Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Standard Chartered shares higher in Hong Kong after the London
Speaker 2: based bank said that it would ramp up its multi
Speaker 2: billion dollar share buyback program, this as it reports a
Speaker 2: beat on second quarter pre tax profits driven by its
Speaker 2: wealth business. And I'm pleased to say that we're joined
Speaker 2: now by the CEO of Standard Charted, Bill Winters.
Speaker 1: Welcome back to the program, Veil.
Speaker 2: Let's start with that buyback one point five billion dollars,
Speaker 2: a plan to return at least five billion dollars to
Speaker 2: investors by twenty twenty six. Is there a times you
Speaker 2: could go beyond that target now that you've got results
Speaker 2: like these. Yeah.
Speaker 3: We set a three year target of an excess of
Speaker 3: five billion. We've done two point seven billion in the
Speaker 3: first first year so far. So yeah, if we continue
Speaker 3: to perform well. What we've said to shareholders is we've
Speaker 3: got a strategy. We're pursuing the strategy. It's working quite well.
Speaker 3: Earnings are strong. We're managering capital very very directly and
Speaker 3: I take quite active and that's allowed us to return
Speaker 3: any surplus to shareholders.
Speaker 1: And we said especially giving where our stock prices, which
Speaker 1: is not as high as we think it should be.
Speaker 1: We will buy.
Speaker 3: Back as many shares as we can with surplus capital.
Speaker 1: That's what we're doing.
Speaker 3: If we keep on performing, of course, we can keep
Speaker 3: on buying back shares.
Speaker 1: Yeah.
Speaker 2: I think earlier in the A you described the stock
Speaker 2: price performances and I quote crap. So you're not still
Speaker 2: not happy with it.
Speaker 1: No, of course not.
Speaker 3: It's less crap than it was, but it's you know,
Speaker 3: we have a long way to go, and yeah, we
Speaker 3: have to ask a question why it certainly isn't that
Speaker 3: we're not performing well.
Speaker 1: So the performances we can do better.
Speaker 3: I will always recognize that we can do better, and
Speaker 3: we are doing better. But yeah, I think we're operating
Speaker 3: in a somewhat difficult environment and I think we need
Speaker 3: to be clear about just how differentiated Center Chartered is.
Speaker 3: And at the end of the day, we serve multinational
Speaker 3: corporations on their cross border needs and we serve affluent individuals.
Speaker 1: We do that extremely well.
Speaker 3: We got a fully scaled and quite a substantial position
Speaker 3: across Asian, Middle East and Africa, but also with more
Speaker 3: national corporations coming out of the Americas and Europe.
Speaker 1: That's what we do.
Speaker 3: We're doing it well, it's generating good returns.
Speaker 1: We keep on going.
Speaker 2: So do you have potentially a new target figure for
Speaker 2: the buyback target.
Speaker 3: We haven't revised our We just set the five billion
Speaker 3: target in February. I mean, we're not going to find
Speaker 3: tune this thing every.
Speaker 1: Three six months.
Speaker 3: What we said was we'll do in excess of five billion,
Speaker 3: and we're on track to achieve that. And as I said,
Speaker 3: we'll keep on going if we can generate the strong performance.
Speaker 2: Okay, I want to ask how your Fit for Growth
Speaker 2: plans going. So this is your plan to cut costs
Speaker 2: by one point five billion dollars over the next three years.
Speaker 2: Are you seeing much wage inflation?
Speaker 1: For example, we have.
Speaker 3: We obviously had a big spike in wage inflation last year.
Speaker 3: This year is much more subdued, and that obviously is
Speaker 3: getting back down to normal. The fIF for Growth really
Speaker 3: is a transformation program. So we've had cost cutting programs
Speaker 3: pretty much my whole time as Center Charter, and we'll
Speaker 3: continue to get more efficient. We're trying to do this
Speaker 3: one a bit different though, which is actually quite a
Speaker 3: bit differently, which is to look at every single one
Speaker 3: of our processes and say, how do we simplify this.
Speaker 3: How do we replace manual processes with digital processes, automation, simplification,
Speaker 3: et cetera. How do we make it an easier place
Speaker 3: to get things done for ourselves, for our colleagues, for clients.
Speaker 1: That requires investments.
Speaker 3: So in addition to saving one point five billion a year,
Speaker 3: we said we're going to spend one point five billion upfront.
Speaker 1: To achieve that everything is on track.
Speaker 3: We've got over two hundred initiatives that we're pursuing.
Speaker 1: Each one is quite small.
Speaker 3: I mean, these aren't a big, big marquee projects, but
Speaker 3: collectively it makes a big difference.
Speaker 2: Okay, there's still into these pre tax profits arise driven
Speaker 2: by your wealth business. Where are the biggest inflows geographically?
Speaker 3: Biggest inflows for US are everything international, so what we
Speaker 3: call international banking, a big chunk from mainland China, investing
Speaker 3: in Hong Kong, investing in Singapore to a lesser extent,
Speaker 3: and investing in Dubai. But that's happening global Indians, so
Speaker 3: that the Indian wealthy population obviously growing very quickly. Again
Speaker 3: across Dubai, Singapore, Hong Kong are three big wealth hubs
Speaker 3: in addition to Jersey.
Speaker 1: But also the rest of OSI in.
Speaker 3: I mean, the wonderful thing about our footprint is that
Speaker 3: there's a rising upper middle class. They're saving, in many
Speaker 3: cases for the first time in their families histories, and
Speaker 3: people who had some wealth before, of course are becoming
Speaker 3: wealthier as these economies grow, and it just is playing
Speaker 3: right into our strengths.
Speaker 2: I do want to come back to the China outlook,
Speaker 2: but on wealth, could you hire more wealth managers?
Speaker 1: We are hiring more wealth managers.
Speaker 3: We've had it about We've grown the number of wealth
Speaker 3: managers by about nine percent nine ten percent per year
Speaker 3: for the past three years, and we'll keep on going.
Speaker 3: We're focusing on the full spectrum, from the ultra high
Speaker 3: networth so private banking, through to our real sweet spot,
Speaker 3: which is the mass affluent, so you know, people that
Speaker 3: have material savings but aren't in the family office zone.
Speaker 3: And we're very good at it helping lift those those
Speaker 3: individuals or families out of the states that they've been
Speaker 3: in which have been typically not accumulating savings into investing
Speaker 3: substantial amounts.
Speaker 2: And you've got a target of over eighty billion dollars
Speaker 2: of net new money for twenty twenty four to twenty
Speaker 2: twenty six. Are you confident now that you're going to
Speaker 2: hit or beat that target.
Speaker 1: We're very much on track.
Speaker 3: So the guidance that we gave just just six months ago,
Speaker 3: we've already surpassed that. In terms of the early stages.
Speaker 3: It's been a good market. It's not been a perfect market,
Speaker 3: and obviously we've had challenges in some of the equity
Speaker 3: markets around the world, and so questions about how the
Speaker 3: tech sector will perform.
Speaker 1: Et cetera.
Speaker 3: But against the backdrop of a market which is i'd
Speaker 3: say neutral in terms of attractiveness, we're outperforming. So assuming
Speaker 3: the market stays neutral, I think we'll do very very well.
Speaker 3: If we have a very very difficult time in the market,
Speaker 3: it gets tough for a short period of time. But
Speaker 3: this is a long term story, and this you know,
Speaker 3: we've been growing it at nine ten percent for ten years,
Speaker 3: and we we cover that, and we'll cover that in our.
Speaker 1: Earnings presentation in just a bit. That this is a
Speaker 1: long term, secular growth story.
Speaker 3: It'll be volable from quarter to quarter, maybe even from
Speaker 3: year to year, but the trajectory is very clear and
Speaker 3: we're perfectly positioned for it.
Speaker 2: You mentioned China Hong Kong. I wonder whether you're still
Speaker 2: staying on the sidelines when it comes to Hong Kong.
Speaker 1: Mortgages, so.
Speaker 3: Tooth stories about Hong Kong mortgages versus they're very safe.
Speaker 3: We've got very low loan to value and aggregate, so
Speaker 3: we've got zero concerns. Even with a somewhat soft residential
Speaker 3: property market in Hong Kong, and it is a little
Speaker 3: bit soft, we've got no concerns about losses. But the
Speaker 3: market is extremely competitive and Hong Kong mortgages tend to
Speaker 3: be the thing that soaks up surplus deposits, and there
Speaker 3: is a surplus of deposits in Hong Kong right now,
Speaker 3: so the margins are quite are actually unattractive in Hong Kong.
Speaker 3: Our market chair has we've taken it down deliberately, but
Speaker 3: we're not concerned about that because the franchise for our
Speaker 3: customers in Hong Kong, it is still extremely strong and
Speaker 3: we're able to service any customer that looks at mortgages
Speaker 3: as part of a broader relationship. So we continue to
Speaker 3: be active, just not as active as we have been
Speaker 3: in the past.
Speaker 2: Okay, we were talking about the stock price. What do
Speaker 2: you think it's going to take for it to be
Speaker 2: properly re rated by the market.
Speaker 1: Well, that's a big question.
Speaker 3: And the first story is for us is to keep
Speaker 3: on performing. So this performance today we'll add to that momentum.
Speaker 3: It's been if you can draw a line through the
Speaker 3: interest rate.
Speaker 1: Effect of the COVID period, it's been a.
Speaker 3: Good study performance story for five years. But obviously we
Speaker 3: have to demonstrate to the market that is sustainable in
Speaker 3: this kind of a rate environment. Everyone expects rates to
Speaker 3: come down probably starting in September. That will provide or
Speaker 3: present some sort of an interest rate headwind, but we've
Speaker 3: still guided to increasing that interest income because we can
Speaker 3: think we can offset the rate effect with volume growth
Speaker 3: and with mixshifts in our portfolio.
Speaker 1: So I think, but we need to demonstrate that.
Speaker 3: Second, I think that the world will need to recognize
Speaker 3: that we're not a proxy for Chinese GDP. We are
Speaker 3: a proxy for the degree to which China opens up
Speaker 3: to some degree. We've got a super business in China.
Speaker 3: We're helping connect China to the rest of Asia, to
Speaker 3: the Middle East, Africa to the rest of the world,
Speaker 3: and vice versa. Those trade links and investment links haven't
Speaker 3: gone away. In fact, they're extremely robust. But the market
Speaker 3: still sees China as an economic weak spot and is.
Speaker 1: Concerned that that could spill over to our earnings.
Speaker 3: Empirically, we're showing it doesn't, so I'm very hopeful as
Speaker 3: we just stick to our knitting focus on those things
Speaker 3: where we really make a difference, will perform, will generate
Speaker 3: the results, share price will follow.
Speaker 2: So you're not a proxy for China GDP. You're London listed,
Speaker 2: but the business isn't predominantly about London. I do wonder
Speaker 2: whether you expect a lift to the valuation because of
Speaker 2: the boost from the lack of political uncertainty. Now, given
Speaker 2: Labor's electual.
Speaker 3: Win, well, it's certainly good to have a stable government
Speaker 3: in the UK. I think they've, as the Chancellor has
Speaker 3: made clear, they've were working through some challenges fiscal and otherwise.
Speaker 3: But certainly all of the rhetoric to this point from
Speaker 3: this Labor government has been very supportive of a stable
Speaker 3: business environment. Which is not to say that that there's
Speaker 3: going to be giveaways or handouts.
Speaker 1: There won't be.
Speaker 3: We don't expect that at all, but predictability in and
Speaker 3: of itself is a good thing. The last government passed
Speaker 3: through a competitiveness objective, a secondary objective for the regulators
Speaker 3: to focus not just on financial stability but also on
Speaker 3: creating a competitive financial sector.
Speaker 1: These things are working through the system, and.
Speaker 3: Me thankly it's a highly sophisticated regulatory environment here, stable politically,
Speaker 3: that's a good environment for us to have a headquarters.
Speaker 2: Okay, good, And just finally, Bill, you're in your tenth
Speaker 2: year now as CEO. You talk about the long term.
Speaker 2: You've said before you've got no plans of going anywhere,
Speaker 2: and I wonder whether it's your intention to see through
Speaker 2: this cost cutting and growth plan until at least their
Speaker 2: completion in twenty twenty six.
Speaker 1: Yeah, i'd like to. I'd like to, but you know,
Speaker 1: you know how these things go. You live it from
Speaker 1: day to day.
Speaker 3: But certainly all the actions I'm taking today are with
Speaker 3: a medium long term view. I've always tried to be
Speaker 3: that way. And we've got a fantastic team as Santa Charter,
Speaker 3: with a couple of new members and a couple of
Speaker 3: people that have been with us for a long time.
Speaker 3: So I'm quite sure that what we build in the
Speaker 3: coming years we can continue for some time to come.
Speaker 1: But yeah, my hope.
Speaker 3: Objective is to see if we can deliver the strategy well.
Speaker 2: I hope to be discussing your ownings with you for
Speaker 2: many years to come. Bill into CEO Sander Charted. We
Speaker 2: thank you for joining us