Reference Number ZC18
Directors’ Report and
Financ
ial Statements
Incorporated in England lim
ited l
iab
il
Princ
ipal Office: 1 Bas
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
Contents
Page
Strategic report
01–50
Key performance ind
icators
02
Our business
03
Who we are and what we do
04
Where we operate
07
Market environment
08
Business model
11
Our strategy
14
Client segment reviews
17
Regional reviews
18
Financ
ial rev
iew
20
Underlying versus reported results reconcil
iat
ions
25
Risk review
32
Stakeholders and responsib
il
it
ies
38
Directors’ report
51-56
Statement of directors’ responsib
il
it
ies
57
Risk review and Capital review
58-145
Financ
ial Statements and Notes
146-307
Independent auditors’ report
146
Consolidated income statement
160
Consolidated statement of comprehensive income
161
Consolidated Balance sheet
162
Consolidated statement of changes in equity
163
Cash flow statements
164
Company statement of changes in equity
165
Notes to the financial statements
166-307
Supplementary
308-314
Glossary
315-324
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
1
Strategic report
We are a leading internat
ional cross-border bank
Standard Chartered connects the world’s most dynamic markets, serving the businesses that are the engines of global
growth and supporting people to meet their ambit
ions. Every day, we help cl
ients to manage and invest their finances safely
and seamlessly, and grow their businesses and wealth with confidence.
Over our 170 year history, and across a unique geographical footprint that connects Asia, Africa and the Middle East to each
other and the world, we’ve built a bank like no other, with diverse capabil
it
ies and partnerships that set us apart. Inspired by
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 on Standard Chartered 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, Risk Review and Capital Review and Supplementary Information 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 Bahrain, Botswana,
Cote d’Ivoire, Egypt, Ghana, Iraq, Kenya, Maurit
ius, N
iger
ia, Oman, Pak
istan, Qatar, Saudi Arabia, South Africa, Tanzania, the United Arab Emirates (UAE), Uganda, and
Zambia and Europe & Americas (EA) includes Argentina, Brazil, Colombia, Falkland Islands, France, Germany, Israel, Jersey, Poland, Sweden, Türkiye, 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 2023
2
Strategic report continued
Key performance ind
icators
We measure ourselves against Group key performance ind
icators (KPIs) as deta
iled below.
FINANCIAL KPIs AND MEASURES
1,2
Underlying basis
Reported basis
Return on tangible equity
12.9%
400bps
Read more on (page 21)
Return on tangible equity
12.5%
370bps
Read more on (page 29)
Operating income
$11,408m
14%
Read more on (page 21)
Operating income
$11,549m
13%
Read more on (page 28)
Profit before tax
$4,541m
29%
Read more on (page 21)
Profit before tax
$4,414m
27%
Read more on (page 28)
CAPITAL KPIs
Common Equity Tier 1 ratio
13.2%
50bps
Read more on (page 24)
NON-FINANCIAL KPIs
Divers
ity and
inclus
ion: Women
in senior roles
³
29.2%
0.9ppt
1
Basis point (bps) and percentage movements are in relation to 31 December 2022, with brackets representing negative movements
2
Reconcil
iat
ions from underlying to reported and defin
it
ions of alternative performance measures can be found on pages 25 to 29
3
Senior leadership is defined as Managing Directors and Band 4 roles (includ
ing Management Team)
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
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.
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
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 2023
4
Who we are and what we do
Who we are and what we do
Our Purpose is to drive commerce and prosperity through our unique divers
ity. We serve three cl
ient segments in three
Our client segments
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
Operating income
$7,972m
$8,032m
Underlying basis
Reported 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
Operating income
$3,456m $3,501m
Underlying basis
Reported basis
Ventures promotes innovat
ion,
invests in disrupt
ive
financial technology and explores alternat
ive
Operating income
$137m
$137m
Underlying basis
Reported basis
Central and other items
Operating income
$(157)m
$(121)m
Underlying basis
Reported basis
Total operating income
Operating income
$11,408m $11,549m
Underlying basis
Reported basis
Strategic report continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
5
Our regions
Asia
Our largest markets by income are Singapore and India.
Operating income
$5,331m
$5,316m
Underlying basis
Reported basis
Europe & Americas
Centred in London, with a growing presence across
continental Europe, and New York, we operate in both
North America and several markets in Latin America.
Operating income
$1,682m
$1,696m
Underlying basis
Reported basis
Africa & the Middle East
We have a presence in 18 markets of which the most
sizeable by income are UAE, Pakistan, Kenya, Niger
ia,
South Africa and Ghana
Operating income
$2,764m
$2,894m
Underlying basis
Reported basis
Central & other items (region)
Operating income
$1,631m
$1,643m
Underlying basis
Reported basis
Total operating income
Operating income
$11,408m $11,549m
Underlying basis
Reported basis
Strategic report continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
6
Global functions
Our client-facing businesses are supported by our global functions, which work together to ensure the Group’s operations run
smoothly and consistently.
Conduct, Financ
ial Cr
ime and Compliance
Partners internally and externally to achieve the highest standards in conduct and compliance to enable a sustainable
business and to fight financ
ial cr
ime.
Corporate Affairs, Brand and Marketing
Manages the Group’s marketing communicat
ions and engagement w
ith stakeholders to promote and protect the Group’s
reputation, brand and services.
Group Chief Financ
ial Officer
Comprises seven support functions: Finance, Treasury, Strategy, Investor Relations, Corporate Development, Supply Chain
Management and Property. The leaders of these functions report directly to the Group Chief Financ
ial Officer.
Group Internal Audit
An independent function whose primary role is to help the Court and Management team protect the assets, reputation and
sustainab
il
ity of the Group.
Human Resources
Maxim
ises the value of our
investment in people through recruitment, development and employee engagement.
Legal
Provides legal advice and support to the Group to manage legal risks and issues.
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.
Transformation, Technology & Operations
Responsible for leading bank-wide transformation and for reshaping the Group’s systems and technology platforms to
ensure we provide robust, responsive, and innovat
ive technology and d
ig
ital solut
ions. Also manages all client operations,
seeking to provide an optimal client service and experience across the board.
Valued behaviours
Our valued behaviours are the guid
ing pr
inc
iples for how we work together, and the way we do bus
iness, every day.
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 2023
7
Strategic report continued
Where we operate
We operate in the world’s most dynamic markets which set the pace for global growth and prosperity. Our unique
geographic footprint connects high-growth and emerging markets in Asia, Africa and the Middle East with more established
economies in Europe and the Americas, allowing us to channel capital where it’s needed most.
For more than 170 years we have used the power of our network to maxim
ise opportun
it
ies for people and bus
inesses
who trade, operate, or invest in these regions.
Our diverse experience, capabil
it
ies and culture sets us apart.
We are present in 50 markets.
Asia
We have a long-standing and deep franchise in some of the world’s fastest-growing economies. 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 & the Middle East
We have a deep-rooted heritage in Africa & Middle East and have been present in the region for more than 170 years.
The
United Arab Emirates, Pakistan, Kenya, Niger
ia, South Afr
ica, and Ghana
are our largest markets by income.
Bahrain
Niger
ia
Uganda
Botswana
Oman
Zambia
Cote d’Ivoire
Pakistan
Egypt
Qatar
Ghana
Saudi Arabia
Iraq
South Africa
Kenya
Tanzania
Maurit
ius
UAE
Europe & Americas
We support clients in Europe & Americas through hubs in
London and New York
and have
a strong presence
in several
European and Latin American markets.
Argentina
Germany
Sweden
Brazil
Israel
Türkiye
Colombia
Jersey
UK
Falkland Islands
Poland
US
France
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
8
Market environment
Macroeconomic factors affecting the global landscape
Trends in 2023
•
Global GDP growth continued to slow in 2023, likely to 3.1 per cent, from 3.5 per cent in 2022, as central banks continue to
tighten policy and the boost from post pandemic reopening of economies faded.
•
Asia was the best-performing region, recording growth of 5.1 per cent, on strong momentum in India and favourable base
effects in China. Sub-Saharan Africa likely saw growth of 3 per cent in 2023, nearly unchanged from 2022, supported by
domestic reform momentum in key economies.
•
Among the majors, despite a banking-sector cris
is
in the first half of the year, the United States likely recorded annual
growth of 2.5 per cent on the back of resil
ient domest
ic demand, while growth likely slowed sharply in the UK to 0.1 per cent.
•
The euro-area economy likely grew by 0.5 per cent in 2023 following 3.4 per cent growth in 2022, supported by household
demand and a posit
ive contr
ibut
ion from exports
in H1.
•
In most majors, labour markets remained strong, with low unemployment rates that helped support consumer confidence.
•
Major central banks like the Federal Reserve and European Central Bank (ECB) continued to tighten monetary policy in the
first three quarters of 2023 with a view to bring
ing
inflat
ion back to target levels. F
iscal policy remained accommodative as
governments tried to shield consumers and businesses from still elevated prices.
Outlook for 2024
•
Global growth is likely to stay below-trend at 2.9 per cent in 2024 as high interest rates drag on consumers as well as
investment spending.
•
Asia will likely be the fastest-growing region and will continue to drive global growth, expanding by 4.9 per cent. Among the
majors, the United States is expected to experience below-trend growth of 1.8 per cent in 2024, the UK will grow just 0.1%,
while the euro area is likely to see an overall modest expansion of 0.6 per cent.
•
Easing inflat
ion
is likely to allow major central banks to start cutting rates from Q2 2024, with a focus on supporting
softening economic activ
ity.
•
Unfavourable global liqu
id
ity condit
ions are l
ikely to make it diff
icult for some emerg
ing markets to access internat
ional
financing, forc
ing them to seek multilateral support.
•
Downside risks to this outlook include a sharper than expected slowdown in major economies, sustained inflat
ionary
pressures, a sluggish housing market in China, and another flare-up of geopolit
ical tens
ions.
Medium-term and long-term view
High interest rate environment
•
Trade fragmentation and heightened geopolit
ical r
isks and related supply disrupt
ions together w
ith still resil
ient labour
markets have the potential to see inflat
ion elevated over the med
ium-term.
•
Concerns about stagflation are likely to see central banks adopting a cautious approach to monetary easing, with the risk
that rates stay elevated for an extended period of time.
•
Fiscal policy might also turn from a tailw
ind to a headw
ind for growth. High public debt and government defic
its also mean
that most economies are looking to tighten fiscal policy over the medium term.
•
There may be adverse environmental, agricultural, and economic consequences of a severe El Niño weather cycle.
South Asia and Sub-Saharan Africa economies are most at risk from the impact on agricultural production; and although
El Niño has varying impacts on GDP growth, it is inflat
ionary for most econom
ies.
•
Growing trade fragmentation could undermine the resil
ience of global
isat
ion, dr
iv
ing up consumer pr
ices, and slowing the
pace of economic convergence for emerging markets.
Strategic report continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
9
Strategic report continued
Broader global trends
•
The world economy could see a permanent loss of economic output or ‘scarring’ due to the recession following 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,
includ
ing generat
ive artif
ic
ial intell
igence (AI).
•
Relatively younger populations, and the adoption of dig
ital technology, w
ill allow emerging markets to become
increas
ingly
important to global growth.
•
In order to meet net zero targets, energy-related spending will have to increase sign
ificantly; headw
inds include insuff
ic
ient
funds across emerging markets, labour shortages and supply chain constraints.
Regional outlooks
Actual and projected growth by country in 2023 and 2024
2024
2023
Asia
China
4.8 per cent
5.2 per cent
Hong Kong
2.9 per cent
3.2 per cent
India
6.3 per cent
6.8 per cent
Indonesia
5.2 per cent
5.1 per cent
Singapore
2.6 per cent
1.0 per cent
Africa & Middle East
Niger
ia
3.5 per cent
2.7 per cent
UAE
4.0 per cent
2.7 per cent
Europe & Americas
UK
0.1 per cent
0.1 per cent
US
1.8 per cent
2.5 per cent
Trends and outlook for our three regions
Asia
•
China’s economic activ
ity rema
ins below potential, leaving room for further recovery. We forecast 2024 growth at 4.8 per
cent. The post-COVID recovery has been disappo
int
ing, due to continu
ing contract
ion of the property sector, negative
contribut
ion from fore
ign trade, and a lack of confidence on the part of consumers and private businesses. While GDP
growth picked up to 5.2 per cent in 2023 on the reopening boost, policy support and a favourable base, economic activ
ity
is
currently 2-3ppt below trend according to our estimate. We expect the government to set a growth target of around 5 per
cent in 2024, the same as in 2023, to narrow the negative output gap and prevent deflation expectation from getting
entrenched.
•
While housing market adjustment will likely continue, we expect it to exert less of a drag on growth next year. The
authorit
ies have turned more support
ive of the sector since the July Politburo meeting, relaxing purchase restrict
ions,
lowering mortgage rates, accelerating renovation of urban villages, and pledging to meet reasonable financ
ing need
from elig
ible property developers. Consumpt
ion is likely to remain the key driver of the economy, with consumers showing
renewed will
ingness to draw on the
ir excess savings. The easing bias of macro polic
ies
is likely to remain to consolidate the
recovery. We expect the PBoC to increas
ingly rely on expans
ion of its balance sheet to inject ample liqu
id
ity, keeping the
credit condit
ion relat
ively easy. The offic
ial budget deficit may exceed the
impl
ic
it ceil
ing of 3 per cent of GDP, w
ith the
central government more will
ing to share the debt burden. However, the ups
ide is likely to be capped by private sector’s
hesitat
ion to expand
investment.
•
Hong Kong’s outlook remains challenging. We expect growth to slow to 2.9 per cent in 2024 from 3.2 per cent in 2023,
a reflection of still cautious household and business sentiment. The posit
ive factors,
includ
ing a cont
inued normalisat
ion
in tourist arrivals and a persistently tight labour market, may not be suffic
ient to offset a weak property market and
elevated US interest rates that keep weigh
ing on
investment appetite.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
10
Strategic report continued
•
In India, we expect FY25 (year beginn
ing Apr
il 2024) GDP growth to likely moderate to 6.3 per cent vs 6.8 per cent for FY24
amid slower global growth, higher interest rates and slowing consumer demand. However the growth dynamics are likely
to stay strong. Ris
ing real wages are l
ikely to support rural demand and we expect private capex recovery post national
elections in April/May 2024; the current ruling party is widely expected to return to power. Meanwhile, inflat
ion pressures
are expected to ease slightly to 5 per cent in FY25 vs 5.4 per cent in FY24. Hence we see a shallow rate cut cycle of 50 bps
starting June 2024 amid easing global rates. Ample foreign exchange (FX) reserves, yet another year of balance of
payment surplus led by index inclus
ion related
inflows remain a strong buffer for the economy and are likely to lim
it FX
market volatil
ity. The key r
isks to our view can emanate from higher oil prices and or tighter global financ
ial cond
it
ions.
•
While global demand may remain soft in 2024, we expect the external drag on externally-oriented economies in
Associat
ion of South East As
ian Nations (ASEAN), includ
ing S
ingapore, Vietnam, Malaysia and Thailand, to be more
moderate due to favourable base effects. In addit
ion, a bottom
ing of the global electronics cycle may help these
economies, though we do not expect a sign
ificant recovery g
iven weak external demand and uncertainty. Domestic
activ
ity may see consumpt
ion and investment sentiment partly affected by higher interest rates and still-high inflat
ion
earlier in the year. But potential rate cuts and easing inflat
ion
in H2 and likely stable labour markets should provide support.
Election spending in Indonesia may also provide a boost to consumption earlier in the year. Tourism recovery may continue
to bolster growth in 2024 but the support may be fading. Inflation is expected to moderate in 2024 on favourable base
effects and tighter monetary polic
ies but ups
ide risks arise from potentially higher food and energy prices, especially with
the latest developments in the Middle East.
•
Monetary policy in the region may remain tight for longer given upside risks to inflat
ion and th
is poses a downside risk to
economic growth but some easing is expected in H2 which will help support growth sentiment. On balance, growth may
remain somewhat subdued and sim
ilar to 2023, but lower
inflat
ion and rate cuts
in H2 may help offset a weaker H1.
Africa and the Middle East
•
For Sub-Saharan Africa, external factors remain a key headwind. Constrained or more expensive access to external
financing
is a challenge, especially given a concentration of external debt maturit
ies
in the years ahead. Scaled-up
multilateral support for emerging and frontier economies is likely to be a partial mit
igant. Whether the US can avo
id
a hard landing will be key to risk appetite.
FX liqu
id
ity remains an issue, although encouragingly FX reforms are now underway in key markets. Higher oil prices may
increase pressures. Common Framework debt restructuring progress in Zambia and Ghana remains key to economic
prospects, as they look to build resil
ience to further shocks.
•
In Niger
ia, w
ith a new cabinet and central bank leadership in place, we expect fuel subsidy and FX reforms to be completed
in 2024. New investment in LNG production and a scaling up of domestic refin
ing capac
ity should add to economic
resil
ience. In South Afr
ica, while load shedding has improved, port and rail bottlenecks may hold back growth. In Kenya,
increased concessional financ
ing and a part
ial refinanc
ing of the 2024 Eurobond have eased external l
iqu
id
ity concerns
but fiscal consolidat
ion w
ill be key to stabil
is
ing high debt levels.
•
Higher for longer rates, higher commodity prices and elevated regional tensions highl
ight the d
ivergence between
MENAP oil exporting and oil import
ing econom
ies. The Gulf Cooperation Council (GCC) is likely to continue using oil
windfalls to reverse the deteriorat
ion
in government balance sheets stemming from the late-2014 and 2020 oil price shocks.
The UAE, Oman and Qatar have committed to de-leveraging alongside the rebuild
ing of external buffers. In Saud
i Arabia,
drawdowns at the Central Bank continue to support growing Public Investment Fund assets; robust domestic investment
and execution of giga-projects aim to expand potential in the non-oil economy. Headline growth in Saudi Arabia may be
modest, given extension of oil output cuts. However, GCC non-oil growth remains robust against external headwinds, aided
by relatively lower levels of domestic inflat
ion.
Europe & Americas
•
The US economy has been resil
ient
in the face of sustained monetary policy tighten
ing. But as cred
it growth slows, housing
affordabil
ity weakens and del
inquenc
ies r
ise as higher rates feed through to the real economy and we expect a slowdown
in growth over the course of 2024. In the euro area, we expect growth to be elusive until rate cuts start in Q2, before pick
ing
up modestly in H2.
•
Headline inflat
ion has fallen sharply for both the US and Euro area, but core
inflat
ion st
ill remains off target. Central banks
will remain alert to any signs of renewed upside risks to inflat
ion, stemm
ing from ongoing tight labour markets and
geopolit
ical tens
ions.
•
The Fed and ECB have likely completed their rate hik
ing cycles. Lower
inflat
ion leaves room for cuts from both central banks
beginn
ing
in Q2; we expect the Fed to deliver 100bps and the ECB to deliver 125bps by end-2024.
•
There is likely to be less of a tailw
ind to growth
in Europe from fiscal policy as new fiscal rules and higher interest rates force
consolidat
ion of budget deficit, and programmes
introduced during the 2022-2023 energy cris
is come to an end. The US
economy has benefitted from fiscal support for infrastructure investment, but this impulse is likely to fade in 2024.
•
In Latin America, weakening domestic demand and a downtrend in inflat
ion should support further monetary eas
ing by
the region’s central banks most of which have already started rate cuts. Lower interest rates are likely to support better
recovery in H2-2024, although sluggish external demand and tight global financ
ial cond
it
ions could be headw
inds.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
11
Business model
We help corporates and financial
inst
itut
ions connect and maxim
ise opportun
it
ies across our global network, and we support
ind
iv
iduals and local businesses in growing their wealth.
Our business
Corporate, Commercial and Institut
ional Bank
ing (CCIB)
We support large corporates and financial
inst
itut
ions across the world’s most dynamic markets, helping unlock growth
opportunit
ies and create susta
inable value
Consumer, Private and Business Banking (CPBB)
We support small and medium-sized enterprises and ind
iv
iduals, from Mass Retail clients to Affluent includ
ing h
igh-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. Ventures includes
our market leading 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 export 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, fee income on financ
ing solut
ions, advisory 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, impa
irments and taxes
Return on tangible equity
•
Profit after tax generated relative to tangible equity invested
Strategic report continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
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 to 16 for more), challenge us to use our un
ique posit
ion art
iculated below.
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 are committed to sustainable social and economic development across our business, operations and communit
ies.
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
•
Upskill
ing and resk
ill
ing our people cont
inues to be a prior
ity –colleagues are undertak
ing learning to build future-ready
skills, includ
ing
in sustainable finance, data and analytics, dig
ital, cyber secur
ity, and leadership.
•
We continue to strengthen a work environment that supports inclus
ion,
innovat
ion, and h
igh performance, with an ongoing
focus on wellbeing. This includes further embedding flexible working across our markets, provid
ing enhanced benefits,
and build
ing the capab
il
it
ies of our people leaders.
International network
Our network is our unique competit
ive advantage and connects compan
ies, inst
itut
ions and ind
iv
iduals to, and in, some of
the world’s fastest-growing and most dynamic regions.
How we’re enhancing our resources
•
Across our internat
ional network, we are
invest
ing
in capabil
it
ies such as dig
ital channels and cl
ient experiences to access
new high-growth segments, grow our share of wallet with exist
ing cl
ients and create new business model opportunit
ies.
•
We are strengthening our Transaction Banking, Financ
ial Markets, Susta
inable Finance solutions in CCIB and Wealth
Management offerings in CPBB to meet the needs of our cross-border clients across our network.
Local expertise
We are deeply rooted in our markets with a strong understanding of key economic drivers, offering us ins
ights that help our
clients achieve their ambit
ions.
How we’re enhancing our resources
•
We continue to enhance our product, advisory and dig
ital capab
il
it
ies to serve our ind
iv
idual clients. In 2023, our PLC Group
launched more than 20 new dig
ital wealth capab
il
it
ies, made our Signature Chief Investment Office (CIO) funds available
in 12 markets and launched new dig
ital loan partnersh
ips.
•
In Business Banking, we continued to support the growth of small and medium-sized-enterprises by making dig
ital loan
orig
inat
ion available in more markets and expanding the SC Women’s International Network, our offering for women
entrepreneurs.
Brand recognit
ion
We are a leading internat
ional bank
ing group with 170 years of history. In many of our markets we are a household name.
How we’re enhancing our resources
•
In 2023 we continued to invest in our brand through our ‘Possib
il
it
ies are Everywhere’ global advert
is
ing campa
ign,
highl
ight
ing our dist
inct
ive brand promise to be here for good and showcasing how we help people, companies and
communit
ies grow and prosper across our
internat
ional network.
•
We have been successful in leveraging brand and ins
ights to support bus
iness growth. Media sentiment towards the PLC
Group continued to exceed the average for the banking sector and ranked top three in most of our key markets over 2023.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
13
Strategic report continued
Financ
ial strength
With $539 bill
ion
in assets on our balance sheet, we are a strong, trusted partner for our clients.
How we’re enhancing our resources
•
Our capital posit
ion rema
ins strong, with our Common Equity Tier 1 (CET1) ratio of 13.2 per cent above the Group target
of 12 per cent.
Technology
Our strong dig
ital foundat
ions and leading technological capabil
it
ies continue to enable a data-driven dig
ital bank that
delivers world class client service.
How we’re enhancing our resources
•
We are mainta
in
ing momentum on simpl
ification and harmon
isat
ion of our technology estate,
integrat
ing platforms us
ing
the cloud where appropriate, and invest
ing
in our engineer
ing capab
il
it
ies and best-in-class tools to provide secure and
resil
ient technology.
•
We are accelerating automation to optim
ise our technology stack and enhanc
ing the end-to-end delivery of requirements
to deployment via a new, single platform that enables our colleagues to collaborate on technology projects in a consistent
and efficient manner.
•
We have continued deliver
ing value to our cl
ients by improv
ing speed to market, as enabled by more efficient and scalable
technology development and delivery processes.
The value we create
We aim to create long-term value for a broad range of stakeholders in a sustainable way
Clients
We deliver banking solutions for our clients across our network, both dig
itally and
in person. We help ind
iv
iduals grow their
wealth while connecting corporates and financ
ial
inst
itut
ions to opportunit
ies across our network.
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, working 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 play our part in supporting the effective function
ing of the financial system and the broader economy by proact
ively
engaging with public authorit
ies and by pay
ing our taxes.
Investors
We aim to deliver robust returns and long-term sustainable value for our investors.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
14
Our strategy
To become a leader in global finance
Over the past year, we have executed well against our strategy, with a considerable uplift in our Return on ordinary
shareholders’ Tangible Equity (RoTE) delivered.
We will continue to focus on:
•
Four strategic prior
it
ies: 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
While the macroeconomic and industry environments continue to evolve, we believe the strategy remains fit for the Bank.
Our strategic prior
it
ies and enablers will continue to be supported by our three Stands: Accelerating Zero, Lift
ing Part
ic
ipat
ion
and Resetting Globalisat
ion (please find more deta
ils of our Stands on page 15 to 16).
Strategic prior
it
ies
Network business
Through our unique network, we enable global trade and investment through financ
ing, payments, asset or
ig
inat
ion and risk
management, with an increas
ing focus on Susta
inable Finance.
Our on-the-ground presence and capabil
it
ies in our markets give us an advantage in advice and deal execution for
corporates and financial
inst
itut
ions by:
•
Helping our clients seize opportunit
ies
in shift
ing supply cha
ins, tapping into exist
ing and emerg
ing trade and investment
corridors such as intra-Asia, and supporting our European and American clients’ access to emerging markets assets
•
Continuously improv
ing cl
ient experience with market-leading dig
ital platforms that allow seamless onboard
ing, client
servic
ing and appl
icat
ion programm
ing interface (API) connectiv
ity
•
Developing different
iated propos
it
ions
in high-returning, high-growth sectors such as Technology, Media & Telecom (TMT),
Healthcare, Cleantech and Electric Vehicles
Affluent client business
We offer comprehensive solutions, personalised advice, and exceptional client experiences to help our Affluent clients
manage and grow their wealth, at home and abroad.
As a leading internat
ional wealth manager, we are strengthen
ing our competit
ive advantage by:
•
Unlocking the value of our network, leveraging our wealth hubs in Singapore, Hong Kong, UAE, and Jersey to deliver
a seamless global proposit
ion and cl
ient experience by enhancing our dig
ital, wealth and adv
isory capabil
it
ies
•
Maxim
is
ing synergies across our client portfolios and the bank by nurturing clients up the Affluent client continuum via our
deep local expertise and different
iated propos
it
ions, and by partner
ing with CCIB to offer corporate solutions like real
estate and acquis
it
ion financ
ing to ultra-h
igh-net-worth clients
•
Deliver
ing expert adv
ice and dig
ital-first wealth solut
ions via an open architecture approach, supported by investments in
innovat
ion and scalable platforms.
Mass retail business
Mass Retail is strategically important to our client continuum. It demonstrates our deep local expertise, commitment to and
relevance in the markets where we operate.
Besides provid
ing a cont
inuous stream of clients who become more affluent over time, Mass Retail underscores our
commitment to lift
ing part
ic
ipat
ion in the communit
ies we serve.
Our focus is on:
•
Continu
ing the p
ivot towards a dig
ital-first model to become more personal
ised, relevant and real-time
•
Sharpening our onboarding and engagement capabil
it
ies through dig
ital sales and market
ing, advanced analytics
capabil
it
ies and straight-through self-service
•
Launching and developing new business models with leading global and regional partners to leverage synergies in
distr
ibut
ion, dig
ital capab
il
it
ies, and risk management to serve customers at scale
Strategic report continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
15
Sustainab
il
ity
We aim to support the sustainable economic and social development of our markets, helping people to thrive long-term.
In line with our Stands, we are committed to accelerating the transit
ion to net zero, l
ift
ing part
ic
ipat
ion in the economy and
resetting globalisat
ion. Our focus
includes:
•
Continu
ing to scale our susta
inable and transit
ion finance bus
iness by integrat
ing susta
inab
il
ity as a core component of our
value proposit
ion and enhanc
ing our suite of Sustainable Finance products and solutions across CCIB and CPBB
•
Progressing on our pathway to achieve net zero financed emiss
ions by 2050,
includ
ing sett
ing inter
im 2030 targets for
addit
ional h
igh-emitt
ing sectors and enhanc
ing our exist
ing Cl
imate Risk governance and management processes
•
Contribut
ing our sk
ills, experience and networks to global partnerships and in
it
iat
ives that enhance standards and further
develop the global sustainab
il
ity ecosystem
•
Seeking to partner with our clients and communit
ies to mob
il
ise soc
ial capital and drive economic inclus
ion and
entrepreneurship through our Futuremakers global in
it
iat
ive
Crit
ical enablers
People and culture
We invest in our people by build
ing future-ready sk
ills, provid
ing a d
ifferent
iated employee exper
ience, and strengthening our
inclus
ive and
innovat
ive culture. We do th
is by:
•
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 and work, al
igned with the business strategy and
workforce’s aspirat
ions
•
Strengthening leadership capabil
ity through modern
ised development programmes and measurement platforms
•
Focusing on wellbeing to enhance resil
ience, product
iv
ity and performance as well as offer
ing progressive,
purpose-led benefits
•
Further embedding flexible working across our footprint
Ways of working
We drive client-centric
ity w
ith a focus on speed to value for our clients. We are improv
ing our operat
ing rhythm and
organisat
ional ag
il
ity wh
ile empowering our people to continuously improve the way we work. We continue to progress on:
•
Simpl
ify
ing and transforming the way we invest, operate and execute
•
Harnessing operational effic
ienc
ies to help us continue the drive of commerce and prosperity in our markets
•
Enhancing the way we deliver and manage change across the Bank, anchored around simpl
ify
ing our processes
end-to-end
Innovation
We embed innovat
ion through d
ig
it
is
ing our core, leverag
ing partnerships to drive scale and extended reach, and build
ing
new business models through ventures. We continue to focus on:
•
Modernis
ing and strengthen
ing our technology estate and data management
•
Exploring and experiment
ing to enhance cl
ient experience, develop new platforms and improve operational resil
ience
•
Leveraging partnerships to access new clients and strengthen our capabil
it
ies
•
Build
ing, launch
ing and scaling innovat
ive ventures wh
ile driv
ing ventures’ collaborat
ion with the broader Bank
and its clients
Our Stands
Climate change, stark inequal
ity and the unfa
ir aspects of globalisat
ion
impact us all. We’re taking a stand by setting
long-term ambit
ions on these
issues where they matter most. This works in unison with our strategy, stretching our think
ing,
our action and our leadership to accelerate our growth.
Strategic report continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
16
Strategic report continued
Accelerating Zero
The world must reach net zero carbon emiss
ions by 2050 to l
im
it the worst effects of cl
imate change. This will require efforts
across stakeholder groups to accelerate the transit
ion to a low-carbon, cl
imate-resil
ient economy. Pol
icymakers, corporates
and financial
inst
itut
ions must play a substantial part in this to ensure that finance is an enabler of change. The need for a
just transit
ion that addresses env
ironmental challenges, while ensuring inclus
ive econom
ic and social development in the
footprint markets where we operate, is a prior
ity for the Group.
Lift
ing Part
ic
ipat
ion
Inequality, along with gaps in economic inclus
ion, mean that many young people, women, and small bus
inesses struggle to
gain access to the financ
ial system to save for the
ir futures and to grow their businesses. We want to increase access to
financial serv
ices and make them available at low cost. We strive to expand the reach and scale of accessible banking and to
connect clients and our wider communit
ies to the sk
ills and educational opportunit
ies that promote and susta
in access to
finance and economic opportunity.
Resetting Globalisat
ion
Globalisat
ion has l
ifted mill
ions out of poverty but left many beh
ind. We advocate for a new model of globalisat
ion based on
transparency to build trust, renew confidence and promote dialogue and innovat
ion. We connect the cap
ital, expertise and
ideas needed to drive new standards and create innovat
ive solut
ions for sustainable growth. We work across our markets to
shape a new understanding of growth, one that is based on inclus
iv
ity, sustainab
il
ity and our ambit
ion to support people and
communit
ies for the long term.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
17
Client segment reviews
Corporate, Commercial & Institut
ional Bank
ing
Profit before taxation
$3,987m
$3,886m
Underlying basis
Reported 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 channeling 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 $3,987 mill
ion up 19 per cent, pr
imar
ily dr
iven by higher income partly offset
by higher expenses.
•
Underlying operating income of $7,972 mill
ion was up 15 per cent pr
imar
ily due to h
igher Transaction Banking income
(primar
ily cash) on account of h
igher interest margins, partly offset by lower Financ
ial Markets performance on the back
of reduced market volatil
ity.
•
Credit impa
irment
is a net writeback, due to sign
ificant releases
in Stage 3 with
in the AME reg
ion.
Consumer, Private & Business Banking
Profit before taxation
$1,335m
$1,304m
Underlying basis
Reported 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 dr
iv
ing end-to-end d
ig
ital
isat
ion and
process simpl
ification.
Performance highl
ights
•
Underlying profit before taxation of $1,335 mill
ion up 43 per cent dr
iven by higher income.
•
Underlying operating income of $3,456 mill
ion was up 22 per cent, dr
iven by strong performance in Retail deposits
on the back of improved interest margins and recovery in Wealth Management income, partly offset by Mortgages.
•
Expenses were up 6 per cent year-on-year due to higher staff costs.
•
Credit impa
irment
increased $110m due to higher charge-offs in unsecured lending portfolios in India, Malaysia
and Singapore.
Strategic report continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
18
Strategic report continued
Ventures
Profit before taxation
$(253)m
$(257)m
Underlying basis
Reported basis
Segment overview
Ventures is comprised of Trust Bank, which is Singapore’s first cloud-native bank launched in September 2022 and aims to
become the fourth largest dig
ital reta
il bank in Singapore by the end of 2024. To achieve this, it will scale through its partner
ecosystem and deepen its customer relationsh
ips w
ith the mass and mass affluent customer segments.
Performance highl
ights
•
Underlying loss before tax of $253 mill
ion was dr
iven by continued investment in our dig
ital bank, Trust,
in Singapore
Regional reviews
Asia
Profit before taxation
$2,416m
$2,351m
Underlying basis
Reported 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 47 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 $2,416 mill
ion was up 20 per cent due to h
igher income.
•
Underlying operating income of $5,331 mill
ion up 16 per cent, due to h
igher Transaction Banking and Retail Products income
benefiting from
interest rate rises, partially offset by lower Financ
ial Markets
income.
•
Credit impa
irment up $124m
ill
ion, due to h
igher charge offs in unsecured lending portfolio with
in CPBB.
•
Total assets and liab
il
it
ies up 6 per cent and 10 per cent respect
ively since 31 December 2022.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
19
Strategic report continued
Africa & Middle East
Profit before taxation
$1,243m
$1,267m
Underlying basis
Reported basis
Region overview
We have a deep-rooted heritage in Africa & Middle East (AME) and are present in 18 markets, of which the UAE, Niger
ia,
Pakistan, Kenya, South Africa and Ghana are the largest by income.
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. AME is an important element of global trade and investment corridors
and we are well placed to facil
itate these flows.
Gulf Cooperation Council (GCC) markets are expected to outpace global growth on the back of oil price recovery, higher
government spend and bilateral trade negotiat
ions. The macro-econom
ic risk remains elevated in Pakistan and some
markets in Africa due to a high level of sovereign debt and FX liqu
id
ity challenges. Overall, AME’s medium and long-term
attractiveness remains compelling and intact, and it is an important part of our global network proposit
ion for our cl
ients.
Performance highl
ights
•
Underlying operating profit before tax of $1,243 mill
ion was up 62 per cent dr
iven by higher income and lower credit
impa
irments, partly offset by h
igher cost
•
Underlying operating income of $2,764 mill
ion was up 14 per cent ma
inly due to growth in Transaction Banking and
Retail Deposits, partly offset by lower Financ
ial Markets
income.
•
Total assets was largely flat from 31 December 2022 due to de-risk
ing
in markets with elevated macro-economic risk.
Europe & Americas
Profit before taxation
$15m
$(3)m
Underlying basis
Reported 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 be
ing a key orig
inat
ion centre for CCIB, the region offers local, on-the-ground expertise and solutions to help
internat
ionally m
inded clients grow across Europe and Americas. The region is home to the Group’s two biggest payment
clearing centres and the largest trading floor, with sign
ificant amount of the reg
ion’s income orig
inat
ing from Financ
ial
Markets and Transaction Banking products.
Our European CPBB focuses on serving clients with links to our footprint markets.
Performance highl
ights
•
Underlying operating profit before taxation of $15mill
ion reduced 99 per cent dr
iven by lower income, primar
ily on account
of increased cost of hedges with
in Treasury, as well as h
igher expenses
•
Underlying operating income of $1,682 mill
ion was down 35 per cent largely due to drag from structural and short-term
hedges and lower Financ
ial Markets
income, moderated by higher Cash income from improved interest margins
•
Expenses increased 14 per cent due to higher staff cost
•
Total assets and liab
il
it
ies reduced 5 per cent and 15 percent from 31 December 2022, dr
iven by Financ
ial Markets
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
20
Financ
ial rev
iew
Summary of financial performance
2023
$mill
ion
2022
1
$mill
ion
Change
%
Underlying Net Interest income
3
5,637
4,703
20
Underlying Non NII
3
5,771
5,314
9
Underlying operating income
11,408
10,017
14
Other underlying expenses
(6,758)
(6,331)
(7)
UK bank levy
(111)
(102)
(9)
Underlying operating expenses
(6,869)
(6,433)
(7)
Underlying operating profit before impa
irment and taxat
ion
4,539
3,584
27
Credit impa
irment
46
25
84
Other impa
irment
(40)
(85)
53
Loss from associates and jo
int ventures
(4)
(13)
69
Underlying profit before taxation
4,541
3,511
29
Restructuring
(117)
(80)
(46)
Goodwill and Other impa
irment
–
(10)
100
DVA
27
33
(18)
Other Items
(37)
20
nm
5
Reported profit before taxation
4,414
3,474
27
Taxation
(1,177)
(1,122)
(5)
Profit for the year
3,237
2,352
38
Underlying return on tangible equity (%)
2
12.9
8.9
400
Common Equity Tier 1 (%)
2,4
13.2
12.7
50
1
Underlying performance for relevant periods in 2022 has been restated for the removal of (i) exit markets and businesses in AME (i
i) Av
iat
ion F
inance and (i
i
i) DVA.
No change to reported performance
2
Change is the basis points (bps) difference between the two periods rather than the percentage change
3
To be consistent with how we compute Net Interest Margin (NIM), and to align with the way we manage our business, we have changed our defin
it
ion of Underlying
Net Interest Income (NII) and Underlying Non NII. The adjustments made to NIM, includ
ing
interest expense relating to funding our trading book, will now be shown
against Underlying Non NII rather than Underlying NII. Prior periods have been restated. There is no impact on total income
4
The 2022 comparatives have been restated to correctly reflect credit risk mit
igat
ion
5 Not meaningful
Reported financial performance summary
2023
$mill
ion
2022
$mill
ion
Change
%
Net Interest income
4,607
4,451
4
Non NII
6,942
5,783
20
Reported operating income
11,549
10,234
13
Reported operating expenses
(7,147)
(6,662)
(7)
Reported operating profit before impa
irment and taxat
ion
4,402
3,572
23
Credit impa
irment
58
22
164
Goodwill and other impa
irment
(42)
(107)
61
Loss from associates and jo
int ventures
(4)
(13)
69
Reported profit before taxation
4,414
3,474
27
Taxation
(1,177)
(1,122)
(5)
Profit for the year
3,237
2,352
38
Reported return on tangible equity (%)
1
12.5
8.8
370
1
Change is the basis points (bps) difference between the two periods rather than the percentage change
Strategic report continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
21
Strategic report continued
The commentaries below are on an underlying basis unless otherwise stated
Operating income
increased 14 per cent and was driven by growth in both net interest income and non net interest income,
on the back of higher net interest margins and a one off gain from a subsid
iary d
isposal.
Net interest income
increased 20 per cent, driven by higher net interest margins, partially offset by short-term and structural
hedge losses. Net interest margin averaged 160 basis points and is 23 basis points higher year-on-year benefit
ing from r
is
ing
interest rates.
Non NII
increased 9 per cent, due to gain on disposal of a subsid
iary, partly offset by lower F
inanc
ial Markets
income.
Operating expenses
excluding the UK bank levy are up 7 per cent primar
ily reflect
ing the impact of a high-inflat
ion
environment, includ
ing salary
increases, headcount growth, 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 4 percentage
points to 59 per cent, with posit
ive jaws of 7 per cent.
Credit impa
irment
is a net credit of $46 mill
ion dr
iven by sign
ificant releases
in Stage 3 from corporate clients, partly offset by
higher charges with
in the unsecured lend
ing portfolio
Other impa
irment
is a net charge of $40m and primar
ily relates to software.
The Group’s
underlying profit before taxation
no longer includes movement in the debit valuation adjustment (DVA), the
markets and businesses it is exit
ing
in Africa and Middle East (AME) and the Aviat
ion F
inance business and now reports these
with
in restructur
ing and other items. Restructuring is a loss of $117 mill
ion pr
imar
ily reflect
ing reflects the impact of actions to
transform the organisat
ion to
improve productiv
ity, pr
imar
ily redundancy related charges and the AME market ex
its, while
loss of $37 mill
ion
in other items is in relation to a sale of a portfolio of Aviat
ion loans.
Taxation
of $1,177 mill
ion for the year represents an effect
ive tax rate of 27 per cent against prior year effective tax rate of
32%, primar
ily due to a change
in the mix of profits across jur
isd
ict
ions and d
isposals and restructuring of our businesses
Underlying Return on tangible equity
increased by 400 basis points to 12.9 per cent driven by higher profits on account of
strong income growth and lower impa
irments
Underlying profit/(loss) before tax by client segment and geographic region
2023
$mill
ion
2022¹
$mill
ion
Change
%
Corporate, Commercial & Institut
ional Bank
ing
1
3,987
3,339
19
Consumer, Private & Business Banking
1
1,335
931
43
Ventures
(253)
(277)
(12)
Central & other items (segment)
(528)
(482)
2
Underlying profit before taxation
4,541
3,511
29
Asia
2,416
2,017
20
Africa & Middle East
1,243
766
62
Europe & Americas
15
1,213
(99)
Central & other items (region)
867
(485)
279
Underlying profit before taxation
4,541
3,511
29
1
Underlying performance for relevant periods in 2022 has been restated for the removal of (i) exit markets and businesses in AME (i
i) Av
iat
ion F
inance and (i
i
i) DVA.
No change to reported performance
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
22
Strategic report continued
Adjusted net interest income and margin
2023
$mill
ion
2022
$mill
ion
Change¹
%
Adjusted net interest income
2
5,694
4,695
21
Average interest-earning assets
356,450
343,947
4
Average interest-bearing liab
il
it
ies
322,422
316,964
2
Gross yield (%)
3
5.16
2.84
232
Rate paid (%)
3
3.93
1.60
233
Net interest margin (%)
3,4
1.60
1.37
23
1
Variance is better/(worse) other than assets and liab
il
it
ies wh
ich is increase/(decrease)
2
Adjusted net interest income is reported net interest income less funding costs for the trading book and financ
ial guarantee fees on
interest earning asset
3
Change in the basis points (bps) difference between two periods rather than the percentage change
4
Net interest margin is calculated as Adjusted net interest income div
ided by average
interest-earning assets, annualised
Adjusted net interest income increased 21 per cent driven by higher net interest margin which increased 23 basis point
year-on-year, benefitting from an
increase in interest rates across many of our markets.
Average interest-earning assets increased 4 per cent driven by higher Treasury Markets assets, partially offset by lower
lending assets on the back of optim
isat
ion in
it
iat
ives. Gross y
ields increased 232 basis points compared to the average
in same period of 2022, reflecting the impact of increase of key interest rates.
Average interest-bearing liab
il
it
ies
increased 2 per cent driven by growth in customer accounts, with rate paid on liab
il
it
ies
increas
ing by 233 bas
is points year-on-year reflecting impact of interest rate rises.
Credit quality
Balance Sheet
2023
$mill
ion
2022
$mill
ion
Change
1
%
Gross loans and advances to customers
2
159,552
162,158
(2)
Of which stage 1
146,718
148,213
(1)
Of which stage 2
7,657
7,743
(1)
Of which stage 3
5,177
6,202
(17)
Expected credit loss provis
ions
(3,409)
(4,032)
(15)
Of which stage 1
(198)
(268)
(26)
Of which stage 2
(193)
(187)
3
Of which stage 3
(3,018)
(3,577)
(16)
Net loans and advances to customers
156,143
158,126
(1)
Of which stage 1
146,520
147,945
(1)
Of which stage 2
7,464
7,556
(1)
Of which stage 3
2,159
2,625
(18)
Cover ratio of stage 3 before/after collateral (%)
3
58 / 73
58 / 74
0 / (1)
Credit grade 12 accounts ($mill
ion)
2,117
1,282
65
Early alerts ($mill
ion)
3,791
3,143
21
Investment grade corporate exposures (%)
3
75
79
(4)
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 $13,827 mill
ion at 31 December 2023 (2022: $15,586 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 2023
23
Strategic report continued
Asset quality remained resil
ient, reflected
in lower year-on-year credit impa
irment charges. The Group cont
inues to actively
manage the credit portfolio whilst remain
ing alert to a volat
ile and challenging external environment includ
ing
increased
geopolit
ical tens
ions which has led to id
iosyncrat
ic stress in a select number of markets and industry sectors.
Credit impa
irment was a net release of $46 m
ill
ion, reflect
ing the impact of sign
ificant releases
in stage 3 with
in CCIB ,
partly offset by higher charge-offs in unsecured lending portfolio.
Gross stage 3 loans and advances to customers of $5.2 bill
ion were 17 per cent lower year-on-year as repayments, cl
ient
upgrades and write-offs more than offset new inflows
Credit grade 12 balances have increased by 65 per cent to $2.1 bill
ion substant
ially from a change in composit
ion of an
exist
ing sovere
ign exposure.
Restructuring, goodwill impa
irment and other
items
2023
$mill
ion
2022¹
$mill
ion
Restructuring
Goodwill
and Other
Impairment
DVA
Other items
2
Restructuring
Goodwill
and Other
impa
irment
DVA
Other items
Operating income
151
–
27
(37)
164
–
33
20
Operating expenses
(278)
–
–
–
(229)
–
–
–
Credit impa
irment
12
–
–
–
(3)
–
–
–
Other impa
irment
(2)
–
–
–
(12)
(10)
–
–
(Loss)/profit before
taxation
(117)
–
27
(37)
(80)
(10)
33
20
1
Underlying performance for relevant periods in 2022 has been restated for the removal of (i) exit markets and businesses in AME (i
i) Av
iat
ion F
inance and (i
i
i) DVA.
No change to reported performance
2
Other items includes loss of $37 mill
ion
in relation to the sale of a portfolio of Aviat
ion loans
The Group’s reported 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.
Effective 1st January 2023, the Group no longer includes the seven exit markets or the two CPBB business exits in the AME
region and the Aviat
ion F
inance business with
in the Group’s underly
ing operating profit before taxation but will report them
with
in restructur
ing. The sale of one of the exit markets, Jordan was completed in August 2023 and the $8 mill
ion ga
in is
included in operating income in restructuring. The remain
ing ex
its in the AME region are expected to complete in 2024.
The Group is also reclassify
ing movements
in the debit valuation adjustment (DVA) out of its underlying operating profit
before taxation and into other items.
To aid comparisons with prior periods the Group has removed the exit markets, Aviat
ion F
inance business and DVA from its
underlying operating profit before taxation for 2022.
Restructuring charges of $117 mill
ion reflects the
impact of actions to transform the organisat
ion to
improve productiv
ity,
primar
ily redundancy related charges.
DVA was a posit
ive $27 m
ill
ion movement dr
iven by the widen
ing of the Group’s asset swap spreads on der
ivat
ive
liab
il
ity exposures.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
24
Strategic report continued
Balance sheet and liqu
id
ity
2023
$mill
ion
2022
$mill
ion
Assets
Loans and advances to banks
22,803
27,383
Loans and advances to customers
156,143
158,126
Other assets
359,633
365,225
Total assets
538,579
550,734
Liab
il
it
ies
Deposits by banks
23,616
24,150
Customer accounts
237,902
243,075
Other liab
il
it
ies
243,117
249,366
Total liab
il
it
ies
504,635
516,591
Equity
33,944
34,143
Total equity and liab
il
it
ies
538,579
550,734
Advances-to-deposits ratio (%)¹
50.5%
50.4%
Standard Chartered 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
The Group now excludes $20,710 mill
ion held w
ith central banks (2022: $20,798 mill
ion) that have been confirmed as repayable at the po
int of stress. Advances exclude
repurchase agreements and other sim
ilar secured lend
ing of $13,827 mill
ion and
include loans and advances to customers held at fair value through profit or loss of
$3,188 mill
ion. Depos
its include customer accounts held at fair value through profit or loss of $9,166 mill
ion
The Group’s balance sheet is strong, highly liqu
id and d
ivers
ified.
Loans and advances to customers decreased 1 per cent since December 2022 to $156 bill
ion dr
iven mainly by risk-weighted
asset optim
isat
ion actions undertaken by CCIB.
Customer accounts of $238 bill
ion decreased by 2 per cent s
ince December 2022 driven by lower financ
ial markets volume,
partly offset by higher cash volumes in transaction banking and increase in retail term deposits
The advances-to-deposits ratio was broadly flat.
Capital base and ratios
2023
$mill
ion
2022
$mill
ion
¹
CET1 capital
21,794
21,746
Addit
ional T
ier 1 capital (AT1)
5,453
5,403
Tier 1 capital
27,247
27,149
Tier 2 capital
11,607
12,439
Total capital
38,854
39,588
CET1 capital ratio (%)
13.2%
12.7%
Total capital ratio (%)
23.5%
23.1%
Leverage ratio (%)
5.0%
4.8%
1
The 2022 comparatives have been restated to correctly reflect credit risk mit
igat
ion.
Standard Chartered Bank is authorised by the PRA and regulated by the Financ
ial Conduct Author
ity and the PRA as
Standard Chartered Bank.
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 13.2 per cent at FY2023 with leverage at 5.0 per cent. The Group mainta
ins
high levels of loss absorbing capacity. Compared to 31 December 2022, the Group’s CET1 ratio increased by approximately
50 bps to 13.2 per cent. RWAs decreased by $6.1 bill
ion to $165.6 b
ill
ion. CET1 cap
ital remained largely flat at $21.8 bill
ion as
profits of $3.2 bill
ion and movement
in other comprehensive income of $0.4 bill
ion were offset by d
istr
ibut
ions of $3.0 bill
ion,
a foreign currency translation impact of $0.5 bill
ion and an
increase in intang
ible assets of $0.1 b
ill
ion.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
25
Strategic report continued
Underlying versus reported reconcil
iat
ions
Underlying versus reported reconcil
iat
ions
Reconcil
iat
ions between underlying and reported results are set out in the tables below:
Operating income by client segment
2023
Corporate,
Commercial &
Institut
ional
Banking
$mill
ion
Consumer,
Private &
Business
Banking
$mill
ion
Ventures
$mill
ion
Central &
Other Items
(Segment)
$mill
ion
Total
$mill
ion
Underlying operating income
7,972
3,456
137
(157)
11,408
Restructuring
70
45
–
36
151
DVA
27
–
–
–
27
Other items
2
(37)
–
–
–
(37)
Reported operating income
8,032
3,501
137
(121)
11,549
2022¹
Corporate,
Commercial &
Institut
ional
Banking
$mill
ion
Consumer,
Private &
Business
Banking
$mill
ion
Ventures
$mill
ion
Central &
Other Items
(Segment)
$mill
ion
Total
$mill
ion
Underlying operating income
6,917
2,828
3
269
10,017
Restructuring
93
47
–
24
164
DVA
33
–
–
–
33
Other items
–
–
–
20
20
Reported operating income
7,043
2,875
3
313
10,234
1
Underlying performance for relevant periods in 2022 has been restated for the removal of (i) exit markets and businesses in AME (i
i) Av
iat
ion F
inance and (i
i
i) DVA.
No change to reported performance
2
Other items includes loss of $37 mill
ion
in relation to the sale of a portfolio of Aviat
ion loans
Operating income by region
2023
Asia
$mill
ion
Africa &
Middle East
$mill
ion
Europe &
Americas
$mill
ion
Central &
Other Items
(Region)
$mill
ion
Total
$mill
ion
Underlying operating income
5,331
2,764
1,682
1,631
11,408
Restructuring
5
122
12
12
151
DVA
(6)
26
7
–
27
Other items
2
(14)
(18)
(5)
–
(37)
Reported operating income
5,316
2,894
1,696
1,643
11,549
2022
¹
Asia
$mill
ion
Africa &
Middle East
$mill
ion
Europe &
Americas
$mill
ion
Central &
Other Items
(Region)
$mill
ion
Total
$mill
ion
Underlying operating income
4,614
2,431
2,579
393
10,017
Restructuring
27
145
(7)
(1)
164
DVA
11
8
14
–
33
Other items
–
–
–
20
20
Reported operating income
4,652
2,584
2,586
412
10,234
1
Underlying performance for relevant periods in 2022 has been restated for the removal of (i) exit markets and businesses in AME (i
i) Av
iat
ion F
inance and (i
i
i) DVA.
No change to reported performance
2
Other items includes loss of $37 mill
ion
in relation to the sale of a portfolio of Aviat
ion loans
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
26
Strategic report continued
Profit before taxation (PBT)
2023
Underlying
$mill
ion
Restructuring
$mill
ion
DVA
$mill
ion
Net gain on
businesses
disposed off
1
$mill
ion
Goodwill and
Other
impa
irment
$mill
ion
Reported
$mill
ion
Operating income
11,408
151
27
(37)
–
11,549
Operating expenses
(6,869)
(278)
–
–
–
(7,147)
Operating profit/(loss) before impa
irment losses
and taxation
4,539
(127)
27
(37)
–
4,402
Credit impa
irment
46
12
–
–
–
58
Other impa
irment
(40)
(2)
–
–
–
(42)
Loss from associates and jo
int ventures
(4)
–
–
–
–
(4)
Profit/(loss) before taxation
4,541
(117)
27
(37)
–
4,414
2022
2
Underlying
$mill
ion
Restructuring
$mill
ion
DVA
$mill
ion
Net gain on
businesses
disposed off
$mill
ion
Goodwill and
Other
impa
irment
$mill
ion
Reported
$mill
ion
Operating income
10,017
164
33
20
–
10,234
Operating expenses
(6,433)
(229)
–
–
–
(6,662)
Operating profit/(loss) before impa
irment losses
and taxation
3,584
(65)
33
20
–
3,572
Credit impa
irment
25
(3)
–
–
–
22
Other impa
irment
(85)
(12)
–
–
(10)
(107)
Loss from associates and jo
int ventures
(13)
–
–
–
–
(13)
Profit/(loss) before taxation
3,511
(80)
33
20
(10)
3,474
1
Net gain on businesses disposed of for sale includes loss of $37 mill
ion
in relation to the sale of a portfolio of Aviat
ion loans
2
Underlying performance for relevant periods in 2022 has been restated for the removal of (i) exit markets and businesses in AME (i
i) Av
iat
ion F
inance and (i
i
i) DVA.
No change to reported performance
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
27
Strategic report continued
Profit before taxation (PBT) by client segment
2023
Corporate,
Commercial &
Institut
ional
Banking
$mill
ion
Consumer,
Private &
Business
Banking
$mill
ion
Ventures
$mill
ion
Central &
Other Items
(Segment)
$mill
ion
Total
$mill
ion
Operating income
7,972
3,456
137
(157)
11,408
External
6,026
2,124
138
3,120
11,408
Inter-segment
1,946
1,332
(1)
(3,277)
–
Operating expenses
(4,103)
(1,989)
(329)
(448)
(6,869)
Operating profit/(loss) before impa
irment losses and taxat
ion
3,869
1,467
(192)
(605)
4,539
Credit impa
irment
153
(128)
(13)
34
46
Other impa
irment release/(charge)
(35)
(4)
(24)
23
(40)
(Loss)/profit from associates and jo
int ventures
–
–
(24)
20
(4)
Underlying profit/(loss) before taxation
3,987
1,335
(253)
(528)
4,541
Restructuring
(91)
(31)
(4)
9
(117)
Goodwill and other impa
irment
–
–
–
–
–
DVA
27
–
–
–
27
Other Items
1
(37)
–
–
–
(37)
Reported profit/(loss) before taxation
3,886
1,304
(257)
(519)
4,414
2022
²
Corporate,
Commercial &
Institut
ional
Banking
$mill
ion
Consumer,
Private &
Business
Banking
$mill
ion
Ventures
$mill
ion
Central &
Other Items
(Segment)
$mill
ion
Total
$mill
ion
Operating income
6,917
2,828
3
269
10,017
External
6,321
2,274
3
1,419
10,017
Inter-segment
596
554
–
(1,150)
–
Operating expenses
(3,755)
(1,873)
(242)
(563)
(6,433)
Operating profit/(loss) before impa
irment losses and taxat
ion
3,162
955
(239)
(294)
3,584
Credit impa
irment
186
(18)
(2)
(141)
25
Other impa
irment
(9)
(6)
(20)
(50)
(85)
(Loss)/profit from associates and jo
int ventures
–
–
(16)
3
(13)
Underlying profit/(loss) before taxation
3,339
931
(277)
(482)
3,511
Restructuring
(26)
(31)
(1)
(22)
(80)
Goodwill and other impa
irment
–
–
–
(10)
(10)
DVA
33
–
–
–
33
Other Items
–
–
–
20
20
Reported profit/(loss) before taxation
3,346
900
(278)
(494)
3,474
1
Other Items includes loss of $37 mill
ion
in relation to the sale of a portfolio of Aviat
ion loans
2
Underlying performance for relevant periods in 2022 has been restated for the removal of (i) exit markets and businesses in AME (i
i) Av
iat
ion F
inance and (i
i
i) DVA.
No change to reported performance
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
28
Strategic report continued
Profit before taxation (PBT) by region
2023
Asia
$mill
ion
Africa &
Middle East
$mill
ion
Europe &
Americas
$mill
ion
Central &
Other Items
(Region)
$mill
ion
Total
$mill
ion
Operating income
5,331
2,764
1,682
1,631
11,408
Operating expenses
(2,812)
(1,597)
(1,659)
(801)
(6,869)
Operating profit before impa
irment losses and taxat
ion
2,519
1,167
23
830
4,539
Credit impa
irment
(64)
91
28
(9)
46
Other impa
irment
(39)
(15)
(12)
26
(40)
(Loss)/profit from associates and jo
int ventures
–
–
(24)
20
(4)
Underlying profit before taxation
2,416
1,243
15
867
4,541
Restructuring
(45)
16
(20)
(68)
(117)
Goodwill and other impa
irment
–
–
–
–
–
DVA
(6)
26
7
–
27
Other Items
1
(14)
(18)
(5)
–
(37)
Reported profit/(loss) before taxation
2,351
1,267
(3)
799
4,414
2022
2
Asia
$mill
ion
Africa &
Middle East
$mill
ion
Europe &
Americas
$mill
ion
Central &
Other Items
(Region)
$mill
ion
Total
$mill
ion
Operating income
4,614
2,431
2,579
393
10,017
Operating expenses
(2,653)
(1,552)
(1,456)
(772)
(6,433)
Operating profit/(loss) before impa
irment losses and taxat
ion
1,961
879
1,123
(379)
3,584
Credit impa
irment
60
(115)
88
(8)
25
Other impa
irment
(4)
2
2
(85)
(85)
Loss from associates and jo
int ventures
–
–
–
(13)
(13)
Underlying profit/(loss) before taxation
2,017
766
1,213
(485)
3,511
Restructuring
(4)
25
(35)
(66)
(80)
Goodwill and other impa
irment
–
–
–
(10)
(10)
DVA
11
8
14
–
33
Other items
–
–
–
20
20
Reported profit/(loss) before taxation
2,024
799
1,192
(541)
3,474
1
Other items includes loss of $37 mill
ion
in relation to the sale of a portfolio of Aviat
ion loans
2
Underlying performance for relevant periods in 2022 has been restated for the removal of (i) exit markets and businesses in AME (i
i) Av
iat
ion F
inance and (i
i
i) DVA.
No change to reported performance
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
29
Strategic report continued
Return on tangible equity (RoTE)
2023
$mill
ion
2022¹
$mill
ion
Average parent company Shareholders’ Equity
2
27,889
28,858
Less Average preference share capital and share premium
(1,031)
(1,500)
Less Average intang
ible assets
(4,042)
(3,847)
Average Ordinary Shareholders’ Tangible Equity
22,816
23,511
Profit for the period attributable to equity holders
3,237
2,352
Non-controlling interests
(29)
18
Div
idend payable on preference shares and AT1 class
if
ied as equ
ity
(363)
(311)
Profit for the year attributable to ordinary shareholders
2,845
2,059
Items normalised:
Restructuring
127
47
Goodwill and other Impairment
–
10
Net gains on sale of Businesses
–
(20)
Tax on normalised items
(21)
–
Underlying profit for the year attributable to ordinary shareholders
2,951
2,096
Underlying return on tangible equity
12.9%
8.9%
Reported return on tangible equity
12.5%
8.8%
1
Underlying performance for relevant periods in 2022 has been restated for the removal of (i) exit markets and businesses in AME (i
i) Av
iat
ion F
inance and (i
i
i) DVA.
No change to reported performance
2
Excludes other equity instruments includ
ing AT1s
FY’23
%
FY’22
%
Underlying RoTE
12.9
8.9
Restructuring
Of which: Income
0.5
0.7
Of which: Expenses
(1.2)
(1.0)
Of which: Credit impa
irment
0.1
(0.0)
Of which: Other impa
irment
(0.0)
(0.1)
DVA
0.1
0.1
Net gains on disposal of available for sale instruments
–
0.1
Tax on normalised items
0.1
–
Reported RoTE
12.5
8.8
Net charge-off ratio
2023
2022
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
1
$mill
ion
Net
Charge-off
Ratio
1
%
Stage 1
32
169,013
(0.02)%
68
165,791
(0.04)%
Stage 2
(132)
7,154
1.85%
(7)
8,811
0.08%
Stage 3
45
2,358
(1.91)%
57
2,444
(2.33)%
Total exposure
(55)
178,525
0.03%
118
177,046
(0.07)%
1
Prior year has been restated
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
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
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.
Average interest
earning balance
Daily average of the interest earning assets and interest bearing liab
il
it
ies balances exclud
ing the daily average
cash collateral balances in other assets and other liab
il
it
ies that are related to the F
inanc
ial Markets trad
ing book.
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
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
Reported 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
NIM or Net
interest margin
Reported net interest income adjusted for interest expense incurred on amortised cost liab
il
it
ies used to fund the
Financ
ial Markets bus
iness and financ
ial guarantee fees on
interest earning assets, div
ided by average
interest-
earning assets excluding financ
ial assets measured at fa
ir value through profit or loss.
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 on average assets less rate paid on average liab
il
it
ies.
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
Reported 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 average tangible
equity, being ordinary shareholders’ equity less the average intang
ible assets for the report
ing period. Where a
target RoTE is stated, this is based on profit and equity expectations for future periods.
TSR or Total
shareholder return
The total return of the Group’s equity (share price growth and div
idends) to
investors.
Underlying net
interest income
Reported net interest income normalised to an underlying basis adjusted for interest expense incurred on
amortised cost liab
il
it
ies used to fund the F
inanc
ial Markets bus
iness and financ
ial guarantee fees on
interest
earning assets.
Underlying Non NII
Reported Non NII normalised to an underlying basis adjusted for interest expense incurred on amortised cost
liab
il
it
ies used to fund the F
inanc
ial Markets bus
iness and financ
ial guarantee fees on
interest earning assets.
In prior periods Underlying Non NII was described as underlying other income.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
31
Strategic report continued
Measure
Definit
ion
Underlying/
Normalised
A performance measure is described as underlying/normalised if the reported 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. Restructuring includes impacts to profit or loss from businesses that have been disclosed as no longer
part of the Group’s ongoing business, redundancy costs, costs of closure or relocation of business locations,
impa
irments of assets and other costs wh
ich are not related to the Group’s ongoing business. Restructuring in this
context is not the same as a restructuring provis
ion as defined
in IAS 37
A reconcil
iat
ion between underlying/normalised and reported performance is contained in Note 2 to the financ
ial
statements.
The following balances and measures are presented on an underlying basis when described as such:
• Operating income
• Operating expense
• Profit before tax
• Cost-to-income ratio
• Jaws
•
RoTE or Return on tangible equity
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
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
32
Risk review
An update on our risk management approach
Our Risk Management Framework (RMF) outlines how we manage risk enterprise wide. 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 responsib
il
it
ies and m
in
imum governance requ
irements for the management of Princ
ipal R
isks.
In revis
ions made
in the RMF in 2023, effective 1 January 2024, the concepts of Integrated Risk Types (IRTs) and IRT Owner
roles were discont
inued. Overs
ight on exist
ing IRTs,
i.e. Climate Risk, Dig
ital Asset and Th
ird Party Risk, is achieved through
the Risk Type Frameworks (RTFs) and dedicated polic
ies. The Subject Matter Experts (SME) as the pol
icy owner for these risks
provide overall governance and ensure a holist
ic v
iew of how risks are monitored and managed across the Princ
ipal R
isk
Types (PRTs).
Princ
ipal R
isk Types
PRTs 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 Statement. We will not compromise
compliance with our Risk Appetite in order to pursue revenue growth or higher returns.
The table below provides an overview of Risk Appetite statement for the PRTs:
Risk Types
Risk Appetite Statements
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 and act
iv
it
ies to ensure that market and counterparty credit risk
losses do not cause material damage to the Group’s franchise.
Treasury Risk
Indiv
idual regulated ent
it
ies w
ith
in the Group should ma
inta
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 their franchise. In addit
ion, they
should ensure that their 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 the conduct of bus
iness matters, do not cause material damage to the
Group’s or PLC Group’s franchise.
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 wh
ilst
inc
idents are unwanted, they cannot be ent
irely avoided.
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.
Information and
Cyber Security Risk
The Group aims to mit
igate and control ICS r
isks to ensure that inc
idents do not cause the Bank mater
ial harm,
business disrupt
ion, financial loss or reputat
ional damage – recognis
ing that wh
ilst inc
idents are unwanted,
they cannot be entirely avoided.
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 w
ith the appropriate level of management and governance
oversight. This includes a potential failure to uphold responsible business conduct in striv
ing to do no s
ign
ificant
environmental and social harm.
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 some model uncertainty.
Strategic report continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
33
Topical and Emerging Risks (TERs)
Emerging Risks refer to unpredictable and uncontrollable outcomes from certain events which may have the potential to
adversely impact our business. Topical Risks refer to themes that may have emerged but are still evolving rapidly.
As part of our continuous risk ident
ification process, we have updated the Group’s TERs from those d
isclosed in the 2022
Annual Report and 2023 Half-Year Report; these remain applicable, with nuances in their evolution noted where pertinent.
Below is a summary of the TERs, 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 Group. There are
some horizon risks that, although not highly likely at present, could evolve into a threat in the future and we are therefore
monitor
ing them. These
include future pandemics and the world’s preparedness for them, and other potential cross-border
conflicts. Our mit
igat
ion approach for these risks may not elim
inate them but demonstrates the Group’s awareness and
attempt to reduce or manage the risks. As certain risks develop and material
ise over t
ime, management will take appropriate
steps to mit
igate them based on the
ir material
ity on the Group.
Macroeconomic and geopolit
ical cons
iderat
ions
There is interconnectedness between risks due to the importance of US Dollar financ
ing cond
it
ions for global markets,
the global or concentrated nature of key supply chains for energy, food, semi-conductors and rare metals, and the direct
influence of geopolit
ics on geoeconom
ics.
The Group is exposed to these risks directly through investments, infrastructure and staff, and also ind
irectly through
its clients. Whilst the main impacts are financ
ial, other ram
if
icat
ions may exist such as reputational, compliance or
operational considerat
ions.
Expanding array of global tensions and new geopolit
ical order
Global power dynamics have shifted, with different polit
ical and econom
ic alliances beginn
ing to create a mult
ipolar power
system. This has been accelerated by the war in Ukraine and conflicts in the Middle East. Whilst the Group has lim
ited d
irect
exposure to Russia, Ukraine or Israel, it may be impacted by second order effects on its clients and markets for agricultural
commodit
ies, o
il or gas.
The posit
ion
ing of ‘middle powers’ is complex and evolving, and could tip the geopolit
ical scales. The negot
iat
ing power of
exporters of energy and other natural resources has expanded and can shape global markets, as they can use global
div
is
ions to raise their own profile. One such example is the envisaged expansion of BRICS to seek a counterweight to Western
power axes.
US-China tensions remain, with protection
ist measures
imposed by both sides. Tariffs, embargos, sanctions, new taxes such
as that on carbon, and restrict
ions on technology exports and
investments, are being used to achieve goals beyond just
economic. Further economic or polit
ical act
ions could escalate distrust and accelerate the decoupling of trade links, leading
to increas
ingly
ineff
ic
ient production and inflat
ion pressures.
Despite attempts to become more pragmatic, a number of potential flashpoints remain. A push by China to increase RMB
trade and establish RMB as a secondary global reserve currency presents new business opportunit
ies but also potent
ial
disrupt
ion to the balance of power.
With many elections due across the world in the next twelve months, there is uncertainty over the polit
ical d
irect
ion of
domestic and foreign policy. There is a risk of short-term polit
ical exped
iency taking precedence over long-term strategic
decis
ion mak
ing. The malic
ious use of AI-enabled d
is
informat
ion could also cause disrupt
ion and underm
ine trust in the
polit
ical process.
There is an ongoing threat of terrorism, with unpredictab
il
ity exacerbated by the wider range of ideolog
ies at play.
Cyber warfare by state related actors could also be used to disrupt infrastructure or inst
itut
ions in rival countries.
A more complex and less integrated global polit
ical and econom
ic landscape has the potential to challenge cross border
business models, but also provides new business opportunit
ies.
Strategic report continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
34
Persistent high inflat
ion and
interest rates
Although rate cuts have been signaled by the Federal Reserve, global rates could remain elevated for longer. Structurally
higher spending and continued supply disrupt
ions
increase the probabil
ity of
inflat
ion rema
in
ing st
icky. During 2023, the
International Monetary Fund (IMF) and World Trade Organisat
ion lowered the
ir in
it
ial forecasts for trade growth and
increased that of inflat
ion
in 2024, suggesting that several economies will walk a fine line between recession and stagflation.
Concern for the credit environment spans both commercial and retail lending, with price inflat
ion and the cl
iff effects of
energy, mortgage and debt re-pric
ing ult
imately leading to higher defaults. This is vis
ible
in bond markets with yields
widen
ing markedly and prone to h
igh volatil
ity.
Drives to de-risk supply chains combined with no obvious resolution to ongoing conflicts continue to disrupt supply chains.
This complicates efforts to combat inflat
ion as supply constra
ined markets dent the effectiveness of monetary policy.
Some sectors are particularly sensit
ive to h
igh rates, notably commercial real estate, non-bank financ
ial
inst
itut
ions (NBFI)
and leveraged finance due to their reliance on the availab
il
ity of cheap financ
ing. Bank fa
ilures in Q1 2023 highl
ighted
challenges in managing liqu
id
ity, credit, refinanc
ing and market r
isks. They also raised questions of competence and
confidence in the finance industry.
Economic slowdown in China
Whilst China’s exit from COVID restrict
ions has had an overall pos
it
ive
impact, it has failed to deliver a sustained boost to the
global economy as the country contends with strain in several sectors such as real estate. There has also been a change in
the corporate operating environment, with reduced clarity on the economic outlook.
Given China’s importance to global trade a slowdown would have wider impl
icat
ions across the supply chain, especially
for its trading partners, as well as to countries which rely on it for investment, such as those in Africa. However, opportunit
ies
arise from the divers
ification of
intra-Asia trade and other global trade routes, and growth acceleration in South Asia,
especially India.
Sovereign risk
Credit fundamentals have been eroding across both emerging and advanced economies due to persistently high interest
rates, food and energy prices. Emerging markets will also be affected by weakness in local currencies versus the US Dollar
and the resultant cost of refinancing ex
ist
ing debt, or ava
ilab
il
ity of hard currency liqu
id
ity. Issues and challenges have
already been observed across several of the Group’s footprint markets, includ
ing the recent default of Ghana, pol
it
ical
instab
il
ity in Pakistan, high inflat
ion
in Turkey, economic turmoil in Sri Lanka, and coups in Africa.
For some countries there is a heightened risk of failure to manage social demands, which might culminate in increased
polit
ical vulnerab
il
ity. Furthermore, food secur
ity exacerbated by the influences of armed conflict and climate change,
and energy security challenges have the potential to drive social unrest.
Debt moratoria and refinanc
ing
in
it
iat
ives are compl
icated by larger number of financ
iers, w
ith much financ
ing done
on a bilateral basis outside of the Paris Club. Whilst the Global Sovereign Debt Roundtable has made some progress on
coordinat
ing approaches between the Par
is Club and other lenders their interests do not always match. This can lead to
delays in negotiat
ions on debt resolut
ions for developing nations.
Supply chain issues and material shortages
Demand and supply imbalances in global supply chains are increas
ingly becom
ing structural in nature and affect a wide
range of commodit
ies
includ
ing food, energy, m
inerals and raw materials, plus targeted restrict
ions on certa
in industry
sectors.
There is growing polit
ical awareness around the need for key component and resource secur
ity at national level. Countries
are enacting rules to “de-risk” by reducing reliance on rivals or concentrated suppliers (for example semiconductors) and look
to either re-industr
ial
ise or make use of near-shoring and friend-shoring production.
The growing need for minerals and rare earth metals to power green energy technologies could increase the geopolit
ical
standing of the main refiners, such as China, Indonesia and some African nations. However, there are also environmental
and social costs to rapidly increas
ing extract
ion. A desire to avoid dependence may slow down the move by some nations
towards the transit
ion.
Strategic report continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
35
How these risks are mit
igated/next steps
•
We remain vig
ilant
in monitor
ing r
isk and assessing impacts from geopolit
ical and macroeconom
ic risks to portfolio
concentrations.
•
We conduct thematic stress tests and portfolio reviews at the Group, country, and business level, with regular reviews on
vulnerable sectors, and undertake any necessary mit
igat
ing actions.
•
We mainta
in a d
ivers
ified portfol
io across products and geographies, with specif
ic r
isk appetite metrics to monitor
concentrations.
•
Increased scrutiny is applied when onboarding clients and in ensuring compliance with sanctions.
•
Collateral and credit insurance are used to manage concentrations.
•
We track the partic
ipat
ion of our footprint countries in the G20’s Common Framework Agreement and Debt Service
Suspension Init
iat
ive for Debt Treatments and the associated exposure.
•
Our NBFI exposure is closely monitored in terms of both lim
its, products and counterpart
ies.
Regulatory considerat
ions
Changing regulatory environment
Given notable bank failures in 2023 (and the response of resolution authorit
ies to those fa
ilures), the regulatory framework for
banks remains subject to continued change in addit
ion to the
implementat
ion of Basel 3.1
in various jur
isd
ict
ions. Add
it
ionally,
the differ
ing pace and scale of regulatory adopt
ion between jur
isd
ict
ions, along w
ith increas
ing extraterr
itor
ial reach and
prescript
iveness, can make
it challenging for multinat
ional groups to manage the
ir business. Implementation timel
ines are a
focus.
The scale of upcoming regulatory change in 2024 and 2025 is sign
ificant w
ith major regime changes in capital and
operational resil
ience due to take effect.
How these risks are mit
igated/next steps
•
We actively monitor regulatory developments, includ
ing those related to susta
inable finance and ESG, and respond to
consultations either bilaterally or through well-established industry bodies.
ESG considerat
ions
ESG stakeholder expectations
Organisat
ions across the corporate and financial sectors are sett
ing ambit
ious susta
inab
il
ity goals and net zero targets
with many embedding them in their business models. This has prompted increased attention from various stakeholders in
ensuring that net zero targets are being met with credible action plans. Stakeholder scrutiny around greenwashing risk
relating to ESG focused financ
ial products, as well as compan
ies’ commitments, transpires in the various regulatory
developments and early enforcement actions taken by several key regulators.
Fragmentation in the pace and scale of adoption of ESG regulations around the world remains, particularly around
taxonomies and disclosure requirements, which may lead to unintended consequences includ
ing m
isallocat
ion of cap
ital,
increased implementat
ion costs and l
it
igat
ion risks.
The Group’s net zero aspirat
ions may be
impacted by governments or corporates scaling back their sustainab
il
ity targets,
especially as economic condit
ions rema
in challenging, and budgets are constrained. There have been examples in
developed nations, such as the UK revis
it
ing its electric vehicle transit
ion t
imel
ine. A slower trans
it
ion from key cl
ients may
also weigh reputational pressure on the Group’s roadmap.
Higher frequencies of extreme weather-related events such as wildf
ires, floods and fam
ines may lead to physical climate risk
and the cost of managing it becoming a heavier burden on global economies. This will be particularly impactful to
developing markets. Alongside climate change, biod
ivers
ity loss, pollution, and depletion of key resources, such as water,
pose incremental risks to food and health systems, energy security and contribute to the disrupt
ion of supply cha
ins.
Human rights concerns are increas
ingly
in focus, with the scope expanding beyond direct abuses to cover other areas such as
technological advancement and supply chains.
Strategic report continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
36
Strategic report continued
How these risks are mit
igated/next steps
•
We update our environmental and social standards for provid
ing financial serv
ices to clients every two years, with a new
version scheduled for 2024.
•
We focus on embedding our values through our Posit
ion Statements for sens
it
ive sectors and a l
ist of prohib
ited act
iv
it
ies.
•
We integrate the management of greenwashing risks into our Reputational and Sustainab
il
ity Risk Framework and polic
ies.
•
Green, Sustainable and Transit
ion F
inance labels for products reflect the standards set out in our sustainable product
framework which are regularly reviewed. We obtain external verif
icat
ion on the Sustainable Finance asset pool.
•
We assess our clients and suppliers against various internat
ional human r
ights princ
iples, as well as through our
social safeguards and supplier charter.
+ More details can be found in our
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 and enhance modelling
capabil
it
ies to understand the financ
ial r
isks and opportunit
ies from cl
imate change.
•
Work is underway to embed Climate Risk considerat
ions across all relevant PRTs. Th
is includes client-level Climate
Risk assessments, includ
ing sett
ing adequate mit
igants or controls as part of dec
is
ion mak
ing and portfolio
management activ
it
ies.
Technological considerat
ions
Data and dig
ital
The Group’s dig
ital footpr
int will expand as more services and products are dig
it
ised and made more accessible. Scale in
operations and interact
ions w
ith dig
ital systems w
ill further reduce the tolerance for errors and outages. The risk of data
breaches is amplif
ied by h
ighly organised actors, with threats such as ‘Ransomware as a Service’ and affordable,
sophist
icated AI systems help
ing to facil
itate attacks on organ
isat
ions and
ind
iv
iduals.
Data regulation continues to be fluid and fragmented. Geopolit
ical tens
ions have accelerated the implementat
ion of data
sovereignty laws, includ
ing data local
isat
ion requ
irements and cross-border access restrict
ions. These regulat
ions often have
an extraterritor
ial reach wh
ich could increase operating costs sign
ificantly, and also
impact cross-border business models.
Stakeholder expectations on data management have also increased, particularly relating to quality, integr
ity, record keep
ing,
privacy, sovereignty, the ethical use of data and applicat
ion of AI.
The sophist
icat
ion and adoption of AI solutions are growing exponentially and will increase exposure to exist
ing r
isks
such as model, fraud, financial cr
ime, compliance and Information and Cyber Security (ICS) risks. In response, regulation is
accelerating, particularly around the ethical applicat
ion of AI
in decis
ion-mak
ing, necessitat
ing robust governance measures.
The Group needs to ensure that it develops suffic
ient
in-house subject matter expertise.
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. The
continued exploration of partnerships, alliances, dig
ital assets, generat
ive AI and nascent technologies, such as quantum
computing, provides both opportunit
ies and un
ique challenges. This is increas
ingly
important as dig
ital assets and
distr
ibuted ledger technology become progress
ively prevalent and interconnected with the financ
ial ecosystem. Supply
chains are becoming more complex, interconnected and dig
ital. H
ighly extended enterprises expand opportunit
ies ava
ilable
for malic
ious actors, w
ith risk cascading further down supply chains beyond just direct and third party risks.
These innovat
ions requ
ire special
ist
in-house expertise, new operating models and adapting risk frameworks to perform
robust risk assessment and management of new threats. There is also growing regulatory attention in many of these areas.
Balancing resil
ience and ag
il
ity
is essential given the global nature of new technologies alongside the maintenance of
exist
ing systems. It
is imperat
ive to establ
ish clear ownership, frameworks, and oversight of the use of emerging technologies.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
37
How these risks are mit
igated/next steps
•
We monitor emerging trends, opportunit
ies and developments
in technology as well as emerging business models that
may have impl
icat
ions for the banking sector.
•
We invest in our capabil
it
ies, to better prepare and protect ourselves against possible disrupt
ion and new r
isks.
•
We track the evolving regulatory landscape affecting key areas such as data management, dig
ital assets and AI,
includ
ing
country-specif
ic requ
irements, and actively collaborate with regulators to support important in
it
iat
ives.
•
We have established enhanced governance for novel areas through the Dig
ital Asset R
isk Committee and Responsible AI
Council, which considers emerging regulatory guidance.
•
We manage data risks through our Compliance Risk Type Framework and informat
ion secur
ity risks through our ICS Risk
Type Framework.
•
We have developed a Group Data Strategy, to strengthen ownership of related data risks.
•
We mainta
in a ded
icated Data Compliance Policy with globally applicable standards. These standards undergo regular
review to ensure alignment with evolving regulations and industry best practice.
•
We mainta
in programmes to enhance our data r
isk management capabil
it
ies and controls, includ
ing compl
iance with
BCBS239 requirements on effective risk data aggregation, with progress tracked at executive level risk governance
committees.
•
The Group has implemented a ‘defence-in-depth’ ICS control environment strategy to protect, detect and respond to
known and emerging ICS threats.
•
New risks aris
ing from partnersh
ips, alliances, dig
ital assets and generat
ive technologies are ident
ified through the New
Init
iat
ives Risk Assessment and Third Party Risk Management Policy and Standards.
Demographic considerat
ions
Talent pools of the future
The expectations of the workforce, especially skilled workers, continue to evolve. The COVID pandemic accelerated changes
on how people work, connect and collaborate, with expectations on hybrid working now a given. The focus is increas
ingly on
‘what’ work people do and ‘how’ they get to deliver it, which are becoming different
iators
in the war for future talents. 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 among M
illenn
ials and Generat
ion Z who make up an increas
ing proport
ion of the
global talent pool, and as dig
ital nat
ives possess the attributes and skills we seek to pursue our strategy.
To sustainably attract, grow and retain talent, we must continue to invest in and further strengthen our Employee Value
Proposit
ion (EVP) and here for good our brand prom
ise, through both firm-wide intervent
ions as well as targeted act
ion.
Demographic trends
Divergent demographic trends across developed and emerging markets create contrasting challenges. Developed markets’
state budgets could be strained by ageing and shrink
ing populat
ions, whilst polit
ical stances reduce the ab
il
ity to fill sk
ills
gaps through imm
igrat
ion. Conversely emerging markets are experienc
ing fast-grow
ing, younger workforces. Whilst it is an
opportunity to develop talent, population growth will put pressure on key resources such as food, water, education and
health, as well as government budgets.
Population displacement, whether as a result of climate events, lack of key resources, polit
ical
issues or war, may increase the
fragil
ity of soc
ietal structures in vulnerable centres. Large scale movement could cause social unrest, as well as propagate
disease transmiss
ion and accelerate the spread of future pandem
ics.
How these risks are mit
igated/next steps
•
Our culture and EVP work aims to address the emerging expectations of the diverse talent we seek. The Brand and Culture
Dashboard monitors our divers
ity and
inclus
ion, colleagues’ percept
ions of our EVP, and whether we are liv
ing our Valued
Behaviours. Management teams discuss many of these metrics (includ
ing employee survey responses) to
ident
ify act
ions.
•
We are undertaking a multi-year journey of developing future-skills amongst our colleagues by focusing on continuous
learning, to balance appropriately between ‘build
ing’ and ‘
induct
ing’ sk
ills into the Group.
•
Our internal Talent Marketplace provides colleagues with opportunit
ies to learn through exper
ience by sign
ing up for
cross-functional (or even cross-geography) projects.
•
Our flexible working programme is currently live. We continue to enhance support and resources to People Leaders and
colleagues to help balance productiv
ity, collaborat
ion and wellbeing.
•
Our Stands continue to be operational
ised through our strategy, and help address the talent pool’s
increased expectations
of us being purpose-led.
Strategic report continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
38
Strategic report continued
Stakeholders and responsib
il
it
ies
As an internat
ional bank operat
ing in 50 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.
See the following pages for:
•
How we engage stakeholders to understand their interests. See pages 38 to 40
•
How we engage employees and respond to their interests. See pages 43 to 45
•
How we respond to stakeholder interests through sustainable and responsible business. See pages 46 to 47
Detailed informat
ion about how the Court engages d
irectly with stakeholders and shareholders can be found in the
Director’s report on pages 51 to 56.
An example of the Court’s Princ
ipal dec
is
ion
is included in this section. This section also forms our key non-financ
ial d
isclosures
in relation to sections 414CA and 414CB of the Companies Act. Our non-financ
ial
informat
ion statement can be found at the
end of this section.
Princ
ipal Court dec
is
ions – market entr
ies and exits
In 2023 the Court approved the sale of our aviat
ion finance leas
ing business with this transaction completing in November
2023. In making this decis
ion the Court cons
idered the potential challenges and the resulting impact on stakeholders, having
particular regard to the clients and employees of the aviat
ion bus
iness.
Following on from the announcement in 2022 of the intent
ion to ex
it onshore operations in seven markets in AME and exit its
CPBB business in a further two markets, the Court approved a series of four transactions covering the sales of (i) our Jordan
branch (completed in August 2023), (i
i) our Z
imbabwe business, (i
i
i) a CPBB portfolio in Côte d’Ivoire and (iv) our businesses in
Angola, Cameroon, Gambia and Sierra Leone, and a CPBB portfolio in Tanzania. The focus will now be solely on the CCIB
business in Côte d’Ivoire and Tanzania.
These strategic exits were undertaken in order to focus resources with
in the AME reg
ion to those areas where we have the
greatest scale and growth potential, for the benefit of our shareholders, employees and customers. In assessing each of the
sale transactions, the Court considered the potential challenges and the resulting impact on the key stakeholders, particularly
the employees, as well as our local and wider regulatory relationsh
ips. The Court cont
inues to receive regular progress
updates on these transactions.
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 2023, we made improvements to some of our feedback processes, so relationsh
ip managers could address cl
ient needs 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 support us to operate as a responsible and sustainable business.
Stakeholder feedback, where appropriate, is communicated internally to senior management through the relevant forums
and governing committees such as the PLC Group’s Sustainab
il
ity Forum, and to the PLC Board’s Culture and Sustainab
il
ity
Committee (CSC) which oversees the PLC Group’s approach to its main relationsh
ips w
ith stakeholders.
We communicate progress regularly with 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 Sustainab
il
ity
section of pages 15 to 16.
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.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
39
Strategic report continued
How we serve and engage
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 PLC Group’s a
im to reach net zero carbon emiss
ions by 2050, our trans
it
ion
finance team have been working closely with our clients in hard-to-abate sectors on their own transit
ions. Th
is is in addit
ion
to our PLC Group’s plan to mobil
ise $300 b
ill
ion of Susta
inable Finance between 2021 and 2030.
Across the bank, we have processes and controls to mit
igate greenwash
ing risks, and to support transparency we publish the
details of what constitutes our sustainable products and investments universe externally.
We work closely with third-party Environmental, Social and Governance (ESG) data providers to support the development of
product ideas, and due dil
igence
is conducted by our in-house team on our high convict
ion su
ite of sustainable funds.
Our push for a best-in-class client experience is underpinned by innovat
ive products and d
ig
ital stra
ight-through services. 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.
To act in the best interests of our clients, we use our ins
ights gathered from our data alongs
ide robust polic
ies, procedures and
the Group’s risk appetite to design and offer products and services that meet client needs, regulatory requirements and
Group performance targets, while contribut
ing to a susta
inable and resil
ient env
ironment.
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. Complaints are reviewed on an ongoing basis
and are one of the factors that are taken into account prior to amendments to annual interest, fees and charges.
We also 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, are intended to provide a
complete view of whether to continue, enhance, grow or retire products.
Train
ing
is provided to frontline staff across our branches, contact centres and dig
ital channels to
ident
ify and support
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.
Throughout 2023, we mainta
ined our sharp focus on
improv
ing the 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.
Consumer, Private and Business Banking
In Consumer, Private and Business Banking (CPBB), 2023 saw sign
ificant
improvements in dig
ital wealth w
ith the delivery of
new capabil
it
ies across our markets. This includes client DIY Wealth Lending for Funds in the UAE and MyInsure in India where
relationsh
ip managers can leverage a d
ig
ital tool to perform comprehens
ive insurance needs analysis and portfolio reviews
for clients.
Our focus on partnerships continues to show results with the growth of our exist
ing partnersh
ips business in Vietnam,
Indonesia, and Singapore, and we have expanded the partnership business to Malaysia. In 2023, the Bank launched
partnerships with SeaMoney in Indonesia, and Atome in Singapore and Malaysia.
Addit
ionally, we made s
ign
ificant progress
in our advisory business with the launch of SC Wealth Select in several markets.
SC Wealth Select aims to bring a portfolio approach to client conversations and is supported by our dig
ital adv
isory tool
MyWealth Advisor. Across CPBB, a number of colleagues have completed the SC Wealth Select e-learning train
ing wh
ile
some frontline colleagues have completed or are undertaking the Standard Chartered INSEAD Wealth Academy Advisory
programme.
Importantly, we leverage our cross-border scale by using the same technology and open architecture product platform in
different markets to offer competit
ive products and solut
ions globally. Examples of this include our series of Signature CIO
Funds and Wealth Saver, an innovat
ive sav
ings product.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
40
Corporate, Commercial and Institut
ional Bank
ing
In 2023, Corporate, Commercial and 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.
Refining our processes through cont
inuous improvement has enabled us to achieve benefits in revenue and cost savings by
creating capacity and reducing client wait
ing t
imes. We are transforming our bank-wide processes by taking a client-
focused, data-driven dig
ital bank approach that w
ill enable us to serve the needs of our clients better and faster and reduce
the amount of frict
ion and complex
ity in our network.
We have set in place processes and guidel
ines spec
if
ic to our cl
ient businesses for us to better understand and promptly
address issues.
We implemented 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. These have reduced operational costs and enhanced the overall client
experience. Agile ways of working accelerated our decis
ion-mak
ing processes and change delivery to create great
experiences and make it easier for our clients to bank with us.
We continue to engage in partnerships that help us offer enhanced services to customers. Collaborations with Linklog
is and
Taulia, which is part of SAP, aid clients with supply chain financ
ing through blockcha
in and dynamic discount
ing; our work
with the Partior platform allows us to deliver the speed, effic
iency and v
is
ib
il
ity of domest
ic settlement systems to cross-
border payments and settlements networks to absolve sign
ificant wholesale cross border payment fr
ict
ions and del
iver
instant, 24/7 settlement of dig
ital assets on the blockcha
in.
Our work with dig
ital trade transact
ion portal Trade Track-It integrates DHL’s tracking system and Lloyd’s List Intelligence
vessel tracking system through API, to offer clients end-to-end vis
ib
il
ity of the
ir trade transaction status globally.
Across both CCIB and CPBB, throughout 2024, 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.
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 2023, 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 w
ith offic
ials on
the financial serv
ices regulatory environment, in particular on prudential, financ
ial markets, conduct and financial cr
ime
frameworks. Our PLC Group Public and Regulatory Affairs team supports most engagements while Conduct, Financ
ial Cr
ime
& Compliance, Risk, Legal and Finance ident
ify and analyse relevant pol
ic
ies, leg
islat
ion and regulat
ion. This work is overseen
by various governance forums with
in the Bank, wh
ich comprise senior executives representing business and control functions
to support 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, trade flows and competit
ive markets
•
Sustainable Finance and net zero transit
ion
•
Dig
ital
innovat
ion
in financ
ial serv
ices
• Operational resil
ience
• Customer protection
• Financ
ial stab
il
ity
Strategic report continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
41
Strategic report continued
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 progress aga
inst our strategic and financ
ial
frameworks.
Through our PLC Group’s footprint and the execution of our sustainab
il
ity agenda, we 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.
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.
We continued to expand our use of virtual meetings during the year, coupled with a growing number of face-to-face
interact
ions. Our PLC Group hosted two cap
ital markets days, focusing on our Asia region and the Sustainab
il
ity opportunity
in May and November respectively.
Key investor feedback, recommendations and requests are considered by our PLC Board, whose members keep abreast of
current topics of interest. Our PLC Group’s Annual General Meeting (AGM) in May was open to shareholders to attend either
in person or electronically where they were provided a platform to view a live video feed of the meeting. All partic
ipants were
provided with the opportunity to submit their votes and ask the PLC Board questions. Sim
ilarly, our PLC Group Cha
irman,
alongside some members of the PLC 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, includ
ing susta
inab
il
ity, net zero and
governance matters. The event included an open question-and-answer session across a range of key issues.
We continue to respond to growing interest from a wide range of stakeholders on ESG matters, includ
ing
investors. Our PLC
Group sought shareholder endorsement for our net zero roadmap at the PLC Group’s AGM, intended as a means by which we
will measure progress, 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 2024, we will continue to engage with investors on progress against our strategic prior
it
ies and actions, as well as our
financial framework as we progress towards our returns target.
Their interests
•
Safe, strong and sustainable financ
ial performance
•
Facil
itat
ion of sustainable finance to meet the United Nations (UN) Sustainable Development Goals
•
Progress on ESG matters, includ
ing advanc
ing our net zero roadmap
Suppliers
How we create value
We are dedicated to engaging with suppliers who offer value-adding goods and services across our network, and we work
closely with them to support global environmental and social standards. Our suppliers are expected to be ethical, respect
human rights, divers
ity and
inclus
ion, and the env
ironment to support our colleagues, clients, and communit
ies.
How we serve and engage
We must effectively manage, monitor, and mit
igate r
isks in our supply chain. We do this through our Third-Party Risk
Management Policy. This, in conjunct
ion w
ith the Princ
ipal R
isk Type Polic
ies and Standards, set out the Group’s m
in
imum
control requirements for the ident
ification, m
it
igat
ion and management of risks aris
ing from the use of suppl
iers.
Our PLC Group’s Supplier Charter sets out our princ
iples
in relation to ethics, human rights, divers
ity and
inclus
ion, and
environmental performance. All newly onboarded suppliers are expected to agree with these princ
iples. We seek to re
inforce
this through the terms of our standard contract templates, where possible, and we further encourage alignment by sending
an annual letter to all active suppliers. This includes guidance regarding our stance on ethics and conduct, sustainab
il
ity
aspirat
ions, payment processes and other relevant pr
inc
iples such as Ant
i-Bribery and Corruption. The Charter covers all
geographies and categories of suppliers, and our PLC Group plan to refresh the Charter in 2024.
Supporting our suppliers to achieve net zero
Our supply chain is crit
ical to ach
iev
ing the Group’s susta
inab
il
ity aspirat
ions, and we cont
inue to make good progress. We
encourage our suppliers to set science-based emiss
ions reduct
ion targets and by 2028 our PLC Group plans to direct 70 per
cent of total PLC Group’s expenditure to suppliers who have set or committed to setting science-based emiss
ion reduct
ion
targets. In 2023, our PLC Group held group sessions with our suppliers to support them reduce their emiss
ions, d
iscuss progress
and next steps.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
42
Strategic report continued
Supporting a diverse and inclus
ive supply cha
in
We recognise the value of supply chain divers
ity to our bus
iness and society. In 2023, our PLC Group continued to integrate
supplier divers
ity
into our business strategy and make efforts to include diverse suppliers in sourcing activ
it
ies and improve
spending levels with diverse suppliers as appropriate. To do this we have continued to collaborate with non-governmental
organisat
ions (NGOs), bus
iness incubators and others to help build and develop our diverse and talented supplier pool.
In 2023, our PLC Group joined member-buyer events, local procurement network
ing activ
it
ies and best practice sharing
events with partners like WEConnect International – a global network supporting women-owned businesses to connect
with larger companies.
We have continued to build capacity with our own colleagues through online train
ing on suppl
ier divers
ity and
inclus
ion.
Highl
ight
ing our commitment, our PLC Group has been awarded the Chartered Institute of Procurement and Supply Asia
Excellence in Procurement Award for outstanding Divers
ity and Inclus
ion practices in procurement teams and Best Init
iat
ive
to Build a Diverse Supplier Base.
Their interests
•
Open, transparent and consistent tendering process
• Accurate and on-time payments
•
Will
ingness to adopt suppl
ier-driven innovat
ions
•
Obtain guidance on implementat
ion of susta
inab
il
ity matters
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, 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 us to understand alternative perspectives and ensure 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 2023, climate change, our net zero roadmap, human rights and nature continued to underpin many of our conversations.
Our PLC Group primar
ily rece
ived NGO feedback via our public inbox and responded to queries in line with our standards. For
complex issues such as climate change, our PLC Group held bilateral virtual meetings with NGOs to exchange perspectives in
greater depth.
In 2023, together with the Standard Chartered Foundation, our PLC Group continued to engage with NGOs, charit
ies and
other organisat
ions to empower the next generat
ion to learn, earn and grow through Futuremakers by Standard Chartered,
our PLC Group’s global community in
it
iat
ive to tackle
inequal
ity by promot
ing greater economic inclus
ion.
To close the gender gap and promote access to finance, our PLC Group piloted financ
ing fac
il
it
ies to support women-led
microbus
inesses w
ith green and social ambit
ions. At the UN Cl
imate Change Conference, COP 28, our PLC Group held a
Futuremakers Youth Panel in Dubai, and online in Nairob
i to generate
ins
ights on scal
ing tech solutions for a green and
inclus
ive economy. In 2024, we w
ill conduct a study on our social return on investment to assess the impact of Futuremakers.
By offering three days paid volunteering leave, we inst
illed a strong culture of volunteer
ing. In 2024, we will increase our
skills-based activ
it
ies leveraging our colleagues’ skills to deepen our impact.
Their interests
• Climate change and decarbonisat
ion
• Nature
• Human rights
• Financ
ial
inclus
ion
• Economic empowerment
• Gender equity
• Community impact
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
43
Strategic report continued
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 network sets us apart. To lead the way in addressing the evolving needs of our clients and advances in
technology, we are developing a workforce that is future-ready and are co-creating with our employees to build 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. A culture of inclus
ion and amb
it
ion enables us to unlock
innovat
ion, make better dec
is
ions, del
iver our business
strategy, live our valued behaviours and embody our brand promise. We proactively assess and manage people-related risks,
such as, capacity, capabil
ity and culture, as part of our PLC Group R
isk Management Framework.
Our People Strategy, which was approved by the PLC Board, stays relevant and future-focused, with external events having
accelerated many of the future of work trends which inform 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 d
iverse set of markets and for a spectrum of 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, colleague sent
iment is captured 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. 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.
In 2023, our annual My Voice survey was conducted in May and June. Key measures of employee satisfact
ion have cont
inued
to improve year on year, with a 12.1 point increase in our employee Net Promoter Score (NPS) (which measures whether
employees would recommend working for us) as well as a 5 percentage point increase in our employee engagement index.
87 per cent say that the bank meets or exceeds their expectations. It is also encouraging to see that 97 per cent of employees
feel committed to doing what is required to help the bank succeed and 91 per cent feel proud about working for the bank.
The consistent increase in scores ind
icate that we are cont
inu
ing to
improve as a place to work.
Externally our PLC Group Glassdoor rating (out of five) has increased from 3.7 in 2019 to 3.9 in 2023, and 77 per cent would
recommend working with us to friends. We also continue to be recognised as an employer of choice and details of our
accolades can be found on
sc.com/awards
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.
Strengthening our culture of high-performance
As the bank transforms to achieve our strategic ambit
ions, we cont
inue to embed our refreshed approach to managing,
recognis
ing and reward
ing performance. We are strengthening a culture of ambit
ion, act
ion and accountabil
ity by
increas
ing
the frequency of performance and development conversations and emphasis
ing the
importance of two-way feedback. We
are placing greater focus on recognis
ing outperformance that
is driven by collaboration and innovat
ion and are encourag
ing
more aspirat
ion dur
ing goal-setting and flexib
il
ity in reward decis
ions (supported by the removal of formula
ic performance
decis
ions start
ing 2022).
Behavioural changes are vis
ible. Colleagues across PLC Group are tell
ing us that they are having more regular performance
check-ins with their leaders and exchanging more feedback. We know that recognit
ion
is also an important enabler of high
performance, and we have launched a dig
ital platform
in January 2024 to encourage democratised, peer-to-peer
recognit
ion for all colleagues.
The wellbeing of our colleagues is crit
ical to susta
inable high-performance, and supporting their health, safety, and resil
ience
continues to be a key prior
ity. In 2023, levels of h
igh work-related stress felt by employees continued to drop. Employees felt
more supported with their mental, physical, social and financ
ial wellbe
ing needs, and their satisfact
ion w
ith work-personal
life balance continued to increase. Globally, colleagues are provided access to wide-ranging support and tools to manage
their wellbeing, includ
ing several progress
ive benefits, a mental health app, an employee assistance programme, wellbeing
toolkits and network of trained Mental Health First Aiders. We continue to tackle the drivers of work-related stress, which
includes insert
ing wellbe
ing skills-build
ing
into learning intervent
ions.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
44
Strategic report continued
We have been embedding the flexible working model that we in
it
iated in 2021, combin
ing flex
ib
il
ity in working patterns and
locations, to enhance both the productiv
ity and exper
ience of our workforce. Our model consciously balances client needs
and business prior
it
ies with ind
iv
idual choice, allowing us to be inclus
ive of the d
iverse needs of our workforce. Colleagues
continue to adopt ways of working that balance the benefits of remote working with face-to-face interact
ions. Toolk
its and
guidance are being provided to people leaders and ind
iv
iduals to help navigate flexible working. These include support on
organis
ing team and
ind
iv
idual work to enhance 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 strengthening
connections in flexible work environments. We also continue to re-imag
ine our phys
ical workspaces with the relevant
infrastructure and technology to provide hubs for teamwork, collaboration and learning. As a result of these ongoing
intervent
ions, employees who are work
ing flexibly express greater satisfact
ion w
ith overall employee experience and
work-life balance in comparison to employees working fully remotely or fully in the office. Also, over 85 per cent colleagues
expressed in the 2023 My Voice survey that flexible working has had a posit
ive
impact on their abil
ity to get work done
and to collaborate as well as their sense of belonging and social connection with others.
> Read more about our approach to flexible working at
sc.com/flexiblework
ing
Build
ing leadersh
ip capabil
it
ies
Exceptional performance needs exceptional leadership, and it is encouraging to see manager NPS continues to increase to
36 points in 2023 (up 7.6 points year-on-year). Engaging, developing, and measuring our people leaders continues to be a
crit
ical enabler of our performance and culture. Our Leadersh
ip Agreement sets out clear expectations from our leaders to
Aspire, Inspire and Execute. It also forms the foundation of a modernised leadership development curriculum through which
we are helping our people leaders build new skills and habits across different leadership stages – includ
ing sk
ills on coaching,
performance management in business-specif
ic contexts, lead
ing for transformation and leading through ambigu
ity.
In addit
ion to face-to-face leadersh
ip programmes during the year for our People Leaders, leadership skill build
ing
is also
made accessible to all colleagues to build the capabil
ity deeper
into the organisat
ion such as through our 60-day Leadersh
ip
Health journey of regular micro-learning activ
it
ies, monthly Leadership Insights newsletter, leadership sessions during our
annual Global Learning Week and the Leadership Academy on diSCover.
People leaders continue to receive feedback through our ‘always on’ feedback tool available to all colleagues as well as
through the structured 360-degree feedback tool that is available to mid-to-senior people leaders. Leaders are also provided
a consolidated view of the environment they are creating for their teams, and feedback on their leadership skills, as part of
their Leadership Dashboard. The dashboard has been designed to bring transparency to performance and development
conversations, and to highl
ight the value we place on leadersh
ip.
> Read our Leadership Agreement at
sc.com/leadershipagreement
Developing skills of future strategic value and enabling careers
To keep pace with technological innovat
ion, evolv
ing customer expectations and the changing world of work, we are
adopting a ‘skills-led’ approach - accelerating the development of future skills amongst our workforce and bring
ing
in greater
agil
ity to how sk
ills are deployed to areas of opportunity. We are helping employees build the skills needed for high
performance today, to reskill and upskill for tomorrow and to be global cit
izens who understand the chang
ing nature of the
world in which we operate. This includes helping them strengthen a combinat
ion of human and techn
ical skills, as well as
build
ing a culture of cont
inuous learning that empowers them to grow and follow their aspirat
ions.
Learning in classrooms is balanced with learning through our online learning platform diSCover, which is also accessible
via a mobile app. Colleagues are using our Future Skills to build skills around Data & Analytics, Dig
ital, Cyber, Cl
ient Advisory,
Sustainable Finance and Leadership, amongst others. Employees are also build
ing and pract
ic
ing new sk
ills on the job by
sign
ing up for projects (often cross-funct
ional and cross-location) through our AI-enabled internal Talent Marketplace
platform. By combin
ing such project opportun
it
ies w
ith purposeful internal talent moves we continue to enhance the career
experience of colleagues. The Marketplace also acts as a platform to connect employees to mentors across PLC Group.
The 2023 My Voice scores ind
icate that our efforts are
in the right direct
ion, as employee sat
isfact
ion w
ith development and
growth opportunit
ies
increased compared to previous years, and also highl
ight that th
is is an area we must continue to focus
on.
We continue to expand targeted learning journeys to upskill colleagues towards crit
ical ‘future’ roles where our strateg
ic
workforce planning analysis has predicted an increas
ing need for talent,
includ
ing un
iversal banker, data translator, cloud
security engineer, product owner/ scrum master and cyber security analyst roles. At the same time, we have been
strengthening and scaling the proposit
ion to support colleagues
in build
ing system
ic skills, in areas such as sustainab
il
ity,
innovat
ion, data, d
ig
ital and leadersh
ip which an increas
ing populat
ion of the workforce is antic
ipated to need to keep pace
with the changes happening in the sector.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
45
Strategic report continued
We are also embedding a focus on skills across our talent management processes. Our refreshed approach to ident
ify
ing the
future potential of our workforce focuses on their abil
ity aga
inst a range of skills, along with their aspirat
ion to put these sk
ills
into action by taking on complex responsib
il
it
ies (thus,
in turn moving away from the tradit
ional emphas
is on past
performance being a primary ind
icator of future potent
ial). Through this approach we are placing strong emphasis on
learning agil
ity to
ident
ify the talent that we want to accelerate as well as deploy
in areas of highest impact for clients and
the business.
Creating an inclus
ive workplace
We believe that inclus
ion
is what enables our diverse talent to truly deliver impact and drive business success. Through our
annual My Voice survey and supplemented by qualitat
ive feedback gathered, we a
im to better understand the lived
experiences of our colleagues, and then act to make targeted and meaningful changes to further drive inclus
ion and
enhance their experience.
Our progress in this space is reflected in the 83.7 per cent of employees who shared posit
ive sent
iments around our culture of
inclus
ion
in the 2023 survey. This has been enabled by continued efforts towards increas
ing awareness around d
ivers
ity and
inclus
ion pr
inc
iples, unconsc
ious bias and micro behaviours as well as emphasis
ing the
importance of creating an inclus
ive
environment – aspects that are covered in the ‘When we’re all included’ learning programme. Further, the ‘Respect at Work’
e-learning programme that helps understand what constitutes harassment, bullying, discr
im
inat
ion and v
ict
im
isat
ion,
is now
mandatory for all employees.
Leadership commitment is core to our approach on Divers
ity and Inclus
ion (D&I). Our Global D&I Council is chaired by our
CEO, CCIB and Europe & Americas and comprises of enterprise-wide leaders representing various business, functions and
geographies from across the PLC Group. The Council is responsible for our overall PLC Group D&I strategy, direct
ion sett
ing,
and overseeing the implementat
ion of susta
inable and measurable improvements.
We aim to further strengthen our inclus
ive culture, where all our people feel that the
ir ident
ity
is understood
and recognised for its uniqueness and anyone with the capabil
ity to excel can do so. Employees are prov
ided, where legally
permiss
ible, w
ith the abil
ity to share the
ir ident
ity data through our
internal employee portal. We are focused on in
it
iat
ives
that encourage and increase self-declaration, so that we can further improve colleague experience by introduc
ing pol
ic
ies
and intervent
ions that are representat
ive of the needs of our diverse workforce
Our continued partnership with Purple Tuesday is one of the many in
it
iat
ives through wh
ich we are creating a work
environment where colleagues are encouraged bring their whole selves to work. The partnership is helping increase the
vis
ib
il
ity of role models and careers for those w
ith disab
il
it
ies. It
is also helping to drive an ongoing conversation, to build
awareness and break down myths and stereotypes when engaging with clients and colleagues with disab
il
it
ies. The SC Out
Pride Leadership Summit this year saw Employee Resource Group leads, allies and advocates come together to define our
approach for further build
ing a respectful, support
ive, and safe work environment for our LGBT+ colleagues. We also
recognise six key D&I dates
1
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 overall agenda in our communit
ies.
Our gender divers
ity cont
inues to grow with more women leaders moving up to senior roles. Women currently represent 54
per cent of the Court, and representation of women in senior leadership roles increased to 29.2 per cent at the end of 2023.
We are committed to continuous improvement in this area and aspire to have 35 per cent representation of women at a
senior level across PLC Group by 2025.
We remain focused on build
ing a workforce that
is truly representative of our client base and footprint. We continue to
develop strategic partnerships and experiment with programmes to widen our talent pools (such as the Spring Insights
Programme in 2023 that provided a multi-day immers
ive exper
ience to Black, African American, Hispan
ic and Lat
inx students
in New York and London to learn about our CCIB business, and access internsh
ip opportun
it
ies). In 2023, as a result of our
listen
ing exerc
ises and data ins
ights, we also establ
ished a Black and African Talent Steering Committee and Working Group,
and appointed PLC Group Management Team and Global D&I Council sponsors to advocate for leadership action in focus
areas ident
ified, such as career progress
ion and the internat
ional mob
il
ity exper
ience. As we work towards achiev
ing our
2025 UK and US ethnic
ity sen
ior leadership aspirat
ions, we are also focused on nurtur
ing local talent in markets across Asia,
Africa and the Middle East.
> Read more about our approach towards strengthening divers
ity and
inclus
ion at
sc.com/divers
ityfa
irpayreport
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 2023
46
Strategic report continued
Driv
ing a susta
inable future
We are committed to the sustainable economic and social development , helping people in our footprint markets to thrive
long-term. With a long-standing presence in parts of the world where sustainable finance can have a sign
ificant
impact, we
facil
itate the movement of cap
ital to where it is needed most. We apply our expertise to create financ
ial solut
ions that help
to address challenges and support sustainable growth.
The work we do to accelerate the transit
ion to net zero, l
ift partic
ipat
ion in the economy and reset globalisat
ion
is
fundamental to our business. These three areas of focus are known as our Stands and inform our overall strategy,
includ
ing our approach to susta
inab
il
ity, our advocacy efforts on behalf of our markets and engagement with our
employees and society.
Our approach to sustainab
il
ity
Embedding sustainab
il
ity across our business is a strategic prior
ity for the PLC Group. To accelerate our Susta
inab
il
ity
agenda, the PLC Group’s inaugural Chief Sustainab
il
ity Officer (CSO) was appointed in 2022. Since then, our dedicated CSO
organisat
ion – wh
ich houses our Sustainable Finance, Strategic Init
iat
ives, Sustainab
il
ity Strategy, Net Zero Delivery, and
Environmental and Social (E&S) Risk Management teams – acts as a centre of excellence and a catalyst for the execution of
the PLC Group-wide sustainab
il
ity strategy, includ
ing the ach
ievement of our net zero roadmap.
We focus on deliver
ing both our long-term susta
inab
il
ity goals – our
Sustainab
il
ity Aspirat
ions
– as well as our short-term
targets and immed
iate pr
ior
it
ies – our
Sustainab
il
ity Strategic Pillars
.
Approach to
sustainab
il
ity
Sustainab
il
ity Aspirat
ions:
our long-term goals
Aspirat
ion 1: Mob
il
ise $300 b
ill
ion of Susta
inable Finance by 2030
Aspirat
ion 2: Operat
ional
ise our
inter
im 2023 financed em
iss
ions targets to
meet our 2050 net zero ambit
ion
Aspirat
ion 3: Enhance and deepen the susta
inab
il
ity ecosystem
Aspirat
ion 4: Dr
ive social impact with our clients and communit
ies
Sustainab
il
ity Strategic Pillars:
our short-term targets and
immed
iate pr
ior
it
ies
Pillar 1: Scale Sustainable Finance income
Pillar 2: Further embed sustainab
il
ity across the organisat
ion
Pillar 3: Deliver on the annual milestones with
in our net zero roadmap
Pillar 4: Leverage our innovat
ion hubs
Measuring what matters most - understanding our material
ity
Material
ity
is considered to be the threshold of sign
ificance for report
ing sustainab
il
ity-related risks and opportunit
ies for
users of financial statements:
investors and wider stakeholders. We consider guidance provided by the IFRS Foundation,
which focuses on meeting the sustainab
il
ity data and informat
ion needs of our
investors. Determin
ing mater
ial
ity for
sustainab
il
ity-related risks and opportunit
ies should cons
ider both quantitat
ive and qual
itat
ive aspects related to
sustainable social and economic development.
Our approach to sustainab
il
ity reporting will continue to evolve subject to regulatory and voluntary standards across our
list
ing locat
ions and footprint markets. Our disclosures are guided by internat
ional standards, frameworks and pr
inc
iples
to the extent relevant to our business. We publish an ESG Reporting Index against the disclosures captured in the Global
Reporting Init
iat
ive (GRI) Universal and select Topic Standards, relevant metrics from sector-specif
ic SASB Standards and the
World Economic Forum (WEF) Stakeholder Capital
ism Metr
ics framework.
Sustainab
il
ity Aspirat
ions: our long-term goals
Since 2016, the PLC Group’s approach to sustainab
il
ity has been underpinned by a suite of Sustainab
il
ity Aspirat
ions. Dur
ing
2023, we refreshed and consolidated our Sustainab
il
ity Aspirat
ions
into four overarching long-term goals, each supported by
key performance ind
icators.
Aspirat
ion 1: Mob
il
ise $300 b
ill
ion of Susta
inable Finance
Across our markets, many clients are at the early phase of evaluating the risks and opportunit
ies assoc
iated with their
transit
ion to a low carbon economy. We leverage a full su
ite of sustainable finance solutions – includ
ing loans, bonds, trade
finance and carbon trading - to support their transit
ion.
These are underpinned by our sustainable finance frameworks that outline how we apply the ‘green’, ‘sustainable’ or
‘transit
ion’ labels across products and transact
ions. We also work with corporate, retail and wealth clients to mobil
ise d
iverse
sources of capital in support of social outcomes.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
47
Strategic report continued
Aspirat
ion 2: Operat
ional
ise our
inter
im 2023 financed em
iss
ions targets to meet our 2050 net zero amb
it
ion
We aim to reach net zero in our financed emiss
ions by 2050 and
in our operations by 2025. To date, the PLC Group has set
and disclosed science-based inter
im 2030 financed em
iss
ions targets for eleven h
igh-emitt
ing sectors,
in line with guidance
from the Net-Zero Banking Alliance (NZBA). We are working across our businesses and functions, and alongside our clients to
deliver these targets, notwithstand
ing the challenges presented by a mater
ial portion of our markets not having a
commitment to achieve net zero by 2050.
Aspirat
ion 3: Enhance and deepen the susta
inab
il
ity ecosystem
We are util
is
ing our expertise and networks to actively contribute to global partnerships and in
it
iat
ives that enhance
the sustainab
il
ity ecosystem. These range from those which support the mobil
isat
ion and scaling of Sustainable Finance,
to furthering the development of the voluntary carbon markets and fostering innovat
ive solut
ions in the arena of
conservation finance, through to supporting the advancement of social topics underpinn
ing the UN Susta
inable
Development Goals (SDGs).
Aspirat
ion 4: Dr
ive social impact with our clients and communit
ies
We seek to partner with our clients and communit
ies to mob
il
ise soc
ial capital and drive economic inclus
ion as well as
entrepreneurship through our Futuremakers in
it
iat
ive. Our Employee Volunteer
ing programme encourages employees
to volunteer and organise activ
it
ies, such as fundrais
ing, that al
ign to the PLC Group’s community strategy or respond to
local issues.
Strategic Pillars: our short-term targets and immed
iate pr
ior
it
ies
Our four Sustainab
il
ity Strategic Pillars represent our near-term strategic focus. Each member of the PLC Group Management
Team (MT) is responsible for strategically driv
ing cl
imate and sustainab
il
ity considerat
ions w
ith
in the
ir geography, business
segment or function in line with the PLC Group’s net zero roadmap. Selected sustainab
il
ity-related targets, includ
ing those
with a climate-related dimens
ion, are
incorporated into the annual PLC Group Scorecard which informs variable
remuneration for all colleagues under the Target Total Variable Compensation plan, includ
ing the MT.
Pillar 1: Scale Sustainable Finance income
We are build
ing a scalable Susta
inable Finance (SF) franchise, supporting our clients on their transit
ion journeys by
developing customised solutions that speak to their needs and ambit
ions.
Pillar 2: Further embed sustainab
il
ity across the organisat
ion
The CSO organisat
ion’s a
im is to act as a catalyst for change and a centre of excellence to partners across the PLC Group.
It fosters collaboration internally to embed sustainab
il
ity across our business operations and functions, and externally with
clients and other stakeholders who are aligned with our miss
ion to dr
ive change. This is achieved by:
•
People – Rolling out an expanding curriculum of sustainab
il
ity and climate-related train
ing across the PLC Group.
•
Processes – Integrating our 2030 sectoral net zero targets into our credit risk appetite and capital allocation processes
allowing us to track, monitor and continually assess progress against our targets.
•
Technology – Investing to build a robust single-source data architecture to facil
itate engagement w
ith our clients, includ
ing
automated or semi-automated tools that will support decis
ion-mak
ing and analysis of the expected impact of a
transaction on the PLC Group’s financed emiss
ions.
Pillar 3: Deliver on the annual milestones with
in our net zero roadmap
We aim to reach net zero GHG emiss
ions
in our financed emiss
ions by 2050 and
in our own operations by 2025. Since 2018 we
have been working on align
ing our d
irect and ind
irect em
iss
ions to the Par
is Agreement’s goal of well below two degrees
Celsius of global warming by the end of the century.
Pillar 4: Leverage our innovat
ion hubs
Announced in 2023, the four thematic innovat
ion hubs – Adaptat
ion Finance, Blended Finance, Carbon Markets and Nature
Posit
ive Solut
ions – focus on emerging sectors of sustainab
il
ity aligned to areas where the PLC Group has a core competency
and are particularly suited to our clients in our footprint markets. By being deliberate in demonstrating leadership to advance
the ecosystem in these emerging thematic areas, the PLC Group’s Sustainable Finance franchise will be well posit
ioned to
take advantage of the sign
ificant and d
ifferent
iated revenue potent
ial that will result from maturation of these hubs in the
future. Each hub is transversal, run by senior leaders in the CSO organisat
ion and a
ims to ident
ify opportun
it
ies for future
returns outside of our core range of tradit
ional products and serv
ices.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
48
Strategic report continued
Education and Train
ing
Our focus in 2023 was to reinforce the tiered learning curriculum through refinement of the on-demand foundation program
and establish
ing a pract
it
ioner-level learn
ing program for colleagues in leadership and key front-line roles.
Course
Descript
ion
Sustainab
il
ity
Foundation
Programme
We encourage all employees across our global footprint to increase 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. Since launching our “Understanding Sustainab
il
ity” online learning in April 2022, more than
15,067 (18 per cent) of colleagues voluntarily completed this learning programme up to October 2023. It was
refreshed as part of the Sustainab
il
ity Foundation Programme and reflects the first level in our tiered learning
curriculum, through which we aim to tailor content to different needs from foundational to practit
ioner.
Climate-related
financial and
non-financial
risk train
ing
The PLC Group has provided bespoke classroom train
ing for colleagues across CCIB, CPBB, R
isk and Audit teams.
This covered a broad range of topics, from how physical and transit
ion r
isks may manifest, to special
ised top
ics
around how climate stress tests are conducted and how we embed Climate Risk into first and second-line credit
risk processes.
We also partnered with Imperial College London on a seven-hour detailed online train
ing programme that
focused on the latest developments with
in academ
ia, industry, and the regulatory landscape.
Starting in Q4 2023, a targeted practit
ioner-level tra
in
ing programme was rolled out
in phases to Relationsh
ip
Managers, Global Credit Markets bankers, Credit and Climate Analysts and Credit Officers. This programme
focuses on all climate and net zero-related learning requirements.
The PLC Board also received train
ing on cl
imate scenarios, includ
ing a focus on regulatory expectat
ions, key
features of industry-level climate scenarios, in-house base and tail risk scenarios and key second-order impacts
from climate change.
Sustainable
Finance (SF) and
Environmental
and Social Risk
Management
(ESRM) train
ing
In 2023, the practit
ioner-level learn
ing of the tiered Sustainable Finance curriculum was launched. This level aims
to build detailed knowledge of concepts related to sustainab
il
ity and how these are embedded throughout our
processes and financing.
The Sustainable Finance Practit
ioner Cert
if
icate
is a 15-week programme jo
intly developed
in partnership with
Imperial College Business School. It is our practit
ioner-level learn
ing targeted at our Global Account Managers
and select Relationsh
ip Managers across CCIB and CPBB. Th
is program helps develop the core knowledge
required to support our clients on their sustainab
il
ity journey covering topics such as net zero, climate risk,
adaptation finance, biod
ivers
ity, energy transit
ion, products and solut
ions, and blended finance.
Addit
ionally
in 2023, over a hundred country and regional CEOs and Heads of Business jo
ined targeted tra
in
ing
covering the energy transit
ion and related financing opportun
it
ies, clean technology, and susta
inab
il
ity-related
risks and regulation.
There were also over forty ad-hoc train
ing courses held throughout the year that reached over 3,200 employees
covering specif
ic learn
ing needs and topics e.g., the PLC Group’s progress related to sectoral net zero target
setting, sector-specif
ic voluntary carbon markets or SF products and related governance. We cont
inue to upskill
our Relationsh
ip Managers and Cred
it Officers in assessing Environmental & Social (E&S) risk, as well as having
access to detailed online resources. 2,606 colleagues received E&S risk-related train
ing
in 2023. In 2024, we plan to
further refine the programmes to target specif
ic roles
in the PLC Group and further build knowledge and expertise
in SF and ESRM.
Mit
igat
ing Environmental and Social Risk
We seek to proactively manage Environmental and Social (E&S) Risks and impacts aris
ing from the PLC Group’s cl
ient
relationsh
ips and transact
ions. For over 20 years, our cross-sector Environmental and Social Risk Management (ESRM)
Framework has helped us apply internat
ional standards and best pract
ices across all our markets. In the front line, our ESRM
team with
in the Ch
ief Sustainab
il
ity Officer (CSO) organisat
ion oversees the management of E&S R
isks associated with our
client relationsh
ips. Our approach
is embedded directly into our credit approval process and supports us to work with our
stakeholders to ident
ify, manage and mon
itor the potential impacts that stem from our financ
ing dec
is
ions.
Managing Climate Risk
We have designed an approach that begins to embed Climate Risk with impacted Princ
ipal R
isk Types (PRTs) with
in our
central Enterprise Risk Management Framework based around two princ
iples:
1.
Treat Climate Risk like a tradit
ional r
isk type. Climate Risk may lead to financ
ial losses and non-financial detr
iments, much
like Credit Risk, and should be managed as such to lim
it the PLC Group’s exposure to these detr
iments. This means
embedding Climate Risk considerat
ions
into exist
ing r
isk ident
ification and management processes, governance, report
ing,
scenario analysis, strategy, and financ
ial plann
ing.
2.
Recognise and build for where Climate Risk is different. Climate Risk is likely to crystallise over much longer time horizons
and is inherently diff
icult to quant
ify. Its unique features and a need for granular forward-looking measurements require
the use and development of new tools and methodologies to quantify and analyse the impl
icat
ions.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
49
Strategic report continued
Integrity, conduct and ethics
We aim to live our valued behaviours, which are ‘Never settle’, ‘Better together’ and ‘Do the right thing’ through our actions,
decis
ions and
interact
ions day-to-day w
ith colleagues and clients.
•
The Code of Conduct and Ethics (the Code) remains the primary tool through which we set our conduct expectations.
In October 2023, we launched the refreshed Code to improve alignment with our Stands, strengthen the link between
ethics, culture, conduct, and the Group’s strategy.
•
Our Speaking Up programme provides a safe, independent and confident
ial way to report known or suspected concerns.
It helps build and mainta
in a strong eth
ical culture, with integr
ity, trust, and transparency. The early d
isclosure of concerns
reduces the risk of financ
ial and reputat
ional loss caused by misconduct.
•
Our ambit
ion
is to help tackle financ
ial cr
ime by making the financ
ial system a host
ile environment for crim
inals and
terrorists. We have no appetite for breaches in laws and regulations related to financ
ial cr
ime. Our Conduct, Financ
ial
Crime & Compliance (CFCC) team sets our financ
ial cr
ime risk management framework.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
50
Non-financial and susta
inab
il
ity informat
ion statement
This table sets out where shareholders and stakeholders of the Group can find informat
ion about key non-financial and
sustainab
il
ity matters in this report. As the Company is a subsid
iary undertak
ing of PLC and included with
in PLC Group,
compliance with the non-financ
ial and susta
inab
il
ity reporting requirements contained in sections 414CA and 414 CB of the
Companies Act 2006 is achieved by reference to PLC Group activ
it
ies where relevant and to the PLC Group report available at
sc.com. Further disclosures are available via
sc.com/sustainab
il
ityhub
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
Risk Review (princ
ipal r
isks)
Pages 126 to 143
Environment
•
Sustainable & Responsible Business Pages 45 to 49
•
Directors Report
Pages 51 to 56
Employees
Pages 43 to 45
Human rights
Page 36
Social matters
Page 42
Anti-corruption and anti-bribery
Page 135
Authority
The strategic report up to page 50 has been issued by order of the Court.
Bill Winters
Director
23 February 2024
Company Reference Number: ZC18
Strategic report continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
51
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 2023. 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 - 50) 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 outlets in 50 markets. The Financ
ial Rev
iew on pages 20 to 24 contains a review of the business during 2023.
Key stakeholders
The long-term success of the Group is dependent on its relationsh
ips w
ith its key stakeholders. On pages 40 to 49 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 160.
Div
idends of $2,167 m
ill
ion were pa
id during the year to ordinary shareholders (2022: $575 mill
ion).
Share capital
Details of the Company’s share capital includ
ing the part
iculars of any share buy-backs 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 of the accounts.
Post balance sheet events
Details of post balance sheet events are given in Note 40 to the accounts.
Research and development
During the year, the PLC Group invested $2.01 bill
ion (2022: $1.98 b
ill
ion)
in research and development, of which $0.99 bill
ion
(2022: $0.94 bill
ion) was recogn
ised as an expense. The research and development investment primar
ily related 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 on pages 1 to 40 .
Directors and their interests
The directors of the Company during the year were as follows:
Mr A N Halford
Mr W T Winters, CBE
Mrs C M Hodgson, CBE (Resigned 31 January 2023)
Ms J Hunt
Ms G Huey Evans, CBE
Ms R Lawther, CBE
Mr D Tang
Dr J Viñals
Ms J M Whitbread (Resigned 3 May 2023)
Mr P Rivett
Ms M Ramos
Ms A McFadyen
Ms S Ricke (Appointed 24 February 2023)
Mr S Apte (Appointed 1 January 2023)
Dr L Yueh, CBE (Appointed 1 January 2023)
Directors’ Report
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
52
Directors’ Report continued
Mr Halford resigned from the Company on 2 January 2024 and Mr D De Giorg
i was appo
inted a director of the Company on
3 January 2024.
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
undertakings.
Details of directors’ pay and benefits are disclosed in Note 37 to the accounts.
All of the directors as at 31 December 2023, except Ms McFadyen and Ms Ricke 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
Having made appropriate enquir
ies, the Court
is satisf
ied that the Company and the Group as a whole have adequate
resources to continue in operation and meet its liab
il
it
ies as they fall due for a per
iod of at least 12 months from 23 February
2024 and therefore continues 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 2023.
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 2023 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 2023 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 50 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
Countries in the Asia Hub, which include the Greater China and North Asia Hub and the ASEAN and South Asia Hub, operate
under the Asia governance model. As the Group continues to cover the vast major
ity 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 2023
53
Directors’ Report continued
The Court is supported by 4 primary committees: Audit Committee; 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 (includ
ing
in respect of their compliance with the Code), please see pages 164 to 169
and 170 to 175 of PLC’s 2023 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 38.
A copy of the UK Corporate Governance Code can be found at
frc.org.uk
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 that they have the opportunit
ies to prov
ide feedback and engage in a dialogue.
We strive 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 November 2023 we launched our new employee
communicat
ions platform – Pulse. Pulse w
ill become our primary internal communicat
ions channel that w
ill allow colleagues
to receive key dynamic updates that are personalised by role and location, sign up for events, provide feedback, and
navigate to other internal platforms. In addit
ion to targeted d
ig
ital commun
icat
ions, we also deploy aud
io and video calls,
virtual and face-to-face townhalls, and other employee engagement and recognit
ion events. To cont
inue 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. Our sen
ior leaders and people leaders 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 offer addit
ional support to our people leaders w
ith specif
ic calls and
communicat
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-one conversations 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 recognit
ion and reward relate to th
is. 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 also engages with and listens to the views of the workforce through several sources,
includ
ing through
interact
ive engagement sess
ions. 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 2.7 mill
ion followers. The d
iverse range of internal and external communicat
ion tools and channels we
have put in place aim to ensure that all 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 PLC 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, employees are provided with at least thirty days’ leave
(through annual leave and public holidays), and new parents are provided a min
imum of twenty calendar weeks’ fully pa
id
leave irrespect
ive of gender, relat
ionsh
ip status or how a ch
ild comes to permanently jo
in a fam
ily. These are above the
International Labour Organisat
ion’s (ILO) 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 ILO conventions 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).
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 employee attrit
ion, pos
it
ive employee morale and engagement, ma
inta
ins employee wellbe
ing, and reduces
people-related risk. All colleagues are responsible for fostering an inclus
ive culture where
ind
iv
idual
ity and d
iffer
ing sk
ills,
capabil
it
ies and experience are understood, respected and valued. All colleagues, consultants, contractors, volunteers,
interns, casual workers and agency workers are required to comply with the Standard, includ
ing conduct
ing themselves in a
manner that demonstrates appropriate, non-discr
im
inatory behaviours.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
54
Directors’ Report continued
We do not accept unlawful discr
im
inat
ion
in our recruitment or employment practices on any grounds includ
ing but not
lim
ited to: sex, race, colour, nat
ional
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 maternity, sexual orientat
ion, gender
ident
ity, express
ion or reassignment, parental status, mil
itary and
veterans status, flexib
il
ity of working arrangements, relig
ion or bel
ief. We are committed to provide equal opportunit
ies and
fair treatment in recruitment, appraisals, pay and condit
ions, tra
in
ing, development, success
ion planning, promotion,
grievance/disc
ipl
inary procedures and employment terminat
ion pract
ices, 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
skills, 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 also endeavour to 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 aim to support them with appropriate train
ing and workplace adjustments where
possible and to support their continued employment.
Director Train
ing
The induct
ion programmes of Court d
irectors are undertaken as part of Group level in
it
iat
ives and are ta
ilored depending on
their roles and responsib
il
it
ies. Dur
ing the year, train
ing and development
included areas such as dig
ital assets and cl
imate
risk train
ing. Where
it is recognised that the Court or ind
iv
idual directors need further train
ing development
in key areas,
addit
ional sess
ions are arranged with subject matter experts.
Health, Safety and Wellbeing
Our Health, Safety and Wellbeing (HSW) vis
ion
is to support employee productiv
ity through a healthy and res
il
ient workforce,
and our miss
ion
is to deliver every day in a safe, secure and resil
ient way. Our corporate 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.
We follow the International Labour Organisat
ion (ILO) code of pract
ice on recording and notif
icat
ion of occupational
accidents and diseases and guidance published by UK Health and Safety Executive (HSE), and ensure that we meet all local
Health and Safety (H&S) regulatory reporting requirements. We record and report all work-related illness and injuries,
includ
ing from sub-contractors, v
is
itors and cl
ients.
HSW performance and risks are reported annually to the PLC Group Risk Committee and Court Risk Committee. We use a
H&S management system and local regulatory compliance tracker across all countries to ensure a consistently high level of
H&S reporting and compliance for all our colleagues and clients.
The PLC Group sponsors medical and healthcare services for all employees, except in markets where cover is provided
through State-mandated healthcare, which represent less than 0.6 per cent of the PLC Group’s employees.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
55
Directors’ Report continued
Across the Group, support for employee mental wellbeing is available. All employees 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 wellbeing platform. Our global Mental Health First Aid (MHFA) program offers help to anyone 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. To date we have tra
ined over 500 mental health
first aiders in 43 markets.
In 2023, we recorded two work-related fatalit
ies. A contractor was trag
ically and fatally injured while crossing a road on her
way to work in Niger
ia. An employee was trag
ically and fatally injured in a road accident in India. Ma
jor in
juries (per the UK
HSE definit
ion) decreased from 20 in 2022 to 16, with fractures the most common type of major in
jury (75 per cent). Overall,
reported injuries increased by 28 per cent, with ‘slips/trips/falls’ and ‘transport/commuting’ remain
ing the most common
causes of injury. The overall increase in reported injuries was a post COVID result, with all markets moving into the new normal
in 2023. Our injury rates remain aligned to, or better than industry benchmarks. Hazards and near miss reports decreased 4
per cent between 2022 and 2023.
In 2023, we ran a back-to-basics programme to re-establish commitment and responsib
il
ity in safety & security at all levels,
and address post pandemic and new normal practices. All premises are inspected at least annually to ident
ify any hazards,
risks, and inc
idences of non-compl
iance. HSW communicat
ion
is provided through mandatory train
ings for all new joiners,
along with annual refreshers. In 2023, we also created a pathway in the Group’s learning platform using engaging bite-sized
video content to help educate colleagues on their responsib
il
it
ies to keep the Group safe. The Group celebrated World Day
for Safety and Health at Work in April with the theme “Safety is Everyone’s Responsib
il
ity” in line with the back – to – basics
intent.
One hundred and fifty-eight (158) build
ings, wh
ich covers more than 90 per cent of our employees, 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. Four major head office projects also obtained the broader WELL certif
icat
ion.
Our regular Office and Home Working Experience survey, conducted across 49 markets, demonstrated continued high scores
around wellbeing with 80 per cent of respondents agreeing that the workplace has a posit
ive
impact on their wellbeing and
87 per cent saying they are able to be physically active and mainta
in a healthy work l
ife balance.
In 2023, all Standard Chartered markets saw relaxation of COVID restrict
ions w
ith business moving to new normal, and
continued uptake of the Group’s Future Work Now (flexible working) programme. An ergonomic online assessment tool is
available for employees to assess their home working area for hazards, with a virtual assessment of the ind
iv
idual’s work
environment, and a workplace adjustment procedure available for employees who require support based on personal
circumstances. Our work injury insurance covers all employees working from home.
Business travel returned to pre-pandemic levels in 2023, and we put together a Travel Risk Management Framework aligned
to ISO 31030:2021 Travel Risk Management Standards and supported by external travel risk and security advisors at
International SOS to support travellers.
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.
> Our Supplier Charter and Supplier Divers
ity and Inclus
ion standard can be viewed at
sc.com/suppliercharter
and
sc.com/supplierd
ivers
ity
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
56
Directors’ Report continued
Product responsib
il
ity
The PLC Group has in place a risk framework, compris
ing pol
ic
ies, standards and controls to support these objectives
in
alignment with our Conduct Risk Framework. The 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 are 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 to keep them relevant to the
changing needs of clients and to meet regulatory obligat
ions.
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 38 to 39 and 45 to 47. For more informat
ion on fraud
ident
ification see page 131 of PLC’s 2023 Annual Report .
Environmental impact of our operations
The PLC Group aims to min
im
ise the environmental impact of its operations as part of its commitment to be a responsible
company. The PLC Group reports on energy, water and non-hazardous waste data and the targets the PLC Group has set to
reduce its operational emiss
ions and waste consumpt
ion.
The PLC Group’s reporting methodology is based upon the “The Greenhouse Gas Protocol – A Corporate Accounting and
Reporting Standard (Revised Edit
ion)”.
Information on the princ
iples and methodolog
ies used to calculate the GHG emiss
ions of the PLC Group can be found
in our
Environmental Reporting Criter
ia document at
sc.com/environmentalcr
iter
ia
Reporting period
The reporting period of our Scope 1 and 2, emiss
ions
is from 1 October 2022 to 30 September 2023. This allows suffic
ient t
ime
for independent assurance to be completed on our Scope 1 and Scope 2 emiss
ions pr
ior to the publicat
ion of the PLC Annual
Report. Accordingly, the operating income used in this inventory corresponds to the same time period rather than the
calendar year used in financ
ial report
ing.
Summary of Activ
it
ies of the Company’s Jersey Branch
Standard Chartered Bank Jersey Branch’s private banking activ
it
ies include deposit taking, lending and investment business
in accordance with Jersey laws and regulations.
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
2024 PLC Annual General Meeting.
By order of the Court
Bill Winters
Director
23 February 2024
Company Reference Number: ZC18
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
57
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 as
adopted by the European Union (EU IFRS) and applicable law, and the Company financ
ial 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
Diego De Giorg
i
Director
23 February 2024
Directors’ Report continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
58
Risk review and Capital review
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 60) to the end of other princ
ipal
risks in the same section (page 120); and
•
b) Capital review:
Tables marked as ‘audited’ from the start of ‘Capital base’ to the end of ‘Total capital’ (page 145).
Risk Index
Annual Report
and Accounts
Risk profile
Credit risk
60
Basis of preparation
60
Credit risk overview
60
Impairment model
60
Staging of financ
ial
instruments
60
IFRS 9 expected credit loss princ
iples and approaches
60
Summary of Performance in 2023
61
Maximum exposure to Credit risk
62
Analysis of financ
ial
instrument by stage
65
Credit quality analysis
69
•
Credit quality by client segment
69
Movement in gross exposures and credit impa
irment for loans and advances, debt secur
it
ies,
undrawn commitments and financ
ial guarantees
74
Movement of debt securit
ies, alternat
ive Tier 1 and other elig
ible b
ills
77
Credit impa
irment charge
81
Problem credit management and provis
ion
ing
81
•
Forborne and other modif
ied loans by cl
ient segment
81
Credit risk mit
igat
ion
84
• Collateral
84
•
Collateral held on loans and advances
85
•
Collateral – Corporate, Commercial and Institut
ional Bank
ing
87
•
Collateral – Consumer, Private and Business Banking
88
•
Mortgage loan-to-value ratios by geography
88
•
Collateral and other credit enhancements possessed or called upon
89
•
Other Credit risk mit
igat
ion
89
Other portfolio analysis
90
•
Contractual maturity analysis of loans and advances by client segment
90
•
Credit quality by industry
92
•
Debt securit
ies and other el
ig
ible b
ills
96
IFRS 9 expected credit loss methodology
98
Traded risk
107
Market Risk changes
107
Counterparty Credit risk
109
Derivat
ive financial
instruments Credit risk mit
igat
ion
110
Liqu
id
ity and Funding risk
110
Liqu
id
ity and Funding risk metrics
110
Liqu
id
ity analysis of the Group’s balance sheet
112
Interest Rate risk in the Banking Book
118
Operational and Technology risk
119
Operational and Technology risk profile
119
Operational and Technology risk events and losses
120
Other princ
ipal r
isks
120
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
59
Risk Index
Annual Report
and Accounts
Risk management
approach
Risk Management Framework
121
Princ
ipal R
isks
126
Capital
Capital Summary
144
Capital ratios
144
Capital base
145
Risk-weighted asset
145
Leverage ratio
145
Risk review and Capital review continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
60
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 15 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. Cred
it
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
Supplementary informat
ion
Page
Approach to determin
ing
expected
credit losses
IFRS 9 methodology
Determin
ing l
ifet
ime expected cred
it loss for revolving products
98
Incorporation of forward-
looking informat
ion
Incorporation of forward-looking informat
ion
Forecast of key macroeconomic variables underlying the expected credit loss calculation
Management overlay and sensit
iv
ity to macroeconomic variables
99
Sign
ificant
increase in
Credit Risk (SICR)
Quantitat
ive cr
iter
ia
Sign
ificant
increase in credit risk thresholds
Specif
ic qual
itat
ive and quant
itat
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
103
Assessment of credit-
impa
ired financial assets
Consumer and Business Banking clients
CCIB and Private Banking clients
105
Transfers between stages
Movement in loan exposures and expected credit losses
74
Modif
ied financial assets
Forbearance and other modif
ied loans
81
Governance and applicat
ion
of expert credit judgement
in respect of expected
credit losses
PLC Group Credit Model Assessment Committee
IFRS 9 Impairment Committee
106
Risk profile
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
61
Risk profile continued
Summary of performance in 2023
Loans and Advances
92 per cent (31 December 2022: 91 per cent) of the Group’s gross loans and advances to customers remain in stage 1 at $146.7
bill
ion (31 December 2022: $148.2 b
ill
ion) reflect
ing our continued focus on high-quality orig
inat
ion.
Stage 1 loans decreased by $1.5 bill
ion to $146.7 b
ill
ion (31 December 2022: $148.2 b
ill
ion). Stage 1 balances for Corporate,
Commercial and Institut
ional Bank
ing (CCIB) decreased by $1.5 bill
ion to $77.5 b
ill
ion (31 December 2022: $79 b
ill
ion) due to
exposure reductions mainly in the financ
ing,
insurance and non-banking sectors. This was offset by a $1.3 bill
ion
increase in
Consumer and Private Business Banking (CPBB) Credit Cards and Secured Wealth products. Stage 1 cover ratio remained
stable at 0.1 per cent (31 December 2022: 0.2 per cent).
Stage 2 gross loans and advances to customers were broadly stable at $7.7 bill
ion (31 December 2022: $7.7 b
ill
ion). Th
is was
due to $1.1 bill
ion of CCIB exposure reduct
ions in the Transport, Telecom and Util
it
ies and Commercial Real Estate (CRE) sector,
which was offset by a $1 bill
ion
increase in Central and other items. CPBB exposures were broadly stable at $1 bill
ion (31
December 2022: $1 bill
ion). H
igher risk exposure net increase of $1 bill
ion from Central and other
items, was due to a short-term
exposure to a Central Bank in the Africa and Middle East region, which was partly offset by exposure reductions and transfers
to stage 3 in CCIB. Stage 2 cover ratio increased by 0.1 per cent to 2.5 per cent (31 December 2022: 2.4 per cent). CCIB cover
ratio increased by 0.3 per cent to 2.3 per cent (31 December 2022: 2 per cent) due to higher coverage on 'higher risk accounts.
CPBB stage 2 cover ratio was broadly stable at 5.9 per cent (31 December 2022: 5.4 per cent).
Stage 3 loans decreased by $1 bill
ion to $5.2 b
ill
ion (31 December 2022: $6.2 b
ill
ion) pr
imar
ily
in the CCIB segment, which was
driven by repayments and write offs. The CCIB stage 3 cover ratio increased by 1 per cent to 61 per cent (31 December 2022: 60
per cent) due to exposure reductions. CPBB stage 3 loans was stable at $1.1 bill
ion (31 December 2022: $1.1 b
ill
ion) and the cover
ratio also remained stable at 60 per cent (31 December 2022: 60 per cent). Ventures stage 3 exposures increased by $2 mill
ion
to $2 mill
ion (31 December 2022: n
il) due to portfolio growth in Trust Bank Singapore. The cover ratio after collateral
decreased to 73 per cent (31 December 2022: 74 per cent)
> Further details can be found in the ‘Analysis of financ
ial
instruments by stage’ section in pages 65 to 68; ‘Credit quality by
client segment’ section in pages 69 to 73; ‘Credit quality by industry’ section in pages 92 to 95. Stage 3 cover ratio is also
disclosed in the ‘Stage 3 cover ratio’ section in page 83.
Maximum exposure
The Group’s on-balance sheet maximum exposure to Credit Risk decreased by $8 bill
ion to $517 b
ill
ion (31 December 2022:
$525 bill
ion). Cash at central bank
increased by $13.7 bill
ion to $64 b
ill
ion (31 December 2022: $51 b
ill
ion) due to depos
its
placed with the US Federal Reserve. Fair Value through profit and loss increased by $15 bill
ion to $96 b
ill
ion (31 December
2022: $81 bill
ion), largely due to $9 b
ill
ion
increase in debt securit
ies and $6 b
ill
ion
increase in reverse repos. This was partly
offset by a $12 bill
ion decrease
in Derivat
ive financial
instruments to $52.6 bill
ion, a $4.6 b
ill
ion decrease
in loans to banks to
$22.8 bill
ion, and a $2 b
ill
ion decrease
in loans and advances to customers to $156 bill
ion (31 December 2022: $158 b
ill
ion). Out
of the $2 bill
ion decrease
in loans and advances to customers, a $1.8 bill
ion reduct
ion relates to reverse repos. Amortised cost
debt securit
ies decreased by $10.4 b
ill
ion to $102 b
ill
ion (31 December 2022: $112 b
ill
ion) as part of the Group’s l
iqu
id
ity
management actions. Other assets decreased by $6.5 bill
ion to $21 b
ill
ion (31 December 2022: $27 b
ill
ion). Off-balance sheet
instruments increased by $23 bill
ion to $179 b
ill
ion (31 December 2022: $156 b
ill
ion), wh
ich was driven by new businesses.
> Further details can be found in the ‘Maximum exposure to Credit Risk’ section in pages 62 to 64.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
62
Risk profile continued
Credit impa
irment charges
The ongoing credit impa
irment was a net release of $46 m
ill
ion (31 December 2022: release of $25 m
ill
ion).
For CCIB, stage 1 and 2 impa
irment charges
increased by $73 mill
ion to $2 m
ill
ion (31 December 2022: release of $71 m
ill
ion), as
2022 included a $94 mill
ion full release of COVID-19 overlay, wh
ich was partly offset by Pakistan Sovereign downgrades. In
2023, $3 mill
ion
impa
irment charges was due to portfol
io movements includ
ing
impa
irments on Pak
istan Sovereign clients,
which was offset by a $10 mill
ion release from model methodology updates.
CCIB stage 3 impa
irment charges decreased by $40 m
ill
ion to a net release of $155 m
ill
ion (31 December 2022: $115 m
ill
ion).
This was largely driven by sign
ificant releases
in the Africa and Middle East region, which was partly offset by $12 mill
ion net
increase in Niger
ia due to fore
ign exchange availab
il
ity.
For CPBB, stage 1 and 2 impa
irment charges
increased by $70 mill
ion to $51 m
ill
ion (31 December 2022: release of $19 m
ill
ion).
This was due to normal flows largely from unsecured portfolios in India, Malaysia and Singapore. This was partly offset by a
$21 mill
ion full release of COVID-19 overlay, and $18 m
ill
ion release from non-l
inear
ity post model adjustment. 2022
included
$93 mill
ion of COVID-19 and operat
ing environment overlay releases, as well as releases from model methodology updates
largely in the Asia region.
CPBB stage 3 impa
irment charges
increased by $40 mill
ion to $77 m
ill
ion (31 December 2022: $37 m
ill
ion) as 2023
included
charge offs primar
ily dr
iven by India, Malaysia and Singapore, and higher bankruptcy related write-offs.
For Ventures, stage 1 and 2 impa
irment charges
increased by $5 mill
ion to $7 m
ill
ion (31 December 2022: $2 m
ill
ion). Stage 3
impa
irment charge
increased by $6 mill
ion to $6 m
ill
ion (31 December 2022: n
il), due to portfolio growth in Trust Bank
Singapore.
For Central and other items, stage 1 and 2 impa
irment charges decreased by $146 m
ill
ion to a net release of $42 m
ill
ion (31
December 2022: $104 mill
ion), as 2022
included Pakistan Sovereign CG12 downgrades. In 2023, the decrease was driven by
exposure reductions and shortening tenors of balances to the Pakistan Sovereign, which was partly offset by a $8 mill
ion
charge due to Kenya Sovereign downgrade.
Central and other items stage 3 impa
irment charge decreased by $29 m
ill
ion to $8 m
ill
ion (31 December 2022: $37 m
ill
ion), as
Sri Lanka and Ghana exposures were downgraded to Stage 3 in 2022.
> Further details can be found in the ‘Credit impa
irment charge’ sect
ion in page 81.
Management adjustments
Given the evolving nature of risks in the China commercial real estate sector, a management overlay of $11 mill
ion (31
December 2022: nil) has been taken in CCIB. Overlays of $5 mill
ion (31 December 2022: $16 m
ill
ion) have been appl
ied in CPBB
to capture macroeconomic environment challenges caused by sovereign defaults. An overlay of $17 mill
ion (31 December
2022: nil) was also applied in Central and other items, due to a temporary market dislocat
ion
in Africa and Middle East.
> Further details can be found in the ‘Judgemental management overlays’ section in page 101.
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 2023, before and after taking into account any collateral held or other Credit risk
mit
igat
ion.
> Further details can be found in the ‘Summary of performance in 2023’ in pages 61 to 62.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
63
Risk profile continued
Group
2023
2022
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
64,198
64,198
50,531
50,531
Loans and advances to banks
1
22,803
1,653
21,150
27,383
878
26,505
of which – reverse repurchase
agreements and other sim
ilar secured
lending
7
1,653
1,653
–
878
878
–
Loans and advances to customers
1
156,143
51,985
104,158
158,126
52,699
105,427
of which – reverse repurchase
agreements and other sim
ilar secured
lending
7
13,827
13,827
–
15,586
15,586
–
Investment securit
ies – Debt secur
it
ies
and other elig
ible b
ills
2
102,040
102,040
112,425
112,425
Fair value through profit or loss
3, 7
95,658
68,149
–
27,509
80,668
62,333
–
18,335
Loans and advances to banks
2,265
2,265
859
859
Loans and advances to customers
3,188
3,188
4,065
4,065
Reverse repurchase agreements and
other sim
ilar lend
ing
7
68,149
68,149
–
62,333
62,333
–
Investment securit
ies – Debt secur
it
ies
and other elig
ible b
ills
2
22,056
22,056
13,411
13,411
Derivat
ive financial
instruments
4, 7
52,554
7,960
43,684
910
65,050
8,304
52,827
3,919
Accrued income
1,768
1,768
1,858
1,858
Assets held for sale
9
693
693
1,388
1,388
Other assets
5
20,714
20,714
27,210
27,210
Total balance sheet
516,571
129,747
43,684
343,140
524,639
124,214
52,827
347,598
Off-balance sheet
6
Undrawn Commitments
117,899
2,296
115,603
107,885
2,250
105,635
Financ
ial Guarantees and other
equivalents
60,707
2,139
58,568
47,799
2,229
45,570
Total off-balance sheet
178,606
4,435
–
174,171
155,684
4,479
–
151,205
Total
695,177
134,182
43,684
517,311
680,323
128,693
52,827
498,803
1
Net of credit impa
irment. An analys
is of credit quality is set out in the credit quality analysis section (page 69). Further details of collateral held by client segment and
stage are set out in the collateral analysis section (page 84)
2
Excludes equity and other investments of $434 mill
ion (31 December 2022: $603 m
ill
ion). Further deta
ils are set out in Note 12 Financ
ial
instruments
3
Excludes equity and other investments of $1,442 mill
ion (31 December 2022: $1,886 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
9
The amount is after ECL. Further details are set out in Note 20 Assets held for sale and associated liab
il
it
ies
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
64
Risk profile continued
Company
2023
2022
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
52,758
52,758
38,867
38,867
Loans and advances to banks
1
10,135
554
9,581
18,548
184
18,364
of which – reverse repurchase
agreements and other sim
ilar secured
lending
7
554
554
–
184
184
–
Loans and advances to customers
1
75,883
23,157
52,726
80,611
26,889
53,722
of which – reverse repurchase
agreements and other sim
ilar secured
lending
7
12,212
12,212
–
15,071
15,071
–
Investment securit
ies – Debt secur
it
ies
and other elig
ible b
ills
2
92,362
92,362
95,049
95,049
Fair value through profit or loss
3, 7
85,097
64,804
–
20,293
74,051
59,057
–
14,994
Loans and advances to banks
2,244
2,244
837
837
Loans and advances to customers
2,622
2,622
3,196
3,196
Reverse repurchase agreements and
other sim
ilar lend
ing
7
64,804
64,804
–
59,057
59,057
–
Investment securit
ies – Debt secur
it
ies
and other elig
ible b
ills
2
15,427
15,427
10,961
10,961
Derivat
ive financial
instruments
4, 7
53,221
7,289
45,556
376
65,481
7,710
53,810
3,961
Accrued income
1,151
1,151
1,342
1,342
Assets held for sale
9
52
52
544
544
Other assets
5
16,990
16,990
23,625
23,625
Total balance sheet
387,649
95,804
45,556
246,289
398,118
93,840
53,810
250,468
Off-balance sheet
6
Undrawn Commitments
69,007
1,387
67,620
64,005
1,373
62,632
Financ
ial Guarantees and other
equivalents
49,586
1,836
47,750
37,890
1,965
35,925
Total off-balance sheet
118,593
3,223
–
115,370
101,895
3,338
–
98,557
Total
506,242
99,027
45,556
361,659
500,013
97,178
53,810
349,025
1
Net of credit impa
irment. An analys
is of credit quality is set out in the credit quality analysis section (page 69). Further details of collateral held by client segment and
stage are set out in the collateral analysis section (page 84)
2
Excludes equity and other investments of $409 mill
ion (31 December 2022: $323 m
ill
ion). Further deta
ils are set out in Note 12 Financ
ial
instruments
3
Excludes equity and other investments of $1,315 mill
ion (31 December 2022: $1,741 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
9
The amount is after ECL. Further details are set out in Note 20 Assets held for sale and associated liab
il
it
ies
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
65
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.
> Further details can be found in the ‘Summary of performance in 2023’ in pages 61 to 62.
Group
2023
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
63,606
–
63,606
207
(7)
200
404
(12)
392
64,217
(19)
64,198
Loans and
advances to
banks (amortised
cost)
22,210
(3)
22,207
537
(9)
528
74
(6)
68
22,821
(18)
22,803
Loans and
advances to
customers
(amortised cost)
146,718
(198) 146,520
7,657
(193)
7,464
5,177
(3,018)
2,159
159,552
(3,409)
156,143
Debt securit
ies
and other elig
ible
bills
5
100,092
(26)
1,861
(34)
165
(61)
102,118
(121)
Amortised cost
39,774
(19)
39,755
103
(2)
101
121
(57)
64
39,998
(78)
39,920
FVOCI
2
60,318
(7)
1,758
(32)
44
(4)
62,120
(43)
Accrued income
(amortised cost)
4
1,768
–
1,768
–
–
–
–
–
–
1,768
–
1,768
Assets held for
sale
654
(34)
620
76
(4)
72
1
–
1
731
(38)
693
Other assets
20,714
–
20,714
–
–
–
3
(3)
–
20,717
(3)
20,714
Undrawn
commitments
3
113,301
(20)
4,596
(27)
2
–
117,899
(47)
Financ
ial
guarantees, trade
credits and
irrevocable letter
of credits
3
57,505
(8)
2,530
(13)
672
(112)
60,707
(133)
Total
526,568
(289)
17,464
(287)
6,498
(3,212)
550,530
(3,788)
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 $80 mill
ion (31 December 2022: $28 m
ill
ion) or
ig
inated cred
it-impa
ired debt secur
it
ies w
ith impa
irment of $14 m
ill
ion (31 December 2022:
$13 mill
ion)
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
66
Risk profile continued
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
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
bills
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
4
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)
4,113
(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 or
ig
inated cred
it-impa
ired debt secur
it
ies and $13 m
ill
ion
impa
irment
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
67
Risk profile continued
Company
2023
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
52,756
–
52,756
2
–
2
–
–
–
52,758
–
52,758
Loans and
advances to
banks (amortised
cost)
9,849
(1)
9,848
286
(1)
285
6
(4)
2
10,141
(6)
10,135
Loans and
advances to
customers
(amortised cost)
70,343
(89)
70,254
4,077
(80)
3,997
3,761
(2,129)
1,632
78,181
(2,298)
75,883
Debt securit
ies
and other elig
ible
bills
5
92,038
(23)
315
–
76
(56)
92,429
(79)
Amortised cost
38,053
(11)
38,042
–
–
–
76
(56)
20
38,129
(67)
38,062
FVOCI
2
53,985
(11)
315
–
–
–
54,300
(11)
Accrued income
(amortised cost)
4
1,151
–
1,151
–
–
–
–
–
–
1,151
–
1,151
Assets held for
sale
52
–
52
–
–
–
–
–
–
52
–
52
Other assets
16,990
–
16,990
–
–
–
–
–
–
16,990
–
16,990
Undrawn
commitments
3
65,255
(15)
3,752
(18)
–
–
69,007
(33)
Financ
ial
guarantees, trade
credits and
irrevocable letter
of credits
3
47,186
(4)
1,886
(8)
514
(87)
49,586
(99)
Total
6
355,620
(132)
10,318
(107)
4,357
(2,276)
370,295
(2,515)
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 $25 mill
ion (31 December 2022: $28 m
ill
ion) or
ig
inated cred
it-impa
ired debt secur
it
ies w
ith impa
irment of $14 m
ill
ion (31 December 2022:
$13 mill
ion)
6
Excludes 'Amounts due from subsid
iary undertak
ings and other related parties' of $10,053 mill
ion. The amounts are held w
ith
in stage 1 and rated as 'strong' at
31 December 2023 and is net of an expected credit loss of $20.4 mill
ion
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
68
Risk profile continued
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
bills
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
4
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)
Total
6
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 gross includes $28 mill
ion or
ig
inated cred
it-impa
ired debt secur
it
ies and $13 m
ill
ion
impa
irment
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 2022 and is net of an expected credit loss of $5 mill
ion
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
69
Risk profile continued
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.
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
5
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+
2
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+
3
0.426 to 15.75
Class II and Class III
Loans past due till 29 days
Higher risk
Grade 12
CCC+/C
4
15.751 to 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
Commercial real estate collateral. Class IV covers margin trading facil
it
ies
2
Banks’ rating: AAA/AA+ to BB+. Sovereign’s rating: AAA to BB+
3
Banks’ rating: BB to “CCC+ to C”. Sovereigns’ rating: BB+/BB to B-/CCC+
4
Banks’ rating: CCC+ to C. Sovereigns’ rating: CCC+ to “CCC+ to C”
5
Medium enterprise clients with
in Bus
iness Banking are managed using the same internal credit grades as CCIB
The table below 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.
> Further details can be found in the ‘Summary of performance in 2023’ in pages 61 to 62.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
70
Risk profile continued
Loans and advances by client segment (audited)
Group
Amortised cost
2023
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
22,210
77,513
46,378
235
22,592
146,718
113,301
57,505
• Strong
14,756
55,407
42,362
232
22,254
120,255
104,198
37,642
• Satisfactory
7,454
22,106
4,016
3
338
26,463
9,103
19,863
Stage 2
537
5,696
994
2
965
7,657
4,596
2,530
• Strong
53
862
659
–
–
1,521
947
801
• Satisfactory
211
3,955
100
–
–
4,055
3,168
1,472
• Higher risk
273
879
235
2
965
2,081
481
257
Of which (stage 2):
•
Less than 30 days past due
–
78
100
–
–
178
–
–
•
More than 30 days past due
–
10
235
2
–
247
–
–
Stage 3, credit-impa
ired financial assets
74
3,887
1,064
2
224
5,177
2
672
Gross balance¹
22,821
87,096
48,436
239
23,781
159,552
117,899
60,707
Stage 1
(3)
(68)
(123)
(7)
–
(198)
(20)
(8)
• Strong
(2)
(26)
(80)
(7)
–
(113)
(8)
(1)
• Satisfactory
(1)
(42)
(43)
–
–
(85)
(12)
(7)
Stage 2
(9)
(133)
(59)
–
(1)
(193)
(27)
(13)
• Strong
–
(11)
(22)
–
–
(33)
(3)
–
• Satisfactory
(2)
(64)
(7)
–
–
(71)
(15)
(6)
• Higher risk
(7)
(58)
(30)
–
(1)
(89)
(9)
(7)
Of which (stage 2):
•
Less than 30 days past due
–
(1)
(7)
–
–
(8)
–
–
•
More than 30 days past due
–
(1)
(30)
–
–
(31)
–
–
Stage 3, credit-impa
ired financial assets
(6)
(2,362)
(639)
(2)
(15)
(3,018)
–
(112)
Total credit impa
irment
(18)
(2,563)
(821)
(9)
(16)
(3,409)
(47)
(133)
Net carrying value
22,803
84,533
47,615
230
23,765
156,143
Stage 1
0.0%
0.1%
0.3%
3.0%
0.0%
0.1%
0.0%
0.0%
• Strong
0.0%
0.0%
0.2%
3.0%
0.0%
0.1%
0.0%
0.0%
• Satisfactory
0.0%
0.2%
1.1%
0.0%
0.0%
0.3%
0.1%
0.0%
Stage 2
1.7%
2.3%
5.9%
0.0%
0.1%
2.5%
0.6%
0.5%
• Strong
0.0%
1.3%
3.3%
0.0%
0.0%
2.2%
0.3%
0.0%
• Satisfactory
0.9%
1.6%
7.0%
0.0%
0.0%
1.8%
0.5%
0.4%
• Higher risk
2.6%
6.6%
12.8%
0.0%
0.1%
4.3%
1.9%
2.7%
Of which (stage 2):
•
Less than 30 days past due
0.0%
1.3%
7.0%
0.0%
0.0%
4.5%
0.0%
0.0%
•
More than 30 days past due
0.0%
10.0%
12.8%
0.0%
0.0%
12.6%
0.0%
0.0%
Stage 3, credit-impa
ired financial assets
8.1%
60.8%
60.1%
100.0%
6.7%
58.3%
0.0%
16.7%
Cover ratio
0.1%
2.9%
1.7%
3.8%
0.1%
2.1%
0.0%
0.2%
Fair value through profit or loss
Performing
28,318
45,266
–
–
–
45,266
–
–
• Strong
23,954
27,667
–
–
–
27,667
–
–
• Satisfactory
4,364
17,536
–
–
–
17,536
–
–
• Higher risk
–
63
–
–
–
63
–
–
Defaulted (CG13-14)
–
18
–
–
–
18
–
–
Gross balance (FVTPL)
2
28,318
45,284
–
–
–
45,284
–
–
Net carrying value (incl FVTPL)
51,121
129,817
47,615
230
23,765
201,427
–
–
1
Loans and advances includes reverse repurchase agreements and other sim
ilar secured lend
ing of $13,827 mill
ion under Customers and of $1,653 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 $42,096 mill
ion under Customers and of $26,053 m
ill
ion under Banks,
held at fair value through profit or loss
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
71
Risk profile continued
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 balance
1
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
65
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
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 and loss.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
72
Risk profile continued
Loans and advances by client segment (audited)
Company
Amortised cost
2023
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
9,849
57,077
12,096
1,170
70,343
65,255
47,186
• Strong
5,987
42,254
9,812
867
52,933
58,451
30,160
• Satisfactory
3,862
14,823
2,284
303
17,410
6,804
17,026
Stage 2
286
3,819
258
–
4,077
3,752
1,886
• Strong
54
437
119
–
556
700
679
• Satisfactory
201
2,954
50
–
3,004
2,690
1,098
• Higher risk
31
428
89
–
517
362
109
Of which (stage 2):
•
Less than 30 days past due
–
69
50
–
119
–
–
•
More than 30 days past due
–
8
89
–
97
–
–
Stage 3, credit-impa
ired financial assets
6
2,907
630
224
3,761
–
514
Gross balance¹
10,141
63,803
12,984
1,394
78,181
69,007
49,586
Stage 1
(1)
(35)
(54)
–
(89)
(15)
(4)
• Strong
(1)
(17)
(35)
–
(52)
(6)
–
• Satisfactory
–
(18)
(19)
–
(37)
(9)
(4)
Stage 2
(1)
(52)
(28)
–
(80)
(18)
(8)
• Strong
(1)
(3)
(3)
–
(6)
(2)
–
• Satisfactory
–
(29)
(2)
–
(31)
(11)
(6)
• Higher risk
–
(20)
(23)
–
(43)
(5)
(2)
Of which (stage 2):
•
Less than 30 days past due
–
–
(2)
–
(2)
–
–
•
More than 30 days past due
–
(1)
(23)
–
(24)
–
–
Stage 3, credit-impa
ired financial assets
(4)
(1,715)
(399)
(15)
(2,129)
–
(87)
Total credit impa
irment
(6)
(1,802)
(481)
(15)
(2,298)
(33)
(99)
Net carrying value
10,135
62,001
12,503
1,379
75,883
Stage 1
0.0%
0.1%
0.4%
0.0%
0.1%
0.0%
0.0%
• Strong
0.0%
0.0%
0.4%
0.0%
0.1%
0.0%
0.0%
• Satisfactory
0.0%
0.1%
0.8%
0.0%
0.2%
0.1%
0.0%
Stage 2
0.3%
1.4%
10.9%
0.0%
2.0%
0.5%
0.4%
• Strong
1.9%
0.7%
2.5%
0.0%
1.1%
0.3%
0.0%
• Satisfactory
0.0%
1.0%
4.0%
0.0%
1.0%
0.4%
0.5%
• Higher risk
0.0%
4.7%
25.8%
0.0%
8.3%
1.4%
1.8%
Of which (stage 2):
•
Less than 30 days past due
0.0%
0.0%
4.0%
0.0%
1.7%
0.0%
0.0%
•
More than 30 days past due
0.0%
12.5%
25.8%
0.0%
24.7%
0.0%
0.0%
Stage 3, credit-impa
ired financial assets
66.7%
59.0%
63.3%
6.7%
56.6%
0.0%
16.9%
Cover ratio
0.1%
2.8%
3.7%
1.1%
2.9%
0.0%
0.2%
Fair value through profit or loss
Performing
25,655
44,013
–
–
44,013
–
–
• Strong
21,448
26,803
–
–
26,803
–
–
• Satisfactory
4,207
17,210
–
–
17,210
–
–
• Higher risk
–
–
–
–
–
–
–
Defaulted (CG13-14)
–
2
–
–
2
–
–
Gross balance (FVTPL)
2
25,655
44,015
–
–
44,015
–
–
Net carrying value (incl FVTPL)
35,790
106,016
12,503
1,379
119,898
–
–
1
Loans and advances include reverse repurchase agreements and other sim
ilar secured lend
ing for $12,212 mill
ion under Customers and for $554 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 $41,393 mill
ion under Customers and for $23,411 m
ill
ion under Banks,
held at fair value through profit and loss
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
73
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
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 of $15,071 mill
ion under Customers and of $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 of $37,858 mill
ion under Customers and of $21,199 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 2023
74
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 net change in exposures reflect repayments although stage 2 may include new facil
it
ies
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 PD, LGD and EAD of assets during the year,
which includes the impact of releasing provis
ions over the term to matur
ity. 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 $9.7 bill
ion to $440 b
ill
ion (31 December 2022: $430 b
ill
ion). CCIB exposure
increased by
$13.7 bill
ion to $238 b
ill
ion (31 December 2022: $224 b
ill
ion) due to an
increase in off-balance sheet exposures from new
business. CPBB exposure increased by $3.2 bill
ion to $78 b
ill
ion (31 December 2022: $75 b
ill
ion). Debt secur
it
ies decreased by
$6.8 bill
ion to $100 b
ill
ion (31 December 2022: $107 b
ill
ion) due to act
ions taken to manage liqu
id
ity.
Stage 1 provis
ions decreased by $75 m
ill
ion to $255 m
ill
ion (31 December 2022: $330 m
ill
ion). CCIB decreased by $33 m
ill
ion to
$91 mill
ion (31 December 2022: $124 m
ill
ion) due to exposure reduct
ions, which was partly offset by model updates. CPBB
decreased by $55 mill
ion to $129 m
ill
ion (31 December 2022: $184 m
ill
ion), due to the release of the judgemental non-l
inear
ity
post model adjustment and the full release of the remain
ing COVID-19 overlays, both of wh
ich are reported in ‘Changes in risk
parameters‘.
Stage 2 gross exposures decreased by $3 bill
ion to $17 b
ill
ion (31 December 2022: $20 b
ill
ion), dr
iven by CCIB. Debt securit
ies
decreased by $3.6 bill
ion to $1.9 b
ill
ion (31 December 2022: $5.5 b
ill
ion) due to the cont
inued management of Pakistan
Sovereign exposures following its sovereign rating downgrade.
Stage 2 provis
ions decreased by $73 m
ill
ion to $276 m
ill
ion (31 December 2022: $349 m
ill
ion). CPBB prov
is
ions decreased by
$1 mill
ion to $55 m
ill
ion (31 December 2022: $56 m
ill
ion). Debt secur
it
ies prov
is
ions decreased by $56 m
ill
ion to $34 m
ill
ion
(31 December 2022: $90 mill
ion) largely dr
iven by exposure reductions and shorter tenor for Pakistan Sovereign exposures.
CCIB decreased by $22 mill
ion to $186 m
ill
ion (31 December 2022: $208 m
ill
ion) due to portfol
io movements, and model
updates. This was partly offset by clients downgrades, as a result of a further Pakistan Sovereign rating downgrade during
the year.
The impact of model and methodology updates in 2023 reduced stage 1 and 2 provis
ions by $11 m
ill
ion
in CCIB, $9 mill
ion
in
Central and other items, and $2 mill
ion
in CPBB. Stage 3 exposures decreased by $1.1 bill
ion to $6 b
ill
ion (31 December 2022:
$7 bill
ion), wh
ich was primar
ily dr
iven by repayments and write-offs in CCIB. Stage 3 provis
ions decreased by $0.6 b
ill
ion to
$3 bill
ion (31 December 2022: $4 b
ill
ion), wh
ich were also due to repayments and write-offs in CCIB.
Risk profile continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
75
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
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
78
(96)
39
21
Risk profile continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
76
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
2023
430,079
(330) 429,749
20,469
(349)
20,120
7,173
(3,831)
3,342
457,721
(4,510)
453,211
Transfers to
stage 1
11,184
(515)
10,669
(11,174)
515
(10,659)
(10)
–
(10)
–
–
–
Transfers to
stage 2
(26,645)
130
(26,515)
26,784
(138)
26,646
(139)
8
(131)
–
–
–
Transfers to
stage 3
(19)
1
(18)
(1,523)
132
(1,391)
1,542
(133)
1,409
–
–
–
Net change in
exposures
20,964
(150)
20,814
(14,050)
19
(14,031)
(1,476)
460
(1,016)
5,438
329
5,767
Net
remeasurement
from stage
changes
–
48
48
–
(153)
(153)
–
(61)
(61)
–
(166)
(166)
Changes in risk
parameters
–
160
160
–
53
53
–
(503)
(503)
–
(290)
(290)
Write-offs
–
–
–
–
–
–
(666)
666
–
(666)
666
–
Interest due but
unpaid
–
–
–
–
–
–
(19)
19
–
(19)
19
–
Discount unwind
–
–
–
–
–
–
–
139
139
–
139
139
Exchange
translation
differences and
other
movements¹
4,263
401
4,664
(3,325)
(355)
(3,680)
(315)
39
(276)
623
85
708
As at 31
December 2023²
439,826
(255) 439,571
17,181
(276)
16,905
6,090
(3,197)
2,893 463,097
(3,728) 459,369
Income
statement ECL
(charge)/
release
3
58
(81)
(104)
(127)
Recoveries of
amounts
previously
written off
–
–
185
185
Total credit
impa
irment
(charge)/
release
4
58
(81)
81
58
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 gross balance of $87,433 mill
ion (31 December 2022:
$81,078 mill
ion) and total cred
it impa
irment of $60 m
ill
ion (31 December 2022: $91 m
ill
ion)
3
Does not include release relating to Other assets (31 December 2022: $1 mill
ion)
4 Reported basis
5
Stage 3 gross includes $80 mill
ion (31 December 2022: $28 m
ill
ion) and ECL $14 m
ill
ion (31 December 2022: $13 m
ill
ion) or
ig
inated cred
it-impa
ired debt secur
it
ies
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 2023
77
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 3
2
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
1
6
(97)
(35)
(126)
Recoveries of amounts
previously written off
–
–
–
–
Total credit
impa
irment (charge)/
release
6
(97)
(35)
(126)
As at 1 January 2023
106,886
(20) 106,866
5,455
(90)
5,365
144
(106)
38
112,485
(216) 112,269
Transfers to stage 1
371
(65)
306
(371)
65
(306)
–
–
–
–
–
–
Transfers to stage 2
(884)
14
(870)
884
(14)
870
–
–
–
–
–
–
Transfers to stage 3
–
–
–
(16)
–
(16)
16
–
16
–
–
–
Net change in
exposures
(10,326)
(20) (10,346)
(1,899)
(43)
(1,942)
7
–
7
(12,218)
(63) (12,281)
Net remeasurement
from stage changes
–
5
5
–
(10)
(10)
–
–
–
–
(5)
(5)
Changes in risk
parameters
–
32
32
–
90
90
–
(4)
(4)
–
118
118
Write-offs
–
–
–
–
–
–
–
–
–
–
–
–
Interest due but
unpaid
–
–
–
–
–
–
–
–
–
–
–
–
Exchange translation
differences and other
movements
1
4,045
28
4,073
(2,192)
(32)
(2,224)
(2)
49
47
1,851
45
1,896
As at 31 December
2023
100,092
(26) 100,066
1,861
(34)
1,827
165
(61)
104
102,118
(121) 101,997
Income statement ECL
(charge)/release
17
37
(4)
50
Recoveries of amounts
previously written off
–
–
–
–
Total credit
impa
irment (charge)/
release
17
37
(4)
50
1
Includes fair value adjustments and amortisat
ion on debt secur
it
ies
2
Stage 3 gross includes $80 mill
ion (31 December 2022: $28 m
ill
ion) or
ig
inated cred
it-impa
ired debt secur
it
ies w
ith impa
irment of $14 m
ill
ion (31 December 2022:
$13 mill
ion)
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 $102,040 mill
ion
(31 December 2022: $112,425 mill
ion). Refer to the Analys
is of financ
ial
instrument by stage table on page 65
Risk profile continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
78
All segments – Company (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
2022
254,531
(210) 254,321
20,578
(311) 20,267
5,810
(3,238)
2,572
280,919
(3,759) 277,160
fresh
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
54
86
(25)
115
Recoveries of
amounts previously
written off
–
–
67
67
Total credit
impa
irment
(charge)/release
54
86
42
182
Risk profile continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
79
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
2023
280,763
(195) 280,568
12,812
(120)
12,692
5,435
(2,789)
2,646
299,010
(3,104) 295,906
Transfers to stage 1
8,709
(222)
8,487
(8,699)
222
(8,477)
(10)
–
(10)
–
–
–
Transfers to stage
2
(17,712)
43
(17,669)
17,784
(48)
17,736
(72)
5
(67)
–
–
–
Transfers to stage
3
–
–
–
(767)
117
(650)
767
(117)
650
–
–
–
Net change in
exposures
8,702
(56)
8,646
(9,095)
12
(9,083)
(1,088)
273
(815)
(1,481)
229
(1,252)
Net
remeasurement
from stage
changes
–
–
–
–
(16)
(16)
–
(32)
(32)
–
(48)
(48)
Changes in risk
parameters
–
64
64
–
93
93
–
(330)
(330)
–
(173)
(173)
Write-offs
–
–
–
–
–
–
(435)
435
–
(435)
435
–
Interest due but
unpaid
–
–
–
–
–
–
(154)
154
–
(154)
154
–
Discount unwind
–
–
–
–
–
–
–
139
139
–
139
139
Exchange
translation
differences and
other movements¹
4,209
234
4,443
(1,719)
(367) (2,086)
(86)
(14)
(100)
2,404
(147)
2,257
As at 31 December
2023²
284,671
(132) 284,539
10,316
(107) 10,209
4,357
(2,276)
2,081 299,344
(2,515) 296,829
Income statement
ECL (charge)/
release
3
8
89
(89)
8
Recoveries of
amounts previously
written off
–
–
73
73
Total credit
impa
irment
(charge)/release
4
8
89
(16)
81
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 gross balance of $70,951 mill
ion (31 December 2022:
$61,408 mill
ion) and total cred
it impa
irment (31 December 2022: $30 m
ill
ion)
3
Does not include release relating to Other assets (31 December 2022: $1 mill
ion)
4 Reported basis
5
Stage 3 gross includes $25 mill
ion (31 December 2022: $28 m
ill
ion) and ECL $14 m
ill
ion (31 December 2022: $13 m
ill
ion) or
ig
inated cred
it-impa
ired debt secur
it
ies
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 2023
80
Of which movement of debt securit
ies, alternat
ive tier one and other elig
ible b
ills – Company (audited)
Amortised cost and FVOCI
Stage 1
Stage 2
Stage 3
2
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
As at 1 January 2023
93,243
(20) 93,223
1,785
(1)
1,784
78
(50)
28
95,106
(71) 95,035
Transfers to stage 1
277
(8)
269
(277)
7
(270)
–
–
–
–
(1)
(1)
Transfers to stage 2
(316)
–
(316)
316
–
316
–
–
–
–
–
–
Transfers to stage 3
–
–
–
–
–
–
–
–
–
–
–
–
Net change in
exposures
(5,315)
(12)
(5,327)
(10)
–
(10)
–
–
–
(5,325)
(12)
(5,337)
Net remeasurement
from stage changes
–
–
–
–
2
2
–
–
–
–
2
2
Changes in risk
parameters
–
14
14
–
1
1
–
–
–
–
15
15
Write-offs
–
1
1
–
–
–
–
–
–
–
1
1
Interest due but unpaid
–
–
–
–
–
–
–
–
–
–
–
–
Exchange translation
differences and other
movements
1
4,149
2
4,151
(1,499)
(9)
(1,508)
(2)
(6)
(8)
2,648
(13)
2,635
As at 31 December 2023
92,038
(23)
92,015
315
–
315
76
(56)
20
92,429
(79) 92,350
Income statement ECL
(charge)/release
2
3
–
5
Recoveries of amounts
previously written off
–
–
–
–
Total credit impa
irment
(charge)/release
2
3
–
5
1
Includes fair value adjustments and amortisat
ion on debt secur
it
ies
2
Stage 3 gross includes $25 mill
ion (31 December 2022: $28 m
ill
ion) and ECL $14 m
ill
ion (31 December 2022: $13 m
ill
ion) or
ig
inated cred
it-impa
ired debt secur
it
ies
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 $92,362 mill
ion
(31 December 2022: $95,049 mill
ion). Refer to the Analys
is of financ
ial
instrument by stage table on page 67
Risk profile continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
81
Credit impa
irment charge (aud
ited)
The table below analyses credit impa
irment charges or releases of the ongo
ing business portfolio and restructuring business
portfolio for the year ended 31 December 2023.
> Further details can be found in the ‘Summary of performance in 2023’ in pages 61 to 62.
2023
2022
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
2
(155)
(153)
(71)
(115)
(186)
Consumer, Private & Business Banking
51
77
128
(19)
37
18
Ventures
7
6
13
2
–
2
Central & other items
(42)
8
(34)
104
37
141
Credit impa
irment charge/(release)
18
(64)
(46)
16
(41)
(25)
Restructuring business portfolio
Others
5
(17)
(12)
–
3
3
Credit impa
irment charge/(release)
5
(17)
(12)
–
3
3
Total credit impa
irment charge/(release)
23
(81)
(58)
16
(38)
(22)
1
Underlying credit impa
irment has been restated for the removal of (
i) exit markets and businesses in AME and (i
i) Av
iat
ion F
inance. No change to reported credit
impa
irment
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 $302 mill
ion to $570 m
ill
ion (31 December 2022: $872 m
ill
ion) largely due to repayments.
Net non-performing forborne loans decreased by $191 mill
ion to $539 m
ill
ion (31 December 2022: $730 m
ill
ion) wh
ile
performing forborne loans reduced by $111 mill
ion to $31 m
ill
ion (31 December 2022: $142 m
ill
ion).
The table below presents loans with forbearance measures by segment.
Risk profile continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
82
Group
Amortised cost
2023
2022
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
1,218
194
–
1,412
1,596
279
–
1,875
Credit impa
irment (stage 1
and 2)
–
(2)
–
(2)
(2)
–
–
(2)
Credit impa
irment (stage
3)
(755)
(85)
–
(840)
(870)
(131)
–
(1,001)
Net carrying value
463
107
–
570
724
148
–
872
Included with
in the above
table
Gross performing forborne
loans
–
33
–
33
90
54
–
144
Modif
icat
ion of terms and
condit
ions
1
–
33
–
33
90
54
–
144
Refinancing
2
–
–
–
–
–
–
–
–
Impairment provis
ions
–
(2)
–
(2)
(2)
–
–
(2)
Modif
icat
ion of terms and
condit
ions
1
–
(2)
–
(2)
(2)
–
–
(2)
Refinancing
2
–
–
–
–
–
–
–
–
Net performing forborne
loans
–
31
–
31
88
54
–
142
Collateral
–
31
–
31
7
56
–
63
Gross non-performing
forborne loans
1,218
161
–
1,379
1,506
225
–
1,731
Modif
icat
ion of terms and
condit
ions
1
1,210
161
–
1,371
1,463
225
–
1,688
Refinancing
2
8
–
–
8
43
–
–
43
Impairment provis
ions
(755)
(85)
–
(840)
(870)
(131)
–
(1,001)
Modif
icat
ion of terms and
condit
ions
1
(747)
(85)
–
(832)
(827)
(131)
–
(958)
Refinancing
2
(8)
–
–
(8)
(43)
–
–
(43)
Net non-performing
forborne loans
463
76
–
539
636
94
–
730
Collateral
153
42
–
195
204
53
–
257
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 borrower in credit stress, such that they are refinanced and can pay other debt contracts that they were unable to honour
Risk profile continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
83
Risk profile continued
Company
Amortised cost
2023
2022
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
904
25
929
1,186
36
1,222
Credit impa
irment (stage 1 and 2)
–
(1)
(1)
(1)
–
(1)
Credit impa
irment (stage 3)
(549)
(3)
(552)
(629)
(2)
(631)
Net carrying value
355
21
376
556
34
590
Included with
in the above table
Gross performing forborne loans
–
17
17
81
23
104
Modif
icat
ion of terms and condit
ions
1
–
17
17
81
23
104
Refinancing
2
–
–
–
–
–
–
Impairment provis
ions
–
(1)
(1)
(1)
–
(1)
Modif
icat
ion of terms and condit
ions
1
–
(1)
(1)
(1)
–
(1)
Refinancing
2
–
–
–
–
–
–
Net performing forborne loans
–
16
16
80
23
103
Collateral
–
18
18
7
24
31
Gross non-performing forborne loans
904
8
912
1,105
13
1,118
Modif
icat
ion of terms and condit
ions
1
897
8
905
1,064
13
1,077
Refinancing
2
7
–
7
41
–
41
Impairment provis
ions
(549)
(3)
(552)
(629)
(2)
(631)
Modif
icat
ion of terms and condit
ions
1
(542)
(3)
(545)
(588)
(2)
(590)
Refinancing
2
(7)
–
(7)
(41)
–
(41)
Net non-performing forborne loans
355
5
360
476
11
487
Collateral
124
3
127
148
7
155
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 borrower in credit stress, such that they are refinanced and can pay other debt contracts that they were unable to honour
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.
> Further informat
ion on collateral
is provided in the 'Credit Risk mit
igat
ion' section in pages 84 to 88.
> Further details on stage 3 loans and advances and cover ratio can be found in the ‘Summary of performance in 2023’ in
pages 61 to 62.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
84
Risk profile continued
Group
Amortised cost
2023
2022
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
Ventures
$mill
ion
Central &
Others
$mill
ion
Total
$mill
ion
Gross credit-impa
ired
3,887
1,064
2
224
5,177
4,859
1,095
–
248
6,202
Credit impa
irment
provis
ions
(2,362)
(639)
(2)
(15)
(3,018)
(2,904)
(655)
–
(18)
(3,577)
Net credit-impa
ired
1,525
425
–
209
2,159
1,955
440
–
230
2,625
Cover ratio
61%
60%
100%
7%
58%
60%
60%
–
7%
58%
Collateral ($ mill
ion)
352
393
–
–
745
628
411
–
–
1,039
Cover ratio (after
collateral)
70%
97%
100%
7%
73%
73%
97%
–
7%
74%
Company
Amortised cost
2023
2022
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
$mill
ion
Gross credit-impa
ired
2,907
630
224
3,761
3,810
627
248
4,685
Credit impa
irment
provis
ions
(1,715)
(399)
(15)
(2,129)
(2,201)
(402)
(18)
(2,621)
Net credit-impa
ired
1,192
231
209
1,632
1,609
225
230
2,064
Cover ratio
59%
63%
7%
57%
58%
64%
7%
56%
Collateral ($ mill
ion)
293
217
–
510
480
209
–
689
Cover ratio (after
collateral)
69%
98%
7%
70%
70%
97%
7%
71%
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 lend
ing
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.
CCIB collateral decreased by $2 bill
ion to $25.7 b
ill
ion (31 December 2022: $27.8 b
ill
ion) and CPBB collateral
increased by
$2 bill
ion to $30 b
ill
ion (31 December 2022: $28 b
ill
ion). Total collateral for Central and other
items remained stable at
$2.4 bill
ion (31 December 2022: $2.3 b
ill
ion). However, collateral for stage 2 Central and other
items increased by $1 bill
ion
(31 December 2022: nil) due to short term reverse repo with a Central Bank in the Africa and Middle East region.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
85
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
2023
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 Bank
ing
1
107,336
6,091
1,593
25,744
2,043
352
81,592
4,048
1,241
Consumer, Private &
Business Banking
47,615
935
425
29,960
619
393
17,655
316
32
Ventures
230
2
–
–
–
–
230
2
–
Central & other items
23,765
964
209
2,369
964
–
21,396
–
209
Total
178,946
7,992
2,227
58,073
3,626
745
120,873
4,366
1,482
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 Bank
ing
1
114,862
6,900
1,989
27,754
2,286
628
87,108
4614
1,361
Consumer, Private &
Business Banking
46,013
927
440
28,015
661
411
17,998
266
29
Ventures
64
1
–
–
–
–
64
1
–
Central & other items
24,570
–
230
2,287
–
–
22,283
0
230
Total
185,509
7,828
2,659
58,056
2,947
1,039
127,453
4,881
1,620
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 2023
86
Risk profile continued
Company
Amortised cost
2023
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 Bank
ing
1
72,136
4,052
1,194
19,783
1,343
293
52,353
2,709
901
Consumer, Private &
Business Banking
12,503
230
231
6,401
94
217
6,102
136
14
Central & other items
1,379
–
209
750
–
–
629
–
209
Total
86,018
4,282
1,634
26,934
1,437
510
59,084
2,845
1,124
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 Bank
ing
1
84,468
4,928
1,610
23,245
1,822
480
61,223
3106
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
0
230
Total
99,159
5,346
2,065
30,411
2,103
689
68,748
3,243
1,376
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 2023
87
Risk profile continued
Collateral – CCIB (audited)
Our underwrit
ing standards encourage tak
ing specif
ic charges on assets and we cons
istently seek high-quality, investment-
grade collateral.
82 per cent (31 December 2022: 78 per cent) of tangible collateral excluding reverse repurchase agreements and financ
ial
guarantees held comprises physical assets or is property based, with the remainder held in cash. Overall collateral decreased
by $2 bill
ion to $26 b
ill
ion (31 December 2022: $28 b
ill
ion) ma
inly due to a decrease in reverse repos.
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 the 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
2023
$mill
ion
2022
$mill
ion
Maximum exposure
107,336
114,862
Property
3,486
3,276
Plant, machinery and other stock
896
1,141
Cash
1,497
1,959
Reverse repos
13,127
14,213
AA- to AA+
2
395
–
A- to A+
2
10,548
10,459
BBB- to BBB+
855
1,485
Lower than BBB-
169
–
Unrated
1,160
2,269
Financ
ial guarantees and
insurance
4,169
4,492
Commodit
ies
5
38
Ships and aircraft
2,564
2,635
Total value of collateral
1
25,744
27,754
Net exposure
81,592
87,108
Company
Corporate, Commercial & Institut
ional Bank
ing
Amortised cost
2023
$mill
ion
2022
$mill
ion
Maximum exposure
72,136
84,468
Property
2,186
2,143
Plant, machinery and other stock
602
801
Cash
953
1,355
Reverse repos
12,016
13,504
AA- to AA+
2
395
–
A- to A+
2
10,548
10,459
BBB- to BBB+
21
822
Unrated
1,052
2,223
Financ
ial guarantees and
insurance
2,916
3,687
Commodit
ies
2
29
Ships and aircraft
1,108
1,726
Total value of collateral
1
19,783
23,245
Net exposure
52,353
61,223
1
Adjusted for over-collateralisat
ion based on the drawn and undrawn components of exposures
2
Prior year has been represented to provide granular credit ratings
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
88
Risk profile continued
Group
Collateral – CPBB – Group (audited)
In CPBB, fully secured products remained stable at 85 per cent of the total portfolio (31 December 2022: 86 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
2023
2022
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
40,483
198
6,934
47,615
39,493
160
6,360
46,013
Loans to ind
iv
iduals
Mortgages
24,750
–
–
24,750
24,695
–
–
24,695
CCPL
370
–
6,334
6,704
205
–
5,929
6,134
Auto
312
–
–
312
502
–
–
502
Secured wealth products
15,009
–
–
15,009
14,024
–
–
14,024
Other
42
198
600
840
67
160
431
658
Total collateral
1
29,960
28,015
Net exposure
2
17,655
17,998
Percentage of total loans
85%
0%
15%
86%
0%
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
Company
Collateral – CPBB (audited)
In CPBB, $9.5 bill
ion wh
ich equates to 76 per cent of the portfolio is fully secured (31 December 2022: 77 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
2023
2022
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
$mill
ion
Maximum exposure
9,531
156
2,816
12,503
8,940
131
2,590
11,661
Loans to ind
iv
iduals
Mortgages
5,345
–
–
5,345
4,848
–
–
4,848
CCPL
369
–
2,460
2,829
205
–
2,317
2,522
Auto
15
–
–
15
26
–
–
26
Secured wealth products
3,786
–
–
3,786
3,857
–
–
3,857
Other
16
156
356
528
4
131
273
408
Total collateral
1
6,401
5,394
Net exposure
2
6,102
6,267
Percentage of total loans
76%
1%
23%
77%
1%
22%
1
Collateral values are adjusted where appropriate in accordance with our risk mit
igat
ion policy and for the effect of over-collateralisat
ion
2
Amounts net of ECL
Mortgage loan-to-value ratios by geography (audited)
Loan-to-value (LTV) ratios measure the ratio of the current mortgage outstanding to the current fair value of the properties
on which they are secured.
In mortgages, the value of property held as security sign
ificantly exceeds the value of mortgage loans. The average LTV of
the overall mortgage portfolio is low at 45.8 per cent (31 December 2022: 45.8 per cent). Singapore, which represents 65.8 per
cent of the resident
ial mortgage portfol
io as at 31 December 2023, has an average LTV of 43.0 per cent.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
89
Risk profile continued
An analysis of LTV ratios by geography for the mortgage portfolio is presented in the table below.
Amortised cost
2023
Asia
%
Gross
Africa &
Middle East
%
Gross
Europe &
Americas
%
Gross
Total
%
Gross
Less than 50 per cent
51.2
51.1
31.0
49.6
50 per cent to 59 per cent
22.2
14.7
17.4
21.4
60 per cent to 69 per cent
15.0
13.7
33.9
16.4
70 per cent to 79 per cent
9.2
12.8
14.4
9.8
80 per cent to 89 per cent
2.1
3.9
2.5
2.2
90 per cent to 99 per cent
0.2
2.1
0.6
0.3
100 per cent and greater
0.2
1.7
0.3
0.3
Average portfolio loan-to-value
44.6
51.1
56.0
45.8
Loans to ind
iv
iduals – mortgages ($mill
ion)
21,324
1,183
2,243
24,750
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
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 2023 is $16.5 mill
ion (31 December 2022: $14.9 m
ill
ion).
2023
$mill
ion
2022
$mill
ion
Property, plant and equipment
10.5
9.6
Guarantees
6.0
5.3
Total
16.5
14.9
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 $3.5 bill
ion (31 December 2022: $5.1 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.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
90
Risk profile continued
Credit linked notes
The Group has issued credit linked notes for portfolio management purposes, referencing loan assets with a notional value of
$22.5 bill
ion (31 December 2022: $13.5 b
ill
ion). The Group cont
inues to hold the underlying assets for which the credit linked
notes provide mit
igat
ion. The credit linked notes are recognised as a financ
ial l
iab
il
ity at amortised cost on the balance sheet.
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 110).
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 segment remain predominantly short-term, with $56 bill
ion (31 December 2022: $62 b
ill
ion)
maturing in less than one year. 97 per cent (31 December 2022: 95 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 49 per cent (31 December 2022: 52 per cent) of the loans
maturing over five years, as mortgages constitute the major
ity of th
is portfolio.
Group
Amortised cost
2023
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
55,898
21,194
10,004
87,096
Consumer, Private & Business Banking
20,078
4,767
23,591
48,436
Ventures
198
41
–
239
Central & other items
23,725
56
–
23,781
Gross loans and advances to customers
99,899
26,058
33,595
159,552
Impairment provis
ions
(3,245)
(101)
(63)
(3,409)
Net loans and advances to customers
96,654
25,957
33,532
156,143
Net loans and advances to banks
22,029
773
1
22,803
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
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
91
Risk profile continued
Company
Amortised cost
2023
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
42,803
13,828
7,172
63,803
Consumer, Private & Business Banking
5,692
2,762
4,530
12,984
Central & other items
1,349
45
–
1,394
Gross loans and advances to customers
49,844
16,635
11,702
78,181
Impairment provis
ions
(2,202)
(54)
(42)
(2,298)
Net loans and advances to customers
47,642
16,581
11,660
75,883
Net loans and advances to banks
9,439
695
1
10,135
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
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
92
Risk profile continued
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.
Group
Amortised cost
2023
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
8,064
(9)
8,055
648
(22)
626
933
(527)
406
9,645
(558)
9,087
Manufacturing
10,639
(6)
10,633
491
(13)
478
541
(329)
212
11,671
(348)
11,323
Financ
ing,
insurance
and non-banking
24,376
(10) 24,366
169
(1)
168
79
(76)
3
24,624
(87) 24,537
Transport, telecom and
util
it
ies
8,846
(6)
8,840
1,583
(32)
1,551
481
(178)
303
10,910
(216) 10,694
Food and household
products
5,853
(15)
5,838
323
(7)
316
354
(261)
93
6,530
(283)
6,247
Commercial real estate
5,917
(9)
5,908
705
(13)
692
282
(170)
112
6,904
(192)
6,712
Min
ing and quarry
ing
3,795
(3)
3,792
132
(10)
122
147
(81)
66
4,074
(94)
3,980
Consumer durables
2,363
(2)
2,361
221
(20)
201
290
(271)
19
2,874
(293)
2,581
Construction
1,520
(1)
1,519
480
(8)
472
358
(326)
32
2,358
(335)
2,023
Trading companies &
distr
ibutors
355
–
355
10
–
10
102
(55)
47
467
(55)
412
Government
26,209
(4) 26,205
1,768
(5)
1,763
357
(33)
324
28,334
(42) 28,292
Other
2,168
(3)
2,165
131
(3)
128
187
(70)
117
2,486
(76)
2,410
Retail Products:
Mortgage
24,008
(7) 24,001
509
(3)
506
353
(110)
243
24,870
(120) 24,750
Credit Cards
3,310
(57)
3,253
120
(25)
95
42
(29)
13
3,472
(111)
3,361
Personal loans and
other unsecured lending
3,500
(48)
3,452
65
(19)
46
180
(105)
75
3,745
(172)
3,573
Auto
310
–
310
1
–
1
1
–
1
312
–
312
Secured wealth
products
14,663
(14) 14,649
258
(8)
250
435
(325)
110
15,356
(347) 15,009
Other
822
(4)
818
43
(4)
39
55
(72)
(17)
920
(80)
840
Net carrying value
(customers)¹
146,718
(198)146,520
7,657
(193)
7,464
5,177
(3,018)
2,159 159,552
(3,409) 156,143
1
Includes reverse repurchase agreements and other sim
ilar secured lend
ing held at amortised cost of $13,827 mill
ion
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
93
Risk profile continued
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 quarry
ing
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 2023
94
Risk profile continued
Company
Amortised cost
2023
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
5,560
(4)
5,556
475
(3)
472
648
(276)
372
6,683
(283)
6,400
Manufacturing
6,907
(3)
6,904
275
(4)
271
426
(283)
143
7,608
(290)
7,318
Financ
ing,
insurance
and non-banking
21,533
(4)
21,529
85
(1)
84
29
(26)
3
21,647
(31)
21,616
Transport, telecom and
util
it
ies
4,915
(4)
4,911
1,288
(18)
1,270
367
(110)
257
6,570
(132)
6,438
Food and household
products
3,640
(3)
3,637
58
(1)
57
190
(149)
41
3,888
(153)
3,735
Commercial real estate
4,560
(7)
4,553
288
(1)
287
257
(165)
92
5,105
(173)
4,932
Min
ing and quarry
ing
2,968
(1)
2,967
76
(7)
69
77
(73)
4
3,121
(81)
3,040
Consumer durables
1,811
(2)
1,809
95
(7)
88
260
(244)
16
2,166
(253)
1,913
Construction
1,127
(1)
1,126
305
(5)
300
293
(269)
24
1,725
(275)
1,450
Trading companies &
distr
ibutors
163
–
163
7
–
7
78
(38)
40
248
(38)
210
Government
3,688
(4)
3,684
794
(3)
791
357
(33)
324
4,839
(40)
4,799
Other
1,375
(2)
1,373
73
(2)
71
149
(64)
85
1,597
(68)
1,529
Retail Products:
Mortgage
5,160
(4)
5,156
72
(1)
71
191
(73)
118
5,423
(78)
5,345
Credit Cards
634
(14)
620
62
(11)
51
11
(8)
3
707
(33)
674
Personal loans and
other unsecured lending
2,125
(26)
2,099
41
(11)
30
38
(12)
26
2,204
(49)
2,155
Auto
15
–
15
–
–
–
–
–
–
15
–
15
Secured wealth
products
3,649
(7)
3,642
70
(3)
67
368
(291)
77
4,087
(301)
3,786
Other
513
(3)
510
13
(2)
11
22
(15)
7
548
(20)
528
Net carrying value
(customers)¹
70,343
(89) 70,254
4,077
(80)
3,997
3,761
(2,129)
1,632
78,181
(2,298) 75,883
1
Includes reverse repurchase agreements and other sim
ilar secured lend
ing held at amortised cost of $12,212 mill
ion
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
95
Risk profile continued
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
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 quarry
ing
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 2023
96
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 127. Total gross debt
securit
ies and other el
ig
ible b
ills decreased by $10.4 bill
ion to $102.1 b
ill
ion (31 December 2022: $112.5 b
ill
ion).
Stage 1 gross balance decreased by $6.8 bill
ion to $100.1 b
ill
ion (31 December 2022: $106.9 b
ill
ion), of wh
ich $3.4 bill
ion of the
decrease was from unrated.
Stage 2 gross balance decreased by $3.6 bill
ion to $1.9 b
ill
ion (31 December 2022: $5.5 b
ill
ion).
Stage 3 gross balance was broadly stable at $0.2 bill
ion (31 December 2022: $0.1 b
ill
ion).
Group
Amortised cost and FVOCI
2023
2022
Gross
$mill
ion
ECL
$mill
ion
Net
2
$mill
ion
Gross
$mill
ion
ECL
$mill
ion
Net
2
$mill
ion
Stage 1
100,092
(26)
100,066
106,886
(20)
106,866
AAA
56,555
(8)
56,547
65,729
(7)
65,722
AA- to AA+
11,386
(1)
11,385
14,767
(3)
14,764
A- to A+
9,155
(1)
9,154
6,311
(2)
6,309
BBB- to BBB+
13,100
(6)
13,094
7,387
(1)
7,386
Lower than BBB-
1,611
(2)
1,609
1,047
(2)
1,045
Unrated
8,285
(8)
8,277
11,645
(5)
11,640
– Strong
7,150
(7)
7,143
11,484
(1)
11,483
– Satisfactory
1,135
(1)
1,134
161
(4)
157
Stage 2
1,861
(34)
1,827
5,455
(90)
5,365
AAA
98
–
98
21
–
21
AA- to AA+
22
–
22
40
–
40
A- to A+
81
–
81
17
(1)
16
BBB- to BBB+
500
(7)
493
2,605
(15)
2,590
Lower than BBB-
893
(26)
867
2,485
(71)
2,414
Unrated
267
(1)
266
287
(3)
284
– Strong
217
–
217
26
(2)
24
– Satisfactory
50
(1)
49
–
–
–
– Higher risk
–
–
–
262
(1)
261
Stage 3
165
(61)
104
144
(106)
38
Lower than BBB-
73
(5)
68
66
(55)
11
Unrated
92
(56)
36
78
(51)
27
Gross balance¹
102,118
(121)
101,997
112,485
(216)
112,269
1
Stage 3 gross includes $80 mill
ion (31 December 2022: $28 m
ill
ion) or
ig
inated cred
it-impa
ired debt secur
it
ies w
ith impa
irment of $14 m
ill
ion (31 December 2022:
$13mill
ion)
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 $102,040 mill
ion
(31 December 2022: $112,425 mill
ion). Refer to the Analys
is of financ
ial
instrument by stage table on page 65
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
97
Risk profile continued
Company
Amortised cost and FVOCI
2023
2022
Gross
$mill
ion
ECL
$mill
ion
Net
2
$mill
ion
Gross
$mill
ion
ECL
$mill
ion
Net
2
$mill
ion
Stage 1
92,038
(23)
92,015
93,243
(20)
93,223
AAA
55,008
(7)
55,001
63,232
(7)
63,225
AA- to AA+
11,198
(1)
11,197
14,447
(3)
14,444
A- to A+
5,968
(1)
5,967
4,275
(2)
4,273
BBB- to BBB+
11,377
(5)
11,372
5,841
(5)
5,836
Lower than BBB-
1,431
(2)
1,429
1,047
(2)
1,045
Unrated
7,056
(7)
7,049
4,401
(1)
4,400
– Strong
6,508
(7)
6,501
4,331
–
4,331
– Satisfactory
548
–
548
70
(1)
69
Stage 2
315
–
315
1,785
(1)
1,784
AAA
98
–
98
21
–
21
AA- to AA+
–
–
–
40
–
40
A- to A+
–
–
–
17
(1)
16
BBB- to BBB+
–
–
–
1,504
–
1,504
Lower than BBB-
–
–
–
203
–
203
Unrated
217
–
217
–
–
–
– Strong
217
–
217
–
–
–
– Satisfactory
–
–
–
–
–
–
– Higher risk
–
–
–
–
–
–
Stage 3
76
(56)
20
78
(50)
28
Lower than BBB-
–
–
–
–
–
–
Unrated
76
(56)
20
78
(50)
28
Gross balance¹
92,429
(79)
92,350
95,106
(71)
95,035
1
Stage 3 gross includes $25 mill
ion (31 December 2022: $28 m
ill
ion) or
ig
inated cred
it-impa
ired debt secur
it
ies w
ith impa
irment of $14 m
ill
ion (31 December 2022:
$13mill
ion)
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 $92,362 mill
ion
(31 December 2022: $95,049 mill
ion). Refer to the Analys
is of financ
ial
instrument by stage table on page 67
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
98
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 cal
ibrat
ion of
forward-looking 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.
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.
The behavioural life for corporate overdraft facil
it
ies is 24 months.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
99
Risk profile continued
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 marginally in the near term. Global GDP is forecast to grow by just below 3 per cent in 2024. World GDP growth
averaged 3.7 per cent for the 10 years prior to COVID-19 (between 2010 and 2019). The world economy should be able to
achieve a soft landing after the most aggressive monetary tighten
ing cycle
in years, although risks abound. The lagged
impact of aggressive central bank tighten
ing
is likely to be felt most acutely in developed economies.
Linger
ing
inflat
ion and geopol
it
ical developments are r
isks to the global soft-landing scenario. The ongoing war in Ukraine,
conflicts in the Middle East, ongoing US-China tensions, and the November 2024 US election are key sources of geopolit
ical
and polit
ical r
isk; they come against a backdrop of increas
ing global fragmentat
ion. On the inflat
ion front,
it is unclear
whether it can slow on a sustained basis. Core inflat
ion has rema
ined sticky in some markets, signall
ing pers
istent underlying
pressures. Structural factors – includ
ing h
igher fiscal defic
its, the cost of the cl
imate transit
ion and recent under-
investment in
fossil fuels – could keep inflat
ion h
igher than during the pre-COVID period. Oil prices and geopolit
ical confl
ict are also sources
of upside inflat
ion r
isk.
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 the inherent
uncertainty in economic forecast, and the 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 2023 around econom
ic outcomes, the trends in
each macroeconomic variable modelled and the correlation in the unexplained movements around these trends. 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 page 100 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.
China’s GDP growth is expected to ease to 4.8 per cent in 2024 from over 5 per cent in 2023. This reflects a continued
contraction in the property sector, a negative contribut
ion from fore
ign trade, and low consumer and business confidence.
Growth in India is expected to ease to 6 per cent from 6.7 per cent in 2023 due to impact from pre-election uncertaint
ies,
tighter lending condit
ions and global recess
ion concerns. Growth in the US is expected to slow on tighter financ
ial and cred
it
condit
ions and as the
impact of previous interest rate increases by the central bank feed through to the economy. For sim
ilar
reasons Eurozone growth is expected to remain weak in 2024. The uncertainty over the ongoing war in Ukraine, conflicts in
the Middle East, has hit global investor and business confidence.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
100
Risk profile continued
In contrast, GDP growth for Singapore is expected to accelerate to just over 2.5 per cent in 2024 from 0.8 per cent last year.
Favourable base effects may boost exports, despite the soft global growth outlook. The global electronics and
semiconductor industry is showing signs of bottoming out. Although a strong rebound is not expected, inventory restocking
may provide a small boost to Singapore’s electronics sector. GDP growth for the UAE is also expected to improve and to
around 4 per cent from just below 3 per cent in 2023. Non-oil sectors are expected to hold up despite regional and global
headwinds. Growth in Abu Dhabi, in particular, will be supported by the rapid expansion in the financ
ial sector.
Brent crude oil prices are expected to average around $90 in 2024 compared to around $84 in 2022. Robust demand, in
particular from Asia, and decelerating non-OPEC supply growth should support prices at higher levels. They are expected to
remain elevated beyond this year. The five-year average oil price is $88.
2023 year-end forecasts⁷
China
⁵
UAE
Singapore⁶
India
5 yr
average
base
forecast
Base
forecast
quarterly
peak/
trough
Low
2
High
3
5 yr
average
base
forecast
Base
forecast
quarterly
peak/
trough
Low
2
High
3
5 yr
average
base
forecast
Base
forecast
quarterly
peak/
trough
Low
2
High
3
5 yr
average
base
forecast
Base
forecast
quarterly
peak/
trough
Low
2
High
3
GDP growth
(YoY%)
4.3
5.7/3.8
0.6
7.7
3.4
4.3/2.4
(1.3)
8.8
2.9
3.8/1.9
(2.4)
8.5
6.2
9.1/4.4
2.1
10.5
Unemployment
(%)
4.0
4.1/3.8
3.3
4.4
NA
NA
NA
NA
2.8
2.9/2.8
1.7
3.8
NA
NA
NA
NA
3 month interest
rates (%)
2.1
2.5/1.7
0.8
3.8
3.8
5.3/2.7
0.4
7.8
2.9
4.1/2.3
0.6
5.9
6.2
6.3/5.8
2.7
9.9
House prices
(YoY%)
4.6
7.2/1.5
(1.5)
12.0
2.6
8.4/1.9
(15.3)
19.1
2.2 3.9/(0.7)
(16.2)
19.2
6.1
6.5/4.7
(0.5)
13.8
2022 year-end forecasts
China
5
UAE
Singapore⁶
India
5 yr
average
base
forecast
Base
forecast
quarterly
peak/
trough
Low
2
High
3
5 yr
average
base
forecast
Base
forecast
quarterly
peak/
trough
Low
2
High
3
5 yr
average
base
forecast
Base
forecast
quarterly
peak/
trough
Low
2
High
3
5 yr
average
base
forecast
Base
forecast
quarterly
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
NA
NA
NA
NA
3.0
3.2/3.0
2.1
4.5
NA
NA
NA
NA
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
2023 year-end forecasts
2022 year-end forecasts
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
88.2
93.8/82.8
46.0
137.8
106.6
118.8/88.0
42.4
204.2
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 2024 to Q4 2028. The forward-looking simulat
ion starts from Q1 2024.
5
A judgemental management adjustment is held in respect of the China commercial real estate sector as discussed below.
6
Singapore unemployment rate covers the resident unemployment rate, which refers to cit
izens and permanent res
idents.
7
Data presented are those used in the calculation of ECL. These may differ slightly to forecasts presented elsewhere in the Financ
ial statements as they are finalised
before the period end.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
101
Risk profile continued
Judgemental adjustments
As at 31 December 2023, the Group held $33 mill
ion (31 December 2022: $41 m
ill
ion) of judgemental management overlays,
$11 mill
ion (31 December 2022: $9 m
ill
ion) of wh
ich relates to CCIB, $5 mill
ion (31 December 2022: $32 m
ill
ion) to CPBB and
$17 mill
ion (31 December 2022: n
il) to Central & Other.
As at 31 December 2023, judgemental post model adjustments to reduce ECL by a net $1 mill
ion (31 December 2022:
$16 mill
ion
increase in ECL) have been applied to certain CPBB models, primar
ily to adjust for temporary factors
impact
ing
modelled outputs. These will be released when these factors normalise.
Judgemental adjustments are re-assessed quarterly, are reviewed and approved by the IFRS 9 Impairment Committee and
will be released when the risks are no longer relevant.
Judgemental management overlays
Given the evolving nature of the risks in the China commercial real estate sector, a management overlay of $11 mill
ion
(31 December 2022: nil) has been taken in CCIB by estimat
ing the
impact of further deteriorat
ion to exposures
in this sector.
Overlays of $5 mill
ion (31 December 2022: $16 m
ill
ion) have also been appl
ied in CPBB to capture macroeconomic
environment challenges caused by sovereign defaults, the impact of which is not fully captured in the modelled outcomes.
An overlay of $17 mill
ion (31 December 2022: n
il) was applied in Central & Other due to a temporary market dislocat
ion
in the
Africa and Middle East region.
The remain
ing COVID-19 overlay
in CPBB of $21 mill
ion that was held at 31 December 2022 has been fully released
in 2023.
The stage 3 overlay in CCIB of $9 mill
ion that was held at 31 December 2022 follow
ing the Sri Lanka Sovereign default was
also fully released in 2023.
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 in particular to explore the current
uncertaint
ies over commod
ity prices. The first scenario explores a temporary spike (relative to base) in commodity prices,
inflat
ion and
interest rates in the near term from escalating tensions in Ukraine and the Middle East. The second more severe
scenario is based on the Bank of England’s most recent Annual Cyclical Scenario (ACS), which explores a persistent rise in
commodity prices, inflat
ion and
interest rates.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
102
Risk profile continued
Baseline
Global Stagflation
ACS
Five year
average
Peak/Trough
Five year
average
Peak/Trough
Five year
average
Peak/Trough
China GDP
4.3
5.7 / 3.8
3.7
6.2 / (0.8)
2.2
3.9 / (3.4)
China unemployment
4.0
4.1 / 3.8
5.3
6.4 / 3.8
5.3
5.7 / 4.6
China property prices
4.6
7.2 / 1.5
4.4
15.9 / (17.5)
(5.5)
9.2 / (16.3)
UAE GDP
3.4
4.3 / 2.4
3.1
3.8 / 2.4
1.9
3.4 / (1.3)
UAE property prices
2.6
8.4 / 1.9
2.2
7.4 / 1.4
(4.6)
8.3 / (15.8)
US GDP
1.7
2.3 / 0.8
1.4
2.7 / (1.3)
0.1
1.5 / (4.8)
Singapore GDP
2.9
3.8 / 1.9
2.7
5.0 / (1.6)
1.2
5.9 / (8.7)
India GDP
6.2
9.1 / 4.4
4.9
6.6 / 0.6
4.2
7.3 / (0.7)
Crude oil
88.2
93.8 / 82.8
95.3
152.9 / 82.8
118
147.9 / 83.6
The total reported stage 1 and 2 ECL provis
ions (
includ
ing both on and off-balance sheet
instruments) would be
approximately $70 mill
ion h
igher under the Global Stagflation scenario and $263 mill
ion h
igher under the ACS 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 4.0 per cent
in the base case to 4.2 per cent and 7.2 per cent respectively under the Global Stagflation and ACS 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
booked in the Singapore. 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 Global
Stagflation
$mill
ion
ECL ACS
$mill
ion
Stage 1
Corporate, Commercial & Institut
ional Bank
ing
11
33
Consumer, Private & Business Banking
19
77
Ventures
–
–
Central & Others
2
4
Total increase in stage 1 ECL
32
114
Stage 2
Corporate, Commercial & Institut
ional Bank
ing
25
79
Consumer, Private & Business Banking
13
70
Ventures
–
–
Central & Others
–
–
Total increase in stage 2 ECL
38
149
Total Stage 1 & 2
Corporate, Commercial & Institut
ional Bank
ing
36
112
Consumer, Private & Business Banking
32
147
Ventures
–
–
Central & Others
2
4
Total increase in stage 1 & 2 ECL
70
263
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
103
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 cr
iter
ia have been
separately defined for each business 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 IFRS 9 lifet
ime probab
il
ity of default (IFRS 9 PD) over the res
idual term of the exposure.
The absolute measure of increase in credit risk is used to capture instances where the IFRS 9 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 IFRS 9 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 IFRS 9 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 IFRS 9 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 quantitat
ive thresholds are a relat
ive 100 per cent increase in IFRS 9 PD and an absolute change in IFRS 9
PD of between 50 and 100 bps.
For Consumer and Business Banking clients, portfolio specif
ic quant
itat
ive thresholds
in Singapore, Malaysia and UAE are
used to determine SICR. The thresholds include relative and absolute increases in IFRS 9 PD with average lifet
ime IFRS 9 PD
cut-offs for those exposures that are with
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%
For all other Consumer and Business Banking portfolios, the quantitat
ive SICR thresholds appl
ied are a relative threshold
of 100 per cent increase in IFRS 9 PD and an absolute change in IFRS 9 PD of 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.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
104
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 SICR 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 IFRS 9 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 IFRS 9 PDs is
non-linear (e.g. a one-notch downgrade in the investment grade universe results in a much smaller IFRS 9 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 IFRS 9 PD from orig
inat
ion to the reporting date as
described previously (page 98). For these portfolios, the orig
inal l
ifet
ime IFRS 9 PD term structure
is determined based on the
orig
inal Appl
icat
ion Score or R
isk Segment of the client.
Qualitat
ive and backstop 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. In addit
ion, SICR
is also assessed where specif
ic r
isk elevation events
have occurred in a market that are not yet reflected in modelled outcomes or in other metrics. This is applied collectively
either to impacted specif
ic products/customer cohorts or across the overall consumer bank
ing portfolio in the affected
market.
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 2023
105
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 IFRS 9 PD from orig
inat
ion to the reporting date using the same thresholds as for CCIB clients.
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 non-purely
precautionary 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 2023
106
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 post model adjustment (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 report
ing
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 IFRS 9 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 2023
107
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 with 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 income streams 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 129).
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
•
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 2023 was $41.1 mill
ion, 1.2 per cent h
igher than in 2022
($40.6 mill
ion). The year end level of total trad
ing and non-trading VaR in 2023 was $32.2 mill
ion, 29.7 per cent lower
than in 2022 ($45.8 mill
ion), due to a reduct
ion in non-trading posit
ions.
Daily value at risk (VaR at 97.5%, one day) (audited)
Trading
1
and non-trading
2
2023
2022
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
26.3
38.8
16.8
17.2
21.2
31.9
15.9
18.5
Credit Spread Risk
27.9
43.9
20.9
26.0
27.3
39.7
15.0
25.9
Foreign Exchange Risk
6.6
10.0
3.6
6.3
6.4
9.5
4.7
7.4
Commodity Risk
5.6
9.4
3.4
4.6
6.9
12.1
3.5
7.9
Equity Risk
0.1
0.4
0.0
0.0
0.1
1.4
–
0.1
Divers
ification effect
(25.4)
N/A
N/A
(21.9)
(21.3)
N/A
N/A
(14.0)
Total
41.1
55.3
30.3
32.2
40.6
51.8
29.8
45.8
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
108
Risk profile continued
Trading
1
2023
2022
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
10.8
14.8
6.3
6.3
8.1
12.7
5.3
10.2
Credit Spread Risk
6.9
9.7
5.7
6.9
6.8
12.2
3.4
6.2
Foreign Exchange Risk
6.6
10.0
3.6
6.3
6.4
9.5
4.7
7.4
Commodity Risk
5.6
9.4
3.4
4.5
6.9
12.1
3.5
7.9
Equity Risk
–
–
–
–
–
–
–
–
Divers
ification effect
(11.9)
N/A
N/A
(9.8)
(12.2)
N/A
N/A
(12.7)
Total
18.0
25.3
13.0
14.2
16
21.3
10.5
19
Non-trading
2
2023
2022
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
22.9
31.0
13.4
14.3
20.5
31.5
14.6
16.4
Credit Spread Risk
24.1
37.8
17.6
20.1
23.5
31.9
14.0
23.9
Equity Risk
4
0.1
0.4
0.0
0.0
0.1
1.4
0.0
0.1
Divers
ification effect
(13.1)
N/A
N/A
(8.6)
(8.6)
N/A
N/A
(6.6)
Total
34.0
43.1
23.6
25.8
35.5
41.1
28.4
33.8
The following table sets out how trading and non-trading VaR is distr
ibuted across the Group’s products:
2023
2022
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
41.0
55.3
30.3
32.2
40.6
51.8
29.8
45.8
Trading
1
Global Credit
11.1
15.7
7.2
7.6
9.7
14.6
4.1
8.5
Macro Trading
3
11.6
16.0
7.6
9.6
11.5
14.7
8.9
14.7
XVA
5.8
7.8
4.1
5.6
4.5
6.4
2.8
5.5
Divers
ification effect
(10.5)
N/A
N/A
(8.6)
(9.7)
N/A
N/A
(9.7)
Total
18.0
25.3
13.0
14.2
16.0
21.3
10.5
19.0
Non-trading
2
Treasury
4
33.0
40.9
22.2
25.5
29.8
22.7
24
28.6
Global Credit
3.7
14.0
1.9
3.7
12.7
22.7
8.4
19.9
Listed Private Equity
0.1
0.4
0.0
0.0
0.1
1.4
0.0
0.1
Divers
ification effect
(2.9)
N/A
N/A
(3.4)
(7.1)
N/A
N/A
(14.8)
Total
34.0
43.1
23.6
25.8
35.5
41.1
28.4
33.8
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
Macro Trading comprises the Rates, FX and Commodit
ies bus
inesses
4
Treasury comprises Treasury Markets and Treasury Capital Management businesses
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
109
Risk profile continued
Average daily income earned from Market Risk-related activ
it
ies
¹
Trading
2023
$mill
ion
2022
$mill
ion
Interest Rate Risk
3.0
2.8
Credit Spread Risk
0.7
1.0
Foreign Exchange Risk
3.7
4.6
Commodity Risk
0.4
0.9
Equity Risk
–
–
Total
7.8
9.3
Non-trading
$mill
ion
$mill
ion
Interest Rate Risk
(0.1)
0.1
Credit Spread Risk
(0.5)
0.1
Equity Risk
0.1
–
Total
(0.6)
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 non funded 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.
2023
$mill
ion
2022¹
$mill
ion
Indian rupee
3,291
4,396
Singapore dollar
2,370
1,891
Malaysian ringg
it
1,540
1,571
Euro
1,125
893
Bangladeshi Taka
1,007
832
Thai baht
782
782
UAE dirham
696
664
Pakistan
i rupee
306
352
Indonesian rupiah
293
261
Renminb
i
52
46
Taiwanese dollar
44
46
Other
3,204
3,212
14,710
14,946
1
Prior year has been represented to provide granular currency details
As at 31 December 2023, the Group had taken net investment hedges using derivat
ive financial
instruments to partly cover its
exposure to the Indian rupee of $1,809 mill
ion (31 December 2022: $621 m
ill
ion), UAE d
irham of $1,470 mill
ion (31 December
2022: $1,334 mill
ion), S
ingapore dollar of $1,047 mill
ion (31 December 2022: $1,608 m
ill
ion) and South Afr
ican rand of $64 mill
ion
(31 December 2022: $nil mill
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 $146 mill
ion (31 December 2022: $179 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 144).
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.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
110
Risk profile continued
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
transactions.
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.
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 55 per cent of total liab
il
it
ies and
equity as at 31 December 2023, the major
ity of wh
ich are current accounts, savings accounts and time deposits. 89 per cent of
the Group customer deposit base by geography is evenly distr
ibuted
in Asia and Europe & Americas.
Composit
ion of l
iab
il
it
ies and equ
ity
Percentage
Geographic distr
ibut
ion of customer accounts balances
Percentage
Equity
6.3%
Asia
44.5%
Subordinated liab
il
it
ies and other borrowed funds
2.1%
Africa & Middle East
11.0%
Debt securit
ies
in issue
8.6%
Europe & Americas
44.5%
Derivat
ive financial
instruments
10.2%
Total
100.0%
Customer accounts
54.5%
Deposit by banks
5.6%
Other liab
il
it
ies
12.7%
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), recovery capacity and net stable funding ratio
(NSFR). In addit
ion to the Board R
isk Appetite, there are further lim
its that apply at Group and country level such as external
wholesale borrowing (WBE) and cross currency lim
its.
Liqu
id
ity coverage ratio (LCR)
The 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. Standard Chartered 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 2023, calculated under the
Liqu
id
ity Coverage Ratio per PRA rulebook.
Stress 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 – Captures the l
iqu
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 – 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 – 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.
Concentration risk approach has been enhanced to capture single name and industry concentration.
As of 31 December 2023, 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.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
111
Risk profile continued
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.
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 remained broadly flat with a minor reduction in loans and advances and deposits from
corporate customers.
2023
$mill
ion
2022
$mill
ion
Total loans and advances to customers
1,2
124,794
125,807
Total customer accounts
3
247,068
249,630
Advances-to-deposits ratio
50.5%
50.4%
1
Excludes reverse repurchase agreement and other sim
ilar secured lend
ing of $13,827 mill
ion and
includes loans and advances to customers held at fair value through
profit and loss of $3,188 mill
ion
2
Loans and advances to customers for the purpose of the advances-to-deposits ratio excludes $20,710 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 $9,166 mill
ion (31 December 2022: $6,555 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. Standard
Chartered Bank is not regulated for NSFR, however the bank and material subsid
iar
ies in the consolidat
ion have standalone
NSFR ratios above 100 per cent at 31 December 2023.
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 $136 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 LCR per PRA rulebook.
Group
2023
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
28,859
2,456
46,715
78,030
Central banks, governments/public sector entit
ies
17,998
1,363
15,219
34,580
Multilateral development banks and internat
ional organ
isat
ions
127
961
10,754
11,842
Other
126
–
1,161
1,287
Total Level 1 securit
ies
47,110
4,780
73,849
125,739
Level 2A securit
ies
1,972
128
6,946
9,046
Level 2B securit
ies
348
–
376
724
Total LCR elig
ible assets
49,430
4,908
81,171
135,509
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
112
Risk profile continued
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
Company
2023
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
6,915
2,087
41,492
50,494
Central banks, governments/public sector entit
ies
6,880
1,197
15,219
23,296
Multilateral development banks and internat
ional organ
isat
ions
–
961
10,754
11,715
Other
–
–
1,161
1,161
Total Level 1 securit
ies
13,795
4,245
68,626
86,666
Level 2A securit
ies
102
128
6,946
7,176
Level 2B securit
ies
–
–
376
376
Total LCR elig
ible assets
13,897
4,373
75,948
94,218
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
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 fa
ir
valued 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 one
year cumulative net funding posit
ion has
improved by $12 bill
ion as of 31 December 2023 compared to 31 December 2022,
largely due to the Group focus on improv
ing the qual
ity of its deposit base.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
113
Risk profile continued
Group
2023
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
61,147
–
–
–
–
–
–
3,051
64,198
Derivat
ive financial
instruments
19,240
9,324
6,132
3,098
2,548
3,997
5,208
3,007
52,554
Loans and advances to
banks
1,2
17,521
14,057
7,166
3,563
4,104
1,488
2,124
1,098
51,121
Loans and advances to
customers
1,2
61,802
40,058
18,856
8,866
8,234
13,212
15,950
34,449
201,427
Investment securit
ies
1
6,246
12,824
9,487
8,350
7,274
12,020
31,708
38,063
125,972
Other assets
9,071
20,691
1,088
408
528
65
93
5,697
37,641
Due from subsid
iary
undertakings and other
related parties
5,666
–
–
–
–
–
–
–
5,666
Total assets
180,693
96,954
42,729
24,285
22,688
30,782
55,083
85,365
538,579
Liab
il
it
ies
Deposits by banks
1,3
21,993
1,637
1,086
503
594
1,243
2,845
4
29,905
Customer accounts
1,4
220,227
34,561
17,476
7,681
6,031
4,916
2,446
227
293,565
Derivat
ive financial
instruments
18,540
11,042
5,836
3,299
2,438
4,125
5,952
3,941
55,173
Senior debt
5
45
992
1,353
758
536
3,742
5,897
4,301
17,624
Other debt securit
ies
in
issue
1
3,063
5,257
5,247
3,182
2,153
1,827
3,191
4,787
28,707
Due to parent companies
and other related
undertakings
31,166
–
–
–
–
–
–
–
31,166
Other liab
il
it
ies
9,437
20,040
213
20
62
1,687
1,556
4,026
37,041
Subordinated liab
il
it
ies and
other borrowed funds
–
–
11
–
11
21
73
11,338
11,454
Total liab
il
it
ies
304,471
73,529
31,222
15,443
11,825
17,561
21,960
28,624
504,635
Net liqu
id
ity gap
(123,778)
23,425
11,507
8,842
10,863
13,221
33,123
56,741
33,944
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
2
Loans and advances include reverse repurchase agreements and other sim
ilar secured lend
ing of $83.6 bill
ion
3
Deposits by banks include repurchase agreements and other sim
ilar secured borrow
ing of $5.0 bill
ion
4
Customer accounts include repurchase agreements and other sim
ilar secured borrow
ing of $46.5 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 2023
114
Risk profile continued
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 debt⁵
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
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 2023
115
Risk profile continued
Company
2023
One month
or less
$mill
ion
Between one
month and
three
months
$mill
ion
Between
three
months and
six months
$mill
ion
Between ix
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
51,446
–
–
–
–
–
–
1,312
52,758
Derivat
ive financial
instruments
12,441
10,666
6,527
3,491
2,867
4,842
7,113
5,274
53,221
Loans and advances to
banks
1,2
12,528
10,389
4,157
2,431
1,675
1,431
2,082
1,097
35,790
Loans and advances to
customers
1,2
39,724
18,061
16,415
7,159
6,593
9,930
9,456
12,560
119,898
Investment securit
ies
1
3,575
9,204
8,090
7,419
7,179
10,918
27,202
35,926
109,513
Investment in subsid
iary
undertaking
–
–
–
–
–
–
–
10,066
10,066
Other assets
7,634
15,125
615
183
253
12
35
2,993
26,850
Due from subsid
iary
undertakings and other
related parties
10,053
–
–
–
–
–
–
–
10,053
Total assets
137,401
63,445
35,804
20,683
18,567
27,133
45,888
69,228
418,149
Liab
il
it
ies
Deposits by banks
1,3
17,512
1,140
1,035
500
571
1,179
2,488
–
24,425
Customer accounts
1,4
129,023
22,499
11,447
4,496
3,020
3,905
2,221
216
176,827
Derivat
ive financial
instruments
12,638
11,984
6,225
3,710
2,969
5,207
7,506
5,292
55,531
Senior debt
5
44
990
1,214
758
448
3,711
5,851
4,284
17,300
Other debt securit
ies
in
issue
1
2,876
4,813
4,810
2,921
1,754
1,688
3,191
4,941
26,994
Due to parent companies
and other related
undertakings
47,317
–
–
–
–
–
–
–
47,317
Other liab
il
it
ies
10,851
13,610
168
6
23
1,535
1,323
690
28,206
Subordinated liab
il
it
ies and
other borrowed funds
–
12
28
4
28
93
214
10,517
10,896
Total liab
il
it
ies
220,261
55,048
24,927
12,395
8,813
17,318
22,794
25,940
387,496
Net liqu
id
ity gap
(82,860)
8,397
10,877
8,288
9,754
9,815
23,094
43,288
30,653
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
2
Loans and advances include reverse repurchase agreements and other sim
ilar secured lend
ing of $77.6 bill
ion
3
Deposits by banks include repurchase agreements and other sim
ilar secured borrow
ing of $4.8 bill
ion
4
Customer accounts include repurchase agreements and other sim
ilar secured borrow
ing of $46.3 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 2023
116
Risk profile continued
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 debt⁵
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
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 $45.7 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 2023
117
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
analysis 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 years.
Group
2023
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
21,997
1,643
1,102
512
604
1,245
2,845
4
29,952
Customer accounts
220,861
34,791
17,728
7,905
6,238
5,100
2,663
248
295,534
Derivat
ive financial
instruments
53,511
487
11
2
48
90
438
586
55,173
Debt securit
ies
in issue
3,148
6,277
6,727
4,034
2,795
5,408
9,802
8,553
46,744
Due to parent companies
and other related
undertakings
31,166
–
–
–
–
–
–
–
31,166
Subordinated liab
il
it
ies and
other borrowed funds
47
79
146
154
146
572
1,743
17,558
20,445
Other liab
il
it
ies
7,613
19,995
213
21
66
1,689
1,556
2,786
33,939
Total liab
il
it
ies
338,343
63,272
25,927
12,628
9,897
14,104
19,047
29,735
512,953
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
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
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
118
Risk profile continued
Company
2023
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
17,515
1,143
1,049
509
581
1,181
2,487
–
24,465
Customer accounts
129,577
22,647
11,602
4,637
3,128
4,081
2,426
230
178,328
Derivat
ive financial
instruments
53,886
487
11
2
48
89
422
586
55,531
Debt securit
ies
in issue
2,961
5,830
6,145
3,770
2,301
6,021
9,755
9,383
46,166
Due to parent companies
and other related
undertakings
47,317
–
–
–
–
–
–
–
47,317
Subordinated liab
il
it
ies and
other borrowed funds
47
79
146
154
146
572
1,717
15,920
18,781
Other liab
il
it
ies
6,425
13,573
168
6
23
1,535
1,323
2,343
25,396
Total liab
il
it
ies
257,728
43,759
19,121
9,078
6,227
13,479
18,130
28,462
395,984
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
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
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 and down) to the current market-impl
ied path of rates, across all
yield 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 2023
119
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. In particular, 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, market cond
it
ions, customer behav
iour and risk management strategy. Therefore,
while 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:
2023
USD bloc
$mill
ion
SGD bloc
$mill
ion
Other
currency bloc
$mill
ion
Total
$mill
ion
+ 50 basis points
70
50
140
260
- 50 basis points
(100)
(50)
(150)
(300)
+ 100 basis points
150
100
260
510
- 100 basis points
(190)
(100)
(290)
(580)
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
As at 31 December 2023, the Group estimates the one-year impact of an instantaneous, parallel increase across all yield
curves of 50 basis points to increase projected NII by $260 mill
ion. The equ
ivalent impact from a parallel decrease of 50
basis points would result in a reduction in projected NII of $300 mill
ion. The Group est
imates the one-year impact of an
instantaneous, parallel increase across all yield curves of 100 basis points to increase projected NII by $510 mill
ion. The
equivalent impact from a parallel decrease of 100 basis points would result in a reduction in projected NII of $580 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 falling rate scenarios has increased versus 31 December 2022, due to changes in
modelling assumptions to reflect expected re-pric
ing act
iv
ity on Reta
il and Transaction Banking current accounts and
savings accounts in the current interest rate environment.
Operational and Technology Risk
The Bank defines Operational and Technology risk 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). Operational and Technology risk
may occur anywhere in the Bank, includ
ing th
ird-party processes.
Operational and Technology risk profile
Risk management practices help the business grow safely and ensure 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. Managing Operational and Technology risk makes the Bank more effic
ient and enables
it to offer
better, sustainable service to its customers. The Bank’s Operational and Technology Risk Type Framework (‘O&T RTF’) is
designed to enable the Bank to govern, ident
ify, measure, mon
itor and test, manage and report on its Operational and
Technology risks. The Bank continues to ensure the O&T RTF supports the business and functions in effectively managing risk
and controls with
in r
isk appetite to meet their strategic object
ives.
The Bank has demonstrated progress on ensuring vis
ib
il
ity of r
isks and risk management through implementat
ion of a
standardised risk taxonomy. Standardis
ing the r
isk taxonomy enables improved risk aggregation and reporting and provides
opportunit
ies for s
impl
ify
ing the process of risk ident
ification and assessment. A rev
ised Process Universe along with
taxonomies for causes and controls have been designed and will be implemented in 2024, with control categories supporting
the streamlin
ing and removal of dupl
icate controls, reducing complexity, and improv
ing r
isk and control management. Macro
processes will provide a client-centric view and enable clearer accountabil
ity for del
ivery as well as management of risks in
line with business object
ives.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
120
Risk profile continued
Operational and Technology risk is elevated in areas such as Information and Cyber Security, Data Management and
Transaction Processing. Other key areas of focus are Change, Systems Health/Technology risk, Third Party risk, Resil
ience and
Regulatory Compliance. Management has focused on addressing these areas, improv
ing the susta
inable operating
environment and has in
it
iated a number of programmes to enhance the control environment. The Bank continues to monitor
and manage Operational and Technology risks associated with the external environment such as geopolit
ical factors and
the increas
ing r
isk of cyber-attacks. Dig
ital
isat
ion and
inappropr
iate use of Art
if
ic
ial Intelligence, various regulatory
expectations across our footprint and the changing technology landscape remain key emerging areas to manage, allowing
the Bank to keep pace with new business developments, whilst ensuring that risk and control frameworks evolve accordingly.
The Bank continues to strengthen its risk management to understand the full spectrum of risks in the operating environment,
enhance its defences and improve resil
ience.
Operational and Technology 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 Bank’s profile of operational loss events in 2023 and 2022 is summarised in the table below, which shows the distr
ibut
ion
of gross operational losses by Basel business line.
Distr
ibut
ion of Operational Losses by Basel business line
% Loss
2023
2022
1
Agency Services
1.1%
3.5%
Asset Management
0.0%
0.9%
Commercial Banking
9.0%
10.3%
Corporate Finance
8.7%
1.4%
Corporate Items
43.7%
3.1%
Payment and Settlements
12.0%
50.4%
Retail Banking
15.2%
12.1%
Retail Brokerage
0.0%
0.0%
Trading and Sales
10.2%
18.3%
1
Losses in 2022 have been restated to include incremental events recognised in 2023
The Bank’s profile of operational loss events in 2023 and 2022 is also summarised by Basel event type in the table below. It
shows the distr
ibut
ion of gross operational losses by Basel event type.
Distr
ibut
ion of Operational Losses by Basel event type
% Loss
2023
2022
1
Business disrupt
ion and system fa
ilures
7.1%
3.1%
Clients’ products and business practices
1.3%
6.6%
Damage to physical assets
0.0%
0.0%
Employment practices and workplace safety
0.0%
0.2%
Execution delivery and process management
78.8%
84.1%
External fraud
12.5%
4.9%
Internal fraud
0.2%
1.1%
1
Losses in 2022 have been restated to include incremental events recognised in 2023
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 2023
121
Risk profile continued
Risk Management Framework
Risk management is at the heart of banking, it is what we do. Managing risk effectively is how we drive commerce and
prosperity for our clients and our communit
ies, and
it is how we grow sustainably and profitably as an organisat
ion.
Effective risk management is essential in deliver
ing cons
istent and sustainable performance for all our stakeholders and is a
central part of the financial and operat
ional management of the Group. The Group adds value to clients and the
communit
ies
in which they operate by balancing risk and reward to generate 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 (RA). The RMF has been designed in accordance
with the PLC Group’s Enterprise Risk Management Framework (ERMF), and is reviewed annually. The latest version is effective
from January 2024.
Annual review
In the 2023 review, the concepts of Integrated Risk Types (IRTs) and IRT Owner roles were discont
inued. Overs
ight on IRTs, i.e.
Climate Risk, Dig
ital Assets and Th
ird Party Risk, is provided through the Risk Type Frameworks (RTFs) and relevant dedicated
polic
ies. The subject matter experts as pol
icy owners for these risks provide overall governance and a holist
ic v
iew of how risks
are monitored and managed across the Princ
ipal R
isk Types (PRTs).
Risk culture
Risk culture encompasses our general awareness, attitudes, and behaviours towards risk, as well as how risk is managed at
enterprise level.
A healthy risk culture is one in which everyone takes personal responsib
il
ity to ident
ify and assess, openly d
iscuss, and take
prompt action to address exist
ing and emerg
ing risks. We expect those in our control functions to provide oversight and
challenge constructively, collaboratively, and in a timely manner. This effort is reflected in our valued behaviours, underpinned
by our Code of Conduct and Ethics, and reinforced by how we hire, develop, reward our people, serve our clients, and
contribute to communit
ies around the world.
The risks we face constantly evolve, and we must always look for ways to manage them as effectively as possible. While
unfavourable outcomes will occur from time to time, a healthy risk culture means that we react quickly and transparently. We
can then take the opportunity to learn from our experience and improve our framework and processes.
Strategic risk management
The Group’s approach to strategic risk management includes the following:
•
Risk ident
ification:
impact analyses of risks that arise from the Group’s growth plans, strategic in
it
iat
ives, and bus
iness
model vulnerabil
it
ies are reviewed. This assesses how exist
ing r
isks have evolved in terms of relative importance or whether
new risks have emerged.
•
Risk Appetite:
impact analysis is performed to assess if strategic in
it
iat
ives can be ach
ieved with
in RA and h
ighl
ight areas
where addit
ional RA should be cons
idered.
•
Stress Testing:
the risks highl
ighted dur
ing the strategy review and other risk ident
ification processes are used to develop
scenarios for enterprise stress tests. In order to ensure that the Group’s Strategy remains with
in the approved RA, the Group
Chief Risk Officer (GCRO) and Group Chief Financ
ial Officer (GCFO) recommend strateg
ic actions based on the stress test
results.
Roles and responsib
il
it
ies
Senior Managers Regime
1
Roles and responsib
il
it
ies under the RMF are al
igned to the object
ives of the Sen
ior Managers Regime (SMR). The GCRO is
responsible for the overall development and maintenance of the Group’s RMF and for ident
ify
ing material risks which the
Group may be exposed to. The GCRO delegates effective implementat
ion of the RTFs to R
isk Framework Owners (RFO) who
provide second line of defence oversight for their respective PRTs.
In addit
ion, the GCRO
is the senior manager responsible for the development of the Group’s Dig
ital Assets R
isk Assessment
Approach, and management of Climate Risk.
1
Senior managers refers to ind
iv
iduals designated as senior management functions under the FCA and PRA Senior Managers Regime.
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 2023
122
Risk profile continued
The Risk function
The Risk function provides oversight and challenge on the Group’s risk management, ensuring that business is conducted in
line with regulatory expectations. The GCRO directly manages the Risk function, which is independent from the orig
inat
ion,
trading, and sales functions of the businesses. The Risk function is responsible for:
•
Determin
ing the RA for approval by Group’s Management Team (GMT) and the Court.
•
Mainta
in
ing the ERMF, ensuring that it remains relevant and appropriate to the Group’s business activ
it
ies, and is effectively
communicated and implemented across the Group.
•
Upholding the overall integr
ity of the Group’s r
isk and return decis
ions ensur
ing that the risks are properly assessed, risk and
return decis
ions are transparently and that r
isks are controlled in accordance with the PLC Group’s standards and RA.
•
Overseeing and challenging the management of PRTs under the ERMF.
•
Ensuring that the necessary balance in making risk and return decis
ions
is not compromised by short-term pressures to
generate revenues through the independence of the Risk function.
In addit
ion, the R
isk function provides special
ist capab
il
it
ies relevant to risk management processes in the broader
organisat
ion.
The Risk function supports the Group’s strategy by build
ing a susta
inable RMF that places regulatory and compliance
standards, together with culture of appropriate conduct, at the forefront of the Group’s agenda.
Our Conduct, Financ
ial Cr
ime and Compliance (CFCC) function works alongside the Risk function with
in the RMF to del
iver a
unif
ied second l
ine of defence.
Three lines of defence model
The Group applies a three line of defence model to its day-to-day activ
it
ies for effective risk management, and to reinforce a
strong governance and control environment. Typically:
•
The businesses and functions engaged in or supporting revenue generating activ
it
ies that own and manage the risks
constitute the first line of defence.
•
The control functions, independent of the first line of defence, that provide oversight and challenge of risk management
activ
it
ies act as the second line of defence.
•
Internal Audit acts as the third line of defence provid
ing
independent assurance on the effectiveness of controls supporting
the activ
it
ies of the first and second line of defence functions.
Risk Appetite and profile
The Group recognises 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, given its current capabil
it
ies and resources, before
breaching constraints determined by capital and liqu
id
ity requirements or the internal operational environment, or
otherwise fail
ing to meet the expectat
ions of regulator and law enforcement agencies.
•
RA is defined by the Group and approved by the Court. It is the boundary for the risk that the Group is will
ing to undertake
to achieve its strategic object
ives and Corporate Plan.
The Court is responsible for approving the RA Statements, which are underpinned by a set of financ
ial and operat
ional
control parameters known as RA metrics and their associated thresholds. These directly constrain the aggregate risk
exposures that can be taken across the Group.
The Group RA is reviewed at least annually to ensure that it is fit for purpose and aligned with strategy, with focus given to
new or emerging risks.
Risk Appetite framework
The RA is defined in accordance with risk management princ
iples that
inform our overall approach to risk management and
our risk culture. We set RA to enable us to grow sustainably whilst managing our risks, giv
ing confidence to our stakeholders.
The RA is supplemented by risk control tools such as granular-level lim
its, pol
ic
ies, standards, and other operat
ional control
parameters that are used to mainta
in the Group’s r
isk profile with
in approved RA.
Risk Appetite statement
“The Group will not compromise adherence to its Risk Appetite in order to pursue revenue growth or higher returns”.
See Table 1 for the set of RA statements.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
123
Risk profile continued
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.
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.
The Group leverages the PLC Group’s dynamic 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, and risk sub-types; as well as the Topical and Emerging Risks (TERs) inventory that includes near-term as well as
longer-term uncertaint
ies. R
isk assessments of planned growth and strategic in
it
iat
ives aga
inst the Group’s RA is undertaken
annually.
The GCRO and the Standard Chartered Bank (SCB ERC) regularly review reports on the risk profile for the PRTs, adherence to
Group RA and the Group risk inventory, includ
ing TERs. They use th
is informat
ion to escalate mater
ial developments and
make recommendations to the Court annually on any potential changes to our Corporate Plan.
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;
•
understands key business model risks and considers what kind of event might crystallise those risks – even if extreme and
with a low likel
ihood of occurr
ing;
•
Identify, as required, actions to mit
igate the l
ikel
ihood or
impact of those events;
•
considers how the outcome of plausible stress events, includ
ing TERs, may
impact availab
il
ity of liqu
id
ity and regulatory
capital; and
•
has set RA metrics at appropriate levels.
The PLC Group enterprise stress tests incorporate Capital and Liqu
id
ity Adequacy Stress Tests, includ
ing recovery and
resolution, as well 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.
Based on the stress test results, the GCFO and GCRO can recommend strategic actions to the Court to ensure that the
Group’s strategy remains with
in RA.
In addit
ion, analys
is is run at PRT level to assess specif
ic r
isks and concentrations that the Group may be exposed to. These
include qualitat
ive assessments such as stress
ing of credit sectors or portfolios, measures such as Value at Risk (VaR) and
multi-factor scenarios in Traded Risk and internal stressed liqu
id
ity metrics. Non-financ
ial r
isk types are also stressed to assess
the necessary capital requirements under the Operational & Technology RTF.
The PLC Group has also undertaken a number of Climate Risk stress tests, both those mandated by regulators as well as
management scenarios.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
124
Risk profile continued
Princ
ipal R
isk Types
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’s RTFs which are cascaded to the Group.
The PRTs and associated RA Statements are approved by the Court, and reviewed annually.
The table below shows the Group’s current PRTs.
Table 1: Princ
ipal R
isk Types Defin
it
ion and RA Statement
Princ
ipal R
isk Types
Definit
ion
Risk Appetite Statement
Credit Risk
Potential for loss due to failure of a counterparty to
meet its agreed obligat
ions to pay the Group.
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
Potential for loss resulting from activ
it
ies undertaken
by the Group in financ
ial markets.
The Group should control its financ
ial markets and act
iv
it
ies
to ensure that market and counterparty credit risk losses do
not cause material damage to the Group’s franchise.
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.
Indiv
idual regulated ent
it
ies w
ith
in 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 their franchise. In addit
ion, they should ensure
that their pension plans are adequately funded.
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
risks).
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’s or PLC Group’s
franchise.
Financ
ial Cr
ime Risk
1
Potential for legal or regulatory penalties, material
financial 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 and anti-bribery and
corruption, and fraud.
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.
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.
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 entirely avoided.
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.
The Group aims to mit
igate and control ICS r
isks to ensure
that inc
idents do not cause the Bank mater
ial harm,
business disrupt
ion, financial loss or reputat
ional damage
– recognis
ing that wh
ilst inc
idents are unwanted, they
cannot be entirely avoided.
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 fa
ilure to uphold responsible business
conduct as we strive to do no sign
ificant
environmental and social harm through our client,
third party relationsh
ips, or our own operat
ions.
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 w
ith the
appropriate level of management and governance
oversight. This includes a potential failure to uphold
responsible business conduct in striv
ing to do no s
ign
ificant
environmental and social harm.
Model Risk
Potential loss that may occur because of decis
ions or
the risk of mis-estimat
ion that could be pr
inc
ipally
based on the output of models, due to errors in the
development, implementat
ion, or use of such models.
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 some model
uncertainty.
1
Fraud forms part of the Financ
ial Cr
ime RA Statement but in line with market practice does not apply a zero-tolerance approach
In addit
ion, there
is a RA statement for Climate Risk: “The Group aims to measure and manage financ
ial and non-financial
risks aris
ing from cl
imate change, and reduce emiss
ions related to our own act
iv
it
ies and those related to the financ
ing of
clients in alignment with the Paris Agreement.”
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
125
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 (CRC).
The ERMF effectiveness review enables measurement of year-on-year progress. Ongoing effectiveness reviews allow for a
structured approach to ident
ify
improvement opportunit
ies and bu
ild plans to address them.
In 2024, the Group aims to further strengthen its risk management practices by improv
ing the management of non-financial
risks with
in
its businesses, functions and across our footprint.
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.
Court and Executive level risk committee governance structure
The Committee governance structure below presents the view as of 2023.
COURT
COURT LEVEL COMMITTEES¹
Court Risk Committee
Court Audit Committee
Combined United States
Operations
and Risk Committee
(US Risk Committee)
Court Nominat
ion
Committee
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
Court Risk Committee:
The CRC 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
United States ERMF, approving and overseeing the implementat
ion of the r
isk management polic
ies and also spec
if
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 Group, includ
ing at least one
independent non-executive director and one with sign
ificant r
isk
management experience.
The Group has two management level committees, namely the Standard Chartered Bank Executive Risk Committee (SCB
ERC) and Solo & Standard Chartered Bank UK (Branch) Asset and Liab
il
ity Management Committee (Solo & SCB ALCO).
Standard Chartered Bank Executive Risk Committee
SCB ERC 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 GMT. 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. SCB ERC relies on jo
int meet
ings with the PLC Group Risk Committee and its sub-
committees to provide oversight of the PRTs 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 alerts
Senior/Executive management when risk reports do not meet its requirements.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
126
Risk profile continued
Solo & Standard Chartered Bank UK (Branch) Asset and Liab
il
ity Management Committee
Solo & SCB ALCO is chaired by the Chief Executive Officer (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 RA and external
requirements relating to capital, loss-absorbing capacity, liqu
id
ity, leverage, Interest Rate Risk in the Banking Book (IRRBB),
Banking Book Basis Risk and Structural Foreign Exchange Risk as well as monitor
ing the structural
impact of decis
ions around
sustainable finance, Net Zero and Climate Risk. The Committee is also responsible for ensuring that internal and external
recovery planning requirements are met.
The SCB ERC and Solo & SCB ALCO receive reports that include informat
ion on r
isk measures, RA 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.
Princ
ipal R
isks
We manage and control our PRTs in line with the PLC Group RTFs, polic
ies and RA.
Credit Risk
The Group defines Credit Risk as the potential for loss due to 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 RTF for the Group are set and owned by the Chief Risk Officers (CROs) for the respective
business segments.
The Credit Risk control function is the second line of defence responsible for independent challenge, monitor
ing and overs
ight
of the Credit Risk management practices of 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 RA, PLC Group’s credit
polic
ies and standards.
Mit
igat
ion
We apply segment-specif
ic PLC Group pol
ic
ies for CCIB and Consumer, Pr
ivate and Business Banking (CPBB) for the
management of Credit Risk. The Credit Policy for CCIB Client Coverage sets the princ
iples that must be followed for the
end-to-end credit 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 CPBB segments, for end-to-end cred
it
process includ
ing cred
it in
it
iat
ion, cred
it assessment, documentation 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 RA, 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 is 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
its
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 CRC oversees the effective management of Credit Risk. At the executive level, the SCB ERC 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 CCIB Risk Committee, CPBB Risk Committee, Asia Risk Committee, and Africa and Middle East Risk Committee.
These committees are responsible for overseeing all risk profiles includ
ing Cred
it Risk of the Group with
in the respect
ive
business areas and regions. Meetings are held regularly, and the committees monitor all material Credit Risk exposures, as
well as key internal developments and external trends, ensuring that appropriate action is taken where necessary.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
127
Risk profile continued
Decis
ion-mak
ing authorit
ies and delegat
ion
The Credit RTF is the formal mechanism of delegating Credit Risk authorit
ies cascad
ing from the GCRO, as the Senior
Manager of the Credit Risk PRT. The delegation is to ind
iv
iduals such as the business segments’ CROs. Further delegation of
credit authorit
ies to
ind
iv
idual credit officers may be undertaken 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 RTF.
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 period
ically. In CPBB, where cred
it 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, the ind
iv
iduals delegating the Credit Risk authorit
ies perform per
iod
ic qual
ity
control assessments and assurance checks.
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.
In CCIB Client Coverage, clients and portfolios are subject 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 subject to a dedicated
process overseen by the Credit Issues Committee 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.
On an annual basis, senior members from Business and Risk partic
ipate
in a more extensive portfolio review for certain
corporate industry groups. In addit
ion to a rev
iew of the portfolio informat
ion, th
is enhanced review (known as the industry
portfolio review) incorporates industry outlook, key elements of business strategy, RA, credit profile and emerging/horizon
risks. A condensed version of these industry portfolio reviews will also be shared with the CCIB Risk Committee.
Any material in-country developments that may impact sovereign ratings are monitored closely by the Country Risk Team.
The Country Risk Early Warning system, a triage-based risk ident
ification system, categor
ises countries based on a forward-
looking view of possible downgrades and the potential incremental risk-weighted assets (RWA) impact.
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 RA. Portfol
io delinquency trends are also monitored.
Accounts that are past due (or perceived as high risk but not yet past due) are subject to collections or recovery processes
managed by a special
ist
independent function. In some countries, aspects of collections and recovery activ
it
ies are
outsourced. For discret
ionary lend
ing portfolios, sim
ilar processes to those of CCIB cl
ient coverage are followed.
In addit
ion, an
independent Credit Risk Review team (part of ERM function), performs judgement-based assessments of the
Credit Risk profiles at various portfolio levels. They 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 RA and pol
ic
ies, through forward-look
ing mit
igat
ing actions where
necessary.
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. Client income, net worth, and the liqu
id
ity of asset by class are considered for overall
risk assessment for wealth lending. The availab
il
ity of Wealth Lending credit lim
its
is subject to the availab
il
ity of qualif
ied
collateral.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
128
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 Rat
ings Based (AIRB) approach under the Basel regulatory
framework to calculate Credit Risk capital requirements. The Group has also established a global programme to assess
capital requirements necessary to be implemented to meet the latest revised Basel III final
isat
ion (referred to as Basel 3.1 or
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. The R
isk Decis
ion Framework uses a cred
it rating system to define the portfolio/new booking
segmentation, shape and decis
ion cr
iter
ia for the unsecured consumer bus
iness segment.
AIRB 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. The PLC Group Model R
isk Committee approves material internal
ratings-based risk measurement models. Prior to review and approval, all internal ratings-based models are validated in
detail 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. RA metr
ics are set at portfolio level and monitored to control concentrations, where appropriate, by
industry, products, tenor, collateralisat
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 SCB ERC and CRC.
Credit impa
irment
ECL is 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-spec
if
ic
macroeconomic variables. For more detailed informat
ion on macroeconom
ic data feeding into IFRS 9 ECL calculations,
please refer to the Risk profile section (pages 98 to 106).
At the time of orig
inat
ion or purchase of a non-credit impa
ired financial asset (Stage 1), ECL represents cash shortfalls ar
is
ing
from possible default events up to 12 months into the future from the balance sheet date. ECL continues 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 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 continues to be measured on a lifet
ime bas
is.
For CCIB, in line with the regulatory guidel
ines, Stage 3 ECL
is considered when an obligor is more than 90 days past due on
any amount payable to the Group, or the obligor has symptoms of unlikel
iness to pay
its credit obligat
ions
in full as they fall
due. These credit-impa
ired accounts are managed by SAG.
In CPBB, loans to ind
iv
iduals and small businesses are considered credit impa
ired as soon as any payment of
interest or
princ
ipal
is 90 days overdue or they meet other object
ive ev
idence of impa
irment, such as bankruptcy, debt restructur
ing,
fraud, or death. Financ
ial assets are wr
itten off, in the amount that is determined to be irrecoverable, when they meet
condit
ions set such that emp
ir
ical ev
idence suggests the client is unlikely to meet their contractual obligat
ions, or a loss of
princ
ipal
is reasonably 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 ECL under
IFRS 9, please refer to the Risk profile section (page 101).
Risk profile continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
129
Risk profile continued
Traded Risk
The Group defines Traded Risk as the potential for loss resulting from activ
it
ies undertaken by the Group in financ
ial markets.
Risk Appetite Statement
The Group should control its financ
ial markets and act
iv
it
ies to ensure that market and counterparty credit risk losses do not
cause material damage to the Group’s franchise.
Roles and responsib
il
it
ies
The addendum to the Traded RTF, which sets the roles and responsib
il
it
ies
in respect of Traded Risk for the Group, is owned by
the Global Head, Traded Risk Management (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.
TRM is the second line control function that performs independent challenge, monitor
ing and overs
ight of the Traded Risk
management practices of the first line of defence, predominantly Financ
ial Markets and Treasury Markets.
Mit
igat
ion
The Country addendum to the Traded RTF requires that Traded Risk lim
its be defined at a level appropr
iate to ensure that
the Group remains with
in RA. All bus
inesses incurr
ing Traded R
isk must comply with the Traded RTF. 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 period
ically to
ensure their ongoing effectiveness.
Governance committee oversight
At Court level, the CRC oversees the effective management of Traded Risk. At the executive level, the SCB ERC 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 CCIB Risk Committee, 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 CRO 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 Traded RTF is the formal mechanism which delegates 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 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 cond
it
ions to
estimate 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 provides 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 majority of spec
if
ic (cred
it spread) risk VaR.
•
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
VaR 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 are subject to capital add-ons.
An analysis of VaR results in 2023 is available in the Risk profile section (pages 107 to 108).
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
130
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 Credit 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.
Underwrit
ing
The underwrit
ing of secur
it
ies and loans
is in scope of the RA set by the Group for Traded Risk. Addit
ional l
im
its approved by
the GCRO are set on the sectoral concentration, and the maximum holding period. The Underwrit
ing Comm
ittee, under the
authority of the GCRO, approves ind
iv
idual proposals to underwrite new security issues and loans for our clients.
Monitor
ing
TRM monitors the overall portfolio risk and ensures that it is with
in spec
if
ied l
im
its and therefore RA. L
im
its are typ
ically
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 times 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.
Risk profile continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
131
Risk profile continued
Treasury Risk
The Group defines Treasury Risk 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 the Group should ma
inta
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 their franchise. In addit
ion, they should ensure that the
ir
pension plans are adequately funded.
Roles and responsib
il
it
ies
The Global Head, ERM is the RFO for Treasury Risk under the RMF. The Company addendum to the Treasury RTF 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 RTF as the first line of defence
and is responsible for managing Treasury Risk.
Treasury CROs 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
RA metrics set at Solo and country level.
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 absorb
ing
capacity, and an effic
ient m
ix of the different components of capital are mainta
ined to support our strategy and bus
iness
plans.
Treasury is responsible for the ongoing assessment of the demand for capital and the updating of the Solo’s capital plan.
Solo level RA 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 Foreign Exchange (FX) Risk
The Group’s structural FX 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’s and Solo’s Common Equity Tier 1 ratio.
Hedges are contracted across PLC Group and Solo to manage its structural FX posit
ion
in accordance with the RA, and as a
result net investment hedges to partially cover its exposure to certain non-US dollar currencies to mit
igate the FX
impact of
such posit
ions on
its capital ratios.
Liqu
id
ity and Funding Risk
At Solo and country level we implement various RA metrics and monitor these against lim
its and management act
ion
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
mainta
ins an adequate and well-d
ivers
ified l
iqu
id
ity buffer, as well as a stable funding base, and that it meets its liqu
id
ity
and funding regulatory requirements.
Interest Rate Risk in the Banking Book
At Solo level, we implement RA for Economic Value of Equity and Annual Earnings at Risk and monitor these against lim
its
and management action triggers. IRRBB arises from differences in the repric
ing profile,
interest rate basis, and optional
ity of
banking 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.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
132
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 ind
icators, an escalat
ion framework, and a set of management actions capable of being implemented during 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 (BoE) is required to set a preferred resolution strategy for the PLC Group.
The BoE’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 BoE. 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. Following the BoE’s first resolvabil
ity
assessment and public disclosure for major UK firms in 2022, the second Resolvabil
ity Assessment Framework cycle
is under
way. The PLC Group submitted its Resolvabil
ity Assessment Report to the BoE and PRA on 6 October 2023 and
is due to
publish its resolvabil
ity publ
ic disclosure in June 2024.
Governance committee oversight
At the Court level, the CRC oversees the effective management of Treasury Risk. At the executive level, Solo & SCB ALCO
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 RA 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.
Decis
ion-mak
ing authorit
ies and delegat
ion
The GCFO has responsib
il
ity for capital, funding, and liqu
id
ity under the SMR. The GCRO has delegated the RFO
responsib
il
it
ies assoc
iated with Treasury Risk to the Global Head, ERM. The Global Head, ERM delegates second line of
defence oversight and challenge responsib
il
it
ies to the Treasury CRO and Country CROs for Cap
ital Risk, Liqu
id
ity and
Funding Risk and IRRBB, and to Head of Pensions for Pension Risk.
Monitor
ing
On a day-to-day basis, Treasury Risk is managed by Treasury, Finance and Country CEOs. 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
& SCB ALCO. The reports contain key informat
ion on balance sheet trends, exposures aga
inst RA 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 CRO as part of ERM 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 and 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 and Pension Risk, the Treasury CRO and the Global Head, ERM on a
period
ic bas
is.
Risk profile continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
133
Risk profile continued
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).
Changes to Third Party Risk
With effect from January 2024, the Group has removed the IRT classif
icat
ion and formally included Third Party Risk as a sub
risk under OTR. Third Party Risk is defined as the potential for loss or adverse impact due to the failure to manage the
onboarding, lifecycle and exit strategy of a third party. The PLC Group’s Third Party Risk Management Policy and Standard, in
conjunction w
ith the respective PRT polic
ies and standards, hol
ist
ically set out the Group’s m
in
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.
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’s or PLC Group’s franchise.
Roles and responsib
il
it
ies
The Company addendum to the Operational and Technology RTF sets the roles and responsib
il
it
ies
in respect of Operational
and Technology risk for the Group. The Operational and Technology RTF defines the Group’s Operational and Technology risk
sub-types 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 Operational and Technology RTF. The list of Operational and Technology
risk sub-types includes Execution Capabil
ity, Governance, Report
ing 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 Operational and Technology 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 SMEs. For each r
isk sub-type, the subject matter expert sets
polic
ies and standards for the organ
isat
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.
Mit
igat
ion
The Company addendum to the Operational and Technology RTF sets out the Group’s overall approach to the management
of Operational and Technology risk in line with the Group’s Operational and Technology RA. This is supported by the 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 IRTs).
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 failures in these processes and the related risks of such failures;
•
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; and
•
assessments of residual risk and timely actions for elevated risks.
Risks that exceed the Group’s Operational and Technology RA require treatment plans to address underlying causes.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
134
Governance committee oversight
At Court level, the CRC oversees the effective management of Operational and Technology risk. At the executive level, the
SCB ERC is responsible for the governance and oversight of Operational and Technology risk for the Group. The SCB ERC,
supported by the PLC Group Non-Financ
ial R
isk Committee (GNFRC), monitors the Group’s Operational and Technology RA
and relies on other key committees for the management of Operational and Technology risk.
Regional business segments and functional committees also provide governance oversight of their respective processes and
related Operational and Technology risk. In addit
ion, Country Non-F
inanc
ial R
isk Committees (CNFRCs) oversee the
management of Operational and Technology Risk at the country (or entity) level. In smaller countries, the responsib
il
it
ies of
the CNFRC may be exercised 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 GCRO has delegated the RFO responsib
il
it
ies assoc
iated with the Operational and Technology RTF to the Global Head
of Risk, Functions and Operational Risk (GHRFOR).
The Company addendum to the Operational and Technology RTF is the formal mechanism through which the delegation of
Operational and Technology Risk authorit
ies
is made. The GHRFOR places reliance on the respective SMEs for second line of
defence oversight of the relevant Operational and Technology risk sub-types through this Company addendum.
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 and Technology risks. The Group prior
it
ises and manages risks which are sign
ificant to cl
ients and to the
financial serv
ices sectors. Control ind
icators are regularly mon
itored to determine the Group’s exposure to residual risk.
The residual risk assessments and reporting of events form the Group’s Operational and Technology Risk profile. The
completeness of the Operational and Technology 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 Risk Committee is informed on adherence to Operational and Technology RA 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 risk. These Operational and Technology RA metrics are consolidated on a regular basis and reported to the SCB ERC
and CRC. This provides senior management with the relevant informat
ion to
inform their risk decis
ions.
Risk profile continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
135
Risk profile continued
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 and anti-bribery and 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
ilst 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 Financ
ial
Conduct Authority (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 of defence, the business 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
financial cr
ime. The business must communicate risks and any policy non-compliance to the second line of defence for review
and approval following the model for delegation of authority.
Mit
igat
ion
There are four PLC Group polic
ies
in support of the Financ
ial Cr
ime RTF:
•
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 lim
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 CRC oversees the effective management of Financ
ial Cr
ime Risk. At the executive level, the SCB ERC is
responsible for the governance and oversight of Financ
ial Cr
ime Risk for the Group, and relies on other key PLC Group
committees for the management of Financ
ial Cr
ime Risk. In particular, it relies on the PLC Group Financ
ial Cr
ime Risk
Committee and the PLC GNFRC 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.
Decis
ion-mak
ing authorit
ies and delegat
ion
The Company addendum to the PLC Group Financ
ial Cr
ime RTF is the formal mechanism through which the delegation of
Financ
ial Cr
ime Risk authorit
ies
is made. The Group Head, CFCC is the RFO for Financ
ial Cr
ime Risk under the Group’s RMF.
Certain aspects of Financ
ial Cr
ime Compliance, second line of defence oversight and challenge, are delegated with
in the
CFCC function. 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 RA metrics. These metrics are reviewed period
ically and
reported to the SCB ERC, CRC and relevant Court Risk Committees.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
136
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, CFCC as RFO for Compliance Risk provides support to senior management on regulatory and compliance
matters by:
•
provid
ing
interpretat
ion and adv
ice on CFCC regulatory requirements and their impact on the Group; and
•
setting enterprise-wide standards for management of compliance risks through the establishment and maintenance of
the Compliance RTF.
The Group Head, CFCC also performs the FCA controlled function and senior management function of Compliance Risk
oversight in accordance with the requirements set out by the FCA.
All activ
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 provides second line of defence oversight and challenge of the first line of defence
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 RFO or control
function to ensure that effective oversight and challenge of the first line of defence can be provided by the appropriate
second line of defence function.
Each of the assigned second line of defence functions have 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 overs
ight and challenge of first line of defence processes and controls. In addit
ion,
the remit of CFCC has been further clarif
ied
in 2023 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 is responsible for the
establishment and maintenance of polic
ies, standards and controls to ensure cont
inued legal and regulatory compliance,
and the mit
igat
ion of Compliance Risk. In this, the requirements of the Operational and Technology RTF are followed to
ensure a consistent approach to the management of processes and controls.
The deployment of technological solutions to improve effic
ienc
ies and simpl
ify processes has cont
inued in 2023. These
include launch of a new Regulatory Change Management System for Group regulatory obligat
ions management, and
further enhancement of the Ask Compliance platform.
Governance committee oversight
At a management level, the SCB ERC 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 GNFRC and the Risk and
CFCC Non-Financ
ial R
isk Committee.
Both Compliance Risk and the risk of non-compliance with laws and regulations resulting from failed processes and controls
are reported at the respective country, business, product, function, Risk and CFCC Non-Financ
ial R
isk Committees. Relevant
matters, as required, are further escalated to the PLC GNFRC and SCB ERC. At Court level, oversight of Compliance Risk is
primar
ily prov
ided by the Audit Committee, and by the CRC for relevant issues.
Whilst not a formal governance committee, the CFCC Oversight Group provides oversight of CFCC risks includ
ing the
effective implementat
ion of the Compl
iance RTF. The Regulatory Change Oversight Forum provides vis
ib
il
ity and overs
ight of
material and/or complex large-scale regulatory change emanating from Financ
ial Serv
ices regulators impact
ing Non-
Financ
ial R
isks. The CFCC Policy Council provides 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 RA.
Decis
ion-mak
ing authorit
ies and delegat
ion
The Company addendum to the Compliance RTF is the formal mechanism through which the delegation of Compliance Risk
authorit
ies
is made. The Group Head, CFCC has the authority to delegate second line of defence responsib
il
it
ies w
ith
in the
CFCC function to relevant and suitably qualif
ied
ind
iv
iduals.
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 RTF. 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 GNFRC, SCB ERC, CRC and Court Risk
Committees.
Risk profile continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
137
Risk profile continued
Information and Cyber Security (ICS) Risk
The Group defines ICS 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 aims to mit
igate and control ICS r
isks to ensure that inc
idents do not cause the Bank mater
ial harm, business
disrupt
ion, financial loss or reputat
ional damage - recognis
ing that wh
ilst inc
idents are unwanted, they cannot be ent
irely
avoided.
Roles and responsib
il
it
ies
The Group’s ICS RTF defines the roles and responsib
il
it
ies of the first and second l
ines 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 has the 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 of defence also manages all key ICS Risks, breaches and risk treatment plans. ICS
Risk profile, RA breaches and remediat
ion status are reported at the Court and Execut
ive committees, alongside business,
function and country governance committees.
The Chief Information Risk Security Officer (CISRO) function with
in Group R
isk 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. The ICS
Policy and standards are aligned to industry best practice models includ
ing the Nat
ional Institute of Standards and
Technology Cyber Security Framework and ISO 27001. This function has the responsib
il
ity for governance, oversight, and
independent challenge of first line of defence’s pursuit of the ICS strategy. Group ICS Risk Framework Strategy remains the
responsib
il
ity of the ICS RFO, delegated from the GCRO to the Group CISRO.
Mit
igat
ion
ICS Risk is managed through the ICS RTF, 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 ERMF.
Governance committee oversight
At Court level, the CRC oversees the effective management of ICS Risk. The SCB ERC 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 GNFRC and the Cyber Security Advisory Forum. The SBC ERC and PLC
GNFRC are responsible for oversight of ICS Risk profile and RA breaches. Sub-committees of the PLC GNFRC have oversight of
ICS Risk management aris
ing from the bus
inesses, countries and functions.
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 at a bus
iness, function, region and country level.
The Group CISO is responsible for implement
ing ICS R
isk Management with
in the Group, and to cascade ICS r
isk
management into the businesses, functions and countries to comply with the ICS RTF, policy, and standards.
Monitor
ing
Group CISO performs 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 RA.
The ICS Risk profiles of all businesses, functions and countries are consolidated to present a holist
ic Group-level ICS R
isk profile
for ongoing monitor
ing. Mandatory ICS learn
ing, phish
ing exerc
ises and role-specif
ic tra
in
ing support colleagues to mon
itor
and manage this risk.
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 RA are escalated to the appropriate
governance committee or authority levels for remediat
ion and track
ing. A dedicated Group CISRO team supports this work
by executing offensive security testing exercises, includ
ing vulnerab
il
ity assessments and penetrat
ion tests, which show a
wider picture of the Group’s risk profile, leading to better vis
ib
il
ity on potent
ial ‘in flight’ risks. The Group also tracks
remediat
ion of secur
ity matters ident
ified by external rev
iews such as the BoE CBEST Threat Intelligence-Led Assessment and
the Hong Kong Monetary Authority’s (HKMA) Intelligence-led Cyber Attack Simulat
ion Test
ing (iCAST).
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
138
Reputational and 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 of the Group through actual or perceived
actions or inact
ions,
includ
ing a fa
ilure to uphold responsible business conduct as we strive to do no sign
ificant env
ironmental
and social harm through our clients, 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 w
ith the appropriate level of management and governance oversight. This includes a
potential failure to uphold responsible business conduct in striv
ing to do no s
ign
ificant env
ironmental and social harm.
Roles and responsib
il
it
ies
The Global Head, ERM is responsible as RFO for Reputational and Sustainab
il
ity Risk under the Group’s RMF.
The PLC Group’s Reputational and Sustainab
il
ity RTF allocates responsib
il
it
ies
in a manner consistent with the three lines of
defence model.
In the first line of defence, the PLC Group’s Chief Sustainab
il
ity Officer (CSO) manages the overall Group Sustainab
il
ity
strategy and engagements. A dedicated Sustainable Finance solutions team is responsible for 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. The CSO team works with businesses to launch various sustainable finance products. Furthermore, the
Environmental and Social Risk Management (ESRM) team provides dedicated advisory and challenge to businesses on the
management of environmental and social risks and impacts aris
ing from the Group’s cl
ient relationsh
ips and transact
ions.
In the second line of defence, the responsib
il
ity for Reputational and Sustainab
il
ity Risk management is delegated to the PLC
Group Environmental, Social, and Corporate Governance (ESG) and Reputational Risk team, as well as CROs at region,
country and client-business levels. They constitute the second line responsible to oversee and challenge the first line, which
resides with the CEOs, business heads, product heads and function heads. The PLC Group ESG and Reputational Risk team is
responsible for establish
ing RA, framework and pol
ic
ies for manag
ing Reputational and Sustainab
il
ity risk, in line with
emerging regulatory expectations across our markets.
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, includ
ing sh
ifts as a result of greenwashing claims, due to decis
ions related to
clients, products, transactions, third parties and strategic coverage;
•
potential material harm or degradation to the natural environment (environmental) through actions/inact
ions of the
Group; and
•
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 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 is based on explic
it pr
inc
iples
includ
ing, but not l
im
ited to, human r
ights and climate change. The assessment of stakeholder perception risk considers a
variety of factors. Whenever potential for stakeholder concerns is ident
ified,
issues are subject to review and decis
ion by both
first and second lines of defence.
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. This includes management of greenwashing risks
through the ongoing monitor
ing of Susta
inable Finance products and transactions and clients throughout their lifecycle, from
labelling to disclosures in line with emerging local and internat
ional regulatory obl
igat
ions.
•
Clients are expected to adhere to the min
imum regulatory and compl
iance requirements, includ
ing cr
iter
ia from the PLC
Group’s Posit
ion Statements to sens
it
ive sectors where env
ironmental and social risks are heightened. The Group also
defines the approach to certain special
ist sectors where there are confl
ict
ing stakeholder v
iews.
•
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. The PLC Group is committed to respecting universal human rights, and we assess our clients
and suppliers against various internat
ional pr
inc
iples, as well as through our soc
ial safeguards.
•
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. We are committed to becoming Net Zero in our own operations by 2025.
•
The PLC Group relies on the frameworks to help the labelling of Sustainable Finance Use of Proceeds products and
transactions as well as the classif
icat
ion of pureplay clients.
Risk profile continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
139
Risk profile continued
Reputational and Sustainab
il
ity Risk polic
ies and standards are appl
icable to all PLC Group entit
ies. However, where local
regulators impose addit
ional requ
irements, these are complied with in addit
ion to ex
ist
ing PLC Group requ
irements.
Governance committee oversight
The PLC Group’s Culture and Sustainab
il
ity Committee oversight across PLC Group for our Sustainab
il
ity strategy while the
CRC oversees Reputational and Sustainab
il
ity Risk as part of the RMF. The SCB ERC 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 GNFRC.
The PLC GRRRC’s remit is to:
•
Challenge, constrain and, if required, stop business activ
it
ies where Reputational and Sustainab
il
ity risks are not aligned
with the PLC Group’s RA;
•
Make decis
ions on Reputat
ional and Sustainab
il
ity Risk matters assessed as high or very high based on the PLC Group’s
Reputational and Sustainab
il
ity Risk Material
ity Assessment Matr
ix, and matters escalated from the regions or client
businesses;
•
Provide oversight of material Reputational and Sustainab
il
ity Risk and/or thematic issues aris
ing from the potent
ial failure
of other risk types;
•
Identify TERs, as part of a dynamic risk scanning process;
•
Monitor exist
ing or new regulatory pr
ior
it
ies.
The Sustainable Finance Governance Committee, appointed by the PLC GRRRC, provides leadership, governance, and
oversight for deliver
ing the PLC Group’s susta
inable finance offering. This includes:
•
Review
ing and support
ing the Group’s frameworks for Green and Sustainable Products, and Transit
ion F
inance for approval
of PLC GRRRC. These frameworks set out the guidel
ines for approval of products and transact
ions which carry the
sustainable finance and/or transit
ion finance label.
•
Decis
ion-mak
ing authority on the elig
ib
il
ity of a susta
inable asset for any RWA relief;
•
Approving sustainable finance and transit
ion finance labels for products
in addit
ion to regular product management and
governance;
•
Review
ing the reputat
ional risks aris
ing from greenwash
ing claims related to Sustainable Finance products and services
The GNFRC has oversight of the control environment and effective management of Reputational Risk incurred when there
are negative shifts in stakeholder perceptions of the PLC Group due to failure of other PRTs. The regional and client-business
risk committees provide oversight on the Reputational and Sustainab
il
ity Risk profile with
in the
ir remit. The CNFRC provides
oversight of the Reputational and Sustainab
il
ity Risk profile at a country level.
Decis
ion-mak
ing authorit
ies and delegat
ion
The Global Head, ERM 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 reviews
and supports the risk assessments for clients and transactions and escalates to the PLC Group ESG and Reputational Risk
team as required.
Monitor
ing
Exposure to stakeholder perception risks aris
ing from transact
ions, clients, products and strategic coverage is monitored
through established triggers to prompt the right levels of appropriate risk-based considerat
ion and assessment 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 of defence processes. The
environmental and social risks are considered for clients and transactions via the Environmental and Social Risk Assessments
and for vendors in our supply chain through the Modern Slavery questionna
ires.
Furthermore, monitor
ing and report
ing on the RA metrics ensures that there is appropriate oversight by the MT and the Court
over performance and breaches of thresholds across key metrics.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
140
Model Risk
The Group defines Model Risk as potential loss that may occur because 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 some model uncertainty.
Roles and responsib
il
it
ies
The Global Head, ERM is the RFO for Model Risk under the Group’s RMF. Responsib
il
ity for the oversight and implementat
ion
of the Model RTF is delegated to the Global Head, Model Risk Management.
The PLC Group’s Model Risk Framework sets out clear accountabil
ity and roles for Model R
isk management through the three
lines of defence model. First line of defence ownership of Model Risk resides with Model Sponsors, who are business or
function heads and assign a Model Owner and provide oversight of Model Owner activ
it
ies. Model Owners are accountable
for the model development process, represent model users, are responsible for the overall model design process, coordinate
the submiss
ion of models for val
idat
ion and approval, and ensure appropr
iate implementat
ion and use. Model Developers
are responsible for the development of models and are responsible for documenting and testing the model in accordance
with Policy requirements, and for engaging with Model Users.
Second line of defence oversight is provided by Model Risk Management, which comprises Group Model Validat
ion (GMV) to
independently review and grade models, and the Model Risk Policy and Governance team, which provides oversight of model
risk activ
it
ies and reports to senior management via respective committees.
The PLC Group adopts an industry standard model defin
it
ion as specif
ied
in the PLC Group 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 Framework.
Model Owners are accountable for ensuring that all models under their purview have been independently validated by GMV.
Models are 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.
The Model RTF is cascaded to in-scope countries by way of local addendum or local framework documentation, along with
specif
ic respons
ib
il
it
ies of the Country Model RFO. In-scope countr
ies are selected with reference to regulatory capital
requirements with credit risk (AIRB), counterparty credit risk Internal Model Method (IMM), or market risk Internal Model
Approach (IMA) permiss
ions for use of models for regulatory cap
ital calculations; and countries where regulators have
stipulated specif
ic model r
isk requirements. Addit
ional cr
iter
ia,
includ
ing financial mater
ial
ity, regulatory
importance,
presence of important business services or crit
ical econom
ic functions are also considered.
The main responsib
il
it
ies of Country Model RFO are to ensure model usage
is correctly ident
ified, a su
itable local governance
process is established, and fundamental model risk train
ing
is provided for respective country stakeholders.
Based on respective levels of regulatory expectations regarding Model Risk, a tier
ing approach
is adopted to provide
appropriate risk-based levels of depth and rigour of the associated requirements.
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 model mon
itor
ing, model overlays and/or a
model redevelopment plan, which undergoes 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 RTF, with remediat
ion plans
implemented where necessary.
Risk profile continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
141
Risk profile continued
Governance committee oversight
At Court level, the CRC exercises oversight of Model Risk with
in the Group. At the execut
ive level, the SCB ERC is responsible for
the governance and oversight of Model Risk for the PLC Group and relies on other PLC Group committees to ensure effective
measurement and management of Model Risk. 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 RTF is the formal mechanism through which the delegation of Model Risk
authorit
ies
is made.
The Global Head, ERM delegates authorit
ies to des
ignated ind
iv
iduals or Policy Owners through the Model RTF. The second
line of defence ownership for Model Risk at country level is delegated to Country CROs at the applicable branches and
subsid
iar
ies.
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 Group monitors Model Risk via a set of RA metrics. Adherence to Model RA and any threshold breaches are reported to
the CRC, SCB ERC and PLC Model Risk Committee. These metrics and thresholds are reviewed twice per year 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 d
iscuss
ion at the Model R
isk governance committees
on a regular basis.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
142
Climate Risk (Oversight has moved to Reputational and Sustainab
il
ity Risk with effect from January 2024)
With effect from January 2024, the Group has removed the IRT classif
icat
ion. Climate Risk is defined as the potential for
financial loss and non-financial detr
iments aris
ing from cl
imate change and society’s response to it. We are developing
methodologies to ident
ify, measure and manage the phys
ical and transit
ion r
isks that we are exposed to through our own
operations, our suppliers, our clients, and the markets we operate in.
Risk Appetite Statement
The Group aims to measure and manage financ
ial and non-financial r
isks aris
ing from cl
imate 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.
Roles and responsib
il
it
ies
The GCRO has the ultimate second line of defence and responsib
il
ity for Climate Risk, with support by the Global Head, ERM
who has day-today oversight and central responsib
il
ity for second line of defence Climate Risk activ
it
ies. As Climate Risk is
embedded into the relevant PRTs, second line of defence responsib
il
it
ies l
ie with those RFOs (at Group, regional and country
level), with SME support from the central Climate Risk team.
Mit
igat
ion
We have completed c.4,100 Climate Risk Assessments in 2023 (c.85 - 90 per cent of the CCIB corporate portfolio lim
its), wh
ich
measures transit
ion r
isk of our clients. Concentration of Black and Red rated clients remain with
in proposed RA levels at 6 per
cent. Linkages to Credit Underwrit
ing Pr
inc
iples have been finalised for four sectors (O
il and Gas (O&G), Shipp
ing,
Commercial Real Estate CRE and Min
ing),
includ
ing
improved climate-related analysis, portfolio-level caps and addit
ional
data gathering measures. A key focus area going forward is to embed Climate Risk and net zero targets into business and
credit decis
ions. To enable th
is, we have established a Net Zero Climate Risk Working Forum to facil
itate d
iscuss
ions on
account plans for high Climate Risk and net zero divergent clients. As of September 2023, we have assessed physical risk for
79 per cent and transit
ion r
isk for 54 per cent of our CPBB book.
The focus for Operational and Technology Risk has been to assess physical risks for our properties and data centres, as well
as third parties. Concentration of top corporate liqu
id
ity providers to high transit
ion r
isk and low levels of mit
igat
ion is being
monitored.
Governance committee oversight
Court level oversight is exercised through the CRC, with regular updates on Climate Risk. At an executive level, the PLC Group
Risk Committee has appointed the Climate Risk Management Committee, which meets at least six times a year to oversee
the implementat
ion of Cl
imate Risk workplans and monitor
ing the Group’s Cl
imate Risk profile.
In 2023, The PLC Group has strengthened country and regional governance oversight for the Climate Risk profile across our
key markets by cascading ident
ified RA metr
ics, and rolling out climate risk management informat
ion.
Decis
ion-mak
ing authorit
ies and delegat
ion
The Global Head, ERM is supported by a Climate Risk team with
in the ERM funct
ion. The Global Head, ESG and Reputational
Risk is responsible for executing the delivery of the Climate Risk workplan which will define decis
ion-mak
ing authorit
ies and
delegations across the PLC Group.
Monitor
ing
The Climate RA Statement is approved and reviewed annually by the Court, following the recommendation of the CRC.
The PLC Group has developed its first-generation Climate Risk reporting and Board/MT Level RA metrics and these will
continue to be enhanced in 2024. Management informat
ion and RA metr
ics are also being progressively rolled out at the
regional and country level. Management informat
ion
is reviewed at a quarterly frequency and any breaches in RA are
reported to the GRC and BRC.
Risk profile continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
143
Risk profile continued
Dig
ital Assets R
isk
With effect from January 2024, the Group has removed the IRT classif
icat
ion. The Group recognises Dig
ital Assets (DA) as an
asset class which is managed under the RMF. DA Risk is defined as the potential for regulatory penalties, financ
ial loss and/or
reputational damage to the Group resulting from DA-related activ
it
ies aris
ing from the Group’s bus
inesses across clients,
products, investments and projects.
Risk Appetite Statement
As DA Risk manifests through the various PRTs, the ind
iv
idual RA statements for each PRT take account of the risks specif
ic to
DAs.
Roles and responsib
il
it
ies
Senior managers with
in the first l
ine of defence are responsible for the overall management of DA risks, in
it
iat
ives and
exposures that may arise with
in the
ir business segments.
The GCRO has the second line of defence responsib
il
ity for defin
ing the Group’s framework for manag
ing DA-related risks,
through the Dig
ital Assets R
isk Management Approach (DARMA). The GCRO is supported by the Global Head, ERM and the
Global Head, DA Risk Management, who have day-to-day responsib
il
ity for second line of defence oversight of the DARMA.
As DA Risk management is embedded into the relevant PRTs, RFOs and dedicated SMEs across the PRTs have second line of
defence responsib
il
it
ies of DA R
isks for their respective PRTs.
Mit
igat
ion
The Group deploys a DA Risk management policy (DA Policy) to define the incremental risk management requirements for
DA-related activ
it
ies under the DARMA. The respective PRTs then include specif
ic r
isk mit
igat
ion requirements with
in the
relevant processes, polic
ies and standards for the
ir PRTs. DA Risk Assessments are conducted on certain higher-risk DA-
related projects and products. These risk assessments detail the specif
ic
inherent risks, residual risks, controls and mit
igants
across the PRTs, and are reviewed and supported by the respective businesses, RFOs and DA SMEs.
Governance committee oversight
Court level oversight is exercised through the CRC, and DA Risk updates are provided to the Court and CRC, as requested. At
the executive level, the SC Bank ERC oversees the risk management of DA. The GCRO has also appointed a dedicated DA
Risk Committee (DRC) consist
ing of sen
ior business representatives, RFOs and DA SMEs across the Group. The DRC meets a
min
imum of four t
imes per year to review and assess the risk assessments related to DA Projects and Products, discuss
development and implementat
ion of the DARMA, and to prov
ide structured governance around DA Risk.
Decis
ion-mak
ing authorit
ies and delegat
ion
The Global Head, ERM is supported by a centralised DA Risk team with
in the ERM Funct
ion and is responsible for the design
and maintenance of the DARMA. Decis
ion-mak
ing authorit
ies and delegat
ion are defined in the DA Policy, outlin
ing the
incremental responsib
il
it
ies and the embedd
ing of risk management with
in assoc
iated polic
ies and r
isk artefacts.
The businesses are responsible for implementat
ion of the DARMA and ut
il
ise dec
is
ion-mak
ing authorit
ies granted to them by
their respective Businesses, PRTs or in ind
iv
idual capacit
ies to assess and approve DA act
iv
it
ies and exposures that may give
rise to risk.
DA Risk follows prescribed robust risk management practices across the PRTs, with specif
ic expert
ise applied from DA experts.
Risk management practices are informed by the “Dear CEO” letters published by the PRA and the FCA in June 2018, with
updated notices in June 2022. Further guidance from the recent publicat
ion of the BCBS d545 on the prudent
ial treatment of
crypto assets, which will be in effect from January 2025, has refined the risk management approach. DA is a developing area
which will continue to mature and stabil
ise over t
ime as the technology, together with its use in financ
ial serv
ices and
associated research, become more established.
Monitor
ing
DA Risks are monitored through the exist
ing Group RA metr
ics across the PRTs. In addit
ion, spec
if
ic DA R
isk Management
Monitor
ing level metr
ics are reviewed and monitored by the relevant ind
iv
idual PRTs. DA risk decis
ions relat
ing to other PRTs
are taken with
in the author
it
ies for the respect
ive PRT.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
144
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 121.
Standard Chartered Bank is authorised by the PRA and regulated by the Financ
ial Conduct Author
ity and the PRA as
Standard Chartered Bank. 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 13.2 per cent at FY2023 with leverage at 5.0 per cent. The Group mainta
ins h
igh
levels of loss absorbing capacity. Compared to 31 December 2022, the Group’s CET1 ratio increased by approximately 50 bps
to 13.2 per cent. RWAs decreased by $6.1 bill
ion to $165.6 b
ill
ion. CET1 cap
ital remained largely flat at $21.8bn as profits of
$3.2 bill
ion and movement
in other comprehensive income of $0.4 bill
ion were offset by d
istr
ibut
ions of $3.0 bill
ion, a fore
ign
currency translation impact of $0.5 bill
ion and an
increase in intang
ible assets of $0.1 b
ill
ion.
Capital ratios
2023
2022¹
CET1 capital
13.2%
12.7%
Tier 1 capital
16.5%
15.8%
Total capital
23.5%
23.1%
1
The 2022 comparatives have been restated to correctly reflect in line with adjustment posted for credit risk mit
igat
ion
Capital review
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
145
Capital review continued
Capital base
1
(audited)
2023
$mill
ion
2022
$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
9,687
10,467
Accumulated other comprehensive income (and other reserves)
(6,508)
(6,965)
Non-controlling interests (amount allowed in consolidated CET1)
162
145
Independently audited year-end profits
3,208
2,410
Foreseeable div
idends
(166)
(189)
CET1 capital before regulatory adjustments
27,276
26,761
CET1 regulatory adjustments
Addit
ional value adjustments (prudent
ial valuation adjustments)
(534)
(626)
Intangible assets (net of related tax liab
il
ity)
(4,115)
(4,002)
Deferred tax assets that rely on future profitabil
ity (excludes those aris
ing from
temporary differences)
(23)
(66)
Fair value reserves related to net losses on cash flow hedges
13
513
Deduction of amounts resulting from the calculation of excess expected loss
(566)
(627)
Net gains on liab
il
it
ies at fa
ir value resulting from changes in own credit risk
(47)
26
Defined-benefit pension fund assets
(75)
(69)
Fair value gains aris
ing from the
inst
itut
ion’s own credit risk related to derivat
ive l
iab
il
it
ies
(107)
(74)
Exposure amounts which could qualify for risk weight
ing of 1250%
(28)
(61)
Other regulatory adjustments to CET1 capital
3
–
(29)
Total regulatory adjustments to CET1
(5,482)
(5,015)
CET1 capital
21,794
21,746
Addit
ional T
ier 1 capital (AT1) instruments
5,473
5,423
AT1 regulatory adjustments
(20)
(20)
Tier 1 capital
27,247
27,149
Tier 2 capital instruments
11,637
12,469
Tier 2 regulatory adjustments
(30)
(30)
Tier 2 capital
11,607
12,439
Total capital
38,854
39,588
Total risk-weighted assets (unaudited)
⁴
165,623
171,723
1
Capital base is prepared on the regulatory scope of consolidat
ion
2
Retained earnings include IFRS9 capital relief (Transit
ional) of n
il (2022: $106 mill
ion)
3
Other regulatory adjustments to CET1 capital includes Insuffic
ient coverage for non-perform
ing exposures of nil (2022: $(29) mill
ion)
4
The 2022 comparatives have been restated to correctly reflect in line with adjustment posted for credit risk mit
igat
ion
Leverage ratio
Capital and total exposures
2023
$mill
ion
2022
1
$mill
ion
Tier 1 capital
27,247
27,149
Total leverage ratio exposures
544,061
562,076
Leverage ratio
5.0%
4.8%
1
The 2022 comparatives have been restated to correctly reflect in line with adjustment posted for credit risk mit
igat
ion
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
146
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
(together with the Company, 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 2023 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 have 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 2023
which comprise:
Group
Company
Consolidated income statement for the year ended 31 December 2023;
Balance sheet as at 31 December 2023;
Consolidated statement of comprehensive income for the year ended;
Cash flow statement for the year then ended;
Consolidated balance sheet as at 31 December 2023;
Statement of changes in equity for the year ended
31 December 2023; and
Consolidated statement of changes in equity for the year then ended;
Related notes 1 to 40, where relevant to the financial
statements, includ
ing mater
ial accounting policy
informat
ion.
Consolidated Cash flow statement for the year then ended;
Related notes 1 to 40 to the financial statements,
includ
ing mater
ial
accounting policy informat
ion; and
Risk and capital disclosures marked as ‘audited’.
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 directors' going concern assessment includ
ing the Group’s forecast cap
ital, liqu
id
ity, and leverage ratios over
the period of twelve months from 23 February 2024 to evaluate the headroom against the min
imum regulatory
requirements and the risk appetite set by the directors.
•
Engaging internal valuation and economic special
ists to assess and challenge the reasonableness of assumpt
ions used to
develop the forecasts in the Corporate Plan and evaluating the accuracy of histor
ical forecast
ing.
•
Assessing the Group’s funding plan and repayment plan for funding instruments maturing over the period of twelve
months from 23 February 2024.
•
Understanding and evaluating credit rating agency ratings and actions.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
147
Independent Auditor’s report
to the members of Standard Chartered Bank continued
•
Engaging internal prudential regulatory special
ists to assess the results of management’s stress test
ing, includ
ing
considerat
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 going concern disclosure included in note 1 to the financ
ial statements
in order to assess that the disclosures
were appropriate and in conformity with the reporting standards.
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 Company’s ab
il
ity to cont
inue as a going
concern for a period of twelve months from 23 February 2024.
In relation to the Group and Parent Company’s reporting on how they have applied the UK Corporate Governance Code, we
have nothing material to add or draw attention to in relation to the directors’ statement in the financ
ial statements about
whether the directors considered it appropriate to adopt the going concern basis of accounting.
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 and Parent Company’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 6 components
in 5 countries and audit
procedures on specif
ic balances for a further 14 components
in 13 countries.
•
In addit
ion to the above, the Pr
imary Audit Team also performed full-scope audit procedures on components
related to the Group consolidat
ion process
•
The components where we performed full or specif
ic aud
it procedures accounted for 77% of the absolute profit
before tax (PBT), 82% of absolute operating income and 92% of Total assets.
Key audit matters
• Credit impa
irment
• Priv
ileged 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 $221m 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 Group financ
ial statements, and to ensure we had adequate
quantitat
ive coverage of s
ign
ificant accounts
in the financ
ial statements, of the 219 report
ing units of the Group, we selected
24 reporting units which represent 20 components in 17 countries: Bahrain, Bangladesh, India, Indonesia, Jersey, Japan, Kenya,
Malaysia, Niger
ia, Pak
istan, Singapore, Sri Lanka, Taiwan, United Arab Emirates, United Kingdom, United States of America,
and Zambia.
The definit
ion of a component is aligned with the structure of the Group’s consolidat
ion system, typ
ically these are either a
branch, group of branches, group of subsid
iar
ies (or associates), or a subsid
iary.
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 (SSC), Commercial, Corporate
and Institut
ional Bank
ing SSC, Credit Impairment SSC and Technology, as well as certain other matters audited centrally by
the Primary Audit Team.
Of the 20 components selected in 17 countries, we performed an audit of the complete financ
ial
informat
ion of 6 components
(“full scope components”) which were selected based on their size or risk characterist
ics. For 11 components (“spec
if
ic scope
components”) we performed audit procedures on specif
ic accounts w
ith
in that component that we cons
idered had the
potential for the greatest impact on the sign
ificant accounts
in the Group financ
ial statements e
ither because of the size of
certain aspects of credit impa
irment r
isk of these accounts or their risk profile. We also instructed 3 locations to perform
specif
ied procedures over certa
in aspects of credit impa
irment r
isk.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
148
Independent Auditor’s report
to the members of Standard Chartered Bank continued
Group's Absolute PBT
Group's Total assets
Group's Absolute Operating Income
2023
2022
2023
2022
2023
2022
Full scope components
57%
63%
84%
80%
62%
68%
Specif
ic scope components
18%
13%
8%
12%
18%
15%
Specif
ied procedures
2%
0%
0.40%
0%
2%
0%
Total
77%
76%
92%
92%
82%
83%
Of the remain
ing report
ing units that together represent 23% of the Group’s absolute PBT, none are ind
iv
idually greater than
3% of the Group’s absolute PBT. For the components represented by these reporting units, we performed other procedures at
the Group level which included: performing analytical reviews at the Group financ
ial statement l
ine item level, evaluating
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 selected 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 financ
ial statements.
The charts below illustrate the coverage obtained from the work performed by our audit teams.
Absolute Profit before tax
57% Full scope components (2022: 63%)
18% Specif
ic scope components (2022: 13%)
2% Specif
ied procedures (2022: 0%)
23% Other procedures (2022: 24%)
Total assets
Absolute operating income
84% Full scope components (2022: 80%)
8% Specif
ic scope components (2022: 12%)
0.4% Specif
ied procedures (2022: 0%)
8% Other procedures (2022: 8%)
62% Full scope components (2022: 68%)
18% Specif
ic scope components (2022: 15%)
2% Specif
ied procedures (2022: 0%)
18% Other procedures (2022: 17%)
Changes from the prior year
We assessed our 2023 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.
Two components in Cameroon and South Africa, which were included in prior year audit scope and assigned specif
ic scope,
were excluded from the Group audit scope in the current year based on our updated risk assessment. These components
represent ind
iv
idually no more than 0.2% of Group absolute PBT, 0.7% of the Group’s absolute operating income and 0.4% of
the Group’s Total assets respectively in the current year. No component which was full scope in the prior year, has been
excluded from Group audit scope for the 2023 audit.
For Germany, Australia, Ghana and Cameroon, the Primary Audit Team performed certain procedures centrally over the cash
balances as at 31 December 2023. Malaysia, Indonesia, Pakistan and Kenya 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 2023, we assigned a specif
ic scope to Bahra
in and United Kingdom (Jersey) components that are sign
ificant based on r
isk,
and specif
ied procedures to Ta
iwan (Taipe
i Branch). These components were not
in-scope in the prior year.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
149
Independent Auditor’s report
to the members of Standard Chartered Bank continued
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 primary audit engagement team (the "Primary Audit Team"), or by component auditors
from other firms operating under our instruct
ion. All of the d
irect components of the Group (full, specif
ic or spec
if
ied
procedures) were audited by EY global network firms.
Of the 6 full scope components, audit procedures were performed on 2 of these (includ
ing the aud
it of the Company) directly
by the Primary Audit Team (EY London) in the United Kingdom. For 1 specif
ic scope component, the aud
it procedures were
performed by the Primary Audit Team. Where components were audited by the Primary Audit Team, this was under the
direct
ion and superv
is
ion of the Sen
ior Statutory Auditor. For the 13 remain
ing components, where the work was performed by
component auditors, 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 opin
ion on the Group as a whole.
In addit
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 serv
ice centre audits.
The Primary Audit Team continued to follow a programme of planned vis
its to component teams and shared serv
ice 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)
• Indonesia
•
Malaysia (includ
ing the shared serv
ices centre)
• Pakistan
•
Singapore (includ
ing the shared serv
ices centre)
• 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 SSC audit teams where
appropriate during various stages of the audit, reviewed relevant working papers and deliverables to the Primary Audit
Team, and were responsible for the scope and direct
ion of the aud
it process.
The Primary Audit Team also undertook video conference meetings with component and SSC audit teams and
management. These virtual meetings involved discuss
ing the aud
it approach and any issues aris
ing from the
ir work, as well
as performing remote reviews of key audit workpapers.
This, together with the procedures performed at Group level, gave us appropriate 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
manages climate risk according to the characterist
ics of the
impacted risk types and is embedding climate-risk
considerat
ions
into relevant frameworks, includ
ing pr
inc
ipal r
isk type frameworks, and processes. The assessment of the risk
by the Group is explained on page 142 in the “Risk profile: Climate Risk” section and in the Strategic Report, where the Group
has 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.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
150
Independent Auditor’s report
to the members of Standard Chartered Bank continued
The Group has explained in the strategic report, includ
ing by reference to the Annual Report of Standard Chartered PLC, 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
estimates relating to climate change are included in the section “Climate impact on the Group’s balance sheet” of note 1 to
the financial statements. As stated
in these disclosures, the Group has considered Climate to be an area of sign
ificant
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. The Group has concluded that wh
ilst it is not currently quantitat
ively mater
ial, it considers
climate to be qualitat
ively mater
ial.
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, and the
ir climate commitments have been
appropriately reflected in the valuation of assets and liab
il
it
ies, where these can be rel
iably measured, following the currently
effective 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 considers 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.
We also challenged the Directors’ considerat
ions of cl
imate change risks in their assessment of going concern, and the
associated disclosures. Where considerat
ions of cl
imate change were relevant to our assessment of going concern, these are
covered by the procedures described above.
Based on our work, we have considered the impact of climate change on the financ
ial statements to
impact certain key audit
matters. 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 2023
151
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
Refer to the Accounting polic
ies (page 180); Note
8 of the financial statements; and relevant cred
it
risk disclosures (includ
ing pages 65 and 67)
At 31 December 2023, the Group reported total
credit impa
irment balance sheet prov
is
ion of
$3,788 mill
ion (2022: $4,601 m
ill
ion).
Management’s judgements and estimates are
highly subject
ive as a result of the s
ign
ificant
uncertainty associated with the estimat
ion of
expected future credit losses that are dependent
upon several hard to estimate factors.
Assumptions with increased complexity in
respect of the tim
ing and measurement of
expected credit losses (ECL) include:
•
Staging
– the determinat
ion of what
constitutes sign
ificant
increase in credit risk
and consequent timely allocation of qualify
ing
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
appropriateness, completeness and valuation
of post-model adjustments applied to model
output to address ident
ified model deficienc
ies
or risks not fully captured by the models;
•
Economic scenarios
– Sign
ificant judgements
involved in the determinat
ion of the
appropriateness of economic variables, the
future forecasting of these variables and the
parameters used in the Monte Carlo
Simulat
ion. The assessment of non-l
inear
ity
produced by the Monte Carlo simulat
ion, the
benchmarking of the output and the
evaluation of the need for 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 allowances
–
Measurement of ind
iv
idual provis
ions
includ
ing
the assessment of probabil
ity we
ighted
recovery scenarios, exit strategies, collateral
valuations, expected future cashflows and the
tim
ing of these cashflows
In 2023, the most material factors impact
ing the
ECL were in relation to sovereign downgrades
impacted by dollar availab
il
ity, the continu
ing
impact of higher interest rates and inflat
ion and
geopolit
ical uncerta
inty. In addit
ion, where
relevant we considered the impact of climate on
the impa
irment prov
is
ions.
Overall, these factors were prevalent in the prior
year, and consequently the risk of a material
misstatement to the ECL remained consistent
with that of the prior year.
We evaluated the design of controls relevant to the Group’s
systems and processes over material ECL balances,
includ
ing the judgements and est
imates noted, involv
ing EY
special
ists to ass
ist us in performing our procedures where
relevant. Based on our evaluation we selected the controls
upon which we intended to rely and tested those for
operating effectiveness. We increased the extent of our
reliance on controls over model governance and in certain
locations of the stage 3 exposures.
We performed an overall stand-back assessment of the ECL
allowance in total and by stage to determine if the ECL was
reasonable. We considered the overall credit quality of the
Group’s portfolios, risk profile and the impact of sovereign
downgrades. We performed peer benchmarking to the
extent that this was considered relevant and invest
igated
and sought explanations for any areas noted as being
outliers. 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.
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 the completeness of the ident
ification of s
ign
ificant
increase in credit risk, we challenged the risk ratings
(includ
ing appropr
iate operation of quantitat
ive backstops)
for a sample of performing 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 and cyclical sectors (as
defined by the PLC Group) resulted in a sign
ificant
increase
in credit risk at a sector level.
Modelled output and adjustments
– We performed a risk
assessment on models involved in the ECL calculation using
EY independently determined quantitat
ive and qual
itat
ive
criter
ia to select a sample of models to test. Based on th
is
risk assessment, 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 or for known model deficienc
ies. This included the
completeness and appropriateness of these adjustments.
In response to new or enhanced models implemented this
year to address known weaknesses in previous models, we
performed substantive testing procedures as defined by our
model inherent risk assessment process, includ
ing code
review and implementat
ion test
ing.
We did not rely on controls over model monitor
ing and
therefore adopted a substantive approach compris
ing
reperformance of 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:
• We increased the
extent of our reliance
of controls over model
governance and stage
3 exposures in certain
locations;
•
Our evaluation of the
appropriateness of
the sign
ificant
increase in credit risk
triggers, and the
results of our
sensit
iv
ity analysis
and recalculation of
the staging
• our assessment of
the assumptions used
to determine the
Stage 3 ECL;
•
Our assessment of the
completeness and
measurement of post
model adjustments
and overlays;
•
Our assessment of the
quantum of the
non-linear
ity
adjustment produced
by the Monte Carlo
model includ
ing the
comparison to the
non-linear
ity
produced by running
narrative discrete
scenarios;
•
Our assessment of the
appropriateness of
the Group’s models to
generate the ECL and
staging outcomes
includ
ing the
appropriateness and
valid
ity of the data
used in the models
and to generate the
staging and
consequent ECL.
• Our evaluation of
management’s
enhanced modelling
approach to the
assessment of the
potential impact on
ECL from climate
change;
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
152
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
– In collaboration with our economists
and modelling special
ists, we challenged the completeness
and appropriateness of the macroeconomic variables used
as inputs to the ECL models.
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 reviewed and
challenged the appropriateness of the underlying coding
and assumptions used in the Monte Carlo simulat
ion.
We assessed the reasonableness of the non-linear
ity
impact on ECL allowances. We engaged our economists
and modelling special
ists, to assess and challenge the
Group’s choice of discrete scenarios to benchmark the
output from the Monte Carlo model and determine the
sensit
iv
ity analysis as set out on page 101 in the annual
report. This challenge included the choice of narrative
scenarios and we independently challenged the output
from these scenarios using independently determined EY
weights for each scenario. We also performed a stand-
back assessment by benchmarking
the resulting non-linear
ity upl
ift and overall ECL charge
and provis
ion coverage to peers.
Management overlays
– We challenged the completeness
and appropriateness of overlays used for risks not captured
by the models. We focussed our challenge on sovereign
risks and the sustained impact of higher interest rates and
inflat
ion. Our procedures
included assessing the need for
management overlays, and evaluating the assumptions
and judgments used to determine each overlay taking
current market condit
ions
into account.
Indiv
idually assessed ECL allowances
- Our procedures
included challenging management's forward-looking
economic assumptions of the recovery outcomes ident
ified,
cashflow profile and tim
ing,
ind
iv
idual probabil
ity
weight
ings for each scenar
io, 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 sectors. We also considered whether planned
exit strategies were viable.
We concluded that
management’s
methodology,
judgements and
assumptions used in
calculating credit
impa
irment are
materially in accordance
with the accounting
standard.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
153
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
a) Impairment of Goodwill: Accounting polic
ies
(page 249); and Note 16 of the financial
statements.
b) Impairment of investments in subsid
iary
undertakings: Accounting polic
ies (page 283);
and Note 31 of the financial statements.
At 31 December 2023, the Group reported
Goodwill balance of $1,299 mill
ion (2022: $1,323
mill
ion). In the Parent Company financial
statements, investment in subsid
iary undertak
ings
balance comprised $10,066 mill
ion (2022: $10,300
mill
ion). Dur
ing the year there were no impa
irment
of Goodwill recognised (2022: $10mill
ion), and
in
the Parent Company financial statements,
recognised an impa
irment of
investment of
investments in subsid
iar
ies of $298 mill
ion net of
reversals (2022: reversal of impa
irment of $249
mill
ion).
On an annual basis, management is required to
perform an impa
irment assessment for goodw
ill,
and to assess for ind
icators of
impa
irment
in
respect of investments in subsid
iary undertak
ings.
Where ind
icators of
impa
irment are
ident
ified,
the recoverable amount of the investment should
be estimated.
The impa
irment assessment of goodw
ill is
performed by calculating a 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
macroeconomic and geopolit
ical factors wh
ich
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.
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.
We performed audit procedures to assess the
reasonableness of the forecasts by understanding the
Group Strategy, challenging key assumptions underpinn
ing
the Plan, assessing the feasib
il
ity of management actions
necessary to achieve the Plan and testing the reliab
il
ity of
the Group’s histor
ical forecast
ing 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.
We agreed the NAV of the subsid
iar
ies against their
carrying value to confirm impa
irment or reversal of
impa
irment recogn
ised in the Parent`s Company
financial results.
We assessed the appropriateness of goodwill and
investments in subsid
iary undertak
ings impa
irment
disclosures in accordance with IAS 36.
We concluded that the
goodwill balance as at
31 December 2023 and
the related disclosures,
are not materially
misstated.
We also concluded that
the investments in
subsid
iary undertak
ings
balance reported in the
Parent Company
financial statements
and the associated
disclosures, are not
materially misstated as
at 31 December 2023.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
154
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 192) and
Note 12 to the financial statements.
At 31 December 2023, the Group reported
financial assets measured at fa
ir value of
$212,208 mill
ion (2022: $218,831 m
ill
ion), and
financial l
iab
il
it
ies at fa
ir value of $120,992 mill
ion
(2022: $136,266 mill
ion), of wh
ich financ
ial assets
of $4,234 mill
ion (2022: $4,744 m
ill
ion) and
financial l
iab
il
it
ies of $1,591 m
ill
ion (2022:
$888 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 validat
ion
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 testing on a risk-assessed sample basis:
Test complex model-dependent valuations by
independently revaluing 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,
Level 3 loans at fair value, Level 3 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
macroeconomic environment. In addit
ion, we assessed
whether there were any ind
icators of aggregate b
ias in
financial
instrument marking and methodology
assumptions.
We concluded that
assumptions used by
management to
estimate the fair value of
financial
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:
•
We did not ident
ify
material differences
aris
ing from our
independent testing
of complex model-
dependent valuations;
• Fair values of
derivat
ive
transactions, debt
securit
ies
in issue,
unlisted equity
investments, Level 3
loans, Level 3 debt
and other financial
instruments valued
using pric
ing
informat
ion w
ith
lim
ited observab
il
ity
were not materially
misstated as at 31
December 2023,
based on the output
of our independent
calculations; and
• Valuation adjustments
in respect of credit,
funding, own credit
and other risks applied
to derivat
ive portfol
ios
and debt securit
ies
in
issue were
appropriate, based on
our analysis of market
data and
benchmarking of
pric
ing
informat
ion.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
155
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
Priv
ileged Access Management
IT General Controls (ITGCs) support the
continuous operation of the automated and
other IT dependent controls with
in the bus
iness
processes related to financial 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, 2021 and 2022 audits, a number
of sign
ificant
infrastructure priv
ileged access
management 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 users gain
ing access pr
iv
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.
The risk has decreased in comparison to prior
year due to management’s remediat
ion
program.
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 2023.
We communicated the
results of our audit
procedures to the Audit
Committee throughout
the audit, in respect of
the effectiveness of
priv
ileged access
management controls
and explained the
results of the addit
ional
audit procedures
performed and noted an
overall improvement in
the control environment
during the course of
the year.
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 financ
ial
statements, related to
infrastructure priv
ileged
access management, to
an appropriate level.
The key audit matters remain consistent from prior year.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
156
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 $221 m
ill
ion (2022: $178 m
ill
ion), wh
ich is 5% (2022: 5%) of adjusted PBT. This
reflects actual PBT adjusted for non-recurring items relating to restructuring. We believe that adjusted PBT provides us with
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.
During 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 bas
is for
material
ity calculat
ion from the planning stage.
•
Reported profit before tax – $4,414m
•
Add restructuring items – $0.6m
Starting basis
Adjustments
• Total 4,415m Adjusted PBT
•
Material
ity of $221m (5% of Adjusted PBT)
Material
ity
We determined material
ity for the Company to be $155 m
ill
ion (2022: $178 m
ill
ion), wh
ich is 5% of adjusted PBT (2022: was
aligned to the material
ity of the Group). We bel
ieve that adjusted PBT provides us with most appropriate measure for the
users of the financial statements, g
iven the Company is profit making, it is consistent with the wider industry, it is the standard
for regulated entit
ies and we bel
ieve it reflects the most relevant measure for users of the financ
ial statements.
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 assessment, together with our evaluation of the Group’s overall control environment, our judgement
was that performance material
ity was 50% (2022: 50%) of our plann
ing material
ity, namely $111m (2022: $89m). 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 scale 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
$11.4m mill
ion to $22.8m m
ill
ion (2022: $8.8 m
ill
ion to $34.1 m
ill
ion).
Independent Auditor’s report
to the members of Standard Chartered Bank continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
157
Independent Auditor’s report
to the members of Standard Chartered Bank continued
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 $11 mill
ion
(2022: $8 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.
We evaluate any uncorrected misstatements against both the quantitat
ive measures of mater
ial
ity d
iscussed above and in
light of other relevant qualitat
ive cons
iderat
ions
in forming our opin
ion.
Other informat
ion
The other informat
ion compr
ises the informat
ion
included in the Annual Report and Accounts, includ
ing: the Strateg
ic Report,
Directors’ Report, Statement of Directors’ Responsib
il
it
ies, R
isk Review and Capital Review (other than those sections marked
as audited), Supplementary informat
ion and Glossary, 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.
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 57, 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.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
158
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.
•
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, Financ
ial Conduct
Authority (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 Arab Emirates and 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 regulations that may have an effect on the determinat
ion of the amounts and d
isclosures in the financ
ial statements
and those laws and regulations 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 it would have resulted in it 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 pr
inc
ipal 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.
Independent Auditor’s report
to the members of Standard Chartered Bank continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
159
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 3 May 2023 to audit the financ
ial statements for the year end
ing 31 December 2023 and subsequent financ
ial
periods.
•
The period of total uninterrupted engagement is four years, covering the years ended 31 December 2020 to
31 December 2023.
•
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
23 February 2024
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
160
Consolidated income statement
For the year ended 31 December 2023
Notes
2023
$mill
ion
2022
$mill
ion
Interest income
Interest expense
(13,773 )
(5,314 )
Net interest income
3
Fees and commiss
ion
income
Fees and commiss
ion expense
(656 )
(709 )
Net fees and commiss
ion
income
4
Net trading income
5
Other operating income
6
(114 )
Operating income
Staff costs
(6,286 )
(5,748 )
Premises costs
(241 )
(228 )
General admin
istrat
ive expenses
(75 )
Depreciat
ion and amort
isat
ion
(647 )
(611 )
Operating expenses
7
(7,147 )
(6,662 )
Operating profit before impa
irment losses and taxat
ion
Credit impa
irment
8
Goodwill, property, plant and equipment and other impa
irment
9
(42 )
(107 )
Loss from associates and jo
int ventures
31
(4 )
(13 )
Profit before taxation
Taxation
10
(1,177 )
(1,122 )
Profit for the year
Profit attributable to:
Non-controlling interests
28
(18 )
Parent company shareholders
Profit for the year
The notes on pages 167 to 305 form an integral part of these financ
ial statements.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
161
Consolidated statement of comprehensive income
For the year ended 31 December 2023
Notes
2023
$mill
ion
2022
$mill
ion
Profit for the year
Other comprehensive income/(loss)
Items that will not be reclassif
ied to
income statement:
(27 )
Own credit gains/(losses) 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 (losses)/gains on retirement benefit obligat
ions
29
(27 )
Taxation relating to components of other comprehensive income
10
(75 )
Items that may be reclassif
ied subsequently to
income statement:
(2,739 )
Exchange differences on translation of foreign operations:
Net losses taken to equity
(563 )
(1,328 )
Net (losses)/gains on net investment hedges
13
(18 )
Debt instruments at fair value through other comprehensive income:
Net valuation gains/(losses) taken to equity
(1,285 )
Reclassif
ied to
income statement
6
Net impact of expected credit loss
(48 )
Cash flow hedges:
Net movements in cash flow hedge reserve
13
(592 )
Taxation relating to components of other comprehensive income
10
(91 )
Other comprehensive gain/(loss) for the year, net of taxation
(2,766 )
Total comprehensive income/(loss) for the year
(414 )
Total comprehensive income/(loss) attributable to:
Non-controlling interests
28
(2 )
(56 )
Parent company shareholders
(358 )
Total comprehensive income/(loss) for the year
(414 )
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
162
Consolidated balance sheet
As at 31 December 2023
Notes
Group
Company
2023
$mill
ion
2022
$mill
ion
2023
$mill
ion
2022
$mill
ion
Assets
Cash and balances at central banks
12,34
52,758
38,867
Financ
ial assets held at fa
ir value through profit or loss
12
86,412
75,792
Derivat
ive financial
instruments
12,13
53,221
65,481
Loans and advances to banks
12,14
10,135
18,548
Loans and advances to customers
12,14
75,883
80,611
Investment securit
ies
12
92,771
95,372
Other assets
19
21,742
31,715
Due from subsid
iary undertak
ings and other related parties
10,053
13,214
Current tax assets
10
395
347
Prepayments and accrued income
1,386
1,598
Interests in associates and jo
int ventures
31
–
–
Investments in subsid
iary undertak
ings
31
10,066
10,300
Goodwill and intang
ible assets
16
2,359
2,279
Property, plant and equipment
17
521
430
Deferred tax assets
10
379
579
Assets classif
ied as held for sale
20
68
592
Total assets
418,149
435,725
Liab
il
it
ies
Deposits by banks
12
18,280
17,900
Customer accounts
12
121,648
137,422
Repurchase agreements and other sim
ilar secured borrow
ing
12,15
11,977
1,723
Financ
ial l
iab
il
it
ies held at fa
ir value through profit or loss
12
64,467
66,189
Derivat
ive financial
instruments
12,13
55,531
69,203
Debt securit
ies
in issue
12,21
34,740
34,992
Other liab
il
it
ies
22
19,213
20,990
Due to parent companies, subsid
iary undertak
ings & other related
parties
47,317
39,933
Current tax liab
il
it
ies
10
188
329
Accruals and deferred income
2,453
2,140
Subordinated liab
il
it
ies and other borrowed funds
12,26
10,896
12,729
Deferred tax liab
il
it
ies
10
477
486
Provis
ions for l
iab
il
it
ies and charges
23
171
249
Retirement benefit obligat
ions
29
133
124
Liab
il
it
ies
included in disposal groups held for sale
20
5
345
Total liab
il
it
ies
387,496
404,754
Equity
Share capital and share premium account
27
21,643
22,393
Other reserves
(6,509 )
(6,965 )
(3,403)
(4,252)
Retained earnings
7,671
8,080
Total parent company shareholders’ equity
25,911
26,221
Other equity instruments
27
4,742
4,750
Total equity excluding non-controlling interests
30,653
30,971
Non-controlling interests
28
–
–
Total equity
30,653
30,971
Total equity and liab
il
it
ies
418,149
435,725
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 $2,585 mill
ion (2022: Profit after tax $2,372 m
ill
ion).
The notes on pages 167 to 305 form an integral part of these financ
ial statements
irectors and authorised for issue on 23 February 2024 and signed
on its behalf by:
Bill Winters
, Director
Diego De Giorg
i
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
163
Consolidated statement of changes in equity
For the year ended 31 December 2023
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 2022
(3 )
(11 )
(4,544 )
Profit/(loss) for the year
(18 )
Other comprehensive
(loss)/income⁹
(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
5
6
As at 31 December 2022
(26 )
(851 )
(513 )
(5,781 )
Profit for the year
Other comprehensive
income/(loss)⁹
(550 )
(33 )
2
(31 )
Distr
ibut
ions
(103 )
(103 )
Other equity instruments
issued, net of expenses
Redemption of other
equity instruments
(1,000 )
(1,000 )
Share option expenses
Div
idends on ord
inary shares
(2,599 )
(2,599 )
(2,599 )
Div
idends on preference shares
and AT1 securit
ies
(363 )
(363 )
(363 )
Deemed distr
ibut
ion to parent
3
(174 )
(174 )
(174 )
Share buyback¹⁰
(750 )
(750 )
(750 )
Other movements
7
(41 )
4
(26 )
8
As at 31 December 2023
(514 )
(13 ) (6,260 )
1
Includes capital reserve of $35 mill
ion, cap
ital redemption reserve of $5 mill
ion
2
Comprises actuarial gain/(loss) on Group defined benefit schemes
3
Relates to deemed distr
ibut
ion to parent company aris
ing from share-based payment net of taxat
ion of $174 mill
ion (2022: $159 m
ill
ion)
4
Movement related to Translation adjustment
5
Movement relating to $21 mill
ion NCI on Power2SME Pte. Ltd. and $8 m
ill
ion on CurrencyFa
ir Lim
ited
6
Movements related to non-controlling interest from Trust Bank Singapore Lim
ited ($47 m
ill
ion), Power2SME Pte. Ltd. ($9 m
ill
ion) and Zod
ia Markets Holdings Lim
ited
($3 mill
ion)
7
Movements in Reserves relating to Ventures Group due to change in ownership
8
Movement from non-controlling interest of $28 mill
ion pr
imar
ily from Trust Bank S
ingapore offset by release of non-controlling interest relating to Venture group
($7 mill
ion) due to change
in ownership
9
All the amounts are net of tax
10 At an Extraordinary General Meeting of the Company duly convened and held at 1 Basinghall Avenue, London, EC2V 5DD on 26 June 2023, the capital of the Company
was reduced by (i) cancelling and extingu
ish
ing 7,500 7.014% non-cumulative preference shares of US$5 each in the capital of the Company (the “Preference Shares”)
and (i
i) reduc
ing the amount standing to the credit of the Company’s share premium account by US$749,962,500, and a repayment of capital of US$750,000,000 be
paid to the holder of the Preference Shares.
Note 27 includes a descript
ion of each reserve.
The notes on pages 167 to 305 form an integral part of these financ
ial statements
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
164
Notes
Group
Company
2023
$mill
ion
2022
(Restated)¹
$mill
ion
2023
$mill
ion
2022
(Restated)¹
$mill
ion
Cash flows from operating activ
it
ies:
Profit before taxation
3,088
2,996
Adjustments for non-cash items and other adjustments
included with
in
income statement
33
(107 )
(790)
381
Change in operating assets¹
33
23,104
(2,793)
Change in operating liab
il
it
ies
33
(4,503 )
(13,891)
4,521
Contribut
ions to defined benefit schemes
29
(60 )
(46 )
(46)
(36)
UK and overseas taxes paid
10
(1,229 )
(782 )
(658)
(359)
Net cash from operating activ
it
ies
10,807
4,710
Cash flows from invest
ing act
iv
it
ies:
Internally generated capital
ised software
16
(649 )
(761 )
(378)
(501)
Purchase of property, plant and equipment
17
(100 )
(139 )
(53)
(59)
Disposal of property, plant and equipment
17
1
14
Acquis
it
ion of investment in subsid
iar
ies, associates
and joint ventures
31
(1 )
(25 )
–
–
Div
idends rece
ived from subsid
iar
ies, associates
and joint ventures
31
2,060
1,046
Disposal of subsid
iar
ies, associates and jo
int ventures
–
–
Disposal of assets held for sale and associated liab
il
it
ies
108
–
Purchase of investment securit
ies
(124,780 )
(156,905 )
(91,970)
(114,671)
Disposal and maturity of investment securit
ies
97,216
98,999
Net cash from/(used in) from invest
ing act
iv
it
ies
(19,629 )
6,984
(15,172)
Cash flows from financing act
iv
it
ies:
Cancellation of shares includ
ing share buyback
27
(750 )
(750)
–
Premises and equipment lease liab
il
ity princ
ipal payment
(97 )
(129 )
(45)
(78)
Issue of Addit
ional T
ier 1 capital, net of expenses
27
992
1,000
Redemption of Tier 1 capital
27
(1,000 )
(999 )
(1,000)
(999)
Gross proceeds from issue of subordinated liab
il
it
ies
33
–
750
Interest paid on subordinated liab
il
it
ies
33
(714 )
(424 )
(583)
(378)
Repayment of subordinated liab
il
it
ies
33
(2,160 )
(1,008 )
(2,160)
(1,008)
Proceeds from issue of senior debts
33
4,820
4,091
Repayment of senior debts
33
(2,546 )
(1,490 )
(1,806)
(298)
Interest paid on senior debts
33
(235 )
(1 )
(235)
(1)
Net cash inflow from non-controlling interests
28
–
–
Distr
ibut
ions and Div
idends pa
id to non-controlling interests,
preference shareholders and AT1 securit
ies
11,28
(466 )
(398 )
(363)
(311)
Div
idends pa
id to ordinary shareholders
11
(2,599 )
(575 )
(2,599)
(575)
Net cash (used in)/from financ
ing act
iv
it
ies
(3,939 )
(3,729)
2,193
Net increase/(decrease) in cash and cash equivalents
14,062
(8,269)
Cash and cash equivalents at beginn
ing of the year¹
40,264
49,394
Effect of exchange rate movements on cash and cash equivalents
(797 )
(2,171 )
(338)
(861)
Cash and cash equivalents at end of the year¹
34
53,988
40,264
1
Refer to note 33 and 34 for details of the restatement
For Bank Group, Interest received was $18,174 mill
ion (31 December 2022: $8,897 m
ill
ion) ,
interest paid was $13,773 mill
ion
(31 December 2022: $4,356 mill
ion).
For Bank Company Interest received was $12,518 mill
ion (31 December 2022: $5,355 m
ill
ion),
interest paid was $10,787 mill
ion
(31 December 2022: $3,394 mill
ion).
Cash flow statement
For the year ended 31 December 2023
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
165
Company statement of changes in equity
For the year ended 31 December 2023
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 2022
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)/income⁴
–
–
(25)
(950)
(1)
(483)
(704)
6
2
(2,157)
–
(2,157)
Shares issued, net of expenses
–
–
–
–
–
–
–
–
–
–
–
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
Profit for the year
–
–
–
–
–
–
–
2,585
2,585
–
2,585
Other comprehensive income/(loss)⁴
–
–
73
324
67
471
(86)
(21)
2
828
–
828
Other equity instruments issued,
net of expenses
–
–
–
–
–
–
–
–
–
992
992
Redemption of other equity instruments
–
–
–
–
–
–
–
–
–
(1,000)
(1,000)
Share option expenses
–
–
–
–
–
–
–
114
114
–
114
Div
idends on ord
inary shares
–
–
–
–
–
–
–
(2,599)
(2,599)
–
(2,599)
Div
idends on preference shares
and AT1 securit
ies
–
–
–
–
–
–
–
(363)
(363)
–
(363)
Deemed distr
ibut
ion to parent
3
–
–
–
–
–
–
–
(113)
(113)
–
(113)
Share buyback⁵
(750)
–
–
–
–
–
–
–
(750)
–
(750)
Other movements
–
–
–
–
–
–
–
(12)
(12)
–
(12)
As at 31 December 2023
21,643
40
49
(716)
214
(51)
(2,939)
7,671
25,911
4,742
30,653
1
Includes capital reserve of $35 mill
ion, cap
ital redemption reserve of $5 mill
ion
2
Comprises actuarial gain/(loss) on Group defined benefit schemes
3
Relates to deemed distr
ibut
ion to parent company aris
ing from share-based payment net of taxat
ion of $113 mill
ion (31 December 2022: $104 m
ill
ion)
4
All the amounts are net of tax
5
At an Extraordinary General Meeting of the Company duly convened and held at 1 Basinghall Avenue, London, EC2V 5DD on 26 June 2023, the capital of the Company
was reduced by (i) cancelling and extingu
ish
ing 7,500 7.014% non-cumulative preference shares of US$5 each in the capital of the Company (the “Preference Shares”)
and (i
i) reduc
ing the amount standing to the credit of the Company’s share premium account by US$749,962,500, and a repayment of capital of US$750,000,000 be
paid to the holder of the Preference Shares.
Note 27 includes a descript
ion of each reserve.
The notes on pages 167 to 305 form an integral part of these financ
ial statements.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
166
Section
Note
Page
Basis of preparation
1
Accounting polic
ies
167
Performance/return
2
Segmental informat
ion
169
3
Net interest income
175
4
Net fees and commiss
ion
176
5
Net trading income
178
6
Other operating income
178
7
Operating expenses
179
8
Credit impa
irment
180
9
Goodwill, property, plant and equipment and other impa
irment
184
10
Taxation
185
11
Div
idends
191
Assets and liab
il
it
ies held at fa
ir value
12
Financ
ial
instruments
192
13
Derivat
ive financial
instruments
231
Financ
ial
instruments held at amortised cost
14
Loans and advances to banks and customers
246
15
Reverse repurchase and repurchase agreements includ
ing other
sim
ilar lend
ing and borrowing
246
Other assets and investments
16
Goodwill and intang
ible assets
249
17
Property, plant and equipment
252
18
Leased assets
255
19
Other assets
256
20
Assets held for sale and associated liab
il
it
ies
257
Funding, accruals, provis
ions, cont
ingent
liab
il
it
ies and legal proceed
ings
21
Debt securit
ies
in issue
259
22
Other liab
il
it
ies
260
23
Provis
ions for l
iab
il
it
ies and charges
261
24
Contingent liab
il
it
ies and comm
itments
262
25
Legal and regulatory matters
263
Capital instruments, equity and reserves
26
Subordinated liab
il
it
ies and other borrowed funds
264
27
Share capital, other equity instruments and reserves
265
28
Non-controlling interests
267
Employee benefits
29
Retirement benefit obligat
ions
268
30
Share-based payments
278
Scope of consolidat
ion
31
Investments in subsid
iary undertak
ings, jo
int ventures and assoc
iates
283
32
Structured entit
ies
286
Cash flow statement
33
Cash flow statement
288
34
Cash and cash equivalents
289
Other disclosure matters
35
Related party transactions
290
36
Auditor’s remuneration
293
37
Remuneration of directors
293
38
Related undertakings of the Group
295
39
Group Reorganisat
ion
307
40
Post Balance Sheet events
307
Contents – Notes to the financial statements
Notes to the financial statements
Standard Chartered Bank
167
Directors’ Report and Financ
ial Statements 2023
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) Risk review: Disclosures from the start of Risk profile section (page 60) to the end of other princ
ipal r
isks in the same section
(page 120) excluding:
•
Liqu
id
ity coverage ratio (LCR), (page 110)
• Stressed coverage, (page 110)
•
Net stable funding ratio (NSFR), (page 111)
• Liqu
id
ity pool, (page 111)
•
Interest Rate Risk in the Banking Book, (page 118)
• Operational risk, (page 119)
•
Other princ
ipal r
isks, (page 120)
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 convention, 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 and other account
ing estimates and judgement
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 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
judgements are:
•
Expected credit loss calculations (Note 8)
•
Financ
ial
instruments measured at fair value (Note 12)
•
Investments in subsid
iary undertak
ings (Note31)
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)
•
Retirement benefit obligat
ions (Note 29)
Notes to the financial statements cont
inued
Standard Chartered Bank
168
Directors’ Report and Financ
ial Statements 2023
1. Accounting polic
ies cont
inued
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 sign
ificant account
ing estimate
and judgment 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
material to the Group.
The PLC Group has assessed the impact of climate risk on the financ
ial report. Th
is is set out with
in the Susta
inab
il
ity Review
chapter 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 in 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 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). At PLC Group level, the setting of net zero targets for our
high carbon sectors, which as of this annual report covers 11 of the 12 high carbon sectors as mandated by the Net Zero
Banking Alliance, manages transit
ion r
isk. Net zero targets enable the portfolio managers to work with our clients on their
transit
ion, deploy cap
ital to those clients which are engaged and have adequate transit
ion pathways, and ex
it clients that
refuse to work with the Group on moving from a high carbon present to a low carbon future. All of these actions manage the
Group’s transit
ion r
isk and engage clients before transit
ion r
isk manifests itself into credit losses.
Physical risk is already included with
in the majority of our mortgage lend
ing decis
ions, and we have appl
ied 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 quantitat
ive assessment of the
impact of climate risk on the IFRS 9 ECL
provis
ion. Th
is assessment has been performed across both the CCIB and CPBB portfolios. The Climate risk impact
assessment on IFRS 9 business as usual ECL has been conducted based on newly developed internal climate risk models for
four Corporate sectors (Oil and Gas, Power, Steel and Min
ing) and Sovere
igns, whilst the top-down approach developed in
2022 was used for the remain
ing portfol
ios. The impact assessment resulted in a marginal ECL increase across CCIB and
CPBB, which will not be recorded as an overlay for the Group or the PLC Group at the 2023 year end.
The PLC Group’s corporate plan has a 5 year outlook and considers the high carbon sectors the Group finances. The major
ity
of the PLC Group high carbon sector targets are production/physical intens
it
ies which allow continued levels of lending as
long as the products the client produce have a decreasing carbon cost. For Coal Min
ing and O
il and Gas, these sectors have
absolute targets which represent a decreasing carbon budget. Coal Min
ing
is an immater
ial book, wh
ilst for Oil and Gas
lending is being actively monitored towards lower carbon counterparties and technologies. The corporate plan is shorter
term than many of the climate scenario outlooks but seeks to capture the nearer term performance as required by
recoverabil
ity models. The PLC Group has for the second t
ime in the 2024 corporate plan included antic
ipated ECL charges
linked to climate for four sectors (Oil and Gas, Metals and Min
ing, Power and Transport exclud
ing Aviat
ion) over the 5 years.
This addit
ion of ECL has not
in itself, impacted the recoverabil
ity of assets supported by d
iscounted cash flow models (such as
Value in Use) which util
ise the Corporate plan.
The PLC Group has further progressively strengthened its scenario analysis capabil
it
ies with the modelling of Climate Risk
impact over a 30-year period across multiple dimens
ions
includ
ing scenar
io data and pathways. This has been lim
ited by
availab
il
ity of client-specif
ic data, and modell
ing lim
itat
ions which have required judgements to be made around scenarios
chosen, regression and proxies used. 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 bespoke 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
planning as the Group implements its net zero journey.
Notes to the financial statements cont
inued
Standard Chartered Bank
169
Directors’ Report and Financ
ial Statements 2023
1. Accounting polic
ies cont
inued
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:
• Cash flow statement
• Note 2 Segmental informat
ion
•
Note 33 Cash flow statement
•
There were no new accounting standards or interpretat
ions that had a mater
ial effect on the Group’s Financ
ial Statements
IAS 21 Amendment - Lack of Exchangeabil
ity
The IAS 21 amendment was issued in August 2023 and is effective for annual reporting periods beginn
ing on or after January
1, 2025. This amendment is not yet endorsed for use in the United Kingdom. The amendment provides guidance to specify
when a currency is exchangeable and how to determine the exchange rate when it is not. The amendment requires
disclosure of informat
ion that enables users of financial statements to understand the
impact of a currency not being
exchangeable. The Group will apply the IAS 21 Amendment for annual reporting periods beginn
ing on January 1, 2025 and
is
currently assessing the impact on the Group’s financ
ial statements but do not expect th
These financial statements were approved by the Court of d
irectors on 23 February 2024. 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
current macroeconomic and geopolit
ical headw
inds, includ
ing:
•
A 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 revised budget.
•
Considerat
ion of stress test
ing performed, includ
ing the PCL Group’s Recovery Plan (RP) wh
ich include the applicat
ion of
stressed scenarios. Under the tests and through the range of scenarios, the results of these exercises and the RP
demonstrate that the Group has sufficient cap
ital and liqu
id
ity to continue as a going concern and meet min
imum
regulatory capital and liqu
id
ity requirements
•
Analysis of the capital, funding and liqu
id
ity posit
ion of the PLC Group,
includ
ing the cap
ital and leverage ratios, and ICAAP
which summarises the PLC Group’s capital and risk assessment processes, assesses its capital requirements and the
adequacy of resources to meet them. Further, PLC Group’s funding and liqu
id
ity was considered in the context of the risk
appetite metrics, includ
ing the PLC Group’s LCR rat
io
•
The PLC 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 PLC Group’s 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 PLC Group’s debt
•
A detailed review of all PLC Group’s princ
ipal and emerg
ing risks
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 23 February 2024. For this reason, the Group continues to adopt the going
concern basis of accounting for preparing the financ
ies
The Group has changed its accounting policy regarding the determinat
ion of the cost of
its portfolio of Investment Securit
ies
held at amortised cost and Debt securit
ies and other el
ig
ible b
ills, other than those included with
in financial
instruments held
at fair value through profit or loss. Refer to Note 12 Financ
Notes to the financial statements cont
inued
Standard Chartered Bank
170
Directors’ Report and Financ
ial Statements 2023
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 otherwise
The Group’s segmental reporting is in accordance with IFRS 8 Operating Segments and is reported consistently with the
Restructuring items excluded from underlying results
The Group’s reported IFRS performance is adjusted for certain items to arrive at alternative performance measures. These
items include 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
consistent performance period-by period. The alternative performance measures are not with
in the scope of IFRS and not a
substitute for IFRS measures. These adjustments are set out below
Restructuring loss of $117 mill
ion pr
imar
ily relates to the ex
its in AME. The Group is also reclassify
ing the movement
in Debit
Valuation Adjustment (DVA) into restructuring and other items.
Reconcil
iat
ions between underlying and reported results are set out in the tables below:
Profit before taxation (PBT)
2023 | |||||||||
Net gain on | Goodwill and | ||||||||
businesses | Other | ||||||||
Underlying | Restructuring | DVA | disposed off 1 | impa irment | Reported | ||||
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | ||||
Operating income | 11,408 | 151 | 27 | (37) | – | 11,549 | |||
Operating expenses | (6,869) | (278) | – | – | – | (7,147) | |||
Operating profit/(loss) before impa irment losses | |||||||||
and taxation | 4,539 | (127) | 27 | (37) | – | 4,402 | |||
Credit impa irment | 46 | 12 | – | – | – | 58 | |||
Other impa irment | (40) | (2) | – | – | – | (42) | |||
Loss from associates and jo int ventures | (4) | – | – | – | – | (4) | |||
Profit/(loss) before taxation | 4,541 | (117) | 27 | (37) | – | 4,414 | |||
| 2022 2 | ||||||
Net gain on | Goodwill and | |||||
business | Other | |||||
Underlying | Restructuring | DVA | disposed off | impa irment | Reported | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Operating income | 10,017 | 164 | 33 | 20 | – | 10,234 |
Operating expenses | (6,433) | (229) | – | – | – | (6,662) |
Operating profit/(loss) before impa irment losses | ||||||
and taxation | 3,584 | (65) | 33 | 20 | – | 3,572 |
Credit impa irment | 25 | (3) | – | – | – | 22 |
Other impa irment | (85) | (12) | – | – | (10) | (107) |
Loss from associates and jo int ventures | (13) | – | – | – | – | (13) |
Profit/(loss) before taxation | 3,511 | (80) | 33 | 20 | (10) | 3,474 |
1
Net gain on businesses disposed of for sale includes a loss of $37mill
ion
in relation to a sale of a portfolio of Aviat
ion loans
2
Restructuring, DVA and other items for relevant periods in 2022 have been restated for the removal of (i) exit markets and businesses in AME (i
i) Av
iat
ion F
inance and
(i
i
i) DVA from underlying operating performance
Notes to the financial statements cont
inued
Standard Chartered Bank
171
Directors’ Report and Financ
ial Statements 2023
2. Segmental informat
ion cont
inued
Underlying performance by client segment
2023 | |||||
Corporate, | Consumer | ||||
Commercial& | Private & | Central & | |||
Institut ional | Business | Other Items | |||
Banking | Banking | Ventures | (Segment) | Total | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Operating income | 7,972 | 3,456 | 137 | (157) | 11,408 |
External | 6,026 | 2,124 | 138 | 3,120 | 11,408 |
Inter-segment | 1,946 | 1,332 | (1) | (3,277) | – |
Operating expenses | (4,103) | (1,989) | (329) | (448) | (6,869) |
Operating profit/(loss) before impa irment losses and taxat ion | 3,869 | 1,467 | (192) | (605) | 4,539 |
Credit impa irment | 153 | (128) | (13) | 34 | 46 |
Other impa irment | (35) | (4) | (24) | 23 | (40) |
(Loss)/profit from associates and jo int ventures | – | – | (24) | 20 | (4) |
Underlying profit/(loss) before taxation | 3,987 | 1,335 | (253) | (528) | 4,541 |
Restructuring | (91) | (31) | (4) | 9 | (117) |
Goodwill and other impa irment | – | – | – | – | – |
DVA | 27 | – | – | – | 27 |
Other Items 1 | (37) | – | – | – | (37) |
Reported profit/(loss) before taxation | 3,886 | 1,304 | (257) | (519) | 4,414 |
Total assets | 285,036 | 49,137 | 2,208 | 202,198 | 538,579 |
Total liab il it ies | 330,747 | 70,953 | 1,535 | 101,400 | 504,635 |
| 2022² | |||||
Corporate, | Consumer | ||||
Commercial& | Private & | Central & | |||
Institut ional | Business | Other Items | |||
Banking | Banking | Ventures | (Segment) | Total | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Operating income | 6,917 | 2,828 | 3 | 269 | 10,017 |
External | 6,321 | 2,274 | 3 | 1,419 | 10,017 |
Inter-segment | 596 | 554 | – | (1,150) | – |
Operating expenses | (3,755) | (1,873) | (242) | (563) | (6,433) |
Operating profit/(loss) before impa irment losses and taxat ion | 3,162 | 955 | (239) | (294) | 3,584 |
Credit impa irment | 186 | (18) | (2) | (141) | 25 |
Other impa irment | (9) | (6) | (20) | (50) | (85) |
(Loss)/profit from associates and jo int ventures | – | – | (16) | 3 | (13) |
Underlying profit/(loss) before taxation | 3,339 | 931 | (277) | (482) | 3,511 |
Restructuring | (26) | (31) | (1) | (22) | (80) |
Goodwill and other impa irment | – | – | – | (10) | (10) |
DVA | 33 | – | – | – | 33 |
Other Items | – | – | – | 20 | 20 |
Reported 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 |
1
Other items includes loss of $37 mill
ion
in relation to the sale of a portfolio of Aviat
ion loans
2
Underlying performance for relevant periods in 2022 has been restated for the removal of (i) exit markets and businesses in AME (i
i) Av
iat
ion F
inance and (i
i
i) DVA.
No change to reported performance
Notes to the financial statements cont
inued
Standard Chartered Bank
172
Directors’ Report and Financ
ial Statements 2023
2. Segmental informat
ion cont
inued
Operating income by client segment
| 2023 | |||||
Corporate, | Consumer | ||||
Commercial& | Private & | Central & | |||
Institut ional | Business | Other Items | |||
Banking | Banking | Ventures | (Segment) | Total | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Underlying operating income | 7,972 | 3,456 | 137 | (157) | 11,408 |
Restructuring | 70 | 45 | – | 36 | 151 |
Other items 1 | (37) | – | – | – | (37) |
DVA | 27 | – | – | – | 27 |
Reported operating income | 8,032 | 3,501 | 137 | (121) | 11,549 |
| 2022² | |||||
Corporate, | Consumer | ||||
Commercial& | Private & | Central & | |||
Institut ional | Business | Other Items | |||
Banking | Banking | Ventures | (Segment) | Total | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Underlying operating income | 6,917 | 2,828 | 3 | 269 | 10,017 |
Restructuring | 93 | 47 | – | 24 | 164 |
Other items | – | – | – | 20 | 20 |
DVA | 33 | – | – | – | 33 |
Reported operating income | 7,043 | 2,875 | 3 | 313 | 10,234 |
1
Other items includes loss of $37 mill
ion
in relation to the sale of a portfolio of Aviat
ion loans
2
Underlying performance for relevant periods in 2022 has been restated for the removal of (i) exit markets and businesses in AME (i
i) Av
iat
ion F
inance and (i
i
i) DVA.
No change to reported performance
Underlying performance by region
2023 | ||||||
Central & | ||||||
Africa & | Europe & | Other Items | ||||
Asia | Middle East | Americas | (Region) | Total | ||
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | ||
Operating income | 5,331 | 2,764 | 1,682 | 1,631 | 11,408 | |
Operating expenses | (2,812) | (1,597) | (1,659) | (801) | (6,869) | |
Operating profit before impa irment losses and taxat ion | 2,519 | 1,167 | 23 | 830 | 4,539 | |
Credit impa irment | (64) | 91 | 28 | (9) | 46 | |
Other impa irment | (39) | (15) | (12) | 26 | (40) | |
(Loss)/profit from associates and jo int ventures | – | – | (24) | 20 | (4) | |
Underlying profit before taxation | 2,416 | 1,243 | 15 | 867 | 4,541 | |
Restructuring | (45) | 16 | (20) | (68) | (117) | |
Goodwill and other impa irment | – | – | – | – | – | |
DVA | (6) | 26 | 7 | – | 27 | |
Other Items 1 | (14) | (18) | (5) | – | (37) | |
Reported profit/(loss) before taxation | 2,351 | 1,267 | (3) | 799 | 4,414 | |
Total assets | 162,185 | 37,408 | 308,279 | 30,707 | 538,579 | |
Total liab il it ies | 148,595 | 37,288 | 217,279 | 101,473 | 504,635 | |
Notes to the financial statements cont
inued
Standard Chartered Bank
173
Directors’ Report and Financ
ial Statements 2023
2. Segmental informat
ion cont
inued
| 2022² | |||||
Central & | |||||
Africa & | Europe & | Other Items | |||
Asia | Middle East | Americas | (Region) | Total | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Operating income | 4,614 | 2,431 | 2,579 | 393 | 10,017 |
Operating expenses | (2,653) | (1,552) | (1,456) | (772) | (6,433) |
Operating profit/(loss) before impa irment losses and taxat ion | 1,961 | 879 | 1,123 | (379) | 3,584 |
Credit impa irment | 60 | (115) | 88 | (8) | 25 |
Other impa irment | (4) | 2 | 2 | (85) | (85) |
Loss from associates and jo int ventures | – | – | – | (13) | (13) |
Underlying profit/(loss) before taxation | 2,017 | 766 | 1,213 | (485) | 3,511 |
Restructuring | (4) | 25 | (35) | (66) | (80) |
Goodwill and other impa irment | – | – | – | (10) | (10) |
DVA | 11 | 8 | 14 | – | 33 |
Other Items | – | – | – | 20 | 20 |
Reported 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 |
1
Other items includes loss of $37 mill
ion
in relation to a sale of a portfolio of Aviat
ion loans
2
Underlying performance for relevant periods in 2022 has been restated for the removal of (i) exit markets and businesses in AME (i
i) Av
iat
ion F
inance and (i
i
i) DVA.
No change to reported performance
Operating income by region
| 2023 | |||||
Central & | |||||
Africa & | Europe & | Other Items | |||
Asia | Middle East | Americas | (Region) | Total | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Underlying operating income | 5,331 | 2,764 | 1,682 | 1,631 | 11,408 |
Restructuring | 5 | 122 | 12 | 12 | 151 |
Other items 1 | (14) | (18) | (5) | – | (37) |
DVA | (6) | 26 | 7 | – | 27 |
Reported operating income | 5,316 | 2,894 | 1,696 | 1,643 | 11,549 |
| 2022 2 | |||||
Central & | |||||
Africa & | Europe & | Other Items | |||
Asia | Middle East | Americas | (Region) | Total | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Underlying operating income | 4,614 | 2,431 | 2,579 | 393 | 10,017 |
Restructuring | 27 | 145 | (7) | (1) | 164 |
Other items | – | – | – | 20 | 20 |
DVA | 11 | 8 | 14 | – | 33 |
Reported operating income | 4,652 | 2,584 | 2,586 | 412 | 10,234 |
1
Other items includes loss of $37mill
ion
in relation to a sale of a portfolio of Aviat
ion loans
2
Underlying performance for relevant periods in 2022 has been restated for the removal of (i) exit markets and businesses in AME (i
i) Av
iat
ion F
inance and (i
i
i) DVA. No
change to reported performance
Notes to the financial statements cont
inued
Standard Chartered Bank
174
Directors’ Report and Financ
ial Statements 2023
2. Segmental informat
ion cont
inued
Addit
ional segmental
informat
ion (reported)
| 2023 | |||||
Corporate, | Consumer | ||||
Commercial& | Private & | Central & | |||
Institut ional | Business | Other Items | |||
Banking | Banking | Ventures | (Segment) | Total | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Net interest income | 3,259 | 2,346 | 9 | (1,007) | 4,607 |
Net fees and commiss ion income | 1,397 | 876 | 40 | 125 | 2,438 |
Net trading and other income | 3,376 | 279 | 88 | 761 | 4,504 |
Operating income | 8,032 | 3,501 | 137 | (121) | 11,549 |
| 2022 | |||||
Corporate, | Consumer | ||||
Commercial& | Private & | Central & | |||
Institut ional | Business | Other Items | |||
Banking | Banking | Ventures | (Segment) | Total | |
$mill ion | $mill ion | $mill ion | $mill ion | $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 |
Operating income by Region
| 2023 | |||||
Central & | |||||
Africa & | Europe & | Other Items | |||
Asia | Middle East | Americas | (Region) | Total | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Net interest income | 2,551 | 1,578 | (516) | 994 | 4,607 |
Net fees and commiss ion income | 1,070 | 493 | 566 | 309 | 2,438 |
Net trading and other income | 1,695 | 823 | 1,646 | 340 | 4,504 |
Operating income | 5,316 | 2,894 | 1,696 | 1,643 | 11,549 |
| 2022 | |||||
Central & | |||||
Africa & | Europe & | Other Items | |||
Asia | Middle East | Americas | (Region) | Total | |
$mill ion | $mill ion | $mill ion | $mill ion | $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 |
Operating income by Key Countries
| 2023 | ||||||
Singapore | India | Indonesia | UAE | UK | US | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Net interest income | 1,156 | 934 | 152 | 510 | (760) | 176 |
Net fees and commiss ion income | 658 | 181 | 34 | 175 | 363 | 409 |
Net trading and other income | 879 | 313 | 82 | 481 | 1,513 | 67 |
Operating income | 2,693 | 1,428 | 268 | 1,166 | 1,116 | 652 |
Notes to the financial statements cont
inued
Standard Chartered Bank
175
Directors’ Report and Financ
ial Statements 2023
2. Segmental informat
ion cont
inued
2022 | ||||||
Singapore | India | Indonesia | UAE | UK | US | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $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 |
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 rate is the rate that discounts estimated future cash payments or receipts through the expected life of
the financial
instrument or, when appropriate, a shorter period, to the net carrying amount of the financ
ial asset or financial
liab
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
2023 | 2022 | |
$mill ion | $mill ion | |
Balances at central banks | 2,813 | 745 |
Loans and advances to banks | 1,175 | 635 |
Loans and advances to customers | 9,399 | 5,756 |
Debt securit ies | 3,650 | 2,037 |
Other elig ible b ills | 1,204 | 518 |
Accrued on impa ired assets (d iscount unwind) | 139 | 74 |
Interest income | 18,380 | 9,765 |
Of which: financ ial instruments held at fair value through other comprehensive income | 2,550 | 1,508 |
Deposits by banks | 626 | 358 |
Customer accounts | 10,739 | 3,999 |
Debt securit ies in issue | 1,771 | 367 |
Subordinated liab il it ies and other borrowed funds | 602 | 562 |
Interest expense on IFRS 16 lease liab il it ies | 35 | 28 |
Interest expense | 13,773 | 5,314 |
Net interest income | 4,607 | 4,451 |
Notes to the financial statements cont
inued
Standard Chartered Bank
176
Directors’ Report and Financ
ial Statements 2023
ion
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
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 than
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.
Upfront bancassurance considerat
ion amounts are amort
ised on a straight-line basis over the contractual period to which
the considerat
ion relates.
Notes to the financial statements cont
inued
4. Net fees and commiss
ion cont
inued
Standard Chartered Bank
177
Directors’ Report and Financ
ial Statements 2023
2023 | 2022 | |
$mill ion | $mill ion | |
Fees and commiss ions income | 3,094 | 2,863 |
Of which: | ||
Financ ial instruments that are not fair valued through profit or loss | 1,139 | 1,013 |
Trust and other fiduciary act iv it ies | 239 | 243 |
Fees and commiss ions expense | (656) | (709) |
Of which: | ||
Financ ial instruments that are not fair valued through profit or loss | (84) | (225) |
Trust and other fiduciary act iv it ies | (17) | (14) |
Net fees and commiss ion | 2,438 | 2,154 |
| 2023 | |||||
Corporate, | Consumer | ||||
Commercial& | Private & | ||||
Institut ional | Business | Central & | |||
Banking | Banking | Ventures | other items | Total | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Transaction Banking | 1,196 | 22 | – | – | 1,218 |
Trade | 694 | 17 | – | – | 711 |
Cash Management | 502 | 5 | – | – | 507 |
Financ ial Markets | 658 | – | – | – | 658 |
Lending and Portfolio Management | 118 | 5 | – | – | 123 |
Princ ipal F inance | (1) | – | – | – | (1) |
Wealth Management | – | 678 | – | – | 678 |
Retail Products | – | 382 | 23 | – | 405 |
Treasury | – | – | – | 4 | 4 |
Others | – | (12) | 32 | (11) | 9 |
Net fees and commiss ion income | 1,971 | 1,075 | 55 | (7) | 3,094 |
Net fees and commiss ion expense | (574) | (199) | (15) | 132 | (656) |
Net fees and commiss ion | 1,397 | 876 | 40 | 125 | 2,438 |
| 2022 | |||||
Corporate, | Consumer | ||||
Commercial& | Private & | ||||
Institut ional | Business | Central & | |||
Banking | Banking | Ventures | other items | Total | |
$mill ion | $mill ion | $mill ion | $mill ion | $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 | – | 711 | – | – | 711 |
Retail Products | – | 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 |
Notes to the financial statements cont
inued
Standard Chartered Bank
178
Directors’ Report and Financ
ial Statements 2023
4. Net fees and commiss
ion cont
inued
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 $ 474 mill
ion (31 December
2022: $549 mill
ion). Follow
ing renegotiat
ion of the contract
in 2023, the life of the contract was extended for a further 3 years.
Accordingly, the income will be earned evenly over a longer period for the next 8.5 years (31 December 2022: 6.5 years). For the
twelve months ended 31 December 2023, $60 mill
ion of fee
income was released from deferred income (31 December 2022:
$66 mill
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.
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
Income is recognised from the sale and purchase of trading posit
ions, marg
ins on market making and customer business and
fair value changes.
2023 | 2022 | |
$mill ion | $mill ion | |
Net trading income | 4,100 | 3,743 |
Sign ificant items with in net trad ing income include: | ||
Gains on instruments held for trading¹ | 2,762 | 3,489 |
Gains on financ ial assets mandator ily at fair value through profit or loss | 3,976 | 951 |
Gains on financ ial assets des ignated at fair value through profit or loss | 2 | – |
Losses on financial l iab il it ies des ignated at fair value through profit or loss | (2,445) | (726) |
1
Includes $104 mill
ion loss (31 December 2022 $202 m
ill
ion loss) from the transact
ion of foreign currency monetary assets and liab
il
it
2023 | 2022 | |
$mill ion | $mill ion | |
Other operating income includes: | ||
Rental income from operating lease assets | 4 | 5 |
Net loss on disposal of fair value through other comprehensive income debt instruments | (92) | (157) |
Net (loss)/gain on disposal of amortised cost financ ial assets 1 | (86) | 3 |
Net gain/(loss) on sale of businesses 2 | 448 | (1) |
Div idend income | 10 | 11 |
Others³ | 120 | 25 |
Other operating income | 404 | (114) |
1
Includes $37 mill
ion loss on d
isposal of debt finance portfolio
2
2023 includes gain of $416 mill
ion on d
isposal from sale of subsid
iary SC Ventures Hold
ing Lim
ited to a fellow group undertak
ing of Standard Chartered PLC, $18 mill
ion
on disposal of associate (Metaco SA), $8 mill
ion ga
in from the sale of one of the AME region exit markets, Jordan and $7 mill
ion ga
in on sale of subsid
iary (Kozag
i)
3
2023 mainly includes $59 mill
ion of Research & Development expend
iture credits relating to prior years. $16 mill
ion
interest income from tax refund in India and $12
mill
ion ga
Notes to the financial statements cont
inued
Standard Chartered Bank
179
Directors’ Report and Financ
ial Statements 2023
2023 | 2022 | |
$mill ion | $mill ion | |
Staff costs: | ||
Wages and salaries | 4,926 | 4,562 |
Social security costs | 172 | 150 |
Other pension costs (Note 29) | 312 | 275 |
Share-based payment costs (Note 30) | 175 | 156 |
Other staff costs | 701 | 605 |
6,286 | 5,748 |
Other staff costs include redundancy expenses of $81 mill
ion (31 December 2022: $26 m
ill
ion). Further costs
in this category
include train
ing, travel costs and other staff related costs.
Details of directors’ pay, benefits, pensions and benefits and interests in shares are disclosed in Note 37 Remuneration of
Directors’ (page 293).
Transactions with directors, officers and other related parties are disclosed in Note 35.
2023 | 2022 | |
$mill ion | $mill ion | |
Premises and equipment expenses | 241 | 228 |
General admin istrat ive expenses: | ||
UK bank levy | 111 | 102 |
Provis ion for regulatory matters | – | 14 |
Other general admin istrat ive expenses | (138) | (41) |
(27) | 75 | |
Depreciat ion and amort isat ion: | ||
Property, plant and equipment: | ||
Premises | 131 | 140 |
Equipment | 72 | 86 |
203 | 226 | |
Intangibles: | ||
Software | 440 | 379 |
Acquired on business combinat ions | 4 | 6 |
647 | 611 | |
Total operating expenses | 7,147 | 6,662 |
Operating expenses include research expenditure of $687 mill
ion (31 December 2022: $689 m
ill
ion), wh
ich was recognized 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
Notes to the financial statements cont
inued
Standard Chartered Bank
180
Directors’ Report and Financ
ial Statements 2023
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;
•
Determin
ing est
imates of forward looking macroeconomic forecasts;
•
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 98).
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 99).
Expected credit losses
An ECL 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
ECL 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
which 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 r
isk
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.
Notes to the financial statements cont
inued
Standard Chartered Bank
181
Directors’ Report and Financ
ial Statements 2023
8. Credit impa
irment cont
inued
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.
financial 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
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)
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 (see page 103 to 105).
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.
Notes to the financial statements cont
inued
Standard Chartered Bank
182
Directors’ Report and Financ
ial Statements 2023
8. Credit impa
irment cont
inued
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 81);
•
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 present value of expected cash shortfalls (discounted at the instrument’s orig
inal effect
ive interest rate)
under a range of scenarios, includ
ing the real
isat
ion of any collateral held where appropr
iate.
The Group’s definit
ion of default is aligned with the regulatory defin
it
ion of default as set out in the UK’s onshored Capital
Requirements Regulation (Article 178) and related guidel
ines
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 (wh
ich is a qualitat
ive tr
igger
for sign
ificant
increase in credit risk- see page 104), the credit 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.
Notes to the financial statements cont
inued
Standard Chartered Bank
183
Directors’ Report and Financ
ial Statements 2023
8. Credit impa
irment cont
inued
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.
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).
For financial 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.
Notes to the financial statements cont
inued
Standard Chartered Bank
184
Directors’ Report and Financ
ial Statements 2023
8. Credit impa
irment cont
inued
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)
ia above, a further two-year probat
ion period has to be fulfilled, whereby regular payments are
2023 | 2022 | |
$mill ion | $mill ion | |
Net credit impa irment on loans and advances to banks and customers | 55 | (118) |
Net credit impa irment aga inst profit or loss during the year relating to debt securit ies 1 | (50) | 126 |
Net credit impa irment relat ing to financ ial guarantees and loan comm itments | (63) | (29) |
Net credit impa irment relat ing to other financ ial assets | – | (1) |
Credit impa irment 1 | (58) | (22) |
1
Includes impa
irment of $1 m
ill
ion (31 December 2022: $13 m
ill
ion) on or
ig
inated cred
it-impa
ired debt secur
it
irment
2023 | 2022 | |
$mill ion | $mill ion | |
Impairment of goodwill (Note 16) | – | 10 |
Impairment of property, plant and equipment (Note 17) | (1) | 5 |
Impairment of other intang ible assets (Note 16) | 35 | 57 |
Other | 8 | 35 |
Property, plant and equipment and other impa irment | 42 | 97 |
Goodwill, property, plant and equipment and other impa irment | 42 | 107 |
Notes to the financial statements cont
inued
Standard Chartered Bank
185
Directors’ Report and Financ
ial Statements 2023
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.
Deferred tax is provided on temporary differences aris
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.
Deferred tax assets are recognised where it is probable that future taxable profit will be available against which the
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
not by component of deferred taxation.
Current and deferred tax relating to items which are charged or credited directly to equity, is credited or charged directly to
equity and is subsequently recognised in the income statement together with the current or deferred gain or loss.
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
The following table provides analysis of taxation charge in the year:
2023 | 2022 | |
$mill ion | $mill ion | |
The charge for taxation based upon the profit for the year comprises: | ||
Current tax: | ||
United Kingdom corporation tax at 23.5 per cent (2022: 19 per cent): | ||
Current tax charge on income for the year | (111) | 111 |
Adjustments in respect of prior years (includ ing double tax rel ief) | 16 | – |
Foreign tax: | ||
Current tax charge on income for the year | 1,200 | 1,036 |
Adjustments in respect of prior years | 6 | 11 |
1,111 | 1,158 | |
Deferred tax: | ||
Orig inat ion/reversal of temporary differences | 76 | (11) |
Adjustments in respect of prior years | (10) | (25) |
66 | (36) | |
Tax on profits on ordinary activ it ies | 1,177 | 1,122 |
Effective tax rate | 26.7% | 32.3% |
The tax charge for the year of $1,177 mill
ion (31 December 2022: $1,122 m
ill
ion) on a profit before tax of $4,414 m
ill
ion (31
December 2022: $3,474 mill
ion) reflects the
impact of non-deductible expenses, non-creditable withhold
ing taxes and other
taxes, and countries with tax rates higher or lower than the UK, the most sign
ificant of wh
ich is India. These are partly offset
by tax exempt gain on disposal of subsid
iar
ies as part of internal restructuring.
Notes to the financial statements cont
inued
Standard Chartered Bank
186
Directors’ Report and Financ
ial Statements 2023
Tax rate: The tax charge for the year is higher than the charge at the rate of corporation tax in the UK, 23.5 per cent. The
differences are explained below:
2023 | 2022 | |||
$mill ion | % | $mill ion | % | |
Profit on ordinary activ it ies before tax | 4,414 | 3,474 | ||
Tax at 23.5 per cent (2022: 19 per cent) | 1,037 | 23.5 | 660 | 19.0 |
Lower tax rates on overseas earnings | (264) | (6.0) | (116) | (3.3) |
Higher tax rates on overseas earnings | 302 | 6.8 | 390 | 11.2 |
Tax at domestic rates applicable where profits earned | 1,075 | 24.3 | 934 | 26.9 |
Non-creditable withhold ing taxes and other taxes 1 | 70 | 1.6 | 150 | 4.3 |
Tax exempt income | (20) | (0.5) | (3) | (0.1) |
Non-deductible expenses | 146 | 3.3 | 53 | 1.5 |
Bank levy | 26 | 0.6 | 19 | 0.5 |
Non-taxable (gains)/losses on investments | (98) | (2.2) | 1 | – |
Payments on financial instruments in reserves | (65) | (1.5) | (43) | (1.2) |
Goodwill impa irment | – | – | 2 | 0.1 |
Deferred tax not recognised | 34 | 0.8 | 30 | 0.9 |
Deferred tax rate changes | (3) | – | (11) | (0.3) |
Adjustments to tax charge in respect of prior years | 12 | 0.3 | (14) | (0.4) |
Other items 1 | – | – | 4 | 0.1 |
Tax on profit on ordinary activ it ies | 1,177 | 26.7 | 1,122 | 32.3 |
1
The comparatives have been reclassif
ied by mov
ing the effect of other taxes from Other items to Non-creditable withhold
ing taxes and other taxes
in order to provide
more clarity to the reader. The 2022 comparatives have been reclassif
ied as follows to al
ign with the presentation in the current period: Non-creditable withhold
ing
taxes and other taxes from $70 mill
ion to $150 m
ill
ion and Other
items from $84 mill
ion to $4 m
ill
ion.
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 reported tax rates, changes in tax legislat
ion and tax rates and resolut
ion of uncertain tax
posit
ions.
The evaluation 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.
| 2023 | 2022 | |||||
Current tax | Deferred tax | Total | Current tax | Deferred tax | Total | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Tax recognised in other comprehensive income | ||||||
Items that will not be reclassif ied to income statement | – | (75) | (75) | – | 17 | 17 |
Own credit adjustment | – | (26) | (26) | – | 2 | 2 |
Equity instruments at fair value through other | ||||||
comprehensive income | – | (56) | (56) | – | 27 | 27 |
Retirement benefit obligat ions | – | 7 | 7 | – | (12) | (12) |
Items that may be reclassed subsequently to | ||||||
income statement | – | (91) | (91) | – | 135 | 135 |
Debt instruments at fair value through other | ||||||
comprehensive income | – | (8) | (8) | – | 44 | 44 |
Cashflow hedges | – | (83) | (83) | – | 91 | 91 |
Total tax credit/(charge) recognised in equity | – | (166) | (166) | – | 152 | 152 |
Notes to the financial statements cont
inued
Standard Chartered Bank
187
Directors’ Report and Financ
ial Statements 2023
Current tax: The following are the movements in current tax during the year:
Group | Company | |||
2023 | 2022 | 2023 | 2022 | |
$mill ion | $mill ion | $mill ion | $mill ion | |
Current tax comprises: | ||||
Current tax assets | 446 | 648 | 347 | 487 |
Current tax liab il it ies | (556) | (336) | (329) | (168) |
Net current tax opening balance | (110) | 312 | 18 | 319 |
Movements in income statement | (1,111) | (1,158) | (487) | (633) |
Movements in other comprehensive income | – | – | – | – |
Taxes paid | 1,229 | 782 | 658 | 359 |
Other movements | 31 | (46) | 18 | (27) |
Net current tax balance as at 31 December | 39 | (110) | 207 | 18 |
Current tax assets | 484 | 446 | 395 | 347 |
Current tax liab il it ies | (445) | (556) | (188) | (329) |
Total | 39 | (110) | 207 | 18 |
il
it
ies and assets recogn
ised by the Group and movements thereon
during the year:
Group
Exchange & | (Charge)/ | At 31 | |||
At 1 January | other | (Charge)/ | credit to | December | |
2023 | adjustments | credit to profit | equity | 2023 | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Deferred tax comprises: | |||||
Accelerated tax depreciat ion | (306) | (4) | (8) | – | (318) |
Impairment provis ions on loans and advances | 222 | (19) | – | – | 203 |
Tax losses carried forward | 89 | 32 | (51) | – | 70 |
Equity instruments at fair value through other comprehensive | |||||
income | (74) | 4 | – | (56) | (126) |
Debt instruments at fair value through other comprehensive income | 53 | (14) | (3) | (8) | 28 |
Cashflow hedges | 88 | (2) | – | (83) | 3 |
Own credit adjustment | – | (26) | – | (26) | (52) |
Retirement benefit obligat ions | 2 | 2 | (9) | 7 | 2 |
Share-based payments | 26 | – | 4 | – | 30 |
Other temporary differences | 64 | 15 | 1 | – | 80 |
Net deferred tax assets/liab il it ies | 164 | (12) | (66) | (166) | (80) |
Notes to the financial statements cont
inued
Standard Chartered Bank
188
Directors’ Report and Financ
ial Statements 2023
Exchange & | (Charge)/ | At 31 | |||
At 1 January | other | (Charge)/ | credit to | December | |
2022 | adjustments | credit to profit | equity | 2022 | |
$mill ion | $mill ion | $mill ion | $mill ion | $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 |
Equity instruments at fair value through other comprehensive | |||||
income 1 | (97) | (5) | 1 | 27 | (74) |
Debt instruments at fair value through other comprehensive income 1 | (19) | 5 | 23 | 44 | 53 |
Cashflow 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/liab il it ies | 12 | (36) | 36 | 152 | 164 |
1
2022 has been reclassif
ied to separately d
isclose Equity instruments at fair value through other comprehensive income and Debt instruments at fair value through other
comprehensive income. No change in overall balance
Deferred tax comprises assets and liab
il
it
ies as follows:
| 2023 | 2022 | |||||
Total | Asset | Liab il ity | Total | Asset | Liab il ity | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Deferred tax comprises: | ||||||
Accelerated tax depreciat ion | (318) | 12 | (330) | (306) | 12 | (318) |
Impairment provis ions on loans and advances | 203 | 192 | 11 | 222 | 244 | (22) |
Tax losses carried forward | 70 | 22 | 48 | 89 | 70 | 19 |
Equity instruments at fair value through other | ||||||
comprehensive income 1 | (126) | (1) | (125) | (74) | – | (74) |
Debt instruments at fair value through other | ||||||
comprehensive income 1 | 28 | 28 | – | 53 | 42 | 11 |
Cashflow hedges | 3 | 12 | (9) | 88 | 86 | 2 |
Own credit adjustment | (52) | – | (52) | – | – | – |
Retirement benefit obligat ions | 2 | 9 | (7) | 2 | 15 | (13) |
Share-based payments | 30 | 3 | 27 | 26 | – | 26 |
Other temporary differences | 80 | 225 | (145) | 64 | 272 | (208) |
(80) | 502 | (582) | 164 | 741 | (577) | |
1
2022 has been reclassif
ied to separately d
isclose Equity instruments at fair value through other comprehensive income and Debt instruments at fair value through other
comprehensive income. No change in overall balance
Notes to the financial statements cont
inued
Standard Chartered Bank
189
Directors’ Report and Financ
ial Statements 2023
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
Exchange & | (Charge)/ | At 31 | |||
At 1 January | other | (Charge)/ | credit to | December | |
2023 | adjustments | credit to profit | equity | 2023 | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Deferred tax comprises: | |||||
Accelerated tax depreciat ion | (270) | (3) | 9 | – | (264) |
Impairment provis ions on loans and advances | 135 | (2) | (12) | – | 121 |
Tax losses carried forward | 67 | 32 | (29) | – | 70 |
Equity instruments at fair value through other comprehensive | |||||
income | (65) | (4) | – | (54) | (123) |
Debt instruments at fair value through other comprehensive income | 61 | – | – | (12) | 49 |
Cashflow hedges | 86 | (2) | – | (79) | 5 |
Own credit adjustment | – | (25) | – | (27) | (52) |
Retirement benefit obligat ions | 1 | 1 | (11) | 4 | (5) |
Share-based payments | 10 | – | 1 | – | 11 |
Other temporary differences | 68 | (3) | 25 | – | 90 |
Net deferred tax assets/liab il it ies | 93 | (6) | (17) | (168) | (98) |
Exchange & | (Charge)/ | At 31 | |||
At 1 January | other | (Charge)/ | credit to | December | |
2022 | adjustments | credit to profit | equity | 2022 | |
$mill ion | $mill ion | $mill ion | $mill ion | $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 |
Equity instruments at fair value through other comprehensive | |||||
income 1 | (79) | (4) | 1 | 17 | (65) |
Debt instruments at fair value through other comprehensive income 1 | (7) | (1) | 2 | 67 | 61 |
Cashflow 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 assets/liab il it ies | (75) | (7) | 8 | 167 | 93 |
1
2022 has been reclassif
ied to separately d
isclose Equity instruments at fair value through other comprehensive income and Debt instruments at fair value through other
comprehensive income. No change in overall balance
Notes to the financial statements cont
inued
Standard Chartered Bank
190
Directors’ Report and Financ
ial Statements 2023
Deferred tax comprises assets and liab
il
it
ies as follows:
| 2023 | 2022 | |||||
Total | Asset | Liab il ity | Total | Asset | Liab il ity | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Deferred tax comprises: | ||||||
Accelerated tax depreciat ion | (264) | 12 | (276) | (270) | 6 | (276) |
Impairment provis ions on loans and advances | 121 | 113 | 8 | 135 | 180 | (45) |
Tax losses carried forward | 70 | 22 | 48 | 67 | 51 | 16 |
Equity instruments at fair value through other | ||||||
comprehensive income 1 | (123) | (1) | (122) | (65) | – | (65) |
Debt instruments at fair value through other | ||||||
comprehensive income 1 | 49 | 50 | (1) | 61 | 47 | 14 |
Cashflow hedges | 5 | 12 | (7) | 86 | 86 | – |
Own credit adjustment | (52) | – | (52) | – | – | – |
Retirement benefit obligat ions | (5) | 4 | (9) | 1 | 14 | (13) |
Share-based payments | 11 | 3 | 8 | 10 | – | 10 |
Other temporary differences | 90 | 164 | (74) | 68 | 195 | (127) |
(98) | 379 | (477) | 93 | 579 | (486) | |
1
2022 has been reclassif
ied to separately d
isclose Equity instruments at fair value through other comprehensive income and Debt instruments at fair value through other
comprehensive income. No change in overall balance
Group
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. The Group’s total deferred tax assets
include $70 mill
ion
relating to tax losses carried forward, of which $48 mill
ion ar
ises in legal entit
ies w
ith offsetting deferred tax liab
il
it
ies. The
remain
ing deferred tax assets on losses of $22 m
ill
ion are forecast to be recovered before exp
iry and with
in five years.
Company
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. The Company’s total deferred tax assets
include $70
mill
ion relat
ing to tax losses carried forward, of which $48 mill
ion ar
ises in legal entit
ies w
ith offsetting deferred tax liab
il
it
ies.
The remain
ing deferred tax assets on losses of $22 m
ill
ion are forecast to be recovered before exp
iry and with
in five years.
Unrecognised deferred tax
Net | Gross | Net | Gross | |
2023 | 2023 | 2022 | 2022 | |
Group | $mill ion | $mill ion | $mill ion | $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 | (347) | (2,634) | (227) | (1,841) |
Tax losses | 920 | 3,683 | 936 | 3,727 |
Held over gains on incorporation of overseas branches | (174) | (621) | (164) | (587) |
Other temporary differences | 377 | 1,436 | 451 | 1,702 |
Net | Gross | Net | Gross | |
2023 | 2023 | 2022 | 2022 | |
Company | $mill ion | $mill ion | $mill ion | $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 | (241) | (1,694) | (128) | (978) |
Tax losses | 827 | 3,215 | 862 | 3,352 |
Held over gains on incorporation of overseas branches | (174) | (621) | (164) | (587) |
Other temporary differences | 369 | 1,397 | 450 | 1,697 |
Notes to the financial statements cont
inued
Standard Chartered Bank
191
Directors’ Report and Financ
ial Statements 2023
idends
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
2023 | 2022 | |||
Cents | Cents | |||
per share | $mill ion | per share | $mill ion | |
2022 final div idend declared and pa id during the year | 8 | 1,661 | – | – |
2023/2022 inter im d iv idend declared and pa id during the year | 5 | 938 | 3 | 575 |
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.
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
2023 | 2022 | |
$mill ion | $mill ion | |
Non-cumulative redeemable preference shares: | ||
7.014 per cent preference shares of $5 each | 45 | 53 |
Floating rate preference shares of $5 each¹ | 50 | 20 |
95 | 73 | |
Addit ional T ier 1 securit ies: F ixed rate resetting perpetual subordinated contingent | ||
convertible securit ies | 268 | 238 |
363 | 311 |
1
Floating rate is based on Secured Overnight Financ
ing Rate (SOFR), average rate pa
Notes to the financial statements cont
inued
Standard Chartered Bank
192
Directors’ Report and Financ
ial Statements 2023
ial
instruments
Classif
icat
ion and measurement
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.
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 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.
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 | • Provid ing financing and or ig inat ing | • Corporate Lending | • Loans and |
assets and hold them to | assets to earn interest income as | • Financ ial Markets | advances | |
maturity, collecting the | primary income stream | • Transaction | • Debt securit ies | |
contractual cash flows over | • Performing credit risk management | Banking | ||
the term of the instrument | activ it ies | • Retail Lending | ||
• Costs include funding costs, | • Treasury Markets | |||
transaction costs and impa irment | (Loans and | |||
losses | Borrowings) | |||
Hold to collect | Business object ive met | • Portfolios held for liqu id ity needs; or | • Treasury Markets | • Debt securit ies |
and sell | through both hold to collect | where a certain interest yield profile | ||
and by selling financ ial assets | 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 | ||||
Fair value through | All other business object ives, | • Assets held for trading | • Financ ial Markets | • Derivat ives |
profit or loss | includ ing trad ing and | • Assets that are orig inated, | • All other business | • Equity shares |
managing financ ial assets on | purchased, and sold for profit taking | lines | • Trading portfolios | |
a fair value basis | or underwrit ing act iv ity | • Financ ial Markets | ||
• Performance of the portfolio is | reverse repos | |||
evaluated on a fair value basis | • Financ ial Markets | |||
• Income streams are from fair value | (FM Bond and Loan | |||
changes or trading gains or losses | Syndicat ion) |
Notes to the financial statements cont
inued
Standard Chartered Bank
193
Directors’ Report and Financ
ial Statements 2023
12. Financ
ial
instruments continued
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 financ
ial
assets to collect contractual cashflows (hold to collect) are recorded at amortised cost. Conversely, financ
ial assets wh
ich
have SPPI characterist
ics but are held w
ith
in a bus
iness model whose object
ive
is achieved by both collecting contractual
cashflows and selling financ
ial assets (Hold to collect and sell) are class
if
ied as held at FVOCI. Both hold to collect and hold to
collect and sell business models involve holding financ
ial assets to collect the contractual cashflows. However, the bus
iness
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 financ
ial assets but sales for other reasons should be
infrequent or ins
ign
if
icant. Cashflows 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.
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
ion
Designated at fair value through profit or loss
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 an embedded derivat
ive where the Group
is not able to bifurcate and separately value the embedded derivat
ive
component.
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.
Notes to the financial statements cont
inued
Standard Chartered Bank
194
Directors’ Report and Financ
ial Statements 2023
12. Financ
ial
instruments continued
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
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 ongoing 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.
Init
ial recogn
it
ion
Regular way purchases and sales of financial assets held at fa
ir value through profit or loss, and held at fair 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 financial 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 and l
iab
il
it
ies 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. 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 following the passage of time, or 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 the profit or loss and are accumulated in equity. On
derecognit
ion, the cumulat
ive 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.
Notes to the financial statements cont
inued
Standard Chartered Bank
195
Directors’ Report and Financ
ial Statements 2023
12. Financ
ial
instruments continued
Financ
ial assets and l
iab
il
it
ies held at fa
ir value through profit or loss
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.
Derecognit
ion of financial
instruments
Financ
ial assets wh
ich are subject to commercial refinanc
ing where the loan
is priced to the market with no payment related
concessions regardless of form of legal documentation or nature of lending will be derecognised. Where the Group’s rights to
the cash flows under the orig
inal contract have exp
ired, the old loan is derecognised and the new loan is recognised at fair
value. For all other modif
icat
ions for example forborne loans or restructuring, whether or not a change in the cash flows is
'substantially different' is judgemental and will be considered on a case-by-case basis, taking into account all the relevant
facts and circumstances.
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
ity, that are held in other comprehensive income.
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 per cent, 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 'Non funded 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 from 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
Notes to the financial statements cont
inued
Standard Chartered Bank
196
Directors’ Report and Financ
ial Statements 2023
12. Financ
ial
instruments continued
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 at fair value | |||||||||
Non-trading | Designated | ||||||||
mandatorily | at fair value | Fair value | Total | Assets held | |||||
Derivat ives | at fair value | through | through other | financial | at | ||||
held for | through | profit or | comprehensive | assets at | amortised | ||||
Trading | hedging | profit or loss | loss | income | fair value | cost | Total | ||
Assets | Notes | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion |
Cash and balances at central | |||||||||
banks¹ | – | – | – | – | – | – | 64,198 | 64,198 | |
Financ ial assets held at fa ir | |||||||||
value through profit or loss | |||||||||
Loans and advances to | |||||||||
banks² | 2,265 | – | – | – | – | 2,265 | – | 2,265 | |
Loans and advances to | |||||||||
customers² | 3,001 | – | 187 | – | – | 3,188 | – | 3,188 | |
Reverse repurchase | |||||||||
agreements and other | |||||||||
sim ilar secured lend ing | 15 | 185 | – | 67,964 | – | – | 68,149 | – | 68,149 |
Debt securit ies, alternat ive | |||||||||
tier one and other elig ible | |||||||||
bills | 21,452 | – | 604 | – | – | 22,056 | – | 22,056 | |
Equity shares | 1,322 | – | 120 | – | – | 1,442 | – | 1,442 | |
28,225 | – | 68,875 | – | – | 97,100 | – | 97,100 | ||
Derivat ive financial | |||||||||
instruments | 13 | 50,883 | 1,671 | – | – | – | 52,554 | – | 52,554 |
Loans and advances to | |||||||||
banks² | 14 | – | – | – | – | – | – | 22,803 | 22,803 |
of which – reverse | |||||||||
repurchase agreements | |||||||||
and other sim ilar secured | |||||||||
lending | 15 | – | – | – | – | – | – | 1,653 | 1,653 |
Loans and advances to | |||||||||
customers² | 14 | – | – | – | – | – | – | 156,143 | 156,143 |
of which – reverse | |||||||||
repurchase agreements | |||||||||
and other sim ilar secured | |||||||||
lending | 15 | – | – | – | – | – | – | 13,827 | 13,827 |
Investment securit ies | |||||||||
Debt securit ies, alternat ive | |||||||||
tier one and other elig ible | |||||||||
bills | – | – | – | – | 62,120 | 62,120 | 39,920 | 102,040 | |
Equity shares | – | – | – | – | 434 | 434 | – | 434 | |
– | – | – | – | 62,554 | 62,554 | 39,920 | 102,474 | ||
Other assets | 19 | – | – | – | – | – | – | 20,714 | 20,714 |
Assets held for sale | 20 | – | – | – | – | – | – | 693 | 693 |
Total at 31 December 2023 | 79,108 | 1,671 | 68,875 | – | 62,554 | 212,208 | 304,471 | 516,679 | |
1
Cash and balances at central banks includes both cash held in restricted accounts and on demand or placements which are contractually due to mature overnight
only. Other placements with central banks are reported as part of Loans and advances to customers
2
Further analysed in Risk review and Capital review (pages 58 to 145)
Notes to the financial statements cont
inued
Standard Chartered Bank
197
Directors’ Report and Financ
ial Statements 2023
12. Financ
ial
instruments continued
| Assets at fair value | |||||||||
Non-trading | |||||||||
mandatorily | Designated | Fair value | Total | Assets held | |||||
Derivat ives | at fair value | at fair value | through other | financial | at | ||||
held for | through | through | comprehensive | assets at | amortised | ||||
Trading | hedging | profit or loss | profit or loss | income | fair value | cost | Total | ||
Assets | Notes | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion |
Cash and balances at central | |||||||||
banks¹ | – | – | – | – | – | – | 50,531 | 50,531 | |
Financ ial assets held at fa ir | |||||||||
value through profit or loss | |||||||||
Loans and advances to | |||||||||
banks² | 859 | – | – | – | – | 859 | – | 859 | |
Loans and advances to | |||||||||
customers² | 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 | |||||||||
bills | 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 | |||||||||
banks² | 14 | – | – | – | – | – | – | 27,383 | 27,383 |
of which – reverse | |||||||||
repurchase agreements | |||||||||
and other sim ilar secured | |||||||||
lending | 15 | – | – | – | – | – | – | 878 | 878 |
Loans and advances to | |||||||||
customers² | 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 | |||||||||
bills | – | – | – | – | 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
Cash and balances at central banks includes both cash held in restricted accounts and on demand or placements which are contractually due to mature overnight
only. Other placements with central banks are reported as part of Loans and advances to customers
2
Further analysed in Risk review and Capital review (pages 58 to 145)
Notes to the financial statements cont
inued
Standard Chartered Bank
198
Directors’ Report and Financ
ial Statements 2023
12. Financ
ial
instruments continued
Company
| Assets at fair value | |||||||||
Non-trading | Designated | ||||||||
mandatorily | at fair value | Fair value | Total | Assets held | |||||
Derivat ives | at fair value | through | through other | financial | at | ||||
held for | through | profit or | comprehensive | assets at | amortised | ||||
Trading | hedging | profit or loss | loss | income | fair value | cost | Total | ||
Assets | Notes | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion |
Cash and balances at central | |||||||||
banks¹ | – | – | – | – | – | – | 52,758 | 52,758 | |
Financ ial assets held at fa ir | |||||||||
value through profit or loss | |||||||||
Loans and advances to | |||||||||
banks² | 2,244 | – | – | – | – | 2,244 | – | 2,244 | |
Loans and advances to | |||||||||
customers² | 2,566 | – | 56 | – | – | 2,622 | – | 2,622 | |
Reverse repurchase | |||||||||
agreements and other | |||||||||
sim ilar secured lend ing | 15 | 185 | – | 64,619 | – | – | 64,804 | – | 64,804 |
Debt securit ies, alternat ive | |||||||||
tier one and other elig ible | |||||||||
bills | 13,713 | – | 1,714 | – | – | 15,427 | – | 15,427 | |
Equity shares | 1,312 | – | 3 | – | – | 1,315 | – | 1,315 | |
20,020 | – | 66,392 | – | – | 86,412 | – | 86,412 | ||
Derivat ive financial | |||||||||
instruments | 13 | 51,627 | 1,594 | – | – | – | 53,221 | – | 53,221 |
Loans and advances to | |||||||||
banks² | 14 | – | – | – | – | – | – | 10,135 | 10,135 |
of which – reverse | |||||||||
repurchase agreements | |||||||||
and other sim ilar secured | |||||||||
lending | 15 | – | – | – | – | – | – | 554 | 554 |
Loans and advances to | |||||||||
customers² | 14 | – | – | – | – | – | – | 75,883 | 75,883 |
of which – reverse | |||||||||
repurchase agreements | |||||||||
and other sim ilar secured | |||||||||
lending | 15 | – | – | – | – | – | – | 12,212 | 12,212 |
Investment securit ies | |||||||||
Debt securit ies, alternat ive | |||||||||
tier one and other elig ible | |||||||||
bills | – | – | – | – | 54,300 | 54,300 | 38,062 | 92,362 | |
Equity shares | – | – | – | – | 409 | 409 | – | 409 | |
– | – | – | – | 54,709 | 54,709 | 38,062 | 92,771 | ||
Other assets | 19 | – | – | – | – | – | – | 16,990 | 16,990 |
Assets held for sale | 20 | – | – | – | – | – | – | 52 | 52 |
Total at 31 December 2023 | 71,647 | 1,594 | 66,392 | – | 54,709 | 194,342 | 193,880 | 388,222 | |
1
Cash and balances at central banks includes both cash held in restricted accounts and on demand or placements which are contractually due to mature overnight
only. Other placements with central banks are reported as part of Loans and advances to customers
2
Further analysed in Risk review and Capital review (pages 58 to 145)
Notes to the financial statements cont
inued
Standard Chartered Bank
199
Directors’ Report and Financ
ial Statements 2023
12. Financ
ial
instruments continued
| Assets at fair value | |||||||||
Non-trading | |||||||||
mandatorily | Designated | Fair value | Total | Assets held | |||||
Derivat ives | at fair value | at fair value | through other | financial | at | ||||
held for | through | through | comprehensive | assets at | amortised | ||||
Trading | hedging | profit or loss | profit or loss | income | fair value | cost | Total | ||
Assets | Notes | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion |
Cash and balances at central | |||||||||
banks¹ | – | – | – | – | – | – | 38,867 | 38,867 | |
Financ ial assets held at fa ir | |||||||||
value through profit or loss | |||||||||
Loans and advances to | |||||||||
banks² | 837 | – | – | – | – | 837 | – | 837 | |
Loans and advances to | |||||||||
customers² | 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 | |||||||||
bills | 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 | |||||||||
banks² | 14 | – | – | – | – | – | – | 18,548 | 18,548 |
of which – reverse | |||||||||
repurchase agreements | |||||||||
and other sim ilar secured | |||||||||
lending | 15 | – | – | – | – | – | – | 184 | 184 |
Loans and advances to | |||||||||
customers² | 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 | |||||||||
bills | – | – | – | – | 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
Cash and balances at central banks includes both cash held in restricted accounts and on demand or placements which are contractually due to mature overnight
only. Other placements with central banks are reported as part of Loans and advances to customers
2
Further analysed in Risk review and Capital review (pages 58 to 145)
Notes to the financial statements cont
inued
Standard Chartered Bank
200
Directors’ Report and Financ
ial Statements 2023
12. Financ
ial
instruments continued
Group
| Liab il it ies at fa ir value | |||||||
Designated at | |||||||
Derivat ives | fair value | Total financial | |||||
held for | through profit | liab il it ies at | Amortised | ||||
Trading | hedging | or loss | fair value | cost | Total | ||
Liab il it ies | Notes | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion |
Financ ial l iab il it ies held at fa ir value | |||||||
through profit or loss | |||||||
Deposits by banks | – | – | 1,321 | 1,321 | – | 1,321 | |
Customer accounts | 39 | – | 9,127 | 9,166 | – | 9,166 | |
Repurchase agreements and other | |||||||
sim ilar secured borrow ing | 15 | 1,438 | – | 37,994 | 39,432 | – | 39,432 |
Debt securit ies in issue | 21 | – | – | 9,850 | 9,850 | – | 9,850 |
Short posit ions | 6,050 | – | – | 6,050 | – | 6,050 | |
7,527 | – | 58,292 | 65,819 | – | 65,819 | ||
Derivat ive financial instruments | 13 | 53,209 | 1,964 | – | 55,173 | – | 55,173 |
Deposits by banks | – | – | – | – | 23,616 | 23,616 | |
Customer accounts | – | – | – | – | 237,902 | 237,902 | |
Repurchase agreements and other | |||||||
sim ilar secured borrow ing | 15 | – | – | – | – | 12,033 | 12,033 |
Debt securit ies in issue | 21 | – | – | – | – | 36,481 | 36,481 |
Other liab il it ies | 22 | – | – | – | – | 24,109 | 24,109 |
Subordinated liab il it ies and other | |||||||
borrowed funds | 26 | – | – | – | – | 11,454 | 11,454 |
Liab il it ies included in disposal groups | |||||||
held for sale | 20 | – | – | – | – | 726 | 726 |
Total at 31 December 2023 | 60,736 | 1,964 | 58,292 | 120,992 | 346,321 | 467,313 | |
| Liab il it ies at fa ir value | |||||||
Designated at | |||||||
Derivat ives | fair value | Total financial | |||||
held for | through profit | liab il it ies at | Amortised | ||||
Trading | hedging | or loss | fair value | cost | Total | ||
Liab il it ies | Notes | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $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 | – | 2,302 | |
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 | |
Notes to the financial statements cont
inued
Standard Chartered Bank
201
Directors’ Report and Financ
ial Statements 2023
12. Financ
ial
instruments continued
Company
| Liab il it ies at fa ir value | |||||||
Designated at | |||||||
Derivat ives | fair value | Total financial | |||||
held for | through profit | liab il it ies at | Amortised | ||||
Trading | hedging | or loss | fair value | cost | Total | ||
Liab il it ies | Notes | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion |
Financ ial l iab il it ies held at fa ir value | |||||||
through profit or loss | |||||||
Deposits by banks | – | – | 1,321 | 1,321 | – | 1,321 | |
Customer accounts | – | – | 8,852 | 8,852 | – | 8,852 | |
Repurchase agreements and other | |||||||
sim ilar secured borrow ing | 15 | 1,438 | – | 37,736 | 39,174 | – | 39,174 |
Debt securit ies in issue | 21 | – | – | 9,554 | 9,554 | – | 9,554 |
Short posit ions | 5,566 | – | – | 5,566 | – | 5,566 | |
7,004 | – | 57,463 | 64,467 | – | 64,467 | ||
Derivat ive financial instruments | 13 | 53,614 | 1,917 | – | 55,531 | – | 55,531 |
Deposits by banks | – | – | – | – | 18,280 | 18,280 | |
Customer accounts | – | – | – | – | 121,648 | 121,648 | |
Repurchase agreements and other | |||||||
sim ilar secured borrow ing | 15 | – | – | – | – | 11,977 | 11,977 |
Debt securit ies in issue | 21 | – | – | – | – | 34,740 | 34,740 |
Other liab il it ies | 22 | – | – | – | – | 18,879 | 18,879 |
Subordinated liab il it ies and other | |||||||
borrowed funds | 26 | – | – | – | – | 10,896 | 10,896 |
Liab il it ies included in disposal groups | |||||||
held for sale | 20 | – | – | – | – | – | – |
Total at 31 December 2023 | 60,618 | 1,917 | 57,463 | 119,998 | 216,420 | 336,418 | |
| Liab il it ies at fa ir value | |||||||
Designated at | |||||||
Derivat ives | fair value | Total financial | |||||
held for | through profit | liab il it ies at | Amortised | ||||
Trading | hedging | or loss | fair value | cost | Total | ||
Liab il it ies | Notes | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $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 | |
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 | |
Notes to the financial statements cont
inued
Standard Chartered Bank
202
Directors’ Report and Financ
ial Statements 2023
12. Financ
ial
instruments continued
Interest rate benchmark reform
During 2023, sign
ificant progress was made
in support of LIBOR transit
ion.
New LIBOR-referencing business had ceased and a full suite of Risk Free Rate-referencing derivat
ive and cash products were
standard offerings across the Group.
Having completed the remediat
ion of all non-USD LIBOR exposures at the end of 2021 w
ith no reliance on synthetic rates, the
Programme focused on remediat
ing legacy USD LIBOR stock ahead of the USD LIBOR cessat
ion date (30 June 2023).
The Group made sign
ificant progress towards complet
ing its remediat
ion of legacy exposures over the course of 2023. Cl
ients
with legacy USD LIBOR loans were engaged to remediate their contracts via active conversion to alternative rates, or other
suitable transit
ion mechan
isms such as the inclus
ion of robust fallbacks. For der
ivat
ives, 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 cont
inued
to engage clients to do the same or to negotiate remediat
ion b
ilaterally. The Group also successfully partic
ipated
in CCP
conversion events, includ
ing both tranches of the London Clear
ing House (LCH) conversions for USD LIBOR and also the SGD/
THB conversion, as well as the CME Eurodollar futures and the Hong Kong Exchanges and Clearing (HKEX) USD LIBOR
events. This sign
ificantly reduced our overall not
ional exposure to USD LIBOR, as centrally cleared derivat
ives and b
ilateral
derivat
ives w
ith fallbacks represented a substantial portion of the Group’s overall USD LIBOR notional exposure.
As of 31 December 2023, a number of contracts remain subject to remediat
ion but these are cons
idered immater
ial for the
Group. The largest population of remain
ing exposures are synd
icated loans, either on a standalone basis, or where the loans
have been hedged with derivat
ives. These contracts currently operate under a synthet
ic USD LIBOR rate.
Risks which the Group is exposed to due to LIBOR 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 un-remediated contracts, and manage the risks of the transit
ion unt
il fully
complete.
Particular attention will continue to be paid to: legal risk of any contracts that may remain outstanding after the end of
synthetic LIBOR (currently scheduled for end of September 2024); conduct risk aris
ing from cont
inued remediat
ion; financial
and accounting risk in terms of the financ
ial
impact of IBOR transit
ion for the outstand
ing contracts, and also financ
ial
instruments that may be affected by accounting issues such as accounting for contractual changes due to IBOR reform, fair
value measurement and hedge accounting, as well as other risks inherent in the reform.
At 31 December 2022 the Group had the following notional princ
ipal exposures to
interest rate benchmarks that were subject
to interest rate benchmark reform.
Notes to the financial statements cont
inued
Standard Chartered Bank
203
Directors’ Report and Financ
ial Statements 2023
12. Financ
ial
instruments continued
Group
USD LIBOR | GBP LIBOR | SGD SOR | THB FIX | Other IBOR | Total IBOR | |
IBOR exposures by benchmark at 31 December 2022 | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $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 | – | 5,235 |
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 |
Company
USD LIBOR | GBP LIBOR | SGD SOR | THB FIX | Other IBOR | Total IBOR | |
IBOR exposures by benchmark at 31 December 2022 | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $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 |
Loans commitments off balance sheet | 2,167 | – | – | – | – | 2,167 |
Notes to the financial statements cont
inued
Standard Chartered Bank
204
Directors’ Report and Financ
ial Statements 2023
12. Financ
ial
instruments continued
Offsetting of financ
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.
Group
| 2023 | ||||||
Net amounts | Related amount not offset | |||||
Gross | of financial | in the balance sheet | ||||
amounts of | instruments | |||||
recognised | Impact of | presented in | ||||
financial | offset in the | the balance | Financ ial | Financ ial | ||
instruments | balance sheet | sheet | instruments | collateral | Net amount | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Assets | ||||||
Derivat ive financial instruments | 100,321 | (47,767) | 52,554 | (43,684) | (7,960) | 910 |
Reverse repurchase agreements and other sim ilar | ||||||
secured lending | 95,461 | (11,832) | 83,629 | – | (83,629) | – |
At 31 December 2023 | 195,782 | (59,599) | 136,183 | (43,684) | (91,589) | 910 |
Liab il it ies | ||||||
Derivat ive financial instruments | 102,940 | (47,767) | 55,173 | (43,684) | (8,378) | 3,111 |
Repurchase agreements and other sim ilar | ||||||
secured borrowing | 63,297 | (11,832) | 51,465 | – | (51,465) | – |
At 31 December 2023 | 166,237 | (59,599) | 106,638 | (43,684) | (59,843) | 3,111 |
| 2022 | ||||||
Net amounts | Related amount not offset | |||||
Gross | of financial | in the balance sheet | ||||
amounts of | instruments | |||||
recognised | Impact of | presented in | ||||
financial | offset in the | the balance | Financ ial | Financ ial | ||
instruments | balance sheet | sheet | instruments | collateral | Net amount | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $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 |
Notes to the financial statements cont
inued
Standard Chartered Bank
205
Directors’ Report and Financ
ial Statements 2023
12. Financ
ial
instruments continued
Company
| 2023 | ||||||
Net amounts | Related amount not offset | |||||
Gross | of financial | in the balance sheet | ||||
amounts of | instruments | |||||
recognised | Impact of | presented in | ||||
financial | offset in the | the balance | Financ ial | Financ ial | ||
instruments | balance sheet | sheet | instruments | collateral | Net amount | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Assets | ||||||
Derivat ive financial instruments | 100,988 | (47,767) | 53,221 | (45,556) | (7,289) | 376 |
Reverse repurchase agreements and other sim ilar | ||||||
secured lending | 89,402 | (11,832) | 77,570 | – | (77,570) | – |
At 31 December 2023 | 190,390 | (59,599) | 130,791 | (45,556) | (84,859) | 376 |
Liab il it ies | ||||||
Derivat ive financial instruments | 103,298 | (47,767) | 55,531 | (45,556) | (7,505) | 2,470 |
Repurchase agreements and other sim ilar secured | ||||||
borrowing | 62,983 | (11,832) | 51,151 | – | (51,151) | – |
At 31 December 2023 | 166,281 | (59,599) | 106,682 | (45,556) | (58,656) | 2,470 |
| 2022 | ||||||
Net amounts | Related amount not offset in | |||||
Gross | of financial | the balance sheet | ||||
amounts of | instruments | |||||
recognised | Impact of | presented in | ||||
financial | offset in the | the balance | Financ ial | Financ ial | ||
instruments | balance sheet | sheet | instruments | collateral | Net amount | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $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 |
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
ion
Financ
ial l
iab
il
it
ies des
ignated at fair value through profit or loss
2023 | 2022 | |
$mill ion | $mill ion | |
Carrying balance aggregate fair value | 58,292 | 65,077 |
Amount contractually obliged to repay at maturity | 59,576 | 66,138 |
Difference between aggregate fair value and contractually obliged to repay at maturity | (1,284) | (1,061) |
Cumulative change in fair value accredited to credit risk difference | 87 | (31) |
The net fair value loss on financ
ial l
iab
il
it
ies des
ignated at fair value through profit or loss was $2,445 mill
ion for the year (31
December 2022: net loss of $726 mill
ion).
Further details of the Group’s own credit adjustment (OCA) valuation technique is described later in this note.
Notes to the financial statements cont
inued
Standard Chartered Bank
206
Directors’ Report and Financ
ial Statements 2023
12. Financ
ial
instruments continued
Valuation of financ
ial
instruments
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
performs 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.
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 207).
•
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 218).
•
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
Notes to the financial statements cont
inued
Standard Chartered Bank
207
Directors’ Report and Financ
ial Statements 2023
12. Financ
ial
instruments continued
Valuation techniques
Refer to the fair value hierarchy explanation – Level 1, 2 and 3 (page 210)
•
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.
Notes to the financial statements cont
inued
Standard Chartered Bank
208
Directors’ Report and Financ
ial Statements 2023
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:
–
Cash and balances at central banks:
The fair value of cash and balances at central banks is their carrying amounts
–
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
maturity
–
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 derived from proxy 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 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.
Notes to the financial statements cont
inued
Standard Chartered Bank
209
Directors’ Report and Financ
ial Statements 2023
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:
Movement | Movement | |||||
during the | during the | |||||
01.01.23 | year | 31.12.23 | 01.01.22 | year | 31.12.22 | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Bid-offer valuation adjustment | 89 | 2 | 91 | 87 | 2 | 89 |
Credit Valuation adjustment | 135 | (37) | 98 | 6 | 129 | 135 |
Debit Valuation adjustment | (91) | (27) | (118) | – | (91) | (91) |
Model valuation adjustment | 3 | 1 | 4 | 3 | – | 3 |
Funding Valuation adjustment | 44 | (8) | 36 | – | 44 | 44 |
Other fair value adjustments | 19 | 1 | 20 | 13 | 6 | 19 |
Total | 199 | (68) | 131 | 109 | 90 | 199 |
Income deferrals | ||||||
Day 1 and other deferrals | 160 | (97) | 63 | 84 | 76 | 160 |
Total | 160 | (97) | 63 | 84 | 76 | 160 |
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.
Notes to the financial statements cont
inued
Standard Chartered Bank
210
Directors’ Report and Financ
ial Statements 2023
12. Financ
ial
instruments continued
•
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 pr
ic
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.
•
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 in comparison with the
incept
ion of the trade and, conversely, decrease
if its credit standing improves. The Group’s OCA reserve will reverse over time
as its liab
il
it
ies mature.
Fair value hierarchy – financ
ial
instruments held at fair value
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.
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 observabil
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.
Notes to the financial statements cont
inued
Standard Chartered Bank
211
Directors’ Report and Financ
ial Statements 2023
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
Level 1 | Level 2 | Level 3 | Total | |
Assets | $mill ion | $mill ion | $mill ion | $mill ion |
Financ ial instruments held at fair value through profit or loss | ||||
Loans and advances to banks | – | 2,265 | – | 2,265 |
Loans and advances to customers | – | 2,016 | 1,172 | 3,188 |
Reverse repurchase agreements and other sim ilar secured lend ing | – | 66,784 | 1,365 | 68,149 |
Debt securit ies and other el ig ible b ills | 11,626 | 9,210 | 1,220 | 22,056 |
Of which: | ||||
Issued by central banks & governments | 11,178 | 5,994 | – | 17,172 |
Issued by corporates other than financial inst itut ions 1 | – | 927 | 318 | 1,245 |
Issued by financial inst itut ions¹ | 448 | 2,289 | 902 | 3,639 |
Equity shares | 1,243 | 114 | 85 | 1,442 |
Derivat ive financial instruments | 940 | 51,538 | 76 | 52,554 |
Of which: | ||||
Foreign exchange | 114 | 45,585 | 24 | 45,723 |
Interest rate | 37 | 5,426 | 3 | 5,466 |
Credit | – | 405 | 47 | 452 |
Equity and stock index options | – | 47 | 2 | 49 |
Commodity | 789 | 75 | – | 864 |
Investment securit ies | ||||
Debt securit ies and other el ig ible b ills | 25,288 | 36,761 | 71 | 62,120 |
Of which: | ||||
Issued by central banks & governments | 19,475 | 14,530 | 51 | 34,056 |
Issued by corporates other than financial inst itut ions 1 | – | 1,019 | – | 1,019 |
Issued by financial inst itut ions 1 | 5,813 | 21,212 | 20 | 27,045 |
Equity shares | 183 | 6 | 245 | 434 |
Total financial assets at 31 December 2023 | 39,280 | 168,694 | 4,234 | 212,208 |
Liab il it ies | ||||
Financ ial instruments held at fair value through profit or loss | ||||
Deposits by banks | – | 1,253 | 68 | 1,321 |
Customer accounts | – | 8,934 | 232 | 9,166 |
Repurchase agreements and other sim ilar secured borrow ing | – | 39,432 | – | 39,432 |
Debt securit ies in issue | – | 8,824 | 1,026 | 9,850 |
Short posit ions | 2,151 | 3,796 | 103 | 6,050 |
Derivat ive financial instruments | 740 | 54,271 | 162 | 55,173 |
Of which: | ||||
Foreign exchange | 113 | 46,304 | 12 | 46,429 |
Interest rate | 46 | 7,107 | 5 | 7,158 |
Credit | – | 448 | 126 | 574 |
Equity and stock index options | – | 108 | 19 | 127 |
Commodity | 581 | 304 | – | 885 |
Other liab il it ies | – | – | – | – |
Total financial l iab il it ies at 31 December 2023 | 2,891 | 116,510 | 1,591 | 120,992 |
1
Includes covered bonds of $6,377 mill
ion, secur
it
ies
issued by Multilateral Development Banks/International Organisat
ions of $6,300 m
ill
ion and State-owned agenc
ies
and development banks of $3,186 mill
ion
The fair value of financ
ial assets and financial l
iab
il
it
ies class
if
ied as Level 2
in the fair value hierarchy that are subject to
complex modelling techniques is $707 mill
ion and $125 m
ill
ion respect
ively.
There were no sign
ificant changes to valuat
ion or levelling approaches in 2023.
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.
Notes to the financial statements cont
inued
Standard Chartered Bank
212
Directors’ Report and Financ
ial Statements 2023
12. Financ
ial
instruments continued
Level 1 | Level 2 | Level 3 | Total | |
Assets | $mill ion | $mill ion | $mill ion | $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 assets at 31 December 2022 2 | 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 |
ive financial Derivat 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 l iab il it ies at 31 December 2022 2 | 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 $5,578 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 financ
ial assets and financial l
iab
il
it
ies class
if
ied as Level 2
in the fair value hierarchy that are subject to
complex modelling techniques is $554 mill
ion and $26 m
ill
ion respect
ively.
Notes to the financial statements cont
inued
Standard Chartered Bank
213
Directors’ Report and Financ
ial Statements 2023
12. Financ
ial
instruments continued
Company
Level 1 | Level 2 | Level 3 | Total | |
Assets | $mill ion | $mill ion | $mill ion | $mill ion |
Financ ial instruments held at fair value through profit or loss | ||||
Loans and advances to banks | – | 2,244 | – | 2,244 |
Loans and advances to customers | – | 1,598 | 1,024 | 2,622 |
Reverse repurchase agreements and other sim ilar secured lend ing | – | 63,712 | 1,092 | 64,804 |
Debt securit ies and other el ig ible b ills | 8,376 | 6,937 | 114 | 15,427 |
Of which: | ||||
Issued by central banks & governments | 7,951 | 3,850 | – | 11,801 |
Issued by corporates other than financial inst itut ions 1 | – | 427 | 20 | 447 |
Issued by financial inst itut ions 1 | 425 | 2,660 | 94 | 3,179 |
Equity shares | 1,203 | 112 | – | 1,315 |
Derivat ive financial instruments | 932 | 52,217 | 72 | 53,221 |
Of which: | ||||
Foreign exchange | 107 | 41,092 | 21 | 41,220 |
Interest rate | 37 | 10,478 | 2 | 10,517 |
Credit | – | 432 | 47 | 479 |
Equity and stock index options | – | 21 | 2 | 23 |
Commodity | 788 | 194 | – | 982 |
Investment securit ies | ||||
Debt securit ies and other el ig ible b ills | 21,960 | 32,340 | – | 54,300 |
Of which: | ||||
Issued by central banks & governments | 16,376 | 9,855 | – | 26,231 |
Issued by corporates other than financial inst itut ions 1 | – | 1,001 | – | 1,001 |
Issued by financial inst itut ions 1 | 5,584 | 21,484 | – | 27,068 |
Equity shares | 182 | 1 | 226 | 409 |
Total financial assets at 31 December 2023 | 32,653 | 159,161 | 2,528 | 194,342 |
Liab il it ies | ||||
Financ ial instruments held at fair value through profit or loss | ||||
Deposits by banks | – | 1,253 | 68 | 1,321 |
Customer accounts | – | 8,722 | 130 | 8,852 |
Repurchase agreements and other sim ilar secured borrow ing | – | 39,174 | – | 39,174 |
Debt securit ies in issue | – | 8,693 | 861 | 9,554 |
Short posit ions | 1,956 | 3,507 | 103 | 5,566 |
Derivat ive financial instruments | 737 | 54,732 | 62 | 55,531 |
Of which: | ||||
Foreign exchange | 110 | 42,525 | 16 | 42,651 |
Interest rate | 46 | 11,161 | 5 | 11,212 |
Credit | – | 525 | 32 | 557 |
Equity and stock index options | – | 64 | 9 | 73 |
Commodity | 581 | 457 | – | 1,038 |
Other liab il it ies | – | – | – | – |
Total financial l iab il it ies at 31 December 2023 | 2,693 | 116,081 | 1,224 | 119,998 |
1
Includes covered bonds of $6,149 mill
ion, secur
it
ies
issued by Multilateral Development Banks/International Organisat
ions of $6,118 m
ill
ion and State-owned agenc
ies
and development banks of $3,153 mill
ion.
The fair value of financ
ial assets and financial l
iab
il
it
ies class
if
ied as Level 2
in the fair value hierarchy that are subject to
complex modelling techniques is $489 mill
ion and $68 m
ill
ion respect
ively.
There were no sign
ificant changes to valuat
ion or levelling approaches in 2023.
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.
Notes to the financial statements cont
inued
Standard Chartered Bank
214
Directors’ Report and Financ
ial Statements 2023
12. Financ
ial
instruments continued
Level 1 | Level 2 | Level 3 | Total | |
Assets | $mill ion | $mill ion | $mill ion | $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 assets at 31 December 2022 2 | 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 l iab il it ies at 31 December 2022 2 | 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 financ
ial assets and financial l
iab
il
it
ies class
if
ied as Level 2
in the fair value hierarchy that are subject to
complex modelling techniques is $398 mill
ion and $48 m
ill
ion respect
ively.
Notes to the financial statements cont
inued
Standard Chartered Bank
215
Directors’ Report and Financ
ial Statements 2023
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
| Fair value | |||||
Carrying value | Level 1 | Level 2 | Level 3 | Total | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Assets | |||||
Cash and balances at central banks¹ | 64,198 | – | 64,198 | – | 64,198 |
Loans and advances to banks | 22,803 | – | 22,746 | – | 22,746 |
of which – reverse repurchase agreements and other sim ilar | |||||
secured lending | 1,653 | – | 1,653 | – | 1,653 |
Loans and advances to customers | 156,143 | – | 47,454 | 106,336 | 153,790 |
of which – reverse repurchase agreements and other sim ilar | |||||
secured lending | 13,827 | – | 13,827 | – | 13,827 |
Investment securit ies 2 | 39,920 | – | 37,795 | 33 | 37,828 |
Other assets¹ | 20,714 | – | 20,714 | – | 20,714 |
Assets held for sale | 693 | 101 | 541 | 51 | 693 |
At 31 December 2023 | 304,471 | 101 | 193,448 | 106,420 | 299,969 |
Liab il it ies | |||||
Deposits by banks | 23,616 | – | 23,671 | – | 23,671 |
Customer accounts | 237,902 | – | 234,937 | – | 234,937 |
Repurchase agreements and other sim ilar secured borrow ing | 12,033 | – | 12,033 | – | 12,033 |
Debt securit ies in issue | 36,481 | – | 36,355 | – | 36,355 |
Subordinated liab il it ies and other borrowed funds | 11,454 | – | 12,545 | – | 12,545 |
Other liab il it ies¹ | 24,109 | – | 24,109 | – | 24,109 |
Liab il it ies held for sale | 726 | 54 | 672 | – | 726 |
At 31 December 2023 | 346,321 | 54 | 344,322 | – | 344,376 |
| Fair value | |||||
Carrying value | Level 1 | Level 2 | Level 3 | Total | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Assets | |||||
Cash and balances at central banks¹ | 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 assets¹ | 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 |
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 $12,667 mill
ion at 31 December 2023 and $13,781 m
ill
ion at 31 December 2022
Notes to the financial statements cont
inued
Standard Chartered Bank
216
Directors’ Report and Financ
ial Statements 2023
12. Financ
ial
instruments continued
Company
| Fair value | |||||
Carrying value | Level 1 | Level 2 | Level 3 | Total | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Assets | |||||
Cash and balances at central banks¹ | 52,758 | – | 52,758 | – | 52,758 |
Loans and advances to banks | 10,135 | – | 10,104 | – | 10,104 |
of which – reverse repurchase agreements and other sim ilar | |||||
secured lending | 554 | – | 554 | – | 554 |
Loans and advances to customers | 75,883 | – | 21,435 | 52,113 | 73,548 |
of which – reverse repurchase agreements and other sim ilar | |||||
secured lending | 12,212 | – | 12,212 | – | 12,212 |
Investment securit ies 2 | 38,062 | – | 35,872 | 33 | 35,905 |
Other assets¹ | 16,990 | – | 16,990 | – | 16,990 |
Assets held for sale | 52 | – | – | 52 | 52 |
At 31 December 2023 | 193,880 | – | 137,159 | 52,198 | 189,357 |
Liab il it ies | |||||
Deposits by banks | 18,280 | – | 18,335 | – | 18,335 |
Customer accounts | 121,648 | – | 121,525 | – | 121,525 |
Repurchase agreements and other sim ilar secured borrow ing | 11,977 | – | 11,977 | – | 11,977 |
Debt securit ies in issue | 34,740 | – | 34,976 | – | 34,976 |
Subordinated liab il it ies and other borrowed funds | 10,896 | – | 11,457 | – | 11,457 |
Other liab il it ies¹ | 18,879 | – | 18,879 | – | 18,879 |
Liab il it ies held for sale | – | – | – | – | – |
At 31 December 2023 | 216,420 | – | 217,149 | – | 217,149 |
| Fair value | |||||
Carrying value | Level 1 | Level 2 | Level 3 | Total | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Assets | |||||
Cash and balances at central banks¹ | 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 assets¹ | 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 |
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 $11,991 mill
ion as at 31 December 2023 and $12,321 m
ill
ion as at 31 December 2022
Notes to the financial statements cont
inued
Standard Chartered Bank
217
Directors’ Report and Financ
ial Statements 2023
12. Financ
ial
instruments continued
The Group has changed its method of determin
ing the cost of
its portfolio of Investment Securit
ies held at amort
ised cost
and Debt securit
ies and other el
ig
ible b
ills, other than those included with
in financial
instruments held at fair value through
profit or loss, from the weighted average cost method to the first-in-first-out method. This change in accounting policy will
affect the calculation of gains or losses on derecognit
ion of such
instruments and the determinat
ion of the
in
it
ial credit risk of
these instruments, to better align with the IFRS 9 requirements for recognis
ing and measur
ing impa
irment losses. The change
was made prospectively for certain but not all securit
ies and transact
ions. It is impract
icable for the Group to determ
ine the
impact of this approach for each security and each transaction that was executed in previous periods.
Loans and advances to customers by client segment
¹
Group
| 2023 | ||||||
| Carrying value | Fair value | |||||
Stage 1 and | Stage 1 and | |||||
Stage 3 | stage 2 | Total | Stage 3 | stage 2 | Total | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Corporate, Commercial & Institut ional Bank ing | 1,525 | 83,008 | 84,533 | 1,513 | 80,659 | 82,172 |
Consumer, Private & Business Banking | 425 | 47,190 | 47,615 | 426 | 47,197 | 47,623 |
Ventures | – | 230 | 230 | – | 230 | 230 |
Central & other items | 209 | 23,556 | 23,765 | 209 | 23,556 | 23,765 |
At 31 December 2023 | 2,159 | 153,984 | 156,143 | 2,148 | 151,642 | 153,790 |
| 2022 | ||||||
| Carrying value | Fair value | |||||
Stage 1 and | Stage 1 and | |||||
Stage 3 | stage 2 | Total | Stage 3 | stage 2 | Total | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $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 |
1
Loans and advances includes reverse repurchase agreements and other sim
ilar secured lend
ing: carrying value $13,827mill
ion and fa
ir value $13,827mill
ion (31 December
2022: $15,586 mill
ion and fa
ir value $15,727mill
ion)
Company
| 2023 | ||||||
| Carrying value | Fair value | |||||
Stage 1 and | Stage 1 and | |||||
Stage 3 | stage 2 | Total | Stage 3 | stage 2 | Total | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Corporate, Commercial & Institut ional Bank ing | 1,192 | 60,809 | 62,001 | 1,192 | 58,543 | 59,735 |
Consumer, Private & Business Banking | 231 | 12,272 | 12,503 | 231 | 12,203 | 12,434 |
Central & other items | 209 | 1,170 | 1,379 | 209 | 1,170 | 1,379 |
At 31 December 2023 | 1,632 | 74,251 | 75,883 | 1,632 | 71,916 | 73,548 |
| 2022 | ||||||
| Carrying value | Fair value | |||||
Stage 1 and | Stage 1 and | |||||
Stage 3 | stage 2 | Total | Stage 3 | stage 2 | Total | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Corporate, Commercial & Institut ional Bank ing | 1,609 | 64,311 | 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 |
1
Loans and advances includes reverse repurchase agreements and other sim
ilar secured lend
ing: carrying value $12,212mill
ion and fa
ir value $12,212 mill
ion (31 December
2022: $15,071 mill
ion and fa
ir value $15,071 mill
ion)
Notes to the financial statements cont
inued
Standard Chartered Bank
218
Directors’ Report and Financ
ial Statements 2023
12. Financ
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
Value as at 31 | ||||||
December 2023 | ||||||
Assets | Liab il it ies | Sign ificant unobservable | Weighted average 2 | |||
Instrument | $mill ion | $mill ion | Princ ipal valuat ion technique | inputs | Range 1 | |
Loans and advances to | 1,172 | – | Discounted cash flows | Price/yield | 1.7% - 100% | 14.0% |
customers | Credit spreads | 0.1% - 0.8% | 0.6% | |||
Reverse repurchase agreements | 1,365 | – | Discounted cash flows | Repo curve | 5.1% - 7.6% | 6.3% |
and other sim ilar secured lend ing | Price/yield | (2.75)% - 10.3% | (1.2)% | |||
Debt securit ies, alternat ive tier | 1,240 | – | Discounted cash flow | Price/yield | (14.1)% - 25.8% | 10.1% |
one and other elig ible secur it ies | Recovery rates | 0.1% - 1.0% | 0.2% | |||
Internal pric ing model | Equity-Equity correlation | 44.1% - 100% | 80.7% | |||
Equity-FX correlation | (35.9)% - 45.5% | 14.2% | ||||
Government bonds and treasury | 51 | – | Discounted cash flows | Price/yield | 17.7% - 21.8% | 20.6% |
bills | ||||||
Equity shares (includes private | 330 | – | Comparable pric ing/y ield | EV/Revenue multiples | 9.3x - 30.9x | 15.8x |
equity investments) | P/E multiples | 13.2x - 51.8x | 44.8x | |||
P/B multiples | 0.5x - 2.7x | 2.6x | ||||
P/S multiples | 1.5x - 1.6x | 1.5x | ||||
Liqu id ity discount | 20.0% - 20.0% | 20.0% | ||||
Discounted cash flows | Discount rates | 9.2% - 35.6% | 22.2% | |||
Option pric ing model | Equity value based on | 8.4x - 42.5x | 27.5x | |||
EV/Revenue multiples | ||||||
Equity value based on | 3.1x - 3.1x | 3.1x | ||||
EV/EBITDA multiples | ||||||
Equity value based on | 50.0% - 65.0% | 61.9% | ||||
volatil ity | ||||||
Derivat ive financial instruments | ||||||
of which: | ||||||
Foreign exchange | 24 | 12 | Option pric ing model | Foreign exchange option | 0.5% - 51% | 24.5% |
impl ied volat il ity | ||||||
Discounted cash flows | Interest rate curves | 3.6% - 5.8% | 3.8% | |||
Foreign exchange curves | 0.6% - 64.2% | 12.7% | ||||
Interest rate | 3 | 5 | Discounted cash flows | Interest rate curves | 3.6% - 8.5% | 5.2% |
Credit | 47 | 126 | Discounted cash flows | Price/yield | 1.8% - 16.3% | 8.7% |
Equity and stock index | 2 | 19 | Internal pric ing model | Equity-Equity correlation | 44.1% - 100% | 55.0% |
Equity-FX correlation | (35.9)% - 45.4% | 13.3% | ||||
Deposits by banks | – | 68 | Discounted cash flows | Credit spreads | 0.6% - 3.4% | 2.0% |
Customer accounts | – | 232 | Discounted cash flows | Interest rate curves | 2.9% - 8.6% | 6.1% |
Price/yield | 6.3% - 15.1% | 10.5% | ||||
Internal pric ing model | Equity-Equity correlation | 44.1% - 100% | 80.7% | |||
Equity-FX correlation | (35.9)% - 45.5% | 14.2% | ||||
Debt securit ies in issue | – | 1,026 | Discounted cash flows | Price/yield | 6.6% - 20.9% | 17.9% |
Interest rate curves | 2.9% - 5.3% | 4.4% | ||||
Equity-Equity correlation | 44.1% - 100% | 80.7% | ||||
Internal pric ing model | Bond option impl ied | 2.9% - 5.3% | 4.4% | |||
volatil ity | ||||||
Equity-FX correlation | (35.9)% - 45.5% | 14.2% | ||||
Short posit ions | – | 103 | Discounted cash flows | Price/yield | 7.1% - 7.1% | 7.1% |
Total | 4,234 | 1,591 | ||||
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 2023. 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
Notes to the financial statements cont
inued
Standard Chartered Bank
219
Directors’ Report and Financ
ial Statements 2023
12. Financ
ial
instruments continued
Value as at 31 | ||||||
December 2022 | ||||||
Assets | Liab il it ies | Sign ificant unobservable | Weighted | |||
Instrument | $mill ion | $mill ion | Princ ipal valuat ion technique | inputs | Range 1 | average 2 |
Loans and advances to banks | 21 | – | Discounted cash flows | 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 | 1,988 | – | Discounted cash flows | Repo curve | 2.3% - 8.0% | 6.2% |
and other sim ilar secured lend ing | Price/yield | 1.9% - 7.2% | 4.7% | |||
Debt securit ies, alternat ive tier one | 807 | – | Discounted cash flows | Price/yield | 5.5% - 48.5% | 8.3% |
and other elig ible secur it ies | Recovery rates | 0.0% - 1.0% | 0.2%. | |||
Equity shares (includes private | 576 | – | Comparable pric ing/y ield | EV/EBITDA multiples | N/A | N/A |
equity investments) | P/E 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 | 4.8x - 76.1x | 32.9x | |||
EV/Revenue multiples | ||||||
Equity value based on | 2.6x | 2.6x | ||||
EV/EBITDA multiples | ||||||
Equity value based on | 60.0% | 60.0% | ||||
volatil ity | ||||||
Derivat ive financial instruments | ||||||
of which: | ||||||
Foreign exchange | 17 | 14 | Option pric ing model | Foreign exchange option | (21.0)% - 21% | (2.7)% |
impl ied volat il ity | ||||||
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 | N/A | N/A | |||
volatil ity | ||||||
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-Equity correlation | 30.0% - 96.0% | 67.0% |
Equity-FX correlation | (70.0)% | 37.0% | ||||
- 85.0% | ||||||
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-Equity correlation | 30.0% - 96.0% | 67.0% | |||
Equity-FX correlation | (70.0)% | 37.0% | ||||
- 85.0% | ||||||
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
Notes to the financial statements cont
inued
Standard Chartered Bank
220
Directors’ Report and Financ
ial Statements 2023
12. Financ
ial
instruments continued
Company
Value as at 31 December | ||||||
2023 | ||||||
Assets | Liab il it ies | Princ ipal valuat ion | Sign ificant unobservable | Weighted | ||
Instrument | $mill ion | $mill ion | technique | inputs | Range 1 | average 2 |
Loans and advances to customers | 1,024 | – | Discounted cash flows | Price/yield | 1.7% - 100% | 14.3% |
Credit spreads | 0.1% - 0.8% | 0.6% | ||||
Reverse repurchase agreements | 1,092 | – | Discounted cash flows | Repo curve | 5.1% - 7.6% | 6.5% |
and other sim ilar secured lend ing | Price/yield | (2.7)% - 10.3% | (1.2)% | |||
Debt securit ies, alternat ive tier one | 114 | – | Discounted cash flows | Price/yield | (2.8)% - 25.8% | 10.0% |
and other elig ible secur it ies | Recovery rates | 0.1% - 0.1% | 0.1% | |||
Equity shares (includes private | 226 | – | Comparable pric ing/ | P/E multiples | 51.8x | 43.1x |
equity investments) | yield | P/B multiples | 0.6x - 2.7x | 2.6x | ||
P/S multiples | N/A | N/A | ||||
Liqu id ity discount | 20.0% - 20.0% | 20.0% | ||||
Discounted cash flows | Discount rates | 12.6% - 18.5% | 16.9% | |||
Option pric ing model | Equity value based on | 10.7x | 10.7x | |||
EV/Revenue multiples | ||||||
Equity value based on | N/A | N/A | ||||
EV/EBITDA multiples | ||||||
Equity value based on | N/A | N/A | ||||
volatil ity | ||||||
Derivat ive financial instruments of | ||||||
which: | ||||||
Foreign exchange | 21 | 16 | Option pric ing model | Foreign exchange option | 0.5% - 51% | 35.2% |
impl ied volat il ity | ||||||
Discounted cash flows | Interest rate curves | 3.6% - 5.8% | 3.8% | |||
Foreign exchange curves | 0.6% - 64.2% | 20.7% | ||||
Interest rate | 2 | 5 | Discounted cash flows | Interest rate curves | 3.6% - 7.5% | 5.0% |
Credit | 47 | 32 | Discounted cash flows | Price/yield | 1.8% - 16.3% | 8.9% |
Equity and stock index | 2 | 9 | Internal pric ing model | Equity-Equity correlation | 44.1% - 100% | 80.7% |
Equity-FX correlation | (35.9)% | 14.2% | ||||
- 45.5% | ||||||
Deposits by banks | – | 68 | Discounted cash flows | Credit spreads | 0.6% - 3.4% | 2.0% |
Customer accounts | – | 130 | Discounted cash flows | Interest rate curves | 6.4% - 8.6% | 7.1% |
Price/yield | 6.3% - 15.1% | 9.7% | ||||
Debt securit ies in issue | – | 861 | Discounted cash flows | Price/yield | 6.6% - 18.2% | 18.0% |
Interest rate curves | 2.9% - 5.3% | 4.4% | ||||
Internal pric ing model | Equity-Equity correlation | 44.1% - 100% | 80.7% | |||
Equity-FX correlation | (35.9)% | 14.2% | ||||
- 45.5% | ||||||
Bond option impl ied | 2.9% - 5.3% | 4.4% | ||||
volatil ity | ||||||
Short posit ions | – | 103 | Discounted cash flows | Price/yield | 7.1% - 7.1% | 7.1% |
Total | 2,528 | 1,224 | ||||
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 2023. 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
Notes to the financial statements cont
inued
Standard Chartered Bank
221
Directors’ Report and Financ
ial Statements 2023
12. Financ
ial
instruments continued
Value as at 31 December 2022 | ||||||
Assets | Liab il it ies | Sign ificant unobservable | Weighted | |||
Instrument | $mill ion | $mill ion | Princ ipal valuat ion technique | inputs | Range 1 | average 2 |
Loans and advances to | 899 | – | Discounted cash flows | Price/yield | 2.8% - 11.5% | 4.9% |
customers | Recovery rates | 26.5% - 100% | 93.0% | |||
Reverse repurchase | 1,988 | – | Discounted cash flows | Repo curve | 2.3% - 8.0% | 6.2% |
agreements and other | ||||||
sim ilar secured lend ing | Price/yield | 1.9%.-7.2% | 4.7% | |||
Debt securit ies, | 469 | – | Discounted cash flows | Price/yield | 6.8% - 48.5% | 8.5% |
alternative tier one and | Recovery rates | 0.0% - 1.0% | 0.2% | |||
other elig ible secur it ies | ||||||
Equity shares (includes | 220 | – | Comparable pric ing/y ield | EV/EBITDA multiples | N/A | N/A |
private equity | EV/Revenue multiples | N/A | N/A | |||
investments) | ||||||
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 | 12.2x | 12.2x | |||
EV/ | ||||||
Revenue multiples | ||||||
Equity value based on | N/A | N/A | ||||
EV/EBITDA | ||||||
multiples | ||||||
Equity value based on | N/A | N/A | ||||
volatil ity | ||||||
Derivat ive financial | ||||||
instruments of which: | ||||||
Foreign exchange | 16 | 25 | Option pric ing model | Foreign exchange option | (21.0)% - 21.0% | (3.6)% |
impl ied volat il ity | ||||||
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 | N/A | N/A | |||
volatil ity | ||||||
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 | 1 | 51 | Internal pric ing model | Equity-Equity correlation | 30.0% - 96.0% | 67.0% |
index | 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 | 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-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
Notes to the financial statements cont
inued
Standard Chartered Bank
222
Directors’ Report and Financ
ial Statements 2023
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 y
ield (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
period
•
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.
Notes to the financial statements cont
inued
Standard Chartered Bank
223
Directors’ Report and Financ
ial Statements 2023
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
| Held at fair value through profit or loss | Investment securit ies | ||||||||
Reverse | Debt | Debt | |||||||
repurchase | securit ies, | securit ies, | |||||||
agreements | alternative | alternative | |||||||
Loans and | and other | tier one | tier one | ||||||
Loans and | advances | sim ilar | and other | Derivat ive | and other | ||||
advances | to | secured | elig ible | Equity | financial | elig ible | Equity | ||
to banks | customers | lending | bills | shares | instruments | bills | shares | Total | |
Assets | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion |
At 1 January 2023 | 21 | 1,308 | 1,988 | 807 | 92 | 44 | – | 484 | 4,744 |
Total (losses)/gains recognised in | |||||||||
income statement | – | (15) | (49) | (260) | (8) | 13 | – | – | (319) |
Net trading income | – | (15) | (49) | (272) | (8) | 13 | – | – | (331) |
Other operating income | – | – | – | 12 | – | – | – | – | 12 |
Total gains recognised in | |||||||||
other comprehensive income (OCI) | – | – | – | – | – | – | 1 | 42 | 43 |
Fair value through OCI reserve | – | – | – | – | – | – | – | 43 | 43 |
Exchange difference | – | – | – | – | – | – | 1 | (1) | – |
Purchases | 22 | 1,046 | 4,838 | 1,051 | 1 | 189 | 21 | 1 | 7,169 |
Sales | (22) | (1,133) | (3,943) | (516) | – | (118) | (23) | (5) | (5,760) |
Settlements | – | (16) | (1,469) | – | – | (25) | – | – | (1,510) |
Transfers out 1 | (21) | (224) | – | (6) | – | (27) | (5) | (284) | (567) |
Transfers in 2 | – | 206 | – | 144 | – | – | 77 | 7 | 434 |
At 31 December 2023 | – | 1,172 | 1,365 | 1,220 | 85 | 76 | 71 | 245 | 4,234 |
Total unrealised (losses)/gains | |||||||||
recognised in the income statement, | |||||||||
with in net trad ing income, relating to | |||||||||
change in fair value of assets held at | |||||||||
31 December 2023 | – | (3) | 3 | (3) | (8) | (11) | – | – | (22) |
1
Transfers out includes debt securit
ies, alternat
ive tier one and other elig
ible b
ills , 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 relates to debt secur
it
ies, alternat
ive tier one and other elig
ible b
ills, equity shares and loans and advances where the valuation parameters
became unobservable during the year
Notes to the financial statements cont
inued
Standard Chartered Bank
224
Directors’ Report and Financ
ial Statements 2023
12. Financ
ial
instruments continued
The table below analyses movements in Level 3 financ
ial assets carr
ied at fair value.
| Held at fair value through profit or loss | Investment securit ies | ||||||||
Reverse | Debt | Debt | |||||||
repurchase | securit ies, | securit ies, | |||||||
agreements | alternative | alternative | |||||||
Loans and | and other | tier one | tier one | ||||||
Loans and | advances | sim ilar | and other | Derivat ive | and other | ||||
advances | to | secured | elig ible | Equity | financial | elig ible | Equity | ||
to banks | customers | lending | bills | shares | instruments | bills | shares | Total | |
Assets | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion |
At 1 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 (losses)/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 relates 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 became unobservable during the year
Notes to the financial statements cont
inued
Standard Chartered Bank
225
Directors’ Report and Financ
ial Statements 2023
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
Held at fair value through profit or loss | Investment securit ies | |||||||
Reverse | ||||||||
repurchase | Debt | Debt | ||||||
agreements | securit ies, | securit ies, | ||||||
and other | alternative | alternative | ||||||
Loans and | Loans and | sim ilar | tier one and | Derivat ive | tier one and | |||
advances to | advances to | secured | other elig ible | financial | other elig ible | |||
banks | customers | lending | bills | instruments | bills | Equity shares | Total | |
Assets | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion |
At 1 January 2023 | – | 899 | 1,988 | 469 | 39 | – | 220 | 3,615 |
Total (losses)/gains | ||||||||
recognised in income | ||||||||
statement | – | (4) | (52) | (267) | 13 | – | – | (310) |
Net trading income | – | (4) | (52) | (267) | 13 | – | – | (310) |
Other operating income | – | – | – | – | – | – | – | – |
Total gains recognised in | ||||||||
other comprehensive | ||||||||
income (OCI) | – | – | – | – | – | – | 42 | 42 |
Fair value through OCI | ||||||||
reserve | – | – | – | – | – | – | 42 | 42 |
Exchange difference | – | – | – | – | – | – | – | – |
Purchases | – | 957 | 4,568 | 208 | 171 | – | 1 | 5,905 |
Sales | – | (798) | (3,943) | (289) | (111) | – | (5) | (5,146) |
Settlements | – | (9) | (1,469) | – | (17) | – | – | (1,495) |
Transfers out 1 | – | (216) | – | (8) | (23) | – | (32) | (279) |
Transfers in 2 | – | 195 | – | 1 | – | – | – | 196 |
At 31 December 2023 | – | 1,024 | 1,092 | 114 | 72 | – | 226 | 2,528 |
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 | ||||||||
2023 | – | – | – | – | (9) | – | – | (9) |
1
Transfers out includes debt securit
ies, alternat
ive tier one and other elig
ible b
ills, derivat
ive financial
instruments, equity shares 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 relates to debt secur
it
ies, alternat
ive tier one and other elig
ible b
ills and loans and advances where the valuation parameters became
unobservable during the year
Notes to the financial statements cont
inued
Standard Chartered Bank
226
Directors’ Report and Financ
ial Statements 2023
12. Financ
ial
instruments continued
Held at fair value through profit or loss | Investment securit ies | |||||||
Reverse | ||||||||
repurchase | ||||||||
agreements | Debt | Debt | ||||||
and other | securit ies, | securit ies, | ||||||
Loans and | Loans and | sim ilar | alternative tier | Derivat ive | alternative tier | |||
advances to | advances to | secured | one and other | financial | one and other | |||
banks | customers | lending | elig ible b ills | instruments | elig ible b ills | Equity shares | Total | |
Assets | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion |
At 1 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 derivat
ive financial
instruments, debt securit
ies, alternat
ive tier one and other elig
ible b
ills 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 relates 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 became unobservable during the year
Notes to the financial statements cont
inued
Standard Chartered Bank
227
Directors’ Report and Financ
ial Statements 2023
12. Financ
ial
instruments continued
Level 3 movement tables – financial l
iab
il
it
ies
Group
| 2023 | ||||||
Derivat ive | ||||||
Deposits by | Customer | Debt securit ies | financial | Short | ||
banks | accounts | in issue | instruments | posit ions | Total | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
At 1 January 2023 | 133 | 170 | 427 | 118 | 40 | 888 |
Total (gains)/losses recognised in income statement | ||||||
– net trading income | – | (20) | 32 | (53) | 3 | (38) |
Issues | 293 | 509 | 1,466 | 404 | 100 | 2,772 |
Settlements | (353) | (442) | (1,178) | (297) | (40) | (2,310) |
Transfers out 1 | (5) | (9) | (85) | (13) | – | (112) |
Transfers in 2 | – | 24 | 364 | 3 | – | 391 |
At 31 December 2023 | 68 | 232 | 1,026 | 162 | 103 | 1,591 |
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 2023 | – | (21) | 6 | (47) | – | (62) |
| 2022 | ||||||
Derivat ive | ||||||
Deposits by | Customer | Debt securit ies | financial | Short | ||
banks | Accounts | in issue | instruments | posit ions | Total | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
At 1 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) |
1
Transfers out during the year primar
ily relates to debt secur
it
ies
in issue, bank deposits, customer accounts 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
Notes to the financial statements cont
inued
Standard Chartered Bank
228
Directors’ Report and Financ
ial Statements 2023
12. Financ
ial
instruments continued
Company
| 2023 | ||||||
Derivat ive | ||||||
Deposits by | Customer | Debt securit ies | financial | |||
banks | accounts | in issue | instruments | Short posit ions | Total | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
At 1 January 2023 | 119 | 67 | 262 | 110 | 40 | 598 |
Total losses/(gains) recognised in income statement | ||||||
– net trading income | – | 2 | 26 | (16) | 3 | 15 |
Issues | 281 | 260 | 993 | 154 | 100 | 1,788 |
Settlements | (327) | (203) | (699) | (177) | (40) | (1,446) |
Transfers out 1 | (5) | – | (85) | (9) | – | (99) |
Transfers in 2 | – | 4 | 364 | – | – | 368 |
At 31 December 2023 | 68 | 130 | 861 | 62 | 103 | 1,224 |
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 2023 | – | – | – | (10) | – | (10) |
| 2022 | ||||||
Derivat ive | ||||||
Deposits by | Customer | Debt securit ies | financial | |||
banks | Accounts | in issue | instruments | Short posit ions | Total | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
At 1 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) |
1
Transfers out during the year primar
ily relates to debt secur
it
ies
in issue, bank deposits 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 customer accounts where the valuation parameters became 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.
Notes to the financial statements cont
inued
Standard Chartered Bank
229
Directors’ Report and Financ
ial Statements 2023
12. Financ
ial
instruments continued
Group
Held at fair value through other | ||||||
Held at fair value through profit or loss | comprehensive income | |||||
Favourable | Unfavourable | Favourable | Unfavourable | |||
Net exposure | changes | changes | Net exposure | changes | changes | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Financ ial instruments held at fair value | ||||||
Loans and advances | 1,172 | 1,186 | 1,140 | – | – | – |
Reverse repurchase agreements and other | ||||||
sim ilar secured lend ing | 1,365 | 1,367 | 1,362 | – | – | – |
Debt securit ies, alternat ive tier one and other | ||||||
elig ible b ills | 1,220 | 1,265 | 1,153 | 71 | 77 | 65 |
Equity shares | 85 | 94 | 77 | 245 | 270 | 221 |
Derivat ive financial instruments | (86) | (44) | (127) | – | – | – |
Customers accounts | (232) | (218) | (246) | – | – | – |
Deposits by banks | (68) | (68) | (68) | – | – | – |
Short posit ions | (103) | (101) | (105) | – | – | – |
Debt securit ies in issue | (1,026) | (951) | (1,100) | – | – | – |
At 31 December 2023 | 2,327 | 2,530 | 2,086 | 316 | 347 | 286 |
Financ ial instruments held at fair value | ||||||
Loans and advances | 1,329 | 1,348 | 1,268 | – | – | – |
Reverse repurchase agreements and other | ||||||
sim ilar secured lend ing | 1,988 | 2,003 | 1,969 | – | – | – |
Debt securit ies, alternat ive tier one and other | ||||||
elig ible b ills | 807 | 818 | 783 | – | – | – |
Equity shares | 92 | 101 | 83 | 484 | 528 | 441 |
Derivat ive financial instruments | (74) | (41) | (107) | – | – | – |
Customers 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 |
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.
2023 | 2022 | ||
Financ ial instruments | Fair value changes | $mill ion | $mill ion |
Held at fair value through profit or loss | Possible increase | 203 | 131 |
Possible decrease | (241) | (189) | |
Fair value through other comprehensive income | Possible increase | 31 | 44 |
Possible decrease | (30) | (43) |
Notes to the financial statements cont
inued
Standard Chartered Bank
230
Directors’ Report and Financ
ial Statements 2023
12. Financ
ial
instruments continued
Company
Held at fair value through other | ||||||
Held at fair value through profit or loss | comprehensive income | |||||
Favourable | Unfavourable | Favourable | Unfavourable | |||
Net exposure | changes | changes | Net exposure | changes | changes | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Financ ial instruments held at fair value | ||||||
Loans and advances | 1,024 | 1,037 | 999 | – | – | – |
Reverse repurchase agreements and other | ||||||
sim ilar secured lend ing | 1,092 | 1,094 | 1,090 | – | – | – |
Debt securit ies, alternat ive tier one and other | ||||||
elig ible b ills | 114 | 118 | 110 | – | – | – |
Equity shares | – | – | – | 226 | 249 | 203 |
Derivat ive financial instruments | 10 | 15 | 5 | – | – | – |
Customers accounts | (130) | (122) | (138) | – | – | – |
Deposits by banks | (68) | (68) | (68) | – | – | – |
Short posit ions | (103) | (101) | (105) | – | – | – |
Debt securit ies in issue | (861) | (788) | (934) | – | – | – |
At 31 December 2023 | 1,078 | 1,185 | 959 | 226 | 249 | 203 |
Financ ial instruments held at fair value | ||||||
Loans and advances | 899 | 913 | 872 | – | – | – |
Reverse repurchase agreements and other | ||||||
sim ilar secured lend ing | 1,988 | 2,003 | 1,969 | – | – | – |
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) | – | – | – |
Customers 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 |
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.
2023 | 2022 | ||
Financ ial instruments | Fair value changes | $mill ion | $mill ion |
Held at fair value through profit or loss | Possible increase | 107 | 99 |
Possible decrease | (119) | (128) | |
Fair value through other comprehensive income | Possible increase | 23 | 19 |
Possible decrease | (23) | (19) |
Notes to the financial statements cont
inued
Standard Chartered Bank
231
Directors’ Report and Financ
ial Statements 2023
ive financial
instruments
Accounting policy
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
ir value is negative.
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 applied
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 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
•
Prospective and retrospective effectiveness of the hedge should be 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.
Fair value hedge
Changes in the fair value of derivat
ives that are des
ignated and qualify as fair value hedging instruments are recorded in 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.
Should the Group consider the hedged future cash flows are no longer expected to occur due to reasons, the cumulative gain
or loss will be immed
iately reclass
if
ied to profit or loss.
Notes to the financial statements cont
inued
Standard Chartered Bank
232
Directors’ Report and Financ
ial Statements 2023
13. Derivat
ive financial
instruments continued
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
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
ing the contract at the reporting date.
Derivat
ives
Group
| 2023 | 2022 | |||||
Notional | Notional | |||||
princ ipal | princ ipal | |||||
amounts | Assets | Liab il it ies | amounts | Assets | Liab il it ies | |
Derivat ives | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion |
Foreign exchange derivat ive contracts: | ||||||
Forward foreign exchange contracts | 3,315,302 | 36,523 | 36,348 | 2,901,200 | 45,187 | 45,162 |
Currency swaps and options | 967,868 | 9,200 | 10,081 | 999,374 | 11,391 | 12,589 |
4,283,170 | 45,723 | 46,429 | 3,900,574 | 56,578 | 57,751 | |
Interest rate derivat ive contracts: | ||||||
Swaps | 4,412,137 | 51,193 | 52,496 | 3,213,891 | 58,440 | 60,124 |
Forward rate agreements and options | 309,630 | 2,001 | 2,382 | 95,480 | 2,140 | 2,838 |
4,721,767 | 53,194 | 54,878 | 3,309,371 | 60,580 | 62,962 | |
Exchange traded futures and options | 321,138 | 39 | 47 | 324,225 | 279 | 258 |
Credit derivat ive contracts | 272,695 | 452 | 574 | 246,802 | 406 | 433 |
Equity and stock index options | 6,771 | 49 | 127 | 4,912 | 86 | 158 |
Commodity derivat ive contracts | 112,846 | 864 | 885 | 83,738 | 1,312 | 1,487 |
Gross total derivat ives | 9,718,387 | 100,321 | 102,940 | 7,869,622 | 119,241 | 123,049 |
Offset | – | (47,767) | (47,767) | – | (54,191) | (54,191) |
Total derivat ives | 9,718,387 | 52,554 | 55,173 | 7,869,622 | 65,050 | 68,858 |
Company
| 2023 | 2022 | |||||
Notional | Notional | |||||
princ ipal | princ ipal | |||||
amounts | Assets | Liab il it ies | amounts | Assets | Liab il it ies | |
Derivat ives | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion |
Foreign exchange derivat ive contracts: | ||||||
Forward foreign exchange contracts | 3,857,570 | 31,658 | 31,966 | 3,322,275 | 39,464 | 40,402 |
Currency swaps and options | 1,001,366 | 9,562 | 10,685 | 1,027,838 | 12,110 | 12,864 |
4,858,936 | 41,220 | 42,651 | 4,350,113 | 51,574 | 53,266 | |
Interest rate derivat ive contracts: | ||||||
Swaps | 4,979,421 | 56,121 | 56,504 | 3,548,036 | 63,668 | 64,723 |
Forward rate agreements and options | 312,356 | 2,124 | 2,428 | 98,617 | 2,277 | 2,944 |
5,291,777 | 58,245 | 58,932 | 3,646,653 | 65,945 | 67,667 | |
Exchange traded futures and options | 321,138 | 39 | 47 | 324,225 | 279 | 258 |
Credit derivat ive contracts | 278,156 | 479 | 557 | 246,922 | 352 | 437 |
Equity and stock index options | 4,486 | 23 | 73 | 3,223 | 69 | 126 |
Commodity derivat ive contracts | 117,875 | 982 | 1,038 | 89,095 | 1,453 | 1,640 |
Gross total derivat ives | 10,872,368 | 100,988 | 103,298 | 8,660,231 | 119,672 | 123,394 |
Offset | – | (47,767) | (47,767) | – | (54,191) | (54,191) |
Total derivat ives | 10,872,368 | 53,221 | 55,531 | 8,660,231 | 65,481 | 69,203 |
Notes to the financial statements cont
inued
Standard Chartered Bank
233
Directors’ Report and Financ
ial Statements 2023
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
ives
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 107).
The Derivat
ives and Hedg
ing sections of the Risk review and Capital review (page 110) explain the Group’s risk management
of derivat
ive contracts and appl
icat
ion of hedg
ing.
Derivat
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
| 2023 | 2022 | |||||
Notional | Notional | |||||
princ ipal | princ ipal | |||||
amounts | Assets | Liab il it ies | amounts | Assets | Liab il it ies | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Derivat ives des ignated as fair value hedges: | ||||||
Interest rate swaps | 47,257 | 1,115 | 1,224 | 56,127 | 2,052 | 1,509 |
Currency swaps | 115 | 10 | 6 | 114 | 14 | 4 |
47,372 | 1,125 | 1,230 | 56,241 | 2,066 | 1,513 | |
Derivat ives des ignated as cash flow hedges: | ||||||
Interest rate swaps | 35,467 | 99 | 535 | 22,820 | 25 | 576 |
Forward foreign exchange contracts | 11,862 | 416 | 183 | 11,889 | 97 | 385 |
Currency swaps | 1,007 | 21 | 4 | 1,336 | 5 | 50 |
48,336 | 536 | 722 | 36,045 | 127 | 1,011 | |
Derivat ives des ignated as net investment hedges: | ||||||
Forward foreign exchange contracts | 4,402 | 10 | 12 | 3,130 | 17 | 51 |
Total derivat ives held for hedg ing | 100,110 | 1,671 | 1,964 | 95,416 | 2,210 | 2,575 |
Company
| 2023 | 2022 | |||||
Notional | Notional | |||||
princ ipal | princ ipal | |||||
amounts | Assets | Liab il it ies | amounts | Assets | Liab il it ies | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Derivat ives des ignated as fair value hedges: | ||||||
Interest rate swaps | 45,062 | 1,075 | 1,207 | 54,273 | 1,978 | 1,507 |
Currency swaps | 115 | 10 | 6 | 114 | 14 | 4 |
45,177 | 1,085 | 1,213 | 54,387 | 1,992 | 1,511 | |
Derivat ives des ignated as cash flow hedges: | ||||||
Interest rate swaps | 33,330 | 81 | 535 | 20,880 | 24 | 576 |
Forward foreign exchange contracts | 11,097 | 416 | 165 | 11,829 | 93 | 385 |
Currency swaps | 199 | 4 | 1 | 47 | –– | 2 |
44,626 | 501 | 701 | 32,756 | 117 | 963 | |
Derivat ives des ignated as net investment hedges: | ||||||
Forward foreign exchange contracts | 3,339 | 8 | 3 | 1,939 | 17 | – |
Total derivat ives held for hedg ing | 93,142 | 1,594 | 1,917 | 89,082 | 2,126 | 2,474 |
Notes to the financial statements cont
inued
Standard Chartered Bank
234
Directors’ Report and Financ
ial Statements 2023
13. Derivat
ive financial
instruments continued
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 22 and 27). 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 13). 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 and interest cashflows mismatch between
the hedging instruments and underlying hedged items. The amortisat
ion of fa
ir value hedge adjustments for hedged items
no longer designated is recognised in net interest income.
At 31 December 2023 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
| 2023 | |||||
Carrying amount | Change in fair | ||||
value used to | Ineffectiveness | ||||
calculate hedge | recognised in | ||||
Notional | Asset | Liab il ity | ineffect iveness | profit or loss | |
Interest rate 1 | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion |
Interest rate swaps – debt securit ies/subord inated notes issued | 26,617 | 311 | 1,107 | 574 | 3 |
Interest rate swaps – loans and advances | 537 | 5 | 1 | 1 | – |
Interest rate swaps – debt securit ies and other el ig ible b ills | 20,103 | 799 | 116 | (382) | (14) |
Interest and currency risk 1 | |||||
Cross-currency swaps – debt securit ies/subord inated notes | |||||
issued | 70 | – | 6 | (2) | – |
Cross-currency swaps – debt securit ies and other el ig ible b ills | 45 | 10 | – | 10 | – |
Total at 31 December 2023 | 47,372 | 1,125 | 1,230 | 201 | (11) |
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
2022 | |||||
Carrying amount | Change in fair | ||||
value used to | Ineffectiveness | ||||
calculate hedge | recognised in | ||||
Notional | Asset | Liab il ity | ineffect iveness | profit or loss | |
Interest rate 1 | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion |
Interest rate swaps – debt securit ies/subord inated notes issued | 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 – debt securit ies/subord inated 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
Notes to the financial statements cont
inued
Standard Chartered Bank
235
Directors’ Report and Financ
ial Statements 2023
13. Derivat
ive financial
instruments continued
Hedged items in fair value hedges
| 2023 | ||||||
Accumulated amount of fair | Cumulative | |||||
value hedge adjustments | balance of fair | |||||
included in the carrying | value | |||||
Carrying amount | amount | Change in the | adjustments | |||
value used for | from de- | |||||
calculating | designated | |||||
hedge | hedge | |||||
Asset | Liab il ity | Asset | Liab il ity | ineffect iveness | relationsh ips¹ | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Debt securit ies /subord inated notes issued | – | 27,465 | – | 674 | (569) | (50) |
Debt securit ies and other el ig ible b ills | 18,977 | – | (520) | – | 358 | 591 |
Loans and advances to customers | 534 | – | (4) | – | (1) | 11 |
Total at 31 December 2023 | 19,511 | 27,465 | (524) | 674 | (212) | 552 |
| 2022 | ||||||
Accumulated amount of fair | Cumulative | |||||
value hedge adjustments | balance of fair | |||||
included in the carrying | value | |||||
Carrying amount | amount | Change in fair | adjustments | |||
value used for | from de- | |||||
calculating | designated | |||||
hedge | hedge | |||||
Asset | Liab il ity | Asset | Liab il ity | ineffect iveness | relationsh ips 1 | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Debt securit ies /subord inated notes issued | – | 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 |
1
This represents a credit/(debit) to the balance sheet value
Income statement impact of fair value hedges
2023 | 2022 | |
$mill ion | $mill ion | |
Income/ | Income/ | |
(expense) | (expense) | |
Change in fair value of hedging instruments | 201 | 1,296 |
Change in fair value of hedged risks attributable to hedged items | (212) | (1,279) |
Net ineffect iveness (loss)/ga in to net trading income | (11) | 17 |
Amortisat ion ga in to net interest income | 193 | 117 |
Hedging instruments and ineffect
iveness
Company
| 2023 | |||||
Carrying amount | Change in fair | ||||
value used to | Ineffectiveness | ||||
calculate hedge | recognised in | ||||
Notional | Asset | Liab il ity | ineffect iveness | profit or loss | |
Interest rate 1 | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion |
Interest rate swaps – debt securit ies/subord inated notes issued | 26,617 | 311 | 1,107 | 575 | 3 |
Interest rate swaps – loans and advances | 509 | 4 | 1 | – | – |
Interest rate swaps – debt securit ies and other el ig ible b ills | 17,936 | 760 | 99 | (367) | (13) |
Interest and currency risk 1 | |||||
Cross-currency swaps – debt securit ies/subord inated notes | |||||
issued | 70 | – | 6 | (2) | – |
Cross-currency swaps – debt securit ies and other el ig ible b ills | 45 | 10 | – | 10 | – |
Total at 31 December 2023 | 45,177 | 1,085 | 1,213 | 216 | (10) |
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
Notes to the financial statements cont
inued
Standard Chartered Bank
236
Directors’ Report and Financ
ial Statements 2023
13. Derivat
ive financial
instruments continued
2022 | ||||||||||
Carrying amount | Change in fair | |||||||||
value used to | Ineffectiveness | |||||||||
calculate hedge | recognised in | |||||||||
Notional | Asset | Liab il ity | ineffect iveness | profit or loss | ||||||
Interest rate 1 | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |||||
Interest rate swaps – debt securit ies/subord inated notes | ||||||||||
issued | 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 risk 1 | ||||||||||
Cross-currency swaps – debt securit ies/subord inated 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 |
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
Hedged Items in fair value hedges
| 2023 | ||||||
Accumulated amount of fair | Cumulative | |||||
value hedge adjustments | balance of fair | |||||
included in the carrying | value | |||||
Carrying amount | amount | Change in the | adjustments | |||
value used for | from de- | |||||
calculating | designated | |||||
hedge | hedge | |||||
Asset | Liab il ity | Asset | Liab il ity | ineffect iveness | relationsh ips 1 | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Debt securit ies /subord inated notes issued | – | 27,465 | – | 674 | (570) | (50) |
Debt securit ies and other el ig ible b ills | 16,867 | – | (510) | – | 344 | 564 |
Loans and advances to customers | 507 | – | (2) | – | – | 11 |
Total at 31 December 2023 | 17,374 | 27,465 | (512) | 674 | (226) | 525 |
| 2022 | ||||||
Accumulated amount of fair | Cumulative | |||||
value hedge adjustments | balance of fair | |||||
included in the carrying | value | |||||
Carrying amount | amount | Change in fair | adjustments | |||
value used for | from de- | |||||
calculating | designated | |||||
hedge | hedge | |||||
Asset | Liab il ity | Asset | Liab il ity | ineffect iveness | relationsh ips 1 | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Debt securit ies /subord inated notes issued | – | 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 credit/(debit) to the balance sheet value
Income statement impact of fair value hedges
2023 | 2022 | |
$mill ion | $mill ion | |
Income/ | Income/ | |
(expense) | (expense) | |
Change in fair value of hedging instruments | 216 | 1,164 |
Change in fair value of hedged risks attributable to hedged items | (226) | (1,147) |
Net ineffect iveness (loss)/ga in to net trading income | (10) | 17 |
Amortisat ion ga in to net interest income | 192 | 120 |
Notes to the financial statements cont
inued
Standard Chartered Bank
237
Directors’ Report and Financ
ial Statements 2023
13. Derivat
ive financial
instruments continued
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). Hedge ineffect
iveness for cash flow hedges
is mainly driven by payment frequency mismatch between
the hedging instrument and the underlying hedged item.
The hedged risk is determined as the variab
il
ity of future cash flows aris
ing from changes
in the designated benchmark
interest and/or foreign exchange rates.
Hedging instruments and ineffect
iveness
Group
| 2023 | |||||||
Carrying amount | Change in fair | Ineffectiveness | Amount | ||||
value used to | Gain | gain recognised | reclassif ied from | ||||
calculate hedge | recognised in | in net trading | reserves to net | ||||
Notional | Asset | Liab il ity | ineffect iveness | OCI | income | trading income | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Interest rate risk | |||||||
Interest rate swaps | 35,467 | 99 | 535 | 501 | 499 | 2 | – |
Currency risk | |||||||
Forward foreign exchange | |||||||
contract | 11,862 | 416 | 183 | 107 | 106 | 1 | – |
Cross-currency swaps | 1,007 | 21 | 4 | – | – | – | – |
Total as at 31 December 2023 | 48,336 | 536 | 722 | 608 | 605 | 3 | – |
| 2022 | |||||||
Carrying amount | Change in fair | Ineffectiveness | Amount | ||||
value used to | (loss)/gain | reclassif ied | |||||
calculate | Loss | recognised in | from reserves | ||||
hedge | recognised in | net trading | to net trading | ||||
Notional | Asset | Liab il ity | ineffect iveness | OCI | income | income | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $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) | – | – |
Notes to the financial statements cont
inued
Standard Chartered Bank
238
Directors’ Report and Financ
ial Statements 2023
13. Derivat
ive financial
instruments continued
Hedged items in cash flow hedges
| 2023 | |||
Cumulative | |||
balance in the | |||
cash flow | |||
hedge reserve | |||
Change in fair | from | ||
value used for | de- | ||
calculating | designated | ||
hedge | Cash flow | hedge | |
ineffect iveness | hedge reserve | relationsh ips | |
$mill ion | $mill ion | $mill ion | |
Customer accounts | (389) | (74) | 25 |
Debt securit ies and other el ig ible b ills | (19) | (28) | (12) |
Loans and advances to customers | (197) | 77 | – |
Intragroup borrowing currency hedge | – | – | – |
Total at 31 December 2023 | (605) | (25) | 13 |
| 2022 | |||
Cumulative | |||
balance in the | |||
cash flow | |||
hedge reserve | |||
Change in fair | from | ||
value used for | de- | ||
calculating | designated | ||
hedge | Cash flow | hedge | |
ineffect iveness | hedge reserve | relationsh ips | |
$mill ion | $mill ion | $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) |
Intragroup lending currency hedge | (2) | – | – |
Total at 31 December 2022 | 702 | (600) | (3) |
Impact of cash flow hedges on profit and loss and other comprehensive income
2023 | 2022 | |
Income/ | Income/ | |
(expense) | (expense) | |
$mill ion | $mill ion | |
Cash flow hedge reserve balance as at 1 January | (513) | (11) |
Gains/(losses) recognised in other comprehensive income on effective portion of changes in | ||
fair value of hedging instruments | 605 | (702) |
(Losses)/gains reclassif ied to income statement when hedged item affected net profit | (22) | 110 |
Taxation credit relating to cash flow hedges | (83) | 90 |
Cash flow hedge reserve balance as at 31 December | (13) | (513) |
Notes to the financial statements cont
inued
Standard Chartered Bank
239
Directors’ Report and Financ
ial Statements 2023
13. Derivat
ive financial
instruments continued
Hedging instruments and ineffect
iveness
Company
| 2023 | |||||||
Carrying amount | Change in fair | Ineffectiveness | Amount | ||||
value used to | gain | reclassif ied | |||||
calculate | Gain | recognised in | from reserves | ||||
hedge | recognised in | net trading | to net trading | ||||
Notional | Asset | Liab il ity | ineffect iveness | OCI | income | income | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Interest rate risk | |||||||
Interest rate swaps | 33,330 | 81 | 535 | 478 | 476 | 2 | – |
Currency risk | |||||||
Forward foreign exchange contract | 11,097 | 416 | 165 | 107 | 106 | 1 | – |
Cross-currency swaps | 199 | 4 | 1 | – | – | – | – |
Total as at 31 December 2023 | 44,626 | 501 | 701 | 585 | 582 | 3 | – |
| 2022 | |||||||
Carrying amount | Change in fair | Ineffectiveness | Amount | ||||
value used to | (loss) | reclassif ied | |||||
calculate | (Loss) | recognised in | from reserves | ||||
hedge | recognised in | net trading | to net trading | ||||
Notional | Asset | Liab il ity | ineffect iveness | OCI | income | income | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $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) | – |
Hedged items in cash flow hedges
| 2023 | |||
Change in fair | |||
value used for | Cumulative balance in the | ||
calculating | cash flow hedge reserve from | ||
hedge | Cash flow | de-designated hedge | |
ineffect iveness | hedge reserve | relationsh ips | |
$mill ion | $mill ion | $mill ion | |
Customer accounts | (389) | (74) | 25 |
Debt securit ies and other el ig ible b ills | (19) | (28) | (12) |
Loans and advances to customers | (174) | 60 | – |
Intragroup lending currency hedge | – | – | – |
Total at 31 December 2023 | (582) | (42) | 13 |
| 2022 | |||
Change in fair | |||
value used for | Cumulative balance in the | ||
calculating | cash flow hedge reserve from | ||
hedge | Cash flow | de-designated hedge | |
ineffect iveness | hedge reserve | relationsh ips | |
$mill ion | $mill ion | $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) |
Intragroup lending currency hedge | (2) | – | – |
Total at 31 December 2022 | 682 | (573) | (2) |
Notes to the financial statements cont
inued
Standard Chartered Bank
240
Directors’ Report and Financ
ial Statements 2023
13. Derivat
ive financial
instruments continued
Impact of cash flow hedges on profit and loss and other comprehensive income
2023 | 2022 | |
Income/ | Income/ | |
(expense) | (expense) | |
$mill ion | $mill ion | |
Cash flow hedge reserve balance as at 1 January | (522) | (39) |
Gains/(losses) recognised in other comprehensive income on effective portion of changes in | ||
fair value of hedging instruments | 582 | (682) |
(Losses)/gains reclassif ied to income statement when hedged item affected net profit | (32) | 110 |
Taxation credit relating to cash flow hedges | (79) | 89 |
Cash flow hedge reserve balance as at 31 December | (51) | (522) |
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.
Hedging instruments and ineffect
iveness
Group
| 2023 | |||||||
Carrying amount | Changes in | ||||||
the value of | |||||||
Change in fair | the hedging | Amount | |||||
value used to | instrument | Ineffectiveness | reclassif ied | ||||
calculate hedge | recognised in | recognised in | from reserves | ||||
Notional | Asset | Liab il ity | ineffect iveness | OCI | profit or loss | to income | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Derivat ive forward currency | |||||||
contracts¹ | 4,402 | 10 | 12 | (18) | (18) | – | – |
| 2022 | |||||||
Carrying amount | Changes in | ||||||
the value of | |||||||
Change in fair | the hedging | Amount | |||||
value used to | instrument | Ineffectiveness | reclassif ied | ||||
calculate hedge | recognised in | recognised in | from reserves | ||||
Notional | Asset | Liab il ity | ineffect iveness | OCI | profit or loss | to income | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Derivat ive forward currency | |||||||
contracts¹ | 3,130 | 17 | 51 | 54 | 54 | – | – |
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
Hedged items in net investment hedges
| 2023 | |||
Change in the | Balances remain ing in the | ||
value used for | translation reserve from | ||
calculating | hedging relationsh ips for | ||
hedge | Translation | which hedge accounting is no | |
ineffect iveness | reserve | longer applied | |
$mill ion | $mill ion | $mill ion | |
Net investments | 18 | (2) | – |
| 2022 | |||
Change in the | Balances remain ing in the | ||
value used for | translation reserve from | ||
calculating | hedging relationsh ips for | ||
hedge | Translation | which hedge accounting is no | |
ineffect iveness | reserve | longer applied | |
$mill ion | $mill ion | $mill ion | |
Net investments | (54) | (34) | – |
Notes to the financial statements cont
inued
Standard Chartered Bank
241
Directors’ Report and Financ
ial Statements 2023
13. Derivat
ive financial
instruments continued
Impact of net investment hedges on other comprehensive income
2023 | 2022 | |
Income/ | Income/ | |
(expense) | (expense) | |
$mill ion | $mill ion | |
(Losses) / gains recognised in other comprehensive income | (18) | 54 |
Hedging instruments and ineffect
iveness
Company
| 2023 | |||||||
Carrying amount | Changes in | ||||||
the value of | |||||||
Change in fair | the hedging | Amount | |||||
value used to | instrument | Ineffectiveness | reclassif ied | ||||
calculate hedge | recognised in | recognised in | from reserves | ||||
Notional | Asset | Liab il ity | ineffect iveness | OCI | profit or loss | to income | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Derivat ive forward currency | |||||||
contracts¹ | 3,339 | 8 | 3 | (16) | (16) | – | – |
| 2022 | |||||||
Changes in | |||||||
Carrying amount | the value of | ||||||
Change in fair | the hedging | Amount | |||||
value used to | instrument | Ineffectiveness | reclassif ied | ||||
calculate hedge | recognised in | recognised in | from reserves | ||||
Notional | Asset | Liab il ity | ineffect iveness | OCI | profit or loss | to income | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Derivat ive forward currency | |||||||
contracts¹ | 1,939 | 17 | – | 51 | 51 | – | – |
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
Hedged items in net investment hedges
2023 | |||
Change in the | Balances remain ing in the | ||
value used for | translation reserve from | ||
calculating | hedging relationsh ips for | ||
hedge | Translation | which hedge accounting is no | |
ineffect iveness | reserve | longer applied | |
$mill ion | $mill ion | $mill ion | |
Net investments | 16 | 5 | – |
| 2022 | |||
Change in the | Balances remain ing in the | ||
value used for | translation reserve from | ||
calculating | hedging relationsh ips for | ||
hedge | Translation | which hedge accounting is no | |
ineffect iveness | reserve | longer applied | |
$mill ion | $mill ion | $mill ion | |
Net investments | (51) | 17 | – |
Impact of net investment hedges on other comprehensive income
2023 | 2022 | |
Income/ | Income/ | |
(expense) | (expense) | |
$mill ion | $mill ion | |
(Losses)/gains recognised in other comprehensive income | (16) | 51 |
Notes to the financial statements cont
inued
Standard Chartered Bank
242
Directors’ Report and Financ
ial Statements 2023
13. Derivat
ive financial
instruments continued
Maturity of hedging instruments
Group
Fair value hedges
| 2023 | |||||
More than one | |||||
month and | |||||
Less than one | less than one | One to five | More than five | ||
month | year | years | years | ||
Interest rate swap | |||||
Notional | $mill ion | 2,914 | 6,142 | 28,697 | 9,504 |
Cross-currency swap | |||||
Notional | $mill ion | – | 115 | – | – |
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 | 1,990 | 25,831 | 7,239 | 407 |
Average fixed interest rate | USD | 5.09% | 3.39% | 4.68% | 3.16% |
Cross-currency swap | |||||
Notional | $mill ion | 74 | 735 | 198 | – |
Average fixed interest rate | INR | – | 7.85% | 10.02% | – |
KRO | – | 4.11% | 3.11% | – | |
THO | – | 2.17% | 2.36% | – | |
IDR | – | 6.43% | – | – | |
Average exchange rate | INR/USD | – | 82.90 | 82.69 | – |
KRO/USD | – | 1,275.24 | 1,220.50 | – | |
THO/USD | – | 33.72 | 33.72 | – | |
IDR/USD | – | 15,715.00 | – | – | |
Forward foreign exchange contracts | |||||
Notional | $mill ion | 2,194 | 9,668 | – | – |
Average exchange rate | JPY/USD | 130.49 | 136.05 | – | – |
BRL/USD | – | 5.17 | – | – | |
Net investment hedges | |||||
Foreign exchange derivat ives | |||||
Notional | $mill ion | 4,402 | – | – | – |
Average exchange rate | INR/USD | 82.91 | – | – | – |
SGD/USD | 1.33 | – | – | – | |
AED/USD | 3.67 | – | – | – | |
Notes to the financial statements cont
inued
Standard Chartered Bank
243
Directors’ Report and Financ
ial Statements 2023
13. Derivat
ive financial
instruments continued
Fair value hedges
| 2022 | |||||
More than | |||||
one month | |||||
Less than one | and less than | One to five | More than five | ||
month | one year | years | years | ||
Interest rate swap | |||||
Notional | $mill ion | 451 | 7,406 | 36,788 | 11,482 |
Cross-currency swap | |||||
Notional | $mill ion | – | – | 114 | – |
Average fixed interest rate (to USD) | GBP | – | – | 1.33% | – |
HKD | – | – | 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% | – |
Average exchange rate | INO/USD | – | 78.32 | 79.90 | – |
Forward foreign exchange contracts | |||||
Notional | $mill ion | 1,246 | 10,643 | – | – |
Average exchange rate | CLO/USD | ||||
Net investment hedges | |||||
Foreign exchange derivat ives | |||||
Notional | $mill ion | 3,130 | – | – | – |
Average exchange rate | INR/USD | 80.55 | – | – | – |
SGD/USD | 1.40 | – | – | – | |
AED/USD | 3.67 | – | – | – | |
Notes to the financial statements cont
inued
Standard Chartered Bank
244
Directors’ Report and Financ
ial Statements 2023
13. Derivat
ive financial
instruments continued
Maturity of hedging instruments
Company
Fair value hedges
| 2023 | |||||
More than one | |||||
month and | |||||
Less than one | less than one | One to five | More than five | ||
month | year | years | years | ||
Interest rate swap | |||||
Notional | $mill ion | 2,914 | 6,142 | 26,502 | 9,504 |
Cross-currency swap | |||||
Notional | $mill ion | – | 115 | – | – |
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 | 1,965 | 25,058 | 5,900 | 407 |
Average fixed interest rate | USD | 5.09% | 2.59% | 4.56% | 2.65% |
Cross-currency swap | |||||
Notional | $mill ion | – | 199 | – | – |
Average fixed interest rate | KRO | – | 3.13% | – | – |
PHP | – | 6.30% | – | – | |
IDR | – | 6.43% | – | – | |
Average exchange rate | KRO/USD | – | 1,318.70 | – | – |
PHP/USD | – | 55.54 | – | – | |
IDR/USD | – | 15,715.00 | – | – | |
Forward foreign exchange contracts | |||||
Notional | $mill ion | 2,194 | 8,903 | – | – |
Average exchange rate | JPY/USD | 130.49 | 136.05 | – | – |
Net investment hedges | |||||
Foreign exchange derivat ives | |||||
Notional | $mill ion | 3,339 | – | – | – |
Average exchange rate | INR/USD | 82.91 | – | – | – |
AED/USD | 3.67 | – | – | – | |
Notes to the financial statements cont
inued
Standard Chartered Bank
245
Directors’ Report and Financ
ial Statements 2023
13. Derivat
ive financial
instruments continued
Fair value hedges
| 2022 | |||||
More than | |||||
one month | |||||
Less than one | and less than | One to five | More than five | ||
month | one year | years | years | ||
Interest rate swap | |||||
Notional | $mill ion | 451 | 7,251 | 35,089 | 11,482 |
Cross-currency swap | |||||
Notional | $mill ion | – | – | 114 | – |
Average fixed interest rate (to USD) | GBP | – | – | 1.33% | – |
HKD | – | – | 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 | 1186 | 10643 | 0 | 0 |
Average exchange rate | JPY/USD | 135.18 | 133.26 | – | 0 |
Net investment hedges | |||||
Foreign exchange derivat ives | |||||
Notional | $mill ion | 1939 | – | – | – |
Average exchange rate | INR/USD | 80.55 | |||
AED/USD | 3.67 | – | – | – | |
Interest rate benchmark reform
As at 31 December 2023, there are no derivat
ive
instruments designated in fair value or cash flow hedge accounting
relationsh
ips that were l
inked to IBOR reference rates (31 December 2022: $45,540 mill
ion for Group and $41,569 m
ill
ion for
Notes to the financial statements cont
inued
Standard Chartered Bank
246
Directors’ Report and Financ
ial Statements 2023
Refer to Note 12 Financ
ial
Group | Company | |||
2023 | 2022 | 2023 | 2022 | |
$mill ion | $mill ion | $mill ion | $mill ion | |
Loans and advances to banks | 22,821 | 27,394 | 10,141 | 18,552 |
Expected credit loss | (18) | (11) | (6) | (4) |
22,803 | 27,383 | 10,135 | 18,548 | |
Loans and advances to customers | 159,552 | 162,158 | 78,181 | 83,457 |
Expected credit loss | (3,409) | (4,032) | (2,298) | (2,846) |
156,143 | 158,126 | 75,883 | 80,611 | |
Total loans and advances to banks and customers 1 | 178,946 | 185,509 | 86,018 | 99,159 |
1
Includes $2.2 bill
ion (31 December 2022: $1 b
ill
ion) of assets pledged as collateral.
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 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.
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
Notes to the financial statements cont
inued
Standard Chartered Bank
247
Directors’ Report and Financ
ial Statements 2023
15. Reverse repurchase and repurchase agreements includ
ing other s
im
ilar lend
ing and borrowing continued
Group
2023 | 2022 | |
$mill ion | $mill ion | |
Banks | 27,706 | 24,154 |
Customers | 55,923 | 54,643 |
83,629 | 78,797 | |
Of which: | ||
Fair value through profit or loss | 68,149 | 62,333 |
Banks | 26,053 | 23,276 |
Customers | 42,096 | 39,057 |
Held at amortised cost | 15,480 | 16,464 |
Banks | 1,653 | 878 |
Customers | 13,827 | 15,586 |
Under reverse repurchase and securit
ies borrow
ing arrangements, the Group obtains securit
ies under usual and customary
terms which permit it to repledge or resell the securit
ies to others. Amounts on such terms are:
2023 | 2022 | |
$mill ion | $mill ion | |
Securit ies and collateral rece ived (at fair value) | 87,153 | 113,744 |
Securit ies and collateral wh ich can be repledged or sold (at fair value) | 87,084 | 113,624 |
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) | 33,652 | 44,628 |
Company | ||
2023 | 2022 | |
$mill ion | $mill ion | |
Banks | 23,965 | 21,383 |
Customers | 53,605 | 52,929 |
77,570 | 74,312 | |
Of which: | ||
Fair value through profit or loss | 64,804 | 59,057 |
Banks | 23,411 | 21,199 |
Customers | 41,393 | 37,858 |
Held at amortised cost | 12,766 | 15,255 |
Banks | 554 | 184 |
Customers | 12,212 | 15,071 |
Under reverse repurchase and securit
ies borrow
ing arrangements, the Group obtains securit
ies under usual and customary
terms which permit it to repledge or resell the securit
ies to others. Amounts on such terms are:
2023 | 2022 | |
$mill ion | $mill ion | |
Securit ies and collateral rece ived (at fair value) | 80,899 | 108,433 |
Securit ies and collateral wh ich can be repledged or sold (at fair value) | 80,852 | 108,314 |
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) | 32,774 | 44,419 |
Notes to the financial statements cont
inued
Standard Chartered Bank
248
Directors’ Report and Financ
ial Statements 2023
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
2023 | 2022 | |
$mill ion | $mill ion | |
Banks | 4,968 | 6,536 |
Customers | 46,497 | 45,857 |
51,465 | 52,393 | |
Of which: | ||
Fair value through profit or loss | 39,432 | 50,402 |
Banks | 4,137 | 5,422 |
Customers | 35,295 | 44,980 |
Held at amortised cost | 12,033 | 1,991 |
Banks | 831 | 1,114 |
Customers | 11,202 | 877 |
The tables below set out the financial assets prov
ided as collateral for repurchase and other secured borrowing transactions:
Collateral pledged against repurchase agreements
| 2023 | |||||
Fair value | |||||
Fair value | through other | ||||
through profit | comprehensive | Amortised | Off-balance | ||
or loss | income | cost | sheet | Total | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
On-balance sheet | |||||
Debt securit ies and other el ig ible b ills | 4,069 | 7,312 | 10,181 | – | 21,562 |
Off-balance sheet | |||||
Repledged collateral received | – | – | – | 33,652 | 33,652 |
At 31 December 2023 | 4,069 | 7,312 | 10,181 | 33,652 | 55,214 |
Collateral pledged against repurchase agreements
| 2022 | |||||
Fair value | |||||
Fair value | through other | ||||
through profit | comprehensive | Amortised | Off-balance | ||
or loss | income | cost | sheet | Total | |
$mill ion | $mill ion | $mill ion | $mill ion | $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 |
Company
2023 | 2022 | |
$mill ion | $mill ion | |
Banks | 4,824 | 6,215 |
Customers | 46,327 | 45,687 |
51,151 | 51,902 | |
Of which: | ||
Fair value through profit or loss | 39,174 | 50,179 |
Banks | 4,030 | 5,307 |
Customers | 35,144 | 44,872 |
Held at amortised cost | 11,977 | 1,723 |
Banks | 794 | 908 |
Customers | 11,183 | 815 |
Notes to the financial statements cont
inued
Standard Chartered Bank
249
Directors’ Report and Financ
ial Statements 2023
15. Reverse repurchase and repurchase agreements includ
ing other s
im
ilar lend
ing and borrowing continued
The tables below set out the financial assets prov
ided as collateral for repurchase and other secured borrowing transactions:
2023 | |||||
Fair value | |||||
Fair value | through other | ||||
through profit | comprehensive | Amortised | Off-balance | ||
or loss | income | cost | sheet | Total | |
Collateral pledged against repurchase agreements | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion |
On-balance sheet | |||||
Debt securit ies and other el ig ible b ills | 3,985 | 7,293 | 10,181 | – | 21,459 |
Off-balance sheet | |||||
Repledged collateral received | – | – | – | 32,774 | 32,774 |
At 31 December 2023 | 3,985 | 7,293 | 10,181 | 32,774 | 54,233 |
2022 | |||||
Fair value | |||||
Fair value | through other | ||||
through profit | comprehensive | Amortised | Off-balance | ||
or loss | income | cost | sheet | Total | |
Collateral pledged against repurchase agreements | $mill ion | $mill ion | $mill ion | $mill ion | $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 |
ible assets
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
carried 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 which 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 generates 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
in the CGU table (page 251).
Other accounting 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 CGUs.
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 to the
recoverable amount.
Notes to the financial statements cont
inued
Standard Chartered Bank
250
Directors’ Report and Financ
ial Statements 2023
16. Goodwill and intang
ible assets cont
inued
Computer software
Acquired computer software licences are capital
ised, 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. These costs include staff remuneration costs such as salaries, statutory
payments and share-based payments, materials, service providers and contractors, provided their time is directly
attributable to the software build. Costs incurred in the ongoing maintenance of software are expensed immed
iately when
incurred. Internally generated software is amortised over each assets useful life to a maximum of 10 years. 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 that
is internally generated, judgement is required to determine which costs relate to research
(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, includ
ing custom
isat
ion 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
Group
2023 | 2022 | |||||||
Acquired | Computer | Acquired | Computer | |||||
Goodwill | intang ibles | software | Total | Goodwill | intang ibles | software | Total | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Cost | ||||||||
At 1 January | 1,323 | 143 | 3,962 | 5,428 | 1,379 | 148 | 3,569 | 5,096 |
Exchange translation | ||||||||
differences | (24) | (8) | 23 | (9) | (44) | (5) | 1 | (48) |
Addit ions | – | – | 649 | 649 | – | – | 761 | 761 |
Impairment charge¹ | – | – | (50) | (50) | (10) | – | (18) | (28) |
Amounts written off | – | – | (5) | (5) | – | – | (346) | (346) |
Assets held for sale | – | – | – | – | (2) | – | (5) | (7) |
At 31 December | 1,299 | 135 | 4,579 | 6,013 | 1,323 | 143 | 3,962 | 5,428 |
Provis ion for amort isat ion | ||||||||
At 1 January | – | 119 | 1,257 | 1,376 | – | 118 | 1,178 | 1,296 |
Exchange translation | ||||||||
differences | – | (8) | 6 | (2) | – | (5) | (6) | (11) |
Amortisat ion | – | 4 | 440 | 444 | – | 6 | 379 | 385 |
Impairment (charge)/ | ||||||||
release 1 | – | – | (15) | (15) | – | – | 39 | 39 |
Amounts written off | – | – | – | – | – | – | (329) | (329) |
Assets held for sale | – | – | – | – | – | – | (4) | (4) |
At 31 December | – | 115 | 1,688 | 1,803 | – | 119 | 1,257 | 1,376 |
Net book value | 1,299 | 20 | 2,891 | 4,210 | 1,323 | 24 | 2,705 | 4,052 |
1
Computer software impa
irment
includes $14.3 mill
ion (31 December 2022: $50 m
ill
ion) charge relat
ing to write off on SaaS (Software as a Service) applicat
ions
capital
ised
in previous years
At 31 December 2023, accumulated goodwill impa
irment losses
incurred from 1 January 2005 amounted to $3,237 mill
ion
(31 December 2022: $3,237 mill
ion), of wh
ich Nil mill
ion was recogn
ised in 2023 (31 December 2022: $10 mill
ion).
Notes to the financial statements cont
inued
Standard Chartered Bank
251
Directors’ Report and Financ
ial Statements 2023
16. Goodwill and intang
ible assets cont
inued
Company
2023 | 2022 | |||||||
Acquired | Computer | Acquired | Computer | |||||
Goodwill | intang ibles | software | Total | Goodwill | intang ibles | software | Total | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Cost | ||||||||
At 1 January | 72 | 29 | 3,183 | 3,284 | 79 | 30 | 2,997 | 3,106 |
Exchange translation | ||||||||
differences | – | (1) | 35 | 34 | – | (1) | 1 | – |
Addit ions | – | – | 378 | 378 | – | – | 501 | 501 |
Impairment charge¹ | – | – | (23) | (23) | (6) | – | (17) | (23) |
Amounts written off | – | – | (5) | (5) | – | – | (297) | (297) |
Assets held for sale | – | – | – | – | (1) | – | (2) | (3) |
At 31 December | 72 | 28 | 3,568 | 3,668 | 72 | 29 | 3,183 | 3,284 |
Provis ion for amort isat ion | ||||||||
At 1 January | – | 18 | 987 | 1,005 | – | 18 | 967 | 985 |
Exchange translation | ||||||||
differences | – | (1) | 11 | 10 | – | (2) | (3) | (5) |
Amortisat ion | – | – | 302 | 302 | – | 2 | 271 | 273 |
Impairment (charge)/ | ||||||||
release¹ | – | – | (8) | (8) | – | – | 37 | 37 |
Amounts written off | – | – | – | – | – | – | (285) | (285) |
At 31 December | – | 17 | 1,292 | 1,309 | – | 18 | 987 | 1,005 |
Net book value | 72 | 11 | 2,276 | 2,359 | 72 | 11 | 2,196 | 2,279 |
1
Computer software impa
irment
includes $5 mill
ion release (31 December 2022: $50 m
ill
ion charge) relat
ing to write off on SaaS (Software as a Service) applicat
ions
capital
ised
in previous years
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 2028. 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 the 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
| 2023 | 2022 | |||||
Pre-Tax | Long-term | Pre-Tax | Long-term | |||
Discount | forecast GDP | Discount | forecast GDP | |||
Goodwill | Rates | growth rates | Goodwill | Rates | growth rates | |
Cash-generating unit | $mill ion | per cent | per cent | $mill ion | per cent | per cent |
Country CGUs | ||||||
Africa & Middle East | 65 | 69 | ||||
Pakistan | 31 | 35.5 | 3.2 | 35 | 30.9 | 5.9 |
Bahrain | 34 | 12.4 | 0.5 | 34 | 16.6 | 0.7 |
Asia | 284 | 281 | ||||
Singapore | 284 | 13.9 | 2.1 | 281 | 12.3 | 2.3 |
Global CGUs | 950 | 973 | ||||
Global Private Banking | 83 | 15.4 | 1.9 | 83 | 14.4 | 2.0 |
Global Corporate, Commercial & Institut ional Bank ing | 867 | 16.1 | 2.3 | 890 | 14.5 | 2.5 |
1,299 | 1,323 | |||||
Notes to the financial statements cont
inued
Standard Chartered Bank
252
Directors’ Report and Financ
ial Statements 2023
16. Goodwill and intang
ible assets cont
inued
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).
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:
2023 | 2022 | |
Cash-generating unit | $mill ion | $mill ion |
Country CGUs | ||
Bahrain | 17 | 17 |
Global CGUs | ||
Global Corporate, Commercial & Institut ional Bank ing | 55 | 55 |
72 | 72 |
Acquired intang
ibles
Acquired Intangibles primar
ily compr
ises of the intellectual property acquired from Standard chartered Bank Hongkong
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 | |||
2023 | 2022 | 2023 | 2022 | |
$mill ion | $mill ion | $mill ion | $mill ion | |
Acquired intang ibles compr ise: | ||||
Brand names | – | 1 | – | – |
Customer relationsh ips | 1 | 1 | 2 | 2 |
Licences | 19 | 22 | 10 | 9 |
Net book value | 20 | 24 | 12 | 11 |
Accounting policy
All property, plant and equipment is stated at cost less accumulated depreciat
ion and
impa
irment losses.
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:
• Owned premises
up to 50 years
• Leasehold premises
up to 50 years
• Leasehold improvements
shorter of remain
ing lease term and 10 years
• Equipment and motor vehicles
three to 15 years
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. The account
ing policy for leased assets is
Notes to the financial statements cont
inued
Standard Chartered Bank
253
Directors’ Report and Financ
ial Statements 2023
Group
| 2023 | |||||
Leased | Leased | ||||
premises | equipment | ||||
Premises | Equipment | assets | assets | Total | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Cost or valuation | |||||
At 1 January | 549 | 519 | 780 | 7 | 1,855 |
Exchange translation differences | (24) | (18) | (3) | (1) | (46) |
Addit ions 1 | 25 | 75 | 124 | – | 224 |
Disposals and fully depreciated assets written off 2 | (33) | (99) | (1) | – | (133) |
Assets held for sale | 15 | – | – | – | 15 |
As at 31 December | 532 | 477 | 900 | 6 | 1,915 |
Depreciat ion | |||||
Accumulated at 1 January | 207 | 348 | 302 | 4 | 861 |
Exchange translation differences | (9) | (15) | (23) | (1) | (48) |
Charge for the year | 30 | 71 | 101 | 1 | 203 |
Impairment release | – | – | (1) | – | (1) |
Attributable to assets sold, transferred or written off 2 | (31) | (98) | (1) | – | (130) |
Assets held for sale | 1 | (1) | – | – | – |
Accumulated at 31 December | 198 | 305 | 378 | 4 | 885 |
Net book amount at 31 December | 334 | 172 | 522 | 2 | 1,030 |
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 $100 mill
ion on
page 164
2
Disposals for property, plant and equipment during the year of $15 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
| 2022 | |||||
Leased | Leased | ||||
premises | equipment | ||||
Premises | Equipment | assets | assets | Total | |
$mill ion | $mill ion | $mill ion | $mill ion | $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) |
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) |
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 $139mill
ion on
page 164
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
Notes to the financial statements cont
inued
Standard Chartered Bank
254
Directors’ Report and Financ
ial Statements 2023
Company
| 2023 | |||||
Leased | Leased | ||||
premises | equipment | ||||
Premises | Equipment | assets | assets | Total | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Cost or valuation | |||||
At 1 January | 205 | 311 | 377 | 1 | 894 |
Exchange translation differences | (2) | (2) | (3) | – | (7) |
Addit ions 1 | 7 | 46 | 112 | – | 165 |
Disposals, transfers and fully depreciated assets written off 2 | (27) | (52) | – | – | (79) |
Assets held for sale | 17 | – | – | – | 17 |
As at 31 December | 200 | 303 | 486 | 1 | 990 |
Depreciat ion | |||||
Accumulated at 1 January | 75 | 191 | 197 | 1 | 464 |
Exchange translation differences | – | – | (15) | – | (15) |
Charge for the year | 9 | 45 | 43 | – | 97 |
Impairment release | – | – | (1) | – | (1) |
Attributable to assets sold, transferred or written off 2 | (26) | (52) | – | – | (78) |
Assets held for sale | 2 | – | – | – | 2 |
Accumulated at 31 December | 60 | 184 | 224 | 1 | 469 |
Net book amount at 31 December | 140 | 119 | 262 | – | 521 |
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 $53 mill
ion on
page 164
2
Disposals for property, plant and equipment during the year of $1 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
2022 | |||||
Leased | Leased | ||||
premises | equipment | ||||
Premises | Equipment | assets | assets | Total | |
$mill ion | $mill ion | $mill ion | $mill ion | $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 and fully depreciated assets written off 2 | (75) | (31) | (226) | – | (332) |
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) |
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 $59mill
ion on
page 164
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
Notes to the financial statements cont
inued
Standard Chartered Bank
255
Directors’ Report and Financ
ial Statements 2023
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 are 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
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 $131 mill
ion for Group and $62 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 Nil mill
ion 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
is disclosed in Note 3.
Maturity analysis
The maturity profile for lease liab
il
it
ies assoc
iated with leased premises and equipment assets is as follows:
Group
| 2023 | |||||
Between one | Between two | ||||
One year or | year and two | years and five | More than five | ||
less | years | years | years | Total | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Other liab il it ies – lease l iab il it ies | 123 | 103 | 208 | 308 | 742 |
| 2022 | |||||
Between one | Between two | ||||
One year or | year and two | years and five | More than five | ||
less | years | years | years | Total | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Other liab il it ies – lease l iab il it ies | 130 | 119 | 260 | 238 | 747 |
Notes to the financial statements cont
inued
Standard Chartered Bank
256
Directors’ Report and Financ
ial Statements 2023
Company
| 2023 | |||||
Between one | Between two | ||||
One year or | year and two | years and five | More than five | ||
less | years | years | years | Total | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Other liab il it ies – lease l iab il it ies | 60 | 48 | 89 | 201 | 398 |
| 2022 | |||||
Between one | Between two | ||||
One year or | year and two | years and five | More than five | ||
less | years | years | years | Total | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Other liab il it ies – lease l iab il it ies | 63 | 57 | 133 | 111 | 364 |
Group
Other assets include:
2023 | 2022 | |
$mill ion | $mill ion | |
Financ ial assets held at amort ised cost (Note 12): | ||
Cash collateral 1 | 8,378 | 11,372 |
Acceptances and endorsements | 3,967 | 3,777 |
Unsettled trades and other financial assets | 8,369 | 12,061 |
20,714 | 27,210 | |
Non-financial assets: | ||
Commodit ies 2 | 7,405 | 10,174 |
Other assets | 388 | 257 |
28,507 | 37,641 |
1
Cash collateral are margins placed to collateralize net derivat
ive mark-to-market (MTM) pos
it
ions
2
Commodit
ies and em
iss
ions cert
if
icates are carr
ied at fair value less costs to sell, $3.6 bill
ion (31 December 2022: $5.5 b
ill
ion) are class
if
ied as Level 1 and $3.8 b
ill
ion are
classif
ied as Level 2 (31 December 2022: $4.6 b
ill
ion)
Company
Other assets include:
2023 | 2022 | |
$mill ion | $mill ion | |
Financ ial assets held at amort ized cost (Note 12): | ||
Cash collateral 1 | 7,505 | 10,231 |
Acceptances and endorsements | 2,315 | 2,737 |
Unsettled trades and other financial assets | 7,170 | 10,657 |
16,990 | 23,625 | |
Non-financial assets: | ||
Commodit ies 2 | 4,485 | 7,921 |
Other assets | 267 | 169 |
21,742 | 31,715 |
1
Cash collateral are margins placed to collateralize net derivat
ive mark-to-market (MTM) pos
it
ions
2
Commodit
ies and em
iss
ions cert
if
icates are carr
ied at fair value less costs to sell, $3.2 bill
ion (31 December 2022: $3.2 b
ill
ion) are class
if
ied as Level 1 and $1.2 b
ill
ion are
classif
ied as Level 2 (31 December 2022: $4.7 b
ill
Notes to the financial statements cont
inued
Standard Chartered Bank
257
Directors’ Report and Financ
ial Statements 2023
il
it
ies
Upon reclassif
icat
ion property, plant and equipment are measured at the lower of their carrying amount and fair value less
costs to sell. Financ
ial
instruments continue to be measured per the accounting polic
ies
in Note 12 Financ
ial
The assets below have been presented as held for sale following the approval of Group management and the transactions
are expected to complete in 2024.
Group
Assets held for sale
The financial assets reported below are class
if
ied under Level 1 $101 m
ill
ion (31 December 2022: $345 m
ill
ion), Level 2 $541
mill
ion (31 December 2022: $946 m
ill
ion) and Level 3 $51 m
ill
ion (31 December 2022: $100 m
ill
ion).
2023 | 2022 | |
$mill ion | $mill ion | |
Financ ial assets held at fa ir value through profit or loss | – | 3 |
Equity shares | – | 2 |
Derivat ive F inanc ial Instruments – Assets | – | 1 |
Financ ial assets held at amort ised cost¹ | 693 | 1,388 |
Cash and balances at central banks | 246 | 423 |
Loans and advances to banks | 24 | 81 |
Loans and advances to customers | 243 | 508 |
Debt securit ies held at amort ised cost | 180 | 376 |
Goodwill and intang ible assets¹ | – | 4 |
Property, plant and equipment¹ | 12 | 36 |
Others | 50 | 55 |
755 | 1,486 |
1
Refer to the cash flow statement under cash flow from invest
ing act
iv
it
ies for Jordan sale ($108 mill
ion) dur
ing the year 2023
Notes to the financial statements cont
inued
Standard Chartered Bank
258
Directors’ Report and Financ
ial Statements 2023
20. Assets held for sale and associated liab
il
it
ies cont
inued
Liab
il
it
ies held for sale
The financial l
iab
il
it
ies reported below are class
if
ied under Level 1 $54m
ill
ion (31 December 2022: $402m
ill
ion) and Level 2
$672 mill
ion (31 December 2022: $833 m
ill
ion).
2023 | 2022 | |
$mill ion | $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 | 726 | 1,230 |
Deposits by banks | 3 | 17 |
Customer accounts | 723 | 1,213 |
Other liab il it ies | 50 | 64 |
Provis ions for l iab il it ies and charges | 11 | 8 |
787 | 1,307 |
Company
Assets held for sale
The financial assets reported below are class
if
ied under Level 1 n
il (31 December 2022: $198 mill
ion), Level 2 n
il (31 December
2022: $248 mill
ion) and Level 3 $52 m
ill
ion (31 December 2022: $100 m
ill
ion).
2023 | 2022 | |
$mill ion | $mill ion | |
Financ ial assets held at fa ir value through profit or loss | – | 2 |
Equity shares | – | 2 |
Financ ial assets held at amort ised cost | 52 | 544 |
Cash and balances at central banks | – | 96 |
Loans and advances to banks | – | 74 |
Loans and advances to customers | 52 | 230 |
Debt securit ies held at amort ised cost | – | 144 |
Goodwill and intang ible assets | – | 3 |
Property, plant and equipment | – | 20 |
Others | 16 | 23 |
68 | 592 |
Liab
il
it
ies held for sale
The financial l
iab
il
it
ies reported below are class
if
ied under Level 1 n
il (31 December 2022: $325 mill
ion) and Level 2 n
il
(31 December 2022: $10 mill
ion).
2023 | 2022 | |
$mill ion | $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 | 5 | 10 |
5 | 345 |
Notes to the financial statements cont
inued
Standard Chartered Bank
259
Directors’ Report and Financ
ial Statements 2023
ies
in issue
Refer to Note 12 Financ
ial
Group
| 2023 | 2022 | |||||
Certif icates of | Certif icates of | |||||
deposit of | Other debt | deposit of | Other debt | |||
$100,000 or | securit ies in | $100,000 or | securit ies in | |||
more | issue | Total | more | issue | Total | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Debt securit ies in issue | 13,833 | 22,648 | 36,481 | 20,026 | 16,956 | 36,982 |
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) | – | 9,850 | 9,850 | – | 7,563 | 7,563 |
Total debt securit ies in issue | 13,833 | 32,498 | 46,331 | 20,026 | 24,519 | 44,545 |
Company
| 2023 | 2022 | |||||
Certif icates of | Certif icates of | |||||
deposit of | Other debt | deposit of | Other debt | |||
$100,000 or | securit ies in | $100,000 or | securit ies in | |||
more | issue | Total | more | issue | Total | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Debt securit ies in issue | 13,733 | 21,007 | 34,740 | 19,926 | 15,066 | 34,992 |
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) | – | 9,554 | 9,554 | – | 7,271 | 7,271 |
Total debt securit ies in issue | 13,733 | 30,561 | 44,294 | 19,926 | 22,337 | 42,263 |
In 2023, the Company issued a total of $2.9 bill
ion sen
ior notes for general business purposes of the Group as shown below:
Securit ies | $mill ion |
USD 1,500 mill ion callable fixed-rate sen ior notes due 2029 (callable 2028) | 1,500 |
USD 750 mill ion callable fixed-rate sen ior notes due 2028 (callable 2027) | 750 |
USD 653 mill ion callable fixed- rate sen ior notes due 2030 (callable 2029) | 653 |
Total senior notes issued | 2,903 |
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 |
Notes to the financial statements cont
inued
Standard Chartered Bank
260
Directors’ Report and Financ
ial Statements 2023
il
it
ies
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 share-based
Group
2023 | 2022 | |
$mill ion | $mill ion | |
Financ ial l iab il it ies held at amort ized cost (Note 12) | ||
Acceptances and endorsements 1 | 4,026 | 3,842 |
Cash collateral³ | 7,960 | 8,304 |
Property leases 2 | 593 | 550 |
Equipment leases 2 | 1 | 2 |
Unsettled trades and other financial l iab il it ies | 11,529 | 12,869 |
24,109 | 25,567 | |
Non-financial l iab il it ies | ||
Cash-settled share-based payments | – | 2 |
Other liab il it ies | 368 | 356 |
24,477 | 25,925 | |
Company | ||
2023 | 2022 | |
$mill ion | $mill ion | |
Financ ial l iab il it ies held at amort ised cost (Note 12) | ||
Acceptances and endorsements | 2,315 | 2,737 |
Cash collateral³ | 7,289 | 7,710 |
Property leases 2 | 295 | 227 |
Unsettled trades and other financial l iab il it ies | 8,980 | 9,987 |
18,879 | 20,661 | |
Non-financial l iab il it ies | ||
Other liab il it ies | 334 | 329 |
19,213 | 20,990 |
1
Includes early receipts of funds ($60 mill
ion) from customer and correspond
ing liab
il
ity is due on January 2024
2
Other financial l
iab
il
it
ies
include the present value of lease liab
il
it
ies, as requ
ired by IFRS 16 from 1 January 2019; refer to Note 18
3
Cash collateral are margins received against collateralize net derivat
ive mark-to-market (MTM) pos
it
Notes to the financial statements cont
inued
Standard Chartered Bank
261
Directors’ Report and Financ
ial Statements 2023
ions for l
iab
il
it
ies and charges
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 t
im
ing
of settlement. Judgements are required for inherently uncertain areas such as legal decis
ions (
includ
ing external adv
ice
Group
| 2023 | 2022 | |||||
Expected | Expected | |||||
credit loss for | credit loss for | |||||
credit | Other | credit | Other | |||
commitments 1 | provis ions 2 | Total | commitments 1 | provis ions 2 | Total | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
At 1 January | 251 | 84 | 335 | 316 | 80 | 396 |
Exchange translation differences | (8) | 4 | (4) | (36) | (4) | (40) |
(Release)/charge against profit | (63) | 15 | (48) | (29) | 27 | (2) |
Provis ions ut il ised | – | (45) | (45) | – | (19) | (19) |
Transfer 3 | – | (3) | (3) | – | – | – |
At 31 December | 180 | 55 | 235 | 251 | 84 | 335 |
Company
| 2023 | 2022 | |||||
Expected | Expected | |||||
credit loss for | credit loss for | |||||
credit | Other | credit | Other | |||
commitments 1 | provis ions 2 | Total | commitments 1 | provis ions² | Total | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
At 1 January | 183 | 66 | 249 | 245 | 53 | 298 |
Exchange translation differences | (2) | – | (2) | (32) | (3) | (35) |
(Release)/charge against profit | (49) | (4) | (53) | (30) | 13 | (17) |
Provis ions ut il ised | – | (20) | (20) | – | (3) | (3) |
Transfer 3 | – | (3) | (3) | – | 6 | 6 |
At 31 December | 132 | 39 | 171 | 183 | 66 | 249 |
1
Expected credit loss for credit 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.
2
Other provis
ions cons
ist mainly of provis
ions for legal cla
ims and regulatory and enforcement invest
igat
ions and proceedings.
3
Includes the provis
Notes to the financial statements cont
inued
Standard Chartered Bank
262
Directors’ Report and Financ
ial Statements 2023
il
it
ies and comm
itments
Financ
ial guarantee contracts and loan comm
itments
Financ
ial guarantee contracts and any loan comm
itments 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 and their expected credit loss provis
ion. Loan comm
itments 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 commitments 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
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
represent amounts at risk.
Group | Company | |||
2023 | 2022 | 2023 | 2022 | |
$mill ion | $mill ion | $mill ion | $mill ion | |
Financ ial guarantees and trade cred its | ||||
Financ ial guarantees, trade and irrevocable letters of credit | 60,707 | 47,799 | 49,586 | 37,890 |
60,707 | 47,799 | 49,586 | 37,890 | |
Commitments | ||||
Undrawn formal standby facil it ies, credit lines and other commitments to lend | ||||
One year and over | 62,083 | 54,610 | 48,719 | 44,162 |
Less than one year | 17,895 | 18,429 | 14,113 | 13,807 |
Uncondit ionally cancellable | 37,921 | 34,846 | 6,175 | 6,036 |
117,899 | 107,885 | 69,007 | 64,005 | |
Capital commitments | ||||
Contracted capital expenditure approved by the directors but not provided for in | ||||
these accounts | 215 | 11 | – | – |
Notes to the financial statements cont
inued
Standard Chartered Bank
263
Directors’ Report and Financ
ial Statements 2023
24. Contingent liab
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 | |||
2023 | 2022 | 2023 | 2022 | |
$mill ion | $mill ion | $mill ion | $mill ion | |
Financ ial guarantees and trade cred its (Group) | ||||
Financ ial guarantees, trade and irrevocable letters of credit | 3,031 | 3,076 | 12,017 | 12,465 |
3,031 | 3,076 | 12,017 | 12,465 | |
Commitments(Group) | ||||
Undrawn commitments | 1,504 | 1,007 | 1,916 | 1,936 |
1,504 | 1,007 | 1,916 | 1,936 | |
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
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,
Since 2014, the PLC 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 D
istr
icts of New York aga
inst a number of banks (includ
ing Standard Chartered
or its affil
iates) on behalf of pla
int
iffs who are, or are relat
ives of, vict
ims of attacks
in Iraq and Afghanistan. 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 United States Anti-Terrorism Act. None of these lawsuits specify the
amount of damages claimed. The PLC Group continues to defend these lawsuits.
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 PLC Group. It is alleged that the ind
iv
iduals breached their duties to the
PLC Group and caused a waste of corporate assets by permitt
ing the conduct that gave r
ise to the costs and losses to the
PLC Group related to legacy conduct and control issues. In March 2021, an amended complaint was served in which the
Company 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.
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 PLC 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 PLC Group by the
BMIS bankruptcy trustee and the Fairf
ield funds’ l
iqu
idators,
in each case seeking to recover funds paid to the PLC 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, exclud
ing any pre-judgment interest that may be awarded. The four lawsuits commenced by the
Fairf
ield funds’ l
iqu
idators have been d
ism
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
Notes to the financial statements cont
inued
Standard Chartered Bank
264
Directors’ Report and Financ
ial Statements 2023
il
it
ies and other borrowed funds
2023 | 2022 | |
$mill ion | $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 |
NPR 2.4 bill ion fixed sub debt rate 10.3 per cent 2,3 | 18 | – |
558 | 540 | |
Subordinated loan capital – issued by the Company | ||
$700 mill ion 8.0 per cent subord inated notes due 2031 | 342 | 345 |
$ 2 bill ion 2.335 per cent subord inated notes due 2023 | – | 2,000 |
$500 mill ion 4.96 per cent subord inated notes due 2043 | 414 | 393 |
$2 bill ion 4.82 per cent subord inated notes due 2044 | 1,856 | 1,821 |
$250 mill ion 4.82 per cent subord inated notes due 2048 | 250 | 250 |
$1 bill ion 2.94 per cent subord inated notes due 2029 | 999 | 991 |
$1.5 bill ion float ing rate subordinated notes due 2032 | 1,250 | 1,250 |
$1 bill ion 3.516 per cent subord inated notes due 2030 | 965 | 881 |
£504 mill ion 6.1368 per cent subord inated notes due 2043 | 689 | 630 |
$2 bill ion 5.30 per cent subord inated notes due 2035 | 1,764 | 1,767 |
£527 mill ion float ing rate subordinated notes due 2039 | 671 | 633 |
€1 bill ion 2.5 per cent subord inated notes due 2030 | 1,048 | 977 |
$750 mill ion 3.603 per cent subord inated notes due 2033 | 648 | 630 |
10,896 | 12,568 | |
Primary capital floating rate notes | ||
$400 mill ion float ing rate undated subordinated notes | – | 16 |
$300 mill ion float ing rate undated subordinated notes (Series 2) | – | 69 |
$400 mill ion float ing rate undated subordinated notes (Series 3) | – | 50 |
$200 mill ion float ing rate undated subordinated notes (Series 4) | – | 26 |
– | 161 | |
Total for Group | 11,454 | 13,269 |
1 Issued by Standard Chartered Bank Singapore Lim ited | ||
2 Issued by Standard Chartered Bank Nepal Lim ited | ||
3 NPR refers to Nepalese Rupee | ||
2023 | 2022 | |
$mill ion | $mill ion | |
USD | 9,028 | 11,028 |
GBP | 1,360 | 1,264 |
EUR | 1,048 | 977 |
NPR | 18 | – |
Total | 11,454 | 13,269 |
Redemptions and repurchases during the year
Standard Chartered Bank exercised its right to redeem $2 bill
ion 2.335 per cent subord
inated notes 2023. Further to that the
outstanding balances of floating rate undated subordinate notes were redeemed during the year.
Issuances during the year
On 1st March 2023, Standard Chartered Bank Nepal Lim
ited
issued NPR 2.4 bill
ion 10.3 per cent fixed rate dated subord
inated
Notes to the financial statements cont
inued
Standard Chartered Bank
265
Directors’ Report and Financ
ial Statements 2023
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
Total share | ||||||
Number of | Ordinary | Preference | capital and | |||
ordinary | Ordinary | share | share | share | Other equity | |
shares | share capital 1 | premium | premium | premium | instruments | |
mill ions | mill ions | mill ions | mill ions | mill ions | mill ions | |
At 1 January 2022 | 20,597 | 20,597 | 296 | 1,500 | 22,393 | 4,749 |
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 |
Cancellation of shares includ ing share buy-back 2 | – | – | – | (750) | (750) | – |
Addit ional T ier 1 equity issuance | – | – | – | – | – | 992 |
Addit ional T ier 1 redemption | – | – | – | – | – | (1,000) |
At 31 December 2023 | 20,597 | 20,597 | 296 | 750 | 21,643 | 4,742 |
1
Issued and fully paid ordinary shares of $1 each
2
Includes preference share capital of $37,500
The authorised share capital of the Company at 31 December 2023 was $26,789 mill
ion and TWD 1,225 m
ill
ion (31 December
2022: $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 2023 was $20,597 mill
ion (31 December 2022: $20,597 m
ill
ion) made
up of: 20,597 mill
ion ord
inary shares of $1 each.
There 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:
Number of | |
Nominal amount of Shares or Stock held | 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 |
Notes to the financial statements cont
inued
Standard Chartered Bank
266
Directors’ Report and Financ
ial Statements 2023
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
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 |
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 |
31 March 2023 | USD 750 mill ion | 7.75% | 30 January, 30 July each year | 30 July 3037 |
31 March 2023 | GBP 96 mill ion | 7.90% | 4 April, 4 October each year | 4 April 2028 |
31 March 2023 | GBP 99 mill ion | 7.90% | 4 April, 4 October each year | 4 April 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
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. 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.
Gains and losses are recorded in this reserve and never recycled to the income statement
Notes to the financial statements cont
inued
Standard Chartered Bank
267
Directors’ Report and Financ
ial Statements 2023
•
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 2023, the distr
ibutable reserves of Standard Chartered Bank (the Company) were $2.7 b
ill
ion
(2022: $5.2 bill
ion). These compr
ised of retained earnings. Distr
ibut
ion of reserves is subject to mainta
in
ing min
imum
$mill ion | |
At 1 January 2022 | 1,248 |
Comprehensive loss for the year | (56) |
Loss in equity attributable to non-controlling interests | (38) |
Other loss attributable to non-controlling interests | (18) |
Distr ibut ions | (87) |
Other increases 1 | 59 |
At 31 December 2022 | 1,164 |
Comprehensive loss for the year | (2) |
Loss in equity attributable to non-controlling interests | (31) |
Other profits attributable to non-controlling interests | 29 |
Distr ibut ions | (103) |
Other increases 2 | 21 |
At 31 December 2023 | 1,080 |
1
Addit
ional
investment by minor
ity shareholders
in Trust Bank Singapore Lim
ited ($47 m
ill
ion), Power2SME Pte. Ltd. ($9 m
ill
ion), & Zod
ia Markets Holdings Lim
ited
($3 mill
ion)
2
Addit
ional
investment by minor
ity shareholders ($28 m
ill
ion) majorly
in Trust Bank Singapore Lim
ited offset by release of
interest on account of change in ownership
($7 mill
Notes to the financial statements cont
inued
Standard Chartered Bank
268
Directors’ Report and Financ
ial Statements 2023
ions
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 contribut
ion
plans, the Bank Group pays contribut
ions to publ
icly 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
defined benefit
plans, which promise levels of payment where the future cost is not known with certainty:
–
The accounting 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 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 per
iod 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 in the income statement in the
period in which they were incurred.
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. The table below summarises how these assumptions are set
Assumption | Detail |
Discount rate | 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 all | |
our geographies. | |
Inflation | Where there are inflat ion-l inked bonds available (e.g. United Kingdom and the eurozone), the 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 linked to Retail Price Index inflat ion. Where no inflat ion-l inked bonds exist, we determine inflat ion assumpt ions | |
based on a combinat ion of long-term forecasts and short-term inflat ion data. | |
Salary growth | Salary growth assumptions reflect the Group’s long-term expectations, taking into account future business plans |
and macroeconomic data (primar ily expected future long-term inflat ion). | |
Demographic | Demographic assumptions, includ ing mortal ity and turnover rates, are typically set based on the assumptions |
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
Group
Retirement benefit obligat
ions compr
ise:
2023 | 2022 | |
$mill ion | $mill ion | |
Defined benefit plans obligat ion | 161 | 147 |
Defined contribut ion plans obl igat ion | 16 | 19 |
Net obligat ion | 177 | 166 |
Retirement benefit charge comprises: | ||
2023 | 2022 | |
$mill ion | $mill ion | |
Defined benefit plans | 41 | 28 |
Defined contribut ion plans | 271 | 247 |
Charge against profit (Note 7) | 312 | 275 |
Notes to the financial statements cont
inued
Standard Chartered Bank
269
Directors’ Report and Financ
ial Statements 2023
29. Retirement benefit obligat
ions cont
inued
The 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 273 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,
reduction in discount rates in most countries with material pension liab
il
it
ies over 2023 has led to h
igher liab
il
it
ies. Th
is has
been partly offset by increases in the value of bonds held as well as good performance of growth assets such as equit
ies,
leading to an increase in the pension defic
it reported. 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 partially
offset the increase in 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 2023.
UK Fund
The Standard Chartered Pension Fund (the ‘UK Fund’) is the Group’s largest pension plan, representing 67 per cent (31
December 2022: 67 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 2020 was completed in December 2021 by the Scheme Actuary, T Kripps of WTW, 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 $162m
ill
ion (£127 m
ill
ion).
To repair the defic
it, three annual cash payments of $42 m
ill
ion (£32.9 m
ill
ion) were agreed, w
ith the first of these paid in
December 2021, and two further instalments to be paid in December 2022 and December 2023. 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. Based on the fund
ing posit
ions at the agreed measurement po
int of mid-year, no payment was
made in December 2022 and a reduced payment of $8m (£6m) was made in December 2023. As part of the 2020 valuation,
in order to provide security for future contribut
ions an add
it
ional $64 m
ill
ion nom
inal gilts (£50 mill
ion) were purchased and
transferred into the exist
ing escrow account of $140 m
ill
ion g
ilts (£110 mill
ion), topp
ing it up to $204 mill
ion. Under the terms of
the 2020 valuation agreement, the $8 mill
ion payment made
in December 2023 is deductible from the funds held in escrow.
The Bank Group has not recognised any addit
ional l
iab
il
ity under IFRIC 14 as the Bank has control of any pension surplus
under the Trust Deed and Rules.
Virg
in Med
ia vs NTL Pension Trustees II Ltd
Following the June 2023 ruling in the case of Virg
in Med
ia vs NTL Pension Trustees II Lim
ited, the Bank has cons
idered the
potential impact of this ruling on the UK Fund and is of the view that any potential impact is not expected to be material.
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.
Notes to the financial statements cont
inued
Standard Chartered Bank
270
Directors’ Report and Financ
ial Statements 2023
29. Retirement benefit obligat
ions cont
inued
Key assumptions
The princ
ipal financial assumpt
ions used at 31 December 2023 were:
| 2023 | 2022 | |||||
Overseas | Overseas | |||||
UK Fund | Plans 1 | Unfunded Plans 2 | UK Funded | Plans 1 | Unfunded Plans 2 | |
% | % | % | % | % | % | |
Discount rate | 4.6 | 3.3 – 7.4 | 3.1 – 7.4 | 4.8 | 3.7 – 7.6 | 3.7 – 7.6 |
Price inflat ion | 2.5 | 2.2 – 5.0 | 2.0 – 5.0 | 2.6 | 2.3 – 4.0 | 2.0 – 4.0 |
Salary increases | n/a | 3.7 – 8.5 | 4.0 – 8.5 | n/a | 3.8 – 7.8 | 3.7 – 7.8 |
Pension increases | 2.3 | 0.0 - 2.9 | N/A | 2.4 | 0.0 - 3.1 | 0.0 – 2.4 |
8% in 2023 reducing | 7% in 2022 reducing | |||||
Post-retirement medical | by 0.5% per annum | by 0.5% per annum | ||||
rate | to 5% in 2029 | to 5% in 2026 | ||||
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
2
The range of assumptions shown is for the main unfunded plans in, India, Thailand, UAE, UK and the US. They comprise around 90 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 UK mortality tables are S3PMA for males
and S3PFA for females, projected by year of birth with the CMI 2019 improvement model with a 1.25% annual trend and in
it
ial
addit
ion parameter of 0.25%. Scal
ing factors of 92% for male pensioners, 92% for female pensioners, 92% for male
dependants and 82% for female dependants have been applied.
The assumptions for life expectancy for the UK Fund are that a male member currently aged 60 will live for 27 years (31
December 2022: 27 years) and a female member for 30 years (31 December 2022: 30 years) and a male member currently
aged 40 will live for 29 years (31 December 2022: 29 years) and a female member for 32 years (31 December 2022: 31 years)
after their 60th birthdays.
Both financial 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 report
ing 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 $35 mill
ion for the UK Fund
(31 December 2022: $30 mill
ion) and $20 m
ill
ion for the other plans (31 December 2022: $15 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 (31 December 2022: $20 m
ill
ion) and $10 m
ill
ion for
the other plans (31 December 2022: $10 mill
ion)
•
If the rate of salary growth relative to inflat
ion
increased by 25 basis points, the liab
il
ity would increase by nil for the UK
Fund (31 December 2022: nil) and approximately $5 mill
ion for the other plans (31 December 2022: $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
(31 December 2022: $35 mill
ion) and $10 m
ill
ion for the other plans (31 December 2022: $10 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.
Profile of plan obligat
ions
Funded plans | |||
Unfunded | |||
UK Fund | Overseas | plans | |
Duration of the defined benefit obligat ion ( in years) | 11 | 11 | 9 |
Duration of the defined benefit obligat ion – 2022 | 11 | 11 | 9 |
Benefits expected to be paid from plans | |||
Benefits expected to be paid during 2024 | 80 | 34 | 18 |
Benefits expected to be paid during 2025 | 82 | 29 | 16 |
Benefits expected to be paid during 2026 | 84 | 31 | 17 |
Benefits expected to be paid during 2027 | 86 | 31 | 16 |
Benefits expected to be paid during 2028 | 89 | 35 | 17 |
Benefits expected to be paid during 2029 to 2033 | 478 | 204 | 78 |
Notes to the financial statements cont
inued
Standard Chartered Bank
271
Directors’ Report and Financ
ial Statements 2023
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:
| UK Fund | Overseas plans | |||||
Unquoted | Unquoted | |||||
Quoted assets | assets | Total assets | Quoted assets | assets | Total assets | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
At 31 December 2022 | ||||||
Equit ies | 2 | – | 2 | 97 | – | 97 |
Government bonds | 206 | – | 206 | 104 | – | 104 |
Corporate bonds | 309 | 82 | 391 | 81 | – | 81 |
Hedge funds | – | 14 | 14 | – | – | – |
Infrastructure | – | 177 | 177 | – | – | – |
Property | – | 126 | 126 | – | – | – |
Derivat ives | 2 | – | 2 | – | – | – |
Cash and equivalents | 257 | – | 257 | 21 | – | 21 |
Others | 7 | 4 | 11 | – | 63 | 63 |
Total fair value of assets 1 | 783 | 403 | 1,186 | 303 | 63 | 366 |
At 31 December 2023 | ||||||
Equit ies | 2 | – | 2 | 44 | – | 44 |
Government bonds | 443 | – | 443 | 119 | – | 119 |
Corporate bonds | 360 | 113 | 473 | 148 | – | 148 |
Hedge funds | – | 9 | 9 | – | – | – |
Infrastructure | – | 166 | 166 | – | – | – |
Property | – | 84 | 84 | – | – | – |
Derivat ives | 2 | 5 | 7 | – | – | – |
Cash and equivalents | 66 | – | 66 | 20 | – | 20 |
Others | 7 | 2 | 9 | - | 78 | 78 |
Total fair value of assets 1 | 880 | 379 | 1,259 | 331 | 78 | 409 |
1
Self-investment is monitored closely and is less than $1 mill
ion of Standard Chartered equ
it
ies and bonds for 2023 (31 December 2022: <$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 Standard Chartered is a constituent of the relevant index
| At 31 December 2023 | At 31 December 2022 | |||||
Funded plans | Funded plans | |||||
Overseas | Unfunded | Overseas | Unfunded | |||
UK Fund | Plans | Plans | UK Fund | Plans | Plans | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Total fair value of assets | 1,259 | 409 | N/A | 1,186 | 366 | N/A |
Present value of liab il it ies | (1,219) | (429) | (181) | (1,138) | (394) | (167) |
Net pension plan asset/(obligat ion) | 40 | (20) | (181) | 48 | (28) | (167) |
Notes to the financial statements cont
inued
Standard Chartered Bank
272
Directors’ Report and Financ
ial Statements 2023
29. Retirement benefit obligat
ions cont
inued
The pension cost for defined benefit plans was:
Funded plans | ||||
Overseas | Unfunded | |||
UK Fund | plans | plans | Total | |
2023 | $mill ion | $mill ion | $mill ion | $mill ion |
Current service cost 1 | – | 15 | 9 | 24 |
Past service cost and curtailments 2 | 8 | – | – | 8 |
Settlement cost 3 | – | 2 | – | 2 |
Interest income on pension plan assets | (57) | (25) | – | (82) |
Interest on pension plan liab il it ies | 56 | 25 | 8 | 89 |
Total charge to profit before deduction of tax | 7 | 17 | 17 | 41 |
Net (gains)/losses on plan assets 4 | (18) | (50) | – | (68) |
(Gains)/losses on liab il it ies | 30 | 57 | 8 | 95 |
Total (gains)/losses recognised directly in statement of comprehensive income | ||||
before tax | 12 | 7 | 8 | 27 |
Deferred taxation | (1) | (6) | – | (7) |
Total (gains)/losses after tax | 11 | 1 | 8 | 20 |
1
Includes admin
istrat
ive expenses paid out of plan assets of $1 mill
ion (31 December 2022: $1 m
ill
ion)
2
Includes the cost of discret
ionary
increases paid to UK pensioners
3
Terminat
ion benefits pa
id from the pension plan in Indonesia
4
The actual return on the UK Fund assets was a gain of $75 mill
ion and on overseas plan assets was a ga
in of $75 mill
ion
Funded plans | ||||
Overseas | Unfunded | |||
UK Fund | plans | plans | Total | |
2022 | $mill ion | $mill ion | $mill ion | $mill ion |
Current service cost 1 | – | 17 | 6 | 23 |
Past service cost and curtailments 2 | – | 1 | – | 1 |
Settlement cost | – | – | – | – |
Interest income on pension plan assets | (33) | (23) | – | (56) |
Interest on pension plan liab il it ies | 32 | 22 | 6 | 60 |
Total charge to profit before deduction of tax | (1) | 17 | 12 | 28 |
Net (gains)/losses on plan assets 3 | 485 | 68 | – | 553 |
(Gains)/losses on liab il it ies | (452) | (83) | (41) | (576) |
Total (gains)/losses recognised directly in statement of comprehensive income | ||||
before tax | 33 | (15) | (41) | (23) |
Deferred taxation | 7 | 5 | – | 12 |
Total (gains)/losses after tax | 40 | (10) | (41) | (11) |
1
Includes admin
istrat
ive expenses paid out of plan assets of $1 mill
ion (31 December 2021: $1 m
ill
ion)
2
Past service costs arose from plan amendments in India, Kenya, Maurit
ius and Sr
i Lanka
3
The actual return on the UK Fund assets was a gain of $452 mill
ion and on overseas plan assets was a ga
in of $45 mill
ion
Notes to the financial statements cont
inued
Standard Chartered Bank
273
Directors’ Report and Financ
ial Statements 2023
29. Retirement benefit obligat
ions cont
inued
Movement in the defined benefit pension plan defic
it dur
ing the year comprise:
Funded plans | ||||
Overseas | Unfunded | |||
UK Fund | plans | plans | Total | |
$mill ion | $mill ion | $mill ion | $mill ion | |
Surplus/(deficit) at 1 January 2023 | 48 | (28) | (167) | (147) |
Contribut ions | 8 | 38 | 14 | 60 |
Current service cost | – | (15) | (9) | (24) |
Past service cost and curtailments | (8) | – | – | (8) |
Settlement costs and transfers impact | – | (2) | – | (2) |
Net interest on the net defined benefit asset/liab il ity | 1 | – | (8) | (7) |
Actuarial (losses)/gains | (12) | (7) | (8) | (27) |
Asset held for sale | – | (7) | 6 | (1) |
Exchange rate adjustment | 3 | 1 | (9) | (5) |
Surplus/(deficit) at 31 December 2023¹ | 40 | (20) | (181) | (161) |
1
The deficit total of $161 m
ill
ion
is made up of plans in defic
it of $236 m
ill
ion (31 December 2022: $220 m
ill
ion) net of plans
in surplus with assets totalling $75 mill
ion
(31 December 2022: $73 mill
ion)
Funded plans | ||||
Overseas | Unfunded | |||
UK Fund | plans | plans | Total | |
$mill ion | $mill ion | $mill ion | $mill ion | |
Surplus/(deficit )at 1 January 2022 | 88 | (47) | (228) | (187) |
Contribut ions | – | 32 | 14 | 46 |
Current service cost | – | (17) | (6) | (23) |
Past service cost and curtailments | – | (1) | – | (1) |
Settlement costs and transfers impact | – | – | – | – |
Net interest on the net defined benefit asset/liab il ity | 1 | 1 | (6) | (4) |
Actuarial (losses)/gains | (33) | 15 | 41 | 23 |
Assets held for sale | – | (4) | 2 | (2) |
Exchange rate adjustment | (8) | (7) | 16 | 1 |
Surplus/(deficit) at 31 December 2022¹ | 48 | (28) | (167) | (147) |
1
The deficit total of $147 m
ill
ion
is made up of plans in defic
it of $220 m
ill
ion (31 December 2022: $305 m
ill
ion) net of plans
in surplus with assets totalling $73 mill
ion
(31 December 2022: $118 mill
ion)
The Bank Group’s expected contribut
ion to
its defined benefit pension plans in 2024 is $ 31 mill
ion.
| 2023 | 2022 | |||||
Assets | Obligat ions | Total | Assets | Obligat ions | Total | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
At 1 January | 1,552 | (1,699) | (147) | 2,424 | (2,611) | (187) |
Contribut ions 1 | 61 | (1) | 60 | 47 | (1) | 46 |
Current service cost 2 | – | (24) | (24) | – | (23) | (23) |
Past service cost and curtailments | – | (8) | (8) | – | (1) | (1) |
Settlement costs & transfers | – | (2) | (2) | (5) | 5 | – |
Interest cost on pension plan liab il it ies | – | (89) | (89) | – | (60) | (60) |
Interest income on pension plan assets | 82 | – | 82 | 56 | – | 56 |
Benefits paid out | (120) | 120 | – | (130) | 130 | – |
Actuarial (losses)/gains 3 | 68 | (95) | (27) | (553) | 576 | 23 |
Assets held for sale | (7) | 6 | (1) | (18) | 16 | (2) |
Exchange rate adjustment | 32 | (37) | (5) | (269) | 270 | 1 |
At 31 December | 1,668 | (1,829) | (161) | 1,552 | (1,699) | (147) |
1
Includes employee contribut
ion of $1 m
ill
ion (31 December 2022: $1 m
ill
ion)
2
Includes admin
istrat
ive expenses paid out of plan assets of $1 mill
ion (31 December 2022: $1 m
ill
ion)
3
Actuarial loss on obligat
ion compr
ises of $28 mill
ion loss (31 December 2022: $644 m
ill
ion ga
in) from financ
ial assumpt
ion changes, $1 mill
ion loss (31 December 2022:
$4 mill
ion ga
in) from demographic assumption changes and $34 mill
ion loss (31 December 2022: $74 m
ill
ion loss) from exper
ience
Notes to the financial statements cont
inued
Standard Chartered Bank
274
Directors’ Report and Financ
ial Statements 2023
29. Retirement benefit obligat
ions cont
inued
Company
Retirement benefit obligat
ions compr
ise:
2023 | 2022 | |
$mill ion | $mill ion | |
Defined benefit plans obligat ion | 128 | 120 |
Defined contribut ion plans obl igat ion | 5 | 4 |
Net obligat ion | 133 | 124 |
Retirement benefit charge comprises: | ||
2023 | 2022 | |
$mill ion | $mill ion | |
Defined benefit plans | 29 | 17 |
Defined contribut ion plans | 135 | 119 |
Charge against profit | 164 | 136 |
UK Fund
See the Bank Group section on the UK Fund in this note (page 341). 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 2023.
The financial assumpt
ions used at 31 December 2023 as shown below. Sensit
iv
it
ies are recorded on page 271 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.
| 2023 | 2022 | |||||
Overseas | Overseas | |||||
UK Fund | Plans 1 | Unfunded Plans 2 | UK Funded | Plans 1 | Unfunded Plans 2 | |
% | % | % | % | % | % | |
Discount rate | 4.6 | 3.3 – 7.4 | 4.6 – 7.4 | 4.8 | 3.7 – 7.6 | 4.8 – 7.6 |
Price inflat ion | 2.5 | 2.2 – 5.0 | 2.5 – 5.0 | 2.6 | 2.3 – 4.0 | 2.5 – 4.0 |
Salary increases | n/a | 3.7 – 8.5 | 4.0 – 8.5 | n/a | 3.8 – 7.8 | 4.0 – 7.8 |
Pension increases | 2.3 | 0.0 - 2.9 | 0.0 – 2.3 | 2.4 | 0.0 - 3.1 | 0.0 – 2.4 |
8% in 2023 reducing | 7% in 2022 reducing | |||||
Post-retirement medical | by 0.5% per annum | by 0.5% per annum | ||||
rate | to 5% in 2029 | to 5% in 2026 | ||||
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
2
The range of assumptions shown is for the main unfunded plans in India, UAE and the UK. These comprise around 85 per cent of the total liab
il
it
ies of unfunded plans
Notes to the financial statements cont
inued
Standard Chartered Bank
275
Directors’ Report and Financ
ial Statements 2023
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:
| UK Fund | Overseas plans | |||||
Unquoted | Unquoted | |||||
Quoted assets | assets | Total assets | Quoted assets | assets | Total assets | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
At 31 December 2022 | ||||||
Equit ies | 2 | – | 2 | 90 | – | 90 |
Government bonds | 206 | – | 206 | 94 | – | 94 |
Corporate bonds | 309 | 82 | 391 | 79 | – | 79 |
Hedge funds | – | 14 | 14 | – | – | – |
Infrastructure | – | 177 | 177 | – | – | – |
Property | – | 126 | 126 | – | – | – |
Derivat ives | 2 | – | 2 | – | – | – |
Cash and equivalents | 257 | – | 257 | 15 | – | 15 |
Others | 7 | 4 | 11 | – | 27 | 27 |
Total fair value of assets 1 | 783 | 403 | 1,186 | 278 | 27 | 305 |
At 31 December 2023 | ||||||
Equit ies | 2 | – | 2 | 39 | – | 39 |
Government bonds | 443 | – | 443 | 111 | – | 111 |
Corporate bonds | 360 | 113 | 473 | 146 | – | 146 |
Hedge funds | – | 9 | 9 | – | – | – |
Infrastructure | – | 166 | 166 | – | – | – |
Property | – | 84 | 84 | – | – | – |
Derivat ives | 2 | 5 | 7 | – | – | – |
Cash and equivalents | 66 | – | 66 | 12 | – | 12 |
Others | 7 | 2 | 9 | – | 32 | 32 |
Total fair value of assets 1 | 880 | 379 | 1,259 | 308 | 32 | 340 |
1
Self investment is monitored closely and is less than $1 mill
ion of Standard Chartered equ
it
ies and bonds for 2023 (31 December 2022: <$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 Standard Chartered is a constituent of the relevant index
| At 31 December 2023 | At 31 December 2022 | |||||
Funded plans | Funded plans | |||||
Overseas | Unfunded | Overseas | Unfunded | |||
UK Fund | Plans | Plans | UK Fund | Plans | Plans | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Total fair value of assets | 1,259 | 340 | N/A | 1,186 | 305 | N/A |
Present value of liab il it ies | (1,219) | (338) | (170) | (1,138) | (315) | (158) |
Net pension plan asset/(obligat ion) | 40 | 2 | (170) | 48 | (10) | (158) |
Notes to the financial statements cont
inued
Standard Chartered Bank
276
Directors’ Report and Financ
ial Statements 2023
29. Retirement benefit obligat
ions cont
inued
The pension cost for defined benefit plans was:
Funded plans | ||||
Overseas | Unfunded | |||
UK Fund | plans | Plans | Total | |
2023 | $mill ion | $mill ion | $mill ion | $mill ion |
Current service cost 1 | – | 7 | 6 | 13 |
Past service cost and curtailments 2 | 8 | – | – | 8 |
Settlement cost | – | 2 | – | 2 |
Interest income on pension plan assets 3 | (57) | (18) | – | (75) |
Interest on pension plan liab il it ies | 56 | 18 | 7 | 81 |
Total charge to profit before deduction of tax | 7 | 9 | 13 | 29 |
Net gains on plan assets 4 | (18) | (13) | – | (31) |
Loss on liab il it ies | 30 | 18 | 8 | 56 |
Total loss recognised directly in statement of comprehensive income before tax | 12 | 5 | 8 | 25 |
Deferred taxation | (1) | (3) | – | (4) |
Total loss after tax | 11 | 2 | 8 | 21 |
1
Includes admin
istrat
ive expenses paid out of plan assets of $1 mill
ion (31 December 2022: $1 m
ill
ion)
2
Includes the cost of discret
ionary pens
ion increases paid to UK pensioners.
3
Terminat
ion benefits pa
id from the pension plan in Indonesia.
4
The actual return on the UK Fund assets was a gain of $75 mill
ion and on overseas plan assets was a ga
in of $31 mill
ion
Funded plans | ||||
Overseas | Unfunded | |||
UK Fund | plans | plans | Total | |
2022 | $mill ion | $mill ion | $mill ion | $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 charge to profit before deduction of tax | (1) | 10 | 8 | 17 |
Net loss on plan assets 2 | 485 | 89 | – | 574 |
Gains on liab il it ies | (452) | (91) | (41) | (584) |
Total losses/(gains) recognised directly in statement of comprehensive income | ||||
before tax | 33 | (2) | (41) | (10) |
Deferred taxation | 7 | 3 | – | 10 |
Total losses/(gains) after tax | 40 | 1 | (41) | – |
1
Includes admin
istrat
ive expenses paid out of plan assets of $1 mill
ion (31 December 2022: $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
Notes to the financial statements cont
inued
Standard Chartered Bank
277
Directors’ Report and Financ
ial Statements 2023
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 | ||||
Overseas | Unfunded | |||
UK Fund | plans | plans | Total | |
$mill ion | $mill ion | $mill ion | $mill ion | |
Surplus/(deficit) at 1 January 2023 | 48 | (10) | (158) | (120) |
Contribut ions | 8 | 26 | 12 | 46 |
Current service cost | – | (7) | (6) | (13) |
Past service cost and curtailments | (8) | – | – | (8) |
Settlement costs and transfers impact | – | (2) | – | (2) |
Net interest on the net defined benefit asset/liab il ity | 1 | – | (7) | (6) |
Actuarial loss | (12) | (5) | (8) | (25) |
Assets held for sale 2 | – | – | (1) | (1) |
Exchange rate adjustment | 3 | – | (2) | 1 |
Surplus/(deficit) at 31 December 2023¹ | 40 | 2 | (170) | (128) |
1
The deficit total of $128 m
ill
ion
is made up of plans in defic
it of $202 m
ill
ion ( 31 December 2022: $192 m
ill
ion) net of plans
in surplus with assets totalling $74 mill
ion
(31 December 2022: $72 mill
ion)
2
“Assets held for sale” is an adjustment related to an unfunded plan in Jordan, which was sold in August 2023, due to the country being excluded in the opening assets
and liab
il
it
ies but
included in the profit & loss and other comprehensive income items shown.
Funded plans | ||||
Overseas | Unfunded | |||
UK Fund | plans | plans | Total | |
$mill ion | $mill ion | $mill ion | $mill ion | |
Surplus/(deficit) at 1 January 2022 | 88 | (23) | (217) | (152) |
Contribut ions | – | 22 | 14 | 36 |
Current service cost | – | (9) | (4) | (13) |
Past service cost and curtailments 2 | – | (1) | – | (1) |
Settlement costs and transfers impact | – | – | – | – |
Net interest on the net defined benefit asset/liab il ity | 1 | – | (4) | (3) |
Actuarial (losses)/gains | (33) | 2 | 41 | 10 |
Assets held for sale | – | – | 1 | 1 |
Exchange rate adjustment | (8) | (1) | 11 | 2 |
Surplus/(deficit) at 31 December 2022¹ | 48 | (10) | (158) | (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, Kenya and Sri Lanka
The Company’s expected contribut
ion to
its defined benefit pension plans in 2024 is $28 mill
ion
| 2023 | 2022 | |||||
Assets | Obligat ions | Total | Assets | Obligat ions | Total | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
At 1 January | 1,491 | (1,611) | (120) | 2,336 | (2,488) | (152) |
Contribut ions | 46 | – | 46 | 36 | – | 36 |
Current service cost 1 | – | (13) | (13) | – | (13) | (13) |
Past service cost and curtailments | – | (8) | (8) | – | (1) | (1) |
Settlement costs | – | (2) | (2) | – | – | – |
Interest cost on pension plan liab il it ies | – | (81) | (81) | – | (51) | (51) |
Interest income on pension plan assets | 75 | – | 75 | 48 | – | 48 |
Benefits paid out | (114) | 114 | – | (122) | 122 | – |
Actuarial gains/(losses)² | 31 | (56) | (25) | (574) | 584 | 10 |
Asset held for sale | – | (1) | (1) | – | 1 | 1 |
Exchange rate adjustment | 70 | (69) | 1 | (233) | 235 | 2 |
At 31 December | 1,599 | (1,727) | (128) | 1,491 | (1,611) | (120) |
1
Includes admin
istrat
ive expenses paid out of plan assets of $1 mill
ion (31 December 2022: $1 m
ill
ion)
2
Actuarial loss on obligat
ion compr
ises of $25 mill
ion loss (31 December 2022: $633 m
ill
ion ga
in) from financ
ial assumpt
ion changes, $1 mill
ion loss (31 December 2022:
$4 mill
ion ga
in) from demographic assumption changes and $30 mill
ion loss (31 December 2022: $55 m
ill
ion loss) from exper
Notes to the financial statements cont
inued
Standard Chartered Bank
278
Directors’ Report and Financ
ial Statements 2023
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 2024 in respect of 2023 performance, which vest in 2025-2027, is recognised as an expense over
the period from 1 January 2023 to the vesting dates in 2025-2027. 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 to parent undertakings..
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 are determined using an estimat
ion of expected d
iv
idends.
•
Sharesave Plan valuations are determined using a binom
ial opt
ion-pric
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.
Total | Total | |
$mill ion | $mill ion | |
Deferred share awards | 99 | 84 |
Other share awards | 75 | 66 |
Total share-based payments 1,2 | 174 | 150 |
1
No forfeiture during the year
2
Includes $(1) mill
ion (2022: $(6) m
ill
ion) of share-based payments reported
in ‘other staff costs’. This reflects Bank Group’s requirement under IFRS 2 to account for
cash-settled awards made to employees of Bank Group settled by Standard Chartered PLC with payments linked to PLC’s share price as equity-settled awards
Notes to the financial statements cont
inued
Standard Chartered Bank
279
Directors’ Report and Financ
ial Statements 2023
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 from 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.
–
replacement buy-out awards to new joiners who forfe
it awards on leaving their previous employers. These vest in the
quarter most closely following the date when the award would have vested at the previous employer. 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 competitors, these 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 eight years. The 2011 Plan has expired and no further awards will be granted under this
plan.
Valuation – LTIP awards
The vesting of awards granted in 2023, 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
relative 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 value of the rema
in
ing components
is based on the expected performance
against the RoTE and strategic measures in the scorecard and the resulting estimated number of shares expected to vest at
each reporting date. These combined values are used to determine the accounting charge.
No div
idend equ
ivalents accrue for the LTIP awards made in 2023, 2022 or 2021 and the fair value takes this into account,
calculated by reference to market consensus div
idend y
ield.
2023 | 2022 | |
Grant date | 13 March | 14 March |
Share price at grant date (£) | 7.40 | 4.88 |
Vesting period (years) | 3-7 | 3-7 |
Expected div ided y ield (%) | 3.1 | 3.4 |
Fair value (RoTE) (£) | 1.91, 1.85 | 1.24, 1.20 |
Fair value (TSR) (£) | 1.08, 1.04 | 0.70, 0.68 |
Fair value (Strategic) (£) | 2.54, 2.46 | 1.65, 1.60 |
Deferred 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.
Notes to the financial statements cont
inued
Standard Chartered Bank
280
Directors’ Report and Financ
ial Statements 2023
Deferred share awards – variable remuneration
2023 | ||||||
Grant date | 18 September | 19 June | 13 March | |||
Share price at grant date (£) | 7.43 | 6.75 | 7.40 | |||
Expected | Expected | Expected | ||||
div idend y ield | div idend y ield | div idend y ield | ||||
Vesting period (years) | (%) | Fair value (£) | (%) | Fair value (£) | (%) | Fair value (£) |
1-3 years | N/A | 7.43 | 3.3 | 6.75 | 3.1 | 7.40 |
1-5 years | 3.0 | 6.51 | 3.3, 3.3 | 6.23, 5.83 | 3.1, 3.1 | 6.85, 6.65 |
6.65, 6.75, | ||||||
3-7 years | – | – | – | – | 3.1,3.1,3.1,3.1 | 6.35, 6.16 |
2022 | ||||||
Grant date | 09 November | 20 June | 14 March | |||
Share price at grant date (£) | 5.62 | 6.04 | 4.88 | |||
Expected | Expected | Expected | ||||
div idend y ield | div idend y ield | div idend y ield | ||||
Vesting period (years) | (%) | Fair value (£) | (%) | Fair value (£) | (%) | Fair value (£) |
1-3 years | N/A | 5.62 | N/A | 6.04 | N/A | 4.88 |
N/A, 3.4, 3.4, | 4.88, 4.48, | |||||
1-5 years | 3.4 | 5.17 | 3.4, 3.4 | 5.56, 5.56 | 3.4 | 4.41, 4.34 |
4.48, 4.13, | ||||||
3-7 years | – | – | – | – | 3.4,3.4,3.4 | 3.99 |
Deferred share awards – buy-outs
2023 | ||||||||
Grant date | 20-Nov | 18-Sep | 19-Jun | 13-Mar | ||||
Share price at grant date | ||||||||
(£) | 6.60 | 7.43 | 6.75 | 7.40 | ||||
Expected | Expected | Expected | Expected | |||||
div idend y ield | div idend y ield | div idend y ield | div idend y ield | |||||
Vesting period (years) | (%) | Fair Value (£) | (%) | Fair Value (£) | (%) | Fair Value (£) | (%) | Fair Value (£) |
3 months | 3.0 | 7.38 | 3.3 | 6.7 | 3.1 | 7.34 | ||
4 months | 3.0 | 6.54 | ||||||
6 months | 3.0 | 7.32 | 3.3 | 6.64 | ||||
7 months | 3.0 | 6.49 | ||||||
9 months | 3.0 | 7.27 | 3.3 | 6.48, 6.59 | ||||
10 months | 3.0 | 6.44 | ||||||
6.25, 6.30, | 7.06, 7.11, | 6.18, 6.38, | ||||||
1 years | 3.0 | 6.35, 6.39 | 3.0 | 7.16, 7.22 | 3.3 | 6.43, 6.54 | 3.1 | 7.12, 7.18 |
6.12, 6.16, | 6.85, 6.9, | 5.98, 6.18, | ||||||
2 years | 3.0 | 6.21 | 3.0 | 6.95, 7.01 | 3.3 | 6.33 | 3.1 | 6.91, 6.96 |
5.94, 5.98, | 5.98, 5.79, | |||||||
3 years | 3.0 | 6.03 | 3.0 | 6.65, 6.7, 6.8 | 3.3 | 6.13 | 3.1 | 6.70, 6.75 |
4 years | 3.0 | 5.76 | 3.1 | 6.50, 6.55 | ||||
5 years | 3.1 | 6.35 | ||||||
Notes to the financial statements cont
inued
Standard Chartered Bank
281
Directors’ Report and Financ
ial Statements 2023
2022 | |||||||||
Grant date | 28-Nov | 09-Nov | 20-Jun | 14-Mar | |||||
Share price at grant date | |||||||||
(£) | 5.90 | 5.62 | 6.04 | 4.88 | |||||
Expected | Expected | Expected | Expected | ||||||
div idend y ield | div idend y ield | div | idend y ield | div idend y ield | |||||
Vesting period (years) | (%) | Fair value (£) | (%) | Fair value (£) | (%) | Fair value (£) | (%) | 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 | |||||||
All Employee Sharesave Plans
Sharesave Plans
The 2013 Sharesave Plan expired in May 2023 and a new 2023 Sharesave Plan was approved by shareholders at the Annual
General Meeting in May 2023. Under the 2023 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 six 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 remain
ing l
ife of the 2023 Sharesave Plan during which new awards can be made is ten years. The 2013 Sharesave Plan
has expired and no further awards will be granted under this plan.
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:
2023 | 2022 | |
18 | 30 | |
Grant date | September | November |
Share price at grant date (£) | 7.35 | 5.80 |
Exercise price (£) | 5.88 | 4.23 |
Vesting period (years) | 3 | 3 |
Expected volatil ity (%) | 36.7 | 39.3 |
Expected option life (years) | 3.5 | 3.33 |
Risk-free rate (%) | 4.48 | 3.21 |
Expected div idend y ield (%) | 3.0 | 3.4 |
Fair value (£) | 3.05 | 2.08 |
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.
Notes to the financial statements cont
inued
Standard Chartered Bank
282
Directors’ Report and Financ
ial Statements 2023
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 2023 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 2023 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 2023 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 2023 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 2023 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 30 March 2023. In relation to the waiver of strict compliance with Note 1 to 17.03(18), in 2023 no
changes to the Plan rules have been proposed and therefore the Board has not been required to exercise its discret
ion.
Reconcil
iat
ion of share award movements for the year ending 31 December 2023
Weighted | ||||
average | ||||
Sharesave | ||||
Deferred | exercise price | |||
LTIP1 | shares 1 | Sharesave | (£) | |
Outstanding at 1 January 2023 | 10,739,911 | 39,721,124 | 9,959,559 | 3.85 |
Granted 2,3 | 2,019,504 | 18,097,855 | 3,994,289 | – |
Lapsed | (1,815,215) | (1,067,731) | (1,021,483) | 4.17 |
Vested/Exercised | (605,890) | (17,042,123) | (2,055,642) | 3.81 |
Outstanding at 31 December 2023 | 10,338,310 | 39,709,125 | 10,876,723 | 4.57 |
Total number of securit ies ava ilable for issue under the plan | 10,338,310 | 39,709,125 | 10,876,723 | 4.57 |
Percentage of the issued shares this represents as at 31 December | 0.39 | 1.49 | 0.41 | |
Exercisable as at 31 December 2023 | – | 670,108 | 1,319,426 | 3.17 |
Range of exercise prices (£) | – | – | 3.14 - 5.88 | |
Intrins ic value of vested but not exerc ised options ($ mill ion) | 0.00 | 5.69 | 5.88 | |
Weighted average contractual remain ing l ife (years) | 5.79 | 8.16 | 2.39 | |
Weighted average share price for awards exercised during the period (£) | 6.95 | 7.04 | 6.68 |
1
Granted under the 2021 Plan and 2011 Plan. Employees do not contribute to the cost of these awards.
2
2,011,685 (LTIP) granted on 13 March 2023, 6,501 (LTIP) granted as a notional div
idend on 1 March 2023, 1318 (LTIP) granted as a not
ional div
idend on 1 September 2023,
17,360,108 (Deferred shares) granted on 13 March 2023, 96,805 (Deferred shares) granted as a notional div
idend on 1 March 2023, 288,238 (Deferred Shares) granted on
19 June 2023, 218,497 (Deferred Shares) granted on 18 September 2023, 41,298 (Deferred shares) granted as a notional div
idend on 1 September 2023, 92,909 (Deferred
shares) granted on 20 November 2023, 3,994,289 (Sharesave) granted on 18 September 2023 under the 2023 Sharesave Plan.
3
For Sharesave granted in 2023 the exercise price is £5.88 per share, a 20% discount from the average of the closing prices prior to five days to the inv
itat
ion date of
21 August 2023. The closing share price on 18 August 2023 was £7.214.
Notes to the financial statements cont
inued
Standard Chartered Bank
283
Directors’ Report and Financ
ial Statements 2023
Reconcil
iat
ion of share award movements for the year ending 31 December 2022
Weighted | ||||
average | ||||
Sharesave | ||||
Deferred | exercise price | |||
LTIP1 | shares 1 | Sharesave | (£) | |
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 shares) granted on 14 March 2022, 62,076 (Deferred shares) granted as a notional div
idend on 1 March 2022, 550,432 (Deferred shares) granted on
20 June 2022, 35,175 (Deferred shares) granted as a notional div
idend on 8 August 2022, 710,435 (Deferred shares) granted on 9 November 2022, 123,321 (Deferred
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
iary undertak
ings, jo
int ventures and assoc
iates
int arrangements
int operat
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,
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.
Notes to the financial statements cont
inued
Standard Chartered Bank
284
Directors’ Report and Financ
ial Statements 2023
31. Investments in subsid
iary undertak
ings, jo
int ventures and assoc
iates continued
Impairment testing of investments in associates and jo
int ventures, and on a Company level
investments in subsid
iar
ies 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 financ
ial d
iff
iculty, or breaches of contracts/regulatory fines of the
associate or jo
int venture. Further judgement
is required when consider
ing broader
ind
icators of
impa
irment such as losses of
active 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.
ions
The acquis
it
ion method of accounting is used to account for the acquis
it
ion of subsid
iar
ies by the Group.
In the Company’s financial statements,
investment in subsid
iar
ies, associates and jo
int ventures are held at cost less
impa
irment and d
iv
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
2023 | 2022 | |
Investments in subsid iary undertak ings | $mill ion | $mill ion |
As at 1 January | 10,300 | 9,694 |
Addit ions¹ | 529 | 357 |
Disposal² | (465) | – |
Impairment (Charge)/release³ | (298) | 249 |
As at 31 December | 10,066 | 10,300 |
1
Includes issuances of $124 mill
ion to Standard Chartered Bank AG, $299 m
ill
ion to Standard Chartered Bank (S
ingapore) Lim
ited, $47 m
ill
ion to SC Ventures Hold
ings
Lim
ited (formerly Standard Chartered UK Hold
ings Lim
ited) and $40 m
ill
ion to Standard Chartered Cap
ital Ltd, $18 mill
ion to Standard Chartered Afr
ica Ltd. (31
December 2022 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 Business Services Co., Ltd)
2
Includes disposal of SC Ventures Holdings Lim
ited ($464 m
ill
ion)
3
Primar
ily relates to the net of
impa
irment charge of $388 m
ill
ion on account of decrease
in the valuation of SC Ventures Holdings Lim
ited (31 December 2022: $273
mill
ion reversal of
impa
irment) and
impa
irment release of $78 m
ill
ion
in the valuation of Standard Chartered Bank AG
On 6 June 2023, the Group sold its subsid
iary SC Ventures Hold
ings Lim
ited (formerly Standard Chartered UK Hold
ings
Lim
ited) and
its associated subsid
iary undertak
ings to Standard Chartered I H Lim
ited (a fellow group undertak
ing of
Standard Chartered PLC) for the arms-length purchase price of $464 mill
ion, g
iv
ing r
ise to a gain on disposal of $416 mill
ion. In
addit
ion the Group d
isposed of its wholly owned subsid
iary Kozag
i during 2023. The gain on sale of business was $7 mill
ion.
Notes to the financial statements cont
inued
Standard Chartered Bank
285
Directors’ Report and Financ
ial Statements 2023
31. Investments in subsid
iary undertak
ings, jo
int ventures and assoc
iates continued
At 31 December 2023, 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:
Group interest | ||
in ordinary | ||
share capital | ||
Place of incorporation or registrat ion | Main areas of operation | % |
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 |
Group interest | ||
in ordinary | ||
share capital | ||
Place of incorporation or registrat ion | Main areas of operation | % |
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 $58 mill
ion
(31 December 2022: $16 mill
ion) of the profit attr
ibutable to non-controlling interest and $172 mill
ion (31 December 2022:
$164 mill
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
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 2023, the total cash and balances with central banks was $64.2 bill
ion (31 December
2022: $50.5 bill
ion) of wh
ich $3 bill
ion (31 December 2022: $3.5 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.
Notes to the financial statements cont
inued
Standard Chartered Bank
286
Directors’ Report and Financ
ial Statements 2023
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:
2023 | 2022 | |
$mill ion | $mill ion | |
Loss from investment in jo int ventures | (7) | (7) |
Profit/(loss) from investment in associates | 3 | (6) |
Total | (4) | (13) |
Group
Interests in associates and jo
int ventures
2023 | 2022 | |
$mill ion | $mill ion | |
As at 1 January | 143 | 156 |
Exchange translation differences | – | 2 |
Addit ions | 1 | 25 |
Share of loss | (4) | (13) |
Disposals 1 | (55) | (1) |
Div idends rece ived | (4) | (6) |
Impairment | – | (28) |
Other Movements | – | 8 |
As at 31 December | 81 | 143 |
1
Disposal of interest in associates due to change in ownership. Associates - CurrencyFair Lim
ited ($40 m
ill
ion), F
intech for International Development Ltd ($1 mill
ion),
Olea Global Pte. Ltd. ($14 mill
ion) and Metaco SA (n
il). Metaco SA was disposed for a sale considerat
ion of $18 m
ill
ion. Except Metaco SA all other d
isposals were part of
disposal of SC Ventures Holdings Lim
ited ($464 m
ill
ies
Structured entit
ies are consol
idated when the substance of the relationsh
ip between the Group and the structured ent
ity
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
ies:
A structured entity 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.
2023 | 2022 | |
$mill ion | $mill ion | |
Princ ipal and other structured finance | 116 | 212 |
Total | 116 | 212 |
Notes to the financial statements cont
inued
Standard Chartered Bank
287
Directors’ Report and Financ
ial Statements 2023
32. Structured entit
ies cont
inued
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. 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 entity.
The table below presents the carrying amount of the assets recognised in the financ
ial statements relat
ing to variable
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.
| 2023 | 2022 | |||||||||||
Asset- | Princ ipal | Asset- | Princ ipal | |||||||||
backed | Structured | Finance | Other | backed | Structured | Finance | Other | |||||
securit ies | Lending | Finance | funds | activ it ies | Total | securit ies | Lending | Finance | funds | activ it ies | Total | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Group's interest – | ||||||||||||
assets | ||||||||||||
Financ ial assets held | ||||||||||||
at fair value through | ||||||||||||
profit or loss | 368 | 172 | 139 | 75 | – | 754 | 194 | – | – | 81 | – | 275 |
Loans and | ||||||||||||
advances/ | ||||||||||||
Investment | ||||||||||||
securit ies at | ||||||||||||
amortised cost | 13,184 | 9,298 | 7,210 | – | 190 | 29,882 | 13,508 | 11,804 | 10,165 | – | 246 | 35,723 |
Investment | ||||||||||||
securit ies (fa ir value | ||||||||||||
through other | ||||||||||||
comprehensive | ||||||||||||
income) | 1,977 | – | – | – | – | 1,977 | 1,496 | – | – | – | – | 1,496 |
Other assets | – | – | 34 | – | – | 34 | – | – | – | 1 | – | 1 |
Total assets | 15,529 | 9,470 | 7,383 | 75 | 190 | 32,647 | 15,198 | 11,804 | 10,165 | 82 | 246 | 37,495 |
Off-balance sheet | – | 3,971 | 4,752 | – | 20 | 8,743 | – | 3,220 | 6,527 | 92 | – | 9,839 |
Group's maximum | ||||||||||||
exposure to loss | 15,529 | 13,441 | 12,135 | 75 | 210 | 41,390 | 15,198 | 15,024 | 16,692 | 174 | 246 | 47,334 |
Total assets of | ||||||||||||
structured entit ies | 113,622 | 9,470 | 7,383 | 89 | 1,688 | 132,252 | 98,835 | 8,236 | 11,384 | 150 | 1,828 | 120,433 |
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 reputational 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.
Notes to the financial statements cont
inued
Standard Chartered Bank
288
Directors’ Report and Financ
ial Statements 2023
32. Structured entit
ies cont
inued
•
Lending:
Lending comprises secured lending in the normal course of business to third parties through structured entit
ies
•
Structured Finance:
Structured finance comprises interests in transaction 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 primar
ily represents the prov
is
ion of fund
ing to these structures as a financ
ial
intermed
iary, for wh
ich it receives a
lender’s return. The transactions largely relate to real estate financ
ing and the prov
is
ion of a
ircraft leasing and ship finance
•
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
refinancing of ex
ist
ing cred
it and debt facil
it
ies, as well as setting up of bankruptcy remote structured entit
ies.
In the above table, the Group determined the total assets of the structured entit
ies us
ing following bases:
•
Asset Backed Securit
ies, Pr
inc
ipal F
inance, and Other activ
it
ies are based on the published total assets of the
structured entit
ies
•
Lending and Structured Finance are estimated based on the Group's loan values to the structured entit
Adjustment for non-cash items and other adjustments included with
in
income statement
Group | Company | |||
2023 | 2022 | 2023 | 2022 | |
$mill ion | $mill ion | $mill ion | $mill ion | |
Amortisat ion of d iscounts and premiums of investment securit ies | (509) | 353 | (286) | 556 |
Interest expense on subordinated liab il it ies | 602 | 562 | 876 | 508 |
Interest expense on senior debt securit ies in issue | 516 | 7 | 820 | 81 |
Other non-cash items | (306) 1 | (18) | (132) | (19) |
Pension costs for defined benefit schemes | 41 | 28 | 25 | 17 |
Share-based payment costs | 175 | 156 | 116 | 100 |
Impairment losses on loans and advances and other credit risk provis ions | (58) | (22) | (81) | (183) |
Div idend income from subsid iar ies | – | – | (2,060) | (1,046) |
Other impa irment | 42 | 107 | 314 | (181) |
Gain on disposal of property, plant and equipment | (12) | (18) | – | (10) |
Loss on disposal of FVOCI & AMCST financ ial assets | 178 | 154 | 114 | 99 |
Depreciat ion and amort isat ion | 647 | 611 | 399 | 396 |
Fair value changes taken to income statement | (1,531) | (235) | (940) | (113) |
Foreign Currency revaluation | 104 | 202 | 45 | 176 |
Loss from associates and jo int ventures | 4 | 13 | – | – |
Total | (107) | 1,900 | (790) | 381 |
1
This includes gain on sale of subsid
iary, assoc
iate and jo
int venture (ma
inly SC Ventures Holdings Lim
ited $416 m
ill
ion) offset w
ith discount unwind $139 mill
ion
Change in operating assets
Group | Company | |||
2022 | 2022 | |||
2023 | (Restated) | 2023 | (Restated) | |
$mill ion | $mill ion | $mill ion | $mill ion | |
Decrease/(increase) in derivat ive financial instruments | 9,954 | (8,171) | 8,873 | (6,448) |
(Increase)/decrease in debt securit ies, treasury b ills and equity shares held at fair | ||||
value through profit or loss 1 | (10,371) | 9,622 | (3,059) | 2,415 |
(Increase)/decrease in loans and advances to banks and customers¹ | (2,412) | 10,992 | 5,247 | 7,185 |
Net decrease/(increase) in prepayments and accrued income | 75 | (908) | 209 | (718) |
Net decrease/(increase) in other assets | 7,160 | (3,905) | 11,834 | (5,227) |
Total | 4,406 | 7,630 | 23,104 | (2,793) |
1
Decrease in debt securit
ies, treasury b
ills and equity shares held at fair value through profit or loss for 2022 has been restated by $(823) mill
ion for Group and
$(849) mill
ion for Company and the decrease
in loans and advances to banks and customers for 2022 has been restated by $10,611 mill
ion for Group and $3,507 m
ill
ion
for Company (refer note 34)
Notes to the financial statements cont
inued
Standard Chartered Bank
289
Directors’ Report and Financ
ial Statements 2023
Change in operating liab
il
it
ies
Group
Company
2023
2022
2023
2022
$mill
ion
$mill
ion
$mill
ion
$mill
ion
(Decrease)/Increase in derivat
ive financial
instruments
(11,197)
11,674
(10,275)
9,854
Net increase/(decrease) in deposits from banks, customer accounts, debt
securit
ies
in issue and short posit
ions
2,419
(2,526)
(9,347)
(4,239)
Increase in accruals and deferred income
431
919
315
644
Increase/(decrease) in amount due to parents/subsid
iar
ies/other related
3,580
(1,932)
7,627
(59)
Net increase/(decrease) in other liab
il
it
ies
264
(1,181)
(2,211)
(1,679)
Total
(4,503)
6,954
(13,891)
4,521
Disclosures
Group
Company
2023
2022
2023
2022
$mill
ion
$mill
ion
$mill
ion
$mill
ion
Subordinated debt (includ
ing accrued
interest):
Opening balance
13,272
14,621
12,731
14,081
Proceeds from the issue
18
750
–
750
Interest paid
(714)
(424)
(583)
(378)
Repayment
(2,160)
(1,008)
(2,160)
(1,008)
Foreign exchange movements
113
(227)
113
(227)
Fair value changes from hedge accounting
215
(861)
215
(861)
Accrued Interest and Others
713
421
583
374
Closing balance
11,457
13,272
10,899
12,731
Group
Company
2023
2022
2023
2022
$mill
ion
$mill
ion
$mill
ion
$mill
ion
Senior debt (includ
ing accrued
interest):
Opening balance
5,154
1,289
4,777
923
Proceeds from the issue
5,597
5,316
4,820
4,091
Interest paid
(235)
(1)
(235)
(1)
Repayment
(2,546)
(1,490)
(1,806)
(298)
Foreign exchange movements
2
(49)
3
(12)
Fair value changes from hedge accounting
(1)
8
–
6
Accrued Interest and Others
(111)
81
268
68
Closing balance
7,860
5,154
7,827
4,777
Cash and cash equivalents includes:
•
‘Cash and balances at central banks’, except for restricted balances; and
•
Other balances listed in the table below, when they have less than three months’ maturity from the date of acquis
it
ion, are
not subject to contractual restrict
ions, are subject to
ins
ign
if
icant changes
in value, are highly liqu
id and are held for the
purpose of meeting short-term cash commitments. This includes products such as treasury bills and other elig
ible b
ills,
short-term government securit
ies, loans and advances to banks (
includ
ing reverse repos), and loans and advances to
customers (placements at central banks), which are held for appropriate business purposes.
‘Cash and balances at central banks’ includes both cash held in restricted accounts and on demand or placements which are
contractually due to mature overnight only. Other placements with central banks are reported as part of ‘Loans and
Following a reassessment of the nature and purpose of balances held with central banks, customers and banks, the Group’s
and Company’s cash and cash equivalents balances for 31 December 2022 and 1 January 2022 have been restated. The
following balances have been ident
ified by the Group and Company as be
ing cash and cash equivalents based on the
criter
ia descr
ibed above.
Notes to the financial statements cont
inued
Standard Chartered Bank
290
Directors’ Report and Financ
ial Statements 2023
Group | Company | ||||
2022 | 2022 | ||||
2023 | (Restated) | 2023 | (Restated) | ||
$mill ion | $mill ion | $mill ion | $mill ion | ||
Cash and balances at central banks | 64,198 | 50,531 | 52,758 | 38,867 | |
Less: restricted balances | (3,050) | (3,515) | (1,311) | (1,320) | |
Treasury bills and other elig ible b ills | 3,298 | 5,801 | 896 | 181 | |
Loans and advances to banks | 3,195 | 4,665 | 1,333 | 2,536 | |
Loans and advances to customers | 20,475 | 20,611 | 68 | – | |
Investments | 244 | 162 | 244 | – | |
Total | 88,360 | 78,255 | 53,988 | 40,264 | |
The Group’s cash and cash equivalents balance for 31 December 2022 has been restated to increase the balance by $7,185
mill
ion as balances w
ith central banks that met the cash and cash equivalents defin
it
ion were orig
inally
included in loans
and advances to customers ($20,611 mill
ion) but not
included in cash and cash equivalents and there were balances included
in cash and cash equivalents related to loans and advances to banks ($9,754 mill
ion), treasury b
ills and other elig
ible b
ills
($3,654 mill
ion) as well as Investments ($18 m
ill
ion) that d
id not meet the cash and cash equivalents defin
it
ion. The cash
and cash equivalents balance at the beginn
ing of the year for 2022 has also been restated to decrease the balance by
$2,604 mill
ion. On the 2022 cash flow statement for Group, the change
in operating assets has also been restated by
$9,788 mill
ion as a result of these changes.
The Company’s cash and cash equivalents balance for 31 December 2022 have been restated to decrease the balance
by $7,354 mill
ion as there were balances
included in cash and cash equivalents related to loans and advances to banks
($5,030 mill
ion), treasury b
ills and other elig
ible b
ills ($2,306 mill
ion) as well as Investments ($18 m
ill
ion) that d
id not meet the
cash and cash equivalents defin
it
ion. The cash and cash equivalents balance at the beginn
ing of the year for 2022 has also
been restated to decrease the balance by $10,012 mill
ion. On the 2022 cash flow statement for the Company, the change
in
operating assets has also been restated by $2,658 mill
Directors and officers
Details of directors’ remuneration and interests in shares are disclosed in the Note 37 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.
2023 | 2022 | |
$mill ion | $mill ion | |
Salaries, allowances and benefits in kind | 41 | 38 |
Share-based payments | 26 | 26 |
Bonuses paid or receivable | 5 | 4 |
Terminat ion benefits | – | 1 |
Total | 72 | 69 |
Transactions with directors and others
At 31 December 2023, 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:
2023 | 2022 | |||
Number | $mill ion | Number | $mill ion | |
Directors 1 | 4 | – | 3 | – |
1
Outstanding loan balances were below $50,000
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.
Notes to the financial statements cont
inued
Standard Chartered Bank
291
Directors’ Report and Financ
ial Statements 2023
Group
| 2023 | 2022 | |||||||
Due from/to | ||||||||
subsid iary | Subordinated | Due from/to | Subordinated | |||||
undertakings | liab il it ies and | subsid iary | liab il it ies and | |||||
and other | Derivat ive | other | undertakings | Derivat ive | other | |||
related | financial | borrowed | Debt | and other | financial | borrowed | Debt | |
parties | instruments | funds | Securit ies | related parties | instruments | funds | Securit ies | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Assets | ||||||||
Ultimate parent company | 26 | 1,127 | – | 20 | 133 | 1,557 | – | – |
Fellow subsid iar ies of | ||||||||
Standard Chartered PLC | ||||||||
Group | 5,640 | 7,057 | – | 655 | 6,254 | 9,573 | – | 601 |
5,666 | 8,184 | – | 675 | 6,387 | 11,130 | – | 601 | |
Liab il it ies | ||||||||
Ultimate parent company | 10,193 | 85 | 11,094 | 9,543 | 6,516 | 321 | 12,924 | 6,707 |
Fellow subsid iar ies of | ||||||||
Standard Chartered PLC | ||||||||
Group | 20,974 | 6,748 | – | 18 | 21,586 | 9,007 | – | 669 |
31,166 | 6,833 | 11,094 | 9,561 | 28,102 | 9,328 | 12,924 | 7,376 | |
| 2023 | ||||
Fees and | Fees and | |||
commiss ion | commiss ion | Interest | Interest | |
income | expense | income | expense | |
$mill ion | $mill ion | $mill ion | $mill ion | |
Ultimate parent company | – | – | – | 1,296 |
Fellow subsid iar ies of Standard Chartered PLC Group | 225 | 151 | 129 | 819 |
225 | 151 | 130 | 2,116 | |
| 2022 | ||||
Fees and | Fees and | |||
commiss ion | commiss ion | Interest | Interest | |
income | expense | income | expense | |
$mill ion | $mill ion | $mill ion | $mill ion | |
Ultimate parent company | – | – | 1 | 875 |
Fellow subsid iar ies of Standard Chartered PLC Group | 79 | 122 | 63 | 329 |
79 | 122 | 64 | 1,204 | |
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:
2023 | 2022 | |
$mill ion | $mill ion | |
Assets | ||
Loans and advances | – | 20 |
Financ ial Assets held at FVTPL | 14 | – |
Derivat ive assets | 12 | 18 |
Total assets | 26 | 38 |
Liab il it ies | ||
Deposits | 38 | 49 |
Other liab il it ies | 1 | 19 |
Total liab il it ies | 39 | 69 |
Loan commitments and other guarantees 1 | 113 | 164 |
1
The maximum loan commitments and other guarantees during the year was $113 mill
ion
Notes to the financial statements cont
inued
Standard Chartered Bank
292
Directors’ Report and Financ
ial Statements 2023
Company
| 2023 | 2022 | |||||||
Due from/to | ||||||||
subsid iary | Subordinated | Due from/to | Subordinated | |||||
undertakings | liab il it ies and | subsid iary | liab il it ies and | |||||
and other | Derivat ive | other | undertakings | Derivat ive | other | |||
related | financial | borrowed | Debt | and other | financial | borrowed | Debt | |
parties | instruments | funds | Securit ies | related parties | instruments | funds | Securit ies | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Assets | ||||||||
Ultimate parent company | 26 | 1,127 | – | 20 | 133 | 1,557 | – | – |
Subsid iar ies and fellow | ||||||||
subsid iar ies of SC PLC | ||||||||
Group | 10,028 | 10,365 | – | 4,436 | 13,081 | 13,207 | – | 2,438 |
10,053 | 11,492 | – | 4,456 | 13,214 | 14,764 | – | 2,438 | |
Liab il it ies | ||||||||
Ultimate parent company | 10,184 | 85 | 10,554 | 9,543 | 6,510 | 321 | 12,384 | 6,707 |
Subsid iar ies and fellow | ||||||||
subsid iar ies of SC PLC | ||||||||
Group | 37,133 | 10,281 | – | 18 | 33,423 | 13,421 | – | 2 |
47,317 | 10,366 | 10,554 | 9,561 | 39,933 | 13,742 | 12,384 | 6,709 | |
| 2023 | |||||
Fees and | Fees and | ||||
commiss ion | commiss ion | Interest | Interest | Div idend | |
income | expense | income | expense | income | |
$mill ion | $mill ion | $mill ion | $mill ion | $mill ion | |
Ultimate parent company | – | – | – | 1,257 | – |
Subsid iar ies and fellow subsid iar ies of SC PLC Group | 349 | 59 | 459 | 1,378 | 2,060 |
349 | 59 | 459 | 2,635 | 2,060 | |
| 2022 | |||||
Fees and | Fees and | ||||
commiss ion | commiss ion | Interest | Interest | Div idend | |
income | expense | income | expense | income | |
$mill ion | $mill ion | $mill ion | $mill ion | $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 | |
As at 31 December 2023, Standard Chartered Bank had created a charge over $68 mill
ion (31 December 2022: $89 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
for non-payment of the coupon interest.
SC Ventures Lim
ited d
isposal
On 6 June 2023, the Group sold its subsid
iary SC Ventures Hold
ings Lim
ited (formerly Standard Chartered UK Hold
ings
Lim
ited) and
its associated subsid
iary undertak
ings to Standard Chartered I H Lim
ited (a fellow group undertak
ing of
Standard Chartered PLC) for the arms-length purchase price of $464 mill
ion, g
iv
ing r
ise to a gain on disposal of $416 mill
Notes to the financial statements cont
inued
Standard Chartered Bank
293
Directors’ Report and Financ
ial Statements 2023
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.
2023 | 2022 | |
$mill ion | $mill ion | |
Audit fees for the Standard Chartered PLC Group statutory audit | 27.8 | 22.2 |
Of which fees for the statutory audit of Standard Chartered Bank Group | 20.6 | 16.3 |
Fees payable to EY for other services provided to the Standard Chartered Bank Group: | ||
Audit of Standard Chartered Bank subsid iar ies | 8.8 | 8.4 |
Total Audit fees | 36.6 | 30.7 |
Audit -related assurance services | 3.4 | 2.9 |
Other assurance services | 6.2 | 3.8 |
Other non-audit services | 0.8 | 0.1 |
Total fees payable
47.0
37.5
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
•
Transaction related services are fees payable to EY LLP for issu
ing comfort letters
Expenses incurred in respect of their role as auditors were reimbursed to EY LLP $0.9 mill
ion (2022: $0.5 m
ill
This table sets out salary (includ
ing salary shares), pens
ion and benefits received in 2023 and variable remuneration awards
received in respect of 2023.
2023 1 | 2022 2 | |
£000 | £000 | |
Salaries and fees | 8,299 | 8,263 |
Pension | 421 | 533 |
Benefits | 638 | 576 |
Annual incent ive | 3,399 | 4,011 |
Vesting of LTIP awards | 5,475 | 3,538 |
Buy-out award 3 | 862 | 0 |
Total | 19,094 | 16,921 |
1
L Yueh and S Ricke jo
ined the Court on 1 January and 24 February 2023 respect
ively. C Hodgson and J Whitbread stepped down from the Court on 31 January and 3 May
2023 respectively.
2
The values of vesting 2020-22 LTIP awards have been restated based on the final vesting outcome of 36.8% and actual share price of £6.57 when the awards vested in
March 2023.
3
S Ricke received a buy-out award in respect of shares forfeited upon leaving her former role to jo
in the Group. The buy-out award takes the form of upfront shares,
deferred shares, and deferred cash, and has been calculated in line with PRA and FCA remuneration regulations. The buy-out will be delivered over the period of March
2023 – 2027.
Notes to the financial statements cont
inued
Standard Chartered Bank
294
Directors’ Report and Financ
ial Statements 2023
Addit
ional
informat
ion on the remunerat
ion elements in the above single total figure table
Salaries and fees
The total salaries of the three directors as at 1 January 2023 (or the date of appointment, if later) was £4,940,000. 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
highest paid director during 2023 were £7,836,987 (2022: £6,407,691). There were employer pension contribut
ions for the
highest paid director during 2023 of £250,625 (2022: £244,800).
The total annualised fees of the Chairman and directors as at 1 January 2023 (or the date of appointment, if later)
were £3,336,533.
There is no apportionment of remuneration between Standard Chartered Bank and Standard Chartered PLC.
Share awards
No directors 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 Standard Chartered PLC
Group can be found in the Standard Chartered PLC Group’s 2023 Directors’ remuneration report on pages 182 to 216. The
directors who are also employees of the Standard Chartered 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 Standard Chartered PLC Group, annual incent
ives
in respect of 2023 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 2020 vested in March 2023, based on performance over the
years 2020 to 2022. 36.8 per cent of these awards vested. The LTIP awards granted in March 2021 are due to vest in March
2024, based on performance over the years 2021 to 2023. Following a projected assessment of the performance measures
(RoTE with CET1 underpin, relative TSR, sustainab
il
ity and strategic measures), 66 per cent of these awards are expected to
vest. The final assessment of the relative TSR performance will be conducted in March 2024, the end of the three-year
performance period. Based on a share price of £6.72, the three-month average to 31 December 2023, the projected value to
be delivered to the directors is £5,475,443.
The highest paid director has not exercised any share options during the year.
An LTIP award of 506,045 shares was made in March 2023 to the highest paid director, at a share price of £7.398, which are
subject to the satisfact
ion of stretch
ing RoTE, relative TSR, sustainab
il
ity and strategic performance measures over three
years (2023 to 2025).
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 Standard Chartered PLC Group which are set out in the Standard Chartered Pillar 3 report on pages 131 to 135.
Further informat
ion on the remunerat
ion for those directors who are also executive directors of the Standard Chartered PLC
Notes to the financial statements cont
inued
Standard Chartered Bank
295
Directors’ Report and Financ
ial Statements 2023
As at 31 December 2023, the Group’s interests in related undertakings in accordance with Section 409 of the Companies Act
2006 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.
Subsid
iary undertak
ings
Proportion of | ||||
Place of | shares held | |||
Name and registered address | Activ ity | incorporation | Descript ion of shares | (%) |
The following company have the address of 1 Basinghall Avenue, London, EC2V 5DD, United Kingdom | ||||
SC (Secretaries) Lim ited 1 | Others | United Kingdom | £1.00 Ordinary | 100 |
SC Transport Leasing 1 LTD 7, 8 | Leasing Business | United Kingdom | £1.00 Ordinary | 100 |
SC Transport Leasing 2 Lim ited 7, 8 | Leasing Business | United Kingdom | £1.00 Ordinary | 100 |
US$1.00 Redeemable | 100 | |||
Preference | ||||
SCMB Overseas Lim ited 1 | Investment Holding | United Kingdom | £0.10 Ordinary | 100 |
Company | ||||
Standard Chartered Africa Lim ited 1, 7, 8 | Investment Holding | United Kingdom | £1.00 Ordinary | 100 |
Company | ||||
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 | 100 |
Standard Chartered Leasing (UK) Lim ited 1, 7, 8 | Leasing Business | United Kingdom | US$1.00 Ordinary | 100 |
Standard Chartered Nominees (Private Clients UK) | Nominee Services | United Kingdom | US$1.00 Ordinary | 100 |
Lim ited 1 | ||||
Standard Chartered Securit ies (Afr ica) Holdings | Investment Holding | United Kingdom | US$1.00 Ordinary | 100 |
Lim ited 7, 8 | Company | US$1.00 Ordinary | 100 | |
Standard Chartered Trustees (UK) Lim ited 1 | Trustee Services | United Kingdom | £1.00 Ordinary | 100 |
The BW Leasing Partnership 1 LP 2 | Leasing Business | United Kingdom | Lim ited Partnersh ip | 100 |
Interest | ||||
The BW Leasing Partnership 2 LP 2 | Leasing Business | United Kingdom | Lim ited Partnersh ip | 100 |
Interest | ||||
The BW Leasing Partnership 3 LP 2 | Leasing Business | United Kingdom | Lim ited Partnersh ip | 100 |
Interest | ||||
The BW Leasing Partnership 4 LP 2 | Leasing Business | United Kingdom | Lim ited Partnersh ip | 100 |
Interest | ||||
The BW Leasing Partnership 5 LP 2 | Leasing Business | United Kingdom | Lim ited Partnersh ip | 100 |
Interest | ||||
The SC Transport Leasing Partnership 1 | Leasing Business | United Kingdom | Lim ited Partnersh ip | 100 |
Interest | ||||
The SC Transport Leasing Partnership 2 | Leasing Business | United Kingdom | Lim ited Partnersh ip | 100 |
Interest | ||||
The SC Transport Leasing Partnership 3 | Leasing Business | United Kingdom | Lim ited Partnersh ip | 100 |
Interest | ||||
The SC Transport Leasing Partnership 4 | Leasing Business | United Kingdom | Lim ited Partnersh ip | 100 |
Interest | ||||
The following company have the address of 1 Bartholomew Lane, London, EC2N 2AX, United Kingdom | ||||
Corrasi Covered Bonds LLP | Trustee Services | United Kingdom | Membership Interest | 100 |
The following company have the address of 2 More London Rivers ide, London, SE1 2JT, Un ited Kingdom | ||||
Bricks (C&K) LP 2 | Lim ited Partnersh ip | United Kingdom | Lim ited Partnersh ip | 100 |
interest | Interest | |||
Bricks (T) LP 2 | Lim ited Partnersh ip | United Kingdom | Lim ited Partnersh ip | 100 |
interest | Interest | |||
Bricks (C) LP 2 | Lim ited Partnersh ip | United Kingdom | Lim ited Partnersh ip | 100 |
interest | Interest | |||
Notes to the financial statements cont
inued
Standard Chartered Bank
296
Directors’ Report and Financ
ial Statements 2023
Proportion of | ||||
Place of | shares held | |||
Name and registered address | Activ ity | incorporation | Descript ion of shares | (%) |
The following company have the address of Edifíc io K ilamba, 8º Andar Avenida 4 de Fevereiro, Marginal, Luanda, Angola | ||||
Standard Chartered Bank Angola S.A. | Banking & Financ ial | Angola | AOK8,742.05 Ordinary | 60 |
Services | ||||
The following company have the address of Level 5, 345 George St, Sydney NSW 2000, Australia | ||||
Standard Chartered Grindlays Pty Lim ited¹ | Investment Holding | Australia | AUD Ordinary | 100 |
Company | ||||
The following company have the address of 5th Floor Standard House Bldg, The Mall, Queens Road, PO Box 496, Gaborone, Botswana | ||||
Standard Chartered Bank Botswana Lim ited | Banking & Financ ial | Botswana | BWP Ordinary | 75.827 |
Services | ||||
Standard Chartered Bank Insurance Agency | Insurance Services | Botswana | BWP Ordinary Shares | 100 |
(Proprietary) Lim ited | ||||
Standard Chartered Botswana Education Trust 1,2, 3 | CSR programme. | Botswana | Trust Interest | 100 |
Standard Chartered Botswana Nominees | Nominee Services | Botswana | BWP Ordinary | 100 |
(Proprietary) Lim ited | ||||
Standard Chartered Investment Services (Proprietary) Nominee Services | Botswana | BWP Ordinary Shares | 100 | |
Lim ited | ||||
The following company have the address of Avenida Brigade iro Far ia Lima, no 3.477, 6º andar, conjunto 62 - Torre Norte, Condomin io | ||||
Patio Victor Malzoni, CEP 04538-133, Sao Paulo, Brazil | ||||
Standard Chartered Representação e Partic ipações | Banking & Financ ial | Brazil | BRL1.00 Ordinary | 100 |
Ltda 1 | Services | |||
The following company have 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 | Brunei DarussalamBND1.00 Ordinary | 100 | |
Management | ||||
The following company have 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 | Cameroon | XAF10,000.00 Ordinary | 100 |
Services | ||||
The following company have the address of c/o Maples Finance Lim ited, PO Box 1093 GT, Queensgate House, Georgetown, Grand | ||||
Cayman, Cayman Islands | ||||
SCB Investment Holding Company Lim ited 1 | Investment Holding | Cayman Islands | US$1,000.00 Ordinary-A | 99.999 |
Company | ||||
The following company have the address of Maples Corporate Services Lim ited, PO Box 309, Ugland House, Grand Cayman, KY1-1104 , | ||||
Cayman Islands | ||||
Cerulean Investments LP | Investment Holding | Cayman Islands | Lim ited Partnersh ip | 100 |
Company | Interest | |||
The following company have the address of No. 35, Xinhuanbe i Road, Teda, T ianjin, 300457, China | ||||
Standard Chartered Global Business Services Co., Ltd 1 Research, | China | US$ Ordinary | 100 | |
development, other | ||||
services | ||||
The following company have the address of Unit 802B, 803, 1001A,1002B,1003-1005,1101-1105,, 201-1205,1302C,1303, No. 235 Tianhe North | ||||
Road, Tianhe Distr ict,, Guangzhou C ity, Guangdong Province, China | ||||
Standard Chartered Global Business Services | Research, | China | US$ Ordinary | 100 |
(Guangzhou) Co., Ltd 1 | development, other | |||
services | ||||
The following company have 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 | Cote d'Ivoire | XOF100,000.00 Ordinary | 100 |
Services | ||||
The following company have the address of 8 Ecowas Avenue, Banjul, Gambia | ||||
Standard Chartered Bank Gambia Lim ited | Banking & Financ ial | Gambia | GMD1.00 Ordinary | 74.852 |
Services | ||||
The following company have the address of Taunusanlage 16, 60325, Frankfurt am Main, Germany
Notes to the financial statements cont
inued
Standard Chartered Bank
297
Directors’ Report and Financ
ial Statements 2023
Proportion of | ||||
Place of | shares held | |||
Name and registered address | Activ ity | incorporation | Descript ion of shares | (%) |
Standard Chartered Bank AG 1 | Banking & Financ ial | Germany | € Ordinary | 100 |
Services | ||||
The following company have the address of Standard Chartered Bank Build ing, No. 87, Independence Avenue, P.O. Box 768, Accra, | ||||
Ghana | ||||
Standard Chartered Bank Ghana PLC | Banking & Financ ial | Ghana | GHS Ordinary | 69.416 |
Services | GHS0.52 Non-cumulative | 87.043 | ||
Irredeemable Preference | ||||
Standard Chartered Ghana Nominees Lim ited | Nominee Services | Ghana | GHS Ordinary | 100 |
The following company have the address of Standard Chartered Bank Ghana Lim ited, 87, Independence Avenue, Post Office Box 678, | ||||
Accra, Ghana | ||||
Standard Chartered Wealth Management Lim ited | Investment | Ghana | GHS Ordinary | 100 |
Company | Management | |||
The following company have the address of 13/F Standard Chartered Bank Build ing, 4-4A Des Voeux Road Central, Hong Kong | ||||
Standard Chartered Private Equity Lim ited | Investment Holding | Hong Kong | HKD Ordinary | 100 |
Company | ||||
The following company have the address of 13/F Standard Chartered Bank Build ing, 4-4A Des Voeux Road Central, Hong Kong | ||||
Standard Chartered Asia Lim ited | Investment Holding | Hong Kong | HKD Deferred | 100 |
Company | ||||
The following company have the address of 14th Floor, One Taikoo Place, 979 King's Road, Quarry Bay, Hong Kong | ||||
Standard Chartered PF Real Estate (Hong Kong) | Investment Holding | Hong Kong | US$ Ordinary | 100 |
Lim ited | Company | |||
The following company have 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 | Support Services | India | INR10.00 Equity | 100 |
Centre Private Lim ited¹ | ||||
The following company have the address of 1st Floor, Europe Build ing, No.1, Haddows Road, Nungambakkam, Chenna i, 600 006, India | ||||
Standard Chartered Global Business Services Private | Offshore Support | India | INR10.00 Equity | 100 |
Lim ited 1 | Services | |||
The following company have the address of 2nd Floor, 23-25 M.G. Road, Fort, Mumbai 400 001, India | ||||
Standard Chartered Securit ies (Ind ia) Lim ited | Banking & Financ ial | India | INR10.00 Equity | 100 |
Services | ||||
The following company have the address of 90 M.G.Road, II Floor, Fort, Mumbai, Maharashtra, 400001, India | ||||
Standard Chartered Finance Private Lim ited 1 | Support Services | India | INR10.00 Ordinary | 98.683 |
The following company have 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 | India | INR10.00 Equity | 100 |
Services | ||||
The following company have the address of Ground Floor, Crescenzo Build ing, G Block, C 38/39 , Bandra Kurla Complex, Bandra (East) , | ||||
Mumbai , Maharashtra , 400051, India | ||||
St Helen's Nominees India Private Lim ited 1 | Nominee Services | India | INR10.00 Equity | 100 |
Standard Chartered Private Equity Advisory (India) | Support Services | India | INR1,000.00 Equity | 100 |
Private Lim ited | ||||
The following company 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 | US$1.00 Ordinary | 100 |
US$1.00 Redeemable | 100 | |||
Preference | ||||
Standard Chartered Isle of Man Lim ited 1, 6 | Insurance & | Isle of Man | US$1.00 Ordinary | 100 |
Reinsurance Company | ||||
Notes to the financial statements cont
inued
Standard Chartered Bank
298
Directors’ Report and Financ
ial Statements 2023
Proportion of | ||||
Place of | shares held | |||
Name and registered address | Activ ity | incorporation | Descript ion of shares | (%) |
The following company have 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 ited¹ | Banking & Financ ial | Japan | JPY Ordinary | 100 |
Services | ||||
The following company have the address of 15 Castle Street, St Helier, JE4 8PT, Jersey | ||||
SCB Nominees (CI) Lim ited 1 | Nominee Services | Jersey | US$1.00 Ordinary | 100 |
The following company have the address of Standard Chartered@Chiromo, 48 Westlands Road, P. O. Box 30003 - 00100, Nairob i , | ||||
Kenya | ||||
Standard Chartered Bancassurance Intermediary | Insurance Services | Kenya | KES100.00 Ordinary | 100 |
Lim ited | ||||
Standard Chartered Bank Kenya Lim ited | Banking & Financ ial | Kenya | KES5.00 Ordinary | 74.318 |
Services | KES5.00 Preference | 100 | ||
Standard Chartered Financ ial Serv ices Lim ited | Merchant Banking | Kenya | KES20.00 Ordinary | 100 |
Standard Chartered Investment Services Lim ited | Investment services | Kenya | KES20.00 Ordinary | 100 |
Standard Chartered Kenya Nominees Lim ited 1 | Nominee Services | Kenya | KES20.00 Ordinary | 100 |
Standard Chartered Securit ies (Kenya) L im ited | Corporate Finance & | Kenya | KES10.00 Ordinary | 100 |
Advisory Services | ||||
The following company have the address of Atrium Build ing, Maarad Street, 3rd Floor, P.O. Box 11-4081 Ra id El Solh, Beirut Central Distr ict, | ||||
Lebanon | ||||
Standard Chartered Metropolitan Holdings SAL | Investment Holding | Lebanon | US$10.00 Ordinary A | 100 |
Company | ||||
The following company have the address of Level 1, Wisma Standard Chartered, Jalan Teknologi 8, , Taman Teknologi Malaysia, Bukit | ||||
Jalil, , 57000 Kuala Lumpur, Wilayah Persekutuan, Malaysia | ||||
Standard Chartered Global Business Services Sdn | Offshore Support | Malaysia | RM Ordinary | 100 |
Bhd 1 | Services | |||
The following company have the address of Level 25, Equatorial Plaza, Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia | ||||
Cartaban (Malaya) Nominees Sdn Berhad | Nominee Services | Malaysia | RM Ordinary | 100 |
Cartaban Nominees (Asing) Sdn Bhd | Nominee Services | Malaysia | RM Ordinary | 100 |
Cartaban Nominees (Tempatan) Sdn Bhd | Nominee Services | Malaysia | RM Ordinary | 100 |
Golden Maestro Sdn Bhd | Investment Holding | Malaysia | RM Ordinary | 100 |
Company | ||||
Price Solutions Sdn Bhd | Direct Sales/Collection Malaysia | RM Ordinary | 100 | |
Services | ||||
SCBMB Trustee Berhad | Trustee Services | Malaysia | RM Ordinary | 100 |
Standard Chartered Bank Malaysia Berhad | Banking & Financ ial | Malaysia | RM Irredeemable | 100 |
Services | Convertible Preference | |||
RM Ordinary | 100 | |||
Standard Chartered Saadiq Berhad | Banking & Financ ial | Malaysia | RM Ordinary | 100 |
Services | ||||
The following company have 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 | Malaysia | Ordinary | 91 |
Company | ||||
The following company have the address of 6th Floor, Standard Chartered Tower , 19, Bank Street, Cybercity, Ebene, 72201, Maurit ius | ||||
Standard Chartered Bank (Maurit ius) L im ited 1 | Banking & Financ ial | Maurit ius | Ordinary No Par Value | 100 |
Services | ||||
The following company have the address of c/o Ocorian Corporate Services (Maurit ius) Ltd, 6th Floor, Tower A, 1 Cyberc ity, Ebene, 72201, | ||||
Maurit ius | ||||
Standard Chartered Private Equity (Maurit ius) II | Investment | Maurit ius | US$1.00 Ordinary | 100 |
Lim ited | Management | |||
Notes to the financial statements cont
inued
Standard Chartered Bank
299
Directors’ Report and Financ
ial Statements 2023
Proportion of | ||||
Place of | shares held | |||
Name and registered address | Activ ity | incorporation | Descript ion of shares | (%) |
Standard Chartered Private Equity (Maurit ius) | Investment | Maurit ius | US$1.00 Ordinary | 100 |
Lim ited 1 | Management | |||
Standard Chartered Private Equity (Maurit ius) lll | Investment | Maurit ius | US$1.00 Ordinary | 100 |
Lim ited | Management | |||
The following company have 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 | Maurit ius | US$1.00 Ordinary | 100 |
Company | ||||
The following company have the address of Standard Chartered Bank Nepal Lim ited, Madan Bhandar i Marg. Ward No.31, Kathmandu | ||||
Metropolitan City, Kathmandu Distr ict, Bagmat i Province, Kathmandu, 44600, Nepal | ||||
Standard Chartered Bank Nepal Lim ited | Banking & Financ ial | Nepal | NPR100.00 Ordinary | 70.21 |
Services | ||||
The following company 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 | 100 |
Standard Chartered Holdings (Asia Pacif ic) B.V. 6 | Holding Company | Netherlands | €4.50 Ordinary | 100 |
Standard Chartered Holdings (International) B.V. 6 | Holding Company | Netherlands | €4.50 Ordinary | 100 |
Standard Chartered MB Holdings B.V. 6 | Holding company. | Netherlands | €4.50 Ordinary | 100 |
The following company 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 | Niger ia | NGN1.00 B Redeemable | 100 |
Services | Preference | |||
NGN1.00 Irredeemable | 100 | |||
Non Cumulative | ||||
Preference | ||||
NGN1.00 Ordinary | 100 | |||
Standard Chartered Capital & Advisory Niger ia | Corporate Finance & | Niger ia | NGN1.00 Ordinary | 100 |
Lim ited | Advisory Services | |||
Standard Chartered Nominees (Niger ia) L im ited | Custody Services | Niger ia | NGN1.00 Ordinary | 100 |
The following company have the address of P.O. Box No. 5556, I.I. Chundrigar Road , Karachi , 74000, Pakistan | ||||
Standard Chartered Bank (Pakistan) Lim ited 1 | Banking & Financ ial | Pakistan | PKR10.00 Ordinary | 98.986 |
Services | ||||
The following company have the address of 8th Floor, Makati Sky Plaza Build ing 6788, Ayala Avenue San Lorenzo, C ity of Makati, Fourth | ||||
Distr ict, Nat ional Capi, 1223, Phil ipp ines | ||||
Standard Chartered Group Services, Manila | Offshore Support | Phil ipp ines | PHP1.00 Ordinary | 100 |
Incorporated 1 | Services | |||
The following company have the address of Rondo Ignacego Daszyńskiego 2B, 00-843, Warsaw, Poland | ||||
Standard Chartered Global Business Services spółka z Offshore Support | Poland | PLN50.00 Ordinary | 100 | |
ograniczoną odpowiedz ialnośc ią 1 | Services | |||
The following company have the address of Al Faisal iah Office Tower Floor No 7 (T07D) , K ing Fahad Highway, Olaya Distr ict, R iyadh | ||||
P.O box 295522 , Riyadh, 11351 , Saudi Arabia | ||||
Standard Chartered Capital (Saudi Arabia) 1 | Custody Services | Saudi Arabia | SAR10.00 Ordinary | 100 |
The following company have the address of 9 & 11, Lightfoot Boston Street, Freetown, Sierra Leone | ||||
Standard Chartered Bank Sierra Leone Lim ited | Banking & Financ ial | Sierra Leone | SLL1.00 Ordinary | 80.656 |
Services | ||||
The following company have 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 | 100 |
The following company have the address of 77 Robinson Road, #25-00 Robinson 77, 068896, Singapore | ||||
Trust Bank Singapore Lim ited | Banking & Financ ial | Singapore | SGD Ordinary | 60 |
Services | ||||
The following company have the address of 8 Marina Boulevard, #27-01 Marina Bay Financ ial Centre Tower 1, 018981, S ingapore | ||||
SCTS Capital Pte. Ltd | Nominee Services | Singapore | SGD Ordinary | 100 |
SCTS Management Pte. Ltd. | Nominee Services | Singapore | SGD Ordinary | 100 |
Notes to the financial statements cont
inued
Standard Chartered Bank
300
Directors’ Report and Financ
ial Statements 2023
Proportion of | ||||
Place of | shares held | |||
Name and registered address | Activ ity | incorporation | Descript ion of shares | (%) |
Standard Chartered Bank (Singapore) Lim ited 1 | Banking & Financ ial | Singapore | SGD Non-cumulative Class | 100 |
Services | C Tier-1 preference | |||
SGD Non-cumulative Class | 100 | |||
D Tier-1 Preference | ||||
SGD Ordinary-A | 100 | |||
US$ Non-cumulative Class | 100 | |||
B Tier-1 Preference | ||||
US$ Ordinary-A | 100 | |||
US$ Ordinary-B | 100 | |||
US$ Ordinary-C | 100 | |||
Standard Chartered Holdings (Singapore) Private | Investment Holding | Singapore | SGD Ordinary | 100 |
Lim ited 1 | Company | US$ Ordinary | 100 | |
Standard Chartered Nominees (Singapore) Pte Ltd 1 | Nominee Services | Singapore | SGD Ordinary | 100 |
Standard Chartered Trust (Singapore) Lim ited 1 | Trustee Services | Singapore | SGD Ordinary | 100 |
The following company have the address of Abogado Pte Ltd, No. 8 Marina Boulevard, #05-02 MBFC Tower 1, 018981, Singapore | ||||
Standard Chartered IL&FS Management (Singapore) Investment | Singapore | USD Ordinary | 50 | |
Pte. Lim ited 1 | Management | |||
The following company have the address of Standard Chartered Bank, Level 25, MBFC, 8 Marina Blvd, 018981, Singapore | ||||
Standard Chartered Real Estate Investment Holdings | Investment Holding | Singapore | US$ Ordinary | 100 |
(Singapore) Private Lim ited | Company | |||
The following company 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 | 100 |
Standard Chartered Nominees South Africa | Nominee Services | South Africa | ZAR Ordinary | 100 |
Proprietary Lim ited (RF) 1 | ||||
The following company have the address of 1 Floor, International House, Corner of Shaaban Robert Street and Garden Ave, PO Box 9011, | ||||
Dar Es Salaam, Tanzania | ||||
Standard Chartered Tanzania Nominees Lim ited | Nominee Services | Tanzania, United | TZS1,000.00 Ordinary | 100 |
Republic of | ||||
The following company have the address of 1 Floor, International House, Shaaban Robert Street / Garden Avenue, PO Box 9011, Dar Es | ||||
Salaam, Tanzania, United Republic of | ||||
Standard Chartered Bank Tanzania Lim ited | Banking & Financ ial | Tanzania, United | TZS1,000.00 Ordinary | 100 |
Services | Republic of | TZS1,000.00 Preference | 100 | |
The following company have the address of No. 140, 11th, 12th and 14th Floor, Wireless Road, Lumpin i, Patumwan, Bangkok, 10330, | ||||
Thailand | ||||
Standard Chartered Bank (Thai) Public Company | Banking & Financ ial | Thailand | THB10.00 Ordinary | 99.871 |
Lim ited | Services | |||
The following company have the address of Buyukdere Cad. Yapi Kredi Plaza C Blok, Kat 15, Levent, Istanbul, 34330, Turkey | ||||
Standard Chartered Yatir im Bankas i Turk Anonim | Banking & Financ ial | Turkey | TRL0.10 Ordinary | 100 |
Sirket i 1 | Services | |||
The following company have the address of Standard Chartered Bank Bldg, 5 Speke Road, PO Box 7111, Kampala, Uganda | ||||
Standard Chartered Bank Uganda Lim ited | Banking & Financ ial | Uganda | UGS1,000.00 Ordinary | 100 |
Services | ||||
The following company have the address of 1095 Avenue of Americas, New York City NY 10036, United States | ||||
Standard Chartered Bank International (Americas) | Banking & Financ ial | United States | US$1,000.00 Ordinary | 100 |
Lim ited 1 | Services | |||
The following company have the address of 50 Fremont Street, San Francisco CA 94105, United States | ||||
Standard Chartered Overseas Investment, Inc. | Investment Holding | United States | US$10.00 Ordinary | 100 |
Company | ||||
Notes to the financial statements cont
inued
Standard Chartered Bank
301
Directors’ Report and Financ
ial Statements 2023
Proportion of | ||||
Place of | shares held | |||
Name and registered address | Activ ity | incorporation | Descript ion of shares | (%) |
The following company have the address of C/O Corporation Service Company, 251 Little Falls Drive, Wilm ington DE 19808, Un ited | ||||
States | ||||
Standard Chartered Trade Services Corporation | Trade Services | United States | US$0.01 Common | 100 |
The following company have the address of Corporation Trust Center, 1209 Orange Street, Wilm ington DE 19801, Un ited States | ||||
Standard Chartered Holdings Inc. 1 | Investment Holding | United States | US$100.00 Common | 100 |
Company | ||||
Standard Chartered Securit ies (North Amer ica) LLC | Banking & Financ ial | United States | US$1.00 Membership | 100 |
Services | Interest | |||
The following company have 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 | Vietnam | VND Charter Capital | 100 |
Services | ||||
The following company have the address of The Company's Registered Office, Vistra Corporate Services Centre, Wickhams Cay II, Road | ||||
Town, Tortola, VG1110, Virg in Islands, Br it ish | ||||
Sky Harmony Holdings Lim ited 5 | Investment Holding | Virg in Islands, | USD1.00 Ordinary | 100 |
Company | Brit ish | |||
The following company have the address of Stand No. 4642, Corner of Mwaimwena Road and Addis Ababa Dri, Lusaka, 10101, Zambia | ||||
Standard Chartered Bank Zambia Plc | Banking & Financ ial | Zambia | ZMW0.25 Ordinary | 90 |
Services | ||||
The following company have the address of Stand No. 4642, Corner of Mwaimwena Road and Addis Ababa Dri, Lusaka, 10101, Zambia | ||||
Standard Chartered Zambia Securit ies Serv ices | Nominee Services | Zambia | ZMW0.0203 Ordinary | 100 |
Nominees Lim ited | ||||
The following company have the address of Africa Unity Square Build ing, 68 Nelson Mandela Avenue, Harare, Z imbabwe | ||||
Africa Enterprise Network Trust 3 | Investment Holding | Zimbabwe | Trust Interest | 100 |
Company | ||||
Standard Chartered Bank Zimbabwe Lim ited | Banking & Financ ial | Zimbabwe | US$1.00 Ordinary | 100 |
Services | ||||
Standard Chartered Nominees Zimbabwe (Private) | Nominee Services | Zimbabwe | US$2.00 Ordinary | 100 |
Lim ited | ||||
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 note 31 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 the audit exemption are SC Transport Leasing 1 Ltd 06787116, SC Transport Leasing 2 Lim
ited 06787090, Standard
Chartered Leasing (UK) Lim
ited 05513184, Standard Chartered Afr
ica Lim
ited 00002877 and Standard Chartered Secur
it
ies (Afr
ica) Holdings Lim
ited 05843604.
Notes to the financial statements cont
inued
Standard Chartered Bank
302
Directors’ Report and Financ
ial Statements 2023
Associates
Proportion of | ||||
Place of | shares held | |||
Name and registered address | Activ ity | Incorporation | Descript ion of shares | (%) |
The following company has the address of Victor ia House, State House Avenue, V ictor ia, MAHE, Seychelles | ||||
Seychelles International Mercantile Banking | Commercial Bank | Seychelles | SCR1,000.00 Ordinary | 22 |
Corporation Lim ited. | ||||
The following company has the address of 1 Raffles Quay, #23-01, One Raffles Quay, 048583, Singapore | ||||
Clifford Capital Holdings Pte. Ltd. | Investment Holding | Singapore | $1.00 Ordinary | 9.9 |
Company | ||||
The following company has the address of 10 Marina Boulevard #08-08, Marina Bay, Financ ial Centre, 018983, S ingapore | ||||
Verif ied Impact Exchange Hold ings Pte. Ltd | Exchange offering | Singapore | SGD Ordinary | 15 |
liqu id ity of trade | ||||
Sign
ificant
investment holdings and other related undertakings
Proportion of | ||||
Place of | shares held | |||
Name and registered address | Activ ity | Incorporation | Descript ion of shares | (%) |
The following company has the address of 1 Bartholomew Lane, London, EC2N 2AX, United Kingdom | ||||
Corrasi Covered Bonds (LM) Lim ited | Liqu idat ion member | United Kingdom | £1.00 Ordinary | 20 |
(Bond holders) | ||||
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 | 5.272 |
$0.01 Ordinary-B | 100 | |||
The following companies have the address of Unit 605-07, 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 | 39.689 |
$ Class B Ordinary | 39.689 | |||
Actis Rivendell Holdings (HK) Lim ited | Investment holding | Hong Kong | $ Class A Ordinary | 39.671 |
$ Class B Ordinary | 39.671 | |||
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 | India | INR10.00 Ordinary | 26 |
activ it ies | ||||
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 | India | INR100.00 Ordinary | 26 |
Chemical | ||||
The following companies 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 | 40.74 |
Preferred Stock | ||||
US$0.0001 Series C3 | 8.91 | |||
Preferred Stock | ||||
Notes to the financial statements cont
inued
Standard Chartered Bank
303
Directors’ Report and Financ
ial Statements 2023
In liqu
idat
ion
Subsid
iary Undertak
ings
Proportion of | ||||
Place of | shares held | |||
Name and registered address | Activ ity | Incorporation | Descript ion of shares | (%) |
The following companies have the address of C/O Teneo Financ ial Adv isory Lim ited, The Colmore Bu ild ing, 20 Colmore C ircus, | ||||
Queensway, Birm ingham, B4 6AT, Un ited Kingdom | ||||
Standard Chartered Masterbrand Licens ing L im ited | To manage | United Kingdom | $1.00 Ordinary | 100 |
intellectual property | ||||
for Group | ||||
Standard Chartered Leasing (UK) 3 Lim ited | Leasing Business | United Kingdom | $1.00 Ordinary | 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 | 100 |
Nominees One Lim ited | Fiduc iary Serv ices | Guernsey | £1.00 Ordinary | 100 |
Nominees Two Lim ited | Fiduc iary Serv ices | Guernsey | £1.00 Ordinary | 100 |
Songbird Lim ited | Fiduc iary Serv ices | Guernsey | £1.00 Ordinary | 100 |
Standard Chartered Secretaries (Guernsey) Lim ited | Fiduc iary Serv ices | Guernsey | £1.00 Ordinary | 100 |
Standard Chartered Trust (Guernsey) Lim ited | Fiduc iary Serv ices | Guernsey | £1.00 Ordinary | 100 |
The following company has the address of 30 Rue Schrobilgen, 2526, Luxembourg | ||||
Standard Chartered Financ ial Serv ices (Luxembourg) Corporate Finance & | Luxembourg | €25.00 Ordinary | 100 | |
S.A. | Advisory Services | |||
The following company has the address of Jiron Huascar 2055, Jesus Maria, Lima 15072, Peru | ||||
Banco Standard Chartered en Liqu idac ion | Banking services | Peru | $75.133 Ordinary | 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. | Financ ial counsell ing | Uruguay | UYU1.00 Ordinary | 100 |
services | ||||
Notes to the financial statements cont
inued
Standard Chartered Bank
304
Directors’ Report and Financ
ial Statements 2023
Liqu
idated/d
issolved/sold Subsid
iary and other related Undertak
ings
Proportion | ||||
Country of | of shares | |||
Name | Activ ity | Incorporation | Descript ion of shares | held (%) |
The following companies have the address of 1 Basinghall Avenue, London, EC2V 5DD, United Kingdom | ||||
Standard Chartered UK Holdings Lim ited² | Investment Holding | United Kingdom | $1.00 Ordinary | 100 |
Company | ||||
The following companies have the address of C/o WALKERS CORPORATE LIMITED, 190 Elgin Avenue George Town Grand Cayman | ||||
KY1-9008 , Cayman Islands | ||||
Sirat Holdings Lim ited¹ | Investment Holding Entity | Cayman Islands | $0.01 Ordinary | 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., | Real Estate Developers | China | CNY1.00 Ordinary | 42.5 |
Ltd. | ||||
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 | Hong Kong | HKD Ordinary | 100 |
Company | ||||
The following companies have the address of 91 Pembroke Road, Dublin 4, Ballsbridge, Dublin, DO4 EC42, Ireland | ||||
Currencyfair Lim ited | FX transfer services | Ireland | €0.001 A Ordinary | 100 |
€0.001 Ordinary | 43.422 | |||
The following companies have the address of Standard Chartered@Chiromo, 48 Westlands Road, P. O. Box 30003 - 00100, Nairob i , | ||||
Kenya | ||||
Tawi Fresh Kenya Lim ited | Dig ital Marketplace, | Kenya | KES1,000.00 Ordinary | 100 |
Ecommerce | ||||
The following companies have 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 | Maurit ius | $1.00 Ordinary | 100 |
Company | ||||
The following companies have the address of 142, Ahmadu Bello Way, Victor ia Island, Lagos, 101241, N iger ia | ||||
Cherroots Niger ia L im ited | Investment Holding | Niger ia | NGN1.00 Ordinary | 100 |
Company | ||||
The following companies have the address of Raffles Place, #26-01 Republic Plaza, Singapore , 048619, Singapore | ||||
Audax Financ ial Technology Pte. Ltd | Support Services | Singapore | $ Ordinary | 100 |
Autumn Life Pte. Ltd. | Support Services | Singapore | $ Ordinary | 100 |
Letsbloom Pte. Ltd. | Others | Singapore | $ Ordinary | 100 |
Pegasus Dealmaking Pte. Ltd. | Mergers and Acquis it ions | Singapore | $ Ordinary | 100 |
(M&A) marketplace | ||||
The following companies have the address of 9 Raffles Place, #26-01 Republic Plaza , Singapore , 048619, Singapore | ||||
SCV Research and Development Pte. Ltd. | Research, development, | Singapore | $ Ordinary | 100 |
other services | ||||
SCV Master Holding Company Pte. Ltd. | Investment Holding Entity | Singapore | $ Ordinary | 100 |
Power2SME Pte. Ltd. | Investment Holding Entity | Singapore | US$ Ordinary | 90.6 |
The following companies have the address of 80 Robinson Road, #02-00, 068898, Singapore | ||||
Cardspal Pte. Ltd. | Support Services | Singapore | $ Ordinary | 100 |
The following companies has the address of 49, Sungei Kadut Avenue, #03-01 S729673, Singapore | ||||
Omni Centre Pte. Ltd. | Real Estate Owners & | Singapore | SGD Redeemable | 99.998 |
Developers | Convertible Preference | |||
Notes to the financial statements cont
inued
Standard Chartered Bank
305
Directors’ Report and Financ
ial Statements 2023
Proportion | ||||
Country of | of shares | |||
Name | Activ ity | Incorporation | Descript ion 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 | Singapore | $ Ordinary | 41 |
products and services. | $ Preference | 100 | ||
Solv-India Pte. Ltd. | Investment Holding Entity | Singapore | $ Ordinary | 100 |
The following company has the address of Avenue de Tivol i 2, 1007, Lausanne, Sw itzerland | ||||
Metaco SA | Integrated infrastructure | Switzerland | CHF 0.01 Preference A | 29.505 |
solutions | ||||
The following companies have the address of Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, Virg in | ||||
Islands, Brit ish | ||||
Sky Favour Investments Lim ited | Investment Holding | Virg in Islands, | $1.00 Ordinary | 100 |
Company | Brit ish | |||
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 | United Arab | AED1,000.00 Ordinary | 100 |
support service provider | Emirates | |||
The following company has the address of Suites 508, 509, 15th Floor, Al Sarab Tower, Adgm Square, Al Maryah Island, Abu Dhabi, | ||||
United Arab Emirates | ||||
Financ ial Inclus ion Technologies Ltd | Dig ital wallet and | United Arab | US$1.00 Ordinary | 100 |
technology payments | Emirates | |||
platform | ||||
The following companies have the address of 5th Floor, Holland House 1-4 Bury Street, London, EC3A 5AW, United Kingdom | ||||
Zodia Holdings Lim ited | Investment Holding | United Kingdom | $1.00 Ordinary | 100 |
Company | ||||
Zodia Custody Lim ited | Custody Services | United Kingdom | $1.00 Ordinary | 95.1 |
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 companies have the address of 1 Basinghall Avenue, London, EC2V 5DD, United Kingdom | ||||
SC Ventures Innovation Investment L.P. | Investment Holding | United Kingdom | Lim ited Partnersh ip | 100 |
Company | Interest | |||
Shoal Lim ited | Dig ital marketplace for | United Kingdom | US$1.00 Ordinary | 100 |
sustainable and “green” | ||||
products. | ||||
SC Ventures G.P. Lim ited | Investment Holding | United Kingdom | £1.00 Ordinary | 100 |
Company | ||||
Zodia Markets (UK) Lim ited | Banking & Financ ial | United Kingdom | £1.00 Ordinary | 100 |
Services | ||||
The following companies have the address of 6th Floor, 1 Basinghall Avenue, London, EC2V 5DD, United Kingdom | ||||
Zodia Markets Holdings Lim ited | Dig ital Venture: Hold ing | United Kingdom | US$1.00 Ordinary | 75.01 |
Company for The Zodia | ||||
Markets Group | ||||
The following company has the address of 505 Howard St. #201, San Francisco, CA 94105, United States | ||||
SC Studios, LLC | Offshore Support Services | United States | US$1.00 Membership | 100 |
Interest | ||||
Notes to the financial statements cont
inued
Standard Chartered Bank
306
Directors’ Report and Financ
ial Statements 2023
Proportion | ||||
Country of | of shares | |||
Name | Activ ity | Incorporation | Descript ion of shares | held (%) |
The following companies have the address of 1 Basinghall Avenue, London, EC2V 5DD, United Kingdom | ||||
The following companies have the address of 8th Floor, 20 Farringdon Street, London, EC4A 4AB, United Kingdom. | ||||
Assembly Payments UK Ltd | Payment Services Provider | United Kingdom | $1.00 Ordinary | 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 | United Kingdom | £1.00 Ordinary | 100 |
Services | ||||
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 companies has the address of 17/31 Queen Street, Melbourne VIC 3000, Australia | ||||
Assembly Payments Australia Pty Ltd | Holding Company | Australia | $ Ordinary | 100 |
The following companies has the address of Wilsons Landing, Level 5, 6A Glen Street, Milsons Point NSW 2061, Australia | ||||
CurrencyFair Australia Pty Ltd | Foreign Currency | Australia | AUD Ordinary | 100 |
conversion services. | ||||
The following company has the address of Level 20, 31 Queen Street, Melbourne VIC 3000, Australia | ||||
Zai Australia Pty Ltd | Payment Service Provider | Australia | $1.00 Ordinary | 100 |
AUD0.01 Ordinary | ||||
The following company has the address of 66 Wellington Street, West, Suite 4100, Toronto Domin ion Centre, Toronto ON M5K 1B7, | ||||
Canada | ||||
CurrencyFair (Canada) Ltd | Dormant | Canada | CAD$ Common | 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 | Providers of Foreign | China | CNY Ordinary | 100 |
Lim ited | Currency conversion | |||
services. | ||||
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 | 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 | Hong Kong | HKD Ordinary | 100 |
conversion services. | ||||
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 | India | INR100.00 Ordinary | 100 |
financial intermed iat ion | ||||
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 | Support Services | India | INR10.00 A Equity | 100 |
India Private Lim ited | INR10.00 Cumulative | 100 | ||
Redeemable Preference | ||||
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 | Ireland | $1.00 Ordinary | 100 |
Services | ||||
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 | 100 |
The following companies have the address of StandardChartered@Chiromo, Number 48, Westlands Road, P. O. Box 30003 - 00100, | ||||
Nairob i, Kenya | ||||
Solveazy Technology Kenya Ltd | B2B dig ital platform | Kenya | KES1,000.00 Ordinary | 100 |
Notes to the financial statements cont
inued
Standard Chartered Bank
307
Directors’ Report and Financ
ial Statements 2023
Proportion | ||||
Country of | of shares | |||
Name | Activ ity | Incorporation | Descript ion of shares | held (%) |
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 | Malaysia | RM5.00 Ordinary | 100 |
offering financ ial serv ices | ||||
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 | Malaysia | RM Ordinary | 100 |
activ it ies | ||||
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 | 100 |
The following company has the address of 1 Robinson Road, #17-00, AIA Tower, 048542, Singapore | ||||
CurrencyFair (Singapore) Pte.Ltd | Foreign Currency | Singapore | SGD Ordinary | 100 |
conversion services. | ||||
The following companies have the address of 38 Beach Road, #29-11 South Beach Tower, 189767, Singapore | ||||
Assembly Payments SGP Pte. Ltd. | Transaction/Payment | Singapore | SGD Ordinary | 100 |
Processing Services | ||||
Assembly Payments Pte. Ltd. | Investment holding | Singapore | $ Ordinary | 100 |
company | $ Preference | 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 C/O Corporation Service Company, 251 Little Falls Drive, Wilm ington DE 19808, Un ited | ||||
States | ||||
CurrencyFair (USA) Inc | Dormant | United States | $1.00 Uncertif icated | 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 |
1
Directly held related undertaking
2
ion
On 6 June 2023, the Group sold its subsid
iary SC Ventures Hold
ings Lim
ited (formerly Standard Chartered UK Hold
ings
Lim
ited) and
its associated subsid
iary undertak
ings to Standard Chartered I H Lim
ited (a fellow group undertak
ing of
Standard Chartered PLC) for the arms-length purchase price of $464 mill
ion, g
iv
ing r
ise to a gain on disposal of $416 mill
38. Related undertakings of the Group continued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
308
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.
2023
2022
Bank deposits
$mill
ion
Customer
accounts
$mill
ion
Bank deposits
$mill
ion
Customer
accounts
$mill
ion
Insured deposits
10
18,456
28
16,218
Current accounts
9
7,932
8
8,336
Savings deposits
–
5,359
–
4,352
Time deposits
1
5,072
20
3,467
Other deposits
–
93
–
63
Uninsured deposits
29,895
275,109
31,244
279,269
Current accounts
17,790
112,752
18,970
107,316
Savings deposits
–
15,063
–
14,339
Time deposits
6,643
99,876
5,381
110,379
Other deposits
5,462
47,418
6,893
47,235
Total
29,905
293,565
31,272
295,487
Classif
icat
ion of insured deposits is based on the local deposits insurance regulations exist
ing
in the jur
isd
ict
ions
in which the
Group operates. The jurisd
ict
ions w
ith the most sign
ificant levels of customer depos
its are Hong Kong, Korea and Singapore,
which provide insurance for deposits up to SGD 75,000, in each case based on the total relationsh
ip value.
UK and non-UK deposits
The following table summarises the split of Bank and Customer deposits into UK and Non-UK deposits for respective account
lines based on the domic
ile or res
idence of the clients.
2023
2022
Bank deposits
$mill
ion
Customer
accounts
$mill
ion
Bank deposits
$mill
ion
Customer
accounts
$mill
ion
UK deposits
2,881
27,476
4,109
36,461
Current accounts
888
5,695
849
7,481
Savings deposits
–
31
–
34
Time deposits
310
5,237
1,004
6,558
Other deposits
1,683
16,513
2,256
22,388
Non-UK deposits
27,024
266,089
27,163
259,026
Current accounts
16,911
114,989
18,129
108,171
Savings deposits
–
20,391
–
18,657
Time deposits
6,334
99,711
4,397
107,288
Other deposits
3,779
30,998
4,637
24,910
Total
29,905
293,565
31,272
295,487
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
309
Contractual maturity of Loans, Investment securit
ies and Depos
its
2023
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
46,411
137,816
21,695
22,486
–
25,813
285,976
Between one and five years
3,612
29,162
4
43,724
–
4,088
7,362
Between five and ten years
837
9,816
–
14,565
–
4
131
Between ten years and fifteen years
35
6,891
–
9,189
–
–
86
More than fifteen years and undated
226
17,742
–
12,434
1,875
–
10
Total
51,121
201,427
21,699
102,398
1,875
29,905
293,565
Total amortised cost and
FVOCI exposures
22,803
156,143
Fixed interest rate exposures
20,514
94,343
Floating interest rate exposures
2,289
61,800
2022
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
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
Maturity and yield of Debt securit
ies, alternat
ive tier one and other elig
ible b
ills held at amortised cost
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 Central and
other government agencies
• US
1,373
1.44
6,807
1.62
4,356
1.66
4,524
3.89
17,060
2.22
• UK
39
2.75
39
1.25
101
0.67
–
–
179
1.25
• Other
1,915
2.88
4,556
2.93
1,460
3.16
37
9.13
7,968
2.99
Other debt securit
ies
2,361
6.51
2,156
5.44
1,688
5.90
8,508
5.21
14,713
5.54
As at 31 December 2023
5,688
4.05
13,558
2.67
7,605
2.87
13,069
4.76
39,920
3.59
Supplementary financial
informat
ion cont
inued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
310
Supplementary financial
informat
ion cont
inued
Maturity and yield of Debt securit
ies, alternat
ive tier one and other elig
ible b
ills held at amortised cost continued
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
15,061
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
41,801
2.85
The maturity distr
ibut
ions are presented in the above table on the basis of residual 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.
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:
Reported 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 2023 and 31 December 2022 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
2023
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
6,849
65,375
2,813
4.30
3.89
Gross loans and advances to banks
30,042
24,619
1,175
4.77
2.15
Gross loans and advances to customers
48,839
160,448
9,408
5.86
4.50
Impairment provis
ions aga
inst loans and advances to banks and
customers
–
(4,330)
–
–
–
Investment securit
ies – Treasury and Other El
ig
ible B
ills
4,284
18,151
1,204
6.63
5.37
Investment securit
ies – Debt Secur
it
ies
13,372
87,099
3,650
4.19
3.63
Investment securit
ies – Equ
ity Shares
1,313
–
–
-
-
Due from subsid
iary undertak
ings and other related parties
–
5,088
130
2.56
2.56
Property, plant and equipment and intang
ible assets
4,202
–
–
–
–
Prepayments, accrued income and other assets
95,872
–
–
–
–
Investment associates and jo
int ventures
143
–
–
-
-
Total average assets
204,916
356,450
18,380
5.16
3.27
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
311
Average balance sheets and yields and volume and price variances continued
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 liab
il
it
ies
2023
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
10,587
20,824
626
3.01
1.99
Customer accounts:
Current accounts
28,008
100,986
2,839
2.81
2.20
Savings deposits
–
18,922
512
2.71
2.71
Time deposits
8,310
105,927
5,099
4.81
4.46
Other deposits
44,163
5,008
173
3.45
0.35
Debt securit
ies
in issue
10,246
31,086
1,771
5.70
4.28
Due to parent companies, subsid
iary undertak
ings
& other related parties
–
26,744
2,116
7.91
7.91
Accruals, deferred income and other liab
il
it
ies
103,131
584
35
5.99
0.03
Subordinated liab
il
it
ies and other borrowed funds
–
12,341
602
4.88
4.88
Non-controlling interests
1,184
–
–
–
–
Shareholders’ funds
33,315
–
–
–
–
238,944
322,422
13,773
4.27
2.45
Adjustment for Financ
ial Markets fund
ing costs and financ
ial
guarantee fees on interest earning assets
(1,087)
Total average liab
il
it
ies and shareholders’ funds
238,944
322,422
12,686
3.93
2.26
Supplementary financial
informat
ion cont
inued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
312
Supplementary financial
informat
ion cont
inued
Average balance sheets and yields and volume and price variances continued
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
–
–
–
–
Total average liab
il
it
ies and shareholders’ funds
257,328
316,964
5,314
1.68
0.93
Adjustment for Financ
ial Markets fund
ing costs and financ
ial
guarantee fees on interest earning assets
(244)
Total average liab
il
it
ies and shareholders’ funds
257,328
316,964
5,070
1.60
0.88
Net interest margin
2023
$mill
ion
2022
$mill
ion
Interest income (Reported)
18,380
9,765
Average interest earning assets
356,450
343,947
Gross yield (%)
5.16
2.84
Interest expense (Reported)
13,773
5,314
Adjustment for Financ
ial Markets fund
ing costs and financ
ial guarantee fees on
interest earning assets
(1,087)
(244)
Interest expense adjusted for Financ
ial Markets trad
ing book funding costs and financ
ial guarantee fees on
interest-earning assets
12,686
5,070
Average interest-bearing liab
il
it
ies
322,422
316,964
Rate paid (%)
3.93
1.60
Net yield (%)
1.23
1.24
Net interest income adjusted for Financ
ial Markets fund
ing costs and Financ
ial guarantee fees on
interest
earning assets
5,694
4,695
Net interest margin (%)
1.60
1.37
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
313
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.
2023 versus 2022
(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
575
1,493
2,068
Loans and advances to banks
(189)
729
540
Loans and advances to customers
325
3,359
3,684
Investment securit
ies
(47)
2,346
2,299
Due from subsid
iary undertak
ings and other related parties
(6)
30
24
Total interest earning assets
658
7,957
8,615
Interest bearing liab
il
it
ies
Subordinated liab
il
it
ies and other borrowed funds
(33)
73
40
Deposits by banks
(59)
327
268
Customer accounts:
Current accounts and savings deposits
(243)
3,025
2,782
Time and other deposits
612
2,975
3,587
Debt securit
ies
in issue
124
1,280
1,404
Due to parent companies, subsid
iary undertak
ings & other related parties
(58)
436
378
Total interest bearing liab
il
it
ies
343
8,116
8,459
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
Supplementary financial
informat
ion cont
inued
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
314
The following table summarises the number of employees with
in the Group and Company:
Group
2023
2022
Business
Support
services
Total
Business
Support
services
Total
At 31 December
19,611
49,619
69,230
20,031
47,166
67,197
Average for the year
19,958
49,417
69,375
20,069
46,334
66,403
Company
2023
2022
Business
Support
services
Total
Business
Support
services
Total
At 31 December
8,245
13,493
21,738
8,493
12,627
21,120
Average for the year
8,479
13,483
21,962
8,359
12,404
20,763
Return on assets
FY'23
$mill
ion
FY'22
$mill
ion
Profit attributable to shareholders
3,208
2,370
Total assets
538,579
550,734
Return on assets
1
0.6%
0.4%
1
Represents profit attributable to shareholders div
ided by the total assets of the Group
Supplementary people informat
ion
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
315
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 condit
ions set out
in Article
52(1) of the Capital Requirements Regulation (as it forms part of UK domestic law), as well as the share premium accounts
related to those instruments.
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
requirements are expected to be implemented in the UK from 2025.
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 28 countries and territor
ies.
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
An EU capital adequacy legislat
ive package largely
implemented or onshored into UK law. The package comprises the
Capital Requirements Direct
ive and the Cap
ital Requirements Regulation (CRR) and 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 has recently implemented the UK’s version of CRR II
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 2023
316
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 items, includ
ing the common shares
issued by the Group and related share
premium, retained earnings, accumulated other comprehensive income and other disclosed reserves, elig
ible noncontroll
ing
interests and regulatory adjustments required in the calculation of Common Equity Tier 1, set out in Article 26(1) of the of the
Capital Requirements Regulation (as it forms part of UK domestic law), capable of being available to the inst
itut
ion for
unrestricted and immed
iate use to absorb losses as soon as these occur.
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 grade
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 nonperforming or
defaulted customers.
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.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
317
Glossary continued
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.
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.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
318
Glossary continued
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.
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 20 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 th
is
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, sets 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).
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
319
Glossary continued
G-SII buffer
A CET1 capital buffer which results from designat
ion as a G-SII. The G-SII 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-SII buffer is implemented via
CRD IV as Global Systemically Important Institut
ions (G-SII) buffer requ
irement.
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 under stressed cond
it
ions 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.
Standard Chartered Bank
Directors’ Report and Financ
ial Statements 2023
320
Glossary continued
Loans and advances to banks
Amounts loaned to credit inst
itut
ions includ
ing secur
it
ies bought under Reverse repo.
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 and the Bank of England (as the
UK resolution authority) to set a min
imum requ
irement for own funds and elig
ible l
iab
il
it
ies for bank
ing groups, implement
ing
the FSB’s Total Loss Absorbing 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 ensures the
continu
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 2023
321
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 31.
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 operating
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 cap
ital
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 2023
322
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 group, 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; Audax Financ
ial Technology Pte. Ltd, Cardspal Pte. Ltd. Letsbloom 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., Solv Sdn. Bhd., 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, Taw
i Fresh Kenya 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.
Reported performance/results
Reported performance/results with
in th
is financ
ial report means amounts reported under UK-adopted IAS and EU IFRS. In
prior periods Reported performance/ results were described as Statutory performance/results.
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 2023
323
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 listed in the Prudential Regulation Authority waiver written notice dated 21 August 2023. This
differs from Standard Chartered Bank Company in that it includes the full consolidat
ion of three subs
id
iar
ies, namely
Standard Chartered Holdings (International) B.V., Standard Chartered Grindlays PTY Lim
ited, SCMB Overseas L
im
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) ratings 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 bus
iness
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 fore
ign
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 2023
324
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 cr
it
ical
functions 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’.