WEBVTT - Standard Chartered CEO Bill Winters Talks US and China, Share Price

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio News. We're joined by Bill

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<v Speaker 1>Winter's the chief executive officers Standard Charger. Bill, as always

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<v Speaker 1>your Davis regular, Thank you so much for joining us.

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<v Speaker 1>There's a lot going on. I'm sure you get stopped

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<v Speaker 1>in the corridor saying what will Trump do? What's it

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<v Speaker 1>mean for the economy? What do you answer?

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<v Speaker 2>Well, what we know so far is that the animal

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<v Speaker 2>spirits have been unleashed, so so people are looking at

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<v Speaker 2>ways so they can invest around the themes that they

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<v Speaker 2>think the US is migrating towards. No surprise in his

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<v Speaker 2>early actions so far. But the big questions on the

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<v Speaker 2>economy are where are we going to come out on dariffs,

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<v Speaker 2>and where we're going to come out in terms of

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<v Speaker 2>the engagement between the US and China and what's that

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<v Speaker 2>mean for the rest of the world. And those questions

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<v Speaker 2>are still are still doing.

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<v Speaker 1>How do you see US China playing out? Actually for

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<v Speaker 1>the banks, especially as we're expecting the swave of deregulation

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<v Speaker 1>in the US.

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<v Speaker 2>Look, I live in hope, and that the hope in

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<v Speaker 2>which we live is that there can be an on

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<v Speaker 2>to I don't think we're going to see some sort

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<v Speaker 2>of a big rough ROUCHEMMP between the US and China.

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<v Speaker 2>But I think there can be an understanding about how

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<v Speaker 2>we can cooperate together to get some really important things

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<v Speaker 2>done in the world. There's some really obvious ones, like

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<v Speaker 2>climate change, which is unlikely to be the natural point

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<v Speaker 2>of engagement between the Trump administration and China. But the

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<v Speaker 2>system for global trade is a second. And yeah, we

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<v Speaker 2>all know the world in aggregate is better off if

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<v Speaker 2>we have free and fair trade, but we also know

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<v Speaker 2>that people have been left behind. And Trump's been very

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<v Speaker 2>very straightforward in his determination to change the rules. We'll see.

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<v Speaker 1>But when you hear Donald Trump actually say Ervice's favorite

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<v Speaker 1>word in English dictionary, do you believe him at face value?

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<v Speaker 1>Or is everything a negotiating tactic and a starting point?

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<v Speaker 2>Well? I think ultimately everything is a negotiating tactic kind

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<v Speaker 2>of for everyone when you're trying to change the statusquoa.

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<v Speaker 2>And how deep is his conviction and how much does

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<v Speaker 2>he really believe things need to change and how much

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<v Speaker 2>can things change? There's a limit to how much flex

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<v Speaker 2>either side has in a negotiation. It really is an

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<v Speaker 2>open question, and I think the market is as un

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<v Speaker 2>clear on that question as has ever.

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<v Speaker 1>Been okay, how does it change how you want to

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<v Speaker 1>run the bank.

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<v Speaker 2>So we've we've run the bank for our clients as

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<v Speaker 2>a practical matter, and our clients have been diversifying their

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<v Speaker 2>supply chains for the past eight years. So obviously there

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<v Speaker 2>was the first round of Trump, although the tensions between

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<v Speaker 2>the China and the US have been going on from

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<v Speaker 2>before then. We know they carried on with Biden very

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<v Speaker 2>very strongly. So diversifying supply chains. COVID actually through a

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<v Speaker 2>different obviously through a different spanner in the works in

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<v Speaker 2>terms of security of supply. But we've also got many

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<v Speaker 2>countries around the world who have developed outstanding manufacturing bases

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<v Speaker 2>of their own. You think about a place like Vietnam

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<v Speaker 2>or or increasing the India. So that's been ongoing and

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<v Speaker 2>our job is to help them get from where they

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<v Speaker 2>are to where they're going in a seamless and effective way.

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<v Speaker 2>And I say, so far, that's that's going well.

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<v Speaker 1>So do you want to increase your presence in the

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<v Speaker 1>US be there for your clients.

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<v Speaker 2>You know, we've got a good presence in the US.

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<v Speaker 2>We've got a very good presence with our corporate clients

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<v Speaker 2>and financial institutions US. Most of whom are operating back

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<v Speaker 2>in Asian Middle East and Africa, which is which are

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<v Speaker 2>our our home markets. But you know, it's it's a

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<v Speaker 2>it's a big market in the US and lots of

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<v Speaker 2>opportunity for us to engage in terms that makes sense

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<v Speaker 2>for us and for them.

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<v Speaker 1>Your share price it's going in the in the right

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<v Speaker 1>direction direction you want it. Yes, Is this a landmark point?

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<v Speaker 2>I don't know. I'm I think we've got a lot

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<v Speaker 2>further to go. I mean, our share price has gone

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<v Speaker 2>up because we're making more money, and you know, our

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<v Speaker 2>earnings are improving. Earnings are improving because we're we've got

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<v Speaker 2>some really good strategic positioning. Everything is everything's cross border,

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<v Speaker 2>especially if there's an Asian Middle East, Africa anchor, and

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<v Speaker 2>then serving the affluent and the aspiring affluent. And this

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<v Speaker 2>is kind of what's a little bit different about our

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<v Speaker 2>our private banking and affluent banking effort is that you know,

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<v Speaker 2>if you go into into India or even into Korea

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<v Speaker 2>or Indonesia, we've got people who say, like, I'm not

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<v Speaker 2>really rich yet, but I want to be rich and

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<v Speaker 2>and and I want to find a way to manage

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<v Speaker 2>my money so that I can grow and become wealthy

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<v Speaker 2>and re hire comfortably and lead something to my children.

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<v Speaker 2>And those are the people that are attracted to center chargersion.

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<v Speaker 2>And yet we're kind of we're on top of that one.

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<v Speaker 2>It's going well.

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<v Speaker 1>So how much do you think your share price can

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<v Speaker 1>rise by?

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<v Speaker 2>I wish I could answer that question. We're trading below

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<v Speaker 2>book value. We're still trading blowbook value, which doesn't make

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<v Speaker 2>any sense to me given the returns that we're generating.

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<v Speaker 1>But you know, okay, so what's the winter's target? You

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<v Speaker 1>must have a target? And this was like you've reached

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<v Speaker 1>where you wanted it to be.

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<v Speaker 2>So far, we're return on tangible approaching thirty percent? Is

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<v Speaker 2>the actual guidance that we give in twenty twenty six.

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<v Speaker 2>You know, we'll announce our all full year earnings in

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<v Speaker 2>a few weeks, and you've seen the US banks have

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<v Speaker 2>reported they be very strong. We're participating in the same markets.

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<v Speaker 2>So I feel very good about our prospects and I

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<v Speaker 2>see that playing out for some time, and I think

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<v Speaker 2>if we make more money and if we do a

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<v Speaker 2>good job for our shareholders, our share price will vote.

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<v Speaker 1>Okay, do you have new targets that you'll announce?

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<v Speaker 2>We will announce new targets when we announce new targets.

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<v Speaker 2>But no, as you our friends, no doubt, I'll be

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<v Speaker 2>in your studio and look talking about that in February.

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<v Speaker 1>Okay, talk to me a bit about your fit for

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<v Speaker 1>Growth strategy? Right again? Are you there? Are you going

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<v Speaker 1>to do more?

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<v Speaker 2>Like?

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<v Speaker 1>What's is this mission accomplished? For? No? Ends are like

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<v Speaker 1>seventy five percent?

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<v Speaker 2>There no mission? No? So I Fit for Growth is

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<v Speaker 2>so I've been in Center Charter for ten years now.

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<v Speaker 2>For the first seven years, our expenses were basically ten

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<v Speaker 2>billion dollars. It's flat. We had to pick up a

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<v Speaker 2>round inflation, and because performance was improving, we told the

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<v Speaker 2>market we're going to cap our expenses in twenty twenty

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<v Speaker 2>six at twelve billion dollars. Right, and that's going to

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<v Speaker 2>require us to do some some ongoing productivity, which we

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<v Speaker 2>do every year. In any case, Fit for Growth is

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<v Speaker 2>a great opportunity to be a little bit more strategic

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<v Speaker 2>about it and really change the way we do business.

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<v Speaker 2>So far, so good.

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<v Speaker 1>Okay, what's one thing that you worry about in this year? Actually,

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<v Speaker 1>in the next twelve months.

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<v Speaker 2>I worry about all sorts of things. I worry about

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<v Speaker 2>the US economy overheating and getting an inflationary thrust which

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<v Speaker 2>drags everything back. We all know that a higher US

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<v Speaker 2>interst rates and wrong yost economy, meaning also a stronger dollar,

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<v Speaker 2>which is tough for emerging markets. So you know, we've

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<v Speaker 2>seen we were seeing the beginnings of meaningful capital inflow

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<v Speaker 2>back into emerging markets. That's pulled back now. So I

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<v Speaker 2>do worry about about that US economy overheating. Of course,

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<v Speaker 2>the geopolitical intentions are always are always with us. But

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<v Speaker 2>you know, I think for the moment, it's maybe because

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<v Speaker 2>we're a doubles, we can be hopeful that there's the

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<v Speaker 2>prospect of peace in the Middle East, right there's we

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<v Speaker 2>can imagine the prospect for peace in Europe, and but

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<v Speaker 2>that would require an on topped between the US and China.

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<v Speaker 2>That could also happen. So while we're fantasizing, let's let's ye.

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<v Speaker 1>But so it just it just feels like it could

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<v Speaker 1>be very volatile year on all fronts.

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<v Speaker 2>It be a very volatile year. And I think that

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<v Speaker 2>the economy is going through a transition. The US is

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<v Speaker 2>clearly at full employment, but still with a very large

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<v Speaker 2>budget deficit. So we'll see volatility and interest rates. We'll

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<v Speaker 2>see volatility and therefore in form exchange rates.

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<v Speaker 1>Is that good for banks? Is that good?

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<v Speaker 2>It's very good for us, And it's good for us

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<v Speaker 2>up until the point where it really hurts our clients.

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<v Speaker 2>Once the clients are feeling pain, of course, and we

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<v Speaker 2>feel some pain as well. And the volatility so far

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<v Speaker 2>has been okay. I think his secular increase in US

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<v Speaker 2>interest rates, or a failure to decrease, would begin to

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<v Speaker 2>really hurt clients in the US and in the rest

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<v Speaker 2>of the world.

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<v Speaker 1>A lot of banks are thinking about succession. How do

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<v Speaker 1>you think about that?

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<v Speaker 2>I think about it all the time, and thankfully I've

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<v Speaker 2>got a really good group of direct reports, you know,

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<v Speaker 2>running our corporate bank, running our retail bank. We have

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<v Speaker 2>a CFO that joined us a year ago, and any

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<v Speaker 2>of those people could run the center charter. So if

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<v Speaker 2>I fall off that edge tomorrow, the center charter will

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<v Speaker 2>be fine. We also go through the ordinary course of

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<v Speaker 2>chairman succession, and our chairman has he joined just after me,

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<v Speaker 2>so he will hit his nine year point over the

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<v Speaker 2>course of this year. Thankfully, we've got deep, a deep

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<v Speaker 2>bench on the board. We've got a deep bench in management.

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<v Speaker 2>But it's the job of the chairman and the CEO

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<v Speaker 2>to make sure that succession is provided for. I think

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<v Speaker 2>we've done a pretty job.

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<v Speaker 1>Okay, Bill, thanks so much, and you're not falling anywhere.

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<v Speaker 1>We'll make sure you get safely off the chair. With

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<v Speaker 1>all Bill wagers, of course, the chief executive standard charger