
idate the Group or the Company or to cease
operations or have no realist
ic alternat
ive but to do so.
The directors are responsible for keeping adequate accounting records that are suffic
ient to show and expla
in the
Company’s transactions and disclose with reasonable accuracy at any time the financ
ial pos
it
ion of the Company and
enable them to ensure that its financ
ial statements comply w
ith the Companies Act 2006. They are responsible for such
internal control as they determine is necessary to enable the preparation of financ
ial statements that are free from mater
ial
misstatement, whether due to fraud or error, and have general responsib
il
ity for taking such steps as are reasonably open
to them to safeguard the assets of the Group and to prevent and detect fraud and other irregular
it
ies.
Under applicable law and regulations, the directors are also responsible for preparing a Strategic Report and Directors’
Report that complies with that law and those regulations.
Responsib
il
ity statement of the directors in respect of the Directors’ Report and Financ
ial Statements
We confirm that to the best of our knowledge:
•
The financial statements, prepared
in accordance with the applicable set of accounting standards, give a true and fair
view of the assets, liab
il
it
ies, financial pos
it
ion and profit or loss of the Company and the undertak
ings included in the
consolidat
ion taken as a whole; and
•
The Strategic Report includes a fair review of the development and performance of the business and the posit
ion of
the Company and the undertakings included in the consolidat
ion taken as a whole, together w
ith a descript
ion of the
emerging risks and uncertaint
ies that they face.
We consider the Directors’ Report and Financ
ial Statements, taken as a whole,
is fair, balanced and understandable
and provides the informat
ion necessary to assess the Group’s pos
it
ion and performance, bus
iness model and strategy.
By order of the Court
Andy Halford
Director
16 February 2023
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
63
Risk Index
Annual Report
and Accounts
Risk profile
Credit Risk
65
Basis of preparation
65
Credit Risk overview
65
Impairment model
65
Staging of financ
ial
instruments
65
IFRS 9 expected credit loss princ
iples and approaches
65
Maximum exposure to Credit Risk
67
Analysis of financ
ial
instrument by stage
70
Credit quality analysis
73
•
Credit quality by client segment
75
Movement in gross exposures and credit impa
irment for loans and advances,
debt securit
ies, undrawn comm
itments and financ
ial guarantees
79
Movement of debt securit
ies, alternat
ive Tier 1 and other elig
ible b
ills
82
Credit impa
irment charge
88
COVID-19 relief measures
88
Problem credit management and provis
ion
ing
89
•
Forborne and other modif
ied loans by cl
ient segment
89
•
Credit-impa
ired (stage 3) loans and advances by cl
ient segment
90
Credit Risk mit
igat
ion
91
• Collateral
91
•
Collateral held on loans and advances
92
•
Collateral – Corporate, Commercial and Institut
ional Bank
ing
94
•
Collateral – Consumer, Private and Business Banking
95
•
Mortgage loan-to-value ratios by geography
95
•
Collateral and other credit enhancements possessed or called upon
96
•
Other Credit Risk mit
igat
ion
96
Other portfolio analysis
97
•
Contractual maturity analysis of loans and advances by client segment
97
•
Credit quality by industry
98
•
Debt securit
ies and other el
ig
ible b
ills
103
IFRS 9 expected credit loss methodology
105
Traded Risk
114
Market Risk changes
114
Counterparty Credit Risk
116
Derivat
ive financial
instruments Credit Risk mit
igat
ion
116
Liqu
id
ity and Funding Risk
117
Liqu
id
ity and Funding Risk metrics
117
Liqu
id
ity analysis of the Group’s balance sheet
119
Interest Rate Risk in the Banking Book
125
Operational and Technology Risk
126
Operational and Technology Risk profile
126
Operational Risk events and losses
127
Other princ
ipal r
isks
127
Risk review and Capital review
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
64
Risk Index
Annual Report
and Accounts
Risk management
approach
Risk Management Framework
128
Princ
ipal R
isks
134
Capital
Capital Summary
152
Capital ratios
152
Capital base
153
Risk-weighted asset
153
Leverage ratio
153
The following parts of the Risk review and Capital review form part of these financ
ial statements –
•
a) Risk review:
Disclosures marked as ‘audited’ from the start of Credit Risk section (page 65) to the end of other princ
ipal
risks in the same section (page 127); and
•
b) Capital review:
Tables marked as ‘audited’ from the start of ‘Capital base’ to the end of ‘Total capital’ (page 153).
Risk review and Capital review continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
65
Credit Risk
Basis of preparation
Unless otherwise stated the balance sheet and income statement informat
ion presented w
ith
in th
is section is based on
the Group’s management view. This is princ
ipally the locat
ion from which a client relationsh
ip
is managed, which may differ
from where it is financ
ially booked and may be shared between bus
inesses and/or regions. This view reflects how the client
segments and regions are managed internally.
Loans and advances to customers and banks held at amortised cost in this Risk profile section include reverse repurchase
agreement balances held at amortised cost, per Note 14 Reverse repurchase and repurchase agreements includ
ing other
sim
ilar secured lend
ing and borrowing.
Credit Risk overview
Credit Risk is the potential for loss due to the failure of a counterparty to meet its obligat
ions to pay the Group.
Credit exposures arise from both the banking and trading books.
Impairment model
IFRS 9 requires an impa
irment model that requ
ires the recognit
ion of expected cred
it losses (ECL) on all financ
ial debt
instruments held at amortised cost, fair value through other comprehensive income (FVOCI), undrawn loan commitments
and financial guarantees.
Staging of financ
ial
instruments
Financ
ial
instruments that are not already credit-impa
ired are or
ig
inated
into stage 1 and a 12-month expected credit loss
provis
ion
is recognised.
Instruments will remain in stage 1 until they are repaid, unless they experience sign
ificant cred
it deteriorat
ion (stage 2)
or they become credit-impa
ired (stage 3).
Instruments will transfer to stage 2 and a lifet
ime expected cred
it loss provis
ion recogn
ised when there has been a sign
ificant
change in the credit risk compared to what was expected at orig
inat
ion.
The framework used to determine a sign
ificant
increase in credit risk is set out below.
Stage 1
Stage 2
Stage 3
• 12-month ECL
• Performing
•
Lifet
ime expected cred
it loss
•
Performing but has exhib
ited s
ign
ificant
increase in Credit risk (SICR)
• Credit-impa
ired
• Non-performing
IFRS 9 expected credit loss princ
iples and approaches
The main methodology princ
iples and approach adopted by the Group are set out
in the following table.
Title
Descript
ion
Supplementary informat
ion
Page
Approach to
determin
ing
expected
credit losses
For material loan portfolios, the Group has adopted a statist
ical
modelling approach for determin
ing expected cred
it losses that
makes extensive use of credit modelling. These models leveraged
exist
ing advanced Internal Rat
ings Based (IRB) models, where
these were available. Where model performance breaches model
monitor
ing thresholds or val
idat
ion standards, a post-model
adjustment may be required to correct for ident
ified model
issues,
which will be removed once those issues have been remedied.
IFRS 9 methodology
Determin
ing l
ifet
ime expected
credit loss for revolving products
105
105
Incorporation of
forward-looking
informat
ion
The determinat
ion of expected cred
it loss includes various
assumptions and judgements in respect of forward-looking
macroeconomic informat
ion. Refer to page 106 for
incorporation
of forward-looking informat
ion, forecast of key macroeconom
ic
variables underlying the expected credit loss calculation and the
impact on non-linear
ity and sens
it
iv
ity of expected credit loss
calculation to macroeconomic variables. Judgemental adjustments,
includ
ing management overlays may also be used to capture r
isks
not ident
ified
in the models.
Incorporation of
forward-looking informat
ion
Forecast of key macroeconomic
variables underlying the expected
credit loss calculation
Judgemental adjustments
and sensit
iv
ity to
macroeconomic variables
106
106
108
Risk profile
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
66
Risk profile continued
Title
Descript
ion
Supplementary informat
ion
Page
Sign
ificant
increase in
credit risk (SICR)
Expected credit loss for financ
ial assets w
ill transfer from a 12-month
basis (stage 1) to a lifet
ime bas
is (stage 2) when there is a sign
ificant
increase in credit risk (SICR) relative to that which was expected at
the time of orig
inat
ion, or when the asset becomes credit-impa
ired.
On transfer to a lifet
ime bas
is, the expected credit loss for those
assets will reflect the impact of a default event expected to occur
over the remain
ing l
ifet
ime of the
instrument rather than just over
the 12 months from the reporting date.
SICR is assessed by comparing the risk of default of an exposure
at the reporting date with the risk of default at orig
inat
ion (after
consider
ing the passage of t
ime). ‘Sign
ificant’ does not mean
statist
ically s
ign
ificant nor
is it reflective of the extent of the impact
on the Group’s financial statements. Whether a change
in the risk
of default is sign
ificant or not
is assessed using quantitat
ive and
qualitat
ive cr
iter
ia, the we
ight of which will depend on the type of
product and counterparty.
Quantitat
ive cr
iter
ia
Sign
ificant
increase in
credit risk thresholds
Specif
ic qual
itat
ive and
quantitat
ive cr
iter
ia per segment:
Corporate, Commercial &
Institut
ional Bank
ing
(CCIB) clients
Consumer and Business
Banking clients
Private Banking clients
Debt securit
ies
110
110
111
111
111
111
112
Assessment of
credit-impa
ired
financial assets
Credit-impa
ired (stage 3) financial assets compr
ise those assets
that have experienced an observed credit event and are in default.
Default represents those assets that are at least 90 days past due in
respect of princ
ipal and
interest payments and/or where the assets
are otherwise considered unlikely to pay. This defin
it
ion is consistent
with internal credit risk management and the regulatory defin
it
ion
of default.
Unlikely to pay factors include object
ive cond
it
ions such as bankruptcy,
debt restructuring, fraud or death. It also includes credit-related
modif
icat
ions of contractual cash flows due to sign
ificant financial
diff
iculty (forbearance) where the Group has granted concess
ions
that it would not ordinar
ily cons
ider.
Interest income for stage 3 assets is recognised by applying the orig
inal
effective interest rate to the net asset amount (that is, net of credit
impa
irment prov
is
ions). When financial assets are transferred from
stage 3 to stage 2, any contractual interest recovered in excess of the
interest income recognised while the asset was in stage 3 is reported
with
in the cred
it impa
irment l
ine.
Consumer and Business
Banking clients
CCIB and Private Banking clients
112
112
Transfers
between stages
Assets will transfer from stage 3 to stage 2 when they are no longer
considered to be credit-impa
ired. Assets w
ill not be considered
credit-impa
ired only
if the customer makes payments such that they
are paid to current in line with the orig
inal contractual terms.
Assets may transfer to stage 1 if they are no longer considered to
have experienced a sign
ificant
increase in credit risk. This will be
immed
iate when the or
ig
inal PD based transfer cr
iter
ia are no
longer met (and as long as none of the other transfer criter
ia apply).
Where assets were transferred using other measures, the assets will
only transfer back to stage 1 when the condit
ion that caused the
sign
ificant
increase in credit risk no longer applies (and as long as
none of the other transfer criter
ia apply).
Movement in loan exposures
and expected credit losses
79
Modif
ied
financial assets
Where the contractual terms of a financial
instrument have
been modif
ied, and th
is does not result in the instrument being
derecognised, a modif
icat
ion gain or loss is recognised in the
income statement representing the difference between the orig
inal
cashflows and the modif
ied cash flows, d
iscounted at the effective
interest rate. The modif
icat
ion gain/loss is directly applied to the
gross carrying amount of the instrument.
If the modif
icat
ion is credit related, such as forbearance or where the
Group has granted concessions that it would not ordinar
ily cons
ider,
then it will be considered credit-impa
ired. Mod
if
icat
ions that are not
credit related will be subject to an assessment of whether the asset’s
credit risk has increased sign
ificantly s
ince orig
inat
ion by comparing
the remain
ing l
ifet
ime PD based on the mod
if
ied terms to the
remain
ing l
ifet
ime PD based on the or
ig
inal contractual terms.
COVID-19 relief measures
Forbearance and other
modif
ied loans
88
89
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
67
Risk profile continued
Title
Descript
ion
Supplementary informat
ion
Page
Governance
and applicat
ion
of expert credit
judgement in
respect of
expected
credit losses
The models used in determin
ing ECL are rev
iewed and approved
by the PLC Group Credit Model Assessment Committee and have
been validated by Group model validat
ion, wh
ich is independent
of the business.
A quarterly model monitor
ing process
is in place that uses recent
data to compare the differences between model predict
ions and
actual outcomes against approved thresholds. Where a model’s
performance breaches the monitor
ing thresholds then an assessment
of whether an ECL adjustment is required to correct for the ident
ified
model issue is completed.
The determinat
ion of expected cred
it losses requires a sign
ificant
degree of management judgement which had an impact on
governance processes, with the output of the expected credit
models assessed by the IFRS 9 Impairment Committee.
PLC Group Credit Model
Assessment Committee
IFRS 9 Impairment Committee
113
113
Maximum exposure to Credit Risk (audited)
The table below presents the Group’s maximum exposure to Credit risk for its on-balance sheet and off-balance sheet
financial
instruments as at 31 December 2022, before and after taking into account any collateral held or other Credit
risk mit
igat
ion. The Group’s on-balance sheet maximum exposure to Credit Risk increased by $8 bill
ion to $525 b
ill
ion
(31 December 2021: $517 bill
ion).
Loans and advances to customers includ
ing reverse repurchase agreements
increased by $13 bill
ion to $158 b
ill
ion
(31 December 2021: $145 bill
ion) and fa
ir value loans and advances reverse repurchase agreements decreased by $16.7 bill
ion
to $62 bill
ion (31 December 2021: $79 b
ill
ion). Th
is was offset by risk-weighted asset optim
isat
ion actions undertaken by
CCIB and currency translation. Excluding reverse repurchase agreements, loans and advances to customers increased by
$2 bill
ion to $143 b
ill
ion (31 December 2021: $141 b
ill
ion).
Derivat
ive exposures
increased by $12 bill
ion to $65 b
ill
ion (31 December 2021: $53 b
ill
ion) and
investment debt securit
ies
increased by $10.7 bill
ion to $112 b
ill
ion (31 December 2021: $102 b
ill
ion). Th
is was offset by a decrease of $11.4 bill
ion of cash
and balances at central banks and a decrease of $2.6 bill
ion
in loans to banks. Off-balance sheet instruments increased by
$5.8 bill
ion to $156 b
ill
ion (31 December 2021: $150 b
ill
ion), from h
igher undrawn commitments.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
68
Risk profile continued
Group
2022
2021
Maximum
exposure
$mill
ion
Credit risk management
Net
exposure
$mill
ion
Maximum
exposure
$mill
ion
Credit risk management
Net
exposure
$mill
ion
Collateral
8
$mill
ion
Master
netting
agreements
$mill
ion
Collateral
8
$mill
ion
Master
netting
agreements
$mill
ion
On-balance sheet
Cash and balances at central banks
50,531
50,531
61,963
61,963
Loans and advances to banks
1
27,383
878
26,505
29,999
956
29,043
of which – reverse repurchase
agreements and other sim
ilar
secured lending
7
878
878
–
956
956
–
Loans and advances to customers
1
158,126
52,699
105,427
144,799
43,172
101,627
of which – reverse repurchase
agreements and other sim
ilar
secured lending
7
15,586
15,586
–
3,764
3,764
–
Investment securit
ies – Debt secur
it
ies
and other elig
ible b
ills
2
112,425
112,425
101,705
101,705
Fair value through profit or loss
3, 7
80,668
62,333
–
18,335
101,944
78,986
–
22,958
Loans and advances to banks
859
859
3,622
3,622
Loans and advances to customers
4,065
4,065
3,932
3,932
Reverse repurchase agreements
and other sim
ilar lend
ing
7
62,333
62,333
–
78,986
78,986
–
Investment securit
ies – Debt
securit
ies and other el
ig
ible b
ills
2
13,411
13,411
15,404
15,404
Derivat
ive financial
instruments
4,7
65,050
8,304
52,827
3,919
53,245
7,757
42,577
2,911
Accrued income
1,858
1,858
996
996
Assets held for sale
1,388
1,388
52
52
Other assets
5
27,210
27,210
22,281
22,281
Total balance sheet
524,639
124,214
52,827
347,598
516,984
130,871
42,577
343,536
Off-balance sheet
6
Undrawn Commitments
107,885
2,250
105,635
100,686
2,658
98,028
Financ
ial Guarantees and
other equivalents
47,799
2,229
45,570
49,235
1,813
47,422
Total off-balance sheet
155,684
4,479
–
151,205
149,921
4,471
–
145,450
Total
680,323
128,693
52,827
498,803
666,905
135,342
42,577
488,986
1
Net of credit impa
irment. An analys
is of credit quality is set out in the credit quality analysis section (page 73). Further details of collateral held by client segment and
stage are set out in the collateral analysis section (page 91)
2
Excludes equity and other investments of $603 mill
ion (31 December 2021: $575 m
ill
ion). Further deta
ils are set out in Note 12 Financ
ial
instruments
3
Excludes equity and other investments of $1,886 mill
ion (31 December 2021: $4,585 m
ill
ion). Further deta
ils are set out in Note 12 Financ
ial
instruments
4
The Group enters into master netting agreements, which in the event of default result in a single amount owed by or to the counterparty through netting the sum
of the posit
ive and negat
ive mark-to-market values of applicable derivat
ive transact
ions
5
Other assets include cash collateral, and acceptances, in addit
ion to unsettled trades and other financial assets
6
Excludes ECL allowances which are reported under Provis
ions for l
iab
il
it
ies and charges
7
Collateral capped at maximum exposure (over-collateralised)
8
Adjusted for over-collateralisat
ion, wh
ich has been determined with reference to the drawn and undrawn component as this best reflects the effect on the amount
aris
ing from expected cred
it losses. Loans and advances to customers collateral now re-presented between on and off -balance sheet as it also includes guarantees
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
69
Risk profile continued
Company
2022
2021
Maximum
exposure
$mill
ion
Credit risk management
Net
exposure
$mill
ion
Maximum
exposure
$mill
ion
Credit risk management
Net
exposure
$mill
ion
Collateral⁸
$mill
ion
Master
netting
agreements
$mill
ion
Collateral⁸
$mill
ion
Master
netting
agreements
$mill
ion
On-balance sheet
Cash and balances at central banks
38,867
38,867
48,165
48,165
Loans and advances to banks
1
18,548
184
18,364
16,117
438
15,679
of which – reverse repurchase
agreements and other sim
ilar
secured lending
7
184
184
–
438
438
–
Loans and advances to customers
1
80,611
26,889
53,722
71,161
17,053
54,108
of which – reverse repurchase
agreements and other sim
ilar
secured lending
7
15,071
15,071
–
3,047
3,047
–
Investment securit
ies – Debt secur
it
ies
and other elig
ible b
ills
2
95,049
95,049
86,028
86,028
Fair value through profit or loss
3,7
74,051
59,057
–
14,994
95,284
77,655
–
17,629
Loans and advances to banks
837
837
3,570
3,570
Loans and advances to customers
3,196
3,196
3,207
3,207
Reverse repurchase agreements
and other sim
ilar lend
ing
7
59,057
59,057
–
77,655
77,655
–
Investment securit
ies – debt
securit
ies and other el
ig
ible b
ills
2
10,961
10,961
10,852
10,852
Derivat
ive financial
instruments
4,7
65,481
7,710
53,810
3,961
53,478
7,033
43,788
2,657
Accrued income
1,342
1,342
659
659
Assets held for sale
544
544
49
49
Other assets
5
23,625
23,625
19,860
19,860
Total balance sheet
398,118
93,840
53,810
250,468
390,801
102,179
43,788
244,834
Off-balance sheet
6
Undrawn Commitments
64,005
1,373
62,632
66,678
1,820
64,858
Financ
ial Guarantees and
other equivalents
37,890
1,965
35,925
37,465
1,581
35,884
Total off-balance sheet
101,895
3,338
–
98,557
104,143
3,401
–
100,742
Total
500,013
97,178
53,810
349,025
494,944
105,580
43,788
345,576
1
Net of credit impa
irment. An analys
is of credit quality is set out in the credit quality analysis section (page 73]. Further details of collateral held by client segment and
stage are set out in the collateral analysis section (page 91)
2
Excludes equity and other investments of $323 mill
ion (31 December 2021: $361 m
ill
ion). Further deta
ils are set out in Note 12 Financ
ial
instruments
3
Excludes equity and other investments of $1,741 mill
ion (31 December 2021: $4,421 m
ill
ion). Further deta
ils are set out in Note 12 Financ
ial
instruments
4
The Group enters into master netting agreements, which in the event of default result in a single amount owed by or to the counterparty through netting the sum
of the posit
ive and negat
ive mark-to-market values of applicable derivat
ive transact
ions
5
Other assets include cash collateral, and acceptances, in addit
ion to unsettled trades and other financial assets
6
Excludes ECL allowances which are reported under Provis
ions for l
iab
il
it
ies and charges
7
Collateral capped at maximum exposure (over-collateralised)
8
Adjusted for over-collateralisat
ion, wh
ich has been determined with reference to the drawn and undrawn component as this best reflects the effect on the amount
aris
ing from expected cred
it losses. Loans and advances to customers collateral now re-presented between on and off -balance sheet as it also includes guarantees
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
70
Risk profile continued
Analysis of financ
ial
instrument by stage (audited)
This table shows financ
ial
instruments and off-balance sheet commitments by stage, along with the total credit impa
irment
loss provis
ion aga
inst each class of financ
ial
instrument.
The proportion of financ
ial
instruments held with
in stage 1
increased by 1.7 per cent to 94.8 per cent (31 December 2021:
93 per cent). Total stage 1 balances increased by $29 bill
ion, of wh
ich around $18 bill
ion was
in loans and advances to
customers, primar
ily due to
increased levels of reverse repos in CCIB. CPBB remains broadly flat at $45 bill
ion. Off-balance
sheet exposures increased by $8 bill
ion to $148 b
ill
ion (31 December 2021: $140 b
ill
ion) pr
imar
ily
in undrawn commitments.
Stage 2 financial
instruments reduced by $7 bill
ion to $21 b
ill
ion (31 December 2021: $28 b
ill
ion), $5 b
ill
ion of wh
ich was in loans
and advances to customers due to exposure changes and stage transfers in CCIB in the Energy, Transport, telecoms and
util
it
ies sectors. As a result, the proportion of loans and advances to customers classif
ied
in stage 2 reduced by 4 per cent
to 5 per cent (31 December 2021: 9 per cent).
Stage 3 financial
instruments reduced by $0.3 bill
ion to $7.6 b
ill
ion (31 December 2021: $8 b
ill
ion) due to repayments and
write-offs during the year.
Group
2022
Stage 1
Stage 2
Stage 3
Total
Gross
balance
1
$mill
ion
Total credit
impa
irment
$mill
ion
Net
carrying
value
Gross
balance
1
$mill
ion
Total credit
impa
irment
$mill
ion
Net
carrying
value
Gross
balance
1
$mill
ion
Total credit
impa
irment
$mill
ion
Net
carrying
value
$mill
ion
Gross
balance
1
$mill
ion
Total credit
impa
irment
$mill
ion
Net
carrying
value
$mill
ion
Cash and
balances at
central banks
49,911
–
49,911
333
(8)
325
295
–
295
50,539
(8)
50,531
Loans and
advances
to banks
(amortised cost)
27,084
(7)
27,077
275
(3)
272
35
(1)
34
27,394
(11)
27,383
Loans and
advances to
customers
(amortised cost)
148,213
(268) 147,945
7,743
(187)
7,556
6,202
(3,577)
2,625
162,158
(4,032)
158,126
Debt securit
ies
and other
elig
ible b
ills
5
106,886
(20)
5,455
(90)
144
(106)
112,485
(216)
Amortised cost
41,512
(7)
41,505
271
(2)
269
78
(51)
27
41,861
(60)
41,801
FVOCI
2
65,374
(13)
5,184
(88)
66
(55)
70,624
(156)
–
Accrued income
(amortised cost)
4
1,858
1,858
–
–
1,858
–
1,858
Assets held
for sale
1,083
(6)
1,077
262
(4)
258
120
(67)
53
1,465
(77)
1,388
Other assets
27,213
(3)
27,210
–
–
–
3
(3)
–
27,216
(6)
27,210
Undrawn
commitments
3
103,644
(26)
4,133
(42)
128
–
107,885
(68)
Financ
ial
guarantees,
trade credits and
irrevocable letter
of credits
3
44,252
(9)
2,883
(27)
664
(147)
47,799
(183)
Total
510,144
(339)
21,064
(361)
7,591
(3,901)
538,799
(4,601)
1
Gross carrying amount for off-balance sheet refers to notional values
2
These instruments are held at fair value on the balance sheet. The ECL provis
ion
in respect of debt securit
ies measured at FVOCI
is held with
in the OCI reserve
3
These are off-balance sheet instruments. Only the ECL is recorded on-balance sheet as a financ
ial l
iab
il
ity and therefore there is no “net carrying amount”.
ECL allowances on off-balance sheet instruments are held as liab
il
ity provis
ions to the extent that the drawn and undrawn components of loan exposures can
be separately ident
ified. Otherw
ise they will be reported against the drawn component
4
Stage 1 ECL is not material
5
Stage 3 gross includes $28 mill
ion (2021: $33 m
ill
ion) or
ig
inated cred
it-impa
ired debt secur
it
ies w
ith impa
irment of $13 m
ill
ion (2021: N
il)
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
71
Risk profile continued
2021
Stage 1
Stage 2
Stage 3
Total
Gross
balance
1
$mill
ion
Total credit
impa
irment
$mill
ion
Net
carrying
value
$mill
ion
Gross
balance
1
$mill
ion
Total credit
impa
irment
$mill
ion
Net
carrying
value
$mill
ion
Gross
balance
1
$mill
ion
Total credit
impa
irment
$mill
ion
Net
carrying
value
$mill
ion
Gross
balance
1
$mill
ion
Total credit
impa
irment
$mill
ion
Net
carrying
value
$mill
ion
Cash and
balances at
central banks
61,901
–
61,901
66
(4)
62
–
–
–
61,967
(4)
61,963
Loans and
advances
to banks
(amortised cost)
29,422
(11)
29,411
561
(4)
557
31
–
31
30,014
(15)
29,999
Loans and
advances to
customers
(amortised cost)
129,990
(266) 129,724
12,741
(381)
12,360
6,941
(4,226)
2,715
149,672
(4,873) 144,799
Debt securit
ies
and other
elig
ible b
ills
5
96,350
(58)
5,315
(42)
113
(66)
101,778
(166)
Amortised cost
28,978
(10)
28,968
196
3
199
113
(66)
47
29,287
(73)
29,214
FVOCI
2
67,372
(48)
5,119
(45)
–
–
72,491
(93)
Accrued income
(amortised cost)
4
996
996
–
–
996
–
996
Assets held
for sale
4
52
52
–
–
52
–
52
Other assets
22,281
–
22,281
–
–
–
3
(3)
–
22,284
(3)
22,281
Undrawn
commitments
3
94,170
(23)
6,516
(53)
–
–
100,686
(76)
Financ
ial
guarantees,
trade credits and
irrevocable letter
of credits
3
45,916
(12)
2,522
(21)
797
(207)
49,235
(240)
Total
481,078
(370)
27,721
(505)
7,885
(4,502)
516,684
(5,377)
1
Gross carrying amount for off-balance sheet refers to notional values
2
These instruments are held at fair value on the balance sheet. The ECL provis
ion
in respect of debt securit
ies measured at FVOCI
is held with
in the OCI reserve
3
These are off-balance sheet instruments. Only the ECL is recorded on-balance sheet as a financ
ial l
iab
il
ity and therefore there is no “net carrying amount”.
ECL allowances on off-balance sheet instruments are held as liab
il
ity provis
ions to the extent that the drawn and undrawn components of loan exposures can
be separately ident
ified. Otherw
ise they will be reported against the drawn component
4
Stage 1 ECL is not material
5
Stage 3 gross includes $33 mill
ion or
ig
inated cred
it-impa
ired debt secur
it
ies and N
il impa
irment
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
72
Risk profile continued
Company
2022
Stage 1
Stage 2
Stage 3
Total
Gross
balance
1
$mill
ion
Total credit
impa
irment
$mill
ion
Net
carrying
value
$mill
ion
Gross
balance
1
$mill
ion
Total credit
impa
irment
$mill
ion
Net
carrying
value
$mill
ion
Gross
balance
1
$mill
ion
Total credit
impa
irment
$mill
ion
Net
carrying
value
$mill
ion
Gross
balance
1
$mill
ion
Total credit
impa
irment
$mill
ion
Net
carrying
value
$mill
ion
Cash and
balances at
central banks
38,847
–
38,847
10
–
10
10
–
10
38,867
–
38,867
Loans and
advances
to banks
(amortised cost)
18,423
(3)
18,420
128
(1)
127
1
–
1
18,552
(4)
18,548
Loans and
advances to
customers
(amortised cost)
73,476
(148)
73,328
5,296
(77)
5,219
4,685
(2,621)
2,064
83,457
(2,846)
80,611
Debt securit
ies
and other
elig
ible b
ills
5
93,243
(20)
1,785
(1)
78
(50)
95,106
(71)
Amortised cost
38,011
(6)
38,005
10
(1)
9
78
(50)
28
38,099
(57)
38,042
FVOCI
2
55,232
(14)
1,775
–
–
–
57,007
(14)
–
Accrued income
(amortised cost)
4
1,342
1,342
–
–
1,342
–
1,342
Assets held
for sale
412
(1)
411
132
(2)
130
30
(27)
3
574
(30)
544
Other assets
23,625
–
23,625
–
–
–
–
–
–
23,625
–
23,625
Undrawn
commitments
3
60,727
(18)
3,150
(24)
128
–
64,005
(42)
Financ
ial
guarantees,
trade credits and
irrevocable letter
of credits
3
34,894
(6)
2,453
(17)
543
(118)
37,890
(141)
Total⁶
344,989
(196)
12,954
(122)
5,475
(2,816)
363,418
(3,134)
1
Gross carrying amount for off-balance sheet refers to notional values
2
These instruments are held at fair value on the balance sheet. The ECL provis
ion
in respect of debt securit
ies measured at FVOCI
is held with
in the OCI reserve
3
These are off-balance sheet instruments. Only the ECL is recorded on-balance sheet as a financ
ial l
iab
il
ity and therefore there is no 'net carrying amount'.
ECL allowances on off-balance sheet instruments are held as liab
il
ity provis
ions to the extent that the drawn and undrawn components of loan exposures can
be separately ident
ified. Otherw
ise they will be reported against the drawn component
4
Stage 1 ECL is not material
5
Stage 3 includes gross of $28 mill
ion (2021: $33 m
ill
ion) or
ig
inated cred
it-impa
ired debt secur
it
ies w
ith impa
irment of $13 m
ill
ion (2021: N
il)
6
Excludes 'Amounts due from subsid
iary undertak
ings and other related parties' of $13,214 mill
ion. The amounts are held w
ith
in stage 1 and rated as 'strong' at
31 December and is net of an expected credit loss of $5 mill
ion
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
73
Risk profile continued
2021
Stage 1
Stage 2
Stage 3
Total
Gross
balance
1
$mill
ion
Total credit
impa
irment
$mill
ion
Net
carrying
value
$mill
ion
Gross
balance
1
$mill
ion
Total credit
impa
irment
$mill
ion
Net
carrying
value
$mill
ion
Gross
balance
1
$mill
ion
Total credit
impa
irment
$mill
ion
Net
carrying
value
$mill
ion
Gross
balance
1
$mill
ion
Total credit
impa
irment
$mill
ion
Net
carrying
value
$mill
ion
Cash and
balances at
central banks
48,165
–
48,165
–
–
–
–
–
–
48,165
–
48,165
Loans and
advances
to banks
(amortised cost)
15,882
(9)
15,873
247
(3)
244
–
–
–
16,129
(12)
16,117
Loans and
advances to
customers
(amortised cost)
59,760
(151)
59,609
9,795
(235)
9,560
5,019
(3,027)
1,992
74,574
(3,413)
71,161
Debt securit
ies
and other
elig
ible b
ills
5
82,388
(32)
3,603
(21)
82
(36)
86,073
(89)
Amortised cost
25,828
(8)
25,820
130
(1)
129
82
(36)
46
26,040
(45)
25,995
FVOCI
2
56,560
(24)
3,473
(20)
–
–
60,033
(44)
Accrued income
(amortised cost)
4
659
659
–
–
659
–
659
Assets held
for sale
4
49
49
–
–
49
–
49
Other assets
19,860
–
19,860
–
–
–
–
–
–
19,860
–
19,860
Undrawn
commitments
3
61,792
(9)
4,886
(35)
–
–
66,678
(44)
Financ
ial
guarantees,
trade credits and
irrevocable letter
of credits
3
34,709
(9)
2,047
(17)
709
(175)
37,465
(201)
Total⁶
323,264
(210)
20,578
(311)
5,810
(3,238)
349,652
(3,759)
1
Gross carrying amount for off-balance sheet refers to notional values
2
These instruments are held at fair value on the balance sheet. The ECL provis
ion
in respect of debt securit
ies measured at FVOCI
is held with
in the OCI reserve
3
These are off-balance sheet instruments. Only the ECL is recorded on-balance sheet as a financ
ial l
iab
il
ity and therefore there is no 'net carrying amount'.
ECL allowances on off-balance sheet instruments are held as liab
il
ity provis
ions to the extent that the drawn and undrawn components of loan exposures can
be separately ident
ified. Otherw
ise they will be reported against the drawn component
4
Stage 1 ECL is not material
5
Stage 3 includes $33 mill
ion or
ig
inated cred
it-impa
ired debt secur
it
ies and N
il impa
irment
6
Excludes 'Amounts due from subsid
iary undertak
ings and other related parties' of $10,741 mill
ion. The amounts are held w
ith
in stage 1 and rated as 'strong' at
31 December and is net of an expected credit loss of $26 mill
ion
Credit quality analysis (audited)
Credit quality by client segment
For the CCIB portfolios, exposures are analysed by credit grade (CG), which plays a central role in the quality assessment
and monitor
ing of r
isk. All loans are assigned a CG, which is reviewed period
ically and amended
in light of changes in the
borrower’s circumstances or behaviour. CGs 1 to 12 are assigned to stage 1 and stage 2 (performing) clients or accounts,
while CGs 13 and 14 are assigned to stage 3 (credit-impa
ired) cl
ients. The mapping of credit quality is as follows.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
74
Risk profile continued
Mapping of credit quality
The Group uses the following internal risk mapping to determine the credit quality for loans.
Credit quality
descript
ion
Corporate, Commercial & Institut
ional Bank
ing
Private Banking
1
Consumer and Business Banking
4
Internal
Grade mapping
S&P external
ratings
equivalent
Regulatory
PD range (%)
Internal ratings
Number of days past due
Strong
1A to 5B
AAA/AA+ to
BBB-/BB+
0 to 0.425
Class I and Class IV
Current loans (no past dues nor impa
ired)
Satisfactory
6A to 11C
BB+/BB to
B-/CCC+
2
0.426 to 15.75
Class II and Class III
Loans past due till 29 days
Higher Risk
Grade 12
CCC+/C
3
15.751-99.999
Stressed Assets
Group (SAG)
Managed
Past due loans 30 days and over till 90 days
1
For Private Banking, classes of risk represent the type of collateral held. Class I represents facil
it
ies with liqu
id collateral, such as cash and marketable secur
it
ies.
Class II represents unsecured/partially secured facil
it
ies and those with ill
iqu
id collateral, such as equity in private enterprises. Class III represents facil
it
ies with
resident
ial or Commerc
ial real estate collateral. Class IV covers margin trading facil
it
ies
2
Banks’ rating: BB to CCC/C
3
Banks’ Rating: CCC to C
4
Medium enterprise clients with
in Bus
iness Banking are managed using the same internal credit grade as CCIB
The table overleaf sets out the gross loans and advances held at amortised cost, expected credit loss provis
ions and
expected credit loss coverage by business segment and stage. Expected credit loss coverage represents the expected
credit loss reported for each segment and stage as a proportion of the gross loan balance for each segment and stage.
Stage 1
Stage 1 gross loans and advances to customers increased by 14 per cent to $148 bill
ion (31 December 2021: $130 b
ill
ion) and
represents 91 per cent (31 December 2021: 87 per cent) of loans and advances to customers. The stage 1 coverage ratio
remained at 0.2 per cent compared with 31 December 2021.
In CCIB, stage 1 loans have increased by $12.5 bill
ion to $79 b
ill
ion (31 December 2021: $66 b
ill
ion),
increas
ing the proport
ion
of investment grade stage 1 loans to 71 per cent (31 December 2021: 61 per cent). $11 bill
ion of the
increase was from a few
notable clients in Financ
ing,
insurance and non-banking, and $2 bill
ion was from Stage 2 upgrades of cl
ients in Transport,
telecom and util
it
ies.
CPBB stage 1 loans was broadly stable at $45 bill
ion, w
ith the proportion rated as ‘strong’ remain
ing stable at 93 per cent.
Central and other items segment increased by $5.5 bill
ion to $24 b
ill
ion (31 December 2021: $19 b
ill
ion) due to h
igher levels
of lending to Governments.
Stage 2
Stage 2 loans and advances to customers decreased by $5 bill
ion to $8 b
ill
ion (31 December 2021: $13 b
ill
ion), pr
imar
ily
in CCIB.
$3.7 bill
ion of th
is was due to exposure reductions and ratings upgrades in Energy, Transport, telecom and util
it
ies sectors.
The proportion of stage 2 loans also reduced to 4.8 per cent (31 December 2021: 8.5 per cent).
CPBB stage 2 loans reduced by $0.2 bill
ion to $1 b
ill
ion (31 December 2021: $1.2 b
ill
ion) pr
imar
ily due to the transfers
into stage 1
from changes in sign
ificant
increase in credit risk thresholds for certain credit card portfolios in Asia.
Stage 2 loans to customers classif
ied as ‘h
igher risk’ was at $1.4 bill
ion due to the downgrade of Pak
istan. This was largely
offset by downgrades to stage 3 primar
ily as a result of Sr
i Lanka and Ghana sovereign rating downgrade.
The overall stage 2 cover ratio reduced to 2.4 per cent (31 December 2021: 3.0 per cent) largely due to lower coverage in CPBB
of 5.4 per cent (31 December 2021: 10.2 per cent), driven by the release of COVID-19 management overlays, together with
lower coverage in CCIB primar
ily
in higher risk exposures.
Stage 3
Gross stage 3 loans decreased by $0.7 bill
ion to $6.2 b
ill
ion (31 December 2021: $6.9 b
ill
ion) as a result of upgrades and
repayments in CCIB offset by the downgrade of Sri Lanka and Ghana Sovereign.
CPBB stage 3 loans decreased by $0.1 bill
ion to $1.1 b
ill
ion (31 December 2021: $1.2 b
ill
ion), due to Secured wealth products
and Mortgages.
Stage 3 cover ratio (excluding collateral) reduced to 57.7 per cent (31 December 2021: 60.9 per cent) largely due to lower levels
of coverage on sovereign defaults in Sri Lanka and Ghana and from repayments.
Central and other items stage 3 balances increased to $248 mill
ion (31 December 2021: $n
il) due to downgrade of local
currency loans to Sri Lanka Sovereign.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
75
Risk profile continued
Loans and advances by client segment (audited)
Group
Amortised cost
2022
Banks
$mill
ion
Customers
Undrawn
commitments
$mill
ion
Financ
ial
Guarantees
$mill
ion
Corporate,
Commercial
&
Institut
ional
Banking
$mill
ion
Consumer,
Private &
Business
Banking
$mill
ion
Ventures
$mill
ion
Central &
other items
$mill
ion
Customer
Total
$mill
ion
Stage 1
27,084
78,983
44,825
65
24,340
148,213
103,644
44,252
– Strong
16,722
56,167
41,683
63
24,340
122,253
92,418
29,973
– Satisfactory
10,362
22,816
3,142
2
–
25,960
11,226
14,279
Stage 2
275
6,762
980
1
–
7,743
4,113
2,883
– Strong
86
1,070
691
–
–
1,761
986
501
– Satisfactory
119
4,480
73
–
–
4,553
2,487
1,977
–
Higher risk
70
1,212
216
1
–
1,429
640
405
Of which (stage 2):
–
Less than 30 days past due
5
100
75
–
–
175
–
–
–
More than 30 days past due
6
22
217
1
–
240
–
–
Stage 3, credit-impa
ired financial assets
35
4,859
1,095
–
248
6,202
128
664
Gross balance¹
27,394
90,604
46,900
66
24,588
162,158
107,885
47,799
Stage 1
(7)
(87)
(179)
(2)
–
(268)
(26)
(9)
– Strong
(2)
(29)
(117)
(2)
–
(148)
(16)
(2)
– Satisfactory
(5)
(58)
(62)
–
–
(120)
(10)
(7)
Stage 2
(3)
(134)
(53)
–
–
(187)
(42)
(27)
– Strong
–
(11)
(21)
–
–
(32)
(2)
–
– Satisfactory
(2)
(74)
(6)
–
–
(80)
(35)
(14)
–
Higher risk
(1)
(49)
(26)
–
–
(75)
(5)
(13)
Of which (stage 2):
–
Less than 30 days past due
–
(1)
(11)
–
–
(12)
–
–
–
More than 30 days past due
–
(1)
(26)
–
–
(27)
–
–
Stage 3, credit-impa
ired financial assets
(1)
(2,904)
(655)
–
(18)
(3,577)
–
(147)
Total credit impa
irment
(11)
(3,125)
(887)
(2)
(18)
(4,032)
(68)
(183)
Net carrying value
27,383
87,479
46,013
64
24,570
158,126
Stage 1
0.0%
0.1%
0.4%
3.1%
0.0%
0.2%
0.0%
0.0%
– Strong
0.0%
0.1%
0.3%
3.2%
0.0%
0.1%
0.0%
0.0%
– Satisfactory
0.0%
0.3%
2.0%
0.0%
0.0%
0.5%
0.1%
0.0%
Stage 2
1.1%
2.0%
5.4%
0.0%
0.0%
2.4%
1.0%
0.9%
– Strong
0.0%
1.0%
3.0%
0.0%
0.0%
1.8%
0.2%
0.0%
– Satisfactory
1.7%
1.7%
8.2%
0.0%
0.0%
1.8%
1.4%
0.7%
–
Higher risk
1.4%
4.0%
12.0%
0.0%
0.0%
5.2%
0.8%
3.2%
Of which (stage 2):
–
Less than 30 days past due
0.0%
1.0%
14.7%
0.0%
0.0%
6.9%
0.0%
0.0%
–
More than 30 days past due
0.0%
4.5%
12.0%
0.0%
0.0%
11.3%
0.0%
0.0%
Stage 3, credit-impa
ired financial assets (S3)
2.9%
59.8%
59.8%
0.0%
7.3%
57.7%
0.0%
22.1%
Cover ratio
0.0%
3.4%
1.9%
3.0%
0.1%
2.5%
0.1%
0.4%
Fair value through profit or loss
Performing
24,135
40,562
–
–
2,557
43,119
–
–
– Strong
20,656
33,256
–
–
2,409
35,665
–
–
– Satisfactory
3,479
7,306
–
–
148
7,454
–
–
–
Higher risk
–
–
–
–
–
–
–
–
Defaulted (CG13-14)
–
3
–
–
–
3
–
–
Gross balance (FVTPL)
2
24,135
40,565
–
–
2,557
43,122
–
–
Net carrying value (incl FVTPL)
51,518
128,044
46,013
64
27,127
201,248
–
–
1
Loans and advances includes reverse repurchase agreements and other sim
ilar secured lend
ing of $15,586 mill
ion under Customers and of $878 m
ill
ion under Banks,
held at amortised cost
2
Loans and advances includes reverse repurchase agreements and other sim
ilar secured lend
ing of $39,057 mill
ion under Customers and of $23,276 m
ill
ion under Banks,
held at fair value through profit or loss
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
76
Risk profile continued
Group
Amortised cost
2021 (Restated)¹
Banks
$mill
ion
Customers
Undrawn
commitments
$mill
ion
Financ
ial
Guarantees
$mill
ion
Corporate,
Commercial
&
Institut
ional
Banking
$mill
ion
Consumer,
Private &
Business
Banking
$mill
ion
Ventures
$mill
ion
Central &
other items
$mill
ion
Customer
Total
$mill
ion
Stage 1
29,422
66,471
44,645
–
18,874
129,990
94,170
45,916
– Strong
17,582
40,699
41,598
–
18,768
101,065
82,108
31,200
– Satisfactory
11,840
25,772
3,047
–
106
28,925
12,062
14,716
Stage 2
561
11,421
1,210
–
110
12,741
6,516
2,522
– Strong
119
2,016
673
–
–
2,689
1,787
580
– Satisfactory
104
8,214
251
–
–
8,465
3,737
1,387
–
Higher risk
338
1,191
286
–
110
1,587
992
555
Of which (stage 2):
–
Less than 30 days past due
–
77
251
–
–
328
–
–
–
More than 30 days past due
–
49
286
–
–
335
–
–
Stage 3, credit-impa
ired financial assets
31
5,750
1,191
–
–
6,941
–
797
Gross balance
2
30,014
83,642
47,046
–
18,984
149,672
100,686
49,235
Stage 1
(11)
(54)
(212)
–
–
(266)
(23)
(12)
– Strong
(3)
(23)
(129)
–
–
(152)
(10)
(3)
– Satisfactory
(8)
(31)
(83)
–
–
(114)
(13)
(9)
Stage 2
(4)
(258)
(123)
–
–
(381)
(53)
(21)
– Strong
(3)
(2)
(62)
–
–
(64)
(5)
(1)
– Satisfactory
(1)
(158)
(28)
–
–
(186)
(40)
(9)
–
Higher risk
–
(98)
(33)
–
–
(131)
(8)
(11)
Of which (stage 2):
–
Less than 30 days past due
–
(2)
(28)
–
–
(30)
–
–
–
More than 30 days past due
–
(3)
(33)
–
–
(36)
–
–
Stage 3, credit-impa
ired financial assets
–
(3,563)
(663)
–
–
(4,226)
–
(207)
Total credit impa
irment
(15)
(3,875)
(998)
–
–
(4,873)
(76)
(240)
Net carrying value
29,999
79,767
46,048
–
18,984
144,799
Stage 1
0.0%
0.1%
0.5%
0.0%
0.0%
0.2%
0.0%
0.0%
– Strong
0.0%
0.1%
0.3%
0.0%
0.0%
0.2%
0.0%
0.0%
– Satisfactory
0.1%
0.1%
2.7%
0.0%
0.0%
0.4%
0.1%
0.1%
Stage 2
0.7%
2.3%
10.2%
0.0%
0.0%
3.0%
0.8%
0.8%
– Strong
2.5%
0.1%
9.2%
0.0%
0.0%
2.4%
0.3%
0.2%
– Satisfactory
1.0%
1.9%
11.2%
0.0%
0.0%
2.2%
1.1%
0.6%
–
Higher risk
0.0%
8.2%
11.5%
0.0%
0.0%
8.3%
0.8%
2.0%
Of which (stage 2):
–
Less than 30 days past due
0.0%
2.6%
11.2%
0.0%
0.0%
9.1%
0.0%
0.0%
–
More than 30 days past due
0.0%
6.1%
11.5%
0.0%
0.0%
10.7%
0.0%
0.0%
Stage 3, credit-impa
ired financial assets (S3)
0.0%
62.0%
55.7%
0.0%
0.0%
60.9%
0.0%
26.0%
Cover ratio
0.0%
4.6%
2.1%
0.0%
0.0%
3.3%
0.1%
0.5%
Fair value through profit or loss
Performing
22,330
62,398
–
–
1,774
64,172
–
–
– Strong
19,888
48,426
–
–
1,772
50,198
–
–
– Satisfactory
2,442
13,972
–
–
2
13,974
–
–
–
Higher risk
–
–
–
–
–
–
–
–
Defaulted (CG13-14)
–
38
–
–
–
38
–
–
Gross balance (FVTPL)
3
22,330
62,436
–
–
1,774
64,210
–
–
Net carrying value (incl FVTPL)
52,329
142,203
46,048
–
20,758
209,009
–
–
1
Following the increased strategic importance and reporting of Ventures to management, this has been established as a separate operating segment from 1 January
2022. Prior period has been restated
2
Loans and advances includes reverse repurchase agreements and other sim
ilar secured lend
ing of $3,764 mill
ion under Customers and of $956 m
ill
ion under Banks,
held at amortised cost
3
Loans and advances includes reverse repurchase agreements and other sim
ilar secured lend
ing of $60,278 mill
ion under Customers and of $18,708 m
ill
ion under Banks,
held at fair value through profit and loss
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
77
Risk profile continued
Loans and advances by client segment (audited)
Company
Amortised cost
2022
Banks
$mill
ion
Customers
Undrawn
commitments
$mill
ion
Financ
ial
Guarantees
$mill
ion
Corporate,
Commercial
&
Institut
ional
Banking
$mill
ion
Consumer,
Private &
Business
Banking
$mill
ion
Central &
other items
$mill
ion
Customer
Total
$mill
ion
Stage 1
18,423
59,561
11,115
2,800
73,476
60,727
34,894
– Strong
10,989
44,313
9,188
2,800
56,301
51,980
23,117
– Satisfactory
7,434
15,248
1,927
–
17,175
8,747
11,777
Stage 2
128
4,852
444
–
5,296
3,150
2,453
– Strong
4
763
294
–
1,057
532
446
– Satisfactory
96
3,392
55
–
3,447
2,023
1,666
–
Higher risk
28
697
95
–
792
595
341
Of which (stage 2):
–
Less than 30 days past due
–
85
56
–
141
–
–
–
More than 30 days past due
4
13
95
–
108
–
–
Stage 3, credit-impa
ired financial assets
1
3,810
627
248
4,685
128
543
Gross balance¹
18,552
68,223
12,186
3,048
83,457
64,005
37,890
Stage 1
(3)
(51)
(97)
–
(148)
(18)
(6)
– Strong
(1)
(28)
(77)
–
(105)
(10)
(1)
– Satisfactory
(2)
(23)
(20)
–
(43)
(8)
(5)
Stage 2
(1)
(51)
(26)
–
(77)
(24)
(17)
– Strong
–
(10)
(4)
–
(14)
(2)
–
– Satisfactory
(1)
(22)
(8)
–
(30)
(18)
(9)
–
Higher risk
–
(19)
(14)
–
(33)
(4)
(8)
Of which (stage 2):
–
Less than 30 days past due
–
(1)
(8)
–
(9)
–
–
–
More than 30 days past due
–
–
(14)
–
(14)
–
–
Stage 3, credit-impa
ired financial assets
–
(2,201)
(402)
(18)
(2,621)
–
(118)
Total credit impa
irment
(4)
(2,303)
(525)
(18)
(2,846)
(42)
(141)
Net carrying value
18,548
65,920
11,661
3,030
80,611
Stage 1
0.0%
0.1%
0.9%
0.0%
0.2%
0.0%
0.0%
– Strong
0.0%
0.1%
0.8%
0.0%
0.2%
0.0%
0.0%
– Satisfactory
0.0%
0.2%
1.0%
0.0%
0.3%
0.1%
0.0%
Stage 2
0.8%
1.1%
5.9%
0.0%
1.5%
0.8%
0.7%
– Strong
0.0%
1.3%
1.4%
0.0%
1.3%
0.4%
0.0%
– Satisfactory
1.0%
0.6%
14.5%
0.0%
0.9%
0.9%
0.5%
–
Higher risk
0.0%
2.7%
14.7%
0.0%
4.2%
0.7%
2.3%
Of which (stage 2):
–
Less than 30 days past due
0.0%
1.2%
14.3%
0.0%
6.4%
0.0%
0.0%
–
More than 30 days past due
0.0%
0.0%
14.7%
0.0%
13.0%
0.0%
0.0%
Stage 3, credit-impa
ired financial assets (S3)
0.0%
57.8%
64.1%
7.3%
55.9%
0.0%
21.7%
Cover ratio
0.0%
3.4%
4.3%
0.6%
3.4%
0.1%
0.4%
Fair value through profit or loss
Performing
22,036
38,642
–
2,410
41,052
–
–
– Strong
18,558
32,000
–
2,409
34,409
–
–
– Satisfactory
3,478
6,642
–
1
6,643
–
–
–
Higher risk
–
–
–
–
–
–
–
Defaulted (CG13-14)
–
2
–
–
2
–
–
Gross balance (FVTPL)
2
22,036
38,644
–
2,410
41,054
–
–
Net carrying value (incl FVTPL)
40,584
104,564
11,661
5,440
121,665
–
–
1
Loans and advances include reverse repurchase agreements and other sim
ilar secured lend
ing for $15,071 mill
ion under Customers and for $184 m
ill
ion under Banks,
held at amortised cost
2
Loans and advances include reverse repurchase agreements and other sim
ilar secured lend
ing for $37,858 mill
ion under Customers and for $21,199 m
ill
ion under Banks,
held at fair value through profit and loss
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
78
Company
Amortised cost
2022
Banks
$mill
ion
Customers
Undrawn
commitments
$mill
ion
Financ
ial
Guarantees
$mill
ion
Corporate,
Commercial
&
Institut
ional
Banking
$mill
ion
Consumer,
Private &
Business
Banking
$mill
ion
Central &
other items
$mill
ion
Customer
Total
$mill
ion
Stage 1
15,882
45,659
11,612
2,489
59,760
61,792
34,709
– Strong
8,566
28,908
9,767
2,412
41,087
52,276
24,136
– Satisfactory
7,316
16,751
1,845
77
18,673
9,516
10,573
Stage 2
247
9,194
491
110
9,795
4,886
2,047
– Strong
81
1,609
271
–
1,880
1,144
512
– Satisfactory
38
6,750
94
–
6,844
3,006
1,045
–
Higher risk
128
835
126
110
1,071
736
490
Of which (stage 2):
–
Less than 30 days past due
–
69
94
–
163
–
–
–
More than 30 days past due
–
36
126
–
152
–
–
Stage 3, credit-impa
ired financial assets
–
4,353
666
–
5,019
–
709
Gross balance
1
16,129
59,206
12,769
2,599
74,574
66,678
37,465
Stage 1
(9)
(30)
(121)
–
(151)
(9)
(9)
– Strong
(3)
(13)
(63)
–
(76)
(5)
(4)
– Satisfactory
(6)
(17)
(58)
–
(75)
(4)
(5)
Stage 2
(3)
(178)
(57)
–
(235)
(35)
(17)
– Strong
(2)
(4)
(22)
–
(26)
(2)
–
– Satisfactory
(1)
(115)
(11)
–
(126)
(28)
(7)
–
Higher risk
–
(59)
(24)
–
(83)
(5)
(10)
Of which (stage 2):
–
Less than 30 days past due
–
(2)
(11)
–
(13)
–
–
–
More than 30 days past due
–
–
(24)
–
(24)
–
–
Stage 3, credit-impa
ired financial assets
–
(2,637)
(390)
–
(3,027)
–
(175)
Total credit impa
irment
(12)
(2,845)
(568)
–
(3,413)
(44)
(201)
Net carrying value
16,117
56,361
12,201
2,599
71,161
Stage 1
0.1%
0.1%
1.0%
0.0%
0.3%
0.0%
0.0%
– Strong
0.0%
0.0%
0.6%
0.0%
0.2%
0.0%
0.0%
– Satisfactory
0.1%
0.1%
3.1%
0.0%
0.4%
0.0%
0.0%
Stage 2
1.2%
1.9%
11.6%
0.0%
2.4%
0.7%
0.8%
– Strong
2.5%
0.2%
8.1%
0.0%
1.4%
0.2%
0.0%
– Satisfactory
2.6%
1.7%
11.7%
0.0%
1.8%
0.9%
0.7%
–
Higher risk
0.0%
7.1%
19.0%
0.0%
7.7%
0.7%
2.0%
Of which (stage 2):
–
Less than 30 days past due
0.0%
2.9%
11.7%
0.0%
8.0%
0.0%
0.0%
–
More than 30 days past due
0.0%
0.0%
19.0%
0.0%
14.8%
0.0%
0.0%
Stage 3, credit-impa
ired financial assets (S3)
0.0%
60.6%
58.6%
0.0%
60.3%
0.0%
24.7%
Cover ratio
0.1%
4.8%
4.4%
0.0%
4.6%
0.1%
0.5%
Fair value through profit or loss
Performing
21,950
60,672
–
1,774
62,446
–
–
– Strong
19,543
46,971
–
1,772
48,743
–
–
– Satisfactory
2,407
13,701
–
2
13,703
–
–
–
Higher risk
–
–
–
–
–
–
–
Defaulted (CG13-14)
–
36
–
–
36
–
–
Gross balance (FVTPL)
2
21,950
60,708
–
1,774
62,482
–
–
Net carrying value (incl FVTPL)
38,067
117,069
12,201
4,373
133,643
–
–
1
Loans and advances include reverse repurchase agreements and other sim
ilar secured lend
ing of $3,047 mill
ion under Customers and of $438 m
ill
ion under Banks,
held at amortised cost
2
Loans and advances include reverse repurchase agreements and other sim
ilar secured lend
ing of $59,275 mill
ion under Customers and of $18,380 m
ill
ion under Banks,
held at fair value through profit and loss
Risk profile continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
79
Movement in gross exposures and credit impa
irment for loans and advances, debt secur
it
ies,
undrawn commitments and financ
ial guarantees (aud
ited)
The tables overleaf set out the movement in gross exposures and credit impa
irment by stage
in respect of amortised cost
loans to banks and customers, undrawn commitments, financ
ial guarantees and debt secur
it
ies class
if
ied at amort
ised
cost and FVOCI. The tables are presented for the Group and debt securit
ies and other el
ig
ible b
ills.
Methodology
The movement lines with
in the tables are an aggregat
ion of monthly movements over the year and will therefore reflect
the accumulation of multiple trades during the year. The credit impa
irment charge
in the income statement comprises the
amounts with
in the boxes
in the table below less recoveries of amounts previously written off. Discount unwind is reported
in net interest income and related to stage 3 financ
ial
instruments only.
The approach for determin
ing the key l
ine items in the tables is set out below.
•
Transfers
– transfers between stages are deemed to occur at the beginn
ing of a month based on pr
ior month
closing balances.
•
Net remeasurement from stage changes
– the remeasurement of credit impa
irment prov
is
ions ar
is
ing from a change
in
stage is reported with
in the stage that the assets are transferred to. For example, assets transferred
into stage 2 are
remeasured from a 12 month to a lifet
ime expected cred
it loss, with the effect of remeasurement reported in stage 2.
For stage 3, this represents the in
it
ial remeasurement from specif
ic prov
is
ions recogn
ised on ind
iv
idual assets transferred
into stage 3 in the year.
•
Net changes in exposures
– new business written less repayments in the year. With
in stage 1, new bus
iness written will
attract up to 12 months of expected credit loss charges. Repayments of non-amortis
ing loans (pr
imar
ily w
ith
in CCIB) w
ill
have low amounts of expected credit loss provis
ions attr
ibuted to them, due to the release of provis
ions over the term to
maturity. In stages 2 and 3, the amounts princ
ipally reflect repayments although stage 2 may
include new business written
where clients are on non-purely precautionary early alert, are a credit grade 12, or when non-investment grade debt
securit
ies are acqu
ired.
•
Changes in risk parameters
– for stages 1 and 2, this reflects changes in the probabil
ity of default (PD), loss g
iven default
(LGD) and exposure at default (EAD) of assets during the year, which includes the impact of releasing provis
ions over the
term to maturity. It also includes the effect of changes in forecasts of macroeconomic variables during the year and
movements in management overlays. In stage 3, this line represents addit
ional spec
if
ic prov
is
ions recogn
ised on exposures
held with
in stage 3.
•
Interest due but not paid
– change in contractual amount of interest due in stage 3 financ
ial
instruments but not paid,
being the net of accruals, repayments and write-offs, together with the corresponding change in credit impa
irment.
Changes to ECL models, which incorporates changes to model approaches and methodologies, is not reported as a separate
line item as it has an impact over a number of lines and stages.
Movements during the year
Stage 1 gross exposures increased by $34 bill
ion to $430 b
ill
ion (31 December 2021: $396 b
ill
ion). $16 b
ill
ion of the
increase was
due to loans out of which $11 bill
ion was from financing,
insurance and non-banking sectors from a few notable clients and
$11 bill
ion
increase was due to debt securit
ies.
Total stage 1 provis
ions decreased by $40 m
ill
ion to $330 m
ill
ion (31 December 2021: $370 m
ill
ion). Th
is is due to reductions
in risk parameters which includes a $65 mill
ion net release
in the COVID-19 element of the management overlay in CPBB.
Stage 2 gross exposures decreased by $7 bill
ion to $20.5 b
ill
ion (31 December 2021: $27.7 b
ill
ion). Th
is was primar
ily dr
iven by
net outflows from exposure changes and transfers to stage 1 in CCIB, particularly in the Energy and Transport and telecom
and util
it
ies sectors. Debt securit
ies
increased by $0.1 bill
ion due to the sovere
ign downgrade of Pakistan which was offset by
upgrades.
Stage 2 provis
ions decreased by $152 m
ill
ion to $349 m
ill
ion (31 December 2021: $501 m
ill
ion). Th
is was due to a $121 mill
ion
net release in the COVID-19 element of the management overlays in CCIB and CPBB, SICR and model updates in CPBB.
This was offset by normalised flows into CPBB and sovereign downgrades in CCIB and Central and other items segment.
Stage 3 exposures decreased by $0.7 bill
ion to $7.2 b
ill
ion (31 December 2021: $7.9 b
ill
ion), pr
imar
ily
in CCIB which was driven
by repayments and upgrades. Stage 3 provis
ions also decreased by $0.7 b
ill
ion to $3.8 b
ill
ion (31 December 2021: $4.5 b
ill
ion)
due to repayments offset by sovereign downgrades.
Risk profile continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
80
All segments – Group (audited)
Amortised cost
and FVOCI
Stage 1
Stage 2
Stage 3
5
Total
Gross
balance
6
$mill
ion
Total credit
impa
irment
$mill
ion
Net
$mill
ion
Gross
balance
6
$mill
ion
Total credit
impa
irment
$mill
ion
Net
$mill
ion
Gross
balance
6
$mill
ion
Total credit
impa
irment
$mill
ion
Net
$mill
ion
Gross
balance
6
$mill
ion
Total credit
impa
irment
$mill
ion
Net
$mill
ion
As at
1 January 2021
365,589
(430)
365,159
29,832
(746)
29,086
9,168
(5,219)
3,949 404,589
(6,395) 398,194
Transfers to
stage 1
18,004
(452)
17,552
(17,956)
452
(17,504)
(48)
–
(48)
–
–
–
Transfers to
stage 2
(40,145)
145
(40,000)
40,465
(154)
40,311
(320)
9
(311)
–
–
–
Transfers to
stage 3
(126)
1
(125)
(2,166)
216
(1,950)
2,292
(217)
2,075
–
–
–
Net change
in exposures
60,165
(87)
60,078
(22,135)
99
(22,036)
(2,180)
617
(1,563)
35,850
629
36,479
Net
remeasurement
from stage
changes
–
46
46
–
(129)
(129)
–
(99)
(99)
–
(182)
(182)
Changes in risk
parameters
–
51
51
–
98
98
–
(752)
(752)
–
(603)
(603)
Write-offs
–
–
–
–
–
–
(957)
957
–
(957)
957
–
Interest due
but unpaid
–
–
–
–
–
–
(187)
187
–
(187)
187
–
Discount
unwind
–
–
–
–
–
–
–
211
211
–
211
211
Exchange
translation
differences
and other
movements¹
(7,639)
356
(7,283)
(385)
(337)
(722)
114
(193)
(79)
(7,910)
(174)
(8,084)
As at
31 December
2021²
395,848
(370)
395,478
27,655
(501)
27,154
7,882
(4,499)
3,383
431,385
(5,370) 426,015
Income
statement ECL
(charge)/
release
3
10
68
(234)
(156)
Recoveries of
amounts
previously
written off
–
–
186
186
Total credit
impa
irment
(charge)/
release
10
68
(48)
30
Risk profile continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
81
Amortised cost
and FVOCI
Stage 1
Stage 2
Stage 3
5
Total
Gross
balance
6
$mill
ion
Total credit
impa
irment
$mill
ion
Net
$mill
ion
Gross
balance
6
$mill
ion
Total credit
impa
irment
$mill
ion
Net
$mill
ion
Gross
balance
6
$mill
ion
Total credit
impa
irment
$mill
ion
Net
$mill
ion
Gross
balance
6
$mill
ion
Total credit
impa
irment
$mill
ion
Net
$mill
ion
As at
1 January 2022
395,848
(370)
395,478
27,655
(501)
27,154
7,882
(4,499)
3,383
431,385
(5,370) 426,015
Transfers to
stage 1
18,477
(407)
18,070
(18,445)
407
(18,038)
(32)
–
(32)
–
–
–
Transfers to
stage 2
(35,697)
180
(35,517)
36,198
(198)
36,000
(501)
18
(483)
–
–
–
Transfers to
stage 3
(80)
–
(80)
(2,554)
205
(2,349)
2,634
(205)
2,429
–
–
–
Net change in
exposures
66,022
(102)
65,920
(20,488)
73
(20,415)
(1,396)
300
(1,096)
44,138
271
44,409
Net
remeasurement
from stage
changes
–
40
40
–
(90)
(90)
–
(81)
(81)
–
(131)
(131)
Changes in risk
parameters
–
140
140
–
(79)
(79)
–
(355)
(355)
–
(294)
(294)
Write-offs
–
–
–
–
–
–
(633)
633
–
(633)
633
–
Interest due
but unpaid
–
–
–
–
–
–
(168)
168
–
(168)
168
–
Discount
unwind
–
–
–
–
–
–
–
119
119
–
119
119
Exchange
translation
differences and
other
movements¹
(14,491)
189
(14,302)
(1,897)
(166)
(2,063)
(613)
71
(542)
(17,001)
94
(16,907)
As at
31 December
2022²
430,079
(330) 429,749
20,469
(349)
20,120
7,173
(3,831)
3,342
457,721
(4,510)
453,211
Income
statement ECL
(charge)/
release
3
78
(96)
(136)
(154)
Recoveries of
amounts
previously
written off
–
–
175
175
Total credit
impa
irment
(charge)/
release
4
78
(96)
39
21
1
Includes fair value adjustments and amortisat
ion on debt secur
it
ies
2
Excludes Cash and balances at central banks, Accrued income, Assets held for sale and Other assets
3
Does not include $1 mill
ion (31 December 2021: N
il) release relating to Other assets
4 Statutory basis
5
Stage 3 gross includes $28 mill
ion (2021: $33 m
ill
ion) or
ig
inated cred
it-impa
ired debt secur
it
ies w
ith impa
irment of $13 m
ill
ion (2021: N
il)
6
The gross balance includes the notional amount of off balance sheet instruments
Risk profile continued
All segments – Group (audited) continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
82
Of which movement of debt securit
ies, alternat
ive Tier 1 and other elig
ible b
ills (audited)
Amortised cost
and FVOCI
Stage 1
Stage 2
Stage 3²
Total
Gross
balance
$mill
ion
Total credit
impa
irment
$mill
ion
Net
$mill
ion
Gross
balance
$mill
ion
Total credit
impa
irment
$mill
ion
Net
$mill
ion
Gross
balance
$mill
ion
Total credit
impa
irment
$mill
ion
Net
$mill
ion
Gross
balance
$mill
ion
Total credit
impa
irment
$mill
ion
Net
3
$mill
ion
As at
1 January 2021
82,230
(50)
82,180
3,488
(26)
3,462
114
(58)
56
85,832
(134)
85,698
Transfers to
stage 1
403
(11)
392
(403)
11
(392)
–
–
–
–
–
–
Transfers to
stage 2
(2,358)
16
(2,342)
2,358
(16)
2,342
–
–
–
–
–
–
Transfers to
stage 3
–
–
–
–
–
–
–
–
–
–
–
–
Net change in
exposures
18,789
(42)
18,747
(136)
(18)
(154)
–
1
1
18,653
(59)
18,594
Net
remeasurement
from stage
changes
–
13
13
–
(26)
(26)
–
–
–
–
(13)
(13)
Changes in risk
parameters
–
18
18
–
34
34
–
(3)
(3)
–
49
49
Write-offs
–
–
–
–
–
–
–
–
–
–
–
–
Interest due
but unpaid
–
–
–
–
–
–
–
–
–
–
–
–
Exchange
translation
differences and
other movements
1
(2,714)
(2)
(2,716)
8
(1)
7
(1)
(6)
(7)
(2,707)
(9)
(2,716)
As at
31 December 2021
96,350
(58)
96,292
5,315
(42)
5,273
113
(66)
47
101,778
(166)
101,612
Income
statement ECL
(charge)/release
1
(11)
(10)
(2)
(23)
Recoveries of
amounts
previously
written off
–
–
–
–
Total credit
impa
irment
(charge)/release
(11)
(10)
(2)
(23)
Risk profile continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
83
Amortised cost
and FVOCI
Stage 1
Stage 2
Stage 3²
Total
Gross
balance
$mill
ion
Total credit
impa
irment
$mill
ion
Net
$mill
ion
Gross
balance
$mill
ion
Total credit
impa
irment
$mill
ion
Net
$mill
ion
Gross
balance
$mill
ion
Total credit
impa
irment
$mill
ion
Net
$mill
ion
Gross
balance
$mill
ion
Total credit
impa
irment
$mill
ion
Net
3
$mill
ion
As at
1 January 2022
96,350
(58)
96,292
5,315
(42)
5,273
113
(66)
47
101,778
(166)
101,612
Transfers to
stage 1
2,296
(22)
2,274
(2,296)
22
(2,274)
–
–
–
–
–
–
Transfers to
stage 2
(3,942)
38
(3,904)
3,942
(38)
3,904
–
–
–
–
–
Transfers to
stage 3
–
–
–
(66)
42
(24)
66
(42)
24
–
–
–
Net change in
exposures
19,290
(44)
19,246
(752)
1
(751)
–
1
1
18,538
(42)
18,496
Net
remeasurement
from stage
changes
–
11
11
–
(4)
(4)
–
(23)
(23)
–
(16)
(16)
Changes in risk
parameters
–
39
39
–
(94)
(94)
–
(13)
(13)
–
(68)
(68)
Write-offs
–
–
–
–
–
–
(30)
30
–
(30)
30
–
Interest due
but unpaid
–
–
–
–
–
–
–
–
–
–
–
–
Exchange
translation
differences
and other
movements
1
(7,108)
16
(7,092)
(688)
23
(665)
(5)
7
2
(7,801)
46
(7,755)
As at 31
December 2022
106,886
(20) 106,866
5,455
(90)
5,365
144
(106)
38
112,485
(216)
112,269
Income
statement ECL
(charge)/release
6
(97)
(35)
(126)
Recoveries of
amounts
previously
written off
–
–
–
–
Total credit
impa
irment
(charge)/release
6
(97)
(35)
(126)
1
Includes fair value adjustments and amortisat
ion on debt secur
it
ies
2
Stage 3 gross includes $28 mill
ion (2021: $33 m
ill
ion) or
ig
inated cred
it-impa
ired debt secur
it
ies w
ith impa
irment of $13 m
ill
ion (2021: N
il)
3
FVOCI instrument are not presented net of ECL. While the presentation is on a net basis for the table, the total net on-balance sheet amount is $112,425 mill
ion
(31 December 2021: $101,705 mill
ion). Refer to the Analys
is of financ
ial
instrument by stage table on page 69
Risk profile continued
Of which movement of debt securit
ies, alternat
ive Tier 1 and other elig
ible b
ills (audited) continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
84
All segments – Company (audited)
Amortised cost and
FVOCI
Stage 1
Stage 2
Stage 3⁵
Total
Gross
balance
6
$mill
ion
Total credit
impa
irment
$mill
ion
Net
$mill
ion
Gross
balance
6
$mill
ion
Total credit
impa
irment
$mill
ion
Net
$mill
ion
Gross
balance
6
$mill
ion
Total credit
impa
irment
$mill
ion
Net
$mill
ion
Gross
balance
6
$mill
ion
Total credit
impa
irment
$mill
ion
Net
$mill
ion
As at
1 January 2021
241,561
(237) 241,324
20,758
(476)
20,282
6,761
(3,812)
2,949 269,080
(4,525) 264,555
Transfers to
stage 1
13,549
(223)
13,326
(13,501)
223
(13,278)
(48)
–
(48)
–
–
–
Transfers to
stage 2
(29,383)
47
(29,336)
29,594
(56)
29,538
(211)
9
(202)
–
–
–
Transfers to
stage 3
(94)
1
(93)
(1,598)
171
(1,427)
1,692
(172)
1,520
–
–
–
Net change
in exposures
34,059
(56)
34,003
(14,441)
80
(14,361)
(1,611)
407
(1,204)
18,007
431
18,438
Net
remeasurement
from stage
changes
–
14
14
–
(57)
(57)
–
(79)
(79)
–
(122)
(122)
Changes in risk
parameters
–
18
18
–
93
93
–
(449)
(449)
–
(338)
(338)
Write-offs
–
–
–
–
–
–
(592)
592
–
(592)
592
–
Interest due
but unpaid
–
–
–
–
–
–
(143)
143
–
(143)
143
–
Discount unwind
–
–
–
–
–
–
–
170
170
–
170
170
Exchange
translation
differences and
other movements¹
(5,161)
226
(4,935)
(234)
(289)
(523)
(38)
(47)
(85)
(5,433)
(110)
(5,543)
As at
31 December
2021²
254,531
(210) 254,321
20,578
(311)
20,267
5,810
(3,238)
2,572
280,919
(3,759) 277,160
Income
statement ECL
(charge)/release
(24)
116
(121)
(29)
Recoveries
of amounts
previously
written off
–
–
67
67
Total credit
impa
irment
(charge)/release
(24)
116
(54)
38
Risk profile continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
85
Amortised cost and
FVOCI
Stage 1
Stage 2
Stage 3⁵
Total
Gross
balance
6
$mill
ion
Total credit
impa
irment
$mill
ion
Net
$mill
ion
Gross
balance
6
$mill
ion
Total credit
impa
irment
$mill
ion
Net
$mill
ion
Gross
balance
6
$mill
ion
Total credit
impa
irment
$mill
ion
Net
$mill
ion
Gross
balance
6
$mill
ion
Total credit
impa
irment
$mill
ion
Net
$mill
ion
As at
1 January 2022
254,531
(210) 254,321
20,578
(311)
20,267
5,810
(3,238)
2,572
280,919
(3,759) 277,160
Transfers to
stage 1
13,424
(240)
13,184
(13,394)
240
(13,154)
(30)
–
(30)
–
–
–
Transfers to
stage 2
(22,222)
126
(22,096)
22,653
(109)
22,544
(431)
(17)
(448)
–
–
–
Transfers to
stage 3
–
–
–
(1,873)
(32)
(1,905)
1,873
32
1,905
–
–
–
Net change in
exposures
47,019
(33)
46,986
(14,167)
54
(14,113)
(988)
190
(798)
31,864
211
32,075
Net
remeasurement
from stage
changes
–
7
7
–
(12)
(12)
–
(49)
(49)
–
(54)
(54)
Changes in risk
parameters
–
80
80
–
44
44
–
(166)
(166)
–
(42)
(42)
Write-offs
–
–
–
–
–
–
(369)
369
–
(369)
369
–
Interest due
but unpaid
–
–
–
–
–
–
(130)
130
–
(130)
130
–
Discount unwind
–
–
–
–
–
–
–
74
74
–
74
74
Exchange
translation
differences and
other movements¹
(11,989)
75
(11,914)
(985)
6
(979)
(300)
(114)
(414)
(13,274)
(33)
(13,307)
As at 31
December 2022²
280,763
(195) 280,568
12,812
(120)
12,692
5,435
(2,789)
2,646
299,010
(3,104) 295,906
Income
statement ECL
(charge)/release
3
54
86
(25)
115
Recoveries
of amounts
previously
written off
–
–
67
67
Total credit
impa
irment
(charge)/release
4
54
86
42
182
1
Includes fair value adjustments and amortisat
ion on debt secur
it
ies
2
Excludes Cash and balances at central banks, Accrued income, Assets held for sale and Other assets
3
Does not include $1 mill
ion (31 December 2021: N
il) release relating to Other assets
4 Statutory basis
5
Stage 3 gross includes $28 mill
ion (2021: $33 m
ill
ion) or
ig
inated cred
it-impa
ired debt secur
it
ies w
ith impa
irment of $13 m
ill
ion (2021: N
il)
6
The gross balance includes the notional amount of off balance sheet instruments
Risk profile continued
All segments – Company (audited) continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
86
Of which Movement of debt securit
ies – Company (aud
ited)
Amortised cost
and FVOCI
Stage 1
Stage 2
Stage 3²
Total
Gross
balance
$mill
ion
Total credit
impa
irment
$mill
ion
Net
$mill
ion
Gross
balance
$mill
ion
Total credit
impa
irment
$mill
ion
Net
$mill
ion
Gross
balance
$mill
ion
Total credit
impa
irment
$mill
ion
Net
$mill
ion
Gross
balance
$mill
ion
Total credit
impa
irment
$mill
ion
Net
3
$mill
ion
As at
1 January 2021
68,742
(19)
68,723
2,083
(10)
2,073
84
(29)
55
70,909
(58)
70,851
Transfers to
stage 1
265
(6)
259
(265)
6
(259)
–
–
–
–
–
–
Transfers to
stage 2
(1,740)
5
(1,735)
1,740
(5)
1,735
–
–
–
–
–
–
Transfers to
stage 3
–
–
–
–
–
–
–
–
–
–
–
–
Net change
in exposures
17,227
(25)
17,202
110
(1)
109
–
–
–
17,337
(26)
17,311
Net
remeasurement
from stage
changes
–
4
4
–
(16)
(16)
–
–
–
–
(12)
(12)
Changes in risk
parameters
–
19
19
–
(5)
(5)
–
(4)
(4)
–
10
10
Write-offs
–
–
–
–
–
–
–
–
–
–
–
–
Interest due
but unpaid
–
–
–
–
–
–
–
–
–
–
–
–
Exchange
translation
differences and
other movements
1
(2,106)
(10)
(2,116)
(65)
10
(55)
(2)
(3)
(5)
(2,173)
(3)
(2,176)
As at
31 December 2021
82,388
(32)
82,356
3,603
(21)
3,582
82
(36)
46
86,073
(89)
85,984
Income
statement ECL
(charge)/release
(2)
(22)
(4)
(28)
Recoveries
of amounts
previously
written off
–
–
–
–
Total credit
impa
irment
(charge)/release
(2)
(22)
(4)
(28)
Risk profile continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
87
Amortised cost
and FVOCI
Stage 1
Stage 2
Stage 3²
Total
Gross
balance
$mill
ion
Total credit
impa
irment
$mill
ion
Net
$mill
ion
Gross
balance
$mill
ion
Total credit
impa
irment
$mill
ion
Net
$mill
ion
Gross
balance
$mill
ion
Total credit
impa
irment
$mill
ion
Net
$mill
ion
Gross
balance
$mill
ion
Total credit
impa
irment
$mill
ion
Net
3
$mill
ion
As at
1 January 2022
82,388
(32)
82,356
3,603
(21)
3,582
82
(36)
46
86,073
(89)
85,984
Transfers to
stage 1
1,604
(21)
1,583
(1,604)
21
(1,583)
–
–
–
–
–
–
Transfers to
stage 2
(424)
3
(421)
424
(3)
421
–
–
–
–
–
–
Transfers to
stage 3
–
–
–
–
–
–
–
–
–
–
–
–
Net change in
exposures
15,757
(11)
15,746
(173)
2
(171)
–
1
1
15,584
(8)
15,576
Net
remeasurement
from stage
changes
–
2
2
–
7
7
–
–
–
–
9
9
Changes in risk
parameters
–
16
16
–
8
8
–
(13)
(13)
–
11
11
Write-offs
–
–
–
–
–
–
–
–
–
–
–
–
Interest due
but unpaid
–
–
–
–
–
–
–
–
–
–
–
–
Exchange
translation
differences and
other movements
1
(6,082)
23
(6,059)
(465)
(15)
(480)
(4)
(2)
(6)
(6,551)
6
(6,545)
As at
31 December 2022
93,243
(20)
93,223
1,785
(1)
1,784
78
(50)
28
95,106
(71)
95,035
Income
statement ECL
(charge)/release
7
17
(12)
12
Recoveries of
amounts
previously
written off
–
–
–
–
Total credit
impa
irment
(charge)/release
7
17
(12)
12
1
Includes fair value adjustments and amortisat
ion on debt secur
it
ies
2
Stage 3 gross includes $28 mill
ion (2021: $33 m
ill
ion) or
ig
inated cred
it-impa
ired debt secur
it
ies w
ith impa
irment of $13 m
ill
ion (2021: N
il)
3
FVOCI instrument are not presented net of ECL. While the presentation is on a net basis for the table, the total net on-balance sheet amount is $95,049 mill
ion
(31 December 2021: $86,028 mill
ion). Refer to the Analys
is of financ
ial
instrument by stage table on page 72
Risk profile continued
Of which Movement of debt securit
ies – Company (aud
ited) continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
88
Risk profile continued
Credit impa
irment charge (aud
ited)
Ongoing credit impa
irment was a net release of $22 m
ill
ion (31 December 2021: $28 m
ill
ion), w
ith a $40 mill
ion release
in
stage 3 partly offset by a charge of $18 mill
ion
in stage 1 and 2.
CCIB Stage 1 and 2 was a net $71 mill
ion release, wh
ich included the full release of the remain
ing $94 m
ill
ion COVID-19
overlay. This was partly offset by the impact of sovereign downgrades of Pakistan and Ghana.
CCIB had a net $115 mill
ion release
in stage 3 due to repayments and debt sales offset by the sovereign default of Sri Lanka
and Ghana.
CPBB stage 1 and 2 net release of $18 mill
ion
includes a net release of $93 mill
ion from the judgemental management overlay.
Excluding overlay releases, the impact of higher delinquenc
ies and adverse macroeconom
ic forecasts was offset by releases
from methodology and model updates, primar
ily
in Asia. Stage 3 charge of $37 mill
ion (31 December 2021: $192 m
ill
ion) was
sign
ificantly lower ma
inly due to lower charge-offs from unsecured and business banking portfolios, improved delinquency
flows and $15 mill
ion release from the management overlay. 2021 was
impacted by post moratoria cliff effects and a
sign
ificant charge for a Bus
iness Banking client.
Ventures was a charge of $2 mill
ion (31 December 2021: $n
il) from impa
irments
in Trust Bank Singapore.
Central and other items stage 1 and 2 charge of $105 mill
ion (31 December 2021: $21 m
ill
ion)
is due to the sovereign
downgrades during the year. Central and other items stage 3 charge of $38 mill
ion (31 December 2021: $n
il) primar
ily
relates to the sovereign downgrades in Ghana and Sri Lanka.
2022
2021 (Restated)
1
Stage 1 & 2
$mill
ion
Stage 3
$mill
ion
Total
$mill
ion
Stage 1 & 2
$mill
ion
Stage 3
$mill
ion
Total
$mill
ion
Ongoing business portfolio
Corporate, Commercial & Institut
ional Bank
ing
(71)
(115)
(186)
(74)
(144)
(218)
Consumer, Private & Business Banking
1
(18)
37
19
(23)
192
169
Ventures
1
2
–
2
–
–
–
Central & other items
105
38
143
21
–
21
Credit impa
irment charge
18
(40)
(22)
(76)
48
(28)
Restructuring business portfolio
Others
(1)
1
–
(2)
–
(2)
Credit impa
irment charge
2
(1)
1
–
(2)
–
(2)
Total credit impa
irment charge
17
(39)
(22)
(78)
48
(30)
1
Following the increased strategic importance and reporting of Ventures to management, this has been established as a separate operating segment from
1 January 2022. Prior period has been restated
2
There was no impa
irment release ( 31 December 2021: $2 m
ill
ion) from the Group’s d
iscont
inued bus
inesses
COVID-19 relief measures
Outstanding relief balance for CCIB are less than $100 mill
ion (31 December 2021: $1,195 m
ill
ion), and are less than
$100 mill
ion (31 December 2021: $879 m
ill
ion) for CPBB and $n
il (31 December 2021: $nil) for Ventures.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
89
Risk profile continued
Problem credit management and provis
ion
ing
Forborne and other modif
ied loans by cl
ient segment (audited)
A forborne loan arises when a concession has been made to the contractual terms of a loan in response to a customer’s
financial d
iff
icult
ies.
Net forborne loans decreased by $444 mill
ion to $872 m
ill
ion (31 December 2021: $1,316 m
ill
ion), of wh
ich $146 mill
ion decrease
was in performing forborne loans and $298 mill
ion decrease was
in non-performing forborne loans. Performing forborne
loans reduction in CCIB was driven by COVID-19 relief measures in 2021 which have expired across most of our markets while
non-performing forborne loans reduction was due a major repayment.
The table below presents loans with forbearance measures by segment.
Group
Amortised cost
2022
2021 (Restated)
1
Corporate,
Commercial
&
Institut
ional
Banking
$mill
ion
Consumer,
Private &
Business
Banking
$mill
ion
Ventures
$mill
ion
Total
$mill
ion
Corporate,
Commercial
&
Institut
ional
Banking
$mill
ion
Consumer,
Private &
Business
Banking
$mill
ion
Ventures
$mill
ion
Total
$mill
ion
All loans with forbearance measures
1,596
279
–
1,875
2,334
271
–
2,605
Credit impa
irment (stage 1 and 2)
(2)
–
–
(2)
(4)
–
–
(4)
Credit impa
irment (stage 3)
(870)
(131)
–
(1,001)
(1,159)
(126)
–
(1,285)
Net carrying value
724
148
–
872
1,171
145
–
1,316
Included with
in the above table
Gross performing forborne loans
90
54
–
144
238
53
–
291
Modif
icat
ion of terms and condit
ions
2
90
54
–
144
238
53
–
291
Refinancing
3
–
–
–
–
–
–
–
–
Impairment provis
ions
(2)
–
–
(2)
(3)
–
–
(3)
Modif
icat
ion of terms and condit
ions
2
(2)
–
–
(2)
(3)
–
–
(3)
Refinancing
3
–
–
–
–
–
–
–
–
Net performing forborne loans
88
54
–
142
235
53
–
288
Collateral
7
56
–
63
36
56
–
92
Gross non-performing forborne loans
1,506
225
–
1,731
2,095
218
–
2,313
Modif
icat
ion of terms and condit
ions
2
1,463
225
–
1,688
1,937
218
–
2,155
Refinancing
3
43
–
–
43
158
–
–
158
Impairment provis
ions
(870)
(131)
–
(1,001)
(1,159)
(126)
–
(1,285)
Modif
icat
ion of terms and condit
ions
2
(827)
(131)
–
(958)
(1,028)
(126)
–
(1,154)
Refinancing
3
(43)
–
–
(43)
(131)
–
–
(131)
Net non-performing forborne loans
636
94
–
730
936
92
–
1,028
Collateral
204
53
–
257
208
53
–
261
1
Following the increased strategic importance and reporting of Ventures to management, this has been established as a separate operating segment from
1 January 2022. Prior period has been restated
2
Modif
icat
ion of terms is any contractual change apart from refinanc
ing, as a result of cred
it stress of the counterparty, i.e. interest reductions, loan covenant waivers
3
Refinancing
is a new contract to a lender in credit stress, such that they are refinanced and can pay other debt contracts that they were unable to honour
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
90
Risk profile continued
Company
Amortised cost
2022
2021
Corporate,
Commercial
&
Institut
ional
Banking
$mill
ion
Consumer,
Private &
Business
Banking
$mill
ion
Total
$mill
ion
Corporate,
Commercial
&
Institut
ional
Banking
$mill
ion
Consumer,
Private &
Business
Banking
$mill
ion
Total
$mill
ion
All loans with forbearance measures
1,186
36
1,222
1,630
34
1,664
Credit impa
irment (stage 1 and 2)
(1)
–
(1)
(2)
–
(2)
Credit impa
irment (stage 3)
(629)
(2)
(631)
(789)
(2)
(791)
Net carrying value
556
34
590
839
32
871
Included with
in the above table
Gross performing forborne loans
81
23
104
164
18
182
Modif
icat
ion of terms and condit
ions
1
81
23
104
164
18
182
Refinancing
2
–
–
–
–
–
–
Impairment provis
ions
(1)
–
(1)
(2)
–
(2)
Modif
icat
ion of terms and condit
ions
1
(1)
–
(1)
(2)
–
(2)
Refinancing
2
–
–
–
–
–
–
Net performing forborne loans
80
23
103
162
18
180
Collateral
7
24
31
32
18
50
Gross non-performing forborne loans
1,105
13
1,118
1,466
16
1,482
Modif
icat
ion of terms and condit
ions
1
1,064
13
1,077
1,313
16
1,329
Refinancing
2
41
–
41
153
–
153
Impairment provis
ions
(629)
(2)
(631)
(789)
(2)
(791)
Modif
icat
ion of terms and condit
ions
1
(588)
(2)
(590)
(662)
(2)
(664)
Refinancing
2
(41)
–
(41)
(127)
–
(127)
Net non-performing forborne loans
476
11
487
677
14
691
Collateral
148
7
155
130
13
143
1
Modif
icat
ion of terms is any contractual change apart from refinanc
ing, as a result of cred
it stress of the counterparty, i.e. interest reductions, loan covenant waivers
2
Refinancing
is a new contract to a lender in credit stress, such that they are refinanced and can pay other debt contracts that they were unable to honour
Credit-impa
ired (stage 3) loans and advances by cl
ient segment (audited)
Gross Stage 3 loans for the Group decreased by $0.7 bill
ion to $6.2 b
ill
ion (31 December 2021: $6.9 b
ill
ion).
In CCIB, inflows were driven by higher risk category from Ghana and Sri Lanka sovereign downgrades. This was offset by
outflows due to repayments and upgrades of a few sign
ificant cl
ients and $0.1 bill
ion bus
iness exits in Cameroon and Jordan.
CPBB stage 3 loans were materially unchanged at $1.1 bill
ion (31 December 2021: $1.2 b
ill
ion), w
ith $0.1 bill
ion decrease from
secured wealth products and mortgages.
Central and other items include new inflows relating to local currency default of Sri Lanka.
Stage 3 cover ratio (audited)
The stage 3 cover ratio measures the proportion of stage 3 impa
irment prov
is
ions to gross stage 3 loans, and
is a metric
commonly used in consider
ing
impa
irment trends. Th
is metric does not allow for variat
ions
in the composit
ion of stage 3
loans and should be used in conjunct
ion w
ith other Credit Risk informat
ion prov
ided, includ
ing the level of collateral cover.
The balance of stage 3 loans not covered by stage 3 impa
irment prov
is
ions represents the adjusted value of collateral held
and the net outcome of any workout or recovery strategies.
Collateral provides risk mit
igat
ion to some degree in all client segments and supports the credit quality and cover ratio
assessments post impa
irment prov
is
ions. Further
informat
ion on collateral
is provided in the Credit Risk mit
igat
ion section.
The CCIB cover ratio reduced by 2 percentage points to 60 per cent (31 December 2021: 62 per cent) due to write-offs,
repayments and lower levels on coverage on sovereign default related exposures.
The CPBB cover ratio increased by 4 percentage points to 60 per cent (31 December 2021: 56 per cent) due to reduction in
outstanding balances.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
91
Risk profile continued
Group
Amortised cost
2022
2021
Corporate,
Commercial
&
Institut
ional
Banking
$mill
ion
Consumer,
Private &
Business
Banking
$mill
ion
Ventures
$mill
ion
Central &
Others
$mill
ion
Total
$mill
ion
Corporate,
Commercial
&
Institut
ional
Banking
$mill
ion
Consumer,
Private &
Business
Banking
$mill
ion
Ventures¹
$mill
ion
Central &
Others
$mill
ion
Total
$mill
ion
Gross credit-impa
ired
4,859
1,095
–
248
6,202
5,750
1,191
–
–
6,941
Credit impa
irment
provis
ions
(2,904)
(655)
–
(18)
(3,577)
(3,563)
(663)
–
–
(4,226)
Net credit-impa
ired
1,955
440
–
230
2,625
2,187
528
–
–
2,715
Cover ratio
60%
60%
–
7%
58%
62%
56%
–
–
61%
Collateral ($ mill
ion)
628
411
–
–
1,039
700
487
–
–
1,187
Cover ratio
(after collateral)
73%
97%
–
7%
74%
74%
97%
–
–
78%
1
Following the increased strategic importance and reporting of Ventures to management, this has been established as a separate operating segment from 1 January
2022. Prior period disclosure has been re-presented.
Company
Amortised cost
2022
2021
Corporate,
Commercial
&
Institut
ional
Banking
$mill
ion
Consumer,
Private &
Business
Banking
$mill
ion
Central &
Others
$mill
ion
Total
$mill
ion
Corporate,
Commercial
&
Institut
ional
Banking
$mill
ion
Consumer,
Private &
Business
Banking
$mill
ion
Central &
Others
$mill
ion
Total
$mill
ion
Gross credit-impa
ired
3,810
627
248
4,685
4,353
666
–
5,019
Credit impa
irment prov
is
ions
(2,201)
(402)
(18)
(2,621)
(2,637)
(390)
–
(3,027)
Net credit-impa
ired
1,609
225
230
2,064
1,716
276
–
1,992
Cover ratio
58%
64%
7%
56%
61%
59%
–
60%
Collateral ($ mill
ion)
480
209
–
689
479
241
–
720
Cover ratio
(after collateral)
70%
97%
7%
71%
72%
95%
–
75%
Credit risk mit
igat
ion
Potential credit losses from any given account, customer or portfolio are mit
igated us
ing a range of tools such as collateral,
netting arrangements, credit insurance and credit derivat
ives, tak
ing into account expected volatil
ity and guarantees.
The reliance that can be placed on these mit
igants
is carefully assessed in light of issues such as legal certainty and
enforceabil
ity, market valuat
ion correlation and counterparty risk of the guarantor.
Collateral (audited)
The requirement for collateral is not a substitute for the abil
ity to repay, wh
ich is the primary considerat
ion for any
lending decis
ions.
The collateral values in the table below (which covers loans and advances to banks and customers, excluding those held at
fair value through profit or loss) are adjusted where appropriate in accordance with our risk mit
igat
ion policy and for the
effect of over-collateralisat
ion. The extent of over-collateral
isat
ion has been determ
ined with reference to both the drawn
and undrawn components of exposure as this best reflects the effect of collateral and other credit enhancements on the
amounts aris
ing from expected cred
it losses. We have remained prudent in the way we assess the value of collateral, which
is calibrated for a severe downturn and backtested against our prior experience. On average, across all types of non-cash
collateral, the value ascribed is approximately half of its current market value. In the CPBB segments, a secured loan is one
where the borrower pledges an asset as collateral of which the Group is able to take possession in the event that the
borrower defaults.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
92
Risk profile continued
Collateral held on loans and advances (audited)
The table below details collateral held against exposures, separately disclos
ing stage 2 and stage 3 exposure and
corresponding collateral.
Group
Amortised cost
2022
Net amount outstanding
Collateral
Net exposure
Total
$mill
ion
Stage 2
financial
assets
$mill
ion
Credit-
impa
ired
financial
assets (S3)
$mill
ion
Total
2
$mill
ion
Stage 2
financial
assets
$mill
ion
Credit-
impa
ired
financial
assets (S3)
$mill
ion
Total
$mill
ion
Stage 2
financial
assets
$mill
ion
Credit-
impa
ired
financial
assets (S3)
$mill
ion
Corporate,
Commercial
&
Institut
ional
Banking
1
114,862
6,900
1,989
27,754
2,286
628
87,108
4,614
1,361
Consumer,
Private &
Business
Banking
46,013
927
440
28,015
661
411
17,998
266
29
Ventures³
64
1
–
–
–
–
64
1
–
Central &
other items
24,570
–
230
2,287
–
–
22,283
–
230
Total
185,509
7,828
2,659
58,056
2,947
1,039
127,453
4,881
1,620
Amortised
cost
2021
Net amount outstanding
Collateral
Net exposure
Total
$mill
ion
Stage 2
financial
assets
$mill
ion
Credit-
impa
ired
financial
assets (S3)
$mill
ion
Total
2
$mill
ion
Stage 2
financial
assets
$mill
ion
Credit-
impa
ired
financial
assets (S3)
$mill
ion
Total
$mill
ion
Stage 2
financial
assets
$mill
ion
Credit-
impa
ired
financial
assets (S3)
$mill
ion
Corporate,
Commercial
&
Institut
ional
Banking
1
109,766
11,720
2,218
18,463
3,479
700
91,303
8,241
1,518
Consumer,
Private &
Business
Banking
ª
ª
46,048
1,087
528
27,322
707
487
18,726
380
41
Ventures³
–
–
–
–
–
–
–
–
–
Central &
other items
18,984
110
–
2,814
–
–
16,170
110
–
Total
174,798
12,917
2,746
48,599
4,186
1,187
126,199
8,731
1,559
1
Includes loans and advances to banks
2
Adjusted for over-collateralisat
ion based on the drawn and undrawn components of exposures
3
Following the increased strategic importance and reporting of Ventures to management, this has been established as a separate operating segment in 2022.
Prior period disclosure has been re-presented
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
93
Risk profile continued
Company
Amortised cost
2022
Net amount outstanding
Collateral
Net exposure
Total
$mill
ion
Stage 2
financial
assets
$mill
ion
Credit-
impa
ired
financial
assets (S3)
$mill
ion
Total
2
$mill
ion
Stage 2
financial
assets
$mill
ion
Credit-
impa
ired
financial
assets (S3)
$mill
ion
Total
$mill
ion
Stage 2
financial
assets
$mill
ion
Credit-
impa
ired
financial
assets (S3)
$mill
ion
Corporate,
Commercial
&
Institut
ional
Banking
1
84,468
4,928
1,610
23,245
1,822
480
61,223
3,106
1,130
Consumer,
Private &
Business
Banking
11,661
418
225
5,394
281
209
6,267
137
16
Central &
other items
3,030
–
230
1,772
–
–
1,258
–
230
Total
99,159
5,346
2,065
30,411
2,103
689
68,748
3,243
1,376
Amortised
cost
2021
Net amount outstanding
Collateral
Net exposure
Total
$mill
ion
Stage 2
financial
assets
$mill
ion
Credit-
impa
ired
financial
assets (S3)
$mill
ion
Total
2
$mill
ion
Stage 2
financial
assets
$mill
ion
Credit-
impa
ired
financial
assets (S3)
$mill
ion
Total
$mill
ion
Stage 2
financial
assets
$mill
ion
Credit-
impa
ired
financial
assets (S3)
$mill
ion
Corporate,
Commercial
&
Institut
ional
Banking
1
72,478
9,260
1,716
12,892
2,840
479
59,586
6,420
1,237
Consumer,
Private &
Business
Banking
12,201
434
276
5,913
295
241
6,288
139
35
Central &
other items
2,599
110
–
2,087
–
–
512
110
–
Total
87,278
9,804
1,992
20,892
3,135
720
66,386
6,669
1,272
1
Includes loans and advances to banks
2
Adjusted for over-collateralisat
ion based on the drawn and undrawn components of exposures
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
94
Risk profile continued
Collateral – CCIB (audited)
78 per cent of tangible collateral excluding reverse repurchase agreements (31 December 2021: 76 per cent) held comprises
physical assets or is property based, with the remainder held in cash. Overall collateral increased by $9 bill
ion to $28 b
ill
ion
(31 December 2021: $18 bill
ion) due to an
increase in reverse repurchase agreements.
Non-tangible collateral such as guarantees and standby letters of credit is also held against corporate exposures, although
the financial effect of th
is type of collateral is less sign
ificant
in terms of recoveries. However, this is considered when
determin
ing probab
il
ity of default and other cred
it-related factors. Collateral is also held against off-balance sheet
exposures, includ
ing undrawn comm
itments and trade-related instruments.
The following table provides an analysis of the types of collateral held against CCIB loan exposures.
Group
Corporate, Commercial & Institut
ional Bank
ing
Amortised cost
2022
$mill
ion
2021
$mill
ion
Maximum exposure
114,862
109,766
Property
3,276
4,004
Plant, machinery and other stock
1,141
1,331
Cash
1,959
2,595
Reverse repos
14,213
1,920
A- to AA+
10,459
–
BBB- to BBB+
1,485
483
Unrated
2,269
1,437
Financ
ial guarantees and
insurance
4,494
5,513
Commodit
ies
38
36
Ships and aircraft
2,635
3,064
Total value of collateral
1
27,756
18,463
Net exposure
87,106
91,303
Company
Corporate, Commercial & Institut
ional Bank
ing
Amortised cost
2022
$mill
ion
2021
$mill
ion
Maximum exposure
84,468
72,478
Property
2,143
2,253
Plant, machinery and other stock
801
876
Cash
1,355
1,979
Reverse repos
13,504
1,387
A- to AA+
10,459
–
BBB- to BBB+
822
2
Unrated
2,223
1,385
Financ
ial guarantees and
insurance
3,687
4,327
Commodit
ies
29
35
Ships and aircraft
1,726
2,035
Total value of collateral
1
23,245
12,892
Net exposure
61,223
59,586
1
Adjusted for over-collateralisat
ion based on the drawn and undrawn components of exposures
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
95
Risk profile continued
Group
Collateral – CPBB- Group (audited)
In CPBB, $39 bill
ion wh
ich equates to 86 per cent of the portfolio is fully secured (31 December 2021: 84 per cent).
The following table presents an analysis of loans to ind
iv
iduals by product; split between fully secured, partially secured
and unsecured:
Amortised cost
2022
2021 (Restated)
3
Fully
secured
$mill
ion
Partially
secured
$mill
ion
Unsecured
$mill
ion
Total
$mill
ion
Fully
secured
$mill
ion
Partially
secured
$mill
ion
Unsecured
$mill
ion
Total
$mill
ion
Maximum exposure
39,493
160
6,360
46,013
38,916
856
6,276
46,048
Loans to ind
iv
iduals
Mortgages
24,695
–
–
24,695
23,915
–
–
23,915
CCPL
205
–
5,929
6,134
148
–
5,738
5,886
Auto
502
–
–
502
542
–
–
542
Secured wealth products
14,024
–
–
14,024
14,196
–
–
14,196
Other
67
160
431
658
115
856
538
1,509
Total collateral
1
28,015
27,322
Net exposure
2
17,998
18,726
Percentage of total loans
86%
0%
14%
84%
2%
14%
1
Collateral values are adjusted where appropriate in accordance with our risk mit
igat
ion policy and for the effect of over-collateralisat
ion
2
Amounts net of ECL
3
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
Company
Collateral – CPBB (audited)
In CPBB, $9 bill
ion wh
ich equates to 77 per cent of the portfolio is fully secured (31 December 2021: 72 per cent).
The following table presents an analysis of loans to ind
iv
iduals by product; split between fully secured, partially secured
and unsecured:
Amortised cost
2022
2021
Fully
secured
$mill
ion
Partially
secured
$mill
ion
Unsecured
$mill
ion
Total
$mill
ion
Fully
secured
$mill
ion
Partially
secured
$mill
ion
Unsecured
$mill
ion
Total
$mill
ion
Maximum exposure
8,940
131
2,590
11,661
8,781
841
2,579
12,201
Loans to ind
iv
iduals
Mortgages
4,848
–
–
4,848
4,802
–
–
4,802
CCPL
205
–
2,317
2,522
148
–
2,229
2,377
Auto
26
–
–
26
38
–
–
38
Secured wealth products
3,857
–
–
3,857
3,786
–
–
3,786
Other
4
131
273
408
7
841
350
1,198
Total collateral
1
5,394
5,913
Net exposure
2
6,267
6,288
Percentage of total loans
77%
1%
22%
72%
7%
21%
1
Collateral values are adjusted where appropriate in accordance with our risk mit
igat
ion policy and for the effect of over-collateralisat
ion
2
Amounts net of ECL
Mortgage loan-to-value ratios by geography (audited)
Loan-to-value (LTV) ratios measure the ratio of the current mortgage outstanding to the current fair value of the properties
on which they are secured.
In mortgages, the value of property held as security sign
ificantly exceeds the value of mortgage loans. The average LTV of
the overall mortgage portfolio is low at 45.8 per cent. Singapore, which represents 67 per cent of the retail mortgage portfolio
as at 31 December 2022, has an average LTV of 42.9 per cent.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
96
Risk profile continued
An analysis of LTV ratios by geography for the mortgage portfolio is presented in the table below.
Amortised cost
2022
Asia
%
Gross
Africa &
Middle East
%
Gross
Europe &
Americas
%
Gross
Total
%
Gross
Less than 50 per cent
50.0
43.0
32.2
48.2
50 per cent to 59 per cent
20.2
18.2
19.2
20.0
60 per cent to 69 per cent
19.5
16.8
31.3
20.1
70 per cent to 79 per cent
7.5
12.8
14.8
8.3
80 per cent to 89 per cent
2.6
5.1
1.1
2.6
90 per cent to 99 per cent
0.2
2.0
–
0.3
100 per cent and greater
0.1
2.2
1.3
0.4
Average portfolio loan-to-value
44.4
54.3
56.6
45.8
Loans to ind
iv
iduals – mortgages ($mill
ion)
21,435
1,388
1,872
24,695
Amortised cost
2021
Asia
%
Gross
Africa &
Middle East
%
Gross
Europe &
Americas
%
Gross
Total
%
Gross
Less than 50 per cent
43.9
27.6
16.8
40.7
50 per cent to 59 per cent
20.3
18.6
19.9
20.3
60 per cent to 69 per cent
20.2
19.6
37.5
21.4
70 per cent to 79 per cent
12.5
16.5
17.1
13.1
80 per cent to 89 per cent
2.5
9.1
8.7
3.4
90 per cent to 99 per cent
0.4
4.8
–
0.7
100 per cent and greater
0.2
3.8
–
0.4
Average portfolio loan-to-value
44.3
61.9
60.8
46.5
Loans to ind
iv
iduals – mortgages ($mill
ion)
20,455
1,651
1,808
23,914
Collateral and other credit enhancements possessed or called upon
The Group obtains assets by taking possession of collateral or calling upon other credit enhancements (such as guarantees).
Repossessed properties are sold in an orderly fashion. Where the proceeds are in excess of the outstanding loan balance the
excess is returned to the borrower.
Certain equity securit
ies acqu
ired may be held by the Group for investment purposes and are classif
ied as fa
ir value
through profit or loss, and the related loan written off. The carrying value of collateral possessed and held by the Group
as at 31 December 2022 is $14.9 mill
ion (31 December 2021: $11.8 m
ill
ion).
2022
$mill
ion
2021
$mill
ion
Property, plant and equipment
9.6
5.8
Guarantees
5.3
6.0
Total
14.9
11.8
Other Credit Risk mit
igat
ion (audited)
Other forms of Credit Risk mit
igat
ion are set out below.
Credit default swaps
The Group has entered into credit default swaps for portfolio management purposes, referencing loan assets with a notional
value of $5.1 bill
ion (31 December 2021: $12.1 b
ill
ion). These cred
it default swaps are accounted for as financ
ial guarantees as
per IFRS 9 as they will only reimburse the holder for an incurred loss on an underlying debt instrument. The Group continues
to hold the underlying assets referenced in the credit default swaps and it continues to be exposed to related Credit and
Foreign Exchange Risk on these assets.
Credit linked notes
The Group has issued credit linked notes for portfolio management purposes, referencing loan assets with a notional
value of $13.5 bill
ion (31 December 2021: $10.0 b
ill
ion). The Group cont
inues to hold the underlying assets for which the credit
linked notes provide mit
igat
ion.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
97
Risk profile continued
Derivat
ive financial
instruments
The Group enters into master netting agreements, which in the event of default result in a single amount owed by or to
the counterparty through netting the sum of the posit
ive and negat
ive mark-to-market values of applicable derivat
ive
transactions. These are also set out under the Derivat
ive financial
instruments Credit Risk Mit
igat
ion section (page 116).
Off-balance sheet exposures
For certain types of exposures, such as letters of credit and guarantees, the Group obtains collateral such as cash depending
on internal Credit Risk assessments, as well as in the case of letters of credit holding legal title to the underlying assets should
a default take place.
Other portfolio analysis
This section provides maturity analysis of loans and advances by business segment.
Contractual maturity analysis of loans and advances by client segment (audited)
Loans and advances to the CCIB segments remain predominantly short-term, with 68 per cent (31 December 2021: 64 per
cent) maturing in less than one year. 95 per cent (31 December 2021: 97 per cent) of loans to banks mature in less than one
year. Shorter maturit
ies g
ive us the flexib
il
ity to respond promptly to events and rebalance or reduce our exposure to clients
or sectors that are facing increased pressure or uncertainty.
The CPBB loan book continues to be longer-term in nature with 52 per cent (31 December 2021: 49 per cent) of the loans
maturing over five years, as mortgages constitute the major
ity of th
is portfolio.
Group
Amortised cost
2022
One year
or less
$mill
ion
One to
five years
$mill
ion
Over
five years
$mill
ion
Total
$mill
ion
Corporate, Commercial & Institut
ional Bank
ing
61,972
20,863
7,769
90,604
Consumer, Private & Business Banking
17,045
5,402
24,453
46,900
Ventures
66
–
–
66
Central & other items
24,584
–
4
24,588
Gross loans and advances to customers
103,667
26,265
32,226
162,158
Impairment provis
ions
(3,558)
(404)
(70)
(4,032)
Net loans and advances to customers
100,109
25,861
32,156
158,126
Net loans and advances to banks
26,097
1,134
152
27,383
Amortised cost
2021 (Restated)
1
One year
or less
$mill
ion
One to
five years
$mill
ion
Over
five years
$mill
ion
Total
$mill
ion
Corporate, Commercial & Institut
ional Bank
ing
53,449
20,973
9,220
83,642
Consumer, Private & Business Banking
18,702
5,471
22,873
47,046
Ventures
–
–
–
–
Central & other items
18,758
222
4
18,984
Gross loans and advances to customers
90,909
26,666
32,097
149,672
Impairment provis
ions
(4,409)
(355)
(109)
(4,873)
Net loans and advances to customers
86,500
26,311
31,988
144,799
Net loans and advances to banks
29,060
785
154
29,999
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
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
98
Risk profile continued
Company
Amortised cost
2022
One year
or less
$mill
ion
One to
five years
$mill
ion
Over
five years
$mill
ion
Total
$mill
ion
Corporate, Commercial & Institut
ional Bank
ing
47,258
14,840
6,125
68,223
Consumer, Private & Business Banking
5,357
2,594
4,235
12,186
Central & other items
3,048
–
–
3,048
Gross loans and advances to customers
55,663
17,434
10,360
83,457
Impairment provis
ions
(2,458)
(336)
(52)
(2,846)
Net loans and advances to customers
53,205
17,098
10,308
80,611
Net loans and advances to banks
17,403
992
153
18,548
Amortised cost
2021
One year
or less
$mill
ion
One to
five years
$mill
ion
Over
five years
$mill
ion
Total
$mill
ion
Corporate, Commercial & Institut
ional Bank
ing
36,691
14,561
7,954
59,206
Consumer, Private & Business Banking
5,840
3,045
3,884
12,769
Central & other items
2,598
–
1
2,599
Gross loans and advances to customers
45,129
17,606
11,839
74,574
Impairment provis
ions
(3,093)
(235)
(85)
(3,413)
Net loans and advances to customers
42,036
17,371
11,754
71,161
Net loans and advances to banks
15,321
642
154
16,117
Credit quality by industry
Loans and advances
This section provides an analysis of the Group’s amortised cost portfolio by industry on a gross, total credit impa
irment
and net basis.
From an industry perspective, gross loans and advances increased by $12.5 bill
ion to $162 b
ill
ion (31 December 2021:
$150 bill
ion), of wh
ich $12.6 bill
ion
is in CCIB and Central and other items segments. CPBB was largely flat at $47 bill
ion.
Stage 1 loans increased by $18.2 bill
ion to $148.2 b
ill
ion (31 December 2021: $130 b
ill
ion), pr
imar
ily w
ith
in the CCIB and Central
and other items segments. Of this $11.3 bill
ion was from an exposure
increase in Financ
ing,
insurance and non-banking from a
few notable clients and $4.9 bill
ion was from an
increased lending to Governments, mainly in Singapore. Transport, telecom
and util
it
ies increased by $2 bill
ion due to upgrades.
In CPBB stage 1 loans increased by $0.2 bill
ion to $44.9 b
ill
ion (31 December 2021: $44.6 b
ill
ion) ma
inly from credit cards
following changes to criter
ia for transferr
ing exposures into stage 2 and from mortgage portfolio.
Stage 2 loans decreased by $5 bill
ion largely due to CCIB, $2.5 b
ill
ion decrease
in Transport, telecom and util
it
ies from
upgrades to Stage 1, and $1.1 bill
ion decrease
in Energy due to repayments.
Stage 3 loans reduced by $0.7 bill
ion to $6.2 b
ill
ion (31 December 2021: $6.9 b
ill
ion) of wh
ich CPBB was broadly flat at $1.1 bill
ion.
CCIB and Central and other items fell by $0.6 bill
ion to $5.1 b
ill
ion (31 December 2021: $5.8 b
ill
ion) as the
impact of sovereign
downgrades in Ghana and Sri Lanka were more than offset by repayments and upgrades.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
99
Risk profile continued
Group
Amortised cost
2022
Stage 1
Stage 2
Stage 3
Total
Gross
balance
$mill
ion
Total credit
impa
irment
$mill
ion
Net
carrying
amount
$mill
ion
Gross
balance
$mill
ion
Total credit
impa
irment
$mill
ion
Net
carrying
amount
$mill
ion
Gross
balance
$mill
ion
Total credit
impa
irment
$mill
ion
Net
carrying
amount
$mill
ion
Gross
balance
$mill
ion
Total credit
impa
irment
$mill
ion
Net
carrying
amount
$mill
ion
Industry:
Energy
8,569
(8)
8,561
786
(9)
777
1,318
(612)
706
10,673
(629)
10,044
Manufacturing
10,839
(19)
10,820
645
(26)
619
649
(409)
240
12,133
(454)
11,679
Financ
ing,
insurance and
non-banking
26,667
(7)
26,660
276
(2)
274
193
(174)
19
27,136
(183)
26,953
Transport,
telecom
and util
it
ies
8,677
(18)
8,659
1,819
(34)
1,785
651
(219)
432
11,147
(271)
10,876
Food and
household
products
6,410
(20)
6,390
624
(20)
604
411
(252)
159
7,445
(292)
7,153
Commercial
real estate
5,229
(4)
5,225
847
(12)
835
232
(160)
72
6,308
(176)
6,132
Min
ing and
quarrying
3,598
(3)
3,595
380
(5)
375
241
(168)
73
4,219
(176)
4,043
Consumer
durables
2,492
(3)
2,489
328
(15)
313
320
(289)
31
3,140
(307)
2,833
Construction
1,340
(1)
1,339
371
(5)
366
495
(410)
85
2,206
(416)
1,790
Trading
companies &
distr
ibutors
466
–
466
12
(1)
11
120
(77)
43
598
(78)
520
Government
26,566
(1)
26,565
533
(1)
532
168
(15)
153
27,267
(17)
27,250
Other
2,470
(3)
2,467
141
(4)
137
309
(137)
172
2,920
(144)
2,776
Retail Products:
Mortgage
23,893
(10)
23,883
563
(6)
557
418
(163)
255
24,874
(179)
24,695
Credit Cards
2,925
(53)
2,872
88
(25)
63
40
(31)
9
3,053
(109)
2,944
Personal loans
and other
unsecured
lending
3,213
(89)
3,124
80
(14)
66
167
(103)
64
3,460
(206)
3,254
Auto
501
–
501
1
–
1
–
–
–
502
–
502
Secured
wealth products
13,749
(27)
13,722
219
(7)
212
380
(290)
90
14,348
(324)
14,024
Other
609
(2)
607
30
(1)
29
90
(68)
22
729
(71)
658
Net carrying
value
(customers)¹
148,213
(268) 147,945
7,743
(187)
7,556
6,202
(3,577)
2,625
162,158
(4,032)
158,126
1
Includes reverse repurchase agreements and other sim
ilar secured lend
ing held at amortised cost of $15,586 mill
ion
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
100
Risk profile continued
Amortised cost
2021
Stage 1
Stage 2
Stage 3
Total
Gross
balance
$mill
ion
Total credit
impa
irment
$mill
ion
Net
carrying
amount
$mill
ion
Gross
balance
$mill
ion
Total credit
impa
irment
$mill
ion
Net
carrying
amount
$mill
ion
Gross
balance
$mill
ion
Total credit
impa
irment
$mill
ion
Net
carrying
amount
$mill
ion
Gross
balance
$mill
ion
Total credit
impa
irment
$mill
ion
Net
carrying
amount
$mill
ion
Industry:
Energy
9,219
(14)
9,205
1,898
(71)
1,827
889
(629)
260
12,006
(714)
11,292
Manufacturing
10,837
(6)
10,831
788
(26)
762
757
(510)
247
12,382
(542)
11,840
Financ
ing,
insurance and
non-banking
15,338
(6)
15,332
720
(11)
709
247
(206)
41
16,305
(223)
16,082
Transport,
telecom
and util
it
ies
6,691
(3)
6,688
4,368
(47)
4,321
938
(282)
656
11,997
(332)
11,665
Food and
household
products
6,048
(7)
6,041
563
(26)
537
370
(266)
104
6,981
(299)
6,682
Commercial
real estate
5,876
(8)
5,868
695
(10)
685
385
(211)
174
6,956
(229)
6,727
Min
ing and
quarrying
2,887
(2)
2,885
419
(19)
400
261
(179)
82
3,567
(200)
3,367
Consumer
durables
2,203
(2)
2,201
251
(8)
243
360
(323)
37
2,814
(333)
2,481
Construction
1,171
(1)
1,170
491
(19)
472
914
(624)
290
2,576
(644)
1,932
Trading
companies &
distr
ibutors
554
–
554
20
(6)
14
159
(131)
28
733
(137)
596
Government
21,663
(2)
21,661
624
(2)
622
155
(8)
147
22,442
(12)
22,430
Other
2,860
(3)
2,857
694
(13)
681
316
(194)
122
3,870
(210)
3,660
Retail Products:
Mortgage
23,156
(19)
23,137
506
(19)
487
449
(159)
290
24,111
(197)
23,914
Credit Cards²
2,515
(51)
2,464
288
(50)
238
43
(43)
–
2,846
(144)
2,702
Personal loans
and other
unsecured
lending²
3,163
(90)
3,073
85
(25)
60
201
(150)
51
3,449
(265)
3,184
Auto
541
(1)
540
2
–
2
–
–
–
543
(1)
542
Secured
wealth products
13,821
(44)
13,777
254
(9)
245
441
(267)
174
14,516
(320)
14,196
Other
1,447
(7)
1,440
75
(20)
55
56
(44)
12
1,578
(71)
1,507
Net carrying
value
(customers)¹
129,990
(266) 129,724
12,741
(381)
12,360
6,941
(4,226)
2,715
149,672
(4,873) 144,799
1
Includes reverse repurchase agreements and other sim
ilar secured lend
ing held at amortised cost of $3,764 mill
ion
2
Prior year has been re-presented to provide product granularity
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
101
Risk profile continued
Company
Amortised cost
2022
Stage 1
Stage 2
Stage 3
Total
Gross
balance
$mill
ion
Total credit
impa
irment
$mill
ion
Net
carrying
amount
$mill
ion
Gross
balance
$mill
ion
Total credit
impa
irment
$mill
ion
Net
carrying
amount
$mill
ion
Gross
balance
$mill
ion
Total credit
impa
irment
$mill
ion
Net
carrying
amount
$mill
ion
Gross
balance
$mill
ion
Total credit
impa
irment
$mill
ion
Net
carrying
amount
$mill
ion
Industry:
Energy
5,513
(4)
5,509
671
(1)
670
1,050
(360)
690
7,234
(365)
6,869
Manufacturing
7,076
(11)
7,065
364
(5)
359
527
(336)
191
7,967
(352)
7,615
Financ
ing,
insurance and
non-banking
24,308
(3)
24,305
198
(2)
196
150
(132)
18
24,656
(137)
24,519
Transport,
telecom and
util
it
ies
5,790
(14)
5,776
1,409
(20)
1,389
457
(117)
340
7,656
(151)
7,505
Food and
household
products
3,898
(7)
3,891
279
(2)
277
266
(157)
109
4,443
(166)
4,277
Commercial real
estate
3,732
(3)
3,729
617
(4)
613
224
(156)
68
4,573
(163)
4,410
Min
ing and
quarrying
2,799
(2)
2,797
223
(3)
220
158
(152)
6
3,180
(157)
3,023
Consumer
durables
1,723
(3)
1,720
139
(9)
130
284
(254)
30
2,146
(266)
1,880
Construction
1,131
(1)
1,130
315
(3)
312
402
(345)
57
1,848
(349)
1,499
Trading
companies &
distr
ibutors
173
–
173
4
–
4
98
(65)
33
275
(65)
210
Government
4,635
(1)
4,634
524
(1)
523
168
(15)
153
5,327
(17)
5,310
Other
1,584
(2)
1,582
107
(1)
106
274
(130)
144
1,965
(133)
1,832
Retail Products:
Mortgage
4,511
(6)
4,505
226
(3)
223
232
(112)
120
4,969
(121)
4,848
Credit Cards
619
(18)
601
53
(11)
42
11
(7)
4
683
(36)
647
Personal loans
and other
unsecured
lending
1,875
(60)
1,815
60
(8)
52
23
(14)
9
1,958
(82)
1,876
Auto
26
–
26
–
–
–
–
–
–
26
–
26
Secured wealth
products
3,718
(12)
3,706
90
(3)
87
320
(256)
64
4,128
(271)
3,857
Other
365
(1)
364
17
(1)
16
41
(13)
28
423
(15)
408
Net carrying
value
(customers)¹
73,476
(148)
73,328
5,296
(77)
5,219
4,685
(2,621)
2,064
83,457
(2,846)
80,611
1
Includes reverse repurchase agreements and other sim
ilar secured lend
ing held at amortised cost of $15,071 mill
ion
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
102
Risk profile continued
Amortised cost
2021
Stage 1
Stage 2
Stage 3
Total
Gross
balance
$mill
ion
Total credit
impa
irment
$mill
ion
Net
carrying
amount
$mill
ion
Gross
balance
$mill
ion
Total credit
impa
irment
$mill
ion
Net
carrying
amount
$mill
ion
Gross
balance
$mill
ion
Total credit
impa
irment
$mill
ion
Net
carrying
amount
$mill
ion
Gross
balance
$mill
ion
Total credit
impa
irment
$mill
ion
Net
carrying
amount
$mill
ion
Industry:
Energy
6,519
(13)
6,506
1,518
(61)
1,457
559
(339)
220
8,596
(413)
8,183
Manufacturing
5,929
(3)
5,926
583
(16)
567
628
(402)
226
7,140
(421)
6,719
Financ
ing,
insurance and
non-banking
13,229
(4)
13,225
440
(1)
439
204
(167)
37
13,873
(172)
13,701
Transport,
telecom and
util
it
ies
3,674
(1)
3,673
4,004
(43)
3,961
696
(152)
544
8,374
(196)
8,178
Food and
household
products
3,310
(2)
3,308
342
(13)
329
174
(152)
22
3,826
(167)
3,659
Commercial
real estate
3,934
(2)
3,932
436
(5)
431
353
(205)
148
4,723
(212)
4,511
Min
ing and
quarrying
2,133
(1)
2,132
296
(17)
279
160
(152)
8
2,589
(170)
2,419
Consumer
durables
1,363
(1)
1,362
156
(3)
153
315
(280)
35
1,834
(284)
1,550
Construction
847
(1)
846
410
(6)
404
804
(547)
257
2,061
(554)
1,507
Trading
companies &
distr
ibutors
246
–
246
9
(5)
4
75
(74)
1
330
(79)
251
Government
4,993
(1)
4,992
615
(2)
613
155
(7)
148
5,763
(10)
5,753
Other
1,971
(1)
1,970
495
(6)
489
231
(159)
72
2,697
(166)
2,531
Retail Products:
Mortgage
4,468
(7)
4,461
205
(16)
189
259
(107)
152
4,932
(130)
4,802
Credit Cards²
631
(25)
606
106
(19)
87
13
(13)
–
750
(57)
693
Personal loans
and other
unsecured
lending²
1,705
(61)
1,644
55
(15)
40
25
(25)
–
1,785
(101)
1,684
Auto
37
–
37
1
–
1
–
–
–
38
–
38
Secured
wealth products
3,601
(23)
3,578
94
(6)
88
354
(234)
120
4,049
(263)
3,786
Other
1,170
(5)
1,165
30
(1)
29
14
(12)
2
1,214
(18)
1,196
Net carrying
value
(customers)¹
59,760
(151)
59,609
9,795
(235)
9,560
5,019
(3,027)
1,992
74,574
(3,413)
71,161
1
Includes reverse repurchase agreements and other sim
ilar secured lend
ing held at amortised cost of $3,047 mill
ion
2
Prior year has been re-presented to provide product granularity
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
103
Risk profile continued
Debt securit
ies and other el
ig
ible b
ills (audited)
This section provides further detail on gross debt securit
ies and treasury b
ills.
The standard credit ratings used by the Group are those used by Standard & Poor’s or its equivalent. Debt securit
ies
held that have a short-term rating are reported against the long-term rating of the issuer. For securit
ies that are unrated,
the Group applies an internal credit rating, as described under the credit rating and measurement section on page 135.
Total gross debt securit
ies and other el
ig
ible b
ills increased by $10.7 bill
ion to $112 b
ill
ion (31 December 2021: $102 b
ill
ion).
Stage 1 gross balance increased by $10.5 bill
ion to $107 b
ill
ion (31 December 2021: $96 b
ill
ion) of wh
ich $7 bill
ion
increase was
unrated. Of the unrated securit
ies, 97 per cent (31 December 2021: 88 per cent) are
internally rated as Strong and 3 per cent
(31 December 2021: 12 per cent) were internally rated as Satisfactory.
Stage 2 gross balance was broadly stable at $5.5 bill
ion (31 December 2021: $5.3 b
ill
ion) wh
ich includes the sovereign
downgrade of Pakistan.
Stage 3 gross balance was at $0.1 bill
ion (31 December 2021: $0.1 b
ill
ion) wh
ich includes the sovereign downgrade of Ghana.
Group
Amortised cost and FVOCI
2022
2021
Gross
$mill
ion
ECL
$mill
ion
Net
2
$mill
ion
Gross
$mill
ion
ECL
$mill
ion
Net
2
$mill
ion
Stage 1
106,886
(20)
106,866
96,350
(58)
96,292
AAA
65,729
(7)
65,722
58,836
(18)
58,818
AA- to AA+
14,767
(3)
14,764
12,584
(5)
12,579
A- to A+
6,311
(2)
6,309
8,142
(2)
8,140
BBB- to BBB+
7,387
(1)
7,386
11,071
(27)
11,044
Lower than BBB-
1,047
(2)
1,045
1,123
(1)
1,122
Unrated
11,645
(5)
11,640
4,594
(5)
4,589
Stage 2
5,455
(90)
5,365
5,315
(42)
5,273
AAA
21
–
21
641
(7)
634
AA- to AA+
40
–
40
592
(3)
589
A- to A+
17
(1)
16
22
(1)
21
BBB- to BBB+
2,605
(15)
2,590
2,869
(9)
2,860
Lower than BBB-
2,485
(71)
2,414
809
(20)
789
Unrated
287
(3)
284
382
(2)
380
Stage 3
144
(106)
38
113
(66)
47
Lower than BBB-
66
(55)
11
–
–
–
Unrated
78
(51)
27
113
(66)
47
Gross balance¹
112,485
(216)
112,269
101,778
(166)
101,612
1
Stage 3 gross includes $28 mill
ion (2021: $33 m
ill
ion) or
ig
inated cred
it-impa
ired debt secur
it
ies w
ith impa
irment of $13 m
ill
ion (2021: N
il)
2
FVOCI instrument are not presented net of ECL. While the presentation is on a net basis for the table, the total net on-balance sheet amount is $112,425 mill
ion
(31 December 2021: $101,705 mill
ion). Refer to the Analys
is of financ
ial
instrument by stage table on page 70
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
104
Risk profile continued
Company
Amortised cost and FVOCI
2022
2021
Gross
$mill
ion
ECL
$mill
ion
Net²
$mill
ion
Gross
$mill
ion
ECL
$mill
ion
Net²
$mill
ion
Stage 1
93,243
(20)
93,223
82,388
(32)
82,356
AAA
63,232
(7)
63,225
56,041
(17)
56,024
AA- to AA+
14,447
(3)
14,444
10,585
(5)
10,580
A- to A+
4,275
(2)
4,273
6,450
(2)
6,448
BBB- to BBB+
5,841
(5)
5,836
6,263
(6)
6,257
Lower than BBB-
1,047
(2)
1,045
1,123
(1)
1,122
Unrated
4,401
(1)
4,400
1,926
(1)
1,925
Stage 2
1,785
(1)
1,784
3,603
(21)
3,582
AAA
21
–
21
641
(7)
634
AA- to AA+
40
–
40
592
(3)
589
A- to A+
17
(1)
16
22
(1)
21
BBB- to BBB+
1,504
–
1,504
1,672
(2)
1,670
Lower than BBB-
203
–
203
589
(7)
582
Unrated
–
–
–
87
(1)
86
Stage 3
78
(50)
28
82
(36)
46
Lower than BBB-
–
–
–
–
–
–
Unrated
78
(50)
28
82
(36)
46
Gross balance¹
95,106
(71)
95,035
86,073
(89)
85,984
1
Stage 3 gross includes $28 mill
ion (2021: $33 m
ill
ion) or
ig
inated cred
it-impa
ired debt secur
it
ies w
ith impa
irment of $13 m
ill
ion (2021: N
il)
2
FVOCI instrument are not presented net of ECL. While the presentation is on a net basis for the table, the total net on-balance sheet amount is $95,049 mill
ion
(31 December 2021: $86,028 mill
ion). Refer to the Analys
is of financ
ial
instrument by stage table on page 72
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
105
Risk profile continued
IFRS 9 expected credit loss methodology (audited)
Approach for determin
ing expected cred
it losses
Credit loss terminology
Component
Definit
ion
Probabil
ity of default
(PD)
The probabil
ity that a counterparty w
ill default, over the next 12 months from the reporting date (stage 1)
or over the lifet
ime of the product (stage 2),
incorporating the impact of forward-looking economic assumptions
that have an effect on Credit Risk, such as unemployment rates and GDP forecasts.
The PD estimates will Fluctuate in line with the economic cycle. The lifet
ime (or term structure) PDs are
based on statist
ical models, cal
ibrated using histor
ical data and adjusted to
incorporate forward-looking
economic assumptions.
Loss given default
(LGD)
The loss that is expected to arise on default, incorporating the impact of forward-looking economic assumptions
where relevant, which represents the difference between the contractual cashFlows due and those that the bank
expects to receive.
The Group estimates LGD based on the history of recovery rates and considers the recovery of any collateral that
is integral to the financ
ial asset, tak
ing into account forward-looking economic assumptions where relevant.
Exposure at default
(EAD)
The expected balance sheet exposure at the time of default, taking into account expected changes over the
lifet
ime of the exposure. Th
is incorporates the impact of drawdowns of facil
it
ies with lim
its, pr
inc
ipal and
repayments of interest and amortisat
ion.
To determine the expected credit loss, these components are multipl
ied together: PD for the reference per
iod (up to
12 months or lifet
ime) x LGD x EAD and d
iscounted to the balance sheet date using the effective interest rate as the
discount rate.
IFRS 9 expected credit loss models have been developed for the CCIB business on a global basis, in line with their
respective portfolios. However, for some of the key countries, country-specif
ic models have also been developed.
The calibrat
ion of forward-look
ing informat
ion
is assessed at a country or region level to take into account local
macroeconomic condit
ions.
Retail expected credit loss models are country and product specif
ic g
iven the local nature of the retail business.
For less material retail portfolios, the Group has adopted less sophist
icated approaches based on h
istor
ical roll rates or
loss rates:
•
For medium-sized retail portfolios, a roll rate model is applied, which uses a matrix that gives the average loan migrat
ion
rate between delinquency states from period to period. A matrix multipl
icat
ion is then performed to generate the final
PDs by delinquency bucket over different time horizons.
•
For smaller retail portfolios, loss rate models are applied. These use an adjusted gross charge-off rate, developed using
monthly write-off and recoveries over the preceding 12 months and total outstanding balances.
•
While the loss rate models do not incorporate forward looking informat
ion, to the extent that there are s
ign
ificant
changes in the macroeconomic forecasts an assessment will be completed on whether an adjustment to the modelled
output is required.
For a lim
ited number of exposures, proxy parameters or approaches are used where the data
is not available to calculate
the orig
inat
ion PDs for the purpose of applying the SICR criter
ia; or for some reta
il portfolios where a full history of LGD data is
not available, estimates based on the loss experience from sim
ilar portfol
ios are used. The use of proxies is monitored and will
reduce over time.
The following processes are in place to assess the ongoing performance of the models:
•
Quarterly model monitor
ing that uses recent data to compare the d
ifferences between model predict
ions and actual
outcomes against approved thresholds.
•
Annual independent validat
ions of the performance of mater
ial models by Group Model Valuation (GMV); an abridged
validat
ion
is completed for non-material models.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
106
Risk profile continued
Applicat
ion of l
ifet
ime
Expected credit loss is estimated based on the period over which the Group is exposed to Credit Risk. For the major
ity
of exposures this equates to the maximum contractual period. For retail credit cards and corporate overdraft facil
it
ies
however, the Group does not typically enforce the contractual period, which can be as short as one day. As a result, the
period over which the Group is exposed to Credit Risk for these instruments reflects their behavioural life, which incorporates
expectations of customer behaviour and the extent to which Credit Risk management actions curtail the period of that
exposure. The average behavioural life for retail credit cards is between 3 and 6 years across our footprint markets.
In 2022, the behavioural life for corporate overdraft facil
it
ies was re-estimated using recent data, and it was confirmed
that the exist
ing l
ifet
ime of 24 months rema
ins appropriate.
Key assumptions and judgements in determin
ing expected cred
it loss
Incorporation of forward-looking informat
ion
The evolving economic environment is a key determinant of the abil
ity of a bank’s cl
ients to meet their obligat
ions as they
fall due. It is a fundamental princ
iple of IFRS 9 that the prov
is
ions banks hold aga
inst potential future credit risk losses should
depend not just on the health of the economy today but should also take into account potential changes to the economic
environment. For example, if a bank were to antic
ipate a sharp slowdown
in the world economy over the coming year,
it should hold more provis
ions today to absorb the cred
it losses likely to occur in the near future.
To capture the effect of changes to the economic environment, the PDs and LGDs used to calculate ECL incorporate
forward-looking informat
ion
in the form of forecasts of the values of economic variables and asset prices that are likely to
have an effect on the repayment abil
ity of the Group’s cl
ients.
The ‘Base Forecast’ of the economic variables and asset prices is based on management’s view of the five-year outlook,
supported by projections from the Group’s
in-house research team and outputs from a third-party model that project specif
ic
economic variables and asset prices. The research team takes consensus views into considerat
ion and sen
ior management
reviews project
ions for some core country var
iables against consensus when forming their view of the outlook. For the period
beyond five years, management util
ises the
in-house research view and third-party model outputs, which allow for a
reversion to long-term growth rates or norms. All project
ions are updated on a quarterly bas
is.
Forecast of key macroeconomic variables underlying the expected credit loss calculation and the impact
on non-linear
ity
In the Base Forecast – management’s view of the most likely outcome –the pace of growth of the world economy is expected
to slow in the near term as central banks keep monetary policy restrict
ive. Global GDP
is forecast to grow by less than
3 per cent in 2023. World GDP growth averaged 3.7 per cent for the 10 years prior to COVID-19 (between 2010 and 2019).
The multitude of headwinds that have faced most economies in 2022 are likely to persist in the months ahead. However,
a recovery in growth is expected to take hold in H2 2023.
The balance of risks to the 2023 outlook is to the downside. They include the impact from higher inflat
ion and
interest rates,
ongoing geopolit
ical tens
ions, renewed lockdowns/restrict
ions to movement from the spread of COVID and severe
corrections in property sectors in key countries.
While the quarterly Base Forecasts inform the Group’s strategic plan, one key requirement of IFRS 9 is that the assessment of
provis
ions should cons
ider multiple future economic environments. For example, the global economy may grow more quickly
or more slowly than the Base Forecast, and these variat
ions would have d
ifferent impl
icat
ions for the provis
ions that the
Group should hold today. As the negative impact of an economic downturn on credit losses tends to be greater than the
posit
ive
impact of an economic upturn, if the Group sets provis
ions only on the ECL under the Base Forecast
it might mainta
in
a level of provis
ions that does not appropr
iately capture the range of potential outcomes. To address this property of
skewness (or non-linear
ity), IFRS 9 requ
ires reported ECL to be a probabil
ity-we
ighted ECL calculated over a range of possible
outcomes.
To assess the range of possible outcomes the Group simulates a set of 50 scenarios around the Base Forecast, calculates the
ECL under each of them and assigns an equal weight of 2 per cent to each scenario outcome. These scenarios are generated
by a Monte Carlo simulat
ion, wh
ich addresses the challenges of crafting many realist
ic alternat
ive scenarios in the many
countries in which the Group operates by means of a model, which produces these alternative scenarios while consider
ing
the degree of histor
ical uncerta
inty (or volatil
ity) observed from Q1 1990 to Q3 2022 around econom
ic outcomes and how
these outcomes have tended to move in relation to one another (or correlation). This naturally means that each of the 50
scenarios do not have a specif
ic narrat
ive, although collectively they explore a range of hypothetical alternative outcomes for
the global economy, includ
ing scenar
ios that turn out better than expected and scenarios that amplify antic
ipated stresses.
The tables on 106 provide a summary of the Group’s Base Forecast for key markets. The peak/trough amounts in the tables
show the highest and lowest points with
in the Base Forecast.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
107
Risk profile continued
China’s growth is expected to accelerate to 5.8 per cent in 2023 from less than 3.5 per cent in 2022. Consumption should start
to recover as the country gradually eases its zero-COVID stance and starts to reopen. Recently announced policy support
measures for the real estate sector are also expected to lift the outlook for the broader economy in H2 2023. Singapore’s GDP
growth is forecast to ease to 2.8 per cent in 2023 from around 3.5 per cent in 2022, largely due to a weak external outlook.
Major economies such as the US and Europe are expected to slow sharply on account of monetary policy tighten
ing and
high inflat
ion. Growth
in India is also forecast to ease with GDP expected to grow by 5.5 per cent in FY24 (ending March 2024)
from 7 per cent in FY23. Fading pent-up demand (especially in the services sector), ris
ing
interest rates, lim
ited real wage h
ikes
and easing global demand will weigh on activ
ity. The econom
ic expansion in the UAE is also forecast to slow on muted oil
sector growth based on the OPEC+ decis
ion to cut o
il production at the end of 2022. GDP growth in the country is expected to
moderate to 4.5 per cent in 2023 from around 7 per cent last year.
The slowdown in world GDP growth in the near term will translate to a softening in the growth of demand for commodit
ies
in 2023. Brent crude oil prices are expected to average around $91 in 2023 compared to around $100 in 2022. Despite this the
five-year average price is over $100 up from the equivalent $64 in the 2021 annual report. This reflects recent supply shocks
and the expectation that world GDP growth will recover from H2 2023.
2022
China
UAE
Singapore
India
5 yr
average
base
forecast
Base
forecast
peak/
trough
Low
2
High
3
5 yr
average
base
forecast
Base
forecast
peak/
trough
Low
2
High
3
5 yr
average
base
forecast
Base
forecast
peak/
trough
Low
2
High
3
5 yr
average
base
forecast
Base
forecast
peak/
trough
Low
2
High
3
GDP growth
(YoY%)
5.1 7.9/4.5
1.1
9.6
3.6
5.4/2.1
(1.5)
8.8
2.7
3.7/1.7
(3.4)
8.6
6.4
7.7/3.2
1.5
12.1
Unemployment
(%)
3.9
4.1/3.8
3.4
4.3
N/A
N/A
N/A
N/A
3.0
3.2/3.0
2.1
4.5
N/A
N/A
N/A
N/A
3 month
interest rates (%)
2.3
3.0/1.4
0.6
4.4
3.5
5.2/2.8
(0.4)
8.5
3.1
4.7/2.4
0.8
5.6
5.6
6.3/5.3
1.9
9.5
House prices
(YoY%)
3.6 5.0/0.0
(3.4)
10.0
1.8
2.0/1.1 (14.7)
17.6
2.8 4.7/-2.4
(15.9)
20.4
5.7
7.2/1.6
(1.1)
13.0
2021
China
UAE
Singapore
India
5 yr
average
base
forecast
Base
forecast
peak/
trough
Low
2
High
3
5 yr
average
base
forecast
Base
forecast
peak/
trough
Low
2
High
3
5 yr
average
base
forecast
Base
forecast
peak/
trough
Low
2
High
3
5 yr
average
base
forecast
Base
forecast
peak/
trough
Low
2
High
3
GDP growth
(YoY%)
5.4
6.1/4.7
2.6
8.3
3.7
6.5/1.3
1.8
8.2
2.5
4.8/1.8
(4.0)
9.4
6.4
16.6/4.2
2.0
10.5
Unemployment
(%)
3.4
3.4/3.4
3.3
3.5
N/A
N/A
N/A
N/A
3.1
3.4/3.0
2.1
4.5
N/A
N/A
N/A
N/A
3 month
interest rates (%)
2.8
3.1/2.1
1.3
4.6
1.5
2.2/0.6
0.0
4.4
1.4
2.2/0.5
0.1
4.2
5.4
6.2/4.0
3.2
8.8
House prices
(YoY%)
4.0
4.5/1.8
(2.8)
11.1
1.4
0.6/
(1.0)
(4.4)
11.9
3.6
4.2/3.3
(4.1)
15.4
7.1
7.2/5.8
(1.9) 24.9
2022
2021
5 yr average
base forecast
Base forecast
peak/trough
Low
2
High
3
5 yr average
base forecast
Base forecast
peak/trough
Low
2
High
3
Brent Crude, $ pb
106.6
118.8/88.0
42.4
204.2
63.7
73.5/60.0
8.9
211.4
1
N/A – Not available
2
Represents the 10th percentile in the range of economic scenarios used to determine non-linear
ity
3
Represents the 90th percentile in the range of economic scenarios used to determine non-linear
ity
4
Base forecasts are evaluated from Q1 2023 to Q4 2027. The forward-looking simulat
ion starts from Q1 2022
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
108
Risk profile continued
Judgemental adjustments
As at 31 December 2022, the Group held a $41 mill
ion (31 December 2021: $233 m
ill
ion) management overlay, $9 m
ill
ion
(31 December 2021: $93 mill
ion) of wh
ich relates to CCIB and $32 mill
ion (31 December 2021: $140 m
ill
ion) to CPBB.
The overlay is re-assessed quarterly and are reviewed and approved by the IFRS 9 Impairment Committee.
CCIB
The COVID-19 overlay of $93 mill
ion at 31 December 2021 has been fully released
in 2022 and no overlay is held at
31 December 2022.
Sri Lanka
Due to the ongoing economic uncertainty following the Sri Lanka sovereign default in the first half of 2022, a judgemental
overlay of $9 mill
ion (31 December 2021: $n
il) is held against stage 3 exposures in Sri Lanka that have not yet been ind
iv
idually
assessed for impa
irment.
CPBB
While industry wide government COVID-19 relief measures have ended for most markets, there are a few markets where
either the schemes have recently ended or lim
ited rel
iefs are still available. At 31 December $21 mill
ion (31 December 2021:
$140 mill
ion) was held for res
idual COVID-19 related risks in these portfolios.
Overlays of $12 mill
ion (31 December 2021: $n
il) have also been applied to capture operating environment challenges, in part
caused by ris
ing
interest rates in certain markets, and the impact of sovereign defaults in the last quarter of 2022, both of
which are not fully captured in the modelled outcomes
Stage 3 assets
Credit-impa
ired assets managed by Stressed Asset R
isk incorporate forward-looking economic assumptions in respect
of the recovery outcomes ident
ified, and are ass
igned ind
iv
idual probabil
ity we
ight
ings. These assumpt
ions are not based
on a Monte Carlo simulat
ion but are
informed by the Base Forecast.
Sensit
iv
ity of expected credit loss calculation to macroeconomic variables
The ECL calculation relies on multiple variables and is inherently non-linear and portfolio-dependent, which impl
ies that no
single analysis can fully demonstrate the sensit
iv
ity of the ECL to changes in the macroeconomic variables. The Group has
conducted a series of analyses with the aim of ident
ify
ing the macroeconomic variables which might have the greatest
impact on overall ECL. These encompassed single variable and multi-variable exercises, using simple up/down variat
ion
and extracts from actual calculation data, as well as bespoke scenario design and assessments.
The primary conclusion of these exercises is that no ind
iv
idual macroeconomic variable is materially influent
ial. The Group
believes this is plausible as the number of variables used in the ECL calculation is large. This does not mean that
macroeconomic variables are uninfluent
ial; rather, that the Group bel
ieves that considerat
ion of macroeconom
ics should
involve whole scenarios, as this aligns with the multi-variable nature of the calculation.
The Group faces downside risks in the operating environment related to the uncertaint
ies surround
ing the macroeconomic
outlook. To explore this, a sensit
iv
ity analysis of ECL was undertaken to explore the effect of slower economic recoveries
across the Group’s footprint markets. Two downside scenarios were considered. The first scenario is based on the Bank of
England’s 2022 regulatory Annual Cyclical Scenario (ACS 2022) and is a deep synchronised global downturn characterised
by sign
ificantly h
igher commodity prices relative to base, inflat
ion and
interest rates. In the second more modest downside
scenario inflat
ion
in advanced economies surprises to the upside in the very near term as the supply-chain cris
is
intens
ifies
and this prompts addit
ional monetary t
ighten
ing. F
inanc
ial markets weaken w
ith bond yields spik
ing and equ
it
ies fall
ing
sharply. The deteriorat
ion
in sentiment also leads to adjustments in property markets. Advanced economies are shocked
more than emerging markets in the second scenario.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
109
Risk profile continued
Baseline
ACS 2022
Advanced Economic Downturn
Five year
average
Peak/Trough
Five year
average
Peak/Trough
Five year
average
Peak/Trough
China GDP
5.1
7.9/4.5
3.1
4.7/(2.6)
4.9
7.2/3.7
China unemployment
3.9
4.1/3.8
5.2
5.6/4.6
4.1
4.3/3.8
China property prices
3.6
5.0/0.0
(6.5)
9.2/(22.1)
3.3
6.9/(1.8)
UAE GDP
3.6
5.4/2.1
2.1
3.9/(1.3)
3.5
5.4/2.1
UAE property prices
1.8
2.0/1.1
(4.6)
7.4/(16.4)
1.7
3.1/(0.6)
US GDP
1.7
3.1/(0.4)
0.1
2.4/(5.9)
1.6
3.9/(2.6)
Singapore GDP
2.7
3.7/1.7
1.1
4.6/(7.0)
2.6
3.1/1.4
India GDP
6.4
7.7/3.2
4.3
6.6/(0.2)
6.3
7.7/3.2
Crude Oil
106.6
118.8/88
140.3
148.4/118.8
90.2
104.9/77.3
The total reported stage 1 and 2 ECL provis
ions (
includ
ing both on and off-balance sheet
instruments) would be
approximately $30 mill
ion h
igher under the Advanced Economy Downturn scenario and $269 mill
ion h
igher under the ACS
2022 scenario than the baseline ECL provis
ions (wh
ich excluded the impact of multiple economic scenarios and management
overlays which may already capture some of the risks in these scenarios). The proportion of stage 2 assets would increase
from 3.6 per cent in the base case to 3.8 per cent and 9.8 per cent respectively under the Advanced Economy Downturn and
ACS 2022 scenarios. This includes the impact of exposures transferring to stage 2 from stage 1 but does not consider an
increase in stage 3 defaults.
Under both scenarios the major
ity of the
increase in CCIB came from the main corporate and project finance portfolios in the
United Arab Emirates. For the CPBB portfolios most of the increases came from the unsecured retail portfolios with Singapore
Credit Cards most impacted.
There was no material change in modelled stage 3 provis
ions as these pr
imar
ily relate to unsecured reta
il exposures for which
the LGD is not sensit
ive to changes
in the macroeconomic forecasts. There is also no material change for non-modelled stage
3 exposures as these are more sensit
ive to cl
ient specif
ic factors than to alternat
ive macroeconomic scenarios.
The actual outcome of any scenario may be materially different due to, among other factors, the effect of management
actions to mit
igate potent
ial increases in risk and changes in the underlying portfolio.
Modelled provis
ions
Increase in ECL
ECL Advanced
Economy Downturn
$mill
ion
ECL ACS 2022
$ mill
ion
Stage 1
CCIB
7
44
CPBB
6
42
Ventures
–
–
Central & Others
1
12
Total increase in stage 1 ECL
14
98
Stage 2
CCIB
8
130
CPBB
1
40
Ventures
–
–
Central & Others
–
1
Total increase in stage 2 ECL
9
171
Total Stage 1 & 2
CCIB
15
174
CPBB
7
82
Ventures
–
–
Central & Others
1
13
Total increase in stage 2 ECL
23
269
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
110
Risk profile continued
Sign
ificant
increase in credit risk (SICR)
Quantitat
ive cr
iter
ia
SICR is assessed by comparing the risk of default at the reporting date to the risk of default at orig
inat
ion. Whether a change
in the risk of default is sign
ificant or not
is assessed using quantitat
ive and qual
itat
ive cr
iter
ia. These quant
itat
ive s
ign
ificant
deteriorat
ion thresholds have been separately defined for each bus
iness and where meaningful are consistently applied
across business lines.
Assets are considered to have experienced SICR if they have breached both relative and absolute thresholds for the change
in the average annualised lifet
ime probab
il
ity of default over the res
idual term of the exposure.
The absolute measure of increase in credit risk is used to capture instances where the IFRS9 PDs on exposures are relatively
low at in
it
ial recognit
ion as these may
increase by several multiples without representing a sign
ificant
increase in credit risk.
Where IFRS9 PDs are relatively high at in
it
ial recognit
ion, a relat
ive measure is more appropriate in assessing whether there
is a sign
ificant
increase in credit risk, as the IFRS9 PDs increase more quickly.
The SICR thresholds have been calibrated based on the following princ
iples:
•
Stabil
ity – The thresholds are set to ach
ieve a stable stage 2 population at a portfolio level, trying to min
im
ise the number
of accounts moving back and forth between stage 1 and stage 2 in a short period of time
•
Accuracy – The thresholds are set such that there is a materially higher propensity for stage 2 exposures to eventually
default than is the case for stage 1 exposures
•
Dependency from backstops – The thresholds are stringent enough such that a high proportion of accounts transfer
to stage 2 due to movements in forward-looking IFRS9 PDs rather than relying on backward-looking backstops such
as arrears
•
Relationsh
ip w
ith business and product risk profiles – The thresholds reflect the relative risk differences between different
products, and are aligned to business processes
For CCIB clients, the relative threshold is a 100 per cent increase in IFRS9 PD and the absolute change in IFRS9 PD is between
50 and 100 bps.
For Consumer and Business Banking clients, portfolio specif
ic quant
itat
ive thresholds
in Singapore, Malaysia and UAE have
been introduced in 2022 for credit cards. The thresholds include relative and absolute increases in IFRS9 PD with average
lifet
ime IFRS9 PD cut-offs for those exposures that are w
ith
in a range of customer ut
il
isat
ion lim
its and d
ifferent
iate between
exposures that are current and those that are 1-29 days past due. The range of thresholds applied are:
Portfolio
Relative IFRS9
PD increase (%)
Absolute IFRS9
PD increase (%)
Customer
util
isat
ion (%)
Average IFRS9
PD (lifet
ime)
Credit cards – Current
50%–150%
3.5%–9.3%
15%–85%
4.15%–11.6%
Credit cards – 1-29 days past due
100%–180%
3.5%–6.1%
25%–47%
3.5%–18.5%
The impact of this change has been to transfer $183 mill
ion of cred
it cards balances from stage 2 to stage 1, which reduced
ECL by a net $14 mill
ion.
For all other Consumer and Business Banking portfolios, the thresholds remained the same as 2021, with a relative
threshold of 100 per cent increase in IFRS9 PD and an absolute change in IFRS9 PD is between 100 and 350 bps depending
on the product.
Private Banking clients are assessed qualitat
ively, based on a del
inquency measure relating to collateral top-ups or
sell-downs.
Debt securit
ies or
ig
inated before 1 January 2018 w
ith an internal credit rating mapped to an investment grade equivalent are
allocated to stage 1 and all other debt securit
ies to stage 2. Debt secur
it
ies or
ig
inated after 1 January 2018 apply the same
approach and thresholds as for CCIB clients.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
111
Risk profile continued
Qualitat
ive cr
iter
ia
Qualitat
ive factors that
ind
icate that there has been a s
ign
ificant
increase in credit risk include processes linked to current risk
management, such as placing loans on non-purely precautionary early alert.
Backstop
Across all portfolios, accounts that are 30 or more days past due (30 DPD) on contractual payments of princ
ipal and/or
interest that have not been captured by the criter
ia above are cons
idered to have experienced a sign
ificant
increase in
credit risk.
Expert credit judgement may be applied in assessing sign
ificant
increase in credit risk to the extent that certain risks may
not have been captured by the models or through the above criter
ia. Such
instances are expected to be rare, for example
due to events and material uncertaint
ies ar
is
ing close to the report
ing date.
CCIB clients
Quantitat
ive cr
iter
ia
Exposures are assessed based on both the absolute and the relative movement in the IFRS9 PD from orig
inat
ion to the
reporting date as described above.
To account for the fact that the mapping between internal credit grades (used in the orig
inat
ion process) and IFRS9 PDs is
non-linear (e.g. a one-notch downgrade in the investment grade universe results in a much smaller IFRS9 PD increase than
in the sub-investment grade universe), the absolute thresholds have been different
iated by cred
it quality at orig
inat
ion,
as measured by internal credit grades being investment grade or sub-investment grade.
Qualitat
ive cr
iter
ia
All assets of clients that have been placed on early alert (for non-purely precautionary reasons) are deemed to have
experienced a sign
ificant
increase in credit risk.
An account is placed on non-purely precautionary early alert if it exhib
its r
isk or potential weaknesses of a material nature
requir
ing closer mon
itor
ing, superv
is
ion or attent
ion by management. Weaknesses in such a borrower’s account, if left
uncorrected, could result in deteriorat
ion of repayment prospects and the l
ikel
ihood of be
ing downgraded. Indicators
could include a rapid erosion of posit
ion w
ith
in the
industry, concerns over management’s abil
ity to manage operat
ions,
weak/deteriorat
ing operat
ing results, liqu
id
ity strain and overdue balances, among other factors.
All client assets that have been assigned a CG12 rating, equivalent to ‘Higher risk’, are deemed to have experienced a
sign
ificant
increase in credit risk. Accounts rated CG12 are primar
ily managed by relat
ionsh
ip managers
in the CCIB unit
with support from SAG for certain accounts. All CCIB clients are placed in CG12 when they are 30 DPD unless they are
granted a waiver through a strict governance process.
Consumer and Business Banking clients
Quantitat
ive cr
iter
ia
Material portfolios (defined as a combinat
ion of country and product) for wh
ich a statist
ical model has been bu
ilt, are
assessed based on both the absolute and relative movement in the IFRS9 PD from orig
inat
ion to the reporting date as
described previously (page 105). For these portfolios, the orig
inal l
ifet
ime IFRS9 PD term structure
is determined based
on the orig
inal Appl
icat
ion Score or R
isk Segment of the client.
Qualitat
ive cr
iter
ia
Accounts that are 30 DPD that have not been captured by the quantitat
ive cr
iter
ia are cons
idered to have experienced a
sign
ificant
increase in credit risk. For less material portfolios, which are modelled based on a roll-rate or loss-rate approach,
SICR is primar
ily assessed through the 30 DPD tr
igger.
Private Banking clients
For Private Banking clients, SICR is assessed by referencing the nature and the level of collateral against which credit is
extended (known as ‘Classes of Risk’).
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
112
Risk profile continued
Qualitat
ive cr
iter
ia
For all Private Banking classes, in line with risk management practice, an increase in credit risk is deemed to have occurred
where margin
ing or loan-to-value covenants have been breached.
For Class I assets (lending against divers
ified l
iqu
id collateral),
if these margin
ing requ
irements have not been met with
in
30 days of a trigger, a sign
ificant
increase in credit risk is assumed to have occurred.
For Class I and Class III assets (real-estate lending), a sign
ificant
increase in credit risk is assumed to have occurred where
the bank is unable to ‘sell down’ the applicable assets to meet revised collateral requirements with
in five days of a tr
igger.
Class II assets are typically unsecured or partially secured, or secured against ill
iqu
id collateral such as shares in private
companies. Sign
ificant cred
it deteriorat
ion of these assets
is deemed to have occurred when any early alert trigger has
been breached.
Debt securit
ies
Quantitat
ive cr
iter
ia
For debt securit
ies or
ig
inated before 1 January 2018, the bank
is util
is
ing the low credit risk simpl
ified approach, where debt
securit
ies w
ith an internal credit rating mapped to an investment grade equivalent are allocated to stage 1 and all other debt
securit
ies are allocated to stage 2. Debt secur
it
ies or
ig
inated after 1 January 2018 are assessed based on the absolute and
relative movements in IFRS9 PD from orig
inat
ion to the reporting date.
Qualitat
ive cr
iter
ia
Debt securit
ies ut
il
ise the same qual
itat
ive cr
iter
ia as the CCIB cl
ient segments, includ
ing be
ing placed on early alert or being
classif
ied as CG12.
Assessment of credit-impa
ired financial assets
Consumer and Business Banking clients
The core components in determin
ing cred
it-impa
ired expected cred
it loss provis
ions are the value of gross charge off and
recoveries. Gross charge off and/or loss provis
ions are recogn
ised when it is established that the account is unlikely to pay
through the normal process. Recovery of unsecured debt post credit impa
irment
is recognised based on actual cash
collected, either directly from clients or through the sale of defaulted loans to third-party inst
itut
ions. Release of credit
impa
irment prov
is
ions for secured loans
is recognised if the loan outstanding is paid in full (release of full provis
ion),
or the provis
ion
is higher than the loan outstanding (release of the excess provis
ion).
CCIB, and Private Banking clients
Credit-impa
ired accounts are managed by the Group’s spec
ial
ist recovery un
it, Stress Asset Risk (SAR), which is independent
from its main businesses. Where any amount is considered irrecoverable, a stage 3 credit impa
irment prov
is
ion
is raised.
This stage 3 provis
ion
is the difference between the loan-carrying amount and the probabil
ity-we
ighted present value of
estimated future cash flows, reflecting a range of scenarios (typically the best, worst and most likely recovery outcomes).
Where the cash flows include realisable collateral, the values used will incorporate the impact of forward-looking economic
informat
ion.
The ind
iv
idual circumstances of each client are considered when SAR estimates future cash flows and the tim
ing of future
recoveries which involves sign
ificant judgement. All ava
ilable sources, such as cash flow aris
ing from operat
ions, selling assets
or subsid
iar
ies, realis
ing collateral or payments under guarantees are cons
idered. In any decis
ion relat
ing to the rais
ing of
provis
ions, the Group attempts to balance econom
ic condit
ions, local knowledge and exper
ience, and the results of
independent asset reviews.
Write-offs
Where it is considered that there is no realist
ic prospect of recover
ing a portion of an exposure against which an impa
irment
provis
ion has been ra
ised, that amount will be written off.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
113
Risk profile continued
Governance and applicat
ion of expert cred
it judgement in respect of expected credit losses
The Group applies PLC Group’s Credit Policy and Standards framework which details the requirements for continuous
monitor
ing to
ident
ify any changes
in credit quality and resultant ratings, as well as ensuring a consistent approach to
monitor
ing, manag
ing and mit
igat
ing credit risks. The framework aligns with the governance of ECL estimat
ion through
the early recognit
ion of s
ign
ificant deter
iorat
ions
in ratings which drive stage 2 and 3 ECL.
The Group relies on the PLC Group committees for the assessment of ECL. The models used in determin
ing expected cred
it
losses are reviewed and approved by the PLC Group Credit Model Assessment Committee (CMAC) which is appointed
by the PLC Group Model Risk Committee. CMAC has the responsib
il
ity to assess and approve the use of models and to
review all IFRS 9 interpretat
ions related to models. CMAC also prov
ides oversight on operational matters related to model
development, performance monitor
ing and model val
idat
ion act
iv
it
ies includ
ing standards and regulatory matters.
Prior to submiss
ion to CMAC for approval, the models are val
idated by Group Model Validat
ion (GMV), a funct
ion which is
independent of the business and the model developers. GMV’s analysis comprises review of model documentation, model
design and methodology, data validat
ion, rev
iew of the model development and calibrat
ion process, out-of-sample
performance testing, and assessment of compliance review against IFRS 9 rules and internal standards.
A quarterly model monitor
ing process
is in place that uses recent data to compare the differences between model
predict
ions and actual outcomes aga
inst approved thresholds. Where a model’s performance breaches the monitor
ing
thresholds an assessment of whether a PMA is required to correct for the ident
ified model
issue is completed.
Key inputs into the calculation and resulting expected credit loss provis
ions are subject to rev
iew and approval by the IFRS 9
Impairment Committee (IIC) which is appointed by the PLC Group Risk Committee. The IIC consists of senior representatives
from Risk, Finance, and Group Economic Research. It meets at least twice every quarter, once before the models are run to
approve key inputs into the calculation, and once after the models are run to approve the expected credit loss provis
ions
and any judgemental overrides that may be necessary.
The IFRS 9 Impairment Committee:
•
Oversees the appropriateness of all Business Model Assessment and Solely Payments of Princ
ipal and Interest (SPPI) tests;
•
Reviews and approves expected credit loss for financ
ial assets class
if
ied as stages 1, 2 and 3 for each financial
reporting period;
•
Reviews and approves stage allocation rules and thresholds;
•
Approves material adjustments in relation to expected credit loss for fair value through other comprehensive income
(FVOCI) and amortised cost financ
ial assets;
•
Reviews, challenges and approves base macroeconomic forecasts and the multiple macroeconomic scenarios approach
that are util
ised
in the forward-looking expected credit loss calculations
The IFRS 9 Impairment Committee is supported by an Expert Panel which also reviews and challenges the base
case projections and mult
iple macroeconomic scenarios. The Expert Panel consists of members of Enterprise Risk
Management (which includes the Scenario Design team), Finance, Group Economic Research and country representatives
of major jurisd
ict
ions.
PMAs may be applied to account for ident
ified weaknesses
in model estimates. The processes for ident
ify
ing the need for,
calculating the level of, and approving PMAs are prescribed in the Credit Risk IFRS9 ECL Model Family Standards which are
approved by the Global Head, Model Risk Management. PMA calculation methodologies are reviewed by GMV and
submitted to CMAC as the model approver or the IIC. All PMAs have a remediat
ion plan to fix the
ident
ified model
weakness, and these plans are reported to and tracked at CMAC.
In addit
ion, judgemental management adjustments account for events that are not captured
in the Base Case Forecast
or the resulting ECL calculated by the models. All judgemental management adjustments must be approved by the IIC
having considered the nature of the event, why the risk is not captured in the model, and the basis on which the quantum
of the overlay has been calculated. Judgemental management adjustments are subject to quarterly review and re-approval
by the IIC and will be released when the risks are no longer relevant.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
114
Risk profile continued
Traded Risk
Traded Risk is the potential for loss resulting from activ
it
ies undertaken by the Group in Financ
ial markets. The PLC Group’s
Traded Risk Type Framework, which is adopted by the Company through an addendum, brings together Market Risk,
Counterparty Credit Risk and Algorithm
ic Trad
ing. Traded Risk Management is the core risk management function
supporting market-facing businesses, predominantly Financ
ial Markets and Treasury Markets.
Market Risk (audited)
Market Risk is the potential for fair value loss due to adverse moves in financ
ial markets. The Group’s exposure to Market R
isk
arises predominantly from the following sources:
•
Trading book: The Group provides clients access to financ
ial markets, fac
il
itat
ion of which entails the Group taking
moderate Market Risk posit
ions. All trad
ing teams support client activ
ity; there are no propr
ietary trading teams. Hence,
income earned from Market Risk-related activ
it
ies is primar
ily dr
iven by the volume of client activ
ity rather than r
isk-taking.
• Non-trading book:
–
The Treasury Markets desk is required to hold a liqu
id assets buffer, much of wh
ich is held in high-quality marketable
debt securit
ies
–
The Group has capital invested and related income streams denominated in currencies other than US dollars. To the
extent that these are not hedged, the Group is subject to Structural Foreign Exchange Risk which is reflected in reserves
A summary of our current polic
ies and pract
ices regarding Market Risk management is provided in the Princ
ipal R
isks section
(page 137 to 138).
The primary categories of Market Risk for the Group are:
•
Interest Rate Risk: aris
ing from changes
in yield curves and impl
ied volat
il
it
ies on interest rate options
•
Foreign Exchange Rate Risk: aris
ing from changes
in currency exchange rates and impl
ied volat
il
it
ies on foreign
exchange options
•
Commodity Risk: aris
ing from changes
in commodity prices and impl
ied volat
il
it
ies on commodity options; covering energy,
precious metals, base metals and agriculture as well as commodity baskets
•
Credit Spread Risk: aris
ing from changes
in the price of debt instruments and credit-linked derivat
ives, dr
iven by factors
other than the level of risk-free interest rates
•
Equity Risk: aris
ing from changes
in the prices of equit
ies, equ
ity ind
ices, equ
ity baskets and impl
ied volat
il
it
ies on
related options
Market risk changes (audited)
Value-at Risk (VaR) allows the Group to manage market risk across the trading book and most of the fair valued
non-trading books.
The average level of total trading and non-trading VaR in 2022 was $40.6 mill
ion, 1.2 per cent lower than
in 2021 ($41.1 mill
ion).
The actual level of total trading and non-trading VaR as at the end of 2022 was $45.8 mill
ion, 51.7 per cent h
igher than in 2021
($30.2 mill
ion) due to an
increase in market volatil
ity
in H2 2022, driven by a number of Central Banks increas
ing
interest rates
to curb inflat
ion.
Daily value at risk (VaR at 97.5%, one day) (audited)
Trading
1
and non-trading
2
2022
2021
Average
$mill
ion
High
$mill
ion
Low
$mill
ion
Year End
$mill
ion
Average
$mill
ion
High
$mill
ion
Low
$mill
ion
Year End
$mill
ion
Interest Rate Risk
21.2
31.9
15.9
18.5
24.9
53.9
13.2
19.3
Credit Spread Risk
27.3
39.7
15.0
25.9
27.7
82.4
12.1
15.9
Foreign Exchange Risk
6.4
9.5
4.7
7.4
6.9
16.5
4.0
7.0
Commodity Risk
6.9
12.1
3.5
7.9
4.5
10.8
2.3
3.8
Equity Risk
0.1
1.4
–
0.1
1.3
1.7
1.0
1.4
Total
40.6
51.8
29.8
45.8
41.1
99.9
20.9
30.2
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
115
Risk profile continued
Trading
1
2022
2021
Average
$mill
ion
High
$mill
ion
Low
$mill
ion
Year End
$mill
ion
Average
$mill
ion
High
$mill
ion
Low
$mill
ion
Year End
$mill
ion
Interest Rate Risk
8.1
12.7
5.3
10.2
7.1
9.4
5.1
6.2
Credit Spread Risk
6.8
12.2
3.4
6.2
7.4
17.0
3.9
5.0
Foreign Exchange Risk
6.4
9.5
4.7
7.4
6.9
16.5
4.0
7.0
Commodity Risk
6.9
12.1
3.5
7.9
4.5
10.8
2.3
3.8
Equity Risk
–
–
–
–
0.0
0.0
0.0
0.0
Total
16.0
21.3
10.5
19.0
15.6
28.7
11.4
14.0
Non-trading
2
2022
2021
Average
$mill
ion
High
$mill
ion
Low
$mill
ion
Year End
$mill
ion
Average
$mill
ion
High
$mill
ion
Low
$mill
ion
Year End
$mill
ion
Interest Rate Risk
20.5
31.5
14.6
16.4
26.8
52.3
14.9
18.3
Credit Spread Risk
23.5
31.9
14.0
23.9
22.7
61.3
11.3
14.9
Equity Risk
3
0.1
1.4
0.0
0.1
1.3
1.7
1.0
1.4
Total
35.5
41.1
28.4
33.8
36.3
78.7
19.5
28.8
The following table sets out how trading and non-trading VaR is distr
ibuted across the Group’s products:
2022
2021
Average
$mill
ion
High
$mill
ion
Low
$mill
ion
Year End
$mill
ion
Average
$mill
ion
High
$mill
ion
Low
$mill
ion
Year End
$mill
ion
Trading
1
and non-trading
2
40.6
51.8
29.8
45.8
41.1
99.9
20.9
30.2
Trading
1
Rates
6.8
10.0
4.5
8.7
6.4
9.1
4.7
6.0
Foreign Exchange
6.4
9.5
4.7
7.4
6.9
16.5
4.0
7.0
Credit Trading &
Capital Markets
9.7
14.6
4.1
8.5
6.8
18.2
3.5
4.9
Commodit
ies
6.9
12.1
3.5
7.9
4.6
10.8
2.4
3.8
Equit
ies
–
–
–
–
0.0
0.0
0.0
0.0
XVA
4.5
6.4
2.8
5.5
5.1
10.3
2.8
2.9
Total
16.0
21.3
10.5
19.0
15.6
28.7
11.4
14.0
Non-trading
2
Treasury Markets
29.8
22.7
24
28.6
29.5
64.0
16.5
26.7
Treasury Capital
Management
9.1
15.3
6.4
9.1
9.2
22.7
4.9
6.5
Global Credit
12.7
22.7
8.4
19.9
12.4
24.8
4.1
8.7
Listed Private Equity
0.1
1.4
0.0
0.1
1.3
1.7
1.0
1.4
Total
35.5
41.1
28.4
33.8
36.3
78.7
19.5
28.8
1
The trading book for Market Risk is defined in accordance with the UK onshored Capital Requirements Regulation Part 3 Title I Chapter 3, which restricts the posit
ions
permitted in the trading book
2
The non-trading book VaR does not include syndicated loans
3
Non-trading Equity Risk VaR includes only listed equit
ies
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
116
Risk profile continued
Average daily income earned from Market Risk-related activ
it
ies
¹
Trading
2022
$mill
ion
2021
$mill
ion
Interest Rate Risk
2.8
1.6
Credit Spread Risk
1.0
0.6
Foreign Exchange Risk
4.6
3.4
Commodity Risk
0.9
0.6
Equity Risk
–
–
Total
9.3
6.2
Non-trading
$mill
ion
$mill
ion
Interest Rate Risk
0.1
0.3
Credit Spread Risk
0.1
(0.1)
Equity Risk
–
–
Total
0.2
0.2
1
Reflects total product income which is the sum of client income and own account income. Includes elements of trading income, interest income and other income which
are generated from Market Risk-related activ
it
ies. Rates, XVA and Treasury income are included under Interest Rate Risk whilst Credit Trading income is included under
Credit Spread Risk.
Structural foreign exchange exposures
The table below sets out the princ
ipal structural fore
ign exchange exposures (net of investment hedges) of the Group
2022
$mill
ion
2021
$mill
ion
Indian rupee
4,396
4,323
Singapore dollar
1,891
36
Malaysian ringg
it
1,571
2,228
Thai baht
782
49
UAE dirham
664
643
Pakistan
i rupee
352
1,532
Indonesian rupiah
261
775
Renminb
i
46
289
Taiwanese dollar
46
429
Other
4,937
4,976
14,946
15,280
As at 31 December 2022, the Group had taken net investment hedges using derivat
ive financial
investments to partly cover
its exposure to the Singapore dollar of $1,608 mill
ion (2021: 729 m
ill
ion), UAE d
irham of $1,334 mill
ion (2021: 1,198 m
ill
ion) and
Indian rupee of $621 mill
ion (2021: $656 m
ill
ion). An analys
is has been performed on these exposures to assess the impact of a
1 per cent fall in the US dollar exchange rates, adjusted to incorporate the impacts of correlations of these currencies to the
US dollar. The impact on the posit
ions above would be an
increase of $179 mill
ion (2021: $156 m
ill
ion). Changes
in the valuation
of these posit
ions are taken to reserves.
For analysis of the Group’s capital posit
ion and requ
irements, refer to the Capital Review (page 152).
Counterparty credit risk
Counterparty Credit Risk is the potential for loss in the event of the default of a derivat
ive counterparty, after tak
ing into
account the value of elig
ible collaterals and r
isk mit
igat
ion techniques. The Group’s counterparty credit exposures are
included in the Credit Risk section.
Derivat
ive financial
instruments credit risk mit
igat
ion
The Group enters into master netting agreements, which in the event of default result in a single amount owed
by or to the counterparty through netting the sum of the posit
ive and negat
ive mark-to-market values of applicable
derivat
ive transact
ions.
In addit
ion, the Group enters
into credit support annexes (CSAs) with counterparties where collateral is deemed a necessary
or desirable mit
igant to the exposure. Cash collateral
includes collateral called under a variat
ion marg
in process from
counterparties if total uncollateralised mark-to-market exposure exceeds the threshold and min
imum transfer amount
specif
ied
in the CSA. With certain counterparties, the CSA is reciprocal and requires us to post collateral if the overall
mark-to-market values of posit
ions are
in the counterparty’s favour and exceed an agreed threshold.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
117
Risk profile continued
Liqu
id
ity and Funding risk
Liqu
id
ity and Funding Risk is the risk that the Group may not have suffic
ient stable or d
iverse sources of funding to meet its
obligat
ions as they fall due.
The Group follows the PLC Group’s Liqu
id
ity and Funding Risk framework, which requires each country to ensure that it
operates with
in predefined l
iqu
id
ity lim
its and rema
ins in compliance with PLC Group’s liqu
id
ity polic
ies and pract
ices,
as well as local regulatory requirements.
The table below shows the composit
ion of l
iab
il
it
ies
in which customer deposits make up 54 per cent of total liab
il
it
ies and
equity as at 31 December 2022, the major
ity of wh
ich are current accounts, savings accounts and time deposits. The largest
customer deposit base by geography is Europe & Americas which holds 50 per cent of Group customer accounts.
Composit
ion of l
iab
il
it
ies and equ
ity
Percentage
Geographic distr
ibut
ion of customer accounts balances
Percentage
Equity
6.2%
Asia
39.6%
Subordinated liab
il
it
ies and other borrowed funds
2.4%
Africa & Middle East
10.7%
Debt securit
ies
in issue
8.1%
Europe & Americas
49.7%
Derivat
ive financial
instruments
12.5%
Total
100.0%
Customer accounts
53.6%
Deposit by banks
5.7%
Other liab
il
it
ies
11.5%
Total
100.0%
Liqu
id
ity and Funding risk metrics
The Group monitors key liqu
id
ity metrics regularly on a country basis.
The following liqu
id
ity and funding Board Risk Appetite metrics define the maximum amount and type of risk that the Group
is will
ing to assume
in pursuit of its strategy: liqu
id
ity coverage ratio (LCR), liqu
id
ity stress survival horizons, external wholesale
borrowing, advances-to-deposits ratio, and net stable funding ratio (NSFR).
Liqu
id
ity coverage ratio (LCR)
The Liqu
id
ity Coverage Ratio (LCR) aims to ensure that a bank has suffic
ient unencumbered h
igh-quality liqu
id assets to
meet its liqu
id
ity needs in a 30-calendar-day liqu
id
ity stress scenario. SC Bank is not regulated for LCR, however, the bank
and material subsid
iar
ies in the consolidat
ion have standalone LCR rat
ios above 100 per cent at 31 December 2022,
calculated under the Liqu
id
ity Coverage Ratio (CRR) part of the PRA rulebook.
Stressed coverage
Stress testing and scenario analysis are used to assess the financ
ial and management capab
il
ity to cont
inue to operate
effectively under extreme, but plausible, operating condit
ions and to understand the potent
ial threats to the PLC Group’s
liqu
id
ity and other financ
ial resources.
The PLC Group’s internal liqu
id
ity stress testing framework covers the following stress scenarios:
•
Standard Chartered-specif
ic – wh
ich captures the liqu
id
ity impact from an id
iosyncrat
ic event affecting Standard
Chartered only, with the rest of the market assumed to be operating normally;
•
Market wide – which captures the liqu
id
ity impact from a market wide cris
is affect
ing all partic
ipants
in a country,
region or globally, and;
•
Combined – which assumes both Standard Chartered-specif
ic and Market-w
ide events affect the PLC Group
simultaneously and hence is the most severe scenario.
All scenarios include, but are not lim
ited to, modelled outflows for reta
il and wholesale funding, off-balance sheet funding
risk, cross currency funding risk, intraday risk, franchise risk and risks associated with a deteriorat
ion of a firm’s cred
it rating.
As of 31 December 2022, all entit
ies w
ith
in the Group follow a cons
istent approach and met their ind
iv
idual stress test
requirements with
in r
isk appetite, and as a result, ensure Group has surplus liqu
id
ity on a consolidated basis.
External wholesale borrowing
This metric seeks to monitor and prevent excessive reliance on wholesale borrowing. Lim
its and targets are appl
ied to
branches and operating subsid
iar
ies in the Group.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
118
Risk profile continued
Advances-to-deposits ratio
This is defined as the ratio of total loans and advances to customers relative to total customer accounts. An advances-to-
deposits ratio of below 100 per cent demonstrates that customer deposits exceed customer loans as a result of the emphasis
placed on generating a high level of funding from customers. Lim
its and targets are appl
ied to all branches and operating
subsid
iar
ies in the Group.
Advances-to-deposits ratio has decreased by 1.7 per cent to 50.4 per cent, driven primar
ily by a m
inor reduction in loans and
advances alongside continued robust growth of deposits from corporate customers.
2022
$mill
ion
2021
$mill
ion
Total loans and advances to customers
1,2
125,807
129,799
Total customer accounts
3
249,630
249,299
Advances-to-deposits ratio
50.4%
52.1%
1
Excludes reverse repurchase agreement and other sim
ilar secured lend
ing of $15,586 mill
ion and
includes loans and advances to customers held at fair value through
profit and loss of $4,065 mill
ion
2
Loans and advances to customers for the purpose of the advances-to-deposits ratio excludes $20,798 mill
ion of approved balances held w
ith central banks,
confirmed as repayable at the point of stress.
3
Includes customer accounts held at fair value through profit or loss of $6,555 mill
ion (31 December 2021: $6,968 m
ill
ion)
Net stable funding ratio (NSFR)
The NSFR is a balance sheet metric which requires inst
itut
ions to mainta
in a stable fund
ing profile in relation to an assumed
duration of their assets and off-balance sheet activ
it
ies over a one-year horizon. It is the ratio between the amount of
available stable funding (ASF) and the amount of required stable funding (RSF). ASF factors are applied to balance sheet
liab
il
it
ies and cap
ital, based on their perceived stabil
ity and the amount of stable fund
ing they provide. Likew
ise, RSF factors
are applied to assets and off-balance sheet exposures according to the amount of stable funding they require. SC Bank is
not regulated for NSFR, however the bank and material subsid
iar
ies in the consolidat
ion have standalone NSFR rat
ios above
100 per cent at 31 December 2022.
Liqu
id
ity pool
The liqu
id
ity value of the Group’s LCR elig
ible l
iqu
id
ity pool at the reporting date was $131 bill
ion. The figures
in the below table
account for haircuts, currency convertib
il
ity and portabil
ity constra
ints, and therefore are not directly comparable with the
consolidated balance sheet. A liqu
id
ity pool is held to offset stress outflows as defined in the Liqu
id
ity Coverage Ratio (CRR)
part of the PRA rulebook.
Group
2022
Asia
$mill
ion
Africa &
Middle East
$mill
ion
Europe &
Americas
$mill
ion
Total
$mill
ion
Level 1 securit
ies
Cash and balances at central banks
28,551
1,066
36,522
66,139
Central banks, governments/public sector entit
ies
13,811
2,712
23,680
40,203
Multilateral development banks and internat
ional organ
isat
ions
334
837
10,843
12,014
Other
37
7
1,430
1,474
Total Level 1 securit
ies
42,733
4,622
72,475
119,830
Level 2A securit
ies
4,044
139
6,033
10,216
Level 2B securit
ies
71
21
1,103
1,195
Total LCR elig
ible assets
46,848
4,782
79,611
131,241
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
119
Risk profile continued
2021
Asia
$mill
ion
Africa &
Middle East
$mill
ion
Europe &
Americas
$mill
ion
Total
$mill
ion
Level 1 securit
ies
Cash and balances at central banks
20,626
890
46,973
68,489
Central Banks, governments/public sector entit
ies
13,607
2,096
27,389
43,092
Multilateral development banks and internat
ional organ
isat
ions
727
356
7,366
8,449
Other
–
–
478
478
Total Level 1 securit
ies
34,960
3,342
82,206
120,508
Level 2A securit
ies
3,447
187
5,047
8,681
Level 2B securit
ies
114
–
1,620
1,734
Total LCR elig
ible assets
38,521
3,529
88,873
130,923
Company
2022
Asia
$mill
ion
Africa &
Middle East
$mill
ion
Europe &
Americas
$mill
ion
Total
$mill
ion
Level 1 securit
ies
Cash and balances at central banks
6,181
630
31,235
38,046
Central banks, governments/public sector entit
ies
4,618
2,507
23,680
30,805
Multilateral development banks and internat
ional organ
isat
ions
–
837
10,843
11,680
Other
–
7
1,430
1,437
Total Level 1 securit
ies
10,799
3,981
67,188
81,968
Level 2A securit
ies
2,271
139
6,033
8,443
Level 2B securit
ies
–
21
1,103
1,124
Total LCR elig
ible assets
13,070
4,141
74,324
91,535
2021
Asia
$mill
ion
Africa &
Middle East
$mill
ion
Europe &
Americas
$mill
ion
Total
$mill
ion
Level 1 securit
ies
Cash and balances at central banks
3,801
476
40,983
45,260
Central Banks, governments /public sector entit
ies
6,599
1,608
27,388
35,595
Multilateral development banks and internat
ional organ
isat
ions
–
356
7,366
7,722
Other
–
–
478
478
Total Level 1 securit
ies
10,400
2,440
76,215
89,055
Level 2A securit
ies
695
187
5,047
5,929
Level 2B securit
ies
–
–
1,618
1,618
Total LCR elig
ible assets
11,095
2,627
82,880
96,602
Liqu
id
ity analysis of the Group’s balance sheet (audited)
Contractual maturity of assets and liab
il
it
ies
The following table presents assets and liab
il
it
ies by matur
ity groupings based on the remain
ing per
iod to the contractual
maturity date as at the balance sheet date on a discounted basis. Contractual maturit
ies do not necessar
ily reflect actual
repayments or cashflows.
With
in the tables below, cash and balances w
ith central banks, interbank placements and investment securit
ies that are
fair value through other comprehensive income are used by the Group princ
ipally for l
iqu
id
ity management purposes.
As at the reporting date, assets remain predominantly short-dated, with 68 per cent maturing in one year. The less than
three-month cumulative net funding posit
ion rema
ined in surplus and the scale of the surplus is broadly in line with the
previous year, largely due to the Group focus on improv
ing the qual
ity of its deposit base. In practice, these deposits are
recognised as stable and have behavioural profiles that extend beyond their contractual maturit
ies.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
120
Risk profile continued
Group
2022
One month
or less
$mill
ion
Between one
month and
three
months
$mill
ion
Between
three
months and
six months
$mill
ion
Between six
months and
nine months
$mill
ion
Between
nine months
and one year
$mill
ion
Between
one year and
two years
$mill
ion
Between
two years
and five
years
$mill
ion
More than
five years
and undated
$mill
ion
Total
$mill
ion
Assets
Cash and balances at
central banks
47,025
–
–
–
–
–
–
3,506
50,531
Derivat
ive financial
instruments
24,108
9,640
7,304
3,704
2,830
5,225
7,495
4,744
65,050
Loans and advances
to banks
1,2
18,066
12,200
9,227
4,253
3,588
2,577
972
635
51,518
Loans and advances
to customers
1,2
59,599
44,981
20,247
6,999
7,248
9,746
19,212
33,216
201,248
Investment securit
ies¹
6,620
13,802
12,948
6,868
5,624
10,726
29,709
42,028
128,325
Other assets
12,388
28,182
1,066
170
529
89
23
5,228
47,675
Due from subsid
iary
undertakings and other
related parties
6,387
–
–
–
–
–
–
–
6,387
Total assets
174,193
108,805
50,792
21,994
19,819
28,363
57,411
89,357
550,734
Liab
il
it
ies
Deposits by banks
1,3
24,747
1,858
2,163
821
329
1,236
112
6
31,272
Customer accounts
1,4
216,605
39,600
17,394
8,766
6,107
5,510
1,350
155
295,487
Derivat
ive financial
instruments
22,946
13,624
7,310
4,059
3,085
5,880
6,689
5,265
68,858
Senior debt
5
96
308
234
395
399
2,481
5,050
3,704
12,667
Other debt securit
ies
in issue
1
2,686
4,870
7,369
6,297
2,710
342
4,413
3,191
31,878
Due to parent companies
and other related
undertakings
28,102
–
–
–
–
–
–
–
28,102
Other liab
il
it
ies
12,243
19,257
581
63
46
212
792
1,864
35,058
Subordinated liab
il
it
ies and
other borrowed funds
2,000
–
9
–
11
21
55
11,173
13,269
Total liab
il
it
ies
309,425
79,517
35,060
20,401
12,687
15,682
18,461
25,358
516,591
Net liqu
id
ity gap
(135,232)
29,288
15,732
1,593
7,132
12,681
38,950
63,999
34,143
1
Loans and advances, investment securit
ies, depos
its by banks, customer accounts and debt securit
ies
in issue include financ
ial
instruments held at fair value through
profit or loss, see Note 12 Financ
ial
instruments (pages 198 to 240]
2
Loans and advances include reverse repurchase agreements and other sim
ilar secured lend
ing of $78.8 bill
ion
3
Deposits by banks include repurchase agreements and other sim
ilar secured borrow
ing of $6.5 bill
ion
4
Customer accounts include repurchase agreements and other sim
ilar secured borrow
ing of $45.8 bill
ion
5
Senior debt maturity profiles are based upon contractual maturity, which may be later than call options over the debt held by the Group
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
121
Risk profile continued
2021
One month
or less
$mill
ion
Between
one month
and three
months
$mill
ion
Between
three
months and
six months
$mill
ion
Between six
months and
nine months
$mill
ion
Between
nine months
and one year
$mill
ion
Between
one year and
two years
$mill
ion
Between
two years
and five
years
$mill
ion
More than
five years
and undated
$mill
ion
Total
$mill
ion
Assets
Cash and balances at
central banks
58,904
–
–
–
–
–
–
3,059
61,963
Derivat
ive financial
instruments
16,174
9,643
6,531
3,159
2,509
4,246
5,927
5,056
53,245
Loans and advances
to banks
1,2
15,511
16,075
9,535
4,018
4,145
1,308
1,442
295
52,329
Loans and advances
to customers
1,2
64,975
51,711
17,984
6,817
6,639
11,320
17,572
31,991
209,009
Investment securit
ies¹
4,143
8,488
6,516
6,046
5,624
13,489
35,855
42,108
122,269
Other assets
16,757
16,438
702
66
288
34
32
5,424
39,741
Due from subsid
iary
undertakings and
other related parties
6,235
–
–
–
–
–
–
–
6,235
Total assets
182,699
102,355
41,268
20,106
19,205
30,397
60,828
87,933
544,791
Liab
il
it
ies
Deposits by banks
1,3
28,048
849
1,032
83
224
96
22
2
30,356
Customer accounts
1,4
233,858
38,901
17,994
6,069
4,111
3,433
1,139
334
305,839
Derivat
ive financial
instruments
16,149
10,433
6,503
3,488
2,513
4,429
6,521
3,550
53,586
Senior debt⁵
187
473
563
314
299
456
1,289
2,060
5,641
Other debt securit
ies
in issue¹
2,210
12,470
7,168
2,892
3,248
3,132
3,022
637
34,779
Due to parent companies
and other related
undertakings
30,998
–
–
–
–
–
–
–
30,998
Other liab
il
it
ies
9,440
17,583
598
166
354
759
861
3,779
33,540
Subordinated liab
il
it
ies
and other borrowed funds
4
35
96
113
1,063
2,348
1,076
9,880
14,615
Total liab
il
it
ies
320,894
80,744
33,954
13,125
11,812
14,653
13,930
20,242
509,354
Net liqu
id
ity gap
(138,195)
21,611
7,314
6,981
7,393
15,744
46,898
67,691
35,437
1
Loans and advances, investment securit
ies, depos
its by banks, customer accounts and debt securit
ies
in issue include financ
ial
instruments held at fair value through
profit or loss, see Note 12 Financ
ial
instruments (pages 198 to 240]
2
Loans and advances include reverse repurchase agreements and other sim
ilar secured lend
ing of $83.7 bill
ion
3
Deposits by banks include repurchase agreements and other sim
ilar secured borrow
ing of $5.1 bill
ion
4
Customer accounts include repurchase agreements and other sim
ilar secured borrow
ing of $56.5 bill
ion
5
Senior debt maturity profiles are based upon contractual maturity, which may be later than call options over the debt held by the Group
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
122
Risk profile continued
Company
2022
One month
or less
$mill
ion
Between
one month
and three
months
$mill
ion
Between
three
months and
six months
$mill
ion
Between
six months
and nine
months
$mill
ion
Between
nine months
and one year
$mill
ion
Between
one year and
two years
$mill
ion
Between
two years
and five
years
$mill
ion
More than
five years
and undated
$mill
ion
Total
$mill
ion
Assets
Cash and balances at
central banks
37,547
–
–
–
–
–
–
1,320
38,867
Derivat
ive financial
instruments
15,479
11,486
7,889
4,292
3,242
6,339
9,639
7,115
65,481
Loans and advances
to banks
1,2
13,015
9,713
7,658
3,566
2,940
2,192
865
635
40,584
Loans and advances
to customers
1,2
42,655
21,176
16,742
5,804
4,208
7,421
12,292
11,367
121,665
Investment securit
ies¹
3,894
7,049
10,294
6,204
4,393
8,883
26,789
40,568
108,074
Investment in subsid
iary
undertaking
–
–
–
–
–
–
–
10,300
10,300
Other assets
11,274
22,523
550
49
350
86
15
2,693
37,540
Due from subsid
iary
undertakings and other
related parties
13,214
–
–
–
–
–
–
–
13,214
Total assets
137,078
71,947
43,133
19,915
15,133
24,921
49,600
73,998
435,725
Liab
il
it
ies
Deposits by banks
1,3
18,814
1,472
2,108
818
302
1,063
106
5
24,688
Customer accounts
1,4
135,238
28,308
13,749
5,195
2,426
3,287
1,087
144
189,434
Derivat
ive financial
instruments
15,644
15,056
7,836
4,502
3,516
7,065
8,827
6,757
69,203
Senior debt
5
45
228
80
360
338
2,272
4,992
3,685
12,000
Other debt securit
ies
in issue
1
2,633
4,332
7,184
6,297
2,544
342
4,413
2,518
30,263
Due to parent companies
and other related
undertakings
39,933
–
–
–
–
–
–
–
39,933
Other liab
il
it
ies
10,604
13,856
563
56
42
128
442
813
26,504
Subordinated liab
il
it
ies and
other borrowed funds
2,000
–
9
–
11
21
55
10,633
12,729
Total liab
il
it
ies
224,911
63,252
31,529
17,228
9,179
14,178
19,922
24,555
404,754
Net liqu
id
ity gap
(87,833)
8,695
11,604
2,687
5,954
10,743
29,678
49,443
30,971
1
Loans and advances, investment securit
ies, depos
its by banks, customer accounts and debt securit
ies
in issue include financ
ial
instruments held at fair value through
profit or loss, see Note 12 Financ
ial
instruments (pages 198 to 240]
2
Loans and advances include reverse repurchase agreements and other sim
ilar secured lend
ing of $74.3 bill
ion
3
Deposits by banks include repurchase agreements and other sim
ilar secured borrow
ing of $6.2 bill
ion
4
Customer accounts include repurchase agreements and other sim
ilar secured borrow
ing of $45.6 bill
ion
5
Senior debt maturity profiles are based upon contractual maturity, which may be later than call options over the debt held by the Group
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
123
Risk profile continued
2021
One month
or less
$mill
ion
Between
one month
and three
months
$mill
ion
Between
three
months and
six months
$mill
ion
Between six
months and
nine months
$mill
ion
Between
nine months
and one year
$mill
ion
Between
one year and
two years
$mill
ion
Between
two years
and five
years
$mill
ion
More than
five years
and undated
$mill
ion
Total
$mill
ion
Assets
Cash and balances at
central banks
47,004
–
–
–
–
–
–
1,161
48,165
Derivat
ive financial
instruments
11,901
10,740
7,068
3,506
2,820
4,734
6,974
5,735
53,478
Loans and advances
to banks
1,2
10,742
12,682
6,314
2,817
2,810
1,133
1,274
295
38,067
Loans and advances
to customers
1,2
49,367
31,122
13,598
4,733
3,595
8,802
10,672
11,754
133,643
Investment securit
ies¹
2,257
4,479
4,418
4,335
4,091
10,367
31,343
40,372
101,662
Investment in subsid
iary
undertaking
–
–
–
–
–
–
–
9,694
9,694
Other assets
16,128
10,465
367
52
233
31
21
3,130
30,427
Due from subsid
iary
undertakings and other
related parties
10,741
–
–
–
–
–
–
–
10,741
Total assets
148,140
69,488
31,765
15,443
13,549
25,067
50,284
72,141
425,877
Liab
il
it
ies
Deposits by banks
1,3
21,971
364
991
80
188
52
20
–
23,666
Customer accounts
1,4
145,292
27,787
15,276
4,380
2,420
2,130
911
323
198,519
Derivat
ive financial
instruments
11,941
11,743
6,985
3,894
2,666
4,888
7,488
4,230
53,835
Senior debt⁵
152
396
368
200
299
364
1,187
2,041
5,007
Other debt securit
ies
in issue
1
2,010
12,447
6,184
2,892
3,248
1,682
3,022
1,420
32,905
Due to parent companies
and other related
undertakings
40,745
–
–
–
–
–
–
–
40,745
Other liab
il
it
ies
8,474
11,262
516
130
309
643
666
3,477
25,477
Subordinated liab
il
it
ies
and other borrowed funds
4
35
96
113
1,063
2,348
1,076
9,341
14,076
Total liab
il
it
ies
230,589
64,034
30,416
11,689
10,193
12,107
14,370
20,832
394,230
Net liqu
id
ity gap
(82,449)
5,454
1,349
3,754
3,356
12,960
35,914
51,309
31,647
1
Loans and advances, investment securit
ies, depos
its by banks, customer accounts and debt securit
ies
in issue include financ
ial
instruments held at fair value through
profit or loss, see Note 12 Financ
ial
instruments (pages 198 to 240)
2
Loans and advances include reverse repurchase agreements and other sim
ilar secured lend
ing of $81.1 bill
ion
3
Deposits by banks include repurchase agreements and other sim
ilar secured borrow
ing of $4.7 bill
ion
4
Customer accounts include repurchase agreements and other sim
ilar secured borrow
ing of $56.4 bill
ion
5
Senior debt maturity profiles are based upon contractual maturity, which may be later than call options over the debt held by the Group
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
124
Risk profile continued
Behavioural maturity of financ
ial assets and l
iab
il
it
ies
The cashflows presented in the previous section reflect the cashflows that will be contractually payable over the residual
maturity of the instruments. However, contractual maturit
ies do not necessar
ily reflect the tim
ing of actual repayments or
cashflow. In practice, certain assets and liab
il
it
ies behave d
ifferently from their contractual terms, especially for short-term
customer accounts, credit card balances and overdrafts, which extend to a longer period than their contractual maturity.
On the other hand, mortgage balances tend to have a shorter repayment period than their contractual maturity date.
Expected customer behaviour is assessed and managed on a country basis using qualitat
ive and quant
itat
ive techn
iques,
includ
ing analys
is of observed customer behaviour over time.
Maturity of financ
ial l
iab
il
it
ies on an und
iscounted basis
The following table analyses the contractual cashflows payable for the Group’s financ
ial l
iab
il
it
ies by rema
in
ing contractual
maturit
ies on an und
iscounted basis. The financ
ial l
iab
il
ity balances in the table below will not agree to the balances
reported in the consolidated balance sheet as the table incorporates all contractual cashflows, on an undiscounted
basis, relating to both princ
ipal and
interest payments. Derivat
ives not treated as hedg
ing derivat
ives are
included in
the ‘On demand’ time bucket and not by contractual maturity.
With
in the ‘More than five years and undated’ matur
ity band are undated financ
ial l
iab
il
it
ies, the majority of wh
ich relate
to subordinated debt, on which interest payments are not included as this informat
ion would not be mean
ingful, given the
instruments are undated. Interest payments on these instruments are included with
in the relevant matur
it
ies up to five year.
Group
2022
One month
or less
$mill
ion
Between
one month
and three
months
$mill
ion
Between
three
months and
six months
$mill
ion
Between six
months and
nine months
$mill
ion
Between
nine months
and one year
$mill
ion
Between
one year and
two years
$mill
ion
Between
two years
and five
years
$mill
ion
More than
five years
and undated
$mill
ion
Total
$mill
ion
Deposits by banks
24,752
1,864
2,192
825
342
1,258
112
8
31,353
Customer accounts
216,983
39,828
17,625
8,934
6,297
5,585
1,396
158
296,806
Derivat
ive financial
instruments
1
66,772
28
5
6
6
763
547
731
68,858
Debt securit
ies
in issue
2,801
5,204
7,811
6,836
3,257
2,329
10,072
11,544
49,854
Due to parent companies
and other related
undertakings
28,102
–
–
–
–
–
–
–
28,102
Subordinated liab
il
it
ies and
other borrowed funds
2,074
64
127
135
127
499
1,496
16,038
20,560
Other liab
il
it
ies
10,961
20,402
577
61
44
203
650
954
33,852
Total liab
il
it
ies
352,445
67,390
28,337
16,797
10,073
10,637
14,273
29,433
529,385
2021
One month
or less
$mill
ion
Between
one month
and three
months
$mill
ion
Between
three
months and
six months
$mill
ion
Between six
months and
nine months
$mill
ion
Between
nine months
and one year
$mill
ion
Between
one year and
two years
$mill
ion
Between
two years
and five
years
$mill
ion
More than
five years
and undated
$mill
ion
Total
$mill
ion
Deposits by banks
28,048
850
1,032
83
224
96
22
3
30,358
Customer accounts
233,879
38,922
18,017
6,084
4,145
3,461
1,152
334
305,994
Derivat
ive financial
instruments
1
53,377
7
19
5
3
23
73
79
53,586
Debt securit
ies
in issue
2,414
12,946
7,752
3,221
3,572
3,652
4,428
6,875
44,860
Due to parent companies
and other related
undertakings
30,998
–
–
–
–
–
–
–
30,998
Subordinated liab
il
it
ies and
other borrowed funds
37
59
129
125
1,089
2,423
1,252
16,483
21,597
Other liab
il
it
ies
12,992
17,561
589
166
354
759
861
1,201
34,483
Total liab
il
it
ies
361,745
70,345
27,538
9,684
9,387
10,414
7,788
24,975
521,876
1
Derivat
ives are on a d
iscounted basis
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
125
Risk profile continued
Company
2022
One month
or less
$mill
ion
Between one
month and
three
months
$mill
ion
Between
three
months and
six months
$mill
ion
Between
six months
and nine
months
$mill
ion
Between
nine months
and one year
$mill
ion
Between
one year and
two years
$mill
ion
Between
two years
and five
years
$mill
ion
More than
five years
and undated
$mill
ion
Total
$mill
ion
Deposits by banks
18,818
1,477
2,137
822
314
1,086
106
5
24,765
Customer accounts
135,456
28,477
13,933
5,309
2,532
3,349
1,122
139
190,317
Derivat
ive financial
instruments
1
67,115
28
5
6
6
763
543
737
69,203
Debt securit
ies
in issue
2,696
4,586
7,467
6,799
3,026
2,904
10,014
6,348
43,840
Due to parent companies
and other related
undertakings
39,933
–
–
–
–
–
–
–
39,933
Subordinated liab
il
it
ies and
other borrowed funds
2,074
64
127
135
127
499
1,496
15,498
20,020
Other liab
il
it
ies
10,174
14,183
563
56
42
128
442
520
26,108
Total liab
il
it
ies
276,266
48,815
24,232
13,127
6,047
8,729
13,723
23,247
414,186
2021
One month
or less
$mill
ion
Between
one month
and three
months
$mill
ion
Between
three
months and
six months
$mill
ion
Between six
months and
nine months
$mill
ion
Between
nine months
and one year
$mill
ion
Between
one year and
two years
$mill
ion
Between
two years
and five
years
$mill
ion
More than
five years
and undated
$mill
ion
Total
$mill
ion
Deposits by banks
21,971
364
991
80
188
52
22
–
23,668
Customer accounts
145,311
27,800
15,289
4,391
2,429
2,151
915
322
198,608
Derivat
ive financial
instruments
1
53,634
5
19
5
3
19
70
80
53,835
Debt securit
ies
in issue
2,179
12,846
6,570
3,105
3,572
2,110
4,326
3,490
38,198
Due to parent companies
and other related
undertakings
40,745
–
–
–
–
–
–
–
40,745
Subordinated liab
il
it
ies
and other borrowed funds
37
59
129
125
1,089
2,423
1,252
15,353
20,467
Other liab
il
it
ies
11,716
11,249
516
130
309
643
666
717
25,946
Total liab
il
it
ies
275,593
52,323
23,514
7,836
7,590
7,398
7,251
19,962
401,467
1
Derivat
ives are on a d
iscounted basis
Interest Rate Risk in the Banking Book
The following table provides the estimated impact to a hypothetical base case project
ion of the Group’s earn
ings under the
following scenarios:
•
A 50 basis point parallel interest rate shock (up and down) to the current market-impl
ied path of rates, across all
yield curves
•
A 100 basis point parallel interest rate shock (up) to the current market-impl
ied path of rates, across all y
ield curves
These interest rate shock scenarios assume all other economic variables remain constant. The sensit
iv
it
ies shown represent
the estimated change to a hypothetical base case projected net interest income (NII), plus the change in interest rate
impl
ied
income and expense from FX swaps used to manage banking book currency posit
ions, under the d
ifferent interest
rate shock scenarios.
The base case projected NII is based on the current market-impl
ied path of rates and forward rate expectat
ions. The NII
sensit
iv
it
ies below stress th
is base case by a further 50 or 100bps. Actual observed interest rate changes will lag behind
market expectation. Accordingly, the shocked NII sensit
iv
ity does not represent a forecast of the Group’s net interest income.
The interest rate sensit
iv
it
ies are
ind
icat
ive stress tests and based on simpl
ified scenar
ios, estimat
ing the aggregate
impact of an unantic
ipated,
instantaneous parallel shock across all yield curves over a one-year horizon, includ
ing the t
ime
taken to implement changes to pric
ing before becom
ing effective. The assessment assumes that the size and mix of the
balance sheet remain constant and that there are no specif
ic management act
ions in response to the change in rates.
No assumptions are made in relation to the impact on credit spreads in a changing rate environment.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
126
Risk profile continued
Sign
ificant modell
ing and behavioural assumptions are made regarding scenario simpl
ification, market compet
it
ion,
pass-through rates, asset and liab
il
ity re-pric
ing tenors, and pr
ice flooring. The assumptions that interest rates of all
currencies and maturit
ies sh
ift by the same amount concurrently, and that no actions are taken to mit
igate the
impacts
aris
ing from th
is are considered unlikely. Reported sensit
iv
it
ies w
ill vary over time due to a number of factors includ
ing
changes in balance sheet composit
ion, customer behav
iour and risk management strategy, the interest rates assumed in
setting the base case, and other market condit
ions. Therefore, wh
ile the NII sensit
iv
it
ies are a relevant measure of the
Group’s interest rate exposure, they should not be considered an income or profit forecast.
Estimated one-year impact to earnings from a parallel shift in yield curves at the
beginn
ing of the per
iod of:
2022
USD bloc
$mill
ion
SGD bloc
$mill
ion
Other
currency bloc
$mill
ion
Total
$mill
ion
+ 50 basis points
70
40
120
230
- 50 basis points
(70)
(40)
(110)
(220)
+ 100 basis points
130
90
240
460
Estimated one-year impact to earnings from a parallel shift in yield curves at the
beginn
ing of the per
iod of:
2021
USD bloc
$mill
ion
SGD bloc
$mill
ion
Other
currency bloc
$mill
ion
Total
$mill
ion
+ 50 basis points
140
70
90
300
- 50 basis points
(120)
(70)
(60)
(250)
+ 100 basis points
260
120
200
580
As at 31 December 2022, the estimated one-year impact of an instantaneous, parallel increase across all yield curves of
50 basis points to increase projected NII by $230 mill
ion. The equ
ivalent impact from a parallel decrease of 50 basis points
would result in a reduction in projected NII of $220 mill
ion. The est
imated one-year impact of an instantaneous, parallel
increase across all yield curves of 100 basis points to increase projected NII by $460 mill
ion.
The benefit from ris
ing
interest rates is primar
ily from re
invest
ing at h
igher yields and from assets re-pric
ing faster and
to a greater extent than deposits. NII sensit
iv
ity in all scenarios has decreased versus 31 December 2021. The change in NII
sensit
iv
ity reflects updates to the base case scenario to factor in higher interest rates as at 31 December 2022. In addit
ion,
NII sensit
iv
it
ies have reduced due to the dampen
ing effect of USD hedging strategies intended to provide short term income
certainty and smooth longer term NII volatil
ity, and due to changes
in modelling assumptions to reflect expected re-pric
ing
activ
ity on Reta
il and Transaction Banking current accounts and savings accounts in the current interest rate environment.
Operational and Technology Risk
Operational and Technology Risk is defined as the “Potential for loss from inadequate or failed internal processes, technology
events, human error, or from the impact of external events (includ
ing legal r
isks)”. The Group can be impacted from a range of
operational risks which are inherent in the Group’s strategy and business model.
Operational and Technology Risk profile
Risk management practices help the business grow safely and ensures governance and management of Operational and
Technology Risk through the delivery and embedding of effective frameworks and polic
ies, together w
ith continuous
oversight and assurance.
The Group continues to ensure the operational and technology risk framework supports the business and functions in
effectively managing risk and controls with
in r
isk appetite to meet their strategic object
ives.
Overall, the Group’s Operational Risk profile has remained stable with the quality of risk understanding and ident
ification
improv
ing. Operat
ional and Technology Risks remain heightened in areas such as Fraud, Data Management, and
Information and Cyber Security. Other focus risk areas are Third Party Risk, Technology Risk, People Risk and Change
Management. The Group continues to enhance its operational resil
ience and defences aga
inst these risks, as well as
continue to monitor impacts of the ongoing pandemic, through vigorous enhancement programmes.
Dig
ital
isat
ion and w
ider technological improvements remain a key focus for the Group, to keep pace with new business
developments whilst ensuring control frameworks and Risk Appetite evolve accordingly.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
127
Risk profile continued
Operational resil
ience
In line with regulatory expectations, the Standard Chartered PLC Board has approved the Group’s Important Business
Services, Impact Tolerance Statements and the Operational Resil
ience self-assessment. By 31 March 2025, the author
it
ies
expect the Group to complete mapping, continue scenario testing to ident
ify vulnerab
il
it
ies, remediate ident
ified
vulnerabil
it
ies, and embed sustainable governance, assurance and testing.
Operational Risk events and losses
Operational losses are one ind
icator of the effect
iveness and robustness of the non-financ
ial r
isk control environment.
The Group’s profile of operational loss events in 2022 and 2021 is summarised in the table below. It shows the percentage
distr
ibut
ion of gross operational losses by Basel business line.
Distr
ibut
ion of Operational Losses by Basel business line
% Loss
2022
2021
1
Agency Services
3.2%
0.7%
Asset Management
0.3%
0.0%
Commercial Banking
10.3%
3.6%
Corporate Finance
–
3.4%
Corporate Items
3.9%
41.9%
Payment and Settlements
54.4%
35.7%
Retail Banking
10.3%
8.3%
Retail Brokerage
0.0%
0.0%
Trading and Sales
17.5%
6.4%
1
Losses in 2021 have been restated to include incremental events recognised in 2022
The Group’s profile of operational loss events in 2022 and 2021 is also summarised by Basel event type in the table below.
It shows the percentage distr
ibut
ion of gross operational losses by Basel event type.
Distr
ibut
ion of Operational Losses by Basel event type
% Loss
2022
2021
1
Business disrupt
ion and system fa
ilures
4.3%
0.3%
Clients’ products and business practices
6.3%
1.5%
Damage to physical assets
0.0%
0.0%
Employment practices and workplace safety
0.2%
0.0%
Execution delivery and process management
83.3%
91.6%
External fraud
4.8%
6.4%
Internal fraud
1.2%
0.2%
1
Losses in 2021 have been restated to include incremental events recognised in 2022
Other princ
ipal r
isks
Losses aris
ing from operat
ional failures for other princ
ipal and
integrated risks are reported as operational losses.
Operational losses do not include Operational Risk-related credit impa
irments.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
128
Risk profile continued
Risk Management Framework
Effective risk management is essential in deliver
ing cons
istent and sustainable performance for all of our stakeholders
and is a central part of the financ
ial and operat
ional management of the Group. The Group adds value to clients and
the communit
ies
in which they operate by taking and managing appropriate levels of risk, which in turn generates returns
for shareholders.
The Risk Management Framework (RMF) enables the Group to manage enterprise-wide risks, with the object
ive of
maxim
is
ing risk-adjusted returns while remain
ing w
ith
in our R
isk Appetite. The RMF has been designed in accordance
with the PLC Group’s Enterprise Risk Management Framework (ERMF), and since its approval in June 2020, it has been
implemented with the explic
it goal of
improv
ing the Group’s r
isk management. The RMF is reviewed annually and the
latest version is effective from January 2023.
Risk culture
The Group’s risk culture provides guid
ing pr
inc
iples for the behav
iours expected from our people when managing risk.
The Court has approved a risk culture statement that encourages the following behaviours and outcomes:
•
An enterprise-level abil
ity to
ident
ify and assess current and future r
isks, openly discuss these and take prompt actions.
•
The highest level of integr
ity by be
ing transparent and proactive in disclos
ing and manag
ing all types of risks.
•
A constructive and collaborative approach in provid
ing overs
ight and challenge and taking decis
ions
in a timely manner.
•
Everyone to be accountable for their decis
ions and feel safe
in using their judgement to make these considered decis
ions.
We acknowledge that banking inherently involves risk-taking and undesired outcomes will occur from time to time; however,
we shall take the opportunity to learn from our experience and formalise what we can do to improve. We expect managers
to demonstrate a high awareness of risk and control by self-ident
ify
ing issues and managing them in a manner that will
deliver lasting change.
Strategic risk management
The Group approaches strategic risk management as follows:
•
By conducting an impact analysis on the risk profile from growth plans, strategic in
it
iat
ives and bus
iness model
vulnerabil
it
ies, with the aim of proactively ident
ify
ing and managing new risks or exist
ing r
isks that need to be
reprior
it
ised as part of the strategy review process.
•
By confirming that growth plans and strateg
ic in
it
iat
ives can be del
ivered with
in the approved R
isk Appetite and/or
proposing addit
ional R
isk Appetite for Court considerat
ion as part of the strategy rev
iew process.
•
By validat
ing the Corporate Plan aga
inst the approved or proposed Risk Appetite Statement to the Court. The Court
approves the strategy review and the five-year Corporate Plan with a confirmat
ion from the Group Ch
ief Risk Officer
(GCRO) that it is aligned with the RMF and the Group Risk Appetite Statement where project
ions allow.
•
Country Risk management approach and Country Risk reviews are used to ensure the country lim
its and exposures are
reasonable and in line with Group strategy, country strategy, and the operating environment, consider
ing the
ident
ified
risks. The Group leverages the PLC Group’s framework for country risk management.
Roles and responsib
il
it
ies
Senior Managers Regime¹
Roles and responsib
il
it
ies under the RMF are al
igned to the object
ives of the Sen
ior Managers Regime. The GCRO is
responsible for the overall development and maintenance of the Group’s RMF and for ident
ify
ing material risk types to
which the Group may be potentially exposed. The GCRO delegates effective implementat
ion of the PLC Group R
isk Type
Frameworks (RTFs) through the RMF to Risk Framework Owners who provide second line of defence oversight for the Princ
ipal
Risk Types (PRTs). In addit
ion, the GCRO has been formally
ident
ified as the relevant sen
ior manager responsible for the
development of the Group’s Dig
ital Asset R
isk Assessment Approach, as well as the senior manager responsible for Climate
Risk management as it relates to financ
ial and non-financial r
isks to the Group aris
ing from cl
imate change. This does not
include elements of corporate social responsib
il
ity, the Group’s contribut
ion to cl
imate change and the Sustainable Finance
strategy supporting a low-carbon transit
ion, wh
ich are the responsib
il
ity of other relevant senior managers.
1
Senior managers refer to ind
iv
iduals designated as senior management functions under the FCA and PRA Senior Managers Regime (SMR).
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
129
Risk profile continued
The Risk function
The Risk function is responsible for the sustainab
il
ity of our business through good management of risk across the Group by
provid
ing overs
ight and challenge, thereby ensuring that business is conducted in line with regulatory expectations.
The GCRO directly manages the Risk function, which is separate and independent from the orig
inat
ion, trading and sales
functions of the businesses. The Risk function is responsible for:
•
Mainta
in
ing the RMF, ensuring that it remains relevant and appropriate to the Group’s business activ
it
ies, and is effectively
communicated and implemented across the Group, and admin
ister
ing related governance and reporting processes
•
Upholding the overall integr
ity of the Group’s r
isk and return decis
ions to ensure that r
isks are properly assessed that these
decis
ions are made transparently on the bas
is of proper assessments and that risks are controlled in accordance with the
PLC Group’s standards and Risk Appetite
•
Overseeing and challenging the management of PRTs and Integrated Risk Types under the RMF
The independence of the Risk function ensures that the necessary balance in making risk and return decis
ions
is not
compromised by short-term pressures to generate revenues.
In addit
ion, the R
isk function is a centre of excellence that provides special
ist capab
il
it
ies relevant to risk management
processes in the broader organisat
ion.
The Risk function supports the Group’s commitment to be ‘Here for good’ by build
ing a susta
inable framework that
places regulatory and compliance standards and a culture of appropriate conduct at the forefront of the Group’s agenda,
in a manner proportionate to the nature, scale and complexity of the Group’s business.
Conduct, Financ
ial Cr
ime and Compliance (CFCC), under the Management Team leadership of the Group Head, CFCC,
works alongside the Risk function with
in the framework of the RMF to del
iver a unif
ied second l
ine of defence.
Three lines of defence model
Roles and responsib
il
it
ies for r
isk management are defined under a three lines of defence model. Each line of defence has a
specif
ic set of respons
ib
il
it
ies for r
isk management and control as shown, in the table below.
Lines of defence Defin
it
ion
Key responsib
il
it
ies
include
1st
The businesses and functions engaged
in or supporting revenue-generating
activ
it
ies that own and manage the risks
•
Propose the risks required to undertake revenue-generating activ
it
ies
•
Identify, assess, monitor and escalate risks and issues to the second
line and senior management
1
and promote a healthy risk culture and
good conduct
•
Validate and self-assess compliance to RTFs and polic
ies, confirm the
quality of validat
ion, and prov
ide evidence-based affirmat
ion to the
second line
•
Manage risks with
in R
isk Appetite, set and execute remediat
ion
plans and ensure laws and regulations are being complied with
•
Ensure systems meet risk data aggregation, risk reporting and data
quality requirements set by the second line
2nd
The control functions independent of the
first line that provide oversight and
challenge of risk management to
provide confidence to the GCRO,
senior management and the Court
•
Identify, monitor and escalate risks and issues to the GCRO, senior
management and the Court and promote a healthy
risk culture and good conduct
•
Oversee and challenge first-line risk-taking activ
it
ies and review
first-line risk proposals
•
Propose Risk Appetite to the Court, monitor and report adherence to Risk
Appetite and intervene to curtail business if it is not in line with an exist
ing
or adjusted Risk Appetite, there is material non-compliance with policy
requirements or when operational controls do not effectively manage risk
•
Set risk data aggregation, risk reporting and data quality requirements
•
Ensure that there are appropriate controls to comply with applicable
laws and regulations, and escalate sign
ificant non-compl
iance matters
to senior management and the appropriate committees
3rd
The Group Internal Audit function provides
independent assurance on the effectiveness
of controls that support first line’s risk
management of business activ
it
ies, and
the processes mainta
ined by the second l
ine
•
Independently assess whether management has ident
ified the key
risks in the businesses and whether these are reported and governed
in line with the established risk management processes
•
Independently assess the adequacy of the design of controls and their
operating effectiveness
1
Senior management in this table refers to ind
iv
iduals designated as senior management functions under the FCA and PRA Senior Managers Regime (SMR)
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
130
Risk profile continued
Risk Appetite and profile
We recognise the following constraints which determine the risks that we are will
ing to take
in pursuit of our strategy and the
development of a sustainable business:
•
Risk capacity is the maximum level of risk the Group can assume, before breaching constraints determined by capital
and liqu
id
ity requirements and internal operational environment, or otherwise fail
ing to meet the expectat
ions of
regulators and law enforcement agencies.
•
Risk Appetite is defined by the Group and approved by the Court. It is the maximum amount and type of risk the Group is
will
ing to assume
in pursuit of its strategy. Risk Appetite cannot exceed risk capacity.
The Court is responsible for approving the Risk Appetite Statement, which is underpinned by a set of financ
ial and
operational control parameters known as Risk Appetite metrics and their associated thresholds. These directly constrain
the aggregate risk exposures that can be taken across the Group.
The Group Risk Appetite is reviewed at least on an annual basis to ensure that it is fit for purpose and aligned with strategy,
and focus is given to emerging or new risks. The Risk Appetite Statement is supplemented by an overarching statement
outlin
ing the Group’s R
isk Appetite princ
iples.
Risk Appetite princ
iples
The Group Risk Appetite is defined in accordance with risk management princ
iples that
inform our overall approach to risk
management and our risk culture. We follow the highest ethical standards and ensure a fair outcome for our clients, as well
as facil
itat
ing the effective operation of financ
ial markets, wh
ile at the same time meeting the expectations of regulators
and law enforcement agencies. We set our Risk Appetite to enable us to grow sustainably and to avoid shocks to earnings
or our general financial health, as well as manage our Reputat
ional Risk in a way that does not materially undermine the
confidence of our investors and all internal and external stakeholders.
Risk Appetite Statement
The Group will not compromise adherence to its Risk Appetite in order to pursue revenue growth or higher returns.
The Group Risk Appetite is supplemented by risk control tools such as granular level lim
its, pol
ic
ies, standards and other
operational control parameters that are used to keep the Group’s risk profile with
in R
isk Appetite. The Group’s risk profile
is its overall exposure to risk at a given point in time, covering all applicable risk types. Status against Risk Appetite is reported
to the Court, Court Risk Committee and the Standard Chartered Bank Executive Risk Committee, includ
ing the status of
breaches and remediat
ion plans where appl
icable.
The Standard Chartered Bank Executive Risk Committee and the Solo & Standard Chartered Bank UK (Branch) Asset and
Liab
il
ity Management Committee are responsible for ensuring that our risk profile is managed in compliance with the Risk
Appetite set by the Court. The Court Risk Committee advises the Court on and monitors the Group’s compliance with the
Risk Appetite Statement.
The ind
iv
idual PRTs’ Risk Appetite Statements approved by the Court are set out in the
Princ
ipal R
isks
section
pages 134 to 151
.
Risk ident
ification and assessment
Identif
icat
ion and assessment of potentially adverse risk events is an essential first step in managing the risks of any business
or activ
ity. To ensure cons
istency in communicat
ion, we use PRTs to class
ify our risk exposures.
Nevertheless, we also recognise the need to mainta
in a hol
ist
ic perspect
ive since a single transaction or activ
ity may g
ive
rise to multiple types of risk exposure, risk concentrations may arise from multiple exposures that are closely correlated,
and a given risk exposure may change its form from one risk type to another. There are also sources of risk that arise
beyond our own operations, such as the Group’s dependency on suppliers for the provis
ion of serv
ices and technology.
As the Group remains accountable for risks aris
ing from the act
ions of such third parties, failure to adequately monitor
and manage these relationsh
ips could mater
ially impact the Group’s abil
ity to operate and could have an
impact on our
abil
ity to cont
inue to provide services that are material to the Group.
To facil
itate r
isk ident
ification and assessment, the Group leverages the PLC Group’s dynam
ic risk-scanning process with
inputs on the internal and external risk environment, as well as potential threats and opportunit
ies from the bus
iness and
client perspectives. The Group mainta
ins a taxonomy of the PRTs, Integrated R
isk Types and risk sub-types that are inherent
to the strategy and business model; as well as a Topical and Emerging Risks (TERs) inventory that includes near-term as well
as longer-term uncertaint
ies. Near-term r
isks are those that are on the horizon and can be measured and mit
igated to some
extent, while uncertaint
ies are longer-term matters that should be on the radar but are not yet fully measurable.
The GCRO and the Standard Chartered Bank Executive Risk Committee review regular reports on the risk profile for the PRTs,
adherence to the approved Risk Appetite and the Group risk inventory includ
ing emerg
ing risks and uncertaint
ies. They use
this informat
ion to escalate mater
ial developments in each risk event and make recommendations to the Court annually on
any potential changes to our Corporate Plan.
Further informat
ion on the Group’s
topical and emerging risks
can be found on
pages 35 to 39
.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
131
Risk profile continued
Stress testing
The objective of stress test
ing is to support the PLC Group in assessing that it:
•
does not have a portfolio with excessive risk concentration that could produce unacceptably high losses under severe
but plausible scenarios;
•
has sufficient financial resources to w
ithstand severe but plausible scenarios;
•
has the financial flex
ib
il
ity to respond to extreme but plausible scenarios; and
•
understands the PLC Group’s key business Model Risks and considers what kind of event might crystallise those risks –
even if extreme with a low likel
ihood of occurr
ing – and ident
ifies as requ
ired, actions to mit
igate the l
ikel
ihood or
impact of those events
The PLC Group enterprise stress tests incorporate Capital and Liqu
id
ity Adequacy Stress Tests, includ
ing
in the context of
capital adequacy, recovery and resolution, and stress tests that assess scenarios where our business model becomes
challenged, such as the Bank of England Bienn
ial Exploratory Scenar
io, or unviable, such as reverse stress tests.
Stress tests are performed at PLC Group, Solo, country, business and portfolio level under a wide range of risks and at varying
degrees of severity. Unless set by the Bank of England, scenario design is a bespoke process that aims to explore risks that
can adversely impact the PLC Group.
The Group relies on these stress tests to understand the Group level vulnerabil
it
ies. Based on the stress test results,
the Group Chief Financ
ial Officer (CFO) and GCRO can recommend strateg
ic actions to the Court to ensure that the Group
strategy remains with
in the Court-approved R
isk Appetite.
PRTs
PRTs are those risks that are inherent in our strategy and business model and have been formally defined in the Group’s RMF.
These risks are managed in line with the PLC Group RTFs which are adopted by the Company via an addendum to each RTF.
The PRTs and associated Risk Appetite Statements are approved by the Court.
The Group currently recognises Climate Risk, Dig
ital Asset R
isk and Third-Party Risk as Integrated Risk Types. Climate Risk is
defined as “the potential for financ
ial loss and non-financial detr
iments aris
ing from cl
imate change and society’s response
to it”; Dig
ital Asset R
isk is defined as “the potential for regulatory penalties, financ
ial loss and or reputat
ional damage to the
Group resulting from dig
ital asset exposure or d
ig
ital asset related act
iv
it
ies aris
ing from the Group’s Cl
ients, Products and
Projects” and Third-Party Risk is defined as “the potential for loss or adverse impact from failure to manage multiple risks
aris
ing from the use of th
ird-parties, and is the aggregate of these risks.”
In future reviews, we will continue to consider if exist
ing PRTs or
incremental risks should be treated as Integrated Risk Types.
The table below shows the Group’s current PRTs.
PRTs
Definit
ion
Credit Risk
•
Potential for loss due to the failure of a counterparty to meet its agreed obligat
ions to pay the Group
Traded Risk
•
Potential for loss resulting from activ
it
ies undertaken by the Group in financ
ial markets
Treasury Risk
•
Potential for insuff
ic
ient capital, liqu
id
ity or funding to support our operations, the risk of reductions in
earnings or value from movements in interest rates impact
ing bank
ing book items and the potential for
losses from a shortfall in the Group’s pension plans.
Operational and
Technology Risk
•
Potential for loss resulting from inadequate or failed internal processes, technology events, human error,
or from the impact of external events (includ
ing legal r
isks)
Information and
Cyber Security Risk
•
Risk to the Group’s assets, operations and ind
iv
iduals due to the potential for unauthorised access, use,
disclosure, disrupt
ion, mod
if
icat
ion, or destruction of informat
ion assets and/or
informat
ion systems
Compliance Risk
•
Potential for penalties or loss to the Group or for an adverse impact to our clients, stakeholders or to the
integr
ity of the markets we operate
in through a failure on our part to comply with laws or regulations
Financ
ial Cr
ime Risk
•
Potential for legal or regulatory penalties, material financ
ial loss or reputat
ional damage resulting from the
failure to comply with applicable laws and regulations relating to International Sanctions, Anti-Money
Laundering, Anti-Bribery and Corruption and Fraud
Model Risk
•
Potential loss that may occur as a consequence of decis
ions or the r
isk of misest
imat
ion that could be
princ
ipally based on the output of models, due to errors
in the development, implementat
ion or use of
such models
Reputational and
Sustainab
il
ity Risk
•
Potential for damage to the franchise (such as loss of trust, earnings or market capital
isat
ion) because of
stakeholders taking a negative view of the Group through actual or perceived actions or inact
ions,
includ
ing a
failure to uphold responsible business conduct or lapses in our commitment to do no sign
ificant env
ironmental
and social harm through our client, third-party relationsh
ips or our own operat
ions
Further details of our princ
ipal r
isks and how these are being managed are set out in the
Princ
ipal R
isks
section
pages 134 to 151
.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
132
Risk profile continued
RMF effectiveness reviews
Effectiveness review of the RMF is managed as part of the PLC Group ERMF effectiveness review. At Group level,
a self-assessment is conducted to assess the overall effectiveness of the RMF, and the results are taken into considerat
ion
in the ERMF effectiveness review. The GCRO is responsible for annually affirm
ing the effect
iveness of the RMF to the
Court Risk Committee.
The RMF effectiveness review is conducted annually since its implementat
ion
in 2020 and enables measurement of progress
against the 2020 baseline. Ongoing ERMF effectiveness reviews allows for a structured approach to ident
ify
improvement
opportunit
ies and bu
ild plans to address them. Over the course of 2023, the Group aims to further strengthen its risk
management practises by further improv
ing on the management of non-financial r
isks and integrated risks with
in
its
businesses and functions.
Executive and Court risk oversight
Overview
The Court comprises of the major
ity of the
independent non-executive directors from the PLC Board, executive directors
from the PLC Board as well as an executive director and non-executive director who are appointed solely to the Court with
the specif
ic purpose of prov
id
ing
independent decis
ion mak
ing at the Court meetings.
The Court discharges its responsib
il
it
ies d
irectly or, in order to assist it in carrying out its function of ensuring effective
independent oversight, delegates specif
ic respons
ib
il
it
ies to
its four primary committees. The Court has ultimate responsib
il
ity
for risk management and approves the RMF based on the recommendation from the Court Risk Committee, which also
recommends the Group Risk Appetite Statement for all PRTs.
Court and Executive level risk committee governance structure
The Committee governance structure below presents the view as of 2022.
COURT
COURT LEVEL COMMITTEES¹
Court Risk Committee
Court Audit Committee
Combined United States
Operations
and Risk Committee
(US Risk Committee)
Court Nominat
ion
Committee
Court Risk Committee:
The Court Risk Committee is concerned with the oversight and review of princ
ipal r
isks.
Court Audit Committee:
The Court Audit Committee is concerned with the oversight and review of financ
ial, aud
it, internal control and non-financ
ial
crime issues.
Combined United States Operations and Risk Committee (US Risk Committee):
The US Risk Committee is required to meet the requirements of the Dodd-Frank Act Section 165 Enhanced Prudential
Standard Final Rules as released by the Federal Reserve Bank. It has prescribed responsib
il
it
ies
in relation to overseeing the
risk management framework, approving and overseeing the implementat
ion of the r
isk management polic
ies and also
specif
ic rev
iew and approval responsib
il
it
ies
in relation to liqu
id
ity risk management. Membership of the Committee is
comprised of directors of the Company or PLC, includ
ing at least one
independent non-executive director and one with
sign
ificant r
isk management experience.
1
The Court also has a Standing Committee with a remit to approve matters, on behalf of the Court, where a formal resolution is required for legal and
regulatory purposes
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
133
Risk profile continued
Standard Chartered Bank
Executive
Risk Committee
Solo & Standard Chartered
Bank UK (Branch)
Asset and Liab
il
ity
Management Committee
EXECUTIVE LEVEL COMMITTEES
The Company’s Management Team comprises of the members of the PLC Group Management Team includ
ing the Group
Chief Executive Officer (CEO), the Group Chief Risk Officer and the Group CFO. Their responsib
il
it
ies under the Sen
ior
Managers Regime cover both the PLC Group and the Group.
The Group has two management level committees, namely the Standard Chartered Bank Executive Risk Committee and
Solo & Standard Chartered Bank UK (Branch) Asset and Liab
il
ity Management Committee.
Standard Chartered Bank Executive Risk Committee
The Standard Chartered Bank Executive Risk Committee is responsible for ensuring the effective management of risk
throughout the Group in support of the Group’s strategy. The GCRO chairs the Committee, whose members are drawn
from the Group’s Management Team. The Committee oversees the implementat
ion of the Standard Chartered Bank RMF,
includ
ing the delegat
ion of any part of its authorit
ies to appropr
iate ind
iv
iduals or properly constituted sub-committees.
Standard Chartered Bank Executive Risk Committee relies on jo
int meet
ings with the PLC Group Risk Committee and its
sub-committees to provide oversight of the PRTs and Integrated Risk Types across clients, businesses, products and functions.
The Committee requests and receives relevant informat
ion to fulfil
its governance mandates relating to the risks to which
the Group is exposed, and alert management when risk reports do not meet its requirements.
Solo & Standard Chartered Bank UK (Branch) Asset and Liab
il
ity Management Committee
The Solo & Standard Chartered Bank UK (Branch) Asset and Liab
il
ity Management Committee is chaired by the CEO,
Corporate, Commercial and Institut
ional Bank
ing (CCIB), Europe & Americas. The Committee is responsible for determin
ing
the Group’s approach to balance sheet management and ensuring that, in executing the Group’s strategy, the Group
operates with
in the
internally approved Risk Appetite and external requirements relating to capital, loss-absorbing capacity,
liqu
id
ity, leverage, Interest Rate Risk in the Banking Book, Banking Book Basis Risk and Structural Foreign Exchange Risk
as well as monitor
ing the structural
impact of decis
ions around susta
inable finance, Net Zero and Climate Risk. The
Committee is also responsible for ensuring that internal and external recovery planning requirements are met.
The Standard Chartered Bank Executive Risk Committee and Solo & Standard Chartered Bank UK (Branch) Asset and
Liab
il
ity Management Committee receive reports that include informat
ion on r
isk measures, Risk Appetite metrics and
thresholds, risk concentrations, forward-looking assessments, updates on specif
ic r
isk situat
ions and act
ions agreed by
these committees to reduce or manage risk.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
134
Risk profile continued
Princ
ipal r
isks
We manage and control our PRTs in line with the PLC Group Risk Type Frameworks, polic
ies and Court-approved
Risk Appetite. These are implemented at the Company level via addenda to the PLC Group Risk Type Frameworks.
Credit Risk
The Group defines Credit Risk as the potential for loss due to the failure of a counterparty to meet its agreed obligat
ions to
pay the Group.
Risk Appetite Statement
The Group manages its credit exposures following the princ
iple of d
ivers
ification across products, geograph
ies,
client segments and industry sectors.
Roles and responsib
il
it
ies
The Company addenda to the Credit Risk Type Frameworks for the Group are set and owned by the Chief Risk Officers
for the business segments. The Credit Risk function is the second-line control function responsible for independent challenge,
monitor
ing and overs
ight of the Credit Risk management practices of the business and functions engaged in or supporting
revenue-generating activ
it
ies which constitute the first line of defence. In addit
ion, they ensure that Cred
it Risks are properly
assessed and transparent; and that credit decis
ions are controlled
in accordance with the Group’s Risk Appetite, PLC Group’s
credit polic
ies and standards.
Mit
igat
ion
We apply segment-specif
ic PLC Group pol
ic
ies for the management of Cred
it Risk. The Credit Policy for CCIB Client
Coverage sets the princ
iples that must be followed for the end-to-end cred
it process, includ
ing cred
it in
it
iat
ion, cred
it
grading, credit assessment, product structuring, Credit Risk mit
igat
ion, monitor
ing and control, and documentat
ion.
The CPBB Credit Risk Management Policy sets the princ
iples for the management of Consumer, Pr
ivate and Business Banking
(CPBB) segments, that must be followed for end-to-end credit process, includ
ing cred
it in
it
iat
ion, cred
it assessment and
monitor
ing for lend
ing to these segments.
In addit
ion, there are other PLC Group-w
ide polic
ies
integral to Credit Risk management such as those relating to
Risk Appetite, Model Risk, Stress Testing, and Impairment Provis
ion
ing.
We also apply the PLC Group standards for the elig
ib
il
ity, enforceab
il
ity and effect
iveness of Credit Risk mit
igat
ion
arrangements. Potential credit losses from a given account, client or portfolio are mit
igated us
ing a range of tools,
such as collateral, netting agreements, credit insurance, credit derivat
ives and guarantees.
Risk mit
igants are also carefully assessed for the
ir market value, legal enforceabil
ity, correlat
ion and counterparty risk
of the protection provider.
Collateral must be valued prior to drawdown and regularly thereafter as required, to reflect current market condit
ions,
the probabil
ity of recovery and the per
iod of time to realise the collateral in the event of liqu
idat
ion. We also seek to divers
ify
our collateral holdings across asset classes and markets.
Where guarantees, credit insurance, standby letters of credit or credit derivat
ives are used as Cred
it Risk mit
igat
ion,
the creditworth
iness of the protect
ion provider is assessed and monitored using the same credit approval process
applied to the obligor.
Governance committee oversight
At Court level, the Court Risk Committee oversees the effective management of Credit Risk among other risks with
in the bank.
At the executive level, the Standard Chartered Bank Executive Risk Committee is responsible for the management of all
risk types includ
ing Cred
it Risk for the Group, and relies on other key PLC Group committees – in particular the Corporate,
Commercial and Institut
ional Bank
ing Risk Committee (CCIBRC), Consumer, Private and Business Banking Risk Committee
(CPBBRC), and the regional risk committees for Asia, and Africa & Middle East.
These committees are responsible for overseeing all Risk profiles includ
ing Cred
it Risk for the Group with
in the respect
ive
business areas and regions.
Decis
ion-mak
ing authorit
ies and delegat
ion
The Credit Risk Type Frameworks are the formal mechanism by which delegate Credit Risk authorit
ies cascad
ing from
the GCRO, as the Senior Manager of the Credit Risk Type, to ind
iv
iduals such as the business segments’ Chief Risk Officers.
Named ind
iv
iduals further delegate credit authorit
ies to
ind
iv
idual credit officers based on risk-adjusted scales by customer
type or portfolio. The decis
ion-mak
ing authorit
ies and delegat
ions are set out at the Group level via the Company addenda
to the Credit Risk Type Frameworks.
Credit Risk authorit
ies are rev
iewed at least annually to ensure that they remain appropriate. In CCIB Client Coverage, the
ind
iv
iduals delegating the Credit Risk authorit
ies perform overs
ight by review
ing a sample of the l
im
it appl
icat
ions approved
by the delegated credit officers on a monthly basis. In CPBB, where credit decis
ion systems and tools (e.g. appl
icat
ion
scorecards) are used for credit decis
ion
ing, such risk models are subject to performance monitor
ing and per
iod
ic val
idat
ion.
Where manual or discret
ionary cred
it decis
ions are appl
ied, period
ic qual
ity control assessments and assurance checks are
performed by the ind
iv
iduals delegating the Credit Risk authorit
ies.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
135
Monitor
ing
We regularly monitor credit exposures, portfolio performance, external trends and emerging risks that may impact risk
management outcomes. Internal risk management reports that are presented to risk committees contain informat
ion on key
polit
ical and econom
ic trends across major portfolios and countries, portfolio delinquency and loan impa
irment performance.
The Industry Portfolio Mandate, developed jo
intly by the CCIB Cl
ient Coverage business and the Risk function, provides a
forward-looking assessment of risk using a platform from which business strategy, risk considerat
ions and cl
ient planning
are performed with one consensus view of the external industry outlook, portfolio overviews, Risk Appetite, underwrit
ing
princ
iples and stress test
ins
ights.
In CCIB Client Coverage, clients and portfolios are subjected to addit
ional rev
iew when they display signs of actual or
potential weakness; for example, where there is a decline in the client’s posit
ion w
ith
in the
industry, financ
ial deter
iorat
ion,
a breach of covenants, or non-performance of an obligat
ion w
ith
in the st
ipulated period. Such accounts are subjected to a
dedicated process overseen by the Credit Issues Committees in the relevant countries where client account strategies and
credit grades are re-evaluated. In addit
ion, remed
ial actions, includ
ing plac
ing accounts on early alert for increased scrutiny,
exposure reduction, security enhancement or exit
ing the account, could be undertaken. Certa
in accounts could also be
transferred into the control management of the Stressed Assets Group (SAG), which is our special
ist recovery un
it for CCIB
Client Coverage that operates independently from our main business.
Any material in-country developments that may impact the sovereign ratings are monitored closely by the Country Risk
Team. A Country Risk Early Warning system, a triage-based risk ident
ification system was developed to categor
ise countries
based on a forward looking view of a possible downgrade and expected incremental RWA impact of a potential downgrade.
For CPBB, exposures and collateral monitor
ing are performed at the counterparty and/or portfol
io level across different client
segments to ensure transactions and portfolio exposures remain with
in R
isk Appetite. Portfolio delinquency trends are
monitored on an ongoing basis. Accounts that are past due (or perceived as high risk but not yet past due) are subject to
a collections or recovery process managed by a special
ist funct
ion independent from the orig
inat
ion function. In some
countries, aspects of collections and recovery activ
it
ies are outsourced. Oversight and assurance are undertaken in risk
committees and various governance forums. For discret
ionary lend
ing portfolios, sim
ilar processes as those of Commerc
ial
client coverage are followed.
In addit
ion, an
independent Credit Risk Review team (part of Enterprise Risk Management) performs judgement-based
assessments of the Credit Risk profiles at various portfolio levels, with focus on selected countries and segments through
deep dives, comparative analysis, and review and challenge of the basis of credit approvals. The review ensures that the
evolving Credit Risk profiles of CCIB and CPBB are well managed with
in our R
isk Appetite and polic
ies through prompt and
forward-looking mit
igat
ing actions.
Credit rating and measurement
All credit proposals are subject to a robust Credit Risk assessment. It includes a comprehensive evaluation of the client’s
credit quality, includ
ing w
ill
ingness, ab
il
ity and capac
ity to repay. The primary lending considerat
ion
is based on the client’s
credit quality and the repayment capacity from operating cashflows for counterparties; and personal income or wealth
for ind
iv
idual borrowers. The risk assessment gives due considerat
ion to the cl
ient’s liqu
id
ity and leverage posit
ion. Where
applicable, the assessment includes a detailed analysis of the Credit Risk mit
igat
ion arrangements to determine the level of
reliance on such arrangements as the secondary source of repayment in the event of a sign
ificant deter
iorat
ion
in a client’s
credit quality leading to default. For Wealth Lending, Collateral is considered primary source of repayment whereby loan
agreement envisages that the repayment of loan is based on sale of collateral provided.
Risk measurement plays a central role, along with judgement and experience, in inform
ing r
isk-taking and portfolio
management decis
ions. We adopt the advanced
internal ratings-based approach under the Basel regulatory framework
to calculate Credit Risk capital requirements. The PLC Group has also established a global programme to undertake a
comprehensive assessment of capital requirements necessary to be implemented to meet the latest revised Basel III
finalisat
ion (Basel IV) regulations.
A standard alphanumeric Credit Risk grade system is used for CCIB Client Coverage. The numeric grades run from 1 to 14
and some of the grades are further sub-classif
ied. Lower numer
ic credit grades are ind
icat
ive of a lower likel
ihood of default.
Credit grades 1 to 12 are assigned to performing customers, while credit grades 13 and 14 are assigned to non-performing or
defaulted customers.
CPBB internal ratings-based portfolios use applicat
ion and behav
ioural credit scores that are calibrated to generate
a probabil
ity of default. R
isk Decis
ion Framework (RDF) as a cred
it rating system supports the delivery of optimum
risk-adjusted-returns with controlled volatil
ity and
is used to define the portfolio/new booking segmentation, shape and
decis
ion cr
iter
ia for unsecured consumer bus
iness segment.
Risk profile continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
136
Risk profile continued
Advanced internal ratings-based models cover a substantial major
ity of our exposures and are used
in assessing risks at a
customer and portfolio level, setting strategy and optim
is
ing our risk-return decis
ions. Mater
ial internal ratings-based risk
measurement models are approved by the PLC Group Model Risk Committee. Prior to review and approval, all internal
ratings-based models are validated in detail by a model validat
ion team, wh
ich is separate from the teams that develop
and mainta
in the models. Models undergo annual val
idat
ion by an
independent model validat
ion team. Rev
iews are also
triggered if the performance of a model deteriorates materially against predetermined thresholds during the ongoing
model performance monitor
ing process wh
ich takes place between the annual validat
ions.
Credit Concentration Risk
Credit Concentration Risk may arise from a single large exposure to a counterparty or a group of connected counterparties,
or from multiple exposures across the portfolio that are closely correlated. Large exposure Concentration Risk is managed
through concentration lim
its set for a counterparty or a group of connected counterpart
ies based on control and economic
dependence criter
ia. R
isk Appetite metrics are set at portfolio level and monitored to control concentrations, where
appropriate, by industry, specif
ic products, tenor, collateral
isat
ion level, top cl
ients and exposure to holding companies.
Single name credit concentration thresholds are set by client group depending on credit grade, and by customer
segment. For concentrations that are material at a Group level, breaches and potential breaches are monitored by
the respective governance committees and reported to the Standard Chartered Bank Executive Risk Committee and
Court Risk Committees.
Credit impa
irment
Expected credit losses (ECL) are determined for all financ
ial assets that are class
if
ied as amort
ised cost or fair value
through other comprehensive income. ECL is computed as an unbiased, probabil
ity-we
ighted provis
ion determ
ined by
evaluating a range of plausible outcomes, the time value of money, and forward-looking informat
ion such as cr
it
ical
global or country-specif
ic macroeconom
ic variables. For more detailed informat
ion on macroeconom
ic data feeding
into IFRS 9 ECL calculations, please refer to the Risk profile section in pages 105 to 113.
At the time of orig
inat
ion or purchase of a non-credit- impa
ired financial asset (stage 1), ECL represent cash shortfalls
aris
ing from poss
ible default events up to 12 months into the future from the balance sheet date. ECL continue to be
determined on this basis until there is a sign
ificant
increase in the Credit Risk of the asset (stage 2), in which case an ECL
is recognised for default events that may occur over the lifet
ime of the asset. If there
is observed object
ive ev
idence of
credit impa
irment or default (stage 3), ECL cont
inue to be measured on a lifet
ime bas
is.
In CCIB Client Coverage, a loan is considered credit- impa
ired where analys
is and review ind
icate that full payment of e
ither
interest or princ
ipal,
includ
ing the t
imel
iness of such payment,
is questionable, or as soon as payment of interest or princ
ipal
is 90 days overdue. These credit-impa
ired accounts are managed by our spec
ial
ist recovery un
it, SAG.
In CPBB, a loan to ind
iv
iduals and small businesses is considered credit-impa
ired as soon as payment of
interest or princ
ipal
is 90 days overdue or meets other object
ive ev
idence of impa
irment such as bankruptcy, debt restructur
ing, fraud or death.
Financ
ial assets are wr
itten-off when it meets certain threshold condit
ions wh
ich are set at the point where empir
ical
evidence suggests that the client is unlikely to meet their contractual obligat
ions, or a loss of pr
inc
ipal
is expected.
Estimat
ing the amount and t
im
ing of future recover
ies involves sign
ificant judgement and cons
iders the assessment of
matters such as future economic condit
ions and the value of collateral, for wh
ich there may not be a readily accessible
market. The total amount of the Group’s impa
irment prov
is
ion
is inherently uncertain, being sensit
ive to changes
in economic
and credit condit
ions across the reg
ions in which the Group operates. For further details on sensit
iv
ity analysis of expected
credit losses under IFRS 9, please refer to page 108.
Stress testing
Stress testing is a forward-looking risk management tool that constitutes a key input into the ident
ification, mon
itor
ing
and mit
igat
ion of Credit Risk, as well as contribut
ing to R
isk Appetite calibrat
ion. Per
iod
ic stress tests are performed on
credit portfolios/segments to antic
ipate vulnerab
il
it
ies from stressed condit
ions and
in
it
iate timely right-siz
ing and m
it
igat
ion
plans. Addit
ionally, mult
iple enterprise-wide and country-level stress tests are mandated by regulators to assess the abil
ity
of the PLC Group and its subsid
iar
ies to continue to meet their capital requirements during a plausible, adverse shock to the
business. These regulatory stress tests are conducted in line with the princ
iples stated
in the Enterprise Stress Testing Policy.
The Group relies on these stress tests to understand the Group level vulnerabil
it
ies given the sign
ificant overlap between
Group and PLC Group Credit Risk profile.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
137
Traded Risk
The Group defines Traded Risk as the potential for loss resulting from activ
it
ies undertaken in financ
ial markets.
Risk Appetite Statement
The Group should control its financ
ial markets act
iv
it
ies to ensure that Traded Risk losses do not cause material damage to
the Group’s or PLC Group’s franchise.
The Group princ
iples to manage Traded R
isk are set in the Traded Risk Type Framework (TRTF). The TRTF covers three risk
sub-types: Market Risk, Counterparty Credit Risk and Algorithm
ic Trad
ing.
Roles and responsib
il
it
ies
The addendum to the TRTF, which sets the roles and responsib
il
it
ies
in respect of Traded Risk for the Group, is owned by the
Global Head, TRM. The business, acting as first line of defence, is responsible for the effective management of risks with
in
the scope of its direct organisat
ional respons
ib
il
it
ies set by the Court.
Traded Risk Management (TRM) is the core second-line control function that performs independent challenge, monitor
ing
and oversight of the Traded Risk management practices of the first line of defence, predominantly Financ
ial Markets and
Treasury Markets. The first and second lines of defence are supported by the organisat
ion structure, job descr
ipt
ions and
authorit
ies delegated by Traded R
isk control owners.
Mit
igat
ion
The Country addendum to the TRTF requires that Traded Risk lim
its are defined at a level appropr
iate to ensure that the
Group remains with
in R
isk Appetite. All businesses incurr
ing Traded R
isk must comply with the TRTF. The Traded Risk Policy
sets the princ
iples that must be followed for the end-to-end Traded R
isk management process includ
ing l
im
it sett
ing, risk
capture and measurement, lim
it mon
itor
ing and escalat
ion, risk mit
igat
ion and stress testing. Polic
ies and standards ensure
that these Traded Risk lim
its are
implemented. Polic
ies are rev
iewed and approved by the Global Head, TRM every two years
to ensure their ongoing effectiveness.
Governance committee oversight
At Court level, the Court Risk Committee oversees the effective management of Traded Risk. At the executive level, the
Standard Chartered Bank Executive Risk Committee is responsible for the governance and oversight of Traded Risk for
the Group, and relies on other key PLC Group committees for the management of Traded Risk – in particular CCIBRC, the
Underwrit
ing Comm
ittee and the Model Risk Committee. For subsid
iar
ies, the authority for setting Traded Risk lim
its
is
delegated from the local board to the local risk committee, Country Chief Risk Officer and Traded Risk managers. Meetings
are held regularly, and the committees monitor all material Traded Risk exposures, as well as key internal developments
and external trends, and ensure that appropriate action is taken.
Decis
ion-mak
ing authorit
ies and delegat
ion
The TRTF is the formal mechanism which delegate Traded Risk authorit
ies cascad
ing from the GCRO, as the Senior Manager
of the Traded Risk Type, to the Global Head, TRM who further delegates authorit
ies to named
ind
iv
iduals.
Traded Risk authorit
ies are rev
iewed at least annually to ensure that they remain appropriate and to assess the quality
of decis
ions taken by the author
ised person. Key risk-taking decis
ions are made only by certa
in ind
iv
iduals with the skills,
judgement and perspective to ensure that the Group’s control standards and risk-return object
ives are met.
Market Risk
The Group uses a Value at Risk (VaR) model to measure the risk of losses aris
ing from future potent
ial adverse movements
in market rates, prices and volatil
it
ies. VaR is a quantitat
ive measure of Market R
isk that applies recent histor
ical market
condit
ions to est
imate the potential future loss in market value that will not be exceeded in a set time period at a set
statist
ical confidence level. VaR prov
ides a consistent measure that can be applied across trading businesses and products
over time and can be set against actual daily trading profit and loss outcomes.
For day-to-day risk management, VaR is calculated as at the close of business, generally at UK time for expected market
movements over one business day and to a confidence level of 97.5 per cent. Intra-day risk levels may vary from those
reported at the end of the day.
The Group applies two VaR methodologies:
•
Histor
ical s
imulat
ion: th
is involves the revaluation of all exist
ing pos
it
ions to reflect the effect of h
istor
ically observed
changes in Market Risk factors on the valuation of the current portfolio. This approach is applied for general Market
Risk factors and the major
ity of spec
if
ic (cred
it spread) risk VaRs.
•
Monte Carlo simulat
ion: th
is methodology is sim
ilar to h
istor
ical s
imulat
ion but w
ith considerably more input risk factor
observations. These are generated by random sampling techniques, but the results retain the essential variab
il
ity and
correlations of histor
ically observed r
isk factor changes. This approach is applied for some of the specif
ic (cred
it spread)
risk VaRs in relation to id
iosyncrat
ic exposures in credit markets.
A one-year histor
ical observat
ion period is applied in both methods.
As an input to regulatory capital, trading book VaR is calculated for expected movements over 10 business days and to
a confidence level of 99 per cent. Some types of Market Risk are not captured in the regulatory VaR measure, and these
Risks not in VaR (RNIVs) are subject to capital add-ons.
Risk profile continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
138
Risk profile continued
An analysis of VaR results in 2022 is available in the Risk profile section pages 114 to 116.
Counterparty Credit Risk
The Group uses a Potential Future Exposure (PFE) model to measure the credit exposure aris
ing from the pos
it
ive
mark-to-market of traded products and future potential movements in market rates, prices and volatil
it
ies. PFE is a
quantitat
ive measure of Counterparty Cred
it Risk that applies recent histor
ical market cond
it
ions to est
imate the potential
future credit exposure that will not be exceeded in a set time period at a confidence level of 97.5 per cent. PFE is calculated
for expected market movements over different time horizons based on the tenor of the transactions.
The Group applies two PFE methodologies: simulat
ion based, wh
ich is predominantly used, and an add-on based
PFE methodology.
Monitor
ing
TRM monitors the overall portfolio risk and ensures that it is with
in spec
if
ied l
im
its and therefore R
isk Appetite. Lim
its are
typically reviewed twice a year. Most of the Traded Risk exposures are monitored daily against approved lim
its. Traded R
isk
lim
its apply at all t
imes unless separate intra-day lim
its have been set. L
im
it excess approval dec
is
ions are based on an
assessment of the circumstances driv
ing the excess and of the proposed remed
iat
ion plan. L
im
its and excesses can only
be approved by a Traded Risk manager with the appropriate delegated authority.
Stress testing
The VaR and PFE measurements are complemented by stress testing of Market Risk and Counterparty Credit Risk to
highl
ight the potent
ial risk that may arise from severe but plausible market events.
Stress testing is an integral part of the Traded Risk management framework and considers both histor
ical market events and
forward-looking scenarios. A consistent stress testing methodology is applied to trading and non-trading books. The stress
testing methodology assumes that management action would be lim
ited dur
ing a stress event, reflecting the expected
decrease in market liqu
id
ity. Stress test scenarios are applied to interest rates, credit spreads, exchange rates, commodity
prices and equity prices. Stress scenarios are regularly reviewed and updated where necessary to reflect changes in risk
profile and economic events.
TRM reviews the stress testing results and, where necessary, enforces reductions in overall Traded Risk exposures.
The Standard Chartered Bank Executive Risk Committee considers the results of stress tests as part of its supervis
ion
of Risk Appetite. PLC Group and business-wide stress testing are supplemented by legal entity stress testing, subject to
the relevant local governance.
Treasury Risk
Treasury Risk is defined as the “potential for insuff
ic
ient capital, liqu
id
ity or funding to support our operations, the risk of
reductions in earnings or value from movements in interest rates impact
ing bank
ing book items and the potential for
losses from a shortfall in the Group’s pension plans”.
Risk Appetite Statement
Indiv
idual regulated ent
it
ies w
ith
in SC Bank should ma
inta
in sufficient cap
ital, liqu
id
ity and funding to support their
operations, and an interest rate profile ensuring that the reductions in earnings or value from movements in interest rates
impact
ing bank
ing book items does not cause material damage to their franchise. In addit
ion, they should ensure
its
Pension plans are adequately funded.
Roles and responsib
il
it
ies
The Global Head, Enterprise Risk Management is the Risk Framework Owner for Treasury Risk under the Risk Management
Framework.
The Company addendum to the Treasury Risk Type Framework sets the roles and responsib
il
it
ies
in respect of Treasury Risk,
and it is owned by the Global Head, Enterprise Risk Management.
The Group Treasurer is supported by teams in Treasury and Finance to implement the Treasury Risk Type Framework as the
first line of defence, and is responsible for managing Treasury Risk.
Treasury Chief Risk Officer for Treasury Risk (except Pension Risk) and Head of Pensions for Pension Risk are responsible for
overseeing and challenging the first line of defence.
Mit
igat
ion
We apply the PLC Group polic
ies for the management of mater
ial Treasury risks and closely monitor our risk profile through
Risk Appetite metrics set at Solo and country level.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
139
Capital Risk
In order to manage Capital Risk, strategic business and capital plans (Corporate Plan) are drawn up covering a
five-year horizon which are approved by the Court annually. The plan ensures that adequate levels of capital, includ
ing
loss-absorbing capacity, and an effic
ient m
ix of the different components of capital are mainta
ined to support our strategy
and business plans.
Treasury is responsible for the ongoing assessment of the demand for capital and the updating of the Solo’s capital plan.
Solo level Risk Appetite metrics includ
ing cap
ital, leverage, and min
imum requ
irement for own funds and elig
ible l
iab
il
ity
(MREL) are assessed with
in the Corporate Plan to ensure that the strategy can be ach
ieved with
in r
isk tolerances.
Structural FX Risk
The Group’s structural posit
ion results from the Company’s non-US dollar
investment in the share capital and reserves of
subsid
iar
ies and branches. The FX translation gains, or losses are recorded in the Company’s translation reserves with a
direct impact on the PLC Group and Solo’s Common Equity Tier 1 ratio.
Structural FX posit
ion
is monitored and managed at PLC Group level as part of overall PLC Group foreign exchange exposure.
Liqu
id
ity and Funding Risk
At Solo and country level we implement various risk appetite metrics and monitor these against Lim
its and Management
Action Triggers. In addit
ion to these, where relevant, Mon
itor
ing Metr
ics are also set against specif
ic r
isks. This ensures that
the Group entit
ies ma
inta
in an adequate and well-d
ivers
ified l
iqu
id
ity buffer, as well as a stable funding base, and that they
meet their liqu
id
ity and funding regulatory requirements.
Interest Rate Risk in the Banking Book
At Solo level, we implement risk appetite for Economic Value of Equity (EVE) and NII sensit
iv
it
ies and mon
itor these against
lim
its and management act
ion triggers. IRRBB arises from differences in the repric
ing profile,
interest rate basis, and
optional
ity of bank
ing book assets, liab
il
it
ies and off-balance sheet
items. IRRBB represents an economic and commercial
risk to the Group and its capital adequacy.
Pension Risk
Pension Risk is the potential for loss due to having to meet an actuarially assessed shortfall in the Group’s pension plans.
Pension obligat
ion r
isk to a firm arises from its contractual or other liab
il
it
ies to or w
ith respect to an occupational pension
plan or other long term benefit obligat
ion. For a funded plan
it represents the risk that addit
ional contr
ibut
ions w
ill need to
be made because of a future shortfall in the funding of the plan or, for unfunded obligat
ions,
it represents the risk that the
cost of meeting future benefit payments is greater than currently antic
ipated.
Recovery and Resolution Planning
In line with PRA requirements, the PLC Group mainta
ins a Recovery Plan wh
ich is a live document to be used by management
in the event of stress in order to restore the PLC Group to a stable and sustainable posit
ion. The Recovery Plan
includes a set
of Recovery Indicators, an escalation framework, and a set of management actions capable of being implemented in a
stress. A Recovery Plan is also mainta
ined w
ith
in each major ent
ity includ
ing those under Solo, and all recovery plans are
subject to period
ic fire-dr
ill testing. The Group follows the PLC Group’s Recovery Plan.
As the UK resolution authority, the Bank of England is required to set a preferred resolution strategy for the PLC Group.
The Bank of England’s preferred resolution strategy is whole PLC Group single point of entry bail-in at the ultimate holding
company level (Standard Chartered PLC) and would be led by the Bank of England as the PLC Group’s home resolution
authority. In support of this strategy, the PLC Group has been developing a set of capabil
it
ies, arrangements and resources
to achieve the required outcomes. On 10 June 2022, the PLC Group and other major UK banks published their resolvabil
ity
disclosures, alongside the Bank of England’s public assessment of the industry’s preparations for resolution. No defic
ienc
ies
were ident
ified by the Bank of England on the PLC Group’s resolut
ion capabil
ity, but there were some shortcom
ings and areas
for further enhancement ident
ified. Address
ing these points remains a key prior
ity for the PLC Group. S
ign
ificant progress has
been made and PLC Group is on track to meet the commitments made to the Bank of England.
Governance committee oversight
At Court level, the Court Risk Committee oversees the effective management of Treasury Risk. At the executive level,
the Solo & Standard Chartered Bank UK (Branch) Asset and Liab
il
ity Management Committee ensures the effective
management of risk throughout the Group in support of the Group’s strategy, guides the Group’s strategy on balance sheet
optim
isat
ion and ensures that the Group operates with
in the
internally approved Risk Appetite and other internal and
external requirements relating to Treasury Risk (except Pension Risk). The Group relies on the PLC Group Risk Committee
and Regional Risk Committees for management of Pension Risk.
Regional and country oversight resides with regional and country Asset and Liab
il
ity Committees. Regions and
countries must ensure that they remain in compliance with PLC Group Treasury polic
ies and pract
ices, as well as local
regulatory requirements.
Risk profile continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
140
Risk profile continued
Decis
ion-mak
ing authorit
ies and delegat
ion
The Group CFO has responsib
il
ity for capital, funding and liqu
id
ity under the Senior Managers Regime.
The GCRO has delegated the Risk Framework Owner responsib
il
it
ies assoc
iated with Treasury Risk to the Global Head,
Enterprise Risk Management. The Global Head, Enterprise Risk Management delegates second-line oversight and challenge
responsib
il
it
ies to the Treasury Ch
ief Risk Officer for Capital Risk, Liqu
id
ity and Funding Risk and Interest Rate Risk in the
Banking Book, and to Head of Pensions for management of Pension Risk.
Monitor
ing
On a day-to-day basis, Treasury Risk is managed by Treasury, Finance and Country Chief Executive Officers. The Group
regularly reports and monitors Treasury Risk inherent in its business activ
it
ies and those that arise from internal and
external events.
Internal risk management reports covering the balance sheet and the capital and liqu
id
ity posit
ion are presented to the
Solo & Standard Chartered Bank UK (Branch) Asset and Liab
il
ity Management Committee. The reports contain key
informat
ion on balance sheet trends, exposures aga
inst Risk Appetite and supporting risk measures which enable
members to make informed decis
ions around the overall management of the balance sheet.
In addit
ion, an
independent Treasury Chief Risk Officer as part of Enterprise Risk Management reviews the prudency and
effectiveness of Treasury Risk management.
Pension Risk is actively managed by the Head of Pensions and monitored by the Head of Country Risk, Scenario Analysis,
Insurable & Pension Risk. The Head of Pensions ensures that accurate, complete and timely updates on Pension Risk are
shared with the Head of Country Risk, Scenario Analysis & Pension Risk; Treasury CRO and the Global Head, ERM on a
period
ic bas
is.
Stress Testing
Stress testing and scenario analysis are an integral part of the Treasury Risk framework and are used to ensure that the
PLC Group and Solo’s internal assessment of capital and liqu
id
ity considers the impact of extreme but plausible scenarios
on its risk profile. A number of stress scenarios, some designed internally, some required by regulators, are run period
ically.
They provide an ins
ight
into the potential impact of sign
ificant adverse events on the PLC Group and Solo’s cap
ital and
liqu
id
ity posit
ion and how th
is could be mit
igated through appropr
iate management actions to ensure that the PLC Group
and Solo remain with
in the approved R
isk Appetite and regulatory lim
its.
Daily liqu
id
ity stress scenarios are also run to ensure that the PLC Group and Solo hold suffic
ient h
igh-quality liqu
id assets
to withstand extreme liqu
id
ity events. The Group relies on these stress tests to understand the Group level vulnerabil
it
ies
given the sign
ificant overlap between the Group and PLC Group’s Treasury R
isk.
Operational and Technology Risk
The Group defines Operational and Technology Risk as the potential for loss resulting from inadequate or failed internal
processes, technology events, human error or from the impact of external events (includ
ing legal r
isks).
Risk Appetite Statement
The Group aims to control Operational and Technology Risks to ensure that operational losses (financ
ial or reputat
ional),
includ
ing any related to conduct of bus
iness matters, do not cause material damage to the Group or PLC Group’s franchise.
Roles and responsib
il
it
ies
The Company addendum to the Operational and Technology Risk Type Framework (O&T RTF) sets the roles and
responsib
il
it
ies
in respect of Operational Risk for the Group, and is owned by the Global Head of Risk, Functions and
Operational Risk (GHRFOR). This framework collectively defines the Group’s Operational Risk sub-types which have not
been classif
ied as PRTs and sets standards for the
ident
ification, control, mon
itor
ing and treatment of r
isks. These standards
are applicable across all PRTs and risk sub-types in the O&T RTF. These risk sub-types relate to execution capabil
ity,
governance, reporting and obligat
ions, legal enforceab
il
ity, and operat
ional resil
ience (
includ
ing cl
ient service, change
management, people management, safety and security, and technology risk).
The O&T RTF reinforces clear accountabil
ity for manag
ing risk throughout the PLC Group and delegates second line of
defence responsib
il
it
ies to
ident
ified subject matter experts. For each r
isk sub-type, the expert sets polic
ies and standards
for the organisat
ion to comply w
ith, and provides guidance, oversight and challenge over the activ
it
ies of the PLC Group.
They ensure that key risk decis
ions are only taken by
ind
iv
iduals with the requis
ite sk
ills, judgement, and perspective to
ensure that the PLC Group’s risk-return object
ives are met.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
141
Mit
igat
ion
The Company addendum to the O&T RTF sets out the Group’s overall approach to the management of Operational Risk in
line with the Group’s Operational and Technology Risk Appetite. This is supported by Risk and Control Self-Assessment
(RCSA) which defines roles and responsib
il
it
ies for the
ident
ification, control and mon
itor
ing of r
isks (applicable to all PRTs,
risk sub-types and integrated risk types).
The RCSA is used to determine the design strength and reliab
il
ity of each process, and requires:
•
the recording of processes run by client segments, products, and functions into a process universe
•
the ident
ification of potent
ial breakdowns to these processes and the related risks of such breakdowns
•
an assessment of the impact of the ident
ified r
isks based on a consistent scale
•
the design and monitor
ing of controls to m
it
igate pr
ior
it
ised risks
•
assessments of residual risk and timely actions for elevated risks.
Risks that exceed the Group’s Operational and Technology Risk Appetite require treatment plans to address
underlying causes.
Governance committee oversight
At Court level, the Court Risk Committee oversees the effective management of Operational Risk. At the executive level,
the Standard Chartered Bank Executive Risk Committee is responsible for the governance and oversight of Operational Risk
for the Group, monitors the Group’s Operational and Technology Risk Appetite and relies on other key PLC Group committees
for the management of Operational Risk in particular the PLC Group Non-Financ
ial R
isk Committee (GNFRC).
Regional business segments and functional committees also provide enterprise oversight of their respective processes
and related operational risks. In addit
ion, Country Non-F
inanc
ial R
isk Committees (CNFRCs) oversee the management of
Operational Risk at the country (or entity) level. In smaller countries, the responsib
il
it
ies of the CNFRC may be exerc
ised
directly by the Country Risk Committee (for branches) or Executive Risk Committee (for subsid
iar
ies).
Decis
ion-mak
ing authorit
ies and delegat
ion
The Company addendum to the O&T RTF is the formal mechanism through which the delegation of Operational Risk
authorit
ies
is made. The GHRFOR places reliance on the respective Senior Managers who are outside the Risk function for
second-line oversight of the risk sub-types through this Company addendum. The Senior Managers may further delegate
their second-line responsib
il
it
ies to des
ignated ind
iv
iduals at a global business, product and function level, as well as regional
or country level.
Monitor
ing
To deliver services to clients and to partic
ipate
in the financ
ial serv
ices sector, the Group runs processes which are exposed
to operational risks. The Group prior
it
ises and manages risks which are sign
ificant to cl
ients and to the financ
ial serv
ices
sectors. Control ind
icators are regularly mon
itored to determine the residual risk the Group is exposed to.
The residual risk assessments and reporting of events form the Group’s Operational Risk profile. The completeness of the
Operational Risk profile ensures appropriate prior
it
isat
ion and t
imel
iness of r
isk decis
ions,
includ
ing r
isk acceptances with
treatment plans for risks that exceed acceptable thresholds.
The Court is informed on adherence to Operational and Technology Risk Appetite through metrics reported for selected risks.
These metrics are monitored, and escalation thresholds are devised based on the material
ity and s
ign
ificance of the r
isk.
These Operational and Technology Risk Appetite metrics are consolidated on a regular basis and reported to the Standard
Chartered Bank Executive Risk Committee and Court Risk Committee. This provides senior management with the relevant
informat
ion to
inform their risk decis
ions.
Stress testing
Stress testing and scenario analysis are used to assess capital requirements for operational risks. This approach considers
the impact of extreme but plausible scenarios on the PLC Group’s Operational Risk profile. A number of scenarios have been
ident
ified to test the robustness of the PLC Group’s processes and assess the potent
ial impact on the PLC Group. These
scenarios include anti-money laundering, sanctions, as well as informat
ion and cyber secur
ity. The Group relies on these
stress tests to understand the Group-level vulnerabil
it
ies given the sign
ificant overlap between the Group and PLC Group
operational risk profile.
Risk profile continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
142
Risk profile continued
Information and Cyber Security Risk
The Group defines Information and Cyber Security Risk as the risk to the Group’s assets, operations and ind
iv
iduals due to the
potential for unauthorised access, use, disclosure, disrupt
ion, mod
if
icat
ion, or destruction of informat
ion assets and/or
informat
ion systems.
Risk Appetite Statement
The Group has zero appetite for very high Information and Cyber Security (ICS) residual risks and low appetite for High ICS
residual risks which result in loss of services, data or funds. The Group will implement an effective ICS control environment
and proactively ident
ify and respond to emerg
ing ICS threats in order to lim
it ICS
inc
idents
impact
ing the Group’s franch
ise.
Roles and responsib
il
it
ies
The Group’s Information and Cyber Security Risk Type Framework (ICS RTF) defines the roles and responsib
il
it
ies of the first
and second lines of defence in managing and governing ICS Risk across the Group. It emphasises business ownership and
ind
iv
idual accountabil
ity.
The Group Chief Transformation, Technology & Operations Officer (CTTO) has overall first line of defence responsib
il
ity
for ICS Risk and is accountable for the Group’s ICS strategy. The Group Chief Information Security Officer (CISO) leads the
development and execution of the ICS strategy. The first line also manages all key ICS Risks, breaches and risk treatment
plans with oversight from Group Chief Information Security Risk Officer (CISRO). ICS Risk posture, Risk Appetite breaches
and remediat
ion status are reported at Board and Execut
ive committees, alongside Business, Function and Country
governance committees.
The CISRO function with
in Group R
isk, led by the Group CISRO, is the second line of defence and sets the framework, policy,
standards and methodology for assessing, scoring and prior
it
is
ing ICS R
isks across the Group. This function has overall
responsib
il
ity for governance, oversight and independent challenge of first line’s pursuit of the ICS strategy. Group ICS Risk
Framework Strategy remains the responsib
il
ity of the ICS Risk Framework Owner (RFO), delegated from the GCRO to the
Group CISRO.
Mit
igat
ion
ICS Risk is managed through the structured ICS Risk Type Framework, compris
ing a r
isk assessment methodology and
supporting policy, standards and methodologies. These are aligned to industry recommended practice. We undertake
an annual ICS Effectiveness Review to evaluate ICS Risk management practices in alignment with the Enterprise Risk
Management Framework.
In 2022, we uplifted the ICS RTF to include an updated ICS end-to-end Risk Management and Governance approach and
continued the roll out of the threat-led scenario risk assessment across the Group. The Group CISRO function monitors
compliance to the ICS RTF by review
ing Group CISO’s r
isk assessments and conducting independent assurance reviews.
Governance committee oversight
At Court level, the Court Risk Committee oversees the effective management of ICS Risk. The Standard Chartered Bank
Executive Risk Committee is responsible for the governance and oversight of ICS Risk for the Group, and relies on other
key PLC Group Committees and fora to ensure effective implementat
ion of the ICS RTF –
in particular, the PLC Group
Non-Financ
ial R
isk Committee and the Cyber Security Advisory Forum. The Standard Chartered Bank Executive Risk
Committee and PLC Group GNFRC are responsible for oversight of ICS Risk posture and Risk Appetite breaches rated very
high and high. Sub-committees of the GNFRC have oversight of ICS Risk management aris
ing from bus
iness, country and
functional areas.
Decis
ion-mak
ing authorit
ies and delegat
ion
The ICS RTF defines how the Group manages ICS Risk. The Group CISRO delegates authority to designated ind
iv
iduals
through the ICS RTF, includ
ing second-l
ine ownership at a Business, Function, Region and Country level.
The Group CISO is responsible for implement
ing ICS R
isk Management with
in the Group, leverag
ing Group Process
Owners and Business CISOs. These stakeholders cascade ICS Risk Management into the Businesses, Functions and
Countries to comply with the ICS RTF, policy and standards.
Monitor
ing
Group CISO perform a threat-led risk assessment to ident
ify key threats,
in-scope applicat
ions and key controls requ
ired to
ensure the Group remains with
in R
isk Appetite.
The ICS Risk postures of all businesses, functions and countries are consolidated to present a holist
ic Group-level ICS R
isk
posture for ongoing monitor
ing.
During these reviews, the status of each risk is assessed against the Group’s controls to ident
ify any changes to
impact and
likel
ihood, wh
ich affects the overall risk rating.
Group CISO and Group CISRO monitor the ICS Risk profile and ensure that breaches of Risk Appetite are escalated to the
appropriate governance committee or authority levels for adequate remediat
ion and track
ing. A dedicated Group CISRO
team is supporting this work by executing offensive security testing exercises, which shows wider picture of risk security
posture what leads to better vis
ib
il
ity on potent
ial risks “in flight”.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
143
Stress Testing
Stress testing and scenario analysis are used to assess capital requirements for ICS Risk. Specif
ic scenar
ios are developed
annually in collaboration between first- and second-line ICS teams, incorporating extreme but plausible ICS Risk events.
Compliance Risk
The Group defines Compliance Risk as the potential for penalties or loss to the Group or for an adverse impact to our clients,
stakeholders or to the integr
ity of the markets we operate
in through a failure on our part to comply with laws, or regulations.
Risk Appetite Statement
The Group has no appetite for breaches in laws and regulations related to regulatory non-compliance; recognis
ing that
whilst inc
idents are unwanted, they cannot be ent
irely avoided.
Roles and responsib
il
it
ies
The Group Head, Conduct, Financ
ial Cr
ime and Compliance (Group Head, CFCC) as Risk Framework Owner for Compliance
Risk provides support to senior management on regulatory and compliance matters. The Group Head, CFCC also performs
the Financ
ial Conduct Author
ity (FCA) controlled function and senior management function of Compliance Risk Oversight in
accordance with the requirements set out by the FCA.
The Company addendum to the PLC Group Compliance RTF sets out the Group’s overall approach to the management of
Compliance Risk and the roles and responsib
il
it
ies. All act
iv
it
ies that the Group engages in must be designed to comply with
the applicable laws and regulations in the countries in which we operate. The CFCC function is the second-line that provides
oversight and challenge of the first-line risk management activ
it
ies that relate to Compliance Risk.
Where Compliance Risk arises, or could arise, from failure to manage another PRT or sub-type, the Compliance RTF outlines
that the responsib
il
ity rests with the respective Risk Framework Owner or control function to ensure that effective oversight
and challenge of the first line can be provided by the appropriate second-line function.
Each of the assigned second-line functions has responsib
il
it
ies
includ
ing mon
itor
ing relevant regulatory developments from
Non-Financ
ial Serv
ices regulators at both Group and country levels, policy development, implementat
ion, and val
idat
ion
as well as oversight and challenge of first-line processes and controls.
In addit
ion, the role of CFCC has been further clar
if
ied
in 2022 in relation to Compliance risk and the boundary of
responsib
il
it
ies w
ith other PRTs.
Mit
igat
ion
We apply the PLC Group’s polic
ies for management of Compl
iance Risk. The CFCC function develops and deploys relevant
polic
ies and standards sett
ing out requirements and controls for adherence by the Group to ensure continued compliance
with applicable laws and regulations. Through a combinat
ion of standard sett
ing, risk assessment, control monitor
ing and
assurance activ
it
ies, the Compliance Risk Framework Owner seeks to ensure that all polic
ies are operat
ing as expected to
mit
igate the r
isk that they cover. The installat
ion of appropr
iate processes and controls is the primary tool for the mit
igat
ion
of Compliance Risk. In this, the requirements of the Operational and Technology Risk Type Framework are followed to ensure
a consistent approach to the management of processes and controls. Deployment of technological solutions to improve
efficienc
ies and simpl
ify processes has cont
inued in 2022. These include launch of the MyComplianceOff
ice platform to
manage conflict review for Outside Business Activ
ity, Personal Account Deal
ing, Close Financ
ial Relat
ionsh
ip and Deals/
Reportable Events, and alongside dig
ital chatbots, Adv
isor Connect to connect with an Advisor for complex queries.
Governance committee oversight
At a management level, the Standard Chartered Bank Executive Risk Committee is responsible for the governance and
oversight of Compliance Risk, and relies on other key PLC Group level committees for the management of Compliance
Risk – in particular, the PLC Group Non-Financ
ial R
isk Committee and the Risk and CFCC Non-Financ
ial R
isk Committee.
Compliance Risk and the risk of non-compliance with laws and regulations resulting from failed processes and controls are
overseen by the respective Country, Business, Product and Function Non-Financ
ial R
isk Committees includ
ing the R
isk and
CFCC Non-Financ
ial R
isk Committee for CFCC owned processes. Relevant matters, as required, are further escalated to the
PLC Group Non-Financ
ial R
isk Committee and Standard Chartered Bank Executive Risk Committee. The Group also relies
on the PLC Group CFCC Oversight Group, while not a formal committee, to provide oversight of CFCC risks includ
ing the
effective implementat
ion of the Compl
iance RTF. The Compliance Risk Framework Owner established a Regulatory Change
Oversight Forum to have vis
ib
il
ity and overs
ight of material and/or complex large-scale regulatory change emanating from
financial serv
ices regulators impact
ing Non-F
inanc
ial R
isks. A CFCC Policy Council has also been established to provide
oversight, challenge and direct
ion to Compl
iance and FCC Policy Owners on material changes and posit
ions taken
in
CFCC-owned Polic
ies,
includ
ing
issues relating to regulatory interpretat
ion and Group’s CFCC r
isk appetite.
At Court level, oversight of Compliance Risk is primar
ily prov
ided by the Court Audit Committee, and also by the Court Risk
Committee for relevant issues.
Decis
ion-mak
ing authorit
ies and delegat
ion
The Company addendum to the Compliance Risk Type Framework is the formal mechanism through which the delegation of
Compliance Risk authorit
ies
is made. The Group Head, CABM has the authority to delegate second-line responsib
il
it
ies w
ith
in
the CFCC function to relevant and suitably qualif
ied
ind
iv
iduals.
Risk profile continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
144
Risk profile continued
Monitor
ing
The monitor
ing of controls des
igned to mit
igate the r
isk of regulatory non-compliance in processes is governed in line with
the Operational and Technology Risk Type Framework. The Group has a monitor
ing and report
ing process in place for
Compliance Risk, which includes escalation and reporting to Risk and CFCC Non-Financ
ial R
isk Committee, PLC Group
Non-Financ
ial R
isk Committee, Standard Chartered Bank Executive Risk Committee, Court Risk Committee and Court
Audit Committee, as appropriate.
Stress testing
Stress testing and scenario analysis are used to assess capital requirements for Compliance Risk and form part of the overall
scenario analysis portfolio managed under the Operational and Technology Risk Type Framework. Specif
ic scenar
ios are
developed annually with collaboration between the business, which owns and manages the risk, and the CFCC function,
which is second line to incorporate sign
ificant Compl
iance Risk tail events. This approach considers the impact of extreme
but plausible scenarios on the PLC Group’s Compliance Risk profile. The Group relies on these stress tests to understand the
Group-level vulnerabil
it
ies given the sign
ificant overlap between the Group and PLC Group act
iv
it
ies.
Financ
ial Cr
ime Risk
The Group defines Financ
ial Cr
ime Risk as the potential for legal or regulatory penalties, material financ
ial loss or reputat
ional
damage resulting from the failure to comply with applicable laws and regulations relating to internat
ional sanct
ions,
anti-money laundering, anti-bribery & corruption, and fraud.
Risk Appetite Statement
The Group has no appetite for breaches in laws and regulations related to financ
ial cr
ime, recognis
ing that wh
ile inc
idents
are unwanted, they cannot be entirely avoided.
Roles and responsib
il
it
ies
The Group Head, CFCC has overall responsib
il
ity for Financ
ial Cr
ime Risk and is responsible for the establishment and
maintenance of effective systems and controls to meet legal and regulatory obligat
ions
in respect of Financ
ial Cr
ime Risk.
The Group Head, CFCC is the Group’s Compliance and Money-Laundering Reporting Officer and performs the FCA controlled
function and senior management function in accordance with the requirements set out by the FCA, includ
ing those set
out in their handbook on systems and controls. As the first line, the business unit process owners have responsib
il
ity for the
applicat
ion of pol
icy controls and the ident
ification and measurement of r
isks relating to financ
ial cr
ime. Business units must
communicate risks and any policy non-compliance to the second line for review and approval following the model for
delegation of authority.
Mit
igat
ion
We apply the four PLC Group polic
ies
in support of the Financ
ial Cr
ime Risk Type Framework
•
Group Anti-Bribery and Corruption Policy
•
Group Anti-Money Laundering and Counter Terrorist Financ
ing Pol
icy
• Group Sanctions Policy
•
Group Fraud Risk Management Policy
The PLC Group operates risk-based assessments and controls in support of its Financ
ial Cr
ime Risk programme,
includ
ing (but not l
im
ited to):
•
Group Risk Assessment – the PLC Group monitors enterprise-wide Financ
ial Cr
ime Risks through the CFCC Risk Assessment
process consist
ing of F
inanc
ial Cr
ime Risk and Compliance Risk assessments. The Financ
ial Cr
ime Risk assessment is a PLC
Group-wide risk assessment undertaken annually to assess the inherent Financ
ial Cr
ime Risk exposures, and the associated
processes and controls by which these exposures are mit
igated.
•
Financ
ial Cr
ime Surveillance – risk-based systems and processes to prevent and detect financ
ial cr
ime.
The strength of controls is tested and assessed through the PLC Group’s Operational and Technology RTF, in addit
ion to
oversight by CFCC Assurance.
Governance committee oversight
At Court level, the Court Risk Committee oversees the effective management of Financ
ial Cr
ime Risk. At the executive
level, the Standard Chartered Bank Executive Risk Committee is responsible for the governance and oversight of Financ
ial
Crime Risk for the Group, and relies on other key PLC Group committees for the management of Financ
ial Cr
ime Risk, in
particular the PLC Group Financ
ial Cr
ime Risk Committee and the PLC Group Non-Financ
ial R
isk Committee for Fraud Risk.
Both committees are responsible for ensuring effective oversight of Operational Risk relating to Financ
ial Cr
ime Risk and
Fraud Risk, respectively, throughout the PLC Group.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
145
Decis
ion-mak
ing authorit
ies and delegat
ion
The Company addendum to the PLC Group Financ
ial Cr
ime Risk Type Framework is the formal mechanism through which
the delegation of Financ
ial Cr
ime Risk authorit
ies
is made. The Group Head, CFCC is the Risk Framework Owner for Financ
ial
Crime Risk under the Group’s Risk Management Framework. Certain aspects of Financ
ial Cr
ime Compliance, second-line
oversight and challenge, are delegated with
in the CFCC funct
ion. Approval frameworks are in place to allow for risk-based
decis
ions on cl
ient onboarding, potential breaches of sanctions regulation or policy, situat
ions of potent
ial money laundering
(and terrorist financ
ing), br
ibery and corruption or internal and external fraud.
Monitor
ing
The Group monitors Financ
ial Cr
ime Risk compliance against a set of Risk Appetite metrics that are approved by the Court.
These metrics are reviewed period
ically and reported regularly to the Standard Chartered Bank Execut
ive Risk Committee
and Court Risk Committee.
Stress testing
The assessment of Financ
ial Cr
ime vulnerabil
it
ies under stressed condit
ions or extreme events w
ith a low likel
ihood of
occurring is carried out through enterprise stress testing conducted at PLC Group level. The Group relies on these stress tests
to understand the Group level vulnerabil
it
ies given the sign
ificant overlap between the Group and PLC Group act
iv
it
ies.
Model Risk
The Group defines Model Risk as potential loss that may occur as a consequence of decis
ions or the r
isk of mis-estimat
ion
that could be princ
ipally based on the output of models, due to errors
in the development, implementat
ion or use of
such models.
Risk Appetite Statement
The Group has no appetite for material adverse impl
icat
ions aris
ing from m
isuse of models or errors in the development
or implementat
ion of models; wh
ilst accepting model uncertainty.
Roles and responsib
il
it
ies
The Global Head, Enterprise Risk Management is the Risk Framework Owner for Model Risk under the Group’s Risk
Management Framework. Responsib
il
ity for the oversight and implementat
ion of the Model R
isk Type Framework is
delegated to the Global Head, Model Risk Management.
The PLC Group’s Model Risk Type Framework sets out clear accountabil
ity and roles for Model R
isk management through a
Three Lines of Defence model. First-line ownership of Model Risk resides with Model Sponsors, who are business or function
heads and assign a Model Owner for each model and provide oversight of Model Owner activ
it
ies. Model Owners are the
accountable executive for the model development process, represent model users, and are responsible for the overall model
design process includ
ing engagement w
ith Model Users to solic
it feedback on the proposed model solut
ion. Model Owners
also coordinate the submiss
ion of models for val
idat
ion and approval and ensure appropr
iate model implementat
ion and
use. Model Developers are responsible for the development of models, acting as a delegate of the Model Owner, and are
responsible for documenting and testing the model in accordance with Policy requirements, and for engaging with Model
Users as part of the development process. Second-line oversight is provided by Model Risk Management, which comprises
Group Model Validat
ion (GMV) and Model R
isk Policy and Governance.
The PLC Group adopts an industry standard model defin
it
ion as specif
ied
in the PLC Group’s Model Risk Policy, together
with a scope of applicab
il
ity represented by defined model family types as detailed with
in the PLC Group’s Model R
isk Type
Framework. Model Owners are accountable for ensuring that all models under their purview have been independently
validated by GMV. Models must be validated before use and then on an ongoing basis, with schedule determined by the
perceived level of Model Risk associated with the model, or more frequently if there are specif
ic regulatory requ
irements
GMV independently reviews and grades models, in line with design object
ives, bus
iness uses and compliance requirements,
and highl
ights
ident
ified Model R
isks by rais
ing model related
issues. The Model Risk Policy and Governance team provide
oversight of Model Risk activ
it
ies, performing regular Model Risk Assessment and risk profile reporting to senior management.
For countries or legal entit
ies that are
in scope of the Model Risk Type Framework, the Group Model Risk Policy specif
ies
the Country Model Risk Framework Owner, delegated to the Country Chief Risk Officer, as accountable for ensuring model
usage is correctly ident
ified w
ith
in the country or legal ent
ity and a suitable local governance process is established to
accommodate models requir
ing local regulatory approval and for any other spec
if
ic local regulatory requ
irements at the
country or legal entity level. Group Model Validat
ion w
ill take into considerat
ion any country or legal ent
ity specif
ic
considerat
ions when val
idat
ing a model, the model would be endorsed at Group level and then approved for use
in the
country or legal entity via the local governance process.
We will rely on the PLC Group’s workplan and embed Model Risk into the Group’s Risk Management approach accordingly.
Risk profile continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
146
Risk profile continued
Mit
igat
ion
We apply the PLC Group polic
ies for Model R
isk Management. The Model Risk policy and standards define requirements
for model development and validat
ion act
iv
it
ies, includ
ing regular model performance mon
itor
ing. Any model
issues or
deficienc
ies ident
ified through the val
idat
ion process are m
it
igated through the appl
icat
ion of model mon
itor
ing, model
overlays and/or a model redevelopment plan, which undergo robust review, challenge and approval. Operational
controls govern all Model Risk-related processes, with regular risk assessments performed to assess appropriateness and
effectiveness of those controls, in line with the Operational and Technology Risk Type Framework, with remediat
ion plans
implemented where necessary.
Governance committee oversight
At Court level, the Court Risk Committee exercises oversight of Model Risk with
in the Group. At the execut
ive level, the
Standard Chartered Bank Executive Risk Committee is responsible for the governance and oversight of Model Risk for
the Group and relies on other PLC Group committees to ensure effective measurement and management of Model Risk,
in particular the Model Risk Committee. Sub-committees such as the Credit Model Assessment Committee, Traded Risk
Model Assessment Committee and Financ
ial Cr
ime Compliance Model Assessment Committee oversee their respective
in-scope models and escalate material Model Risks to the Model Risk Committee. In parallel, business and function-level
risk committees provide governance oversight of the models used in their respective processes.
Decis
ion-mak
ing authorit
ies and delegat
ion
The Company addendum to the PLC Group Model Risk Type Framework is the formal mechanism through which the
delegation of Model Risk authorit
ies
is made. The Global Head, Enterprise Risk Management delegates authorit
ies to
designated ind
iv
iduals or Policy Owners through the Company addendum to the Risk Type Framework. The Model Risk
Committee is responsible for approving models for use. Model approval authority is also delegated to the Credit Model
Assessment Committee, Traded Risk Model Assessment Committee, Financ
ial Cr
ime Compliance Model Assessment
Committee and ind
iv
idual designated model approvers for less material models.
Monitor
ing
The Court approved the Risk Appetite metrics for Model Risk in 2022. Adherence to Model Risk Appetite and any threshold
breaches will be reported regularly to the Court Risk Committee and SC Bank Executive Risk Committee. These metrics and
thresholds will be reviewed on an annual basis to ensure that threshold calibrat
ion rema
ins appropriate and the themes
adequately cover the current risks.
Models undergo regular monitor
ing based on the
ir level of perceived Model Risk, with monitor
ing results and breaches
presented to Model Risk Management and delegated model approvers. Model Risk Management produces Model Risk
reports covering the model landscape, which include performance metrics, ident
ified model
issues and remediat
ion plans.
These are presented for discuss
ion at the Model R
isk governance committees on a regular basis.
Stress testing
Models play an integral role in the PLC Group’s stress testing and are rigorously user-tested to ensure that they are fit-for-use
under stressed market condit
ions. Compl
iance with Model Risk management requirements and regulatory guidel
ines
are also assessed as part of each stress test, with any ident
ified gaps m
it
igated through model overlays and defined
remediat
ion plans.
Reputational & Sustainab
il
ity Risk
The Group defines Reputational and Sustainab
il
ity Risk as the potential for damage to the franchise (such as loss of trust,
earnings, or market capital
isat
ion), because of stakeholders taking a negative view through actual or perceived actions
or inact
ions,
includ
ing a fa
ilure to uphold responsible business conduct or lapses in our commitment to do no sign
ificant
environmental and social harm through our client, third-party relationsh
ips or our own operat
ions.
Risk Appetite Statement
The Group aims to protect the franchise from material damage to its reputation by ensuring that any business activ
ity
is
satisfactor
ily assessed and managed by the appropr
iate level of management and governance oversight. This includes
a potential failure to uphold responsible business conduct or lapses in our commitment to do no sign
ificant env
ironmental
and social harm.
Reputational and Sustainab
il
ity Risk continues to be an area of growing importance, driv
ing a need for strateg
ic
transformation across business activ
it
ies and risk management to ensure that we uphold the princ
iples of Respons
ible
Business Conduct and continue to do the right thing for our stakeholders, the environment and affected communit
ies.
The PLC Group’s policy frameworks and Posit
ion Statements
integrate our values into our core working practices by
articulat
ing our approach to cl
ients in sensit
ive sectors and our comm
itments to climate change and human rights.
The PLC Group continues to progress on transformation agenda, driv
ing Net Zero comm
itments and build
ing a lead
ing
sustainable franchise. The PLC Group’s progress to date includes the setting of public Net Zero targets, leadership in
voluntary carbon markets, and ongoing support of innovat
ion
in green, transit
ion, and soc
ial finance.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
147
The growth of Sustainable Finance products offering across the banking industry has prompted stronger and more robust
regulations to prevent greenwashing. The PLC Group is moving quickly to integrate anti-greenwashing polic
ies, standards
and controls into our risk management activ
it
ies. As the PLC Group prepares for the varying regulatory developments across
our footprint, we continue to invest in data and infrastructure to reinforce our compliance efforts and are actively engaging
with several of our regulatory supervisors. In 2022, the PLC Group has increased capabil
it
ies in horizon scanning and focused
on developing an effective operating model to manage regulatory change to bolster our efforts to systematically track
emerging risks across our business operations and supply chains.
Roles and responsib
il
it
ies
The Global Head, Enterprise Risk Management is the Risk Framework Owner for Reputational and Sustainab
il
ity Risk under
the Group’s Risk Management Framework.
The responsib
il
ity for Reputational and Sustainab
il
ity Risk management is delegated to Reputational and Sustainab
il
ity
Risk Leads in ERM as well as Chief Risk Officers at region, country and client-business levels. They constitute the second line
of defence, overseeing and challenging the first line of defence, which resides with the Chief Executive Officers, Business
Heads, Product Heads and Function Heads in respect of risk management activ
it
ies of reputational and sustainab
il
ity-
related risks respectively.
In the first line of defence, the PLC Group has in 2022 appointed a Chief Sustainab
il
ity Officer (CSO) whose remit spans
across both Sustainab
il
ity strategy and client solutions. Reporting to the CSO is PLC Group Sustainab
il
ity team, who
manages the overall PLC Group Sustainab
il
ity strategy and engagement. On client solutions, the Sustainable Finance team
is responsible for pan-bank sustainable finance products and frameworks to help ident
ify green and susta
inable finance
and transit
ion finance opportun
it
ies to a
id our clients on their sustainab
il
ity journey. Furthermore, the Environmental and
Social Risk Management team (ESRM) provides dedicated advisory and challenge to businesses on the management of
environmental and social risks and impacts aris
ing from the PLC Group’s cl
ient relationsh
ips and transact
ions.
Mit
igat
ion
In line with the princ
iples of Respons
ible Business Conduct and Do No Sign
ificant Harm, the Group deems Reputat
ional and
Sustainab
il
ity Risk to be driven by:
•
negative shifts in stakeholder perceptions due to decis
ions related to cl
ients, products, transactions, third parties and
strategic coverage
•
potential material harm or degradation to the natural environment (environmental) through actions/inact
ions of
the Group
•
potential material harm to ind
iv
iduals or communit
ies (soc
ial) risks through actions/inact
ions of the Group
We apply the PLC Group’s polic
ies for management of Reputat
ional and Sustainab
il
ity Risk.
The PLC Group’s Reputational Risk policy sets out the princ
ipal sources of Reputat
ional Risk driven by negative shifts in
stakeholder perceptions as well as responsib
il
it
ies, control and overs
ight standards for ident
ify
ing, assessing, escalating and
effectively managing Reputational Risk. The PLC Group takes a structured approach to the assessment of risks associated
with how ind
iv
idual client, transaction, product and strategic coverage decis
ions may affect percept
ions of the organisat
ion
and its activ
it
ies, based on explic
it pr
inc
iples
includ
ing, but not l
im
ited to human r
ights, gambling, defence and dual use
goods. Whenever potential for stakeholder concerns is ident
ified,
issues are subject to prior approval by a management
authority commensurate with the material
ity of matters be
ing considered. Such authorit
ies may accept or decl
ine the risk
or impose condit
ions upon proposals, to protect the PLC Group’s reputat
ion. In 2022, the Reputational Risk Policy was
enhanced to include more rigorous assessment of clients operating in sectors which have heightened Climate Risk.
The PLC Group’s Sustainab
il
ity Risk policy sets out the requirements and responsib
il
it
ies for manag
ing environmental and
social risks for the Group’s clients, third parties and in our own operations, as guided by various industry standards such as the
OECD’s Due Dil
igence Gu
idance for Responsible Business Conduct, Equator Princ
iples, UN Susta
inable Development Goals
and the Paris Agreement.
•
Clients are expected to adhere to min
imum regulatory and compl
iance requirements, includ
ing cr
iter
ia from the PLC
Group’s Posit
ion Statements. In 2022, the Susta
inab
il
ity Risk Policy was enhanced to include the monitor
ing of
inherent
risks related to Sustainable Finance products and transactions and clients through-out their lifecycle – from labelling
to disclosures.
•
Third parties such as suppliers must comply with the PLC Group’s Supplier Charter which sets out the PLC Group’s
expectations on ethics, anti-bribery and corruption, human rights, environmental, health and safety standards, labour
and protection of the environment.
•
With
in our operat
ions, the PLC Group seeks to min
im
ise its impact on the environment and have targets to reduce energy,
water and waste.
Reputational and Sustainab
il
ity Risk polic
ies and standards are appl
icable to all PLC Group entit
ies. However, local regulators
in some markets may impose addit
ional requ
irements on how banks manage and track Reputational and Sustainab
il
ity Risk.
In such cases, these are complied with in addit
ion to PLC Group pol
ic
ies and standards.
Risk profile continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
148
Risk profile continued
Governance committee oversight
The PLC Group’s Culture and Sustainab
il
ity Committee provides oversight across PLC Group for our Sustainab
il
ity strategy
while the Court Risk Committee oversees Reputational and Sustainab
il
ity Risk as part of the Group RMF. The Standard
Chartered Bank Executive Risk Committee provides executive-level committee oversight and relies on other key PLC
Group committees for the effective management of Reputational and Sustainab
il
ity Risk in particular the PLC Group
Responsib
il
ity and Reputational Risk Committee (GRRRC), the Sustainable Finance Governance Committee and the PLC
Group Non-Financ
ial R
isk Committee.
Decis
ion-mak
ing authorit
ies and delegat
ion
The addendum to the PLC Group’s Reputational and Sustainab
il
ity RTF is the formal mechanism through which the
delegation of Reputational and Sustainab
il
ity Risk authorit
ies
is made. The Global Head, Enterprise Risk Management
delegates risk acceptance authorit
ies for stakeholder percept
ion risks to designated ind
iv
iduals in the first line and second
line or to Committees such as the GRRRC via risk authority matrices.
These risk authority matrices are tiered at country, regional, business segment or Group levels and are established for risks
incurred in strategic coverage, clients, products or transactions. For environmental and social risks, the ESRM team must
review and support the risk assessments for clients and transactions and escalate to the Reputational and Sustainab
il
ity
Risk leads as required.
Monitor
ing
Exposure to stakeholder perception risks aris
ing from transact
ions, clients, products and strategic coverage are monitored
through established triggers outlined in risk material
ity matr
ices to prompt the right levels of risk-based considerat
ion by the
first line and escalations to the second line where necessary. Risk acceptance decis
ions and themat
ic trends are also being
reviewed on a period
ic bas
is.
Exposure to Sustainab
il
ity Risk is monitored through triggers embedded with
in the first-l
ine processes where environmental
and social risks are considered for clients and transactions via the Environmental and Social Risk Assessments and considered
for vendors in our supply chain through the Modern Slavery questionna
ires.
Furthermore, monitor
ing and report
ing on the risk appetite metrics at PLC Group level ensures that there is appropriate
oversight over performance and breaches of thresholds across key metrices namely in concentration of material reputational
risk, level of alignment with PLC Group’s Net Zero aspirat
ions and Pos
it
ion Statements, and modern slavery r
isks in
our suppliers.
Stress testing
Reputational Risk outcomes are taken into account in enterprise stress tests and incorporated into the PLC Group’s stress
testing scenarios. For example, the PLC Group might consider what impact a hypothetical event leading to loss of confidence
among liqu
id
ity providers in a particular market might have, or what the impl
icat
ions might be for supporting part of the
organisat
ion
in order to protect the brand. As Sustainab
il
ity Risk continues to evolve as an area of emerging regulatory
focus with various markets developing ESG regulatory guidance, we are keeping pace with external developments to
enable us to explore meaningful scenario analysis in the future with the aim of advancing Reputational and Sustainab
il
ity
Risk management.
Climate Risk
The Group recognises Climate Risk as an integrated risk type. Climate Risk is defined as the potential for financ
ial loss and
non-financial detr
iments aris
ing from cl
imate change and society’s response to it.
Risk Appetite Statement
The Group aims to measure and manage financ
ial and non-financial r
isks from climate change, and reduce emiss
ions
related to our own activ
it
ies and those related to the financ
ing of cl
ients in alignment with the Paris Agreement.
Climate Risk has been recognised by the PLC Group as an emerging risk since 2017 and was elevated to an integrated
risk type (previously known as a material cross-cutting risk) with
in our central r
isk management framework in 2019.
The PLC Group has introduced Climate Risk into mainstream risk management processes in alignment with the Bank of
England’s Supervisory Statement 3/19 requirements. We have made further progress this year in embedding Climate Risk
considerat
ions across the
impacted PRTs, and by using the results from our management scenario analysis, we are build
ing
a good understanding of the markets and industr
ies where the effects of cl
imate change will have the greatest impact.
However, it is still a relatively nascent risk area which will mature and develop over time. We will rely on the PLC Group’s
workplan and integrate Climate Risk into the Bank’s risk management approach accordingly.
Roles and responsib
il
it
ies
The three lines of defence model as per the Group’s Risk Management Framework applies to Climate Risk. The GCRO has the
ultimate second-line and senior management responsib
il
ity for Climate Risk. The GCRO is supported by the Global Head,
Enterprise Risk Management who has day-to-day oversight and central responsib
il
ity for second-line Climate Risk activ
it
ies.
As Climate Risk is integrated into the relevant PRTs, second-line responsib
il
it
ies l
ie with the Risk Framework Owner (at Group,
regional and country level), with subject matter expertise support from the central Climate Risk team.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
149
Mit
igat
ion
As an integrated risk type manifests through other PRTs, risk mit
igat
ion activ
it
ies are specif
ic to
ind
iv
idual PRTs. The Group
has made progress to integrate Climate Risk into PRT processes. Climate Risk assessments are considered as part of
Reputational and Sustainab
il
ity transaction reviews for clients and transactions in high carbon sectors. We have directly
engaged with clients on their adaptation and mit
igat
ion plans using client level Climate Risk questionna
ires and
integrated
climate risk into the credit process for ~70 per cent of our corporate client exposure in CCIB. As part of quarterly credit portfolio
reviews in CPBB, physical risk assessments for the resident
ial mortgage portfol
ios are also being monitored for concentration
levels. The Traded Risk stress testing framework covers market impacts from Climate Risk – this includes a transit
ion r
isk
and two physical risk scenarios. Physical and transit
ion r
isk ratings for sovereigns are widely used across the Group for risk
management and reporting purposes. The focus for Operational and Technology Risk was orig
inally on Property, Res
il
ience
and Third-Party Risk management, and is now being expanded to material technology arrangements. We have also
completed liqu
id
ity risk assessments for our top liqu
id
ity providers. Relevant polic
ies and standards across PRTs have been
updated to factor in Climate Risk considerat
ions and a focus area for 2022 was to bu
ild out our risk management, data and
modelling capabil
it
ies.
Governance committee oversight
Board-level oversight is exercised through the SC Bank Court Risk Committee (CRC), and regular Climate Risk updates are
provided to the Court and CRC. At the executive level, the Standard Chartered Bank Executive Risk Committee oversees
implementat
ion of the Cl
imate Risk workplan and relies on other key PLC Group committees and fora for the management
of Climate Risk, includ
ing the Cl
imate Risk Management Committee. The Climate Risk Management Committee, appointed
by the GCRO, consists of senior representatives from the Business, Risk, Strategy and other functions such as Compliance,
Audit and Finance. The Climate Risk Management Committee meets at least six times a year to oversee the implementat
ion
of the Group’s Climate Risk workplan and progress in meeting regulatory requirements, monitor the Climate Risk profile of the
Group and review Climate Risk-related disclosures and stress tests. The PLC Group has also strengthened country and
regional governance oversight for the Climate Risk profile across our key markets in 2022.
Tools and methodologies
Applying exist
ing r
isk management tools to quantify Climate Risk is challenging given inherent data and methodology
challenges, includ
ing the need to be forward-look
ing over long time horizons. To quantify climate physical and transit
ion
risk we leverage and have invested in a number of areas, includ
ing tools and partnersh
ips at the PLC Group level.
•
Munich Re – we are using Munich Re’s physical risk assessment tool, which is built on extensive re-insurance experience
•
Baringa Partners – we are using Baringa’s flagship climate models to understand climate scenarios, and compute transit
ion
risk and temperature alignment
•
Standard & Poor – we are leveraging S&P and Trucost’s wealth of climate data covering asset locations, energy mixes
and emiss
ions
•
Imperial College – we are leveraging Imperial’s academic expertise to advance our understanding of climate science,
upskill our staff and senior management, and progress the state of independent research on climate risks with an acute
focus on emerging markets
•
Deloitte – we are working with Deloitte to build internal IFRS 9 and stress testing models.
Decis
ion-mak
ing authorit
ies and delegat
ion
The Global Head, Enterprise Risk Management is supported by a centralised Climate Risk team with
in the ERM funct
ion.
The Global Head, Climate Risk and Net Zero Oversight is responsible for ensuring and executing the delivery of the Climate
Risk workplan which will define decis
ion-mak
ing authorit
ies and delegat
ions across the PLC Group.
Monitor
ing
The Climate Risk Appetite Statement is approved and reviewed annually by the Court, following the recommendation of the
Court Risk Committee.
The PLC Group has developed its first-generation Climate Risk reporting and Board/Management Team Level Risk Appetite
metrics and this will continue to be enhanced in 2023. Management informat
ion and R
isk Appetite metrics are also being
progressively rolled out at the regional and country level.
Stress testing
As Climate Risk intens
ifies over t
ime, the future global temperature rises will depend on today’s transit
ion pathway.
Consider
ing d
ifferent transit
ion scenar
ios is crucial to assessing Climate Risk over the next 10, 20 and 50 years. Stress testing
and scenario analysis are used to assess capital requirements for Climate Risk and since 2020 physical and transit
ion r
isks
have been included in the PLC Group Internal Capital Adequacy Assessment Process (ICAAP). In 2022, the PLC Group
undertook a number of Climate Risk stress tests, includ
ing by the Monetary Author
ity of Singapore and internal management
scenario analysis. We will rely on these stress tests to understand the Group level vulnerabil
it
ies given the sign
ificant overlap
between SC Bank and PLC Group’s activ
it
ies.
In 2023, the PLC Group intends to extend its management scenario capabil
it
ies, which will strengthen business strategy and
financial plann
ing and support the PLC Group’s Net Zero journey.
Risk profile continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
150
Risk profile continued
Dig
ital Assets R
isk
Dig
ital Assets (DA) R
isk has been managed under the Dig
ital Assets R
isk Management Approach since 2020 and was
formalised as an Integrated Risk Type (previously known as material cross cutting risk) with
in the RMF. D
ig
ital Assets R
isk
follows the prescribed, robust risk management practices across the PRTs, with specif
ic expert
ise applied from Dig
ital Assets
experts. Risk management practices take guidance from the “Dear CEO” letters published by the Prudential Regulatory
Authority and the Financ
ial Conduct Author
ity in June 2018, with updated notices in June 2022. This is a developing risk
area which will mature and stabil
ise over t
ime as the technology and associated research becomes more established.
Risk Appetite Statement
As Dig
ital Assets R
isk manifests through the various PRTs, the specif
ic R
isk Appetite statements for the PRTs apply.
Roles and responsib
il
it
ies
The three lines of defence model defined in the RMF applies to Dig
ital Assets R
isk. The GCRO has the second-line and
senior management responsib
il
ity for Dig
ital Assets R
isk with respect to the framework. The respective Business Segments
Senior Managers are responsible for the overall management of Dig
ital Assets
in
it
iat
ives w
ith
in the
ir segments.
The GCRO is supported by the Global Head, Enterprise Risk Management and the Global Head, Dig
ital Assets R
isk
Management who have day-to-day oversight and central responsib
il
ity for second line Dig
ital Assets R
isk activ
it
ies.
As Dig
ital Assets R
isk is integrated into the relevant PRTs, Risk Framework Owners and dedicated Subject Matter Experts
(SMEs) across the PRTs also have second line responsib
il
it
ies for D
ig
ital Assets R
isk.
Mit
igat
ion
The Group deploys a DA specif
ic pol
icy to outline incremental risk management requirements for DA related activ
it
ies.
The Group’s polic
ies for other PRTs also
include DA requirements where relevant Risk mit
igat
ion activ
it
ies are also specif
ic
to ind
iv
idual PRTs and the Group has undertaken development and integrat
ion of D
ig
ital Assets R
isk into the PRT processes.
Dig
ital Assets R
isk Assessments are conducted on certain higher-risk DA related Projects and Products. These specif
ic r
isk
assessments detail the specif
ic
inherent risks, residual risks, controls and mit
igants across the PRTs and are rev
iewed and
supported by the respective Risk Framework Owners and DA SMEs.
Governance committee oversight
Board-level oversight is exercised through the Board Risk Committee (BRC), and DA Risk updates are provided to the
Board and BRC, as requested. At the executive level, the Group Risk Committee (GRC) oversees the risk management of
DA. The GCRO has also appointed a dedicated Dig
ital Assets R
isk Committee (DRC) consist
ing of sen
ior representatives,
Risk Framework Owners and SMEs across the Group includ
ing the bus
iness, risk, and other functions such as legal. The DRC
meets at the pre-defined frequency, a min
imum of four t
imes per year, to review and assess the detailed risk assessments
related to DA Projects and Products, discuss development and implementat
ion of the DA r
isk management, and to provide
structured governance around DA.
Decis
ion-mak
ing authorit
ies and delegat
ion
The Global Head, Enterprise Risk Management is supported by a centralised DA team with
in the ERM funct
ion and is
responsible for the DA framework. The respective PRT Risk Framework Owners and SMEs util
ise dec
is
ion mak
ing authorit
ies
granted to them with
in the
ir respective PRTs or in ind
iv
idual capacit
ies.
Monitor
ing
Dig
ital Assets are mon
itored through the exist
ing Group R
isk Appetite metrics across the PRTs. In addit
ion, spec
if
ic D
ig
ital
Assets Risk Appetite metrics are approved and reviewed annually by GRC. DA decis
ions relat
ing to other PRTs are taken
with
in the author
it
ies for the respect
ive PRT.
Stress testing
Stress testing and scenario analysis are used to help assess capital requirements for Dig
ital Assets R
isk and form part of
the overall scenario analysis portfolio managed under the Operational and Technology Risk Type Framework. Specif
ic
scenarios are developed annually with collaboration between the business, which owns and manages the risk, and the DA
Risk function, to consider relevant DA scenarios. This approach considers the impact of extreme but plausible scenarios on the
PLC Group’s capital profile with respect to DA.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
151
Third Party Risk
The Group recognises Third Party Risk as an Integrated Risk Type. Third Party Risk is defined as the potential for loss or
adverse impact from failure to manage multiple risks aris
ing from the use of Th
ird Parties, and is the aggregate of these risks.
The engagement of Third Parties in provid
ing products, serv
ices and goods is essential for the Group to operate effic
iently
and effectively, however we also understand that doing so may introduce incremental risks which, if not managed correctly,
could result in regulatory non-compliance, financ
ial loss and or adverse
impact to clients. We continue to enhance our
polic
ies, standards, processes and controls to ensure we safely manage any
incremental risks introduced by the use of
Third Parties.
Risk Appetite Statement
As Third Party Risk manifests through the various PRTs, the specif
ic R
isk Appetite statements for the PRTs apply. Third Party
Risk does not carry a standalone Risk Appetite statement.
Roles and responsib
il
it
ies
The Global Head of Risk, Functions and Operational Risk has second line oversight responsib
il
ity for Third Party Risk as
defined in the Enterprise Risk Management Framework. The three lines of defence model applies to Third Party Risk, and roles
and responsib
il
it
ies are further defined
in the Third Party Risk Management Policy and Standard. It is important to note that
as an Integrated Risk Type, the risks associated with the management of Third Parties material
ise across mult
iple PRTs.
The Risk Framework Owners for the PRTs are therefore responsible for embedding requirements to manage Third Party
Risk with
in the
ir Risk Type Frameworks, Polic
ies and Standards as appropr
iate, and ensuring compliance to the min
imum
requirements defined by the Global Head of Risk, Functions and Operational Risk.
Mit
igat
ion
To ensure we continue to prior
it
ise the engagement of Third Parties, while safely managing any risks, the Third Party Risk
Management Policy and Standard, in conjunct
ion w
ith the PRT Polic
ies and Standards, hol
ist
ically set out the Group’s
min
imum controls requ
irements for the ident
ification, m
it
igat
ion and management of risks aris
ing from the use of Th
ird
Parties. These min
imum control requ
irements have been enhanced in 2022 to ensure compliance with new requirements
issued by our regulators.
The Group aims to manage its risk profile with
in R
isk Appetite, and in order to do so, Risk Appetite metrics for Third Party
Risk are embedded with
in the respect
ive PRTs includ
ing Informat
ion and Cyber Security, Compliance, Financ
ial Cr
ime and
Operational and Technology Risk. To further supplement this, addit
ional work
is underway to enhance the Group’s approach
to concentration risk. Where appropriate, Risk Appetite metrics are cascaded to countries.
Governance committee oversight
At the Board level, the Board Risk Committee oversees the effective management of Third Party Risk. At the executive level,
the Group Risk Committee is responsible for the governance and oversight of Third Party Risk for the Group. The Group Third
Party Risk Management Committee (GTPRMC), established under the Group Non-Financ
ial R
isk Committee, is responsible for
overseeing all Third Party Risk types and associated risks across the Group, as well as the effective embedding of Third Party
Risk across the respective PRTs.
The management of Third Party Risk is overseen at a Country or entity level by the Country Third Party Risk Management
Committee (CTPRMC). In smaller markets the responsib
il
it
ies are exerc
ised directly by the Executive Risk Committee (for
subsid
iar
ies) or Country Risk Committee (for branches).
Decis
ion-mak
ing authorit
ies and delegat
ion
The GCRO has second line responsib
il
ity for Third Party Risk under the Senior Managers Regime. The GCRO has delegated
the Integrated Risk Framework Owner responsib
il
it
ies assoc
iated with Third Party Risk to the Global Head of Risk, Functions
and Operational Risk, through the Enterprise Risk Management Framework. Second line oversight and challenge
responsib
il
it
ies for Th
ird Party Risk at a Country or entity level are delegated to the Country Chief Risk Officers.
Monitor
ing
The monitor
ing of Th
ird Party Risk with
in the Group’s Process Un
iverse is managed in accordance with the Operational and
Technology Risk Type Framework.
The Third Party Risk management profile is reported to the GTPRMC, and includes the monitor
ing and overs
ight on Risk
Appetite, assessment of new Third Party arrangements, on-going performance monitor
ing of Th
ird Party arrangements,
internal and external events and elevated risks with appropriate treatment plans.
Stress testing
Stress testing and scenario analysis are used to assess capital requirements, and for Third Party Risk, form part of the overall
scenario analysis portfolio managed under the Operational and Technology Risk Type Framework. Specif
ic scenar
ios are
developed annually with collaboration between the business, which owns and manages the risk, and the second line of
defence. This approach considers the impact of extreme but plausible scenarios on the Group’s Risk profile.
Risk profile continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
152
Capital management and governance
The Group’s capital and leverage posit
ion
is managed with
in the Court-approved R
isk Appetite framework. Further detail is
provided with
in the R
isk Management Framework section on (page 128).
Standard Chartered Bank is authorised by the PRA and regulated by the Financ
ial Conduct Author
ity and the PRA as
Standard Chartered Bank (Solo Consolidated). Standard Chartered Bank continues to operate through its branches and a
number of subsid
iar
ies, all of which remain well capital
ised
in line with their applicable Court-approved Risk Appetites which
takes into account local regulations, Pillar 1 and 2 requirements and regulatory and management buffers as applicable.
The Group’s CET1 ratio remained strong at 12.3 per cent at FY2022 with leverage at 4.8 per cent. The Group mainta
ins h
igh
levels of loss absorbing capacity. Compared to 31 December 2021, the Group’s CET1 ratio remained largely flat. RWAs
decreased by $17.6 bill
ion to $176.4 b
ill
ion. CET1 cap
ital decreased by $2.1bn as profits of $2.4 bill
ion were more than offset by
distr
ibut
ions of $0.9 bill
ion, a fore
ign currency translation impact of $1.2 bill
ion, movement
in other comprehensive income of
$1.0 bill
ion, removal of software benefit $0.7bn and an
increase in regulatory deductions and other movements of $0.7 bill
ion.
On 9 July 2021, the PRA published a policy statement on implement
ing Basel standards wh
ich confirmed that qualify
ing
software assets would need to be deducted from CET1 capital from January 2022 with impact of 32 basis points to CET1 ratio.
From 1 January 2022 RWA increases due to post model adjustments following new PRA rules on IRB models and the
introduct
ion of standard
ised rules for counterparty credit risk on derivat
ives and other
instruments.
Capital ratios
2022
2021
CET1
12.3%
12.3%
Tier 1 capital
15.4%
15.3%
Total Capital
22.4%
21.6%
Capital review
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
153
Capital review continued
Capital base¹ (audited)
2022
$mill
ion
2021
$mill
ion
CET1 capital instruments and reserves
Capital instruments and the related share premium accounts
20,893
20,893
Of which: share premium accounts
296
296
Retained earnings
2
10,467
9,831
Accumulated other comprehensive income (and other reserves)
(6,965)
(4,245)
Non-controlling interests (amount allowed in consolidated CET1)
145
179
Independently audited year-end profits
2,410
1,639
Foreseeable div
idends
(189)
(186)
CET1 capital before regulatory adjustments
26,761
28,111
CET1 regulatory adjustments
Addit
ional value adjustments (prudent
ial valuation adjustments)
(626)
(453)
Intangible assets (net of related tax liab
il
ity)
(4,002)
(3,037)
Deferred tax assets that rely on future profitabil
ity (excludes those aris
ing from temporary d
ifferences)
(66)
(141)
Fair value reserves related to net losses on cash flow hedges
513
11
Deduction of amounts resulting from the calculation of excess expected loss
(627)
(416)
Net gains on liab
il
it
ies at fa
ir value resulting from changes in own credit risk
26
3
Defined-benefit pension fund assets
(69)
(114)
Fair value gains aris
ing from the
inst
itut
ion’s own credit risk related to derivat
ive l
iab
il
it
ies
(74)
(51)
Exposure amounts which could qualify for risk weight
ing of 1250%
(61)
(29)
Other regulatory adjustments to CET1 capital
3
(29)
–
Total regulatory adjustments to CET1
(5,015)
(4,227)
CET1 capital
21,746
23,884
Addit
ional T
ier 1 capital (AT1) instruments
5,423
5,892
AT1 regulatory adjustments
(20)
(20)
Tier 1 capital
27,149
29,756
Tier 2 capital instruments
12,469
12,105
Tier 2 regulatory adjustments
(30)
(30)
Tier 2 capital
12,439
12,075
Total capital
39,588
41,831
Total risk-weighted assets (unaudited)
176,355
193,988
1
Capital base is prepared on the regulatory scope of consolidat
ion
2
Retained earnings include IFRS9 capital relief (Transit
ional) of $106 m
ill
ion
3
Other regulatory adjustments to CET1 capital includes Insuffic
ient coverage for non-perform
ing exposures of $(29) mill
ion
Leverage ratio
Capital and total exposures
2022
$mill
ion
2021
$mill
ion
Tier 1 capital
27,149
29,258
Total leverage ratio exposures
569,172
653,396
Leverage ratio
4.8%
4.5%
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
154
Independent Auditor’s report
to the members of Standard Chartered Bank
Opin
ion
In our opin
ion:
•
the financial statements of Standard Chartered Bank (the ‘Company’ or the ‘Parent Company’) and
its subsid
iar
ies
(the ‘Group’) give a true and fair view of the state of the Group’s and of the Company’s affairs as at 31 December 2022 and
of the Group’s profit for the year then ended;
•
the Group financial statements have been properly prepared
in accordance with UK adopted International Accounting
Standards (IAS) and International Financ
ial Report
ing Standards (IFRS) as adopted by the European Union (EU IFRS);
•
the Company financial statements been properly prepared
in accordance with UK adopted IAS as applied in accordance
with section 408 of the Companies Act 2006; and
•
the financial statements have been prepared
in accordance with the requirements of the Companies Act 2006.
We have audited the financ
ial statements of the Group and the Company for the year ended 31 December 2022
which comprise:
Group
Company
Consolidated income statement for the year ended 31 December 2022;
Balance sheet as at 31 December 2022;
Consolidated statement of comprehensive income for the year ended;
Cash flow statement for the year then ended;
Consolidated balance sheet as at 31 December 2022;
Company statement of changes in equity for the year ended
31 December 2022; and
Consolidated statement of changes in equity for the year then ended;
Related notes 1 to 39, where relevant to the financial
statements, includ
ing a summary of s
ign
ificant
accounting polic
ies.
Consolidated Cash flow statement for the year then ended;
Related notes 1 to 39 to the financial statements,
includ
ing a summary of
sign
ificant account
ing polic
ies; and
Risk and capital disclosures marked as ‘audited’ from page 63 to page 153.
The financial report
ing framework that has been applied in their preparation is applicable law and UK adopted IAS and EU
IFRS; and as regards the Parent Company financial statements, UK adopted IAS as appl
ied in accordance with section 408
of the Companies Act 2006.
Basis for opin
ion
We conducted our audit in accordance with International Standards on Audit
ing (UK) (ISAs (UK)) and appl
icable law.
Our responsib
il
it
ies under those standards are further descr
ibed in the Auditor’s responsib
il
it
ies for the aud
it of the financ
ial
statements section of our report. We believe that the audit evidence we have obtained is suffic
ient and appropr
iate to
provide a basis for our opin
ion.
Independence
We are independent of the Group and the Company in accordance with the ethical requirements that are relevant to our
audit of the financ
ial statements
in the UK, includ
ing the FRC’s Eth
ical Standard as applied to listed public interest entit
ies,
and we have fulfilled our other ethical responsib
il
it
ies
in accordance with these requirements.
The non-audit services prohib
ited by the FRC’s Eth
ical Standard were not provided to the Group or the Company and we
remain independent of the Group and the Company in conducting the audit.
Conclusions relating to going concern
In audit
ing the financial statements, we have concluded that the d
irectors’ use of the going concern basis of accounting in
the preparation of the financ
ial statements
is appropriate. Our evaluation of the directors’ assessment of the Group and
Parent Company’s abil
ity to cont
inue to adopt the going concern basis of accounting included:
•
Performing a risk assessment to ident
ify factors that could
impact the going concern basis of accounting, includ
ing the
impact of external risks such as geopolit
ical r
isk.
•
Assessing the Group’s forecast capital, liqu
id
ity, and leverage ratios over the period of twelve months from 16 February 2023
to evaluate the headroom against the min
imum regulatory requ
irements and the risk appetite set by the directors.
•
Engaging internal valuation and economic special
ists to assess the reasonableness of assumpt
ions used to develop the
forecasts in the Corporate Plan and evaluating the accuracy of histor
ical forecast
ing.
•
Inspecting the Group’s funding plan and repayment plan for funding instruments maturing over the period of twelve
months from 16 February 2023.
•
Understanding and evaluating credit rating agency ratings and actions.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
155
Independent Auditor’s report
to the members of Standard Chartered Bank continued
•
Assessing the results of management’s stress testing, includ
ing cons
iderat
ion of pr
inc
ipal and emerg
ing risks, on funding,
liqu
id
ity, and regulatory capital.
•
Review
ing correspondence w
ith prudential regulators and authorit
ies for matters that may
impact the going concern
assessment; and
•
Evaluating the appropriateness of the going concern disclosure included in note 1 to the financ
ial statements.
Based on the work we have performed, we have not ident
ified any mater
ial uncertaint
ies relat
ing to events or condit
ions
that, ind
iv
idually or collectively, may cast sign
ificant doubt on the Group and the Company’s ab
il
ity to cont
inue as a going
concern for a period of twelve months from 16 February 2023.
Our responsib
il
it
ies and the respons
ib
il
it
ies of the d
irectors with respect to going concern are described in the relevant
sections of this report. However, because not all future events or condit
ions can be pred
icted, this statement is not a
guarantee as to the Group’s abil
ity to cont
inue as a going concern.
Overview of our audit approach
Audit scope
•
We performed an audit of the complete financ
ial
informat
ion of 10 components across 8 countr
ies and audit
procedures on specif
ic balances for a further 8 components across 8 countr
ies.
•
The components where we performed full or specif
ic aud
it procedures accounted for 76% of absolute adjusted
profit before tax (PBT) measure used to calculate material
ity, 83% of absolute operat
ing income and 92% of
total assets.
Key audit matters
• Credit impa
irment
• User access management
•
Impairment of Goodwill and Investments in subsid
iary undertak
ings
•
Valuation of financ
ial
instruments held at fair value with higher risk characterist
ics
Material
ity
•
Overall group material
ity of $178m wh
ich represents 5% of adjusted PBT.
An overview of the scope of the Parent Company and Group audits
Tailor
ing the scope
Our assessment of audit risk, our evaluation of material
ity and our allocat
ion of performance material
ity determ
ine our
audit scope for each component with
in the Group. Taken together, th
is enables us to form an opin
ion on the consol
idated
financial statements. We took
into account the size, risk profile, the organisat
ion of the Group and effect
iveness of control
environment, changes in the business environment and other factors such as the level of issues and misstatements noted in
prior period when assessing the level of work to be performed at each component.
In assessing the risk of material misstatement to the consolidated financ
ial statements, and to ensure we had adequate
quantitat
ive coverage of s
ign
ificant accounts
in the financ
ial statements, of the 266 report
ing units of the Group, we selected
21 reporting units which represent 18 components in 16 countries: Bangladesh, Cameroon, India, Indonesia, Japan, Kenya,
Malaysia, Niger
ia, Pak
istan, Republic of South Africa, Singapore, Sri Lanka, United Arab Emirates, United Kingdom, United
States of America and Zambia. The defin
it
ion of a component is aligned with the structure of the Group’s consolidat
ion
system, typically these are either a branch, group of branches, group of subsid
iar
ies, a subsid
iary or an assoc
iate.
We took a centralised approach to audit
ing certa
in processes and controls, as well as the substantive testing of specif
ic
balances. This included audit work over Group's Global Business Services shared services centre, Commercial, Corporate and
Institut
ional Bank
ing, Credit Impairment and Technology.
Of the 18 components selected in 16 countries, we performed an audit of the complete financ
ial
informat
ion of 10
components in 8 countries (‘full scope components’) which were selected based on their size or risk characterist
ics. For the
remain
ing 8 components
in 8 countries (‘specif
ic scope components’), we performed aud
it procedures on specif
ic accounts
with
in that component that we cons
idered had the potential for the greatest impact on the Group financ
ial statements
either because of the size of these accounts or their risk profile.
The reporting components where we performed audit procedures accounted for 76% (2021: 76%) of the Group’s absolute
adjusted PBT, 83% (2021: 83%) of the Group’s absolute operating income and 92% (2021: 93%) of the Group’s total assets.
For the current year, the full scope components contributed 63% (2021: 68%) of the Group’s absolute adjusted PBT, 68% (2021:
73%) of the Group’s absolute operating income and 80% (2021: 82%) of the Group’s total assets. The specif
ic scope
components contributed 13% (2021: 8%) of the Group’s absolute adjusted PBT, 15% (2021: 10%) of the Group’s absolute
operating income and 12% (2021: 11%) of the Group’s total assets. The audit scope of these components may not have
included testing of all sign
ificant accounts of the component but w
ill have contributed to the coverage of sign
ificant
accounts tested for the Group overall.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
156
Independent Auditor’s report
to the members of Standard Chartered Bank continued
Of the remain
ing 245 report
ing units that together represent 24% of the Group’s absolute adjusted PBT, none ind
iv
idually
contributed more than 3% of the Group’s absolute adjusted PBT. For the components represented by these reporting units,
we performed other procedures at a Group level which included: performing analytical reviews at a Group financ
ial
statement line item level, testing entity level controls, performing audit procedures on the centralised shared service centres,
testing of consolidat
ion journals and
intercompany elim
inat
ions, inqu
ir
ing with overseas EY teams on the outcome of prior
year local statutory audits (where audited by EY) to ident
ify any potent
ial risks of material misstatement to the Group
financial statements.
The charts below illustrate the coverage obtained from the work performed by our audit teams.
Absolute adjusted Profit before tax
63% Full scope components
13% Specif
ic scope components
24% Other procedures
Total assets
80% Full scope components
12% Specif
ic scope components
8% Other procedures
Absolute operating income
68% Full scope components
15% Specif
ic scope components
17% Other procedures
Changes from the prior year
We assessed our 2022 audit scope with considerat
ion of h
istory or expectation of unusual or complex transactions and
potential for material misstatements. We also kept our audit scope under review throughout the year.
One component (Germany) which was included in our prior year audit scope and assigned full scope, which has a less than
1% contribut
ion to current year absolute adjusted PBT, 1.9% of the Group’s total assets and 1.1% of the Group’s absolute
operating income, was excluded from the Group audit scope in the current year based on our updated risk assessment.
For this component as well as Phil
ipp
ines, Uganda and Jordan, the Primary Audit Team performed certain procedures
centrally over the cash balances as at 31 December 2022. Niger
ia and Bangladesh were full scope components
in the
prior year but were designated as specif
ic scope components
in the current year based on our updated risk assessment.
In 2022 we assigned a specif
ic scope to Cameroon, Sr
i Lanka, South Africa and Zambia components that are sign
ificant
based on risk. These components were not in-scope in the prior year.
Involvement with component teams
In establish
ing our overall approach to the Group aud
it, we determined the type of work that needed to be undertaken at
each of the components by us, as the Group audit engagement team, or by component auditors from other EY global
network firms.
Of the 10 full scope components, audit procedures were performed on 1 of these (the audit of the Company) directly by
the Primary Audit Team (EY London) in the United Kingdom. For 2 specif
ic scope components, the aud
it procedures were
performed by the Primary Audit Team. Where components were audited by the Primary Team, this was under the direct
ion
and supervis
ion of the Sen
ior Statutory Auditor.
For the remain
ing 15 components, where the work was performed by component aud
itors, we determined the appropriate
level of involvement to enable us to determine that suffic
ient aud
it evidence had been obtained as a basis for our audit
opin
ion on the Group as a whole. In add
it
ion, the Group has central
ised processes and controls over key areas in its shared
service centres. Members of the Primary Audit Team undertook direct oversight, review and coordinat
ion of our shared
service centre audits.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
157
Independent Auditor’s report
to the members of Standard Chartered Bank continued
The Primary Audit Team undertook vis
its to component teams and shared serv
ices centres. During the current year’s audit
cycle, vis
its were undertaken by the Pr
imary Audit Team to the component teams in the following locations:
• Bangladesh
•
India (includ
ing the shared serv
ices centre)
•
Singapore (includ
ing the shared serv
ices centre)
•
Malaysia (includ
ing the shared serv
ices centre)
• Indonesia
• United Arab Emirates
• United States of America
These vis
its
involved oversight of work undertaken at those locations, discuss
ion of the aud
it approach and any issues aris
ing
from their work, meeting with local management, and review
ing relevant aud
it working papers on key risk areas.
In addit
ion to the s
ite vis
its, the Pr
imary Audit Team interacted regularly with the component and shared services centre audit
teams where appropriate during the audit, reviewed relevant working papers remotely and were responsible for the overall
scoping and direct
ion of the aud
it process.
The programme of our vis
its to shared serv
ice centres located in China was impacted by the travel restrict
ions and other
imposed government measures which are still in place from the prior year as a result of the ongoing COVID-19 pandemic
(albeit less so when compared to the prior year). For this location, oversight of the work was performed remotely through
established EY software collaboration platforms for the secure and timely delivery of requested audit evidence.
We also undertook video conference meetings with local audit teams and management. These virtual meetings involved
discuss
ing the aud
it approach with the component and shared service centres team and any issues aris
ing from the
ir work
and performing remote reviews of key audit workpapers.
This, together with the addit
ional procedures performed at Group level, gave us appropr
iate evidence for our opin
ion on the
Group and Company financial statements.
Climate change
Stakeholders are increas
ingly
interested in how climate change will impact the economy, includ
ing the bank
ing sector, and
further how this may consequently impact the valuation of assets and liab
il
it
ies held on bank balance sheets. The Group has
determined climate risk to be a Primary Integrated Risk Type and the assessment of that risk is explained on pages 146 - 149 in
Risk Review and Capital Review and on pages 32 - 51 in the strategic report, where they have also explained their climate
commitments.
All of these disclosures form part of the “Other informat
ion”, rather than the aud
ited financ
ial statements. Our procedures on
these unaudited disclosures therefore consisted solely of consider
ing whether they are mater
ially incons
istent w
ith the
financial statements or our knowledge obta
ined in the course of the audit or otherwise appear to be materially misstated,
in line with our responsib
il
it
ies on “Other
informat
ion”.
In planning and performing our audit we assessed the potential impacts of climate change on the Group’s business and any
consequential material impact on its financ
ial statements.
The Group has explained in the strategic report how they have reflected the impact of climate change in their financ
ial
statements, includ
ing how th
is aligns with their commitment to the aspirat
ions of the Par
is Agreement to achieve net zero
emiss
ions by 2050. S
ign
ificant judgements and est
imates relating to climate change are included in the section “Sign
ificant
accounting estimates and crit
ical judgements” of note 1 to the financial statements, wh
ich also provides the narrative
explanation of the impact of climate risk on credit risk and lending portfolios under the requirements of UK adopted IAS
and EU IFRS. As presented in these disclosures, the Group, having acknowledged the lim
itat
ions of current data available,
increas
ing soph
ist
icat
ion of models, and the evolving and nascent nature of climate impacts on internal and client assets,
has concluded climate risk to have lim
ited quant
itat
ive
impact in the immed
iate term.
Our audit effort in consider
ing the
impact of climate change on the financ
ial statements was focused on evaluat
ing whether
management’s assessment of the impact of climate risk, physical and transit
ion, the
ir climate commitments, and the
sign
ificant judgements and est
imates disclosed in note 1 have been appropriately reflected in the valuation of assets and
liab
il
it
ies, where these can be rel
iably measured, following the requirements of UK adopted IAS and EU IFRS. This was in the
context of the Group’s process being lim
ited, g
iven that this is an emerging area, as a result of lim
itat
ions in the data available
and the availab
il
ity of sophist
icated models, and as the Group cons
iders how it further embeds its climate ambit
ions
into the
planning process.
As part of this evaluation, we performed our own risk assessment, supported by our climate change internal special
ists, to
determine the risks of material misstatement in the financ
ial statements from cl
imate change which needed to be
considered in our audit.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
158
Independent Auditor’s report
to the members of Standard Chartered Bank continued
We also challenged the Directors’ considerat
ions of cl
imate change risks in their assessment of going concern and viab
il
ity,
and the associated disclosures. Where considerat
ions of cl
imate change were relevant to our assessment of going concern,
these are described above.
Based on our work, we have considered the impact of climate change on the financ
ial statements to
impact the key
audit matter of Credit Impairment. Details of our procedures and find
ings are
included in our explanation of key audit
matters below.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most sign
ificance
in our audit of the financ
ial
statements of the current period and include the most sign
ificant assessed r
isks of material misstatement (whether or not
due to fraud) that we ident
ified. These matters
included those which had the greatest effect on: the overall audit strategy,
the allocation of resources in the audit; and direct
ing the efforts of the engagement team. These matters were addressed
in
the context of our audit of the financ
ial statements as a whole, and
in our opin
ion thereon, and we do not prov
ide a separate
opin
ion on these matters.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
159
Independent Auditor’s report
to the members of Standard Chartered Bank continued
Risk
Our response to the risk
Key observations
communicated to the
Audit Committee
Credit Impairment
Accounting polic
ies (page 187); Note 8 of the
financial statements; and relevant cred
it risk
disclosures (includ
ing pages 70 and 72)
At 31 December 2022, the Group reported
total credit impa
irment balance sheet
provis
ion of $4,601 m
ill
ion (2021: $5,377 m
ill
ion).
Management’s judgements and estimates
are especially subject
ive due to s
ign
ificant
uncertainty associated with the estimat
ion
of expected future losses. Assumptions with
increased complexity in respect of the tim
ing
and measurement of expected credit losses
(ECL) include:
•
Staging
– the determinat
ion of s
ign
ificant
increase in credit risk and resultant timely
allocation of assets to the appropriate
stage in accordance with IFRS 9;
•
Model output and adjustments
–
Accounting interpretat
ions, modell
ing
assumptions and data used to build and
run the models that calculate the ECL,
includ
ing the appropr
iateness, completeness
and valuation of post-model adjustments
applied to model output to address risks
not fully captured by the models;
•
Economic scenarios
– Sign
ificant judgements
involved with the determinat
ion of parameters
used in the Monte Carlo Simulat
ion and the
evaluation of the appropriateness of the
output from the model in terms of the extent
to which it adequately generated non-
linear
ity,
includ
ing the assessment of any
Post Model adjustments;
•
Management overlays
– Appropriateness,
completeness and valuation of risk event
overlays to capture risks not ident
ified by
the credit impa
irment models,
includ
ing the
considerat
ion of the r
isk of management
override; and
•
Indiv
idually assessed ECL allowance
s –
Measurement of ind
iv
idual provis
ions
includ
ing
the assessment of probabil
ity we
ighted
recovery scenarios, exit strategies, collateral
valuations and time to collect.
In 2022, the most material factors impact
ing
the ECL were in relation to the sovereign
downgrades, the enhanced Monte Carlo model
and the impact of the global economic
environment includ
ing the
impact of relaxing
pandemic restrict
ions. In add
it
ion, where relevant
we considered the impact of climate on the
impa
irment prov
is
ions. We cons
ider that the
combinat
ion of these factors has
increased the
risk of a material misstatement to the ECL.
We evaluated the design of controls relevant to the
Group’s processes over material ECL balances, includ
ing
the judgements and estimates noted, involv
ing EY
special
ists to ass
ist us in performing our procedures to
the extent it was appropriate. Based on our evaluation
we selected the controls upon which we intended to rely
and tested those for operating effectiveness.
We performed an overall stand-back assessment of the
ECL allowance levels by stage to determine if they were
reasonable by consider
ing the overall cred
it quality of the
Group’s portfolios, risk profile and the impact of sovereign
downgrades. Our assessment also included the evaluation
of the macroeconomic environment by consider
ing trends
in
the economies and countries to which the Group is exposed,
and the consequences of the easing of global restrict
ions
from the pandemic. We performed peer benchmarking
where available to assess overall staging and provis
ion
coverage levels.
Staging
– We evaluated the criter
ia used to determ
ine
sign
ificant
increase in credit risk includ
ing quant
itat
ive
backstops with the resultant allocation of financ
ial assets
to stage 1, 2 or 3 in accordance with IFRS 9. We reperformed
the staging distr
ibut
ion for a sample of financ
ial assets
and assessed the reasonableness of staging downgrades
applied by management.
To test credit monitor
ing wh
ich largely drives the probabil
ity
of default estimates used in the staging calculation, we
challenged the risk ratings (includ
ing appropr
iate operation
of quantitat
ive backstops) for a sample of perform
ing
accounts and other accounts exhib
it
ing risk characterist
ics
such as financial d
iff
icult
ies, deferment of payment, late
payment and watchlist. We also considered the vulnerable
sectors (as defined by the PLC Group).
Modelled output and adjustments
– We performed a risk
assessment on models involved in the ECL calculation using
EY independently determined criter
ia to select a sample
of models to test. We engaged our modelling special
ists
to evaluate a sample of ECL models by assessing the
reasonableness of underpinn
ing assumpt
ions, inputs and
formulae used. This included a combinat
ion of assess
ing the
appropriateness of model design, formulae and algorithms,
alternative modelling techniques and recalculating the
Probabil
ity of Default, Loss G
iven Default and Exposure at
Default parameters. Together with our modelling special
ists,
we also assessed material post-model adjustments which
were applied as a response to risks not fully captured by the
models, includ
ing the completeness and appropr
iateness of
these adjustments, for which we considered the applied
judgments and methodology, and governance thereon.
In response to the new or enhanced models implemented
this year to address known weaknesses in previous models,
we performed substantive testing procedures, includ
ing
code review and implementat
ion test
ing.
We reperformed model monitor
ing procedures for
models classif
ied as h
igher risk in accordance with our EY
independent risk assessment.
To evaluate data quality, we agreed a sample of ECL
calculation data points to source systems, includ
ing, among
other data points, balance sheet data used to run the
models. We also tested a sample of the ECL data points
from the calculation engine through to the general ledger
and disclosures.
We highl
ighted the
following matters to
the Audit Committee:
•
the pathway to achieve
a controls reliance audit
for the Group’s models;
• our evaluation of
management’s
high-level assessment
of the potential impact
on ECL from climate
change;
•
our assessment of the
Group’s enhanced
Monte Carlo approach
includ
ing benchmark
ing
the impact of non-
linear
ity from the
baseline ECL against
UK peers and the
non-linear
ity overlay for
retail exposures; and
•
our assessment of the
appropriateness of the
Group’s methodology
used to determine
the ECL in relation to
sovereign downgrades
includ
ing the
completeness and
rationale for country
downgrades and the
resultant overlays and
ECL impact.
We concluded that
management’s
methodology, judgements
and assumptions used
in calculating credit
impa
irment are mater
ially
in accordance with the
accounting standard.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
160
Independent Auditor’s report
to the members of Standard Chartered Bank continued
Risk
Our response to the risk
Key observations
communicated to the
Audit Committee
Credit Impairment (continued)
Economic scenarios
– For new material models
implemented in 2022, in collaboration with our economists
and modelling special
ists, we challenged the completeness
and appropriateness of the macroeconomic variables
used as inputs to these models. For exist
ing mater
ial
models, we evaluated the output from our independent
model monitor
ing procedures to assess whether the
findings
ind
icated that the macro-econom
ic variables
were outside of accepted tolerances.
Addit
ionally, we
involved our economic special
ists to ass
ist
us in evaluating the reasonableness of the base forecast
for sample of macroeconomic variables most relevant for
the Group’s ECL calculation influenced by the above
assessment. Procedures performed included benchmarking
the forecast for a sample of macroeconomic variables to a
variety of global external sources.
We assessed the reasonableness of the non-linear
ity
impact on ECL allowances. By engaging our economists
and modelling special
ists, we assessed the Group’s cho
ice
of scenarios to determine sensit
iv
ity analysis of the ECL
on page 108 in the annual report. We also performed a
stand-back assessment by benchmarking the uplift and
overall ECL charge and provis
ion coverage to peers.
We evaluated the appropriateness of the non-linear
ity
overlay for retail exposures.
Management overlays
– We challenged the completeness
and appropriateness of overlays used for risks not captured
by the models, particularly regarding the worsening
economic environment impact
ing sovere
ign/country level
credit grades with a focus on Sri Lanka and Ghana which
defaulted during the year, and other countries that
suffered sign
ificant cred
it downgrades. Our procedures
included evaluating the underpinn
ing assumpt
ions and
judgments as to whether they are appropriate in prevail
ing
market condit
ions.
Indiv
idually assessed ECL allowances
– Our procedures
included challenging management's forward-looking
economic assumptions of the recovery outcomes ident
ified
and assigned ind
iv
idual probabil
ity we
ight
ings, and
recalculating a sample of ind
iv
idually assessed provis
ions.
We also engaged our valuation special
ists to test the
value of the collateral used in management’s calculations.
Our sample was based on quantitat
ive thresholds and
qualitat
ive factors,
includ
ing exposure to vulnerable and
cyclical sectors.
Where relevant, with input from our climate special
ists,
we considered the potential impact of climate change in
the determinat
ion of each element of the ECL prov
is
ions.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
161
Independent Auditor’s report
to the members of Standard Chartered Bank continued
Risk
Our response to the risk
Key observations
communicated to the
Audit Committee
User Access Management –
Priv
ileged Access Management
IT General Controls (ITGCs) support the
continuous operation of the automated
and other IT dependent controls with
in the
business processes related to financ
ial report
ing.
Effective IT general controls are needed to
ensure that IT applicat
ions process bus
iness
data as expected and that changes are made
in an appropriate manner.
During the 2020 and 2021 audits, a number
of sign
ificant pr
iv
ileged
ident
ity management
(PIM) control deficienc
ies were ident
ified by us.
Sim
ilar deficienc
ies were ident
ified by Group
Internal Audit (GIA) and the predecessor auditor
in 2018 and 2019.
The possib
il
ity of IT applicat
ion users ga
in
ing
access priv
ileges beyond those necessary to
perform their assigned duties may result in
breaches in segregation of duties, includ
ing
inappropr
iate manual
intervent
ion, unauthor
ised
changes to systems or programmes.
These deficienc
ies are still in the process of being
fully remediated. During the current year audit,
we made further observations relating to the
effectiveness of remediat
ion act
iv
it
ies.
The risk has decreased in the current year due
to management’s remediat
ion program, wh
ich
is still in progress as at the year-end date.
We evaluated the results of management’s remediat
ion
program and risk assessment for applicat
ions
in our
audit scope.
We also tested IT controls (includ
ing IT compensat
ing
controls) where possible, and also performed addit
ional
IT substantive procedures to assess the impact of risks
associated with the reported defic
ienc
ies, on the financ
ial
statements.
We assessed the impact of the results of the above on
our audit procedures over the financ
ial statements for the
year ended 31 December 2022.
• We communicated a
weakness in internal
control to the Audit
Committee throughout
the audit, in respect of
the effectiveness of
priv
ileged
ident
ity
management controls.
• We explained the
results of the addit
ional
audit procedures
performed.
As a result of the
procedures performed,
we have reduced the risk
that our audit has not
ident
ified a mater
ial error
in the Group and
Company financial
statements, related to
priv
ileged access
management, to an
appropriate level.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
162
Independent Auditor’s report
to the members of Standard Chartered Bank continued
Risk
Our response to the risk
Key observations
communicated to the
Audit Committee
Impairment assessment of goodwill and
investments in subsid
iary undertak
ings
Refer to the following:
a) Impairment of Goodwill: Accounting
polic
ies (page 264); and Note 16 of the
financial statements
b) Impairment of investments in subsid
iary
undertakings: Accounting polic
ies (page 297);
and Note 31 of the financial statements.
At 31 December 2022 the Group reported
a goodwill balance of $1,323 mill
ion (2021:
$1,379 mill
ion). In the Parent Company financial
statements, investment in subsid
iary undertak
ings
balance comprised $10,300 mill
ion (2021:
$9,694 mill
ion). Dur
ing the year the Group
impa
ired Goodw
ill by $10 mill
ion (2021: n
il),
and, in the Parent Company financ
ial statements,
recognised a reversal of impa
irment of
investment
in subsid
iary undertak
ings of $249 mill
ion
(2021: impa
irment charge of $2 m
ill
ion).
On an annual basis, management is required
to perform an impa
irment assessment for
goodwill, and to assess for ind
icators of
impa
irment
in respect of investments in subsid
iary
undertakings; where ind
icators of
impa
irment
are ident
ified, the recoverable amount of the
investment should be estimated.
Impairment assessment of goodwill is performed
by calculating value-in-use (VIU) as the
recoverable amount of the related cash
generating unit (CGU).
The Group ident
ified
ind
icators of
impa
irment
of investments in subsid
iary undertak
ings,
includ
ing macroeconom
ic and geopolit
ical factors
which have an impact on the financ
ial pos
it
ion
and performance of the subsid
iar
ies.
In assessing for ind
icators of
impa
irment, among
other procedures, management compares the
Net Asset Value (NAV) of the subsid
iary to the
carrying value of each direct subsid
iary of the
Parent Company. Where the net assets did not
support the carrying value, the recoverable
amount is estimated by determin
ing the h
igher
of the VIU or fair value less cost to sell.
Where the recoverable amount is based on
the VIU, this is modelled by reference to future
cashflow forecasts (profit forecast includ
ing a
regulatory capital haircut adjustment), discount
rates and macroeconomic assumptions such as
long-term growth rates.
Where the recoverable amount is based on
fair value less costs to sell (FVLCS), this is based
on third party valuation reports.
There is a risk that if the judgements and
assumptions underpinn
ing the
impa
irment
assessments are inappropr
iate, then the goodw
ill
and investments in subsid
iar
ies balances may
be misstated.
The level of risk remains consistent with the
prior year.
We obtained an understanding of management’s
process and evaluated the design of controls. Our audit
strategy was fully substantive.
We assessed the appropriateness of the Group’s
methodology for testing the impa
irment of goodw
ill
and investments in subsid
iary undertak
ings for
compliance with the accounting standards.
For goodwill, we assessed the appropriateness of the
cash-generating units ident
ified by management.
We agreed the inputs in the VIU model with their source
and tested the mathematical accuracy of the VIU model.
We engaged EY special
ists to support the aud
it team in
assessing reasonableness of the regulatory haircut
adjustment to future profitabil
ity forecasts and calculating
an independent range for assumptions underlying the
VIU calculations, such as the discount rate and long-term
growth rate for each cash generating unit.
We also reconciled the future profitab
il
ity forecasts of
each CGU to the Group’s approved Corporate Plan
(‘the Plan’). We engaged our special
ist team to determ
ine
the reasonableness of the forward macroeconomic
inputs used in the Plan and to assess their implementat
ion
in the modelled calculation underpinn
ing the Plan.
In addit
ion, our spec
ial
ist team benchmarked certa
in
aspects of the Plan with other comparable businesses.
We performed audit procedures to assess the
reasonableness of the forecasts by understanding
the Group Strategy, challenging key assumptions
underpinn
ing the Plan, assess
ing the feasib
il
ity of
management actions necessary to achieve the Plan
and testing the reliab
il
ity of the Group’s histor
ical
forecasting by comparing with the actual performance.
We performed a stand back assessment to evaluate the
appropriateness of the audit evidence obtained and our
conclusion in relation to these estimates. In addit
ion to
this, we also engaged our special
ist team to perform a
sensit
iv
ity analysis of the key inputs in the VIU model.
We agreed the NAV of the subsid
iar
ies against their
carrying value in the Parent Company balance sheet.
We also challenged the rationale for the impa
irment
reversal. We performed audit procedures to assess
the reasonableness of the recoverable amount of the
investment in subsid
iary, whether
it was determined
with reference to the VIU model or FVLCS.
We assessed the appropriateness of the disclosures
in respect of goodwill and investments in subsid
iary
undertakings.
Our conclusions
We concluded that the
goodwill balance as at
31 December 2022 and
the related disclosures,
are not materially
misstated.
We concluded that the
disclosures in the annual
report appropriately
reflect the sensit
iv
ity of
the carrying value of
goodwill to reasonably
possible changes in key
assumptions, noting
that these downside
sensit
iv
it
ies could requ
ire
an adjustment to the
carrying amount of
goodwill in future.
We also concluded that
the investments in
subsid
iary undertak
ings
reported in the Parent
Company financial
statements and the
associated disclosures, are
not materially misstated
as at 31 December 2022.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
163
Independent Auditor’s report
to the members of Standard Chartered Bank continued
Risk
Our response to the risk
Key observations
communicated to the
Audit Committee
Valuation of financ
ial
instruments held at
fair value with higher risk characterist
ics
Refer to the accounting polic
ies (page 198)
and Note 12 to the financial statements.
At 31 December 2022, the Group reported
financial assets measured at fa
ir value of
$218,831 mill
ion (2021: $232,840 m
ill
ion), and
financial l
iab
il
it
ies at fa
ir value of $136,266 mill
ion
(2021: $129,138 mill
ion), of wh
ich financ
ial
assets of $4,744 mill
ion (2021: $2,883 m
ill
ion)
and financial l
iab
il
it
ies of $888 m
ill
ion (2021:
$1,264 mill
ion) are class
if
ied as Level 3
in the
fair value hierarchy.
The fair value of financ
ial
instruments with
higher risk characterist
ics
involves the use of
management judgement in the selection of
valuation models and techniques, pric
ing
inputs
and assumptions and fair value adjustments.
A higher level of estimat
ion uncerta
inty is
involved for financ
ial
instruments valued using
complex models, pric
ing
inputs that have lim
ited
observabil
ity, and fa
ir value adjustments,
includ
ing the Cred
it Valuation Adjustment,
Funding Valuation Adjustment, Debit Valuation
Adjustment and Own Credit Adjustment.
We considered the following portfolios
presented a higher level of estimat
ion
uncertainty:
•
Level 3 derivat
ives and debt secur
it
ies
in
issue and a portfolio of Level 2 financ
ial
instruments whose valuation involves the
use of complex models, and
•
Unlisted equity investments, loans at fair value,
debt and other financial
instruments classif
ied
in Level 3 with unobservable pric
ing
inputs.
The level of risk remains consistent with the
prior year.
We evaluated the design and operating effectiveness
of controls relating to the valuation of financ
ial
instruments, includ
ing
independent price verif
icat
ion,
model review and approval, fair value adjustments,
income statement analysis and reporting.
Among other procedures, we engaged our valuation
special
ists to ass
ist the audit team in performing the
following procedures:
•
Test complex model-dependent valuations by
independently revaluing a sample of Level 3 and
complex Level 2 derivat
ive financial
instruments and
debt securit
ies
in issue, in order to assess the
appropriateness of models and the adequacy of
assumptions and inputs used by the Group;
•
Test valuations of other financ
ial
instruments with
higher estimat
ion uncerta
inty, such as unlisted equity
investments, loans at fair value, debt and other financ
ial
instruments. We compared management’s valuation
to our own independently developed range, where
appropriate;
•
Assessed the appropriateness of pric
ing
inputs as
part of the Independent Price Verif
icat
ion process; and
•
Compared the methodology used for fair value
adjustments to current market practice. We revalued
a sample of valuation adjustments, compared funding
and credit spreads to third party data and challenged
the basis for determin
ing
ill
iqu
id credit spreads.
Where differences between our independent valuation
and management’s valuation were outside our thresholds,
we performed addit
ional test
ing to assess the impact on
the valuation of financ
ial
instruments.
Throughout our audit procedures we considered
the continu
ing uncerta
inty aris
ing from the current
macro-economic environment includ
ing market volat
il
ity.
In addit
ion, we assessed whether there were any
ind
icators
of aggregate bias in financ
ial
instrument marking and
methodology assumptions.
We concluded that
assumptions used by
management to estimate
the fair value of financ
ial
instruments with higher
risk characterist
ics and
the recognit
ion of related
income were reasonable.
We highl
ighted the
following matters to
the Audit Committee:
• Complex model-
dependent valuations
were appropriate
based on the output
of our independent
revaluations;
•
Fair values of derivat
ive
transactions, debt
securit
ies
in issue,
unlisted equity
investments, loans,
debt and other financial
instruments valued
using pric
ing
informat
ion w
ith lim
ited
observabil
ity were not
materially misstated as
at 31 December 2022,
based on the output
of our independent
calculations; and
• Valuation adjustments
in respect of credit,
funding, own credit
and other risks were
appropriate, based
on our analysis of
market data and
benchmarking of
pric
ing
informat
ion.
The key audit matters remain consistent from prior year.
Our applicat
ion of mater
ial
ity
We apply the concept of material
ity
in planning and performing the audit, in evaluating the effect of ident
ified
misstatements on the audit and in forming our audit opin
ion.
Material
ity
The magnitude of an omiss
ion or m
isstatement that, ind
iv
idually or in the aggregate, could reasonably be expected to
influence the economic decis
ions of the users of the financial statements. Mater
ial
ity prov
ides a basis for determin
ing the
nature and extent of our audit procedures.
We determined material
ity for the Group to be $178 m
ill
ion (2021: $137 m
ill
ion), wh
ich is 5% (2021: 5%) of adjusted PBT.
This reflects actual PBT adjusted for non-recurring items relating to restructuring costs. We believe that adjusted PBT provides
us with the most appropriate measure for the users of the financ
ial statements, g
iven the Group is profit making, it is
consistent with the wider industry, it is the standard for listed and regulated entit
ies and we bel
ieve it reflects the most
relevant measure for users of the financial statements. We also bel
ieve that the adjustments are appropriate as they relate
to material non-recurring items.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
164
•
Statutory profit before tax – $3,474m
• Restructuring costs – $89m
Starting basis
Adjustments
• Totals $3,563m Adjusted PBT
•
Material
ity of $178m (5% of Adjusted PBT)
Material
ity
We determined material
ity for the Company to be $178 m
ill
ion (2021: $137 m
ill
ion), wh
ich is aligned to the material
ity of
the Group.
During the course of our audit, we performed a reassessment of our in
it
ial material
ity. Th
is assessment resulted in higher final
material
ity calculated based on the actual financial performance of the Group for the year. There were no changes to the
basis for material
ity calculat
ion from the planning stage.
Performance material
ity
The applicat
ion of mater
ial
ity at the
ind
iv
idual account or balance level. It is set at an amount to reduce to an appropriately
low level the probabil
ity that the aggregate of uncorrected and undetected m
isstatements exceeds material
ity.
On the basis of our risk assessments, together with our assessment of the Group’s overall control environment, our judgement
was that performance material
ity was 50% (2021: 50%) of our plann
ing material
ity, namely $89 m
ill
ion (2021: $69 m
ill
ion).
We have set performance material
ity at th
is percentage based on a variety of risk assessment factors such as the
expectation of misstatements, internal control environment considerat
ions and other factors such as the global complex
ity
of the Group.
Audit work at component locations for the purpose of obtain
ing aud
it coverage over sign
ificant financial statement accounts
is undertaken based on a percentage of total performance material
ity. The performance mater
ial
ity set for each component
is based on the relative size and risk of the component to the Group as a whole and our assessment of the risk of
misstatement at that component. In the current year, the range of performance material
ity allocated to components
was $8.8 mill
ion to $34.1 m
ill
ion (2021: $8 m
ill
ion to $18 m
ill
ion).
Reporting threshold
An amount below which ident
ified m
isstatements are considered as being clearly triv
ial.
We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of $8 mill
ion
(2021: $7 mill
ion), wh
ich is set at 5% of planning material
ity, as well as d
ifferences below that threshold that, in our view,
warranted reporting on qualitat
ive grounds.
When forming our opin
ion, we evaluate any uncorrected m
isstatements against both the quantitat
ive measures of
material
ity d
iscussed above as well as other relevant qualitat
ive cr
iter
ia.
Other informat
ion
The other informat
ion compr
ises the informat
ion
included in the Annual Report set out on pages 1 to 153, includ
ing the
Strategic report (pages 1 to 55), the Directors’ report (page 56 to 61), the Statement of directors’ responsib
il
it
ies (page 62),
and the informat
ion not marked as ‘aud
ited’ in the Risk review and Capital review section (page 63 to 153), and the
Supplementary informat
ion (page 321 to 327), other than the financial statements and our aud
itor’s report thereon.
The directors are responsible for the other informat
ion conta
ined with
in the annual report.
Independent Auditor’s report
to the members of Standard Chartered Bank continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
165
Independent Auditor’s report
to the members of Standard Chartered Bank continued
Our opin
ion on the financial statements does not cover the other
informat
ion and, except to the extent otherw
ise explic
itly
stated in this report, we do not express any form of assurance conclusion thereon.
Our responsib
il
ity is to read the other informat
ion and,
in doing so, consider whether the other informat
ion
is materially
incons
istent w
ith the financ
ial statements or our knowledge obta
ined in the course of the audit, or otherwise appears
to be materially misstated. If we ident
ify such mater
ial incons
istenc
ies or apparent material misstatements, we are required
to determine whether this gives rise to a material misstatement in the financ
ial statements themselves. If, based on the
work we have performed, we conclude that there is a material misstatement of the other informat
ion, we are requ
ired to
report that fact.
We have nothing to report in this regard.
Opin
ions on other matters prescr
ibed by the Companies Act 2006
In our opin
ion, based on the work undertaken
in the course of the audit:
•
the informat
ion g
iven in the strategic report and the directors’ report for the financ
ial year for wh
ich the financ
ial
statements are prepared is consistent with the financ
ial statements; and
•
the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the Parent Company and its environment obtained
in the course of the audit, we have not ident
ified mater
ial misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to
report to you if, in our opin
ion:
•
adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not
been received from branches not vis
ited by us; or
•
the Parent Company financial statements are not
in agreement with the accounting records and returns; or
•
certain disclosures of directors’ remuneration specif
ied by law are not made; or
•
we have not received all the informat
ion and explanat
ions we require for our audit.
Responsib
il
it
ies of d
irectors
As explained more fully in the directors’ responsib
il
it
ies statement set out on page 62, the d
irectors are responsible for the
preparation of the financ
ial statements and for be
ing satisf
ied that they g
ive a true and fair view, and for such internal
control as the directors determine is necessary to enable the preparation of financ
ial statements that are free from mater
ial
misstatement, whether due to fraud or error.
In preparing the financ
ial statements, the d
irectors are responsible for assessing the Group and Parent Company’s abil
ity to
continue as a going concern, disclos
ing, as appl
icable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liqu
idate the Group or the Parent Company or to cease operat
ions, or have no
realist
ic alternat
ive but to do so.
Auditor’s responsib
il
it
ies for the aud
it of the financ
ial statements
Our objectives are to obta
in reasonable assurance about whether the financ
ial statements as a whole are free from mater
ial
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opin
ion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, ind
iv
idually
or in the aggregate, they could reasonably be expected to influence the economic decis
ions of users taken on the bas
is of
these financial statements.
Explanation as to what extent the audit was considered capable of detecting irregular
it
ies, includ
ing fraud
Irregularit
ies,
includ
ing fraud, are
instances of non-compliance with laws and regulations. We design procedures in line with
our responsib
il
it
ies, outl
ined above, to detect irregular
it
ies, includ
ing fraud. The r
isk of not detecting a material misstatement
due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by,
for example, forgery or intent
ional m
isrepresentat
ions, or through collus
ion. The extent to which our procedures are capable
of detecting irregular
it
ies, includ
ing fraud
is detailed below.
However, the primary responsib
il
ity for the prevention and detection of fraud rests with both those charged with governance
of the Company and management.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
166
•
We obtained an understanding of the legal and regulatory frameworks that are applicable to the Group and determined
that the most sign
ificant are those that relate to the report
ing framework (UK-adopted IAS and EU IFRS, the Companies
Act 2006), regulations and supervisory requirements of the Prudential Regulation Authority (PRA), FRC, FCA and other
overseas regulatory requirements, includ
ing but not l
im
ited to regulat
ions in its major markets such as India, Singapore,
the United States of America, and the relevant tax compliance regulations in the jur
isd
ict
ions
in which the Group operates.
In addit
ion, we concluded that there are certa
in sign
ificant laws and regulat
ions that may have an effect on the
determinat
ion of the amounts and d
isclosures in the financ
ial statements and those laws and regulat
ions relating to
regulatory capital and liqu
id
ity, conduct, financ
ial cr
ime includ
ing ant
i-money laundering, sanctions and market abuse
recognis
ing the financial and regulated nature of the Group’s act
iv
it
ies.
•
We understood how the Group is complying with those frameworks by performing a combinat
ion of
inqu
ir
ies of senior
management and those charged with governance as required by audit
ing standards, rev
iew of board and certain
committee meeting minutes, gain
ing an understand
ing of the Group’s approach to governance, inspect
ion of regulatory
correspondence in the year and engaging with internal and external legal counsel. We also engaged EY financ
ial cr
ime
and forensics special
ists to perform procedures on areas relat
ing to anti-money laundering, whistleblow
ing, and sanct
ions
compliance. Through these procedures, we became aware of actual or suspected non-compliance. The ident
ified actual or
suspected non-compliance was not suffic
iently s
ign
ificant to our aud
it that would have resulted in being ident
ified as a key
audit matter.
•
We assessed the susceptib
il
ity of the Group’s financ
ial statements to mater
ial misstatement, includ
ing how fraud m
ight
occur by consider
ing the controls that the Group has establ
ished to address risks ident
ified by the ent
ity, or that otherwise
seek to prevent, deter or detect fraud. Our procedures to address the risks ident
ified also
included incorporation of
unpredictab
il
ity into the nature, tim
ing and/or extent of our test
ing, challenging assumptions and judgements made
by management in their sign
ificant account
ing estimates and journal entry testing.
•
Based on this understanding, we designed our audit procedures to ident
ify non-compl
iance with such laws and
regulations. Our procedures involved inqu
ir
ies of the Group’s internal and external legal counsel, money laundering
reporting officer, internal audit, certain senior management executives and focused testing on a sample basis, includ
ing
journal entry testing. We also performed inspect
ion of key regulatory correspondence from the relevant regulatory
authorit
ies as well as rev
iew of board and committee minutes.
•
For instances of actual or suspected non-compliance with laws and regulations, which have a material impact on the
financial statements, these were commun
icated by management to the Group audit engagement team and component
teams (where applicable) who performed audit procedures such as inqu
ir
ies with management, sending confirmat
ions to
external legal counsel, substantive testing and meeting with regulators. Where appropriate, we involved special
ists from
our firm to support the audit team.
•
The Group is authorised to provide banking, insurance, mortgages and home finance, consumer credit, pensions,
investments and other activ
it
ies. The Group operates in the banking industry which is a highly regulated environment.
As such, the Senior Statutory Auditor considered the experience and expertise of the Group audit engagement team,
the component teams and the shared service centre teams to ensure that the team had the appropriate competence
and capabil
it
ies, which included the use of special
ists where appropr
iate.
A further descript
ion of our respons
ib
il
it
ies for the aud
it of the financ
ial statements
is located on the Financ
ial Report
ing
Council’s website at https://www.frc.org.uk/auditorsrespons
ib
il
it
ies. This descript
ion forms part of our aud
itor’s report.
Other matters we are required to address
•
Following the recommendation from the Audit Committee, we were re-appointed by the Company at the Annual General
Meeting on 4 May 2022 to audit the financ
ial statements for the year end
ing 31 December 2022 and subsequent financ
ial
periods.
•
The period of total uninterrupted engagement is three years, covering the years ended 31 December 2020 to 31 December 2022.
•
The audit opin
ion
is consistent with the addit
ional report to the Aud
it Committee.
Use of our report
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies
Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are
required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not
accept or assume responsib
il
ity to anyone other than the Company and the Company’s members as a body, for our audit
work, for this report, or for the opin
ions we have formed.
David Canning-Jones (Senior statutory auditor)
For and on behalf of Ernst & Young LLP, Statutory Auditor
London
16 February 2023
Independent Auditor’s report
to the members of Standard Chartered Bank continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
167
Consolidated income statement
For the year ended 31 December 2022
Notes
2022
$mill
ion
2021
$mill
ion
Interest income
Interest expense
(5,314 )
(2,133 )
Net interest income
3
Fees and commiss
ion
income
Fees and commiss
ion expense
(709 )
(576 )
Net fees and commiss
ion
income
4
Net trading income
5
Other operating income
6
(114 )
Operating income
Staff costs
(5,748 )
(5,591 )
Premises costs
(228 )
(224 )
General admin
istrat
ive expenses
(75 )
(71 )
Depreciat
ion and amort
isat
ion
(611 )
(594 )
Operating expenses
7
(6,662 )
(6,480 )
Operating profit before impa
irment losses and taxat
ion
Credit impa
irment
8
Goodwill, property, plant and equipment and other impa
irment
9
(107 )
(30 )
Profit from associates and jo
int ventures
31
(13 )
Profit before taxation
Taxation
10
(1,122 )
(743 )
Profit for the year
Profit attributable to:
Non-controlling interests
28
(18 )
Parent company shareholders
Profit for the year
The notes on pages 174 to 321 form an integral part of these financ
ial statements.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
168
Consolidated statement of comprehensive income
For the year ended 31 December 2022
Notes
2022
$mill
ion
2021
$mill
ion
Profit for the year
Other comprehensive loss
Items that will not be reclassif
ied to
income statement:
(27 )
Own credit (losses)/gains on financ
ial l
iab
il
it
ies des
ignated at fair value through profit or loss
(26 )
Equity instruments at fair value through other comprehensive income
(41 )
Actuarial gains on retirement benefit obligat
ions
29
Taxation relating to components of other comprehensive income
10
(76 )
Items that may be reclassif
ied subsequently to
income statement:
(2,739 )
(869 )
Exchange differences on translation of foreign operations:
Net losses taken to equity
(1,328 )
(502 )
Net gains/(losses) on net investment hedges
(19 )
Share of other comprehensive income from associates and jo
int ventures
Debt instruments at fair value through other comprehensive income:
Net valuation losses taken to equity
(1,285 )
(331 )
Reclassif
ied to
income statement
(96 )
Net impact of expected credit losses
Cash flow hedges:
Net movement in cash flow hedge reserve¹
13
(592 )
(21 )
Taxation relating to components of other comprehensive income
10
Other comprehensive loss for the year, net of taxation
(2,766 )
(599 )
Total comprehensive (loss)/income for the year
(414 )
Total comprehensive (loss)/income attributable to:
Non-controlling interests
28
(56 )
Parent company shareholders
(358 )
Total comprehensive (loss)/income for the year
(414 )
1
This line item has been represented in 2022 as a net balance of all movements in the cash flow hedge reserve
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
169
Consolidated balance sheet
As at 31 December 2022
Notes
Group
Company
2022
$mill
ion
2021
$mill
ion
2022
$mill
ion
2021
$mill
ion
Assets
Cash and balances at central banks
12, 34
38,867
48,165
Financ
ial assets held at fa
ir value through profit or loss
12
75,792
99,705
Derivat
ive financial
instruments
12, 13
65,481
53,478
Loans and advances to banks
12, 14
18,548
16,117
Loans and advances to customers
12, 14
80,611
71,161
Investment securit
ies
12
95,372
86,389
Other assets
19
31,715
25,688
Due from subsid
iary undertak
ings and other related parties
13,214
10,741
Current tax assets
10
347
487
Prepayments and accrued income
1,598
905
Interests in associates and jo
int ventures
31
–
–
Investments in subsid
iary undertak
ings
31
10,300
9,694
Goodwill and intang
ible assets
16
2,279
2,121
Property, plant and equipment
17
430
627
Deferred tax assets
10
579
508
Assets classif
ied as held for sale
20
592
91
Total assets
435,725
425,877
Liab
il
it
ies
Deposits by banks
12
17,900
18,870
Customer accounts
12
137,422
135,478
Repurchase agreements and other sim
ilar secured borrow
ing
12, 15
1,723
283
Financ
ial l
iab
il
it
ies held at fa
ir value through profit or loss
12
66,189
73,902
Derivat
ive financial
instruments
12, 13
69,203
53,835
Debt securit
ies
in issue
12,21
34,992
33,826
Other liab
il
it
ies
22
20,990
20,460
Due to parent companies, subsid
iary undertak
ings & other
related parties
39,933
40,745
Current tax liab
il
it
ies
10
329
168
Accruals and deferred income
2,140
1,550
Subordinated liab
il
it
ies and other borrowed funds
12, 26
12,729
14,076
Deferred tax liab
il
it
ies
10
486
583
Provis
ions for l
iab
il
it
ies and charges
23
249
298
Retirement benefit obligat
ions
29
124
156
Liab
il
it
ies
included in disposal groups held for sale
20
345
–
Total liab
il
it
ies
404,754
394,230
Equity
Share capital and share premium account
27
22,393
22,393
Other reserves
(6,965 )
(4,231 )
(4,252)
(2,089)
Retained earnings
8,080
6,594
Total parent company shareholders’ equity
26,221
26,898
Other equity instruments
27
4,750
4,749
Total equity excluding non-controlling interests
30,971
31,647
Non-controlling interests
28
–
–
Total equity
30,971
31,647
Total equity and liab
il
it
ies
435,725
425,877
The Company has taken advantage of the exemption in section 408 of the Companies Act 2006 not to present its ind
iv
idual
statement of comprehensive income and related notes that form a part of these financ
ial statements. The Company profit
for the year after tax is $2,372 mill
ion (2021: Profit after tax $2,146 m
ill
ion).
The notes on pages 174 to 321 form an integral part of these financ
ial statements
irectors and authorised for issue on 16 February 2023 and signed
on its behalf by:
Bill Winters
, Director
Andy Halford
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
170
Consolidated statement of changes in equity
For the year ended 31 December 2022
Share
capital
and share
premium
account
$mill
ion
Capital
and
merger
reserves
1
$mill
ion
Own credit
adjustment
reserve
$mill
ion
Fair value
through other
comprehensive
income reserve
– debt
$mill
ion
Fair value
through other
comprehensive
income reserve
– equity
$mill
ion
Cash flow
hedge
reserve
$mill
ion
Translation
reserve
$mill
ion
Retained
earnings
$mill
ion
Parent
company
shareholders’
equity
$mill
ion
Other
equity
instruments
$mill
ion
Non-
controlling
interests
$mill
ion
Total
$mill
ion
As at 1 January 2021
(28 )
(4,053 )
Profit for the year
–
–
–
–
–
–
–
–
Other comprehensive
income/(loss)
–
–
(330 )
(16 )
(501 )
2
(574 )
–
(25 )
(599 )
Distr
ibut
ions
–
–
–
–
–
–
–
–
–
–
(83 )
(83 )
Shares issued, net of expenses
–
–
–
–
–
–
–
–
–
Other equity instruments, net of
expenses
–
–
–
–
–
–
–
–
–
–
Redemption of other equity
instruments
–
–
–
–
–
–
–
(41 )
(41 )
(1,001 )
–
(1,042 )
Share option expenses
–
–
–
–
–
–
–
–
–
Div
idends on ord
inary shares
–
–
–
–
–
–
–
(1,511 )
(1,511 )
–
–
(1,511 )
Div
idends on preference shares
and AT1 securit
ies
–
–
–
–
–
–
–
(292 )
(292 )
–
–
(292 )
Deemed distr
ibut
ion to parent
3
–
–
–
–
–
–
–
(136 )
(136 )
–
–
(136 )
Other movements
–
–
–
–
–
–
(10 )
4
–
–
As at 31 December 2021
(3 )
(11 )
(4,544 )
Profit for the year
–
–
–
–
–
–
–
–
(18 )
Other comprehensive
(loss)/income
–
–
(23 )
(963 )
(9 )
(502 )
(1,249 )
2
(2,728 )
–
(38 )
(2,766 )
Distr
ibut
ions
–
–
–
–
–
–
–
–
–
–
(87 )
(87 )
Other equity instruments issued,
net of expenses
–
–
–
–
–
–
–
–
–
–
Redemption of other
equity instruments
–
–
–
–
–
–
–
–
–
(999 )
–
(999 )
Share option expenses
–
–
–
–
–
–
–
–
–
Div
idends on ord
inary shares
–
–
–
–
–
–
–
(575 )
(575 )
–
–
(575 )
Div
idends on preference shares
and AT1 securit
ies
–
–
–
–
–
–
–
(311 )
(311 )
–
–
(311 )
Deemed distr
ibut
ion to parent
3
–
–
–
–
–
–
–
(159 )
(159 )
–
–
(159 )
Other movements
–
–
–
–
–
–
4
6
–
7
As at 31 December 2022
(26 )
(851 )
(513 )
(5,781 )
1
Includes capital reserve of $35 mill
ion, cap
ital redemption reserve of $5 mill
ion
2
Comprises actuarial gain/(loss), net of taxation on Group defined benefit schemes
3
Relates to deemed capital contribut
ion from parent company ar
is
ing from share-based payment net of taxat
ion of $159 mill
ion (2021: $136 m
ill
ion deemed cap
ital
contribut
ion ar
is
ing from share-based payment net of taxat
ion)
4
Movement related to Translation adjustment
5
Movements related to non-controlling interest from Trust Bank Singapore Lim
ited ($70 m
ill
ion) and Zod
ia Markets ($3 mill
ion)
6
Movement relating to $21mill
ion NCI on Power2SME Pte l
im
ited and $8 m
ill
ion on Currency fa
ir
7 Movements related to non-controlling interest from Trust Bank Singapore Lim
ited ($47 m
ill
ion), Power2SME Pte l
im
ited ($9 m
ill
ion) and Zod
ia Markets Holdings Lim
ited
($3 mill
ion)
Note 27 includes a descript
ion of each reserve.
The notes on pages 174 to 321 form an integral part of these financ
ial statements.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
171
Notes
Group
Company
2022
$mill
ion
2021
$mill
ion
2022
$mill
ion
2021
$mill
ion
Cash flows from operating activ
it
ies:
Profit before taxation
2,996
2,496
Adjustments for non-cash items and other adjustments included
with
in
income statement¹
33
381
(659)
Change in operating assets
33
(2,158 )
(13,364 )
(5,451)
(1,178)
Change in operating liab
il
it
ies¹
33
4,521
18,903
Contribut
ions to defined benefit schemes
29
(46 )
(94 )
(36)
(83)
UK and overseas taxes paid
10
(782 )
(557 )
(359)
(274)
Net cash from operating activ
it
ies
2,052
19,205
Cash flows from invest
ing act
iv
it
ies:
Internally generated Capital
ised Software
16
(761 )
(738 )
(501)
(503)
Purchase of property, plant and equipment
17
(139 )
(134 )
(59)
(67)
Disposal of property, plant and equipment
17
14
6
Acquis
it
ion of investment in subsid
iar
ies, associates, and jo
int
ventures, net of cash acquired
31
(25 )
(35 )
–
–
Div
idends rece
ived from subsid
iar
ies, associates and jo
int ventures
31
1,046
1,626
Purchase of investment securit
ies
(156,905 )
(171,609 )
(114,671)
(131,168)
Disposal and maturity of investment securit
ies
98,999
113,905
Net cash used in invest
ing act
iv
it
ies
(19,629 )
(19,398 )
(15,172)
(16,201)
Cash flows from financing act
iv
it
ies:
Issue of ordinary and preference share capital, net of expenses
27
–
1,273
Premises and equipment lease liab
il
ity princ
ipal payment
(129 )
(112 )
(78)
(72)
Issue of Addit
ional T
ier 1 capital, net of expenses
27
1,000
2,750
Redemption of Tier 1 capital
27
(999 )
(1,042 )
(999)
(1,042)
Gross proceeds from issue of subordinated liab
il
it
ies
33
750
–
Interest paid on subordinated liab
il
it
ies
33
(424 )
(479 )
(378)
(456)
Repayment of subordinated liab
il
it
ies
33
(1,008 )
(16 )
(1,008)
(16)
Proceeds from issue of senior debts
33
4,091
660
Repayment of senior debts
33
(1,490 )
(3,250 )
(298)
(422)
Interest paid on senior debts
33
(1 )
(16 )
(1)
(16)
Net cash inflow from non-controlling interest
28
–
–
Distr
ibut
ions and div
idends pa
id to non-controlling interests,
preference shareholders and AT1 securit
ies
(398 )
(375 )
(311)
(292)
Div
idends pa
id to ordinary shareholders
(575 )
(1,511 )
(575)
(1,511)
Net cash from financing act
iv
it
ies
2,193
856
Net (decrease)/increase in cash and cash equivalents
(8,186 )
(10,927)
3,860
Cash and cash equivalents at beginn
ing of the year
59,406
56,151
Effect of exchange rate movements on cash and cash equivalents
(2,171 )
(1,652 )
(861)
(605)
Cash and cash equivalents at end of the year
34
47,618
59,406
1
The 2021 comparative figures have been restated to reclassify $418 mill
ion of
interest paid on subordinated liab
il
it
ies, prev
iously included in ‘Change in operating
liab
il
it
ies’, to ‘Adjustments for non-cash
items'
For Bank Group, Interest received was $8,897 mill
ion (2021: $6,063 m
ill
ion) ,
interest paid was $4,356 mill
ion
(2021: $2,216 mill
ion).
For Bank Company Interest received was $5,355 mill
ion (2021: $3,583 m
ill
ion),
interest paid was $3,394 mill
ion
(2021: $1,627 mill
ion).
Cash flow statement
For the year ended 31 December 2022
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
172
Company statement of changes in equity
For the year ended 31 December 2022
Share
capital
and share
premium
account
$mill
ion
Capital
and
merger
reserves
1
$mill
ion
Own credit
adjustment
reserve
$mill
ion
Fair value
through other
comprehensive
income reserve
– debt
$mill
ion
Fair value
through other
comprehensive
income reserve
– equity
$mill
ion
Cash flow
hedge
reserve
$mill
ion
Translation
reserve
$mill
ion
Retained
earnings
$mill
ion
Parent
company
shareholders’
equity
$mill
ion
Other
equity
instruments
$mill
ion
Total
$mill
ion
As at 1 January 2021
21,120
40
(25)
168
76
(32)
(1,963)
6,157
25,541
3,000
28,541
Profit for the year
–
–
–
–
–
–
–
2,146
2,146
–
2,146
Other comprehensive income/(loss)
–
–
26
(258)
72
(7)
(186)
146
2
(207)
–
(207)
Shares issued, net of expenses
1,273
–
–
–
–
–
–
–
1,273
–
1,273
Other equity instruments issues,
net of expenses
–
–
–
–
–
–
–
–
–
2,750
2,750
Redemption of other equity instruments
–
–
–
–
–
–
–
(41)
(41)
(1,001)
(1,042)
Share option expenses
–
–
–
–
–
–
–
86
86
–
86
Div
idends on ord
inary shares
–
–
–
–
–
–
–
(1,511)
(1,511)
–
(1,511)
Div
idends on preference shares and
AT1 securit
ies
–
–
–
–
–
–
–
(292)
(292)
–
(292)
Deemed distr
ibut
ion to parent
3
–
–
–
–
–
–
–
(85)
(85)
–
(85)
Other movements
–
–
–
–
–
–
–
(12)
4
(12)
–
(12)
As at 31 December 2021
22,393
40
1
(90)
148
(39)
(2,149)
6,594
26,898
4,749
31,647
Profit for the year
–
–
–
–
–
–
–
2,372
2,372
–
2,372
Other comprehensive (loss)/income
–
–
(25)
(950)
(1)
(483)
(704)
6
2
(2,157)
–
(2,157)
Other equity instruments issued,
net of expenses
–
–
–
–
–
–
–
–
–
1,000
1,000
Redemption of other equity instruments
–
–
–
–
–
–
–
–
–
(999)
(999)
Share option expenses
–
–
–
–
–
–
–
98
98
–
98
Div
idends on ord
inary shares
–
–
–
–
–
–
–
(575)
(575)
–
(575)
Div
idends on preference shares and
AT1 securit
ies
–
–
–
–
–
–
–
(311)
(311)
–
(311)
Deemed distr
ibut
ion to parent
3
–
–
–
–
–
–
–
(104)
(104)
–
(104)
Other movements
–
–
–
–
–
–
–
–
–
–
–
As at 31 December 2022
22,393
40
(24)
(1,040)
147
(522)
(2,853)
8,080
26,221
4,750
30,971
1
Includes capital reserve of $35 mill
ion, cap
ital redemption reserve of $5 mill
ion
2
Comprises actuarial gain/(loss), net of taxation on Group defined benefit schemes
3
Relates to deemed capital contribut
ion from parent company ar
is
ing from share-based payment net of taxat
ion of $104 mill
ion (2021: $85 m
ill
ion deemed cap
ital
contribut
ion ar
is
ing from share-based payment net of taxat
ion)
4
Standard Chartered bank Saudi Arabia start-up costs $12 mill
ion
Note 27 includes a descript
ion of each reserve.
The notes on pages 174 to 321 form an integral part of these financ
ial statements.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
173
Section
Note
Page
Basis of preparation
1
Accounting polic
ies
174
Performance/return
2
Segmental informat
ion
177
3
Net interest income
185
4
Net fees and commiss
ion
186
5
Net trading income
188
6
Other operating income
189
7
Operating expenses
189
8
Credit impa
irment
190
9
Goodwill, property, plant and equipment and other impa
irment
195
10
Taxation
195
11
Div
idends
200
Assets and liab
il
it
ies held at fa
ir value
12
Financ
ial
instruments
201
13
Derivat
ive financial
instruments
244
Financ
ial
instruments held at amortised cost
14
Loans and advances to banks and customers
263
15
Reverse repurchase and repurchase agreements includ
ing other
sim
ilar lend
ing and borrowing
267
Other assets and investments
16
Goodwill and intang
ible assets
267
17
Property, plant and equipment
270
18
Leased assets
273
19
Other assets
274
20
Assets held for sale and associated liab
il
it
ies
275
Funding, accruals, provis
ions, cont
ingent
liab
il
it
ies and legal proceed
ings
21
Debt securit
ies
in issue
277
22
Other liab
il
it
ies
277
23
Provis
ions for l
iab
il
it
ies and charges
278
24
Contingent liab
il
it
ies and comm
itments
279
25
Legal and regulatory matters
281
Capital instruments, equity and reserves
26
Subordinated liab
il
it
ies and other borrowed funds
281
27
Share capital, other equity instruments and reserves
282
28
Non-controlling interests
285
Employee benefits
29
Retirement benefit obligat
ions
286
30
Share-based payments
294
Scope of consolidat
ion
31
Investments in subsid
iary undertak
ings, jo
int ventures and assoc
iates
300
32
Structured entit
ies
304
Cash flow statement
33
Cash flow statement
306
34
Cash and cash equivalents
307
Other disclosure matters
35
Related party transactions
308
36
Post balance sheet events
310
37
Auditor’s remuneration
311
38
Remuneration of directors
312
39
Related undertakings of the Group
313
Contents – Notes to the financial statements
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
174
Notes to the financial statements
1. Accounting policies
Statement of compliance
The Group financial statements consolidate Standard Chartered Bank (the Company) and its subsidiaries (together referred
to as the Group) and equity account the Group’s interests in associates and jointly controlled entities.
The parent company financial statements present information about the Company as a separate entity.
The Group financial statements have been prepared and approved by the directors in accordance with UK- adopted
international accounting standards in conformity with the requirements of the Companies Act 2006 and with international
financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union
(EU IFRS). There are no significant differences between UK-adopted international accounting standards and EU IFRS.
The Company financial statements have been prepared in accordance with UK-adopted international accounting
standards as applied in conformity with section 408 of the Companies Act 2006.
The following parts of the Risk review and Capital review form part of these financial statements:
a) From the start of Risk profile section (page 63) to the end of other principal risks in the same section
(page 127) excluding:
• Liquidity coverage ratio (LCR), (page 117)
• Stressed coverage, (page 117)
• Net stable funding ratio (NSFR), (page 118)
• Liquidity pool, (page 118)
• Interest Rate Risk in the Banking Book, (page 125)
• Operational risk, (page 127)
• Other principal risks, (page 127)
b) Capital review: from the start of ‘Capital Requirements Directive (CRD) capital base’ to the end of ‘movement in total
capital’, excluding capital ratios and risk-weighted assets (RWA)
Basis of preparation
The consolidated and Company financial statements have been prepared on a going concern basis and under the
historical cost convention, as modified by the revaluation of cash-settled share-based payments, fair value through other
comprehensive income, and financial assets and liabilities ( including derivatives) at fair value through profit or loss.
The consolidated financial statements are presented in United States dollars ($), being the presentation currency of the
Group and functional currency of the Company, and all values are rounded to the nearest million dollars, except when
otherwise indicated.
Significant accounting estimates and judgements
In determining the carrying amounts of certain assets and liabilities, the Group makes assumptions of the effects of
uncertain future events on those assets and liabilities at the balance sheet date. The Group’s estimates and assumptions are
based on historical experience and expectation of future events and are reviewed periodically. Further information about key
assumptions concerning the future, and other key sources of estimation uncertainty and judgement, are set out in the
relevant disclosure notes for the areas set out under the relevant headings below:
Significant and other accounting estimates and critical judgements
Significant accounting estimates and judgements represent those items which have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next year. Significant accounting estimates and
judgement are:
• Credit impairment, including evaluation of management overlays and post-model adjustments, and determination of
probability weightings for Stage 3 individually assessed provisions (Note 8)
• Financial instruments measured at fair value (Note 12)
• Investments in subsidiary undertakings, joint ventures and associates (Note 31) 1. Accounting polic
ies
The Group financial statements consol
idate Standard Chartered Bank (the Company) and its subsid
iar
ies (together referred
to as the Group) and equity account the Group’s interests in associates and jo
intly controlled ent
it
ies.
The parent company financial statements present
informat
ion about the Company as a separate ent
ity.
The Group financial statements have been prepared and approved by the d
irectors in accordance with UK - adopted
internat
ional account
ing standards in conformity with the requirements of the Companies Act 2006 and with internat
ional
financial report
ing standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union
(EU IFRS). There are no sign
ificant d
ifferences between UK-adopted internat
ional account
ing standards and EU IFRS.
The Company financial statements have been prepared
in accordance with UK-adopted internat
ional account
ing
standards as applied in conformity with section 408 of the Companies Act 2006.
The following parts of the Risk review and Capital review form part of these financ
ial statements:
a) From the start of Risk profile section (page 63) to the end of other princ
ipal r
isks in the same section
(page 127) excluding:
•
Liqu
id
ity coverage ratio (LCR), (page 117)
• Stressed coverage, (page 117)
•
Net stable funding ratio (NSFR), (page 118)
• Liqu
id
ity pool, (page 118)
•
Interest Rate Risk in the Banking Book, (page 125)
• Operational risk, (page 127)
•
Other princ
ipal r
isks, (page 127)
b) Capital review: from the start of ‘Capital Requirements Direct
ive (CRD) cap
ital base’ to the end of ‘movement in total
The consolidated and Company financ
ial statements have been prepared on a go
ing concern basis and under the
histor
ical cost convent
ion, as modif
ied by the revaluat
ion of cash-settled share-based payments, fair value through other
comprehensive income, and financ
ial assets and l
iab
il
it
ies (
includ
ing der
ivat
ives) at fa
ir value through profit or loss.
The consolidated financ
ial statements are presented
in United States dollars ($), being the presentation currency of the
Group and functional currency of the Company, and all values are rounded to the nearest mill
ion dollars, except when
otherwise ind
ificant account
ing estimates and judgements
In determin
ing the carry
ing amounts of certain assets and liab
il
it
ies, the Group makes assumpt
ions of the effects of
uncertain future events on those assets and liab
il
it
ies at the balance sheet date. The Group’s est
imates and assumptions are
based on histor
ical exper
ience and expectation of future events and are reviewed period
ically. Further
informat
ion about key
assumptions concerning the future, and other key sources of estimat
ion uncerta
inty and judgement, are set out in the
relevant disclosure notes for the areas set out under the relevant headings below:
Sign
ificant and other account
ing estimates and crit
ical judgements
Sign
ificant account
ing estimates and judgements represent those items which have a sign
ificant r
isk of causing a material
adjustment to the carrying amounts of assets and liab
il
it
ies w
ith
in the next year. S
ign
ificant account
ing estimates and
judgement are:
•
Credit impa
irment,
includ
ing evaluat
ion of management overlays and post-model adjustments, and determinat
ion of
probabil
ity we
ight
ings for Stage 3
ind
iv
idually assessed provis
ions (Note 8)
•
Financ
ial
instruments measured at fair value (Note 12)
•
Investments in subsid
iary undertak
ings, jo
int ventures and assoc
iates (Note 31)
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
175
Notes to the financial statements cont
inued
1. Accounting polic
ies cont
inued
Other areas of accounting estimate and judgement
Other areas of accounting estimate and judgement do not meet the defin
it
ion under IAS 1 of sign
ificant account
ing
estimates or crit
ical account
ing judgements, but the recognit
ion of certa
in material assets and liab
il
it
ies are based on
assumptions and/or are subject to long-term uncertaint
ies. The other areas of account
ing estimate and judgement are:
• Taxation (Note 10)
• Goodwill impa
irment (Note 16)
•
Property, plant and equipment (Note 17)
•
Provis
ions for l
iab
il
it
ies and charges (Note 23)
•
Retirement benefit obligat
ions (Note 29)
• Share-based payments (Note 30)
Climate impact on the Group's balance sheet
Climate, and the impact of climate on the Group’s balance sheet is considered as an area of accounting estimate and
judgement through the uncertainty of future events and the impact of that uncertainty on the Group’s assets and liab
il
it
ies.
It is noted that although not currently quantitat
ively mater
ial, the Group considers climate to be qualitat
ively mater
ial to the
Group but with the impact crystalis
ing over the longer term.
The PLC Group has assessed the impact of climate risk on the financ
ial report. Th
is is set out with
in the Susta
inable and
Responsible Business chapter on pages 64 to 66 in the PLC Annual Report which incorporates the Group’s Climate-related
Financ
ial D
isclosures which align with the recommendations from the Task Force for Climate related Financ
ial D
isclosures
(TCFD). Further risk disclosure has been provided on pages 148 and 149 of the Princ
ipal R
isks and Uncertaint
ies sect
ion of the
Annual Report where the Group has described how it manages climate risk as an Integrated Risk Type.
The areas of impact and where judgements and the use of estimates have been applied were credit risk and the impact on
lending portfolios; ESG features with
in
issued loans and bonds; physical risk on our mortgage lending portfolio; and, the
corporate plan, in respect of which forward looking cash flows impact the recoverabil
ity of certa
in assets, includ
ing of
goodwill, deferred tax assets and investments in subsid
iary undertak
ings.
This assessment on the corporate loan portfolio was undertaken by consider
ing the matur
ity profile of the loan portfolio
which is major
ity shorter term. Trans
it
ion r
isk, as our clients move to lower carbon emitt
ing revenues, (e
ither by virtue of
legislat
ion or chang
ing end customer preference) is considered with reference to client transit
ion pathways and man
ifests
over a longer term than the maturity of the loan book (up to 2050). Further transit
ion r
isk is managed through reviews of
clients with ESG risk by the Group’s Risk function, and through an ongoing process of ident
ify
ing clients which have transit
ion
pathways that are Paris 1.5 degree compliant and congruent with the Groups.
Physical risk is already included with
in the majority of our mortgage lend
ing and we have applied scenario analysis against
the pathways of different temperature addit
ions and country pol
icy scenarios. We also assess the impact of climate risk on
the classif
icat
ion of financ
ial
instruments under IFRS 9, when Environmental, Sustainab
il
ity or Governance (ESG) triggers may
affect the cash flows received by the Group under the contractual terms of the instrument.
The PLC Group Climate Risk team have performed a top-down quantitat
ive assessment of the
impact of climate risk on the
IFRS 9 ECL provis
ion at the PLC Group level. Th
is assessment has been performed across both the CCIB and CPBB portfolios.
CCIB includes Corporates, Sovereign, Asset Backed Securit
ies, Commerc
ial and Special
ised Lend
ing. CPBB includes
Mortgages, Personal Loans and Credit Cards. The climate adjusted ECL was estimated by adding climate scalars
(multipl
icat
ive adjustments) to the business as usual ECL. The scalars, such as LGD increases, have been informed by the
judgement of using the three pathways/scenarios with
in the Bank of England 2021 Cl
imate Bienn
ial Exploratory Scenar
io
(CBES), being Early Action, Late Action and No Addit
ional Act
ion. These pathways have been probabil
ity we
ighted and
generally include the addit
ion of carbon charges/taxes over t
ime to model transit
ion r
isk. The impact assessment which is
considered a resulted in an marginal ECL increase across CCIB and CPBB which, will not be recorded as an overlay for The
Group or PLC Group at the 2022 year end.
The PLC Groups corporate plan has a 5 year outlook and already includes where we have committed to transit
ion
ing away
from certain high carbon sectors (i.e. coal), offset by transit
ion finance opportun
it
ies. Th
is is shorter term than many of the
climate scenario outlooks but seeks to capture the nearer term performance as required by recoverabil
ity models. We have
for the first time in the 2023 corporate plan included antic
ipated ECL charges l
inked to climate for three sectors (Oil and Gas,
Metals and Min
ing and Power) over the 5 years. Th
is addit
ion of ECL has not
in itself, impacted the recoverabil
ity of assets
supported by discounted cash flow models (such as Value in Use) which util
ise the Corporate plan.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
176
Notes to the financial statements cont
inued
With the aim to enhance our internal scenario analysis capabil
it
ies in line with our Risk Appetite Statement, in 2022 the PLC
Group assessed the impact on our CCIB corporate client portfolio based on three International Energy Agency (IEA) scenarios
and three Phase 2 scenarios from the NGFS (Which align to the CBES scenarios) and partic
ipated
in the Monetary Authority
of Singapore Industry-Wide Stress Test. We also assessed the impact of sea level rises under various Intergovernmental Panel
on Climate Change (IPCC) Representative Concentration Pathways (RCP) scenarios to explore the Physical Risk impact on the
Consumer, Private and Business Banking (CPBB) resident
ial mortgage portfol
io over short- and long-term time horizons for
internal risk management purposes. Notwithstand
ing these challenges, our work to date, us
ing certain assumptions and
proxies, ind
icates that our bus
iness is resil
ient to all Network of Central Banks and Superv
isors for Greening the Financ
ial
System (NGFS) and IEA scenarios that were explored.
The Group, although acknowledging the lim
itat
ions of current data available, increas
ing soph
ist
icat
ion of models evolving
and nascent nature of climate impacts on internal and client assets, considers Climate Risk to have lim
ited quant
itat
ive
impact in the immed
iate term and as a longer term r
isk will be addressed through its business strategy and financ
ial plann
ing
Certain comparatives have been represented in line with current year disclosures. Details of these changes are set out in the
relevant sections and notes below:
• Note 2 Segmental informat
ion
•
Note 3 Net interest income
•
Note 4 Net fees and commiss
ion
• Note 12 Financ
ial
instruments
•
Note 13 Derivat
ive financial
instruments
• Note 32 Structured entit
ies
•
Note 33 Cash flow statement
•
Risk review: various credit risk tables for new segment Ventures
•
IFRS 17 Insurance Contracts
IFRS 17 Insurance Contracts was issued in May 2017 (and subsequently amended in June 2020) to replace IFRS 4
Insurance Contracts and to establish a comprehensive standard for inceptors of insurance polic
ies. The Group w
ill
apply IFRS 17 for annual reporting periods beginn
ing on January 1, 2023. IFRS 17 w
ill not have a material impact on the
These financial statements were approved by the Board of d
irectors on 16 February 2023. The directors have made an
assessment of the Group’s abil
ity to cont
inue as a going concern. This assessment has been made having considered the
impact of COVID-19, macroeconomic and geopolit
ical headw
inds, includ
ing:
•
Review of the Group Strategy and Corporate Plan
•
An assessment of the actual performance to date, loan book quality, credit impa
irment, legal, regulatory and compl
iance
matters, and the updated annual budget
•
Considerat
ion of stress test
ing performed, includ
ing both the Bank of England annual stress test and a Group Recovery
and Resolution Plan (RRP) as submitted to the PRA. Both these submiss
ions
include the applicat
ion of stressed scenar
ios
includ
ing; COVID add
it
ional waves w
ith the accompanying economic shocks, credit impact and short term liqu
id
ity shocks.
Under the tests and through the range of scenarios, the results of these exercises and the RRP demonstrate that the Group
has sufficient cap
ital and liqu
id
ity to continue as a going concern and meet min
imum regulatory cap
ital and liqu
id
ity
requirements
•
Analysis of the capital, funding and liqu
id
ity posit
ion of the Group,
includ
ing the cap
ital and leverage ratios, and ICAAP
which summarises the Group’s capital and risk assessment processes, assesses its capital requirements and the adequacy
of resources to meet them. Further, funding and liqu
id
ity was considered in the context of the risk appetite metrics,
includ
ing the ADR and LCR rat
ios
•
The Group’s Internal Liqu
id
ity Adequacy Assessment Process (ILAAP), which considers the Group’s liqu
id
ity posit
ion,
its
framework and whether sufficient l
iqu
id
ity resources are being mainta
ined to meet l
iab
il
it
ies as they fall due, was also
reviewed
•
The level of debt in issue, includ
ing redempt
ions and issuances during the year, debt falling due for repayment in the
next 12 months and further planned debt issuances, includ
ing the appet
ite in the market for the Group’s debt
•
A detailed review of all princ
ipal and emerg
ing risks
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
177
Notes to the financial statements cont
inued
Based on the analysis performed, the directors confirm they are satisf
ied that the Group has adequate resources to cont
inue
in business for a period of at least 12 months from 16 February 2023. For this reason, the Group continues to adopt the going
concern basis of accounting for preparing the financ
ion
The analysis reflects how the client segments and geographic regions are managed internally. This is described as the
Management View (on an underlying basis) and is princ
ipally the locat
ion from which a client relationsh
ip
is managed,
which may differ from where it is financ
ially booked and may be shared between bus
inesses and/or regions. In certain
instances this approach is not appropriate and a Financ
ial V
iew is disclosed, that is, the location in which the transaction or
balance was booked. Typically, the Financ
ial V
iew is used in areas such as the Market and Liqu
id
ity Risk reviews where actual
booking location is more important for an assessment. Segmental informat
ion
is therefore on a Management View unless
The Group’s segmental reporting is in accordance with IFRS 8 Operating Segments and is reported consistently with the
internal performance framework and as presented to the Group’s Management Team.
As part of the ongoing execution of its refreshed strategy, the Group has expanded and reorganised its reporting structure
with the creation of a third client segment, Ventures, effective on 1st January 2022. Ventures is a consolidat
ion of SC Ventures
and its related entit
ies as well as the Group’s majority owned d
ig
ital bank- Trust
in Singapore.
•
SC Ventures is the platform and catalyst for the Group to promote innovat
ion,
invest in disrupt
ive financial technology
and explore alternative business models.
•
Trust Bank was launched in Singapore in partnership with FairPr
ice Group, the nat
ion’s leading grocery retailer,
in September 2022.
The changes above require comparative periods to be restated.
The following should also be noted:
•
Transactions and funding between the segments are carried out on an arm’s-length basis
•
Corporate Centre costs represent stewardship and central management services roles and activ
it
ies that are not
directly attributable to business or country operations
•
Treasury markets , joint ventures and assoc
iate investments are managed in the regions and are included with
in
the applicable region. However, they are not managed directly by a client segment and are therefore included in the
Central & other items segment
•
In addit
ion to treasury act
iv
it
ies, Corporate Centre costs and other Group related functions, Central & other items for
regions includes globally run businesses or activ
it
ies that are managed by the client segments but not directly by
geographic management. These include Princ
ipal F
inance and Portfolio Management
•
The Group allocated central costs (excluding Corporate Centre costs) relating to client segments and geographic regions
using appropriate business drivers (such as in proportion to the direct cost base of each segment before allocation of
ind
irect costs) and these are reported w
ith
in operat
Restructuring items excluded from underlying results
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 sign
ificant or mater
ial in the
context of the Group’s normal business earnings for the period and items which management and investors would ordinar
ily
ident
ify separately when assess
ing underlying performance period-by period.
Restructuring charges of $115 mill
ion for 2022 reflects the
impact of actions to transform the organisat
ion to
improve
productiv
ity, pr
imar
ily redundancy related charges.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
178
Notes to the financial statements cont
inued
2. Segmental informat
ion cont
inued
Reconcil
iat
ions between underlying and statutory results are set out in the tables below:
Profit before taxation (PBT)
2022
Underlying
$mill
ion
Regulatory
Fine
$mill
ion
Restructuring
$mill
ion
Net gains on
businesses
disposed/
held for sale
$mill
ion
Goodwill
and Other
impa
irment
$mill
ion
Statutory
$mill
ion
Operating income
10,193
–
21
20
–
10,234
Operating expenses
(6,539)
–
(123)
–
–
(6,662)
Operating profit/(loss) before impa
irment losses
and taxation
3,654
–
(102)
20
–
3,572
Credit impa
irment
22
–
–
–
–
22
Other impa
irment
(84)
–
(13)
–
(10)
(107)
Profit from associates and jo
int ventures
(13)
–
–
–
–
(13)
Profit/(loss) before taxation
3,579
–
(115)
20
(10)
3,474
2021
Underlying
$mill
ion
Regulatory
Fine
$mill
ion
Restructuring
$mill
ion
Net gains on
businesses
disposed/
held for sale
$mill
ion
Goodwill
and Other
impa
irment
$mill
ion
Statutory
$mill
ion
Operating income
8,914
–
(74)
20
–
8,860
Operating expenses
(6,204)
(62)
(214)
–
–
(6,480)
Operating profit/(loss) before impa
irment losses
and taxation
2,710
(62)
(288)
20
–
2,380
Credit impa
irment
28
–
2
–
–
30
Other impa
irment
9
–
(39)
–
–
(30)
Profit from associates and jo
int ventures
1
–
–
–
–
1
Profit/(loss) before taxation
2,748
(62)
(325)
20
–
2,381
Underlying performance by client segment
2022
Corporate,
Commercial &
Institut
ional
Banking
$mill
ion
Consumer
Private &
Business
Banking
$mill
ion
Ventures
$mill
ion
Central &
other items
$mill
ion
Total
$mill
ion
Operating income
7,024
2,875
3
291
10,193
External
6,428
2,321
3
1,441
10,193
Inter-segment
596
554
–
(1,150)
–
Operating expenses
(3,813)
(1,917)
(242)
(567)
(6,539)
Operating profit before impa
irment losses and taxat
ion
3,211
958
(239)
(276)
3,654
Credit impa
irment
186
(19)
(2)
(143)
22
Other impa
irment
(8)
(6)
(20)
(50)
(84)
(Loss)/profit from associates and jo
int ventures
–
–
(16)
3
(13)
Underlying profit/(loss) before taxation
3,389
933
(277)
(466)
3,579
Restructuring
(43)
(33)
(1)
(38)
(115)
Goodwill impa
irment and other
items
–
–
–
10
10
Statutory profit/(loss) before taxation
3,346
900
(278)
(494)
3,474
Total assets
299,628
47,435
900
202,771
550,734
Total liab
il
it
ies
348,587
66,777
517
100,710
516,591
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
179
Notes to the financial statements cont
inued
2. Segmental informat
ion cont
inued
2021 (Restated)
1
Corporate,
Commercial &
Institut
ional
Banking
$mill
ion
Consumer
Private &
Business
Banking
$mill
ion
Ventures
$mill
ion
Central &
other items
$mill
ion
Total
$mill
ion
Operating income
5,703
2,680
(21)
552
8,914
External
5,560
2,323
(21)
1,052
8,914
Inter-segment
143
357
–
(500)
–
Operating expenses
(3,591)
(1,943)
(167)
(503)
(6,204)
Operating profit before impa
irment losses and taxat
ion
2,112
737
(188)
49
2,710
Credit impa
irment
216
(169)
–
(19)
28
Other impa
irment
(39)
–
–
48
9
Profit from associates and jo
int ventures
–
–
–
1
1
Underlying profit before taxation
2,289
568
(188)
79
2,748
Restructuring
(108)
(47)
–
(170)
(325)
Goodwill impa
irment and other
items
–
–
20
(62)
(42)
Statutory profit/(loss) before taxation
2,181
521
(168)
(153)
2,381
Total assets
299,608
47,506
404
197,273
544,791
Total liab
il
it
ies
340,801
65,755
51
102,747
509,354
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 client segment
2022
Corporate,
Commercial &
Institut
ional
Banking
$mill
ion
Consumer
Private &
Business
Banking
$mill
ion
Ventures
$mill
ion
Central &
other items
$mill
ion
Total
$mill
ion
Underlying operating income
7,024
2,875
3
291
10,193
Restructuring
19
–
–
2
21
Other items
–
–
–
20
20
Statutory operating income
7,043
2,875
3
313
10,234
2021 (Restated)
1
Corporate,
Commercial &
Institut
ional
Banking
$mill
ion
Consumer
Private &
Business
Banking
$mill
ion
Ventures
$mill
ion
Central &
other items
$mill
ion
Total
$mill
ion
Underlying operating income
5,703
2,680
(21)
552
8,914
Restructuring
(33)
–
–
(41)
(74)
Other items
–
–
20
–
20
Statutory operating income
5,670
2,680
(1)
511
8,860
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
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
180
Notes to the financial statements cont
inued
2. Segmental informat
ion cont
inued
Underlying performance by region
2022
Asia
$mill
ion
Africa &
Middle East
$mill
ion
Europe &
Americas
$mill
ion
Central &
other items
$mill
ion
Total
$mill
ion
Operating income
4,631
2,582
2,587
393
10,193
Operating expenses
(2,655)
(1,638)
(1,473)
(773)
(6,539)
Operating profit/(loss) before impa
irment losses and taxat
ion
1,976
944
1,114
(380)
3,654
Credit impa
irment
61
(118)
87
(8)
22
Other impa
irment
(4)
2
3
(85)
(84)
Loss from associates and jo
int ventures
–
–
–
(13)
(13)
Underlying profit/(loss) before taxation
2,033
828
1,204
(486)
3,579
Restructuring
(9)
(29)
(12)
(65)
(115)
Goodwill impa
irment and other
items
–
–
–
10
10
Statutory profit/(loss) before taxation
2,024
799
1,192
(541)
3,474
Total assets
152,356
37,515
324,039
36,824
550,734
Total liab
il
it
ies
134,639
37,912
256,031
88,009
516,591
2021
Asia
$mill
ion
Africa &
Middle East
$mill
ion
Europe &
Americas
$mill
ion
Central &
other items
$mill
ion
Total
$mill
ion
Operating income
4,274
2,435
2,006
199
8,914
Operating expenses
(2,635)
(1,610)
(1,444)
(515)
(6,204)
Operating profit/(loss) before impa
irment losses and taxat
ion
1,639
825
562
(316)
2,710
Credit impa
irment
(112)
34
120
(14)
28
Other impa
irment
–
(1)
33
(23)
9
Profit from associates and jo
int ventures
–
–
–
1
1
Underlying profit before taxation
1,527
858
715
(352)
2,748
Restructuring
(84)
(26)
(89)
(126)
(325)
Goodwill impa
irment and other
items
–
–
–
(42)
(42)
Statutory profit/(loss) before taxation
1,443
832
626
(520)
2,381
Total assets
163,441
57,404
287,372
36,574
544,791
Total liab
il
it
ies
146,644
41,257
238,220
83,233
509,354
Operating income by region
2022
Asia
$mill
ion
Africa &
Middle East
$mill
ion
Europe &
Americas
$mill
ion
Central &
other items
$mill
ion
Total
$mill
ion
Underlying operating income
4,631
2,582
2,587
393
10,193
Restructuring
21
2
(1)
(1)
21
Other items
–
–
–
20
20
Statutory operating income
4,652
2,584
2,586
412
10,234
2021
Asia
$mill
ion
Africa &
Middle East
$mill
ion
Europe &
Americas
$mill
ion
Central &
other items
$mill
ion
Total
$mill
ion
Underlying operating income
4,274
2,435
2,006
199
8,914
Restructuring
(11)
3
(31)
(35)
(74)
Other items
–
–
–
20
20
Statutory operating income
4,263
2,438
1,975
184
8,860
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
181
Notes to the financial statements cont
inued
2. Segmental informat
ion cont
inued
Addit
ional segmental
informat
ion (statutory)
2022
Corporate,
Commercial&
Institut
ional
Banking
$mill
ion
Consumer
Private &
Business
Banking
$mill
ion
Ventures
$mill
ion
Central &
other items
$mill
ion
Total
$mill
ion
Net interest income
2,428
1,773
3
247
4,451
Net fees and commiss
ion
income
1,310
944
2
(102)
2,154
Net trading and other income
3,305
158
(2)
168
3,629
Operating income
7,043
2,875
3
313
10,234
2021 (Restated)
1
Corporate,
Commercial&
Institut
ional
Banking
$mill
ion
Consumer
Private &
Business
Banking
$mill
ion
Ventures
$mill
ion
Central &
other items
$mill
ion
Total
$mill
ion
Net interest income
2,267
1,464
–
321
4,052
Net fees and commiss
ion
income
1,325
1,076
–
(6)
2,396
Net trading and other income
2,078
139
(1)
196
2,412
Operating income
5,670
2,679
(1)
511
8,860
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
2022
Asia
$mill
ion
Africa &
Middle East
$mill
ion
Europe &
Americas
$mill
ion
Central &
other items
$mill
ion
Total
$mill
ion
Net interest income
2,416
1,292
273
470
4,451
Net fees and commiss
ion
income
1,063
517
567
7
2,154
Net trading and other income
1,173
775
1,746
(65)
3,629
Operating income
4,652
2,584
2,586
412
10,234
2021
Asia
$mill
ion
Africa &
Middle East
$mill
ion
Europe &
Americas
$mill
ion
Central &
other items
$mill
ion
Total
$mill
ion
Net interest income
2,130
1,188
502
232
4,052
Net fees and commiss
ion
income
1,234
605
563
(6)
2,396
Net trading and other income
899
645
910
(42)
2,412
Operating income
4,263
2,438
1,975
184
8,860
Operating income by Key Countries
2022
Singapore
$mill
ion
India
$mill
ion
Indonesia
$mill
ion
UAE
$mill
ion
UK
$mill
ion
US
$mill
ion
Net interest income
1,093
765
106
330
(79)
340
Net fees and commiss
ion
income
715
188
34
204
110
369
Net trading and other income
336
369
76
315
1,577
102
Operating income
2,144
1,322
216
849
1,608
811
2021
Singapore
$mill
ion
India
$mill
ion
Indonesia
$mill
ion
UAE
$mill
ion
UK
$mill
ion
US
$mill
ion
Net interest income
804
820
99
254
285
214
Net fees and commiss
ion
income
850
187
43
253
52
370
Net trading and other income
249
298
72
220
781
114
Operating income
1,903
1,305
214
727
1,118
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
182
Notes to the financial statements cont
inued
Accounting Policy
Interest income for financ
ial assets held at e
ither fair value through other comprehensive income or amortised cost,
and interest expense on all financ
ial l
iab
il
it
ies held at amort
ised cost is recognised in profit or loss using the effective
interest method.
The effective interest method is a method of calculating the amortised cost of a financ
ial asset or a financial l
iab
il
ity
and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate
that discounts estimated future cash payments or receipts through the expected life of the financ
ial
instrument or, when
appropriate, a shorter period, to the net carrying amount of the financ
ial asset or financial l
iab
il
ity. When calculating
the effective interest rate, the Group estimates cash flows consider
ing all contractual terms of the financial
instrument
(for example prepayment options) but does not consider future credit losses. The calculation includes all fees paid or received
between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other
premiums or discounts. For floating-rate financ
ial
instruments, period
ic re-est
imat
ion of cash flows that reflect the
movements in the market rates of interest alters the effective interest rate. Where the estimates of cash flows have been
revised, the carrying amount of the financ
ial asset or l
iab
il
ity is adjusted to reflect the actual and revised cash flows,
discounted at the instruments orig
inal effect
ive interest rate. The adjustment is recognised as interest income or expense
in the period in which the revis
ion
is made as long as the change in estimates is not due to credit issues.
Interest income for financ
ial assets that are e
ither held at fair value through other comprehensive income or amortised cost
that have become credit-impa
ired subsequent to
in
it
ial recognit
ion (stage 3) and have had amounts wr
itten off, is recognised
using the credit adjusted effective interest rate. This rate is calculated in the same manner as the effective interest rate
except that expected credit losses are included in the expected cash flows. Interest income is therefore recognised on the
amortised cost of the financ
ial asset
includ
ing expected cred
it losses. Should the credit risk on a stage 3 financ
ial asset
improve such that the financ
ial asset
is no longer considered credit-impa
ired,
interest income recognit
ion reverts to a
computation based on the rehabil
itated gross carry
ing value of the financ
ial asset.
2022
$mill
ion
2021
2
$mill
ion
Balances at central banks
745
67
Loans and advances to banks
635
321
Loans and advances to customers
5,756
4,061
Debt securit
ies
2,037
1,240
Other elig
ible b
ills
518
285
Accrued on impa
ired assets (d
iscount unwind)
1
74
211
Interest income
9,765
6,185
Of which: financ
ial
instruments held at fair value through other comprehensive income
1,508
1,018
Deposits by banks
358
68
Customer accounts
3,999
1,509
Debt securit
ies
in issue
367
98
Subordinated liab
il
it
ies and other borrowed funds
562
424
Interest expense on IFRS 16 lease liab
il
it
ies
28
34
Interest expense
5,314
2,133
Net interest income
4,451
4,052
1
Includes a $71 mill
ion (2021: $163 m
ill
ion) adjustment
in relation to interest earned on impa
ired assets as requ
ired by IFRS9 Financ
ial Instruments Recogn
it
ion
and Measurement
2
ion of
interest paid on subordinated liab
il
it
ies, prev
iously included in ‘Customer accounts’, to
‘Subordinated liab
il
it
ies and other borrowed funds’
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
183
Notes to the financial statements cont
inued
ion
Accounting policy
Fees and commiss
ions charged for serv
ices provided by the Group are recognised as or when the service is completed or
sign
ificant act performed.
Loan syndicat
ion fees are recogn
ised as revenue when the syndicat
ion has been completed and the Group reta
ined no part
of the loan package for itself, or retained a part at the same effective interest rate as for the other partic
ipants. The Group
can act as trustee or in other fiduc
iary capac
it
ies that result
in the holding or placing of assets on behalf of ind
iv
iduals, trusts,
retirement benefit plans and other inst
itut
ions. The assets and income aris
ing thereon are excluded from these financial
statements, as they are not assets and income of the Group.
The Group applies the following practical expedients:
•
informat
ion on amounts of transact
ion price allocated to unsatisf
ied (or part
ially unsatisf
ied) performance obl
igat
ions at
the end of the reporting period is not disclosed as almost all fee-earning contracts have an expected duration of less than
one year
•
promised considerat
ion
is not adjusted for the effects of a sign
ificant financing component as the per
iod between the
Group provid
ing a serv
ice and the customer paying for it is expected to be less than one year
•
incremental costs of obtain
ing a fee-earn
ing contract are recognised upfront in ‘Fees and commiss
ion expense’ rather
The determinat
ion of the serv
ices performed for the customer, the transaction price, and when the services are completed
depends on the nature of the product with the customer. The main considerat
ions on
income recognit
ion by product are
as follows:
Transaction Banking
The Group recognises fee income associated with transactional trade and cash management at the point in time the service
is provided. The Group recognises income associated with trade contingent risk exposures (such as letters of credit and
guarantees) over the period in which the service is provided.
Payment of fees is usually received at the same time the service is provided. In some cases, letters of credit and guarantees
issued by the Group have annual upfront premiums, which are amortised on a straight-line basis to fee income over the year.
Financ
ial Markets
The Group recognises fee income at the point in time the service is provided. Fee income is recognised for a sign
ificant
nonlending service when the transaction has been completed and the terms of the contract with the customer entitle the
Group to the fee. Fees are usually received shortly after the service is provided.
Syndicat
ion fees are recogn
ised when the syndicat
ion
is complete. Fees are generally received before completion of the
syndicat
ion, or w
ith
in 12 months of the transact
ion date.
Securit
ies serv
ices include custody services, fund accounting and admin
istrat
ion, and broker clearing. Fees are recognised
over the period the custody or fund management services are provided, or as and when broker services are requested.
Wealth Management
Upfront considerat
ion on bancassurance agreements
is amortised straight-line over the contractual term. Commiss
ions
for bancassurance activ
it
ies are recorded as they are earned through sales of third-party insurance products to Customers.
These commiss
ions are rece
ived with
in a short t
ime frame of the commiss
ion be
ing earned. Target-linked fees are accrued
based on percentage of the target achieved, provided it is assessed as highly probable that the target will be met. Cash
payment is received at a contractually specif
ied date after ach
ievement of a target has been confirmed.
Upfront and trail
ing comm
iss
ions for managed
investment placements are recorded as they are confirmed. Income from
these activ
it
ies is relatively even throughout the period, and cash is usually received with
in a short t
ime frame after the
commiss
ion
is earned.
Retail Products
The Group recognises most income at the point in time the Group is entitled to the fee, since most services are provided at
the time of the customer’s request.
Credit card annual fees are recognised at the time the fee is received since in most of our retail markets there are contractual
circumstances under which fees are waived, so income recognit
ion
is constrained until the uncertaint
ies assoc
iated with
the annual fee are resolved. The Group defers the fair value of reward points on its credit card reward programmes,
and recognises income and costs associated with fulfill
ing the reward at the t
ime of redemption.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
184
Notes to the financial statements cont
inued
4. Net fees and commiss
ion cont
inued
2022
$mill
ion
2021
$mill
ion
Fees and commiss
ions
income
2,863
2,972
Of which:
Financ
ial
instruments that are not fair valued through profit or loss
1,013
962
Trust and other fiduciary act
iv
it
ies
243
276
Fees and commiss
ions expense
(709)
(576)
Of which:
Financ
ial
instruments that are not fair valued through profit or loss
(225)
(182)
Trust and other fiduciary act
iv
it
ies
(14)
(9)
Net fees and commiss
ion
2,154
2,396
2022
Corporate,
Commercial &
Institut
ional
Banking
$mill
ion
Consumer
Private &
Business
Banking
$mill
ion
Ventures
$mill
ion
Central &
other items
$mill
ion
Total
$mill
ion
Transaction Banking
1,021
21
–
–
1,042
Trade
501
16
–
–
517
Cash Management
520
5
–
–
525
Financ
ial Markets
717
–
–
–
717
Lending and Portfolio Management
104
4
–
–
108
Princ
ipal F
inance
–
–
–
–
–
Wealth Management
4
–
711
–
–
711
Retail Products
5
–
337
3
–
340
Treasury
–
–
–
1
1
Others
7
(40)
13
(36)
(56)
Net fees and commiss
ion
income
1,849
1,033
16
(35)
2,863
Net fees and commiss
ion expense
(539)
(89)
(14)
(67)
(709)
Net fees and commiss
ion
1,310
944
2
(102)
2,154
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
185
Notes to the financial statements cont
inued
4. Net fees and commiss
ion cont
inued
2021
2,3
Corporate,
Commercial &
Institut
ional
Banking
$mill
ion
Consumer
Private &
Business
Banking
$mill
ion
Ventures
$mill
ion
Central &
other items
$mill
ion
Total
$mill
ion
Transaction Banking
940
27
–
–
967
Trade
501
18
–
–
519
Cash Management
439
9
–
–
448
Financ
ial Markets
662
–
–
–
662
Lending and Portfolio Management
123
–
–
–
123
Princ
ipal F
inance
(5)
–
–
–
(5)
Wealth Management
4
–
946
–
–
946
Retail Products
5
–
332
–
–
332
Treasury
–
–
–
2
2
Others
–
(19)
34
(70)
(55)
Net fees and commiss
ion
income
1
1,720
1,286
34
(68)
2,972
Net fees and commiss
ion expense
1
(395)
(209)
(34)
62
(576)
Net fees and commiss
ion
1
1,325
1,077
–
(6)
2,396
1
Fees & commiss
ion by segments was presented on a net bas
is in 2021. The presentation has been changed to gross basis for Fees & commiss
ion
income and expense.
Prior period has been restated
2
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
3
Following a reorganisat
ion of certa
in clients, there has been a reclassif
icat
ion of balances across products
4. Upfront bancassurance considerat
ion amounts are amort
ised on a straight-line basis over the contractual period to which the considerat
ion relates. Deferred
income
on the balance sheet in respect of these activ
it
ies is $ 549mill
ion (31 December 2021: $634 m
ill
ion). The
income will be earned evenly over the next 6.5 years (31 December
2021: 7.5 years). For the twelve months ended 31 December 2022, $66 mill
ion of fee
income was released from deferred income (31 December 2021: $66 mill
ion).
The Group has recognised revenue of $134 mill
ion from one of
its bancassurance contracts based on confirmat
ion from the counterparty that the annual performance
bonus will be paid to the Group for the year ended 31 December 2022.
5.
$42 mill
ion of amort
isat
ion of cap
ital
ised acqu
is
it
ion costs on credit cards have been recorded as fee and commiss
ion expense
in 2022 as against interest income until
last year. The corresponding impact for 2021 was $42 mill
ion, but the comparat
ives have not been restated based on material
Accounting policy
Gains and losses aris
ing from changes
in the fair value of financ
ial
instruments held at fair value through profit or loss are
recorded in net trading income in the period in which they arise. This includes contractual interest receivable or payable.
Income is recognised from the sale and purchase of trading posit
ions, marg
ins on market making and customer business
and fair value changes.
When the in
it
ial fair value of a financ
ial
instrument held at fair value through profit or loss relies on unobservable inputs, the
difference between the in
it
ial valuation and the transaction price is amortised to net trading income as the inputs become
observable or over the life of the instrument, whichever is shorter. Any unamortised ‘day one’ gain is released to net trading
2022
$mill
ion
2021
$mill
ion
Net trading income
3,743
2,280
Sign
ificant
items with
in net trad
ing income include:
Gains on instruments held for trading
1
3,489
2,291
Gains on financ
ial assets mandator
ily at fair value through profit or loss
951
136
(Losses) on financial assets des
ignated at fair value through profit or loss
–
(5)
Losses on financial l
iab
il
it
ies des
ignated at fair value through profit or loss
(726)
(53)
1
Includes $202mill
ion loss (31 December 2021 $187 m
ill
ion ga
in) from the transaction of foreign currency monetary assets and liab
il
it
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
186
Notes to the financial statements cont
inued
Accounting policy
Operating lease income is recognised on a straight-line basis over the period of the lease unless another systematic basis
is more appropriate.
Div
idends on equ
ity instruments are recognised when the Group’s right to receive payment is established.
On disposal of fair value through other comprehensive income debt instruments, the cumulative gain or loss recognised in
other comprehensive income is recycled to the profit or loss in other operating income.
When the Group loses control of the subsid
iary or d
isposal group, the difference between the considerat
ion rece
ived and
the carrying amount of the subsid
iary or d
isposal group is recognised as a gain or loss on sale of the business.
2022
$mill
ion
2021
$mill
ion
Other operating income includes:
Rental income from operating lease assets
5
2
Net (loss)/gain on disposal of fair value through other comprehensive income debt instruments
(157)
96
Net gain on amortized cost financ
ial assets
3
34
Net (loss)/gain on sale of businesses
(1)
12
Div
idend
income
11
11
Other
25
(23)
Other operating income
(114)
132
Accounting policy
Short-term employee benefits: salaries and social security expenses are recognised over the period in which the employees
provide the service. Variable compensation is included with
in share-based payments costs and wages and salar
ies.
Further details are disclosed in the Directors’ remuneration report (pages 308 to 309).
Pension costs: contribut
ions to defined contr
ibut
ion pens
ion schemes are recognised in profit or loss when payable.
For defined benefit plans, net interest expense, service costs and expenses are recognised in the income statement.
Further details are provided in Note 29.
Share-based compensation: the Group operates equity-settled and cash-settled share-based payment compensation plans.
The fair value of the employee services (measured by the fair value of the option granted) received in exchange for the grant
2022
$mill
ion
2021
$mill
ion
Staff costs:
Wages and salaries
4,562
4,360
Social security costs
150
144
Other pension costs (Note 29)
275
274
Share-based payment costs
156
148
Other staff costs
605
665
5,748
5,591
Other staff costs include redundancy expenses of $26 mill
ion (31 December 2021: $88 m
ill
ion). Further costs
in this category
include train
ing, travel costs and other staff related costs.
The following table summarises the number of employees with
in the Group and Company:
Group
2022
2021
Business
Support
services
Total
Business
Support
services
Total
At 31 December
20,031
47,166
67,197
19,515
45,758
65,273
Average for the year
20,069
46,334
66,403
19,986
45,481
65,467
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
187
Notes to the financial statements cont
inued
7. Operating expenses continued
Company
2022
2021
Business
Support
services
Total
Business
Support
services
Total
At 31 December
8,493
12,627
21,120
8,032
12,534
20,566
Average for the year
8,359
12,404
20,763
8,211
12,618
20,829
Details of directors’ pay, benefits, pensions and benefits and interests in shares are disclosed in Note 38 Remuneration of
Directors’ (page 309).
Transactions with directors, officers and other related parties are disclosed in Note 35.
2022
$mill
ion
2021
$mill
ion
Premises and equipment expenses
228
224
General admin
istrat
ive expenses:
UK bank levy
102
100
Provis
ion for regulatory matters
14
62
Other general admin
istrat
ive expenses
(41)
(91)
75
71
Depreciat
ion and amort
isat
ion:
Property, plant and equipment:
Premises
140
160
Equipment
86
90
226
250
Intangibles:
Software
379
339
Acquired on business combinat
ions
6
5
611
594
Total operating expenses
6,662
6,480
Operating expenses include research expenditure of $689 mill
ion (31 December 2021: $705 m
ill
ion) recogn
ised as an expense
in the year
The UK bank levy is applied to chargeable equity and liab
il
it
ies on the balance sheet of UK operat
ions. Key exclusions
from chargeable equity and liab
il
it
ies
include Tier 1 capital, insured or guaranteed retail deposits, repos secured on certain
sovereign debt and liab
il
it
ies subject to nett
ing. The rates are 0.10 per cent for short-term liab
il
it
ies and 0.05 per cent for
long-term liab
il
it
irment
Accounting policy
Sign
ificant account
ing estimates and judgements
The Group’s expected credit loss (ECL) calculations are outputs of complex models with a number of underlying assumptions.
The sign
ificant judgements
in determin
ing expected cred
it loss include:
•
The Group’s criter
ia for assess
ing if there has been a sign
ificant
increase in credit risk;
•
Development of expected credit loss models, includ
ing the cho
ice of inputs relating to macroeconomic variables;
•
Evaluation of management overlays and post-model adjustments;
•
Determinat
ion of probab
il
ity we
ight
ings for Stage 3
ind
iv
idually assessed provis
ions
The calculation of credit impa
irment prov
is
ions also
involves expert credit judgement to be applied by the credit risk
management team based upon counterparty informat
ion they rece
ive from various sources includ
ing relat
ionsh
ip
managers and on external market informat
ion. Deta
ils on the approach for determin
ing expected cred
it loss can be
found in the credit risk section, under IFRS 9 Methodology (page 65).
Estimates of forecasts of key macroeconomic variables underlying the expected credit loss calculation can be found with
in
the Risk review, Key assumptions and judgements in determin
ing expected cred
it loss (page 106).
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
188
Notes to the financial statements cont
inued
8. Credit impa
irment cont
inued
Expected credit losses
Expected credit losses are determined for all financ
ial debt
instruments that are classif
ied at amort
ised cost or fair value
through other comprehensive income, undrawn commitments and financ
ial guarantees.
An expected credit loss represents the present value of expected cash shortfalls over the residual term of a financ
ial asset,
undrawn commitment or financ
ial guarantee.
A cash shortfall is the difference between the cash flows that are due in accordance with the contractual terms of the
instrument and the cash flows that the Group expects to receive over the contractual life of the instrument.
Measurement
Expected credit losses are computed as unbiased, probabil
ity-we
ighted amounts which are determined by evaluating a
range of reasonably possible outcomes, the time value of money, and consider
ing all reasonable and supportable
informat
ion
includ
ing that wh
ich is forward-looking.
For material portfolios, the estimate of expected cash shortfalls is determined by multiply
ing the probab
il
ity of default
(PD) with the loss given default (LGD) with the expected exposure at the time of default (EAD). There may be multiple default
events over the lifet
ime of an
instrument. Further details on the components of PD, LGD and EAD are disclosed in the Credit
risk section. For less material Retail Banking loan portfolios, the Group has adopted less sophist
icated approaches based on
histor
ical roll rates or loss rates.
Forward-looking economic assumptions are incorporated into the PD, LGD and EAD where relevant and where they influence
credit risk, such as GDP growth rates, interest rates, house price ind
ices and commod
ity prices among others. These
assumptions are incorporated using the Group’s most likely forecast for a range of macroeconomic assumptions. These
forecasts are determined using all reasonable and supportable informat
ion, wh
ich includes both internally developed
forecasts and those available externally, and are consistent with those used for budgeting, forecasting and capital planning.
To account for the potential non-linear
ity
in credit losses, multiple forward-looking scenarios are incorporated into the range
of reasonably possible outcomes for all material portfolios. For example, where there is a greater risk of downside credit losses
than upside gains, multiple forward-looking economic scenarios are incorporated into the range of reasonably possible
outcomes, both in respect of determin
ing the PD (and where relevant, the LGD and EAD) and
in determin
ing the overall
expected credit loss amounts. These scenarios are determined using a Monte Carlo approach centred around the Group’s
most likely forecast of macroeconomic assumptions.
The period over which cash shortfalls are determined is generally lim
ited to the max
imum contractual period for which the
Group is exposed to credit risk. However, for certain revolving credit facil
it
ies, which include credit cards or overdrafts, the
Group’s exposure to credit risk is not lim
ited to the contractual per
iod. For these instruments, the Group estimates an
appropriate life based on the period that the Group is exposed to credit risk, which includes the effect of credit risk
management actions such as the withdrawal of undrawn facil
it
ies.
For credit-impa
ired financial
instruments, the estimate of cash shortfalls may require the use of expert credit judgement.
The estimate of expected cash shortfalls on a collateralised financ
ial
instrument reflects the amount and tim
ing of cash flows
that are expected from foreclosure on the collateral less the costs of obtain
ing and sell
ing the collateral, regardless of
whether foreclosure is deemed probable.
Cash flows from unfunded credit enhancements held are included with
in the measurement of expected cred
it losses
if they are part of, or integral to, the contractual terms of the instrument (this includes financ
ial guarantees, unfunded
risk partic
ipat
ions and other non-derivat
ive cred
it insurance). Although non-integral credit enhancements do not impact
the measurement of expected credit losses, a reimbursement asset is recognised to the extent of the expected credit
losses recorded.
Cash shortfalls are discounted using the effective interest rate (or credit-adjusted effective interest rate for purchased
or orig
inated cred
it-impa
ired
instruments (POCI)) on the financ
ial
instrument as calculated at in
it
ial recognit
ion or
if the
instrument has a variable interest rate, the current effective interest rate determined under the contract.
Instruments
Location of expected credit loss provis
ions
Financ
ial assets held at amort
ised cost
Loss provis
ions: netted aga
inst gross carrying value
1
Financ
ial assets held FVOCI – Debt
instruments
Other comprehensive income (FVOCI expected credit loss reserve)
2
Loan commitments
Provis
ions for l
iab
il
it
ies and charges
3
Financ
ial guarantees
Provis
ions for l
iab
il
it
ies and charges
3
1
Purchased or orig
inated cred
it-impa
ired assets do not attract an expected cred
it loss provis
ion on
in
it
ial recognit
ion. An expected cred
it loss provis
ion w
ill be
recognised only if there is an increase in expected credit losses from that considered at in
it
ial recognit
ion
2
Debt and treasury securit
ies class
if
ied as fa
ir value through other comprehensive income (FVOCI) are held at fair value on the face of the balance sheet. The expected
credit loss attributed to these instruments is held as a separate reserve with
in other comprehens
ive income (OCI) and is recycled to the profit and loss account along
with any fair value measurement gains or losses held with
in FVOCI when the appl
icable instruments are derecognised
3
Expected credit loss on loan commitments and financ
ial guarantees
is recognised as a liab
il
ity provis
ion. Where a financial
instrument includes both a loan
(i.e. financ
ial asset component) and an undrawn comm
itment (i.e. loan commitment component), and it is not possible to separately ident
ify the expected cred
it
loss on these components, expected credit loss amounts on the loan commitment are recognised together with expected credit loss amounts on the financ
ial asset.
To the extent the combined expected credit loss exceeds the gross carrying amount of the financ
ial asset, the expected cred
it loss is recognised as a liab
il
ity provis
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
189
Notes to the financial statements cont
inued
8. Credit impa
irment cont
inued
Recognit
ion
12 months expected credit losses (Stage 1)
Expected credit losses are recognised at the time of in
it
ial recognit
ion of a financial
instrument and represent the lifet
ime
cash shortfalls aris
ing from poss
ible default events up to 12 months into the future from the balance sheet date. Expected
credit losses continue to be determined on this basis until there is either a sign
ificant
increase in the credit risk of an
instrument or the instrument becomes credit-impa
ired. If an
instrument is no longer considered to exhib
it a s
ign
ificant
increase in credit risk, expected credit losses will revert to being determined on a 12-month basis.
Sign
ificant
increase in credit risk (Stage 2)
If a financial asset exper
iences a sign
ificant
increase in credit risk (SICR) since in
it
ial recognit
ion, an expected cred
it loss
provis
ion
is recognised for default events that may occur over the lifet
ime of the asset.
Sign
ificant
increase in credit risk is assessed by comparing the risk of default of an exposure at the reporting date to the risk
of default at orig
inat
ion (after taking into account the passage of time). Sign
ificant does not mean stat
ist
ically s
ign
ificant nor
is it assessed in the context of changes in expected credit loss. Whether a change in the risk of default is sign
ificant or not
is
assessed using a number of quantitat
ive and qual
itat
ive factors, the we
ight of which depends on the type of product and
counterparty. Financ
ial assets that are 30 or more days past due and not cred
it-impa
ired w
ill always be considered to have
experienced a sign
ificant
increase in credit risk. For less material portfolios where a loss rate or roll rate approach is applied
to compute expected credit loss, sign
ificant
increase in credit risk is primar
ily based on 30 days past due.
Quantitat
ive factors
include an assessment of whether there has been sign
ificant
increase in the forward-looking probabil
ity
of default (PD) since orig
inat
ion. A forward-looking PD is one that is adjusted for future economic condit
ions to the extent
these are correlated to changes in credit risk. We compare the residual lifet
ime PD at the balance sheet date to the res
idual
lifet
ime PD that was expected at the t
ime of orig
inat
ion for the same point in the term structure and determine whether both
the absolute and relative change between the two exceeds predetermined thresholds. To the extent that the differences
between the measures of default outlined exceed the defined thresholds, the instrument is considered to have experienced
a sign
ificant
increase in credit risk.
Qualitat
ive factors assessed
include those linked to current credit risk management processes, such as lending placed on
non-purely precautionary early alert (and subject to closer monitor
ing).
A non-purely precautionary early alert account is one which exhib
its r
isk or potential weaknesses of a material nature
requir
ing closer mon
itor
ing, superv
is
ion, or attent
ion by management. Weaknesses in such a borrower’s account, if left
uncorrected, could result in deteriorat
ion of repayment prospects and the l
ikel
ihood of be
ing downgraded. Indicators
could include a rapid erosion of posit
ion w
ith
in the
industry, concerns over management’s abil
ity to manage operat
ions,
weak/deteriorat
ing operat
ing results, liqu
id
ity strain and overdue balances among other factors.
Credit-impa
ired (or defaulted) exposures (Stage 3)
Financ
ial assets that are cred
it-impa
ired (or
in default) represent those that are at least 90 days past due in respect of
princ
ipal and/or
interest. Financ
ial assets are also cons
idered to be credit-impa
ired where the obl
igors are unlikely to pay on
the occurrence of one or more observable events that have a detrimental impact on the estimated future cash flows of the
financial asset. It may not be poss
ible to ident
ify a s
ingle discrete event but instead the combined effect of several events
may cause financial assets to become cred
it-impa
ired.
•
Evidence that a financ
ial asset
is credit-impa
ired
includes observable data about the following events:
•
Sign
ificant financial d
iff
iculty of the
issuer or borrower;
•
Breach of contract such as default or a past due event;
•
For economic or contractual reasons relating to the borrower’s financ
ial d
iff
iculty, the lenders of the borrower have granted
the borrower concession/s that lenders would not otherwise consider. This would include forbearance actions (page 88);
•
Pending or actual bankruptcy or other financ
ial reorgan
isat
ion to avo
id or delay discharge of the borrower’s obligat
ion/s;
•
The disappearance of an active market for the applicable financ
ial asset due to financial d
iff
icult
ies of the borrower;
•
Purchase or orig
inat
ion of a financ
ial asset at a deep d
iscount that reflects incurred credit losses
Lending commitments to a credit-impa
ired obl
igor that have not yet been drawn down are included to the extent that the
commitment cannot be withdrawn. Loss provis
ions aga
inst credit-impa
ired financial assets are determ
ined based on an
assessment of the recoverable cash flows under a range of scenarios, includ
ing the real
isat
ion of any collateral held where
appropriate. The loss provis
ions held represent the d
ifference between the present value of the expected cash flows,
discounted at the instrument’s orig
inal effect
ive interest rate, and the gross carrying value (includ
ing contractual
interest due
but not paid) of the instrument prior to any credit impa
irment. The Group’s definit
ion of default is aligned with the regulatory
definit
ion of default as set out in the UK’s onshored Capital Requirements Regulation (Article 178) and related guidel
ines.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
190
Notes to the financial statements cont
inued
8. Credit impa
irment cont
inued
Expert credit judgement
For Corporate, Commercial & Institut
ional Bank
ing, Consumer, Private and Business Banking, borrowers are graded by credit
risk management on a credit grading (CG) scale from CG1 to CG14. Once a borrower starts to exhib
it cred
it deteriorat
ion,
it will move along the credit grading scale in the performing book and when it is classif
ied as CG12 the cred
it assessment
and oversight of the loan will normally be performed by Stressed Assets Group (SAG). Borrowers graded CG12 exhib
it
well-defined weaknesses in areas such as management and/or performance but there is no current expectation of a loss
of princ
ipal or
interest. Where the impa
irment assessment
ind
icates that there w
ill be a loss of princ
ipal on a loan, the
borrower is graded a CG14 while borrowers of other credit-impa
ired loans are graded CG13. Instruments graded CG13 or
CG14 are regarded as stage 3.
For ind
iv
idually sign
ificant financial assets w
ith
in stage 3, SAG w
ill consider all judgements that have an impact on the
expected future cash flows of the asset. These include: the business prospects, industry and geo polit
ical cl
imate of the
customer, quality of realisable value of collateral, the Group’s legal posit
ion relat
ive to other claimants and any renegotiat
ion/
forbearance/modif
icat
ion options. The future cash flow calculation involves sign
ificant judgements and est
imates. As new
informat
ion becomes ava
ilable and further negotiat
ions/forbearance measures are taken the est
imates of the future cash
flows will be revised, and will have an impact on the future cash flow analysis.
For financial assets wh
ich are not ind
iv
idually sign
ificant, such as the Reta
il Banking portfolio or small business loans,
which comprise a large number of homogenous loans that share sim
ilar character
ist
ics, stat
ist
ical est
imates and techniques
are used, as well as credit scoring analysis.
Consumer and Business Banking clients are considered credit-impa
ired where they are more 90 days past due, or
if the
borrower files for bankruptcy or other forbearance programme, the borrower is deceased or the business is closed in the
case of a small business, or if the borrower surrenders the collateral, or there is an ident
ified fraud on the account. Add
it
ionally,
if the account is unsecured and the borrower has other credit accounts with the Group that are considered credit-impa
ired,
the account may be also be credit-impa
ired.
Techniques used to compute impa
irment amounts use models wh
ich analyse histor
ical repayment and default rates over
a time horizon. Where various models are used, judgement is required to analyse the available informat
ion prov
ided and
select the appropriate model or combinat
ion of models to use.
Expert credit judgement is also applied to determine whether any post-model adjustments are required for credit risk
elements which are not captured by the models.
Modif
ied financial
instruments
Where the orig
inal contractual terms of a financial asset have been mod
if
ied for cred
it reasons and the instrument has not
been derecognised (an instrument is derecognised when a modif
icat
ion results in a change in cash flows that the Group
would consider substantial), the resulting modif
icat
ion loss is recognised with
in cred
it impa
irment
in the income statement
with a corresponding decrease in the gross carrying value of the asset. If the modif
icat
ion involved a concession that the
bank would not otherwise consider, the instrument is considered to be credit-impa
ired and
is considered forborne.
Expected credit loss for modif
ied financial assets that have not been derecogn
ised and are not considered to be credit-
impa
ired w
ill be recognised on a 12-month basis, or a lifet
ime bas
is, if there is a sign
ificant
increase in credit risk. These assets
are assessed (by comparison to the orig
inat
ion date) to determine whether there has been a sign
ificant
increase in credit risk
subsequent to the modif
icat
ion. Although loans may be modif
ied for non-cred
it reasons, a sign
ificant
increase in credit risk
may occur. In addit
ion to the recogn
it
ion of mod
if
icat
ion gains and losses, the revised carrying value of modif
ied financial
assets will impact the calculation of expected credit losses, with any increase or decrease in expected credit loss recognised
with
in
impa
irment.
Forborne loans
Forborne loans are those loans that have been modif
ied
in response to a customer’s financ
ial d
iff
icult
ies. Forbearance
strategies assist clients who are temporarily in financ
ial d
istress and are unable to meet their orig
inal contractual repayment
terms. Forbearance can be in
it
iated by the client, the Group or a third-party includ
ing government sponsored programmes
or a conglomerate of credit inst
itut
ions. Forbearance may include debt restructuring such as new repayment schedules,
payment deferrals, tenor extensions, interest only payments, lower interest rates, forgiveness of princ
ipal,
interest or fees,
or relaxation of loan covenants.
Forborne loans that have been modif
ied (and not derecogn
ised) on terms that are not consistent with those readily available
in the market and/or where we have granted a concession compared to the orig
inal terms of the loans are cons
idered
credit-impa
ired
if there is a detrimental impact on cash flows. The modif
icat
ion loss (see Classif
icat
ion and measurement –
Modif
icat
ions) is recognised in the profit or loss with
in cred
it impa
irment and the gross carry
ing value of the loan reduced
by the same amount. The modif
ied loan
is disclosed as ‘Loans subject to forbearance – credit-impa
ired’.
Loans that have been subject to a forbearance modif
icat
ion, but which are not considered credit-impa
ired (not class
if
ied
as CG13 or CG14), are disclosed as ‘Forborne – not credit-impa
ired’. Th
is may include amendments to covenants with
in the
contractual terms.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
191
Notes to the financial statements cont
inued
8. Credit impa
irment cont
inued
Write-offs of credit-impa
ired
instruments and reversal of impa
irment
To the extent a financial debt
instrument is considered irrecoverable, the applicable portion of the gross carrying value is
written off against the related loan provis
ion. Such loans are wr
itten off after all the necessary procedures have been
completed, it is decided that there is no realist
ic probab
il
ity of recovery and the amount of the loss has been determ
ined.
Subsequent recoveries of amounts previously written off decrease the amount of the provis
ion for cred
it impa
irment
in
the income statement.
Loss provis
ions on purchased or or
ig
inated cred
it-impa
ired
instruments (POCI)
The Group measures expected credit loss on a lifet
ime bas
is for POCI instruments throughout the life of the instrument.
However, expected credit loss is not recognised in a separate loss provis
ion on
in
it
ial recognit
ion for POCI
instruments
as the lifet
ime expected cred
it loss is inherent with
in the gross carry
ing amount of the instruments. The Group recognises
the change in lifet
ime expected cred
it losses aris
ing subsequent to
in
it
ial recognit
ion
in the income statement and the
cumulative change as a loss provis
ion. Where l
ifet
ime expected cred
it losses on POCI instruments are less than those at
in
it
ial recognit
ion, then the favourable d
ifferences are recognised as impa
irment ga
ins in the income statement (and as
impa
irment loss where the expected cred
it losses are greater).
A period may elapse from the point at which instruments enter lifet
ime expected cred
it losses (stage 2 or stage 3) and are
reclassif
ied back to 12-month expected cred
it losses (stage 1). For financ
ial assets that are cred
it-impa
ired (stage 3), a transfer
to stage 2 or stage 1 is only permitted where the instrument is no longer considered to be credit-impa
ired. An
instrument will
no longer be considered credit-impa
ired when there
is no shortfall of cash flows compared to the orig
inal contractual terms.
For financial assets w
ith
in stage 2, these can only be transferred to stage 1 when they are no longer cons
idered to have
experienced a sign
ificant
increase in credit risk.
Where sign
ificant
increase in credit risk was determined using quantitat
ive measures, the
instruments will automatically
transfer back to stage 1 when the orig
inal PD based transfer cr
iter
ia are no longer met. Where
instruments were transferred
to stage 2 due to an assessment of qualitat
ive factors, the
issues that led to the reclassif
icat
ion must be cured before the
instruments can be reclassif
ied to stage 1. Th
is includes instances where management actions led to instruments being
classif
ied as stage 2, requ
ir
ing that act
ion to be resolved before loans are reclassif
ied to stage 1.
A forborne loan can only be removed from being disclosed as forborne if the loan is performing (stage 1 or 2) and a
further two-year probation period is met.
In order for a forborne loan to become performing, the following criter
ia have to be sat
isf
ied:
•
At least a year has passed with no default based upon the forborne contract terms
•
The customer is likely to repay its obligat
ions
in full without realis
ing secur
ity
•
The customer has no accumulated impa
irment aga
inst amount outstanding (except for ECL)
Subsequent to the criter
ia above, a further two-year probat
ion period has to be fulfilled, whereby regular payments are
2022
$mill
ion
2021
$mill
ion
Net credit impa
irment on loans and advances to banks and customers
(118)
(30)
Net credit impa
irment aga
inst profit or loss during the period relating to debt securit
ies¹
126
23
Net credit impa
irment relat
ing to financ
ial guarantees and loan comm
itments
(29)
(23)
Net credit impa
irment relat
ing to other financ
ial assets
(1)
–
Credit impa
irment
1
(22)
(30)
1
Includes impa
irment of $13 m
ill
ion (2021: N
il) on orig
inated cred
it-impa
ired debt secur
it
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
192
Notes to the financial statements cont
inued
irment
Accounting policy
Refer to the below referenced notes for the relevant accounting policy.
2022
$mill
ion
2021
$mill
ion
Impairment of goodwill (Note 16)
10
–
Impairment of property, plant and equipment (Note 17)
5
39
Impairment of other intang
ible assets (Note 16)
57
3
Other
35
1
(12)
Property, plant and equipment and other impa
irment
97
30
Goodwill, property, plant and equipment and other impa
irment
107
1
For 2022, Other primar
ily relates to
impa
irment on
interests in associates and jo
Income tax payable on profits is based on the applicable tax law in each jur
isd
ict
ion and
is recognised as an expense in the
period in which profits arise.
ing between the tax bases of assets and l
iab
il
it
ies and the
ir carrying
amounts in the consolidated financ
ial statements. Deferred tax
is determined using tax rates (and laws) that have been
enacted or substantively enacted as at the balance sheet date, and that are expected to apply when the related deferred
tax asset is realised or the deferred income tax liab
il
ity is settled.
temporary differences can be util
ised. Where perm
itted, deferred tax assets and liab
il
it
ies are offset on an ent
ity basis and
Other accounting estimates and judgements
•
Determin
ing the Group’s tax charge for the year
involves estimat
ion and judgement, wh
ich includes an interpretat
ion of
local tax laws and an assessment of whether the tax authorit
ies w
ill accept the posit
ion taken. These judgements take
account of external advice where appropriate, and the Group’s view on settling with the relevant tax authorit
ies
•
The Group provides for current tax liab
il
it
ies at the best est
imate of the amount that is expected to be paid to the tax
authorit
ies where an outflow
is probable. In making its estimates, the Group assumes that the tax authorit
ies w
ill examine
all the amounts reported to them and have full knowledge of all relevant informat
ion
•
The recoverabil
ity of the Group’s deferred tax assets
is based on management’s judgement of the availab
il
ity of future
taxable profits against which the deferred tax assets will be util
ised. In prepar
ing management forecasts the effect of
applicable laws and regulations relevant to the util
isat
ion of future taxable profits have been considered.
The following table provides analysis of taxation charge in the year:
2022
$mill
ion
2021
$mill
ion
The charge for taxation based upon the profit for the year comprises:
Current tax:
United Kingdom corporation tax at 19 per cent (2021: 19 per cent):
Current tax charge on income for the year
111
(1)
Adjustments in respect of prior years (includ
ing double tax rel
ief)
–
–
Foreign tax:
Current tax charge on income for the year
1,036
737
Adjustments in respect of prior years
11
(40)
1,158
696
Deferred tax:
Orig
inat
ion/reversal of temporary differences
(11)
112
Adjustments in respect of prior years
(25)
(65)
(36)
47
Tax on profits on ordinary activ
it
ies
1,122
743
Effective tax rate
32.3%
31.2%
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
193
Notes to the financial statements cont
inued
10. Taxation continued
The tax charge for the year of $1,122 mill
ion (31 December 2021: $743 m
ill
ion) on a profit before tax of $3,474 m
ill
ion
(31 December 2021: $2,381 mill
ion) reflects the
impact of countries with tax rates higher or lower than the UK, the most
sign
ificant of wh
ich is India, non-creditable withhold
ing tax and non-deduct
ible expense.
Tax rate:
The tax charge for the year is higher than the charge at the rate of corporation tax in the UK, 19 per cent.
The differences are explained below:
2022
2021
$mill
ion
%
$mill
ion
%
Profit on ordinary activ
it
ies before tax
3,474
2,381
Tax at 19 per cent (2021: 19 per cent)
660
19.0
452
19.0
Lower tax rates on overseas earnings
(116)
(3.3)
(81)
(3.4)
Higher tax rates on overseas earnings
390
11.2
333
14.0
Tax at domestic rates applicable where profits earned
934
26.9
704
29.6
Non-creditable withhold
ing taxes
70
2.0
103
4.3
Tax exempt income
(3)
(0.1)
(24)
(1.0)
Non-deductible expenses
53
1.5
106
4.4
Regulatory fine
–
–
12
0.5
Bank levy
19
0.5
19
0.8
Non-taxable (gains)/losses on investments
1
–
(1)
–
Payments on financial
instruments in reserves
(43)
(1.2)
(43)
(1.8)
Goodwill impa
irment
2
0.1
–
–
Deferred tax not recognised
30
0.9
2
0.1
Deferred tax assets written-off
–
–
1
–
Deferred tax rate changes
(11)
(0.3)
–
–
Adjustments to tax charge in respect of prior years
(14)
(0.4)
(105)
(4.4)
Other items
84
2.4
(31)
(1.3)
Tax on profit on ordinary activ
it
ies
1,122
32.3
743
31.2
Factors affecting the tax charge in future years:
the Group’s tax charge, and effective tax rate in future years could be
affected by several factors includ
ing acqu
is
it
ions, disposals and restructuring of our businesses, the mix of profits across
jurisd
ict
ions w
ith different statutory tax rates, changes in tax legislat
ion and tax rates and resolut
ion of uncertain tax
posit
ions. The evaluat
ion of uncertain tax posit
ions
involves an interpretat
ion of local tax laws wh
ich could be subject to
challenge by a tax authority, and an assessment of whether the tax authorit
ies w
ill accept the posit
ion taken. The Group
does not currently consider that assumptions or judgements made in assessing tax liab
il
it
ies have a s
ign
ificant r
isk of
resulting in a material adjustment with
in the next financial year.
Tax recognised in other comprehensive income
2022
2021
Current tax
$mill
ion
Deferred tax
$mill
ion
Total
$mill
ion
Current tax
$mill
ion
Deferred tax
$mill
ion
Total
$mill
ion
Items that will not be reclassif
ied to
income statement
–
17
17
–
(76)
(76)
Own credit adjustment
–
2
2
–
(3)
(3)
Equity instruments at fair value through other
comprehensive income
–
27
27
–
(58)
(58)
Retirement benefit obligat
ions
–
(12)
(12)
–
(15)
(15)
Items that may be reclassed subsequently to
income statement
–
135
135
–
68
68
Debt instruments at fair value through other
comprehensive income
–
44
44
–
63
63
Cash flow hedges
–
91
91
–
5
5
Total tax credit/(charge) recognised in equity
–
152
152
–
(8)
(8)
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
194
Notes to the financial statements cont
inued
10. Taxation continued
Current tax:
The following are the movements in current tax during the year:
Current tax comprises:
Group
Company
2022
$mill
ion
2021
$mill
ion
2022
$mill
ion
2021
$mill
ion
Current tax assets
648
808
487
605
Current tax liab
il
it
ies
(336)
(345)
(168)
(250)
Net current tax opening balance
312
463
319
355
Movements in income statement
(1,158)
(696)
(633)
(302)
Movements in other comprehensive income
–
–
–
–
Taxes paid
782
557
359
274
Other movements
(46)
(12)
(27)
(8)
Net current tax balance as at 31 December
(110)
312
18
319
Current tax assets
446
648
347
487
Current tax liab
il
it
ies
(556)
(336)
(329)
(168)
Total
(110)
312
18
319
The following are the major deferred tax liab
il
it
ies and assets recogn
ised by the Group and movements
thereon during the year:
Group
At 1 January
2022
$mill
ion
Exchange
& other
adjustments
$mill
ion
(Charge)/
credit
to profit
$mill
ion
(Charge)/
credit
to equity
$mill
ion
At 31
December
2022
$mill
ion
Deferred tax comprises:
Accelerated tax depreciat
ion
(275)
(8)
(23)
–
(306)
Impairment provis
ions on loans and advances
243
(35)
14
–
222
Tax losses carried forward
149
16
(76)
–
89
Fair value through other comprehensive income assets
(116)
–
24
71
(21)
Cash flow hedges
(2)
(1)
–
91
88
Own credit adjustment
(3)
1
–
2
–
Retirement benefit obligat
ions
18
(3)
(1)
(12)
2
Share-based payments
25
–
1
–
26
Other temporary differences
(27)
(6)
97
–
64
Net deferred tax assets
12
(36)
36
152
164
At 1 January
2021
$mill
ion
Exchange
& other
adjustments
$mill
ion
(Charge)/
credit
to profit
$mill
ion
(Charge)/
credit
to equity
$mill
ion
At 31
December
2021
$mill
ion
Deferred tax comprises:
Accelerated tax depreciat
ion
(252)
5
(28)
–
(275)
Impairment provis
ions on loans and advances
305
7
(69)
–
243
Tax losses carried forward
143
(3)
9
–
149
Fair value through other comprehensive income assets
(122)
3
(2)
5
(116)
Cash flow hedges
(7)
–
–
5
(2)
Own credit adjustment
1
(1)
–
(3)
(3)
Retirement benefit obligat
ions
29
9
(5)
(15)
18
Share-based payments
14
–
11
–
25
Other temporary differences
(42)
(22)
37
–
(27)
Net deferred tax assets
69
(2)
(47)
(8)
12
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
195
Notes to the financial statements cont
inued
10. Taxation continued
Deferred tax comprises assets and liab
il
it
ies as follows:
2022
2021
Total
$mill
ion
Asset
$mill
ion
Liab
il
ity
$mill
ion
Total
$mill
ion
Asset
$mill
ion
Liab
il
ity
$mill
ion
Deferred tax comprises:
Accelerated tax depreciat
ion
(306)
12
(318)
(275)
18
(293)
Impairment provis
ions on loans and advances
222
244
(22)
243
300
(57)
Tax losses carried forward
89
70
19
149
148
1
Fair value through other comprehensive income assets
(21)
42
(63)
(116)
(14)
(102)
Cash flow hedges
88
86
2
(2)
(3)
1
Own credit adjustment
–
–
–
(3)
–
(3)
Retirement benefit obligat
ions
2
15
(13)
18
13
5
Share-based payments
26
–
26
25
(1)
26
Other temporary differences
64
272
(208)
(27)
220
(247)
164
741
(577)
12
681
(669)
Deferred tax:
The following are the major deferred tax liab
il
it
ies and assets recogn
ised by the Company and movements
thereon during the year:
Company
At 1 January
2022
$mill
ion
Exchange
& other
adjustments
$mill
ion
(Charge)/
credit
to profit
$mill
ion
(Charge)/
credit
to equity
$mill
ion
At 31
December
2022
$mill
ion
Deferred tax comprises:
Accelerated tax depreciat
ion
(254)
(6)
(10)
–
(270)
Impairment provis
ions on loans and advances
176
(21)
(20)
–
135
Tax losses carried forward
114
17
(64)
–
67
Fair value through other comprehensive income assets
(86)
(5)
3
84
(4)
Cash flow hedges
(3)
–
–
89
86
Own credit adjustment
(3)
–
–
3
–
Retirement benefit obligat
ions
14
(3)
(1)
(9)
1
Share-based payments
9
1
–
–
10
Other temporary differences
(42)
10
100
–
68
Net deferred tax liab
il
it
ies
(75)
(7)
8
167
93
At 1 January
2021
$mill
ion
Exchange
& other
adjustments
$mill
ion
(Charge)/
credit
to profit
$mill
ion
(Charge)/
credit
to equity
$mill
ion
At 31
December
2021
$mill
ion
Deferred tax comprises:
Accelerated tax depreciat
ion
(251)
5
(8)
–
(254)
Impairment provis
ions on loans and advances
226
11
(61)
–
176
Tax losses carried forward
106
–
8
–
114
Fair value through other comprehensive income assets
(89)
1
–
2
(86)
Cash flow hedges
(3)
–
–
–
(3)
Own credit adjustment
1
–
–
(4)
(3)
Retirement benefit obligat
ions
21
10
(4)
(13)
14
Share-based payments
4
–
5
–
9
Other temporary differences
(34)
(20)
12
–
(42)
Net deferred tax liab
il
it
ies
(19)
7
(48)
(15)
(75)
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
196
Notes to the financial statements cont
inued
10. Taxation continued
Deferred tax comprises assets and liab
il
it
ies as follows:
2022
2021
Total
$mill
ion
Asset
$mill
ion
Liab
il
ity
$mill
ion
Total
$mill
ion
Asset
$mill
ion
Liab
il
ity
$mill
ion
Deferred tax comprises:
Accelerated tax depreciat
ion
(270)
6
(276)
(254)
9
(263)
Impairment provis
ions on loans and advances
135
180
(45)
176
234
(58)
Tax losses carried forward
67
51
16
114
113
1
Fair value through other comprehensive income assets
(4)
47
(51)
(86)
(5)
(81)
Cash flow hedges
86
86
–
(3)
(3)
–
Own credit adjustment
–
–
–
(3)
–
(3)
Retirement benefit obligat
ions
1
14
(13)
14
9
5
Share-based payments
10
–
10
9
(1)
10
Other temporary differences
68
195
(127)
(42)
152
(194)
93
579
(486)
(75)
508
(583)
Group
As at 31 December 2022, the Group has net deferred tax asset of $164 mill
ion (31 December 2021: $12 m
ill
ion).
The recoverabil
ity of the Group’s deferred tax assets
is based on management’s judgement of the availab
il
ity of
future taxable profits against which the deferred tax assets will be util
ised.
Of the Group’s total deferred tax assets, $89 mill
ion relates to tax losses carr
ied forward. These tax losses have arisen in
ind
iv
idual legal entit
ies and w
ill be offset as future taxable profits arise in those entit
ies.
•
$51 mill
ion of the deferred tax assets relat
ing to losses has arisen in the US. Management forecasts show that the losses
are expected to be fully util
ised over a per
iod of two years.
The remain
ing deferred tax assets of $38 m
ill
ion relat
ing to losses have arisen in other jur
isd
ict
ions and are expected to be
recovered in less than 10 years.
Company
As at 31 December 2022, the Company has net deferred tax asset of $93 mill
ion (31 December 2021: $(75) m
ill
ion).
The recoverabil
ity of the Company’s deferred tax assets
is based on management’s judgement of the availab
il
ity of
future taxable profits against which the deferred tax assets will be util
ised.
Of the Company’s total deferred tax assets, $67 mill
ion asset relates to tax losses carr
ied forward. These tax losses have
arisen in ind
iv
idual legal entit
ies and w
ill be offset as future taxable profits arise in those entit
ies.
•
$51 mill
ion of the deferred tax assets relat
ing to losses has arisen in the US. Management forecasts show that the losses
are expected to be fully util
ised over a per
iod of two years.
The remain
ing deferred tax assets of $16 m
ill
ion relat
ing to losses have arisen in other jur
isd
ict
ions and are expected to be
recovered in less than 10 years.
Unrecognised deferred tax
Group
Net
2022
$mill
ion
Gross
2022
$mill
ion
Net
2021
$mill
ion
Gross
2021
$mill
ion
No account has been taken of the following potential deferred tax
assets/(liab
il
it
ies):
Withhold
ing tax on unrem
itted earnings from overseas subsid
iar
ies
and associates
(227)
(1,841)
(170)
(1,433)
Tax losses
936
3,727
991
3,643
Held over gains on incorporation of overseas branches
(164)
(587)
(218)
(660)
Other temporary differences
451
1,702
196
741
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
197
Notes to the financial statements cont
inued
10. Taxation continued
Company
Net
2022
$mill
ion
Gross
2022
$mill
ion
Net
2021
$mill
ion
Gross
2021
$mill
ion
No account has been taken of the following potential deferred tax
assets/(liab
il
it
ies):
Withhold
ing tax on unrem
itted earnings from overseas subsid
iar
ies
and associates
(128)
(978)
(82)
(649)
Tax losses
862
3,352
945
3,432
Held over gains on incorporation of overseas branches
(164)
(587)
(218)
(660)
Other temporary differences
450
1,697
196
idends
Div
idends on ord
inary shares and preference shares classif
ied as equ
ity are recognised in equity in the year in which they
are declared.
Div
idends on ord
inary equity shares are recorded in the year in which they are declared and, in respect of the final div
idend,
have been approved by the shareholders.
The Court considers a number of factors which include the rate of recovery in the Group’s financ
ial performance, the
macroeconomic environment, and opportunit
ies to further
Ordinary equity shares
2022
2021
Cents per
share
$mill
ion
Cents per
share
$mill
ion
Interim div
idend declared and pa
id during the year
1
–
–
2
300
Interim div
idend declared and pa
id during the year
2
3
575
6
1,211
1
Interim div
idend declared and pa
id during H1 2021
2
Interim div
idend declared and pa
id during H2 2022/2021
Div
idends on ord
inary equity shares are recorded in the period in which they are declared and, in respect of the final div
idend,
have been approved by the shareholders.
Preference shares and Addit
ional T
ier 1 securit
ies
Div
idends on these preference shares and secur
it
ies class
if
ied as equ
ity are recorded in the period in which they are declared.
2022
$mill
ion
2021
$mill
ion
Non-cumulative redeemable preference shares:
7.014 per cent preference shares of $5 each
53
52
6.409 per cent preference shares of $5 each
20
13
73
65
Addit
ional T
ier 1 securit
ies: F
ixed rate resetting perpetual subordinated contingent convertible securit
ies
238
227
311
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
198
Notes to the financial statements cont
inued
ial
instruments
Classif
icat
ion and measurement
The Group classif
ies
its financ
ial assets
into the following measurement categories: amortised cost; fair value through other
comprehensive income(FVOCI); and fair value through profit or loss. Financ
ial l
iab
il
it
ies are class
if
ied as e
ither amortised cost,
or held at fair value through profit or loss. Management determines the classif
icat
ion of its financ
ial assets and l
iab
il
it
ies at
in
it
ial recognit
ion of the
instrument or, where applicable, at the time of reclassif
icat
Financ
ial assets held at amort
ised cost and fair value through other comprehensive income
Debt instruments held at amortised cost or held at FVOCI have contractual terms that give rise to cash flows that are solely
payments of princ
ipal and
interest (SPPI) characterist
ics. Pr
inc
ipal
is the fair value of the financ
ial asset at
in
it
ial recognit
ion
but this may change over the life of the instrument as amounts are repaid. Interest consists of considerat
ion for the t
ime value
of money, for the credit Risk associated with the princ
ipal amount outstand
ing during a particular period and for other basic
lending risks and costs, as well as a profit margin.
In assessing whether the contractual cash flows have SPPI characterist
ics, the Group cons
iders the contractual terms of the
instrument. This includes assessing whether the financ
ial asset conta
ins a contractual term that could change the tim
ing or
amount of contractual cash flows such that it would not meet this condit
ion. In mak
ing the assessment, the Group considers:
•
Contingent events that would change the amount and tim
ing of cash flows
• Leverage features
• Prepayment and extension terms
•
Terms that lim
it the Group’s cla
im to cash flows from specif
ied assets (e.g. non-recourse asset arrangements);
•
Features that modify considerat
ion of the t
ime value of money – e.g. period
ical reset of
interest rates
Whether financial assets are held at amort
ised cost, FVTPL or at FVOCI depends on the object
ives of the bus
iness models
under which the assets are held. A business model refers to how the Group manages financ
ial assets to generate cash flows.
The Group makes an assessment of the objective of a bus
iness model in which an asset is held at the ind
iv
idual product
business line, and where applicable with
in bus
iness lines, depending on the way the business is managed and informat
ion
is provided to management. Factors considered include:
•
How the performance of the product business line is evaluated and reported to the Group’s management
•
How managers of the business model are compensated, includ
ing whether management
is compensated based on the
fair value of assets or the contractual cash flows collected
•
The risks that affect the performance of the business model and how those risks are managed
•
The frequency, volume and tim
ing of sales
in prior periods, the reasons for such sales and expectations about future
sales activ
ity
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
199
Notes to the financial statements cont
inued
12. Financ
ial
instruments continued
The Group’s business model assessment is as follows:
Business model
Business object
ive
Characterist
ics
Businesses
Products
Hold to collect
Intent is to orig
inate financial
assets and hold them to
maturity, collecting the
contractual cash flows over
the term of the instrument
•
Provid
ing financing and or
ig
inat
ing
assets to earn interest income
as primary income stream
• Performing credit risk
management activ
it
ies
•
Costs include funding costs,
transaction costs and
impa
irment losses
• Corporate Lending
• Financ
ial Markets
• Transaction
Banking
• Retail Lending
• Treasury Markets
(Loans and
Borrowings)
• Loans and
advances
• Debt securit
ies
Hold to collect
and sell
Business object
ive met
through both hold to
collect and by selling
financial assets
•
Portfolios held for liqu
id
ity needs; or
where a certain interest yield profile
is mainta
ined; or that are normally
rebalanced to achieve matching of
duration of assets and liab
il
it
ies
•
Income streams come from interest
income, fair value changes, and
impa
irment losses
• Treasury Markets
• Derivat
ives
• Debt securit
ies
Fair value through
profit or loss
All other business object
ives,
includ
ing trad
ing and
managing financ
ial assets
on a fair value basis
•
Assets held for trading
•
Assets that are orig
inated,
purchased, and sold for profit
taking or underwrit
ing act
iv
ity
•
Performance of the portfolio is
evaluated on a fair value basis
•
Income streams are from fair value
changes or trading gains or losses
• Financ
ial Markets
• Syndicat
ion
• All other
business lines
• Derivat
ives
• Trading portfolios
• Financ
ial Markets
reverse repos
• Financ
ial Markets
(FM Bond and Loan
Syndicat
ion)
Financ
ial assets wh
ich have SPPI characterist
ics and that are held w
ith
in a bus
iness model whose object
ive
is to hold
financial assets to collect contractual cash flows (“Hold to collect”) are recorded at amort
ised cost. Conversely, financ
ial
assets which have SPPI characterist
ics but are held w
ith
in a bus
iness model whose object
ive
is achieved by both collecting
contractual cash flows and selling financ
ial assets (“Hold to collect and sell”) are class
if
ied as held at FVOCI.
Both hold to collect business and a hold to collect and sell business model involve holding financ
ial assets to collect the
contractual cash flows. However, the business models are dist
inct by reference to the frequency and s
ign
ificance that asset
sales play in meeting the object
ive under wh
ich a particular group of financ
ial assets
is managed. Hold to collect business
models are characterised by asset sales that are inc
idental to meet
ing the object
ives under wh
ich a group of assets is
managed. Sales of assets under a hold to collect business model can be made to manage increases in the credit Risk of
financial assets but sales for other reasons should be
infrequent or ins
ign
if
icant.
Cash flows from the sale of financial assets under a hold to collect and sell bus
iness model by contrast are integral to
achiev
ing the objectives under wh
ich a particular group of financ
ial assets are managed. Th
is may be the case where
frequent sales of financial assets are requ
ired to manage the Group’s daily liqu
id
ity requirements or to meet regulatory
requirements to demonstrate liqu
id
ity of financ
ial
instruments. Sales of assets under hold to collect and sell business
models are therefore both more frequent and more sign
ificant
in value than those under the hold to collect model.
Equity instruments designated as held at FVOCI
Non-trading equity instruments acquired for strategic purposes rather than capital gain may be irrevocably designated at
in
it
ial recognit
ion as held at FVOCI on an
instrument-by-instrument basis. Div
idends rece
ived are recognised in profit or loss.
Gains and losses aris
ing from changes
in the fair value of these instruments, includ
ing fore
ign exchange gains and losses,
are recognised directly in equity and are never reclassif
ied to profit or loss even on derecogn
it
ion.
ial assets and l
iab
il
it
ies held at fa
ir value through profit or loss
Financ
ial assets wh
ich are not held at amortised cost or that are not held at FVOCI are held at fair value through profit or loss.
Financ
ial assets and l
iab
il
it
ies held at fa
ir value through profit or loss are either mandatorily classif
ied fa
ir value through profit
or loss or irrevocably designated at fair value through profit or loss at in
it
ial recognit
ion.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
200
Notes to the financial statements cont
inued
12. Financ
ial
instruments continued
Mandatorily classif
ied at fa
ir value through profit or loss
Financ
ial assets and l
iab
il
it
ies wh
ich are mandatorily held at fair value through profit or loss are split between two
subcategories as follows:
Trading, includ
ing:
•
Financ
ial assets and l
iab
il
it
ies held for trad
ing, which are those acquired princ
ipally for the purpose of sell
ing in the
short-term
• Derivat
ives
Non-trading mandatorily at fair value through profit or loss, includ
ing
•
Instruments in a business which has a fair value business model (see the Group’s business model assessment) which are
not trading or derivat
ives
•
Hybrid financ
ial assets that conta
in one or more embedded derivat
ives
•
Financ
ial assets that would otherw
ise be measured at amortised cost or FVOCI but which do not have SPPI characterist
ics
•
Equity instruments that have not been designated as held at FVOCI
•
Financ
ial l
iab
il
it
ies that const
itute contingent considerat
ion
in a business combinat
Financ
ial assets and l
iab
il
it
ies may be des
ignated at fair value through profit or loss when the designat
ion el
im
inates or
sign
ificantly reduces a measurement or recogn
it
ion
incons
istency that would otherw
ise arise from measuring assets or
liab
il
it
ies on a d
ifferent basis (‘accounting mismatch’).
Financ
ial l
iab
il
it
ies may also be des
ignated at fair value through profit or loss where they are managed on a fair value
basis or have a embedded derivat
ive where the Group
is not able to bifurcate and separately value the embedded
derivat
Financ
ial l
iab
il
it
ies held at amort
ised cost
Financ
ial l
iab
il
it
ies that are not financial guarantees or loan comm
itments and that are not classif
ied as financial l
iab
il
it
ies
held at fair value through profit or loss are classif
ied as financial l
iab
il
it
ies held at amort
ised cost.
Preference shares which carry a mandatory coupon that represents a market rate of interest at the issue date, or which are
redeemable on a specif
ic date or at the opt
ion of the shareholder are classif
ied as financial l
iab
il
it
ies and are presented
in
other borrowed funds. The div
idends on these preference shares are recogn
ised in the income statement as interest expense
on an amortised cost basis using the effective interest method.
Financ
ial guarantee contracts and loan comm
itments
The Group issues financ
ial guarantee contracts and loan comm
itments in return for fees. Financ
ial guarantee contracts and
any loan commitments issued at below-market interest rates are in
it
ially recognised at their fair value as a financ
ial l
iab
il
ity,
and subsequently measured at the higher of the in
it
ial value less the cumulative amount of income recognised in accordance
with the princ
iples of IFRS 15 Revenue from Contracts w
ith Customers and their expected credit loss provis
ion. Loan
commitments may be designated at fair value through profit or loss where that is the business model under which such
contracts are held.
Fair value of financ
ial assets and l
iab
il
it
ies
Fair value is the price that would be received to sell an asset or paid to transfer a liab
il
ity in an orderly transaction between
market partic
ipants at the measurement date
in the princ
ipal market for the asset or l
iab
il
ity, or in the absence of a princ
ipal
market, the most advantageous market to which the Group has access at the date. The fair value of a liab
il
ity includes the
risk that the bank will not be able to honour its obligat
ions.
The fair value of financ
ial
instruments is generally measured on the basis of the ind
iv
idual financ
ial
instrument. However,
when a group of financial assets and financial l
iab
il
it
ies
is managed on the basis of its net exposure to either market Risk or
credit Risk, the fair value of the group of financ
ial
instruments is measured on a net basis.
The fair values of quoted financ
ial assets and l
iab
il
it
ies
in active markets are based on current prices. A market is regarded
as active if transactions for the asset or liab
il
ity take place with suffic
ient frequency and volume to prov
ide pric
ing
informat
ion on an ongo
ing basis. If the market for a financ
ial
instrument, and for unlisted securit
ies,
is not active, the Group
establishes fair value by using valuation techniques.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
201
Notes to the financial statements cont
inued
12. Financ
ial
instruments continued
Init
ial recogn
it
ion
Purchases and sales of financial assets and l
iab
il
it
ies held at fa
ir value through profit or loss, and debt securit
ies class
if
ied as
financial assets held at fa
ir value through other comprehensive income are in
it
ially recognised on the trade-date (the date
on which the Group commits to purchase or sell the asset). Loans and advances and other financ
ial assets held at amort
ised
cost are recognised on the settlement date (the date on which cash is advanced to the borrowers).
All financial
instruments are in
it
ially recognised at fair value, which is normally the transaction price, plus directly attributable
transaction costs for financ
ial assets wh
ich are not subsequently measured at fair value through profit or loss.
In certain circumstances, the in
it
ial fair value may be based on a valuation technique which may lead to the recognit
ion of
profits or losses at the time of in
it
ial recognit
ion. However, these profits or losses can only be recogn
ised when the valuation
technique used is based solely on observable market data. In those cases where the in
it
ially recognised fair value is based on
a valuation model that uses unobservable inputs, the difference between the transaction price and the valuation model is
not recognised immed
iately
in the income statement but is amortised or released to the income statement as the inputs
become observable, or the transaction matures or is terminated.
Subsequent measurement
Financ
ial assets and financial l
iab
il
it
ies held at amort
ised cost
Financ
ial assets and financial l
iab
il
it
ies held at amort
ised cost are subsequently carried at amortised cost using the
effective interest method (see Interest income and expense). Foreign exchange gains and losses are recognised in the
income statement.
Where a financial
instrument carried at amortised cost is the hedged item in a qualify
ing fa
ir value hedge relationsh
ip,
its carrying value is adjusted by the fair value gain or loss attributable to the hedged risk.
Financ
ial assets held at FVOCI
Debt instruments held at FVOCI are subsequently carried at fair value, with all unrealised gains and losses aris
ing from
changes in fair value (includ
ing any related fore
ign exchange gains or losses) recognised in other comprehensive income and
accumulated in a separate component of equity. Foreign exchange gains and losses on the amortised cost are recognised in
income. Changes in expected credit losses are recognised in profit or loss and are accumulated in equity. On derecognit
ion,
the cumulative fair value gains or losses, net of the cumulative expected credit loss reserve, are transferred to the profit or loss.
Equity investments designated at FVOCI are subsequently carried at fair value with all unrealised gains and losses aris
ing
from changes in fair value (includ
ing any related fore
ign exchange gains or losses) recognised in other comprehensive income
and accumulated in a separate component of equity. On derecognit
ion, the cumulat
ive reserve is transferred to retained
earnings and is not recycled to profit or loss.
Financ
ial assets and l
iab
il
it
ies held at fa
ir value through profit or loss
Financ
ial assets and l
iab
il
it
ies mandator
ily held at fair value through profit or loss and financ
ial assets des
ignated at fair
value through profit or loss are subsequently carried at fair value, with gains and losses aris
ing from changes
in fair value,
includ
ing contractual
interest income or expense, recorded in the net trading income line in the profit or loss unless the
instrument is part of a cash flow hedging relationsh
ip.
Financ
ial l
iab
il
it
ies des
ignated at fair value through profit or loss
Financ
ial l
iab
il
it
ies des
ignated at fair value through profit or loss are held at fair value, with changes in fair value recognised
in the net trading income line in the profit or loss, other than that attributable to changes in credit risk. Fair value changes
attributable to credit risk are recognised in other comprehensive income and recorded in a separate category of reserves
unless this is expected to create or enlarge an accounting mismatch, in which case the entire change in fair value of the
financial l
iab
il
ity designated at fair value through profit or loss is recognised in profit or loss.
ion of financial
instruments
Financ
ial assets are derecogn
ised when the rights to receive cash flows from the financ
ial assets have exp
ired or where the
Group has transferred substantially all risks and rewards of ownership. If substantially all the risks and rewards have been
neither retained nor transferred and the Group has retained control, the assets continue to be recognised to the extent of
the Group's continu
ing
involvement.
Where financial assets have been mod
if
ied, the mod
if
ied terms are assessed on a qual
itat
ive and quant
itat
ive bas
is to
determine whether a fundamental change in the nature of the instrument has occurred, such as whether the derecognit
ion
of the pre-exist
ing
instrument and the recognit
ion of a new
instrument is appropriate.
On derecognit
ion of a financial asset, the d
ifference between the carrying amount of the asset (or the carrying amount
allocated to the portion of the asset derecognised) and the sum of the considerat
ion rece
ived (includ
ing any new asset
obtained, less any new liab
il
ity assumed) and any cumulative gain or loss that had been recognised in other comprehensive
income is recognised in profit or loss except for equity instruments elected FVOCI (see above) and cumulative fair value
adjustments attributable to the credit risk of a liab
il
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
202
Notes to the financial statements cont
inued
12. Financ
ial
instruments continued
Financ
ial l
iab
il
it
ies are derecogn
ised when they are extingu
ished. A financial l
iab
il
ity is extingu
ished when the obl
igat
ion
is
discharged, cancelled or expires and this is evaluated both qualitat
ively and quant
itat
ively. However, where a financial
liab
il
ity has been modif
ied,
it is derecognised if the difference between the modif
ied cash flows and the or
ig
inal cash flows
is more than 10 percent, or if less than 10 per cent, the Group will perform a qualitat
ive assessment to determ
ine whether
the terms of the two instruments are substantially different.
If the Group purchases its own debt, it is derecognised and the difference between the carrying amount of the liab
il
ity and
the considerat
ion pa
id is included in 'Other income' except for the cumulative fair value adjustments attributable to the credit
risk of a liab
il
ity that are held in other comprehensive income which are never recycled to the profit or loss.
Modif
ied financial
instruments
Financ
ial assets and financial l
iab
il
it
ies whose or
ig
inal contractual terms have been mod
if
ied,
includ
ing those loans subject
to forbearance strategies, are considered to be modif
ied
instruments. Modif
icat
ions may include changes to the tenor,
cash flows and or interest rates, among other factors.
Where derecognit
ion of financial assets
is appropriate (see Derecognit
ion), the newly recogn
ised residual loans are assessed
to determine whether the assets should be classif
ied as purchased or or
ig
inated cred
it-impa
ired assets (POCI).
Where derecognit
ion
is not appropriate, the gross carrying amount of the applicable instruments is recalculated as the
present value of the renegotiated or modif
ied contractual cash flows d
iscounted at the orig
inal effect
ive interest rate
(or credit adjusted effective interest rate for POCI financ
ial assets). The d
ifference between the recalculated values and
the pre-modif
ied gross carry
ing values of the instruments are recorded as a modif
icat
ion gain or loss in the profit or loss.
Gains and losses aris
ing from mod
if
icat
ions for credit reasons are recorded as part of ‘Credit Impairment’ (see Credit
Impairment Policy). Modif
icat
ion gains and losses aris
ing for non-cred
it reasons are recognised either as part of “Credit
Impairment or with
in
income depending on whether there has been a change in the credit risk on the financ
ial asset
subsequent to the modif
icat
ion. Modif
icat
ion gains and losses aris
ing on financial l
iab
il
it
ies are recogn
ised with
in
income.
The movements in the applicable expected credit loss loan posit
ions are d
isclosed in further detail in Risk Review.
Under the Phase 2 Interest Rate Benchmark Reform amendments to IFRS 9, changes to the basis for determin
ing contractual
cash flows as a direct result of interest rate benchmark reform are treated as changes to a floating interest rate to that
instrument, provided that the transit
ion from the IBOR benchmark rate to the alternat
ive RFR takes place on an economically
equivalent basis. Where the instrument is measured at amortised cost or FVOCI, this results in a change in the instrument’s
effective interest rate, with no change in the amortised cost value of the instrument. If the change to the instrument does not
meet these criter
ia, the Group appl
ies judgement to assess whether the changes are substantial and if they are, the financ
ial
instrument is derecognised and a new financ
ial
instrument is recognised. If the changes are not substantial, the Group
adjusts the gross carrying amount of the financ
ial
instrument by the present value of the changes not covered by the
practical expedient, discounted using the revised effective interest rate.
icat
ions
Financ
ial l
iab
il
it
ies are not reclass
if
ied subsequent to
in
it
ial recognit
ion. Reclass
if
icat
ions of financ
ial assets are made when,
and only when, the business model for those assets changes. Such changes are expected to be infrequent and arise as a
result of sign
ificant external or
internal changes such as the terminat
ion of a l
ine of business or the purchase of a subsid
iary
whose business model is to realise the value of pre-exist
ing held for trad
ing financ
ial assets through a hold to collect model.
Financ
ial assets are reclass
if
ied at the
ir fair value on the date of reclassif
icat
ion and previously recognised gains and
losses are not restated. Moreover, reclassif
icat
ions of financ
ial assets between financial assets held at amort
ised cost and
financial assets held at fa
ir value through other comprehensive income do not affect effective interest rate or expected
credit loss computations.
Reclassif
ied from amort
ised cost
Where financial assets held at amort
ised cost are reclassif
ied to financial assets held at fa
ir value through profit and loss,
the difference between the fair value of the assets at the date of reclassif
icat
ion and the previously recognised amortised
cost is recognised in profit or loss.
For financial assets held at amort
ised cost that are reclassif
ied to fa
ir value through other comprehensive income, the
difference between the fair value of the assets at the date of reclassif
icat
ion and the previously recognised gross carrying
value is recognised in other comprehensive income. Addit
ionally, the related cumulat
ive expected credit loss amounts
relating to the reclassif
ied financial assets are reclass
if
ied from loan loss prov
is
ions to a separate reserve
in other
comprehensive income at the date of reclassif
icat
ion.
Reclassif
ied from fa
ir value through other comprehensive income
Where financial assets held at fa
ir value through other comprehensive income are reclassif
ied to financial assets held at
fair value through profit or loss, the cumulative gain or loss previously recognised in other comprehensive income is
transferred to the profit or loss.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
203
Notes to the financial statements cont
inued
12. Financ
ial
instruments continued
For financial assets held at fa
ir value through other comprehensive income that are reclassif
ied to financial assets held at
amortised cost, the cumulative gain or loss previously recognised in other comprehensive income is adjusted against the fair
value of the financial asset such that the financial asset
is recorded at a value as if it had always been held at amortised cost.
In addit
ion, the related cumulat
ive expected credit losses held with
in other comprehens
ive income are reversed against the
gross carrying value of the reclassif
ied assets at the date of reclass
if
icat
ion.
Reclassif
ied from fa
ir value through profit or loss
Where financial assets held at fa
ir value through profit and loss are reclassif
ied to financial assets held at fa
ir value through
other comprehensive income or financ
ial assets held at amort
ised cost, the fair value at the date of reclassif
icat
ion is used to
determine the effective interest rate on the financ
ial asset go
ing forward. In addit
ion, the date of reclass
if
icat
ion is used as
the date of in
it
ial recognit
ion for the calculat
ion of expected credit losses. Where financ
ial assets held at fa
ir value through
profit or loss are reclassif
ied to financial assets held at amort
ised cost, the fair value at the date of reclassif
icat
ion becomes
the gross carrying value of the financ
The Group’s classif
icat
ion of its financ
ial assets and l
iab
il
it
ies
is summarised in the following tables.
Group
Assets
Notes
Assets at fair value
Assets
held at
amortised
cost
$mill
ion
Total
$mill
ion
Trading
$mill
ion
Derivat
ives
held for
hedging
$mill
ion
Non-trading
mandatorily
at fair value
through
profit or loss
$mill
ion
Designated
at fair value
through
profit or
loss
$mill
ion
Fair value
through other
comprehensive
income
$mill
ion
Total
financial
assets at
fair value
$mill
ion
Cash and balances at
central banks
–
–
–
–
–
–
50,531
50,531
Financ
ial assets held at fa
ir value
through profit or loss
Loans and advances to banks
1
859
–
–
–
–
859
–
859
Loans and advances
to customers
1
3,531
–
534
–
–
4,065
–
4,065
Reverse repurchase
agreements and other
sim
ilar secured lend
ing
15
–
–
62,333
–
–
62,333
–
62,333
Debt securit
ies, alternat
ive tier
one and other elig
ible b
ills
12,619
–
792
–
–
13,411
–
13,411
Equity shares
1,743
–
143
–
–
1,886
–
1,886
18,752
–
63,802
–
–
82,554
–
82,554
Derivat
ive financial
instruments
13
62,840
2,210
–
–
–
65,050
–
65,050
Loans and advances to banks
1
14
–
–
–
–
–
–
27,383
27,383
of which – reverse repurchase
agreements and other sim
ilar
secured lending
15
–
–
–
–
–
–
878
878
Loans and advances to customers
1
14
–
–
–
–
–
–
158,126
158,126
of which – reverse repurchase
agreements and other sim
ilar
secured lending
15
–
–
–
–
–
–
15,586
15,586
Investment securit
ies
Debt securit
ies, alternat
ive tier
one and other elig
ible b
ills
–
–
–
–
70,624
70,624
41,801
112,425
Equity shares
–
–
–
–
603
603
–
603
–
–
–
–
71,227
71,227
41,801
113,028
Other assets
19
–
–
–
–
–
–
27,210
27,210
Assets held for sale
20
–
–
–
2
–
2
1,388
1,390
Total at 31 December 2022
81,592
2,210
63,802
2
71,227
218,833
306,439
525,272
1
Further analysed in Risk review and Capital review (pages 65 to 153)
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
204
Notes to the financial statements cont
inued
12. Financ
ial
instruments continued
Assets
Notes
Assets at fair value
Assets
held at
amortised
cost
$mill
ion
Total
$mill
ion
Trading
$mill
ion
Derivat
ives
held for
hedging
$mill
ion
Non-trading
mandatorily
at fair value
through
profit or loss
$mill
ion
Designated
at fair value
through
profit
or loss
$mill
ion
Fair value
through other
comprehensive
income
$mill
ion
Total
financial
assets at
fair value
$mill
ion
Cash and balances at
central banks
–
–
–
–
–
–
61,963
61,963
Financ
ial assets held at fa
ir value
through profit or loss
Loans and advances to banks
1
1,315
–
2,307
–
–
3,622
–
3,622
Loans and advances
to customers¹
2,812
–
1,120
–
–
3,932
–
3,932
Reverse repurchase
agreements and other
sim
ilar secured lend
ing
15
–
–
78,986
–
–
78,986
–
78,986
Debt securit
ies, alternat
ive tier
one and other elig
ible b
ills
14,301
–
1,103
–
–
15,404
–
15,404
Equity shares
4,465
–
120
–
–
4,585
–
4,585
22,893
–
83,636
–
–
106,529
–
106,529
Derivat
ive financial
instruments
13
52,609
636
–
–
–
53,245
–
53,245
Loans and advances to banks
1
14
–
–
–
–
–
–
29,999
29,999
of which – reverse repurchase
agreements and other sim
ilar
secured lending
15
–
–
–
–
–
–
956
956
Loans and advances to customers
1
14
–
–
–
–
–
–
144,799
144,799
of which – reverse repurchase
agreements and other sim
ilar
secured lending
15
–
–
–
–
–
–
3,764
3,764
Investment securit
ies
Debt securit
ies, alternat
ive tier
one and other elig
ible b
ills
–
–
–
–
42,491
72,491
29,214
101,705
Equity shares
–
–
–
–
575
575
–
575
–
–
–
–
73,066
73,066
29,214
102,280
Other assets
19
–
–
–
–
–
–
22,281
22,281
Assets held for sale
20
–
–
–
43
–
43
52
95
Total at 31 December 2021
75,502
636
83,636
43
73,066
232,883
288,308
521,191
1
Further analysed in Risk review and Capital review (pages 65 to 153)
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
205
Notes to the financial statements cont
inued
12. Financ
ial
instruments continued
Company
Assets
Notes
Assets at fair value
Assets
held at
amortised
cost
$mill
ion
Total
$mill
ion
Trading
$mill
ion
Derivat
ives
held for
hedging
$mill
ion
Non-trading
mandatorily
at fair value
through
profit or loss
$mill
ion
Designated
at fair value
through
profit or
loss
$mill
ion
Fair value
through other
comprehensive
income
$mill
ion
Total
financial
assets at
fair value
$mill
ion
Cash and balances at
central banks
–
–
–
–
–
–
38,867
38,867
Financ
ial assets held at fa
ir value
through profit or loss
Loans and advances to banks
1
837
–
–
–
–
837
–
837
Loans and advances
to customers
1
3,113
–
83
–
–
3,196
–
3,196
Reverse repurchase
agreements and other
sim
ilar secured lend
ing
15
–
–
59,057
–
–
59,057
–
59,057
Debt securit
ies, alternat
ive tier
one and other elig
ible b
ills
9,282
–
1,679
–
–
10,961
–
10,961
Equity shares
1,738
–
3
–
–
1,741
–
1,741
14,970
–
60,822
–
–
75,792
–
75,792
Derivat
ive financial
instruments
13
63,355
2,126
–
–
–
65,481
–
65,481
Loans and advances to banks
1
14
–
–
–
–
–
–
18,548
18,548
of which – reverse repurchase
agreements and other sim
ilar
secured lending
15
–
–
–
–
–
–
184
184
Loans and advances to customers
1
14
–
–
–
–
–
–
80,611
80,611
of which – reverse repurchase
agreements and other sim
ilar
secured lending
15
–
–
–
–
–
–
15,071
15,071
Investment securit
ies
Debt securit
ies, alternat
ive
tier one and other elig
ible b
ills
–
–
–
–
57,007
57,007
38,042
95,049
Equity shares
–
–
–
–
323
323
–
323
–
–
–
–
57,330
57,330
38,042
95,372
Other assets
19
–
–
–
–
–
–
23,625
23,625
Assets held for sale
20
–
–
–
2
–
2
544
546
Total at 31 December 2022
78,325
2,126
60,822
2
57,330
198,605
200,237
398,842
1
Further analysed in Risk review and Capital review (pages 65 to 153)
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
206
Notes to the financial statements cont
inued
12. Financ
ial
instruments continued
Assets
Notes
Assets at fair value
Assets
held at
amortised
cost
$mill
ion
Total
$mill
ion
Trading
$mill
ion
Derivat
ives
held for
hedging
$mill
ion
Non-trading
mandatorily
at fair value
through
profit or loss
$mill
ion
Designated
at fair value
through
profit
or loss
$mill
ion
Fair value
through other
comprehensive
income
$mill
ion
Total
financial
assets at
fair value
$mill
ion
Cash and balances at central
banks
–
–
–
–
–
–
48,165
48,165
Financ
ial assets held at fa
ir value
through profit or loss
Loans and advances to banks
1
1,293
–
2,277
–
–
3,570
–
3,570
Loans and advances
to customers
1
2,759
–
448
–
–
3,207
–
3,207
Reverse repurchase
agreements and other
sim
ilar secured lend
ing
15
–
–
77,655
–
–
77,655
–
77,655
Debt securit
ies, alternat
ive tier
one and other elig
ible b
ills
9,367
–
1,485
–
–
10,852
–
10,852
Equity shares
4,419
–
2
–
–
4,421
–
4,421
17,838
–
81,867
–
–
99,705
–
99,705
Derivat
ive financial
instruments
13
52,847
631
–
–
–
53,478
–
53,478
Loans and advances to banks
1
14
–
–
–
–
–
–
16,117
16,117
of which – reverse repurchase
agreements and other sim
ilar
secured lending
15
–
–
–
–
–
–
438
438
Loans and advances to customers
1
14
–
–
–
–
–
–
71,161
71,161
of which – reverse repurchase
agreements and other sim
ilar
secured lending
15
–
–
–
–
–
–
3,047
3,047
Investment securit
ies
Debt securit
ies, alternat
ive tier
one and other elig
ible b
ills
–
–
–
–
60,033
60,033
25,995
86,028
Equity shares
–
–
–
–
361
361
–
361
–
–
–
–
60,394
60,394
25,995
86,389
Other assets
19
–
–
–
–
–
–
19,860
19,860
Assets held for sale
20
–
–
–
42
–
42
49
91
Total at 31 December 2021
70,685
631
81,867
42
60,394
213,619
181,347
394,966
1
Further analysed in Risk review and Capital review (pages 65 to 153)
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
207
Notes to the financial statements cont
inued
12. Financ
ial
instruments continued
Group
Liab
il
it
ies
Notes
Liab
il
it
ies at fa
ir value
Amortised
cost
$mill
ion
Total
$mill
ion
Trading
$mill
ion
Derivat
ives
held for
hedging
$mill
ion
Designated at
fair value
through
profit or loss
$mill
ion
Total financial
liab
il
it
ies at
fair value
$mill
ion
Financ
ial l
iab
il
it
ies held at fa
ir value
through profit or loss
Deposits by banks
–
–
586
586
–
586
Customer accounts
29
–
6,526
6,555
–
6,555
Repurchase agreements and other
sim
ilar secured borrow
ing
15
–
–
50,402
50,402
–
50,402
Debt securit
ies
in issue
21
–
–
7,563
7,563
–
7,563
Short posit
ions
2,302
–
–
2,302
–
2,303
Other liab
il
it
ies
–
–
–
–
–
–
2,331
–
65,077
67,408
–
67,408
Derivat
ive financial
instruments
13
66,283
2,575
–
68,858
–
68,858
Deposits by banks
–
–
–
–
24,150
24,150
Customer accounts
–
–
–
–
243,075
243,075
Repurchase agreements and other
sim
ilar secured borrow
ing
15
–
–
–
–
1,991
1,991
Debt securit
ies
in issue
21
–
–
–
–
36,982
36,982
Other liab
il
it
ies
22
–
–
–
–
25,567
25,567
Subordinated liab
il
it
ies and other
borrowed funds
26
–
–
–
–
13,269
13,269
Liab
il
it
ies
included in disposal groups
held for sale
20
–
–
5
5
1,230
1,235
Total at 31 December 2022
68,614
2,575
65,082
136,271
346,264
482,535
Liab
il
it
ies
Notes
Liab
il
it
ies at fa
ir value
Amortised
cost
$mill
ion
Total
$mill
ion
Trading
$mill
ion
Derivat
ives
held for
hedging
$mill
ion
Designated at
fair value
through
profit or loss
$mill
ion
Total financial
liab
il
it
ies at
fair value
$mill
ion
Financ
ial l
iab
il
it
ies held at fa
ir value
through profit or loss
Deposits by banks
–
–
59
59
–
59
Customer accounts
198
–
6,770
6,968
–
6,968
Repurchase agreements and other
sim
ilar secured borrow
ing
15
–
–
61,307
61,307
–
61,307
Debt securit
ies
in issue
21
–
–
4,360
4,360
–
4,360
Short posit
ions
2,852
–
–
2,852
–
2,852
Other liab
il
it
ies
6
–
–
6
–
6
3,056
–
72,496
75,552
–
75,552
Derivat
ive financial
instruments
13
53,344
242
–
53,586
–
53,586
Deposits by banks
–
–
–
–
25,205
25,205
Customer accounts
–
–
–
–
242,331
242,331
Repurchase agreements and other
sim
ilar secured borrow
ing
15
–
–
–
–
325
325
Debt securit
ies
in issue
21
–
–
–
–
36,060
36,060
Other liab
il
it
ies
22
–
–
–
–
25,650
25,650
Subordinated liab
il
it
ies and other
borrowed funds
26
–
–
–
–
14,615
14,615
Liab
il
it
ies
included in disposal groups
held for sale
20
–
–
–
–
–
–
Total at 31 December 2021
56,400
242
72,496
129,138
344,186
473,324
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
208
Notes to the financial statements cont
inued
12. Financ
ial
instruments continued
Company
Liab
il
it
ies
Notes
Liab
il
it
ies at fa
ir value
Amortised
cost
$mill
ion
Total
$mill
ion
Trading
$mill
ion
Derivat
ives
held for
hedging
$mill
ion
Designated at
fair value
through
profit or loss
$mill
ion
Total financial
liab
il
it
ies at
fair value
$mill
ion
Financ
ial l
iab
il
it
ies held at fa
ir value
through profit or loss
Deposits by banks
–
–
573
573
–
573
Customer accounts
–
–
6,325
6,325
–
6,325
Repurchase agreements and other
sim
ilar secured borrow
ing
15
–
–
50,179
50,179
–
50,179
Debt securit
ies
in issue
21
–
–
7,271
7,271
–
7,271
Short posit
ions
1,841
–
–
1,841
–
1,841
Other liab
il
it
ies
–
–
–
–
–
–
1,841
–
64,348
66,189
–
66,189
Derivat
ive financial
instruments
13
66,729
2,474
–
69,203
–
69,203
Deposits by banks
–
–
–
–
17,900
17,900
Customer accounts
–
–
–
–
137,422
137,422
Repurchase agreements and other
sim
ilar secured borrow
ing
15
–
–
–
–
1,723
1,723
Debt securit
ies
in issue
21
–
–
–
–
34,992
34,992
Other liab
il
it
ies
22
–
–
–
–
20,661
20,661
Subordinated liab
il
it
ies and other
borrowed funds
26
–
–
–
–
12,729
12,729
Liab
il
it
ies
included in disposal groups
held for sale
20
–
–
–
–
335
335
Total at 31 December 2022
68,570
2,474
64,348
135,392
225,762
361,154
Liab
il
it
ies
Notes
Liab
il
it
ies at fa
ir value
Amortised
cost
$mill
ion
Total
$mill
ion
Trading
$mill
ion
Derivat
ives
held for
hedging
$mill
ion
Designated at
fair value
through
profit or loss
$mill
ion
Total financial
liab
il
it
ies at
fair value
$mill
ion
Financ
ial l
iab
il
it
ies held at fa
ir value
through profit or loss
Deposits by banks
–
–
59
59
–
59
Customer accounts
–
–
6,598
6,598
–
6,598
Repurchase agreements and other
sim
ilar secured borrow
ing
15
–
–
60,897
60,897
–
60,897
Debt securit
ies
in issue
21
–
–
4,086
4,086
–
4,086
Short posit
ions
2,256
–
–
2,256
–
2,256
Other liab
il
it
ies
6
–
–
6
–
6
2,262
–
71,640
73,902
–
73,902
Derivat
ive financial
instruments
13
53,621
214
–
53,835
–
53,835
Deposits by banks
–
–
–
–
18,870
18,870
Customer accounts
–
–
–
–
135,478
135,478
Repurchase agreements and other
sim
ilar secured borrow
ing
15
–
–
–
–
283
283
Debt securit
ies
in issue
21
–
–
–
–
33,826
33,826
Other liab
il
it
ies
22
–
–
–
–
20,125
20,125
Subordinated liab
il
it
ies and other
borrowed funds
26
–
–
–
–
14,076
14,076
Liab
il
it
ies
included in disposal groups
held for sale
20
–
–
–
–
–
–
Total at 31 December 2021
55,883
214
71,640
127,737
222,658
350,395
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
209
Notes to the financial statements cont
inued
12. Financ
ial
instruments continued
Interest rate benchmark reform
In 2017, the Financ
ial Conduct Author
ity (FCA) announced that it had reached an agreement with LIBOR panel banks to
contribute to LIBOR until the end of 2021, after which there would be a transit
ion from LIBORs to alternat
ive risk-free rates
(RFRs). Since then, there have been further updates, particularly with respect to the cessation date for certain USD LIBOR
tenors being deferred from 31 December 2021 to 30 June 2023.
How the Group is managing the transit
ion to alternat
ive benchmark rates
In 2018, the Group established its IBOR Transit
ion Programme to manage the trans
it
ion away from LIBOR. Sen
ior
management oversight for the Programme is provided by the Chief Executive Officers of CCIB and CPBB. The Programme’s
strategic bank-wide approach aims to support clients throughout the transit
ion, wh
ile ensuring key risks and issues are
ident
ified and effect
ively managed. The Programme is governed by a princ
ipal Programme Steer
ing Committee that
oversees 13 workstreams aligned to the Group’s businesses and functions. With
in the Programme, separate comm
ittees
govern each workstream, and all of them have a dedicated Accountable Executive.
Addit
ional governance
is supported by regular updates provided to senior risk committees, includ
ing the Group R
isk
Committee, Board Risk Committee and the Corporate, Commercial and Institut
ional Bank
ing Risk Committee.
From an industry and regulatory perspective, the Group actively partic
ipates
in and contributes to working groups,
industry associat
ions and bus
iness forums that focus on different aspects of the transit
ion. The Group mon
itors the
developments at these forums and includes sign
ificant dec
is
ions
into its broader transit
ion plans.
Progress during 2022
Supported by a number of system enhancements, the Group has successfully enabled the transit
ion to RFR products, w
ith
end-to-end capabil
it
ies across a full suite of derivat
ive and cash products. Act
iv
ity
in products referencing RFRs continued to
grow throughout 2022. New use of USD LIBOR has ceased, except for lim
ited except
ions as permitted by the regulators.
The Group remediated all non-USD LIBOR exposures by early 2022 and has no reliance on synthetic GBP or JPY LIBOR in 2022.
During 2022, focus shifted on the remediat
ion of legacy USD LIBOR transact
ions and automation of associated data and
processes. Clients with legacy USD LIBOR loans have been engaged to remediate their contracts primar
ily v
ia active
conversion to alternative rates, or other suitable transit
ion mechan
isms such as the inclus
ion of robust fallbacks. The Group
adhered to the International Swaps and Derivat
ives Assoc
iat
ion (ISDA) 2020 IBOR Fallbacks Protocol for all
its trading entit
ies
and continued to engage clients that had not adhered to negotiate remediat
ion of USD LIBOR contracts by the end of June
2023. The Group will also partic
ipate
in the conversion events at the London Clearing House (LCH) during the first part of
2023.
Frontline and client engagement, includ
ing
internal and client communicat
ions, tra
in
ing, and cl
ient webinars were a key
feature of the Programme throughout 2022 to support transit
ion from USD LIBOR to Secured Overn
ight Financ
ing Rate
(SOFR) as well as the transit
ion for other IBOR benchmarks that are ceas
ing.
Risks which the Group is exposed to due to IBOR transit
ion
The Group has largely mit
igated all mater
ial adverse outcomes associated with the cessation of IBOR benchmarks, and
these have not required a change to the Group’s risk management strategy. However, the Group will continue to focus on
the remediat
ion requ
ired for other benchmarks, and will continue to monitor and manage the inherent risks of the transit
ion,
with particular attention being paid to the following:
•
Legal Risk: IBOR transit
ion
introduces sign
ificant legal r
isks and the Group has taken action to mit
igate them where
possible. These include risks around contracts that reference USD LIBOR. Steps have been taken to either insert robust
fallbacks or actively convert transactions from the relevant IBOR to the new RFR-based options. The Group actively
monitors remediat
ion progress and tracks exposures that are prov
ing diff
icult to remed
iate. Based on the informat
ion
available as at the date of this Report, there is a reasonable probabil
ity that some such exposures may not be remed
iated
by the first interest fix
ing date follow
ing June 30 2023. The Group will apply certain legislat
ive solut
ions to these exposures if
required, includ
ing the appl
icat
ion of synthet
ic USD LIBOR, should it be made available
•
Conduct Risk: The Group considers Conduct Risk to be a sign
ificant area of non-financial r
isk management throughout
the transit
ion. Our r
isk appetite statement on Conduct Risk strives to mainta
in appropr
iate outcomes by continuously
demonstrating that we are ‘Doing the Right Thing’ in the way we do business. Accordingly, we recognise that the
ident
ification and m
it
igat
ion of conduct risks aris
ing
in respect of the transit
ion are fundamental to the successful trans
it
ion
to new RFR-based rates. The Group has therefore taken actions in this regard as an integral part of its IBOR Transit
ion
Programme, includ
ing an extens
ive outreach programme
•
Operational Risk: The Group has recognised the importance of the ongoing ident
ification and management of
Operational Risk as a result of IBOR transit
ion,
includ
ing those related to systems affected by the trans
it
ion. The
Programme has adopted the Group’s exist
ing Operat
ional Risk Framework in its approach to ident
ify
ing, quantify
ing,
and mit
igat
ing the impact of operational risks resulting from the transit
ion
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
210
Notes to the financial statements cont
inued
12. Financ
ial
instruments continued
•
Market Risk: As trades are transit
ioned from IBOR to RFRs, the bus
iness-as-usual metrics, lim
it structure and controls w
ill
continue to apply. Lim
its for value at r
isk and market risk sensit
iv
it
ies are
in accordance with the Group Risk Appetite
Statement. New lim
its have been set follow
ing engagement with the business to consider client demand and market
liqu
id
ity in RFR-linked products, as well as the regulatory expectations
•
Financ
ial and pr
ic
ing r
isk: The Group continues to monitor any financ
ial
impact of IBOR transit
ion across bus
iness and
functional workstreams in the Programme, and is implement
ing model and pr
ic
ing changes to m
it
igate these r
isks and
ensure alignment with conventions and pric
ing mechan
isms of the alternative reference rates and ind
ices
•
Accounting Risk: The Group has ident
ified the financial
instruments that may be affected by accounting issues such as
accounting for contractual changes due to IBOR reform, fair value measurement and hedge accounting. We continue to
monitor and contribute to industry developments on tax and accounting changes.
As at 31 December 2022 the Group had the following notional princ
ipal exposures to
interest rate benchmarks that are
expected to be subject to interest rate benchmark reform. The Group has excluded financ
ial
instruments linked to USD LIBOR
maturing before 30 June 2023 as it is assumed these will not require remediat
iom due USD LIBOR no longer be
ing published
on a representative basis beyond this date.
Group
IBOR exposures by benchmark as of 31 December 2022
USD LIBOR
$mill
ion
GBP LIBOR
$mill
ion
SGD SOR
$mill
ion
THB FIX
$mill
ion
Other IBOR
$mill
ion
Total IBOR
$mill
ion
Assets
Loans and advances to banks
610
–
–
–
–
610
Loans and advances to customers
16,537
–
–
–
–
16,537
Debt securit
ies, AT1 and other el
ig
ible b
ills
1,591
–
16
–
–
1,607
18,738
–
16
–
–
18,754
Liab
il
it
ies
–
Deposits by banks
4,194
–
6
–
–
4,200
Customer accounts
3,062
–
–
34
–
3,096
Repurchase agreements and other secured borrowing
671
–
–
–
–
671
Debt securit
ies
in issue
259
–
–
–
–
259
Subordinated liab
il
it
ies and other borrowed funds
–
–
–
–
–
–
8,186
–
6
34
–
8,226
Derivat
ives – Fore
ign exchange contracts
Currency swaps and options
159,088
–
3,941
958
–
163,987
Derivat
ives – Interest rate contracts
–
–
–
–
–
–
Swaps
739,704
–
10,823
11,614
–
762,141
Forward rate agreements and options
22,148
1
–
9
–
22,158
Exchange traded futures and options
31,758
–
–
–
–
31,758
Equity and stock index options
49
–
–
–
–
49
Credit derivat
ive contracts
5,085
–
78
72
–
4,235
Total IBOR derivat
ive exposure
957,832
1
14,842
12,653
–
985,328
Total IBOR exposure
984,756
1
14,864
12,687
–
1,012,308
Loan commitments off balance sheet
2,375
–
14
–
–
2,389
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
211
Notes to the financial statements cont
inued
12. Financ
ial
instruments continued
IBOR exposures by benchmark as at 31 December 2021
USD LIBOR
$mill
ion
GBP LIBOR
$mill
ion
SGD SOR
$mill
ion
THB FIX
$mill
ion
Other IBOR
$mill
ion
Total IBOR
$mill
ion
Assets
Loans and advances to banks
787
–
–
–
–
787
Loans and advances to customers
18,932
123
1,479
15
58
20,607
Debt securit
ies, AT1 and other el
ig
ible b
ills
2,007
237
18
–
–
2,262
21,726
360
1,497
15
58
23,656
Liab
il
it
ies
Deposits by banks
6,636
–
8
–
–
6,644
Customer accounts
3,057
–
1
36
–
3,094
Repurchase agreements and other secured borrowing
671
–
–
–
–
671
Debt securit
ies
in issue
295
–
–
–
–
295
Subordinated liab
il
it
ies and other borrowed funds
160
–
–
–
–
160
10,819
–
9
36
–
10,864
Derivat
ives – Fore
ign exchange contracts
Currency swaps and options
155,567
–
6,008
1,725
–
163,300
Derivat
ives – Interest rate contracts
–
–
–
–
–
–
Swaps
738,979
–
14,053
52,808
–
805,840
Forward rate agreements and options
29,221
1
74
124
–
29,420
Exchange traded futures and options
24,236
–
–
–
–
24,236
Equity and stock index options
74
–
–
–
–
74
Credit derivat
ive contracts
4,056
–
215
277
–
4,458
Total IBOR derivat
ive exposure
925,133
1
20,350
54,934
–
1,027,418
Total IBOR exposure
984,678
361
21,856
54,985
58
1,061,938
Loan commitments off balance sheet
3,291
271
179
–
964
4,705
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
212
Notes to the financial statements cont
inued
12. Financ
ial
instruments continued
Company
IBOR exposures by benchmark as of 31 December 2022
USD LIBOR
$mill
ion
GBP LIBOR
$mill
ion
SGD SOR
$mill
ion
THB FIX
$mill
ion
Other IBOR
$mill
ion
Total IBOR
$mill
ion
Assets
Loans and advances to banks
610
–
–
–
–
610
Loans and advances to customers
15,958
–
–
–
–
15,958
Debt securit
ies, AT1 and other el
ig
ible b
ills
1,577
–
16
–
–
1,593
18,145
–
16
–
–
18,161
Liab
il
it
ies
Deposits by banks
3,930
–
6
–
–
3,936
Customer accounts
2,285
–
–
34
–
2,319
Repurchase agreements and other secured borrowing
471
–
–
–
–
471
Debt securit
ies
in issue
254
–
–
–
–
254
Subordinated liab
il
it
ies
–
–
–
–
–
–
6,940
–
6
34
–
6,980
Derivat
ives – Fore
ign exchange contracts
Currency swaps and options
152,394
–
3,132
919
–
156,445
Derivat
ives – Interest rate contracts
–
–
–
–
–
–
Swaps
704,546
–
9,535
10,910
–
724,991
Forward rate agreements and options
18,814
–
–
9
–
18,823
Exchange traded futures and options
31,216
–
–
–
–
31,216
Equity and stock index options
49
–
–
–
–
49
Credit derivat
ive contracts
4,782
–
78
72
–
4,932
Total IBOR derivat
ive exposure
911,801
–
12,745
11,910
–
936,456
Total IBOR exposure
936,886
–
12,767
11,944
–
961,597
Loan commitments off balance sheet
2,167
–
–
–
2,167
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
213
Notes to the financial statements cont
inued
12. Financ
ial
instruments continued
IBOR exposures by benchmark as at 31 December 2021
USD LIBOR
$mill
ion
GBP LIBOR
$mill
ion
SGD SOR
$mill
ion
THB FIX
$mill
ion
Other IBOR
$mill
ion
Total IBOR
$mill
ion
Assets
Loans and advances to banks
680
–
–
–
–
680
Loans and advances to customers
14,444
123
–
–
58
14,625
Debt securit
ies, AT1 and other el
ig
ible b
ills
1,726
237
–
–
–
1,963
16,850
360
–
–
58
17,268
Liab
il
it
ies
Deposits by banks
5,087
–
–
–
–
5,087
Customer accounts
2,809
–
–
–
–
2,809
Repurchase agreements and other secured borrowing
471
–
–
–
–
471
Debt securit
ies
in issue
275
–
–
–
–
275
Subordinated liab
il
it
ies and other borrowed funds
160
–
–
–
–
160
8,802
–
–
–
–
8,802
Derivat
ives – Fore
ign exchange contracts
Currency swaps and options
145,302
–
2,334
–
–
147,636
Derivat
ives – Interest rate contracts
–
–
–
–
–
–
Swaps
718,980
–
9,971
48,543
–
777,494
Forward rate agreements and options
28,429
1
74
–
–
28,504
Exchange traded futures and options
24,236
–
–
–
–
24,236
Equity and stock index options
74
–
–
–
–
74
Credit derivat
ive contracts
3,867
–
–
–
–
3,867
Total IBOR derivat
ive exposure
920,888
1
12,379
48,543
–
981,811
Total IBOR exposure
946,540
361
12,379
48,543
58
1,007,881
Loan commitments off balance sheet
2,900
263
7
–
879
4,049
ial
instruments
Financ
ial assets and l
iab
il
it
ies are offset and the net amount reported
in the balance sheet when there is a legally
enforceable right to offset the recognised amounts and there is an intent
ion to settle on a net bas
is, or to realise the asset
and settle the liab
il
ity simultaneously.
In practice, for credit mit
igat
ion, the Group is able to offset assets and liab
il
it
ies wh
ich do not meet the IAS 32 netting criter
ia
set out below. Such arrangements include master netting arrangements for derivat
ives and global master repurchase
agreements for repurchase and reverse repurchase transactions. These agreements generally allow that all outstanding
transactions with a particular counterparty can be offset but only in the event of default or other predetermined events.
In addit
ion, the Group also rece
ives and pledges readily realisable collateral for derivat
ive transact
ions to cover net exposure
in the event of a default. Under repurchase and reverse repurchase agreements the Group pledges (legally sells) and obtains
(legally purchases) respectively, highly liqu
id assets wh
ich can be sold in the event of a default.
The following tables set out the impact of netting on the balance sheet. This comprises derivat
ive transact
ions settled
through an enforceable netting agreement where we have the intent and abil
ity to settle net and wh
ich are offset on the
balance sheet.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
214
Notes to the financial statements cont
inued
12. Financ
ial
instruments continued
Group
2022
Gross
amounts of
recognised
financial
instruments
$mill
ion
Impact of
offset in the
balance sheet
$mill
ion
Net amounts
of financial
instruments
presented in
the balance
sheet
$mill
ion
Related amount not offset in
the balance sheet
Net amount
$mill
ion
Financ
ial
instruments
$mill
ion
Financ
ial
collateral
$mill
ion
Assets
Derivat
ive financial
instruments
119,241
(54,191)
65,050
(52,827)
(8,304)
3,919
Reverse repurchase agreements and other sim
ilar
secured lending
94,352
(15,555)
78,797
–
(78,797)
–
At 31 December 2022
213,593
(69,746)
143,847
(52,827)
(87,101)
3,919
Liab
il
it
ies
Derivat
ive financial
instruments
123,049
(54,191)
68,858
(52,827)
(11,372)
4,659
Repurchase agreements and other sim
ilar
secured borrowing
67,948
(15,555)
52,393
–
(52,393)
–
At 31 December 2022
190,997
(69,746)
121,251
(52,827)
(63,765)
4,659
2021
Gross
amounts of
recognised
financial
instruments
$mill
ion
Impact of
offset in the
balance sheet
$mill
ion
Net amounts
of financial
instruments
presented in
the balance
sheet
$mill
ion
Related amount not offset in
the balance sheet
Net amount
$mill
ion
Financ
ial
instruments
$mill
ion
Financ
ial
collateral
$mill
ion
Assets
Derivat
ive financial
instruments
79,128
(25,883)
53,245
(42,577)
(7,757)
2,911
Reverse repurchase agreements and other sim
ilar
secured lending
91,132
(7,426)
83,706
–
(83,706)
–
At 31 December 2021
170,260
(33,309)
136,951
(42,577)
(91,463)
2,911
Liab
il
it
ies
Derivat
ive financial
instruments
79,469
(25,883)
53,586
(42,577)
(8,244)
2,765
Repurchase agreements and other sim
ilar
secured borrowing
69,058
(7,426)
61,632
–
(61.632)
–
At 31 December 2021
148,527
(33,309)
115,218
(42,577)
(69,876)
2,765
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
215
Notes to the financial statements cont
inued
12. Financ
ial
instruments continued
Company
2022
Gross
amounts of
recognised
financial
instruments
$mill
ion
Impact of
offset in the
balance sheet
$mill
ion
Net amounts
of financial
instruments
presented in
the balance
sheet
$mill
ion
Related amount not offset in
the balance sheet
Net amount
$mill
ion
Financ
ial
instruments
$mill
ion
Financ
ial
collateral
$mill
ion
Assets
Derivat
ive financial
instruments
119,672
(54,191)
65,481
(53,810)
(7,710)
3,961
Reverse repurchase agreements and other sim
ilar
secured lending
89,867
(15,555)
74,312
–
(74,312)
–
At 31 December 2022
209,539
(69,746)
139,793
(53,810)
(82,022)
3,961
Liab
il
it
ies
Derivat
ive financial
instruments
123,394
(54,191)
69,203
(53,810)
(10,231)
5,162
Repurchase agreements and other sim
ilar
secured borrowing
67,457
(15,555)
51,902
–
(51,902)
–
At 31 December 2022
190,851
(69,746)
121,105
(53,810)
(62,133)
5,162
2021
Gross
amounts of
recognised
financial
instruments
$mill
ion
Impact of
offset in the
balance sheet
$mill
ion
Net amounts
of financial
instruments
presented in
the balance
sheet
$mill
ion
Related amount not offset in
the balance sheet
Net amount
$mill
ion
Financ
ial
instruments
$mill
ion
Financ
ial
collateral
$mill
ion
Assets
Derivat
ive financial
instruments
79,361
(25,883)
53,478
(43,788)
(7,033)
2,657
Reverse repurchase agreements and other sim
ilar
secured lending
88,566
(7,426)
81,140
–
(81,140)
–
At 31 December 2021
167,927
(33,309)
134,618
(43,788)
(88,173)
2,657
Liab
il
it
ies
Derivat
ive financial
instruments
79,718
(25,883)
53,835
(43,788)
(7,780)
2,267
Repurchase agreements and other sim
ilar
secured borrowing
68,606
(7,426)
61,180
–
(61,180)
–
At 31 December 2021
148,324
(33,309)
115,015
(43,788)
(68,960)
2,267
Related amounts not offset in the balance sheet comprises:
•
Financ
ial
instruments not offset in the balance sheet but covered by an enforceable netting arrangement. This comprises
master netting arrangements held against derivat
ive financial
instruments and excludes the effect of over-collateralisat
ion
•
Financ
ial
instruments where a legal opin
ion ev
idenc
ing enforceab
il
ity the r
ight of offset may not have sought, or may have
been unable to obtain
•
Financ
ial collateral compr
ises cash collateral pledged and received for derivat
ive financial
instruments and
collateral bought and sold for reverse repurchase and repurchase agreements respectively and excludes the
effect of over-collateralisat
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
216
Notes to the financial statements cont
inued
12. Financ
ial
instruments continued
Financ
ial l
iab
il
it
ies des
ignated at fair value through profit or loss
2022
$mill
ion
2021
$mill
ion
Carrying balance aggregate fair value
65,077
72,496
Amount contractually obliged to repay at maturity
66,138
72,710
Difference between aggregate fair value and contractually obliged to repay at maturity
(1,061)
(214)
Cumulative change in fair value accredited to credit risk difference
(31)
14
The net fair value loss on financ
ial l
iab
il
it
ies des
ignated at fair value through profit or loss was $726 mill
ion for the year
(31 December 2021: net loss of $53 mill
ion). Further deta
ils of the Group’s own credit adjustment (OCA) valuation technique
is described later in this note.
Valuation of financ
ial
instruments
The fair values of quoted financ
ial assets and l
iab
il
it
ies
in active markets are based on current prices. A market is regarded as
active if transactions for the asset or liab
il
ity take place with suffic
ient frequency and volume to prov
ide pric
ing
informat
ion
on an ongoing basis. Wherever possible, fair values have been calculated using unadjusted quoted market prices in active
markets for ident
ical
instruments held by the Group. Where quoted market prices are not available, or are unreliable because
of poor liqu
id
ity, fair values have been determined using valuation techniques which, to the extent possible, use market
observable inputs, but in some cases use non market observable inputs. Valuation techniques used include discounted cash
flow analysis and pric
ing models and, where appropr
iate, comparison with instruments that have characterist
ics s
im
ilar to
those of the instruments held by the Group.
The Valuation Methodology function is responsible for independent price verif
icat
ion, oversight of fair value and appropriate
value adjustments and escalation of valuation issues. Independent price verif
icat
ion is the process of determin
ing that the
valuations incorporated into the financ
ial statements are val
idated independent of the business area responsible for the
product. The Valuation Methodology function has oversight of the fair value adjustments to ensure the financ
ial
instruments
are priced to exit. These are key controls in ensuring the material accuracy of the valuations incorporated in the financ
ial
statements. The market data used for price verif
icat
ion may include data sourced from recent trade data involv
ing external
counterparties or third parties such as Bloomberg, Reuters, brokers and consensus pric
ing prov
iders. Valuation Methodology
perform an ongoing review of the market data sources that are used as part of the PV and fair value processes which are
formally documented on a semi-annual basis detail
ing of the su
itab
il
ity of the market data used for price testing. Price
verif
icat
ion uses independently sourced data that is deemed most representative of the market the instruments trade in.
To determine the quality of the market data inputs, factors such as independence, relevance, reliab
il
ity, availab
il
ity of multiple
data sources and methodology employed by the pric
ing prov
ider are taken into considerat
ion.
The Valuation and Benchmarks Committee (VBC) is the valuation governance forum consist
ing of representat
ives from
Group Market Risk, Product Control, Valuation Methodology and the business, which meets monthly to discuss and approve
the independent valuations of the inventory. For Princ
ipal F
inance, the Investment Committee meeting is held on a quarterly
basis to review investments and valuations.
Sign
ificant account
ing estimates and judgements
The Group evaluates the sign
ificance of financial
instruments and material accuracy of the valuations incorporated in the
financial statements as they
involve a high degree of judgement and estimat
ion uncerta
inty in determin
ing the carry
ing
values of financial assets and l
iab
il
it
ies at the balance sheet date.
•
Fair value of financ
ial
instruments is determined using valuation techniques and estimates (see below) which, to the extent
possible, use market observable inputs, but in some cases use non-market observable inputs. Changes in the observabil
ity
of sign
ificant valuat
ion inputs can materially affect the fair values of financ
ial
instruments
•
When establish
ing the ex
it price of a financ
ial
instrument using a valuation technique, the Group estimates valuation
adjustments in determin
ing the fa
ir value (page 219)
•
In determin
ing the valuat
ion of financ
ial
instruments, the Group makes judgements on the amounts reserved to cater for
model and valuation risks, which cover both Level 2 and Level 3 assets, and the sign
ificant valuat
ion judgements in respect
of Level 3 instruments (page 220)
•
Where the estimated measurement of fair value is more judgemental in respect of Level 3 assets, these are valued based
on models that use a sign
ificant degree of non-market-based unobservable
inputs
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
217
Notes to the financial statements cont
inued
12. Financ
ial
instruments continued
Valuation techniques
Refer to the fair value hierarchy explanation – Level 1, 2 and 3 (page 220)
•
Financ
ial
instruments held at fair value
–
Debt securit
ies – asset-backed secur
it
ies:
Asset-backed securit
ies are valued based on external pr
ices obtained from
consensus pric
ing prov
iders, broker quotes, recent trades, arrangers’ quotes, etc. Where an observable price is available
for a given security, it is classif
ied as Level 2. In
instances where third-party prices are not available or reliable, the security
is classif
ied as Level 3. The fa
ir value of Level 3 securit
ies
is estimated using market standard cash flow models with input
parameter assumptions which include prepayment speeds, default rates, discount margins derived from comparable
securit
ies w
ith sim
ilar v
intage, collateral type, and credit ratings
–
Debt securit
ies
in issue:
These debt securit
ies relate to structured notes
issued by the Group. Where independent market
data is available through pric
ing vendors and broker sources these pos
it
ions are class
if
ied as Level 2. Where such l
iqu
id
external prices are not available, valuations of these debt securit
ies are
impl
ied us
ing input parameters such as bond
spreads and credit spreads, and are classif
ied as Level 3. These
input parameters are determined with reference to the
same issuer (if available) or proxies from comparable issuers or assets
–
Derivat
ives:
Derivat
ive products are class
if
ied as Level 2
if the valuation of the product is based upon input parameters
which are observable from independent and reliable market data sources. Derivat
ive products are class
if
ied as Level 3
if there are sign
ificant valuat
ion input parameters which are unobservable in the market, such as products where the
performance is linked to more than one underlying variable. Examples are foreign exchange basket options, equity
options based on the performance of two or more underlying ind
ices and
interest rate products with quanto payouts.
In most cases these unobservable correlation parameters cannot be impl
ied from the market, and methods such as
histor
ical analys
is and comparison with histor
ical levels or other benchmark data must be employed
–
Equity shares – private equity:
The majority of pr
ivate equity unlisted investments are valued based on earning multiples
– Price-to-Earnings (P/E) or enterprise value to earnings before income tax, depreciat
ion and amort
isat
ion (EV/EBITDA)
ratios - of comparable listed companies. The two primary inputs for the valuation of these investments are the actual or
forecast earnings of the investee companies and earning multiples for the comparable listed companies. To ensure
comparabil
ity between these unquoted
investments and the comparable listed companies, appropriate adjustments
are also applied (for example, liqu
id
ity and size) in the valuation. In circumstances where an investment does not have
direct comparables or where the multiples for the comparable companies cannot be sourced from reliable external
sources, alternative valuation techniques (for example, discounted cash flow model or net asset value (“NAV”) or option
pric
ing model), wh
ich use predominantly unobservable inputs or Level 3 inputs, may be applied. Even though earning
multiples for the comparable listed companies can be sourced from third-party sources (for example, Bloomberg), and
those inputs can be deemed Level 2 inputs, all unlisted investments (excluding those where observable inputs are
available, for example, over-the-counter (OTC) prices) are classif
ied as Level 3 on the bas
is that the valuation methods
involve judgements ranging from determin
ing comparable compan
ies to discount rates where the discounted cash
flow method is applied
–
Loans and advances:
These primar
ily
include loans in the FM Bond and Loan Syndicat
ion bus
iness which were not
syndicated as of the balance sheet date and other financ
ing transact
ions with
in F
inanc
ial Markets and loans and
advances includ
ing reverse repurchase agreements that do not have SPPI cash flows or are managed on a fa
ir value
basis. These loans are generally bilateral in nature and, where available, their valuation is based on observable clean
sales transactions prices or market observable spreads. If observable credit spreads are not available, proxy spreads
based on comparable loans with sim
ilar cred
it grade, sector and region, are used. Where observable credit spreads
and market standard proxy methods are available, these loans are classif
ied as Level 2. Where there are no recent
transactions or comparable loans, these loans are classif
ied as Level 3
–
Other debt securit
ies:
These debt securit
ies
include convertible bonds, corporate bonds, credit and structured notes.
Where quoted prices are available through pric
ing vendors, brokers or observable trad
ing activ
it
ies from liqu
id markets,
these are classif
ied as Level 2 and valued us
ing such quotes. Where there are sign
ificant valuat
ion inputs which are
unobservable in the market, due to ill
iqu
id trading or the complexity of the product, these are classif
ied as Level 3.
The valuations of these debt securit
ies are
impl
ied us
ing input parameters such as bond spreads and credit spreads.
These input parameters are determined with reference to the same issuer (if available) or proxied from comparable
issuers or assets
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
218
Notes to the financial statements cont
inued
12. Financ
ial
instruments continued
•
Financ
ial
instruments held at amortised cost
The following sets out the Group’s basis for establish
ing fa
ir values of amortised cost financ
ial
instruments and their
classif
icat
ion between Levels 1, 2 and 3. As certain categories of financ
ial
instruments are not actively traded, there is a
sign
ificant level of management judgement
involved in calculating the fair values:
–
–
Debt securit
ies
in issue, subordinated liab
il
it
ies and other borrowed funds:
The aggregate fair values are calculated
based on quoted market prices. For those notes where quoted market prices are not available, a discounted cash flow
model is used based on a current market related yield curve appropriate for the remain
ing term to matur
ity
–
Deposits and borrowings:
The estimated fair value of deposits with no stated maturity is the amount repayable on
demand. The estimated fair value of fixed interest-bearing deposits and other borrowings without quoted market
prices is based on discounted cash flows using the prevail
ing market rates for debts w
ith a sim
ilar Cred
it Risk and
remain
ing matur
ity
–
Investment securit
ies:
For investment securit
ies that do not have d
irectly observable market values, the Group util
ises a
number of valuation techniques to determine fair value. Where available, securit
ies are valued us
ing input proxies from
the same or closely related underlying (for example, bond spreads from the same or closely related issuer) or input proxies
from a different underlying (for example, a sim
ilar bond but us
ing spreads for a particular sector and rating). Certain
instruments cannot be proxies as set out above, and in such cases the posit
ions are valued us
ing non-market observable
inputs. This includes those instruments held at amortised cost and predominantly relates to asset-backed securit
ies.
The fair value for such instruments is usually proxies from internal assessments of the underlying cash flows
–
Loans and advances to banks and customers:
For loans and advances to banks, the fair value of floating rate
placements and overnight deposits is their carrying amounts. The estimated fair value of fixed interest-bearing deposits
is based on discounted cash flows using the prevail
ing money market rates for debts w
ith a sim
ilar Cred
it Risk and
remain
ing matur
ity. The Group’s loans and advances to customers’ portfolio is well divers
ified by geography and
industry.
Approximately a quarter of the portfolio re-prices with
in one month, and approx
imately half re-prices with
in 12 months.
Loans and advances are presented net of provis
ions for
impa
irment. The fa
ir value of loans and advances to customers
with a residual maturity of less than one year generally approximates the carrying value. The estimated fair value of
loans and advances with a residual maturity of more than one year represents the discounted amount of future cash
flows expected to be received, includ
ing assumpt
ions relating to prepayment rates and Credit Risk. Expected cash flows
are discounted at current market rates to determine fair value. The Group has a wide range of ind
iv
idual instruments
with
in
its loans and advances portfolio and as a result provid
ing quant
if
icat
ion of the key assumptions used to value
such instruments is impract
ical
–
Other assets:
Other assets comprise primar
ily of cash collateral and trades pend
ing settlement. The carrying amount of
these financial
instruments is considered to be a reasonable approximat
ion of fa
ir value as they are either short-term in
nature or re-price to current market rates frequently
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
219
Notes to the financial statements cont
inued
12. Financ
ial
instruments continued
Fair value adjustments
When establish
ing the ex
it price of a financ
ial
instrument using a valuation technique, the Group considers adjustments to
the modelled price which market partic
ipants would make when pr
ic
ing that
instrument. The main valuation adjustments
(described further below) in determin
ing fa
ir value for financ
ial assets and financial l
iab
il
it
ies are as follows:
01.01.22
$mill
ion
Movement
during
the year
$mill
ion
31.12.22
$mill
ion
01.01.21
$mill
ion
Movement
during
the year
$mill
ion
31.12.21
$mill
ion
Bid-offer valuation adjustment
87
2
89
93
(6)
87
Credit Valuation adjustment
6
129
135
169
(163)
6
Debit Valuation adjustment
–
(91)
(91)
(45)
45
–
Model valuation adjustment
3
–
3
5
(2)
3
Funding Valuation adjustment
–
44
44
15
(15)
–
Other fair value adjustments
13
6
19
27
(14)
13
Total
109
90
199
264
(155)
109
Income deferrals
Day 1 and other deferrals
84
76
160
97
(13)
84
Total
84
76
160
97
(13)
84
Note: Bracket represents an asset and credit to the income statement
•
Bid-offer valuation adjustment:
Generally, market parameters are marked on a mid-market basis in the revaluation
systems, and a bid-offer valuation adjustment is required to quantify the expected cost of neutralis
ing the bus
iness’
posit
ions through deal
ing away in the market, thereby bring
ing long pos
it
ions to b
id and short posit
ions to offer.
The methodology to calculate the bid-offer adjustment for a derivat
ive portfol
io involves netting between long and
short posit
ions and the group
ing of risk by strike and tenor based on the hedging strategy where long posit
ions are
marked to bid and short posit
ions marked to offer
in the systems
•
Credit valuation adjustment (CVA):
The Group accounts for CVA against the fair value of derivat
ive products. CVA
is an
adjustment to the fair value of the transactions to reflect the possib
il
ity that our counterparties may default and we may
not receive the full market value of the outstanding transactions. It represents an estimate of the adjustment a market
partic
ipant would
include when deriv
ing a purchase pr
ice to acquire our exposures. CVA is calculated for each subsid
iary,
and with
in each ent
ity for each counterparty to which the entity has exposure and takes account of any collateral we may
hold. The Group calculates the CVA by using estimates of future posit
ive exposure, market-
impl
ied probab
il
ity of default
(PD) and recovery rates. Where market-impl
ied data
is not readily available, we use market-based proxies to estimate the
PD. Wrong-way risk occurs when the exposure to a counterparty is adversely correlated with the credit quality of that
counterparty, and the Group has implemented a model to capture this impact for key wrong-way exposures. The Group
also captures the uncertaint
ies assoc
iated with wrong-way risk in the Group’s Prudential Valuation Adjustments framework
•
Debit valuation adjustment (DVA):
The Group calculates DVA adjustments on its derivat
ive l
iab
il
it
ies to reflect changes
in
its own credit standing. The Group’s DVA adjustments will increase if its credit standing worsens and conversely, decrease
if its credit standing improves. For derivat
ive l
iab
il
it
ies, a DVA adjustment
is determined by applying the Group’s probabil
ity
of default to the Group’s negative expected exposure against the counterparty. The Group’s probabil
ity of default and loss
expected in the event of default is derived based on bond and CDS spreads associated with the Group’s issuances and
market standard recovery levels. The expected exposure is modelled based on the simulat
ion of the underly
ing risk factors
over the expected life of the deal. This simulat
ion methodology
incorporates the collateral posted by the Group and the
effects of master netting agreements
•
Model valuation adjustment:
Valuation models may have pric
ing deficienc
ies or lim
itat
ions that require a valuation
adjustment. These pric
ing deficienc
ies or lim
itat
ions arise due to the choice, implementat
ion and cal
ibrat
ion of the
pric
ing model
•
Funding valuation adjustment (FVA):
The Group makes FVA adjustments against derivat
ive products. FVA reflects an
estimate of the adjustment to its fair value that a market partic
ipant would make to
incorporate funding costs or benefits
that could arise in relation to the exposure. FVA is calculated by determin
ing the net expected exposure at a counterparty
level and then applying a funding rate to those exposures that reflect the market cost of funding. The FVA for
uncollateralised (includ
ing part
ially collateralised) derivat
ives
incorporates the estimated present value of the
market funding cost or benefit associated with funding these transactions
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
220
Notes to the financial statements cont
inued
12. Financ
ial
instruments continued
•
Other fair value adjustments:
The Group calculates the fair value on the interest rate callable products by calibrat
ing
to a set of market prices with differ
ing matur
ity, expiry and strike of the trades
•
Day one and other deferrals:
In certain circumstances the in
it
ial fair value is based on a valuation technique which differs
to the transaction price at the time of in
it
ial recognit
ion. However, these ga
ins can only be recognised when the valuation
technique used is based primar
ily on observable market data. In those cases where the
in
it
ially recognised fair value is
based on a valuation model that uses inputs which are not observable in the market, the difference between the
transaction price and the valuation model is not recognised immed
iately
in the income statement. The difference is
amortised to the income statement until the inputs become observable, or the transaction matures or is terminated.
Other deferrals primar
ily represent adjustments taken to reflect the spec
if
ic terms and cond
it
ions of certa
in derivat
ive
contracts which affect the terminat
ion value at the measurement date
In addit
ion, the Group calculates own cred
it adjustment (OCA) on its issued debt designated at fair value, includ
ing
structured notes, in order to reflect changes in its own credit standing. Issued debt is discounted util
is
ing the spread at which
sim
ilar
instruments would be issued or bought back at the measurement date as this reflects the value from the perspective
of a market partic
ipant who holds the
ident
ical
item as an asset. OCA measures the difference between the fair value of
issued debt as of reporting date and theoretical fair values of issued debt adjusted up or down for changes in own credit
spreads from incept
ion date to the measurement date. Under IFRS 9 the change
in the OCA component is reported under
other comprehensive income. The Group’s OCA reserve will increase if its credit standing worsens and conversely, decrease if
its credit standing improves. The Group’s OCA reserve will reverse over time as its liab
il
it
ies mature.
In the fourth quarter of 2022, the Group implemented refinements to its methodology for the valuation of structured notes, to
align with evolving market practice. Previously, the structured note spread was split into a market level of funding component
(recorded in the Consolidated income statement) and an id
iosyncrat
ic own credit component (recorded in the Consolidated
statement of other comprehensive income). The refinement is to record all prospective movements in the spreads over the
benchmark rate of the host debt instrument through Other Comprehensive income, as changes to the funding component
are considered to be integral to the issuer’s own credit risk. The funding valuation adjustment in relation to the embedded
derivat
ive component of the structured notes w
ill continue to be recorded in the Consolidated income statement.
The impact of this change in estimate, which took effect prospectively from 1 October 2022, was a loss of $21 mill
ion recorded
in the Consolidated statement of other comprehensive income, which would have been recorded in the Consolidated income
statement under the previous methodology. The revised approach is expected to result in a more consistent own credit
valuation with peer banks. The net life-to-date gain previously recorded in the Consolidated income statement of $183mill
ion
from incept
ion of the structured notes to the effect
ive date of this change in estimate in relation to the market level of
funding for the host debt instrument are expected to reverse in the Consolidated statement of other comprehensive income
as the exist
ing portfol
io matures, unless the structured notes are redeemed or otherwise derecognised earlier. This net
life-to-date gain of $183 mill
ion
includes a gain of $165 mill
ion recorded
in the Consolidated income statement for 2022 (2021:
$18 mill
ion ga
in).
Fair value hierarchy – financ
ial
instruments held at fair value
Assets and liab
il
it
ies carr
ied at fair value or for which fair values are disclosed have been classif
ied
into three levels according
to the observabil
ity of the s
ign
ificant
inputs used to determine the fair values. Changes in the observabil
ity of s
ign
ificant
valuation inputs during the reporting period may result in a transfer of assets and liab
il
it
ies w
ith
in the fa
ir value hierarchy.
The Group recognises transfers between levels of the fair value hierarchy when there is a sign
ificant change
in either its
princ
ipal market or the level of observab
il
ity of the
inputs to the valuation techniques as at the end of the reporting period.
•
Level 1:
Fair value measurements are those derived from unadjusted quoted prices in active markets for ident
ical assets
or liab
il
it
ies
•
Level 2:
Fair value measurements are those with quoted prices for sim
ilar
instruments in active markets or quoted prices
for ident
ical or s
im
ilar
instruments in inact
ive markets and financial
instruments valued using models where all sign
ificant
inputs are observable
•
Level 3:
Fair value measurements are those where inputs which could have a sign
ificant effect on the
instrument’s valuation
are not based on observable market data
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
221
Notes to the financial statements cont
inued
12. Financ
ial
instruments continued
The following tables show the classif
icat
ion of financ
ial
instruments held at fair value into the valuation hierarchy:
Group
Assets
Level 1
$mill
ion
Level 2
$mill
ion
Level 3
$mill
ion
Total
$mill
ion
Financ
ial
instruments held at fair value through profit or loss
Loans and advances to banks
–
838
21
859
Loans and advances to customers
–
2,757
1,308
4,065
Reverse repurchase agreements and other sim
ilar secured lend
ing
–
60,345
1,988
62,333
Debt securit
ies and other el
ig
ible b
ills
6,363
6,241
807
13,411
Of which:
Issued by central banks & governments
6,101
3,082
–
9,183
Issued by corporates other than financial
inst
itut
ions
1
86
1,009
416
1,511
Issued by financial
inst
itut
ions¹
176
2,150
391
2,717
Equity shares
1,770
24
92
1,886
Derivat
ive financial
instruments
889
64,117
44
65,050
Of which:
Foreign exchange
136
56,425
17
56,578
Interest rate
32
6,612
24
6,668
Credit
–
405
1
406
Equity and stock index options
–
84
2
86
Commodity
721
591
–
1,312
Investment securit
ies
Debt securit
ies and other el
ig
ible b
ills
31,993
38,631
–
70,624
Of which:
Issued by central banks & governments
22,467
15,056
–
37,523
Issued by corporates other than financial
inst
itut
ions
1
899
1,215
–
2,114
Issued by financial
inst
itut
ions
1
8,627
22,360
–
30,987
Equity shares
112
7
484
603
Total financial
instruments at 31 December 2022²
41,127
172,960
4,744
218,831
Liab
il
it
ies
Financ
ial
instruments held at fair value through profit or loss
Deposits by banks
–
453
133
586
Customer accounts
–
6,385
170
6,555
Repurchase agreements and other sim
ilar secured borrow
ing
–
50,402
–
50,402
Debt securit
ies
in issue
–
7,136
427
7,563
Short posit
ions
251
2,011
40
2,302
Derivat
ive financial
instruments
637
68,103
118
68,858
Of which:
Foreign exchange
96
57,641
14
57,751
Interest rate
29
8,988
12
9,029
Credit
–
396
37
433
Equity and stock index options
–
103
55
158
Commodity
512
975
–
1,487
Other liab
il
it
ies
–
–
–
–
Total financial
instruments at 31 December 2022²
888
134,490
888
136,266
1
Includes covered bonds of $6,082 mill
ion, secur
it
ies
issued by Multilateral Development Banks/International Organisat
ions of $8,563 m
ill
ion and State-owned agenc
ies
and development banks of $5,778 mill
ion
2
The above table does not include held for sale assets of $3 mill
ion and l
iab
il
it
ies of $5 m
ill
ion. These are reported
in Note 20 together with their fair value hierarchy
The fair value of derivat
ives and debt secur
it
ies
in issue classif
ied as Level 2
in the fair value hierarchy that are subject to
complex modelling techniques is $741 mill
ion.
There were no sign
ificant changes to valuat
ion or levelling approaches in 2022.
There were no sign
ificant transfers of financial assets and l
iab
il
it
ies measured at fa
ir value between Level 1 and Level 2 during
the year
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
222
Notes to the financial statements cont
inued
12. Financ
ial
instruments continued
Assets
Level 1
$mill
ion
Level 2
$mill
ion
Level 3
$mill
ion
Total
$mill
ion
Financ
ial
instruments held at fair value through profit or loss
Loans and advances to banks
–
3,613
9
3,622
Loans and advances to customers
–
3,522
410
3,932
Reverse repurchase agreements and other sim
ilar secured lend
ing
–
77,431
1,555
78,986
Debt securit
ies and other el
ig
ible b
ills
4,845
10,247
312
15,404
Of which:
Issued by central banks & governments
4,641
5,343
–
9,984
Issued by corporates other than financial
inst
itut
ions
1
1
2,343
74
2,418
Issued by financial
inst
itut
ions
1
203
2,561
238
3,002
Equity shares
4,449
38
98
4,585
Derivat
ive financial
instruments
1,061
52,117
67
53,245
Of which:
Foreign exchange
156
43,136
12
43,304
Interest rate
9
5,821
50
5,880
Credit
–
2,242
2
2,244
Equity and stock index options
–
90
3
93
Commodity
896
828
–
1,724
Investment securit
ies
Debt securit
ies and other el
ig
ible b
ills
29,433
43,108
40
72,491
Of which:
Issued by central banks & governments
21,431
16,588
40
38,059
Issued by corporates other than financial
inst
itut
ions
1
–
1,344
–
1,344
Issued by financial
inst
itut
ions
1
8,002
25,086
–
33,088
Equity shares
166
17
392
575
Total financial
instruments at 31 December 2021
2
39,954
190,003
2,883
232,840
Liab
il
it
ies
Financ
ial
instruments held at fair value through profit or loss
Deposits by banks
–
37
22
59
Customer accounts
–
6,603
365
6,968
Repurchase agreements and other sim
ilar secured borrow
ing
–
61,307
–
61,307
Debt securit
ies
in issue
–
3,579
781
4,360
Short posit
ions
597
2,255
–
2,852
Derivat
ive financial
instruments
940
52,550
96
53,586
Of which:
Foreign exchange
160
43,127
5
43,292
Interest rate
7
5,927
16
5,950
Credit
–
2,363
41
2,404
Equity and stock index options
–
119
34
153
Commodity
773
1,014
–
1,787
Other liab
il
it
ies
–
6
–
6
Total financial
instruments at 31 December 2021
2
1,537
126,337
1,264
129,138
1
Includes covered bonds of $5,513 mill
ion, secur
it
ies
issued by Multilateral Development Banks/International Organisat
ions of $8,716 m
ill
ion and State-owned agenc
ies
and development banks of $7,430 mill
ion
2
The above table does not include held for sale assets of $43 mill
ion and l
iab
il
it
ies of $n
il. These are reported in Note 20 together with their fair value hierarchy
The fair value of derivat
ives and debt secur
it
ies
in issue classif
ied as Level 2
in the fair value hierarchy that are subject to
complex modelling techniques is $637 mill
ion.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
223
Notes to the financial statements cont
inued
12. Financ
ial
instruments continued
Company
Assets
Level 1
$mill
ion
Level 2
$mill
ion
Level 3
$mill
ion
Total
$mill
ion
Financ
ial
instruments held at fair value through profit or loss
Loans and advances to banks
–
837
–
837
Loans and advances to customers
–
2,297
899
3,196
Reverse repurchase agreements and other sim
ilar secured lend
ing
–
57,069
1,988
59,057
Debt securit
ies and other el
ig
ible b
ills
5,703
4,789
469
10,961
Of which:
Issued by central banks & governments
5,475
1,838
–
7,313
Issued by corporates other than financial
inst
itut
ions
1
86
417
100
603
Issued by financial
inst
itut
ions
1
142
2,534
369
3,045
Equity shares
1,738
3
–
1,741
Derivat
ive financial
instruments
883
64,559
39
65,481
Of which:
Foreign exchange
131
51,427
16
51,574
Interest rate
32
11,980
21
12,033
Credit
–
351
1
352
Equity and stock index options
–
68
1
69
Commodity
720
733
–
1,453
Investment securit
ies
Debt securit
ies and other el
ig
ible b
ills
24,485
32,522
–
57,007
Of which:
Issued by central banks & governments
16,239
10,441
–
26,680
Issued by corporates other than financial
inst
itut
ions
1
–
1,064
–
1,064
Issued by financial
inst
itut
ions
1
8,246
21,017
–
29,263
Equity shares
101
2
220
323
Total financial
instruments at 31 December 2022²
32,910
162,078
3,615
198,603
Liab
il
it
ies
Financ
ial
instruments held at fair value through profit or loss
Deposits by banks
–
454
119
573
Customer accounts
–
6,258
67
6,325
Repurchase agreements and other sim
ilar secured borrow
ing
–
50,179
–
50,179
Debt securit
ies
in issue
–
7,009
262
7,271
Short posit
ions
141
1,660
40
1,841
Derivat
ive financial
instruments
636
68,457
110
69,203
Of which:
Foreign exchange
95
53,146
25
53,266
Interest rate
29
13,696
9
13,734
Credit
–
412
25
437
Equity and stock index options
–
75
51
126
Commodity
512
1,128
–
1,640
Other liab
il
it
ies
–
–
–
–
Total financial
instruments at 31 December 2022²
777
134,017
598
135,392
1
Includes covered bonds of $6,468 mill
ion, secur
it
ies
issued by Multilateral Development Banks/International Organisat
ions of $9,199 m
ill
ion and State-owned agenc
ies
and development banks of $5,503 mill
ion.
2
The above table does not include held for sale assets of $2 mill
ion and l
iab
il
it
ies of $n
il. These are reported in Note 20 together with their fair value hierarchy
The fair value of derivat
ives and debt secur
it
ies
in issue classif
ied as Level 2
in the fair value hierarchy that are subject to
complex modelling techniques is $727 mill
ion.
There were no sign
ificant changes to valuat
ion or levelling approaches in 2022.
There were no sign
ificant transfers of financial assets and l
iab
il
it
ies measured at fa
ir value between Level 1 and Level 2 during
the year.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
224
Notes to the financial statements cont
inued
12. Financ
ial
instruments continued
Assets
Level 1
$mill
ion
Level 2
$mill
ion
Level 3
$mill
ion
Total
$mill
ion
Financ
ial
instruments held at fair value through profit or loss
Loans and advances to banks
–
3,561
9
3,570
Loans and advances to customers
–
3,125
82
3,207
Reverse repurchase agreements and other sim
ilar secured lend
ing
–
76,100
1,555
77,655
Debt securit
ies and other el
ig
ible b
ills
3,683
6,966
203
10,852
Of which:
Issued by central banks & governments
3,495
2,763
–
6,258
Issued by corporates other than financial
inst
itut
ions
1
–
1,539
5
1,544
Issued by financial
inst
itut
ions
1
188
2,664
198
3,050
Equity shares
4,419
2
–
4,421
Derivat
ive financial
instruments
1,047
52,362
69
53,478
Of which:
Foreign exchange
142
41,415
14
41,571
Interest rate
9
7,707
50
7,766
Credit
–
2,244
2
2,246
Equity and stock index options
–
47
3
50
Commodity
896
949
–
1,845
Investment securit
ies
Debt securit
ies and other el
ig
ible b
ills
25,521
34,226
286
60,033
Of which:
Issued by central banks & governments
17,956
9,287
25
27,268
Issued by corporates other than financial
inst
itut
ions
1
–
1,226
–
1,226
Issued by financial
inst
itut
ions
1
7,565
23,713
261
31,539
Equity shares
151
2
208
361
Total financial
instruments at 31 December 2021
2
34,821
176,344
2,412
231,577
Liab
il
it
ies
Financ
ial
instruments held at fair value through profit or loss
Deposits by banks
–
37
22
59
Customer accounts
–
6,306
292
6,598
Repurchase agreements and other sim
ilar secured borrow
ing
–
60,897
–
60,897
Debt securit
ies
in issue
–
3,472
614
4,086
Short posit
ions
462
1,794
–
2,256
Derivat
ive financial
instruments
933
52,797
105
53,835
Of which:
Foreign exchange
153
41,642
16
41,811
Interest rate
7
7,694
15
7,716
Credit
–
2,328
41
2,369
Equity and stock index options
–
38
33
71
Commodity
773
1,095
–
1,868
Other liab
il
it
ies
–
6
–
6
Total financial
instruments at 31 December 2021
2
1,395
125,309
1,033
127,737
1
Includes covered bonds of $5,100 mill
ion, secur
it
ies
issued by Multilateral Development Banks/International Organisat
ions of $8,245 m
ill
ion and State-owned agenc
ies
and development banks of $7,356 mill
ion.
2
The above table does not include held for sale assets of $42 mill
ion and l
iab
il
it
ies of $n
il. These are reported in Note 20 together with their fair value hierarchy
The fair value of derivat
ives and debt secur
it
ies
in issue classif
ied as Level 2
in the fair value hierarchy that are subject to
complex modelling techniques is $631 mill
ion.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
225
Notes to the financial statements cont
inued
12. Financ
ial
instruments continued
Fair value hierarchy – financ
ial
instruments measured at amortised cost
The following table shows the carrying amounts and incorporates the Group's estimate of fair values of those financ
ial assets
and liab
il
it
ies not presented on the Group’s balance sheet at fa
ir value. These fair values may be different from the actual
amount that will be received or paid on the settlement or maturity of the financ
ial
instrument. For certain instruments, the fair
value may be determined using assumptions for which no observable prices are available.
Group
Carrying value
$mill
ion
Fair value
Level 1
$mill
ion
Level 2
$mill
ion
Level 3
$mill
ion
Total
$mill
ion
Assets
Cash and balances at central banks
1
50,531
–
50,531
–
50,531
Loans and advances to banks
27,383
–
27,383
–
27,383
of which – reverse repurchase agreements and other sim
ilar
secured lending
878
–
833
–
833
Loans and advances to customers
158,126
–
58,045
100,025
158,070
of which – reverse repurchase agreements and other sim
ilar
secured lending
15,586
–
15,727
–
15,727
Investment securit
ies
2
41,801
–
39,704
25
39,729
Other assets
1
27,210
–
27,210
–
27,210
Assets held for sale
1,388
344
946
98
1,388
At 31 December 2022
306,439
344
203,819
100,148
304,311
Liab
il
it
ies
Deposits by banks
24,150
–
24,175
–
24,175
Customer accounts
243,075
–
243,160
–
243,160
Repurchase agreements and other sim
ilar secured borrow
ing
1,991
–
1,991
–
1,991
Debt securit
ies
in issue
36,982
–
36,982
–
36,982
Subordinated liab
il
it
ies and other borrowed funds
13,269
–
13,215
–
13,215
Other liab
il
it
ies
1
25,567
–
25,566
1
25,567
Liab
il
it
ies held for sale
1,230
398
832
–
1,230
At 31 December 2022
346,264
398
345,921
1
346,320
Carrying value
$mill
ion
Fair value
Level 1
$mill
ion
restated
Level 2
$mill
ion
Level 3
$mill
ion
restated
Total
$mill
ion
Assets
Cash and balances at central banks
1
61,963
–
61,963
–
61,963
Loans and advances to banks
29,999
–
29,999
–
29,999
of which – reverse repurchase agreements and other sim
ilar
secured lending
956
–
956
–
956
Loans and advances to customers
144,799
–
42,050
102,756
144,806
of which – reverse repurchase agreements and other sim
ilar
secured lending
3,764
–
3,764
–
3,764
Investment securit
ies
2
29,281
–
29,749
–
29,749
Other assets
1
22,281
–
22,280
1
22,281
Assets held for sale
52
–
–
52
52
At 31 December 2021
288,186
–
186,041
102,809
288,850
Liab
il
it
ies
Deposits by banks
25,205
–
25,205
–
25,205
Customer accounts
242,331
–
242,297
–
242,297
Repurchase agreements and other sim
ilar secured borrow
ing
325
–
325
–
325
Debt securit
ies
in issue
36,060
–
36,061
–
36,061
Subordinated liab
il
it
ies and other borrowed funds
14,615
–
14,579
–
14,579
Other liab
il
it
ies
1
25,650
25,649
1
25,650
Liab
il
it
ies held for sale
–
–
–
–
–
At 31 December 2021
344,186
–
344,116
25,205
344,117
1
The carrying amount of these financ
ial
instruments is considered to be a reasonable approximat
ion of fa
ir value as they are short-term in nature or reprice to current
market rates frequently
2
Includes Government bonds and Treasury bills of $13,781 mill
ion at 31 December 2022 and $15,152 m
ill
ion at 31 December 2021
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
226
Notes to the financial statements cont
inued
12. Financ
ial
instruments continued
Company
Carrying value
$mill
ion
Fair value
Level 1
$mill
ion
Level 2
$mill
ion
Level 3
$mill
ion
Total
$mill
ion
Assets
Cash and balances at central banks
1
38,867
–
38,867
–
38,867
Loans and advances to banks
18,548
–
18,548
–
18,548
of which – reverse repurchase agreements and other sim
ilar
secured lending
184
–
184
–
184
Loans and advances to customers
80,611
–
33,590
47,064
80,654
of which – reverse repurchase agreements and other sim
ilar
secured lending
15,071
–
15,071
–
15,071
Investment securit
ies
2
38,042
–
35,944
25
35,969
Other assets
1
23,625
–
23,625
–
23,625
Assets held for sale
544
–
–
544
544
At 31 December 2022
200,237
–
150,574
47,633
198,207
Liab
il
it
ies
Deposits by banks
17,900
–
17,925
–
17,925
Customer accounts
137,422
–
137,394
–
137,394
Repurchase agreements and other sim
ilar secured borrow
ing
1,723
–
1,723
–
1,723
Debt securit
ies
in issue
34,992
–
34,997
–
34,997
Subordinated liab
il
it
ies and other borrowed funds
12,729
–
12,675
–
12,675
Other liab
il
it
ies
1
20,661
–
20,661
–
20,661
Liab
il
it
ies held for sale
335
–
–
335
335
At 31 December 2022
225,762
–
225,375
335
225,710
Carrying value
$mill
ion
Fair value
Level 1
$mill
ion
restated
Level 2
$mill
ion
Level 3
$mill
ion
restated
Total
$mill
ion
Assets
Cash and balances at central banks
1
48,165
–
48,165
–
48,165
Loans and advances to banks
16,117
–
16,117
–
16,117
of which – reverse repurchase agreements and other sim
ilar
secured lending
438
–
438
–
438
Loans and advances to customers
71,161
–
19,600
51,368
70,968
of which – reverse repurchase agreements and other sim
ilar
secured lending
3,047
–
3,047
–
3,047
Investment securit
ies
2
25,995
–
26,529
–
26,529
Other assets
1
19,860
–
19,860
–
19,860
Assets held for sale
49
–
–
49
49
At 31 December 2021
181,347
–
130,271
51,417
181,688
Liab
il
it
ies
Deposits by banks
18,870
–
18,870
–
18,870
Customer accounts
135,478
–
135,444
–
135,444
Repurchase agreements and other sim
ilar secured borrow
ing
283
–
283
–
283
Debt securit
ies
in issue
33,826
–
33,827
–
33,827
Subordinated liab
il
it
ies and other borrowed funds
14,076
–
14,039
–
14,039
Other liab
il
it
ies
1,3
20,125
–
20,125
–
20,125
Liab
il
it
ies held for sale
–
–
–
–
–
At 31 December 2021
222,658
–
222,588
–
222,588
1
The carrying amount of these financ
ial
instruments is considered to be a reasonable approximat
ion of fa
ir value as they are short-term in nature or reprice to current
market rates frequently
2
Includes Government bonds and Treasury bills of $12,321 mill
ion as at 31 December 2022 and $13,827 m
ill
ion as at 31 December 2021
3
Includes correction of fair value hedge accounting adjustment $81 mill
ion
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
227
Notes to the financial statements cont
inued
12. Financ
ial
instruments continued
Loans and advances to customers by client segment¹
Group
2022
Carrying value
Fair value
Stage 3
$mill
ion
Stage 1 and
stage 2
$mill
ion
Total
$mill
ion
Stage 3
$mill
ion
Stage 1 and
stage 2
$mill
ion
Total
$mill
ion
Corporate, Commercial & Institut
ional Bank
ing
1,955
85,524
87,479
1,998
85,382
87,380
Consumer, Private & Business Banking
440
45,573
46,013
448
45,608
46,056
Ventures
–
64
64
–
63
63
Central & other items
230
24,340
24,570
230
24,341
24,571
At 31 December 2022
2,625
155,501
158,126
2,676
155,394
158,070
2021 (Restated)
2
Carrying value
Fair value
Stage 3
$mill
ion
Stage 1 and
stage 2
$mill
ion
Total
$mill
ion
Stage 3
$mill
ion
Stage 1 and
stage 2
$mill
ion
Total
$mill
ion
Corporate, Commercial & Institut
ional Bank
ing
2
2,187
77,580
79,767
2,278
77,330
79,608
Consumer, Private & Business Banking
2
528
45,520
46,048
528
45,687
46,215
Ventures
–
–
–
–
–
–
Central & other items
–
18,984
18,984
–
18,983
18,983
At 31 December 2021
2,715
142,084
144,799
2,806
142,000
144,806
1
Loans and advances includes reverse repurchase agreements and other sim
ilar secured lend
ing: carrying value $15,586 mill
ion and fa
ir value $15,586 mill
ion
(31 December 2021: $3,764 mill
ion and $3,764 m
ill
ion respect
ively)
2
Following the increased strategic importance and reporting of Ventures to management, this has been established as a separate operating segment from January
2022. Prior period has been restated
Company
2022
Carrying value
Fair value
Stage 3
$mill
ion
Stage 1 and
stage 2
$mill
ion
Total
$mill
ion
Stage 3
$mill
ion
Stage 1 and
stage 2
$mill
ion
Total
$mill
ion
Corporate, Commercial & Institut
ional Bank
ing
1,609
63,311
65,920
1,652
64,311
65,963
Consumer, Private & Business Banking
225
11,436
11,661
231
11,430
11,661
Central & other items
230
2,800
3,030
230
2,800
3,030
At 31 December 2022
2,064
78,547
80,611
2,113
78,541
80,654
2021
Carrying value
Fair value
Stage 3
$mill
ion
Stage 1 and
stage 2
$mill
ion
Total
$mill
ion
Stage 3
$mill
ion
Stage 1 and
stage 2
$mill
ion
Total
$mill
ion
Corporate, Commercial & Institut
ional Bank
ing
1,716
54,645
56,361
1,748
54,419
56,167
Consumer, Private & Business Banking
276
11,925
12,201
276
11,928
12,204
Central & other items
–
2,599
2,599
–
2,597
2,597
At 31 December 2021
1,992
69,169
71,161
2,024
68,944
70,968
1
Loans and advances includes reverse repurchase agreements and other sim
ilar secured lend
ing: carrying value $15,071 mill
ion and fa
ir value $15,071 mill
ion
(31 December 2021: $3,047 mill
ion and fa
ir value $3,047 mill
ion)
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
228
Notes to the financial statements cont
inued
ial
instruments continued
Fair value of financ
ial
instruments
Level 3 Summary and sign
ificant unobservable
inputs
The following table presents the Group’s primary Level 3 financ
ial
instruments which are held at fair value. The table also
presents the valuation techniques used to measure the fair value of those financ
ial
instruments, the sign
ificant unobservable
inputs, the range of values for those inputs and the weighted average of those inputs:
Group
Instrument
Value as at
31 December 2022
Princ
ipal valuat
ion
technique
Sign
ificant unobservable
inputs
Range
1
Weighted
average
2
Assets
$mill
ion
Liab
il
it
ies
$mill
ion
Loans and advances to
banks
21
–
Discounted cash flows
Price/yield
N/A
N/A
Credit spreads
2.9%
2.9%
Loans and advances to
customers
1,308
–
Discounted cash flows
Price/yield
0.3% - 18.2%
5.4%
Recovery rates
5.0% - 100%
91.3%
Reverse repurchase
agreements and other
sim
ilar secured lend
ing
1,988
–
Discounted cash flows
Repo curve
2.3% - 8.0%
6.2%
Price/yield
1.9%-7.2%
4.7%
Debt securit
ies,
alternative tier one and
other elig
ible secur
it
ies
807
–
Discounted cash flows
Price/yield
5.5% - 48.5%
8.3%
Recovery rates
0.0% - 1.0%
0.2%
Government bonds and
treasury bills
–
–
Discounted cash flows
Price/yield
N/A
N/A
Asset-backed securit
ies
–
–
Discounted cash flows
Price/yield
N/A
N/A
Equity shares (includes
private equity
investments)
576
–
Comparable pric
ing/y
ieldEV/EBITDA multiples
N/A
N/A
EV/Revenue multiples
8.2x - 23.2x
12.9X
P/E multiples
13.4x - 29.7x
14.5X
P/B multiples
0.3x - 3.3x
1.2X
P/S multiples
2.1x - 2.2x
2.2X
Liqu
id
ity discount
20.0%
20.0%
Discounted cash flows
Discount rates
7.5% -16.4%
8.0%
Option pric
ing model
Equity value based on EV/
Revenue multiples
4.8x - 76.1x
32.9x
Equity value based on EV/EBITDA
multiples
2.6x
2.6x
Equity value based on volatil
ity
60.0%
60.0%
Derivat
ive financial
instruments of which:
Foreign exchange
17
14
Option pric
ing model
Foreign exchange option impl
ied
volatil
ity
(21.0)% - 21%
(2.7)%
Discounted cash flows
Foreign exchange curves
(4.6)% - 81.8%
19.8%
Interest rate
24
12
Discounted cash flows
Interest rate curves
(2.1)% - 50.2%
10.6%
Option pric
ing model
Bond option impl
ied volat
il
ity
N/A
N/A
Credit
1
37
Discounted cash flows
Credit spreads
0.1% - 2.3%
1.2%
Price/yield
7.2% - 9.7%
7.4%
Equity and stock index
2
55
Internal pric
ing model
Equity correlation
30% - 96%
67.0%
Equity-FX correlation
(70.0)% - 85.0%
37.0%
Deposits by banks
–
133
Discounted cash flows
Credit spreads
0.9% - 3.4%
2.0%
Price/yield
6.0%
6.0%
Customer accounts
–
170
Discounted cash flows
Credit spreads
5.5% - 19.1%
11.4%
Price/yield
22.8% - 22.9%
22.9%
Debt securit
ies
in issue
–
427
Discounted cash flows
Credit spreads
2.0% - 7.0%
5.3%
Price/yield
6.8% - 12.4%
9.1%
Internal pric
ing model
Equity correlation
30.0% - 96.0%
67.0%
Equity-FX correlation
(70.0)% - 85.0%
37.0%
Short posit
ions
–
40
Discounted cash flows
Price/yield
6.8%
6.8%
Total
4,744
888
1
The ranges of values shown in the above table represent the highest and lowest levels used in the valuation of the Group’s Level 3 financ
ial
instruments as at
31 December 2022. The ranges of values used are reflective of the underlying characterist
ics of these Level 3 financial
instruments based on the market condit
ions at the
balance sheet date. However, these ranges of values may not represent the uncertainty in fair value measurements of the Group’s Level 3 financ
ial
instruments
2
Weighted average for non-derivat
ive financial
instruments has been calculated by weight
ing
inputs by the relative fair value. Weighted average for derivat
ives has
been provided by weight
ing
inputs by the risk relevant to that variable. N/A has been entered for the cases where weighted average is not a meaningful ind
icator
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
229
Notes to the financial statements cont
inued
12. Financ
ial
instruments continued
Instrument
Value as at
31 December 2021
Princ
ipal valuat
ion
technique
Sign
ificant unobservable
inputs
Range
1
Weighted
average
2
Assets
$mill
ion
Liab
il
it
ies
$mill
ion
Loans and advances to
banks
9
–
Discounted cash flows
Price/yield
1.0%-15.6%
10.8%
Loans and advances to
customers
410
–
Discounted cash flows
Price/yield
0.5% - 6.9%
4.2%
Recovery rates
18.9% - 100%
92.1%
Debt securit
ies,
alternative tier one and
other elig
ible secur
it
ies
312
–
Discounted cash flows
Price/yield
3.8% - 18.7%
11.6%
Government bonds and
treasury bills
40
–
Discounted cash flows
Price/yield
2.9% - 5.5%
3.7%
Asset-backed securit
ies
–
–
Discounted cash flows
Price/yield
1.4% - 3.2%
2.7%
Equity shares (includes
private equity
investments)
490
–
Comparable pric
ing/y
ieldEV/EBITDA multiples
3.5x - 7.3x
4.6x
P/E multiples
17.4x
17.4x
P/B multiples
0.6x - 1.0x
0.9x
P/S multiples
N/A
N/A
Liqu
id
ity discount
10.0% - 20.0%
15.9%
Discounted cash flows
Discount rates
8.4% - 16.2%
9.5%
Derivat
ive financial
instruments of which:
Foreign exchange
12
5
Option pric
ing model
Foreign exchange option impl
ied
volatil
ity
4.4% - 18.9%
16.7%
Discounted cash flows
Foreign exchange curves
7.8% - 8.0%
7.9%
Interest rate
50
16
Discounted cash flows
Interest rate curves
5.3% - 19.6%
8.6%
Option pric
ing model
Bond option impl
ied volat
il
ity
17.0% - 28.0%
24.0%
Credit
2
41
Discounted cash flows
Credit spreads
1.0% - 7.9%
1.1%
Equity and stock index
3
34
Internal pric
ing model
Equity correlation
1.0% - 90.0%
58.0%
Equity-FX correlation
(80.0)% - 70.0%
(29.0)%
Deposits by banks
–
22
Discounted cash flows
Credit spreads
1.0% - 1.8%
1.4%
Customer accounts
–
365
Discounted cash flows
Credit spreads
1.0% - 5.8%
2.7%
Debt securit
ies
in issue
–
781
Discounted cash flows
Credit spreads
0.1% - 1.4%
0.9%
Internal pric
ing model
Equity correlation
1.0% - 90.0%
58.0%
Equity-FX correlation
(80.0)% - 70.0%
(29.0)%
Short posit
ions
–
–
N/A
N/A
N/A
N/A
Total
2,883
1,264
1
The ranges of values shown in the above table represent the highest and lowest levels used in the valuation of the Group’s Level 3 financ
ial
instruments as at 31
December 2021. The ranges of values used are reflective of the underlying characterist
ics of these Level 3 financial
instruments based on the market condit
ions at the
balance sheet date. However, these ranges of values may not represent the uncertainty in fair value measurements of the Group’s Level 3 financ
ial
instruments
2
Weighted average for non-derivat
ive financial
instruments has been calculated by weight
ing
inputs by the relative fair value. Weighted average for derivat
ives has
been provided by weight
ing
inputs by the risk relevant to that variable. N/A has been entered for the cases where weighted average is not a meaningful ind
icator
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
230
Notes to the financial statements cont
inued
12. Financ
ial
instruments continued
Company
Instrument
Value at
31 December 2022
Princ
ipal valuat
ion
technique
Sign
ificant unobservable
inputs
Range
1
Weighted
average
2
Assets
$mill
ion
Liab
il
it
ies
$mill
ion
Loans and advances to
banks
–
–
Discounted cash flows
Price/yield
N/A
N/A
Credit spreads
N/A
N/A
Loans and advances to
customers
899
–
Discounted cash flows
Price/yield
2.8% - 11.5%
4.9%
Recovery rates
26.5% - 100%
93.0%
Reverse repurchase
agreements and other
sim
ilar secured lend
ing
1,988
–
Discounted cash flows
Repo curve
2.3% - 8.0%
6.2%
Price/yield
1.9%-7.2%
4.7%
Debt securit
ies,
alternative tier one and
other elig
ible secur
it
ies
469
–
Discounted cash flows
Price/yield
6.8% - 48.5%
8.5%
Recovery rates
0.0% - 1.0%
0.2%
Government bonds and
treasury bills
–
–
Discounted cash flows
Price/yield
N/A
N/A
Asset-backed securit
ies
–
–
Discounted cash flows
Price/yield
N/A
N/A
Equity shares (includes
private equity
investments)
220
–
Comparable pric
ing/y
ieldEV/EBITDA multiples
N/A
N/A
EV/Revenue multiples
N/A
N/A
P/E multiples
N/A
N/A
P/B multiples
0.7x - 2.3x
1.2x
P/S multiples
N/A
N/A
Liqu
id
ity discount
20.0%
20.0%
Discounted cash flows
Discount rates
7.5% - 16.4%
7.9%
Option pric
ing model
Equity value based on EV/
Revenue multiples
12.2x
12.2x
Equity value based on EV/EBITDA
multiples
N/A
N/A
Equity value based on volatil
ity
N/A
N/A
Derivat
ive financial
instruments of which:
Foreign exchange
16
25
Option pric
ing model
Foreign exchange option impl
ied
volatil
ity
(21.0)% - 21.0%
(3.6)%
Discounted cash flows
Foreign exchange curves
(4.6)% - 81.8%
15.8%
Interest rate
21
9
Discounted cash flows
Interest rate curves
(2.1)% - 50.2%
7.8%
Option pric
ing model
Bond option impl
ied volat
il
ity
N/A
N/A
Credit
1
25
Discounted cash flows
Credit spreads
0.1% - 2.3%
1.2%
Price/yield
7.2% - 9.7%
8.5%
Equity and stock index
1
51
Internal pric
ing model
Equity correlation
30.0% - 96.0%
67.0%
Equity-FX correlation
(70.0)% - 85.0%
37.0%
Deposits by banks
–
119
Discounted cash flows
Credit spreads
0.9% - 3.4%
2.0%
Price/yield
6.0%
6.0%
Customer accounts
–
67
Discounted cash flows
Credit spreads
N/A
N/A
Price/yield
22.8% - 22.9%
22.9%
Debt securit
ies
in issue
–
262
Discounted cash flows
Credit spreads
2.0%
2.0%
Internal pric
ing model
Equity correlation
30.0% - 96.0%
67.0%
Equity-FX correlation
(70.0)% - 85.0%
37.0%
Short posit
ions
–
40
Discounted cash flows
Price/yield
6.8%
6.8%
Total
3,615
598
1
The ranges of values shown in the above table represent the highest and lowest levels used in the valuation of the Group’s Level 3 financ
ial
instruments as at
31 December 2022. The ranges of values used are reflective of the underlying characterist
ics of these Level 3 financial
instruments based on the market condit
ions at the
balance sheet date. However, these ranges of values may not represent the uncertainty in fair value measurements of the Group’s Level 3 financ
ial
instruments
2
Weighted average for non-derivat
ive financial
instruments has been calculated by weight
ing
inputs by the relative fair value. Weighted average for derivat
ives has
been provided by weight
ing
inputs by the risk relevant to that variable. N/A has been entered for the cases where weighted average is not a meaningful ind
icator
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
231
Notes to the financial statements cont
inued
Instrument
Value at
31 December 2021
Princ
ipal valuat
ion
technique
Sign
ificant unobservable
inputs
Range
1
Weighted
average
2
Assets
$mill
ion
Liab
il
it
ies
$mill
ion
Loans and advances to
banks
9
–
Discounted cash flows
Price/yield
1.0%-15.6%
10.8%
Loans and advances to
customers
82
–
Discounted cash flows
Price/yield
0.5% - 6.9%
4.2%
Recovery rates
18.9% - 100%
92.1%
Reverse repurchase
agreements and other
sim
ilar secured lend
ing
1,555
–
Discounted cash flows
Repo rate
Debt securit
ies,
alternative tier one and
other elig
ible secur
it
ies
464
–
Discounted cash flows
Price/yield
3.8% - 18.7%
11.6%
Government bonds and
treasury bills
25
–
Discounted cash flows
Price/yield
2.9% - 5.5%
3.7%
Equity shares (includes
private equity
investments)
208
–
Comparable pric
ing/y
ieldEV/EBITDA multiples
3.5x - 7.3x
4.6x
P/E multiples
17.4x
17.4x
P/B multiples
0.6x - 1.0x
0.9x
P/S multiples
N/A
N/A
Liqu
id
ity discount
10.0% - 20.0%
15.9%
Discounted cash flows
Discount rates
8.4% - 16.2%
9.5%
Derivat
ive financial
instruments of which:
Foreign exchange
14
16
Option pric
ing model
Foreign exchange option impl
ied
volatil
ity
4.4% - 18.9%
16.7%
Discounted cash flows
Foreign exchange curves
7.8% - 8.0%
7.9%
Interest rate
50
15
Discounted cash flows
Interest rate curves
5.3% - 19.6%
8.6%
Option pric
ing model
Bond option impl
ied volat
il
ity
17.0% - 28.0%
24.0%
Credit
2
41
Discounted cash flows
Credit spreads
1.0% - 7.9%
1.1%
Equity and stock index
3
33
Internal pric
ing model
Equity correlation
1.0% - 90.0%
58.0%
Equity-FX correlation
(80.0)% - 70.0%
(29.0)%
Deposits by banks
–
22
Discounted cash flows
Credit spreads
1.0% - 1.8%
1.4%
Customer accounts
–
292
Discounted cash flows
Credit spreads
1.0% - 5.8%
2.7%
Debt securit
ies
in issue
–
614
Discounted cash flows
Credit spreads
0.1% - 1.4%
0.9%
Internal pric
ing model
Equity correlation
1.0% - 90.0%
58.0%
Equity-FX correlation
(80.0)% - 70.0%
(29.0)%
Short posit
ions
–
–
N/A
N/A
N/A
N/A
Total
2,412
1,033
1
The ranges of values shown in the above table represent the highest and lowest levels used in the valuation of the Group’s Level 3 financ
ial
instruments as at
31 December 2021. The ranges of values used are reflective of the underlying characterist
ics of these Level 3 financial
instruments based on the market condit
ions at the
balance sheet date. However, these ranges of values may not represent the uncertainty in fair value measurements of the Group’s Level 3 financ
ial
instruments
2
Weighted average for non-derivat
ive financial
instruments has been calculated by weight
ing
inputs by the relative fair value. Weighted average for derivat
ives has
been provided by weight
ing
inputs by the risk relevant to that variable. N/A has been entered for the cases where weighted average is not a meaningful ind
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
232
Notes to the financial statements cont
inued
12. Financ
ial
instruments continued
The following section describes the sign
ificant unobservable
inputs ident
ified
in the valuation technique table:
•
Comparable price/yield is a valuation methodology in which the price of a comparable instrument is used to estimate
the fair value where there are no direct observable prices. Yield is the interest rate that is used to discount the future cash
flows in a discounted cash flow model. Valuation using comparable instruments can be done by calculating an impl
ied
yield (or spread over a liqu
id benchmark) from the pr
ice of a comparable instrument, then adjust
ing that y
ield (or spread)
to derive a value for the instrument. The adjustment should account for relevant differences in the financ
ial
instruments
such as maturity and/or credit quality. Alternatively, a price-to-price basis can be assumed between the comparable
instrument and the instrument being valued in order to establish the value of the instrument (for example, deriv
ing a fa
ir
value for a junior unsecured bond from the pr
ice of a senior secured bond). An increase in price, in isolat
ion, would result
in a favourable movement in the fair value of the asset. An increase in yield, in isolat
ion, would result
in an unfavourable
movement in the fair value of the asset
•
Correlation is the measure of how movement in one variable influences the movement in another variable. An equity
correlation is the correlation between two equity instruments while an interest rate correlation refers to the correlation
between two swap rates
•
Credit spread represents the addit
ional y
ield that a market partic
ipant would demand for tak
ing exposure to the
Credit Risk of an instrument
•
Discount rate refers to the rate of return used to convert expected cash flows into present value
•
Equity-FX correlation is the correlation between equity instrument and foreign exchange instrument
•
EV/EBITDA multiple is the ratio of Enterprise Value (EV) to Earnings Before Interest, Taxes, Depreciat
ion and Amort
isat
ion
(EBITDA). EV is the aggregate market capital
isat
ion and debt minus the cash and cash equivalents. An increase in
EV/EBITDA multiples, will result in a favourable movement in the fair value of the unlisted firm
•
EV/Revenue multiple is the ratio of Enterprise Value (EV) to Revenue. An increase in EV/Revenue multiple will result in a
favourable movement in the fair value of the unlisted firm
•
Foreign exchange curves is the term structure for forward rates and swap rates between currency pairs over a
specif
ied per
iod
•
Net asset value (NAV) is the value of an entity's assets after deducting any liab
il
it
ies.
•
Interest rate curves is the term structure of interest rates and measure of future interest rates at a particular point in time
•
Liqu
id
ity discounts in the valuation of unlisted investments primar
ily appl
ied to the valuation of unlisted firms’ investments
to reflect the fact that these stocks are not actively traded. An increase in liqu
id
ity discount will result an unfavourable
movement in the fair value of the unlisted firm
•
Price-Earnings (P/E) multiples is the ratio of the market value of equity to the net income after tax. An increase in P/E
multiple will result in a favourable movement in the fair value of the unlisted firm
•
Price-Book (P/B) multiple is the ratio of the market value of equity to the book value of equity. An increase in P/B multiple
will result in a favourable movement in the fair value of the unlisted firm
•
Price-Sales (P/S) multiple is the ratio of the market value of equity to sales. An increase in P/S multiple will result in a
favourable movement in the fair value of the unlisted firm
•
Recovery rates are the expectation of the rate of return resulting from the liqu
idat
ion of a particular loan. As the probabil
ity
of default increases for a given instrument, the valuation of that instrument will increas
ingly reflect
its expected recovery
level assuming default. An increase in the recovery rate, in isolat
ion, would result
in a favourable movement in the fair value
of the loan
•
Repo curve is the term structure of repo rates on repos and reverse repos at a particular point in time.
•
Volatil
ity represents an est
imate of how much a particular instrument, parameter or index will change in value over time.
Generally, the higher the volatil
ity, the more expens
ive the option will be
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
233
Notes to the financial statements cont
inued
12. Financ
ial
instruments continued
Level 3 movement tables – financial assets
The table below analyses movements in Level 3 financ
ial assets carr
ied at fair value.
Group
Assets
Held at fair value through profit or loss
Derivat
ive
financial
instruments
$mill
ion
Investment securit
ies
Total
$mill
ion
Loans and
advances to
banks
$mill
ion
Loans and
advances to
customers
$mill
ion
Reverse
repurchase
agreements
and other
sim
ilar
secured
lending
$mill
ion
Debt
securit
ies,
alternative
tier one and
other
elig
ible b
ills
$mill
ion
Equity
shares
$mill
ion
Debt
securit
ies,
alternative
tier one and
other
elig
ible b
ills
$mill
ion
Equity
shares
$mill
ion
At 01 January 2022
9
410
1,555
312
98
67
40
392
2,883
Total (losses)/gains
recognised in income
statement
(16)
(79)
2
18
(6)
23
–
–
(58)
Net trading income
(16)
(79)
2
18
(6)
23
–
–
(58)
Other operating income
–
–
–
–
–
–
–
–
–
Total gains recognised in
other comprehensive
income (OCI)
–
–
–
–
–
–
(1)
5
4
Fair value through
OCI reserve
–
–
–
–
–
–
–
7
7
Exchange difference
–
–
–
–
–
–
(1)
(2)
(3)
Purchases
37
1,149
6,416
743
10
121
–
84
8,560
Sales
(30)
(237)
(5,485)
(342)
(2)
(74)
–
(6)
(6,176)
Settlements
–
(58)
(500)
(1)
–
(76)
(39)
–
(674)
Transfers out
1
–
(106)
–
–
(8)
(29)
–
–
(143)
Transfers in
2
21
229
–
77
–
12
–
9
348
At 31 December 2022
21
1,308
1,988
807
92
44
–
484
4,744
Total unrealised (losses)
recognised in the income
statement, with
in net
trading income, relating
to change in fair value
of assets held at
31 December 2022
–
–
–
–
(6)
(8)
–
–
(14)
1
Transfers out includes equity shares, derivat
ive financial
instruments and loans and advances where the valuation parameters became observable during the year and
were transferred to Level 1 and Level 2.
2
Transfers in primar
ily relate to debt secur
it
ies, alternat
ive tier one and other elig
ible b
ills, derivat
ive financial
instruments and loans and advances where the valuation
parameters become unobservable during the year
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
234
Notes to the financial statements cont
inued
12. Financ
ial
instruments continued
The table below analyses movements in Level 3 financ
ial assets carr
ied at fair value.
Assets
Held at fair value through profit or loss
Derivat
ive
financial
instruments
$mill
ion
Investment securit
ies
Total
$mill
ion
Loans and
advances to
banks
$mill
ion
Loans and
advances to
customers
$mill
ion
Reverse
repurchase
agreements
and other
sim
ilar
secured
lending
$mill
ion
Debt
securit
ies,
alternative
tier one and
other elig
ible
bills
$mill
ion
Equity
shares
$mill
ion
Debt
securit
ies,
alternative
tier one and
other elig
ible
bills
$mill
ion
Equity
shares
$mill
ion
At 1 January 2021
200
464
1,064
195
124
9
40
255
2,351
Total gains/(losses)
recognised in income
statement
1
(80)
2
(32)
(4)
9
–
–
(104)
Net trading income
1
(80)
2
(31)
(4)
9
–
–
(103)
Other operating income
–
–
–
(1)
–
–
–
–
(1)
Total gains recognised
in other comprehensive
income (OCI)
–
–
–
–
–
–
3
60
63
Fair value through
OCI reserve
–
–
–
–
–
–
4
61
65
Exchange difference
–
–
–
–
–
–
(1)
(1)
(2)
Purchases
9
339
4,962
387
10
92
–
94
5,893
Sales
–
(301)
(4,392)
(202)
(16)
(31)
–
(9)
(4,951)
Settlements
(201)
(161)
(81)
(60)
–
(5)
(13)
–
(521)
Transfers out
1
–
(41)
–
–
(16)
(11)
–
(8)
(76)
Transfers in
2
–
190
–
24
–
4
10
–
228
At 31 December 2021
9
410
1,555
312
98
67
40
392
2,883
Total unrealised gains/
(losses) recognised in the
income statement, with
in
net trading income,
relating to change in fair
value of assets held at
31 December 2021
–
–
–
–
12
(2)
–
–
10
1
Transfers out includes equity shares, derivat
ive financial
instruments and loans and advances where the valuation parameters became observable during the year and
were transferred to Level 1 and Level 2.
2
Transfers in primar
ily relate to debt secur
it
ies, alternat
ive tier one and other elig
ible b
ills, derivat
ive financial
instruments and loans and advances where the valuation
parameters become unobservable during the year
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
235
Notes to the financial statements cont
inued
12. Financ
ial
instruments continued
Level 3 movement tables – financial assets
The table below analyses movements in Level 3 financ
ial assets carr
ied at fair value.
Company
Assets
Held at fair value through profit or loss
Derivat
ive
financial
instruments
$mill
ion
Investment securit
ies
Total
$mill
ion
Loans and
advances to
banks
$mill
ion
Loans and
advances to
customers
$mill
ion
Reverse
repurchase
agreements
and other
sim
ilar
secured
lending
$mill
ion
Debt
securit
ies,
alternative
tier one and
other
elig
ible b
ills
$mill
ion
Debt
securit
ies,
alternative
tier one and
other
elig
ible b
ills
$mill
ion
Equity
shares
$mill
ion
At 01 January 2022
9
82
1,555
203
69
286
208
2,412
Total (losses)/gains recognised in
income statement
(16)
(45)
2
75
23
–
–
39
Net trading income
(16)
(45)
2
75
23
–
–
39
Other operating income
–
–
–
–
–
–
–
–
Total gains recognised in other
comprehensive income (OCI)
–
–
–
–
–
–
19
19
Fair value through OCI reserve
–
–
–
–
–
–
20
20
Exchange difference
–
–
–
–
–
–
(1)
(1)
Purchases
37
823
6,416
297
99
295
1
7,968
Sales
(30)
(85)
(5,485)
(107)
(61)
–
(8)
(5,776)
Settlements
–
(6)
(500)
–
(73)
(15)
–
(594)
Transfers out
1
–
(99)
–
–
(28)
(566)
–
(693)
Transfers in
2
–
229
–
1
10
–
–
240
At 31 December 2022
–
899
1,988
469
39
–
220
3,615
Total unrealised (losses) recognised
in the income statement, with
in
net trading income, relating to
change in fair value of assets held
at 31 December 2022
–
–
–
–
(7)
–
–
(7)
1
Transfers out includes debt securit
ies, alternat
ive tier one and other elig
ible b
ills, derivat
ive financial
instruments and loans and advances where the valuation
parameters became observable during the year and were transferred to Level 1 and Level 2.
2
Transfers in primar
ily relate to debt secur
it
ies, alternat
ive tier one and other elig
ible b
ills, derivat
ive financial
instruments and loans and advances where the valuation
parameters become unobservable during the year
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
236
Notes to the financial statements cont
inued
12. Financ
ial
instruments continued
Assets
Held at fair value through profit or loss
Derivat
ive
financial
instruments
$mill
ion
Investment securit
ies
Total
$mill
ion
Loans and
advances to
banks
$mill
ion
Loans and
advances to
customers
$mill
ion
Reverse
repurchase
agreements
and other
sim
ilar
secured
lending
$mill
ion
Debt
securit
ies,
alternative
tier one and
other elig
ible
bills
$mill
ion
Debt
securit
ies,
alternative
tier one and
other elig
ible
bills
$mill
ion
Equity
shares
$mill
ion
At 1 January 2021
200
275
1,064
135
11
28
172
1,885
Total gains/(losses) recognised in
income statement
1
(36)
2
(18)
9
–
–
(42)
Net trading income
1
(36)
2
(17)
9
–
–
(41)
Other operating income
–
–
–
(1)
–
–
–
(1)
Total gains recognised in other
comprehensive income (OCI)
–
–
–
–
–
–
26
26
Fair value through OCI reserve
–
–
–
–
–
–
26
26
Exchange difference
–
–
–
–
–
–
–
–
Purchases
9
48
4,962
256
91
–
12
5,378
Sales
–
(235)
(4,392)
(170)
(30)
–
(2)
(4,829)
Settlements
(201)
(140)
(81)
–
(5)
(13)
–
(440)
Transfers out
1
–
(20)
–
–
(11)
–
–
(31)
Transfers in
2
–
190
–
–
4
271
–
465
At 31 December 2021
9
82
1,555
203
69
286
208
2,412
Total unrealised losses recognised in
the income statement, with
in net
trading income, relating to change in
fair value of assets held at 31 December
2021
–
–
–
–
(3)
–
–
(3)
1
Transfers out includes derivat
ive financial
instruments and loans and advances where the valuation parameters became observable during the year and were
transferred to Level 1 and Level 2.
2
Transfers in primar
ily relate to debt secur
it
ies, alternat
ive tier one and other elig
ible b
ills, derivat
ive financial
instruments and loans and advances where the valuation
parameters become unobservable during the year
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
237
Notes to the financial statements cont
inued
12. Financ
ial
instruments continued
Level 3 movement tables – financial l
iab
il
it
ies
Group
2022
Deposits by
banks
$mill
ion
Customer
accounts
$mill
ion
Debt securit
ies
in issue
$mill
ion
Derivat
ive
financial
instruments
$mill
ion
Short posit
ions
$mill
ion
Total
$mill
ion
At 01 January 2022
22
365
781
96
–
1,264
Total (gains)/losses recognised in income statement
– net trading income
(11)
(50)
(148)
155
(3)
(57)
Issues
144
906
737
174
140
2,101
Settlements
(22)
(1,099)
(981)
(291)
(97)
(2,490)
Transfers out
1
–
–
(38)
(23)
–
(61)
Transfers in
2
–
48
76
7
–
131
At 31 December 2022
133
170
427
118
40
888
Total unrealised (gains) recognised in the
income statement, with
in net trad
ing income,
relating to change in fair value of liab
il
it
ies held
at 31 December 2022
(1)
(17)
(7)
(3)
–
(28)
2021
Deposits
by banks
$mill
ion
Customer
accounts
$mill
ion
Debt
securit
ies
in issue
$mill
ion
Derivat
ive
financial
instruments
$mill
ion
Short
posit
ions
$mill
ion
Total
$mill
ion
At 1 January 2021
–
(3)
124
117
–
238
Total (gains) recognised in income statement –
net trading income
–
(2)
(12)
(8)
–
(22)
Issues
22
492
1,508
151
–
2,173
Settlements
–
(122)
(882)
(177)
–
(1,181)
Transfers out
1
–
–
(49)
(6)
–
(55)
Transfers in
2
–
–
92
19
–
111
At 31 December 2021
22
365
781
96
–
1,264
Total unrealised (gains)/losses recognised in
the income statement, with
in net trad
ing income,
relating to change in fair value of liab
il
it
ies held
at 31 December 2021
–
–
–
–
–
–
1
Transfers out during the year primar
ily relates to debt secur
it
ies
in issue and derivat
ive financial
instruments where the valuation parameters became observable
during the year and were transferred to Level 2 financ
ial l
iab
il
it
ies
2
Transfers in during the year primar
ily relates to customer accounts, debt secur
it
ies
in issue and derivat
ive financial
instruments where the valuation parameters became
unobservable during the year
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
238
12. Financ
ial
instruments continued
Company
2022
Deposits by
banks
$mill
ion
Customer
accounts
$mill
ion
Debt securit
ies
in issue
$mill
ion
Derivat
ive
financial
instruments
$mill
ion
Short
posit
ions
$mill
ion
Total
$mill
ion
At 01 January 2022
22
292
614
105
–
1,033
Total (gains)/losses recognised in income statement
– net trading income
(11)
(33)
(137)
153
–
(28)
Issues
130
612
263
146
40
1,191
Settlements
(22)
(804)
(517)
(280)
–
(1,623)
Transfers out
1
–
–
(38)
(20)
–
(58)
Transfers in
2
–
–
77
6
–
83
At 31 December 2022
119
67
262
110
40
598
Total unrealised (gains) recognised in the
income statement, with
in net trad
ing income,
relating to change in fair value of liab
il
it
ies held
at 31 December 2022
–
–
–
(4)
–
(4)
2021
Deposits
by banks
$mill
ion
Customer
accounts
$mill
ion
Debt
securit
ies
in issue
$mill
ion
Derivat
ive
financial
instruments
$mill
ion
Short
posit
ions
$mill
ion
Total
$mill
ion
At 1 January 2021
–
(3)
124
90
–
211
Total (gains) recognised in income statement –
net trading income
–
(1)
(8)
(7)
–
(16)
Issues
22
309
1,135
147
–
1,613
Settlements
–
(13)
(680)
(138)
–
(831)
Transfers out
1
–
–
(49)
(5)
–
(54)
Transfers in
2
–
–
92
18
–
110
At 31 December 2021
22
292
614
105
–
1,033
Total unrealised (gains)/losses recognised in
the income statement, with
in net trad
ing income,
relating to change in fair value of liab
il
it
ies held
at 31 December 2021
–
–
–
–
–
–
1
Transfers out during the year primar
ily relates to debt secur
it
ies
in issue and derivat
ive financial
instruments where the valuation parameters became observable
during the year and were transferred to Level 2 financ
ial l
iab
il
it
ies
2
Transfers in during the year primar
ily relates to debt secur
it
ies
in issue and derivat
ive financial
instruments where the valuation parameters become unobservable
during the year
Sensit
iv
it
ies
in respect of the fair values of Level 3 assets and liab
il
it
ies
Sensit
iv
ity analysis is performed on products with sign
ificant unobservable
inputs. The Group applies a 10 per cent increase
or decrease on the values of these unobservable inputs, to generate a range of reasonably possible alternative valuations.
The percentage shift is determined by statist
ical analys
is performed on a set of reference prices based on the composit
ion
of the Group’s Level 3 inventory as the measurement date. Favourable and unfavourable changes (which show the balance
adjusted for input change) are determined on the basis of changes in the value of the instrument as a result of varying the
levels of the unobservable parameters. The Level 3 sensit
iv
ity analysis assumes a one-way market move and does not
consider offsets for hedges.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
239
12. Financ
ial
instruments continued
Group
Held at fair value through profit or loss
Fair value through other
comprehensive income
Net
exposure
$mill
ion
Favourable
changes
$mill
ion
Unfavourable
changes
$mill
ion
Net
exposure
$mill
ion
Favourable
changes
$mill
ion
Unfavourable
changes
$mill
ion
Financ
ial
instruments held at fair value
Loans and advances
1,329
1,348
1,268
–
–
–
Reverse Repurchase agreements and other sim
ilar
secured lending
1,988
2,003
1,969
–
–
–
Asset-backed securit
ies
–
–
–
–
–
–
Debt securit
ies, alternat
ive tier one and other elig
ible b
ills
807
818
783
–
–
–
Equity shares
92
101
83
484
528
441
Other Assets
–
–
–
–
–
–
Derivat
ive financial
instruments
(74)
(41)
(107)
–
–
–
Customer accounts
(170)
(164)
(176)
–
–
–
Deposits by banks
(133)
(128)
(138)
–
–
–
Short posit
ions
(40)
(39)
(41)
–
–
–
Debt securit
ies
in issue
(427)
(395)
(458)
–
–
–
At 31 December 2022
3,372
3,503
3,183
484
528
441
Financ
ial
instruments held at fair value
Loans and advances
419
435
399
–
–
–
Reverse Repurchase agreements and other sim
ilar
secured lending
1,555
1,568
1,538
–
–
–
Asset-backed securit
ies
–
–
–
–
–
–
Debt securit
ies, alternat
ive tier one and other elig
ible b
ills
312
325
299
40
41
38
Equity shares
98
107
88
392
430
351
Other Assets
–
–
–
–
–
–
Derivat
ive financial
instruments
(29)
(13)
(45)
–
–
–
Customer accounts
(365)
(358)
(372)
–
–
–
Deposits by banks
(22)
(17)
(26)
–
–
–
Short posit
ions
–
–
–
–
–
–
Debt securit
ies
in issue
(781)
(723)
(838)
–
–
–
At 31 December 2021
1,187
1,324
1,043
432
471
389
The reasonably possible alternatives could have increased or decreased the fair values of financ
ial
instruments held at
fair value through profit or loss and those classif
ied as fa
ir value through other comprehensive income by the amounts
disclosed below.
Financ
ial
instruments
Fair value changes
2022
$mill
ion
2021
$mill
ion
Held at fair value through profit or loss
Possible increase
131
137
Possible decrease
(189)
(144)
Fair value through other comprehensive income
Possible increase
44
39
Possible decrease
(43)
(43)
Notes to the financial statements cont
inued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
240
12. Financ
ial
instruments continued
Company
Held at fair value through profit or loss
Fair value through other
comprehensive income
Net
exposure
$mill
ion
Favourable
changes
$mill
ion
Unfavourable
changes
$mill
ion
Net
exposure
$mill
ion
Favourable
changes
$mill
ion
Unfavourable
changes
$mill
ion
Financ
ial
instruments held at fair value
Loans and advances
899
913
872
–
–
–
Reverse Repurchase agreements and other sim
ilar
secured lending
1,988
2,003
1,969
–
–
–
Asset-backed securit
ies
–
–
–
–
–
–
Debt securit
ies, alternat
ive tier one and other elig
ible b
ills
469
471
454
–
–
–
Equity shares
–
–
–
220
239
201
Derivat
ive financial
instruments
(71)
(34)
(107)
–
–
–
Customer accounts
(67)
(66)
(68)
–
–
–
Deposits by banks
(119)
(116)
(122)
–
–
–
Short posit
ions
(40)
(39)
(41)
–
–
–
Debt securit
ies
in issue
(262)
(236)
(288)
–
–
–
At 31 December 2022
2,797
2,896
2,669
220
239
201
Financ
ial
instruments held at fair value
Loans and advances
91
94
86
–
–
–
Reverse Repurchase agreements and other sim
ilar
secured lending
1,555
1,568
1,539
–
–
–
Asset-backed securit
ies
–
–
–
–
–
–
Debt securit
ies, alternat
ive tier one and other elig
ible b
ills
203
211
196
286
312
260
Equity shares
–
–
–
208
227
189
Derivat
ive financial
instruments
(36)
(15)
(57)
–
–
–
Customer accounts
(292)
(290)
(294)
–
–
–
Deposits by banks
(22)
(17)
(26)
–
–
–
Short posit
ions
–
–
–
–
–
–
Debt securit
ies
in issue
(614)
(556)
(672)
–
–
–
At 31 December 2021
885
995
772
494
539
449
The reasonably possible alternatives could have increased or decreased the fair values of financ
ial
instruments held at
fair value through profit or loss and those classif
ied as fa
ir value through other comprehensive income by the amounts
disclosed below.
Financ
ial
instruments
Fair value changes
2022
$mill
ion
2021
$mill
ion
Held at fair value through profit or loss
Possible increase
99
110
Possible decrease
(128)
(113)
Fair value through other comprehensive income
Possible increase
19
45
Possible decrease
(19)
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
241
ive financial
instruments
Accounting policy
Derivat
ives are financial
instruments that derive their value in response to changes in interest rates, financ
ial
instrument
prices, commodity prices, foreign exchange rates, credit risk and ind
ices. Der
ivat
ives are categor
ised as trading unless they
are designated as hedging instruments.
Derivat
ives are
in
it
ially recognised and subsequently measured at fair value, with revaluation gains recognised in profit or loss
(except where cash flow or net investment hedging has been achieved, in which case the effective portion of changes in fair
value is recognised with
in other comprehens
ive income).
Fair values may be obtained from quoted market prices in active markets, recent market transactions, and valuation
techniques, includ
ing d
iscounted cash flow models and option pric
ing models, as appropr
iate. Where the in
it
ially recognised
fair value of a derivat
ive contract
is based on a valuation model that uses inputs which are not observable in the market, it
follows the same in
it
ial recognit
ion account
ing policy as for other financ
ial assets and l
iab
il
it
ies. All der
ivat
ives are carr
ied as
assets when fair value is posit
ive and as l
iab
il
it
ies when fa
Under certain condit
ions, the Group may des
ignate a recognised asset or liab
il
ity, a firm commitment, highly probable
forecast transaction or net investment of a foreign operation into a formal hedge accounting relationsh
ip w
ith a derivat
ive
that has been entered to manage interest rate and/or foreign exchange risks present in the hedged item. The Group applies
the ‘Phase 1’ hedge accounting requirements of IAS 39 Financ
ial Instruments: Recogn
it
ion and Measurement, and the ‘Phase
2’ amendments to IFRS in respect of interest rate benchmark reform. There are three categories of hedge relationsh
ips:
•
Fair value hedge: to manage the fair value of interest rate and/or foreign currency risks of recognised assets or liab
il
it
ies
or firm commitments
•
Cash flow hedge: to manage interest rate or foreign exchange risk of highly probable future cash flows attributable to a
recognised asset or liab
il
ity, or a forecasted transaction
•
Net investment hedge: to manage the structural foreign exchange risk of an investment in a foreign operation
The Group formally documents at the incept
ion of the transact
ion the relationsh
ip between hedg
ing instruments and
hedged items, as well as its risk management object
ive and strategy for undertak
ing hedge transactions. This is described
in more detail in the categories of hedges below.
The Group assesses, both at hedge incept
ion and on a quarterly bas
is, whether the derivat
ives des
ignated in hedge
relationsh
ips are h
ighly effective in offsetting changes in fair values or cash flows of hedged items. Hedges are considered to
be highly effective if all the following criter
ia are met:
•
At incept
ion of the hedge and throughout
its life, the hedge is prospectively expected to be highly effective in achiev
ing
offsetting changes in fair value or cash flows attributable to the hedged risk
•
Actual results of the hedge are with
in a range of 80–125%. Th
is is tested using regression analysis
•
The regression co-effic
ient (R squared), wh
ich measures the correlation between the variables in the regression, is at
least 80%
•
In the case of the hedge of a forecast transaction, the transaction must have a high probabil
ity of occurr
ing and must
present an exposure to variat
ions
in cash flows that are expected to affect reported profit or loss. The Group assumes that
any interest rate benchmarks on which hedged item cash flows are based are not altered by IBOR reform
The Group discont
inues hedge account
ing in any of the following circumstances:
•
The hedging instrument is not, or has ceased to be, highly effective as a hedge
•
The hedging instrument has expired, is sold, terminated or exercised
•
The hedged item matures, is sold or repaid
•
The forecast transaction is no longer deemed highly probable
•
The Group elects to discont
inue hedge account
ing voluntarily
For interest rate benchmarks deemed in scope of IBOR reform, if the actual result of a hedge is outside the 80-125% range,
but the hedge passes the prospective assessment, then the Group will not de-designate the hedge relationsh
ip.
Notes to the financial statements cont
inued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
242
Notes to the financial statements cont
inued
13. Derivat
ive financial
instruments continued
Under the Phase 2 Interest Rate Benchmark Reform amendments to IFRS 9 and IAS 39, the Group may change hedge
designat
ions and correspond
ing documentation without the hedge being discont
inued where there
is a change in interest
rate benchmark of the hedged item, hedging instrument or designated hedged risk. Permitted changes include the right to:
•
Redefine the descript
ion of the hedged
item and/or hedging instrument
•
Redefine the hedged risk to reference an alternative risk-free rate
•
Change the method for assessing hedge effectiveness due to modif
icat
ions required by IBOR reform
•
Elect, on a hedge-by-hedge basis, to reset the cumulative fair value changes in the assessment of retrospective hedge
effectiveness to zero
A hedge designat
ion may be mod
if
ied more than once, each t
ime a relationsh
ip
is affected as a direct result of IBOR reform.
Fair value hedge
Changes in the fair value of derivat
ives that are des
ignated and qualify as fair value hedging instruments are recorded i
n net trading income, together with any changes in the fair value of the hedged asset or liab
il
ity that are attributable
to the hedged risk. If the hedge no longer meets the criter
ia for hedge account
ing, the adjustment to the carrying amount
of a hedged item for which the effective interest method is used is amortised to the income statement over the remain
ing
term to maturity of the hedged item. If the hedged item is sold or repaid, the unamortised fair value adjustment is recognised
immed
iately
in the income statement. For financ
ial assets class
if
ied as fa
ir value through other comprehensive income,
the hedge accounting adjustment attributable to the hedged risk is included in net trading income to match the
hedging derivat
ive.
Cash flow hedge
The effective portion of changes in the fair value of derivat
ives that are des
ignated and qualify as cash flow hedging
instruments are in
it
ially recognised in other comprehensive income, accumulating in the cash flow hedge reserve with
in
equity. These amounts are subsequently recycled to the income statement in the periods when the hedged item affects
profit or loss. Both the derivat
ive fa
ir value movement and any recycled amount are recorded in the ‘Cashflow hedges’ line
item in other comprehensive income.
The Group assesses hedge effectiveness using the hypothetical derivat
ive method, wh
ich creates a derivat
ive
instrument to
serve as a proxy for the hedged transaction. The terms of the hypothetical derivat
ive match the cr
it
ical terms of the hedged
item and it has a fair value of zero at incept
ion. The hypothet
ical derivat
ive and the actual der
ivat
ive are regressed to
establish the statist
ical s
ign
ificance of the hedge relat
ionsh
ip. Any
ineffect
ive port
ion of the gain or loss on the hedging
instrument is recognised in the net trading income immed
iately.
If a cash flow hedge is discont
inued, the amount accumulated
in the cash flow hedge reserve is released to the income
statement as and when the hedged item affects the income statement.
For interest rate benchmarks deemed in scope of IBOR reform, the Group will retain the cumulative gain or loss in the cash
flow hedge reserve for designated cash flow hedges even though there is uncertainty aris
ing from these reforms w
ith respect
to the tim
ing and amount of the cash flows of the hedged
items. Should the Group consider the hedged future cash flows
are no longer expected to occur due to reasons other than IBOR reform, the cumulative gain or loss will be immed
iately
reclassif
ied to profit or loss.
Net investment hedge
Hedges of net investments are accounted for in a sim
ilar manner to cash flow hedges, w
ith gains and losses aris
ing on the
effective portion of the hedges recorded in the line ‘Exchange differences on translation of foreign operations’ in other
comprehensive income, accumulating in the translation reserve with
in equ
ity. These amounts remain in equity until the
net investment is disposed of. The ineffect
ive port
ion of the hedges is recognised in the net trading income immed
iately.
The tables below analyse the notional princ
ipal amounts and the pos
it
ive and negat
ive fair values of derivat
ive financial
instruments. Notional princ
ipal amounts are the amounts of pr
inc
ipal underly
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
243
Notes to the financial statements cont
inued
13. Derivat
ive financial
instruments continued
Derivat
ives
Group
Derivat
ives
2022
2021
Notional
princ
ipal
amounts
$mill
ion
Assets
$mill
ion
Liab
il
it
ies
$mill
ion
Notional
princ
ipal
amounts
$mill
ion
Assets
$mill
ion
Liab
il
it
ies
$mill
ion
Foreign exchange derivat
ive contracts:
Forward foreign exchange contracts
2,901,200
45,187
45,162
3,353,471
32,966
32,597
Currency swaps and options
999,374
11,391
12,589
1,333,095
10,338
10,695
3,900,574
56,578
57,751
4,686,566
43,304
43,292
Interest rate derivat
ive contracts:
Swaps
3,213,891
58,440
60,124
3,294,078
30,294
29,849
Forward rate agreements and options
95,480
2,140
2,838
125,200
1,313
1,852
Exchange traded futures and options
324,225
279
258
294,712
156
132
3,633,596
60,859
63,220
3,713,990
31,763
31,833
Credit derivat
ive contracts
246,802
406
433
182,161
2,244
2,404
Equity and stock index options
4,912
86
158
7,124
93
153
Commodity derivat
ive contracts
83,738
1,312
1,487
109,543
1,724
1,787
Gross total derivat
ives
7,869,622
119,241
123,049
8,699,384
79,128
79,469
Offset
–
(54,191)
(54,191)
–
(25,883)
(25,883)
Total derivat
ives
7,869,622
65,050
68,858
8,699,384
53,245
53,586
Company
Derivat
ives
2022
2021
Notional
princ
ipal
amounts
$mill
ion
Assets
$mill
ion
Liab
il
it
ies
$mill
ion
Notional
princ
ipal
amounts
$mill
ion
Assets
$mill
ion
Liab
il
it
ies
$mill
ion
Foreign exchange derivat
ive contracts:
Forward foreign exchange contracts
3,322,275
39,464
40,402
3,887,220
30,604
30,387
Currency swaps and options
1,027,838
12,110
12,864
1,362,078
10,967
11,424
4,350,113
51,574
53,266
5,249,298
41,571
41,811
Interest rate derivat
ive contracts:
Swaps
3,548,036
63,668
64,723
3,597,413
31,993
31,543
Forward rate agreements and options
98,617
2,277
2,944
127,709
1,500
1,924
Exchange traded futures and options
324,225
279
258
294,712
156
132
3,970,878
66,224
67,925
4,019,834
33,649
33,599
Credit derivat
ive contracts
246,922
352
437
185,189
2,246
2,369
Equity and stock index options
3,223
69
126
5,342
50
71
Commodity derivat
ive contracts
89,095
1,453
1,640
113,855
1,845
1,868
Gross total derivat
ives
8,660,231
119,672
123,394
9,573,518
79,361
79,718
Offset
–
(54,191)
(54,191)
–
(25,883)
(25,883)
Total derivat
ives
8,660,231
65,481
69,203
9,573,518
53,478
53,835
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
244
Notes to the financial statements cont
inued
13. Derivat
ive financial
instruments continued
The Group lim
its exposure to cred
it losses in the event of default by entering into master netting agreements with certain
market counterparties. As required by IAS 32, exposures are only presented net in these accounts where they are subject to
legal right of offset and intended to be settled net in the ordinary course of business.
The Group applies balance sheet offsetting only in the instance where we are able to demonstrate legal enforceabil
ity of
the right to offset (e.g. via legal opin
ion) and the ab
il
ity and
intent
ion to settle on a net bas
is (e.g. via operational practice).
The Group may enter into economic hedges that do not qualify for IAS 39 hedge accounting treatment, includ
ing der
ivat
ive
such as interest rate swaps, interest rate futures and cross currency swaps to manage interest rate and currency risks of the
Group. These derivat
ives are measured at fa
ir value, with fair value changes recognised in net trading income: refer to Market
risk (page 114).
The Derivat
ives and Hedg
ing sections of the Risk review and Capital review (page 116) explain the Group’s risk management
of derivat
ive contracts and appl
icat
ion of hedg
ing.
ives held for hedg
ing
The Group enters into derivat
ive contracts for the purpose of hedg
ing interest rate, currency and structural foreign exchange
risks inherent in assets, liab
il
it
ies and forecast transact
ions. The table below summarises the notional princ
ipal amounts and
carrying values of derivat
ives des
ignated in hedge accounting relationsh
ips at the report
ing date.
Group
2022
2021
Notional
princ
ipal
amounts
$mill
ion
Assets
$mill
ion
Liab
il
it
ies
$mill
ion
Notional
princ
ipal
amounts
$mill
ion
Assets
$mill
ion
Liab
il
it
ies
$mill
ion
Derivat
ives des
ignated as fair value hedges:
Interest rate swaps
56,127
2,052
1,509
53,621
623
181
Currency swaps
114
14
4
202
6
12
56,241
2,066
1,513
53,823
629
193
Derivat
ives des
ignated as cash flow hedges:
Interest rate swaps
22,820
25
576
2,651
5
10
Forward foreign exchange contracts
11,889
97
385
72
2
–
Currency swaps
1,336
5
50
226
–
12
36,045
127
1,011
2,949
7
22
Derivat
ives des
ignated as net investment hedges:
Forward foreign exchange contracts
3,130
17
51
2,611
–
27
Total derivat
ives held for hedg
ing
95,416
2,210
2,575
59,383
636
242
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
245
Notes to the financial statements cont
inued
13. Derivat
ive financial
instruments continued
Company
2022
2021
Notional
princ
ipal
amounts
$mill
ion
Assets
$mill
ion
Liab
il
it
ies
$mill
ion
Notional
princ
ipal
amounts
$mill
ion
Assets
$mill
ion
Liab
il
it
ies
$mill
ion
Derivat
ives des
ignated as fair value hedges:
Interest rate swaps
54,273
1,978
1,507
52,444
618
174
Currency swaps
114
14
4
202
6
12
54,387
1,992
1,511
52,646
624
186
Derivat
ives des
ignated as cash flow hedges:
Interest rate swaps
20,880
24
576
2,651
5
10
Forward foreign exchange contracts
11,829
93
385
72
2
–
Currency swaps
47
–
2
69
–
2
32,756
117
963
2,792
7
12
Derivat
ives des
ignated as net investment hedges:
Forward foreign exchange contracts
1,939
17
–
1,871
–
16
Total derivat
ives held for hedg
ing
89,082
2,126
2,474
57,309
631
214
Fair value hedges
The Group issues various long-term fixed rate debt issuances that are measured at amortised cost, includ
ing some
denominated in foreign currency, such as unsecured senior and subordinated debt (see Notes 21 and 26). The Group also
holds various fixed rate debt securit
ies such as government and corporate bonds,
includ
ing some denom
inated in foreign
currency (see Note 12). These assets and liab
il
it
ies held are exposed to changes
in fair value due to movements in market
interest and foreign currency rates.
The Group uses interest rate swaps to exchange fixed rates for floating rates on funding to match floating rates received
on assets, or exchange fixed rates on assets to match floating rates paid on funding. The Group further uses cross currency
swaps to match the currency of the issued debt or held asset with that of the entity’s functional currency.
Hedge ineffect
iveness from fa
ir value hedges is driven by cross currency basis risk. The amortisat
ion of fa
ir value hedge
adjustments for hedged items no longer designated is recognised in net trading income. In future periods hedge relationsh
ips
linked to an interest rate benchmark deemed in scope of benchmark reform may experience ineffect
iveness due to market
partic
ipants’ expectat
ions for when the change from the exist
ing IBOR benchmark to an alternat
ive risk-free rate will occur,
since the transit
ion may occur at d
ifferent times for the hedged item and hedging instrument.
At 31 December 2022 the Group held the following interest rate and cross currency swaps as hedging instruments in fair
value hedges of interest and currency risk.
Hedging instruments and ineffect
iveness
Group
Interest rate
1
2022
Notional
$mill
ion
Carrying amount
Change in fair
value used to
calculate hedge
ineffect
iveness²
$mill
ion
Ineffectiveness
recognised in
profit or (loss)
$mill
ion
Asset
$mill
ion
Liab
il
ity
$mill
ion
Interest rate swaps – issued notes
24,373
100
1,489
(1,439)
2
Interest rate swaps – loans and advances
299
22
–
21
(1)
Interest rate swaps – debt securit
ies and other el
ig
ible b
ills
31,455
1,930
20
2,711
11
Interest and currency risk
1
Cross currency swaps – subordinated notes issued
72
–
4
(6)
2
Cross currency swaps – debt securit
ies and other el
ig
ible b
ills
42
14
–
9
3
Total at 31 December 2022
56,241
2,066
1,513
1,296
17
1
Interest rate swaps are designated in hedges of the fair value of interest rate risk attributable to the hedged item. Cross currency swaps are used to hedge both interest
rate and currency risks. All the hedging instruments are derivat
ives, w
ith changes in fair value includ
ing hedge
ineffect
iveness recorded w
ith
in net trad
ing income
2
This represents a (loss)/ change in fair value used for calculating hedge ineffect
iveness
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
246
Notes to the financial statements cont
inued
13. Derivat
ive financial
instruments continued
Interest rate
1
2021
Notional
$mill
ion
Carrying amount
Change in fair
value used to
calculate hedge
ineffect
iveness²
$mill
ion
Ineffectiveness
recognised in
profit or (loss)
$mill
ion
Asset
$mill
ion
Liab
il
ity
$mill
ion
Interest rate swaps – issued notes
18,694
322
106
(384)
(4)
Interest rate swaps – loans and advances
855
4
3
7
–
Interest rate swaps – debt securit
ies and other el
ig
ible b
ills
34,072
297
72
547
(1)
Interest and currency risk
1
Cross currency swaps – subordinated notes issued
48
–
11
(2)
1
Cross currency swaps – debt securit
ies and other el
ig
ible b
ills
154
6
1
1
–
Total at 31 December 2021
53,823
629
193
169
(4)
1
Interest rate swaps are designated in hedges of the fair value of interest rate risk attributable to the hedged item. Cross currency swaps are used to hedge both interest
rate and currency risks. All the hedging instruments are derivat
ives, w
ith changes in fair value includ
ing hedge
ineffect
iveness recorded w
ith
in net trad
ing income
2
This represents a (loss)/ change in fair value used for calculating hedge ineffect
iveness
Hedged items in fair value hedges
2022
Carrying amount
Accumulated amount of
fair value hedge adjustments
included in the
carrying amount
Change in the
value used for
calculating
hedge
ineffect
iveness¹
$mill
ion
Cumulative
balance of fair
value
adjustments
from
de-
designated
hedge
relationsh
ips²
$mill
ion
Asset
$mill
ion
Liab
il
ity
$mill
ion
Asset
$mill
ion
Liab
il
ity
$mill
ion
Issued notes
–
25,892
–
1,339
1,450
28
Debt securit
ies and other el
ig
ible b
ills
28,861
–
(1,819)
–
(2,708)
383
Loans and advances to customers
277
–
(22)
–
(21)
1
Total at 31 December 2022
29,138
25,892
(1,841)
1,339
(1,279)
412
2021
Carrying amount
Accumulated amount of
fair value hedge adjustments
included in the
carrying amount
Change in the
value used for
calculating
hedge
ineffect
iveness¹
$mill
ion
Cumulative
balance of fair
value
adjustments
from
de-
designated
hedge
relationsh
ips²
$mill
ion
Asset
$mill
ion
Liab
il
ity
$mill
ion
Asset
$mill
ion
Liab
il
ity
$mill
ion
Issued notes
–
18,850
–
134
384
53
Debt securit
ies and other el
ig
ible b
ills
34,062
–
(286)
–
(549)
(7)
Loans and advances to customers
853
–
(2)
–
(8)
(1)
Total at 31 December 2021
34,915
18,850
(288)
134
(173)
45
1
This represents a (loss)/ change in fair value used for calculating hedge ineffect
iveness
2
This represents a credit/(debit) to the balance sheet value
Income statement impact of fair value hedges
2022
$mill
ion
Income/
(expense)
2021
$mill
ion
Income/
(expense)
Change in fair value of hedging instruments
1,296
169
Change in fair value of hedged risks attributable to hedged items
(1,279)
(173)
Net ineffect
iveness (loss)/ga
in to net trading income
17
(4)
Amortisat
ion ga
in/(loss) to net interest income
117
55
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
247
Notes to the financial statements cont
inued
13. Derivat
ive financial
instruments continued
Hedging instruments and ineffect
iveness
Company
Interest rate
1
2022
Notional
$mill
ion
Carrying amount
Change in fair
value used to
calculate hedge
ineffect
iveness²
$mill
ion
Ineffectiveness
recognised in
profit or (loss)
$mill
ion
Asset
$mill
ion
Liab
il
ity
$mill
ion
Interest rate swaps – issued notes
24,373
101
1,489
(1,440)
3
Interest rate swaps – loans and advances
270
19
–
19
(1)
Interest rate swaps – debt securit
ies and other el
ig
ible b
ills
29,630
1,858
18
2,582
10
Interest and currency risk¹
Cross currency swaps – subordinated notes issued
72
–
4
(6)
2
Cross currency swaps – debt securit
ies and other el
ig
ible b
ills
42
14
–
9
3
Total at 31 December 2022
54,387
1,992
1,511
1,164
17
Interest rate
1
2021
Notional
$mill
ion
Carrying amount
Change in fair
value used to
calculate hedge
ineffect
iveness²
$mill
ion
Ineffectiveness
recognised in
profit or (loss)
$mill
ion
Asset
$mill
ion
Liab
il
ity
$mill
ion
Interest rate swaps – issued notes
18,694
322
105
(384)
(4)
Interest rate swaps – loans and advances
826
3
3
6
–
Interest rate swaps – debt securit
ies and other el
ig
ible b
ills
32,924
293
66
534
(1)
Interest and currency risk¹
Cross currency swaps – subordinated notes issued
48
–
11
(2)
1
Cross currency swaps – debt securit
ies and other el
ig
ible b
ills
154
6
1
1
–
Total at 31 December 2021
52,646
624
186
155
(4)
1
Interest rate swaps are designated in hedges of the fair value of interest rate risk attributable to the hedged item. Cross currency swaps are used to hedge both interest
rate and currency risks. All the hedging instruments are derivat
ives, w
ith changes in fair value includ
ing hedge
ineffect
iveness recorded w
ith
in net trad
ing income
2
This represents a (loss)/ change in fair value used for calculating hedge ineffect
iveness
Hedged Items in fair value hedges
2022
Carrying amount
Accumulated amount of
fair value hedge adjustments
included in the
carrying amount
Change in the
value used for
calculating
hedge¹
ineffect
iveness
$mill
ion
Cumulative
balance of fair
value
adjustments
from de-
designated
hedge
relationsh
ips²
$mill
ion
Asset
$mill
ion
Liab
il
ity
$mill
ion
Asset
$mill
ion
Liab
il
ity
$mill
ion
Issued notes
–
25,892
–
1,339
1,450
28
Debt securit
ies and other el
ig
ible b
ills
27,141
–
(1,751)
–
(2,578)
373
Loans and advances to customers
251
–
(19)
–
(19)
1
Total at 31 December 2022
27,392
25,892
(1,770)
1,339
(1,147)
402
1
This represents a (loss)/ change in fair value used for calculating hedge ineffect
iveness
2
This represents a credit/(debit) to the balance sheet value
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
248
Notes to the financial statements cont
inued
13. Derivat
ive financial
instruments continued
2021
Carrying amount
Accumulated amount of
fair value hedge adjustments
included in the
carrying amount
Change in the
value used for
calculating
hedge
ineffect
iveness¹
$mill
ion
Cumulative
balance of fair
value
adjustments
from de-
designated
hedge
relationsh
ips²
$mill
ion
Asset
$mill
ion
Liab
il
ity
$mill
ion
Asset
$mill
ion
Liab
il
ity
$mill
ion
Issued notes
–
18,850
–
134
384
53
Debt securit
ies and other el
ig
ible b
ills
32,907
–
(287)
–
(535)
–
Loans and advances to customers
825
–
(1)
–
(8)
(1)
Total at 31 December 2021
33,732
18,850
(288)
134
(159)
52
1
This represents a (loss)/ change in fair value used for calculating hedge ineffect
iveness
2
This represents a credit/(debit) to the balance sheet value
Income statement impact of fair value hedges
2022
$mill
ion
Income/
(expense)
2021
$mill
ion
Income/
(expense)
Change in fair value of hedging instruments
1,164
155
Change in fair value of hedged risks attributable to hedged items
(1,147)
(159)
Net ineffect
iveness (loss)/ga
in to net trading income
17
(4)
Amortisat
ion ga
in/(loss) to net interest income
120
49
Cash flow hedges
The Group has exposure to market movements in future interest cash flows on portfolios of customer accounts, debt
securit
ies and loans and advances to customers. The amounts and t
im
ing of future cash flows, represent
ing both princ
ipal
and interest flows, are projected on the basis of contractual terms and other relevant factors, includ
ing est
imates of
prepayments and defaults.
The hedging strategy of the Group involves using interest rate swaps to manage the variab
il
ity in future cash flows on assets
and liab
il
it
ies that have float
ing rates of interest by exchanging the floating rates for fixed rates. It also uses foreign exchange
contracts and currency swaps to manage the variab
il
ity in future exchange rates on its assets and liab
il
it
ies and costs
in
foreign currencies. This is done on both a micro basis whereby a single interest rate or cross currency swap is designated in
a separate relationsh
ip w
ith a single hedged item (such as a floating rate loan to a customer), and on a portfolio basis
whereby each hedging instrument is designated against a group of hedged items that share the same risk (such as a group
of customer accounts).
The hedged risk is determined as the variab
il
ity of future cash flows aris
ing from changes
in the designated benchmark
interest rate.
Hedging instruments and ineffect
iveness
Group
2022
Notional
$mill
ion
Carrying amount
Change in fair
value used to
calculate hedge
ineffect
iveness¹
$mill
ion
Gain/(loss)
recognised in
OCI
$mill
ion
Ineffectiveness
gain/(loss)
recognised in
net trading
income
$mill
ion
Asset
$mill
ion
Liab
il
ity
$mill
ion
Interest rate risk
Interest rate swaps
22,820
25
576
(552)
(551)
(1)
Currency risk
Forward foreign
exchange contract
11,889
97
385
(141)
(141)
–
Cross currency swaps
1,336
5
50
(9)
(10)
1
Total as at 31 December 2022
36,045
127
1,011
(702)
(702)
–
1
This represents a (loss)/ change in fair value used for calculating hedge ineffect
iveness
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
249
Notes to the financial statements cont
inued
13. Derivat
ive financial
instruments continued
2021
Notional
$mill
ion
Carrying amount
Change in fair
value used to
calculate hedge
ineffect
iveness1
$mill
ion
Gain/(loss)
recognised in
OCI
$mill
ion
Ineffectiveness
gain/(loss)
recognised in
net trading
income
$mill
ion
Asset
$mill
ion
Liab
il
ity
$mill
ion
Interest rate risk
Interest rate swaps
2,651
5
10
14
14
–
Currency risk
Forward foreign exchange contract
72
2
–
2
2
–
Cross currency swaps
226
–
12
(3)
(3)
–
Total as at 31 December 2021
2,949
7
22
13
13
–
1
This represents a (loss)/ change in fair value used for calculating hedge ineffect
iveness
Hedged items in cash flow hedges
2022
Change in fair
value used for
calculating
hedge
ineffect
iveness¹
$mill
ion
Cash flow
hedge reserve
$mill
ion
Cumulative
balance in the
cash flow hedge
reserve from
de-designated
hedge
relationsh
ips
$mill
ion
Customer accounts
390
(450)
31
Debt securit
ies and other el
ig
ible b
ills
110
(67)
(22)
Loans and advances to customers
204
(83)
(12)
Forecast cashflow currency hedge
–
–
–
Intragroup borrowing currency hedge
(2)
–
–
Total at 31 December 2022
702
(600)
(3)
2021
Change in fair
value used for
calculating
hedge
ineffect
iveness¹
$mill
ion
Cash flow
hedge reserve²
$mill
ion
Cumulative
balance in the
cash flow hedge
reserve from
de-designated
hedge
relationsh
ips
$mill
ion
Customer accounts
(16)
(11)
–
Debt securit
ies and other el
ig
ible b
ills
2
(4)
–
Loans and advances to customers
1
(1)
–
Forecast cashflow currency hedge
–
–
–
Intragroup borrowing currency hedge
–
–
–
Total at 31 December 2021
(13)
(16)
–
1
This represents a (loss)/ change in fair value used for calculating hedge ineffect
iveness
2
Restated to reflect the correct movement in the cashflow reserve. Refer to the following table for addit
ional deta
ils
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
250
Notes to the financial statements cont
inued
13. Derivat
ive financial
instruments continued
Impact of cash flow hedges on profit and loss and other comprehensive income
2022
Cumulative
gain/(loss)
$mill
ion
2021
Cumulative
gain/(loss)
$mill
ion
Cash flow hedge reserve balance as at 1 January
(11)
5
(Losses)/gains recognised in other comprehensive income on effective portion of changes in
fair value of hedging instruments
1
(702)
13
Losses/(gains) reclassif
ied to
income statement when hedged item affected net profit
1
110
(34)
Taxation credit relating to cash flow hedges
90
5
Cash flow hedge reserve balance as at 31 December
(513)
(11)
1
The 2021 comparatives have been restated to correct a presentation error in two line items in the prior period whereby for a group of cross currency swaps designated
in cash flow hedging relationsh
ips, the fa
ir value changes presented in other comprehensive income were shown net of the effect of changes in foreign exchange rates.
Following the restatement, the gain recognised in other comprehensive income for the effective portion of changes in the fair value of hedging instruments has been
increased by $48mill
ion from $(35) m
ill
ion to $13 m
ill
ion and the ga
in reclassif
ied to the
income statement when the hedged item affected net profit, has been reduced
by $(48) mill
ion from $14 m
ill
ion to $(34) m
ill
ion. On the statement of comprehens
ive income these two line items have been combined into one line item in the current
and the prior period to present the net change in other comprehensive income for cash flow hedges, with the gross movements shown in Note 13. No change is required
to the income statement
Hedging instruments and ineffect
iveness
Company
2022
Notional
$mill
ion
Carrying amount
Change in fair
value used to
calculate hedge
ineffect
iveness
1
$mill
ion
Gain/(loss)
recognised in
OCI
$mill
ion
Ineffectiveness
gain/(loss)
recognised in
net trading
income
$mill
ion
Asset
$mill
ion
Liab
il
ity
$mill
ion
Interest rate risk
Interest rate swaps
20,880
24
576
(534)
(533)
(1)
Currency risk
Forward foreign
exchange contract
11,829
93
385
(147)
(147)
–
Cross currency swaps
47
–
2
(2)
(2)
–
Total as at 31 December 2022
32,756
117
963
(683)
(682)
(1)
2021
Notional
$mill
ion
Carrying amount
Change in fair
value used to
calculate hedge
ineffect
iveness¹
$mill
ion
Gain/(loss)
recognised in
OCI
$mill
ion
Ineffectiveness
gain/(loss)
recognised in
net trading
income
$mill
ion
Asset
$mill
ion
Liab
il
ity
$mill
ion
Interest rate risk
Interest rate swaps
2,651
5
10
14
14
–
Currency risk
Forward foreign exchange contract
72
2
–
2
2
–
Cross currency swaps
69
–
2
–
–
–
Total as at 31 December 2021
2,792
7
12
16
16
–
1
This represents a (loss)/ change in fair value used for calculating hedge ineffect
iveness
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
251
Notes to the financial statements cont
inued
13. Derivat
ive financial
instruments continued
Hedged items in cash flow hedges
2022
Change in fair
value used for
calculating
hedge
ineffect
iveness¹
$mill
ion
Cash flow
hedge reserve
$mill
ion
Cumulative
balance in the
cash flow hedge
reserve from
de-designated
hedge
relationsh
ips
$mill
ion
Customer accounts
390
(443)
31
Debt securit
ies and other el
ig
ible b
ills
105
(61)
(22)
Loans and advances to customers
189
(69)
(11)
Forecast cashflow currency hedge
–
–
–
Intragroup borrowing currency hedge
(2)
–
–
Total at 31 December 2022
682
(573)
(2)
2021
Change in fair
value used for
calculating
hedge
ineffect
iveness¹
$mill
ion
Cash flow
hedge reserve²
$mill
ion
Cumulative
balance in the
cash flow hedge
reserve from
de-designated
hedge
relationsh
ips
$mill
ion
Customer accounts
(15)
(6)
–
Debt securit
ies and other el
ig
ible b
ills
(2)
2
–
Loans and advances to customers
1
(1)
–
Forecast cashflow currency hedge
–
–
–
Intragroup borrowing currency hedge
–
–
–
Total at 31 December 2021
(16)
(5)
–
1
This represents a (loss)/ change in fair value used for calculating hedge ineffect
iveness
2
Restated to reflect the correct movement in the cashflow reserve. Refer to the following table for addit
ional deta
ils
Impact of cash flow hedges on profit and loss and other comprehensive income
2022
Cumulative
gain/(loss)
$mill
ion
2021
Cumulative
gain/(loss)
$mill
ion
Cash flow hedge reserve balance as at 1 January
(39)
(32)
(Losses)/gains recognised in other comprehensive income on effective portion of changes in
fair value of hedging instruments
1
(682)
16
Losses/(gains) reclassif
ied to
income statement when hedged item affected net profit
1
110
(24)
Taxation credit relating to cash flow hedges
89
1
Cash flow hedge reserve balance as at 31 December
(522)
(39)
1
The 2021 comparatives have been restated to correct a presentation error in two line items in the prior period whereby for a group of cross currency swaps designated
in cash flow hedging relationsh
ips, the fa
ir value changes presented in other comprehensive income were shown net of the effect of changes in foreign exchange rates.
Following the restatement, the gain recognised in other comprehensive income for the effective portion of changes in the fair value of hedging instruments has been
increased by $24mill
ion from $(8) m
ill
ion to $16 m
ill
ion and the ga
in reclassif
ied to the
income statement when the hedged item affected net profit, has been reduced
by $(24) mill
ion from $n
il to $(24) mill
ion. On the statement of comprehens
ive income these two line items have been combined into one line item in the current and the
prior period to present the net change in other comprehensive income for cash flow hedges, with the gross movements shown in Note 13. No change is required to the
income statement
Net investment hedges
Foreign currency exposures arise from investments in subsid
iar
ies that have a different functional currency from that of the
presentation currency of the Group. This risk arises from the fluctuation in spot exchange rates between the functional
currency of the subsid
iar
ies and the Group’s presentation currency, which causes the value of the investment to vary.
The Group's policy is to hedge these exposures only when not doing so would be expected to have a sign
ificant
impact on the
regulatory ratios of the Group and its banking subsid
iar
ies. The Group uses foreign exchange forwards to manage the effect
of exchange rates on its net investments in foreign subsid
iar
ies.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
252
Notes to the financial statements cont
inued
13. Derivat
ive financial
instruments continued
Hedging instruments and ineffect
iveness
Group
2022
Notional
$mill
ion
Carrying amount
Change in fair
value used to
calculate hedge
ineffect
iveness²
$mill
ion
Changes in the
value of the
hedging
instrument
recognised
in OCI
$mill
ion
Ineffectiveness
recognised in
profit or loss
$mill
ion
Amount
reclassif
ied
from reserves
to income
$mill
ion
Asset
$mill
ion
Liab
il
ity
$mill
ion
Derivat
ive forward
currency contracts¹
3,130
17
51
54
54
–
–
2021
Notional
$mill
ion
Carrying amount
Change in fair
value used to
calculate hedge
ineffect
iveness²
$mill
ion
Changes in the
value of the
hedging
instrument
recognised
in OCI
$mill
ion
Ineffectiveness
recognised in
profit or loss
$mill
ion
Amount
reclassif
ied from
reserves
to income
$mill
ion
Asset
$mill
ion
Liab
il
ity
$mill
ion
Derivat
ive forward
currency contracts¹
2,611
–
27
(31)
(31)
–
–
1
These derivat
ive forward currency contracts have a matur
ity of less than one year. The hedges are rolled on a period
ic bas
is
2
This represents a (loss)/ change in fair value used for calculating hedge ineffect
iveness
Hedged items in net investment hedges
2022
Change in the
value used for
calculating
hedge
ineffect
iveness¹
$mill
ion
Translation
reserve
$mill
ion
Balances
remain
ing
in the
translation
reserve from
hedging
relationsh
ips for
which hedge
accounting is no
longer applied
$mill
ion
Net investments
(54)
(34)
–
2021
Change in the
value used for
calculating
hedge
ineffect
iveness¹
$mill
ion
Translation
reserve
$mill
ion
Balances
remain
ing
in the
translation
reserve from
hedging
relationsh
ips for
which hedge
accounting is no
longer applied
$mill
ion
Net investments
31
(27)
–
1
This represents a (loss)/ change in fair value used for calculating hedge ineffect
iveness
Impact of net investment hedges on other comprehensive income
2022
Income/
(expense)
$mill
ion
2021
Income/
(expense)
$mill
ion
Gains/(losses) recognised in other comprehensive income
54
(19)
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
253
Notes to the financial statements cont
inued
13. Derivat
ive financial
instruments continued
Hedging instruments and ineffect
iveness
Company
2022
Notional
$mill
ion
Carrying amount
Change in fair
value used to
calculate hedge
ineffect
iveness²
$mill
ion
Changes in the
value of the
hedging
instrument
recognised in
OCI
$mill
ion
Ineffectiveness
recognised in
profit or loss
$mill
ion
Amount
reclassif
ied
from reserves to
income
$mill
ion
Asset
$mill
ion
Liab
il
ity
$mill
ion
Derivat
ive forward
currency contracts¹
1,939
17
–
51
51
–
–
2021
Notional
$mill
ion
Carrying amount
Change in fair
value used to
calculate hedge
ineffect
iveness²
$mill
ion
Changes in the
value of the
hedging
instrument
recognised in
OCI
$mill
ion
Ineffectiveness
recognised in
profit or loss
$mill
ion
Amount
reclassif
ied from
reserves to
income
$mill
ion
Asset
$mill
ion
Liab
il
ity
$mill
ion
Derivat
ive forward
currency contracts¹
1,871
–
16
(19)
(19)
–
–
1
These derivat
ive forward currency contracts have a matur
ity of less than one year. The hedges are rolled on a period
ic bas
is
2
This represents a (loss)/ change in fair value used for calculating hedge ineffect
iveness
Hedged items in net investment hedges
2022
Change in the
value used for
calculating
hedge
ineffect
iveness
$mill
ion
Translation
reserve
$mill
ion
Balances
remain
ing
in the
translation
reserve from
hedging
relationsh
ips for
which hedge
accounting is no
longer applied
$mill
ion
Net investments
(51)
17
–
2021
Change in the
value used for
calculating
hedge
ineffect
iveness
$mill
ion
Translation
reserve
$mill
ion
Balances
remain
ing
in the
translation
reserve from
hedging
relationsh
ips for
which hedge
accounting is no
longer applied
$mill
ion
Net investments
19
(16)
–
Impact of net investment hedges on other comprehensive income
2022
Income/
(expense)
$mill
ion
2021
Income/
(expense)
$mill
ion
Gains/(losses) recognised in other comprehensive income
51
(19)
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
254
Notes to the financial statements cont
inued
13. Derivat
ive financial
instruments continued
Maturity of hedging instruments
Group
Fair value hedges
2022
Less than
one month
More than
one month
and less than
one year
One to
five years
More than
five years
Interest rate swap
Notional
$mill
ion
451
7,406
36,788
11,482
Average fixed interest rate
USD
0.51%
2.22%
2.22%
1.98%
EUR
–
2.73%
0.72%
0.56%
Cross currency swap
Notional
$mill
ion
–
–
114
–
Average fixed interest rate (to USD)
GBP
–
–
1.33%
–
CNH
–
–
3.17%
–
Average exchange rate
GBP/USD
–
–
0.66
–
HKD/USD
–
–
6.37
–
Cash flow hedges
Interest rate swap
Notional
$mill
ion
195
8,831
13,582
212
Average fixed interest rate
USD
3.80%
2.16%
1.60%
2.14%
Cross currency swap
Notional
$mill
ion
–
594
742
–
Average fixed interest rate
INO
–
8.67%
11.50%
–
KRO
–
4.14%
4.06%
–
Average exchange rate
JPY/USD
–
78.32
79.90
–
KRO/USD
–
1,368.57
1,288.97
–
Forward foreign exchange contracts
Notional
$mill
ion
1,246
10,643
–
–
Average exchange rate
JPY/USD
135.18
133.26
–
–
CLO/USD
–
–
–
–
Net investment hedges
Foreign exchange derivat
ives
Notional
$mill
ion
3,130
–
–
–
Average exchange rate
INR¹/USD
80.55
–
–
–
SGD/USD
1.40
–
–
–
AED/USD
3.67
–
–
–
1
Offshore currency
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
255
Notes to the financial statements cont
inued
13. Derivat
ive financial
instruments continued
Fair value hedges
2021
Less than
one month
More than
one month
and less than
one year
One to
five years
More than
five years
Interest rate swap
Notional
$mill
ion
2,415
5,465
33,921
11,820
Average fixed interest rate
USD
2.00%
0.61%
0.86%
1.41%
EUR
–
0.12%
(0.09)%
(0.11)%
Cross currency swap
Notional
$mill
ion
48
–
154
–
Average fixed interest rate (to USD)
GBP
4.35%
–
1.33%
–
HKD
–
–
0.22%
–
Average exchange rate
GBP/USD
0.57
–
0.66
–
HKD/USD
–
–
7.77
–
Cash flow hedges
Interest rate swap
Notional
$mill
ion
–
1,666
781
204
Average fixed interest rate
USD
–
0.08%
2.26%
1.26%
Cross currency swap
Notional
$mill
ion
–
69
157
–
Average fixed interest rate
INO
–
3.85%
9.00%
–
Average exchange rate
INO/USD
–
68.85
72.66
–
Forward foreign exchange contracts
Notional
$mill
ion
–
–
72
–
Average exchange rate
CLO/USD
–
–
868.10
–
Net investment hedges
Foreign exchange derivat
ives
Notional
$mill
ion
673
1,938
–
–
Average exchange rate
INR¹/USD
76.17
–
–
–
SGD/USD
–
1.37
–
–
AED/USD
–
3.67
–
–
1
Offshore currency
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
256
Notes to the financial statements cont
inued
13. Derivat
ive financial
instruments continued
Maturity of hedging instruments
Company
Fair value hedges
2022
Less than
one month
More than
one month
and less than
one year
One to
five years
More than
five years
Interest rate swap
Notional
$mill
ion
451
7,251
35,089
11,482
Average fixed interest rate
USD
0.51%
2.23%
2.21%
1.98%
EUR
–
2.73%
0.72%
0.56%
Cross currency swap
Notional
$mill
ion
–
–
114
–
Average fixed interest rate (to USD)
GBP
–
–
1.33%
–
CNH
–
–
3.17%
–
Average exchange rate
GBP/USD
–
–
0.66
–
HKD/USD
–
–
6.37
–
Cash flow hedges
Interest rate swap
Notional
$mill
ion
195
6,891
13,582
212
Average fixed interest rate
USD
3.80%
2.44%
1.60%
2.14%
Cross currency swap
Notional
$mill
ion
–
47
–
–
Average fixed interest rate
KRO
–
5.58%
–
–
Average exchange rate
KRO/USD
–
1,356.70
–
–
Forward foreign exchange contracts
Notional
$mill
ion
1,186
10,643
–
–
Average exchange rate
JPY/USD
135.18
133.26
–
–
Net investment hedges
Foreign exchange derivat
ives
Notional
$mill
ion
1,939
–
–
–
Average exchange rate
INR¹/USD
80.55
–
–
–
AED/USD
3.67
–
–
–
1
Offshore currency
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
257
Notes to the financial statements cont
inued
13. Derivat
ive financial
instruments continued
Fair value hedges
2021
Less than
one month
More than
one month
and less than
one year
One to
five years
More than
five years
Interest rate swap
Notional
$mill
ion
2,415
5,340
32,869
11,820
Average fixed interest rate
USD
2.00%
0.63%
0.85%
1.41%
EUR
–
0.12%
(0.09)%
(0.11)%
Cross currency swap
Notional
$mill
ion
48
–
154
–
Average fixed interest rate (to USD)
GBP
4.35%
–
1.33%
–
HKD
–
–
0.22%
–
Average exchange rate
GBP/USD
0.57
–
0.66
–
HKD/USD
–
–
7.77
–
Cash flow hedges
Interest rate swap
Notional
$mill
ion
–
1,666
781
204
Average fixed interest rate
USD
–
0.08%
2.26%
1.26%
Cross currency swap
Notional
$mill
ion
–
69
–
–
Average fixed interest rate
INO
–
3.85%
–
–
Average exchange rate
INO/USD
–
68.85
–
–
Forward foreign exchange contracts
Notional
$mill
ion
–
–
72
–
Average exchange rate
CLO/USD
–
–
868.10
–
Net investment hedges
Foreign exchange derivat
ives
Notional
$mill
ion
673
1,198
–
–
Average exchange rate
INR¹/USD
76.17
–
–
–
AED/USD
–
3.67
–
–
1
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
258
Notes to the financial statements cont
inued
13. Derivat
ive financial
instruments continued
Interest rate benchmark reform
The Group applies the Phase 1 ‘Interest Rate Benchmark Reform Amendments to IFRS 9, IAS 39 and IFRS 7’ which allow the
Group to assume that the interest rate benchmark on which cash flows for the hedged item and/or hedging instrument are
based is not altered as a result of IBOR reform for the following activ
it
ies:
• Prospective hedge assessment
•
Determin
ing whether a cash flow or forecast transact
ion for a cash flow hedge is highly probable. However, the Group
otherwise assesses whether the cash flows are considered highly probable
•
Determin
ing when cumulat
ive balances in the cash flow hedge reserve from de-designated hedges should be recycled
to the income statement
The Group will not de-designate a hedge relationsh
ip of a benchmark
in scope of IBOR reform if the retrospective hedge
result is outside the required 80-125% range, but the hedge passes the prospective assessment. Any hedge ineffect
iveness
continues to be recorded in net trading income.
For hedges of non-contractually specif
ied benchmark port
ions of an interest rate (such as fair value hedges of interest rate
risk on fixed rate debt instruments) the Group only assesses whether the designated benchmark is separately ident
ifiable at
hedge incept
ion. The cho
ice of designated benchmark is not revis
ited for ex
ist
ing hedge relat
ionsh
ips
In applying these amendments, the Group has made the following key assumptions for the period end, to be reviewed on an
ongoing basis:
•
The interest rate benchmarks applicable to the Group that are in scope of the IFRS amendments are all LIBOR’s, EONIA,
Singapore Swap Offer Rate (SGD SOR) and Thai Baht Interest Rate fix
ing (THB FIX)
•
EURIBOR is not in scope of the IFRS amendments because its revised methodology incorporates market transaction data,
hence the benchmark is expected to continue to exist in future reporting periods
•
The Group assumes that the uncertainty aris
ing from USD LIBOR w
ill be present until 30 June 2023, at which time the
amendments to IFRS no longer apply
As at 31 December 2022, the following notional princ
ipal amounts of der
ivat
ive
instruments designated in fair value or cash
flow hedge accounting relationsh
ips were l
inked to IBOR reference rates:
Group
Fair value
hedges
$mill
ion
Cash flow
hedges
$mill
ion
Total
$mill
ion
Weighted
average
exposure
$mill
ion
Interest rate swaps
USD LIBOR
25,828
18,754
44,582
2.2
GBP LIBOR
–
–
–
–
JPY LIBOR
–
–
–
–
25,828
18,754
44,582
2.2
Cross currency swaps
USD LIBOR vs Fixed rate foreign currency
42
916
958
1.3
Total notional of hedging instruments in scope of IFRS amendments as at
31 December 2022
25,870
19,670
45,540
2.2
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
259
Notes to the financial statements cont
inued
13. Derivat
ive financial
instruments continued
Fair value
hedges
$mill
ion
Cash flow
hedges
$mill
ion
Total
$mill
ion
Weighted
average
exposure
$mill
ion
Interest rate swaps
USD LIBOR
32,543
753
33,296
3.5
GBP LIBOR
47
–
47
0.1
JPY LIBOR
463
–
463
0.1
33,053
753
33,806
3.4
Cross currency swaps
USD LIBOR vs Fixed rate foreign currency
202
–
202
1.1
Total notional of hedging instruments in scope of IFRS amendments as at
31 December 2021
33,255
753
34,008
3.4
Company
Fair value
hedges
$mill
ion
Cash flow
hedges
$mill
ion
Total
$mill
ion
Weighted
average
exposure
$mill
ion
Interest rate swaps
USD LIBOR
24,665
16,814
41,479
2.2
GBP LIBOR
–
–
–
–
JPY LIBOR
–
–
–
–
24,665
16,814
41,479
2.2
Cross currency swaps
USD LIBOR vs Fixed rate foreign currency
42
47
90
1.3
Total notional of hedging instruments in scope of IFRS amendments as at
31 December 2022
24,707
16,861
41,569
2.2
Fair value
hedges
$mill
ion
Cash flow
hedges
$mill
ion
Total
$mill
ion
Weighted
average
exposure
$mill
ion
Interest rate swaps
USD LIBOR
31,520
753
32,273
3.5
GBP LIBOR
47
–
47
0.1
JPY LIBOR
463
–
463
0.1
32,030
753
32,783
3.4
Cross currency swaps
USD LIBOR vs Fixed rate foreign currency
202
–
202
1.9
Total notional of hedging instruments in scope of IFRS amendments as at
31 December 2021
32,232
753
32,985
3.4
The Group’s primary exposure is to USD LIBOR due to the extent of fixed rate debt security assets and issued notes
denominated in USD that are designated in fair value hedge relationsh
ips. Where fixed rate
instruments are in other
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
260
Notes to the financial statements cont
inued
Refer to Note 12 Financ
ial
instruments for the relevant accounting policy
Group
Company
2022
$mill
ion
2021
$mill
ion
2022
$mill
ion
2021
$mill
ion
Loans and advances to banks
27,394
30,014
18,552
16,129
Expected credit loss
(11)
(15)
(4)
(12)
27,383
29,999
18,548
16,117
Loans and advances to customers
162,158
149,672
83,457
74,574
Expected credit loss
(4,032)
(4,873)
(2,846)
(3,413)
158,126
144,799
80,611
71,161
Total loans and advances to banks and customers
185,509
174,798
99,159
87,278
Analysis of loans and advances to customers by client segments and related impa
irment prov
is
ions as set out w
ith
in the
ing other s
im
ilar lend
ing and borrowing
The Group purchases securit
ies (a reverse repurchase agreement – ‘reverse repo’) typ
ically with financ
ial
inst
itut
ions subject
to a commitment to resell or return the securit
ies at a predeterm
ined price. These securit
ies are not
included in the balance
sheet as the Group does not acquire the risks and rewards of ownership, however they are recorded off-balance sheet as
collateral received. Considerat
ion pa
id (or cash collateral provided) is accounted for as a loan asset at amortised cost, unless
it is managed on a fair value basis or designated at fair value through profit or loss. In the major
ity of cases through the
contractual terms of a reverse repo arrangement, the Group as the transferee of the security collateral has the right to sell
or repledge the asset concerned.
The Group also sells securit
ies (a repurchase agreement – ‘repo’) subject to a comm
itment to repurchase or redeem the
securit
ies at a predeterm
ined price. The securit
ies are reta
ined on the balance sheet as the Group retains substantially all
the risks and rewards of ownership and these securit
ies are d
isclosed as pledged collateral. Considerat
ion rece
ived (or cash
collateral received) is accounted for as a financ
ial l
iab
il
ity at amortised cost, unless it is either mandatorily classif
ied as fa
ir
value through profit or loss or irrevocably designated at fair value through profit or loss at in
it
ial recognit
ion.
Financ
ial assets are pledged as collateral as part of sales and repurchases, secur
it
ies borrow
ing and securit
isat
ion
transactions under terms that are usual and customary for such activ
it
ies. The Group is obliged to return equivalent securit
ies.
Repo and reverse repo transactions typically entitle the Group and its counterparties to have recourse to assets sim
ilar to
those provided as collateral in the event of a default. Securit
ies sold subject to repos, e
ither by way of a Global Master
Repurchase Agreement (GMRA), or through a securit
ies sale and Total Return Swap (TRS) cont
inue to be recognised on the
balance sheet as the Group retains substantially the associated risks and rewards of the securit
ies (the TRS
is not recognised).
The counterparty liab
il
ity is included in deposits by banks or customer accounts, as appropriate. Assets sold under repurchase
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
261
Notes to the financial statements cont
inued
15. Reverse repurchase and repurchase agreements includ
ing other s
im
ilar lend
ing and borrowing
continued
Reverse repurchase agreements and other sim
ilar secured lend
ing
Group
2022
$mill
ion
2021
$mill
ion
Banks
24,154
19,664
Customers
54,643
64,042
78,797
83,706
Of which:
Fair value through profit or loss
62,333
78,986
Banks
23,276
18,708
Customers
39,057
60,278
Held at amortised cost
16,464
4,720
Banks
878
956
Customers
15,586
3,764
Under reverse repurchase and securit
ies borrow
ing arrangements, the Group obtains securit
ies on terms wh
ich permit it to
repledge or resell the securit
ies to others. Amounts on such terms are:
2022
$mill
ion
2021
$mill
ion
Securit
ies and collateral rece
ived (at fair value)
113,744
113,892
Securit
ies and collateral wh
ich can be repledged or sold (at fair value)
113,624
113,736
Amounts repledged/transferred to others for financing act
iv
it
ies, to satisfy liab
il
it
ies under sale and
repurchase agreements (at fair value)
44,628
57,879
Company
2022
$mill
ion
2020
2021
Banks
21,383
18,818
Customers
52,929
62,322
74,312
81,140
Of which:
Fair value through profit or loss
59,057
77,655
Banks
21,199
18,380
Customers
37,858
59,275
Held at amortised cost
15,255
3,485
Banks
184
438
Customers
15,071
3,047
Under reverse repurchase and securit
ies borrow
ing arrangements, the Company obtains securit
ies on terms wh
ich permit it
to repledge or resell the securit
ies to others. Amounts on such terms are:
2022
$mill
ion
2021
$mill
ion
Securit
ies and collateral rece
ived (at fair value)
108,433
110,558
Securit
ies and collateral wh
ich can be repledged or sold (at fair value)
108,314
110,462
Amounts repledged/transferred to others for financing act
iv
it
ies, to satisfy liab
il
it
ies under sale and
repurchase agreements (at fair value)
44,419
57,826
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
262
Notes to the financial statements cont
inued
15. Reverse repurchase and repurchase agreements includ
ing other s
im
ilar lend
ing and borrowing
continued
Repurchase agreements and other sim
ilar secured borrow
ing
Group
2022
$mill
ion
2021
$mill
ion
Banks
6,536
5,092
Customers
45,857
56,540
52,393
61,632
Of which:
Fair value through profit or loss
50,402
61,307
Banks
5,422
4,768
Customers
44,980
56,539
Held at amortised cost
1,991
325
Banks
1,114
324
Customers
877
1
The tables below set out the financial assets prov
ided as collateral for repurchase and other secured borrowing transactions:
Collateral pledged against repurchase agreements
2022
Fair value
through profit
or loss
$mill
ion
Fair value
through other
comprehensive
income
$mill
ion
Amortised
cost
$mill
ion
Off-balance
sheet
$mill
ion
Total
$mill
ion
On-balance sheet
Debt securit
ies and other el
ig
ible b
ills
1,629
3,624
4,799
–
10,052
Off-balance sheet
Repledged collateral received
–
–
–
44,628
44,628
At 31 December 2022
1,629
3,624
4,799
44,628
54,680
Collateral pledged against repurchase agreements
2021
Fair value
through profit
or loss
$mill
ion
Fair value
through other
comprehensive
income
$mill
ion
Amortised
cost
$mill
ion
Off-balance
sheet
$mill
ion
Total
$mill
ion
On-balance sheet
Debt securit
ies and other el
ig
ible b
ills
2,318
483
1,778
–
4,579
Off-balance sheet
Repledged collateral received
–
–
–
57,879
57,879
At 31 December 2021
2,318
483
1,778
57,879
62,458
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
263
Notes to the financial statements cont
inued
15. Reverse repurchase and repurchase agreements includ
ing other s
im
ilar lend
ing and borrowing
continued
Company
2022
$mill
ion
2021
$mill
ion
Banks
6,215
4,737
Customers
45,687
56,443
51,902
61,180
Of which:
Fair value through profit or loss
50,179
60,897
Banks
5,307
4,455
Customers
44,872
56,442
Held at amortised cost
1,723
283
Banks
908
282
Customers
815
1
The tables below set out the financial assets prov
ided as collateral for repurchase and other secured borrowing transactions:
Collateral pledged against repurchase agreements
2022
Fair value
through profit
or loss
$mill
ion
Fair value
through other
comprehensive
income
$mill
ion
Amortised
cost
$mill
ion
Off-balance
sheet
$mill
ion
Total
$mill
ion
On-balance sheet
Debt securit
ies and other el
ig
ible b
ills
1,407
3,624
4,799
–
9,830
Off-balance sheet
Repledged collateral received
–
–
–
44,419
44,419
At 31 December 2022
1,407
3,624
4,799
44,419
54,249
Collateral pledged against repurchase agreements
2021
Fair value
through profit
or loss
$mill
ion
Fair value
through other
comprehensive
income
$mill
ion
Amortised
cost
$mill
ion
Off-balance
sheet
$mill
ion
Total
$mill
ion
On-balance sheet
Debt securit
ies and other el
ig
ible b
ills
2,085
318
1,776
–
4,179
Off-balance sheet
Repledged collateral received
–
–
–
57,826
57,826
At 31 December 2021
2,085
318
1,776
57,826
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
264
Notes to the financial statements cont
inued
ible assets
Goodwill represents the excess of the cost of an acquis
it
ion over the fair value of the Group’s share of the ident
ifiable net
assets and contingent liab
il
it
ies of the acqu
ired subsid
iary, assoc
iate or jo
int venture at the date of acqu
is
it
ion. Goodwill on
acquis
it
ions of subsid
iar
ies is included in intang
ible assets. Goodw
ill on acquis
it
ions of associates is included in Investments in
associates. Goodwill included in intang
ible assets
is assessed at each balance sheet date for impa
irment and carr
ied at cost
less any accumulated impa
irment losses. Ga
ins and losses on the disposal of an entity include the carrying amount of
goodwill relating to the entity sold. Detailed calculations are performed based on discount
ing expected cash flows of the
relevant cash generating units (CGUs) and discount
ing these at an appropr
iate discount rate, the determinat
ion of wh
ich
requires the exercise of judgement. Goodwill is allocated to CGUs for the purpose of impa
irment test
ing. CGUs represent the
lowest level with
in the Group wh
ich generate separate cash inflows and at which the goodwill is monitored for internal
management purposes. These are equal to or smaller than the Group’s reportable segments (as set out in Note 2) as the
Group views its reportable segments on a global basis. The major CGUs to which goodwill has been allocated are set out
Sign
ificant account
ing estimates and judgements
The carrying amount of goodwill is based on the applicat
ion of judgements
includ
ing the bas
is of goodwill impa
irment
calculation assumptions. Judgement is also applied in determinat
ion of cash generat
ing units.
Estimates include forecasts used for determin
ing cash flows for CGUs and, the appropr
iate long term growth rates to use
and discount rates which factor in country risk-free rates and applicable risk premiums. These estimates are period
ically
assessed for appropriateness. The Group undertakes an annual assessment to evaluate whether the carrying value of
goodwill is impa
ired. The est
imat
ion of future cash flows and the level to wh
ich they are discounted is inherently uncertain
and requires sign
ificant judgement and
is subject to potential change over time.
Acquired intang
ibles
At the date of acquis
it
ion of a subsid
iary or assoc
iate, intang
ible assets wh
ich are deemed separable and that arise from
contractual or other legal rights are capital
ised and
included with
in the net
ident
ifiable assets acqu
ired. These intang
ible
assets are in
it
ially measured at fair value, which reflects market expectations of the probabil
ity that the future econom
ic
benefits embodied in the asset will flow to the entity, and are amortised on the basis of their expected useful lives (4 to 16
years). At each balance sheet date, these assets are assessed for ind
icators of
impa
irment. In the event that an asset’s
carrying amount is determined to be greater than its recoverable amount, the asset is written down immed
iately.
Computer software
Acquired computer software licences are capital
ised
if the princ
iples of development are met on the bas
is of the costs
incurred to acquire and bring to use the specif
ic software.
Internally generated software represents substantially all of the total software capital
ised. D
irect costs of the development
of separately ident
ifiable
internally generated software are capital
ised where
it is probable that future economic benefits
attributable to the asset will flow from its use (internally generated software). These costs include salaries and wages,
materials, service providers and contractors, and directly attributable overheads. Costs incurred in the ongoing maintenance
of software are expensed immed
iately when
incurred. Internally generated software is amortised over each asset’s useful life
to a maximum of a 10 year time period. On an annual basis software assets’ residual values and useful lives are reviewed,
includ
ing assess
ing for ind
icators of
impa
irment. Ind
icators of impa
irment
include loss of business relevance, obsolescence of
asset, exit of the business to which the software relates, technological changes, change in use of the asset, reduction in useful
life, plans to reduce usage or scope.
For capital
ised software, judgement
is required to determine which costs relate to research (and therefore expensed)
and which costs relate to development (capital
ised). Further judgement
is required to determine the technical feasib
il
ity of
completing the software such that it will be available for use. Estimates are used to determine how the software will generate
probable future economic benefits, these estimates include; cost savings, income increases, balance sheet improvements,
improved functional
ity or
improved asset safeguarding.
Software as a Service (SaaS) is a contractual arrangement that conveys the right to receive access to the supplier’s software
applicat
ion over the contract term. As such, the Group does not have control and as a result recogn
ises an operating expense
for these costs over the contract term. Certain costs related to implementat
ion of the SaaS may meet the definit
ion of an
intang
ible asset
in their own right if it is separately ident
ifiable and control
is established. These costs are capital
ised
if it is
expected to provide the Group with future economic benefits flowing from the underlying resource and the Group can restrict
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
265
Notes to the financial statements cont
inued
16. Goodwill and intang
ible assets cont
inued
Group
2022
2021
Goodwill
$mill
ion
Acquired
intang
ibles
$mill
ion
Computer
software
$mill
ion
Total
$mill
ion
Goodwill
$mill
ion
Acquired
intang
ibles
$mill
ion
Computer
software
$mill
ion
Total
$mill
ion
Cost
At 1 January
1,379
148
3,569
5,096
1,408
132
3,017
4,557
Exchange translation
differences
(44)
(5)
1
(48)
(29)
(4)
(58)
(91)
Addit
ions
–
–
761
761
–
20
738
758
Impairment
(10)
–
(18)
(28)
–
–
–
–
Amounts written off
–
–
(346)
(346)
–
–
(128)
(128)
Classif
ied as held for sale
(2)
–
(5)
(7)
–
–
–
–
At 31 December
1,323
143
3,962
5,428
1,379
148
3,569
5,096
Provis
ion for amort
isat
ion
At 1 January
–
118
1,178
1,296
–
117
944
1,061
Exchange translation
differences
–
(5)
(6)
(11)
–
(4)
(20)
(24)
Amortisat
ion
–
6
379
385
–
5
339
344
Impairment charge
–
–
39
39
–
–
3
3
Classif
ied as held for sale
–
–
(4)
(4)
Amounts written off
–
–
(329)
(329)
–
–
(88)
(88)
At 31 December
–
119
1,257
1,376
–
118
1,178
1,296
Net book value
1,323
24
2,705
4,052
1,379
30
2,391
3,800
At 31 December 2022, accumulated goodwill impa
irment losses
incurred from 1 January 2005 amounted to $3,237 mill
ion
(2021: $3,227 mill
ion), of wh
ich $10 mill
ion was recogn
ised in 2022 (2021: $nil).
Company
2022
2021
Goodwill
$mill
ion
Acquired
intang
ibles
$mill
ion
Computer
software
$mill
ion
Total
$mill
ion
Goodwill
$mill
ion
Acquired
intang
ibles
$mill
ion
Computer
software
$mill
ion
Total
$mill
ion
Cost
At 1 January
79
30
2,997
3,106
79
32
2,647
2,758
Exchange translation
differences
–
(1)
1
–
–
(2)
(48)
(50)
Addit
ions
–
–
501
501
–
–
503
503
Impairment
(6)
–
(17)
(23)
–
–
–
–
Amounts written off
–
–
(297)
(297)
–
–
(105)
(105)
Classif
ied as held for sale
(1)
–
(2)
(3)
–
–
–
–
At 31 December
72
29
3,183
3,284
79
30
2,997
3,106
Provis
ion for amort
isat
ion
At 1 January
–
18
967
985
–
18
782
800
Exchange translation
differences
–
(2)
(3)
(5)
–
(2)
(15)
(17)
Amortisat
ion
–
2
271
273
–
2
271
273
Impairment charge
–
–
37
37
–
–
2
2
Amounts written off
–
–
(285)
(285)
–
–
(73)
(73)
At 31 December
–
–
987
1,005
–
–
967
985
Net book value
72
11
2,196
2,279
79
12
2,030
2,121
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
266
Notes to the financial statements cont
inued
16. Goodwill and intang
ible assets cont
inued
Goodwill
Outcome of impa
irment assessment
An annual assessment is made as to whether the current carrying value of goodwill is impa
ired. For the purposes of
impa
irment test
ing, goodwill is allocated at the date of acquis
it
ion to a CGU. Goodwill is considered to be impa
ired
if the
carrying amount of the relevant CGU exceeds its recoverable amount. Indicators of impa
irment
include changes in the
economic performance and outlook of the region includ
ing geopol
it
ical changes, changes
in market value of regional
investments, large credit defaults and strategic decis
ions to ex
it certain regions. The recoverable amounts for all the CGUs
were measured based on value in use (VIU). The calculation of VIU for each CGU is calculated using five-year cashflow
projections and an est
imated terminal value based on a perpetuity value after year five. The cashflow project
ions are based
on forecasts approved by management up to 2027. The perpetuity terminal value amount is calculated using year five
cashflows using long-term GDP growth rates. All cashflows are discounted using discount rates which reflect market rates
appropriate to the CGU. Post-tax discount rates are used to calculate the VIU using the post-tax cashflows. The post-tax
discount rate is subsequently grossed up to pre-tax discount rate. The calculated VIU using post-tax and pre-tax discount
rate is same.
The goodwill allocated to each CGU and key assumptions used in determin
ing the recoverable amounts are set out below
and are solely estimates for the purposes of assessing impa
irment of acqu
ired goodwill.
Group
Cash generating unit
1
2022
2021
Goodwill
$mill
ion
Pre tax
Discount
Rates
per cent
Long-term
forecast GDP
growth rates
per cent
Goodwill
$mill
ion
Pre tax
Discount
Rates
per cent
Long-term
forecast GDP
growth rates
per cent
Country CGUs
Africa & Middle East
69
76
Pakistan
35
30.9
5.9
42
20.2
5.1
Bahrain
34
16.6
0.7
34
14.2
2.8
ASIA
281
290
Singapore
281
12.3
2.3
280
12.0
3.0
Bangladesh
–
24.3
5.4
10
19.6
7.2
Global CGUs
973
1,013
Global Private Banking
83
14.4
2.0
84
12.6
3.6
Global Corporate, Commercial &
Institut
ional Bank
ing
890
14.5
2.5
929
12.0
3.0
1,323
1,379
Bangladesh has had all the goodwill allocated to them written off, totalling $10 mill
ion. Th
is was primar
ily due to lower
economic growth forecasts and higher discount rates. As a result, the carrying amount of Bangladesh CGU, which included
goodwill, was greater than the recoverable amount (VIU of $83 mill
ion).
In the current year there are no CGUs that are sensit
ive to any
ind
iv
idual movement on key estimates (cashflow, discount rate
and GDP growth rate).
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
267
Notes to the financial statements cont
inued
16. Goodwill and intang
ible assets cont
inued
Company
Acquired intang
ibles pr
imar
ily compr
ise those recognised as part of the acquis
it
ions of American Express Bank, Tradewinds,
Australia and New Zealand Project Finance and Grindlays.
Sign
ificant
items of goodwill aris
ing on acqu
is
it
ions have been allocated to the following cash generating units for the
purposes of impa
irment test
ing:
Cash generating unit
2022
$mill
ion
2021
$mill
ion
Country CGUs
Bahrain
17
17
Bangladesh
–
6
Global CGUs
Global Corporate, Commercial & Institut
ional Bank
ing
55
56
72
79
Bangladesh has had all the goodwill allocated to them written off, totalling $6 mill
ion.
Acquired intang
ibles
Acquired Intangibles primar
ily compr
ises of the intellectual property acquired from Standard Chartered Bank Hong
Kong Lim
ited.
The acquired intang
ibles are amort
ised over periods from four years to a maximum of 16 years. The constituents are
as follows:
Group
Company
2022
$mill
ion
2021
$mill
ion
2022
$mill
ion
2021
$mill
ion
Acquired intang
ibles compr
ise:
Brand names
1
–
–
–
Customer relationsh
ips
1
3
2
3
Licences
22
27
9
9
Net book value
24
30
11
Accounting policy
All property, plant and equipment is stated at cost less accumulated depreciat
ion and
impa
irment losses. Cost
includes
expenditure that is directly attributable to the acquis
it
ion of the assets. Subsequent costs are included in the asset’s carrying
amount or are recognised as a separate asset, as appropriate, only when it is probable that future economic benefits
associated with the item will flow to the Group and the cost of the item can be measured reliably.
At each balance sheet date the assets’ residual values and useful lives are reviewed, and adjusted if appropriate, includ
ing
assessing for ind
icators of
impa
irment. In the event that an asset’s carry
ing amount is determined to be greater than its
recoverable amount, the asset is written down to the recoverable amount. Gains and losses on disposals are included in the
income statement.
Repairs and maintenance are charged to the income statement during the financ
ial per
iod in which they are incurred.
Land and build
ings compr
ise mainly branches and offices. Freehold land is not depreciated although it is subject to
impa
irment test
ing.
Depreciat
ion on other assets
is calculated using the straight-line method to allocate their cost to their residual values
over their estimated useful lives, as follows:
• Build
ings
up to 50 years
•
Leasehold improvements life of lease
up to 50 years
• Equipment and motor vehicles
three to 15 years
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
268
Notes to the financial statements cont
inued
17. Property, plant and equipment continued
Where the Group is a lessee of a right-of-use asset, the leased assets are capital
ised and
included in Property, plant and
equipment with a corresponding liab
il
ity to the lessor recognised in Other liab
il
it
ies,
in accordance with the Group’s leased
assets accounting policy in Note 18.
All other repairs and maintenance are charged to the income statement during the financ
ial per
iod in which they
Group
2022
Premises
$mill
ion
Equipment
$mill
ion
Leased
premises
assets
$mill
ion
Leased
equipment
assets
$mill
ion
Total
$mill
ion
Cost or valuation
At 1 January
663
566
879
8
2,116
Exchange translation differences
(31)
(47)
(78)
(1)
(157)
Addit
ions
1
55
84
247
–
386
Disposals and fully depreciated assets written off
2
(82)
(66)
(263)
–
(411)
Transfers to assets held for sale
(56)
(18)
(5)
–
(79)
As at 31 December
549
519
780
7
1,855
Depreciat
ion
Accumulated at 1 January
298
366
376
5
1,045
Exchange translation differences
(16)
(26)
(22)
(2)
(66)
Charge for the year
32
85
108
1
226
Impairment charge
1
–
4
–
5
Attributable to assets sold, transferred or written off
2
(80)
(65)
(162)
–
(307)
Transfers to assets held for sale
(28)
(12)
(2)
–
(42)
Accumulated at 31 December
207
348
302
4
861
Net book amount at 31 December
342
171
478
3
994
1
Refer to the cash flow statement under cash flows from invest
ing act
iv
it
ies section for the purchase of property, plant and equipment during the year of $139 mill
ion
on page 171
2
Disposals for property, plant and equipment during the year of $30 mill
ion
in the cash flow statement would include the gains and losses incurred as part of other
operating income (Note 6) on disposal of assets during the year and the net book value disposed Group
2021
Premises
$mill
ion
Equipment
$mill
ion
Leased
premises
assets
$mill
ion
Leased
equipment
assets
$mill
ion
Total
$mill
ion
Cost or valuation
At 1 January
666
570
862
6
2,104
Exchange translation differences
(28)
(7)
(32)
2
(65)
Addit
ions
1
43
91
83
1
218
Disposals and fully depreciated assets written off
2
(14)
(88)
(34)
(1)
(137)
Transfers to assets held for sale
(4)
–
–
–
(4)
As at 31 December
663
566
879
8
2,116
Depreciat
ion
Accumulated at 1 January
282
368
249
4
903
Exchange translation differences
(8)
(4)
(14)
–
(26)
Charge for the year
33
89
127
1
250
Impairment charge
–
–
39
–
39
Attributable to assets sold, transferred or written off
2
(9)
(87)
(25)
–
(121)
Accumulated at 31 December
298
366
376
5
1,045
Net book amount at 31 December
365
200
503
3
1,071
1
Refer to the cash flow statement under cash flows from invest
ing act
iv
it
ies section for the purchase of property, plant and equipment during the year of $134 mill
ion
on page 171
2
Disposals for property, plant and equipment during the year of $25 mill
ion
in the cash flow statement would include the gains and losses incurred as part of other
operating income (Note 6) on disposal of assets during the year and the net book value disposed Group
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
269
Notes to the financial statements cont
inued
17. Property, plant and equipment continued
Company
2022
Premises
$mill
ion
Equipment
$mill
ion
Leased
premises
assets
$mill
ion
Leased
equipment
assets
$mill
ion
Total
$mill
ion
Cost or valuation
At 1 January
314
309
596
1
1,220
Exchange translation differences
(19)
(12)
(17)
–
(48)
Addit
ions
1
12
47
24
–
83
Disposals, transfers and fully depreciated assets written off
2
(75)
(31)
(226)
–
(332)
Transfers to assets held for sale
(27)
(2)
–
–
(29)
As at 31 December
205
311
377
1
894
Depreciat
ion
Accumulated at 1 January
150
182
260
1
593
Exchange translation differences
(7)
(9)
(8)
–
(24)
Charge for the year
13
49
61
–
123
Impairment charge/(release)
1
–
(2)
–
(1)
Attributable to assets sold, transferred or written off
2
(74)
(30)
(114)
–
(218)
Transfers to assets held for sale
(8)
(1)
–
–
(9)
Accumulated at 31 December
75
191
197
1
464
Net book amount at 31 December
130
120
180
–
430
1
Refer to the cash flow statement under cash flows from invest
ing act
iv
it
ies section for the purchase of property, plant and equipment during the year of $59 mill
ion
on page 171
2
Disposals for property, plant and equipment during the year of $14 mill
ion
in the cash flow statement would include the gains and losses incurred as part of other
operating income (Note 6) on disposal of assets during the year and the net book value disposed
2021
Premises
$mill
ion
Equipment
$mill
ion
Leased
premises
assets
$mill
ion
Leased
equipment
assets
$mill
ion
Total
$mill
ion
Cost or valuation
At 1 January
313
262
576
1
1,152
Exchange translation differences
(10)
5
(2)
–
(7)
Addit
ions
1
17
50
39
–
106
Disposals and fully depreciated assets written off
2
(6)
(8)
(17)
–
(31)
As at 31 December
314
309
596
1
1,220
Depreciat
ion
Accumulated at 1 January
137
140
166
1
444
Exchange translation differences
–
(2)
(5)
–
(7)
Charge for the year
15
51
77
–
143
Impairment charge
–
–
38
–
38
Attributable to assets sold, transferred or written off
2
(2)
(7)
(16)
–
(25)
Accumulated at 31 December
150
182
260
1
593
Net book amount at 31 December
164
127
336
–
627
1
Refer to the cash flow statement under cash flows from invest
ing act
iv
it
ies section for the purchase of property, plant and equipment during the year of $67 mill
ion
on page 171
2
Disposals for property, plant and equipment during the year of $6 mill
ion
in the cash flow statement would include the gains and losses incurred as part of other
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
270
Notes to the financial statements cont
inued
The Group assesses whether a contract is a lease in scope of this policy by determin
ing whether the contract g
ives it the
right to use a specif
ied underly
ing physical asset for a lease term greater than 12 months, unless the underlying asset is
of low value.
Where the Group is a lessee and the lease is deemed in scope, it recognises a liab
il
ity equal to the present value of lease
payments over the lease term, discounted using the incremental borrowing rate applicable in the economic environment
of the lease. The liab
il
ity is recognised in ‘Other liab
il
it
ies’. A correspond
ing right-of-use asset equal to the liab
il
ity, adjusted
for any lease payments made at or before the commencement date, is recognised in ‘Property, plant and equipment’.
The lease term includes any extension options contained in the contract that the Group is reasonably certain it will exercise.
The Group subsequently depreciates the right-of-use asset using the straight-line method over the lease term and measures
the lease liab
il
ity using the effective interest method. Depreciat
ion on the asset
is recognised in ‘Depreciat
ion and
amortisat
ion’, and
interest on the lease liab
il
ity is recognised in ‘Interest expense’.
If a leased premise, or a physically dist
inct port
ion of a premise such as an ind
iv
idual floor, is deemed by management to
be surplus to the Group’s needs and action has been taken to abandon the space before the lease expires, this is considered
an ind
icator of
impa
irment. An
impa
irment loss
is recognised if the right-of-use asset, or portion thereof, has a carrying value
in excess of its value-in-use when taking into account factors such as the abil
ity and l
ikel
ihood of obta
in
ing a subtenant.
The judgements in determin
ing lease balances are the determ
inat
ion of whether the Group
is reasonably certain that it will
exercise extension options present in lease contracts. On in
it
ial recognit
ion, the Group cons
iders a range of characterist
ics
such as premises function, regional trends and the term remain
ing on the lease to determ
ine whether it is reasonably certain
that a contractual right to extend a lease will be exercised. Where a change in assumption is confirmed by the local property
management team, a remeasurement is performed in the Group-managed vendor system.
The estimates were the determinat
ion of
incremental borrowing rates in the respective economic environments. The Group
uses third party broker quotes to estimate its USD cost of senior unsecured borrowing, then uses cross currency swap pric
ing
informat
ion to determ
ine the equivalent cost of borrowing in other currencies. If it is not possible to estimate an incremental
borrowing rate through this process, other proxies such as local government bond yields are used.
The Group primar
ily enters lease contracts that grant
it the right to use premises such as office build
ings and reta
il branches.
Exist
ing lease l
iab
il
it
ies may change
in future periods due to changes in assumptions or decis
ions to exerc
ise lease renewal or
terminat
ion opt
ions, changes in payments due to renegotiat
ions of market rental rates as perm
itted by those contracts and
changes to payments due to rent being contractually linked to an inflat
ion
index. In general the re-measurement of a lease
liab
il
ity under these circumstances leads to an equal change to the right-of-use asset balance, with no immed
iate effect on
the income statement.
The total cash outflow during the year for premises and equipment leases was $156 mill
ion for Group and $94 m
ill
ion
for Company.
The total expense during the year in respect of leases with a term less than or equal to 12 months is nil during the period
for Group.
The right-of-use asset balances and depreciat
ion charges are d
isclosed in Note 17. The lease liab
il
ity balances are disclosed
in Note 22 and the interest expense on lease liab
il
it
ies
Maturity analysis
The maturity profile for lease liab
il
it
ies assoc
iated with leased premises and equipment assets is as follows:
Group
2022
One year
or less
$mill
ion
Between
one year and
two years
$mill
ion
Between
two years and
five years
$mill
ion
More than
five years
$mill
ion
Total
$mill
ion
Other liab
il
it
ies – lease l
iab
il
it
ies
130
119
260
238
747
2021
One year
or less
$mill
ion
Between
one year and
two years
$mill
ion
Between
two years and
five years
$mill
ion
More than
five years
$mill
ion
Total
$mill
ion
Other liab
il
it
ies – lease l
iab
il
it
ies
137
119
282
84
622
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
271
Notes to the financial statements cont
inued
18. Leased assets continued
Company
2022
One year
or less
$mill
ion
Between
one year and
two years
$mill
ion
Between
two years and
five years
$mill
ion
More than
five years
$mill
ion
Total
$mill
ion
Other liab
il
it
ies – lease l
iab
il
it
ies
63
57
133
111
364
2021
One year
or less
$mill
ion
Between
one year and
two years
$mill
ion
Between
two years and
five years
$mill
ion
More than
five years
$mill
ion
Total
$mill
ion
Other liab
il
it
ies – lease l
iab
il
it
ies
92
88
225
40
Accounting policy
Refer to Note 12 Financ
ial
instruments for the relevant accounting policy.
Commodit
ies represent phys
ical holdings where the Group has title and exposure to the Market Risk associated with
the holding.
Commodit
ies are fa
ir valued with the fair value derived from observable spot or short-term futures prices from
Group
Other assets include:
2022
$mill
ion
2021
$mill
ion
Financ
ial assets held at amort
ised cost (Note 12):
Cash collateral
11,372
8,244
Acceptances and endorsements
3,777
3,047
Unsettled trades and other financial assets
12,061
10,990
27,210
22,281
Non-financial assets:
Commodit
ies
1
10,174
9,265
Other assets
257
424
37,641
31,970
1
Commodit
ies and em
iss
ions cert
if
icates are carr
ied at fair value less costs to sell, $5.5 bill
ion (2021: $5.7 b
ill
ion) are class
if
ied as Level 1 and $4.6 b
ill
ion are class
if
ied as
Level 2 (2021: $3.6 bill
ion)
Company
Other assets include:
2022
$mill
ion
2021
$mill
ion
Financ
ial assets held at amort
ised cost (Note 12):
Cash collateral
10,231
7,780
Acceptances and endorsements
2,737
2,329
Unsettled trades and other financial assets
10,657
9,751
23,625
19,860
Non-financial assets:
Commodit
ies
1
7,921
5,475
Other assets
169
353
31,715
25,688
1
Commodit
ies and em
iss
ions cert
if
icates are carr
ied at fair value less costs to sell, $3.2 bill
ion (2021: $1.8 b
ill
ion) are class
if
ied as Level 1 and $4.7 b
ill
ion are class
if
ied as
Level 2 (2021: $3.6 bill
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
272
Notes to the financial statements cont
inued
il
it
ies
Accounting policy
Financ
ial
instruments can be reclassif
ied as held for sale
if they are non-current assets or if they are part of a disposal group;
however, in these circumstances financ
ial
instruments continue to be measured per the requirements of IFRS 9 Financ
ial
Instruments. Refer to Note 12 Financ
ial
instruments for the relevant accounting policy.
Non-current assets are classif
ied as held for sale and measured at the lower of the
ir carrying amount and fair value less cost
to sell when:
a) Their carrying amounts will be recovered princ
ipally through sale;
b) They are available for immed
iate sale
in their present condit
ion; and
c) Their sale is highly probable.
Immediately before the in
it
ial classif
icat
ion as held for sale, the carrying amounts of the assets are measured in accordance
with the applicable accounting polic
ies related to the asset or l
iab
il
ity before reclassif
icat
ion as held for sale.
The assets below have been presented as held for sale following the approval of Group management and the transactions
are expected to complete in 2023.
Following a decis
ion by the Board of d
irectors to exit certain markets in Africa & Middle east, the assets and liab
il
it
ies of those
markets have been moved to ‘Held for sale’.
Group
Assets held for sale
The financial assets reported below are class
if
ied under Level 1 $345 m
ill
ion (31 December 2021: NIL), Level 2 $946 m
ill
ion
(31 December 2021: NIL) and Level 3 $100 mill
ion (31 December 2021: $95 m
ill
2022
$mill
ion
2021
$mill
ion
Financ
ial assets held at fa
ir value through profit or loss
3
43
Loans and advances to customers
–
20
Equity shares
2
23
Derivat
ive financial
instruments – Assets
1
–
Financ
ial assets held at amort
ised cost
1,388
52
Cash and balances at central banks
423
–
Loans and advances to banks
81
–
Loans and advances to customers
508
52
Debt securit
ies held at amort
ised cost
376
–
Goodwill and intang
ible assets
4
–
Property, plant and equipment
36
3
Others
36
3
Others
55
–
1,486
98
Liab
il
it
ies held for sale
The financial l
iab
il
it
ies reported below are class
if
ied under Level 1 $402m
ill
ion (31 December 2021: N
il) and Level 2 $833 mill
ion
(31 December 2021: Nil).
2022
$mill
ion
2021
$mill
ion
Financ
ial l
iab
il
it
ies held at fa
ir value through profit or loss
5
–
Derivat
ive financial
instruments
5
–
Financ
ial l
iab
il
it
ies held at amort
ised cost
1,230
–
Deposits by banks
17
–
Customer accounts
1,213
–
Other liab
il
it
ies
64
–
Provis
ions for l
iab
il
it
ies and charges
8
–
1,307
–
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
273
20. Assets held for sale and associated liab
il
it
ies cont
inued
Company
Assets held for sale
The financial assets reported below are class
if
ied under Level 1 $198 m
ill
ion (31 December 2021: NIL), Level 2 $248 m
ill
ion
(31 December 2021: NIL) and Level 3 $100 mill
ion (31 December 2021: $91 m
ill
ion).
2022
$mill
ion
2021
$mill
ion
Financ
ial assets held at fa
ir value through profit or loss
2
42
Loans and advances to customers
–
20
Equity shares
2
22
Financ
ial assets held at amort
ised cost
544
49
Cash and balances at central banks
96
–
Loans and advances to banks
74
–
Loans and advances to customers
230
49
Debt securit
ies held at amort
ised cost
144
–
Goodwill and intang
ible assets
3
–
Property, plant and equipment
20
–
Others
20
–
Others
24
–
592
91
Liab
il
it
ies held for sale
The financial l
iab
il
it
ies reported below are class
if
ied under Level 1 $325m
ill
ion (31 December 2021: N
il) and Level 2 $10 mill
ion
(31 December 2021: Nil).
2022
$mill
ion
2021
$mill
ion
Financ
ial l
iab
il
it
ies held at amort
ised cost
335
–
Deposits by banks
7
–
Customer accounts
328
–
Other liab
il
it
ies
10
–
345
ies
in issue
Accounting policy
Refer to Note 12 Financ
ial
Group
2022
2021
Certif
icates of
deposit of
$100,000 or more
$mill
ion
Other debt
securit
ies
in issue
$mill
ion
Total
$mill
ion
Certif
icates of
deposit of
$100,000 or more
$mill
ion
Other debt
securit
ies
in issue
$mill
ion
Total
$mill
ion
Debt securit
ies
in issue
20,026
16,956
36,982
22,498
13,562
36,060
Debt securit
ies
in issue included with
in:
Financ
ial l
iab
il
it
ies held at fa
ir value through
profit or loss (Note 12)
–
7,563
7,563
–
4,360
4,360
Total debt securit
ies
in issue
20,026
24,519
44,545
22,498
17,922
40,420
Notes to the financial statements cont
inued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
274
Notes to the financial statements cont
inued
21. Debt securit
ies
in issue continued
Company
2022
2021
Certif
icates of
deposit of
$100,000 or more
$mill
ion
Other debt
securit
ies
in issue
$mill
ion
Total
$mill
ion
Certif
icates of
deposit of
$100,000
or more$mill
ion
Other debt
securit
ies
in issue
$mill
ion
Total
$mill
ion
Debt securit
ies
in issue
19,926
15,066
34,992
21,799
12,027
33,826
Debt securit
ies
in issue included with
in:
Financ
ial l
iab
il
it
ies held at fa
ir value through
profit or loss (Note 12)
–
7,271
7,271
–
4,086
4,086
Total debt securit
ies
in issue
19,926
22,337
42,263
21,799
16,113
37,912
In 2022, the Company issued a total of $2.5 bill
ion sen
ior notes for general business purposes of the Group as shown below:
Securit
ies
$mill
ion
CNY 1100 mill
ion callable fixed rate sen
ior notes due 2026 (callable 2025)
158
SGD 225 mill
ion callable fixed rate sen
ior notes due 2033 (callable 2032)
190
HKD 800 mill
ion callable fixed rate sen
ior notes due 2025 (callable 2024)
103
$1,000 mill
ion callable fixed rate sen
ior notes due 2028 (callable 2027)
1,000
$1,000 mill
ion callable fixed rate sen
ior notes due 2025 (callable 2024)
1,000
Total Senior Notes issued
2,451
In 2021, the Company issued a total of $3.1 bill
ion sen
ior notes for general business purposes of the Group as shown below :
Securit
ies
$mill
ion
$1500 mill
ion callable fixed rate sen
ior notes due 2025 (callable 2024)
1,500
$1000 mill
ion callable fixed rate sen
ior notes due 2025 (callable 2024)
1,000
EUR 500 mill
ion callable fixed rate sen
ior notes due 2029 (callable 2028)
569
Total Senior Notes issued
3,069
il
it
ies
Accounting policy
Refer to Note 12 Financ
ial
instruments for the relevant accounting policy for financ
ial l
iab
il
it
ies, Note 18 Leased assets
for the accounting policy for leases and Note 30 Share-based payments for the accounting policy for cash-settled
Group
2022
$mill
ion
2021
$mill
ion
Financ
ial l
iab
il
it
ies held at amort
ised cost (Note 12)
Acceptances and endorsements
3,842
3,048
Cash collateral
8,304
7,757
Property leases
1
550
611
Equipment leases
1
2
6
Unsettled trades and other financial l
iab
il
it
ies
12,869
14,228
25,567
25,650
Non-financial l
iab
il
it
ies
Cash-settled share-based payments
2
–
Other liab
il
it
ies
356
363
25,925
26,013
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
275
Notes to the financial statements cont
inued
22. Other liab
il
it
ies cont
inued
Company
2022
$mill
ion
2021
$mill
ion
Financ
ial l
iab
il
it
ies held at amort
ised cost (Note 12)
Acceptances and endorsements
2,737
2,329
Cash collateral
7,710
7,033
Property leases
1
227
417
Unsettled trades and other financial l
iab
il
it
ies
9,987
10,346
20,661
20,125
Non-financial l
iab
il
it
ies
Other liab
il
it
ies
329
335
20,990
20,460
1
Other financial l
iab
il
it
ies
include the present value of lease liab
il
it
ies, as requ
ions for l
iab
il
it
ies and charges
Accounting policy
The Group recognises a provis
ion for a present legal or construct
ive obligat
ion result
ing from a past event when it is more
likely than not that it will be required to transfer economic benefits to settle the obligat
ion and the amount of the obl
igat
ion
can be estimated reliably. Where a liab
il
ity arises based on partic
ipat
ion in a market at a specif
ied date, the obl
igat
ion
is
recognised in the financ
ial statements on that date and
Other accounting estimates and judgements
The recognit
ion and measurement of prov
is
ions for l
iab
il
it
ies and charges requ
ires sign
ificant judgement and the use of
estimates about uncertain future condit
ions or events.
Estimates include the best estimate of the probabil
ity of outflow of econom
ic resources, cost of settling a provis
ion and
tim
ing of settlement. Judgements are requ
ired for inherently uncertain areas such as legal decis
ions (
includ
ing external
advice obtained), and outcome of regulator reviews.
Group
2022
2021
Provis
ion
for credit
commitments
$mill
ion
Other
provis
ions
$mill
ion
Total
$mill
ion
Provis
ion
for credit
commitments
$mill
ion
Other
provis
ions
$mill
ion
Total
$mill
ion
At 1 January
316
80
396
331
69
400
Exchange translation differences
(36)
(4)
(40)
8
(1)
7
Transfer
–
–
–
–
2
2
(Release)/charge against profit
(29)
27
(2)
(23)
30
7
Provis
ions ut
il
ised
–
(19)
(19)
–
(20)
(20)
At 31 December
251
84
335
316
80
396
Company
2022
2021
Provis
ion
for credit
commitments
$mill
ion
Other
provis
ions
$mill
ion
Total
$mill
ion
Provis
ion
for credit
commitments
$mill
ion
Other
provis
ions
$mill
ion
Total
$mill
ion
At 1 January
245
53
298
294
42
336
Exchange translation differences
(22)
(3)
(25)
(9)
–
(9)
Transfer
–
6
6
–
1
1
(Release)/charge against profit
(40)
13
(27)
(40)
18
(22)
Provis
ions ut
il
ised
–
(3)
(3)
–
(8)
(8)
At 31 December
183
66
249
245
53
298
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
276
Notes to the financial statements cont
inued
23. Provis
ions for l
iab
il
it
ies and charges cont
inued
Provis
ion for cred
it commitment comprises those undrawn contractually committed facil
it
ies where there is doubt as to the
borrowers’ abil
ity to meet the
ir repayment obligat
ions.
Other provis
ions
include $14 mill
ion (2021:$17 m
ill
ion) recogn
ised for certain contracts with suppliers for which the unavoidable
costs of meeting the obligat
ions exceed the econom
ic benefits expected to be received. It is expected that the costs will be
incurred over the next 5 years.
Other provis
ions cons
ist mainly of provis
ions for legal cla
ims and regulatory and enforcement invest
igat
ions
il
it
ies and comm
itments
Accounting policy
Financ
ial guarantee contracts and loan comm
itments
The Group issues financ
ial guarantee contracts and loan comm
itments in return for fees. Financ
ial guarantee contracts and
any loan commitments issued at below-market interest rates are in
it
ially recognised at their fair value as a financ
ial l
iab
il
ity,
and subsequently measured at the higher of the in
it
ial value less the cumulative amount of income recognised in accordance
with the princ
iples of IFRS 15 Revenue from Contracts w
ith Customers and their expected credit loss provis
ion. Loan
commitments may be designated at fair value through profit or loss where that is the business model under which such
contracts are held. Notional values of financ
ial guarantee contracts and loan comm
itments are disclosed in the table below.
Financ
ial guarantees, trade cred
its and irrevocable letters of credit are the notional values of contracts issued by the Group’s
Transaction Banking business for which an obligat
ion to make a payment has not ar
isen at the reporting date. Transaction
Banking will issue contracts to clients and counterparties of clients, whereby in the event the holder of the contract is not
paid, the Group will reimburse the holder of the contract for the actual financ
ial loss suffered. These contracts have var
ious
legal forms such as letters of credit, guarantee contracts and performance bonds. The contracts are issued to facil
itate
trade through export and import business, provide guarantees to financ
ial
inst
itut
ions where the Group has a local presence,
as well as guaranteeing project financ
ing
involv
ing large construct
ion projects undertaken by sovereigns and corporates.
The contracts may contain performance clauses which require the counterparty performing services or provid
ing goods to
meet certain condit
ions before a r
ight to payment is achieved, however the Group does not guarantee this performance.
The Group will only guarantee the credit of the counterparty paying for the services or goods.
Commitments are where the Group has confirmed its intent
ion to prov
ide funds to a customer or on behalf of a customer
under prespecif
ied terms and cond
it
ions
in the form of loans, overdrafts, future guarantees whether cancellable or not and
the Group has not made payments at the balance sheet date; those instruments are included in these financ
ial statements
as commitments. Commitments and contingent liab
il
it
ies are generally cons
idered on demand as the Group may have to
honour them, or the client may draw down at any time.
Capital commitments are contractual commitments the Group has entered into to purchase non-financ
ial assets.
The table below shows the contract or underlying princ
ipal amounts of unmatured off-balance sheet transact
ions at the
balance sheet date. The contract or underlying princ
ipal amounts
ind
icate the volume of bus
iness outstanding and do not
Group
Company
2022
$mill
ion
2021
$mill
ion
2022
$mill
ion
2021
$mill
ion
Financ
ial guarantees and trade cred
its
Financ
ial guarantees, trade and
irrevocable letters of credit
47,799
49,235
37,890
37,465
47,799
49,235
37,890
37,465
Commitments
Undrawn formal standby facil
it
ies, credit lines and other commitments to lend
One year and over
54,610
53,128
44,162
45,801
Less than one year
18,429
17,608
13,807
14,353
Uncondit
ionally cancellable
34,846
29,950
6,036
6,524
107,885
100,686
64,005
66,678
Capital commitments
Contracted capital expenditure approved by the directors but not provided
for in these accounts
11
8
–
–
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
277
Notes to the financial statements cont
inued
il
it
ies and comm
itments continued
The table below shows the contract or underlying princ
ipal amounts and r
isk-weighted amounts of unmatured Group
off-balance sheet transactions at the balance sheet date. The contract or underlying princ
ipal amounts
ind
icate the
volume of business outstanding and do not represent amounts at risk.
Group
Company
2022
$mill
ion
2021
$mill
ion
2022
$mill
ion
2021
$mill
ion
Financ
ial guarantees and trade cred
its (inter-group)
Financ
ial guarantees, trade and
irrevocable letters of credit
3,076
2,120
12,465
7,542
3,076
2,120
12,465
7,542
Commitments (inter-group)
Undrawn commitments
1,007
5
1,936
261
1,007
5
1,936
261
Please refer to Note 19 for further details. As set out in Note 25, the Group has contingent liab
il
it
ies
in respect of certain legal
and regulatory matters for which it is not practicable to estimate the financ
ial
impact as there are many factors that may
Accounting policy
Where appropriate, the Group recognises a provis
ion for l
iab
il
it
ies when
it is probable that an outflow of economic
resources embodying economic benefits will be required, and for which a reliable estimate can be made of the obligat
ion.
The uncertaint
ies
inherent in legal and regulatory matters affect the amount and tim
ing of any potent
ial outflows with
respect to which provis
ions have been establ
ished. These uncertaint
ies also mean that
it is not possible to give an
aggregate estimate of contingent liab
il
it
ies ar
is
ing from such legal and regulatory matters.
The Group receives legal claims against it in a number of jur
isd
ict
ions and
is subject to regulatory and enforcement
invest
igat
ions and proceedings from time to time. Apart from the matters described below, the Group currently considers
none of the ongoing claims, invest
igat
ions or proceedings to be ind
iv
idually material. However, in light of the uncertaint
ies
involved in such matters there can be no assurance that the outcome of a particular matter or matters currently not
considered to be material may not ultimately be material to the Group’s results in a particular reporting period depending on,
among other things, the amount of the loss resulting from the matter(s) and the results otherwise reported for such period.
Since 2014, the Group has been named as a defendant in a series of lawsuits that have been filed in the United States Distr
ict
Courts for the Southern and Eastern Distr
icts of New York aga
inst a number of banks (includ
ing Standard Chartered Bank
or its affil
iates) on behalf of pla
int
iffs who are, or are relat
ives of, vict
ims of var
ious terrorist attacks in Iraq and Afghanistan.
The most recent lawsuit was filed in April 2022 and concerns terrorist attacks that occurred in Afghanistan between 2013
and 2016. None of these lawsuits have specif
ied the amount of damages cla
imed. The plaint
iffs
in each of these lawsuits
have alleged that the defendant banks aided and abetted the unlawful conduct of parties with connections to terrorist
organisat
ions
in breach of the U.S. Anti-Terrorism Act. The courts have ruled in favour of the banks’ motions to dism
iss
in six
of these lawsuits, includ
ing a rul
ing issued in December 2022 in which the United States Distr
ict Court for the Eastern D
istr
ict
of New York dism
issed a lawsu
it filed in August 2021. In January 2023 a panel of the United States Court of Appeals for the
Second Circu
it upheld a September 2019 rul
ing by the United States Distr
ict Court for the Eastern D
istr
ict of New York
in which
a lawsuit filed in November 2014 was dism
issed. Wh
ile a ruling is awaited in respect of the Group’s motion to dism
iss the
lawsuit filed in April 2022, the other lawsuits are currently stayed pending a ruling by the United States Supreme Court in
another U.S. Anti-Terrorism Act case in which SCB is not involved. An appeal from the December 2022 dism
issal rul
ing is
also pending.
In January 2020, a shareholder derivat
ive compla
int was filed by the City of Philadelph
ia
in New York State Court against
45 current and former directors and senior officers of the Group. It is alleged that the ind
iv
iduals breached their duties to the
Group and caused a waste of corporate assets by permitt
ing the conduct that gave r
ise to the costs and losses to the Group
related to legacy conduct and control issues. In March 2021, an amended complaint was served in which SCB and seven
ind
iv
iduals were removed from the case. Standard Chartered PLC and Standard Chartered Holdings Lim
ined as
named “nominal defendants” in the complaint. In May 2021, Standard Chartered PLC filed a motion to dism
iss the compla
int.
In February 2022, the New York State Court ruled in favour of Standard Chartered PLC’s motion to dism
iss the compla
int.
The plaint
iffs are pursu
ing an appeal against the February 2022 ruling. A hearing date for the plaint
iffs’ appeal
is awaited.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
278
Notes to the financial statements cont
inued
25. Legal and regulatory matters continued
Bernard Madoff’s 2008 confession to running a Ponzi scheme through Bernard L. Madoff Investment Securit
ies LLC (BMIS)
gave rise to a number of lawsuits against the Group. BMIS and the Fairf
ield funds (wh
ich invested in BMIS) are in bankruptcy
and liqu
idat
ion, respectively. Between 2010 and 2012, five lawsuits were brought against the Group by the BMIS bankruptcy
trustee and the Fairf
ield funds’ l
iqu
idators,
in each case seeking to recover funds paid to the Group’s clients pursuant to
redemption requests made prior to BMIS’ bankruptcy fil
ing. The total amount sought
in these cases exceeds USD 300 mill
ion,
excluding any pre-judgement interest that may be awarded. The four lawsuits commenced by the Fairf
ield funds’ l
iqu
idators
have been dism
issed and the appeals of those d
ism
issals by the funds’ l
iqu
idators are ongo
ing.
The Group has concluded that the threshold for recording provis
ions pursuant to IAS 37 Prov
is
ions, Cont
ingent Liab
il
it
ies
and Contingent Assets is not met with respect to the above matters; however, the outcomes of these lawsuits are inherently
uncertain and diff
icult to pred
il
it
ies and other borrowed funds
Accounting policy
Subordinated liab
il
it
ies and other borrowed funds are class
if
ied as financial
instruments. Refer to Note 12 Financ
ial
instruments for the accounting policy.
All subordinated liab
il
it
ies are unsecured, unguaranteed and subord
inated to the claims of other creditors includ
ing w
ithout
lim
itat
ion, customer deposits and deposits by banks. The Group has the right to settle these debt instruments in certain
2022
$mill
ion
2021
$mill
ion
Subordinated loan capital – issued by subsid
iary undertak
ings
$540 mill
ion float
ing rate subordinated notes due 2030 (callable 2025)
1
540
540
540
540
Subordinated loan capital – issued by the Company
£200 mill
ion 7.75 per cent subord
inated notes due (callable 2022)
–
48
$960 mill
ion float
ing rate subordinated notes due 2022
–
960
$700 mill
ion 8.0 per cent subord
inated notes due 2031
345
418
$2 bill
ion float
ing rate subordinated notes due 2023
2,000
2,000
$500 mill
ion float
ing rate subordinated notes due 2043
392
500
$2 bill
ion float
ing rate subordinated notes due 2044 (callable 2039)
1,821
2,000
$250 mill
ion float
ing rate subordinated notes due 2048 (callable 2043)
250
250
$1 bill
ion float
ing rate subordinated notes due 2029 (callable 2024)
991
1,000
$1.25 bill
ion float
ing rate subordinated notes due 2032 (callable 2027)
1,250
1,250
$1 bill
ion 3.516 per cent subord
inated notes due 2030 (callable 2025)
881
956
£504 mill
ion float
ing subordinated debt 2043 (callable 2038)
630
682
$2 bill
ion 5.3 per cent subord
inated debt 2035 (callable 2030)
1,767
2,000
£527 mill
ion float
ing rate subordinated debt 2039 (callable 2034)
634
713
€1 bill
ion 2.5 per cent subord
inated debt 2030 (callable 2025)
977
1,137
$750 mill
ion 3.604 per cent F
ixed rate reset dated subordinated notes due 2033
630
–
12,568
13,914
Primary capital floating rate notes
$400 mill
ion float
ing rate undated subordinated notes
16
16
$300 mill
ion float
ing rate undated subordinated notes (Series 2)
69
69
$400 mill
ion float
ing rate undated subordinated notes (Series 3)
50
50
$200 mill
ion float
ing rate undated subordinated notes (Series 4)
26
26
161
161
Total for Group
13,269
14,615
1
Issued by Standard Chartered Bank (Singapore) Lim
ited
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
279
Notes to the financial statements cont
inued
26. Subordinated liab
il
it
ies and other borrowed funds cont
inued
2022
USD
$mill
ion
GBP
$mill
ion
EUR
$mill
ion
Total
$mill
ion
Fixed rate subordinated debt
3,623
–
977
4,600
Floating rate subordinated debt
7,405
1,264
–
8,669
Total
11,028
1,264
977
13,269
2021
USD
$mill
ion
GBP
$mill
ion
EUR
$mill
ion
Total
$mill
ion
Fixed rate subordinated debt
3,374
48
1,137
4,559
Floating rate subordinated debt
8,661
1,395
–
10,056
Total
12,035
1,443
1,137
14,615
Redemptions and repurchases during the year
Standard Chartered Bank exercised its right to redeem $960m-3.625% Floating rate Sub Debt Notes Matured on 23 Nov 2022
& £200m-7.75% Fixed rate Subordinated Notes (callable 2022) during the year.
Issuances during the year
Accounting policy
Financ
ial
instruments issued are classif
ied as equ
ity when there is no contractual obligat
ion to transfer cash, other financial
assets or issue available number of own equity instruments. Incremental costs directly attributable to the issue of new shares
or options are shown in equity as a deduction, net of tax, from the proceeds.
Securit
ies wh
ich carry a discret
ionary coupon and have no fixed matur
ity or redemption date are classif
ied as other equ
ity
instruments. Interest payments on these securit
ies are recogn
ised, net of tax, as distr
ibut
ions from equity in the period in
which they are paid.
Where the Company or other members of the consolidated Group purchase the Company’s equity share capital, the
considerat
ion pa
id is deducted from the total shareholders’ equity of the Group and/or of the Company as treasury shares
until they are cancelled. Where such shares are subsequently sold or reissued, any considerat
ion rece
ived is included in
Group and Company
Number of
ordinary
shares
mill
ions
Ordinary
share
capital
1
mill
ions
Ordinary
share
premium
mill
ions
Preference
share
premium
2
mill
ions
Total share
capital and
share
premium
mill
ions
Other equity
instruments
mill
ions
At 1 January 2021
19,324
19,324
296
1,500
21,120
3,000
Shares issued
1,273
1,273
–
–
1,273
–
Addit
ional T
ier 1 equity issuance
–
–
–
–
–
2,750
Addit
ional T
ier 1 redemption
–
–
–
–
–
(1,001)
At 31 December 2021
20,597
20,597
296
1,500
22,393
4,749
Shares issued
–
–
–
–
–
–
Addit
ional T
ier 1 equity issuance
–
–
–
–
–
1,000
Addit
ional T
ier 1 redemption
–
–
–
–
–
(999)
At 31 December 2022
20,597
20,597
296
1,500
22,393
4,750
1
Issued and fully paid ordinary shares of $1 each
2
Includes preference share capital of $75,000
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
280
Notes to the financial statements cont
inued
27. Share capital, other equity instruments and reserves continued
The authorised share capital of the Company at 31 December 2022 was $26,789 mill
ion and TWD 1,225 m
ill
ion (31 December
2021: $26,789 mill
ion and TWD 1,225 m
ill
ion) made up of 26,782 m
ill
ion ord
inary shares of $1 each, 2.4 mill
ion non-cumulat
ive
irredeemable preference shares of $0.01 each, 1 mill
ion non-cumulat
ive preference shares of $5 each, 15,000 non-cumulative
redeemable preference shares of $5 each, 462,500 non-cumulative redeemable 8.125% preference shares of $5 each and
50 mill
ion non-cumulat
ive redeemable preference shares of TWD24.50 each.
The issued share capital of the Company at 31 December 2022 was $20,597 mill
ion (2021: $20,597 m
ill
ion) made up of:
20,597 mill
ion ord
inary shares of $1 each.
The was no new issue of shares during the year. The Company has one class of ordinary shares, which carries no rights to
fixed income. Subject to any special rights or restrict
ions as to vot
ing attached to any shares in accordance with the
Company’s Royal Charter Bye-Laws and Rules, on a show of hands every member present at a general meeting by a
representative or proxy shall have one vote. On a poll, every member holding shares or stock of less than the nominal amount
of US$25 shall not have any vote, but every other member who is present in person or by proxy shall have votes in accordance
with the following scale:
Nominal amount of Shares or Stock held
Number of Votes
US$25 or more but less than US$50
1 vote
US$50 or more but less than US$100
2 votes
US$100 or more but less than US$250
3 votes
US$250 or more but less than US$375
4 votes
US$375 or more but less than US$500
5 votes
US$500 or more but less than US$750
6 votes
US$750 or more but less than US$1,000
7 votes
US$1,000 or more but less than US$1,250
8 votes
US$1,250 or more but less than US$1,500
9 votes
US$1,500 or more
10 votes
Preference share capital
7,500 non-cumulative redeemable preference shares issued on 8 December 2006 with a nominal value of $5 each and a
premium of $99,995, making a paid-up amount per preference share of $100,000. The preference shares are redeemable
at the option of the company in whole or in part on 31 Jan 2027 and on any quarterly div
idend payment date fall
ing on or
around ten-year intervals thereafter. The amount payable on redemption will be the paid up amount of $100,000 per
preference share to be redeemed, plus an amount equal to the accrued but unpaid div
idend thereon up to but exclud
ing
the redemption date; and;7,500 non-cumulative redeemable preference shares issued on 25 May 2007 with a nominal value
of $5 each and a premium of $99,995, making a paid up amount per preference share of $100,000. The preference shares
are redeemable at the option of the company on 30 July 2037 and on any quarterly div
idend payment date fall
ing on or
around ten-year intervals thereafter. The amount payable on redemption will be the paid-up amount of $100,000 per
preference share to be redeemed, plus an amount equal to the accrued but unpaid div
idend thereon up to but exclud
ing
Other equity instruments
The table provides details of outstanding Fixed Rate Resetting Perpetual Subordinated Contingent Convertible AT1 securit
ies
issued by Standard Chartered Bank. All issuances are made for general business purposes and to increase the regulatory
capital base of the Group.
Issuance date
Nominal value
Interest rate
1
Coupon payment dates
2
First reset dates
3
18 January 2017
USD 1,000 mill
ion
7.75%
2 April, 2 October each year
2 April 2023
14 January 2021
USD 1,250 mill
ion
4.75%
14 January, 14 July each year
14 July 2031
19 August 2021
USD 1,500 mill
ion
4.30%
19 February, 19 August each year
19 August 2028
15 August 2022
USD 1,000 mill
ion
7.75%
15 February, 15 August each year
15 February 2028
1
Interest rates for the period from (and includ
ing) the
issue date to (but excluding) the first reset date
2
Interest payable semi-annually in arrears
3
Securit
ies are resettable each date fall
ing five years, or an integral multiple of five years, after the first reset date
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
281
Notes to the financial statements cont
inued
27. Share capital, other equity instruments and reserves continued
The princ
ipal terms of the AT1 secur
it
ies are descr
ibed below:
•
The securit
ies are perpetual and redeemable, at the opt
ion of the Company in whole but not in part, on the first call date or
on any fifth anniversary after the first call date
•
The securit
ies are also redeemable for certa
in regulatory or tax reasons on any date at 100 per cent of their princ
ipal
amount together with any accrued but unpaid interest up to (but excluding) the date fixed for redemption. Any
redemption is subject to the Company giv
ing not
ice to the relevant regulator and the regulator granting permiss
ion to
redeem interest payments on these securit
ies w
ill be accounted for as a div
idend
•
Interest on the securit
ies
is due and payable only at the sole and absolute discret
ion of the Company, subject to certa
in
addit
ional restr
ict
ions set out
in the terms and condit
ions. Accord
ingly, the Company may at any time elect to cancel any
interest payment (or part thereof) which would otherwise be payable on any interest payment date
•
The securit
ies w
ill be written down in full should the fully loaded Common Equity Tier 1 ratio of the issuer fall below
7.0 per cent (a Loss Absorption Event).
The securit
ies rank beh
ind the claims against the Company of: (a) unsubordinated creditors; (b) claims which are expressed
to be subordinated to the claims of unsubordinated creditors of the Company but not further or otherwise; or (c) claims which
are, or are expressed to be, junior to the cla
ims of other creditors of the Company, whether subordinated or unsubordinated,
other than claims which rank, or are expressed to rank, pari passu with, or jun
ior to, the cla
ims of holders
of the AT1 securit
ies
in a wind
ing-up occurr
ing prior to the Loss Absorption Event.
The constituents of the reserves are summarised as follows:
•
The capital reserve represents the exchange difference on redenominat
ion of share cap
ital and share premium from
sterling to US dollars in 2001. The capital redemption reserve represents the nominal value of preference shares redeemed.
•
Own credit adjustment reserve represents the cumulative gains and losses on financ
ial l
iab
il
it
ies des
ignated at fair value
through profit or loss relating to own credit. Gains and losses on financ
ial l
iab
il
it
ies des
ignated at fair value through
profit or loss relating to own credit in the year have been taken through other comprehensive income into this reserve.
On derecognit
ion of appl
icable instruments, the balance of any OCA will not be recycled to the income statement, but will
be transferred with
in equ
ity to retained earnings
•
Fair value through other comprehensive income (FVOCI) debt reserve represents the unrealised fair value gains
and losses in respect of financ
ial assets class
if
ied as FVOCI, net of expected cred
it losses and taxation. Gains and losses
are deferred in this reserve and are reclassif
ied to the
income statement when the underlying asset is sold, matures or
becomes impa
ired.
•
FVOCI equity reserve represents unrealised fair value gains and losses in respect of financ
ial assets class
if
ied as FVOCI,
net of taxation. Gains and losses are recorded in this reserve and never recycled to the income statement
•
Cash flow hedge reserve represents the effective portion of the gains and losses on derivat
ives that meet the cr
iter
ia for
these types of hedges. Gains and losses are deferred in this reserve and are reclassif
ied to the
income statement when the
underlying hedged item affects profit and loss or when a forecast transaction is no longer expected to occur.
•
Translation reserve represents the cumulative foreign exchange gains and losses on translation of the net investment of the
Group in foreign operations. Since 1 January 2004, gains and losses are deferred to this reserve and are reclassif
ied to the
income statement when the underlying foreign operation is disposed. Gains and losses aris
ing from der
ivat
ives used as
hedges of net investments are netted against the foreign exchange gains and losses on translation of the net investment
of the foreign operations.
•
Retained earnings represents profits and other comprehensive income earned by the Group and Company in the current
and prior periods, together with the after tax increase relating to equity-settled share options, less div
idend d
istr
ibut
ions
and own shares held (treasury shares).
A substantial part of the Group’s reserves is held in overseas subsid
iary undertak
ings and branches, princ
ipally to support
local operations or to comply with local regulations. The maintenance of local regulatory capital ratios could potentially
restrict the amount of reserves which can be remitted. In addit
ion,
if these overseas reserves were to be remitted, further
unprovided taxation liab
il
it
ies m
ight arise.
As at 31 December 2022, the distr
ibutable reserves of Standard Chartered Bank (the Company) were $5.2 b
ill
ion
(2021: $4.2 bill
ion). These compr
ised of retained earnings. Distr
ibut
ion of reserves is subject to mainta
in
ing min
imum
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
282
Notes to the financial statements cont
inued
Accounting policy
Non-controlling interests are measured at the non-controlling interest’s proportionate share of the acquiree’s ident
ifiable
net assets.
$mill
ion
At 1 January 2021
1,254
Comprehensive income for the year
4
Loss attributable to non-controlling interests
(25)
Profits attributable to non-controlling interests
29
Distr
ibut
ions
(83)
Other increases
1
73
At 31 December 2021
1,248
Comprehensive loss for the year
(56)
Loss attributable to non-controlling interests
(38)
Profits attributable to non-controlling interests
(18)
Distr
ibut
ions
(87)
Other increases
2
59
At 31 December 2022
1,164
1
Movements related to non-controlling interest from Trust Bank Singapore Lim
ited ($70 m
ill
ion), Zod
ia Markets Holdings Lim
ited ($3 m
ill
ion)
2
Movements related to non-controlling interest from Trust Bank Singapore Lim
ited ($47 m
ill
ion), Power2SME Pte L
im
ited ($9 m
ill
ion), & Zod
ia Markets Holdings Lim
ited
($3 mill
ions
Accounting policy
The Bank Group operates pension and other post-retirement benefit plans around the world, which can be categorised
into defined contribut
ion plans and defined benefit plans. For defined contr
ibut
ion plans, the Bank Group pays contr
ibut
ions
to publicly or privately admin
istered pens
ion plans on a statutory or contractual basis, and such amounts are charged to
operating expenses. The Bank Group has no further payment obligat
ions once the contr
ibut
ions have been pa
id.
For funded defined benefit plans, the liab
il
ity recognised in the balance sheet is the present value of the defined benefit
obligat
ion at the balance sheet date less the fa
ir value of plan assets. For unfunded defined benefit plans the liab
il
ity
recognised at the balance sheet date is the present value of the defined benefit obligat
ion.
The defined benefit obligat
ion
is calculated annually by independent actuaries using the projected unit method.
Actuarial gains and losses that arise are recognised in shareholders’ equity and presented in the statement of other
comprehensive income in the period they arise. The Bank Group determines the net interest expense on the net defined
benefit liab
il
ity for the year by applying the discount rate used to measure the defined benefit obligat
ion at the beg
inn
ing
of the annual period to the net defined benefit liab
il
ity, taking into account any changes in the net defined benefit liab
il
ity
during the year as a result of contribut
ions and benefit payments. Net
interest expense, the cost of the accrual of new
benefits, benefit enhancements (or reductions) and admin
istrat
ion expenses met directly from plan assets are recognised
Other accounting estimates and judgements
There are many factors that affect the measurement of the retirement benefit obligat
ions. Th
is measurement requires the
use of estimates, such as discount rates, inflat
ion, pens
ion increases, salary increases, and life expectancies which are
inherently uncertain.
Discount rates are determined by reference to market yields at the end of the reporting period on high-quality corporate
bonds (or, in countries where there is no deep market in such bonds, government bonds) of a currency and term consistent
with the currency and term of the post-employment benefit obligat
ions. Th
is is the approach adopted across our
geographies. Where there are inflat
ion-l
inked bonds available (e.g. United Kingdom and the eurozone), the Bank Group
derives inflat
ion based on the market on those bonds, w
ith the market yield adjusted in respect of the United Kingdom to
take account of the fact that liab
il
it
ies are l
inked to Consumer Price Index inflat
ion, whereas the reference bonds are l
inked to
Retail Price Index inflat
ion. Where no
inflat
ion-l
inked bonds exist, we determine inflat
ion assumpt
ions based on long-term
forecasts and short-term inflat
ion data. Salary growth assumpt
ions reflect the Bank Group’s long-term expectations, taking
into account future business plans and macroeconomic data (primar
ily expected future long-term
inflat
ion). Demograph
ic
assumptions, includ
ing mortal
ity and turnover rates, are typically set based on the assumptions used in the most recent
actuarial funding valuation, and will generally use industry standard tables, adjusted where appropriate to reflect recent
histor
ic exper
ience and/or future expectations. The sensit
iv
ity of the liab
il
it
ies to changes
in these assumptions is shown in
the Note below.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
283
Notes to the financial statements cont
inued
29. Retirement benefit obligat
ions cont
inued
Group
Retirement benefit obligat
ions compr
ise:
2022
$mill
ion
2021
$mill
ion
Defined benefit plans obligat
ion
147
187
Defined contribut
ion plans obl
igat
ion
19
17
Net obligat
ion
166
204
Retirement benefit charge comprises:
2022
$mill
ion
2021
$mill
ion
Defined benefit plans
28
31
Defined contribut
ion plans
247
243
Charge against profit (Note 7)
275
274
The Bank Group operates over 50 defined benefit plans across its geographies, many of which are closed to new entrants
who now join defined contr
ibut
ion arrangements. The a
im of all these plans is, as part of the Group’s commitment to financ
ial
wellbeing for employees, to give employees the opportunity to save appropriately for retirement in a way that is consistent
with local regulations, taxation requirements and market condit
ions. The defined benefit plans expose the Group to currency
risk, interest rate risk, investment risk and actuarial risks such as longevity risk.
The material holdings of government and corporate bonds shown on page 287 partially hedge movements in the liab
il
it
ies
resulting from interest rate and inflat
ion changes. Sett
ing aside movements from other drivers such as currency fluctuation,
the increases in discount rates in most geographies over 2022 have led to lower liab
il
it
ies. These have been partly offset by
decreases in the value of bonds held and poor stock market performance, with the overall impact being a fall in the pension
deficit reported over 2022. These movements are shown as actuar
ial gains and losses in the table below. Contribut
ions
into a
number of plans in excess of the amounts required to fund benefits accruing have also helped to reduce the net defic
it over
the year.
The disclosures required under IAS 19 have been calculated by independent qualif
ied actuar
ies based on the most recent full
actuarial valuations updated, where necessary, to 31 December 2022.
UK Fund
The Standard Chartered Pension Fund (the ‘UK Fund’) is the Bank Group’s largest pension plan, representing 67 per cent
(31 December 2021: 70 per cent) of total pension liab
il
it
ies. The UK Fund
is set up under a trust that is legally separate from
the Bank (its formal sponsor) and, as required by UK legislat
ion, at least one-th
ird of the trustee directors are nominated by
members; the remainder are appointed by the Bank. The trustee directors have a fiduc
iary duty to members and are
responsible for governing the UK Fund in accordance with its Trust Deed and Rules.
The UK Fund was closed to new entrants from 1 July 1998 and closed to the accrual of new benefits from 1 April 2018.
All employees are now offered membership of a defined contribut
ion plan.
The financial pos
it
ion of the UK Fund
is regularly assessed by an independent qualif
ied actuary. The fund
ing valuation as
at 31 December 2021 was completed in December 2022 by the then Scheme Actuary, T Kripps of Towers Watson Lim
ited,
using assumptions different from those on page 286, and agreed with the UK Fund trustee. It showed that the UK Fund was
92% funded at that date, revealing a past service defic
it of $153m
ill
ion (£127 m
ill
ion).
To repair the defic
it, three annual cash payments of $40 m
ill
ion (£32.9 m
ill
ion) were agreed, w
ith the first of these paid in
December 2022, and two further instalments to be paid in December 2023 and December 2024. However, the agreement
allows that, if the funding posit
ion
improves to being at or near a surplus in future years, the payments due in 2022 and
2023 will be reduced or elim
inated. As a result of the Fund be
ing in surplus at the agreed measurement point of mid-year,
no payment was made in December 2022. As part of the 2020 valuation, in order to provide security for future contribut
ions
an addit
ional $60 m
ill
ion nom
inal gilts (£50 mill
ion) were purchased and transferred
into the exist
ing escrow account of
$132 mill
ion g
ilts (£110 mill
ion), topp
ing it up to $192 mill
ion. Them
ill
ion. The Bank Group has not recogn
ised any addit
ional
liab
il
ity under IFRIC 14 as the Bank has control of any pension surplus under the Trust Deed and Rules.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
284
Notes to the financial statements cont
inued
29. Retirement benefit obligat
ions cont
inued
Overseas plans
The princ
ipal overseas defined benefit arrangements operated by the Bank Group are
in Germany, India, Jersey,
United Arab Emirates (UAE) and the United States of America (US). Plans in Germany, India and UAE remain open
for accrual of future benefits.
Key assumptions
The princ
ipal financial assumpt
ions used at 31 December 2022 were:
Funded plans
UK Fund
Overseas Plans
1
2022
%
2021
%
2022
%
2021
%
Discount rate
4.8
2.0
3.7-7.6
1.0-6.7
Price Inflation
2.6
2.6
2.3-4.0
2.0-4.0
Salary increases
n/a
n/a
3.8-7.8
3.5-7.0
Pension increases
2.4
2.5
0.0-3.1
0.0-3.1
1
The range of assumptions shown is for the main funded defined benefit overseas plans in Germany, India, Jersey, and the US. These comprise around 80 per cent of the
total liab
il
it
ies of funded overseas defined benefit plans
Unfunded plans
US post-retirement medical
Other
1
2022
%
2021
%
2022
%
2021
%
Discount rate
5.1
3.1
3.7-7.6
2.0-6.7
Price inflat
ion
2.5
2.5
2.0-4.0
2.0-4.0
Salary increases
n/a
n/a
3.7-7.8
3.7-7.0
Pension increases
n/a
n/a
0.0-2.4
0.0-2.6
Post-retirement medical rate
7% in 2022
reducing by
0.5% per
annum to
5% in 2026
7% in 2021
reducing by
0.5% per
annum to
5% in 2025
n/a
n/a
1
The range of assumptions shown is for the main unfunded plans in Bahrain, India, Thailand, UAE and the UK. They comprise around 95 per cent of the total liab
il
it
ies of
unfunded plans
The princ
ipal non-financial assumpt
ions are those made for UK life expectancy. The assumptions for life expectancy for
the UK Fund are that a male member currently aged 60 will live for 27 years (2021: 27 years) and a female member for 30
years (2021: 30 years) and a male member currently aged 40 will live for 29 years (2021: 29 years) and a female member for
32 years (2021: 31 years) after their 60th birthdays. Both financ
ial and non-financial assumpt
ions can be expected to change
in the future, which would affect the value placed on the liab
il
it
ies.
For example, changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions
constant, would have affected the defined benefit obligat
ion by the amounts shown below:
•
If the discount rate increased by 25 basis points, the liab
il
ity would reduce by approximately $30 mill
ion for the UK Fund
(2021: $65 mill
ion) and $15 m
ill
ion for the other plans (2021: $25 m
ill
ion)
•
If the rate of inflat
ion
increased by 25 basis points, the liab
il
ity allowing for the consequent impact on pension and salary
increases, would increase by approximately $20 mill
ion for the UK Fund (2021 $45 m
ill
ion) and $10 m
ill
ion for the other plans
(2021: $10 mill
ion)
•
If the rate salaries increase compared with inflat
ion
increased by 25 basis points, the liab
il
ity would increase by nil for the
UK Fund (2021: $nil mill
ion) and approx
imately $5 mill
ion for the other plans (2021: $5 m
ill
ion)
•
If longevity expectations increased by one year, the liab
il
ity would increase by approximately $35 mill
ion for the UK Fund
(2021: $80 mill
ion) and $10 m
ill
ion for the other plans (2021: $15 m
ill
ion)
Although this analysis does not take account of the full distr
ibut
ion of cash flows expected under the UK Fund, it does provide
an approximat
ion of the sens
it
iv
ity to the main assumptions. While changes in other assumptions would also have an
impact, the effect would not be as sign
ificant.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
285
Notes to the financial statements cont
inued
29. Retirement benefit obligat
ions cont
inued
Profile of plan obligat
ions
Funded plans
Unfunded plans
UK Fund
Overseas
Post-
retirement
medical
Other
Duration of the defined benefit obligat
ion (
in years)
11
11
8
9
(Duration of the defined benefit obligat
ion – 2021)
15
13
9
11
Benefits expected to be paid from plans
Benefits expected to be paid during 2023
75
31
1
16
Benefits expected to be paid during 2024
77
28
1
13
Benefits expected to be paid during 2025
79
28
1
14
Benefits expected to be paid during 2026
81
29
1
14
Benefits expected to be paid during 2027
83
34
1
14
Benefits expected to be paid during 2028 to 2023
449
219
4
66
Fund values:
The fair value of assets and present value of liab
il
it
ies of the defined benefit plans were:
At 31 December
2022
2021
UK Fund
Overseas plans
UK Fund
Overseas
plans
Quoted assets
$mill
ion
Unquoted
assets
$mill
ion
Total assets
$mill
ion
Quoted assets
$mill
ion
Unquoted
assets
$mill
ion
Total assets
$mill
ion
Total assets
$mill
ion
Total assets
$mill
ion
Equit
ies
2
–
2
97
–
97
145
149
Government bonds
206
–
206
104
–
104
695
150
Corporate bonds
309
82
391
81
–
81
610
119
Absolute Return Fund
–
–
–
–
–
–
91
–
Hedge funds
–
14
14
–
–
–
19
–
Infrastructure
–
177
177
–
–
–
87
–
Property
–
126
126
–
–
–
127
11
Derivat
ives
2
–
2
–
–
–
10
–
Cash and equivalents
257
–
257
21
–
21
108
83
Others
7
4
11
–
63
63
18
2
Total fair value of assets
1
783
403
1,186
303
63
366
1,910
514
At 31 December
2022
2021
Funded plans
Unfunded plans
Funded plans
Unfunded plans
UK Fund
$mill
ion
Overseas
plans
$mill
ion
Post-
retirement
medical
$mill
ion
Other
$mill
ion
UK Fund
$mill
ion
Overseas
plans
$mill
ion
Post-
retirement
medical
$mill
ion
Other
$mill
ion
Total fair value of assets
1,186
366
N/A
N/A
1,910
514
N/A
N/A
Present value of liab
il
it
ies
(1,138)
(394)
(10)
(157)
(1,822)
(561)
(16)
(246)
Net pension plan asset/
(obligat
ion)
48
(28)
(10)
(157)
(88)
(47)
(13)
(215)
1
Self-investment is monitored closely and is less than $1 mill
ion of Standard Chartered equ
it
ies and bonds for 2022 (2021: <$1 m
ill
ion). Self-
investment is only allowed
where it is not practical to exclude it – for example through investment in index-tracking funds where the Bank Group is a constituent of the relevant index
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
286
Notes to the financial statements cont
inued
29. Retirement benefit obligat
ions cont
inued
The pension cost for defined benefit plans was:
2022
Funded plans
Unfunded plans
Total
$mill
ion
UK Fund
$mill
ion
Overseas
plans
$mill
ion
Post-
retirement
medical
$mill
ion
Other
$mill
ion
Current service cost
1
–
17
–
6
23
Past service cost and curtailments²
–
1
–
–
1
Interest income on pension plan assets
(33)
(23)
–
–
(56)
Interest on pension plan liab
il
it
ies
32
22
–
6
60
Total (release)/charge to profit before deduction of tax
(1)
17
–
12
28
Net losses on plan assets
3
485
68
–
–
553
Gains on liab
il
it
ies
(452)
(83)
(2)
(39)
(576)
Total losses/(gains) recognised directly in statement of
comprehensive income before tax
33
(15)
(2)
(39)
(23)
Deferred taxation
7
5
–
–
12
Total losses/(gains) after tax
40
(10)
(2)
(39)
(11)
1
Includes admin
istrat
ive expenses paid out of plan assets of $1 mill
ion (2021: $1 m
ill
ion)
2
Includes various small costs and gains from plan amendments and settlements in India, Kenya, Maurit
ius, and Sr
i Lanka
3
The actual return on the UK Fund assets was a loss of $452 mill
ion and on overseas plan assets was a loss of $45 m
ill
ion
The pension cost for defined benefit plans was:
2021
Funded plans
Unfunded plans
Total
$mill
ion
UK Fund
$mill
ion
Overseas
plans
$mill
ion
Post-
retirement
medical
$mill
ion
Other
$mill
ion
Current service cost
1
–
21
–
8
29
Past service cost and curtailments
2
–
(1)
–
(4)
(5)
Interest income on pension plan assets
(26)
(19)
–
–
(45)
Interest on pension plan liab
il
it
ies
27
21
–
4
52
Total charge to profit before deduction of tax
1
22
–
8
31
Net gains on plan assets
3
(6)
(34)
–
–
(40)
Gains on liab
il
it
ies
(87)
(18)
(2)
(10)
(117)
Total gains recognised directly in statement of comprehensive
income before tax
(93)
(52)
(2)
(10)
(157)
Deferred taxation
–
15
–
–
15
Total gains after tax
(93)
(37)
(2)
(10)
(142)
1
Includes admin
istrat
ive expenses paid out of plan assets of $1 mill
ion (2020: $2 m
ill
ion)
2
Past service costs arose from plan amendments in India, Kenya, and Sri Lanka
3
The actual return on the UK Fund assets was a gain of $32 mill
ion and on overseas plan assets was a ga
in of $53 mill
ion
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
287
Notes to the financial statements cont
inued
29. Retirement benefit obligat
ions cont
inued
Movement in the defined benefit pension plans and post-retirement medical defic
it dur
ing the year comprise:
Funded plans
Unfunded plans
Total
$mill
ion
UK Fund
$mill
ion
Overseas
plans
$mill
ion
Post-
retirement
medical
$mill
ion
Other
$mill
ion
Surplus/(deficit) at 1 January 2022
88
(47)
(13)
(215)
(187)
Contribut
ions
–
32
1
13
46
Current service cost
–
(17)
–
(6)
(23)
Past service cost and curtailments
–
(1)
–
–
(1)
Net interest on the net defined benefit asset/liab
il
ity
1
1
–
(6)
(4)
Actuarial (losses)/gains
(33)
15
2
39
23
Asset held for sale
–
(4)
–
2
(2)
Exchange rate adjustment
(8)
(7)
–
16
1
Surplus/deficit at 31 December 2022
1
48
(28)
(10)
(157)
(147)
1
The deficit total of $147 m
ill
ion
is made up of plans in defic
it of $220 m
ill
ion (2021: $305 m
ill
ion) net of plans
in surplus with assets totalling $73 mill
ion
(2021: $118 mill
ion)
Movement in the defined benefit pension plans and post-retirement medical defic
it dur
ing the year comprise:
Funded plans
Unfunded plans
Total
$mill
ion
UK Fund
$mill
ion
Overseas
plans
$mill
ion
Post-
retirement
medical
$mill
ion
Other
$mill
ion
Deficit at 1 January 2021
(48)
(108)
(16)
(239)
(411)
Contribut
ions
45
31
1
17
94
Current service cost
–
(21)
–
(8)
(29)
Past service cost and curtailments
–
1
–
4
5
Net interest on the net defined benefit asset/liab
il
ity
(1)
(2)
–
(4)
(7)
Actuarial gains
93
52
2
10
157
Exchange rate adjustment
(1)
–
–
5
4
Surplus/(deficit) at 31 December 2021
1
88
(47)
(13)
(215)
(187)
1
The deficit total of $187 m
ill
ion
is made up of plans in defic
it of $305 m
ill
ion (2020: $411 m
ill
ion) net of plans
in surplus with assets totalling $118 mill
ion (2020: $14 m
ill
ion)
The Bank Group’s expected contribut
ion to
its defined benefit pension plans in 2023 is $39 mill
ion.
2022
2021
Assets
$mill
ion
Obligat
ions
$mill
ion
Total
$mill
ion
Assets
$mill
ion
Obligat
ions
$mill
ion
Total
$mill
ion
At 1 January
2,424
(2,611)
(187)
2,399
(2,810)
(411)
Contribut
ions
1
47
(1)
46
95
(1)
94
Current service cost
2
–
(23)
(23)
–
(29)
(29)
Past service cost and curtailments
–
(1)
(1)
–
5
5
Settlement costs & transfers
3
(5)
5
–
10
(10)
–
Interest cost on pension plan liab
il
it
ies
–
(60)
(60)
–
(52)
(52)
Interest income on pension plan assets
56
–
56
45
–
45
Benefits paid out
2
(130)
130
–
(142)
142
–
Actuarial (losses)/gains
4
(553)
576
23
40
117
157
Assets held for sale
(18)
16
(2)
–
–
–
Exchange rate adjustment
(269)
270
1
(23)
27
4
At 31 December
1,552
(1,699)
(147)
2,424
(2,611)
(187)
1
Includes employee contribut
ion of $1 m
ill
ion (2021: $1 m
ill
ion)
2
Includes admin
istrat
ive expenses paid out of plan assets of $1 mill
ion (2021: $1 m
ill
ion)
3
Impact of settlements relates to the buyout of a pension plan in Switzerland which was agreed in December.
4
Actuarial gain on obligat
ion compr
ises of $644 mill
ion ga
in (2021: $118 mill
ion ga
in) from financ
ial assumpt
ion changes, $4 mill
ion ga
in (2021: $5 mill
ion ga
in) from
demographic assumption changes and $74 mill
ion loss (2021: $6 m
ill
ion loss) from exper
ience.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
288
Notes to the financial statements cont
inued
29. Retirement benefit obligat
ions cont
inued
Company
Retirement benefit obligat
ions compr
ise:
2022
$mill
ion
2021
$mill
ion
Defined benefit plans obligat
ion
120
152
Defined contribut
ion plans obl
igat
ion
4
4
Net obligat
ion
124
156
Retirement benefit charge comprises:
2022
$mill
ion
2021
$mill
ion
Defined benefit plans
17
20
Defined contribut
ion plans
119
116
Charge against profit
136
136
UK Fund
See the Bank Group section on the UK Fund in this note (page 283). There are no differences between Bank Group and
Company in respect of the Fund.
Overseas Plans
The princ
ipal overseas defined benefit arrangements operated by the Company are
in Germany, Jersey, India, United Arab
Emirates (UAE) and the United States of Americas (US).
All Plans
The disclosures required under IAS 19 have been calculated by qualif
ied
independent actuaries based on the most recent
full actuarial valuations updated, where necessary, to 31 December 2022.
The financial assumpt
ions used at 31 December 2022 as shown below. Sensit
iv
it
ies are recorded on page 285 of the Bank
Group accounts and those for non-UK Fund plans are applicable in proportion to the lower liab
il
it
ies of the Company.
Funded plans
UK Fund
Overseas Plans
1
2022
%
2021
%
2022
%
2021
%
Discount rate
4.8
2.0
3.7-7.6
1.0-6.7
Price inflat
ion
1.6
2.6
2.3-4.0
2.0-4.0
Salary increases
n/a
n/a
3.8-7.8
3.5-7.0
Pension increases
2.4
2.5
0.0-3.1
0.0-3.1
1
The range of assumptions shown is for the main funded defined benefit overseas plans in Germany, India, Jersey and the US. These comprise around 80 per cent of the
total liab
il
it
ies of funded overseas plans
Unfunded plans
US Post-retirement medical
1
Other
1
2022
%
2021
%
2022
%
2021
%
Discount rate
5.1
3.1
4.8-7.6
2.0-6.7
Price inflat
ion
2.5
2.5
2.5-4.0
2.5-4.0
Salary increases
n/a
n/a
4.0-7.8
4.0-7.0
Pension increases
n/a
n/a
0.0-2.4
0.0-2.6
Post-retirement medical rate
7% in 2022
reducing by
0.5% per
annum to
5% in 2026
7% in 2021
reducing by
0.5% per
annum to
5% in 2025
n/a
n/a
1
The range of assumptions shown is for the main unfunded plans in India, UAE and the UK. These comprise around 90 per cent of the total liab
il
it
ies of unfunded plans
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
289
Notes to the financial statements cont
inued
29. Retirement benefit obligat
ions cont
inued
Fund values:
The fair value of assets and present value of liab
il
it
ies of the defined benefit plans were
At 31 December
2022
2021
UK Fund
Overseas plans
UK Fund
Overseas Plans
Quoted assets
$mill
ion
Unquoted
assets
$mill
ion
Total assets
$mill
ion
Quoted assets
$mill
ion
Unquoted
assets
$mill
ion
Total assets
$mill
ion
Total assets
$mill
ion
Total assets
$mill
ion
Equit
ies
2
–
2
90
–
90
145
128
Government bonds
206
–
206
94
–
94
695
137
Corporate bonds
309
82
391
79
–
79
610
115
Absolute Return Fund
–
–
–
–
–
–
91
–
Hedge funds
–
14
14
–
–
–
19
–
Infrastructure
–
177
177
–
–
–
87
–
Property
–
126
126
–
–
–
127
–
Derivat
ives
2
–
2
–
–
–
10
–
Cash and equivalents
257
–
257
15
–
15
108
46
Others
7
4
11
–
27
27
18
–
Total fair value of assets
1
783
403
1,186
278
27
305
1,910
426
At 31 December
2022
2021
Funded plans
Unfunded plans
Funded plans
Unfunded plans
UK Fund
$mill
ion
Overseas
plans $mill
ion
Post-
retirement
medical
$mill
ion
Other $mill
ion
UK Fund
$mill
ion
Overseas
plans $mill
ion
Post-
retirement
medical
$mill
ion
Other $mill
ion
Total fair value of assets
1,186
305
N/A
N/A
1,910
426
N/A
N/A
Present value of liab
il
it
ies
(1,138)
(315)
(10)
(148)
(1,822)
(449)
(13)
(204)
Net pension plan asset/
(obligat
ion)
48
(10)
(10)
(148)
88
(23)
(13)
(204)
1
Self investment is monitored closely and is less than $1 mill
ion of Standard Chartered equ
it
ies and bonds for 2022 (2021: <$1 m
ill
ion). Self-
investment is only allowed
where it is not practical to exclude it – for example through investment in index-tracking funds where the Bank is a constituent of the relevant index
The pension cost for defined benefit plans was:
2022
Funded plans
Unfunded plans
Total
$mill
ion
UK Fund
$mill
ion
Overseas
plans
$mill
ion
Post-
retirement
medical
$mill
ion
Other
$mill
ion
Current service cost
1
–
9
–
4
13
Past service cost and curtailments
–
1
–
–
1
Interest income on pension plan assets
(33)
(15)
–
–
(48)
Interest on pension plan liab
il
it
ies
32
15
–
4
51
Total (release)/charge to profit before deduction of tax
(1)
10
–
8
17
Net losses on plan assets
2
485
89
–
–
574
Gains on liab
il
it
ies
(452)
(91)
(2)
(39)
(584)
Total losses/(gains) recognised directly in statement of
comprehensive income before tax
33
(2)
(2)
(39)
(10)
Deferred taxation
7
3
–
–
10
Total losses/(gains) after tax
40
1
(2)
(39)
–
1
Includes admin
istrat
ive expenses paid out of plan assets of $1 mill
ion (2021: $1 m
ill
ion)
2
The actual return on the UK Fund assets was a loss of $452 mill
ion and on overseas plan assets was a ga
in of $74 mill
ion
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
290
Notes to the financial statements cont
inued
29. Retirement benefit obligat
ions cont
inued
2021
Funded plans
Unfunded plans
Total
$mill
ion
UK Fund
$mill
ion
Overseas
plans
$mill
ion
Post-
retirement
medical
$mill
ion
Other
$mill
ion
Current service cost
1
–
11
–
5
16
Past service cost and curtailments
–
(1)
–
(2)
(3)
Interest income on pension plan assets
(26)
(13)
–
–
(39)
Interest on pension plan liab
il
it
ies
27
15
–
4
46
Total charge to profit before deduction of tax
1
12
–
7
20
Net gains on plan assets
2
(6)
(17)
–
–
(23)
Gains on liab
il
it
ies
(87)
(34)
(2)
(9)
(132)
Total gains recognised directly in statement of comprehensive
income before tax
(93)
(51)
(2)
(9)
(155)
Deferred taxation
–
13
–
–
13
Total gains after tax
(93)
(38)
(2)
(9)
(142)
1
Includes admin
istrat
ive expenses paid out of plan assets of $1 mill
ion (2021: $1 m
ill
ion)
2
The actual return on the UK Fund assets was a gain of $32 mill
ion and on overseas plan assets was a ga
in of $30 mill
ion
Movement in the defined benefit pension plans and post-retirement medical defic
it dur
ing the year comprise:
Funded plans
Unfunded plans
Total
$mill
ion
UK Fund
$mill
ion
Overseas
plans
$mill
ion
Post-
retirement
medical
$mill
ion
Other
$mill
ion
Surplus/(deficit) at 1 January 2022
88
(23)
(13)
(204)
(152)
Contribut
ions
–
22
1
13
36
Current service cost
–
(9)
–
(4)
(13)
Past service cost and curtailments
2
–
(1)
–
–
(1)
Net interest on the net defined benefit asset/liab
il
ity
1
–
–
(4)
(3)
Actuarial (losses)/gains
(33)
2
2
39
10
Assets held for sale³
–
–
–
1
1
Exchange rate adjustment
(8)
(1)
–
11
2
Surplus/(deficit )at 31 December 2022¹
48
(10)
(10)
(148)
(120)
1
The deficit total of $120 m
ill
ion
is made up of plans in defic
it of $192 m
ill
ion (2021: $266 m
ill
ion) net of plans
in surplus with assets totalling $72 mill
ion (2021: $114 m
ill
ion)
2
Past service costs and gains arose due to plan amendments in India and Sri Lanka
3
Assets held for sale relates to an unfunded plan in Jordan
Movement in the defined benefit pension plans and post-retirement medical defic
it dur
ing the year comprise:
Funded plans
Unfunded plans
Total
$mill
ion
UK Fund
$mill
ion
Overseas
plans
$mill
ion
Post-
retirement
medical
$mill
ion
Other
$mill
ion
Deficit at 1 January 2021
(48)
(79)
(16)
(224)
(367)
Contribut
ions
45
20
1
17
83
Current service cost
–
(11)
–
(5)
(16)
Past service cost and curtailments
2
–
–
–
2
3
Net interest on the net defined benefit asset/liab
il
ity
(1)
(2)
–
(4)
(7)
Actuarial gains
93
51
2
9
155
Exchange rate adjustment
–
–
–
–
–
Other
(1)
(3)
–
1
(3)
Surplus/(deficit) at 31 December 2021¹
88
(23)
(13)
(204)
(152)
1
The deficit total of $152 m
ill
ion
is made up of plans in defic
it of $266 m
ill
ion (2020: $367 m
ill
ion) net of plans
in surplus with assets totalling $114 mill
ion (2020: $11 m
ill
ion)
2
Past service costs and gains arose due to plan amendments in India, Kenya and Sri Lanka
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
291
Notes to the financial statements cont
inued
29. Retirement benefit obligat
ions cont
inued
The Company’s expected contribut
ion to
its defined benefit pension plans in 2023 is $27 mill
ion
2022
2021
Assets
$mill
ion
Obligat
ions
$mill
ion
Total
$mill
ion
Assets
$mill
ion
Obligat
ions
$mill
ion
Total
$mill
ion
At 1 January
2,336
(2,488)
(152)
2,346
(2,713)
(367)
Contribut
ions
36
–
36
83
–
83
Current service cost
1
–
(13)
(13)
–
(16)
(16)
Past service cost and curtailments
–
(1)
(1)
–
3
3
Interest cost on pension plan liab
il
it
ies
–
(51)
(51)
–
(46)
(46)
Interest income on pension plan assets
48
–
48
39
–
39
Benefits paid out
(122)
122
–
(134)
134
–
Actuarial (losses)/gains
2
(574)
584
10
23
132
155
Asset held for sale
–
1
1
–
–
–
Exchange rate adjustment
(233)
235
2
(21)
18
(3)
At 31 December
1,491
(1,611)
(120)
2,336
(2,488)
(152)
1
Includes admin
istrat
ive expenses paid out of plan assets of $1 mill
ion (2021: $1 m
ill
ion)
2
Actuarial gain on obligat
ion compr
ises of $633 mill
ion loss (2021: $115 m
ill
ion ga
in) from financ
ial assumpt
ion changes, $4 mill
ion ga
in (2021: $5 mill
ion ga
in)
from demographic assumption changes and $55 mill
ion loss (2021: $12 m
ill
ion ga
Accounting policy
The Group operates equity-settled and cash-settled share-based compensation plans. The fair value of the employee
services (measured by the fair value of the awards granted) received in exchange for the grant of the shares and awards
is recognised as an expense. For deferred share awards granted as part of an annual performance award, the expense is
recognised over the period from the start of the performance period to the vesting date. For example, the expense for
three-year awards granted in 2023 in respect of 2022 performance, which vest in 2024-2026, is recognised as an expense
over the period from 1 January 2022 to the vesting dates in 2024-2026. For all other awards, the expense is recognised over
the period from the date of grant to the vesting date.
For equity-settled awards, the total amount to be expensed over the vesting period is determined by reference to the
fair value of the shares and awards at the date of grant, which excludes the impact of any non-market vesting condit
ions
(for example, profitabil
ity and growth targets). The fair value of equity instruments granted is based on market prices,
if available, at the date of grant. In the absence of market prices, the fair value of the instruments is estimated using an
appropriate valuation technique, such as a binom
ial opt
ion pric
ing model. Non-market vest
ing condit
ions are
included in
assumptions for the number of shares and awards that are expected to vest.
At each balance sheet date, the Group revises its estimates of the number of shares and awards that are expected to vest.
It recognises the impact of the revis
ion of or
ig
inal est
imates, if any, in the income statement and a corresponding adjustment
to equity over the remain
ing vest
ing period. Forfeitures prior to vesting attributable to factors other than the failure to satisfy
service condit
ions and non-market vest
ing condit
ions are treated as a cancellat
ion and the remain
ing unamort
ised charge
is debited to the income statement at the time of cancellation. The proceeds received net of any directly attributable
transaction costs are credited to share capital (nominal value) and share premium when awards in the form of options
are exercised.
Cash-settled awards are revalued at each balance sheet date and a liab
il
ity recognised on the balance sheet for all
unpaid amounts, with any changes in fair value charged or credited to staff costs in the income statement until the
awards are exercised. Where forfeitures occur prior to vesting that are attributable to factors other than a failure to satisfy
service condit
ions or market-based performance cond
it
ions, the cumulat
ive charge incurred up to the date of forfeiture is
credited to the income statement. Any revaluation related to cash-settled awards is recorded as an amount due from
subsid
iary undertak
ings.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
292
Notes to the financial statements cont
inued
30. Share-based payments continued
Other accounting estimates and judgements
Share-based payments involve judgement and estimat
ion uncerta
inty in determin
ing the expenses and carry
ing values of
share awards at the balance sheet date.
•
LTIP awards are determined using an estimat
ion of the probab
il
ity of meet
ing certain metrics over a three-year
performance period using the Monte Carlo simulat
ion model.
•
Deferred shares and restricted shares are determined using an estimat
ion of expected d
iv
idends.
•
The 2013 Sharesave Plan valuation is determined using a binom
ial opt
ion-pric
ing model.
The Group operates a number of share-based arrangements for its executive directors and employees. Details of the
share-based payment charge are set out below.
2022
$mill
ion
2021
$mill
ion
Deferred share awards
84
87
Other share awards
66
63
Total share-based payments
1, 2
150
150
1
No forfeiture assumed
2
Includes $(6) mill
ion (2021: $2 m
ill
ion) of share-based payments reported
in ‘other staff costs’. This reflects Bank Group’s requirement under IFRS 2 to account for
2011 Standard Chartered Share Plan (the ‘2011 Plan’) and 2021 Standard Chartered Share Plan (the ‘2021 Plan’)
The 2021 Plan was approved by shareholders in May 2021 and is the Group’s main share plan, replacing the 2011 Plan for new
awards, June 2021. It may be used to deliver various types of share awards to employees and former employees of the Group,
includ
ing d
irectors and former executive directors:
•
Long Term Incentive Plan (LTIP) awards: granted with vesting subject to performance measures. Performance measures
attached to awards granted previously include: relative total shareholder return (TSR); return on tangible equity (RoTE)
(with a Common Equity Tier 1 (CET1) underpin); and strategic measures. Each measure is assessed independently over
a three-year period. LTIP awards have an ind
iv
idual conduct gateway requirement that results in the award lapsing if
not met
•
Deferred awards are used to deliver the deferred portion of variable remuneration, in line with both market practice and
regulatory requirements. These awards vest in instalments on anniversar
ies of the award date spec
if
ied at the t
ime of
grant. Deferred awards are not subject to any plan lim
it. Th
is enables the Group to meet regulatory requirements relating
to deferral levels, and is in line with market practice
•
Restricted share awards, made outside of the annual performance process as replacement buy-out awards to new jo
iners
who forfeit awards on leaving their previous employers, vest in instalments on the anniversar
ies of the award date spec
if
ied
at the time of grant. This enables the Group to meet regulatory requirements relating to buy-outs, and is in line with market
practice. In line with sim
ilar plans operated by our compet
itors, restricted share awards are not subject to an annual lim
it
and do not have any performance measures
Under the 2021 Plan and 2011 Plan, no grant price is payable to receive an award. The remain
ing l
ife of the 2021 Plan
during which new awards can be made is nine years. The 2011 Plan has expired and no further awards will be granted
under this plan.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
293
Notes to the financial statements cont
inued
30. Share-based payments continued
Valuation – LTIP awards
The vesting of awards granted in both 2022 and 2021 is subject to relative TSR performance measures, achievement of a
strategic scorecard and satisfact
ion of RoTE (subject to a cap
ital CET1 underpin). The vesting of awards also have addit
ional
condit
ions under strateg
ic measures related to targets set for sustainab
il
ity linked to business strategy. The fair value of the
TSR component is calculated using the probabil
ity of meet
ing the measures over a three-year performance period, using a
Monte Carlo simulat
ion model. The number of shares expected to vest
is evaluated at each reporting date, based on the
expected performance against the RoTE and strategic measures in the scorecard, to determine the accounting charge.
No div
idend equ
ivalents accrue for the LTIP awards made in 2022 or 2021 and the fair value takes this into account,
calculated by reference to market consensus div
idend y
ield.
2022
2021
Grant date
14 March
15 March
Share price at grant date (£)
4.88
4.90
Vesting period (years)
3-7
3-7
Expected div
ided y
ield (%)
3.4
3.4
Fair value (RoTE) (£)
1.24, 1.20
1.25, 1.20
Fair value (TSR) (£)
0.70, 0.68
0.72, 0.71
Fair value (Strategic) (£)
1.65, 1.60
1.66, 1.60
Deferred shares and restricted shares
The fair value for deferred awards which are not granted to material risk takers is based on 100 per cent of the face value of
the shares at the date of grant as the share price will reflect expectations of all future div
idends. For awards granted to
material risk takers in 2021, the fair value of awards takes into account the lack of div
idend equ
ivalents, calculated by
reference to market consensus div
idend y
ield.
Deferred share awards
Grant date
2022
09 November
20 June
14 March
Share price at
grant date (£)
5.62
6.04
4.88
Vesting period (years)
Expected div
idend
yield (%)
Fair value
(£)
Expected div
idend
yield (%)
Fair value
(£)
Expected div
idend
yield (%)
Fair value
(£)
1-3 years
N/A
5.62
N/A
6.04
N/A
4.88
1-5 years
3.4
5.17
3.4, 3.4
5.56, 5.56
N/A, 3.4, 3.4, 3.4
4.88, 4.48, 4.41,
4.34
3-7 years
–
–
–
–
3.4, 3.4, 3.4
4.48, 4.13, 3.99
Grant date
2021
21 June
15 March
Share price at grant date (£)
4.69
4.90
Vesting period (years)
Expected div
idend
yield (%)
Fair value
(£)
Expected div
idend
yield (%)
Fair value
(£)
1-3 years
N/A, 3.4
4.69, 4.24
N/A, 3.4, 3.4
4.90, 4.58, 4.43
1-5 years
3.4
4.17
3.4, 3.4, 3.4
4.43, 4.36, 4.29
3-7 years
–
–
3.4, 3.4
4.15, 4.01
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
294
Notes to the financial statements cont
inued
30. Share-based payments continued
Other restricted share awards
Grant date
2022
28-Nov
09-Nov
20-Jun
14-Mar
Share price at
grant date (£)
5.90
5.62
6.04
4.88
Vesting period (years)
Expected
div
idend y
ield
(%)
Fair value
(£)
Expected
div
idend y
ield
(%)
Fair value
(£)
Expected
div
idend y
ield
(%)
Fair value
(£)
Expected
div
idend y
ield
(%)
Fair value
(£)
4 Months
3.4
5.56
1 year
3.4
5.71
3.4
5.44
3.4
5.84
3.4
4.72
1.4 years
3.4
5.38
3.4
3.4
2 years
3.4
5.52
3.4
5.26
3.4
5.65
3.4
4.56
2.4 years
3.4
5.2
3.4
3.4
3 years
3.4
5.34
3.4
5.08
3.4
5.46
3.4
4.41
4 years
3.4
5.16
3.4
4.92
3.4
5.28
3.4
4.27
5 years
3.4
4.99
3.4
5.11
3.4
4.13
6 years
3.4
3.99
2021
Grant date
30 September
21 June
15 March
Share price at grant date (£)
4.37
4.69
4.90
Vesting period (years)
Expected
div
idend y
ield
(%)
Fair value
(£)
Expected
div
idend y
ield
(%)
Fair value
(£)
Expected
div
idend y
ield
(%)
Fair value
(£)
1 year
3.4
4.23
3.4
4.53
3.4
4.74
2 years
3.4
4.09
3.4
4.38
3.4
4.58
3 years
3.4
3.95
3.4
4.24
3.4
4.43
4 years
3.4
3.82
3.4
4.10
3.4
4.29
5 years
3.4
3.70
–
–
–
–
All Employee Sharesave Plans
2013 Sharesave Plan
Under the 2013 Sharesave Plan, employees may open a savings contract. Employees can save up to £250 per month over
three years to purchase ordinary shares in the Company at a discount of up to 20 per cent on the share price at the date
of inv
itat
ion (the ‘option exercise price’), after which they have a period of 6 months to exercise the option. There are no
performance measures attached to options granted under the 2013 Sharesave Plan and no grant price is payable to receive
an option. In some countries in which the Group operates, it is not possible to operate Sharesave plans, typically due to
securit
ies law and regulatory restr
ict
ions. In these countr
ies, where possible, the Group offers an equivalent cash-based
alternative to its employees.
The 2013 Sharesave Plan was approved by shareholders in May 2013, and expires in May 2023. A new Sharesave plan will be
taken to shareholders for approval at the Annual General Meeting in May 2023.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
295
Notes to the financial statements cont
inued
30. Share-based payments continued
Valuation – Sharesave:
Options under the Sharesave plans are valued using a binom
ial opt
ion-pric
ing model. The same fa
ir value is applied to all
employees includ
ing execut
ive directors. The fair value per option granted and the assumptions used in the calculation are
as follows:
2022
2021
Grant date
28
November
30
September
Share price at grant date (£)
5.80
4.37
Exercise price (£)
4.23
3.67
Vesting period (years)
3
3
Expected volatil
ity (%)
39.3
35.1
Expected option life (years)
3.33
3.33
Risk-free rate (%)
3.21
0.42
Expected div
idend y
ield (%)
3.4
3.4
Fair value (£)
2.08
1.11
The expected volatil
ity
is based on histor
ical volat
il
ity over the last three years, or three years pr
ior to grant. The expected life
is the average expected period to exercise. The risk-free rate of return is the yield on zero-coupon UK Government bonds of a
term consistent with the assumed option life. The expected div
idend y
ield is calculated by reference to market consensus
div
idend y
ield.
Lim
its
An award shall not be granted under the 2021 Plan in any calendar year if, at the time of its proposed grant, it would cause
the number of Standard Chartered PLC ordinary shares allocated in the period of 10 calendar years ending with that
calendar year under the 2021 Plan and under any other discret
ionary share plan operated by Standard Chartered PLC to
exceed such number as represents 5 per cent of the ordinary share capital of Standard Chartered PLC in issue at that time.
An award shall not be granted under the 2021 Plan or 2013 Sharesave Plan in any calendar year if, at the time of its proposed
grant, it would cause the number of Standard Chartered PLC ordinary shares allocated in the period of 10 calendar years
ending with that calendar year under the 2021 Plan or 2013 Sharesave Plan and under any other employee share plan
operated by Standard Chartered PLC to exceed such number as represents 10 per cent of the ordinary share capital of
Standard Chartered PLC in issue at that time.
An award shall not be granted under the 2021 Plan or 2013 Sharesave Plan in any calendar year if, at the time of its proposed
grant, it would cause the number of Standard Chartered PLC ordinary shares which may be issued or transferred pursuant
to awards then outstanding under the 2021 Plan or 2013 Sharesave Plan as relevant to exceed such number as represents
10 per cent of the ordinary share capital of Standard Chartered PLC in issue at that time.
The number of Standard Chartered PLC ordinary shares which may be issued pursuant to awards granted under the 2021
Plan in any 12-month period must not exceed such number as represents 1 per cent of the ordinary share capital of Standard
Chartered PLC in issue at that time. The number of Standard Chartered PLC ordinary shares which may be issued pursuant to
awards granted under the 2013 Sharesave Plan in any 12-month period must not exceed such number as represents 1 per cent
of the ordinary share capital of Standard Chartered PLC in issue at that time.
Standard Chartered PLC has been granted a waiver from strict compliance with Rules 17.03(3), 17.03(9) and 17.03(18)
of the Rules Governing the List
ing of Secur
it
ies on the Stock Exchange of Hong Kong. Deta
ils are set out in the market
announcement made on 5 May 2021.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
296
Notes to the financial statements cont
inued
30. Share-based payments continued
Reconcil
iat
ion of share award movements for the year to 31 December 2022
LTIP¹
Deferred/
Restricted
shares
1
Sharesave
Weighted
average
Sharesave
exercise price
(£)
Outstanding at 1 January 2022
11,091,777
34,204,272
10,058,458
4.07
Granted
2,3
2,903,903
21,159,348
3,882,756
–
Lapsed
(2,835,051)
(881,277)
(1,898,141)
4.46
Vested/Exercised
(420,718)
(14,761,219)
(2,083,514)
5.06
Outstanding at 31 December 2022
10,739,911
39,721,124
9,959,559
3.85
Total number of securit
ies ava
ilable for issue under the plan
10,739,911
39,721,124
9,959,559
3.85
Percentage of the issued shares this represents as at 31 December
0.37
1.37
0.34
Exercisable as at 31 December 2022
–
1,180,633
864,082
4.96
Range of exercise prices (£)
–
–
3.14-5.13
Intrins
ic value of vested but not exerc
ised options ($ mill
ion)
0.00
8.84
1.32
Weighted average contractual remain
ing l
ife (years)
7.86
8.20
1.02
Weighted average share price for awards exercised during the period (£)
5.09
4.97
5.90
1
Granted under the 2021 Plan and 2011 Plan. Employees do not contribute to the cost of these awards.
2
2,886,441 (LTIP) granted on 14 March 2022, 14,989 (LTIP) granted as a notional div
idend on 1 March 2022, 2,473 (LTIP) granted as a not
ional div
idend on 8 August 2022,
19,677,909 (Deferred/Restricted shares) granted on 14 March 2022, 62,076 (Deferred/Restricted shares) granted as a notional div
idend on 1 March 2022, 550,432
(DRSA/RSA) granted on 20 June 2022, 35,175 (Deferred/Restricted shares) granted as a notional div
idend on 8 August 2022, 710,435 (Deferred/Restr
icted shares)
granted on 9 November 2022, 123,321 (Deferred/Restricted shares) granted on 28 November 2022 under the 2021 Plan. 3,882,756 (Sharesave) granted on 28 November
2022 under the 2013 Sharesave Plan.
3
For Sharesave granted in 2022 the exercise price is £4.23 per share, a 20% discount from the closing price on 1 November 2022. The closing price on 1 November 2022
was £5.282.
Reconcil
iat
ion of share award movements for the year to 31 December 2021
Sharesave
Weighted
average
Sharesave
exercise price
(£)
LTIP¹
Deferred/
Restricted
shares¹
Outstanding at 1 January 2021
22,402,580
34,672,825
10,878,090
4.57
Granted
2,
3,775,615
14,546,571
2,675,125
–
Lapsed
(14,765,454)
(786,117)
(3,491,017)
5.33
Exercised
(320,964)
(14,229,007)
(3,740)
3.62
Outstanding as at 31 December 2021
11,091,777
34,204,272
10,058,458
4.07
Exercisable as at 31 December 2021
3,952
1,534,479
2,293,424
5.11
Range of exercise prices (£)³
–
–
3.14 – 6.20
Intrins
ic value of vested but not exerc
ised options ($ mill
ion)
0.02
9.31
0.05
Weighted average contractual remain
ing l
ife (years)
7.82
8.08
2.04
Weighted average share price for awards exercised
during the period (£)
4.95
4.88
4.69
1
Employees does not contribute towards the cost of these awards and are covered under the 2011 and 2021 share plan rules
2
14,208,239 (DRSA/RSA) granted on 15 March 2021, 78,811 (DRSA/RSA) granted as notional div
idend on 01 March 2021, 3,761,387 (LTIP) granted on 15 March 2021, 10,954
(LTIP) granted as notional div
idend on 01 March 2021, 158,767 (DRSA/RSA) granted on 21 June 2021. 27,785 (DRSA/RSA) granted as not
ional div
idend on 13 August 2021,
3,274 (LTIP) granted as notional div
idend on 13 August 2021, 72,969 (RSA) granted on 30 September 2021, 2,675,125 (Sharesave) granted on 30 September 2021. LTIP and
DRSA/RSA awards granted in March 2021 were granted under the 2011 Plan, and DRSA/RSA awards granted in June and September 2021 were granted under the 2021
Plan. Notional div
idends were granted under the 2011 Plan. Sharesave opt
ions granted in 2021 were granted under the 2013 Sharesave Plan.
3
For Sharesave options granted in 2021 the exercise price is £3.67 per share, which was a 20% discount to the closing share price on 27 August 2021. The closing share
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
297
Notes to the financial statements cont
inued
31. Investments in subsid
iary undertak
ings, jo
int ventures and assoc
iates
Accounting policy
iar
ies
Subsid
iar
ies are all entit
ies,
includ
ing structured ent
it
ies, wh
ich the Group controls. The Group controls an entity when it is
exposed to, and has rights to, variable returns from its involvement with the entity and has the abil
ity to affect those returns
through its power over the investee. The assessment of power is based on the Group’s practical abil
ity to d
irect the relevant
activ
it
ies of the entity unilaterally for the Group’s own benefit and is subject to reassessment if and when one or more of the
elements of control change. Subsid
iar
ies are fully consolidated from the date on which the Group effectively obtains control.
They are deconsolidated from the date that control ceases, and where any interest in the subsid
iary rema
ins, this is
Associates and jo
int arrangements
Joint arrangements are where two or more parties either have rights to the assets, and obligat
ions of the joint arrangement
(joint operat
ions), or have rights to the net assets of the jo
int arrangement (joint venture). The Group evaluates the
contractual terms of joint arrangements to determ
ine whether a jo
int arrangement
is a jo
int operat
ion or a jo
int venture.
The Group did not have any contractual interest in jo
int operat
ions.
An associate is an entity over which the Group has sign
ificant
influence.
Investments in associates and jo
int ventures are accounted for by the equ
ity method of accounting and are in
it
ially
recognised at cost. The Group’s investment in associates and jo
int ventures
includes goodwill ident
ified on acqu
is
it
ion
(net of any accumulated impa
irment loss).
The Group’s share of its associates’ and jo
int ventures’ post-acqu
is
it
ion profits or losses is recognised in the income statement,
and its share of post-acquis
it
ion movements in other comprehensive income is recognised in reserves. The cumulative
post-acquis
it
ion movements are adjusted against the carrying amount of the investment. When the Group’s share of losses
in an associate or a jo
int venture equals or exceeds
its interest in the associate, includ
ing any other unsecured rece
ivables, the
Group does not recognise further losses, unless it has incurred obligat
ions or made payments on behalf of the assoc
iate or
joint venture.
Unrealised gains and losses on transactions between the Group and its associates and jo
int ventures are el
im
inated to the
extent of the Group’s interest in the associates and jo
int ventures. At each balance sheet date, the Group assesses whether
there is any object
ive ev
idence of impa
irment
in the investment in associates and jo
int ventures. Such ev
idence includes
a sign
ificant or prolonged decl
ine in the fair value of the Group’s investment in an associate or jo
int venture below
its cost,
among other factors.
Sign
ificant account
ing estimates and judgements
The Group applies judgement in determin
ing
if it has control, jo
int control or s
ign
ificant
influence over subsid
iar
ies, jo
int
ventures and associates respectively. These judgements are based upon ident
ify
ing the relevant activ
it
ies of counterparties,
being those activ
it
ies that sign
ificantly affect the ent
it
ies returns, and further mak
ing a decis
ion of
if the Group has control
over those entit
ies, joint control, or has s
ign
ificant
influence (being the power to partic
ipate
in the financ
ial and operat
ing
policy decis
ions but not control them).
These judgements are at times determined by equity holdings, and the voting rights associated with those holdings.
However, further considerat
ions
includ
ing but not l
im
ited to board seats, adv
isory committee members and special
ist
knowledge of some decis
ion-makers are also taken
into account. Further judgement is required when determin
ing
if
the Group has de-facto control over an entity even though it may hold less than 50% of the voting shares of that entity.
Judgement is required to determine the relative size of the Group’s shareholding when compared to the size and dispers
ion
of other shareholders.
Impairment testing of investments in associates and jo
int ventures,
is performed if there is a possible ind
icator of
impa
irment.
Judgement is used to determine if there is object
ive ev
idence of impa
irment. Objective ev
idence may be observable data
such as losses incurred on the investment when applying the equity method, the granting of concessions as a result of
financial d
iff
iculty, or breaches of contracts/regulatory fines of the assoc
iate or jo
int venture. Further judgement
is required
when consider
ing broader
ind
icators of
impa
irment such as losses of act
ive markets or ratings downgrades across key
markets in which the associate or jo
int venture operate
in.
Impairment testing is based on estimates includ
ing forecast
ing the expected cash flows from the investments, growth rates,
terminal values and the discount rate used in calculation of the present values of those cash flows. The estimat
ion of future
cash flows and the level to which they are discounted is inherently uncertain and requires sign
ificant judgement.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
298
Notes to the financial statements cont
inued
31. Investments in subsid
iary undertak
ings, jo
int ventures and assoc
iates continued
Business combinat
ions
The acquis
it
ion method of accounting is used to account for the acquis
it
ion of subsid
iar
ies by the Group. The cost of an
acquis
it
ion is measured as the fair value of the assets given, equity instruments issued and liab
il
it
ies
incurred or assumed
at the date of exchange, together with the fair value of any contingent considerat
ion payable. The excess of the cost of
acquis
it
ion over the fair value of the Group’s share of the ident
ifiable net assets and cont
ingent liab
il
it
ies acqu
ired is
recorded as goodwill (see Note 16 for details on goodwill recognised by the Group). If the cost of acquis
it
ion is less than the fair
value of the net assets and contingent liab
il
it
ies of the subs
id
iary acqu
ired, the difference is recognised directly in the income
statement.
Where the fair values of the ident
ifiable net assets and cont
ingent liab
il
it
ies acqu
ired have been determined provis
ionally,
or where contingent or deferred considerat
ion
is payable, adjustments aris
ing from the
ir subsequent final
isat
ion are not
reflected in the income statement if (i) they arise with
in 12 months of the acqu
is
it
ion date (or relate to acquis
it
ions completed
before 1 January 2014) and (i
i) the adjustments ar
ise from better informat
ion about cond
it
ions ex
ist
ing at the acqu
is
it
ion date
(measurement period adjustments). Such adjustments are applied as at the date of acquis
it
ion and, if applicable, prior year
amounts are restated. All changes that are not measurement period adjustments are reported in income other than changes
in contingent considerat
ion not class
if
ied as financial
instruments, which are accounted for in accordance with the appropriate
accounting policy, and changes in contingent considerat
ion class
if
ied as equ
ity, which is not remeasured.
Changes in ownership interest in a subsid
iary, wh
ich do not result in a loss of control, are treated as transactions between equity
holders and are reported in equity. Where a business combinat
ion
is achieved in stages, the previously held equity interest is
remeasured at the acquis
it
ion date fair value with the resulting gain or loss recognised in the income statement.
In the Company’s financial statements,
investment in subsid
iar
ies, associates and jo
int ventures are held at cost less
impa
irment
and div
idends from pre-acqu
is
it
ion profits received prior to 1 January 2009, if any. Inter-company transactions, balances and
unrealised gains and losses on transactions between Group companies are elim
inated
in the Group accounts.
Investments in subsid
iary undertak
ings
2022
$mill
ion
2021
$mill
ion
As at 1 January
9,694
8,258
Addit
ions
1
357
3,077
Disposal
–
(1,639)²
Impairment release/(charge)
249³
(2)
As at 31 December
10,300
9,694
1
Includes issuances of $241 mill
ion to Standard Chartered Bank AG, $114 m
ill
ion to Standard Chartered UK hold
ings and $1 mill
ion to Standard Chartered Global Bus
iness
Services Co., Ltd (31 December 2021 Includes issuances of $1,273 mill
ion by Standard Chartered Hold
ings (Singapore) Private Lim
ited and $1,066 m
ill
ion by Standard
Chartered Bank (Singapore) Lim
ited
2
Disposal of Standard Chartered Bank (Thai) Public Company Lim
ited ($782 m
ill
ion), Standard Chartered Bank (V
ietnam) Lim
ited ($327 m
ill
ion) from Standard
Chartered Bank to Standard Chartered Bank (Singapore) Lim
ited and $530 m
ill
ion repa
id by Standard Chartered Holdings (Singapore) Private Lim
ited to hold
ing
company. Impairment primar
ily cons
ists of $72m on Standard Chartered (Thai) Public Company Lim
ited as a result of a decrease
in net asset value due to losses for the
year, div
idends pa
id and foreign exchange movements, offset by reversals of impa
irment of var
ious subsid
iar
ies, primar
ily Standard Chartered UK Hold
ings Lim
ited and
Standard Chartered Holdings Inc, as a result of fair value movements and profits recognised during the year
3
During 2022, the Bank reversed $273m of previously recognised impa
irment
in its fully owned subsid
iary Standard Chartered UK Hold
ings Lim
ited follow
ing the increase
in carrying value of the investment based on the third-party valuation report. ,$10 mill
ion on Standard Chartered Hold
ings Inc. and $6 mill
ion on Standard Chartered
Investment Holding offset by impa
irment charge of $34m
ill
ion
impa
irment
in Standard Chartered Bank AG is due to the devaluation of functional currency EUR against
the USD, $6 mill
ion related to Standard Chartered Botswana L
im
ited
Impairment testing
At 31 December 2022, the net asset value of Standard Chartered Bank Pakistan Lim
ited was below the carry
ing amount of the
Group‘s investment in subsid
iary. As a result, the Group assessed the carry
ing value of its investment in Standard Chartered Bank
Pakistan Lim
ited for
impa
irment and as the value
in use (VIU) was higher than the carrying value concluded none was required
(2021: nil).
Basis of recoverable amount
The recoverable amount for the subsid
iary was measured based on value
in use (VIU). The VIU was calculated using five-year
cashflow projections and an est
imated terminal value based on a perpetuity value after year five. The cashflow project
ion
is
based on a forecast approved by management up to 2027. The perpetuity terminal value amount is calculated using year five
cashflows using long-term GDP growth rates. All cashflows are discounted using discount rates which reflect market rates
appropriate to the subsid
iary. Post-tax d
iscount rates are used to calculate the VIU using the post-tax cashflows. The post-tax
discount rate is subsequently grossed up to pre-tax discount rate. The calculated VIU using post-tax and pre-tax discount rate
is same.
The sensit
iv
it
ies d
isclosed below are for changes to the GDP, discount rate and cash flows for the 98.99 per cent investment.
Subsid
iary
Carrying
value
($m)
ViU
($m)
Base Case
Sensit
iv
it
ies - 2022
Headroom
($m)
Pre Tax
Discount
Rate
GDP
GDP
Discount Rate
Cash Flows
Cash Flows
Cash
Flows
Combined
Combined
GDP -1%
GDP -1%
DR +1%
DR +1%
+1%
-1%
+1%
-1%
+10%
-10%
+20%
-20%
-30%
CF -10%
CF -20%
Headroom
($m)
Headroom
($m)
Headroom
($m)
Headroom
($m)
Headroom
($m)
Headroom
($m)
Headroom
($m)
Headroom
($m)
Headroom
($m)
Headroom
($m)
Headroom
($m)
Standard Chartered
Bank Pakistan Lim
ited
642
665
23
30.60%
5.92%
57
(5)
(22)
76
85
(38)
146
(99)
(160)
(100)
(154)
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
299
Notes to the financial statements cont
inued
31. Investments in subsid
iary undertak
ings, jo
int ventures and assoc
iates continued
At 31 December 2022, the princ
ipal subs
id
iary undertak
ings, all ind
irectly held except for Standard Chartered Bank AG,
Standard Chartered Bank (Pakistan) Lim
ited and 13.6 per cent of Standard Chartered Bank (S
ingapore) Lim
ited, and
princ
ipally engaged
in the business of banking and provis
ion of other financial serv
ices, were as follows:
Country and place of incorporation or registrat
ion
Main areas
of operation
Group interest
in ordinary
share capital
%
Standard Chartered Bank (Singapore) Lim
ited, S
ingapore
Singapore
100
Standard Chartered Bank AG, Germany
Germany
100
Standard Chartered Bank Malaysia Berhad, Malaysia
Malaysia
100
Standard Chartered Bank Niger
ia L
im
ited, N
iger
ia
Niger
ia
100
Standard Chartered Bank (Vietnam) Lim
ited, V
ietnam
Vietnam
100
Standard Chartered Bank (Maurit
ius) L
im
ited, Maur
it
ius
Maurit
ius
100
Country and place of incorporation or registrat
ion
Main areas
of operation
Group interest
in ordinary
share capital
%
Standard Chartered Bank (Thai) Public Company Lim
ited, Tha
iland
Thailand
99.87
Standard Chartered Bank (Pakistan) Lim
ited, Pak
istan
Pakistan
98.99
Standard Chartered Bank Zambia PLC, Zambia
Zambia
90.00
Standard Chartered Bank Botswana Lim
ited, Botswana
Botswana
75.83
Standard Chartered Bank Kenya Lim
ited, Kenya
Kenya
74.32
Standard Chartered Bank Ghana PLC, Ghana
Ghana
69.42
A complete list of subsid
iary undertak
ing is included in Note 39.
The Group does not have any material non-controlling interest except as listed above, which contribute $16 mill
ion
(2021: $44 mill
ion) of the profit attr
ibutable to non-controlling interest and $164 mill
ion (2021: $213 m
ill
ion) of the equ
ity
attributable to non-controlling interests.
While the Group’s subsid
iar
ies are subject to local statutory capital and liqu
id
ity requirements in relation to foreign exchange
remittance, these restrict
ions ar
ise in the normal course of business and do not sign
ificantly restr
ict the Group’s abil
ity to
access or use assets and settle liab
il
it
ies of the Group.
The Group does not have sign
ificant restr
ict
ions on
its abil
ity to access or use
its assets and settle its liab
il
it
ies other than
those resulting from the regulatory framework with
in wh
ich the banking subsid
iar
ies operate. These frameworks require
banking operations to keep certain levels of regulatory capital, liqu
id assets, exposure l
im
its and comply w
ith other required
ratios. These restrict
ions are summar
ised below:
Regulatory and liqu
id
ity requirements
The Group’s subsid
iar
ies are required to mainta
in m
in
imum cap
ital, leverage ratios, liqu
id
ity and exposure ratios which
therefore restrict the abil
ity of these subs
id
iar
ies to distr
ibute cash or other assets to the parent company.
The subsid
iar
ies are also required to mainta
in balances w
ith central banks and other regulatory authorit
ies
in the countries in
which they operate. At 31 December 2022, the total cash and balances with central banks was $50 bill
ion (31 December 2021:
$62 bill
ion) of wh
ich $3.5 bill
ion (2021: $3 b
ill
ion)
is restricted.
Statutory requirements
The Group’s subsid
iar
ies are subject to statutory requirements not to make distr
ibut
ions of capital and unrealised profits to
the parent company, generally to mainta
in solvency. These requ
irements restrict the abil
ity of subs
id
iar
ies to remit div
idends
to the Group. Certain subsid
iar
ies are also subject to local exchange control regulations which provide for restrict
ions on
exporting capital from the country other than through normal div
idends.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
300
Notes to the financial statements cont
inued
31. Investments in subsid
iary undertak
ings, jo
int ventures and assoc
iates continued
Contractual requirements
The encumbered assets in the balance sheet of the Group’s subsid
iar
ies are not available for transfer around the Group.
Share of profit from investment in associates and jo
int ventures compr
ises:
2022
$mill
ion
2021
$mill
ion
Profit from investment in jo
int ventures
(7)
(2)
Profit from investment in associates
(6)
3
Total
(13)
1
Group
Interests in associates and jo
int ventures
2022
$mill
ion
2021
$mill
ion
As at 1 January
156
79
Exchange translation differences
2
(1)
Addit
ions
25
90
Share of profits
(13)
1
Disposals
(1)
(16)
Div
idends rece
ived
(6)
–
Share of FVOCI and Other reserves
–
3
Impairment
(28)
–
Other Movements
1
8
–
As at 31 December
143
156
1
Movement related to CurrencyFair
Company
Standard Chartered Bank has an Investment in Trade informat
ion network (assoc
iate – carrying value $1mn) which has been
reclassif
ied as an Equ
ity investment during the year.
A complete list of the Group's interest in associates and jo
int ventures
is included in Note 39. The princ
ipal assoc
iate is:
Associate
Nature of
activ
it
ies
Main areas
of operation
Group interest
in ordinary
share capital
%
CurrencyFair Lim
ited Exchange Ireland
Banking
Ireland
43.42
On the 10th September 2021, the Group, through its subsid
iary Standard Chartered UK Hold
ings Lim
ited completed
its
investment in acquis
it
ion of CurrencyFair Lim
ited, an Ir
ish foreign exchange payments platform.
The Group invested in purchased CurrencyFair through the contribut
ion of
its exist
ing
investment in its jo
int venture, Assembly
Payments Pte. Lim
ited and a cash
injection into CurrencyFair of $35 mill
ion, wh
ich provided the Group with equity of 43.42% in
CurrencyFair. This equity ownership, along with control of the board of directors resulted in the Group controlling CurrencyFair.
This equity ownership, along with seats on the board of directors resulted in the Group having sign
ificant
influence over
CurrencyFair and as such will equity method account the investment.
The transaction will facil
itate creat
ion of a combined payments and foreign exchange products franchise, combin
ing the
customer base, staff, expertise and capabil
it
ies of both CurrencyFair and Assembly Payments.
The fair value of considerat
ion for the
investment as follows:
Considerat
ion
$mill
ion
Fair value of the Group’s investment in Assembly Payments
1
36
Cash considerat
ion
35
Total considerat
ion/Investment
in Associate
71
1
The fair value of Assembly Payments was determined to be $60m, of which the Group’s equity ownership on transfer was 59.63%. The Group carried this investment
under the equity method at a balance of $16m resulting in a profit on disposal of $20m
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
301
Notes to the financial statements cont
inued
ies
Accounting policy
A structured entity is an entity that has been designed so that voting or sim
ilar r
ights are not the dominant factor in decid
ing
who controls the entity. Contractual arrangements determine the rights and therefore relevant activ
it
ies of the structured
entity. Structured entit
ies are generally created to ach
ieve a narrow and well-defined object
ive w
ith restrict
ions around the
ir
activ
it
ies. Structured entit
ies are consol
idated when the substance of the relationsh
ip between the Group and the structured
entity ind
icates the Group has power over the contractual relevant act
iv
it
ies of the structured entity, is exposed to variable
returns, and can use that power to affect the variable return exposure.
In determin
ing whether to consol
idate a structured entity to which assets have been transferred, the Group takes into
account its abil
ity to d
irect the relevant activ
it
ies of the structured entity. These relevant activ
it
ies are generally evidenced
through a unilateral right to liqu
idate the structured ent
ity, investment in a substantial proportion of the securit
ies
issued by
the structured entity or where the Group holds specif
ic subord
inate securit
ies that embody certa
in controlling rights. The
Group may further consider relevant activ
it
ies embedded with
in contractual arrangements such as call opt
ions which give
the practical abil
ity to d
irect the entity, special relationsh
ips between the structured ent
ity and investors, and if a single
investor has a large exposure to variable returns of the structured entity.
Judgement is required in determin
ing control over structured ent
it
ies. The purpose and des
ign of the entity is considered,
along with a determinat
ion of what the relevant act
iv
it
ies are of the entity and who directs these. Further judgements are
made around which investor is exposed to, and absorbs the variable returns of the structured entity. The Group will have to
weigh up all of these facts to consider whether the Group, or another involved party is acting as a princ
ipal
in its own right or
as an agent on behalf of others. Judgement is further required in the ongoing assessment of control over structured entit
ies,
specif
ically
if market condit
ions have an effect on the var
iable return exposure of different investors.
The Group has involvement with both consolidated and unconsolidated structured entit
ies, wh
ich may be established by the
ies: A structured ent
ity is consolidated into the Group’s financ
ial statements where
the Group controls the structured entity, as per the determinat
ion
in the accounting policy above.
The following table presents the Group's interests in consolidated structured entit
ies.
2022
$mill
ion
2021
$mill
ion
Princ
ipal and other structured finance
212
173
Total
212
ies:
Unconsolidated structured entit
ies are all structured ent
it
ies that are not
controlled by the Group. The Group enters into transactions with unconsolidated structured entit
ies
in the normal course of
business to facil
itate customer transact
ions and for specif
ic
investment opportunit
ies. Th
is is predominantly with
in the CCIB
business segment. An interest in a structured entity is contractual or non-contractual involvement which creates variab
il
ity of
the returns of the Group aris
ing from the performance of the structured ent
ity
The unconsolidated structure entity table presents the carrying amount of the assets recognised in the financ
ial statements
relating to interests held in unconsolidated structured entit
ies, the max
imum exposure to loss relating to those interests and
the total assets of the structured entit
ies. Max
imum exposure to loss is primar
ily l
im
ited to the carry
ing amount of the Group’s
on-balance sheet exposure to the structured entity. For derivat
ives, the max
imum exposure to loss represents the on-balance
sheet valuation and not the notional amount. For commitments and guarantees, the maximum exposure to loss is the
notional amount of potential future losses.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
302
Notes to the financial statements cont
inued
32. Structured entit
ies cont
inued
2022¹
2021 (Restated)²
Asset
-backed
securit
ies
$mill
ion
Corporate
Lending &
Structured
Finance
$mill
ion
Princ
ipal
Finance
funds
$mill
ion
Other
activ
it
ies
$mill
ion
Total
$mill
ion
Asset
-backed
securit
ies
$mill
ion
Corporate
Lending &
Structured
Finance
$mill
ion
Princ
ipal
Finance
funds
$mill
ion
Other
activ
it
ies
$mill
ion
Total
$mill
ion
Group’s interest – assets
Financ
ial assets held at fa
ir
value through profit or loss
194
–
81
–
275
664
–
82
–
746
Loans and advances/
Investment securit
ies at
amortised cost
13,508
21,969
–
246
35,723
9,234
20,821
–
–
30,055
Investment securit
ies
(fair value through other
comprehensive income)
1,496
–
–
–
1,496
1,368
–
–
–
1,368
Other assets
–
–
–
–
–
–
–
1
–
1
Total assets
15,198
21,969
81
246
37,494
11,266
20,821
83
–
32,170
Off-balance sheet
–
9,747
92
–
9,839
–
10,288
99
–
10,387
Group’s maximum
exposure to loss
15,198
31,716
173
246
47,333
11,266
31,109
182
–
42,557
Total assets of
structured entit
ies
98,835
19,620
150
1,828
120,433
138,014
25,791
872
2
164,679
1
As at 31 December 2022 Corporate Lending & Structured Finance includes $10,165 mill
ion (2021: $11,197 m
ill
ion) related to Loans and advances /
investment securit
ies at
amortized cost with
in Structured F
inance and $11,804 mill
ion (2021: $9,624 m
ill
ion) w
ith
in Corporate Lend
ing; Group’s maximum exposure to loss with
in Structured F
inance
of $16,691 mill
ion (2021: $16,822 m
ill
ion) and $15,025 m
ill
ion (2021: $14,288 m
ill
ion) w
ith
in Corporate Lend
ing; and Total assets of structured entit
ies w
ith
in Structured F
inance
of $11,384 mill
ion (2021: $16,848 m
ill
ion) and $8,236 m
ill
ion (2021: $8,943 m
ill
ion) w
ith
in Corporate Lend
ing
2
The 2021 balances have been restated to reflect the addit
ion of the Group’s
interest in certain entit
ies reported on the Group’s balance sheet but not prev
iously
disclosed as unconsolidated structured entit
ies, assoc
iated off-balance sheet exposure, maximum exposure to loss, and the total assets of structured entit
ies. The
restatement results in increases to the following: Loans and advances / investment securit
ies at amort
ized cost with
in Structured F
inance of $11,197 mill
ion and Corporate
Lending of $9,624 mill
ion; Group’s max
imum exposure to loss with
in Structured F
inance of $16,822 mill
ion and Corporate Lend
ing of $14,288 mill
ion; Off-balance sheet
with
in Structured F
inance of $5,624 mill
ion and Corporate Lend
ing of $4,664 mill
ion; and Total assets of structured ent
it
ies w
ith
in Structured F
inance of $16,848 mill
ion and
Corporate Lending of $8,943 mill
ion
The main types of activ
it
ies for which the Group util
ises unconsol
idated structured entit
ies cover synthet
ic credit default swaps
for managed investment funds (includ
ing spec
ial
ised Pr
inc
ipal F
inance funds), portfolio management purposes, structured
finance and asset-backed securit
ies. These are deta
iled as follows:
• Asset-backed securit
ies (ABS):
The Group also has investments in asset-backed securit
ies
issued by third-party sponsored
and managed structured entit
ies. For the purpose of market mak
ing and at the discret
ion of ABS trad
ing desk, the Group may
hold an immater
ial amount of debt secur
it
ies from structured ent
it
ies or
ig
inated by cred
it portfolio management.
This is disclosed in the ABS column above.
•
Portfolio management (Group sponsored entit
ies):
For the purposes of portfolio management, the Group purchased credit
protection via synthetic credit default swaps from note-issu
ing structured ent
it
ies. Th
is credit protection creates credit
risk which the structured entity and subsequently the end investor absorbs. The referenced assets remain on the Group’s
balance sheet as they are not assigned to these structured entit
ies. The Group cont
inues to own or hold all of the risks
and returns relating to these assets. The credit protection obtained from the regulatory-compliant securit
isat
ion only serves to
protect the Group against losses upon the occurrence of elig
ible cred
it events and the underlying assets are not derecognised
from the Group’s balance sheet. The Group does not hold any equity interests in the structured entit
ies but may hold an
ins
ign
if
icant amount of the
issued notes for market making purposes. This is disclosed in the ABS section above. The proceeds
of the notes’ issuance are typically held as cash collateral in the issuer’s account operated by a trustee or invested in AAA-
rated government-backed securit
ies to collateral
ise the structured entit
ies swap obl
igat
ions to the Group, and to repay the
princ
ipal to
investors at maturity. The structured entit
ies re
imburse the Group on actual losses incurred, through the use of the
cash collateral or realisat
ion of the collateral secur
ity. Correspondingly, the structured entit
ies wr
ite down the notes issued by
an equal amount of the losses incurred, in reverse order of senior
ity. All fund
ing is committed for the life of these vehicles and
the Group has no ind
irect exposure
in respect of the vehicles’ liqu
id
ity posit
ion. The Group has reputat
ional risk in respect of
certain portfolio management vehicles and investment funds either because the Group is the arranger and lead manager or
because the structured entit
ies have Standard Chartered brand
ing.
•
Corporate Lending & Structured finance:
Corporate Lending comprises secured lending in the normal course of business to
third parties through structured entit
ies.
Structured finance comprises interests in transactions that the Group or, more usually, a customer has structured, using one or
more structured entit
ies, wh
ich provide benefic
ial arrangements for customers. The Group’s exposure pr
imar
ily represents the
provis
ion of fund
ing to these structures as a financ
ial
intermed
iary, for wh
ich it receives a lender’s return.
• Princ
ipal F
inance Fund:
The Group’s exposure to Princ
ipal F
inance Funds represents committed or invested capital in
unleveraged investment funds, primar
ily
invest
ing
in pan-Asian infrastructure, real estate and private equity.
• Other activ
it
ies:
Other activ
it
ies include structured entit
ies created to support marg
in financ
ing transact
ions, the refinanc
ing
of exist
ing cred
it and debt facil
it
ies, as well as setting up of bankruptcy remote structured entit
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
303
Notes to the financial statements cont
inued
Adjustment for non-cash items and other adjustments included with
in
income statement
Group
Company
2022
$mill
ion
2021
1
$mill
ion
2022
$mill
ion
2021
$mill
ion
Amortisat
ion of d
iscounts and premiums of investment securit
ies
353
94
556
243
Interest expense on subordinated liab
il
it
ies
562
424
508
401
Interest expense on senior debt securit
ies
in issue
7
60
81
(35)
Other non-cash items
(18)
(67)
(19)
1
Pension costs for defined benefit schemes
28
31
17
20
Share-based payment costs
156
148
100
99
Impairment losses on loans and advances and other credit risk provis
ions
(22)
(30)
(183)
(38)
Div
idend
income from subsid
iar
ies
–
–
(1,046)
(1,626)
Other impa
irment
107
30
(181)
30
Gain on disposal of property, plant and equipment
(18)
(10)
(10)
–
Gain on disposal of FVOCI & AMCST financ
ial assets
154
(130)
99
(69)
Depreciat
ion and amort
isat
ion
611
594
396
416
Fair value changes taken to profit or loss
(235)
(67)
(113)
(34)
Foreign Currency revaluation
202
(188)
176
(67)
Profit from associates and jo
int ventures
13
1
–
–
Total
1,900
888
381
(659)
1
The 2021 comparative figures have been restated to reclassify $418 mill
ion of
interest paid on subordinated liab
il
it
ies, prev
iously included in ‘Change in operating
liab
il
it
ies’, to ‘Adjustments for non-cash
items'
Change in operating assets
Group
Company
2022
$mill
ion
2021¹
$mill
ion
2022
$mill
ion
2021¹
$mill
ion
(Increase)/decrease in derivat
ive financial
instruments
(8,171)
12,730
(6,448)
12,999
Decrease/(Increase) in debt securit
ies, treasury b
ills and equity shares held at fair
value through profit or loss
10,445
(3,581)
3,264
(1,245)
Decrease/(increase) in loans and advances to banks and customers
381
(24,206)
3,678
(15,951)
Net (increase)/decrease in prepayments and accrued income
(908)
19
(718)
44
Net (increase)/decrease in other assets
(3,905)
1,674
(5,227)
2,975
Total
(2,158)
(13,364)
(5,451)
(1,178)
1
Changes in operating assets have been restated
Change in operating liab
il
it
ies
Group
Company
2022
$mill
ion
2021
1
$mill
ion
2022
$mill
ion
2021
1
$mill
ion
Increase/(Decrease) in derivat
ive financial
instruments
11,674
(12,245)
9,854
(12,158)
Net (decrease)/increase in deposits from banks, customer accounts, debt
securit
ies
in issue and short posit
ions
(2,526)
54,022
(4,239)
36,056
Increase in accruals and deferred income
919
113
644
159
(Decrease)/increase in amount due to parents/subsid
iar
ies/other related
(1,932)
(498)
(59)
(1,693)
Net (decrease)/increase in other liab
il
it
ies
(1,181)
(4,207)
(1,679)
(3,461)
Total
6,954
37,185
4,521
18,903
1
Changes in operating liab
il
it
ies have been restated
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
304
Notes to the financial statements cont
inued
33. Cash flow statement continued
Disclosures
Group
Company
2022
$mill
ion
2021
$mill
ion
2022
$mill
ion
2021
$mill
ion
Subordinated debt (includ
ing accrued
interest):
Opening balance
14,621
14,885
14,081
14,345
Proceeds from the issue
750
–
750
–
Interest paid
(424)
(479)
(378)
(456)
Repayment
(1,008)
(16)
(1,008)
(16)
Foreign exchange movements
(227)
(98)
(227)
(98)
Fair value changes
(861)
(150)
(861)
(150)
Accrued Interest and Others
421
479
374
456
Closing balance
13,272
14,621
12,731
14,081
Group
Company
2022
$mill
ion
2021
$mill
ion
2022
$mill
ion
2021
$mill
ion
Senior debt (includ
ing accrued
interest):
Opening balance
1,289
1,706
923
686
Proceeds from the issue
5,316
2,833
4,091
660
Interest paid
(1)
(16)
(1)
(16)
Repayment
(1,490)
(3,250)
(298)
(422)
Foreign exchange movements
(49)
(8)
(12)
(2)
Fair value changes
8
(1)
6
–
Accrued Interest and Others
81
25
68
17
Closing balance
5,154
1,289
4,777
Accounting policy
For the purposes of the cash flow statement, cash and cash equivalents comprise cash, on demand and overnight balances
with central banks (unless restricted) and balances with less than three months’ maturity from the date of acquis
it
ion,
includ
ing treasury b
ills and other elig
ible b
ills, loans and advances to banks, and short-term government securit
ies.
The following balances with less than three months' maturity from the date of acquis
it
ion have been ident
ified by the Group
as being cash and cash equivalents.
Group
Company
2022
$mill
ion
2021
$mill
ion
2022
$mill
ion
2021
$mill
ion
Cash and balances at central banks
50,531
61,963
38,867
48,165
Less: restricted balances
(3,515)
(3,063)
(1,320)
(1,160)
Treasury bills and other elig
ible b
ills
9,455
3,635
2,487
1,627
Loans and advances to banks
14,419
18,672
7,566
10,642
Trading securit
ies
180
220
18
132
Total
71,070
81,427
47,618
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
305
Notes to the financial statements cont
inued
Directors and officers
Details of directors’ remuneration and interests in shares are disclosed in the Note 38 Remuneration of Directors.
IAS 24 Related party disclosures requires the following addit
ional
informat
ion for key management compensat
ion.
Key management comprises non-executive directors, executive directors of Standard Chartered PLC, the Court directors
of Standard Chartered Bank and the persons discharg
ing manager
ial responsib
il
it
ies (PDMR) of Standard Chartered
PLC Group.
2022
$mill
ion
2021
$mill
ion
Salaries, allowances and benefits in kind
38
40
Share-based payments
26
28
Bonuses paid or receivable
4
4
Terminat
ion benefits
1
–
Total
69
72
Transactions with directors and others
At 31 December 2022, the total amounts to be disclosed under the Companies Act 2006 (the Act) and the List
ing Rules of the
Hong Kong Stock Exchange Lim
ited (HK L
ist
ing Rules) about loans to d
irectors were as follows:
2022
2021
Number
$mill
ion
Number
$mill
ion
Directors
3
–
3
–
The loan transactions provided to the directors of Standard Chartered PLC were a connected transaction under Chapter 14A
of the HK List
ing Rules. It was fully exempt as financial ass
istance under Rule 14A.87(1), as it was provided in our ordinary and
usual course of business and on normal commercial terms.
Other than as disclosed in these financ
ial statements, there were no other transact
ions, arrangements or agreements
outstanding for any director of the Company which have to be disclosed under the Act.
Group
2022
2021
Due from/to
subsid
iary
undertakings
and other
related
parties
$mill
ion
Derivat
ive
financial
instruments
$mill
ion
Subordinated
liab
il
it
ies and
other
borrowed
funds
$mill
ion
Debt
Securit
ies
$mill
ion
Due from/to
subsid
iary
undertakings
and other
related parties
$mill
ion
Derivat
ive
financial
instruments
$mill
ion
Subordinated
liab
il
it
ies and
other
borrowed
funds
$mill
ion
Debt
Securit
ies
$mill
ion
Assets
Ultimate parent company
133
1,557
–
–
380
691
–
–
Fellow subsid
iar
ies of
SC PLC Group
6,254
9,573
–
601
5,855
4,521
–
737
6,387
11,130
–
601
6,235
5,212
–
737
Liab
il
it
ies
Ultimate parent company
6,516
321
12,924
6,707
11,264
617
14,148
5,286
Fellow subsid
iar
ies of
SC PLC Group
21,586
9,007
–
669
19,734
4,696
–
667
28,102
9,328
12,924
7,376
30,998
5,313
14,148
5,953
2022
Fees and
commiss
ion
income
$mill
ion
Fees and
commiss
ion
expense
$mill
ion
Interest
income
$mill
ion
Interest
expense
$mill
ion
Ultimate parent company
–
–
1
875
Fellow subsid
iar
ies of SC PLC Group
79
122
63
329
79
122
64
1,204
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
306
Notes to the financial statements cont
inued
35. Related party transactions continued
2021
Fees and
commiss
ion
income
$mill
ion
Fees and
commiss
ion
expense
$mill
ion
Interest
income
$mill
ion
Interest
expense
$mill
ion
Ultimate parent company
–
–
7
776
Fellow subsid
iar
ies of SC PLC Group
71
104
34
49
71
104
41
825
The Group contributes to employee pension funds and provides banking services free of charge to the UK fund. For details of
the funds (see Note 29).
The Group’s employees partic
ipate
in the Standard Chartered PLC group’s share-based compensation plans (see Note 30).
The cost of the compensation is recharged from Standard Chartered PLC to the Group’s branches and subsid
iar
ies.
Associates and jo
int ventures
The following transactions with related parties are on an arm’s length basis:
2022
$mill
ion
2021
(Restated)¹
$mill
ion
Assets
Loans and advances
20
22
Derivat
ive assets
18
2
Total assets
38
24
Liab
il
it
ies
Deposits
49
47
Derivat
ive l
iab
il
it
ies
–
1
Other liab
il
it
ies
19
–
Total liab
il
it
ies
68
48
Loan commitments and other guarantees
2
164
80
1
Prior period has been restated
2
The maximum loan commitments and other guarantees during the year was $164 mill
ion
Company
2022
2021
Due from/to
subsid
iary
undertakings
and other
related
parties
$mill
ion
Derivat
ive
financial
instruments
$mill
ion
Subordinated
liab
il
it
ies and
other
borrowed
funds
$mill
ion
Debt
Securit
ies
$mill
ion
Due from/to
subsid
iary
undertakings
and other
related parties
$mill
ion
Derivat
ive
financial
instruments
$mill
ion
Subordinated
liab
il
it
ies and
other
borrowed
funds
$mill
ion
Debt
Securit
ies
$mill
ion
Assets
Ultimate parent company
133
1,557
–
–
380
691
–
–
Subsid
iar
ies and
fellow subsid
iar
ies of
SC PLC Group
13,081
13,207
–
2,438
10,361
7,067
–
1,784
13,214
14,764
–
2,438
10,741
7,758
–
1,784
Liab
il
it
ies
Ultimate parent company
6,510
321
12,384
6,707
11,262
617
13,609
5,286
Subsid
iar
ies and
fellow subsid
iar
ies of
SC PLC Group
33,423
13,421
–
2
29,483
7,266
–
–
39,933
13,742
12,384
6,709
40,745
7,883
13,609
5,286
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
307
Notes to the financial statements cont
inued
35. Related party transactions continued
2022
Fees and
commiss
ion
income
$mill
ion
Fees and
commiss
ion
expense
$mill
ion
Interest
income
$mill
ion
Interest
expense
$mill
ion
Div
idend
income
$mill
ion
Ultimate parent company
–
–
1
854
–
Subsid
iar
ies and fellow subsid
iar
ies of SC PLC Group
122
127
177
502
1,046
122
127
178
1,356
1,046
2021
Fees and
commiss
ion
income
$mill
ion
Fees and
commiss
ion
expense
$mill
ion
Interest
income
$mill
ion
Interest
expense
$mill
ion
Div
idend
income
$mill
ion
Ultimate parent company
–
–
7
765
–
Subsid
iar
ies and fellow subsid
iar
ies of SC PLC Group
130
133
66
76
1,626
130
133
73
841
1,626
As at 31 December 2022, Standard Chartered Bank had created a charge over $89 mill
ion (31 December 2021: $100 m
ill
ion)
of cash assets in favour of the non-consolidated independent trustee of its employer financed retirement benefit scheme.
The Company contributes to employee pension funds and provides banking services free of charge to the UK fund.
For details of the funds see note 29.
The Company’s employees partic
ipate
in the Standard Chartered PLC group’s share-based compensation plans
(see note 30).
The Company has an agreement with Standard Chartered PLC that in the event of the Company defaulting on its debt
coupon interest payments, where the terms of such debt requires it, Standard Chartered PLC shall issue shares as settlement
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
308
Notes to the financial statements cont
inued
Auditor’s remuneration is included with
in other general adm
in
istrat
ion expenses. The amounts paid by the Group to their
princ
ipal aud
itor, Ernst & Young LLP (EY LLP) and its associates (together EY LLP), are set out below. All services are approved
by the Group Audit Committee and are subject to controls to ensure the external auditor’s independence is unaffected by the
provis
ion of other serv
ices.
2022
$mill
ion
2021
$mill
ion
Audit fees for the Standard Chartered PLC Group statutory audit
22.2
15.9
Of which fees for the statutory audit of Standard Chartered Bank Group
16.3
11.8
Fees payable to EY for other services provided to the Standard Chartered Bank Group:
Audit of Standard Chartered Bank subsid
iar
ies
8.4
7.0
Total Audit fees
30.7
22.9
Audit-related assurance services
2.9
2.8
Other assurance services
3.8
2.8
Other non-audit services
0.1
0.1
Total fees payable
37.5
28.6
The following is a descript
ion of the type of serv
ices included with
in the categor
ies listed above:
•
Audit fees for the Group statutory audit are in respect of fees payable to EY LLP for the statutory audit of the consolidated
financial statements of the Group and the separate financial statements of Standard Chartered PLC
•
Audit-related fees consist of fees such as those for services required by law or regulation to be provided by the auditor,
reviews of inter
im financial
informat
ion, report
ing on regulatory returns, reporting to a regulator on client assets and
extended work performed over financial
informat
ion and controls author
ised by those charged with governance
•
Other assurance services include agreed-upon-procedures in relation to statutory and regulatory fil
ings
•
Corporate finance transaction services are fees payable to EY LLP for issu
ing comfort letters
Expenses incurred in respect of their role as auditors were reimbursed to EYLLP ($0.5m) (2021- $0.2m). Such expenses did not
This table sets out salary (includ
ing salary shares), pens
ion and benefits received in 2022 and variable remuneration awards
received in respect of 2022.
2022¹
£000
2021²
£000
Salaries and fees
8,263
8,588
Pension
533
553
Benefits
576
420
Annual incent
ive
4,011
3,688
Vesting of LTIP awards
1,858
1,434
Total
15,241
14,683
1
C Hodgson, J Hunt and R Lawther joined the Court on 21 September, 1 October and 8 December 2022 respect
ively. N Kheraj and M Smith stepped down from the Court
on 30 April and 31 December 2022 respectively. D Conner and C Tong both stepped down from the Court on 8 December 2022. A McFadyen retired as an employee of
SC PLC Group on 31 March 2022 but remained on the Court as a Non-Executive Director
2
The values of vesting 2019-21 LTIP awards have been restated based on the actual share price of £5.09 when the awards vested in March 2022
Addit
ional
informat
ion on the remunerat
ion elements in the above single total figure table
Salaries and fees
The total salaries of the four directors as at 1 January 2022 were £5,610,200. For two of the directors, salary is paid part in
cash and part in shares which are subject to a retention period and released pro rata over five years. The number of salary
shares allocated is determined based on the monetary value and the prevail
ing market pr
ice of the Group’s shares on the
date of allocation. The emoluments, includ
ing share based payments and other benefits, of the h
ighest paid director during
2022 were £5,483,442 (2021: £4,739,773). There were employer pension contribut
ions for the h
ighest paid director during 2022
of £244,800 (2021: £237,000).
The total annualised fees of the Chairman and directors as at 1 January 2022 (or the date of appointment, if later)
were £3,279,167.
There is no apportionment of remuneration between Standard Chartered Bank and Standard Chartered PLC.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
309
Notes to the financial statements cont
inued
38. Remuneration of Directors continued
Share awards
One director exercised share awards over Standard Chartered PLC during the year.
Pension and benefits
An explanation of pension and benefits for those directors who are also executive directors of the SC PLC Group can be
found in the SC PLC Group’s 2022 Directors’ remuneration report on pages 184 to 217. The directors who are also employees
of the SC PLC Group received a flexible benefits allowance in alignment with the UK workforce to include a mixture of core
pension and benefits provis
ion,
includ
ing pr
ivate medical cover, life assurance and permanent health insurance. Some
directors occasionally use a Group car service for traveling and, in some circumstances, were accompanied by their spouses
to attend events.
For those directors who are also employees of the SC PLC Group, annual incent
ives
in respect of 2022 are delivered upfront
with at least 50 per cent paid in shares subject to a min
imum twelve-month retent
ion period.
Vesting of LTIP awards
The long-term incent
ive plan (LTIP) awards granted
in March 2019 vested in March 2022, based on performance over the
years 2019 to 2021. 23 per cent of these awards vested.
The LTIP awards granted in March 2020 are due to vest in March 2023, based on performance over the years 2020 to 2022.
Following an estimated assessment of the performance measures (RoTE with CET1 underpin, relative TSR and strategic
measures), 22 per cent of these awards will vest. The final assessment of the relative TSR performance will be conducted in
March 2023, the end of the three-year performance period. Based on a share price of £5.78, the three-month average to
31 December 2022, the estimated value to be delivered to the directors is £1,857,877.
The highest paid director has not exercised any share options during the year.
An LTIP award of 756,932 shares was made in March 2022 to the highest paid director, at a share price of GBP4.876, which
are subject to the satisfact
ion of stretch
ing RoTE, TSR and strategic performance measures over three years (2022 to 2024).
Other disclosures
The remuneration policy and practices applying to the Material Risk Taker employees of the Bank are the same as
those applied by the SC PLC Group which are set out in the SC PLC Group’s 2022 Directors’ remuneration report on
pages 184 to 217.
Further informat
ion on the remunerat
ion for those directors who are also executive directors of the SC PLC Group can
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
310
Notes to the financial statements cont
inued
As at 31 December 2022, the Group’s interests in related undertakings are disclosed below. Unless otherwise stated, the share
capital disclosed comprises ordinary or common shares which are held by subsid
iar
ies of the Group. Unless otherwise
ind
icated, all related undertak
ings are held ind
irectly. Unless otherw
ise stated, the princ
ipal country of operat
ion of each
subsid
iary
is the same as its country of incorporation. Note 31 details undertakings that have a sign
ificant contr
ibut
ion to the
Group’s net profit or net assets.
Subsid
iary undertak
ings
Name and registered address
Activ
ity
Place of incorporation Descript
ion of shares
Proportion of
shares held
(%)
The following companies have the address of 1 Basinghall Avenue, London, EC2V 5DD, United Kingdom
SC (Secretaries) Lim
ited
1
Others
United Kingdom
£1.00 Ordinary shares
100
SC Transport Leasing 1 LTD
7,8
Leasing Business
United Kingdom
£1.00 Ordinary shares
100
SC Transport Leasing 2 Lim
ited
7,8
Leasing Business
United Kingdom
£1.00 Ordinary shares
100
SC Ventures Innovation Investment L.P.
Investment Holding Company United Kingdom
Lim
ited Partnersh
ip interest
100
SCMB Overseas Lim
ited
1
Investment Holding Company United Kingdom
£0.10 Ordinary shares
100
Standard Chartered Africa Lim
ited
Investment Holding Company United Kingdom
£1.00 Ordinary shares
100
Standard Chartered Bank
Banking & Financ
ial Serv
ices
United Kingdom
US$0.01 Non-Cumulative
Irredeemable Preference
100
US$1.00 Ordinary
US$5.00 Non-Cumulative
Redeemable Preference
Standard Chartered Foundation
1,2
Charity projects
United Kingdom
Guarantor
100
Standard Chartered Health
Trustee (UK) Lim
ited
1
Trustee Services
United Kingdom
£1.00 Ordinary shares
100
Standard Chartered Leasing
(UK) 3 Lim
ited
1
Leasing Business
United Kingdom
$1.00 Ordinary shares
100
Standard Chartered Leasing
(UK) Lim
ited
1,7,8
Leasing Business
United Kingdom
$1.00 Ordinary shares
100
Standard Chartered Nominees
(Private Clients UK) Lim
ited
1
Nominee Services
United Kingdom
$1.00 Ordinary shares
100
Standard Chartered Securit
ies
(Africa) Holdings Lim
ited
Investment Holding Company United Kingdom
$1.00 Ordinary shares
100
Standard Chartered Trustees
(UK) Lim
ited
1
Trustee Services
United Kingdom
£1.00 Ordinary shares
100
Standard Chartered UK Holdings Lim
ited
1
Investment Holding Company United Kingdom
$1.00 Ordinary shares
100
The SC Transport Leasing Partnership 1
Leasing Business
United Kingdom
Lim
ited Partnersh
ip interest
100
The SC Transport Leasing Partnership 2
Leasing Business
United Kingdom
Lim
ited Partnersh
ip interest
100
The SC Transport Leasing Partnership 3
Leasing Business
United Kingdom
Lim
ited Partnersh
ip interest
100
The SC Transport Leasing Partnership 4
Leasing Business
United Kingdom
Lim
ited Partnersh
ip interest
100
The BW Leasing Partnership 1 LP
2
Leasing Business
United Kingdom
Lim
ited Partnersh
ip interest
100
The BW Leasing Partnership 2 LP
2
Leasing Business
United Kingdom
Lim
ited Partnersh
ip interest
100
The BW Leasing Partnership 3 LP
2
Leasing Business
United Kingdom
Lim
ited Partnersh
ip interest
100
The BW Leasing Partnership 4 LP
2
Leasing Business
United Kingdom
Lim
ited Partnersh
ip interest
100
The BW Leasing Partnership 5 LP
2
Leasing Business
United Kingdom
Lim
ited Partnersh
ip interest
100
Zodia Markets (UK) Lim
ited
Banking & Financ
ial Serv
ices
United Kingdom
$1.00 Ordinary shares
100
Zodia Markets Holdings Lim
ited
Banking & Financ
ial Serv
ices
United Kingdom
$1.00 Ordinary shares
75.01
The following companies have the address of 2 More London Rivers
ide, London SE1 2JT, Un
ited Kingdom
Bricks (C&K) LP
2
Lim
ited Partnersh
ip interest
United Kingdom
Lim
ited Partnersh
ip interest
100
Bricks (C) LP
2
Lim
ited Partnersh
ip interest
United Kingdom
Lim
ited Partnersh
ip interest
100
Bricks (T) LP
2
Lim
ited Partnersh
ip interest
United Kingdom
Lim
ited Partnersh
ip interest
100
The following companies have the address of 8th Floor, 20 Farringdon Street, London, EC4A 4AB, United Kingdom.
SC Ventures G.P. Lim
ited
1
Investment Holding Company United Kingdom
£1.00 Ordinary shares
100
Assembly Payments UK Ltd
Payment Services Provider
United Kingdom
$1.00 Ordinary shares
100
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
311
Notes to the financial statements cont
inued
Name and registered address
Activ
ity
Place of incorporation Descript
ion of shares
Proportion of
shares held
(%)
The following company has the address of 1 Bartholomew Lane, London, EC2N 2AX, United Kingdom
Corrasi Covered Bonds LLP
1
Trustee Services
United Kingdom
Membership Interest
50
The following companies have the address of Thomas House, 84 Eccleston Square, London, SW1V 1PX, United Kingdom
Zodia Custody Lim
ited
Custody services
United Kingdom
$1.00 Ordinary shares
95.1
Zodia Holdings Lim
ited
Investment holding company
United Kingdom
$1.00 Ordinary shares
100
The following company has the address of Robert Denholm House, Bletchingly Road, Nutfield, Redhill, RH1 4HW, United Kingdom
CurrencyFair (UK) Lim
ited
Banking & Financ
ial Serv
ices
United Kingdom
£1.00 Ordinary shares
100
The following company has the address of 23 De Walden Street, London, W1G 8RW, United Kingdom
Shoal Lim
ited
Dig
ital marketplace
for sustainable and
“green” products.
United Kingdom
US$1.00 Ordinary
100
The following company has the address of 1 Poultry, London, EC2R 8EJ, United Kingdom
Zai Technologies Lim
ited
Payment Services Provider.
United Kingdom
£1.00 Ordinary
100
The following company has the address Edifíc
io K
ilamba, 8º Andar Avenida 4 de Fevereiro, Marginal, Luanda, Angola
Standard Chartered Bank Angola S.A.
Banking & Financ
ial Serv
ices
Angola
AOK8,742.05 Ordinary shares
60
The following company has the address of Level 5, 345 George St, Sydney NSW 2000, Australia
Standard Chartered Grindlays Pty Lim
ited
1
Investment Holding Company Australia
AUD Ordinary shares
100
The following company has the address of 17/31 Queen Street, Melbourne VIC 3000, Australia
Assembly Payments Australia Pty Ltd
Holding Company
Australia
$ Ordinary shares
100
The following company has the address of Wilsons Landing, Level 5, 6A Glen Street, Milsons Point NSW 2061, Australia
CurrencyFair Australia Pty Ltd
Foreign Currency
conversion services.
Australia
AUD Ordinary
100
The following company has the address of Level 20, 31 Queen Street, Melbourne VIC 3000, Australia
Zai Australia Pty Ltd
Payment Service Provider
Australia
$1.00 Ordinary
100
AUD0.01 Ordinary shares
The following companies have the address of 5th Floor Standard House Bldg, The Mall, Queens Road, PO Box 496, Gaborone, Botswana
Standard Chartered Bank Insurance
Agency (Proprietary) Lim
ited
Insurance Services
Botswana
BWP Ordinary shares
100
Standard Chartered Investment
Services (Proprietary) Lim
ited
Nominee Services
Botswana
BWP Ordinary shares
100
Standard Chartered Bank
Botswana Lim
ited
Banking & Financ
ial Serv
ices
Botswana
BWP Ordinary shares
75.8
Standard Chartered Botswana
Nominees (Proprietary) Lim
ited
Nominee Services
Botswana
BWP Ordinary shares
100
Standard Chartered Botswana
Education Trust
1,3
CSR programme.
Botswana
Interest in Trust
100
The following company has the address of Avenida Brigade
iro Far
ia Lima, no 3.477, 6º andar, conjunto 62 – Torre Norte,
Condomin
io Pat
io Victor Malzoni, CEP 04538-133, Sao Paulo, Brazil
Standard Chartered Representação
e Partic
ipações Ltda
1
Banking & Financ
ial Serv
ices
Brazil
BRL1.00 Ordinary shares
100
The following company has the address of G01-02, Wisma Haj
i Mohd Taha Bu
ild
ing, Jalan Gadong, BE4119, Brune
i Darussalam
Standard Chartered Securit
ies
(B) Sdn Bhd
1
Investment Management
Brunei Darussalam
BND1.00 Ordinary shares
100
The following company has the address of Standard Chartered Bank Cameroon S.A, 1155, Boulevard de la Liberté, Douala,
B.P. 1784, Cameroon
Standard Chartered Bank Cameroon S.A.
Banking & Financ
ial Serv
ices
Cameroon
XAF10,000.00
Ordinary shares
100
The following company has the address of 66 Wellington Street, West, Suite 4100, Toronto Domin
ion Centre,
Toronto ON M5K 1B7, Canada
CurrencyFair (Canada) Ltd
Dormant
Canada
CAD$ Common shares
100
39. Related undertakings of the Group continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
312
Notes to the financial statements cont
inued
Name and registered address
Activ
ity
Place of incorporation Descript
ion of shares
Proportion of
shares held
(%)
The following company has the address of Maples Corporate Services Lim
ited, PO Box 309, Ugland House,
Grand Cayman KY1-1104, Cayman Islands
Cerulean Investments LP
Investment Holding
Company
Cayman Islands
Lim
ited Partnersh
ip interest
100
The following company has the address of Maples Finance Lim
ited, PO Box 1093 GT, Queensgate House, Georgetown,
Grand Cayman, Cayman Islands
SCB Investment Holding
Company Lim
ited
1
Investment Holding
Company
Cayman Islands
US$1,000.00 Ordinary-A
99.99
The following company has the address of No. 35, Xinhuanbe
i Road, TEDA, T
ianjin, 300457, China
Standard Chartered Global
Business Services Co. Lim
ited
1,4
Research, development,
other services
China
$ Ordinary shares
100
The following company has the address of Room 2619, No 9, Linhe West Road, Tianhe Distr
ict, Guangzhou, Ch
ina
Guangzhou CurrencyFair Information
Technology Lim
ited
Providers of Foreign Currency
conversion services.
China
CNY Ordinary shares
100
The following company has the address of Standard Chartered Bank Cote d'Ivoire, 23 Boulevard de la République,
Abidjan 17, 17 B.P. 1141, Cote d'Ivoire
Standard Chartered Bank
Cote d' Ivoire SA
Banking & Financ
ial Serv
ices
Cote d'Ivoire
XOF100,000.00
Ordinary shares
100
The following company has the address of 8 Ecowas Avenue, Banjul, Gambia
Standard Chartered Bank Gambia Lim
itedBank
ing & Financ
ial Serv
ices
Gambia
GMD1.00 Ordinary shares
74.852
The following company has the address of Taunusanlage 16, 60325, Frankfurt am Main, Germany
Standard Chartered Bank AG
1
Banking & Financ
ial Serv
ices
Germany
€ Ordinary shares
100
The following companies have the address of Standard Chartered Bank Build
ing, 87 Independence Avenue, P.O. Box 768, Accra,Ghana
Standard Chartered Bank Ghana PLC
Banking & Financ
ial Serv
ices
Ghana
GHS Ordinary shares
69.4
GHS0.52 Non-cumulative
Irredeemable Preference
Shares
87.0
Standard Chartered Ghana
Nominees Lim
ited
Nominee Services
Ghana
GHS Ordinary shares
100
The following company has the address of Standard Chartered Bank Ghana Lim
ited, 87, Independence Avenue,
Post Office Box 678, Accra, Ghana
Standard Chartered Wealth
Management Lim
ited Company
Investment Management
Ghana
GHS Ordinary shares
100
The following companies have the address of 14th Floor, One Taikoo Place, 979 King's Road, Quarry Bay, Hong Kong.
Kozagi Lim
ited
Investment Holding
Company
Hong Kong
HKD Ordinary shares
100
Standard Chartered PF Real Estate
(Hong Kong) Lim
ited
Investment Holding
Company
Hong Kong
$ Ordinary shares
100
The following company has the address of 13/F Standard Chartered Bank Build
ing, 4-4A Des Voeux Road Central, Hong Kong
Standard Chartered Private Equity Lim
itedInvestment Hold
ing Company Hong Kong
HKD Ordinary shares
100
The following company has the address of 21/F, Standard Chartered Tower, 388 Kwun Tong Road, Kwun Tong, Kowloon, Hong Kong
Standard Chartered Asia Lim
ited
Investment Holding
Company
Hong Kong
HKD Deferred shares
100
HKD Ordinary shares
100
The following company has the address of 31/F, Tower 2 Times Square, 1 Matheson St, Causeway Bay, Hong Kong
Assembly Payments HK Lim
ited
Online payment platform
Hong Kong
HKD Ordinary Shares
100
The following company has the address of Suites 1103-4 AXA Tower, Landmark East, 100 How Ming Street, Kwun Tong, Hong Kong
Currencyfair Asia Lim
ited
Foreign Currency
conversion services.
Hong Kong
HKD Ordinary shares
100
The following company has the address of 2 Floor Sabari Complex 24 Field Marshal, Capriappa RD Shanthala Nagar,
Ashok Nagar, Bangalore, Karnataka, , 560025, India
Assembly Payments
India Private Lim
ited
Activ
it
ies auxil
iary to
financial
intermed
iat
ion
India
INR100.00 Ordinary
100
39. Related undertakings of the Group continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
313
Notes to the financial statements cont
inued
Name and registered address
Activ
ity
Place of incorporation Descript
ion of shares
Proportion of
shares held
(%)
The following company has the address of 1st Floor, Europe Build
ing, No.1, Haddows Road, Nungambakkam, Chenna
i, 600 006, India
Standard Chartered Global
Business Services Private Lim
ited
Offshore Support Services
India
INR10.00 Equity shares
100
The following company has the address of 90 M.G.Road, II Floor, Fort, Mumbai, Maharashtra, 400 001, India
Standard Chartered Finance
Private Lim
ited
1
Support Services
India
INR10.00 Ordinary shares
98.68
The following company has the address of Ground Floor, Crescenzo Build
ing, G Block, C 38/39 , Bandra Kurla Complex,
Bandra (East) , Mumbai , Mumbai , Maharashtra , 400051, India
Standard Chartered Private Equity
Advisory (India) Private Lim
ited
Support Services
India
INR1,000.00 Ordinary shares
100
The following company has the address of Second Floor, Indiqube Edge, Khata No. 571/630/6/4, Sy.No.6/4, Ambalipura Village,
Varthur Hobli, Marathahalli Sub-Div
is
ion, Ward No. 150, Bengaluru, 560102, India.
Standard Chartered Research and
Technology India Private Lim
ited
Support Services
India
INR10.00 A Equity shares
100
INR10.00 Cumulative
Redeemable Preference
100
The following company has the address of Crescenzo, 6th Floor, Plot No 38-39 G Block , Bandra Kurla Complex, Bandra East,
Mumbai , Maharashtra , 400051, India
Standard Chartered Capital Lim
ited
1
Banking & Financ
ial Serv
ices
India
INR10.00 Equity shares
100
The following company has the address of 2nd Floor, 23-25 M.G. Road, Fort, Mumbai, 400 001, India
Standard Chartered Securit
ies
(India) Lim
ited
Banking & Financ
ial Serv
ices
India
INR10.00 Equity shares
100
The following company has the address of Ground Floor, Crescenzo Build
ing, G Block, C 38/39, Bandra Kurla Complex, Bandra (East) ,
Mumbai , Mumbai , Maharashtra , 400051, India
St Helen's Nominees India Private Lim
ited
1
Nominee Services
India
INR10.00 Equity shares
100
The following company has the address of Vaishnav
i Seren
ity, First Floor, No. 112, Koramangala Industrial Area, 5th Block,
Koramangala, Bangalore, Karnataka, 560095, India
Standard Chartered (India) Modeling
and Analytics Centre Private Lim
ited
1
Support Services
India
INR10.00 Equity shares
100
The following companies have the address of 91 Pembroke Road, Dublin 4, Ballsbridge, Dublin, DO4 EC42, Ireland
CurrencyFair (Canada) Lim
ited
Dormant
Ireland
€1.00 Ordinary
100
CurrencyFair Nominees Lim
ited
Nominee company
Ireland
€1.00 Ordinary
100
The following company has the address of 32 Molesworth Street, Dublin 2, D02Y512, Ireland
Zodia Markets (Ireland) Lim
ited
Banking & Financ
ial Serv
ices
Ireland
$1.00 Ordinary shares
100
The following company has the address of 27 Fitzw
ill
iam Street, Dublin, D02 TP23, Ireland
Zodia Custody (Ireland) Lim
ited
Custody services
Ireland
$1.00 Ordinary shares
100
The following company has the address of 91 Pembroke Road, Dublin 4, Ballsbridge, Dublin, DO4 EC42, Ireland
CurrencyFair Lim
ited
FX transfer services
Ireland
€0.001 A Ordinary shares
100
€0.001 A Ordinary shares
27.951
The following companies have the address of 1st Floor, Goldie House, 1-4 Goldie Terrace, Upper Church Street, Douglas, IM1 1EB,
Isle of Man
Standard Chartered Assurance Lim
ited
1
Insurance Services
Isle of Man
$1.00 Ordinary shares
100
US$1.00 Redeemable
Preference
100
Standard Chartered
Isle of Man Lim
ited
1,6
Insurance &
Reinsurance Company
Isle of Man
$1.00 Ordinary shares
100
The following company has the address of 21/F, Sanno Park Tower, 2-11-1 Nagatacho, Chiyoda-ku, Tokyo, 100-6155, Japan
Standard Chartered
Securit
ies (Japan) L
im
ited
1
Banking & Financ
ial Serv
ices
Japan
JPY Ordinary
100
The following company has the address of 15 Castle Street, St Helier, JE4 8PT, Jersey
SCB Nominees (CI) Lim
ited
1
Nominee Services
Jersey
$1.00 Ordinary shares
100
The following companies have the address of StandardChartered@Chiromo, Number 48, Westlands Road,
P. O. Box 30003 – 00100, Nairob
i, Kenya
39. Related undertakings of the Group continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
314
Notes to the financial statements cont
inued
Name and registered address
Activ
ity
Place of incorporation Descript
ion of shares
Proportion of
shares held
(%)
Solveazy Technology Kenya Ltd
B2B dig
ital platform
Kenya
KES1,000.00 Ordinary
100
Standard Chartered Bancassurance
Intermediary Lim
ited
Insurance Services
Kenya
KES100.00 Ordinary shares
100
Standard Chartered Investment
Services Lim
ited
Investment services
Kenya
KES20.00 Ordinary shares
100
Standard Chartered Bank Kenya Lim
ited
Banking & Financ
ial Serv
ices
Kenya
KES5.00 Ordinary shares
74.32
KES5.00 Preference
100.00
Standard Chartered Securit
ies
(Kenya) Lim
ited
Corporate Finance & Advisory
Services
Kenya
KES10.00 Ordinary shares
100
Standard Chartered Financ
ial
Services Lim
ited
Merchant Banking
Kenya
KES20.00 Ordinary shares
100
Standard Chartered Kenya
Nominees Lim
ited
1
Nominee Services
Kenya
KES20.00 Ordinary shares
100
Tawi Fresh Kenya Lim
ited
Dig
ital Marketplace,
Ecommerce
Kenya
KES1,000.00 Ordinary
100
The following company has the address of Atrium Build
ing, Maarad Street, 3rd Floor, P.O.Box: 11-4081 R
iad El Solh, Beirut,
Beirut Central Distr
ict, Lebanon
Standard Chartered Metropolitan
Holdings SAL
Investment Holding Company Lebanon
$10.00 Ordinary A shares
100
The following companies have the address of Level 26, Equatorial Plaza, Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia
Cartaban (Malaya) Nominees Sdn BerhadNominee Services
Malaysia
RM Ordinary shares
100
Cartaban Nominees (Asing) Sdn Bhd
Nominee Services
Malaysia
RM Ordinary shares
100
Cartaban Nominees (Tempatan) Sdn Bhd Nominee Services
Malaysia
RM Ordinary shares
100
Golden Maestro Sdn Bhd
Investment Holding Company Malaysia
RM Ordinary shares
100
Price Solutions Sdn Bhd
Direct Sales/
Collection Services
Malaysia
RM Ordinary shares
100
SCBMB Trustee Berhad
Trustee Services
Malaysia
RM Ordinary shares
100
Standard Chartered Bank
Malaysia Berhad
Banking & Financ
ial Serv
ices
Malaysia
RM Irredeemable Convertible
Preference shares
100
RM Ordinary shares
100
Standard Chartered Saadiq Berhad
Banking & Financ
ial Serv
ices
Malaysia
RM Ordinary shares
100
The following company has the address of Suite 18-1, Level 18, Vertical Corporate Tower B, Avenue 10, The Vertical, Bangsar South City,
No. 8, Jalan Kerinch
i , 59200 Kuala Lumpur, W
ilayah Persekutuan, Malaysia
Resolution Alliance Sdn Bhd
Investment Holding Company Malaysia
RM Ordinary shares
100
Irredeemable Preference
100
The following company has the address of 12th Floor, Menara Symphony , No. 5, Jalan Prof. Khoo Kay Kim, Seksyen 13,
46200 Petaling Jaya , Selangor, Malaysia
Solv Sdn. Bhd.
B2B dig
ital platform offer
ing
financial serv
ices
Malaysia
RM5.00 Ordinary
100
The following company has the address of Level 1, Wisma Standard Chartered, Jalan Teknologi 8, Taman Teknologi Malaysia,
57000 Bukit Jalil, Kuala Lumpur, Wilayah Persekutuan, Malaysia
Standard Chartered Global
Business Services Sdn Bhd
1
Offshore Support Services
Malaysia
RM Ordinary shares
100
The following company has the address of 10th Floor, Menara Hap Seng, No. 1&3, Jalan P. Ramlee, 50250 Kuala Lumpur, Malaysia
Assembly Payments
Malaysia Sdn. Bhd.
Other financial serv
ice
activ
it
ies
Malaysia
RM Ordinary shares
100
The following companies have the address of 6/F, Standard Chartered Tower, 19, Bank Street, Cybercity, Ebene, 72201, Maurit
ius
Standard Chartered Bank
(Maurit
ius) L
im
ited
1
Banking & Financ
ial Serv
ices
Maurit
ius
$ Ordinary shares
100
Standard Chartered Private Equity
(Maurit
ius) L
im
ited
1
Investment Management
Maurit
ius
$1.00 Ordinary shares
100
Standard Chartered Private Equity
(Maurit
ius) II L
im
ited
Investment Management
Maurit
ius
$1.00 Ordinary shares
100
39. Related undertakings of the Group continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
315
Notes to the financial statements cont
inued
Name and registered address
Activ
ity
Place of incorporation Descript
ion of shares
Proportion of
shares held
(%)
Standard Chartered Private
Equity (Maurit
ius) lll L
im
ited
Investment Management
Maurit
ius
$1.00 Ordinary shares
100
The following company has the address of Mondial Management Services Ltd, Unit 2L, 2nd Floor Standard Chartered Tower,
19 Cybercity, Ebene, Maurit
ius
Subcontinental Equit
ies L
im
ited
Investment Holding Company Maurit
ius
$1.00 Ordinary shares
100
The following company has the address of IQEQ Corporate Services (Maurit
ius) Ltd, 33, Ed
ith Cavell Street, Port Louis, 11324, Maurit
ius
Actis Treit Holdings (Maurit
ius) L
im
ited
2
Investment Holding Company Maurit
ius
Class A $1.00 Ordinary shares
62.001
The following company has the address of Standard Chartered Bank Nepal Lim
ited, Madan Bhandar
i Marg, Ward No.34,
Kathmandu Metropolitan City, Kathmandu Distr
ict, Bagmat
i Zone, Kathmandu, Nepal
Standard Chartered Bank Nepal Lim
ited
Banking & Financ
ial Serv
ices
Nepal
NPR100.00 Ordinary shares
70.21
The following companies have the address of 1 Basinghall Avenue, London, EC2V 5DD, United Kingdom
Standard Chartered Holdings
(Africa) B.V.
6
Holding company
Netherlands
€4.50 Ordinary shares
100
Standard Chartered Holdings
(Asia Pacif
ic) B.V.
6
Holding company
Netherlands
€4.50 Ordinary shares
100
Standard Chartered Holdings
(International) B.V.
6
Holding company
Netherlands
€4.50 Ordinary shares
100
Standard Chartered MB Holdings B.V.
6
Holding company.
Netherlands
€4.50 Ordinary shares
100
The following company has the address of 4 All good Place, Rototuna North, Hamilton, New Zealand, 3210
PromisePay Lim
ited
Payment Services Provider
New Zealand
NZD Ordinary shares
100
The following companies have the address of 142, Ahmadu Bello Way, Victor
ia Island, Lagos, 101241, N
iger
ia
Standard Chartered Bank
Niger
ia L
im
ited
Banking & Financ
ial Serv
ices
Niger
ia
NGN1.00 B Redeemable
Preference
100
NGN1.00 Irredeemable Non
Cumulative Preference
100
NGN1.00 Ordinary
100
Standard Chartered Capital &
Advisory Niger
ia L
im
ited
Corporate Finance &
Advisory Services
Niger
ia
NGN1.00 Ordinary shares
100
Standard Chartered Nominees
(Niger
ia) L
im
ited
Custody Services
Niger
ia
NGN1.00 Ordinary shares
100
The following company has the address of P.O. Box No. 5556I.I. Chundrigar Road, Karachi, 74000, Pakistan
Standard Chartered Bank
(Pakistan) Lim
ited
1
Banking & Financ
ial Serv
ices
Pakistan
PKR10.00 Ordinary shares
98.99
The following company has the address of Rondo Ignacego Daszyńskiego 2B, 00-843, Warsaw, Poland
Standard Chartered Global Business
Services spółka z ograniczoną
odpowiedz
ialnośc
ią1
Offshore Support Services
Poland
PLN50.00 Ordinary shares
100
The following company has the address of Al Faisal
iah Office Tower Floor No 7 (T07D) , K
ing Fahad Highway, Olaya Distr
ict,
Riyadh P.O box 295522, Riyadh, 11351, Saudi Arabia
Standard Chartered
Capital (Saudi Arabia)
1
Custody Services
Saudi Arabia
SAR10.00 Ordinary shares
100
The following company has the address of 9 & 11, Lightfoot Boston Street, Freetown, Sierra Leone
Standard Chartered Bank
Sierra Leone Lim
ited
Banking & Financ
ial Serv
ices
Sierra Leone
SLL1.00 Ordinary shares
80.7
The following companies have the address of 9 Raffles Place, #27-00 Republic Plaza, 048619, Singapore
Actis Treit Holdings No.1
(Singapore) Private Lim
ited
2
Investment Holding Company Singapore
SGD Ordinary
100
Actis Treit Holdings No.2
(Singapore) Private Lim
ited
2
Investment Holding Company Singapore
SGD Ordinary
100
The following company has the address of 7 Changi Business Park Crescent, #03-00 Standard Chartered @ Changi, 486028, Singapore
Raffles Nominees (Pte.) Lim
ited
Nominee Services
Singapore
SGD Ordinary shares
100
The following companies have the address of 8 Marina Boulevard, #27-01 Marina Bay Financ
ial Centre Tower 1, 018981, S
ingapore
39. Related undertakings of the Group continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
316
Notes to the financial statements cont
inued
Name and registered address
Activ
ity
Place of incorporation Descript
ion of shares
Proportion of
shares held
(%)
SCTS Capital Pte. Ltd
Nominee Services
Singapore
SGD Ordinary shares
100
SCTS Management Pte. Ltd.
Nominee Services
Singapore
SGD Ordinary shares
100
Standard Chartered Bank
(Singapore) Lim
ited
Banking & Financ
ial Serv
ices
Singapore
SGD Non-cumulative
Class C Tier-1 preference
100
SGD Ordinary-A
100
US$ Non-cumulative
Class B Tier-1 Preference
100
US$ Ordinary-A
100
US$ Ordinary-B
100
US$ Ordinary-C
100
Standard Chartered Trust
(Singapore) Lim
ited
1
Trustee Services
Singapore
SGD Ordinary shares
100
Standard Chartered Holdings
(Singapore) Private Lim
ited
Investment Holding Company Singapore
SGD Ordinary
100
US$ Ordinary
100
Standard Chartered Nominees
(Singapore) Pte Ltd
1
Nominee Services
Singapore
SGD Ordinary shares
100
The following companies have the address of 80 Robinson Road, #02-00, 068898, Singapore
Autumn Life Pte. Ltd.
Support Services
Singapore
$ Ordinary shares
100
Cardspal Pte. Ltd.
Support Services
Singapore
$ Ordinary shares
100
Audax Financ
ial Technology Pte. Ltd
Support Services
Singapore
$ Ordinary shares
100
Letsbloom Pte. Ltd.
Others
Singapore
$ Ordinary shares
100
SCV Research and Development Pte. Ltd.
Others
Singapore
$ Ordinary shares
100
Pegasus Dealmaking Pte. Ltd.
Mergers and Acquis
it
ions
(M&A) marketplace
Singapore
$ Ordinary shares
100
The following companies have the address of Tricor WP Corporate Services Pte Ltd, 80 Robinson Road #02-00, 068898, Singapore
Power2SME Pte. Ltd.
Investment Holding Entity
Singapore
$ Ordinary shares
90.6
SCV Master Holding Company Pte. Ltd.
Investment Holding Entity
Singapore
$ Ordinary shares
100
Solv-India Pte. Ltd.
Investment Holding Entity
Singapore
$ Ordinary shares
100
The following company has the address of 77 Robinson Road, #25-00 Robinson 77, 068896, Singapore
Trust Bank Singapore Lim
ited
Banking & Financ
ial Serv
ices
Singapore
SGD Ordinary shares
60
The following company has the address of 1 Robinson Road, #17-00, AIA Tower, 048542, Singapore
CurrencyFair (Singapore) Pte.Ltd
Foreign Currency
conversion services.
Singapore
SGD Ordinary shares
100
The following companies have the address of 38 Beach Road, #29-11 South Beach Tower, 189767, Singapore
Assembly Payments SGP Pte. Ltd.
Transaction/Payment
Processing Services
Singapore
SGD Ordinary shares
100
Assembly Payments Pte. Ltd.
Investment holding
company
Singapore
$ Ordinary shares
100
$ Preference shares
100
The following company has the address of Abogado Pte Ltd, No. 8 Marina Boulevard, #05-02 MBFC Tower 1, 018981, Singapore
Standard Chartered IL&FS Management
(Singapore) Pte. Lim
ited
1
Investment Management
Singapore
$ Ordinary
50
The following companies have the address of 2nd Floor, 115 West Street, Sandton, Johannesburg, 2196, South Africa
CMB Nominees (RF) PTY Lim
ited
1
Nominee Services
South Africa
ZAR1.00 Ordinary shares
100
Standard Chartered Nominees South
Africa Proprietary Lim
ited (RF)
1
Nominee Services
South Africa
ZAR Ordinary shares
100
The following company has the address of 6 Fort Street, PO 785848, Birnam, Sandton, 2196 2146, South Africa
Promisepay (PTY) Ltd
Payment Services Provider
South Africa
ZAR1.00 Ordinary
100
The following companies have the address of 1 Floor, International House, Shaaban Robert Street/Garden Avenue, PO Box 9011,
Dar Es Salaam, Tanzania, United Republic of
39. Related undertakings of the Group continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
317
Notes to the financial statements cont
inued
Name and registered address
Activ
ity
Place of incorporation Descript
ion of shares
Proportion of
shares held
(%)
Standard Chartered Bank
Tanzania Lim
ited
Banking & Financ
ial Serv
ices
Tanzania
TZS1,000.00 Ordinary shares
100
TZS1,000.00 Preference
100
Standard Chartered
Tanzania Nominees Lim
ited
Nominee Services
Tanzania
TZS1,000.00 Ordinary shares
100
The following company has the address of No. 140, 11th, 12th and 14th Floor, Wireless Road, Lumpin
i, Patumwan,
Bangkok, 10330, Thailand
Standard Chartered Bank
(Thai) Public Company Lim
ited
Banking & Financ
ial Serv
ices
Thailand
THB10.00 Ordinary shares
99.90
The following company has the address of Buyukdere Cad. Yapi Kredi Plaza C Blok, Kat 15, Levent, Istanbul, 34330, Turkey
Standard Chartered Yatir
im Bankas
i
Turk Anonim Sirket
i
Banking & Financ
ial Serv
ices
Turkey
TRL0.10 Ordinary shares
100
The following company has the address of Standard Chartered Bank Bldg, 5 Speke Road, PO Box 7111, Kampala, Uganda
Standard Chartered Bank
Uganda Lim
ited
Banking & Financ
ial Serv
ices
Uganda
UGS1,000.00 Ordinary shares
100
The following company has the address of EX-26, Ground Floor, Bldg 16-Co Work, Dubai Internet City, Dubai, United Arab Emirates
Appro Onboarding
Solutions FZ-LLC
IT solutions provider and
support service provider.
United Arab
Emirates
AED1,000.00 Ordinary shares
100
The following company has the address of Suites 507, 508, 509, 15th Floor, Al Sarab Tower, Adgm Square, Al Maryah Island, Abu Dhabi
Financ
ial Inclus
ion Technologies Ltd
Dig
ital wallet and technology
payments platform
United Arab
Emirates
US$1.00 Ordinary
100
The following company has the address of 505 Howard St. #201, San Francisco, CA 94105, United States
SC Studios, LLC
1
Offshore Support Services
United States
Membership Interest
100
The following company has the address of Standard Chartered Bank, 37F, 1095 Avenue of the Americas, New York 10036, United States
Standard Chartered Bank
International (Americas) Lim
ited
Banking & Financ
ial Serv
ices
United States
$1,000.00 Ordinary shares
100
The following companies have the address of Corporation Trust Centre, 1209 Orange Street, Wilm
ington DE 19801, Un
ited States
Standard Chartered Holdings Inc
1
Investment Holding Company United States
$100.00 Common shares
100
Standard Chartered Securit
ies
(North America) LLC
Banking & Financ
ial Serv
ices
United States
Membership Interest
100
The following company has the address of 50 Fremont Street, San Francisco CA 94105, United States
Standard Chartered
Overseas Investment, Inc.
Investment Holding Company United States
$10.00 Ordinary shares
100
The following companies have the address of C/O Corporation Service Company, 251 Little Falls Drive, Wilm
ington DE 19808,
United States
CurrencyFair (USA) Inc
Dormant
United States
$1.00 Uncertif
icated Shares
100
Standard Chartered
Trade Services Corporation
Trade Services
United States
$0.01 Common shares
100
The following company has the address of 25 Taylor St, San Francisco, CA, 94102-3916
Assembly Escrow Inc
Payment Services Provider
United States
$0.0001 Ordinary
100
The following company has the address of 555 Washington Av, St Louis, MO, United States of America, 63101
Assembly Payments, Inc
Payment services provider
United States
$0.0001 Ordinary
100
The following company has the address of Level 3, #CP1.L01 and #CP2.L01, Capital Place, 29 Lieu Gia
i Street, Ngoc Khanh Ward,
Ba Dinh Distr
ict, Ha No
i, 10000, Vietnam
Standard Chartered Bank
(Vietnam) Lim
ited
Banking & Financ
ial Serv
ices
Vietnam
VND Charter Capital shares
100
The following companies have the address of Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110,
Virg
in Islands, Br
it
ish
Sky Favour Investments Lim
ited
5
Investment Holding
Company
Virg
in Islands,
Brit
ish
$1.00 Ordinary shares
100
Sky Harmony Holdings Lim
ited
5
Investment Holding
Company
Virg
in Islands,
Brit
ish
$1.00 Ordinary shares
100
39. Related undertakings of the Group continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
318
Notes to the financial statements cont
inued
Name and registered address
Activ
ity
Place of incorporation Descript
ion of shares
Proportion of
shares held
(%)
The following companies have the address of Stand No. 4642, Corner of Mwaimwena Road and Addis Ababa Dri, Lusaka,
Zambia, 10101, Zambia
Standard Chartered Bank Zambia Plc
Banking & Financ
ial Serv
ices
Zambia
ZMW0.25 Ordinary shares
90
Standard Chartered Zambia Securit
ies
Services Nominees Lim
ited
Nominee Services
Zambia
ZMW1.00 Ordinary shares
100
The following companies have the address of Africa Unity Square Build
ing, 68 Nelson Mandela Avenue, Harare, Z
imbabwe
Africa Enterprise Network Trust
3
Investment Holding Company Zimbabwe
Interest in Trust
100
Standard Chartered Bank
Zimbabwe Lim
ited
Banking & Financ
ial Serv
ices
Zimbabwe
$1.00 Ordinary shares
100
Standard Chartered Nominees
Zimbabwe (Private) Lim
ited
Nominee Services
Zimbabwe
$2.00 Ordinary shares
100
1
Directly held related undertaking
2
The Group has determined that these undertakings are excluded from being consolidated into the Groups accounts, and do not meet the defin
it
ion of a Subsid
iary
under IFRS. See notes 31 and 32 for the consolidat
ion pol
icy and disclosure of the undertaking.
3
No share capital by virtue of being a trust
4 Lim
ited l
iab
il
ity company
5
The Group has determined the princ
ipal place of operat
ion to be Hong Kong
6
The Group has determined the princ
ipal place of operat
ion to be United Kingdom
7
Company is exempt from the requirements of the companies Act relating to the audit of ind
iv
idual accounts by virtue of S479A
8
Company numbers of the subsid
iar
ies taking an audit exemption are SC Transport Leasing 1 LTD – 06787116, SC Transport Leasing 2 Lim
ited – 06787090 and
Standard Chartered Leasing (UK) Lim
ited – 05513184
Joint ventures
Name
Activ
ity
Place of Incorporation Descript
ion of shares
Proportion of
shares held
(%)
The following company has the address of Tricor WP Corporate Services Pte Ltd, 80 Robinson Road #02-00, 068898, Singapore
Olea Global Pte. Ltd.
Provis
ion of trade finance
products and services.
Singapore
$ Ordinary shares
50
$ Preference shares
100
Associates
Name
Activ
ity
Place of Incorporation Descript
ion of shares
Proportion of
shares held
(%)
The following company has the address of 41 Luke Street, London, EC2A 4DP , United Kingdom
Fintech for International Development Ltd Financ
ial
intermed
iat
ion
United Kingdom
$0.0001 Ordinary-A
44.445
The following company has the address of 1 Raffles Quay, #23-01, One Raffles Quay, 048583, Singapore
Clifford Capital Holdings Pte. Ltd.
Investment Holding Company Singapore
$1.00 Ordinary shares
9.9
The following company has the address of 10 Marina Boulevard #08-08, Marina Bay, Financ
ial Centre, 018983, S
ingapore
Verif
ied Impact Exchange
Holdings Pte. Ltd
Exchange offering
liqu
id
ity of trade
Singapore
SGD Ordinary shares
15
$ Redeemable Convertible
Preference shares
28.571
The following company has the address of Victor
ia House, State House Avenue, V
ictor
ia, MAHE, Seychelles
Seychelles International Mercantile
Banking Corporation Lim
ited.
Commercial Bank
Seychelles
SCR1,000.00 Ordinary shares
22
The following company has the address of Avenue de Tivol
i 2, 1007, Lausanne, Sw
itzerland
Metaco SA
Integrated
infrastructure solutions
Switzerland
CHF 0.01 Preference A Shares
29.505
39. Related undertakings of the Group continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
319
Notes to the financial statements cont
inued
Sign
ificant
investment holdings and other related undertakings
Name
Activ
ity
Place of Incorporation Descript
ion of shares
Proportion of
shares held
(%)
The following company has the address of 1 Bartholomew Lane, London, EC2N 2AX, United Kingdom
Corrasi Covered Bonds
(LM) Lim
ited
1
Liqu
idat
ion member
representing the bond holders
United Kingdom
£1.00 Ordinary
20
The following company has the address of Intertrust Corporate Services (Cayman) Lim
ited, 190 Elg
in Avenue, George Town,
Grand Cayman , KY1-9005, Cayman Islands
ATSC Cayman Holdco Lim
ited
Investment holding
Cayman Islands
$0.01 Ordinary-A shares
5.272
$0.01 Ordinary-B shares
100
The following company has the address of 3, Floor 1, No.1, Shiner Wuxingca
iyuan, West Er Huan Rd, , X
i Shan Distr
ict, Kunm
ing,
Yunnan Province, PRC , China
Yunnan Golden Shiner Property
Development Co., Ltd.
Real Estate Developers
China
CNY1.00 Ordinary shares
37.5
The following companies have the address of Unit 605-08, 6/F Wing On Centre, 111 Connaught Road, Central, Sheung Wan, Hong Kong
Actis Temple Stay Holdings
(HK) Lim
ited
Investment holding
Hong Kong
$ Class A Ordinary shares
39.689
$ Class B Ordinary shares
39.689
Actis Rivendell Holdings
(HK) Lim
ited
Investment holding
Hong Kong
$ Class A Ordinary shares
39.689
$ Class B Ordinary shares
39.689
The following company has the address of 1221 A, Devika Tower, 12th Floor, 6 Nehru Place, New Delhi 110019, New Delhi, 110019, India
Mikado Realtors Private Lim
ited
Other business activ
it
ies
India
INR10.00 Ordinary shares
26
The following company has the address of 4thFloor, 274, Chital
ia House, Dr. Cawasji Hormusji Road, Dhob
i Talao, Mumbai City,
Maharashtra, India 400 002, Mumbai, 400 002, India
Industrial Minerals and
Chemical Co. Pvt. Ltd
Minerals and Chemical
India
INR100.00 Ordinary shares
26
The following company has the address of Deloitte Anj
in Korea, 5F., One IFC, 23, Yo
ido-dong, Youngdeungpo-gu, Seoul, Korea,
Republic of
Ascenta III
Investment making
Korea
KRW Class B Equity Interest
31
The following company has the address of 49, Sungei Kadut Avenue, #03-01 S729673, Singapore
Omni Centre Pte. Ltd.
Real Estate Owners
& Developers
Singapore
SGD Redeemable Convertible
Preference shares
99.998
The following company has the address of 251 Little Falls Drive, Wilm
ington, New Castle DE 19808, Un
ited States
Paxata, Inc.
Data Analytics
United States
US$0.0001 Series
C2 Preferred Stock
40.74
US$0.0001 Series
C3 Preferred Stock
8.91
1
Directly held related undertaking
39. Related undertakings of the Group continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
320
Notes to the financial statements cont
inued
In liqu
idat
ion
Subsid
iary undertak
ings
Name
Activ
ity
Place of Incorporation Descript
ion of shares
Proportion of
shares held
(%)
The following company has the address of "C/O Teneo Restructuring Lim
ited 156 Great Charles Street Queensway
Birm
ingham West M
idlands B3 3HN"
Standard Chartered
Masterbrand Licens
ing L
im
ited
To manage intellectual
property for Group
United Kingdom
$1.00 Ordinary Shares
100
The following companies have the address of Bucktrout House, Glategny Esplanade, St Peter Port, GY1 3HQ, Guernsey
Birdsong Lim
ited
Fiduc
iary Serv
ices
Guernsey
£1.00 Ordinary shares
100
Nominees One Lim
ited
Fiduc
iary Serv
ices
Guernsey
£1.00 Ordinary shares
100
Nominees Two Lim
ited
Fiduc
iary Serv
ices
Guernsey
£1.00 Ordinary shares
100
Songbird Lim
ited
Fiduc
iary Serv
ices
Guernsey
£1.00 Ordinary shares
100
Standard Chartered Secretaries
(Guernsey) Lim
ited
Fiduc
iary Serv
ices
Guernsey
£1.00 Ordinary shares
100
Standard Chartered Trust
(Guernsey) Lim
ited
1
Fiduc
iary Serv
ices
Guernsey
£1.00 Ordinary shares
100
The following company has the address of 30 Rue Schrobilgen, 2526, Luxembourg
Standard Chartered Financ
ial
Services (Luxembourg) S.A.
Corporate Finance & Advisory
Services
Luxembourg
€25.00 Ordinary shares
100
The following company has the address of Jiron Huascar 2055, Jesus Maria, Lima 15072, Peru
Banco Standard Chartered
en Liqu
idac
ion
1
Used to provide banking
services
Peru
$75.133 Ordinary shares
100
The following company has the address of Luis Alberto de Herrera 1248, Torre II, Piso 11, Esc. 1111, Uruguay
Standard Chartered
Uruguay Representacion S.A.
1
financial counsell
ing services
Uruguay
UYU1.00 Ordinary shares
100
The following company has the address of C/o WALKERS CORPORATE LIMITED, 190 Elgin Avenue George Town
Grand Cayman KY1-9008 , Cayman Islands
Sirat Holdings Lim
ited
1
Investment Holding Entity
Cayman Islands
$0.01 Ordinary shares
100
The following company has the address of c/o Ocorian Corporate Services (Maurit
ius) Ltd, 6th Floor, Tower A, 1 Cyberc
ity,
Ebene, 72201, Maurit
ius
Standard Chartered Financ
ial Hold
ings
Investment Holding Company Maurit
ius
$1.00 Ordinary shares
100
The following company has the address of 142, Ahmadu Bello Way, Victor
ia Island, Lagos, 101241, N
iger
ia
Cherroots Niger
ia L
im
ited
Investment Holding Company Niger
ia
NGN1.00 Ordinary Shares
100
1
Directly held related undertaking
39. Related undertakings of the Group continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
321
Notes to the financial statements cont
inued
Liqu
idated/d
issolved/sold
Subsid
iary undertak
ings
Name
Activ
ity
Place of Incorporation Descript
ion of shares
Proportion of
shares held
(%)
The following companies have the address of Unit 605-08, 6/F Wing On Centre, 111 Connaught Road, Central, Sheung Wan, Hong Kong
Actis Jack Holdings (HK) Lim
ited
Investment holding
Hong Kong
$ Class A Ordinary shares
39.689
$ Class B Ordinary shares
39.689
Actis Young City Holdings
(HK) Lim
ited
Investment holding
Hong Kong
$ Class A Ordinary shares
39.689
$ Class B Ordinary shares
39.689
The following company has the address of 2 More London Rivers
ide, London SE1 2JT, Un
ited Kingdom
Bricks (M) LP2
Investment Holding Company United Kingdom
Lim
ited Partnersh
ip interest
100
The following company has the address of 1 Basinghall Avenue, London, EC2V 5DD, United Kingdom
Standard Chartered Strategic Investments
Lim
ited²
Investment holding Company
United Kingdom
$1.00 Ordinary shares
100
The following company has the address of "C/O Teneo Restructuring Lim
ited 156 Great Charles Street Queensway
Birm
ingham West M
idlands B3 3HN"
Compass Estates Lim
ited
1
Investment holding Company
United Kingdom
£1.00 Ordinary shares
100
The following company has the address of Menara Standard Chartered, 3rd Floor, Jl. Prof.Dr. Satrio no. 164, Setiabud
i,
Jarkarta Selatan, Indonesia
PT Solusi Cakra Indonesia
(dalam liku
idas
i)
1
Banking & Financ
ial Serv
ices
Indonesia
IDR23,809,600.00
Ordinary shares
99
The following company has the address of No. 157 – 157 A, Jakarta Barat, 11130, Indonesia.
PT. Price Solutions Indonesia
(dalam liku
idas
i)
Direct Sales/
Collection Services
Indonesia
$100.00 Ordinary shares
100
The following company has the address of Standard Chartered@Chiromo, Number 48, Westlands Road, P. O. Box 30003-00100,
Nairob
i, Kenya
Standard Chartered Management
Services Lim
ited
Investment Management
Kenya
KES20.00 Ordinary shares
100
The following company has the address of M6-2701, West 27Fl, Suha-dong, 26, Eulj
i-ro 5-g
il, Jung-gu, Seoul, Korea, Republic of
Resolution Alliance Korea Ltd
Investment Management
Korea,
Republic of
KRW5,000.00
Ordinary shares
100
The following company has the address of 8/Floor, Gloucester Tower , The Landmark, 15 Queen's Road Central, Hong Kong
Leopard Hong Kong Lim
ited
Holding Company
Hong Kong
$ Ordinary shares
100
The following company has the address of 8 Marina Boulevard, Level 27, Marina Bay Financ
ial Centre, Tower 1, 018981, S
ingapore
Standard Chartered (2000) Lim
ited
Others
Singapore
SGD1.00 Ordinary shares
100
The following companies has the address of C/o IQ EQ Corporate Services (Maurit
ius) Ltd, 33 Ed
ith Cavell Street,
Port Louis, 11324, Maurit
ius
FAI Lim
ited
Investment Advisory services
Maurit
ius
$1.00 Ordinary shares
76.598
The following company has the address of Level 26, Equatorial Plaza, Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia
Popular Ambience Sdn Bhd
To undertake investments in
non-performing loans
Malaysia
RM Ordinary shares
100
The following company has the address of Lot 6.05, Level 6, KPMG Tower, 8 First Avenue, Bandar Utama, 47800 Petaling Jaya,
Selangor, Malaysia
House Network SDN BHD
Admin
istrat
ion of shared
ATM network
Malaysia
RM1.00 Ordinary shares
25
1
Directly held related undertaking
2
39. Related undertakings of the Group continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
322
Supplementary financial
informat
ion
Insured and uninsured deposits
SCB operates and provides services to customers across many countries and insured deposit is determined on the basis of
lim
its enacted w
ith
in local regulat
ions.
2022
2021
Bank deposits
$mill
ion
Customer
accounts
$mill
ion
Bank deposits
$mill
ion
Customer
accounts
$mill
ion
Insured deposits
28
16,218
90
17,956
Current accounts
8
8,336
10
10,694
Savings deposits
–
4,352
–
4,199
Time deposits
20
3,467
80
2,841
Other deposits
–
63
–
222
Uninsured deposits
31,244
279,269
30,266
287,882
Current accounts
18,970
107,316
21,710
115,582
Savings deposits
–
14,339
–
16,946
Time deposits
5,381
110,379
3,217
96,841
Other deposits
6,893
47,235
5,339
58,514
Total
31,272
295,487
30,356
305,838
UK and non-UK deposits
SCB operates and provides services to customers across many countries and insured deposit is determined on the basis of
lim
its enacted w
ith
in local regulat
ions.
2022
2021
Bank deposits
$mill
ion
Customer
accounts
$mill
ion
Bank deposits
$mill
ion
Customer
accounts
$mill
ion
UK deposits
4,109
36,461
2,554
30,232
Current accounts
849
7,481
1,631
10,215
Savings deposits
–
34
–
29
Time deposits
1,004
6,558
112
7,484
Other deposits
2,256
22,388
811
12,504
Non-UK deposits
27,163
259,026
27,802
275,606
Current accounts
18,129
108,171
20,089
116,061
Savings deposits
–
18,657
–
21,116
Time deposits
4,397
107,288
3,185
92,198
Other deposits
4,637
24,910
4,528
46,231
Total
31,272
295,487
30,356
305,838
Contractual maturity of Loans, Investment securit
ies and Depos
its
2022
Loans and
advances to
banks
$mill
ion
Loans and
advances to
customers
$mill
ion
Investment
securit
ies
– Treasury
and other
elig
ible B
ills
$mill
ion
Investment
securit
ies
– Debt
securit
ies
$mill
ion
Investment
securit
ies
– Equity
shares
$mill
ion
Bank
deposits
$mill
ion
Customer
accounts
$mill
ion
One year or less
47,334
139,074
25,668
20,194
–
29,918
288,472
Between one and five years
3,549
28,958
430
40,005
–
1,348
6,860
Between five and ten years
361
9,435
–
17,884
–
6
90
Between ten years and fifteen years
92
6,387
–
12,843
–
–
48
More than fifteen years and undated
182
17,394
–
8,811
2,490
–
17
Total
51,518
201,248
26,098
99,737
2,490
31,272
295,487
Total amortised cost and FVOCI exposures
27,383
158,126
Fixed interest rate exposures
26,083
89,636
Floating interest rate exposures
1,300
68,490
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
323
2021
Loans and
advances to
banks
$mill
ion
Loans and
advances to
customers
$mill
ion
Investment
securit
ies
– Treasury and
other elig
ible
Bills
$mill
ion
Investment
securit
ies
– Debt
securit
ies
$mill
ion
Investment
securit
ies
– Equity shares
$mill
ion
Bank deposits
$mill
ion
Customer
accounts
$mill
ion
One year or less
49,284
148,126
13,159
17,657
–
30,236
300,933
Between one and five years
2,750
28,892
393
48,951
–
118
4,572
Between five and ten years
143
8,293
–
19,402
–
2
324
Between ten years and fifteen years
–
–
–
17,547
–
–
10
More than fifteen years and undated
152
23,698
–
–
5,160
–
–
Total
52,329
209,009
13,552
103,557
5,160
30,356
305,839
Total amortised cost and
FVOCI exposures
29,999
144,799
Fixed interest rate exposures
27,870
76,689
Floating interest rate exposures
2,129
68,110
Maturity and yield of Debt securit
ies, alternat
ive tier one and other elig
ible b
ills held at amortised cost
2022
One year or less
Between one
and five years
Between five
and ten years
More than ten years
Total
$mill
ion
Yield %
$mill
ion
Yield %
$mill
ion
Yield %
$mill
ion
Yield %
$mill
ion
Yield %
Central and other government agencies
– US
1,860
1.56
3,803
1.42
4,900
1.27
4,498
3.47
15,062
2.00
– UK
–
–
85
1.98
60
0.50
47
0.90
191
1.26
– Other
579
2.58
5,401
2.39
3,056
2.21
–
–
9,036
2.34
Other debt securit
ies
3,188
4.66
1,982
5.64
1,453
3.82
10,890
3.32
17,513
3.87
As at 31 December 2022
5,627
3.42
11,271
2.63
9,469
1.96
15,435
3.36
41,802
2.85
2021
One year or less
Between one
and five years
Between five
and ten years
More than ten years
Total
$mill
ion
Yield %
$mill
ion
Yield %
$mill
ion
Yield %
$mill
ion
Yield %
$mill
ion
Yield %
Central and other government agencies
– US
250
1.75
4,366
1.38
4,763
1.18
3,418
3.00
12,797
1.75
– UK
–
–
49
2.67
114
0.81
52
0.91
215
1.26
– Other
937
1.55
2,550
1.89
1,286
1.41
–
–
4,773
1.69
Other debt securit
ies
1,584
6.43
1,368
5.34
685
3.12
7,792
0.76
11,429
2.24
As at 31 December 2021
2,771
4.36
8,333
2.19
6,848
1.41
11,262
1.44
29,214
1.93
The maturity distr
ibut
ions are presented in the above table on the basis of contractual maturity dates. The weighted
average yield for each range of maturit
ies
is calculated by div
id
ing the annualised interest income for the year by the book
amount of debt securit
ies at that date.
Supplementary financial
informat
ion cont
inued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
324
Supplementary financial
informat
ion cont
inued
Average balance sheets and yields and volume and price variances
Average balance sheets and yields
For the purposes of calculating net interest margin the following adjustments are made:
Statutory net interest income is adjusted to remove interest expense on amortised cost liab
il
it
ies used to prov
ide funding to
the financial Markets bus
iness.
Financ
ial
instruments measured at fair value through profit or loss are classif
ied as non-
interest earning Premiums on
financial guarantees purchased to manage
interest earning assets are treated as interest expense In the Group’s view this
results in a net interest margin that is more reflective of banking book performance.
The following tables set out the average balances and yields for the SC Bank Group’s assets and liab
il
it
ies for the per
iods
ended 31 December 2022 and 31 December 2021 under the revised defin
it
ion of net interest margin.
For the purpose of these tables, average balances have been determined on the basis of daily balances, except for certain
categories, for which balances have been determined less frequently. The Group does not believe that the informat
ion
presented in these tables would be sign
ificantly d
ifferent had such balances been determined on a daily basis.
Average assets
2022
Average
non-interest
earning
balance
$mill
ion
Average
interest
earning
balance
$mill
ion
Interest
income
$mill
ion
Gross yield
%
Gross yield
total balance
%
Cash and balances at central banks
14,190
52,002
745
1.43
1.13
Gross loans and advances to banks
28,252
28,560
635
2.22
1.12
Gross loans and advances to customers
56,483
155,518
5,766
3.71
2.72
Impairment provis
ions aga
inst loans and advances
to banks and customers
–
(4,804)
–
–
–
Investment securit
ies – Treasury and Other El
ig
ible B
ills
3,485
14,113
518
3.67
2.94
Investment securit
ies – Debt Secur
it
ies
9,776
92,171
2,037
2.21
2.00
Investment securit
ies – Equ
ity Shares
2,860
–
–
–
–
Due from subsid
iary undertak
ings and other related parties
–
6,387
64
1.00
1.00
Property, plant and equipment and intang
ible assets
3,873
–
–
–
–
Prepayments, accrued income and other assets
111,206
–
–
–
–
Investment associates and jo
int ventures
220
–
–
–
–
Total average assets
230,345
343,947
9,765
2.84
1.70
Average assets
2021
Average
non-interest
earning
balance
$mill
ion
Average
interest
earning
balance
$mill
ion
Interest
income
$mill
ion
Gross yield
%
Gross yield
total balance
%
Cash and balances at central banks
15,793
52,988
67
0.13
0.10
Gross loans and advances to banks
20,323
27,751
321
1.16
0.67
Gross loans and advances to customers
51,613
154,699
4,231
2.73
2.05
Impairment provis
ions aga
inst loans and advances
to banks and customers
–
(5,542)
–
–
–
Investment securit
ies – Treasury and Other El
ig
ible B
ills
3,359
9,991
285
2.85
2.13
Investment securit
ies – Debt Secur
it
ies
10,836
83,287
1,240
1.49
1.32
Investment securit
ies – Equ
ity Shares
3,481
–
–
–
–
Due from subsid
iary undertak
ings and other related parties
–
7,011
41
0.58
0.58
Property, plant and equipment and intang
ible assets
3,771
–
–
–
–
Prepayments, accrued income and other assets
85,066
–
–
–
–
Investment associates and jo
int ventures
138
–
–
–
–
Total average assets
194,380
330,185
6,185
1.87
1.18
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
325
Average liab
il
it
ies
2022
Average
non-interest
bearing
balance
$mill
ion
Average
interest
bearing
balance
$mill
ion
Interest
expense
$mill
ion
Rate paid
%
Rate paid
total balance
%
Deposits by banks
12,185
22,783
358
1.57
1.02
Customer accounts:
Current accounts
31,956
100,431
968
0.96
0.73
Savings deposits
–
20,621
454
2.20
2.20
Time deposits
7,736
94,825
1,295
1.37
1.26
Other deposits
52,918
3,888
78
2.01
0.14
Debt securit
ies
in issue
6,250
29,800
367
1.23
1.02
Due to parent companies, subsid
iary undertak
ings
& other related parties
–
29,003
1,204
4.15
4.15
Accruals, deferred income and other liab
il
it
ies
102,775
548
28
5.11
0.03
Subordinated liab
il
it
ies and other borrowed funds
–
15,065
562
3.73
3.73
Non-controlling interests
2,972
–
–
–
–
Shareholders’ funds
40,536
–
–
–
–
257,328
316,964
5,314
1.68
0.93
Adjustment for Financ
ial Markets fund
ing costs
(324)
Financ
ial guarantee fees on
interest earning assets
80
Total average liab
il
it
ies and shareholders’ funds
257,328
316,964
5,070
1.60
0.88
Average liab
il
it
ies
2021
Average
non-interest
bearing
balance
$mill
ion
Average
interest
bearing
balance
$mill
ion
Interest
expense
$mill
ion
Rate paid
%
Rate paid
total balance
%
Deposits by banks
12,764
23,476
68
0.29
0.19
Customer accounts:
Current accounts
31,049
87,603
210
0.24
0.18
Savings deposits
–
19,996
245
1.23
1.23
Time deposits
6,765
87,965
207
0.24
0.22
Other deposits
45,027
6,373
22
0.35
0.04
Debt securit
ies
in issue
4,622
26,705
98
0.37
0.31
Due to parent companies, subsid
iary undertak
ings
& other related parties
–
30,392
825
2.71
2.71
Accruals, deferred income and other liab
il
it
ies
81,827
624
34
5.45
0.04
Subordinated liab
il
it
ies and other borrowed funds
–
15,087
424
2.81
2.81
Non-controlling interests
3,036
–
–
–
–
Shareholders’ funds
41,255
–
–
–
–
226,344
298,221
2,133
0.72
0.41
Adjustment for Financ
ial Markets fund
ing costs
(121)
Financ
ial guarantee fees on
interest earning assets
99
Total average liab
il
it
ies and shareholders’ funds
226,344
298,221
2,111
0.71
0.40
Supplementary financial
informat
ion cont
inued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
326
Supplementary financial
informat
ion cont
inued
Net interest margin
2022
$mill
ion
2021
$mill
ion
Interest income (statutory)
9,765
6,185
Average interest earning assets
343,947
330,185
Gross yield (%)
2.84
1.87
Interest expense (statutory)
5,314
2,133
Adjustment for Financ
ial Markets fund
ing costs
(324)
(121)
Financ
ial guarantee fees on
interest earning assets
80
99
Adjusted interest expense used to fund financ
ial
instruments held at fair value
5,070
2,111
Average interest-bearing liab
il
it
ies
316,964
298,221
Rate paid (%)
1.60
0.71
Net yield (%)
1.24
1.16
Net interest income adjusted for Financ
ial Markets fund
ing costs and Financ
ial guarantee fees
on interest earning assets
4,695
4,074
Net interest margin (%)
1.37
1.23
Volume and price variances
The following table analyses the estimated change in the Group’s net interest income attributable to changes in the average
volume of interest-earning assets and interest-bearing liab
il
it
ies, and changes
in their respective interest rates for the years
presented.
Volume and rate variances have been determined based on movements in average balances and average exchange rates
over the year and changes in interest rates on average interest-earning assets and average interest- bearing liab
il
it
ies.
2022 versus 2021
(Decrease)/increase
in interest due to:
Net increase/
(decrease) in
interest
$mill
ion
Volume
$mill
ion
Rate
$mill
ion
Interest earning assets
Cash and unrestricted balances at central banks
(14)
692
678
Loans and advances to banks
18
296
314
Loans and advances to customers
59
1,475
1,534
Investment securit
ies
313
717
1,030
Due from subsid
iary undertak
ings and other related parties
(6)
30
24
Total interest earning assets
370
3,210
3,580
Interest bearing liab
il
it
ies
Subordinated liab
il
it
ies and other borrowed funds
–
138
138
Deposits by banks
(11)
301
290
Customer accounts:
Current accounts and savings deposits
89
818
907
Time and other deposits
88
1,111
1,199
Debt securit
ies
in issue
39
230
269
Due to parent companies, subsid
iary undertak
ings & other related parties
(58)
436
378
Total interest bearing liab
il
it
ies
147
3,034
3,181
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
327
2021 versus 2020
(Decrease)/increase
in interest due to:
Net increase/
(decrease) in
interest
$mill
ion
Volume
$mill
ion
Rate
$mill
ion
Interest earning assets
Cash and unrestricted balances at central banks
15
(38)
(23)
Loans and advances to banks
(71)
(161)
(232)
Loans and advances to customers
(36)
(797)
(833)
Investment securit
ies
120
(632)
(512)
Due from subsid
iary undertak
ings and other related parties
(15)
(8)
(23)
Total interest earning assets
13
(1,636)
(1,623)
Interest bearing liab
il
it
ies
Subordinated liab
il
it
ies and other borrowed funds
(9)
(106)
(115)
Deposits by banks
1
(88)
(87)
Customer accounts:
Current accounts and savings deposits
(12)
(239)
(251)
Time and other deposits
(29)
(841)
(870)
Debt securit
ies
in issue
9
(160)
(151)
Due to parent companies, subsid
iary undertak
ings & other related parties
(3)
(96)
(99)
Total interest bearing liab
il
it
ies
(43)
(1,530)
(1,573)
Supplementary financial
informat
ion cont
inued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
328
AT1 or Addit
ional T
ier 1 capital
Addit
ional T
ier 1 capital consists of instruments other than Common Equity Tier 1 that meet the Capital Requirements
Regulation (CRR) criter
ia for
inclus
ion
in Tier 1 capital.
Addit
ional value adjustment
See Prudent valuation adjustment.
Advanced Internal Rating Based (AIRB) approach
The AIRB approach under the Basel framework is used to calculate credit risk capital based on the Group’s own estimates
of prudential parameters.
Alternative performance measures
A financial measure of h
istor
ical or future financial performance, financial pos
it
ion, or cash flows, other than a financial
measure defined or specif
ied
in the applicable financ
ial report
ing framework.
ASEAN
Associat
ion of South East As
ian Nations (ASEAN) which includes the Group’s operations in Brunei, Indonesia, Malaysia,
Phil
ipp
ines, Singapore, Thailand and Vietnam.
AUM or Assets under management
Total market value of assets such as deposits, securit
ies and funds held by the Group on behalf of the cl
ients.
Basel II
The capital adequacy framework issued by the Basel Committee on Banking Supervis
ion (BCBS)
in June 2006 in the form of
the International Convergence of Capital Measurement and Capital Standards.
Basel III
The global regulatory standards on bank capital adequacy and liqu
id
ity, orig
inally
issued in December 2010 and updated in
June 2011. In December 2017, the BCBS published a document setting out the final
isat
ion of the Basel III framework. The latest
requirements issued in December 2017 will be implemented from 2022.
BCBS or Basel Committee on Banking Supervis
ion
A forum on banking supervisory matters which develops global supervisory standards for the banking industry. Its members
are officials from 45 central banks or prudent
ial supervisors from 27 countries and territor
ies.
Basic earnings per share (EPS)
Represents earnings div
ided by the bas
ic weighted average number of shares.
Basis point (bps)
One hundredth of a per cent (0.01 per cent); 100 basis points is 1 per cent.
CRD or Capital Requirements Direct
ive
A capital adequacy legislat
ive package adopted by the PRA. CRD compr
ises the Capital Requirements Direct
ive and the
UK onshored Capital Requirements Regulation (CRR). The package implements the Basel III framework together with
transit
ional arrangements for some of
its requirements. CRD IV came into force on 1 January 2014. The EU CRR II and CRD V
amending the exist
ing package came
into force in June 2019 with most changes starting to apply from 28 June 2021. Only
those parts of the EU CRR II that applied on or before 31 December 2020, when the UK was a member of the EU, have
been implemented. The PRA recently final
ised the UK’s vers
ion of the CRR II for implementat
ion on 1 January 2022.
Capital-lite income
Income derived from products with low RWA consumption or products which are non-funding in nature.
Capital resources
Sum of Tier 1 and Tier 2 capital after regulatory adjustments.
CGU or Cash-generating unit
The smallest ident
ifiable group of assets that generates cash
inflows that are largely independent of the cash inflows from
other assets or groups of assets.
Cash shortfall
The difference between the cash flows that are due in accordance with the contractual terms of the instrument and the cash
flows that the Group expects to receive over the contractual life of the instrument.
Glossary
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
329
Glossary continued
Clawback
An amount an ind
iv
idual is required to pay back to the Group, which has to be returned to the Group under certain
circumstances.
Commercial real estate
Includes office build
ings,
industr
ial property, med
ical centres, hotels, malls, retail stores, shopping centres, farm land,
multi-family housing build
ings, warehouses, garages, and
industr
ial propert
ies. Commercial real estate loans are those
backed by a package of commercial real estate assets.
CET1 or Common Equity Tier 1 capital
Common Equity Tier 1 capital consists of the common shares issued by the Group and related share premium, retained
earnings, accumulated other comprehensive income and other disclosed reserves, elig
ible non-controll
ing interests and
regulatory adjustments required in the calculation of Common Equity Tier 1.
CET1 ratio
A measure of the Group's CET1 capital as a percentage of risk-weighted assets.
Contractual maturity
Contractual maturity refers to the final payment date of a loan or other financ
ial
instrument, at which point all the remain
ing
outstanding princ
ipal and
interest is due to be paid.
Countercyclical capital buffer
The countercyclical capital buffer (CCyB) is part of a set of macroprudential instruments, designed to help counter
procyclical
ity
in the financ
ial system. CCyB as defined
in the Basel III standard provides for an addit
ional cap
ital
requirement of up to 2.5 per cent of risk-weighted assets in a given jur
isd
ict
ion. The Bank of England’s F
inanc
ial Pol
icy
Committee has the power to set the CCyB rate for the United Kingdom. Each bank must calculate its ‘inst
itut
ion-specif
ic’
CCyB rate, defined as the weighted average of the CCyB rates in effect across the jur
isd
ict
ions
in which it has credit
exposures. The inst
itut
ion-specif
ic CCyB rate
is then applied to a bank’s total risk-weighted assets.
Counterparty credit risk
The risk that a counterparty defaults before satisfy
ing
its obligat
ions under a der
ivat
ive, a secur
it
ies financing transact
ion
(SFT) or a sim
ilar contract.
CCF or Credit conversion factor
An estimate of the amount the Group expects a customer to have drawn further on a facil
ity l
im
it at the po
int of default.
This is either prescribed by CRR or modelled by the bank.
CDS or Credit default swaps
A credit derivat
ive
is an arrangement whereby the credit risk of an asset (the reference asset) is transferred from the buyer
to the seller of protection. A credit default swap is a contract where the protection seller receives premium or interest-related
payments in return for contracting to make payments to the protection buyer upon a defined credit event. Credit events
normally include bankruptcy, payment default on a reference asset or assets, or downgrades by a rating agency.
Credit inst
itut
ions
An inst
itut
ion whose business is to receive deposits or other repayable funds from the public and to grant credits for its
own account.
Credit risk mit
igat
ion
Credit risk mit
igat
ion is a process to mit
igate potent
ial credit losses from any given account, customer or portfolio by using a
range of tools such as collateral, netting agreements, credit insurance, credit derivat
ives and guarantees.
CVA or Credit valuation adjustments
An adjustment to the fair value of derivat
ive contracts that reflects the poss
ib
il
ity that the counterparty may default such
that the Group would not receive the full market value of the contracts.
Customer accounts
Money deposited by all ind
iv
iduals and companies which are not credit inst
itut
ions includ
ing secur
it
ies sold under
repurchase agreement (see repo/reverse repo). Such funds are recorded as liab
il
it
ies
in the Group’s balance sheet under
customer accounts.
Days past due
One or more days that interest and/or princ
ipal payments are overdue based on the contractual terms.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
330
Glossary continued
DVA or Debit valuation adjustment
An adjustment to the fair value of derivat
ive contracts that reflects the poss
ib
il
ity that the Group may default and not pay
the full market value of contracts.
Debt securit
ies
Debt securit
ies are assets on the Group’s balance sheet and represent cert
if
icates of
indebtedness of credit inst
itut
ions,
public bodies or other undertakings excluding those issued by central banks.
Debt securit
ies
in issue
Debt securit
ies
in issue are transferable certif
icates of
indebtedness of the Group to the bearer of the certif
icate. These are
liab
il
it
ies of the Group and
include certif
icates of depos
its.
Deferred tax asset
Income taxes recoverable in future periods in respect of deductible temporary differences between the accounting and tax
base of an asset or liab
il
ity that will result in tax deductible amounts in future periods, the carry-forward of tax losses or the
carry-forward of unused tax credits.
Deferred tax liab
il
ity
Income taxes payable in future periods in respect of taxable temporary differences between the accounting and tax base of
an asset or liab
il
ity that will result in taxable amounts in future periods.
Default
Financ
ial assets
in default represent those that are at least 90 days past due in respect of princ
ipal or
interest and/or where
the assets are otherwise considered to be unlikely to pay, includ
ing those that are cred
it-impa
ired.
Defined benefit obligat
ion
The present value of expected future payments required to settle the obligat
ions of a defined benefit scheme result
ing from
employee service.
Defined benefit scheme
Pension or other post-retirement benefit scheme other than a defined contribut
ion scheme.
Defined contribut
ion scheme
A pension or other post-retirement benefit scheme where the employer’s obligat
ion
is lim
ited to
its contribut
ions to the fund.
Delinquency
A debt or other financial obl
igat
ion
is considered to be in a state of delinquency when payments are overdue. Loans and
advances are considered to be delinquent when consecutive payments are missed. Also known as arrears.
Deposits by banks
Deposits by banks comprise amounts owed to other domestic or foreign credit inst
itut
ions by the Group includ
ing secur
it
ies
sold under repo.
Div
idend per share
Represents the entitlement of each shareholder in the share of the profits of the Company. Calculated in the lowest unit of
currency in which the shares are quoted.
Early alert, purely and non-purely precautionary
A borrower’s account which exhib
its r
isks or potential weaknesses of a material nature requir
ing closer mon
itor
ing,
supervis
ion, or attent
ion by management. Weaknesses in such a borrower’s account, if left uncorrected, could result in
deteriorat
ion of repayment prospects and the l
ikel
ihood of be
ing downgraded to credit grade 12 or worse. When an account
is on early alert, it is classif
ied as e
ither purely precautionary or non-purely precautionary. A purely precautionary account is
one that exhib
its early alert character
ist
ics, but these do not present any
imm
inent cred
it concern. If the symptoms present
an imm
inent cred
it concern, an account will be considered for classif
icat
ion as non-purely precautionary.
Effective tax rate
The tax on profit/(losses) on ordinary activ
it
ies as a percentage of profit/(loss) on ordinary activ
it
ies before taxation.
Encumbered assets
On-balance sheet assets pledged or used as collateral in respect of certain of the Group’s liab
il
it
ies.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
331
Glossary continued
EU or European Union
The European Union (EU) is a polit
ical and econom
ic union of 27 member states that are located primar
ily
in Europe.
Eurozone
Represents the 19 EU countries that have adopted the euro as their common currency.
ECL or Expected credit loss
Represents the present value of expected cash shortfalls over the residual term of a financ
ial asset, undrawn comm
itment or
financial guarantee.
Expected loss
The Group measure of antic
ipated loss for exposures captured under an
internal ratings-based credit risk approach for
capital adequacy calculations. It is measured as the Group-modelled view of antic
ipated loss based on probab
il
ity of default,
loss given default and exposure at default, with a one-year time horizon.
Exposures
Credit exposures represent the amount lent to a customer, together with any undrawn commitments.
EAD or Exposure at default
The estimat
ion of the extent to wh
ich the Group may be exposed to a customer or counterparty in the event of, and at the
time of, that counterparty’s default. At default, the customer may not have drawn the loan fully or may already have repaid
some of the princ
ipal, so that exposure
is typically less than the approved loan lim
it.
ECAI or External Credit Assessment Institut
ion
External credit ratings are used to assign risk-weights under the standardised approach for sovereigns, corporates
and inst
itut
ions. The external ratings are from credit rating agencies that are registered or certif
ied
in accordance with
the credit rating agencies regulation or from a central bank issu
ing cred
it ratings which is exempt from the applicat
ion
of this regulation.
FCA or Financ
ial Conduct Author
ity
The Financ
ial Conduct Author
ity regulates the conduct of financ
ial firms and, for certa
in firms, prudential standards in the UK.
It has a strategic object
ive to ensure that the relevant markets funct
ion well.
Forbearance
Forbearance takes place when a concession is made to the contractual terms of a loan in response to an obligor’s financ
ial
diff
icult
ies. The Group classif
ies such mod
if
ied loans as e
ither ‘Forborne – not impa
ired loans’ or ‘Loans subject to forbearance
– impa
ired’. Once a loan
is categorised as either of these, it will remain in one of these two categories until the loan matures or
satisf
ies the ‘cur
ing’ condit
ions descr
ibed in Note 8 to the financ
ial statements.
Forborne – not impa
ired loans
Loans where the contractual terms have been modif
ied due to financial d
iff
icult
ies of the borrower, but the loan is not
considered to be impa
ired. See ‘Forbearance’.
Funded/unfunded exposures
Exposures where the notional amount of the transaction is funded or unfunded. Represents exposures where a commitment
to provide future funding is made but funds have been released/not released.
FVA or Funding valuation adjustments
FVA reflects an adjustment to fair value in respect of derivat
ive contracts that reflects the fund
ing costs that the market
partic
ipant would
incorporate when determin
ing an ex
it price.
G-SIBs or Global Systemically Important Banks
Global banking financ
ial
inst
itut
ions whose size, complexity and systemic interconnectedness mean that their distress or
failure would cause sign
ificant d
isrupt
ion to the w
ider financ
ial system and econom
ic activ
ity. The l
ist of G-SIBs is assessed
under a framework established by the FSB and the BCBS. In the UK, the G-SIB framework is implemented via the CRD and
G-SIBs are referred to as Global Systemically Important Institut
ions (G-SIIs).
G-SIB buffer
A CET1 capital buffer which results from designat
ion as a G-SIB. The G-SIB buffer
is between 1 per cent and 3.5 per cent,
depending on the allocation to one of five buckets based on the annual scoring. In the EU, the G-SIB buffer is implemented
via CRD IV as Global Systemically Important Institut
ions (G-SII) buffer requ
irement.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
332
Glossary continued
Hong Kong regional hub
Standard Chartered Bank (Hong Kong) Lim
ited and
its subsid
iar
ies includ
ing the pr
imary operating entit
ies
in China, Korea
and Taiwan. Standard Chartered PLC is the ultimate parent company of Standard Chartered Bank (Hong Kong) Lim
ited.
Interest rate risk
The risk of an adverse impact on the Group’s income statement due to changes in interest rates.
IRB or internal ratings-based approach
Risk-weight
ing methodology
in accordance with the Basel Capital Accord where capital requirements are based on a firm’s
own estimates of prudential parameters.
Internal model approach
The approach used to calculate market risk capital and RWA with an internal market risk model approved by the PRA under
the terms of CRD/CRR.
IAS or International Accounting Standard
A standard that forms part of the International Financ
ial Report
ing Standards framework.
IASB or International Accounting Standards Board
An independent standard-setting body responsible for the development and publicat
ion of IFRS, and approv
ing
interpretat
ions of IFRS standards that are recommended by the IFRS Interpretat
ions Committee (IFRIC).
IFRS or International Financ
ial Report
ing Standards
A set of internat
ional account
ing standards developed and issued by the International Accounting Standards Board,
consist
ing of pr
inc
iples-based gu
idance contained with
in IFRSs and IASs. All compan
ies that have issued publicly traded
securit
ies
in the EU are required to prepare annual and inter
im reports under IFRS and IAS standards that have been
endorsed by the EU.
IFRIC
The IFRS Interpretations Committee supports the IASB in provid
ing author
itat
ive gu
idance on the accounting treatment of
issues not specif
ically dealt w
ith by exist
ing IFRSs and IASs.
Income return on risk weighted assets (IRORWA)
Annualised income excluding Debit Valuation Adjustment as a percentage of Average RWA.
Investment grade
A debt security, treasury bill or sim
ilar
instrument with a credit rating measured by external agencies of AAA to BBB.
Leverage ratio
A ratio introduced under CRD IV that compares Tier 1 capital to total exposures, includ
ing certa
in exposures held off-balance
sheet as adjusted by stipulated credit conversion factors. Intended to be a simple, non-risk-based backstop measure.
Liqu
idat
ion portfolio
A portfolio of assets which is beyond our current risk appetite metrics and is held for liqu
idat
ion.
LCR or Liqu
id
ity coverage ratio
The ratio of the stock of high-quality liqu
id assets to expected net cash outflows over the follow
ing 30 days. High-quality
liqu
id assets should be unencumbered, l
iqu
id
in markets during a time of stress and, ideally, be central bank elig
ible.
Loan exposure
Loans and advances to customers reported on the balance sheet held at amortised cost or FVOCI, non-cancellable credit
commitments and cancellable credit commitments for credit cards and overdraft facil
it
ies.
Loans and advances to customers
This represents lending made under bilateral agreements with customers entered into in the normal course of business and is
based on the legal form of the instrument.
Loans and advances to banks
Amounts loaned to credit inst
itut
ions includ
ing secur
it
ies bought under Reverse repo.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
333
Glossary continued
LTV or loan-to-value ratio
A calculation which expresses the amount of a first mortgage lien as a percentage of the total appraised value of real
property. The loan-to-value ratio is used in determin
ing the appropr
iate level of risk for the loan and therefore the correct
price of the loan to the borrower.
Loans past due
Loans on which payments have been due for up to a maximum of 90 days includ
ing those on wh
ich partial payments are
being made.
Loans subject to forbearance – impa
ired
Loans where the terms have been renegotiated on terms not consistent with current market levels due to financ
ial d
iff
icult
ies
of the borrower. Loans in this category are necessarily impa
ired. See ‘Forbearance’.
Loss rate
Uses an adjusted gross charge-off rate, developed using monthly write-off and recoveries over the preceding 12 months and
total outstanding balances.
LGD or Loss given default
The percentage of an exposure that a lender expects to lose in the event of obligor default.
Low returning clients
See ‘Perennial sub-optimal clients’.
Malus
An arrangement that permits the Group to prevent vesting of all or part of the amount of an unvested variable remuneration
award, due to a specif
ic crystall
ised risk, behaviour, conduct or adverse performance outcome.
Master netting agreement
An agreement between two counterparties that have multiple derivat
ive contracts w
ith each other that provides for the
net settlement of all contracts through a single payment, in a single currency, in the event of default on, or terminat
ion of,
any one contract.
Mezzanine capital
Financ
ing that comb
ines debt and equity characterist
ics. For example, a loan that also confers some profit part
ic
ipat
ion to
the lender.
MREL or min
imum requ
irement for own funds and elig
ible l
iab
il
it
ies
A requirement under the Bank Recovery and Resolution Direct
ive for EU resolut
ion authorit
ies to set a m
in
imum requ
irement
for own funds and elig
ible l
iab
il
it
ies for banks,
implement
ing the FSB’s Total Loss Absorb
ing Capacity (TLAC) standard.
MREL is intended to ensure that there is suffic
ient equ
ity and specif
ic types of l
iab
il
it
ies to fac
il
itate an orderly resolut
ion
that min
im
ises any impact on financ
ial stab
il
ity and ensures the cont
inu
ity of cr
it
ical funct
ions and avoids exposing taxpayers
to loss.
Net asset value (NAV) per share
Ratio of net assets (total assets less total liab
il
it
ies) to the number of ord
inary shares outstanding at the end of a
reporting period.
Net exposure
The aggregate of loans and advances to customers/loans and advances to banks after impa
irment prov
is
ions, restr
icted
balances with central banks, derivat
ives (net of master nett
ing agreements), investment debt and equity securit
ies, and
letters of credit and guarantees.
NII or Net interest income
The difference between interest received on assets and interest paid on liab
il
it
ies.
NSFR or Net stable funding ratio
The ratio of available stable funding to required stable funding over a one-year time horizon, assuming a stressed scenario.
It is a longer-term liqu
id
ity measure designed to restrain the amount of wholesale borrowing and encourage stable funding
over a one-year time horizon.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
334
Glossary continued
NPLs or non-performing loans
An NPL is any loan that is more than 90 days past due or is otherwise ind
iv
idually impa
ired. Th
is excludes Retail loans
renegotiated at or after 90 days past due, but on which there has been no default in interest or princ
ipal payments for more
than 180 days since renegotiat
ion, and aga
inst which no loss of princ
ipal
is expected.
Non-linear
ity
Non-linear
ity of expected cred
it loss occurs when the average of expected credit loss for a portfolio is higher than the base
case (median) due to the fact that bad economic environment could have a larger impact on ECL calculation than good
economic environment.
Normalised items
See ‘Underlying/Normalised’ on page 30.
Operating expenses
Staff and premises costs, general and admin
istrat
ive expenses, depreciat
ion and amort
isat
ion. Underly
ing operating
expenses exclude expenses as described in ‘Underlying earnings’. A reconcil
iat
ion between underlying and statutory earnings
is contained in Note 2 to the financ
ial statements.
Operating income or operating profit
Net interest, net fee and net trading income, as well as other operating income. Underlying operating income represents the
income line items above, on an underlying basis. See ‘Underlying earnings’.
OTC or Over-the-counter derivat
ives
A bilateral transaction (e.g. derivat
ives) that
is not exchange traded and that is valued using valuation models.
OCA or Own credit adjustment
An adjustment to the Group’s issued debt designated at fair value through profit or loss that reflects the possib
il
ity that the
Group may default and not pay the full market value of the contracts.
Perennial sub-optimal clients
Clients that have returned below 3% return on risk-weighted assets for the last three years
Physical risks
The risk of increased extreme weather events includ
ing flood, drought and sea level r
ise.
Pillar 1
The first pillar of the three pillars of the Basel framework which provides the approach to calculation of the min
imum
capital requirements for credit, market and operational risk. Min
imum cap
ital requirements are 8 per cent of the Group’s
risk-weighted assets.
Pillar 2
The second pillar of the three pillars of the Basel framework which requires banks to undertake a comprehensive assessment
of their risks and to determine the appropriate amounts of capital to be held against these risks where other suitable
mit
igants are not ava
ilable.
Pillar 3
The third pillar of the three pillars of the Basel framework which aims to provide a consistent and comprehensive disclosure
framework that enhances comparabil
ity between banks and further promotes
improvements in risk practices.
Prior
ity Bank
ing
Prior
ity Bank
ing customers are ind
iv
iduals who have met certain criter
ia for depos
its, AUM, mortgage loans or monthly
payroll. Criter
ia var
ies by country.
Private equity investments
Equity securit
ies
in operating companies generally not quoted on a public exchange. Investment in private equity often
involves the investment of capital in private companies. Capital for private equity investment is raised by retail or inst
itut
ional
investors and used to fund investment strategies such as leveraged buyouts, venture capital, growth capital, distressed
investments and mezzanine capital.
PD or Probabil
ity of default
PD is an internal estimate for each borrower grade of the likel
ihood that an obl
igor will default on an obligat
ion over a g
iven
time horizon.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
335
Glossary continued
Probabil
ity we
ighted
Obtained by consider
ing the values the metr
ic can assume, weighted by the probabil
ity of each value occurr
ing.
Profit (loss) attributable to ordinary shareholders
Profit (loss) for the year after non-controlling interests and div
idends declared
in respect of preference shares classif
ied
as equity.
PVA or Prudent valuation adjustment
An adjustment to CET1 capital to reflect the difference between fair value and prudent value posit
ions, where the appl
icat
ion
of prudence results in a lower absolute carrying value than recognised in the financ
ial statements.
PRA or Prudential Regulation Authority
The Prudential Regulation Authority is the statutory body responsible for the prudential supervis
ion of banks, bu
ild
ing
societ
ies, cred
it unions, insurers and a small number of sign
ificant
investment firms in the UK. The PRA is a part of the
Bank of England.
Regulatory consolidat
ion
The regulatory consolidat
ion of Standard Chartered PLC d
iffers from the statutory consolidat
ion
in that it includes
Ascenta IV, Olea Global Pte. Ltd. Seychelles International Mercantile Banking Corporation Lim
ited.,and all of the legal ent
it
ies
in the Currency Fair group on a proportionate consolidat
ion bas
is. These entit
ies are cons
idered associates for statutory
accounting purposes.
The regulatory consolidat
ion further excludes the follow
ing entit
ies, wh
ich are consolidated for statutory accounting
purposes;, Autumn Life Pte. Ltd., Cardspal Pte. Ltd. Discovery Technology Services Pte. Ltd, Nexco Pte. Ltd, SCV Research
and Development Pte. Ltd., Standard Chartered Assurance Lim
ited, Standard Chartered Isle of Man L
im
ited, Corras
i
Covered Bonds LLP, Pegasus Dealmaking Pte. Ltd., Standard Chartered Botswana Education Trust, Standard Chartered
Bancassurance Intermediary Lim
ited, Standard Chartered Bank Insurance Agency (Propr
ietary) Lim
ited, Standard
Chartered Research and Technology India Private Lim
ited, Standard Chartered Trad
ing (Shanghai) Lim
ited.
Repo/reverse repo
A repurchase agreement or repo is a short-term funding agreement, which allows a borrower to sell a financ
ial asset, such
as asset-backed securit
ies or government bonds as collateral for cash. As part of the agreement the borrower agrees to
repurchase the security at some later date, usually less than 30 days, repaying the proceeds of the loan. For the party on the
other end of the transaction (buying the security and agreeing to sell in the future), it is a reverse repurchase agreement or
reverse repo.
Resident
ial mortgage
A loan to purchase a resident
ial property wh
ich is then used as collateral to guarantee repayment of the loan. The borrower
gives the lender a lien against the property, and the lender can foreclose on the property if the borrower does not repay the
loan per the agreed terms. Also known as a home loan.
RoRWA or Return on risk-weighted assets
Profit before tax for year as a percentage of RWA. Profit may be statutory or underlying and is specif
ied where used.
See ‘RWA’ and ‘Underlying earnings’.
RWA or Risk-weighted assets
A measure of a bank’s assets adjusted for their associated risks, expressed as a percentage of an exposure value in
accordance with the applicable standardised or IRB approach provis
ions.
Risks-not-in-VaR (RNIV)
A framework for ident
ify
ing and quantify
ing marg
inal types of market risk that are not captured in the Value at Risk (VaR)
measure for any reason, such as being a far-tail risk or the necessary histor
ical market data not be
ing available.
Roll rate
Uses a matrix that gives average loan migrat
ion rate from del
inquency states from period to period. A matrix multipl
icat
ion is
then performed to generate the final PDs by delinquency bucket over different time horizons.
Secured (fully and partially)
A secured loan is a loan in which the borrower pledges an asset as collateral for a loan which, in the event that the borrower
defaults, the Group is able to take possession of. All secured loans are considered fully secured if the fair value of the collateral
is equal to or greater than the loan at the time of orig
inat
ion. All other secured loans are considered to be partly secured.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
336
Glossary continued
Securit
isat
ion
Securit
isat
ion is a process by which credit exposures are aggregated into a pool, which is used to back new securit
ies. Under
tradit
ional secur
it
isat
ion transactions, assets are sold to a structured entity which then issues new securit
ies to
investors at
different levels of senior
ity (cred
it tranching). This allows the credit quality of the assets to be separated from the credit rating
of the orig
inat
ing inst
itut
ion and transfers risk to external investors in a way that meets their risk appetite. Under synthetic
securit
isat
ion transactions, the transfer of risk is achieved by the use of credit derivat
ives or guarantees, and the exposures
being securit
ised rema
in exposures of the orig
inat
ing inst
itut
ion.
Senior debt
Debt that takes prior
ity over other unsecured or otherw
ise more ‘ jun
ior’ debt owed by the
issuer. Senior debt has greater
senior
ity
in the issuer's capital structure than subordinated debt. In the event the issuer goes bankrupt, senior debt
theoretically must be repaid before other creditors receive any payment.
SICR or Sign
ificant
increase in credit risk
Assessed by comparing the risk of default of an exposure at the reporting date to the risk of default at orig
inat
ion
(after consider
ing the passage of t
ime).
Solo
The solo regulatory group as defined in the Prudential Regulation Authority waiver letter dated 10 August 2020 differs from
Standard Chartered Bank Company in that it includes the full consolidat
ion of n
ine subsid
iar
ies, namely Standard Chartered
Holdings (International) B.V., Standard Chartered MB Holdings B.V., Standard Chartered UK Holdings Lim
ited, Standard
Chartered Grindlays PTY Lim
ited, SCMB Overseas L
im
ited, Standard Chartered Cap
ital Management (Jersey) LLC,
Cerulean Investments L.P., SC Ventures Innovation Investment L.P. and SC Ventures G.P. Lim
ited.
Sovereign exposures
Exposures to central governments and central government departments, central banks and entit
ies owned or guaranteed
by the aforementioned. Sovereign exposures, as defined by the European Banking Authority, include only exposures to
central governments.
Stage 1
Assets have not experienced a sign
ificant
increase in credit risk since orig
inat
ion and impa
irment recogn
ised on the basis of
12 months expected credit losses.
Stage 2
Assets have experienced a sign
ificant
increase in credit risk since orig
inat
ion and impa
irment
is recognised on the basis of
lifet
ime expected cred
it losses.
Stage 3
Assets that are in default and considered credit-impa
ired (non-perform
ing loans).
Standardised approach
In relation to credit risk, a method for calculating credit risk capital requirements using External Credit Assessment
Institut
ions (ECAI) rat
ings and supervisory risk weights. In relation to operational risk, a method of calculating the operational
capital requirement by the applicat
ion of a superv
isory defined percentage charge to the gross income of eight specif
ied
business lines.
Structured note
An investment tool which pays a return linked to the value or level of a specif
ied asset or
index and sometimes offers
capital protection if the value declines. Structured notes can be linked to equit
ies,
interest rates, funds, commodit
ies and
foreign currency.
Subordinated liab
il
it
ies
Liab
il
it
ies wh
ich, in the event of insolvency or liqu
idat
ion of the issuer, are subordinated to the claims of depositors and other
creditors of the issuer.
Tier 1 capital
The sum of Common Equity Tier 1 capital and Addit
ional T
ier 1 capital.
Tier 1 capital ratio
Tier 1 capital as a percentage of risk-weighted assets.
Tier 2 capital
Tier 2 capital comprises qualify
ing subord
inated liab
il
it
ies and related share prem
ium accounts.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2022
337
Glossary continued
TLAC or Total loss absorbing capacity
An internat
ional standard for TLAC
issued by the FSB, which requires G-SIBs to have suffic
ient loss-absorb
ing and
recapital
isat
ion capacity available in resolution, to min
im
ise impacts on financ
ial stab
il
ity, ma
inta
in the cont
inu
ity of
crit
ical funct
ions and avoid exposing public funds to loss.
Transit
ion r
isks
The risk of changes to market dynamics or sectoral economics due to governments’ response to climate change.
UK bank levy
A levy that applies to certain UK banks and the UK operations of foreign banks. The levy is payable each year based on a
percentage of the chargeable equit
ies and l
iab
il
it
ies on the Group’s UK tax res
ident entit
ies’ balance sheets. Key exclus
ions
from chargeable equit
ies and l
iab
il
it
ies
include Tier 1 capital, insured or guaranteed retail deposits, repos secured on certain
sovereign debt and liab
il
it
ies subject to nett
ing.
Unbiased
Not overly optim
ist
ic or pessim
ist
ic, represents informat
ion that
is not slanted, weighted, emphasised, de-emphasised or
otherwise manipulated to increase the probabil
ity that the financial
informat
ion w
ill be received favourably or unfavourably
by users.
Unlikely to pay
Indicat
ions of unl
ikel
iness to pay shall
include placing the credit obligat
ion on non-accrued status; the recogn
it
ion of a
specif
ic cred
it adjustment resulting from a sign
ificant perce
ived decline in credit quality subsequent to the Group taking on
the exposure; selling the credit obligat
ion at a mater
ial credit-related economic loss; the Group consenting to a distressed
restructuring of the credit obligat
ion where th
is is likely to result in a dim
in
ished financ
ial obl
igat
ion caused by the mater
ial
forgiveness, or postponement, of princ
ipal,
interest or, where relevant fees; fil
ing for the obl
igor's bankruptcy or a sim
ilar order
in respect of an obligor's credit obligat
ion to the Group; the obl
igor has sought or has been placed in bankruptcy or sim
ilar
protection where this would avoid or delay repayment of a credit obligat
ion to the Group.
VaR or Value at Risk
A quantitat
ive measure of market r
isk estimat
ing the potent
ial loss that will not be exceeded in a set time period at a set
statist
ical confidence level.
ViU or Value-in-Use
The present value of the future expected cash flows expected to be derived from an asset or CGU.
Write-downs
After an advance has been ident
ified as
impa
ired and
is subject to an impa
irment prov
is
ion, the stage may be reached
whereby it is concluded that there is no realist
ic prospect of further recovery. Wr
ite-downs will occur when, and to the extent
that, the whole or part of a debt is considered irrecoverable.
XVA
The term used to incorporate credit, debit and funding valuation adjustments to the fair value of derivat
ive financial
instruments. See ‘CVA’, ‘DVA’ and ‘FVA’.