REG - Standard Chrtrd PLC - Additional Financial Information - Part 2
23/02/2024 07:00
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RNS Number : 2467E Standard Chartered PLC 23 February 2024
Standard Chartered PLC - Additional Financial information
Highlights
Standard Chartered PLC (the Group) today releases its results for the year
ended 31 December 2023. The following pages provide additional information
related to the announcement.
Table of contents
Financial statements
Independent Auditor's report 2
Consolidated income statement 17
Consolidated statement of comprehensive income 18
Consolidated balance sheet 19
Consolidated statement of changes in equity 20
Cash flow statement 21
Notes to the financial statements 22
Shareholder information 148
Page 1
Independent Auditor's Report to the members of Standard Chartered PLC
Opinion
In our opinion:
• the financial statements of Standard Chartered PLC (the 'Company' or the
'Parent Company'), its subsidiaries, interests in associates and jointly
controlled entities (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
Financial Reporting 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 financial 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 then 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 then ended; and
Consolidated statement of changes in equity for the year then ended; Related notes 1 to 40, where relevant to the financial statements, including
material accounting policy information.
Consolidated cash flow statement for the year then ended;
Related notes 1 to 40 to the financial statements, including material
accounting policy information;
Information marked as 'audited' within the Directors' remuneration report; and
Risk Review and Capital Review disclosures marked as 'audited'.
The financial reporting 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 applied in accordance with
section 408 of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the Auditor's responsibilities for the
audit of the financial statements section of our report. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Independence
We are independent of the Group and the Company in accordance with the ethical
requirements that are relevant to our audit of the financial statements in the
UK, including the FRC's Ethical Standard as applied to listed public interest
entities, and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
The non-audit services prohibited by the FRC's Ethical Standard were not
provided to the Group or the Company and we remain independent of the Group
and the Company in conducting the audit.
Page 2
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors'
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation of the directors'
assessment of the Group and Parent Company's ability to continue to adopt the
going concern basis of accounting included:
• Performing a risk assessment to identify factors that could impact the
going concern basis of accounting, including the impact of external risks such
as geopolitical risk.
• Assessing the director's going concern assessment including the Group's
forecast capital, liquidity, and leverage ratios over the period of twelve
months from 23 February 2024 to evaluate the headroom against the minimum
regulatory requirements and the risk appetite set by the directors.
• Engaging internal valuation and economic specialists to assess and
challenge the reasonableness of assumptions used to develop the forecasts in
the Corporate Plan and evaluating the accuracy of historical forecasting.
• 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.
• Engaging internal prudential regulatory specialists to assess the results
of management's stress testing, including consideration of principal and
emerging risks, on funding, liquidity, and regulatory capital.
• Reviewing correspondence with prudential regulators and authorities for
matters that may impact the going concern assessment; and
• Evaluating the going concern disclosure included in note 1 to the
financial 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 identified any material
uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the Group and Parent Company's
ability to continue as a going concern for a period of twelve months from 23
February 2024.
In relation to the Group and 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 financial
statements about whether the directors considered it appropriate to adopt the
going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to
going concern are described in the relevant sections of this report. However,
because not all future events or conditions can be predicted, this statement
is not a guarantee as to the Group and Company's ability to continue as a
going concern.
Overview of our audit approach
Audit scope • We performed an audit of the complete financial information of 10
components in 8 countries and audit procedures on specific balances for a
further 17 components in 14 countries.
• In additions to the above, the Primary Audit Team also performed
full-scope audit procedures on components related to the Group consolidation
process.
• The components where we performed full or specific audit procedures
accounted for 78% of the absolute profit before tax (PBT), 87% of absolute
operating income and 94% of Total assets.
Key audit matters • Credit impairment
• Basis of accounting and impairment assessment of China Bohai Bank
(interest in associate)
• Privileged Access Management
• Impairment of goodwill and investments in subsidiary undertakings
• Valuation of financial instruments held at fair value with higher risk
characteristics
Materiality • Overall group materiality of $274m which represents 5% of Adjusted PBT.
Page 3
An overview of the scope of the parent company and group audits
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our allocation
of performance materiality determine our audit scope for each component within
the Group. Taken together, this enables us to form an opinion on the
consolidated financial statements. We took into account the size, risk
profile, the organisation of the Group and effectiveness 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 financial
statements, and to ensure we had adequate quantitative coverage of significant
accounts in the financial statements, of the 346 reporting units of the Group,
we selected 66 reporting units which represent 27 components in 21 countries:
Bahrain, Bangladesh, Hong Kong, India, Indonesia, Japan, Jersey, Kenya,
Mainland China, Malaysia, Nigeria, Pakistan, Republic of Ireland, Republic of
Korea, Singapore, Sri Lanka, Taiwan, United Arab Emirates, United Kingdom,
United States of America, and Zambia.
The definition of a component is aligned with the structure of the Group's
consolidation system, typically these are either a branch, group of branches,
group of subsidiaries (or associates), or a subsidiary.
We took a centralised approach to auditing certain processes and controls, as
well as the substantive testing of specific balances. This included audit work
over Group's Global Business Services shared services centre (SSC),
Commercial, Corporate and Institutional Banking SSC, Credit Impairment SSC and
Technology, as well as certain other matters audited centrally by the Primary
Audit Team.
Of the 27 components selected in 21 countries, we performed an audit of the
complete financial information of 10 components ("full scope components")
which were selected based on their size or risk characteristics. For 14
components ("specific scope components") we performed audit procedures on
specific accounts within that component that we considered had the potential
for the greatest impact on the significant accounts in the Group financial
statements either because of the size of these accounts or their risk profile.
We also instructed 3 locations to perform specified procedures over certain
aspects of credit impairment risk.
Group`s Absoulute PBT Group`s Total assets Group`s Absolute Operating Income
2023 2022 2023 2022 2023 2022
Full scope components 62% 72% 87% 87% 72% 79%
Specific scope components 15% 10% 7% 8% 14% 10%
Specified procedures 1% 0% 0.10% 0% 1% 0%
Total 78% 82% 94% 95% 87% 89%
Of the remaining 280 reporting units that together represent 22% of the
Group's absolute PBT, none are individually greater than 2.3% 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 financial statement line item level,
evaluating entity level controls, performing audit procedures on the
centralised shared service centres, testing of consolidation journals and
intercompany eliminations, inquiring with selected overseas EY teams on the
outcome of prior year local statutory audits (where audited by EY) to identify
any potential risks of material misstatement to the Group financial
statements.
The charts below illustrate the coverage obtained from the work performed by
our audit teams.
Changes from the prior year
We assessed our 2023 audit scope with consideration of history or expectation
of unusual or complex transactions and potential for material misstatements.
We also kept our audit scope under review throughout the year.
Three components in Cameroon, Republic of Ireland, and South Africa, which
were included in prior year audit scope and assigned specific scope, were
excluded from the Group audit scope in the current year based on our updated
risk assessment. These components represent individually no more than 0.1% of
Group absolute PBT, 0.4% of the Group's absolute operating income and 0.3% 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.
Page 4
For Germany, Australia, Ghana and Cameroon, the Primary Audit Team performed
certain procedures centrally over the cash balances as at 31 December 2023.
Taiwan, Malaysia, Indonesia, Pakistan and Kenya were full scope components in
the prior year but were designated as specific scope components in the current
year based on our updated risk assessment.
In 2023, we assigned a specific scope to Bahrain and United Kingdom (Jersey)
components that are significant based on risk, and specified procedures to
Taiwan (Taipei Branch). These components were not in-scope in the prior year.
Involvement with component teams
In establishing our overall approach to the Group audit, 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 instruction. All of the direct
components of the Group (full, specific or specified procedures) were audited
by EY global network firms. There were two non-EY component teams auditing a
single component in a single location, which were instructed by a direct
component of the Group.
Of the 10 full scope components, audit procedures were performed on 3 of these
(including the audit of the Company) directly by the Primary Audit Team (EY
London) in the United Kingdom. For 1 specific scope component, the audit
procedures were performed by the Primary Audit Team. Where components were
audited by the Primary Audit Team, this was under the direction and
supervision of the Senior Statutory Auditor. For the 23 remaining components,
where the work was performed by component auditors, we determined the
appropriate level of involvement to enable us to determine that sufficient
audit evidence had been obtained as a basis for our opinion on the Group as a
whole.
In addition to the above, the Primary audit Team also performed full-scope
audit procedures on components related to the Group consolidation process.
In addition, the Group has centralised processes and controls over key areas
in its shared service centres. Members of the Primary Audit Team undertook
direct oversight, review and coordination of our shared service centre audits.
The Primary Audit Team continued to follow a programme of planned visits to
component teams and shared service centres. During the current year's audit
cycle, visits were undertaken by the Primary Audit Team to the component teams
in the following locations:
• Bangladesh
• Hong Kong
• India (including the shared services centre)
• Indonesia
• Mainland China
• Malaysia (including the shared services centre)
• Pakistan
• Republic of Korea
• Singapore (including the shared services centre)
• United Arab Emirates
• United States of America
These visits typically involved oversight of work undertaken at those
locations, discussion of the audit approach and any issues arising from their
work, meeting with local management, and reviewing relevant audit working
papers on key risk areas.
In addition to the site visits, the Primary 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 direction of the audit
process.
The Primary Audit Team also undertook video conference meetings with component
and SSC audit teams and management. These virtual meetings involved discussing
the audit approach and any issues arising from their 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 opinion on the Group and Company financial
statements.
Page 5
Climate change
Stakeholders are increasingly interested in how climate change will impact the
economy, including the banking sector, and further how this may consequently
impact the valuation of assets and liabilities held on bank balance sheets.
The Group manages climate risk according to the characteristics of the
impacted risk types and is embedding climate-risk considerations into relevant
frameworks, including principal risk type frameworks, and processes. The
assessment of the risk is explained in the "Risk review: Climate Risk" section
and in the "Sustainability review" section of the Annual Report, where the
group has also explained their climate commitments.
All of these disclosures form part of the "Other information," rather than the
audited financial statements. Our procedures on these unaudited disclosures
therefore consisted solely of considering whether they are materially
inconsistent with the financial statements or our knowledge obtained in the
course of the audit or otherwise appear to be materially misstated, in line
with our responsibilities on "Other information".
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 financial statements.
The Group has explained in the "Sustainability review" section of the Annual
Report how they have reflected the impact of climate change in their financial
statements, including how this aligns with their commitment to the aspirations
of the Paris Agreement to achieve net zero emissions by 2050. Significant
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 significant accounting estimate and judgement through
the uncertainty of future events and the impact of that uncertainty on the
Group's assets and liabilities. The Group has concluded that whilst it is not
currently quantitatively material, it considers climate to be qualitatively
material.
Our audit effort in considering the impact of climate change on the Financial
statements was focused on evaluating whether management's assessment of the
impact of climate risk, physical and transition, their climate commitments,
and the significant judgements and estimates disclosed in note 1 have been
appropriately reflected in the valuation of assets and liabilities, where
these can be reliably measured, following the currently effective requirements
of UK adopted IAS and EU IFRS. This was in the context of the Group's process
being limited, given that this is an emerging area, as a result of limitations
in the data available and the availability of sophisticated models, and as the
Group considers how it further embeds its climate ambitions into the planning
process.
As part of this evaluation, we performed our own risk assessment, supported by
our climate change internal specialists, to determine the risks of material
misstatement in the financial statements from climate change which needed to
be considered in our audit.
We also challenged the Directors' considerations of climate change risks in
their assessment of going concern and viability, and the associated
disclosures. Where considerations of climate 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
financial statements to impact the key audit matter of Credit Impairment.
Details of our procedures and findings 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 significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) that we identified. These matters
included those which had the greatest effect on: the overall audit strategy,
the allocation of resources in the audit; and directing the efforts of the
engagement team. These matters were addressed in the context of our audit of
the financial statements as a whole, and in our opinion thereon, and we do not
provide a separate opinion on these matters.
Page 6
Risk Our response to the risk Key observations communicated
to the Audit Committee
1. Credit Impairment We evaluated the design of controls relevant to the Group's systems and We highlighted the following matters to the Audit Committee:
processes over material ECL balances, including the judgements and estimates
Refer to the Audit Committee Report; Accounting policies; Note 8 of the noted, involving EY specialists to assist us in performing our procedures • We increased the extent of our reliance of controls over model
financial statements; and relevant credit risk disclosures where relevant. Based on our evaluation we selected the controls upon which we governance and stage 3 exposures in certain locations;
intended to rely and tested those for operating effectiveness. We increased
At 31 December 2023, the Group reported total credit impairment balance sheet the extent of our reliance on controls over model governance and in certain • Our evaluation of the appropriateness of the significant increase in
provision of $5,601 million (2022: $6,075 million). locations of the stage 3 exposures. credit risk triggers, and the results of our sensitivity analysis and
recalculation of the staging
Management's judgements and estimates are highly subjective as a result of the We performed an overall stand-back assessment of the ECL allowance in total
significant uncertainty associated with the estimation of expected future and by stage to determine if the ECL was reasonable. We considered the overall • Our assessment of the assumptions used to determine the Stage 3 ECL with
credit losses that are dependent upon several hard to estimate factors. credit quality of the Group's portfolios, risk profile, the impact of a focus on sponsor and developers exposed to China Commercial Real Estate and
Assumptions with increased complexity in respect of the timing and measurement sovereign downgrades and challenges facing the China Commercial Real Estate the appropriateness of the management overlay applied to the sector's modelled
of expected credit losses (ECL) include: sector. We performed peer benchmarking to the extent that this was considered ECL;
relevant and investigated and sought explanations for any areas noted as being
• Staging - the determination of what constitutes significant increase in outliers. Our assessment also included the evaluation of the macroeconomic • Our assessment of the completeness and measurement of post model
credit risk and consequent timely allocation of qualifying assets to the environment by considering trends in the economies and countries to which the adjustments and overlays
appropriate stage in accordance with IFRS 9; Group is exposed.
• Our assessment of the quantum of the non-linearity adjustment produced
• Model output and adjustments - Accounting interpretations, modelling Staging - We evaluated the criteria used to determine significant increase in by the Monte Carlo model including the comparison to the non-linearity
assumptions and data used to build and run the models that calculate the ECL, credit risk including quantitative backstops with the resultant allocation of produced by running narrative discrete scenarios.
including the appropriateness, completeness and valuation of post-model financial assets to stage 1, 2 or 3 in accordance with IFRS 9. We reperformed
adjustments applied to model output to address identified model deficiencies the staging distribution for a sample of financial assets and assessed the • Our assessment of the appropriateness of the Group's models to generate
or risks not fully captured by the models; reasonableness of staging downgrades applied by management. the ECL and staging outcomes including the appropriateness and validity of the
data used in the models and to generate the staging and consequent ECL.
• Economic scenarios - Significant judgements involved in the To test the completeness of the identification of significant increase in
determination of the appropriateness of economic variables, the future credit risk, we challenged the risk ratings (including appropriate operation • Our evaluation of management's enhanced modelling approach to the
forecasting of these variables and the parameters used in the Monte Carlo of quantitative backstops) for a sample of performing accounts and other assessment of the potential impact on ECL from climate change;
Simulation. The assessment of non-linearity produced by the Monte Carlo accounts exhibiting risk characteristics such as financial difficulties,
simulation, the benchmarking of the output and the evaluation of the need for deferment of payment, late payment and watchlist. We also considered whether We concluded that management's methodology, judgements and assumptions used in
any Post Model adjustments; vulnerable and cyclical sectors (as defined in the annual report) resulted in calculating credit impairment are materially in accordance with the accounting
a significant increase in credit risk at a sector level. standard.
• Management overlays - Appropriateness, completeness and valuation of
risk event overlays to capture risks not identified by the credit impairment
models, including the consideration of the risk of management override; and
• Individually assessed ECL allowances - Measurement of individual
provisions including the assessment of probability weighted recovery
scenarios, exit strategies, collateral valuations, expected future cashflows
and the timing of these cashflows.
Page 7
Risk Our response to the risk Key observations communicated
to the Audit Committee
1. Credit Impairment continued Modelled output and adjustments - We performed a risk assessment on models
involved in the ECL calculation using EY independently determined quantitative
In 2023, the most material factors impacting the ECL were in relation to the and qualitative criteria to select a sample of models to test. Based on this
China Commercial Real Estate (CRE) portfolio, sovereign downgrades impacted by risk assessment, we engaged our modelling specialists to evaluate a sample of
dollar availability, the continuing impact of higher interest rates and ECL models by assessing the reasonableness of underpinning assumptions, inputs
inflation and geopolitical uncertainty. In addition, where relevant we and formulae used. This included a combination of assessing the
considered the impact of climate on the impairment provisions. Overall, these appropriateness of model design, formulae and algorithms, alternative
factors were prevalent in the prior year, and consequently the risk of a modelling techniques and recalculating the Probability of Default, Loss Given
material misstatement to the ECL remained consistent with that of the prior Default and Exposure at Default parameters. Together with our modelling
year. specialists, 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 deficiencies. 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, including code review
and implementation testing.
We did not rely on controls over model monitoring and therefore adopted a
substantive approach comprising reperformance of model monitoring procedures
for models classified as higher 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, including, 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.
Economic scenarios -In collaboration with our economists and modelling
specialists, we challenged the completeness and appropriateness of the
macroeconomic variables used as inputs to the ECL models.
Additionally, we involved our economic specialists to assist 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 simulation.
Page 8
Risk Our response to the risk Key observations communicated
to the Audit Committee
1. Credit Impairment continued We assessed the reasonableness of the non-linearity impact on ECL allowances.
We engaged our economists and modelling specialists, to assess and challenge
the Group's choice of discrete scenarios to benchmark the output from the
Monte Carlo model and determine the sensitivity analysis as set out 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-linearity up-lift and
overall ECL charge and provision 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 China Commercial Real Estate, sovereign risks and the sustained impact of
higher interest rates and inflation. Our procedures included assessing the
need for management overlays, evaluating the assumptions and judgments used to
determine each overlay taking current market conditions into account. We
computed a range of EY independently determined outcomes for the China
Commercial Real Estate overlays.
Individually assessed ECL allowances - Our procedures included challenging
management's forward-looking economic assumptions of the recovery outcomes
identified, cashflow profile and timing, individual probability weightings for
each scenario, and recalculating a sample of individually assessed provisions.
We also engaged our valuation specialists to test the value of the collateral
used in management's calculations. Our sample was based on quantitative
thresholds and qualitative factors, including exposure to vulnerable sectors.
We have independently assessed all material China CRE developers in Stage 3
including challenging the plausibility of the applied scenarios, the
corresponding weights assigned to work out scenarios and engaging local EY
Real Estate specialists to validate the collateral values. We also considered
whether planned exit strategies were viable.
Page 9
Risk Our response to the risk Key observations communicated
to the Audit Committee
2. Basis of accounting and impairment assessment of China Bohai Bank (Interest Basis of accounting On the basis of the evidence, we
in Associate)
We evaluated the facts and circumstances that the Group presented to concluded that the Group continues to maintain significant influence over
Refer to the Audit Committee Report; Accounting policies; and Note 32 of the demonstrate that it exercises significant influence over China Bohai Bank, China Bohai Bank as at 31 December 2023.
financial statements through Board representation, membership of Board Committees and the sharing
of industry and technical advice. We concluded that the Interest in
Interest in Associate - China Bohai Bank $700 million (2022: $1,421million)
Impairment testing Associate -China Bohai Bank
Other impairment - China Bohai Bank - $850 million (2022: $308 million).
The Group impaired the value of the investment in China Bohai Bank by $850 balance was not materially
At 31 December 2023, the Group's share of China million in 2023 (2022: $308 million). This brings the cumulative impairment
recorded in relation to the Group's investment in China Bohai Bank to $1,458 misstated as at 31 December 2023.
Bohai Bank's market capitalisation was $282m million as at 31 December 2023.
Management's carrying value for
lower than the carrying value of $700m. We assessed the appropriateness of the Group's VIU methodology for testing the
impairment of the investment in China Bohai Bank for compliance with the the investment in Bohai of $700
We focused on judgements and estimates, including the appropriateness of the accounting standards. We tested the mathematical accuracy of the VIU model and
equity accounting treatment under IAS 28 and the assessment of whether the engaged our valuation and modelling specialists to support the audit team in million is within EY`s independent
investment was impaired. calculating an independent range for the VIU .
range.
Basis of accounting We performed audit procedures to assess the reasonableness of the Group's
forecast of the future cashflows relating to Bohai, by evaluating management's We concluded that the disclosures
The Group holds a 16.26% stake in China Bohai Bank and equity accounts for the assessment, benchmarking the forecasts to broker reports published for
investment as an associate, on the grounds that the Group is able to exercise comparable companies and challenging management with regard to the relevance in the annual report appropriately
significant influence over China Bohai Bank. and reliability of historical data, including an evaluation of the public
disclosures by Bohai. reflect the sensitivity of the
IAS 28 states that if the entity holds, directly or indirectly, less than 20%
of the voting power of the investee, it is presumed that the entity does not We assessed the appropriateness of disclosures in the annual report in carrying value to reasonably
have significant influence, unless such influence can be clearly demonstrated. relation to the impact of reasonably possible changes in key assumptions on
the carrying value of the investment in China Bohai Bank. possible changes in key assumptions in the valuation of the investment in
There is a risk that the equity accounting treatment may not be appropriate, China Bohai Bank.
if the Group cannot demonstrate that it exerts significant influence over
China Bohai Bank.
Impairment testing
At 31 December 2023, China Bohai Bank's market capitalisation was
significantly lower than the carrying value of the investment. In addition,
the financial performance of China Bohai Bank deteriorated during 2023. These
matters are indicators of impairment.
Impairment of the investment in China Bohai Bank is determined by comparing
the carrying value to the value-in-use (VIU). The VIU is modelled by reference
to future cashflow forecasts (forecast profit, including a haircut for
regulatory capital), discount rate and macroeconomic assumptions such as
long-term growth rates.
The assumptions underpinning management's assessment of China Bohai Bank's VIU
are subject to estimation uncertainty and consequently, there is a risk that
if the judgements and assumptions are inappropriate, the investment in China
Bohai Bank may be misstated.
The risk of the impairment has increased in the current year in the context of
economic headwinds in Mainland China impacting the banking sector, as well as
Bohai's deteriorating financial performance.
The risk in respect of significant influence has not changed compared to the
prior year.
Page 10
Risk Our response to the risk Key observations communicated
to the Audit Committee
3. Impairment assessment of goodwill and investments in subsidiary We obtained an understanding of management's process and evaluated the design We concluded that the goodwill balance as at 31 December 2023 and the related
undertakings of controls. Our audit strategy was fully substantive. disclosures, are not materially misstated.
a) Impairment of Goodwill: Accounting policies; and Note 17 of the financial We assessed the appropriateness of the Group's methodology for testing the We concluded that the disclosures in the annual report appropriately reflect
statements. Refer to Audit Committee Report. impairment of goodwill and investments in subsidiary undertakings for the sensitivity of the carrying value of goodwill to reasonably possible
compliance with accounting standards. changes in key assumptions, noting that these downside scenarios could
b) Impairment of investments in subsidiary
necessitate an adjustment to the carrying amount of goodwill in future.
For goodwill, we assessed the appropriateness of the cash generating units
undertakings: Accounting policies; and Note 32 of the financial statements. identified by management. We also concluded that the investments in subsidiary undertakings balance
Refer to the Audit Committee Report.
reported in the Parent Company financial statements and the associated
We agreed the inputs in the VIU model to their source and tested the disclosures, are not materially misstated as at 31 December 2023.
At 31 December 2023, the Group reported a mathematical accuracy of the VIU model. We engaged EY specialists to support
the audit team in assessing reasonableness of the regulatory haircut
goodwill balance of $2,429 million (2022: $2,471 adjustment to future profitability forecasts and calculating an independent
range for assumptions underlying the VIU calculations, such as the discount
million). During the year no impairment was rate and long-term growth rate for each cash generating unit.
recognised for goodwill (2022: $14million). In the We also reconciled the future profitability forecasts of each CGU to the
Group's approved Corporate Plan ('the Plan'). We engaged our specialist team
Parent Company financial statements, the to determine the reasonableness of the forward macroeconomic inputs used in
the Plan.
investment in subsidiary undertakings balance
We performed audit procedures to assess the reasonableness of the forecasts by
was $60,791 million (2022: $60,975 million). understanding the Group Strategy, challenging key assumptions underpinning the
Plan, assessing the feasibility of management actions necessary to achieve the
On an annual basis, management is required to Plan and testing the reliability of the Group's historical forecasting by
comparing with the actual performance.
perform an impairment assessment for goodwill,
We performed a stand back assessment to evaluate the appropriateness of the
and to assess for indicators of impairment in audit evidence obtained and our conclusion in relation to these estimates.
respect of investments in subsidiary undertakings. Where indicators of We agreed the NAV of the subsidiaries to their carrying value to confirm
impairment are identified, the recoverable amount of the investment should be impairment or reversal of impairment recognised in the Parent`s Company
estimated. financial results.
The impairment assessment of goodwill is We assessed the appropriateness of disclosures for impairment of goodwill and
investments in subsidiary undertakings in accordance with IAS 36.
performed by calculating a value in use ('VIU') as
the recoverable amount of the related cash
generating unit ('CGU').
The Group identified indicators of impairment of
investments in subsidiary undertakings, including
macroeconomic and geopolitical factors which
have an impact on the financial position and
performance of the subsidiaries.
In assessing for indicators of impairment, among
other procedures, management compares the
Net Asset Value ('NAV') of the subsidiary to the
carrying value of each direct subsidiary of the
Parent Company. Where the net assets do not
support the carrying value, the recoverable
amount is estimated by determining the higher
of 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 including 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 underpinning the
impairment assessments are inappropriate, then the goodwill and investments in
subsidiaries balances may be misstated.
The level of risk remains consistent with the prior year.
Page 11
Risk Our response to the risk Key observations communicated
to the Audit Committee
4. Valuation of financial instruments held at fair value with higher risk We evaluated the design and operating effectiveness of controls relating to We concluded that assumptions
characteristics the valuation of financial instruments, including independent price
verification, model validation and approval, fair value adjustments, income used by management to estimate
Refer to the Audit Committee Report; Accounting policies; and Note 13 of the statement analysis and reporting.
financial statements.
the fair value of financial instruments with higher risk characteristics and
Among other procedures, we engaged our valuation specialists to assist the the recognition of related income were reasonable. We highlighted the
At 31 December 2023, the Group reported financial assets measured at fair audit team in performing the following testing on a risk-assessed sample
value of $301,976 million (2022: $282,263 million), and financial liabilities basis: following matters to the Audit
at fair value of $139,157 million (2022: $149,765 million), of which financial
assets of $6,714 million (2022: $5,865 million) and financial liabilities of • Test complex model-dependent valuations by independently revaluing Level Committee:
$2,960 million (2022: $1,878 million) are classified as Level 3 in the fair 3 and complex Level 2 derivative financial instruments and debt securities in
value hierarchy. issue, in order to assess the appropriateness of models and the adequacy of • We did not identify material differences arising from our independent
assumptions and inputs used by the Group; testing of complex model-dependent valuations;
The fair value of financial instruments with higher risk characteristics
involves the use of management judgement in the selection of valuation models • Test valuations of other financial instruments with higher estimation • Fair values of derivative transactions, debt securities in issue, unlisted
and techniques, pricing inputs and assumptions and fair value adjustments. uncertainty, such as unlisted equity investments, Level 3 loans at fair value, equity investments, Level 3 loans, Level 3 debt and other financial
Level 3 debt and other financial instruments. We compared management's
A higher level of estimation uncertainty is involved for financial instruments valuation to our own independently developed range, where appropriate; instruments valued using pricing
valued using complex models, pricing inputs that have limited observability,
and fair value adjustments, including the Credit Valuation Adjustment, Funding • Assessed the appropriateness of pricing inputs as part of the information with limited observability were not materially misstated as at 31
Valuation Adjustment, Debit Valuation Adjustment and Own Credit Adjustment. Independent Price Verification process; and December 2023, based on the
We considered the following portfolios presented a higher level of estimation • Compared the methodology used for fair value adjustments to current output of our independent
uncertainty: market practice. We revalued a sample of valuation adjustments, compared
funding and credit spreads to third party data and challenged the basis for calculations; and
• Level 3 derivatives and debt securities in issue and a portfolio of determining illiquid credit spreads.
Level 2 financial instruments whose valuation involves the use of complex
• Valuation adjustments in respect of credit, funding, own credit and other
models, and Where differences between our independent valuation and management's valuation risks applied to derivative portfolios and debt securities in issue were
were outside our thresholds, we performed additional testing to assess the appropriate, based on our analysis of market data and benchmarking of pricing
• Unlisted equity investments, loans at fair value, debt and other impact on the valuation of financial instruments. information.
financial instruments classified in Level 3 with unobservable pricing inputs.
Throughout our audit procedures we considered the continuing uncertainty
The level of risk remains consistent with the prior year. arising from the current macroeconomic environment. In addition, we assessed
whether there were any indicators of aggregate bias in financial instrument
marking and methodology assumptions.
5. Privileged Access Management We evaluated the results of management's remediation program and risk We communicated the results of
assessment for applications in our audit scope.
IT General Controls (ITGCs) support the continuous operation of the automated
our audit procedures to the Audit
and other IT dependent controls within the business processes related to We also tested IT controls (including IT compensating controls) where
financial reporting. Effective IT general controls are needed to ensure that possible, and also performed additional IT substantive procedures to assess Committee throughout the audit,
IT applications process business data as expected and that changes are made in the impact of risks associated with the reported deficiencies, on the
an appropriate manner. financial statements. in respect of the effectiveness of
During the 2020, 2021 and 2022 audits, a number of significant infrastructure We assessed the impact of the results of the above on our audit procedures privileged access management
privileged access management control deficiencies were identified by us. over the financial statements for the year ended 31 December 2023.
Similar deficiencies were identified by Group Internal Audit (GIA) and the controls and explained the results
predecessor auditor in 2018 and 2019.
of the additional audit procedures
The possibility of users gaining access privileges beyond those necessary to
perform their assigned duties may result in breaches in segregation of duties, performed and noted an overall
including inappropriate manual intervention, unauthorised changes to systems
or programmes. improvement in the control
The risk has decreased in comparison to prior year due to management's environment during the course of
remediation program.
the year.
As a result of the procedures
performed, we have reduced the
risk that our audit has not
identified a material error in the
financial statements, related to
infrastructure privileged access
management, to an appropriate
level.
The key audit matters remain consistent from prior year.
Page 12
Our application of materiality
We apply the concept of materiality in planning and performing the audit, in
evaluating the effect of identified misstatements on the audit and in forming
our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually or in the
aggregate, could reasonably be expected to influence the economic decisions of
the users of the financial statements. Materiality provides a basis for
determining the nature and extent of our audit procedures.
We determined materiality for the Group to be $2674 million (2022: $234
million), which is 5% (2022: 5%) of adjusted PBT. This reflects actual PBT
adjusted for non-recurring items relating to restructuring costs and the
impairment of China Bohai Bank. We believe that adjusted PBT provides us with
most appropriate measure for the users of the financial statements, given the
Group is profit making, it is consistent with the wider industry, it is the
standard for listed and regulated entities and we believe it reflects the most
relevant measure for users of the financial statements. We also believe that
the adjustments are appropriate as they relate to material non-recurring
items.
During our audit, we performed a reassessment of our initial materiality. This
assessment resulted in higher final materiality calculated based on the actual
financial performance of the Group for the year. There were no changes to the
basis for materiality calculation from the planning stage.
We determined materiality for the Parent Company to be $247 million (2022:
$210 million), which is 0.5% (2022: 0.4%) of the equity of the Parent Company.
We believe that equity provides us with the most appropriate measure for the
users of the Parent Company's financial statements, given that the Parent
Company is primarily a holding company.
Performance materiality
The application of materiality at the individual account or balance level. It
is set at an amount to reduce to an appropriately low level the probability
that the aggregate of uncorrected and undetected misstatements exceeds
materiality.
On the basis of our risk assessment, together with our evaluation of the
Group's overall control environment, our judgement was that performance
materiality was 50% (2022: 50%) of our planning materiality, namely $137m
(2022: $117m). We have set performance materiality at this percentage based on
a variety of risk assessment factors such as the expectation of misstatements,
internal control environment considerations and other factors such as the
global complexity of the Group.
Audit work at component locations for the purpose of obtaining audit coverage
over significant financial statement accounts is undertaken based on a
percentage of total performance materiality. The performance materiality 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 materiality allocated
to components was $11.4 million to $26.2 million (2022: $8.8 million to $34.1
million).
Reporting threshold
An amount below which identified misstatements are considered as being clearly
trivial.
We agreed with the Audit Committee that we would report to them all
uncorrected audit differences in excess of $14 million (2022: $11 million),
which is set at 5% of planning materiality, as well as differences below that
threshold that, in our view, warranted reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the quantitative
measures of materiality discussed above and in light of other relevant
qualitative considerations in forming our opinion.
Other information
The other information comprises the information included in the Annual Report
and Accounts, including: the Strategic Report, Sustainability Review,
Directors' Report (other than those sections of the Directors Remuneration
Report marked as audited), Risk Review and Capital Review (other than those
sections marked as audited) and Supplementary Information, other than the
financial statements and our auditor's report thereon. The directors are
responsible for the other information contained within the annual report.
Page 13
Our opinion on the financial statements does not cover the other information
and, except to the extent otherwise explicitly stated in this report, we do
not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the course of the audit, or otherwise
appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to
determine whether this gives rise to a material misstatement in the financial
statements themselves. If, based on the work we have performed, we conclude
that there is a material misstatement of the other information, we are
required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, the part of the directors' remuneration report to be audited
has been properly prepared in accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the strategic report and the directors' report
for the financial year for which the financial statements are prepared is
consistent with the financial 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
identified material 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 opinion:
• adequate accounting records have not been kept by the Parent Company, or
returns adequate for our audit have not been received from branches not
visited by us; or
• the Parent Company financial statements and the part of the Directors'
Remuneration Report to be audited are not in agreement with the accounting
records and returns; or
• certain disclosures of directors' remuneration specified by law are not
made; or
• we have not received all the information and explanations we require for
our audit.
Corporate Governance Statement
We have reviewed the directors' statement in relation to going concern,
longer-term viability and that part of the Corporate Governance Statement
relating to the Group and Company's compliance with the provisions of the UK
Corporate Governance Code specified for our review by the Listing Rules.
Based on the work undertaken as part of our audit, we have concluded that each
of the following elements of the Corporate Governance Statement is materially
consistent with the financial statements or our knowledge obtained during the
audit:
• Directors' statement with regards to the appropriateness of adopting the
going concern basis of accounting and any material uncertainties identified;
• Directors' explanation as to its assessment of the Company's prospects,
the period this assessment covers and why the period is appropriate;
• Director's statement on whether it has a reasonable expectation that the
Group will be able to continue in operation and meets its liabilities;
• Directors' statement on fair, balanced and understandable;
• Board's confirmation that it has carried out a robust assessment of the
emerging and principal risks;
Page 14
• The section of the annual report that describes the review of
effectiveness of risk management and internal control systems; and
• The section describing the work of the audit committee.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the
directors are responsible for the preparation of the financial statements and
for being satisfied that they give a true and fair view, and for such internal
control as the directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are responsible for
assessing the Group and Parent Company's ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the directors either intend to
liquidate the Group or the Parent Company or to cease operations, or have no
realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor's report that includes our opinion.
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, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
Explanation as to what extent the audit was considered capable of detecting
irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and
regulations. We design procedures in line with our responsibilities, outlined
above, to detect irregularities, including fraud. The risk 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 intentional misrepresentations, or through collusion. The
extent to which our procedures are capable of detecting irregularities,
including fraud is detailed below.
However, the primary responsibility 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 significant are those
that relate to the reporting framework (UK-adopted IAS and EU IFRS, the
Companies Act 2006 and the UK Corporate Governance Code, the Financial Conduct
Authority (FCA) Listing Rules, the Main Board Listing Rules of the Hong Kong
Stock Exchange), regulations and supervisory requirements of the Prudential
Regulation Authority (PRA), FRC, FCA and other overseas regulatory
requirements, including but not limited to regulations in its major markets
such as Mainland China, Hong Kong, Republic of Korea, India, Singapore, the
United Arab Emirates, the United States of America, and the relevant tax
compliance regulations in the jurisdictions in which the Group operates. In
addition, we concluded that there are certain significant laws and regulations
that may have an effect on the determination of the amounts and disclosures in
the financial statements and those laws and regulations relating to regulatory
capital and liquidity, conduct, financial crime including anti-money
laundering, sanctions and market abuse recognising the financial and
regulated nature of the Group's activities.
• We understood how the Group is complying with those frameworks by
performing a combination of inquiries of senior management and those charged
with governance as required by auditing standards, review of board and certain
committee meeting minutes, gaining an understanding of the Group's approach to
governance, inspection of regulatory correspondence in the year and engaging
with internal and external legal counsel. We also engaged EY financial crime
and forensics specialists to perform procedures on areas relating to
anti-money laundering, whistleblowing, and sanctions compliance. Through these
procedures, we became aware of actual or suspected non-compliance. The
identified actual or suspected non-compliance was not sufficiently
significant to our audit that it would have resulted in it being identified
as a key audit matter.
• We assessed the susceptibility of the Group's financial statements to
material misstatement, including how fraud might occur by considering the
controls that the Group has established to address risks identified by the
entity, or that otherwise seek to prevent, deter or detect fraud. Our
procedures to address the risks identified also included incorporation of
unpredictability into the nature, timing and/or extent of our testing,
challenging assumptions and judgements made by management in their significant
accounting estimates and journal entry testing.
Page 15
• Based on this understanding, we designed our audit procedures to identify
non-compliance with such laws and regulations. Our procedures involved
inquiries 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, including journal entry testing. We also
performed inspection of key regulatory correspondence from the principal
regulatory authorities as well as review 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 communicated by management to the Group audit engagement team and
component teams (where applicable) who performed audit procedures such as
inquiries with management, sending confirmations to external legal counsel,
substantive testing and meeting with regulators. Where appropriate, we
involved specialists 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 activities. 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 capabilities, which included the use of specialists where
appropriate.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council's website at
https://www.frc.org.uk/auditorsresponsibilities. This description forms part
of our auditor's report.
Other matters we are required to address
• Following the recommendation from the Audit Committee, we were
re-appointed by the Company at the Annual General Meeting on 3 May 2023 to
audit the financial statements for the year ending 31 December 2023 and
subsequent financial periods.
• The period of total uninterrupted engagement is four years, covering the
years ended 31 December 2020 to 31 December 2023.
• The audit opinion is consistent with the additional report to the Audit
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
responsibility to anyone other than the Company and the Company's members as a
body, for our audit work, for this report, or for the opinions we have formed.
David Canning-Jones (Senior statutory auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
London
23 February 2024
Page 16
Consolidated income statement
For the year ended 31 December 2023
Notes 2023 2022
$million
$million
Interest income 27,227 15,252
Interest expense (19,458) (7,659)
Net interest income 3 7,769 7,593
Fees and commission income 4,067 3,972
Fees and commission expense (815) (859)
Net fee and commission income 4 3,252 3,113
Net trading income 5 6,292 5,310
Other operating income 6 706 302
Operating income 18,019 16,318
Staff costs (8,256) (7,618)
Premises costs (422) (401)
General administrative expenses (1,802) (1,708)
Depreciation and amortisation (1,071) (1,186)
Operating expenses 7 (11,551) (10,913)
Operating profit before impairment losses and taxation 6,468 5,405
Credit impairment 8 (508) (836)
Goodwill, property, plant and equipment and other impairment 9 (1,008) (439)
Profit from associates and joint ventures 32 141 156
Profit before taxation 5,093 4,286
Taxation 10 (1,631) (1,384)
Profit for the year 3,462 2,902
Profit attributable to:
Non-controlling interests 29 (7) (46)
Parent company shareholders 3,469 2,948
Profit for the year 3,462 2,902
cents cents
Earnings per share:
Basic earnings per ordinary share 12 108.6 85.9
Diluted earnings per ordinary share 12 106.2 84.3
The notes form an integral part of these financial statements.
Page 17
Consolidated statement of comprehensive income
For the year ended 31 December 2023
Notes 2023 2022
$million
$million
Profit for the year 3,462 2,902
Other comprehensive income:
Items that will not be reclassified to income statement: 239 (75)
Own credit gains/(losses) on financial liabilities designated at fair value 212 (56)
through
profit or loss
Equity instruments at fair value through other comprehensive income 181 (75)
Actuarial (losses)/gains on retirement benefit obligations 30 (47) 41
Taxation relating to components of other comprehensive income 10 (107) 15
Items that may be reclassified subsequently to income statement: 562 (3,703)
Exchange differences on translation of foreign operations:
Net loss taken to equity (734) (2,466)
Net gains on net investment hedges 14 215 512
Share of other comprehensive loss from associates and joint ventures 32 (7) (79)
Debt instruments at fair value through other comprehensive income:
Net valuation gain/(loss) taken to equity 383 (1,528)
Reclassified to income statement 6 115 207
Net impact of expected credit losses (48) 118
Cash flow hedges:
Net movements in cash flow hedge reserve 14 767 (619)
Taxation relating to components of other comprehensive income 10 (129) 152
Other comprehensive income/(loss) for the year, net of taxation 801 (3,778)
Total comprehensive income/(loss) for the year 4,263 (876)
Total comprehensive income/(loss) attributable to:
Non-controlling interests 29 (38) (88)
Parent company shareholders 4,301 (788)
Total comprehensive income/(loss) for the year 4,263 (876)
Page 18
Consolidated balance sheet
As at 31 December 2023
Notes 2023 2022
$million
$million
Assets
Cash and balances at central banks 13,35 69,905 58,263
Financial assets held at fair value through profit or loss 13 147,222 105,812
Derivative financial instruments 13,14 50,434 63,717
Loans and advances to banks 13,15 44,977 39,519
Loans and advances to customers 13,15 286,975 310,647
Investment securities 13 161,255 172,448
Other assets 20 47,594 50,383
Current tax assets 10 484 503
Prepayments and accrued income 3,033 3,149
Interests in associates and joint ventures 32 966 1,631
Goodwill and intangible assets 17 6,214 5,869
Property, plant and equipment 18 2,274 5,522
Deferred tax assets 10 702 834
Assets classified as held for sale 21 809 1,625
Total assets 822,844 819,922
Liabilities
Deposits by banks 13 28,030 28,789
Customer accounts 13 469,418 461,677
Repurchase agreements and other similar secured borrowing 13,16 12,258 2,108
Financial liabilities held at fair value through profit or loss 13 83,096 79,903
Derivative financial instruments 13,14 56,061 69,862
Debt securities in issue 13,22 62,546 61,242
Other liabilities 23 39,221 43,527
Current tax liabilities 10 811 583
Accruals and deferred income 6,975 5,895
Subordinated liabilities and other borrowed funds 13,27 12,036 13,715
Deferred tax liabilities 10 770 769
Provisions for liabilities and charges 24 299 383
Retirement benefit obligations 30 183 146
Liabilities included in disposal groups held for sale 21 787 1,307
Total liabilities 772,491 769,906
Equity
Share capital and share premium account 28 6,815 6,930
Other reserves 9,171 8,165
Retained earnings 28,459 28,067
Total parent company shareholders' equity 44,445 43,162
Other equity instruments 28 5,512 6,504
Total equity excluding non-controlling interests 49,957 49,666
Non-controlling interests 29 396 350
Total equity 50,353 50,016
Total equity and liabilities 822,844 819,922
The notes form an integral part of these financial statements.
These financial statements were approved by the Board of directors and
authorised for issue on 23 February 2024 and signed on its behalf by:
José
Viñals
Bill
Winters
Diego De Giorgi
Group Chairman
Group Chief
Executive
Group Chief Financial Officer
Page 19
Consolidated statement of changes in equity
For the year ended 31 December 2023
Ordinary share capital and share premium account Preference share capital and share premium account Capital and merger reserves1 Own credit adjust-ment reserve Fair value through other compre-hensive income reserve - debt Fair value through other compre-hensive income reserve - equity Cash- flow hedge reserve Trans-lation reserve Retained earnings Parent company share-holders' equity Other equity instru-ments Non-controlling interests Total
$million
$million
$million
$million
$million
$million
$million
$million
$million
$million
$million
$million
$million
As at 1 January 2022 5,528 1,494 17,246 (15) 103 249 (34) (5,744) 27,184 46,011 6,254 371 52,636
Profit/(loss) for the year - - - - - - - - 2,948 2,948 - (46) 2,902
Other comprehensive (loss)/income¹¹ - - - (48) (1,219) (43) (530) (1,904) 82 (3,736) - (42) (3,778)
Distributions - - - - - - - - - - - (31) (31)
Other equity instruments issued, - - - - - - - - - - 1,240 - 1,240
net of expenses
Redemption of other equity instruments - - - - - - - - - - (999) - (999)
Treasury shares net movement - - - - - - - - (203) (203) - - (203)
Share option expenses - - - - - - - - 163 163 - - 163
Dividends on ordinary shares - - - - - - - - (393) (393) - - (393)
Dividends on preference shares and - - - - - - - - (401) (401) - - (401)
AT1 securities
Share buyback3,4 (92) - 92 - - - - - (1,258) (1,258) - - (1,258)
Other movements - - - - - - - 125 195,6 31 9⁵ 987 138
As at 31 December 2022 5,436 1,494 17,338 (63) (1,116) 206 (564) (7,636) 28,067 43,162 6,504 350 50,016
Profit/(loss) for the year - - - - - - - - 3,469 3,469 - (7) 3,462
Other comprehensive income/(loss)¹¹ - - - 163 426 124 655 (489) (47)2 832 - (31) 801
Distributions - - - - - - - - - - - (26) (26)
Redemption of other equity instruments - - - - - - - - - - (1,000) - (1,000)
Treasury shares net movement - - - - - - - - (189) (189) - - (189)
Share option expenses - - - - - - - - 173 173 - - 173
Dividends on ordinary shares - - - - - - - - (568) (568) - - (568)
Dividends on preference shares and - - - - - - - - (452) (452) - - (452)
AT1 securities
Share buyback8,9 (115) - 115 - - - - - (2,000) (2,000) - - (2,000)
Other movements - - - - - - - 125 65 18 8⁵ 11010 136
As at 31 December 2023 5,321 1,494 17,453 100 (690) 330 91 (8,113) 28,459 44,445 5,512 396 50,353
1 Includes capital reserve of $5 million, capital redemption reserve of
$337 million and merger reserve of $17,111 million
2 Comprises actuarial gain on Group defined benefit schemes
3 On 18 February 2022, the Group announced the buyback programme for a
share buyback of its ordinary shares of $0.50 each. Nominal value of share
purchases was $56 million, and the total consideration paid was $754 million,
the buyback completed on 19 May 2022. The total number of shares purchased was
111,295,408, representing 3.61 per cent of the ordinary shares in issue. The
nominal value of the shares was transferred from the share capital to the
capital redemption reserve account
4 On 1 August 2022, the Group announced the buyback programme for a share
buyback of its ordinary shares of $0.50 each. Nominal value of share purchases
was $36 million, and the total consideration paid was $504 million. The total
number of shares purchased was 73,073,837 representing 2.5 per cent of the
ordinary shares in issue. The nominal value of the shares was transferred from
the share capital to the capital redemption reserve account
5 Movement related to Translation adjustment and AT1 Securities charges
6 Movement mainly related to $21 million NCI on Power2SME Pte. Ltd. and $8
million on CurrencyFair Limited & $(9) million related to AT1 securities
charges
7 Movements primarily from non-controlling interest pertaining to Mox Bank
Limited ($39 million), Trust Bank Singapore Limited ($47 million) , Zodia
Markets Holdings Ltd ($3 million) and Power2SME Pte. td. ($9 million)
8 On 16 February 2023, the Group announced the buyback programme for a
share buyback of its ordinary shares of $0.50 each. Nominal value of share
purchases was $58 million, and the total consideration paid was $1,000 million
and the buyback completed on 29 September 2023. The total number of shares
purchased was 116,710,492, representing 4.03 per cent of the ordinary shares
in issue as at the commencement of the buyback. The nominal value of the
shares was transferred from the share capital to the capital redemption
reserve account
9 On 28 July 2023, the Group announced the buyback programme for a share
buyback of its ordinary shares of $0.50 each. Nominal value of share purchases
was $57 million, and the total consideration paid was $1,000 million and the
buyback completed on 6 November 2023. The total number of shares purchased was
112,982,802, representing 3.90 per cent of the ordinary shares in issue as at
the commencement of the buyback. The nominal value of the shares was
transferred from the share capital to the capital redemption reserve account
10 Movements primarily from non-controlling interest pertaining to Mox
Bank Limited ($48 million), Trust Bank Singapore Limited ($34 million) and
Zodia Custody Limited ($28 million)
11 All the amounts are net of tax
Note 28 includes a description of each reserve.
The notes form an integral part of these financial statements.
Page 20
Cash flow statement
For the year ended 31 December 2023
Notes Group Company
2023 2022 (Restated) 2023 2022
$million
$million
$million
$million
Cash flows from operating activities:
Profit before taxation 5,093 4,286 4,269 402
Adjustments for non-cash items and other adjustments included within income 34 3,274 3,549 (2,847) 565
statement
Change in operating assets(3) 34 (14,458) 12,989 (3,819) (258)
Change in operating liabilities 34 1,977 8,786 3,239 (966)
Contributions to defined benefit schemes 30 (81) (80) - -
UK and overseas taxes paid 10 (1,367) (821) - -
Net cash (used in)/from operating activities (5,562) 28,709 842 (257)
Cash flows from investing activities:
Internally generated capitalised software 17 (1,124) (1,096) - -
Purchase of property, plant and equipment 18 (159) (835) - -
Disposal of property, plant and equipment 18 53 343 - -
Disposal of held for sale property, plant and equipment 21 191 79 - -
Acquisition of investment associates, and joint ventures, net of cash acquired 32 (47) (26) - -
Dividends received from subsidiaries, associates and 32 11 58 4,738 1,047
joint ventures
Disposal of investment in subsidiaries, associates, 32 3,603 - - -
and joint ventures, net of cash acquired²
Purchase of investment securities (229,302) (280,952) (423) -
Disposal and maturity of investment securities 242,585 259,853 2,000 960
Net cash from/(used in) from investing activities 15,811 (22,576) 6,315 2,007
Cash flows from financing activities:
Exercise of share options 26 12 26 12
Purchase of own shares (215) (215) (215) (215)
Cancellation of shares including share buyback (2,000) (1,258) (2,000) (1,258)
Premises and equipment lease liability principal payment (234) (269) - -
Issue of additional Tier 1 Capital, net of expenses 28 - 1,240 - 1,240
Redemption of Tier 1 Capital 28 (1,000) (999) (1,000) (999)
Gross proceeds from issue of subordinated liabilities 34 18 750 - 750
Interest paid on subordinated liabilities 34 (563) (667) (545) (619)
Repayment of subordinated liabilities 34 (2,160) (1,848) (2,160) (1,800)
Proceeds from issue of senior debts 34 15,261 11,902 5,105 1,500
Repayment of senior debts 34 (6,471) (7,838) (2,037) (2,980)
Interest paid on senior debts 34 (1,145) (845) (434) (506)
Net cash inflow from non-controlling interest 29 116 88 - -
Distributions and dividends paid to non-controlling interests, preference 11,29 (478) (432) (452) (401)
shareholders and AT1 Securities
Dividends paid to ordinary shareholders 11 (568) (393) (568) (393)
Net cash from/(used in) financing activities 587 (772) (4,280) (5,669)
Net increase/(decrease) in cash and cash equivalents 10,836 5,361 2,877 (3,919)
Cash and cash equivalents at beginning of the year(3) 97,595 94,947 7,417 11,336
Effect of exchange rate movements on cash and (796) (2,713) - -
cash equivalents
Cash and cash equivalents at end of the year¹(.3) 35 107,635 97,595 10,294 7,417
1 Comprises cash and balances at central banks $69,905 million (31
December 2022: $58,263 million), treasury bills and other eligible bills
$5,931 million (31 December 2022: $12,661 million), loans and advances to
banks $11,879 million (31 December 2022: $10,144 million), loans and advances
to customers $25,829 million (31 December 2022: $24,586 million), investments
$244 million (31 December 2022: $1,114 million) less restricted balances
$6,153 million (31 December 2022: $9,173 million)
2 Includes disposal of aviation finance leasing business ($3,570 million),
sale of Metaco SA ($14 million), Cardspal Pte. Ltd. ($12 million) and Kozagi
($7 million)
3 Refer to note 34 and 35 for details on restatement
Interest received was $27,136 million (31 December 2022: $14,590 million),
interest paid was $18,379 million (31 December 2022: $6,200 million).
Page 21
Contents - Notes to the financial statements
Section Note
Basis of preparation 1 Accounting policies
Performance/return 2 Segmental information
3 Net interest income
4 Net fees and commission
5 Net trading income
6 Other operating income
7 Operating expenses
8 Credit impairment
9 Goodwill, property, plant and equipment and other impairment
10 Taxation
11 Dividends
12 Earnings per ordinary share
Assets and liabilities held at fair value 13 Financial instruments
14 Derivative financial instruments
Financial instruments held at amortised cost 15 Loans and advances to banks and customers
16 Reverse repurchase and repurchase agreements including other
similar lending and borrowing
Other assets and investments 17 Goodwill and intangible assets
18 Property, plant and equipment
19 Leased assets
20 Other assets
21 Assets held for sale and associated liabilities
Funding, accruals, provisions, contingent liabilities and legal proceedings 22 Debt securities in issue
23 Other liabilities
24 Provisions for liabilities and charges
25 Contingent liabilities and commitments
26 Legal and regulatory matters
Capital instruments, equity and reserves 27 Subordinated liabilities and other borrowed funds
28 Share capital, other equity instruments and reserves
29 Non-controlling interests
Employee benefits 30 Retirement benefit obligations
31 Share-based payments
Scope of consolidation 32 Investments in subsidiary undertakings, joint ventures and associates
33 Structured entities
Cash flow statement 34 Cash flow statement
35 Cash and cash equivalents
Other disclosure matters 36 Related party transactions
37 Post balance sheet events
38 Auditor's remuneration
39 Standard Chartered PLC (Company)
40 Related undertakings of the Group
Page 22
Notes to the financial statements
1. Accounting policies
Statement of compliance
The Group financial statements consolidate Standard Chartered PLC (the
Company) and its subsidiaries (together referred to as the Group) and equity
account the Group's interests in associates and jointly controlled entities.
The parent company financial statements present information about the Company
as a separate entity.
The Group financial statements have been prepared in accordance with
UK-adopted international accounting standards and International Financial
Reporting Standards (IFRS) as adopted by the European Union (EU IFRS). The
Company financial statements have been prepared in accordance with UK-adopted
international accounting standards as applied in conformity with section 408
of the Companies Act 2006. The financial statements have been prepared in
accordance with the requirements of the Companies Act 2006.
There are no significant differences between UK-adopted international
accounting standards and EU IFRS.
The following parts of the Risk review and Capital review form part of these
financial statements:
a) Risk review: Disclosures marked as 'audited' from the start of the Credit
Risk section to the end of Other principal risks in the same section.
b) Capital review: Tables marked as 'audited' from the start of 'CRD Capital
base' to the end of 'Movement in total capital', excluding 'Total
risk-weighted assets'.
Basis of preparation
The consolidated and Company financial statements have been prepared on a
going concern basis and under the historical cost convention, as modified by
the revaluation of cash-settled share-based payments, fair value through other
comprehensive income, and financial assets and liabilities (including
derivatives) at fair value through profit or loss.
The consolidated financial statements are presented in United States dollars
($), being the presentation currency of the Group and functional currency of
the Company, and all values are rounded to the nearest million dollars, except
when otherwise indicated.
Significant and other accounting estimates and judgement
In determining the carrying amounts of certain assets and liabilities, the
Group makes assumptions of the effects of uncertain future events on those
assets and liabilities at the balance sheet date. The Group's estimates and
assumptions are based on historical experience and expectation of future
events and are reviewed periodically. Further information about key
assumptions concerning the future, and other key sources of estimation
uncertainty and judgement, are set out in the relevant disclosure notes for
the areas set out under the relevant headings below:
Significant accounting estimates and critical judgements
Significant accounting estimates and judgements represent those items which
have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next year. Significant accounting
estimates and judgements are:
• Expected credit loss calculations (Note 8)
• Financial instruments measured at fair value (Note 13)
• Investments in subsidiary undertakings, joint ventures and associates -
China Bohai associate accounting and impairment analysis (Note 32)
Other areas of accounting estimate and judgement
Other areas of accounting estimate and judgement do not meet the definition
under IAS 1 of significant accounting estimates or critical accounting
judgements, but the recognition of certain material assets and liabilities are
based on assumptions and/or are subject to long-term uncertainties. The other
areas of accounting estimate and judgement are:
Page 23
• Taxation (Note 10)
• Goodwill impairment (Note 17)
• Retirement benefit obligations (Note 30)
• Share-based payments (Note 31)
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 significant accounting estimate and judgment through the
uncertainty of future events and the impact of that uncertainty on the Group's
assets and liabilities. It is noted that although not currently quantitatively
material, the Group considers climate to be qualitatively material to the
Group.
The Group has assessed the impact of climate risk on the financial report.
This is set out within the Sustainability Review chapter which incorporates
the Group's Climate-related Financial Disclosures which align with the
recommendations from the Task Force for Climate related Financial Disclosures
(TCFD). Further risk disclosure has been provided in the Principal Risks and
Uncertainties section 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
within 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 recoverability of certain assets, including of goodwill,
deferred tax assets and investments in subsidiary undertakings.
This assessment on the corporate loan portfolio was undertaken by considering
the maturity profile of the loan portfolio which is majority shorter term.
Transition risk, as our clients move to lower carbon emitting revenues,
(either by virtue of legislation or changing end customer preference) is
considered with reference to client transition pathways and manifests over a
longer term than the maturity of the loan book (up to 2050). 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 transition risk. Net zero targets enable the portfolio
managers to work with our clients on their transition, deploy capital to those
clients which are engaged and have adequate transition pathways, and exit
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
transition risk and engage clients before transition risk manifests itself
into credit losses.
Physical risk is already included within the majority of our mortgage lending
decisions, and we have applied scenario analysis against the pathways of
different temperature additions and country policy scenarios. We also assess
the impact of climate risk on the classification of financial instruments
under IFRS 9, when Environmental, Sustainability or Governance (ESG) triggers
may affect the cash flows received by the Group under the contractual terms
of the instrument.
The Group Climate Risk team have performed a quantitative assessment of the
impact of climate risk on the IFRS 9 ECL provision. This 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 Mining) and Sovereigns, whilst the top-down approach
developed in 2022 was used for the remaining portfolios. The impact assessment
resulted in a marginal ECL increase across CCIB and CPBB, which will not be
recorded as an overlay for the 2023 year end.
The Group's corporate plan has a 5 year outlook and considers the high carbon
sectors the Group finances. The majority of the Group high carbon sector
targets are production/physical intensities which allow continued levels of
lending as long as the products the client produce have a decreasing carbon
cost. For Coal Mining and Oil and Gas, these sectors have absolute targets
which represent a decreasing carbon budget. Coal Mining is an immaterial book,
whilst 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 recoverability models. The Group has for the
second time in the 2024 corporate plan included anticipated ECL charges linked
to climate for four sectors (Oil and Gas, Metals and Mining, Power and
Transport excluding Aviation) over the 5 years. This addition of ECL has not
in itself, impacted the recoverability of assets supported by discounted cash
flow models (such as Value in Use) which utilise the Corporate plan.
Page 24
The Group has further progressively strengthened its scenario analysis
capabilities with the modelling of Climate Risk impact over a 30-year period
across multiple dimensions including scenario data and pathways. This has been
limited by availability of client-specific data, and modelling limitations
which have required judgements to be made around scenarios chosen, regression
and proxies used. Notwithstanding these challenges, our work to date, using
certain assumptions and proxies, indicates that our business is resilient to
all Network of Central Banks and Supervisors for Greening the Financial System
(NGFS) and bespoke scenarios that were explored.
The Group, although acknowledging the limitations of current data available,
increasing sophistication of models evolving and nascent nature of climate
impacts on internal and client assets, considers Climate Risk to have limited
quantitative impact in the immediate term and as a longer-term risk will be
addressed through its business strategy and financial planning as the Group
implements its net zero journey.
IFRS and Hong Kong accounting requirements
As required by the Hong Kong Listing Rules, an explanation of the differences
in accounting practices between UK-adopted IFRS and Hong Kong Financial
Reporting Standards is required to be disclosed. There would be no significant
differences had these accounts been prepared in accordance with Hong Kong
Financial Reporting Standards.
Comparatives
Certain comparatives have been restated 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 information
• Note 12 Earnings per ordinary share
• Note 34 Cash flow statement
• Note 35 Cash and cash equivalents
New accounting standards adopted by the group
There were no new accounting standards or interpretations that had a material
effect on the Group's Financial Statements in 2023.
New accounting standards in issue but not yet effective
IAS 21 Amendment - Lack of Exchangeability
The IAS 21 amendment was issued in August 2023 and is effective for annual
reporting periods beginning 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 information 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 beginning on January 1, 2025 and is currently assessing the impact on
the Group's financial statements but do not expect this to be material.
Going concern
These financial statements were approved by the Board of directors on 23
February 2024. The directors have made an assessment of the Group's ability to
continue as a going concern. This assessment has been made having considered
the current macroeconomic and geopolitical headwinds, including:
• Review of the Group Strategy and Corporate Plan
• An assessment of the actual performance to date, loan book quality, credit
impairment, legal, regulatory and compliance matters, and the updated annual
budget
• Consideration of stress testing performed, including the Group Recovery
Plan (RP) which include the application 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 capital and liquidity to continue as
a going concern and meet minimum regulatory capital and liquidity requirements
Page 25
• Analysis of the capital, funding and liquidity position of the Group,
including the capital and leverage ratios, and ICAAP which summarises the
Group's capital and risk assessment processes, assesses its capital
requirements and the adequacy of resources to meet them. Further, funding and
liquidity was considered in the context of the risk appetite metrics,
including the LCR ratio.
• The Group's Internal Liquidity Adequacy Assessment Process (ILAAP), which
considers the Group's liquidity position, its framework and whether sufficient
liquidity resources are being maintained to meet liabilities as they fall due,
was also reviewed
• The level of debt in issue, including redemptions and issuances during the
year, debt falling due for repayment in the next 12 months and further planned
debt issuances, including the appetite in the market for the Group's debt
• A detailed review of all principal and emerging risks
Based on the analysis performed, the directors confirm they are satisfied that
the Group has adequate resources to continue 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 financial
statements.
Changes in accounting policies
The Group has changed its accounting policy regarding the determination of the
cost of its portfolio of Investment Securities held at amortised cost and Debt
securities and other eligible bills, other than those included within
financial instruments held at fair value through profit or loss. Refer to Note
13 Financial Instruments.
Comparatives
Certain comparatives have been restated 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 information
• Note 12 Earnings per ordinary share
• Note 34 Cash flow statement
• Note 35 Cash and cash equivalents
New accounting standards adopted by the group
There were no new accounting standards or interpretations that had a material
effect on the Group's Financial Statements in 2023.
New accounting standards in issue but not yet effective
IAS 21 Amendment - Lack of Exchangeability
The IAS 21 amendment was issued in August 2023 and is effective for annual
reporting periods beginning 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 information
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 beginning on January 1, 2025 and is currently
assessing the impact on the Group's financial statements but do not expect
this to be material.
Going concern
These financial statements were approved by the Board of directors on 23
February 2024. The directors have made an assessment of the Group's ability to
continue as a going concern. This assessment has been made having considered
the current macroeconomic and geopolitical headwinds, including:
• Review of the Group Strategy and Corporate Plan
• An assessment of the actual performance to date, loan book quality, credit
impairment, legal, regulatory and compliance matters, and the updated annual
budget
• Consideration of stress testing performed, including the Group Recovery
Plan (RP) which include the application 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 capital and liquidity to continue as
a going concern and meet minimum regulatory capital and liquidity requirements
Page 26
• Analysis of the capital, funding and liquidity position of the Group,
including the capital and leverage ratios, and ICAAP which summarises the
Group's capital and risk assessment processes, assesses its capital
requirements and the adequacy of resources to meet them. Further, funding and
liquidity was considered in the context of the risk appetite metrics,
including the LCR ratio.
• The Group's Internal Liquidity Adequacy Assessment Process (ILAAP), which
considers the Group's liquidity position, its framework and whether sufficient
liquidity resources are being maintained to meet liabilities as they fall due,
was also reviewed
• The level of debt in issue, including redemptions and issuances during the
year, debt falling due for repayment in the next 12 months and further planned
debt issuances, including the appetite in the market for the Group's debt
• A detailed review of all principal and emerging risks
Based on the analysis performed, the directors confirm they are satisfied that
the Group has adequate resources to continue 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 financial
statements.
Changes in accounting policies
The Group has changed its accounting policy regarding the determination of the
cost of its portfolio of Investment Securities held at amortised cost and Debt
securities and other eligible bills, other than those included within
financial instruments held at fair value through profit or loss. Refer to Note
13 Financial Instruments.
2. Segmental information
Basis of preparation
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 principally the location from which a client relationship is
managed, which may differ from where it is financially booked and may be
shared between businesses and/or regions. In certain instances this approach
is not appropriate and a Financial View is disclosed, that is, the location in
which the transaction or balance was booked. Typically, the Financial View is
used in areas such as the Market and Liquidity Risk reviews where actual
booking location is more important for an assessment. Segmental information is
therefore on a Management View unless otherwise stated.
Segments and regions
The Group's segmental reporting is in accordance with IFRS 8 Operating
Segments and is reported consistently with the internal performance framework
and as presented to the Group's Management Team.
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
significant or material in the context of the Group's normal business earnings
for the period and items which management and investors would ordinarily
identify separately when assessing consistent performance period by period.
The alternative performance measures are not within the scope of IFRS and not
a substitute for IFRS measures. These adjustments are set out below.
Restructuring losses of $14 million primarily relates to exits in AME and the
Aviation finance business performance until actual disposal. The Group is also
reclassifying the movements in the Debit Valuation Adjustment (DVA) into
restructuring and other items.
Page 27
Reconciliations between underlying and reported results are set out in the
tables below:
2023
Underlying Restructuring Net gain on businesses Goodwill and other impairment1 DVA Reported
$million
$million
disposed off³
$million
$million
$million
$million
Operating income 17,378 362 262 - 17 18,019
Operating expenses (11,136) (415) - - - (11,551)
Operating profit/(loss) before impairment losses and taxation 6,242 (53) 262 - 17 6,468
Credit impairment (528) 20 - - - (508)
Other impairment (130) (28) - (850) - (1,008)
Profit from associates and joint ventures 94 47 - - - 141
Profit/(loss) before taxation 5,678 (14) 262 (850) 17 5,093
2022²
Underlying Restructuring Net gain on businesses Goodwill and other impairment1 DVA Reported
$million
$million
disposed off
$million
$million
$million
$million
Operating income 15,762 494 20 - 42 16,318
Operating expenses (10,409) (504) - - - (10,913)
Operating profit/(loss) before impairment losses and taxation 5,353 (10) 20 - 42 5,405
Credit impairment (836) - - - - (836)
Other impairment (39) (78) - (322) - (439)
Profit/(loss) from associates and joint ventures 167 (11) - - - 156
Profit/(loss) before taxation 4,645 (99) 20 (322) 42 4,286
1 Goodwill and other impairment include $850 million (31 December
2022: $308 million) impairment charge relating to the Group's investment in
its associate China Bohai Bank (Bohai)
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
(ii) Aviation Finance and (iii) DVA from underlying operating performance
3 Net gain on businesses disposed off includes the sale of the Aviation
Finance business, of which there was a gain on sale of $309 million on the
leasing business and a loss of $47 million in relation to a sale of a
portfolio of Aviation loans
Underlying performance by client segment
2023
Corporate, Commercial & Institutional Consumer, Ventures Central & Total
Banking
Private &
$million
other items (segment)
$million
$million
Business
$million
Banking
$million
Operating income 11,218 7,106 156 (1,102) 17,378
External 8,543 3,902 157 4,776 17,378
Inter-segment 2,675 3,204 (1) (5,878) -
Operating expenses (5,627) (4,261) (429) (819) (11,136)
Operating profit/(loss) before impairment losses 5,591 2,845 (273) (1,921) 6,242
and taxation
Credit impairment (123) (354) (85) 34 (528)
Other impairment (32) (4) (26) (68) (130)
(Loss)/profit from associates and joint ventures - - (24) 118 94
Underlying profit/(loss) before taxation 5,436 2,487 (408) (1,837) 5,678
Restructuring 32 (60) (4) 18 (14)
Goodwill and other impairment⁴ - - - (850) (850)
DVA 17 - - - 17
Other items⁵ 262 - - - 262
Reported profit/(loss) before taxation 5,747 2,427 (412) (2,669) 5,093
Total assets 403,058 128,768 4,009 287,009 822,844
Of which: loans and advances to customers 189,395 126,117 1,035 28,939 345,486
loans and advances to customers 130,897 126,104 1,035 28,939 286,975
loans held at fair value through profit or loss (FVTPL)2 58,498 13 - - 58,511
Total liabilities 464,968 200,263 3,096 104,164 772,491
Of which: customer accounts3 328,211 195,678 2,825 7,908 534,622
Page 28
2022¹
Corporate, Commercial & Institutional Consumer, Ventures Central & Total
Banking
Private &
$million
other items (segment)
$million
$million
Business
$million
Banking
$million
Operating income 9,608 5,969 29 156 15,762
External 8,462 4,942 29 2,329 15,762
Inter-segment 1,146 1,027 - (2,173) -
Operating expenses (5,193) (4,104) (336) (776) (10,409)
Operating profit/(loss) before impairment losses 4,415 1,865 (307) (620) 5,353
and taxation
Credit impairment (425) (262) (16) (133) (836)
Other impairment - (10) (24) (5) (39)
(Loss)/profit from associates and joint ventures - - (16) 183 167
Underlying profit/(loss) before taxation 3,990 1,593 (363) (575) 4,645
Restructuring 14 (56) (1) (56) (99)
Goodwill and other impairment⁴ - - - (322) (322)
DVA 42 - - - 42
Other items - - - 20 20
Reported profit/(loss) before taxation 4,046 1,537 (364) (933) 4,286
Total assets 401,567 133,956 2,451 281,948 819,922
Of which: loans and advances to customers 184,254 130,985 702 41,789 357,730
loans and advances to customers 139,756 130,957 702 39,232 310,647
loans held at fair value through profit or loss (FVTPL)2 44,498 28 - 2,557 47,083
Total liabilities 479,981 185,396 1,658 102,871 769,906
Of which: customer accounts3 332,176 180,659 1,548 5,846 520,229
1 Underlying performance for relevant periods in 2022 has been
restated for the removal of (i) exit markets and businesses in AME (ii)
Aviation Finance and (iii) DVA. No change to reported performance
2 Loans held at FVTPL includes $51,299 million (2022: $40,537
million) of reverse repurchase agreements
3 Customer accounts includes $17,248 million (2022: $11,706 million)
of FVTPL and $47,956 million (2022: $46,846 million) of reverse repurchase
agreements
4 Goodwill and other impairment include $850 million (31 December
2023: $308 million) impairment charge relating to the Group's investment in
its associate China Bohai Bank (Bohai)
5 Other items includes the sale of the Aviation Finance business, of
which there was a gain on sale of $309 million on the leasing business and a
loss of $47 million in relation to a sale of a portfolio of Aviation loans
Operating income by client segment
2023
Corporate, Commercial & Institutional Consumer, Ventures Central & Total
Banking
Private &
$million
other items (segment)
$million
$million
Business
$million
Banking
$million
Underlying operating income 11,218 7,106 156 (1,102) 17,378
Restructuring 291 45 - 26 362
DVA 17 - - - 17
Other items² 262 - - - 262
Reported operating income 11,788 7,151 156 (1,076) 18,019
2022¹
Corporate, Commercial & Institutional Consumer, Ventures Central & Total
Banking
Private &
$million
other items (segment)
$million
$million
Business
$million
Banking
$million
Underlying operating income 9,608 5,969 29 156 15,762
Restructuring 436 47 - 11 494
DVA 42 - - - 42
Other items - - - 20 20
Reported operating income 10,086 6,016 29 187 16,318
1 Underlying performance for relevant periods in 2022 has been
restated for the removal of (i) exit markets and businesses in AME (ii)
Aviation Finance and (iii) DVA. No change to reported performance
2 Other items includes the sale of the Aviation Finance business, of
which there was a gain on sale of $309 million on the leasing business and a
loss of $47 million in relation to a sale of a portfolio of Aviation loans
Page 29
Underlying performance by region
2023
Asia Africa & Europe & Central & Total
$million
Middle East
Americas
other items
$million
$million
$million
(region)
$million
Operating income 12,429 2,806 1,397 746 17,378
Operating expenses (7,096) (1,571) (1,733) (736) (11,136)
Operating profit/(loss) before impairment losses 5,333 1,235 (336) 10 6,242
and taxation
Credit impairment (644) 91 19 6 (528)
Other impairment (63) (15) (13) (39) (130)
Profit/(loss) from associates and joint ventures 114 - - (20) 94
Underlying profit/(loss) before taxation 4,740 1,311 (330) (43) 5,678
Restructuring (97) (2) 32 53 (14)
Goodwill and other impairment1 (850) - - - (850)
DVA (16) 26 7 - 17
Other items⁴ 35 (18) 263 (18) 262
Reported profit/(loss) before taxation 3,812 1,317 (28) (8) 5,093
Total assets 505,905 54,140 253,410 9,389 822,844
Of which: loans and advances to customers 256,400 25,870 63,216 - 345,486
loans and advances to customers 233,417 22,774 30,784 - 286,975
loans held at fair value through profit or loss (FVTPL)2 22,983 3,096 32,432 - 58,511
Total liabilities 461,568 40,612 181,417 88,894 772,491
Of which: customer accounts³ 377,020 33,059 124,543 - 534,622
1 Goodwill and other impairment include $850 million (31 December
2023: $308 million) impairment charge relating to the Group's investment in
its associate China Bohai Bank (Bohai)
2 Loans held at FVTPL includes $51,299 million (2022: $40,537
million) of reverse repurchase agreements
3 Customer accounts includes $17,248 million (2022: $11,706 million)
of FVTPL and $47,956million (2022: $46,846 million) of reverse repurchase
agreements
4 Other items includes the sale of the Aviation Finance business, of
which there was a gain on sale of $309 million on the leasing business and a
loss of $47 million in relation to a sale of a portfolio of Aviation loans
2022¹
Asia Africa & Europe & Central & Total
$million
Middle East
Americas
other items
$million
$million
$million
(region)
$million
Operating income 10,912 2,460 2,303 87 15,762
Operating expenses (6,675) (1,551) (1,548) (635) (10,409)
Operating profit/(loss) before impairment losses 4,237 909 755 (548) 5,353
and taxation
Credit impairment (790) (119) 78 (5) (836)
Other impairment (10) 2 1 (32) (39)
Profit/(loss) from associates and joint ventures 179 - - (12) 167
Underlying profit/(loss) before taxation 3,616 792 834 (597) 4,645
Restructuring (46) 21 (13) (61) (99)
Goodwill and other impairment2 (308) - - (14) (322)
DVA 20 8 14 - 42
Other items 20 - - - 20
Reported profit/(loss) before taxation 3,302 821 835 (672) 4,286
Total assets 488,399 53,086 268,960 9,477 819,922
Of which: loans and advances to customers 270,892 23,857 62,981 - 357,730
loans and advances to customers 257,171 21,570 31,906 - 310,647
loans held at fair value through profit or loss (FVTPL)3 13,721 2,287 31,075 - 47,083
Total liabilities 441,349 40,902 219,701 67,954 769,906
Of which: customer accounts4 346,832 31,860 141,537 - 520,229
1 Underlying performance for relevant periods in 2022 has been
restated for the removal of (i) exit markets and businesses in AME (ii)
Aviation Finance and (iii) DVA. No change to reported performance
2 Goodwill and other impairment include $850 million (31 December
2023: $308 million) impairment charge relating to the Group's investment in
its associate China Bohai Bank (Bohai)
3 Loans held at FVTPL includes $51,299 million (2022: $40,537
million) of reverse repurchase agreements
4 Customer accounts includes $17,248 million (2022: $11,706 million)
of FVTPL and $47,956million (2022: $46,846 million) of reverse repurchase
agreements
5 Other items includes the sale of the Aviation Finance business, of
which there was a gain on sale of $309 million on the leasing business and a
loss of $47 million in relation to a sale of a portfolio of Aviation loans
Page 30
Operating income by region
2023
Asia Africa & Europe & Central & Total
$million
Middle East
Americas
other items
$million
$million
$million
(region)
$million
Underlying operating income 12,429 2,806 1,397 746 17,378
Restructuring 203 110 35 14 362
DVA (16) 26 7 - 17
Other items² 35 (18) 263 (18) 262
Reported operating income 12,651 2,924 1,702 742 18,019
2022¹
Asia Africa & Europe & Central & Total
$million
Middle East
Americas
other items
$million
$million
$million
(region)
$million
Underlying operating income 10,912 2,460 2,303 87 15,762
Restructuring 304 140 35 15 494
DVA 20 8 14 - 42
Other items 20 - - - 20
Reported operating income 11,256 2,608 2,352 102 16,318
1 Underlying performance for relevant periods in 2022 has been
restated for the removal of (i) exit markets and businesses in AME (ii)
Aviation Finance and (iii) DVA. No change to reported performance
2 Other items includes the sale of the Aviation Finance business, of which
there was a gain on sale of $309 million on the leasing business and a loss of
$47 million in relation to a sale of a portfolio of Aviation loans
Additional segmental information (reported)
2023
Corporate, Commercial & Institutional Consumer, Ventures Central & Total
Banking
Private &
$million
other items (segment)
$million
$million
Business
$million
Banking
$million
Net interest income 4,541 4,970 81 (1,823) 7,769
Net fees and commission income 1,753 1,538 43 (82) 3,252
Net trading and other income 5,494 643 32 829 6,998
Operating income 11,788 7,151 156 (1,076) 18,019
2022
Corporate, Commercial & Institutional Consumer, Ventures Central & Total
Banking
Private &
$million
other items (segment)
$million
$million
Business
$million
Banking
$million
Net interest income 3,616 3,969 18 (10) 7,593
Net fees and commission income 1,706 1,524 8 (125) 3,113
Net trading and other income 4,764 523 3 322 5,612
Operating income 10,086 6,016 29 187 16,318
2023
Asia Africa & Europe & Central & Total
$million
Middle East
Americas
other items
$million
$million
$million
(region)
$million
Net interest income 5,872 1,584 (545) 858 7,769
Net fees and commission income 2,237 509 553 (47) 3,252
Net trading and other income 4,542 831 1,694 (69) 6,998
Operating income 12,651 2,924 1,702 742 18,019
Page 31
2022
Asia Africa & Europe & Central & Total
$million
Middle East
Americas
other items
$million
$million
$million
(region)
$million
Net interest income 5,747 1,299 260 287 7,593
Net fees and commission income 2,224 526 526 (163) 3,113
Net trading and other income 3,285 783 1,566 (22) 5,612
Operating income 11,256 2,608 2,352 102 16,318
2023
Hong Kong Korea China Taiwan Singapore India Indonesia UAE UK US
$million
$million
$million
$million
$million
$million
$million
$million
$million
$million
Net interest income 1,946 684 520 154 937 654 110 390 (930) 170
Net fees and commission income 615 171 149 182 576 221 53 81 18 441
Net trading and other income 2,052 216 487 214 929 330 78 330 1,277 263
Operating income 4,613 1,071 1,156 550 2,442 1,205 241 801 365 874
2022
Hong Kong Korea China Taiwan Singapore India Indonesia UAE UK US
$million
$million
$million
$million
$million
$million
$million
$million
$million
$million
Net interest income 1,843 751 561 171 982 611 89 281 (189) 330
Net fees and commission income 658 157 143 162 553 239 52 81 44 393
Net trading and other income 1,235 237 450 141 380 377 73 268 1,167 306
Operating income 3,736 1,145 1,154 474 1,915 1,227 214 630 1,022 1,029
3. Net interest income
Accounting policy
Interest income for financial assets held at either fair value through other
comprehensive income or amortised cost, and interest expense on all financial
liabilities held at amortised 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
financial asset or financial liability. When calculating the effective
interest rate, the Group estimates cash flows considering 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 financial instruments, periodic re-estimation 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 financial asset or liability is adjusted
to reflect the actual and revised cash flows, discounted at the instruments
original effective interest rate. The adjustment is recognised as interest
income or expense in the period in which the revision is made as long as the
change in estimates is not due to credit issues.
Interest income for financial assets that are either held at fair value
through other comprehensive income or amortised cost that have become
credit-impaired subsequent to initial recognition (stage 3) and have had
amounts written 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 financial asset including expected credit losses. Should the credit risk
on a stage 3 financial asset improve such that the financial asset is no
longer considered credit-impaired, interest income recognition reverts to a
computation based on the rehabilitated gross carrying value of the financial
asset.
Page 32
2023 2022
$million
$million
Balances at central banks 2,833 765
Loans and advances to banks 2,095 853
Loans and advances to customers 15,518 10,032
Debt securities 5,005 2,836
Other eligible bills 1,596 630
Accrued on impaired assets (discount unwind) 180 136
Interest income 27,227 15,252
Of which: financial instruments held at fair value through other comprehensive 3,445 2,167
income
Deposits by banks 796 433
Customer accounts 14,292 5,443
Debt securities in issue 3,367 1,169
Subordinated liabilities and other borrowed funds 951 570
Interest expense on IFRS 16 lease liabilities 52 44
Interest expense 19,458 7,659
Net interest income 7,769 7,593
4. Net fees and commission
Accounting policy
The Group can act as trustee or in other Fiduciary capacities that result in
the holding or placing of assets on behalf of individuals, trusts, retirement
benefit plans and other institutions. The assets and income arising thereon
are excluded from these financial statements, as they are not assets and
income of the Group.
The Group applies the following practical expedients:
• information on amounts of transaction price allocated to unsatisfied (or
partially unsatisfied) performance obligations 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 consideration is not adjusted for the effects of a significant
financing component as the period between the Group providing a service and
the customer paying for it is expected to be less than one year
• incremental costs of obtaining a fee-earning contract are recognised
upfront in 'Fees and commission expense' rather than amortised, if the
expected term of the contract is less than one year
The determination of the services 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 considerations on income recognition 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.
Financial Markets
The Group recognises fee income at the point in time the service is provided.
Fee income is recognised for a significant non-lending service when the
transaction has been completed and the terms of the contract with the customer
entitle the Group to the fee. This includes fees such as structuring and
advisory fees. Fees are usually received shortly after the service is
provided.
Syndication fees are recognised when the syndication is complete defined as
achieving the final approved hold position. Fees are generally received before
completion of the syndication, or within 12 months of the transaction date.
Page 33
Securities services include custody services, fund accounting and
administration, 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 consideration on bancassurance agreements is amortised straight-line
over the contractual term. Commissions for bancassurance activities are
recorded as they are earned through sales of third-party insurance products to
customers. These commissions are received within a short time frame of the
commission being 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 specified date
after achievement of a target has been confirmed.
Upfront and trailing commissions for managed investment placements are
recorded as they are confirmed. Income from these activities is relatively
even throughout the period, and cash is usually received within a short time
frame after the commission 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 over the service period. In most of our
retail markets there are circumstances under which fees are waived, income
recognition is adjusted to reflect customer's intent to pay the annual fee.
The Group defers the fair value of reward points on its credit card reward
programmes, and recognises income and costs associated with fulfilling the
reward at the time of redemption.
Upfront bancassurance consideration amounts are amortised on a straight-line
basis over the contractual period to which the consideration relates.
2023 2022
$million
$million
Fees and commissions income 4,067 3,972
Of which:
Financial instruments that are not fair valued through profit or loss 1,374 1,306
Trust and other fiduciary activities 508 520
Fees and commissions expense (815) (859)
Of which:
Financial instruments that are not fair valued through profit or loss (169) (303)
Trust and other fiduciary activities (52) (49)
Net fees and commission 3,252 3,113
2023
Corporate, Commercial & Institutional Consumer, Ventures Central & Total
Banking
Private &
$million
other Items (segment)
$million
$million
Business
$million
Banking
$million
Transaction Banking 1,142 32 - - 1,174
Trade & Working capital 576 25 - - 601
Cash Management 566 7 - - 573
Financial Markets 882 - - - 882
Lending & Portfolio Management 141 6 - - 147
Principal Finance (1) - - - (1)
Wealth Management - 1,225 - - 1,225
Retail Products - 592 32 - 624
Treasury - - - (15) (15)
Others - 2 35 (6) 31
Fees and commission income 2,164 1,857 67 (21) 4,067
Fees and commission expense (411) (319) (24) (61) (815)
Net fees and commission 1,753 1,538 43 (82) 3,252
Page 34
2022
Corporate, Commercial & Institutional Consumer Ventures Central & Total
Banking
Private &
$million
other Items (segment)
$million
$million
Business
$million
Banking
$million
Transaction Banking 1,143 32 - - 1,175
Trade & Working capital 594 25 - - 619
Cash Management 549 7 - - 556
Financial Markets 958 - - - 958
Lending & Portfolio Management 124 5 - - 129
Wealth Management - 1,127 - - 1,127
Retail Products - 582 12 - 594
Treasury - - - (5) (5)
Others - (2) 8 (12) (6)
Fees and commission income 2,225 1,744 20 (17) 3,972
Fees and commission expense (519) (220) (12) (108) (859)
Net fees and commission 1,706 1,524 8 (125) 3,113
Upfront bancassurance consideration amounts are amortised on a straight-line
basis over the contractual period to which the consideration relates.
Deferred income on the balance sheet in respect of these activities is $474
million (31 December 2022: $549 million). Following renegotiation 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, $75 million of fee income was released from deferred
income (31 December 2022: $84 million).
5. Net trading income
Accounting policy
Gains and losses arising from changes in the fair value of financial
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 initial fair value of a financial instrument held at fair value
through profit or loss relies on unobservable inputs, the difference between
the initial 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 if the transaction is terminated.
Income is recognised from the sale and purchase of trading positions, margins
on market making and customer business and fair value changes.
2023 2022
$million
$million
Net trading income 6,292 5,310
Significant items within net trading income include:
Gains on instruments held for trading¹ 4,625 4,942
Gains on financial assets mandatorily at fair value through profit or loss 4,270 1,087
Gains/(losses) on financial assets designated at fair value through profit or 10 (6)
loss
Losses on financial liabilities designated at fair value through profit or (2,649) (677)
loss
1 Includes $299 million loss (31 December 2022: $365 million gain)
from the translation of foreign currency monetary assets and liabilities
Page 35
6. Other operating income
2023 2022
$million
$million
Other operating income includes:
Rental income from operating lease assets 375 421
Net loss on disposal of fair value through other comprehensive income debt (115) (207)
instruments
Net (loss)/gain on disposal of amortised cost financial assets1 (94) 17
Net gain/(loss) on sale of businesses2 351 (1)
Dividend income 15 14
Gain on sale of aircrafts - 21
Others³ 174 37
Other operating income 706 302
1 Includes $47 million loss on sale of a portfolio of aviation loans
2 2023 includes $309 million gain from the sale of the aviation
finance leasing business, $18 million from sale of associate (Metaco SA), $16
million gain from sale of subsidiary ($9 million from Cardspal and $7 million
from Kozagi) and $8 million gain from the sale of Jordan one of the AME
regions exit markets
3 2023 mainly includes $59 million tax credit against Research &
Development Expenditure, $38 million gain on disposal of premises, $21 million
income from VISA sponsorship in Hong Kong, $10 million from gain on lease
modification in Hong Kong and $16 million interest income from tax refund in
India
7. Operating expenses
2023 2022
$million
$million
Staff costs:
Wages and salaries 6,459 6,014
Social security costs 233 210
Other pension costs (Note 30) 431 390
Share-based payment costs (Note 31) 226 199
Other staff costs 907 805
8,256 7,618
Other staff costs include redundancy expenses of $106 million (31 December
2022: $79 million). Further costs in this category include training, travel
costs and other staff-related costs.
Details of directors' pay, benefits, pensions and benefits and interests in
shares are disclosed in the Directors' remuneration report.
Transactions with directors, officers and other related parties are disclosed
in Note 36.
2023 2022
$million
$million
Premises and equipment expenses: 422 401
General administrative expenses:
UK bank levy 111 102
Provision for regulatory matters - 14
Other general administrative expenses 1,691 1,592
1,802 1,708
Depreciation and amortisation:
Property, plant and equipment:
Premises 315 326
Equipment 103 123
Operating lease assets 27 202
445 651
Intangibles:
Software 625 531
Acquired on business combinations 1 4
1,071 1,186
Total operating expenses 11,551 10,913
Operating expenses include research expenditure of $996 million (31 December
2022: $946 million), which was recognized as an expense in the year
Page 36
The UK bank levy is applied to chargeable equity and liabilities on the
balance sheet of UK operations. Key exclusions from chargeable equity and
liabilities include Tier 1 capital, insured or guaranteed retail deposits,
repos secured on certain sovereign debt and liabilities subject to netting.
The rates are 0.10 per cent for short-term liabilities and 0.05 per cent for
long-term liabilities.
8. Credit impairment
Accounting policy
Significant accounting estimates and judgements
The Group's expected credit loss (ECL) calculations are outputs of complex
models with a number of underlying assumptions. The significant judgements in
determining expected credit loss include:
• The Group's criteria for assessing if there has been a significant
increase in credit risk;
• Development of expected credit loss models, including the choice of inputs
relating to macroeconomic variables;
• Determining estimates of forward looking macroeconomic forecasts;
• Evaluation of management overlays and post-model adjustments;
• Determination of probability weightings for Stage 3 individually assessed
provisions
The calculation of credit impairment provisions also involves expert credit
judgement to be applied by the credit risk management team based upon
counterparty information they receive from various sources including
relationship managers and on external market information. Details on the
approach for determining expected credit loss can be found in the credit risk
section, under IFRS 9 Methodology.
Estimates of forecasts of key macroeconomic variables underlying the expected
credit loss calculation can be found within the Risk review, Key assumptions
and judgements in determining expected credit loss.
Expected credit losses
An ECL represents the present value of expected cash shortfalls over the
residual term of a financial asset, undrawn commitment or financial 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, probability-weighted amounts which are
determined by evaluating a range of reasonably possible outcomes, the time
value of money, and considering all reasonable and supportable information
including that which is forward-looking.
For material portfolios, the estimate of expected cash shortfalls is
determined by multiplying the probability 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 lifetime 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 sophisticated approaches based on historical 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 indices and commodity 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 information, which 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-linearity 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 determining the PD (and where
relevant, the LGD and EAD) and in determining the overall ECL 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 limited to
the maximum contractual period for which the Group is exposed to credit risk.
However, for certain revolving credit facilities, which include credit cards
or overdrafts, the Group's exposure to credit risk is not limited to the
contractual period. 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 facilities.
Page 37
8. Credit impairment continued
For credit-impaired financial instruments, the estimate of cash shortfalls may
require the use of expert credit judgement.
The estimate of expected cash shortfalls on a collateralised financial
instrument reflects the amount and timing of cash flows that are expected from
foreclosure on the collateral less the costs of obtaining and selling the
collateral, regardless of whether foreclosure is deemed probable.
Cash flows from unfunded credit enhancements held are included within the
measurement of expected credit losses if they are part of, or integral to, the
contractual terms of the instrument (this includes financial guarantees,
unfunded risk participations and other non-derivative credit 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 ECL recorded.
Cash shortfalls are discounted using the effective interest rate (or
credit-adjusted effective interest rate for purchased or originated
credit-impaired instruments (POCI)) on the financial instrument as calculated
at initial recognition or if the instrument has a variable interest rate, the
current effective interest rate determined under the contract.
Instruments Location of expected credit loss provisions
Financial assets held at amortised cost Loss provisions: netted against gross carrying value1
Financial assets held FVOCI - Debt instruments Other comprehensive income (FVOCI expected credit loss reserve)2
Loan commitments Provisions for liabilities and charges3
Financial guarantees Provisions for liabilities and charges3
1 Purchased or originated credit-impaired assets do not attract an
expected credit loss provision on initial recognition. An expected credit loss
provision will be recognised only if there is an increase in expected credit
losses from that considered at initial recognition
2 Debt and treasury securities classified as fair 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 within other comprehensive income (OCI) and is recycled to
the profit and loss account along with any fair value measurement gains or
losses held within FVOCI when the applicable instruments are derecognised
3 Expected credit loss on loan commitments and financial guarantees
is recognised as a liability provision. Where a financial instrument includes
both a loan (i.e. financial asset component) and an undrawn commitment (i.e.
loan commitment component), and it is not possible to separately identify the
expected credit loss on these components, expected credit loss amounts on the
loan commitment are recognised together with expected credit loss amounts on
the financial asset. To the extent the combined expected credit loss exceeds
the gross carrying amount of the financial asset, the expected credit loss is
recognised as a liability provision
Recognition
12 months expected credit losses (stage 1) Expected credit losses are
recognised at the time of initial recognition of a financial instrument and
represent the lifetime cash shortfalls arising from possible 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
significant increase in the credit risk of an instrument or the instrument
becomes credit-impaired. If an instrument is no longer considered to exhibit a
significant increase in credit risk, expected credit losses will revert to
being determined on a 12-month basis.
Significant increase in credit risk (Stage 2) Significant 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 origination (after taking into
account the passage of time). Significant does not mean statistically
significant nor is it assessed in the context of changes in expected credit
loss. Whether a change in the risk of default is significant or not is
assessed using a number of quantitative and qualitative factors, the weight of
which depends on the type of product and counterparty. Financial assets that
are 30 or more days past due and not credit-impaired will always be considered
to have experienced a significant increase in credit risk. For less material
portfolios where a loss rate or roll rate approach is applied to compute
expected credit loss, significant increase in credit risk is primarily based
on 30 days past due.
Quantitative factors include an assessment of whether there has been
significant increase in the forward-looking probability of default (PD) since
origination. A forward-looking PD is one that is adjusted for future economic
conditions to the extent these are correlated to changes in credit risk. We
compare the residual lifetime PD at the balance sheet date to the residual
lifetime PD that was expected at the time of origination 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 significant
increase in credit risk.
Qualitative 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 monitoring).
Page 38
A non-purely precautionary early alert account is one which exhibits risk or
potential weaknesses of a material nature requiring closer monitoring,
supervision, or attention by management. Weaknesses in such a borrower's
account, if left uncorrected, could result in deterioration of repayment
prospects and the likelihood of being downgraded. Indicators could include a
rapid erosion of position within the industry, concerns over management's
ability to manage operations, weak/deteriorating operating results, liquidity
strain and overdue balances among other factors.
Credit-impaired (or defaulted) exposures (Stage 3) Financial assets that are
credit-impaired (or in default) represent those that are at least 90 days past
due in respect of principal and/or interest. Financial assets are also
considered to be credit-impaired where the obligors 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 possible
to identify a single discrete event but instead the combined effect of several
events may cause financial assets to become credit-impaired.
• Evidence that a financial asset is credit-impaired includes observable
data about the following events:
• Significant financial difficulty 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 financial
difficulty, the lenders of the borrower have granted the borrower concession/s
that lenders would not otherwise consider. This would include forbearance
actions;
• Pending or actual bankruptcy or other financial reorganisation to avoid or
delay discharge of the borrower's obligation/s;
• The disappearance of an active market for the applicable financial asset
due to financial difficulties of the borrower;
• Purchase or origination of a financial asset at a deep discount that
reflects incurred credit losses
Lending commitments to a credit-impaired obligor that have not yet been drawn
down are included to the extent that the commitment cannot be withdrawn. Loss
provisions against credit-impaired financial assets are determined based on an
assessment of the present value of expected cash shortfalls (discounted at the
instrument's original effective interest rate) under a range of scenarios,
including the realisation of any collateral held where appropriate. The
Group's definition of default is aligned with the regulatory definition of
default as set out in the UK's onshored capital requirements regulations (Art
178).
Expert credit judgement
For Corporate & Institutional, Commercial and Private Banking, borrowers
are graded by credit risk management on a credit grading (CG) scale from CG1
to CG14. Once a borrower starts to exhibit credit deterioration, it will move
along the credit grading scale in the performing book and when it is
classified as CG12 (which is a qualitative trigger for significant increase in
credit risk the credit assessment and oversight of the loan will normally be
performed by Stressed Assets Risk (SAR).
Borrowers graded CG12 exhibit well-defined weaknesses in areas such as
management and/or performance but there is no current expectation of a loss of
principal or interest in the likely scenario. Where the impairment assessment
indicates that there will be a loss of principal on a loan in the likely
scenario, the borrower is graded a CG14 while borrowers of other
credit-impaired loans are graded CG13. Instruments graded CG13 or CG14 are
regarded as stage 3.
For individually significant financial assets within stage 3, SAR will
consider all judgements that have an impact on the expected future cash flows
of the asset. These include: the business prospects, industry and geo
political climate of the customer, quality of realisable value of collateral,
the Group's legal position relative to other claimants and any renegotiation/
forbearance/ modification options. The future cash flow calculation involves
significant judgements and estimates. As new information becomes available and
further negotiations/ forbearance measures are taken the estimates of the
future cash flows will be revised, and will have an impact on the future cash
flow analysis.
For financial assets which are not individually significant, such as the
Retail Banking portfolio or small business loans, which comprise a large
number of homogenous loans that share similar characteristics, statistical
estimates and techniques are used, as well as credit scoring analysis.
Page 39
Consumer and Business Banking clients are considered credit-impaired 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 identified fraud on the account. Additionally, if
the account is unsecured and the borrower has other credit accounts with the
Group that are considered credit-impaired, the account may be also be
credit-impaired.
Techniques used to compute impairment amounts use models which analyse
historical repayment and default rates over a time horizon. Where various
models are used, judgement is required to analyse the available information
provided and select the appropriate model or combination 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.
Modified financial instruments
Where the original contractual terms of a financial asset have been modified
for credit reasons and the instrument has not been derecognised (an instrument
is derecognised when a modification results in a change in cash flows that the
Group would consider substantial), the resulting modification loss is
recognised within credit impairment in the income statement with a
corresponding decrease in the gross carrying value of the asset. If the
modification involved a concession that the bank would not otherwise consider,
the instrument is considered to be credit-impaired and is considered forborne.
Expected credit loss for modified financial assets that have not been
derecognised and are not considered to be credit-impaired will be recognised
on a 12-month basis, or a lifetime basis, if there is a significant increase
in credit risk. These assets are assessed (by comparison to the origination
date) to determine whether there has been a significant increase in credit
risk subsequent to the modification. Although loans may be modified for
non-credit reasons, a significant increase in credit risk may occur. In
addition to the recognition of modification gains and losses, the revised
carrying value of modified financial assets will impact the calculation of
expected credit losses, with any increase or decrease in expected credit loss
recognised within impairment.
Forborne loans
Forborne loans are those loans that have been modified in response to a
customer's financial difficulties. Forbearance strategies assist clients who
are temporarily in financial distress and are unable to meet their original
contractual repayment terms. Forbearance can be initiated by the client, the
Group or a third-party including government sponsored programmes or a
conglomerate of credit institutions. Forbearance may include debt
restructuring such as new repayment schedules, payment deferrals, tenor
extensions, interest only payments, lower interest rates, forgiveness of
principal, interest or fees, or relaxation of loan covenants.
Forborne loans that have been modified (and not derecognised) on terms that
are not consistent with those readily available in the market and/or where we
have granted a concession compared to the original terms of the loans are
considered credit-impaired if there is a detrimental impact on cash flows. The
modification loss (see Classification and measurement - Modifications) is
recognised in the profit or loss within credit impairment and the gross
carrying value of the loan reduced by the same amount. The modified loan is
disclosed as 'Loans subject to forbearance - credit-impaired'.
Loans that have been subject to a forbearance modification, but which are not
considered credit-impaired (not classified as CG13 or CG14), are disclosed as
'Forborne - not credit-impaired'. This may include amendments to covenants
within the contractual terms.
Write-offs of credit-impaired instruments and reversal of impairment
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 provision. Such loans are written off after all the necessary
procedures have been completed, it is decided that there is no realistic
probability of recovery and the amount of the loss has been determined.
Subsequent recoveries of amounts previously written off decrease the amount of
the provision for credit impairment in the income statement.
Page 40
Loss provisions on purchased or originated credit-impaired instruments (POCI)
The Group measures expected credit loss on a lifetime basis for POCI
instruments throughout the life of the instrument. However, expected credit
loss is not recognised in a separate loss provision on initial recognition for
POCI instruments as the lifetime expected credit loss is inherent within the
gross carrying amount of the instruments. The Group recognises the change in
lifetime expected credit losses arising subsequent to initial recognition in
the income statement and the cumulative change as a loss provision. Where
lifetime expected credit losses on POCI instruments are less than those at
initial recognition, then the favourable differences are recognised as
impairment gains in the income statement (and as impairment loss where the
expected credit losses are greater).
Improvement in credit risk/curing
For financial assets that are credit-impaired (stage 3), a transfer to stage 2
or stage 1 is only permitted where the instrument is no longer considered to
be credit-impaired. An instrument will no longer be considered credit-impaired
when there is no shortfall of cash flows compared to the original contractual
terms.
For financial assets within stage 2, these can only be transferred to stage 1
when they are no longer considered to have experienced a significant increase
in credit risk.
Where significant increase in credit risk was determined using quantitative
measures, the instruments will automatically transfer back to stage 1 when the
original PD based transfer criteria are no longer met. Where instruments were
transferred to stage 2 due to an assessment of qualitative factors, the issues
that led to the reclassification must be cured before the instruments can be
reclassified to stage 1. This includes instances where management actions led
to instruments being classified as stage 2, requiring that action to be
resolved before loans are reclassified to stage 1.
A forborne loan can only be removed from being disclosed as forborne if the
loan is performing (stage 1 or 2) and a further two-year probation period is
met.
In order for a forborne loan to become performing, the following criteria have
to be satisfied:
• At least a year has passed with no default based upon the forborne
contract terms
• The customer is likely to repay its obligations in full without realising
security
• The customer has no accumulated impairment against amount outstanding
(except for ECL)
Subsequent to the criteria above, a further two-year probation period has to
be fulfilled, whereby regular payments are made by the customer and none of
the exposures to the customer are more than 30 days past due.
2023 2022
$million
$million
Net credit impairment on loans and advances to banks and customers 606 743
Net credit impairment on debt securities¹ (50) 122
Net credit impairment relating to financial guarantees and loan commitments (48) (27)
Net credit impairment relating to other financial assets - (2)
Credit impairment 508 836
1 Includes impairment of $1 million (2022: $13 million) on originated
credit-impaired debt securities
9. Goodwill, property, plant and equipment and other impairment
Accounting policy
Refer to the below referenced notes for the relevant accounting policy.
2023 2022
$million
$million
Impairment of goodwill (Note 17) - 14
Impairment of property, plant and equipment (Note 18) 12 50
Impairment of other intangible assets (Note 17) 112 12
Other¹ 884 363
Property, plant and equipment and other impairment 1,008 425
Goodwill, property, plant and equipment and other impairment 1,008 439
1 Other includes $850 million (2022: $308 million) impairment charge relating
to the Group's investment in its associate China Bohai Bank (Bohai),
reflecting Bohai's lower reported net profit in 2023 (compared to 2022), as
well as banking industry challenges and property market uncertainties in
Mainland China, that may impact Bohai's future profitability
Page 41
10. Taxation
Accounting policy
Income tax payable on profits is based on the applicable tax law in each
jurisdiction and is recognised as an expense in the period in which profits
arise.
Deferred tax is provided on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in the consolidated
financial 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 liability 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
utilised. Where permitted, deferred tax assets and liabilities are offset on
an entity 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
• Determining the Group's tax charge for the year involves estimation and
judgement, which includes an interpretation of local tax laws and an
assessment of whether the tax authorities will accept the position taken.
These judgements take account of external advice where appropriate, and the
Group's view on settling with the relevant tax authorities.
• The Group provides for current tax liabilities at the best estimate of the
amount that is expected to be paid to the tax authorities where an outflow is
probable. In making its estimates the Group assumes that the tax authorities
will examine all the amounts reported to them and have full knowledge of all
relevant information.
The recoverability of the Group's deferred tax assets is based on management's
judgement of the availability of future taxable profits against which the
deferred tax assets will be utilised. In preparing management forecasts the
effect of applicable laws and regulations relevant to the utilisation of
future taxable profits have been considered.
The following table provides analysis of taxation charge in the year:
2023 2022
$million
$million
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 (48) 48
Adjustments in respect of prior years (including double tax relief) 14 -
Foreign tax:
Current tax charge on income for the year 1,695 1,216
Adjustments in respect of prior years (11) 5
1,650 1,269
Deferred tax:
Origination/reversal of temporary differences (22) 144
Adjustments in respect of prior years 3 (29)
(19) 115
Tax on profits on ordinary activities 1,631 1,384
Effective tax rate 32.0% 32.3%
The tax charge for the year of $1,631 million (31 December 2022: $1,384
million) on a profit before tax of $5,093 million (31 December 2022: $4,286
million) reflects the impact of tax losses for which no deferred tax assets
are recognised, non-deductible expenses, and non-creditable withholding taxes
and other taxes. These are partly offset by tax exempt income.
Foreign tax includes current tax of $201 million (31 December 2022: $35
million) on the profits assessable in Hong Kong. Deferred tax includes
origination or reversal of temporary differences of $nil million (31 December
2022: $51 million) provided at a rate of 16.5 per cent (31 December 2022: 16.5
per cent) on the profits assessable in Hong Kong.
Page 42
The Group will be in scope of the new Pillar Two global minimum tax rules
which were substantively enacted in the UK on 20 June 2023 to apply for
periods commencing 1 January 2024. The IAS 12 exception to recognise and
disclose information about deferred tax assets and liabilities related to
Pillar Two income taxes has been applied.
Based on an initial impact assessment undertaken in respect of historical
financial data together with corporate plan data available, the Group's
exposure to Pillar Two income taxes are not expected to be material. The Group
is closely monitoring developments to assess potential future implications and
implementation efforts.
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
$million % $million %
Profit on ordinary activities before tax 5,093 4,286
Tax at 23.5 per cent (2022: 19 per cent) 1,197 23.5 814 19.0
Lower tax rates on overseas earnings (330) (6.5) (122) (2.8)
Higher tax rates on overseas earnings 306 6.0 435 10.1
Tax at domestic rates applicable where profits earned 1,173 23.0 1,127 26.3
Non-creditable withholding taxes and other taxes¹ 85 1.7 170 4.0
Tax exempt income (131) (2.6) (69) (1.6)
Share of associates and joint ventures (14) (0.3) (27) (0.6)
Non-deductible expenses 219 4.3 115 2.7
Bank levy 26 0.5 19 0.4
Non-taxable losses on investments² 64 1.3 51 1.2
Payments on financial instruments in reserves (68) (1.3) (56) (1.3)
Goodwill impairment - - 3 0.1
Deferred tax not recognised 278 5.4 77 1.8
Deferred tax rate changes (1) - (9) (0.2)
Adjustments to tax charge in respect of prior years 6 0.1 (24) (0.6)
Other items1 (6) (0.1) 7 0.1
Tax on profit on ordinary activities 1,631 32.0 1,384 32.3
1 The comparatives have been reclassified by moving the effect of other
taxes from Other items to Non-creditable withholding taxes and other taxes in
order to provide more clarity to the reader. The 2022 comparatives have been
reclassified as follows to align with the presentation in the current period:
Non-creditable withholding taxes and other taxes from $90 million to $170
million, and Other items from $87 million to $7 million.
2 Non-taxable losses on investments includes $140 million (2022: $51
million) in respect of the tax impact of the impairment charge relating to the
Group's investment in its associate China Bohai Bank (Bohai).
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
including acquisitions, disposals and restructuring of our businesses, the mix
of profits across jurisdictions with different statutory tax rates, changes in
tax legislation and tax rates and resolution of uncertain tax positions.
The evaluation of uncertain tax positions involves an interpretation of local
tax laws which could be subject to challenge by a tax authority, and an
assessment of whether the tax authorities will accept the position taken. The
Group does not currently consider that assumptions or judgements made in
assessing tax liabilities have a significant risk of resulting in a material
adjustment within the next financial year.
Tax recognised in other comprehensive income 2023 2022
Current tax Deferred tax Total Current tax Deferred tax Total
$million
$million
$million
$million
$million
$million
Items that will not be reclassified to income statement - (107) (107) - 15 15
Own credit adjustment - (49) (49) - 8 8
Equity instruments at fair value through other comprehensive income - (69) (69) - 27 27
Retirement benefit obligations - 11 11 - (20) (20)
Items that may be reclassed subsequently to income statement - (129) (129) - 152 152
Debt instruments at fair value through other comprehensive income - (17) (17) - 63 63
Cashflow hedges - (112) (112) - 89 89
Total tax credit/(charge) recognised - (236) (236) - 167 167
in equity
Page 43
Current tax: The following are the movements in current tax during the year:
Current tax comprises: 2023 2022
$million
$million
Current tax assets 503 766
Current tax liabilities (583) (348)
Net current tax opening balance (80) 418
Movements in income statement (1,650) (1,269)
Movements in other comprehensive income - -
Taxes paid 1,367 821
Other movements 36 (50)
Net current tax balance as at 31 December (327) (80)
Current tax assets 484 503
Current tax liabilities (811) (583)
Total (327) (80)
Deferred tax: The following are the major deferred tax liabilities and assets
recognised by the Group and movements thereon during the year:
At Exchange (Charge)/credit (Charge)/credit At
1 January
& other
to profit
to equity
31 December 2023
2023
adjustments
$million
$million
$million
$million
$million
Deferred tax comprises:
Accelerated tax depreciation (589) 236 (71) - (424)
Impairment provisions on loans and advances 334 (20) (28) - 286
Tax losses carried forward 212 (106) (9) - 97
Equity instruments at fair value through other comprehensive income (74) (1) - (69) (144)
Debt instruments at fair value through other comprehensive income 61 (14) (3) (17) 27
Cashflow hedges 89 (2) - (112) (25)
Own credit adjustment 5 (27) - (49) (71)
Retirement benefit obligations 2 2 (11) 11 4
Share-based payments 36 - 7 - 43
Other temporary differences (11) 16 134 - 139
Net deferred tax assets/(liabilities) 65 84 19 (236) (68)
At Exchange (Charge)/credit (Charge)/credit At
1 January
& other
to profit
to equity
31 December 2022
2022
adjustments
$million
$million
$million
$million
$million
Deferred tax comprises:
Accelerated tax depreciation (515) (8) (66) - (589)
Impairment provisions on loans and advances 351 (41) 24 - 334
Tax losses carried forward 263 16 (67) - 212
Equity instruments at fair value through other comprehensive income1 (96) (6) 1 27 (74)
Debt instruments at fair value through other comprehensive income1 (30) 5 23 63 61
Cashflow hedges - - - 89 89
Own credit adjustment (3) - - 8 5
Retirement benefit obligations 27 (5) - (20) 2
Share-based payments 32 - 4 - 36
Other temporary differences 30 (7) (34) - (11)
Net deferred tax assets/(liabilities) 59 (46) (115) 167 65
1 2022 has been reclassified to separately disclose Equity instruments at
fair value through other comprehensive income and Debt instruments at fair
value through other comprehensive income. No change in overall balance.
Page 44
Deferred tax comprises assets and liabilities as follows:
2023 2022
Total Asset Liability Total Asset Liability
$million
$million
$million
$million
$million
$million
Deferred tax comprises:
Accelerated tax depreciation (424) 3 (427) (589) 1 (590)
Impairment provisions on loans 286 282 4 334 339 (5)
and advances
Tax losses carried forward 97 49 48 212 90 122
Equity instruments at fair value through other comprehensive income1 (144) (1) (143) (74) - (74)
Debt instruments at fair value through other comprehensive income1 27 29 (2) 61 45 16
Cashflow hedges (25) 12 (37) 89 85 4
Own credit adjustment (71) (1) (70) 5 (1) 6
Retirement benefit obligations 4 13 (9) 2 15 (13)
Share-based payments 43 9 34 36 5 31
Other temporary differences 139 307 (168) (11) 255 (266)
(68) 702 (770) 65 834 (769)
1 2022 has been reclassified to separately disclose Equity instruments at
fair value through other comprehensive income and Debt instruments at fair
value through other comprehensive income. No change in overall balance.
The recoverability of the Group's deferred tax assets is based on management's
judgement of the availability of future taxable profits against which the
deferred tax assets will be utilised. The Group's total deferred tax assets
include $97 million relating to tax losses carried forward, of which $48
million arises in legal entities with offsetting deferred tax liabilities. The
remaining deferred tax assets on losses of $49 million are forecast to be
recovered before expiry and within five years.
Sale of aircraft leasing business during the year, included within Other
operating income, resulted in the disposal of $113 million of deferred tax
assets relating to losses in Ireland held at 31 December 2022.
Unrecognised deferred tax
Net Gross Net Gross
2023
2023
2022
2022
$million
$million
$million
$million
No account has been taken of the following potential deferred tax
assets/(liabilities):
Withholding tax on unremitted earnings from overseas subsidiaries (653) (7,685) (507) (6,434)
and associates
Tax losses 2,242 9,326 1,980 8,231
Held over gains on incorporation of overseas branches (366) (1,389) (346) (1,313)
Other temporary differences 397 1,516 544 1,991
11. Dividends
Accounting policy
The Board considers a number of factors prior to dividend declaration which
includes the rate of recovery in the Group's financial performance, the
macroeconomic environment, and opportunities to further invest in our business
and grow profitably in our markets.
Ordinary equity shares
2023 2022
Cents per share $million Cents per share $million
2022/2021 final dividend declared and paid during the year 14 401 9 274
2023/2022 interim dividend declared and paid during the year 6 167 4 119
Dividends on ordinary equity shares are recorded in the period in which they
are declared and, in respect of the final dividend, have been approved by the
shareholders. Accordingly, the final ordinary equity share dividends set out
above relate to the respective prior years.
Page 45
2023 recommended final ordinary equity share dividend
The 2023 ordinary equity share dividend recommended by the Board is 21 cents
per share. The financial statements for the year ended 31 December 2023 do not
reflect this dividend as this will be accounted for in shareholders' equity as
an appropriation of retained profits in the year ending 31 December 2024.
The dividend will be paid in either pounds sterling, Hong Kong dollars or US
dollars on 17 May 2024 to shareholders on the UK register of members at the
close of business in the UK on 8 March 2024.
Preference shares and Additional Tier 1 securities
Dividends on these preference shares and securities classified as equity are
recorded in the period in which they are declared.
2023 2022
$million
$million
Non-cumulative redeemable preference shares: 7.014 per cent preference shares of $5 each 53 53
Floating rate preference shares of $5 each¹ 50 20
103 73
Additional Tier 1 securities: fixed rate resetting perpetual subordinated 349 328
contingent convertible securities
452 401
1 Floating rate is based on Secured Overnight Financing Rate (SOFR),
average rate paid for floating preference shares is 6.62% (2022: 2.71%)
12. Earnings per ordinary share
Earnings per share on an underlying basis differs from earnings defined in IAS
33 Earnings per share. Underlying earnings is profit/(loss) attributable to
ordinary shareholders adjusted for profits or losses of a capital nature;
amounts consequent to investment transactions driven by strategic intent; and
other infrequent and/or exceptional transactions that are significant or
material in the context of the Group's normal business earnings for the year.
The table below provides the basis of underlying earnings.
2023 2022¹
$million
$million
Profit for the period attributable to equity holders 3,462 2,902
Non-controlling interest 7 46
Dividend payable on preference shares and AT1 classified as equity (452) (401)
Profit for the period attributable to ordinary shareholders 3,017 2,547
Items normalised:
Restructuring 14 99
Goodwill and other impairment² 850 322
DVA (17) (42)
Net gains on sale of Businesses³ (262) (20)
Tax on normalised items (21) (3)
Underlying profit 3,581 2,903
Basic - Weighted average number of shares (millions) 2,778 2,966
Diluted - Weighted average number of shares (millions) 2,841 3,023
Basic earnings per ordinary share (cents) 108.6 85.9
Diluted earnings per ordinary share (cents) 106.2 84.3
Underlying basic earnings per ordinary share (cents) 128.9 97.9
Underlying diluted earnings per ordinary share (cents) 126.0 96.0
1 Underlying performance for relevant periods in 2022 has been
restated for the removal of (i) exit markets and businesses in AME (ii)
Aviation Finance and (iii) DVA. No change to reported performance
2. Goodwill and other impairment include $850 million (2022: $308
million) impairment charge relating to the Group's investment in its associate
China Bohai Bank (Bohai)
3. Includes the sale of the Aviation Finance business, of which there
was a gain on sale of $309 million on the leasing business and a loss of $47
million in relation to a sale of a portfolio of Aviation loans
The calculation of basic earnings per share is based on the profit
attributable to equity holders of the parent and the basic weighted average
number of shares excluding treasury shares held in employees benefit trust.
When calculating diluted earnings per share, the weighted average number of
shares in issue is adjusted for the effects of all expected dilutive potential
ordinary shares held in respect of Standard Chartered PLC totalling 56 million
(2022: 52 million). The total number of share options outstanding, under
schemes considered to be potentially dilutive, was 7 million (2022: 5
million). These options have strike prices ranging from $3.99 to $7.49.
Page 46
Of the total number of employee share options and share awards at 31 December
2023 there were nil share options and awards which were anti dilutive.
The 188 million decrease (2022: 142 million decrease) in the basic weighted
average number of shares is primarily due to the impact of the share buy-back
programmes completed in the year.
13. Financial instruments
Classification and measurement
Accounting policy
Financial assets held at amortised 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 principal and
interest (SPPI) characteristics.
In assessing whether the contractual cash flows have SPPI characteristics, the
Group considers the contractual terms of the instrument. This includes
assessing whether the financial asset contains a contractual term that could
change the timing or amount of contractual cash flows such that it would not
meet this condition. In making the assessment, the Group considers:
• Contingent events that would change the amount and timing of cash flows
• Leverage features
• Prepayment and extension terms
• Terms that limit the Group's claim to cash flows from specified assets
(e.g. non-recourse asset arrangements)
• Features that modify consideration of the time value of money - e.g.
periodical reset of interest rates.
Whether financial assets are held at amortised cost or at FVOCI depends on the
objectives of the business models under which the assets are held. A business
model refers to how the Group manages financial assets to generate cash flow.
The Group makes an assessment of the objective of a business model in which an
asset is held at the individual product business line, and where applicable
within business lines depending on the way the business is managed and
information 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, including 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 timing of sales in prior periods, the reasons
for such sales and expectations about future sales activity.
Page 47
The Group's business model assessment is as follows:
Business model Business objective Characteristics Businesses Products
Hold to collect Intent is to originate financial assets and hold them to maturity, collecting • Providing financing and originating assets to earn interest income as • Corporate Lending • Loans and advances
the contractual cash flows over the term of the instrument primary income stream
• Financial Markets • Debt securities
• Performing credit risk management activities
• Transaction Banking
• Costs include funding costs, transaction costs and impairment losses
• Retail Lending
• Treasury Markets (Loans and Borrowings)
Hold to collect and sell Business objective met through both hold to collect and by selling financial • Portfolios held for liquidity needs; or where a certain interest yield • Treasury Markets • Debt securities
assets profile is maintained; or that are normally rebalanced to achieve matching of
duration of assets and liabilities
• Income streams come from interest income, fair value changes, and
impairment losses
Fair value through profit or loss All other business objectives, including trading and managing financial assets • Assets held for trading • Financial Markets • Derivatives
on a fair value basis
• Assets that are originated, purchased, and sold for profit taking or • All other business lines • Equity shares
underwriting activity
• Trading portfolios
• Performance of the portfolio is evaluated on a fair value basis
• Financial Markets reverse repos
• Income streams are from fair value changes or trading gains or losses
• Financial Markets (FM Bond and Loan Syndication)
Financial assets which have SPPI characteristics and that are held within a
business model whose objective is to hold financial assets to collect
contractual cashflows (hold to collect) are recorded at amortised cost.
Conversely, financial assets which have SPPI characteristics but are held
within a business model whose objective is achieved by both collecting
contractual cashflows and selling financial assets (Hold to collect and sell)
are classified as held at FVOCI. Both hold to collect and hold to collect and
sell business models involve holding financial assets to collect the
contractual cashflows. However, the business models are distinct by reference
to the frequency and significance that asset sales play in meeting the
objective under which a particular group of financial assets is managed. Hold
to collect business models are characterised by asset sales that are
incidental to meeting the objectives under which a group of assets is managed.
Sales of assets under a hold to collect business model can be made to manage
increases in the credit risk of financial assets but sales for other reasons
should be infrequent or insignificant. Cashflows from the sale of financial
assets under a hold to collect and sell business model by contrast are
integral to achieving the objectives under which a particular group of
financial assets are managed. This may be the case where frequent sales of
financial assets are required to manage the Group's daily liquidity
requirements or to meet regulatory requirements to demonstrate liquidity of
financial instruments. Sales of assets under hold to collect and sell business
models are therefore both more frequent and more significant 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 initial recognition as held at
FVOCI on an instrument-by-instrument basis. Dividends received are recognised
in profit or loss. Gains and losses arising from changes in the fair value of
these instruments, including foreign exchange gains and losses, are recognised
directly in equity and are never reclassified to profit or loss even on
derecognition.
Page 48
Mandatorily classified at fair value through profit or loss
Financial assets and liabilities which are mandatorily held at fair value
through profit or loss are split between two subcategories as follows:
Trading, including:
• Financial assets and liabilities held for trading, which are those
acquired principally for the purpose of selling in the short-term
• Derivatives
Non-trading mandatorily at fair value through profit or loss, including:
• Instruments in a business which has a fair value business model (see the
Group's business model assessment) which are not trading or derivatives
• Hybrid financial assets that contain one or more embedded derivatives
• Financial assets that would otherwise be measured at amortised cost or
FVOCI but which do not have SPPI characteristics
• Equity instruments that have not been designated as held at FVOCI
• Financial liabilities that constitute contingent consideration in a
business combination
Designated at fair value through profit or loss
Financial assets and liabilities may be designated at fair value through
profit or loss when the designation eliminates or significantly reduces a
measurement or recognition inconsistency that would otherwise arise from
measuring assets or liabilities on a different basis ('accounting mismatch').
Financial liabilities may also be designated at fair value through profit or
loss where they are managed on a fair value basis or have an embedded
derivative where the Group is not able to bifurcate and separately value the
embedded derivative component.
Financial liabilities held at amortised cost
Financial liabilities that are not financial guarantees or loan commitments
and that are not classified as financial liabilities held at fair value
through profit or loss are classified as financial liabilities held at
amortised 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 specific date or
at the option of the shareholder are classified as financial liabilities and
are presented in other borrowed funds. The dividends on these preference
shares are recognised in the income statement as interest expense on an
amortised cost basis using the effective interest method.
Financial guarantee contracts and loan commitments
The Group issues financial guarantee contracts and loan commitments in return
for fees. Financial guarantee contracts and any loan commitments issued at
below-market interest rates are initially recognised at their fair value as a
financial liability, and subsequently measured at the higher of the initial
value less the cumulative amount of income recognised in accordance with the
principles of IFRS 15 Revenue from Contracts with Customers and their expected
credit loss provision. 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 financial assets and liabilities
The fair value of financial instruments is generally measured on the basis of
the individual financial instrument. However, when a group of financial assets
and financial liabilities is managed on the basis of its net exposure to
either market risk or credit risk, the fair value of the group of financial
instruments is measured on a net basis.
The fair values of quoted financial assets and liabilities in active markets
are based on current prices. A market is regarded as active if transactions
for the asset or liability take place with sufficient frequency and volume to
provide pricing information on an ongoing basis. If the market for a financial
instrument, and for unlisted securities, is not active, the Group establishes
fair value by using valuation techniques.
Page 49
Initial recognition
Regular way purchases and sales of financial assets held at fair value through
profit or loss, and held at fair value through other comprehensive income are
initially 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 amortised cost are recognised on the settlement date (the date on
which cash is advanced to the borrowers).
All financial instruments are initially recognised at fair value, which is
normally the transaction price, plus directly attributable transaction costs
for financial assets and liabilities which are not subsequently measured at
fair value through profit or loss.
In certain circumstances, the initial fair value may be based on a valuation
technique which may lead to the recognition of profits or losses at the time
of initial recognition. However, these profits or losses can only be
recognised when the valuation technique used is based solely on observable
market data. Where the initially 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 immediately 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
Financial assets and financial liabilities held at amortised cost
Financial assets and financial liabilities held at amortised 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
qualifying fair value hedge relationship, its carrying value is adjusted by
the fair value gain or loss attributable to the hedged risk.
Financial assets held at FVOCI
Debt instruments held at FVOCI are subsequently carried at fair value, with
all unrealised gains and losses arising from changes in fair value (including
any related foreign 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 derecognition, the cumulative fair value
gains or losses, net of the cumulative expected credit loss reserve, are
transferred to the profit or loss.
Equity investments designated at FVOCI are subsequently carried at fair value
with all unrealised gains and losses arising from changes in fair value
(including any related foreign exchange gains or losses) recognised in other
comprehensive income and accumulated in a separate component of equity. On
derecognition, the cumulative reserve is transferred to retained earnings and
is not recycled to profit or loss.
Financial assets and liabilities held at fair value through profit or loss
Gains and losses arising from changes in fair value, including 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
relationship.
Derecognition of financial instruments
Financial assets which are subject to commercial refinancing 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 original contract have expired, the
old loan is derecognised and the new loan is recognised at fair value. For all
other modifications 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.
Page 50
On derecognition of a financial asset, the difference between the carrying
amount of the asset (or the carrying amount allocated to the portion of the
asset derecognised) and the sum of the consideration received (including any
new asset obtained less any new liability 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
liability, that are held in other comprehensive income.
Financial liabilities are derecognised when they are extinguished. A financial
liability is extinguished when the obligation is discharged, cancelled or
expires and this is evaluated both qualitatively and quantitatively. However,
where a financial liability has been modified, it is derecognised if the
difference between the modified cash flows and the original cash flows is more
than 10 per cent, or if less than 10 per cent, the Group will perform a
qualitative assessment to determine 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 liability and the consideration paid is
included in 'Other income' except for the cumulative fair value adjustments
attributable to the credit risk of a liability that are held in Other
comprehensive income, which are never recycled to the profit or loss.
Modified financial instruments
Financial assets and financial liabilities whose original contractual terms
have been modified, including those loans subject to forbearance strategies,
are considered to be modified instruments. Modifications may include changes
to the tenor, cash flows and or interest rates among other factors.
Where derecognition of financial assets is appropriate (see Derecognition),
the newly recognised residual loans are assessed to determine whether the
assets should be classified as purchased or originated credit-impaired assets
(POCI).
Where derecognition is not appropriate, the gross carrying amount of the
applicable instruments is recalculated as the present value of the
renegotiated or modified contractual cash flows discounted at the original
effective interest rate (or credit adjusted effective interest rate for POCI
financial assets). The difference between the recalculated values and the
pre-modified gross carrying values of the instruments are recorded as a
modification gain or loss in the profit or loss.
Gains and losses arising from modifications for credit reasons are recorded as
part of 'Credit Impairment' (see Credit Impairment policy). Modification gains
and losses arising from non-credit reasons are recognised either as part of
'Credit Impairment' or within income depending on whether there has been a
change in the credit risk on the financial asset subsequent to the
modification. Modification gains and losses arising on financial liabilities
are recognised within income. The movements in the applicable expected credit
loss loan positions are disclosed in further detail in Risk Review.
Page 51
The Group's classification of its financial assets and liabilities is
summarised in the following tables.
Assets Notes Assets at fair value Assets Total
held at amortised
$million
cost
$million
Trading Derivatives held for hedging Non-trading mandatorily at fair value through profit or loss Designated Fair value Total
$million
$million
$million
at fair value through profit or loss
through other comprehensive income
financial assets at
$million
$million
fair value
$million
Cash and balances at - - - - - - 69,905 69,905
central banks(1)
Financial assets held at fair value through profit or loss
Loans and advances 2,265 - - - - 2,265 - 2,265
to banks(2)
Loans and advances 6,930 - 282 - - 7,212 - 7,212
to customers(2)
Reverse repurchase agreements and other similar secured lending 16 9,997 - 71,850 - - 81,847 - 81,847
Debt securities, 52,776 - 98 78 - 52,952 - 52,952
alternative tier one
and other eligible bills
Equity shares 2,721 - 219 - - 2,940 - 2,940
Other assets - - 6 - - 6 - 6
74,689 - 72,455 78 - 147,222 - 147,222
Derivative financial instruments 14 48,333 2,101 - - - 50,434 - 50,434
Loans and advances 15 - - - - - - 44,977 44,977
to banks(2)
of which - reverse repurchase agreements and other similar 16 - - - - - - 1,738 1,738
secured lending
Loans and advances 15 - - - - - - 286,975 286,975
to customers(2)
of which - reverse repurchase agreements and other similar 16 - - - - - - 13,996 13,996
secured lending
Investment securities
Debt securities, - - - - 103,328 103,328 56,935 160,263
alternative tier one
and other eligible bills
Equity shares - - - - 992 992 - 992
- - - - 104,320 104,320 56,935 161,255
Other assets 20 - - - - - - 38,140 38,140
Assets held for sale 21 - - - - - - 701 701
Total at 31 December 2023 123,022 2,101 72,455 78 104,320 301,976 497,633 799,609
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
Page 52
Assets Notes Assets at fair value Assets Total
held at amortised
$million
cost
$million
Trading Derivatives held for hedging Non-trading mandatorily at fair value through profit or loss Designated Fair value Total
$million
$million
$million
at fair value through profit or loss
through other comprehensive income
financial
$million
$million
assets at
fair value
$million
Cash and balances at - - - - - - 58,263 58,263
central banks(1)
Financial assets held at fair value through profit or loss
Loans and advances 976 - - - - 976 - 976
to banks(2)
Loans and advances 5,765 - 781 - - 6,546 - 6,546
to customers(2)
Reverse repurchase agreements and other similar secured lending 16 1,175 - 63,316 - - 64,491 - 64,491
Debt securities, 30,162 - 324 76 - 30,562 - 30,562
alternative tier one
and other eligible bills
Equity shares 2,997 - 233 - - 3,230 - 3,230
Other assets - - 7 - - 7 - 7
41,075 - 64,661 76 - 105,812 - 105,812
Derivative financial instruments 14 60,858 2,859 - - - 63,717 - 63,717
Loans and advances 15 - - - - - - 39,519 39,519
to banks(2)
of which - reverse repurchase agreements and other similar 16 - - - - - - 978 978
secured lending
Loans and advances 15 - - - - - - 310,647 310,647
to customers(2)
of which - reverse repurchase agreements and other similar 16 - - - - - - 24,498 24,498
secured lending
Investment securities
Debt securities, - - - - 111,926 111,926 59,714 171,640
alternative tier one
and other eligible bills
Equity shares - - - - 808 808 - 808
- - - - 112,734 112,734 59,714 172,448
Other assets 20 - - - - - - 39,295 39,295
Assets held for sale 21 - - - 3 - 3 1,388 1,391
Total at 31 December 2022 101,933 2,859 64,661 79 112,734 282,266 508,826 791,092
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
Page 53
Liabilities Notes Liabilities at fair value Amortised Total
cost
$million
$million
Trading Derivatives held for hedging Designated Total financial liabilities at
$million
$million
at fair value through
fair value
profit or loss
$million
$million
Deposits by banks - - - - 28,030 28,030
Customer accounts - - - - 469,418 469,418
Financial liabilities held at fair value through profit
or loss
Deposits by banks - - 1,894 1,894 - 1,894
Customer accounts 39 - 17,209 17,248 - 17,248
Repurchase agreements and other similar 16 1,660 - 39,623 41,283 - 41,283
secured borrowing
Debt securities in issue 22 - - 10,817 10,817 - 10,817
Short positions 11,846 - - 11,846 - 11,846
Other liabilities - - 8 8 - 8
13,545 - 69,551 83,096 - 83,096
Derivative financial instruments 14 52,747 3,314 - 56,061 - 56,061
Repurchase agreements and other similar 16 - - - - 12,258 12,258
secured borrowing
Debt securities in issue 22 - - - - 62,546 62,546
Other liabilities 23 - - - - 38,663 38,663
Subordinated liabilities and other borrowed funds 27 - - - - 12,036 12,036
Liabilities included in disposal groups held for sale 21 - - - - 726 726
Total at 31 December 2023 66,292 3,314 69,551 139,157 623,677 762,834
Liabilities Notes Liabilities at fair value Amortised Total
cost
$million
$million
Trading Derivatives held for hedging Designated Total financial liabilities at
$million
$million
at fair value through
fair value
profit or loss
$million
$million
Deposits by banks - - - - 28,789 28,789
Customer accounts - - - - 461,677 461,677
Financial liabilities held at fair value through profit
or loss
Deposits by banks - - 1,066 1,066 - 1,066
Customer accounts 29 - 11,677 11,706 - 11,706
Repurchase agreements and other similar 16 - - 51,706 51,706 - 51,706
secured borrowing
Debt securities in issue 22 - - 8,572 8,572 - 8,572
Short positions 6,847 - - 6,847 - 6,847
Other liabilities - - 6 6 - 6
6,876 - 73,027 79,903 - 79,903
Derivative financial instruments 14 65,316 4,546 - 69,862 - 69,862
Repurchase agreements and other similar 16 - - - - 2,108 2,108
secured borrowing
Debt securities in issue 22 - - - - 61,242 61,242
Other liabilities 23 - - - - 42,915 42,915
Subordinated liabilities and other borrowed funds 27 - - - - 13,715 13,715
Liabilities included in disposal groups held for sale 21 5 - - 5 1,230 1,235
Total at 31 December 2022 72,197 4,546 73,027 149,770 611,676 761,446
Page 54
Interest rate benchmark reform
During 2023, significant progress was made in support of LIBOR transition.
New LIBOR-referencing business had ceased and a full suite of Risk Free
Rate-referencing derivative and cash products were standard offerings across
the Group.
Having completed the remediation of all non-USD LIBOR exposures at the end of
2021 with no reliance on synthetic rates, the Programme focused on remediating
legacy USD LIBOR stock ahead of the USD LIBOR cessation date (30 June 2023).
The Group made significant progress towards completing its remediation of
legacy exposures over the course of 2023. Clients with legacy USD LIBOR loans
were engaged to remediate their contracts via active conversion to alternative
rates, or other suitable transition mechanisms such as the inclusion of robust
fallbacks. For derivatives, the Group adhered to the International Swaps and
Derivatives Association (ISDA) 2020 IBOR Fallbacks Protocol for all its
trading entities and continued to engage clients to do the same or to
negotiate remediation bilaterally. The Group also successfully participated in
CCP conversion events, including both tranches of the London Clearing 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 significantly reduced our overall notional exposure to USD
LIBOR, as centrally cleared derivatives and bilateral derivatives with
fallbacks represented a substantial portion of the Group's overall USD LIBOR
notional exposure.
At 31 December 2023, a number of contracts remain subject to remediation but
these are considered immaterial for the Group. The largest population of
remaining exposures are syndicated loans, either on a standalone basis, or
where the loans have been hedged with derivatives. These contracts currently
operate under a synthetic USD LIBOR rate.
Risks which the Group is exposed to due to LIBOR transition
The Group has largely mitigated all material 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 transition until 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 arising from continued
remediation; financial and accounting risk in terms of the financial impact of
IBOR transition for the outstanding contracts, and also financial instruments
that may be affected by accounting issues such as accounting for contractual
changes due to IBOR reform, fair value measurement and hedge accounting, as
well as other risks inherent in the reform.
As at 31 December 2022 the Group had the following notional principal
exposures to interest rate benchmarks that were subject to interest rate
benchmark reform.
Page 55
IBOR exposures by benchmark USD LIBOR GBP LIBOR SGD SOR THB FIX Other IBOR Total IBOR
at 31 December 2022
$million
$million
$million
$million
$million
$million
Assets
Loans and advances to banks 145 - - - - 145
Loans and advances to customers 21,395 - 420 - - 21,815
Debt securities, AT1 and other eligible bills 2,843 - 15 - - 2,858
24,383 - 435 - - 24,818
Liabilities
Deposits by banks 332 - - - - 332
Customer accounts 3,066 - - 34 - 3,100
Repurchase agreements and other 671 - - - - 671
secured borrowing
Debt securities in issue 1,211 - - - - 1,211
Subordinated liabilities and other - - - - - -
borrowed funds
5,280 - - 34 - 5,314
Derivatives - Foreign exchange contracts
Currency swaps and options 135,145 - 2,273 959 - 138,377
Derivatives - Interest rate contracts
Swaps 671,534 - 7,512 10,998 - 690,044
Forward rate agreements and options 22,067 - - 9 - 22,076
Exchange traded futures and options 31,922 - - - - 31,922
Equity and stock index options 49 - - - - 49
Credit derivative contracts 3,974 - 46 129 - 4,149
Total IBOR derivative exposure 864,691 - 9,831 12,095 - 886,617
Total IBOR exposure 894,354 - 10,266 12,129 - 916,749
Loan commitments off-balance sheet 2,798 - 14 - - 2,812
Offsetting of financial instruments
Financial assets and liabilities 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 intention to settle on a net basis, or to
realise the asset and settle the liability simultaneously.
In practice, for credit mitigation, the Group is able to offset assets and
liabilities which do not meet the IAS 32 netting criteria set out below. Such
arrangements include master netting arrangements for derivatives 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 addition, the Group also receives and pledges readily realisable collateral
for derivative transactions 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 liquid assets
which can be sold in the event of a default.
Page 56
The following tables set out the impact of netting on the balance sheet. This
comprises derivative transactions settled through an enforceable netting
agreement where we have the intent and ability to settle net and which are
offset on the balance sheet.
2023
Gross amounts Impact of Net amounts Related amount not offset Net amount
of recognised financial instruments
offset in the
of financial instruments presented in the balance sheet
in the balance sheet
$million
$million
balance sheet
$million
$million
Financial instruments Financial
$million
collateral
$million
Assets
Derivative financial instruments 99,929 (49,495) 50,434 (39,293) (8,440) 2,701
Reverse repurchase agreements and other similar secured lending 109,413 (11,832) 97,581 - (97,581) -
At 31 December 2023 209,342 (61,327) 148,015 (39,293) (106,021) 2,701
Liabilities
Derivative financial instruments 105,556 (49,495) 56,061 (39,293) (10,337) 6,431
Repurchase agreements and other 65,373 (11,832) 53,541 - (53,541) -
similar secured borrowing
At 31 December 2023 170,929 (61,327) 109,602 (39,293) (63,878) 6,431
2022
Gross amounts Impact of Net amounts Related amount not offset Net amount
of recognised financial instruments
offset in the
of financial instruments presented in the balance sheet
in the balance sheet
$million
$million
balance sheet
$million
$million
Financial instruments Financial
$million
collateral
$million
Assets
Derivative financial instruments 120,799 (57,082) 63,717 (50,133) (9,206) 4,378
Reverse repurchase agreements and other similar secured lending 105,891 (15,924) 89,967 - (89,967) -
At 31 December 2022 226,690 (73,006) 153,684 (50,133) (99,173) 4,378
Liabilities
Derivative financial instruments 126,944 (57,082) 69,862 (50,133) (12,515) 7,214
Repurchase agreements and other similar secured borrowing 69,738 (15,924) 53,814 - (53,814) -
At 31 December 2022 196,682 (73,006) 123,676 (50,133) (66,329) 7,214
Related amounts not offset in the balance sheet comprises:
• Financial instruments not offset in the balance sheet but covered by an
enforceable netting arrangement. This comprises master netting arrangements
held against derivative financial instruments and excludes the effect of
over-collateralisation
• Financial instruments where a legal opinion evidencing enforceability of
the right of offset may not have been sought, or may have been unable to
obtain
• Financial collateral comprises cash collateral pledged and received for
derivative financial instruments and collateral bought and sold for reverse
repurchase and repurchase agreements respectively and excludes the effect of
over-collateralisation
Financial liabilities designated at fair value through profit or loss
2023 2022
$million
$million
Carrying balance aggregate fair value 69,551 73,027
Amount contractually obliged to repay at maturity 71,240 74,138
Difference between aggregate fair value and contractually obliged to repay at (1,689) (1,111)
maturity
Cumulative change in fair value accredited to credit risk difference 156 (56)
The net fair value loss on financial liabilities designated at fair value
through profit or loss was $2,649 million for the year (31 December 2022: net
loss of $677 million).
Further details of the Group's own credit adjustment (OCA) valuation technique
is described later in this Note.
Page 57
Valuation of financial instruments
The Valuation Methodology function is responsible for independent price
verification, oversight of fair value and appropriate value adjustments and
escalation of valuation issues. Independent price verification is the process
of determining that the valuations incorporated into the financial statements
are validated independent of the business area responsible for the product.
The Valuation Methodology function has oversight of the fair value adjustments
to ensure the financial instruments are priced to exit. These are key controls
in ensuring the material accuracy of the valuations incorporated in the
financial statements. The market data used for price verification (PV) may
include data sourced from recent trade data involving external counterparties
or third parties such as Bloomberg, Reuters, brokers and consensus pricing
providers. The Valuation Methodology function 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 detailing the
suitability of the market data used for price testing. Price verification 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, reliability, availability of multiple
data sources and methodology employed by the pricing provider are taken into
consideration.
The Valuation and Benchmarks Committee (VBC) is the valuation governance forum
consisting of representatives 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 Principal Finance,
the Investment Committee meeting is held on a quarterly basis to review
investments and valuations.
Significant accounting estimates and judgements
The Group evaluates the significance of financial instruments and material
accuracy of the valuations incorporated in the financial statements as they
involve a high degree of judgement and estimation uncertainty in determining
the carrying values of financial assets and liabilities at the balance sheet
date.
• Fair value of financial 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 observability of significant valuation inputs can materially affect the
fair values of financial instruments.
• When establishing the exit price of a financial instrument using a
valuation technique, the Group estimates valuation adjustments in determining
the fair value.
• In determining the valuation of financial 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 significant valuation
judgements in respect of Level 3 instruments.
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 significant
degree of non-market-based unobservable inputs.
Valuation techniques
Refer to the fair value hierarchy explanation - Level 1, 2 and 3
• Financial instruments held at fair value
- Debt securities - asset-backed securities: Asset-backed securities are
valued based on external prices obtained from consensus pricing providers,
broker quotes, recent trades, arrangers' quotes, etc. Where an observable
price is available for a given security, it is classified as Level 2. In
instances where third-party prices are not available or reliable, the security
is classified as Level 3. The fair value of Level 3 securities is estimated
using market standard cash flow models with input parameter assumptions which
include prepayment speeds, default rates, discount margins derived from
comparable securities with similar vintage, collateral type, and credit
ratings.
- Debt securities in issue: These debt securities relate to structured notes
issued by the Group. Where independent market data is available through
pricing vendors and broker sources these positions are classified as Level 2.
Where such liquid external prices are not available, valuations of these debt
securities are implied using input parameters such as bond spreads and credit
spreads, and are classified as Level 3. These input parameters are determined
with reference to the same issuer (if available) or proxies from comparable
issuers or assets.
Page 58
- Derivatives: Derivative products are classified as Level 2 if the
valuation of the product is based upon input parameters which are observable
from independent and reliable market data sources. Derivative products are
classified as Level 3 if there are significant valuation 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 indices and interest rate products with quanto payouts. In most
cases these unobservable correlation parameters cannot be implied from the
market, and methods such as historical analysis and comparison with historical
levels or other benchmark data must be employed.
- Equity shares - private equity: The majority of private equity unlisted
investments are valued based on earning multiples - Price-to-Earnings (P/E) or
enterprise value to earnings before income tax, depreciation and amortisation
(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 comparability between these unquoted investments and the
comparable listed companies, appropriate adjustments are also applied (for
example, liquidity 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 pricing model), which 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 classified as Level
3 on the basis that the valuation methods involve judgements ranging from
determining comparable companies to discount rates where the discounted cash
flow method is applied.
- Loans and advances: These primarily include loans in the FM Bond and Loan
Syndication business which were not fully syndicated as of the balance sheet
date and other financing transactions within Financial Markets, and loans and
advances including reverse repurchase agreements that do not have SPPI
cashflows or are managed on a fair 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
comparables with similar credit grade, sector and region, are used. Where
observable transaction prices, credit spreads and market standard proxy
methods are available, these loans are classified as Level 2. Where there are
no recent transactions or comparables, these loans are classified as Level 3.
- Other debt securities: These debt securities include convertible bonds,
corporate bonds, credit and structured notes. Where quoted prices are
available through pricing vendors, brokers or observable trading activities
from liquid markets, these are classified as Level 2 and valued using such
quotes. Where there are significant valuation inputs which are unobservable in
the market, due to illiquid trading or the complexity of the product, these
are classified as Level 3. The valuations of these debt securities are implied
using 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 .
• Financial instruments held at amortised cost
The following sets out the Group's basis for establishing fair values of
amortised cost financial instruments and their classification between Levels
1, 2 and 3. As certain categories of financial instruments are not actively
traded, there is a significant 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 securities in issue, subordinated liabilities 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 remaining term to maturity
- 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 prevailing market rates for
debts with a similar Credit Risk and remaining maturity
Page 59
- Investment securities: For investment securities that do not have directly
observable market values, the Group utilises a number of valuation techniques
to determine fair value. Where available, securities are valued using 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 similar bond but using spreads for a particular
sector and rating). Certain instruments cannot be proxies as set out above,
and in such cases the positions are valued using non-market observable inputs.
This includes those instruments held at amortised cost and predominantly
relates to asset-backed securities. 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 prevailing money market
rates for debts with a similar Credit Risk and remaining maturity. The Group's
loans and advances to customers' portfolio is well diversified by geography
and industry. Approximately a quarter of the portfolio re-prices within one
month, and approximately half re-prices within 12 months. Loans and advances
are presented net of provisions for impairment. The fair 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, including
assumptions 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 individual instruments within its loans and advances portfolio
and as a result providing quantification of the key assumptions used to value
such instruments is impractical
- Other assets: Other assets comprise primarily cash collateral and trades
pending settlement. The carrying amount of these financial instruments is
considered to be a reasonable approximation of fair value as they are either
short term in nature or re-price to current market rates frequently.
Fair value adjustments
When establishing the exit price of a financial instrument using a valuation
technique, the Group considers adjustments to the modelled price which market
participants would make when pricing that instrument. The main valuation
adjustments (described further below) in determining fair value for financial
assets and financial liabilities are as follows:
01.01.23 Movement 31.12.23 01.01.22 Movement 31.12.22
$million
during the year
$million
$million
during the year
$million
$million
$million
Bid-offer valuation adjustment 118 (3) 115 101 17 118
Credit valuation adjustment 171 (52) 119 165 6 171
Debit valuation adjustment (112) (17) (129) (70) (42) (112)
Model valuation adjustment 3 1 4 5 (2) 3
Funding valuation adjustment 46 (13) 33 - 46 46
Other fair value adjustments 23 2 25 20 3 23
Total 249 (82) 167 221 28 249
Income deferrals
Day 1 and other deferrals 186 (77) 109 147 39 186
Total 186 (77) 109 147 39 186
Note: Bracket represents an asset and credit to the income statement
Page 60
• 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 neutralising the
business' positions through dealing away in the market, thereby bringing long
positions to bid and short positions to offer. The methodology to calculate
the bid-offer adjustment for a derivative portfolio involves netting between
long and short positions and the grouping of risk by strike and tenor based on
the hedging strategy where long positions are marked to bid and short
positions marked to offer in the systems.
• Credit valuation adjustment (CVA): The Group accounts for CVA against the
fair value of derivative products. CVA is an adjustment to the fair value of
the transactions to reflect the possibility 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 participant
would include when deriving a purchase price to acquire our exposures. CVA is
calculated for each subsidiary, and within each entity 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 positive
exposure, market-implied probability of default (PD) and recovery rates. Where
market-implied 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 uncertainties associated with wrong-way
risk in the Group's Prudential Valuation Adjustments framework.
• Debit valuation adjustment (DVA): The Group calculates DVA adjustments on
its derivative liabilities 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 derivative
liabilities, a DVA adjustment is determined by applying the Group's
probability of default to the Group's negative expected exposure against the
counterparty. The Group's probability 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 simulation of the underlying risk factors over the
expected life of the deal. This simulation methodology incorporates the
collateral posted by the Group and the effects of master netting agreements.
• Model valuation adjustment: Valuation models may have pricing deficiencies
or limitations that require a valuation adjustment. These pricing deficiencies
or limitations arise due to the choice, implementation and calibration of the
pricing model.
• Funding valuation adjustment (FVA): The Group makes FVA adjustments
against derivative products, including embedded derivatives. FVA reflects an
estimate of the adjustment to its fair value that a market participant would
make to incorporate funding costs or benefits that could arise in relation to
the exposure. FVA is calculated by determining 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 (including
partially collateralised) derivatives 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 calibrating to a set of market prices with
differing maturity, expiry and strike of the trades.
• Day one and other deferrals: In certain circumstances the initial fair
value is based on a valuation technique which differs to the transaction price
at the time of initial recognition. However, these gains can only be
recognised when the valuation technique used is based primarily on observable
market data. In those cases where the initially 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 immediately 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 primarily represent adjustments
taken to reflect the specific terms and conditions of certain derivative
contracts which affect the termination value at the measurement date.
Page 61
In addition, the Group calculates own credit adjustment (OCA) on its issued
debt designated at fair value, including structured notes, in order to reflect
changes in its own credit standing. Issued debt is discounted utilising the
spread at which similar instruments would be issued or bought back at the
measurement date as this reflects the value from the perspective of a market
participant who holds the identical 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 inception 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 inception of the trade and, conversely, decrease if its credit
standing improves. The Group's OCA reserve will reverse over time as its
liabilities mature.
Fair value hierarchy - financial instruments held at fair value
The fair values of quoted financial assets and liabilities in active markets
are based on current prices. A market is regarded as active if transactions
for the asset or liability take place with sufficient frequency and volume to
provide pricing information on an ongoing basis. Wherever possible, fair
values have been calculated using unadjusted quoted market prices in active
markets for identical instruments held by the Group. Where quoted market
prices are not available, or are unreliable because of poor liquidity, 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 pricing models and, where appropriate, comparison with
instruments that have characteristics similar to those of the instruments held
by the Group.
Assets and liabilities carried at fair value or for which fair values are
disclosed have been classified into three levels according to the
observability of the significant inputs used to determine the fair values.
Changes in the observability of significant valuation inputs during the
reporting period may result in a transfer of assets and liabilities within the
fair value hierarchy. The Group recognises transfers between levels of the
fair value hierarchy when there is a significant change in either its
principal market or the level of observability 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 identical assets or liabilities.
• Level 2: Fair value measurements are those with quoted prices for similar
instruments in active markets or quoted prices for identical or similar
instruments in inactive markets and financial instruments valued using models
where all significant inputs are observable.
• Level 3: Fair value measurements are those where inputs which could have a
significant effect on the instrument's valuation are not based on observable
market data.
Page 62
The following tables show the classification of financial instruments held at
fair value into the valuation hierarchy:
Assets Level 1 Level 2 Level 3 Total
$million
$million
$million
$million
Financial instruments held at fair value through profit or loss
Loans and advances to banks - 2,265 - 2,265
Loans and advances to customers - 5,252 1,960 7,212
Reverse repurchase agreements and other similar secured lending - 79,484 2,363 81,847
Debt securities and other eligible bills 27,055 24,635 1,262 52,952
Of which:
Issued by central banks & governments 23,465 6,557 - 30,022
Issued by corporates other than financial institutions1 4 4,062 346 4,412
Issued by financial institutions1 3,586 14,016 916 18,518
Equity shares 2,386 370 184 2,940
Derivative financial instruments 954 49,400 80 50,434
Of which:
Foreign exchange 129 42,414 25 42,568
Interest rate 37 6,293 6 6,336
Credit - 438 47 485
Equity and stock index options - 73 2 75
Commodity 788 182 - 970
Investment securities
Debt securities and other eligible bills 55,060 48,196 72 103,328
Of which:
Issued by central banks & governments 47,225 18,983 51 66,259
Issued by corporates other than financial institutions1 820 3,236 - 4,056
Issued by financial institutions1 7,015 25,977 21 33,013
Equity shares 199 6 787 992
Other assets - - 6 6
Total financial assets at 31 December 2023 85,654 209,608 6,714 301,976
Liabilities
Financial instruments held at fair value through profit or loss
Deposits by banks - 1,560 334 1,894
Customer accounts - 15,970 1,278 17,248
Repurchase agreements and other similar secured borrowing - 41,283 - 41,283
Debt securities in issue - 9,776 1,041 10,817
Short positions 7,152 4,591 103 11,846
Derivative financial instruments 749 55,116 196 56,061
Of which:
Foreign exchange 122 45,314 10 45,446
Interest rate 46 8,262 5 8,313
Credit - 945 162 1,107
Equity and stock index options - 147 19 166
Commodity 581 448 - 1,029
Other liabilities - - 8 8
Total financial liabilities at 31 December 2023 7,901 128,296 2,960 139,157
1 Includes covered bonds of $7,509 million, securities issued by
Multilateral Development Banks/International Organisations of $24,192 million
and State-owned agencies and development banks of $7,564 million
The fair value of financial assets and financial liabilities classified as
Level 2 in the fair value hierarchy that are subject to complex modelling
techniques is $940 million and $288 million respectively.
There were no significant changes to valuation or levelling approaches during
the year 31 December 2023.
There were no significant transfers of financial assets and liabilities
measured at fair value between Level 1 and Level 2 during the year 31 December
2023.
Page 63
Assets Level 1 Level 2 Level 3 Total
$million
$million
$million
$million
Financial instruments held at fair value through profit or loss
Loans and advances to banks - 955 21 976
Loans and advances to customers - 4,741 1,805 6,546
Reverse repurchase agreements and other similar secured lending 3 62,490 1,998 64,491
Debt securities and other eligible bills 14,702 14,707 1,153 30,562
Of which:
Issued by central banks & governments 14,086 4,734 - 18,820
Issued by corporates other than financial institutions1 91 3,452 517 4,060
Issued by financial institutions1 525 6,521 636 7,682
Equity shares 3,024 24 182 3,230
Derivative financial instruments 892 62,781 44 63,717
Of which:
Foreign exchange 139 54,020 13 54,172
Interest rate 33 7,351 28 7,412
Credit - 410 1 411
Equity and stock index options - 98 2 100
Commodity 720 902 - 1,622
Investment securities
Debt securities and other eligible bills 56,401 55,525 - 111,926
Of which:
Issued by central banks & governments 45,151 22,171 - 67,322
Issued by corporates other than financial institutions1 1,775 4,045 - 5,820
Issued by financial institutions1 9,475 29,309 - 38,784
Equity shares 146 7 655 808
Other assets - - 7 7
Total financial assets at 31 December 2022² 75,168 201,230 5,865 282,263
Liabilities
Financial instruments held at fair value through profit or loss
Deposits by banks - 778 288 1,066
Customer accounts - 10,734 972 11,706
Repurchase agreements and other similar secured borrowing - 51,706 - 51,706
Debt securities in issue - 8,121 451 8,572
Short positions 4,085 2,722 40 6,847
Derivative financial instruments 642 69,099 121 69,862
Of which:
Foreign exchange 101 56,710 12 56,823
Interest rate 29 10,020 12 10,061
Credit - 899 42 941
Equity and stock index options - 191 55 246
Commodity 512 1,279 - 1,791
Other liabilities - - 6 6
Total financial liabilities at 31 December 2022² 4,727 143,160 1,878 149,765
1 Includes covered bonds of $8,455 million, securities issued by
Multilateral Development Banks/International Organisations of $11,438 million
, and State-owned agencies and development banks of $9,211 million
2 The above table does not include held for sale assets of $3 million and
liabilities of $5 million. These are reported in Note 21 together with their
fair value hierarchy
The fair value of financial assets and financial liabilities classified as
Level 2 in the fair value hierarchy that are subject to complex modelling
techniques is $888 million and $209 million respectively.
Page 64
Fair value hierarchy - financial instruments measured at amortised cost
The following table shows the carrying amounts and incorporates the Group's
estimate of fair values of those financial assets and liabilities not
presented on the Group's balance sheet at fair value. These fair values may be
different from the actual amount that will be received or paid on the
settlement or maturity of the financial instrument. For certain instruments,
the fair value may be determined using assumptions for which no observable
prices are available.
Carrying value Fair value
$million
Level 1 Level 2 Level 3 Total
$million
$million
$million
$million
Assets
Cash and balances at central banks¹ 69,905 - 69,905 - 69,905
Loans and advances to banks 44,977 - 44,921 - 44,921
of which - reverse repurchase agreements and other similar secured lending 1,738 - 1,738 - 1,738
Loans and advances to customers 286,975 - 53,472 226,211 279,683
of which - reverse repurchase agreements and other similar secured lending 13,996 - 13,827 169 13,996
Investment securities² 56,935 - 54,419 33 54,452
Other assets¹ 38,140 - 38,140 - 38,140
Assets held for sale 701 101 541 59 701
At 31 December 2023 497,633 101 261,398 226,303 487,802
Liabilities
Deposits by banks 28,030 - 28,086 - 28,086
Customer accounts 469,418 - 460,224 - 460,224
Repurchase agreements and other similar secured borrowing 12,258 - 12,258 - 12,258
Debt securities in issue 62,546 31,255 30,859 - 62,114
Subordinated liabilities and other borrowed funds 12,036 11,119 336 - 11,455
Other liabilities¹ 38,663 - 38,663 - 38,663
Liabilities held for sale 726 54 672 - 726
At 31 December 2023 623,677 42,428 571,098 - 613,526
Carrying value Fair value
$million
Level 1 Level 2 Level 3 Total
$million
$million
$million
$million
Assets
Cash and balances at central banks¹ 58,263 - 58,263 - 58,263
Loans and advances to banks 39,519 - 39,488 - 39,488
of which - reverse repurchase agreements and other similar secured lending 978 - 924 - 924
Loans and advances to customers 310,647 - 58,663 251,560 310,223
of which - reverse repurchase agreements and other similar secured lending 24,498 - 15,727 8,911 24,638
Investment securities² 59,714 - 56,444 25 56,469
Other assets¹ 39,295 - 39,295 - 39,295
Assets held for sale 1,388 344 946 98 1,388
At 31 December 2022 508,826 344 253,099 251,683 505,126
Liabilities
Deposits by banks 28,789 - 28,813 - 28,813
Customer accounts 461,677 - 461,665 - 461,665
Repurchase agreements and other similar secured borrowing 2,108 - 2,108 - 2,108
Debt securities in issue 61,242 24,624 36,148 - 60,772
Subordinated liabilities and other borrowed funds 13,715 12,445 385 - 12,830
Other liabilities¹ 42,915 - 42,914 1 42,915
Liabilities held for sale 1,230 398 832 - 1,230
At 31 December 2022 611,676 37,467 572,865 1 610,333
1 The carrying amount of these financial instruments is considered to
be a reasonable approximation of fair value as they are short-term in nature
or reprice to current market rates frequently
2 Includes Government bonds and Treasury bills of $19,422 million at
31 December 2023 and $17,943 million at 31 December 2022
Page 65
The Group has changed its method of determining the cost of its portfolio of
Investment Securities held at amortised cost and Debt securities and other
eligible bills, other than those included within 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 derecognition of such instruments and
the determination of the initial credit risk of these instruments, to better
align with the IFRS 9 requirements for recognising and measuring impairment
losses. The change was made prospectively for certain but not all securities
and transactions. It is impracticable for the Group to determine the impact of
this approach for each security and each transaction that was executed in
previous periods.
Loans and advances to customers by client segment¹
2023
Carrying value Fai
r
val
ue
Stage 3 Stage 1 and Total Stage 3 Stage 1 and Total
$million
stage 2
$million
$million
stage 2
$million
$million
$million
Corporate, Commercial & 1,975 128,430 130,405 1,910 125,841 127,751
Institutional Banking
Consumer, Private & Business Banking 724 125,335 126,059 721 120,701 121,422
Ventures - 1,033 1,033 - 1,032 1,032
Central & other items 209 29,269 29,478 209 29,269 29,478
At 31 December 2023 2,908 284,067 286,975 2,840 276,843 279,683
2022
Carrying value Fai
r
val
ue
Stage 3 Stage 1 and Total Stage 3 Stage 1 and Total
$million
stage 2
$million
$million
stage 2
$million
$million
$million
Corporate, Commercial & 2,481 137,150 139,631 2,525 137,187 139,712
Institutional Banking
Consumer, Private & Business Banking 677 130,278 130,955 685 131,679 132,364
Ventures - 698 698 - 696 696
Central & other items 230 39,133 39,363 230 37,221 37,451
At 31 December 2022 3,388 307,259 310,647 3,440 306,783 310,223
1 Loans and advances includes reverse repurchase agreements and other
similar secured lending: carrying value $13,996 million and fair value $13,996
million (31 December 2022: $24,498 million and $24,638 million respectively)
Fair value of financial instruments
Level 3 Summary and significant unobservable inputs
The following table presents the Group's primary Level 3 financial instruments
which are held at fair value. The table also presents the valuation techniques
used to measure the fair value of those financial instruments, the significant
unobservable inputs, the range of values for those inputs and the weighted
average of those inputs:
Page 66
Instrument Value as at Principal valuation Significant unobservable inputs Range1 Weighted average2
31 December 2023
technique
Assets Liabilities
$million
$million
Loans and advances to customers 1,960 - Discounted cash flows Price/yield 1.7% - 100% 12.0%
Credit spreads 0.1% - 1.0% 0.6%
Reverse repurchase agreements and other similar secured lending 2,363 - Discounted cash flows Repo curve 5.1% - 7.6% 6.3%
Price/yield (2.7)% - 10.3% 6.0%
Debt securities, alternative tier one and other eligible securities 1,283 - Discounted cash flows Price/yield (14.0)% - 25.8% 10.1%
Recovery rates 0.1% - 1.0% 0.2%
Internal pricing model Equity-Equity correlation 44.1% - 100% 80.7%
Equity-FX correlation (35.9)% - 45.5% 14.2%
Government bonds and 51 - Discounted cash flows Price/yield 17.7% - 21.8% 20.6%
treasury bills
Equity shares (includes private equity investments) 971 - Comparable EV/EBITDA multiples 13.8x - 15.6x 14.9x
pricing/yield
EV/Revenue multiples 9.3x - 30.9x 15.8x
P/E multiples 10.6x - 51.8x 45.7x
P/B multiples 0.3x - 2.7x 1.6x
P/S multiples 0.2x - 1.6x 0.3x
Liquidity discount 7.5% - 20.0% 15.1%
Discounted cash flows Discount rates 9.2% - 35.6% 17.0%
Option pricing model Equity value based on EV/Revenue multiples 8.4x - 42.5x 27.5x
Equity value based on EV/EBITDA multiples 3.1x - 3.1x 3.1x
Equity value based on volatility 21.0% - 65.0% 30.1%
Other assets 6 - NAV N/A N/A N/A
Derivative financial instruments of which:
Foreign exchange 25 10 Option pricing model Foreign exchange option implied volatility 0.5% - 51% 31.8%
Discounted cash flows Interest rate curves 3.6% - 5.8% 3.8%
Foreign exchange curves 0.6% - 64.2% 12.8%
Interest rate 6 5 Discounted cash flows Interest rate curves 3.6% - 8.6% 5.0%
Credit 47 162 Discounted cash flows Credit spreads 1.0% - 1.0% 1.0%
Price/yield 1.7% - 16.3% 8.6%
Equity and stock index 2 19 Internal pricing model Equity-Equity correlation 44.1% - 100% 80.7%
Equity-FX correlation (35.9)% - 45.5% 14.2%
Deposits by banks - 334 Discounted cash flows Credit spreads 0.1% - 3.4% 1.9%
Customer accounts - 1,278 Discounted cash flows Credit spreads 1.0% - 2.0% 1.2%
Interest rate curves 2.9% - 8.6% 6.1%
Price/yield 4.8% - 15.2% 9.9%
Internal pricing model Equity-Equity correlation 44.1% - 100% 80.7%
Equity-FX correlation (35.9)% - 45.5% 14.2%
Debt securities in issue - 1,041 Discounted cash flows Credit spreads 0.3% - 1.6% 1.1%
Price/yield 6.6% - 20.9% 17.9%
Interest rate curves 2.9% - 5.3% 4.4%
Internal pricing model Equity-Equity correlation 44.1% - 100% 80.7%
Equity-FX correlation (35.9)% - 45.5% 14.2%
Bond option implied volatility 2.9% - 5.3% 4.4%
Short positions - 103 Discounted cash flows Price/yield 7.1% - 7.1% 7.1%
Other liabilities - 8 Comparable EV/EBITDA multiples 5.8x - 11.2x 8.5x
pricing/yield
Total 6,714 2,960
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 financial
instruments as at 31 December 2023. The ranges of values used are reflective
of the underlying characteristics of these Level 3 financial instruments based
on the market conditions 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 financial instruments
2 Weighted average for non-derivative financial instruments has been
calculated by weighting inputs by the relative fair value. Weighted average
for derivatives has been provided by weighting inputs by the risk relevant to
that variable. N/A has been entered for the cases where weighted average is
not a meaningful indicator
Page 67
Instrument Value as at Principal valuation Significant unobservable inputs Range1 Weighted average2
31 December 2022
technique
Assets Liabilities
$million
$million
Loans and advances to banks 21 - Discounted cash flows Price/yield N/A N/A
Credit spreads 2.9% 2.9%
Loans and advances 1,805 - Discounted cash flows Price/yield 0.3% - 18.2% 5.3%
to customers
Recovery rates 5.0% - 100% 90.5%
Reverse repurchase agreements and other similar secured lending 1,998 - Discounted cash flows Repo curve 2.3% - 8.0% 6.2%
Price/yield 1.9%-7.2% 6.0%
Debt securities, alternative tier one and other eligible securities 1,152 - Discounted cash flows Price/yield 3.1%-48.5% 7.1%
Recovery rates 0.0% - 1.0% 0.2%
Government bonds and treasury bills - - Discounted cash flows Price/yield N/A N/A
Asset-backed securities 1 - Discounted cash flows Price/yield 6.8% 6.8%
Equity shares (includes private equity investments) 837 - Comparable pricing/yield EV/EBITDA multiples 7.0x - 13.1x 11.0x
EV/Revenue multiples 8.2x - 23.2x 12.9x
P/E multiples 13.4x - 29.7x 17.6x
P/B multiples 0.3x - 3.3x 1.3x
P/S multiples 2.1x - 2.2x 2.2x
Liquidity discount 10.0% - 29.7% 17.5%
Discounted cash flows Discount rates 7.5% - 16.4% 9.4%
Option pricing model Equity value based on EV/Revenue multiples 4.8x - 76.1x 32.9x
Equity value based on EV/EBITDA multiples 2.6x 2.6x
Equity value based on volatility 60.0% 60.0%
Other assets 7 - NAV N/A N/A N/A
Derivative financial instruments of which:
Foreign exchange 13 12 Option pricing model Foreign exchange option implied volatility (21.0)% - 21.0% (2.7)%
Discounted cash flows Foreign exchange curves (4.6)% - 81.8% 15.9%
Interest rate 28 12 Discounted cash flows Interest rate curves (2.1)% - 50.2% 10.6%
Option pricing model Bond option implied volatility N/A N/A
Credit 1 42 Discounted cash flows Credit spreads 0.1% - 2.3% 1.4%
Price/yield 7.2% - 9.7% 7.2%
Equity and stock index 2 55 Internal pricing model Equity-Equity correlation 30.0% - 96.0% 67.0%
Equity-FX correlation (70.0)% - 85.0% 37.0%
Deposits by banks - 288 Discounted cash flows Credit spreads 0.9% - 3.4% 1.8%
Price/yield 6.0% 6.0%
Customer accounts - 972 Discounted cash flows Credit spreads 0.9% - 19.1% 10.3%
Internal pricing model Equity-Equity correlation 30.0% - 96.0% 67.0%
Equity-FX correlation (70.0)% - 85.0% 37.0%
Discounted cash flows Interest rate curves N/A N/A
Price/yield 3.1% - 22.9% 17.8%
Debt securities in issue - 451 Discounted cash flows Credit spreads 0.3% - 7.0% 4.7%
Price/yield 6.8% - 12.4% 9.1%
Internal pricing model Equity-Equity correlation 30.0% - 96.0% 67.0%
Equity-FX correlation (70.0)% - 85.0% 37.0%
Short position - 40 Discounted cash flows Price/yield 6.8% 6.8%
Other liabilities - 6 Comparable pricing/yield EV/EBITDA multiples 4.2x - 9.0x 6.1x
Total 5,865 1,878
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 financial
instruments as at 31 December 2022. The ranges of values used are reflective
of the underlying characteristics of these Level 3 financial instruments based
on the market conditions 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 financial instruments
2 Weighted average for non-derivative financial instruments has been
calculated by weighting inputs by the relative fair value. Weighted average
for derivatives has been provided by weighting inputs by the risk relevant to
that variable. N/A has been entered for the cases where weighted average is
not a meaningful indicator
Page 68
The following section describes the significant unobservable inputs identified
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 implied yield (or spread
over a liquid benchmark) from the price of a comparable instrument, then
adjusting that yield (or spread) to derive a value for the instrument. The
adjustment should account for relevant differences in the financial
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, deriving a fair value for a junior unsecured bond from the price of a
senior secured bond). An increase in price, in isolation, would result in a
favourable movement in the fair value of the asset. An increase in yield, in
isolation, 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 additional yield that a market participant
would demand for taking 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, Depreciation and Amortisation (EBITDA). EV is the
aggregate market capitalisation and debt minus the cash and cash equivalents.
An increase in EV/EBITDA multiple 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 specified period
• Net asset value (NAV) is the value of an entity's assets after deducting
any liabilities
• Interest rate curves is the term structure of interest rates and measures
of future interest rates at a particular point in time
• Liquidity discounts in the valuation of unlisted investments are primarily
applied to the valuation of unlisted firms' investments to reflect the fact
that these stocks are not actively traded. An increase in liquidity discount
will result in an unfavourable movement in the fair value of the unlisted firm
• Price-Earnings (P/E) multiple is the ratio of the market value of the
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 is the expectation of the rate of return resulting from the
liquidation of a particular loan. As the probability of default increases for
a given instrument, the valuation of that instrument will increasingly reflect
its expected recovery level assuming default. An increase in the recovery
rate, in isolation, 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
• Volatility represents an estimate of how much a particular instrument,
parameter or index will change in value over time. Generally, the higher the
volatility, the more expensive the option will be.
Page 69
Level 3 movement tables - financial assets
The table below analyses movements in Level 3 financial assets carried at fair
value.
Assets 2023
Held D In T
at e ve o
fair r st t
value i me a
throug v nt l
h a se
profit t cu $
or i ri m
loss v ti i
e es l
f l
i i
n o
a n
n
c
i
a
l
i
n
s
t
r
u
m
e
n
t
s
$
m
i
l
l
i
o
n
Loans and advances Loans and advances Reverse repurchase agreements and other similar secured lending Debt securities, alternative Equity shares Other Assets Debt securities, alternative Equity shares
to banks
to customers
$million
tier one
$million
$million
tier one
$million
$million
$million
and other eligible bills
and other eligible bills
$million
$million
At 1 January 2023 21 1,805 1,998 1,153 182 7 44 - 655 5,865
Total (losses)/gains recognised in - (35) (107) (292) 4 (1) 12 - - (419)
income statement
Net interest income - - - - - - - - - -
Net trading income - (35) (107) (304) 5 - 12 - - (429)
Other operating income - - - 12 (1) (1) - - - 10
Total (losses)/gains recognised in other comprehensive income (OCI) - - - - - - - (1) 101 100
Fair value through - - - - - - - - 108 108
OCI reserve
Exchange difference - - - - - - - (1) (7) (8)
Purchases 22 1,784 5,902 1,082 8 - 189 21 61 9,069
Sales (22) (1,133) (3,942) (518) (10) - (115) (23) (5) (5,768)
Settlements - (442) (1,488) (305) - - (25) - - (2,260)
Transfers out1 (21) (225) - (6) - - (27) (16) (32) (327)
Transfers in2 - 206 - 148 - - 2 91 7 454
At 31 December 2023 - 1,960 2,363 1,262 184 6 80 72 787 6,714
Total unrealised (losses)/gains recognised - (3) 3 (1) 4 - (12) - - (9)
in the income statement, within net trading income, relating to change in fair
value of assets held at
31 December 2023
1 Transfers out includes loans and advances, debt securities,
alternative tier one and other eligible bills, equity shares and derivative
financial instruments where the valuation parameters became observable during
the period and were transferred to Level 1 and Level 2
2 Transfers in primarily relates to loans and advances, debt
securities, alternative tier one and other eligible bills, equity shares and
derivative financial instruments where the valuation parameters became
unobservable during the year
Page 70
The table below analyses movements in Level 3 financial assets carried at fair
value.
Assets 2022
Held D In T
at e ve o
fair r st t
value i me a
throug v nt l
h a se
profit t cu $
or i ri m
loss v ti i
e es l
f l
i i
n o
a n
n
c
i
a
l
i
n
s
t
r
u
m
e
n
t
s
$
m
i
l
l
i
o
n
Loans and advances Loans and advances Reverse repurchase agreements and other similar secured lending Debt securities, alternative Equity shares Other Assets Debt securities, alternative Equity shares
to banks
to customers
$million
tier one
$million
$million
tier one
$million
$million
$million
and other eligible bills
and other eligible bills
$million
$million
At 1 January 2022 9 1,357 1,566 349 186 26 90 40 493 4,116
Total (losses)/gains recognised in (16) (132) 2 7 4 - 30 - - (105)
income statement
Net interest income - - - - - - - - - -
Net trading income (16) (132) 2 7 4 - 30 - - (105)
Other operating income - - - - - - - - - -
Total losses recognised in other comprehensive income (OCI) - - - - - - - (1) (8) (9)
Fair value through - - - - - - - (1) (1) (2)
OCI reserve
Exchange difference - - - - - - - - (7) (7)
Purchases 55 1,605 6,438 1,063 2 8 118 - 166 9,455
Sales (30) (237) (5,484) (342) (10) (10) (99) - (6) (6,218)
Settlements (19) (877) (524) (1) - - (80) (39) - (1,540)
Transfers out1 - (160) - - - (17) (29) - - (206)
Transfers in2 22 249 - 77 - - 14 - 10 372
At 31 December 2022 21 1,805 1,998 1,153 182 7 44 - 655 5,865
Total unrealised gains/(losses) recognised - - - - 3 - (2) - - 1
in the income statement,
within net trading income, relating to change in fair value of assets held at
31 December 2022
1 Transfers out includes loans and advances, other assets and
derivative financial instruments where the valuation parameters became
observable during the period and were transferred to Level 1 and Level 2
2 Transfers in primarily relates to loans and advances, debt
securities, alternative tier one and other eligible bills and derivative
financial instruments where the valuation parameters became unobservable
during the year
Page 71
Level 3 movement tables - financial liabilities
2023
Deposits Customer accounts Debt securities Derivative financial instruments Short Other Total
by banks
$million
in issue
$million
positions
liabilities
$million
$million
$million
$million
$million
At 1 January 2023 288 972 451 121 40 6 1,878
Total losses/(gains) recognised in income statement - net trading income 7 (6) 39 (52) 3 3 (6)
Issues 628 1,789 1,489 447 100 - 4,453
Settlements (585) (1,491) (1,218) (312) (40) - (3,646)
Transfers out1 (4) (9) (85) (11) - (1) (110)
Transfers in2 - 23 365 3 - - 391
At 31 December 2023 334 1,278 1,041 196 103 8 2,960
Total unrealised (gains)/losses recognised in the income statement, within net - (21) 6 (47) - - (62)
trading income, relating to change in fair value of liabilities held at 31
December 2023
2022
Deposits Customer accounts Debt securities Derivative financial instruments Short Other Total
by banks
$million
in issue
$million
positions
liabilities
$million
$million
$million
$million
$million
At 1 January 2022 283 454 821 94 - 1 1,653
Total (gains)/losses recognised in income statement - net trading income (37) (82) (158) 155 (3) 5 (120)
Issues 447 1,818 815 179 140 - 3,399
Settlements (400) (1,266) (1,066) (291) (97) - (3,120)
Transfers out1 (5) - (38) (23) - - (66)
Transfers in2 - 48 77 7 - - 132
At 31 December 2022 288 972 451 121 40 6 1,878
Total unrealised gains recognised in the income statement, within net trading (1) (17) (7) (3) - - (28)
income, relating
to change in fair value of liabilities held at
31 December 2022
1 Transfers out during the year primarily relates to bank deposits,
customer accounts debt securities in issue, other liabilities and derivative
financial instruments where the valuation parameters became observable during
the year and were transferred to Level 2 financial liabilities
2 Transfers in during the year primarily relates to derivative
financial instruments, customer accounts and debt securities in issue where
the valuation parameters become unobservable during the year
Page 72
Sensitivities in respect of the fair values of Level 3 assets and liabilities
Sensitivity analysis is performed on products with significant 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 statistical
analysis performed on a set of reference prices based on the composition 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 sensitivity
analysis assumes a one-way market move and does not consider offsets for
hedges.
Held at fair value through profit or loss Held at fair value through other comprehensive income
Net exposure Favourable Unfavourable Net exposure Favourable Unfavourable
$million
changes
changes
$million
changes
changes
$million
$million
$million
$million
Financial instruments held at fair value
Loans and advances 1,960 1,985 1,918 - - -
Reverse repurchase agreements and other similar secured lending 2,363 2,390 2,336 - - -
Debt securities, alternative tier one and other eligible bills 1,262 1,309 1,193 72 78 66
Equity shares 184 202 166 787 866 708
Other assets 6 7 5 - - -
Derivative financial instruments (116) (75) (157) - - -
Customers accounts (1,278) (1,191) (1,365) - - -
Deposits by banks (334) (334) (334) - - -
Short positions (103) (101) (105) - - -
Debt securities in issue (1,041) (966) (1,115) - - -
Other liabilities (8) (7) (9) - - -
At 31 December 2023 2,895 3,219 2,533 859 944 774
Financial instruments held at fair value
Loans and advances 1,826 1,851 1,758 - - -
Reverse repurchase agreements and other similar secured lending 1,998 2,013 1,979 - - -
Asset backed securities 1 1 1 - - -
Debt securities, alternative tier one and other eligible bills 1,152 1,168 1,124 - - -
Equity shares 182 200 164 655 715 595
Other assets 7 8 6 - - -
Derivative financial instruments (77) (44) (109) - - -
Customers accounts (972) (934) (1,010) - - -
Deposits by banks (288) (283) (293) - - -
Short positions (40) (39) (41) - - -
Debt securities in issue (451) (419) (482) - - -
Other liabilities (6) (5) (7) - - -
At 31 December 2022 3,332 3,517 3,090 655 715 595
The reasonably possible alternatives could have increased or decreased the
fair values of financial instruments held at fair value through profit or loss
and those classified as fair value through other comprehensive income by the
amounts disclosed below.
Financial instruments Fair value changes 2023 2022
$million
$million
Held at fair value through profit or loss Possible increase 324 185
Possible decrease (362) (242)
Fair value through other comprehensive income Possible increase 85 60
Possible decrease (85) (60)
Page 73
14. Derivative financial instruments
Accounting policy
Fair values may be obtained from quoted market prices in active markets,
recent market transactions, and valuation techniques, including discounted
cash flow models and option pricing models, as appropriate. Where the
initially recognised fair value of a derivative contract is based on a
valuation model that uses inputs which are not observable in the market, it
follows the same initial recognition accounting policy as for other financial
assets and liabilities. All derivatives are carried as assets when fair value
is positive and as liabilities when fair value is negative.
Hedge accounting
Under certain conditions, the Group may designate a recognised asset or
liability, a firm commitment, highly probable forecast transaction or net
investment of a foreign operation into a formal hedge accounting relationship
with a derivative 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 Financial Instruments: Recognition and
Measurement and the 'Phase 2' amendments to IFRS in respect of interest rate
benchmark reform. There are three categories of hedge relationships:
• Fair value hedge: to manage the fair value of interest rate and/or foreign
currency risks of recognised assets or liabilities 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
liability, 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 inception and on a quarterly basis, whether
the derivatives designated in hedge relationships are highly effective in
offsetting changes in fair values or cash flows of hedged items. Hedges are
considered to be highly effective if all the following criteria are met:
• At inception of the hedge and throughout its life, the hedge is
prospectively expected to be highly effective in achieving offsetting changes
in fair value or cash flows attributable to the hedged risk
• Prospective and retrospective effectiveness of the hedge should be within
a range of 80-125%. This is tested using regression analysis
• The regression co-efficient (R squared), which 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 probability of occurring and must present an exposure to variations in
cash flows that are expected to affect reported profit or loss.
Fair value hedge
Changes in the fair value of derivatives that are designated 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 liability that are
attributable to the hedged risk. If the hedge no longer meets the criteria for
hedge accounting, 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 remaining term to maturity of the hedged item. If the
hedged item is sold or repaid, the unamortised fair value adjustment is
recognised immediately in the income statement. For financial assets
classified as fair value through other comprehensive income, the hedge
accounting adjustment attributable to the hedged risk is included in net
trading income to match the hedging derivative.
Cash flow hedge
The effective portion of changes in the fair value of derivatives that are
designated and qualify as cash flow hedging instruments are initially
recognised in other comprehensive income, accumulating in the cash flow hedge
reserve within equity. These amounts are subsequently recycled to the income
statement in the periods when the hedged item affects profit or loss. Both the
derivative fair 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 derivative
method, which creates a derivative instrument to serve as a proxy for the
hedged transaction. The terms of the hypothetical derivative match the
critical terms of the hedged item and it has a fair value of zero at
inception. The hypothetical derivative and the actual derivative are regressed
to establish the statistical significance of the hedge relationship. Any
ineffective portion of the gain or loss on the hedging instrument is
recognised in the net trading income immediately.
Page 74
If a cash flow hedge is discontinued, 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 immediately
reclassified to profit or loss.
Net investment hedge
Hedges of net investments are accounted for in a similar manner to cash flow
hedges, with gains and losses arising 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 within equity. These amounts remain in equity until the net investment
is disposed of. The ineffective portion of the hedges is recognised in the net
trading income immediately.
The tables below analyse the notional principal amounts and the positive and
negative fair values of derivative financial instruments. Notional principal
amounts are the amounts of principal underlying the contract at the reporting
date.
Derivatives 2023 2022
Notional principal amounts Assets Liabilities Notional principal amounts Assets Liabilities
$million
$million
$million
$million
$million
$million
Foreign exchange derivative contracts:
Forward foreign exchange contracts 3,628,067 30,897 32,601 3,154,440 38,162 39,376
Currency swaps and options 1,145,702 11,671 12,845 1,168,026 16,010 17,447
4,773,769 42,568 45,446 4,322,466 54,172 56,823
Interest rate derivative contracts:
Swaps 4,841,616 53,735 55,241 3,516,310 62,001 64,005
Forward rate agreements and options 313,253 2,057 2,520 98,465 2,214 2,880
5,154,869 55,792 57,761 3,614,775 64,215 66,885
Exchange traded futures and options 325,051 39 47 324,702 279 258
Credit derivative contracts 281,130 485 1,107 249,082 411 941
Equity and stock index options 8,671 75 166 6,788 100 246
Commodity derivative contracts 117,436 970 1,029 90,952 1,622 1,791
Gross total derivatives 10,660,926 99,929 105,556 8,608,765 120,799 126,944
Offset - (49,495) (49,495) - (57,082) (57,082)
Total derivatives 10,660,926 50,434 56,061 8,608,765 63,717 69,862
The Group limits exposure to credit 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 enforceability of the right to offset (e.g. via
legal opinion) and the ability and intention to settle on a net basis (e.g.
via operational practice).
The Group may enter into economic hedges that do not qualify for IAS 39 hedge
accounting treatment, including derivatives such as interest rate swaps,
interest rate futures and cross-currency swaps to manage interest rate and
currency risks of the Group. These derivatives are measured at fair value,
with fair value changes recognised in net trading income: refer to Market
Risk.
Derivatives held for hedging
The Group enters into derivative contracts for the purpose of hedging interest
rate, currency and structural foreign exchange risks inherent in assets,
liabilities and forecast transactions. The table below summarises the notional
principal amounts and carrying values of derivatives designated in hedge
accounting relationships at the reporting date.
Page 75
Included in the table above are derivatives held for hedging purposes as
follows:
2023 2022
Notional principal amounts Assets Liabilities Notional principal amounts Assets Liabilities
$million
$million
$million
$million
$million
$million
Derivatives designated as
fair value hedges:
Interest rate swaps 69,347 1,264 2,397 80,760 2,438 2,939
Currency swaps 115 10 6 1,273 16 48
69,462 1,274 2,403 82,033 2,454 2,987
Derivatives designated as
cash flow hedges:
Interest rate swaps 41,834 184 537 31,977 100 671
Forward foreign exchange contracts 12,071 420 183 11,987 99 385
Currency swaps 14,321 191 150 11,787 86 362
68,226 795 870 55,751 285 1,418
Derivatives designated as net investment hedges:
Forward foreign exchange contracts 15,436 32 41 14,576 120 141
Total derivatives held for hedging 153,124 2,101 3,314 152,360 2,859 4,546
Fair value hedges
The Group issues various long-term fixed-rate debt issuances that are measured
at amortised cost, including 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 securities such as government and corporate
bonds, including some denominated in foreign currency (see Note 13). These
assets and liabilities 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 ineffectiveness from fair value hedges is driven by cross-currency basis
risk and interest cashflows mismatch between the hedging instruments and
underlying hedged items. The amortisation of fair 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 ineffectiveness
Interest rate1 2023
Notional Carrying amount Change in fair Ineffectiveness recognised in
$million
value used to calculate hedge ineffectiveness2
profit or loss
$million
$million
Asset Liability
$million
$million
Interest rate swaps - debt securities/subordinated 45,455 381 2,267 271 (4)
notes issued
Interest rate swaps - loans and advances 1,203 26 1 (20) -
Interest rate swaps - debt securities and other 22,689 857 129 (459) (17)
eligible bills
Interest and currency risk1
Cross-currency swaps - debt securities/subordinated 70 - 6 (2) -
notes issued
Cross-currency swaps - debt securities and other 45 10 - 11 -
eligible bills
Total at 31 December 2023 69,462 1,274 2,403 (199) (21)
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 derivatives, with changes in fair value including hedge
ineffectiveness recorded within net trading income
2 This represents a (loss)/gains change in fair value used for calculating
hedge ineffectiveness
Page 76
Interest rate1 2022
Notional Carrying amount Change in fair Ineffectiveness recognised in
$million
value used to calculate hedge ineffectiveness2
profit or loss
$million
$million
Asset Liability
$million
$million
Interest rate swaps - debt securities/subordinated 41,772 112 2,914 (3,020) (7)
notes issued
Interest rate swaps - loans and advances 1,117 68 - 53 (1)
Interest rate swaps - debt securities and other 37,871 2,258 25 3,127 13
eligible bills
Interest and currency risk1
Cross-currency swaps - debt securities/subordinated 72 - 4 (260) 12
notes issued
Cross-currency swaps - debt securities and other 1,201 16 44 (9) 4
eligible bills
Total at 31 December 2022 82,033 2,454 2,987 (109) 21
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 derivatives, with changes in fair value including hedge
ineffectiveness recorded within net trading income
2 This represents a (loss)/gains change in fair value used for calculating
hedge ineffectiveness
Hedged items in fair value hedges
2023
Carrying amount Accumulated amount of fair value hedge adjustments included in the carrying Change in the C
amount
value used for calculating hedge ineffectiveness1 u
$million m
u
l
a
t
i
v
e
b
a
l
a
n
c
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o
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a
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h
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s
2
$
m
i
l
l
i
o
n
Asset Liability Asset Liability
$million
$million
$million
$million
Debt securities /subordinated notes issued - 46,156 - 1,761 (273) 360
Debt securities and other eligible bills 21,473 - (553) - 431 744
Loans and advances to customers 1,183 - (20) - 20 13
Total at 31 December 2023 22,656 46,156 (573) 1,761 178 1,117
2022
Carrying amount Accumulated amount of fair value Change in fair C
hedge adjustments included in the
value used for calculating hedge ineffectiveness1 u
carrying amount $million m
u
l
a
t
i
v
e
b
a
l
a
n
c
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o
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o
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h
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s
2
$
m
i
l
l
i
o
n
Asset Liability Asset Liability
$million
$million
$million
$million
Debt securities /subordinated notes issued - 42,702 - 2,756 3,285 414
Debt securities and other eligible bills 36,028 - (2,075) - (3,101) 441
Loans and advances to customers 1,051 - (65) - (54) 1
Total at 31 December 2022 37,079 42,702 (2,140) 2,756 130 856
1 This represents a gain/(loss) change in fair value used for
calculating hedge ineffectiveness
2 This represents a credit/(debit) to the balance sheet value
Income statement impact of fair value hedges
2023 2022
Income/(expense)
Income/(expense)
$million $million
Change in fair value of hedging instruments (199) (109)
Change in fair value of hedged risks attributable to hedged items 178 130
Net ineffectiveness (loss)/gain to net trading income (21) 21
Amortisation gain to net interest income 232 141
Page 77
Cash flow hedges
The Group has exposure to market movements in future interest cash flows on
portfolios of customer accounts, debt securities and loans and advances to
customers. The amounts and timing of future cash flows, representing both
principal and interest flows, are projected on the basis of contractual terms
and other relevant factors, including estimates of prepayments and defaults.
The hedging strategy of the Group involves using interest rate swaps to manage
the variability in future cash flows on assets and liabilities that have
floating rates of interest by exchanging the floating rates for fixed rates.
It also uses foreign exchange contracts and currency swaps to manage the
variability in future exchange rates on its assets and liabilities 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 relationship
with 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 ineffectiveness 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 variability of future cash flows arising
from changes in the designated benchmark interest and/or foreign exchange
rates.
Hedging instruments and ineffectiveness
2023 Amount reclassified
from reserves
to net trading income
$million
Notional Carrying amount Change in Gain Ineffectiveness gain recognised
$million
fair value used
recognised
in net trading income
to calculate
in OCI
$million
hedge ineffectiveness1
$million
$million
Asset Liability
$million
$million
Interest rate risk
Interest rate swaps 41,834 184 537 612 609 3 -
Currency risk
Forward foreign exchange contract 12,071 420 183 104 103 1 -
Cross-currency swaps 14,321 191 150 185 183 2 -
Total as at 31 December 2023 68,226 795 870 901 895 6 -
2022
Notional Carrying amount Change in (Loss)/gain recognised Ineffectiveness (loss) recognised in net trading income Amount reclassified
$million
fair value used to calculate
in OCI
$million
from reserves
hedge ineffectiveness1
$million
to net trading income
$million
$million
Asset Liability
$million
$million
Interest rate risk
Interest rate swaps 31,977 100 671 (533) (531) (2) -
Currency risk
Forward foreign exchange contract 11,987 99 385 (141) (141) - -
Cross-currency swaps 11,787 86 362 421 426 (5) -
Total as at 31 December 2022 55,751 285 1,418 (253) (246) (7) -
Hedged items in cash flow hedges
2023
Change in Cash flow Cumulative balance in the cash flow hedge reserve from de-designated hedge
fair value used for calculating hedge ineffectiveness1
hedge reserve relationships
$million
$million
$million
Customer accounts (421) (114) 136
Debt securities and other eligible bills (98) (22) (15)
Loans and advances to customers (312) 134 -
Intragroup lending currency hedge (64) - -
Intragroup borrowing currency hedge - - -
Total at 31 December 2023 (895) (2) 121
Page 78
2022
Change in Cash flow Cumulative balance in the cash flow hedge reserve from de-designated hedge
fair value used
hedge reserve relationships
for calculating hedge ineffectiveness1
$million
$million
$million
Customer accounts 244 (444) 108
Debt securities and other eligible bills (165) (72) ((30)
Loans and advances to customers 315 (191) (18)
Intragroup lending currency hedge (135) (6) -
Intragroup borrowing currency hedge (13) - -
Total at 31 December 2022 246 (713) 60
1 This represents a gain/(loss) change in fair value used for
calculating hedge ineffectiveness
Impact of cash flow hedges on profit and loss and other comprehensive income
2023 2022
Income/(expense)
Income/(expense)
$million
$million
Cash flow hedge reserve balance as at 1 January (564) (34)
Gain/(loss) recognised in other comprehensive income on effective portion of 895 (246)
changes in fair value
of hedging instruments
Gain reclassified to income statement when hedged item affected net profit (128) (373)
Taxation charge relating to cash flow hedges (112) 89
Cash flow hedge reserve balance as at 31 December 91 (564)
Net investment hedges
Foreign currency exposures arise from investments in subsidiaries 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 subsidiaries 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 significant impact on the regulatory ratios of the Group
and its banking subsidiaries. The Group uses foreign exchange forwards to
manage the effect of exchange rates on its net investments in foreign
subsidiaries.
Hedging instruments and ineffectiveness
2023
Notional Carrying amount Change in Changes in Ineffectiveness recognised in profit or loss Amount reclassified
$million
fair value used to calculate hedge ineffectiveness1
the value of
$million
from reserves
$million
the hedging instrument recognised
to income
in OCI
$million
$million
Asset Liability
$million
$million
Derivative forward currency contracts2 15,436 32 41 215 215 - -
2022
Notional Carrying amount Change in Changes in Ineffectiveness recognised in profit or loss Amount reclassified
$million
fair value used to calculate hedge ineffectiveness1
the value of
$million
from reserves
$million
the hedging instrument recognised
to income
in OCI
$million
$million
Asset Liability
$million
$million
Derivative forward currency contracts2 14,576 120 141 512 512 - -
1 This represents a gain/(loss) change in fair value used for
calculating hedge ineffectiveness
2 These derivative forward currency contracts have a maturity of less than
one year. The hedges are rolled on a periodic basis
Hedged items in net investment hedges
2023
Change in the Translation Balances remaining in the translation reserve from hedging relationships for
value used for calculating hedge ineffectiveness1
reserve which hedge accounting is no longer applied
$million
$million
$million
Net investments (215) (9) -
Page 79
2022
Change in the Translation Balances remaining in the translation reserve from hedging relationships for
value used for calculating hedge ineffectiveness1
reserve which hedge accounting is no longer applied
$million
$million
$million
Net investments (512) (21) -
1 This represents a gain/(loss) change in fair value used for
calculating hedge ineffectiveness
Impact of net investment hedges on other comprehensive income
2023 2022
Income/(expense)
Income/(expense)
$million
$million
Gains recognised in other comprehensive income 215 512
Maturity of hedging instruments
Fair value hedges 2023
Less than More than One to More than
one month
one month
five years
five years
and less than
one year
Interest rate swap
Notional $million 3,242 9,789 41,545 14,771
Cross-currency swap
Notional $million - 115 - -
Average fixed interest rate (to USD) GBP - 1.33% - -
CNH - 3.17% - -
Average exchange rate GBP/USD - 0.66 - -
CNH/USD - 6.37 - -
Cash flow hedges
Interest rate swap
Notional $million 2,129 27,634 11,664 407
Average fixed interest rate USD 5.10% 3.45% 4.70% 3.16%
Cross-currency swap
Notional $million 166 10,794 3,361 -
Average fixed interest rate HKD - 4.97% 0.21% -
KRO 1.96% 3.58% 0.62% -
USD - 5.64% - -
TWD (3.68)% 0.77% 0.81% -
JPY - (0.07)% (0.05)% -
Average exchange rate HKD/USD - 7.83 7.85 -
KRO/USD 1,192.20 1,320.69 1,284.82 -
USD/HKD - 0.13 - -
TWD/USD 30.63 31.53 32.22 -
JPY/HKD - 17.86 18.09 -
Forward foreign exchange contracts
Notional $million 2,194 9,877 - -
Average exchange rate BRL/USD - 5.17 - -
TWD/HKD - 3.81 - -
JPY/USD 130.49 136.05 - -
Page 80
Net investment hedges
Foreign exchange derivatives
Notional $million 15,436 - - -
Average exchange rate CNY/USD 7.12 - - -
KRW/USD 1,283.25 - - -
AED/USD 3.67 - - -
HKD/USD 7.80 - - -
Fair value hedges 2022
Less than More than One to More than
one month
one month
five years
five years
and less than
one year
Interest rate swap
Notional $million 2,462 8,888 53,225 16,185
Cross-currency swap
Notional $million - 1,109 164 -
Average fixed interest rate (to USD) JPY - (0.62)% - -
Average exchange rate JPY/USD - 138.78 - -
Cash flow hedges
Interest rate swap
Notional $million 195 16,465 14,819 498
Average fixed interest rate HKD - 0.35% 1.34% -
USD 3.80% 1.82% 1.60% 1.29%
Cross-currency swap
Notional $million 45 8,466 2,650 626
Average fixed interest rate HKD - 3.93% - 0.21%
KRO - 3.26% 3.83% -
USD - 4.15% - -
TWD (0.61)% (1.38)% 0.32% -
Average exchange rate HKD/USD - 7.84 - 7.85
KRO/USD - 1,342.85 1,278.62 1,300.90
USD/HKD - 7.84 - -
TWD/USD 27.74 30.77 29.73 -
Forward foreign exchange contracts
Notional $million 1,246 10,741 - -
Average exchange rate JPY/USD 135.18 133.26 - -
Net investment hedges
Foreign exchange derivatives
Notional $million 14,576 - - -
Average exchange rate CNY/USD 6.71 - - -
KRW/USD 1,296.95 - - -
AED/USD 3.67 - - -
HKD/USD 7.83 - - -
Interest rate benchmark reform
As at 31 December 2023, there are no derivative instruments designated in fair
value or cash flow hedge accounting relationships that were linked to IBOR
reference rates (31 December 2022: $65,769 million).
Page 81
15. Loans and advances to banks and customers
Accounting policy
Refer to Note 13 Financial instruments for the relevant accounting policy.
2023 2022
$million
$million
Loans and advances to banks 45,001 39,545
Expected credit loss (24) (26)
44,977 39,519
Loans and advances to customers 292,145 316,107
Expected credit loss (5,170) (5,460)
286,975 310,647
Total loans and advances to banks and customers1 331,952 350,166
1 Includes $3.6 billion (31 December 2022: $4.8 billion) of assets pledged
as collateral. For more information, please refer to Pillar 3 disclosures
The Group has outstanding residential mortgage loans to Korea residents of
$17.2 billion (31 December 2022: $19.1 billion) and Hong Kong residents of
$32.7 billion (31 December 2022: $35 billion).
Analysis of loans and advances to customers by geographic region and client
segment together with their related impairment provisions are set out within
the Risk review and Capital review.
16. Reverse repurchase and repurchase agreements including other similar
lending and borrowing
Accounting policy
The Group purchases securities (a reverse repurchase agreement - 'reverse
repo') typically with financial institutions subject to a commitment to resell
or return the securities at a predetermined price. These securities 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. Consideration paid (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 majority 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 securities (a repurchase agreement - 'repo') subject to a
commitment to repurchase or redeem the securities at a predetermined price.
The securities are retained on the balance sheet as the Group retains
substantially all the risks and rewards of ownership and these securities are
disclosed as pledged collateral. Consideration received (or cash collateral
received) is accounted for as a financial liability at amortised cost unless
it is either mandatorily classified as fair value through profit or loss or
irrevocably designated at fair value through profit or loss at initial
recognition.
Repo and reverse repo transactions typically entitle the Group and its
counterparties to have recourse to assets similar to those provided as
collateral in the event of a default. Securities sold subject to repos, either
by way of a Global Master Repurchase Agreement (GMRA), or through a securities
sale and Total Return Swap (TRS) continue to be recognised on the balance
sheet as the Group retains substantially the associated risks and rewards of
the securities (the TRS is not recognised). The counterparty liability is
included in deposits by banks or customer accounts, as appropriate. Assets
sold under repurchase agreements are considered encumbered as the Group cannot
pledge these to obtain funding.
Reverse repurchase agreements and other similar secured lending
2023 2022
$million
$million
Banks 32,286 24,932
Customers 65,295 65,035
97,581 89,967
Of which:
Fair value through profit or loss 81,847 64,491
Banks 30,548 23,954
Customers 51,299 40,537
Held at amortised cost 15,734 25,476
Banks 1,738 978
Customers 13,996 24,498
Page 82
Under reverse repurchase and securities borrowing arrangements, the Group
obtains securities under usual and customary terms which permit it to repledge
or resell the securities to others. Amounts on such terms are:
2023 2022
$million
$million
Securities and collateral received (at fair value) 101,935 124,989
Securities and collateral which can be repledged or sold (at fair value) 101,845 123,759
Amounts repledged/transferred to others for financing activities, to satisfy 34,154 44,628
liabilities under sale
and repurchase agreements (at fair value)
Repurchase agreements and other similar secured borrowing
2023 2022
$million
$million
Banks 5,585 6,968
Customers 47,956 46,846
53,541 53,814
Of which:
Fair value through profit or loss 41,283 51,706
Banks 4,658 5,737
Customers 36,625 45,969
Held at amortised cost 12,258 2,108
Banks 927 1,231
Customers 11,331 877
The tables below set out the financial assets provided as collateral for
repurchase and other secured borrowing transactions:
Collateral pledged against repurchase agreements 2023
Fair value Fair value Amortised cost Off-balance sheet Total
through profit
through other comprehensive income
$million
$million
$million
or loss
$million
$million
On-balance sheet
Debt securities and other eligible bills 4,993 8,157 10,181 - 23,331
Off-balance sheet
Repledged collateral received - - - 34,154 34,154
At 31 December 2023 4,993 8,157 10,181 34,154 57,485
Collateral pledged against repurchase agreements 2022
Fair value Fair value Amortised cost Off-balance sheet Total
through profit
through other comprehensive income
$million
$million
$million
or loss
$million
$million
On-balance sheet
Debt securities and other eligible bills 2,956 3,630 4,917 - 11,503
Off-balance sheet
Repledged collateral received - - - 44,628 44,628
At 31 December 2022 2,956 3,630 4,917 44,628 56,131
17. Goodwill and intangible assets
Accounting policy
Goodwill
Goodwill on acquisitions of subsidiaries is included in intangible assets.
Goodwill on acquisitions of associates is included in Investments in
associates and joint ventures. Goodwill included in intangible assets is
assessed at each balance sheet date for impairment and carried at cost less
any accumulated impairment losses. Gains 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 forecasting expected cash flows
of the relevant cash-generating units (CGUs) and discounting these at an
appropriate discount rate, the determination of which requires the exercise of
judgement. Goodwill is allocated to CGUs for the purpose of impairment
testing. CGUs represent the lowest level within the Group which 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 83
Other accounting estimates and judgements
The carrying amount of goodwill is based on the application of judgements
including the basis of goodwill impairment calculation assumptions. Judgement
is also applied in determination of CGUs.
Estimates include forecasts used for determining cash flows for CGUs, the
appropriate long-term growth rates to use and discount rates which factor in
country risk-free rates and applicable risk premiums. The Group undertakes an
annual assessment to evaluate whether the carrying value of goodwill is
impaired. The estimation of future cash flows and the level to which they are
discounted is inherently uncertain and requires significant judgement and is
subject to potential change over time.
Acquired intangibles
At the date of acquisition of a subsidiary or associate, intangible assets
which are deemed separable and that arise from contractual or other legal
rights are capitalised and included within the net identifiable assets
acquired. These intangible assets are initially measured at fair value, which
reflects market expectations of the probability that the future economic
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 indicators of impairment. In the
event that an asset's carrying amount is determined to be greater than its
recoverable amount, the asset is written down immediately to the recoverable
amount.
Computer software
Acquired computer software licences are capitalised on the basis of the costs
incurred to acquire and bring to use the specific software.
Internally generated software represents substantially all of the total
software capitalised. Direct costs of the development of separately
identifiable internally generated software are capitalised where it is
probable that future economic benefits attributable to the software 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
immediately when incurred. Internally generated software is amortised over
each asset's useful life to a maximum of 10-years. On an annual basis software
assets' residual values and useful lives are reviewed, including assessing for
indicators of impairment. Indicators of impairment include loss of business
relevance, obsolescence, 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 capitalised software that is internally generated, judgement is required
to determine which costs relate to research (expensed) and which costs relate
to development (capitalised). Further judgement is required to determine the
technical feasibility 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 functionality
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 application over the
contract term. As such, the Group does not have control and as a result
recognises an operating expense for these costs over the contract term.
Certain costs, including customisation costs related to implementation of the
SaaS may meet the definition of an intangible asset in their own right if it
is separately identifiable and control is established. These costs are
capitalised if it is expected to provide the Group with future economic
benefits flowing from the underlying resource and the Group can restrict
others from accessing those benefits.
Page 84
2023 2022
Goodwill Acquired intangibles Computer software Total Goodwill Acquired intangibles Computer software1 Total
$million
$million
$million
$million
$million
$million
$million
$million
Cost
At 1 January 2,471 295 5,178 7,944 2,595 457 4,464 7,516
Exchange translation differences (24) (12) 21 (15) (108) (26) (22) (156)
Additions - - 1,124 1,124 - - 1,096 1,096
Impairment charge² - - (151) (151) (14) - (7) (21)
Disposals and amounts written off (18)¹ (5)¹ (4) (27) - (136) (348) (484)
Classified as held for sale - - - - (2) - (5) (7)
At 31 December 2,429 278 6,168 8,875 2,471 295 5,178 7,944
Provision for amortisation
At 1 January - 276 1,799 2,075 - 437 1,608 2,045
Exchange translation differences - (12) 11 (1) - (29) (11) (40)
Amortisation - 1 625 626 - 4 531 535
Impairment charge2 - - (39) (39) - - 5 5
Disposals and amounts written off - - - - - (136) (331) (467)
Classified as held for sale - - - - - - (3) (3)
At 31 December - 265 2,396 2,661 - 276 1,799 2,075
Net book value 2,429 13 3,772 6,214 2,471 19 3,379 5,869
1 Includes disposal of goodwill and other intangibles relating to aviation
finance leasing business. These were classified as held for sale during 2023
and sold during the year
2 Computer software impairment includes $82.8 million (2022: nil) charge
relating to write off on SaaS (Software as a Service) applications capitalised
in previous years
At 31 December 2023, accumulated goodwill impairment losses incurred from 1
January 2005 amounted to $3,331 million (31 December 2022: $3,331 million), of
which Nil million was recognised in 2023 (31 December 2022: $14 million).
Outcome of impairment assessment
An annual assessment is made as to whether the current carrying value of
goodwill is impaired. For the purposes of impairment testing, goodwill is
allocated at the date of acquisition to a CGU. Goodwill is considered to be
impaired if the carrying amount of the relevant CGU exceeds its recoverable
amount. Indicators of impairment include changes in the economic performance
and outlook of the region, including geopolitical changes, changes in market
value of regional investments, large credit defaults and strategic decisions
to exit 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 estimated terminal
value based on a perpetuity value after year five. The cashflow projections
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 determining the
recoverable amounts are set out below and are solely estimates for the
purposes of assessing impairment of acquired goodwill.
Page 85
Cash-generating unit 2023 2022
Goodwill Pre-Tax Long-term forecast GDP growth rates Goodwill Pre-Tax Long-term forecast GDP growth rates
$million
Discount rates
per cent
$million
Discount rates
per cent
per cent
per cent
Country CGUs
Asia 1,036 1,032
Hong Kong 357 12.9 1.6 357 12.4 1.7
Taiwan 333 12.4 1.5 333 11.3 1.7
Singapore 346 13.9 2.1 342 12.3 2.3
Africa & Middle East 80 85
Pakistan 31 35.5 3.2 36 30.9 5.9
Bahrain 49 12.4 0.5 49 16.6 0.7
Global CGUs 1,313 1,354
Global Private Banking 83 15.3 1.9 83 14.5 2.0
Corporate, Commercial & 1,230 15.7 2.3 1,271 14.7 2.5
Institutional Banking
2,429 2,471
The Group has performed sensitivity analysis on the key assumptions for each
CGU's recoverable amount. Taiwan CGU is considered sensitive to the key
variables and any individual movements on the estimates (cashflow, discount
rate and GDP growth rate) up to the levels disclosed below would eliminate the
current headroom.
CGU 2023
Goodwill Base Case Sensitivities
$million
GDP Discount rate Cash flow Cash flow Cash-flow Downside scenario Extreme downside scenario
GDP -1% GDP -1%
DR +1% DR +1%
+1% -1% +1% -1% +10% -10% +20% -20% -30% CF -10% CF -20%
Head-room Pre-Tax Discount Rate GDP Head-room $million Head-room $million Head-room $million Head-room $million Head-room $million Head-room $million Head-room $million Head-room $million Head-room $million Head-room $million Head-room $million
$million
Taiwan 333 217 12.4% 1.53% 351 112 73 400 375 60 532 (97) (254) (138) (267)
The table above represents reasonably possible scenarios that could occur if
either; economic factors (which drive GDP rates and discount rates);
country-specific cash flows; or a combination of both are different from the
assumptions used in the goodwill impairment assessment at 31 December 2023.
For there to be no headroom, the pre-tax discount rate will need to increase
by 2.02 per cent. Similarly, the GDP rates will need to decrease by 2.36 per
cent and cashflows would need to decrease by 13.8 per cent.
Page 86
Acquired intangibles
These primarily comprise those items recognised as part of the acquisitions of
Union Bank (now amalgamated into Standard Chartered Bank (Pakistan) Limited),
Hsinchu (now amalgamated into Standard Chartered Bank (Taiwan) Limited),
Pembroke, American Express Bank and ABSA's custody business in Africa.
Maintenance intangible assets represent the value in the difference between
the contractual right under acquired leases to receive aircraft in a specified
maintenance condition at the end of the lease and the actual physical
condition of the aircraft at the date of acquisition.
The acquired intangibles are amortised over periods from four years to a
maximum of 16 years. The constituents are as follows:
2023 2022
$million
$million
Acquired intangibles comprise:
Aircraft maintenance - 5
Brand names - 1
Customer relationships 1 1
Licenses 12 12
Net book value 13 19
18. Property, plant and equipment
Accounting policy
All property, plant and equipment is stated at cost less accumulated
depreciation and impairment losses.
Land and buildings comprise mainly branches and offices. Freehold land is not
depreciated although it is subject to impairment testing.
Depreciation 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 remaining lease term and 10 years
• Equipment and motor vehicles • three to
15 years
•
Aircraft
• up to 18 years
•
Ships
• up to 15 years
Where the Group is a lessee of a right-of-use asset, the leased assets are
capitalised and included in Property, plant and equipment with a corresponding
liability to the lessor recognised in Other liabilities. The accounting policy
for lease assets is set out in Note 19.
Page 87
2023
Premises Equipment Operating Leased Leased Total
$million
$million
lease assets
premises
equipment
$million
$million
assets
assets
$million
$million
Cost or valuation
At 1 January 1,773 840 4,420 1,652 29 8,714
Exchange translation differences (27) (22) - (5) (3) (57)
Additions1 45 114 - 286 1 446
Disposals and fully depreciated assets written off (68)² (122)² (4,420)³ (69) (9) (4,688)
Classified as held for sale 18 - - - - 18
As at 31 December 1,741 810 - 1,864 18 4,433
Depreciation
Accumulated at 1 January 678 575 1,185 730 24 3,192
Exchange translation differences (21) (17) 1 (25) (1) (63)
Charge for the year 77 99 27 238 4 445
Impairment charge 3 - - 9 - 12
Attributable to assets sold, transferred (47)² (122)² (1,213)³ (38) (9) (1,429)
or written off
Classified as held for sale 2 - - - - 2
Accumulated at 31 December 692 535 - 914 18 2,159
Net book amount at 31 December 1,049 275 - 950 - 2,274
1. Refer to the cash flow statement under cash flows from investing
activities section for the purchase of property, plant and equipment during
the year of $159 million
2. Disposals for property, plant and equipment during the year of $53
million 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
3. Includes disposal of assets from aviation finance leasing business
and sale of vessels (refer note 32).
2022
Premises Equipment Operating Leased Leased Total
$million
$million
lease assets
premises
equipment
$million
$million
assets
assets
$million
$million
Cost or valuation
At 1 January 1,980 901 4,248 1,854 33 9,016
Exchange translation differences (90) (65) - (111) (4) (270)
Additions1 87 124 624 339 1 1,175
Disposals and fully depreciated assets written off2 (142) (102) (452) (425) (1) (1,122)
Transfers to assets held for sale (62) (18) - (5) - (85)
As at 31 December 1,773 840 4,420 1,652 29 8,714
Depreciation
Accumulated at 1 January 795 611 1,155 819 20 3,400
Exchange translation differences (39) (39) - (33) (3) (114)
Charge for the year 76 116 202 250 7 651
Impairment charge 1 - 40 9 - 50
Attributable to assets sold, transferred (125) (101) (212) (313) - (751)
or written off2
Transfers to assets held for sale (30) (12) - (2) - (44)
Accumulated at 31 December 678 575 1,185 730 24 3,192
Net book amount at 31 December 1,095 265 3,235 922 5 5,522
1 Refer to the cash flow statement under cash flows from investing
activities section for the purchase of property, plant and equipment during
the year of $835 million
2 Disposals for property, plant and equipment during the year of $343
million 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
Page 88
Operating lease assets
The operating lease assets subsection of property, plant and equipment refers
to the Group's aircraft operating leasing business, all leases related to
which were disposed on 2 November 2023. As at 31 December 2022, this consisted
of 99 commercial aircraft of which 97 were narrow-bodies and 2 were
wide-bodies. The leases were classified as operating leases as they did not
transfer substantially all the risks and rewards incidental to the ownership
of the assets. As at 31 December 2022, these assets had a net book value of
$3,235 million. Refer note 6 Other operating income for the disposal gain and
the associated rental income, up to the date of their disposal.
Under these leases up to the date of disposal, the lessee was responsible for
the maintenance and servicing of the aircraft during the lease term while the
Group receives rental income and assumes the risks of the residual value of
the aircraft at the end of the lease.
19. Leased assets
Accounting policy
Where the Group is a lessee and the lease is deemed in scope, it recognises a
liability 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 liability is recognised in 'Other liabilities'.
A corresponding right-of-use asset equal to the liability, 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 liability
using the effective interest method. Depreciation on the asset is recognised
in 'Depreciation and amortisation', and interest on the lease liability is
recognised in 'Interest expense'.
If a leased premise, or a physically distinct portion of a premise such as an
individual 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 indicator of impairment. An impairment 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 ability and
likelihood of obtaining a subtenant.
The judgements in determining lease balances are the determination of whether
the Group is reasonably certain that it will exercise extension options
present in lease contracts. On initial recognition, the Group considers a
range of characteristics such as premises function, regional trends and the
term remaining on the lease to determine 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 determination 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 pricing information to determine the equivalent cost of borrowing in
other currencies. If it is not possible to estimate an incremental borrowing
rate through this process, other proxies such as local government bond yields
are used.
The Group primarily enters lease contracts that grant it the right to use
premises such as office buildings and retail branches.
Existing lease liabilities may change in future periods due to changes in
assumptions or decisions to exercise lease renewal or termination options,
changes in payments due to renegotiations of market rental rates as permitted
by those contracts and changes to payments due to rent being contractually
linked to an inflation index. In general the re-measurement of a lease
liability under these circumstances leads to an equal change to the
right-of-use asset balance, with no immediate effect on the income statement.
The total cash outflow during the year for premises and equipment leases was
$283 million (2022: $310 million).
The right-of-use asset balances and depreciation charges are disclosed in Note
18. The lease liability balances are disclosed in Note 23 and the interest
expense on lease liabilities is disclosed in Note 3.
Page 89
Maturity analysis
The maturity profile for lease liabilities associated with leased premises and
equipment assets is as follows:
2023
One year Between Between More than Total
or less
one year
two years
five years
$million
$million
and two years
and five years $million
$million
$million
Other liabilities - lease liabilities 248 203 373 410 1,234
2022
One year Between Between More than Total
or less
one year
two years
five years
$million
$million
and two years
and five years
$million
$million
$million
Other liabilities - lease liabilities 272 239 437 310 1,258
20. Other assets
Other assets include:
2023 2022
$million
$million
Financial assets held at amortised cost (Note 13):
Hong Kong SAR Government certificates of indebtedness (Note 23)¹ 6,568 7,106
Cash collateral2 10,337 12,515
Acceptances and endorsements 5,326 5,264
Unsettled trades and other financial assets 15,909 14,410
38,140 39,295
Non-financial assets:
Commodities and emissions certificates3 8,889 10,598
Other assets 565 490
47,594 50,383
1 The Hong Kong SAR Government certificates of indebtedness are
subordinated to the claims of other parties in respect of bank notes issued
2 Cash collateral are margins placed to collateralize net derivative
mark-to-market (MTM) positions
3 Physically held commodities and emission certificates are inventory
that is carried at fair value less costs to sell, $5.1 billion (31 December
2022: $6 billion) are classified as Level 1 and $3.7 billion are classified as
Level 2 (31 December 2022: $4.6 billion). For commodities, the fair value is
derived from observable spot or short-term futures prices from relevant
exchanges.
21. Assets held for sale and associated liabilities
Accounting Policy
Upon reclassification property, plant and equipment are measured at the lower
of their carrying amount and fair value less costs to sell. Financial
instruments continue to be measured per the accounting policies in Note 13
Financial instruments.
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.
Page 90
Assets held for sale
The financial assets reported below are classified under Level 1 $101 million
(31 December 2022: $345 million), Level 2 $541 million (31 December 2022: $946
million) and Level 3 $59 million (31 December 2022: $100 million).
2023 2022
$million
$million
Financial assets held at fair value through profit or loss - 3
Equity shares - 2
Derivative financial instruments - Assets - 1
Financial assets held at amortised cost 701 1,388
Cash and balances at central banks 246 423
Loans and advances to banks 24 81
Loans and advances to customers 251 508
Debt securities held at amortised cost 180 376
Goodwill and intangible assets - 4
Property, plant and equipment 59 174
Vessels 43 133
Others 16 41
Others 49 56
809 1,625
During the year, the aviation finance leasing business, which held 99
commercial aircraft, was classified as held for sale. The business was sold to
AviLease for a consideration of $3,570 million, and the Group recorded a gain
on sale of $309 million. In addition, vessels with a carrying value of $83
million were sold (2022: nil) and the Group exited Jordan as part of the exit
of AME regions ($108 million carrying value, with a $8 million gain on sale).
Liabilities held for sale
The financial liabilities reported below are classified under Level 1 $54
million (2022: $402million) and Level 2 $672 million (2022: $833 million).
2023 2022
$million
$million
Financial liabilities held at fair value through profit or loss - 5
Derivative financial instruments - 5
Financial liabilities held at amortised cost 726 1,230
Deposits by banks 3 17
Customer accounts 723 1,213
Other liabilities 51 64
Provisions for liabilities and charges 10 8
787 1,307
22. Debt securities in issue
Accounting policy
Refer to Note 13 Financial instruments for the relevant accounting policy.
2023 2022
Certificates Other debt Total Certificates Other debt Total
of deposit
securities
$million
of deposit
securities
$million
of $100,000
in issue
of $100,000
in issue
or more
$million
or more
$million
$million
$million
Debt securities in issue 15,533 47,013 62,546 23,457 37,785 61,242
Debt securities in issue included within:
Financial liabilities held at fair value through profit or loss (Note13) - 10,817 10,817 - 8,572 8,572
Total debt securities in issue 15,533 57,830 73,363 23,457 46,357 69,814
Page 91
In 2023, the Company issued a total of $8.1 billion senior notes for general
business purposes of the Group as shown below:
Securities $million
$1,000 million fixed-rate senior notes due 2027 (callable 2026) 1,000
EUR 1,000 million fixed-rate senior notes due 2031 (callable 2030) 1,105
HKD 784 million fixed-rate senior notes due 2026 (callable 2025) 100
$1,000 million fixed-rate senior notes due 2034 (callable 2033) 1,000
$1,000 million fixed-rate senior notes due 2027 (callable 2026) 1,000
$500 million floating-rate senior notes due 2027 (callable 2026) 500
$400 million floating-rate senior notes due 2028 (callable 2027) 400
$1,500 million fixed-rate senior notes due 2029 (callable 2028) 1,500
$750 million fixed-rate senior notes due 2030 (callable 2029) 750
$750 million fixed-rate senior notes due 2028 (callable 2027) 750
Total senior notes issued 8,105
In 2022, the Company issued a total of $5.2 billion senior notes for general
business purposes of the Group as shown below:
Securities $million
CNH 1,100 million fixed-rate senior notes due 2026 (callable 2025) 158
$1,250 million fixed-rate senior notes due 2028 (callable 2027) 1,250
$1,000 million fixed-rate senior notes due 2026 (callable 2025) 1,000
$500 million floating-rate senior notes due 2026 (callable 2025) 500
SGD 255 million fixed-rate senior notes due 2033 (callable 2032) 190
HKD 800 million fixed-rate senior notes due 2025 (callable 2024) 102
$1,000 million fixed-rate senior notes due 2025 (callable 2024) 1,000
$1,000 million fixed-rate senior notes due 2028 (callable 2027) 1,000
Total senior notes issued 5,200
23. Other liabilities
Accounting policy
Refer to Note 13 Financial instruments for the relevant accounting policy for
financial liabilities, Note 19 Leased assets for the accounting policy for
leases, and Note 31 Share-based payments for the accounting policy for
cash-settled share-based payments.
2023 2022
$million
$million
Financial liabilities held at amortised cost (Note 13)
Notes in circulation1 6,568 7,106
Acceptances and endorsements2 5,386 5,264
Cash collateral3 8,440 9,206
Property leases4 1,054 1,029
Equipment leases4 4 8
Unsettled trades and other financial liabilities 17,211 20,302
38,663 42,915
Non-financial liabilities
Cash-settled share-based payments 102 81
Other liabilities 456 531
39,221 43,527
1 Hong Kong currency notes in circulation of $6,568 million (31
December 2022: $7,106 million) that are secured by the Government of Hong Kong
SAR certificates of indebtedness of the same amount included in Other assets
(Note 20)
2 Includes early receipts of funds ($60m) from customer, whereas
corresponding liability is due in Jan'24
3 Cash collateral are margins received against collateralize net
derivative mark-to-market (MTM) positions
4 Other financial liabilities include the present value of lease
liabilities, as required by IFRS 16 from 1 January 2019; refer to Note 19
Page 92
24. Provisions for liabilities and charges
Accounting policy
The recognition and measurement of provisions for liabilities and charges
requires significant judgement and the use of estimates about uncertain future
conditions or events.
Estimates include the best estimate of the probability of outflow of economic
resources, cost of settling a provision and timing of settlement. Judgements
are required for inherently uncertain areas such as legal decisions (including
external advice obtained), and outcome of regulator reviews.
2023 2022
Expected credit Other Total Expected credit Other Total
loss for credit commitments1
provisions2
$million
loss for credit commitments1
provisions2
$million
$million
million
$million $million
At 1 January 280 103 383 346 107 453
Exchange translation differences (5) 4 (1) (39) (2) (41)
(Release)/Charge against profit (48) 42 (6) (27) 69 42
Provisions utilized - (71) (71) - (71) (71)
Transfer3 - (6) (6) - - -
At 31 December 227 72 299 280 103 383
1 Expected credit loss for credit commitment comprises those undrawn
contractually committed facilities where there is doubt as to the borrowers'
ability to meet their repayment obligations.
2 Other provisions consist mainly of provisions for legal claims and
regulatory and enforcement investigations and proceedings.
3 Includes the provisions transferred to held for sale.
25. Contingent liabilities and commitments
Accounting policy
Financial guarantee contracts and loan commitments
Financial guarantee contracts and any loan commitments issued at below-market
interest rates are initially recognised at their fair value as a financial
liability, and subsequently measured at the higher of the initial value less
the cumulative amount of income recognised and their expected credit loss
provision. Loan commitments may be designated at fair value through profit or
loss where that is the business model under which such contracts are held.
Notional values of financial guarantee contracts and loan commitments are
disclosed in the table below.
Financial guarantees, trade credits and irrevocable letters of credit are the
notional values of contracts issued by the Group's Transaction Banking
business for which an obligation to make a payment has not arisen 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
financial loss suffered. These contracts have various legal forms such as
letters of credit, guarantee contracts and performance bonds. The contracts
are issued to facilitate trade through export and import business, provide
guarantees to financial institutions where the Group has a local presence, as
well as guaranteeing project financing involving large construction projects
undertaken by sovereigns and corporates. The contracts may contain performance
clauses which require the counterparty performing services or providing goods
to meet certain conditions before a right 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 intention to provide funds
to a customer or on behalf of a customer under prespecified terms and
conditions 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 financial statements as
commitments. Commitments and contingent liabilities are generally considered
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-financial assets.
The table below shows the contract or underlying principal amounts of
unmatured off-balance sheet transactions at the balance sheet date. The
contract or underlying principal amounts indicate the volume of business
outstanding and do not represent amounts at risk.
Page 93
2023 2022
$million
$million
Financial guarantees and trade credits
Financial guarantees, trade credits and irrevocable letters of credit 74,414 60,410
74,414 60,410
Commitments
Undrawn formal standby facilities, credit lines and other commitments to lend
One year and over 78,356 69,597
Less than one year 33,092 31,688
Unconditionally cancellable 70,942 67,383
182,390 168,668
Capital Commitments
Contracted capital expenditure approved by the directors but not provided for 217 257
in these accounts
As set out in Note 26, the Group has contingent liabilities in respect of
certain legal and regulatory matters for which it is not practicable to
estimate the financial impact as there are many factors that may affect the
range of possible outcomes.
26. Legal and regulatory matters
Accounting policy
The Group receives legal claims against it in a number of jurisdictions and is
subject to regulatory and enforcement investigations and proceedings from time
to time. Apart from the matters described below, the Group currently considers
none of the ongoing claims, investigations or proceedings to be individually
material. However, in light of the uncertainties involved in such matters
there can be no assurance that the outcome of a particular matter or matters
currently not considered to be material may not ultimately be material to the
Group's results in a particular reporting period depending on, among other
things, the amount of the loss resulting from the matter(s) and the results
otherwise reported for such period.
Since 2014, the Group has been named as a defendant in a series of lawsuits
that have been filed in the United States District Courts for the Southern and
Eastern Districts of New York against a number of banks on behalf of
plaintiffs who are, or are relatives of, victims of attacks in Iraq and
Afghanistan. The plaintiffs in each of these lawsuits have alleged that the
defendant banks aided and abetted the unlawful conduct of parties with
connections to terrorist organisations in breach of the United States
Anti-Terrorism Act. None of these lawsuits specify the amount of damages
claimed. The Group continues to defend these lawsuits.
In January 2020, a shareholder derivative complaint was filed by the City of
Philadelphia in New York State Court against 45 current and former directors
and senior officers of the Group. It is alleged that the individuals breached
their duties to the Group and caused a waste of corporate assets by permitting
the conduct that gave rise to the costs and losses to the Group related to
legacy conduct and control issues. In March 2021, an amended complaint was
served in which Standard Chartered Bank and seven individuals were removed
from the case. Standard Chartered PLC and Standard Chartered Holdings Limited
remained as named "nominal defendants" in the complaint. In May 2021, Standard
Chartered PLC filed a motion to dismiss the complaint. In February 2022, the
New York State Court ruled in favour of Standard Chartered PLC's motion to
dismiss the complaint. The plaintiffs are pursuing an appeal against the
February 2022 ruling. A hearing date for the plaintiffs' appeal is awaited.
Since October 2020, four lawsuits have been filed in the English High Court
against Standard Chartered PLC on behalf of more than 200 shareholders in
relation to alleged untrue and/or misleading statements and/or omissions in
information published by Standard Chartered PLC in its rights issue
prospectuses of 2008, 2010 and 2015 and/or public statements regarding the
Group's historic sanctions, money laundering and financial crime compliance
issues. These lawsuits have been brought under sections 90 and 90A of the
Financial Services and Markets Act 2000. These lawsuits are at an early
procedural stage.
Page 94
Bernard Madoff's 2008 confession to running a Ponzi scheme through Bernard L.
Madoff Investment Securities LLC (BMIS) gave rise to a number of lawsuits
against the Group. BMIS and the Fairfield funds (which invested in BMIS) are
in bankruptcy and liquidation, respectively. Between 2010 and 2012, five
lawsuits were brought against the Group by the BMIS bankruptcy trustee and the
Fairfield funds' liquidators, in each case seeking to recover funds paid to
the Group's clients pursuant to redemption requests made prior to BMIS'
bankruptcy filing. The total amount sought in these cases exceeds USD 300
million, excluding any pre-judgment interest that may be awarded. The four
lawsuits commenced by the Fairfield funds' liquidators have been dismissed and
the appeals of those dismissals by the funds' liquidators are ongoing.
As has been reported in the press, a number of Korean banks, including
Standard Chartered Bank Korea, have sold equity-linked securities ("ELS") to
customers, the redemption values of which are determined by the performance of
various stock indices. Standard Chartered Bank Korea sold relevant ELS to its
customers with a notional value of approximately USD900m. Due to the
performance of the Hang Seng China Enterprise Index, it is anticipated that
several thousand Standard Chartered Bank Korea customers may redeem their ELS
at a loss. The value of Standard Chartered Bank Korea customers' anticipated
losses is subject to fluctuation as the ELS mature on various dates through
2026 and could total several hundred million USD. Standard Chartered Bank
Korea may be faced with claims by customers and its regulator, the Financial
Supervisory Service, to cover part or all of those anticipated losses and also
may face regulatory penalties.
The Group has concluded that the threshold for recording provisions pursuant
to IAS 37 Provisions, Contingent Liabilities and Contingent Assets is not met
with respect to the above matters; however, the outcomes of these matters are
inherently uncertain and difficult to predict.
In 2023, three legal cases concluded in which allegations of corruption had
been made against the Group or its employees, none of which resulted in
liability being established.
27. Subordinated liabilities and other borrowed funds
2023 2022
$million
$million
Subordinated loan capital - issued by subsidiary undertakings
$700 million 8.0 per cent subordinated notes due 2031 (callable 2026)¹ 342 345
NPR2.4 billion fixed sub debt rate 10.3 per cent2,3 18 -
360 345
Subordinated loan capital - issued by the Company4
Primary capital floating rate notes:
$400 million floating rate undated subordinated notes5 - 16
$300 million floating rate undated subordinated notes (Series 2)5 - 69
$400 million floating rate undated subordinated notes (Series 3)5 - 50
$200 million floating rate undated subordinated notes (Series 4)5 - 26
£900 million 5.125 per cent subordinated notes due 2034 644 587
$2 billion 5.7 per cent subordinated notes due 2044 2,197 2,172
$2 billion 3.95 per cent subordinated notes due 2023 - 1,999
$1 billion 5.2 per cent subordinated notes due 2024 1,001 1,017
$750 million 5.3 per cent subordinated notes due 2043 697 679
€500 million 3.125 per cent subordinated notes due 2024 536 502
$1.25 billion 4.3 per cent subordinated notes due 2027 1,154 1,119
$1 billion 3.516 per cent subordinated notes due 2030 (callable 2025) 964 938
$500 million 4.886 per cent subordinated notes due 2033 (callable 2028) 481 473
£96.035 million 7.375 per cent Non-Cum Pref Shares (reclassed as Debt) - 122 116
Other borrowings
£99.250 million 8.25 per cent Non-Cum Pref Shares (reclassed as Debt) - Other 126 119
borrowings
$750 million 3.604 per cent fixed rate reset dated subordinated notes due 2033 648 630
€ 1 billion 2.5 per cent subordinated debt 2030 1,044 967
$1.25 billion 3.265 per cent subordinated notes due 2036 1,040 1,002
€1 billion 1.200 per cent fixed rate reset dated subordinated notes due 2031 1,022 891
(callable 2026)
11,676 13,370
Total for Group 12,036 13,715
1 Issued by Standard Chartered Bank
2 Issued by Standard Chartered Bank Nepal Limited
3 NPR refers to Nepalese Rupee
4 In the balance sheet of the Company the amount recognised is
$11,945 million (2022: 13,684 million), with the difference on account of
hedge accounting achieved on a Group basis
5 These notes were subject to remediation under interest rate
benchmark reform. Please refer to Note 13 for further information on this
Page 95
2023
USD EUR GBP NPR Total
$million
$million
$million
$million
$million
Fixed rate subordinated debt 8,524 2,602 892 18 12,036
Floating rate subordinated debt - - - - -
Total 8,524 2,602 892 18 12,036
2022
USD EUR GBP NPR Total
$million
$million
$million
$million
$million
Fixed rate subordinated debt 10,372 2,360 822 - 13,554
Floating rate subordinated debt 161 - - - 161
Total 10,533 2,360 822 - 13,715
Redemptions and repurchases during the year
Standard Chartered PLC exercised its right to redeem USD 2 billion 3.95 per
cent subordinated notes 2023. Further to that outstanding balances of floating
rate undated subordinate notes were redeemed during the year.
Issuance during the year
On 1(st) March 2023, Standard Chartered Bank Nepal Limited issued NPR 2.4
billion 10.3 per cent fixed rate dated subordinated notes due 2028.
28. Share capital, other equity instruments and reserves
Accounting policy
Securities which carry a discretionary coupon and have no fixed maturity or
redemption date are classified as other equity instruments. Interest payments
on these securities are recognised, net of tax, as distributions 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 consideration paid 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 consideration received is included in shareholders' equity of
the Group and/or the Company.
Number of Ordinary Ordinary Preference Total share Other
ordinary
share
Share
Share
capital and
equity
shares
capital1
premium
premium2
share premium
instruments
millions
$million
$million
$million
$million
$million
At 1 January 2022 3,079 1,539 3,989 1,494 7,022 6,254
Cancellation of shares including (184) (92) - - (92) -
share buy-back
Additional Tier 1 equity issuance - - - - - 1,240
Additional Tier 1 equity redemption - - - - - (990)
At 31 December 2022 2,895 1,447 3,989 1,494 6,930 6,504
Cancellation of shares including (230) (115) - - (115) -
share buy-back
Additional Tier 1 equity issuance - - - - - -
Additional Tier 1 redemption - - - - - (992)
At 31 December 2023 2,665 1,332 3,989 1,494 6,815 5,512
1 Issued and fully paid ordinary shares of 50 cents each
2 Includes preference share capital of $75,000
Page 96
Share buy-back
On 16 February 2023, the Group announced the buy-back programme for a share
buy-back of its ordinary shares of $0.50 each. Nominal value of share
purchases was $58 million, and the total consideration paid was $1 billion.
The buy-back completed on 29 September 2023. The total number of shares
purchased was 116,710,492 representing 4.03 per cent of the ordinary shares in
issue as at the commencement of the buy-back. The nominal value of the shares
was transferred from the share capital to the capital redemption reserve
account.
On 28 July 2023, the Group announced the buy-back programme for a share
buy-back of its ordinary shares of $0.50 each. Nominal value of share
purchases was $57 million, and the total consideration paid was $1 billion.
The buy-back completed on 6 November 2023. The total number of shares
purchased was 112,982,802 representing 3.90 per cent of the ordinary shares in
issue as at the commencement of the buy-back. The nominal value of the shares
was transferred from the share capital to the capital redemption reserve
account.
The shares were purchased by Standard Chartered PLC on various exchanges not
including the Hong Kong Stock Exchange.
Number of Highest Lowest Average Aggregate Aggregate
ordinary shares
price paid
price paid
price paid
price paid
price paid
£
£
per share
£
$
£
February 2023 9,522,684 7.99400 7.41600 7.77508 74,039,628 89,017,672
March 2023 48,672,024 7.94600 5.79000 7.07885 344,541,860 416,300,544
April 2023 9,521,811 6.58200 6.10600 6.30837 60,067,118 74,798,622
May 2023 10,662,964 6.66000 5.92800 6.28592 67,026,502 83,626,929
June 2023 15,515,223 6.92200 6.36000 6.70601 104,045,286 131,601,470
July 2023 10,388,883 7.53200 6.56400 6.81807 70,832,098 90,241,074
August 2023 22,896,567 7.60800 7.10000 7.28931 166,900,079 211,996,912
September 2023 40,542,727 7.64800 6.93600 7.35577 298,222,942 369,007,327
October 2023 52,084,775 7.66600 6.04800 7.20829 375,442,209 457,218,216
November 2023 9,885,636 6.38400 6.12600 6.23095 61,596,915 75,472,633
Ordinary share capital
In accordance with the Companies Act 2006, the Company does not have
authorised share capital. The nominal value of each ordinary share is 50
cents.
During the period, nil shares were issued under employee share plans.
Preference share capital
At 31 December 2023, the Company has 15,000 $5 non-cumulative redeemable
preference shares in issue, with 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 and are classified in equity.
The available profits of the Company are distributed to the holders of the
issued preference shares in priority to payments made to holders of the
ordinary shares and in priority to, or pari passu with, any payments to the
holders of any other class of shares in issue. On a winding up, the assets of
the Company are applied to the holders of the preference shares in priority to
any payment to the ordinary shareholders and in priority to, or pari passu
with, the holders of any other shares in issue, for an amount equal to any
dividends payable (on approval of the Board) and the nominal value of the
shares together with any premium as determined by the Board. The redeemable
preference shares are redeemable at the paid up amount (which includes
premium) at the option of the Company in accordance with the terms of the
shares. The holders of the preference shares are not entitled to attend or
vote at any general meeting except where any relevant dividend due is not paid
in full or where a resolution is proposed varying the rights of the preference
shares.
Page 97
Other equity instruments
The table provides details of outstanding Fixed Rate Resetting Perpetual
Subordinated Contingent Convertible AT1 securities issued by Standard
Chartered PLC. All issuances are made for general business purposes and to
increase the regulatory capital base of the Group.
Issuance date Nominal value Proceeds net Interest rate1 Coupon payment dates2 First reset dates3 Conversion
of issue costs
price per
ordinary share
3 July 2019 SGD 750 million USD 552 million 5.375% 3 April, 3 October each year 3 October 2024 SGD 10.909
26 Jun 2020 USD 1,000 million USD 992 million 6% 26 January, 26 July each year 26 January 2026 USD 5.331
14 January 2021 USD 1,250 million USD 1,239 million 4.75% 14 January, 14 July each year 14 July 2031 USD 6.353
19 August 2021 USD 1,500 million USD 1,490 million 4.30% 19 February, 19 August each year 19 August 2028 USD 6.382
15 August 2022 USD 1,250 million USD 1,239 million 7.75% 15 February, 15 August each year 15 February 2028 USD 7.333
1 Interest rates for the period from (and including) the issue date to
(but excluding) the first reset date
2 Interest payable semi-annually in arrears
3 Securities are resettable each date falling five years, or an
integral multiple of five years, after the first reset date
Standard Chartered PLC redeemed $1,000m Fixed Rate Resetting Perpetual
Contingent Convertible Securities on its first optional redemption date of 2
April 2023.
The AT1 issuances above are primarily purchased by institutional investors.
The principal terms of the AT1 securities are described below:
• The securities are perpetual and redeemable, at the option of Standard
Chartered PLC in whole but not in part, on the first interest reset date and
each date falling five years after the first reset date
• The securities are also redeemable for certain regulatory or tax reasons
on any date at 100 per cent of their principal amount together with any
accrued but unpaid interest up to (but excluding) the date fixed for
redemption. Any redemption is subject to Standard Chartered PLC giving notice
to the relevant regulator and the regulator granting permission to redeem
• Interest payments on these securities will be accounted for as a dividend.
• Interest on the securities is due and payable only at the sole and
absolute discretion of Standard Chartered PLC, subject to certain additional
restrictions set out in the terms and conditions. Accordingly, Standard
Chartered PLC may at any time elect to cancel any interest payment (or part
thereof) which would otherwise be payable on any interest payment date.
• The securities convert into ordinary shares of Standard Chartered PLC, at
a pre-determined price detailed in the table above, should the fully loaded
Common Equity Tier 1 ratio of the Group fall below 7.0 per cent. Approximately
859 million ordinary shares would be required to satisfy the conversion of all
the securities mentioned above
The securities rank behind the claims against Standard Chartered PLC of (a)
unsubordinated creditors, (b) which are expressed to be subordinated to the
claims of unsubordinated creditors of Standard Chartered PLC but not further
or otherwise; or (c) which are, or are expressed to be, junior to the claims
of other creditors of Standard Chartered PLC, whether subordinated or
unsubordinated, other than claims which rank, or are expressed to rank, pari
passu with, or junior to, the claims of holders of the AT1 securities in a
winding-up occurring prior to the conversion trigger.
Page 98
Reserves
The constituents of the reserves are summarised as follows:
• The capital reserve represents the exchange difference on redenomination
of share capital and share premium from sterling to US dollars in 2001. The
capital redemption reserve represents the nominal value of share capital and
preference shares redeemed
• The amounts in the "Capital and Merger Reserve" represents the premium
arising on shares issued using a cash box financing structure, which required
the Company to create a merger reserve under section 612 of the Companies Act
2006. Shares were issued using this structure in 2005 and 2006 to assist in
the funding of Korea ($1.9 billion) and Taiwan ($1.2 billion) acquisitions, in
2008, 2010 and 2015 for the shares issued by way of a rights issue, primarily
for capital maintenance requirements and for the shares issued in 2009 by way
of an accelerated book build, the proceeds of which were used in the ordinary
course of business of the Group. The funding raised by the 2008, 2010 and 2015
rights issues and 2009 share issue was fully retained within the Company. Of
the 2015 funding, $1.5 billion was used to subscribe to additional equity in
Standard Chartered Bank, a wholly owned subsidiary of the Company. Apart from
the Korea, Taiwan and Standard Chartered Bank funding, the merger reserve is
considered realised and distributable.
• Own credit adjustment reserve represents the cumulative gains and losses
on financial liabilities designated at fair value through profit or loss
relating to own credit. On derecognition of applicable instruments the balance
of any OCA will not be recycled to the income statement, but will be
transferred within equity to retained earnings
• Fair value through other comprehensive income (FVOCI) debt reserve
represents the unrealised fair value gains and losses in respect of financial
assets classified as FVOCI, net of expected credit losses. Gains and losses
are deferred in this reserve and are reclassified to the income statement when
the underlying asset is sold, matures or becomes impaired.
• FVOCI equity reserve represents unrealised fair value gains and losses in
respect of financial assets classified as FVOCI. Gains and losses are recorded
in this reserve and never recycled to the income statement
• Cash flow hedge reserve represents the effective portion of the gains and
losses on derivatives that meet the criteria for these types of hedges. Gains
and losses are deferred in this reserve and are reclassified 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 reclassified to the income statement when the underlying
foreign operation is disposed. Gains and losses arising from derivatives 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 dividend
distributions, own shares held (treasury shares) and share buy-backs
A substantial part of the Group's reserves is held in overseas subsidiary
undertakings and branches, principally 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 addition, if these overseas reserves were to be remitted, further
unprovided taxation liabilities might arise.
As at 31 December 2023, the distributable reserves of Standard Chartered PLC
(the Company) were $14.7 billion (31 December 2022: $13 billion). These
comprised retained earnings and $17 billion of the merger reserve account.
Distribution of reserves is subject to maintaining minimum capital
requirements.
Page 99
Own shares
Computershare Trustees (Jersey) Limited is the trustee of the 2004 Employee
Benefit Trust ('2004 Trust') and Ocorian Trustees (Jersey) Limited has been
the trustee of the 1995 Employees' Share Ownership Plan Trust ('1995 Trust').
The 1995 Trust was closed on 30 June 2023 as all historical awards under this
trust have been satisfied, and the 2004 Trust will be used to satisfy existing
and future awards.
The 2004 Trust is used in conjunction with the Group's employee share schemes
and other employee share-based payments (such as upfront shares and fixed pay
allowances). Group companies fund the 2004 Trust from time to time to enable
the trustees to acquire shares in Standard Chartered PLC to satisfy these
arrangements.
Details of the shares purchased and held by the trusts are set out below.
1995 Trust 2004 Trust Total
2023 2022 2023 2022 2023 2022
Shares purchased during the period - - 29,069,539 30,203,531 29,069,539 30,203,531
Market price of shares purchased ($million) - - 237 218 237 218
Shares held at the end of the period - - 28,095,542 27,525,624 28,095,542 27,525,624
Maximum number of shares held during the period 28,893,930 27,976,046
Except as disclosed, neither the Company nor any of its subsidiaries has
bought, sold or redeemed any Standard Chartered PLC securities listed on The
Stock Exchange of Hong Kong Limited during the period.
Dividend waivers
The trustees of the 2004 Trust, which holds ordinary shares in Standard
Chartered PLC in connection with the operation of its employee share plans,
have lodged standing instructions in relation to shares held by them that have
not been allocated to employees, whereby any dividend is waived on the balance
of ordinary shares and recalculated and paid at the rate of 0.01p per share.
Changes in share capital and other equity instruments of Standard Chartered
PLC subsidiaries
The table below details the transactions in equity instruments (including
convertible and hybrid instruments) of the Group's subsidiaries, including
issuances, conversions, redemptions, purchase or cancellation. This is
required under the Hong Kong Listing requirements, appendix 16 paragraph 10.
Name and registered address Place of incorporation Description of shares Issued/(redeemed) capital Issued/(redeemed) Shares Proportion of shares held (%)
The following companies have the address of 1 Basinghall Avenue, London, EC2V
5DD, United Kingdom
Standard Chartered I H Limited United Kingdom $1.00 Ordinary shares $574,721,653 574,721,653 100
Standard Chartered Holdings Limited United Kingdom $2.00 Ordinary shares $574,721,653 287,360,826 100
Standard Chartered Strategic Investments Limited United Kingdom $1.00 Ordinary shares $45,886,520 45,886,520 100
SC Ventures Holdings Limited United Kingdom $1.00 Ordinary shares $217,712,622 217,712,622 100
Zodia Markets Holdings Limited United Kingdom $1.00 Ordinary shares $5,580 5,580 80.46
The following companies have the address of 5(th) Floor, Holland House 1-4
Bury Street, London, EC3A 5AW, United Kingdom
Zodia Holdings Limited United Kingdom $1.00 Ordinary-A shares $18,300,000 18,300,000 100
The following companies have the address of Suites 508,509,15(th) floor, Al
Sarab Tower, Adgm Square, Al Maryah Island, Abu Dhabi, United Arab Emirates
Financial Inclusion Technologies Ltd United Arab Emirates $1.00 Ordinary shares $13,500,000 13,500,000 100
The following company has the address of 39/F, Oxford House,Taikoo Place,979
king's road, Quarry Bay, Hong Kong
Mox Bank Limited Hong Kong HKD Ordinary shares HKD1,212,100,000 121,210,000 68.29
Page 100
The following company has the address of Second Floor, Indiqube Edge, Khata
No. 571/630/6/4, Sy.No.6/4, Ambalipura Village, Varthur Hobli, Marathahalli
Sub-Division, Ward No. 150, Bengaluru, 560102, India.
Standard Chartered Research and Technology India Private Limited India INR10.00 A Equity shares INR135,758,500 13,575,850 90.63
The following company has the address of Crescenzo, 6(th) Floor, Plot No 38-39
G Block , Bandra Kurla Complex, Bandra East ,
Mumbai , Maharashtra , 400051, India
Standard Chartered Capital Limited India INR10.00 Equity shares INR730,222,220 73,022,222 100
The following company has the address of StandardChartered@Chiromo, Number 48,
Westlands Road, P. O. Box 30003 - 00100, Nairobi, Kenya
Solvezy Technology Kenya Limited Kenya KES1,000.00 Ordinary shares KES237,228,000 237,228 100
Tawi Fresh Kenya Limited Kenya KES1,000.00 Ordinary shares KES505,560,000 505,560 100
The following companies have the address of 27, Fitzwilliam Street, Dublin,
D02 TP23, Ireland
Zodia Custody (Ireland) Limited Ireland $1.00 Ordinary shares $1,230,000 1,230,000 72.83
The following company has the address of 77 Robinson Road, #25-00 Robinson 77,
068896, Singapore
Trust Bank Singapore Limited Singapore SGD Ordinary shares SGD110,000,000 110,000,000 60
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 United Arab Emirates AED1,000.00 Ordinary shares AED25,691,000 25,691 100
The following company has the address of Part of Level 15, Standard Chartered
Bank Building, Plot 8, Burj Downtown, Dubai, United Arab Emirates
myZoi Financial Inclusion Technologies LLC United Arab Emirates AED1.00 Ordinary shares AED25,000,000 25,000,000 100
The following company has the address of Standard Chartered Bank Building, 87
independence Avenue, Ridge, ACCRA, Greater ACCRA, GA-016-4621, Ghana
Solvezy Technology Ghana Ltd Ghana GHS Ordinary GHS4,301,000 4,301,000 100
The following company has the (ad)dress of 8th Floor, Makati Sky Plaza
Building 6788, Ayala Avenue San Lorenzo, City of Makati, Fourth District,
National Capi, 1223, Philippines
Standard Chartered Group Services, Manila Incorporated Philippines PHP1.00 Ordinary PHP108,000,000 108,000,000 100
The following company has the address of 1201 1-2, 15-16, 12/F, Unit No.1,
Building No.1, No. 1 Dongsanhuan Zhong Road, Chaoyang District, Beijing, China
Standard Chartered Securities (China) Limited China CNY Ordinary CNY1,050,000,000 1,050,000,000 100
The following companies have the address of Raffles Place, #26-01 Republic
Plaza, Singapore , 048619, Singapore
Autumn Life Pte. Ltd. Singapore $ Ordinary-A shares $2,650,000 2,650,000 96.62
Audax Financial Technology Pte. Ltd Singapore $ Ordinary-A shares $94,300,000 94,300,000 100
CashEnable Pte. Ltd. Singapore $ Ordinary-A shares $700,000 700,000 100
Letsbloom Pte. Ltd Singapore $ Ordinary shares $4,599,999 4,599,999 100
The following companies have the address of 9 Raffles Place, #26-01 Republic
Plaza, 048619 , Singapore
SCV Research and Development Pte. Ltd. Singapore $ Ordinary shares $8,000,000 8,000,000 100
SCV Master Holding Company Pte Ltd Singapore $ Ordinary shares $25,700,000 25,700,000 100
Page 101
The following companies have the address of 80 Robinson Road, #02-00, 068898,
Singapore
Solv-India Pte Ltd Singapore $ Ordinary shares $47,000,000 47,000,000 100
The following company has the a(dd)ress of 12th Floor, Menara Symphony , No.
5, Jalan Prof. Khoo Kay Kim, Seksyen 13, 46200 Petaling Jaya , Selangor,
Malaysia
Solv Sdn. Bhd. Malaysia RM5.00 Ordinary shares RM10,911,120 2,182,224 90.6
Please see Note 22 Debt securities in issue for issuances and redemptions of
senior notes.
Please see Note 27 Subordinated liabilities and other borrowed funds for
issuance and redemptions of subordinated liabilities and AT1 securities.
Please see Note 40 Related undertakings of the Group for subsidiaries
liquidated, dissolved or sold during the year.
29. Non-controlling interests
$million
At 1 January 2022 371
Comprehensive income for the year (88)
Income in equity attributable to non-controlling interests (42)
Other profits attributable to non-controlling interests (46)
Distributions (31)
Other increases1 98
At 31 December 2022 350
Comprehensive income for the year (38)
Income in equity attributable to non-controlling interests (31)
Other profits attributable to non-controlling interests (7)
Distributions (26)
Other increases2 110
At 31 December 2023 396
1. Additional investment by non-controlling interests mainly in Mox Bank
Limited ($39 million), Trust Bank Singapore Limited ($47 million), Zodia
Markets Holdings Limited ($3 million), Power2SME Pte. Ltd. ($9 million)
2. Additional investment by non-controlling interests mainly in Mox Bank
Limited ($48 million), Trust Bank Singapore Limited ($34 million) and Zodia
Custody Limited ($28 million)
30. Retirement benefit obligations
Accounting policy
The Group operates pension and other post-retirement benefit plans around the
world, which can be categorised into defined contribution plans and defined
benefit plans.
• For defined contribution plans, the Group pays contributions to publicly
or privately administered pension plans on a statutory or contractual basis,
and such amounts are charged to operating expenses. The Group has no further
payment obligations once the contributions have been paid.
• For defined benefit plans, which promise levels of payments where the
future cost is not known with certainty:
- the accounting obligation 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
liability for the year by applying the discount rate used to measure the
defined benefit obligation at the beginning of the annual period to the net
defined benefit liability, taking into account any changes in the net defined
benefit liability during the year as a result of contributions and benefit
payments. Net interest expense, the cost of the accrual of new benefits,
benefit enhancements (or reductions) and administration 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
obligations. This measurement requires the use of estimates, such as discount
rates, inflation, pension increases, salary increases, and life expectancies
which are inherently uncertain. The table below summarises how these
assumptions are set:
Page 102
The sensitivity of the liabilities to changes in these assumptions is shown in
the Note below.
Retirement benefit obligations comprise:
2023 2022
$million
$million
Defined benefit plans obligation 166 128
Defined contribution plans obligation 17 18
Net obligation 183 146
Retirement benefit charge comprises:
2023 2022
$million
$million
Defined benefit plans 66 58
Defined contribution plans1 365 332
Charge against profit (Note 7) 431 390
1 The Group during the year utilised, against defined contribution
payments, $4 million forfeited pension contributions in respect of employees
who left before their interests vested fully. The residual balance of
forfeited contributions is $16 million
The Group operates over 60 defined benefit plans across its geographies, many
of which are closed to new entrants who now join defined contribution
arrangements. The aim of all these plans is, as part of the Group's commitment
to financial 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 conditions. 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 partially hedge
movements in the liabilities resulting from interest rate and inflation
changes. Setting aside movements from other drivers such as currency
fluctuation, the reduction in discount rates in most countries with material
pension liabilities over 2023 has led to higher liabilities. This has been
partly offset by increases in the value of bonds held as well as good
performance of growth assets such as equities, leading to an increase in the
pension deficit reported. These movements are shown as actuarial gains and
losses in the tables below. Contributions into a number of plans in excess of
the amounts required to fund benefits accruing have also partially offset the
increase in the net deficit over the year.
The disclosures required under IAS 19 have been calculated by independent
qualified actuaries 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 53 per cent (31 December 2022: 53 per cent) of
total pension liabilities. The UK Fund is set up under a trust that is legally
separate from the Bank (its formal sponsor) and, as required by UK
legislation, at least one third of the trustee directors are nominated by
members; the remainder are appointed by the Bank. The trustee directors have a
fiduciary 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 UK employees are now offered
membership of a defined contribution plan.
The financial position of the UK Fund is regularly assessed by an independent
qualified actuary. The funding valuation as at 31 December 2020 was completed
in December 2021 by the Scheme Actuary, T Kripps of Willis Towers Watson,
using assumptions different from those below, and agreed with the UK Fund
trustee. It showed that the UK Fund was 92% funded at that date, revealing a
past service deficit of $162 million (£127 million).
To repair the deficit, three annual cash payments each of $42 million (£32.9
million) were agreed, with the first of these paid in December 2021, and two
further instalments to be paid in December 2022 and December 2023. However,
the agreement allowed that, if the funding position improves to being at or
near a surplus in future years, the payments due in 2022 and 2023 will be
reduced or eliminated. Based on the funding positions at the agreed
measurement point 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 contributions an additional
$64 million nominal gilts (£50 million) were purchased and transferred into
the existing escrow account of $140 million gilts (£110 million), topping it
up to $204 million. Under the terms of the 2020 valuation agreement, the USD8m
payment made in December 2023 is deductible from the funds held in escrow.
Page 103
The Group has not recognised any additional liability under IFRIC 14, as the
Bank has control of any pension surplus under the Trust Deed and Rules.
Virgin Media vs NTL Pension Trustees II Ltd
Following the June 2023 ruling in the case of Virgin Media vs NTL Pension
Trustees II Limited, the Bank has considered 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 principal overseas defined benefit arrangements operated by the Group are
in Hong Kong, India, Jersey, Korea, Taiwan, United Arab Emirates (UAE) and the
United States of America (US). Plans in Hong Kong, India, Korea, Taiwan and
UAE remain open for the accrual of future benefits.
Key assumptions
The principal financial assumptions used at 31 December 2023 were:
2023 2022
UK Funded Overseas Plans1 Unfunded Plans2 UK Funded Overseas Plans1 Unfunded Plans2
%
%
% % % %
Discount rate 4.6 1.2 - 4.9 3.1 - 7.4 4.8 1.2 - 5.4 3.7 - 7.6
Price inflation 2.5 2.0 - 2.9 2.0 - 5.0 2.6 1.0 - 3.1 2.0 - 4.0
Salary increases n/a 3.5 - 4.5 4.0 - 8.5 n/a 3.5 - 4.5 4.0 - 7.8
Pension increases 2.3 2.9 0.0 - 2.3 2.4 3.1 0.0 - 2.4
Post-retirement medical rate 8% in 2023 reducing by 0.5% per annum to 7% in 2022 reducing by 0.5% per annum to
5% in 2029
5% in 2026
1 The range of assumptions shown is for the funded defined benefit
overseas plans in Hong Kong, Jersey, Korea, Taiwan, and the US. These comprise
around 75 per cent of the total liabilities of overseas funded plans.
2 The range of assumptions shown is for the main unfunded defined
benefit plans in India, Korea, Thailand, UAE, UK and the US. They comprise
around 95 per cent of the total liabilities of unfunded plans
The principal non-financial assumptions 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 initial addition parameter of 0.25%. Scaling factors of 92% for male
pensioners, 92% for female pensioners, 92% for male dependants and 82% for
female dependants have been applied.
The resulting assumptions for life expectancy for the UK Fund are that a male
member currently aged 60 will live for 27 years (2022: 27 years) and a female
member for 30 years (2022: 30 years) and a male member currently aged 40 will
live for 29 years (2022: 29 years) and a female member for 32 years (2022: 32
years) after their 60(th) birthdays.
Both financial and non-financial assumptions can be expected to change in the
future, which would affect the value placed on the liabilities. For example,
changes at the reporting date to one of the relevant actuarial assumptions,
holding other assumptions constant, would have affected the defined benefit
obligation by the amounts shown below:
• If the discount rate increased by 25 basis points the liability would
reduce by approximately $35 million for the UK Fund (2022: $30 million) and
$20 million for the other plans (2022: $15 million)
• If the rate of inflation increased by 25 basis points the liability,
allowing for the consequent impact on pension and salary increases, would
increase by approximately $20 million for the UK Fund (2022: $20 million) and
$15 million for the other plans (2022: $15 million)
• If the rate of salary growth relative to inflation increased by 25 basis
points the liability would increase by nil for the UK Fund (2022: nil) and
approximately $10 million for the other plans (2022: $10 million)
• If longevity expectations increased by one year the liability would
increase by approximately $35 million for the UK Fund (2022: $35 million) and
$10 million for the other plans (2022: $10 million)
Although this analysis does not take account of the full distribution of cash
flows expected, it does provide an approximation of the sensitivity to the
main assumptions. While changes in other assumptions would also have an
impact, the effect would not be as significant.
Page 104
Profile of plan obligations
Funded plans Unfunded
plans
UK Fund Overseas
Duration of the defined benefit obligation (in years) 11 8 8
Duration of the defined benefit obligation - 2022 11 9 9
Benefits expected to be paid from plans
Benefits expected to be paid during 2024 80 63 19
Benefits expected to be paid during 2025 82 100 17
Benefits expected to be paid during 2026 84 74 17
Benefits expected to be paid during 2027 86 83 17
Benefits expected to be paid during 2028 89 91 18
Benefits expected to be paid during 2029 to 2033 478 444 82
Fund values
UK Fund Overseas plans
Quoted assets Unquoted assets Total assets Quoted assets Unquoted assets Total assets
$million
$million
$million
$million
$million
$million
At 31 December 2022
Equities 2 - 2 223 - 223
Government bonds 206 - 206 160 - 160
Corporate bonds 309 82 391 116 - 116
Hedge funds - 14 14 - - -
Infrastructure - 177 177 - - -
Property - 126 126 - - -
Derivatives 2 - 2 - - -
Cash and equivalents 257 - 257 35 221 256
Others 7 4 11 - 63 63
Total fair value of assets1 783 403 1,186 534 284 818
At 31 December 2023
Equities 2 - 2 160 - 160
Government bonds 443 - 443 173 - 173
Corporate bonds 360 113 473 179 - 179
Hedge funds - 9 9 - - -
Infrastructure - 166 166 - - -
Property - 84 84 - - -
Derivatives 2 5 7 - - -
Cash and equivalents 66 - 66 37 166 203
Others 7 2 9 - 145 145
Total fair value of assets1 880 379 1,259 549 311 860
1 Self-investment is monitored closely and is less than $1 million of
Standard Chartered equities and bonds for 2023 (31 December 2022: <$1
million). Self-investment is only allowed where it is not practical to exclude
it - for example through investment in index-tracking funds where the Group is
a constituent of the relevant index
At 31 December 2023 At 31 December 2022
Funded plans Unfunded Plans Funded plans Unfunded Plans
$million
$million
UK Fund Overseas Plans UK Fund Overseas Plans
$million
$million
$million
$million
Total fair value of assets 1,259 860 N/A 1,186 818 N/A
Present value of liabilities (1,219) (877) (189) (1,138) (817) (177)
Net pension plan asset/(obligation) 40 (17) (189) 48 1 (177)
Page 105
The pension cost for defined benefit plans was:
2023 Funded plans Unfunded plans Total
$million
$million
UK Fund Overseas plans
$million
$million
Current service cost1 - 39 11 50
Past service cost and curtailments2 8 - 1 9
Settlement cost3 - 2 - 2
Interest income on pension plan assets (57) (43) - (100)
Interest on pension plan liabilities 56 41 8 105
Total charge to profit before deduction of tax 7 39 20 66
Net (gain)/losses on plan assets4 (18) (52) - (70)
(Gains)/losses on liabilities 30 79 8 117
Total (gains)/losses recognised directly in statement of comprehensive income 12 27 8 47
before tax
Deferred taxation (1) (10) - (11)
Total (gains) /losses after tax 11 17 8 36
1 Includes administrative expenses paid out of plan assets of $1
million and actuarial losses of $2 million that are immediately recognised
through P&L in line with the requirements of IAS 19.
2 Includes the cost of discretionary pension increases paid to UK
pensioners as well as small past service costs in relation to Hong Kong
3 Termination benefits paid from the pension plan in Indonesia
4 The actual return on the UK Fund assets was a gain of $75 million
and on overseas plan assets was a gain of $95 million
2022 Funded plans Unfunded plans Total
$million
$million
UK Fund Overseas plans
$million
$million
Current service cost1 - 47 6 53
Past service cost and curtailments2 - 2 - 2
Interest income on pension plan assets (34) (32) - (66)
Interest on pension plan liabilities 33 31 5 69
Total charge to profit before deduction of tax (1) 48 11 58
Net (gains)/losses on plan assets3 486 113 - 599
(Gains)/ losses on liabilities (453) (143) (44) (640)
Total losses/(gains) recognised directly in statement of comprehensive income 33 (30) (44) (41)
before tax
Deferred taxation 7 13 - 20
Total (gains)/losses after tax 40 (17) (44) (21)
1 Includes administrative expenses paid out of plan assets of $ 1
million (2021: $ 1 million)
2 Includes various small costs and gains from plan amendments and
settlements in India, Kenya, Mauritius, South Korea and Sri Lanka
3 The actual return on the UK Fund assets was a loss of $452 million
and on overseas plan assets was a loss of $82 million
Movement in the defined benefit pension plans deficit during the year
comprise:
Funded plans Unfunded plans Total
$million
$million
UK Fund Overseas plans
$million
$million
Surplus/(deficit) at January 2023 48 1 (177) (128)
Contributions 8 59 14 81
Current service cost1 - (39) (11) (50)
Past service cost and curtailments (8) - (1) (9)
Settlement costs and transfers impact - (2) - (2)
Net interest on the net defined benefit asset/liability 1 2 (8) (5)
Actuarial gains/(losses) (12) (27) (8) (47)
Assets held for sale3 - (7) 6 (1)
Exchange rate adjustment 3 (4) (4) (5)
Surplus/(deficit) at 31 December 2023² 40 (17) (189) (166)
1 Includes administrative expenses paid out of plan assets of $1
million (31 December 2022: $1 million)
2 The deficit total of $166 million is made up of plans in deficit of
$260 million (31 December 2022: $248 million) net of plans in surplus with
assets totalling $94 million (31 December 2022: $120 million)
3 "Assets held for sale" is an adjustment relating to plans in
Cameroon, Cote D'Ivoire and Zimbabwe which is required due to these countries
being excluded in the opening and closing assets and liabilities, but included
in the profit and other comprehensive income items shown.
Page 106
Funded plans Unfunded plans Total
$million
$million
UK Fund Overseas plans
$million
$million
Surplus/(deficit) at January 2022 88 (44) (236) (192)
Contributions - 67 13 80
Current service cost1 - (47) (6) (53)
Past service cost and curtailments - (2) - (2)
Settlement costs and transfers impact - - - -
Net interest on the net defined benefit asset/liability 1 1 (5) (3)
Actuarial gains/(losses) (33) 30 44 41
Assets held for sale3 - (4) 2 (2)
Exchange rate adjustment (8) - 11 3
Surplus/(deficit) at 31 December 2022² 48 1 (177) (128)
1 Includes administrative expenses paid out of plan assets of $1
million (31 December 2021: $1 million)
2 The deficit total of $128 million is made up of plans in deficit of
$248 million (31 December 2021: $355 million) net of plans in surplus with
assets totalling $120 million (31 December 2021: $163 million)
3 Assets held for sale includes funded and unfunded plans in
Cameroon, Cote D'Ivoire, Jordan and Zimbabwe
The Group's expected contribution to its defined benefit pension plans in 2024
is $53 million.
2023 2022
Assets Obligations Total Assets Obligations Total
$million
$million
$million
$million
$million
$million
At 1 January 2,004 (2,132) (128) 2,942 (3,134) (192)
Contributions1 82 (1) 81 81 (1) 80
Current service cost2 - (50) (50) - (53) (53)
Past service cost and curtailments - (9) (9) - (2) (2)
Settlement costs - (2) (2) (5) 5 -
Interest cost on pension plan liabilities - (105) (105) - (69) (69)
Interest income on pension plan assets 100 - 100 66 - 66
Benefits paid out2 (161) 161 - (176) 176 -
Actuarial gains/(losses)3 70 (117) (47) (599) 640 41
Assets held for sale4 (7) 6 (1) (18) 16 (2)
Exchange rate adjustment 31 (36) (5) (287) 290 3
At 31 December 2,119 (2,285) (166) 2,004 (2,132) (128)
1 Includes employee contributions of $1 million (31 December 2022: $1
million)
2 Includes administrative expenses paid out of plan assets of $1
million (31 December 2022: $1 million)
3 Actuarial gain on obligation comprises of $50 million loss (31
December 2022: $708 million gain) from financial assumption changes, $1
million loss (31 December 2022: $9 million gain) from demographic assumption
changes and $66 million loss (31 December 2022: $77 million loss) from
experience
4 "Assets held for sale" is an adjustment relating to plans in
Cameroon, Cote D'Ivoire and Zimbabwe which is required due to these countries
being excluded in the opening and closing assets and liabilities, but included
in the profit and other comprehensive income items shown.
31. Share-based payments
Accounting policy
The Group operates equity-settled and cash-settled share-based compensation
plans. The fair value of the employee services (measured by the fair value of
the awards granted) received in exchange for the grant of the shares and
awards is recognised as an expense. For deferred share awards granted as part
of an annual performance award, the expense is recognised over the period from
the start of the performance period to the vesting date. For example, the
expense for three-year awards granted in 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.
Page 107
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
conditions (for example, profitability 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
binomial option pricing model. Non-market vesting conditions 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
revision of original estimates, if any, in the income statement and a
corresponding adjustment to equity over the remaining vesting period.
Forfeitures prior to vesting attributable to factors other than the failure to
satisfy service conditions and non-market vesting conditions are treated as a
cancellation and the remaining unamortised 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 liability
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 conditions or
market-based performance conditions, the cumulative charge incurred up to the
date of forfeiture is credited to the income statement.
Other accounting estimates and judgements
Share-based payments involve judgement and estimation uncertainty in
determining the expenses and carrying values of share awards at the balance
sheet date.
• LTIP awards are determined using an estimation of the probability of
meeting certain metrics over a three-year performance period using the Monte
Carlo simulation model.
• Deferred shares are determined using an estimation of expected dividends.
Sharesave Plan valuations are determined using a binomial option-pricing
model.
The Group operates a number of share-based arrangements for its executive
directors and employees. Details of the share-based payment charge are set out
below.
2023¹ 2022¹
Cash Equity Total Cash Equity Total
$million
$million
$million
$million
$million
$million
Deferred share awards 34 103 137 16 92 108
Other share awards 19 70 89 20 71 91
Total share-based payments² 53 173 226 36 163 199
1 No forfeiture during the year
2 The total Share based payments charge during the year includes costs
relating to Business ventures. Business ventures are established as separate
legal entities with their own employee share ownership plans (ESOP) to attract
and incentivise talent. ESOPs have been set up with share based payment
charges recorded in 2023 with $14 million in Cash settled and $3 million
equity settled deferred awards spread across 11 entities
2021 Standard Chartered Share Plan (the '2021 Plan') and 2011 Standard
Chartered Share Plan (the '2011 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, including directors 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 individual 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
anniversaries of the award date specified at the time of grant. Deferred
awards are not subject to any plan limit. This enables the Group to meet
regulatory requirements relating to deferral levels, and is in line with
market practice.
Page 108
- replacement buy-out awards to new joiners who forfeit 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 similar plans operated by our competitors,
these awards are not subject to an annual limit and do not have any
performance measures.
Under the 2021 Plan and 2011 Plan, no grant price is payable to receive an
award. The remaining life 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
satisfaction of RoTE (subject to a capital CET1 underpin). The vesting of
awards also have additional conditions under strategic measures related to
targets set for sustainability linked to business strategy. The fair value of
the relative TSR component is calculated using the probability of meeting the
measures over a three-year performance period, using a Monte Carlo simulation
model. The value of the remaining 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 dividend equivalents 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 dividend yield.
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 divided yield (%) 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
Valuation - 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 dividends.
For awards granted to material risk takers in 2023, the fair value of awards
takes into account the lack of dividend equivalents, calculated by reference
to market consensus dividend yield.
Deferred share awards - variable remuneration
Grant date 2023
18 September 19 June 13 March
Share price at grant date (£) 7.43 6.75 7.40
Vesting period (years) Expected dividend yield (%) Fair value Expected dividend yield (%) Fair value Expected dividend yield (%) Fair value
(£)
(£)
(£)
1-3 years N/A 7.43 3.3 6.75 3.1 7.4
1-5 years 3.0 6.51 3.3, 3.3 6.23, 5.83 3.1, 3.1 6.85, 6.65
3-7 years - - - - 3.1, 3.1, 3.1, 3.1 6.65, 6.75,
6.35, 6.16
Grant date 2022
09 November 20 June 14 March
Share price at grant date (£) 5.62 6.04 4.88
Vesting period (years) Expected dividend yield (%) Fair value Expected dividend yield (%) Fair value Expected dividend yield (%) Fair value
(£)
(£)
(£)
1-3 years N/A 5.62 N/A 6.04 N/A 4.88
1-5 years 3.4 5.17 3.4, 3.4 5.56, 5.56 N/A, 3.4, 4.88, 4.48,
3.4, 3.4
4.41, 4.34
3-7 years - - - - 3.4,3.4,3.4 4.48, 4.13, 3.99
Page 109
Deferred share awards - buy-outs
Grant date 2023
20-Nov 18-Sep 19-Jun 13-Mar
Share price at grant date (£) 6.60 7.43 6.75 7.40
Vesting period (years) Expected dividend yield Fair value Expected dividend yield Fair value Expected dividend yield Fair value Expected dividend yield 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
1 year 3.0 6.25, 6.30, 6.35, 6.39 3.0 7.06, 7.11, 7.16, 7.22 3.3 6.18, 6.38, 6.43, 6.54 3.1 7.12, 7.18
2 years 3.0 6.12, 6.16, 6.21 3.0 6.85, 6.9, 3.3 5.98, 6.18, 6.33 3.1 6.91, 6.96
6.95, 7.01
3 years 3.0 5.94, 5.98, 6.03 3.0 6.65, 6.7, 6.8 3.3 5.98, 5.79, 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
Grant date 2022
28 November 09 November 20 June 14 March
Share price at grant date (£) 5.90 5.62 6.04 4.88
Vesting period (years) Expected dividend yield (%) Fair value Expected dividend yield (%) Fair value Expected dividend yield (%) Fair value Expected dividend yield (%) 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
Page 110
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
invitation (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 Sharesave Plans 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 securities law and
regulatory restrictions. In these countries, where possible, the Group offers
an equivalent cash-based alternative to its employees.
The remaining life 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 binomial option-pricing
model. The same fair value is applied to all employees including executive
directors. The fair value per option granted and the assumptions used in the
calculation are as follows:
All Employee Sharesave Plan (Sharesave)
2023 2022
Grant date 18 September 28 November
Share price at grant date (£) 7.35 5.80
Exercise price (£) 5.88 4.23
Vesting period (years) 3 3
Expected volatility (%) 36.7 39.3
Expected option life (years) 3.5 3.33
Risk-free rate (%) 4.48 3.21
Expected dividend yield (%) 3.0 3.4
Fair value (£) 3.05 2.08
The expected volatility is based on historical volatility over the last three
years, or three years prior 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 dividend yield is calculated by reference to market
consensus dividend yield.
Limits
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
discretionary 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 waivers from strict compliance with
Rules 17.03A, 17.03B(1), 17.03E and 17.03(18) of the Rules Governing the
Listing of Securities on the Stock Exchange of Hong Kong. Details are set out
in the market announcements 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 discretion.
Page 111
Reconciliation of share award movements for the year ending 31 December 2023
Discretionary¹ Sharesave Weighted average Sharesave exercise price
(£)
LTIP Deferred
shares
Outstanding at 1 January 2023 11,339,951 46,449,040 17,109,519 3.81
Granted2,3 2,142,057 21,668,459 5,668,325 -
Lapsed (1,911,931) (1,231,514) (1,407,502) 4.14
Exercised (622,695) (19,817,781) (4,468,125) 3.75
Outstanding at 31 December 2023 10,947,382 47,068,204 16,902,217 4.49
Total number of securities available for issue under the plan 10,947,382 47,068,204 16,902,217
Percentage of the issued shares this represents as at 31 December 2023 0.41 1.76 0.63 4.49
Exercisable as at 31 December 2023 - 685,077 2,482,392 3.16
Range of exercise prices (£)³ - - 3.14 - 5.88
Intrinsic value of vested but not exercised options ($ million) - 5.81 11.08
Weighted average contractual remaining life (years) 7.59 8.11 2.30
Weighted average share price for awards exercised during the period (£) 6.94 7.04 6.65
1. Granted under the 2021 Plan and 2011 Plan. Employees do not contribute to
the cost of these awards.
2. 2,134,238 (LTIP) granted on 13 March 2023, 6,501 (LTIP) granted as a
notional dividend on 1 March 2023, 1,318 (LTIP) granted as a notional dividend
on 1 September 2023; 20,828,385 (Deferred shares) granted on 13 March 2023,
121,314 (Deferred shares) granted as a notional dividend on 1 March 2023,
338,583 (Deferred shares) granted on 19 June 2023, 235,186 (Deferred shares)
granted on 18 September 2023, 52,082 (Deferred shares) granted as a notional
dividend on 1 September 2023, 92,909 (Deferred shares) granted on 20 November
2023; 5,668,325 (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 over the five
days to the invitation date of 21 August 2023. The closing share price on 18
August 2023 was £7.214
Reconciliation of share award movements for the year ending 31 December 2022
Discretionary¹ Sharesave Weighted average Sharesave exercise price
(£)
LTIP Deferred
shares
Outstanding at 1 January 2022 11,627,751 39,718,654 16,897,075 3.95
Granted2,3 3,066,288 25,037,706 5,777,197 -
Lapsed (2,927,828) (1,121,849) (2,700,678) 4.29
Exercised (426,260) (17,185,471) (2,864,075) 5.03
Outstanding at 31 December 2022 11,339,951 46,449,040 17,109,519 3.81
Total number of securities available for issue under the plan 11,339,951 46,449,040 17,109,519
Percentage of the issued shares this represents as at 31 December 2022 0.39 1.60 0.59 3.81
Exercisable as at 31 December 2022 - 1,191,693 1,699,772 4.96
Range of exercise prices (£)³ - - 3.14 - 5.13 -
Intrinsic value of vested but not exercised options ($ million) 0.02 8.93 2.59
Weighted average contractual remaining life (years) 7.88 8.25 2.27
Weighted average share price for awards exercised during the period (£) 5.09 4.93 5.94
1. Granted under the 2021 Plan and 2011 Plan. Employees do not
contribute to the cost of these awards.
2. 3,048,826 (LTIP) granted on 14 March 2022, 14,989 (LTIP) granted as
a notional dividend on 1 March 2022, 2,473 (LTIP) granted as a notional
dividend on 8 August 2022, 23,434,127 (Deferred shares) granted on 14 March
2022, 77,479 (Deferred shares) granted as a notional dividend on 1 March 2022,
584,322 (Deferred shares) granted on 20 June 2022, 43,918 (Deferred shares)
granted as a notional dividend on 8 August 2022, 771,103 (Deferred shares)
granted on 9 November 2022, 126,757 (Deferred shares) granted on 28 November
2022 under the 2021 Plan. 5,777,197 (Sharesave) granted on 28 November 2022
under the 2013 Sharesave Plan.
3. For Sharesave granted in 2022 the exercise price is £4.23 per
share, a 20% discount from the closing price on 1 November 2022. The closing
price on 1 November 2022 was £5.282
Page 112
32. Investments in subsidiary undertakings, joint ventures and associates
Accounting policy
Associates and joint arrangements
The Group did not have any contractual interest in joint operations.
Investments in associates and joint ventures are accounted for by the equity
method of accounting and are initially recognised at cost. The Group's
investment in associates and joint ventures includes goodwill identified on
acquisition (net of any accumulated impairment loss).
The Group's share of its associates' and joint ventures' post-acquisition
profits or losses is recognised in the income statement, and its share of
post-acquisition movements in other comprehensive income is recognised in
reserves. The cumulative post-acquisition movements are adjusted against the
carrying amount of the investment. When the Group's share of losses in an
associate or a joint venture equals or exceeds its interest in the associate,
including any other unsecured receivables, the Group does not recognise
further losses, unless it has incurred obligations or made payments on behalf
of the associate or joint venture.
Unrealised gains and losses on transactions between the Group and its
associates and joint ventures are eliminated to the extent of the Group's
interest in the associates and joint ventures. At each balance sheet date, the
Group assesses whether there is any objective evidence of impairment in the
investment in associates and joint ventures. Such evidence includes a
significant or prolonged decline in the fair value of the Group's investment
in an associate or joint venture below its cost, among other factors.
Significant accounting estimates and judgements
The Group applies judgement in determining if it has control, joint control or
significant influence over subsidiaries, joint ventures and associates
respectively. These judgements are based upon identifying the relevant
activities of counterparties, being those activities that significantly affect
the entities returns, and further making a decision of if the Group has
control over those entities, joint control, or has significant influence
(being the power to participate in the financial and operating policy
decisions but not control them).
These judgements are at times determined by equity holdings, and the voting
rights associated with those holdings. However, further considerations
including but not limited to board seats, advisory committee members and
specialist knowledge of some decision-makers are also taken into account.
Further judgement is required when determining 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 dispersion of other
shareholders.
Impairment testing of investments in associates and joint ventures, and on a
Company level investments in subsidiaries is performed if there is a possible
indicator of impairment. Judgement is used to determine if there is objective
evidence of impairment. Objective evidence may be observable data such as
losses incurred on the investment when applying the equity method, the
granting of concessions as a result of financial difficulty, or breaches of
contracts/regulatory fines of the associate or joint venture. Further
judgement is required when considering broader indicators of impairment such
as losses of active markets or ratings downgrades across key markets in which
the associate or joint venture operate in.
Impairment testing is based on estimates including forecasting 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 estimation of future cash flows and the level to which they are discounted
is inherently uncertain and requires significant judgement.
Business combinations
The acquisition method of accounting is used to account for the acquisition of
subsidiaries by the Group.
In the Company's financial statements, investment in subsidiaries, associates
and joint ventures are held at cost less impairment and dividends from
pre-acquisition profits received prior to 1 January 2009, if any.
Inter-company transactions, balances and unrealised gains and losses on
transactions between Group companies are eliminated in the Group accounts.
Page 113
Investments in subsidiary undertakings 2023 2022
$million
$million
As at 1 January 60,975 60,429
Additions1 1,566 1,545
Disposal2 (1,750) (999)
As at 31 December 60,791 60,975
1 Includes internal Additional Tier 1 Issuances of $992 million by
Standard Chartered Bank and $575 million additional investment in Standard
Chartered Holdings Limited (31 December 2022: Additional Tier 1 issuances of
$1 billion by Standard Chartered Bank and $500 million by Standard Chartered
Bank (Hong Kong) Ltd)
2 Includes redemption of Additional Tier1 capital of $1 billion by
Standard Chartered Bank (31 December 2022: Additional Tier1 capital of $1
billion by Standard Chartered Bank)
At 31 December 2023, the principal subsidiary undertakings, all indirectly
held except for Standard Chartered Bank (Hong Kong) Limited, and principally
engaged in the business of banking and provision of other financial services,
were as follows:
Country and place of incorporation or registration Main areas of operation Group interest
in ordinary
share capital
%
Standard Chartered Bank, England and Wales United Kingdom, Middle East, South Asia, Asia Pacific, Americas and, through 100
Group companies, Africa
Standard Chartered Bank (Hong Kong) Limited, Hong Kong Hong Kong 100
Standard Chartered Bank (Singapore) Limited, Singapore Singapore 100
Standard Chartered Bank Korea Limited, Korea Korea 100
Standard Chartered Bank (China) Limited, China¹ China 100
Standard Chartered Bank (Taiwan) Limited, Taiwan Taiwan 100
Standard Chartered Bank AG, Germany Germany 100
Standard Chartered Bank Malaysia Berhad, Malaysia Malaysia 100
1 Under PRC law, registered as Standard Chartered Bank (China) Limited
Country and place of incorporation or registration Main areas of operation Group interest
in ordinary
share capital
%
Standard Chartered Bank (Thai) Public Company Limited, Thailand Thailand 99.87
Standard Chartered Bank (Pakistan) Limited, Pakistan Pakistan 98.99
Standard Chartered Bank Botswana Limited, Botswana Botswana 75.83
Standard Chartered Bank Kenya Limited, Kenya Kenya 74.32
Standard Chartered Bank Nepal Limited, Nepal Nepal 70.21
Standard Chartered Bank Ghana PLC, Ghana Ghana 69.42
Mox Bank Limited, Hong Kong Hong Kong 68.29
A complete list of subsidiary undertaking is included in Note 40.
The Group does not have any material non-controlling interest except as listed
above, which contribute $35 million (31 December 2022: $(6.2) million) of the
(loss)/Profit attributable to non-controlling interest and $290 million (31
December 2022: $261 million) of the equity attributable to non-controlling
interests.
During 2023 the Group disposed of its investments in Pembroke Group Limited
(Isle of Man), Pembroke Aircraft Leasing Holdings Limited and Pembroke
Aircraft Leasing (Tianjin) Limited (China). The carrying amount was composed
of Property, plant and equipment of $3,249 million, Goodwill and intangible
assets of $23 million, Other assets of $124 million and Other liabilities of
$292 million. The principal activity of these subsidiaries was the aviation
finance leasing business. In Q1 2023, the aviation finance leasing business
was classified as held for sale and was subsequently sold on 2nd November 2023
for a total consideration of $3,570 million. The gain on sale of the business
was $309 million. In addition the Group disposed of its wholly owned
subsidiaries Cardspal Pte. Ltd. and Kozagi during 2023. The gain on sale of
Cardspal Pte. Ltd. and Kozagi comprised $12 million and $7 million,
respectively.
While the Group's subsidiaries are subject to local statutory capital and
liquidity requirements in relation to foreign exchange remittance, these
restrictions arise in the normal course of business and do not significantly
restrict the Group's ability to access or use assets and settle liabilities of
the Group.
The Group does not have significant restrictions on its ability to access or
use its assets and settle its liabilities other than those resulting from the
regulatory framework within which the banking subsidiaries operate. These
frameworks require banking operations to keep certain levels of regulatory
capital, liquid assets, exposure limits and comply with other required ratios.
These restrictions are summarised below:
Regulatory and liquidity requirements
The Group's subsidiaries are required to maintain minimum capital, leverage
ratios, liquidity and exposure ratios which therefore restrict the ability of
these subsidiaries to distribute cash or other assets to the parent company.
Page 114
The subsidiaries are also required to maintain balances with central banks and
other regulatory authorities in the countries in which they operate. At 31
December 2023, the total cash and balances with central banks was $70 billion
(31 December 2022: $58 billion) of which $6 billion (31 December 2022: $9
billion) is restricted.
Statutory requirements
The Group's subsidiaries are subject to statutory requirements not to make
distributions of capital and unrealised profits to the parent company,
generally to maintain solvency. These requirements restrict the ability of
subsidiaries to remit dividends to the Group. Certain subsidiaries are also
subject to local exchange control regulations which provide for restrictions
on exporting capital from the country other than through normal dividends.
Contractual requirements
The encumbered assets in the balance sheet of the Group's subsidiaries are not
available for transfer around the Group.
Share of profit from investment in associates and joint ventures comprises:
2023 2022
$million
$million
Loss from investment in joint ventures (13) (7)
Profit from investment in associates 154 163
Total 141 156
Interests in associates and joint ventures 2023 2022
$million
$million
As at 1 January 1,631 2,147
Exchange translation difference 16 (232)
Additions¹ 64 26
Share of profits 141 156
Dividend received(4) (11) (58)
Disposals - (1)
Impairment2 (872) (336)
Share of FVOCI and Other reserves (7) (79)
Other movements3 4 8
As at 31 December 966 1,631
1 Includes $17 million non-cash consideration (Intellectual Property
- right to use) from SBI Zodia Custody Co. Ltd
2 Impairment mainly relates to the Group's investment in its
associate China Bohai Bank (Bohai) $850 million and CurrencyFair Limited (Zai)
$21 million
3 Movement related to CurrencyFair Limited
4 Include distribution ($7 million) in cash from Ascenta IV
During 2023 the Group disposed of its 13.09% share of investment in associate
Metaco SA for a total consideration of $18 million. The entire amount was
recognised as gain on sale.
A complete list of the Group's interest in associates is included in Note 40.
The Group's principal associates are:
Associate Nature of activities Main areas of operation Group interest in ordinary share capital %
China Bohai Bank Banking China 16.26
CurrencyFair Limited Exchange Ireland Banking Ireland 43.42
The Group's ownership percentage in China Bohai Bank is 16.26%.
Page 115
Although the Group's investment in China Bohai Bank is less than 20 per cent ,
it is considered to be an associate because of the significant influence the
Group is able to exercise over its management and financial and operating
policies. This influence is exercised through Board representation and the
provision of technical expertise to Bohai. The Group applies the equity method
of accounting for investments in associates.
Bohai has a statutory year end of 31 December, but publishes its year-end
financial statements after the Group. As it is impracticable for Bohai to
prepare financial statements sooner, the Group recognises its share of Bohai's
earnings on a three-month lag basis. Therefore, the Group recognised its share
of Bohai's profits and movements in other comprehensive income for the 12
months ended 30 September 2023 in the Group's consolidated statement of income
and consolidated statement of comprehensive income for the year ended 31
December 2023, respectively.
There have been significant developments since 2022, which have required an
impairment to the Group's carrying amount of the investment in Bohai. These
events include Bohai's lower reported net profit in 2023 (compared to 2022) as
well as banking industry challenges and property market uncertainties in
Mainland China, that may impact Bohai's future profitability.
If the Group did not have significant influence over Bohai, the investment
would be measured at fair value rather than the current carrying value, which
is based on the application of the equity method as described in the
accounting policy note.
Impairment testing
At 31 December 2023, the listed equity value of Bohai is below the carrying
amount of the Group's investment in associate. As a result, the Group
assessed the carrying value of its investment in Bohai for impairment and
concluded that an impairment of $850 million was required in 2023 (2022: $308
million impairment). Total impairment is recorded in the 'Goodwill, property,
plant and equipment and other impairment' line in the Consolidated Income
Statement, under Central & other items segment. The carrying value of the
Group's investment in Bohai of $700 million (2022: $1,421 million) represents
the higher of the value in use and fair value less costs to sell. The
financial forecasts used in the VIU calculation reflects Group management's
best estimate of Bohai's future earnings considering the significant
developments explained above.
Bohai 2023 2022
$million
$million
VIU 700 1,421
Carrying amount1 700 1,421
Market capitalisation2 418 685
1 The Group's 16.26% share in the net assets less other equity
instruments which the Group does not hold
2 Number of shares held by the Group multiplied by the quoted share
price at 31 December
Basis of recoverable amount
The impairment test was performed by comparing the recoverable amount of
Bohai, determined as the higher of VIU and fair value less costs to sell, with
its carrying amount.
The value in use ('VIU') is calculated using a dividend discount model
('DDM'), which estimates the distributable future cashflows to the equity
holders, after adjusting for regulatory capital requirements, for a 5-year
period, after which a terminal value ('TV') is calculated based on the 'Gordon
Growth' model. The key assumptions in the VIU are as follows:
• Short to medium term projections are based on management's best estimates
of future profits available to ordinary shareholders and have been determined
with reference to the latest published financial results and historical
performance of Bohai
Page 116
• The projections use available information and include normalised
performance over the forecast period, inclusive of: (i) asset growth
assumptions based long-term GDP growth rate for Mainland China; (ii) ECL
assumptions using Bohai's historical reported ECL, based on the proportion of
ECL from loans and advances to customers and financial investments measured at
amortised cost and FVOCI. This was further adjusted for banking industry
challenges and property market uncertainties; (iii) Net Interest Margin (NIM)
increases from 2025 with reference to third party market interest rate
forecasts in China; (iv) Net fee income estimated according to the latest
available performance of Bohai and contribution of the constituent parts
(trading and fee income); and (v) Effective Tax Rate (ETR) based on Bohai's
historical reported results for the short term projection, updated, for the
medium and long term to a more conservative view
• The discount rate applied to these cash flows was estimated with reference
to transaction and broker data in the local Chinese market, cross-checked to
the capital asset pricing model (CAPM), which includes a long term risk-free
rate, beta and company risk premium assumptions for Bohai
• A long-term GDP growth rate for Mainland China is used to extrapolate the
expected short to medium term earnings to perpetuity to derive a terminal
value; and
• Capital maintenance ratio consists of a capital haircut taken in order to
estimate Bohai's target regulatory capital requirements over the forecast
period. This haircut takes into account movements in risk weighted assets
(RWA) projected based on the historical proportion of RWA to total assets and
the total capital required (Core CET 1 and Minimum Core CET 1 ratios),
including required retained earnings over time to meet the target capital
ratios. RWA projection is adjusted to reflect management's best estimates for
the impact of implementing Basel 3.1, effective 1 January 2024 in China.
The VIU model was refined during 2023 to include a projected summary balance
sheet and more granular income statement assumptions for each period. While it
is impracticable for the Group to estimate the impact on future periods, the
key changes to the 2023 model are summarised as follows:
• Asset growth rates, net interest income margin and ECL assumptions were
applied to the relevant balance sheet lines to produce the profit and loss
forecasts for each period
• RWAs were modelled as a percentage of total assets, to reflect the
potential capital impact(s) of regulatory changes (e.g., Basel 3.1) in each
period. For the purposes of the VIU for 31 December 2023, it was assumed that
the minimum CET 1 ratio is 8.0% (2022: 7.5%) over the forecast and terminal
periods
• Consistent with the model updates explained above, net fee income was
modelled separately from net interest income.
Prior to its use, the 2023 VIU model was calibrated using the 2022 modelled
assumptions.
The key assumptions used in the VIU calculation are as follows:
2023 2022
per cent
per cent
Pre-tax discount rate 13.68 13.03
Long term GDP growth rate 4.00 4.00
Total assets growth rate 4.00 N/A1
RWA as percentage of total assets 63.87-67.06 N/A1
Net interest margin 1.21-1.48 1.50-1.84
Net fee income growth rate 4.00 N/A1
Expected credit losses as a percentage of customer loans 0.80-1.24 0.90-1.45
Expected credit losses as a percentage of financial investments measured at 0.35-0.67 N/A1
amortised cost and FVOCI
Effective tax rate 12.02-16.00² 16.00
Capital maintenance ratio3 8.28 8.06
1 These assumptions were not explicitly modelled in 2022, therefore no
comparative figures are presented
2 Bohai's latest available effective tax rate (12.02%) was only used
for the first year of the cash flows. Thereafter, 16.00% was applied,
consistent with previous periods
3 Core CET 1 reported by Bohai
The table below discloses sensitivities to the key assumptions of Bohai,
according to management judgement of reasonably possible changes. Changes were
applied to every cash flow year on an individual basis. The percentage change
to the assumptions reflects the level at which management assess the
reasonableness of the assumptions used and their impact on the Value in Use.
Page 117
Sensitivities Key assumption change
basis points Increase Decrease
Headroom
Headroom/
Impairment)
(Impairment)
$ million
$ million
Discount Rate 100 (126) 169
Long term GDP growth rate(1) 100 (135) (100)
Total assets growth rate 100 41 (40)
RWA as percentage of total assets 100 (26) 26
Net interest margin 100 452 (282)¹
Net fee income 100 53 (51)
Expected credit losses as a percentage of customer loans 10 (275) 275
Expected credit losses as a percentage of financial investments measured at 10 (131) 131
amortised cost and FVOCI
Effective tax rate 100 (25) 25
Capital maintenance ratio 50 (199) 199
1 Changes in long term GDP growth rate applied only to the calculation of
the terminal value
2 Market capitalisation of Bohai at 31 December 2023 was used as
impairment floor
The following table sets out the summarised financial statements of China
Bohai Bank prior to the Group's share of the associate's profit being applied:
30 Sep 2023 30 Sep 2022
$million
$million
Total assets 246,212 236,396
Total liabilities 230,101 220,662
Operating income1 3,640 3,958
Net profit1 811 1,186
Other comprehensive income1 (38) (457)
1 This represents twelve months of earnings (1 October to 30
September)
33. Structured entities
Accounting policy
Structured entities are consolidated when the substance of the relationship
between the Group and the structured entity indicates the Group has power over
the contractual relevant activities of the structured entity, is exposed to
variable returns, and can use that power to affect the variable return
exposure.
In determining whether to consolidate a structured entity to which assets have
been transferred, the Group takes into account its ability to direct the
relevant activities of the structured entity. These relevant activities are
generally evidenced through a unilateral right to liquidate the structured
entity, investment in a substantial proportion of the securities issued by the
structured entity or where the Group holds specific subordinate securities
that embody certain controlling rights. The Group may further consider
relevant activities embedded within contractual arrangements such as call
options which give the practical ability to direct the entity, special
relationships between the structured entity and investors, and if a single
investor has a large exposure to variable returns of the structured entity.
Judgement is required in determining control over structured entities. The
purpose and design of the entity is considered, along with a determination of
what the relevant activities 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 principal in its own right or as an agent on behalf of others.
Judgement is further required in the ongoing assessment of control over
structured entities, specifically if market conditions have an effect on the
variable return exposure of different investors.
Page 118
Interests in consolidated structured entities: A structured entity is
consolidated into the Group's financial statements where the Group controls
the structured entity, as per the determination in the accounting policy
above. The following table presents the Group's interests in consolidated
structured entities.
2023 2022
$million
$million
Aircraft and ship leasing 52 3,531
Principal and other structured finance 353 330
Total 405 3,861
Interests in unconsolidated structured entities: Unconsolidated structured
entities are all structured entities that are not controlled by the Group. The
Group enters into transactions with unconsolidated structured entities in the
normal course of business to facilitate customer transactions and for specific
investment opportunities. This is predominantly within the CCIB business
segment. An interest in a structured entity is contractual or non-contractual
involvement which creates variability of the returns of the Group arising from
the performance of the structured entity.
The table below presents the carrying amount of the assets recognised in the
financial statements relating to variable interests held in unconsolidated
structured entities, the maximum exposure to loss relating to those interests
and the total assets of the structured entities. Maximum exposure to loss is
primarily limited to the carrying amount of the Group's on-balance sheet
exposure to the structured entity. For derivatives, the maximum 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-backed securities Lending Structured finance Principal Finance funds Other activities Total Asset-backed securities Lending Structured finance Principal Finance funds Other activities Total
$million
$million
$million
$million
$million
$million
$million
$million
$million
$million
$million
$million
Group's interest - assets
Financial assets held at fair value through profit or loss 954 269 143 137 - 1,503 851 - - 136 - 987
Loans and advances/Investment securities at amortised cost 17,795 15,105 13,353 - 190 46,443 18,696 21,667 14,261 - 246 54,870
Investment securities (fair value through other comprehensive income) 2,443 - - - - 2,443 2,248 - - - - 2,248
Other assets - - 34 - - 34 - - - 8 - 8
Total assets 21,192 15,374 13,530 137 190 50,423 21,795 21,667 14,261 144 246 58,113
Off-balance sheet - 8,869 6,691 - 20 15,580 - 9,675 8,710 93 - 18,478
Group's maximum exposure to loss 21,192 24,243 20,221 137 210 66,003 21,795 31,342 22,971 237 246 76,591
Total assets of structured entities 191,627 15,374 31,806 250 1,688 240,745 177,194 17,925 35,732 291 1,828 232,970
The main types of activities for which the Group utilises unconsolidated
structured entities cover synthetic credit default swaps for managed
investment funds (including specialised Principal Finance funds), portfolio
management purposes, structured finance and asset-backed securities. These are
detailed as follows:
• Asset-backed securities (ABS): The Group also has investments in
asset-backed securities issued by third-party sponsored and managed structured
entities. For the purpose of market making and at the discretion of ABS
trading desk, the Group may hold an immaterial amount of debt securities from
structured entities originated by credit portfolio management. This is
disclosed in the ABS column above.
Page 119
• Portfolio management (Group sponsored entities): For the purposes of
portfolio management, the Group purchased credit protection via synthetic
credit default swaps from note-issuing structured entities. This 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 entities. The Group
continues to own or hold all of the risks and returns relating to these
assets. The credit protection obtained from the regulatory-compliant
securitisation only serves to protect the Group against losses upon the
occurrence of eligible credit 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 entities, but may hold an insignificant
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 securities to collateralise the structured
entities swap obligations to the Group, and to repay the principal to
investors at maturity. The structured entities reimburse the Group on actual
losses incurred, through the use of the cash collateral or realisation of the
collateral security. Correspondingly, the structured entities write down the
notes issued by an equal amount of the losses incurred, in reverse order of
seniority. All funding is committed for the life of these vehicles and the
Group has no indirect exposure in respect of the vehicles' liquidity position.
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 entities have Standard Chartered
branding.
• Corporate Lending: Corporate Lending comprises secured lending in the
normal course of business to third parties through structured entities.
• Structured finance: Structured finance comprises interests in transactions
that the Group or, more usually, a customer has structured, using one or more
structured entities, which provide beneficial arrangements for customers. The
Group's exposure primarily represents the provision of funding to these
structures as a financial intermediary, for which it receives a lender's
return. The transactions largely relate to real estate financing and the
provision of aircraft leasing and ship finance.
• Principal finance Fund: The Group's exposure to Principal Finance Funds
represents committed or invested capital in unleveraged investment funds,
primarily investing in pan-Asian infrastructure, real estate and private
equity.
• Other activities: Other activities include structured entities created to
support margin financing transactions, the refinancing of existing credit and
debt facilities, as well as setting up of bankruptcy remote structured
entities.
In the above table, the Group determined the total assets of the structured
entities using following bases:
• Asset Backed Securities, Principal Finance, and Other activities are based
on the published total assets of the structured entities.
• Lending and Structured Finance are estimated based on the Group's loan
values to the structured entities
34. Cash flow statement
Adjustment for non-cash items and other adjustments included within income
statement
Group Company
2023 2022 2023 2022
$million
$million
$million
$million
Amortisation of discounts and premiums of investment securities (704) 237 - -
Interest expense on subordinated liabilities 951 570 632 615
Interest expense on senior debt securities in issue 2,068 794 1,434 696
Other non-cash items (578) (12) 8 301
Pension costs for defined benefit schemes 61 58 - -
Share-based payment costs 219 199 - -
Impairment losses on loans and advances and other credit risk provisions 508 836 - -
Dividend income from subsidiaries - - (4,738) (1,047)
Other impairment 1,008 439 - -
Gain on disposal of property, plant and equipment (31) (62) - -
Loss on disposal of FVOCI and AMCST financial assets 209 190 - -
Depreciation and amortisation 1,071 1,186 - -
Fair value changes taken to Income statement (1,666) (365) (202) -
Foreign Currency revaluation 299 (365) 19 -
Profit from associates and joint ventures (141) (156) - -
Total 3,274 3,549 (2,847) 565
Page 120
Change in operating assets
Group Company
2023 2022 (Restated) 2023 2022
$million
$million
$million
$million
Decrease/(increase) in derivative financial instruments 13,061 (11,873) (19) 259
(Increase)/decrease in debt securities, treasury bills and equity shares held (29,477) 9,067 (4,068) 289
at fair value through profit or loss(1)
(Increase)/decrease in loans and advances to banks and customers(1) (787) 14,381 - -
Net decrease/(increase) in prepayments and accrued income 82 (1,056) - -
Net decrease/(increase) in other assets 2,663 2,470 268 (806)
Total (14,458) 12,989 (3,819) (258)
1 Decrease in debt securities, treasury bills and equity shares held
at fair value through profit or loss for 2022 has been restated by $(821)
million and the decrease in loans and advances to banks and customers for 2022
has been restated by $14,355 million (refer note 35)
Change in operating liabilities
Group Company
2023 2022 2023 2022
$million
$million
$million
$million
(Decrease)/increase in derivative financial instruments (13,629) 17,145 (239) 1,004
Net increase/(decrease) in deposits from banks, customer 17,877 (9,259) 4,479 106
accounts, debt securities in issue, Hong Kong notes in circulation
and short positions
Increase in accruals and deferred income 1,106 1,381 153 4
Net decrease in other liabilities (3,377) (481) (1,154) (2,080)
Total 1,977 8,786 3,239 (966)
Disclosures
Group Company
2023 2022 2023 2022
$million
$million
$million
$million
Subordinated debt (including accrued interest):
Opening balance 13,928 16,885 13,895 16,395
Proceeds from the issue 18 750 - 750
Interest paid (563) (667) (545) (619)
Repayment (2,160) (1,848) (2,160) (1,800)
Foreign exchange movements 146 (338) 146 (337)
Fair value changes from hedge accounting 311 (1,502) 271 (1,098)
Accrued interest and others 536 648 516 604
Closing balance 12,216 13,928 12,123 13,895
Senior debt (including accrued interest):
Opening balance 32,288 29,904 14,080 16,981
Proceeds from the issue 15,261 11,902 5,105 1,500
Interest paid (1,145) (845) (434) (506)
Repayment (6,471) (7,838) (2,037) (2,980)
Foreign exchange movements (21) (729) (2) (431)
Fair value changes from hedge accounting 119 (1,051) 188 (1,014)
Accrued interest and others 1,319 945 618 530
Closing balance 41,350 32,288 17,518 14,080
Page 121
35. Cash and cash
equivalents
Accounting policy
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 acquisition, are not subject to
contractual restrictions, are subject to insignificant changes in value, are
highly liquid and are held for the purpose of meeting short-term cash
commitments. This includes products such as treasury bills and other eligible
bills, short-term government securities, loans and advances to banks
(including 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 advances to customers'.
Following a reassessment of the nature and purpose of balances held with
central banks, customers and banks, the Group's cash and cash equivalents
balance for 31 December 2022 and 1 January 2022 has been restated. The
following balances have been identified by the Group as being cash and cash
equivalents based on the criteria described above.
Group Company
2023 2022 (Restated) 2023 2022
$million
$million
$million
$million
Cash and balances at central banks 69,905 58,263 - -
Less: restricted balances (6,153) (9,173) - -
Treasury bills and other eligible bills 5,931 12,661 - -
Loans and advances to banks 11,879 10,144 - -
Loans and advances to customers 25,829 24,586 - -
Investments 244 1,114 - -
Amounts owed by and due to subsidiary undertakings - - 10,294 7,417
Total 107,635 97,595 10,294 7,417
The Group's cash and cash equivalents balance for 31 December 2022 has been
restated to increase the balance by $8,876 million as balances with central
banks that met the cash and cash equivalents definition were originally
included in loans and advances to customers ($24,586 million) 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 ($10,414 million), treasury
bills and other eligible bills ($5,275 million) as well as Investments ($21
million) that did not meet the cash and cash equivalents definition. The cash
and cash equivalents balance at the beginning of the year for 2022 has also
been restated to decrease the balance by $4,659 million. On the 2022 cash flow
statement for Group, the change in operating assets has also been restated by
$13,534 million as a result of these changes.
36. Related party transactions
Directors and officers
Details of directors' remuneration and interests in shares are disclosed in
the Directors' remuneration report.
IAS 24 Related party disclosures requires the following additional information
for key management compensation. Key management comprises non-executive
directors, executive directors of Standard Chartered PLC, the Court directors
of Standard Chartered Bank and the persons discharging managerial
responsibilities (PDMR) of Standard Chartered PLC.
2023 2022
$million
$million
Salaries, allowances and benefits in kind 42 39
Share-based payments 26 26
Bonuses paid or receivable 5 4
Termination benefits - 1
Total 73 70
Transactions with directors and others
At 31 December 2023, the total amounts to be disclosed under the Companies Act
2006 (the Act) and the Listing Rules of the Hong Kong Stock Exchange Limited
(Hong Kong Listing Rules) about loans to directors were as follows:
2023 2022
Number $million Number $million
Directors1 4 - 3 -
1 Outstanding loan balances were below $50,000
Page 122
The loan transactions provided to the directors of Standard Chartered PLC were
a connected transaction under Chapter 14A of the Hong Kong Listing Rules. It
was fully exempt as financial assistance under Rule 14A.87(1), as it was
provided in our ordinary and usual course of business and on normal commercial
terms.
As at 31 December 2023, Standard Chartered Bank had in place a charge over $68
million (31 December 2022: $89 million) of cash assets in favour of the
independent trustee of its employer financed retirement benefit scheme.
Other than as disclosed in the Annual Report and Accounts, there were no other
transactions, arrangements or agreements outstanding for any director,
connected person or officer of the Company which have to be disclosed under
the Act, the rules of the UK Listing Authority or the Hong Kong Listing Rules.
Details of non-revenue transactions with Temasek Holdings (Private) Limited
are set out in Director's report.
Company
The Company has received $1,469 million (31 December 2022: $1,012 million) of
net interest income from its subsidiaries. The Company issues debt externally
and lends proceeds to Group companies.
The Company has an agreement with Standard Chartered Bank that in the event of
Standard Chartered Bank defaulting on its debt coupon interest payments, where
the terms of such debt requires it, the Company shall issue shares as
settlement for non-payment of the coupon interest.
2023 2022
Standard Standard Others1 Standard Standard Others1
Chartered Bank
Chartered Bank (Hong Kong) Limited
$million
Chartered Bank
Chartered Bank (Hong Kong) Limited
$million
$million
$million
$million
$million
Assets
Due from subsidiaries 10,208 60 25 6,860 141 255
Derivative financial instruments 62 12 - 47 - -
Debt securities 20,524 4,775 1,070 18,787 4,469 526
Total assets 30,794 4,847 1,095 25,694 4,610 781
Liabilities
Due to subsidiaries - - - 2 - -
Derivative financial instruments 1,104 - - 1,283 61 -
Total liabilities 1,104 - - 1,285 61 -
1 Others include Standard Chartered Bank (Singapore) Limited,
Standard Chartered Holdings Limited and Standard Chartered I H Limited
Associate and joint ventures
The following transactions with related parties are on an arm's length basis:
2023 2022
$million
$million
Assets
Loans and advances - 20
Financial Assets held at FVTPL 14
Derivative assets 12 18
Total assets 26 38
Liabilities
Deposits 959 610
Other Liabilities 2 19
Total liabilities 961 629
Loan commitments and other guarantees¹ 113 164
1 The maximum loan commitments and other guarantees during the period
were $113 million (2022: $164 million)
37. Post balance sheet events
On 11 January 2024, Standard Chartered PLC issued $1.5 billion 6.097 per cent
Fixed Rate Reset Notes due 2035. On 19 January 2024, Standard Chartered PLC
issued SGD 335 million 4.00 per cent Fixed Rate Reset Notes due 2030
A share buy-back for up to a maximum consideration of $1 billion has been
declared by the directors after 31 December 2023. This will reduce the number
of ordinary shares in issue by cancelling the repurchased shares.
A final dividend for 2023 of 21 cents per ordinary share was declared by the
directors after 31 December 2023.
Page 123
38. Auditor's remuneration
Auditor's remuneration is included within other general administration
expenses. The amounts paid by the Group to their principal auditor, Ernst
& Young LLP and its associates (together Ernst & Young 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 provision of other services.
2023 2022
$million
$million
Audit fees for the Group statutory audit 27.8 22.2
Of which fees for the audit of Standard Chartered Bank Group 20.6 16.3
Fees payable to EY for other services provided to the SC PLC Group:
Audit of Standard Chartered PLC subsidiaries 13.4 12.8
Total audit fees 41.2 35.0
Audit-related assurance services 6.0 5.5
Other assurance services 7.0 4.3
Other non-audit services 0.8 0.1
Transaction related services 0.3 0.3
Total non-audit fees 14.1 10.2
Total fees payable 55.3 45.2
The following is a description of the type of services included within the
categories listed above:
• Audit fees for the Group statutory audit are in respect of fees payable to
Ernst & Young 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 interim financial
information, reporting on regulatory returns, reporting to a regulator on
client assets and extended work performed over financial information and
controls authorised by those charged with governance
• Other assurance services include agreed-upon-procedures in relation to
statutory and regulatory filings
• Transaction related services are fees payable to Ernst & Young LLP for
issuing comfort letters
Expenses incurred in respect of their role as auditor, were reimbursed to EY
LLP $0.9 million (2022: $0.6 million).
39. Standard Chartered PLC (Company)
Classification and measurement of financial instruments
Financial assets 2023 2022
Derivatives held for hedging Amortised Non-trading mandatorily at fair value through profit or loss Total Derivatives held for hedging Amortised Non-trading mandatorily at fair value through profit or loss Total
$million
cost
$million
$million
$million
cost
$million
$million
$million
$million
Derivatives 80 - - 80 61 - - 61
Investment securities - 6,944 19,4251 26,369 - 8,423 15,3581 23,781
Amounts owed by subsidiary undertakings - 10,294 - 10,294 - 7,417 - 7,417
Total 80 17,238 19,425 36,743 61 15,840 15,358 31,259
1 Standard Chartered Bank, Standard Chartered Bank (Hong Kong)
Limited, Standard Chartered Bank (China) Limited and Standard Chartered Bank
(Singapore) Limited issued Loss Absorbing Capacity (LAC) eligible debt
securities
Instruments classified as amortised cost, which include investment securities
and amounts owed by subsidiary undertakings, are recorded in stage 1 for the
recognition of expected credit losses.
Derivatives held for hedging are held at fair value and are classified as
Level 2 and Level 3 while the counterparty is Standard Chartered Bank,
Standard Chartered Bank (Hong Kong) Limited and external counterparties.
Debt securities comprise securities held at amortised cost issued by Standard
Chartered Bank and SC Ventures Holdings Limited and have a fair value equal to
carrying value of $6,944 million (31 December 2022: $8,423 million).
Page 124
In 2023 and 2022, amounts owed by subsidiary undertakings have a fair value
equal to carrying value.
Financial liabilities 2023 2022
Derivatives held for hedging Amortised Designated at fair value through profit or loss Total Derivatives held for hedging Amortised Designated at fair value through profit or loss Total
$million
cost
$million
$million
$million
cost
$million
$million
$million
$million
Derivatives 1,104 - - 1,104 1,343 - - 1,343
Debt securities in issue - 17,142 14,007 31,149 - 13,891 10,397 24,288
Subordinated liabilities and other borrowed funds - 9,248 2,697 11,945 - 11,239 2,445 13,684
Amounts owed to subsidiary undertakings - - - - - 2 - 2
Total 1,104 26,390 16,704 44,198 1,343 25,132 12,842 39,317
Derivatives held for hedging are held at fair value and are classified as
Level 2 while the counterparty is Standard Chartered Bank and Standard
Chartered Bank (Hong Kong) Limited.
The fair value of debt securities in issue held at amortised cost is $17,195
million (2022: $13,611 million).
The fair value of subordinated liabilities and other borrowed funds held at
amortised cost is $8,717 million (2022: $10,434 million).
Derivative financial instruments
Derivatives 2023 2022
Notional Assets Liabilities Notional Assets Liabilities
principal
$million
$million
principal
$million
$million
amounts
amounts
$million
$million
Foreign exchange derivative contracts:
Forward foreign exchange 8,968 32 - 9,351 47 61
Currency swaps 563 - 35 574 - 71
Interest rate derivative contracts:
Swaps 14,819 43 1,069 15,423 - 1,211
Forward rate agreements and options - - - - - -
Credit derivative contracts 4,030 5 - 3,256 14 -
Total 28,380 80 1,104 28,604 61 1,343
Credit risk
2023 2022
$million
$million
Derivative financial instruments 80 61
Debt securities 26,369 23,781
Amounts owed by subsidiary undertakings 10,294 7,417
Total 36,743 31,259
In 2023 and 2022, amounts owed by subsidiary undertakings were neither past
due nor impaired; the Company had no individually impaired loans.
In 2023 and 2022, the Company had no impaired debt securities. The debt
securities held by the Company are issued by Standard Chartered Bank, Standard
Chartered Bank (Hong Kong) Limited, Standard Chartered Bank (China) Limited
and Standard Chartered Bank (Singapore) Limited, subsidiary undertakings with
credit ratings of A+.
There is no material expected credit loss on these instruments as they are
Stage 1 assets, and of a high quality.
Page 125
Liquidity risk
The following table analyses the residual contractual maturity of the assets
and liabilities of the Company on a discounted basis:
2023
One month Between one month and three months Between three months and Between six months and nine months Between Between Between More than Total
or less
$million
six months
$million
nine months and one year
one year
two years
five years
$million
$million
$million
$million
and two years
and five years
and undated
$million
$million
$million
Assets
Derivative financial instruments 32 - - - - 10 27 11 80
Investment securities - - - - - 3,853 5,581 16,935 26,369
Amount owed by subsidiary undertakings 1,598 504 1,530 12 1,073 1,082 3,254 1,241 10,294
Investments in subsidiary undertakings - - - - - - - 60,791 60,791
Other assets - - - - - - - - -
Total assets 1,630 504 1,530 12 1,073 4,945 8,862 78,978 97,534
Liabilities
Derivative financial instruments 11 26 17 - - 93 171 786 1,104
Senior debt - - - - - 7,242 14,020 9,887 31,149
Amount owed to subsidiary undertakings - - - - - - - - -
Other liabilities 278 202 135 30 5 - - - 650
Subordinated liabilities and other borrowed funds 996 51 8 172 440 330 1,952 7,996 11,945
Total liabilities 1,285 279 160 202 445 7,665 16,143 18,669 44,848
Net liquidity gap 345 225 1,370 (190) 628 (2,720) (7,281) 60,309 52,686
2022
One month Between one month and three months Between three months and Between six months and nine months Between Between Between More than Total
or less
$million
six months
$million
nine months and one year
one year
two years
five years
$million
$million
$million
$million
and two years
and five years
and undated
$million
$million
$million
Assets
Derivative financial instruments 45 - - - - - 16 - 61
Investment securities 2,000 - - - - - 5,351 16,430 23,781
Amount owed by subsidiary undertakings 719 1,250 140 - 840 1,523 2,081 864 7,417
Investments in subsidiary undertakings - - - - - - - 60,975 60,975
Total assets 2,764 1,250 140 - 840 1,523 7,448 78,269 92,234
Liabilities
Derivative financial instruments 77 3 - - - 75 330 858 1,343
Senior debt - - - - - 2,090 14,155 8,043 24,288
Other debt securities in issue - - - - - - - - -
Amount owed to subsidiary undertakings - - - - - - - 2 2
Other liabilities 175 134 95 14 5 - - - 423
Subordinated liabilities and other borrowed funds 2,004 88 13 248 14 1,900 2,078 7,339 13,684
Total liabilities 2,256 225 108 262 19 4,065 16,563 16,242 39,740
Net liquidity gap 508 1,025 32 (262) 821 (2,542) (9,115) 62,027 52,494
Page 126
Financial liabilities on an undiscounted basis
2023
One month Between one month and three months Between three months and Between six months and nine months Between Between Between More than Total
or less
$million
six months
$million
nine months and one year
one year
two years
five years
$million
$million
$million
$million
and two years
and five years
and undated
$million
$million
$million
Derivative financial instruments 11 26 17 - - 93 171 786 1,104
Debt securities in issue 247 57 328 398 278 8,490 16,396 11,279 37,473
Subordinated liabilities and other borrowed funds 1,059 134 34 208 556 410 2,304 13,968 18,673
Other liabilities 5 91 - - - - - - 96
Total liabilities 1,322 308 379 606 834 8,993 18,871 26,033 57,346
2022
One month Between one month and three months Between three months and Between six months and nine months Between Between Between More than Total
or less
$million
six months
$million
nine months and one year
one year
two years
five years
$million
$million
$million
$million
and two years
and five years
and undated
$million
$million
$million
Derivative financial instruments 77 3 - - - 75 330 858 1,343
Debt securities in issue 88 66 262 145 271 2,896 15,676 9,057 28,461
Subordinated liabilities and other borrowed funds 2,097 174 33 273 17 2,035 2,552 14,668 21,849
Other liabilities 9 15 - - - - - - 24
Total liabilities 2,271 258 295 418 288 5,006 18,558 24,583 51,677
40. Related undertakings of the Group
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 subsidiaries of the Group. Standard Chartered
Bank (Hong Kong) Limited, Standard Chartered Funding (Jersey) Limited,
Stanchart Nominees Limited, Standard Chartered Holdings Limited and Standard
Chartered Nominees Limited are directly held subsidiaries, all other related
undertakings are held indirectly.
Subsidiary Undertakings
Name and registered address Activity Place of incorporation Description of shares Proportion of shares held (%)
The following companies have the address of 1 Basinghall Avenue, London, EC2V
5DD, United Kingdom
FinVentures UK Limited Investment Holding Company United Kingdom US$1.00 Ordinary 100
SC (Secretaries) Limited 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 Limited7,8 Leasing Business United Kingdom £1.00 Ordinary 100
SC Ventures G.P. Limited Investment Holding Company United Kingdom £1.00 Ordinary 100
SC Ventures Holdings Limited Investment Holding Company United Kingdom US$1.00 Ordinary 100
US$1.00 Redeemable Preference 100
SC Ventures Innovation Investment L.P. Investment Holding Company United Kingdom Limited Partnership Interest 100
SCMB Overseas Limited Investment Holding Company United Kingdom £0.10 Ordinary 100
Shoal Limited Digital marketplace for sustainable and "green" products. United Kingdom US$1.00 Ordinary 100
Stanchart Nominees Limited ⁹ Nominee Services United Kingdom £1.00 Ordinary 100
Standard Chartered Africa Limited 7,8 Investment Holding Company United Kingdom £1.00 Ordinary 100
Standard Chartered Bank Banking & Financial Services United Kingdom US$0.01 Non-Cumulative Irredeemable Preference 100
US$1.00 Ordinary 100
US$5.00 Non-Cumulative Redeemable Preference 100
Standard Chartered Foundation1 Charity projects United Kingdom Guarantor 100
Standard Chartered Health Trustee (UK) Limited Trustee Services United Kingdom £1.00 Ordinary 100
Page 127
Standard Chartered Holdings Limited⁹ Investment Holding Company United Kingdom US$2.00 Ordinary 100
Standard Chartered I H Limited Investment Holding Company United Kingdom US$1.00 Ordinary 100
Standard Chartered Leasing (UK) Limited7,8 Leasing Business United Kingdom US$1.00 Ordinary 100
Standard Chartered NEA Limited Investment Holding Company United Kingdom US$1.00 Ordinary 100
Standard Chartered Nominees (Private Clients UK) Limited Nominee Services United Kingdom US$1.00 Ordinary 100
Standard Chartered Nominees Limited⁹ Nominee Services United Kingdom £1.00 Ordinary 100
Standard Chartered Securities (Africa) Holdings Limited7,8 Investment Holding Company United Kingdom US$1.00 Ordinary 100
Standard Chartered Strategic Investments Limited7,8 Investment Holding Company United Kingdom £1.00 Ordinary 100
US$1.00 Ordinary 100
Standard Chartered Trustees (UK) Limited Trustee Services United Kingdom £1.00 Ordinary 100
The BW Leasing Partnership 1 LP1 Leasing Business United Kingdom Limited Partnership Interest 100
The BW Leasing Partnership 2 LP1 Leasing Business United Kingdom Limited Partnership Interest 100
The BW Leasing Partnership 3 LP1 Leasing Business United Kingdom Limited Partnership Interest 100
The BW Leasing Partnership 4 LP1 Leasing Business United Kingdom Limited Partnership Interest 100
The BW Leasing Partnership 5 LP1 Leasing Business United Kingdom Limited Partnership Interest 100
The SC Transport Leasing Partnership 1 Leasing Business United Kingdom Limited Partnership Interest 100
The SC Transport Leasing Partnership 2 Leasing Business United Kingdom Limited Partnership Interest 100
The SC Transport Leasing Partnership 3 Leasing Business United Kingdom Limited Partnership Interest 100
The SC Transport Leasing Partnership 4 Leasing Business United Kingdom Limited Partnership Interest 100
The following companies have the address of 1 Poultry, London, EC2R 8EJ,
United Kingdom
Assembly Payments UK Ltd¹ Payment Services Provider United Kingdom US$1.00 Ordinary 100
CurrencyFair (UK) Limited¹ Banking & Financial Services United Kingdom £1.00 Ordinary 100
Zai Technologies Limited¹ Payment Services Provider United Kingdom £1.00 Ordinary 100
The following companies have the address of 2 More London Riverside, London ,
SE1 2JT, United Kingdom
Bricks (C&K) LP 1 Limited Partnership interest United Kingdom Limited Partnership Interest 100
Bricks (T) LP1 Limited Partnership interest United Kingdom Limited Partnership Interest 100
Bricks (C) LP1 Limited Partnership interest United Kingdom Limited Partnership Interest 100
The following companies 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 companies have the address of 5th Floor, Holland House
1-4 Bury Street, London, EC3A 5AW, United Kingdom
Zodia Custody Limited Custody Services United Kingdom US$1.00 Voting Ordinary 95.1
US$2.70 Series A Preferred 15.911
Zodia Holdings Limited Investment Holding Company United Kingdom US$1.00 A Ordinary 100
The following companies have the address of 6th Floor, 1 Basinghall Avenue,
London, EC2V 5DD, United Kingdom
Zodia Markets (UK) Limited Banking & Financial Services United Kingdom US$1.00 Ordinary 100
Zodia Markets Holdings Limited Digital Venture: Holding Company for The Zodia Markets Group United Kingdom US$1.00 Ordinary 80.461
The following company has the address of Edifício Kilamba, 8º Andar Avenida
4 de Fevereiro, Marginal, Luanda, Angola
Standard Chartered Bank Angola S.A. Banking & Financial Services Angola AOK8,742.05 Ordinary 60
The following companies have the address of Level 22, 120 Spencer Street,
Melbourne VIC 3000 VIC 3000, Australia
Assembly Payments Australia Pty Ltd ¹ Holding Company Australia US$ Ordinary 100
Zai Australia Pty Ltd¹ Payment Service Provider Australia AUD0.01 Ordinary 100
Page 128
The following company has the address of Milsons Landing, Level 5, 6A Glen
Street, Milsons Point NSW NSW 2061, Australia
CurrencyFair Australia Pty Ltd ¹ Foreign Currency conversion services. Australia AUD Ordinary 100
The following company has the address of Level 5, 345 George St, Sydney NSW
2000, Australia
Standard Chartered Grindlays Pty Limited Investment Holding Company Australia AUD Ordinary 100
The following companies have the address of 5th Floor Standard House Bldg, The
Mall, Queens Road, PO Box 496, Gaborone, Botswana
Standard Chartered Bank Botswana Limited Banking & Financial Services Botswana BWP Ordinary 75.827
Standard Chartered Bank Insurance Agency (Proprietary) Limited Insurance Services Botswana BWP Ordinary 100
Standard Chartered Botswana Education Trust2 CSR programme. Botswana Trust Interest 100
Standard Chartered Botswana Nominees (Proprietary) Limited Nominee Services Botswana BWP Ordinary 100
Standard Chartered Investment Services (Proprietary) Limited Nominee Services Botswana BWP Ordinary 100
The following company has the address of Avenida Brigadeiro Faria Lima, no
3.477, 6º andar, conjunto 62 - Torre Norte, Condominio Patio Victor Malzoni,
CEP 04538-133, Sao Paulo, Brazil
Standard Chartered Representação e Participações Ltda Banking & Financial Services Brazil BRL1.00 Ordinary 100
The following company has the address of G01-02, Wisma Haji Mohd Taha
Building, , Jalan Gadong, BE4119, Brunei Darussalam
Standard Chartered Securities (B) Sdn Bhd Investment Management Brunei Darussalam BND1.00 Ordinary 100
The following company has the address of Standard Chartered Bank Cameroon S.A,
1155, Boulevard de la Liberté, Douala, B.P. 1784, Cameroon
Standard Chartered Bank Cameroon S.A. Banking & Financial Services Cameroon XAF10,000.00 Ordinary 100
The following company has the address of 66 Wellington Street, West, Suite
4100, Toronto Dominion Centre, Toronto ON M5K 1B7, Canada
CurrencyFair (Canada) Ltd ¹ Digital Payment platform Canada CAD Common 100
The following company has the address of Maples Corporate Services Limited, PO
Box 309, Ugland House, Grand Cayman, KY1-1104 , Cayman Islands
Cerulean Investments LP Investment Holding Company Cayman Islands Limited Partnership Interest 100
The following company has the address of c/o Maples Finance Limited, PO Box
1093 GT, Queensgate House, Georgetown, Grand Cayman, Cayman Islands
SCB Investment Holding Company Limited Investment Holding Company Cayman Islands US$1,000.00 Ordinary-A 99.999
The following company has the address of Room 2619, No 9, Linhe West Road,
Tianhe District, Guangzhou, China
Guangzhou CurrencyFair Information Technology Limited 1,3 Foreign Currency conversion services. China CNY Ordinary 100
The following company has the address of 8A, Hony Tower, 1st Financial Street,
Nanshan District, Shenzen, China
SC Ventures Investment Management (Shenzhen) Limited Serve as a fund manager in China China US$1.00 Ordinary 100
Page 129
The following company has the address of Units 1101B (Office use only), No.
235 Tianhebei Rd.,, Tianhe District, Guangzhou City, Guangdong Province, China
Standard Chartered (Guangzhou) Business Management Co., Ltd. Business consulting services China US$ Ordinary 100
The following company has the address of Standard Chartered Tower, 201 Century
Avenue, Pudong, Shanghai, 200120, China
Standard Chartered Bank (China) Limited 3 Commercial banking China CNY Ordinary 100
The following company has the address of Unit 802B, 803,
1001A,1002B,1003-1005,1101-1105,, 201-1205,1302C,1303, No. 235 Tianhe North
Road, Tianhe District,, Guangzhou City, Guangdong Province, China
Standard Chartered Global Business Services (Guangzhou) Co., Ltd.3 Research, development, other services China US$ Ordinary 100
The following company has the address of No. 35, Xinhuanbei Road, Teda,
Tianjin, 300457, China
Standard Chartered Global Business Services Co., Ltd 3 Research, development, other services China US$ Ordinary 100
The following company has the address of 1201 1-2, 15-16, 12/F, Unit No.1,
Building No.1, No. 1 Dongsanhuan Zhong Road, Chaoyang District, Beijing, China
Standard Chartered Securities (China) Limited Banking & Financial Services China CNY Ordinary 100
The following company has the address of No. 188 Yeshen Rd, 11F, A-1161 RM,
Pudong New District, Shanghai, 31, 201308, China
Standard Chartered Trading (Shanghai) Limited 3 wholesale of base metal and its products China US$15,000,000.00 Ordinary 100
The following company has the address of Standard Chartered Bank Cote
d'Ivoire, 23 Boulevard de la République, Abidjan 17, 17 B.P. 1141, Cote
d'Ivoire
Standard Chartered Bank Cote d' Ivoire SA Banking & Financial Services Cote d'Ivoire XOF100,000.00 Ordinary 100
The following company has the address of 8 Ecowas Avenue, Banjul, Gambia
Standard Chartered Bank Gambia Limited Banking & Financial Services Gambia GMD1.00 Ordinary 74.852
The following company has the address of Taunusanlage 16, 60325, Frankfurt am
Main, Germany
Standard Chartered Bank AG Banking & Financial Services Germany € Ordinary 100
The following company has the address of Standard Chartered Bank Building, 87
Independance Avenue, Ridge, ACCRA, Greater ACCRA, GA-016-4621, Ghana
Solvezy Technology Ghana Ltd Digital Venture Ghana GHS Ordinary 100
The following companies have the address of Standard Chartered Bank Building,
No. 87, Independence Avenue, P.O. Box 768, Accra, Ghana
Standard Chartered Bank Ghana PLC Banking & Financial Services Ghana GHS Ordinary 69.416
GHS0.52 Non-cumulative Irredeemable Preference 87.043
Standard Chartered Ghana Nominees Limited Nominee Services Ghana GHS Ordinary 100
The following company has the address of Standard Chartered Bank Ghana
Limited, 87, Independence Avenue, Post Office Box 678, Accra, Ghana
Standard Chartered Wealth Management Limited Company Investment Management Ghana GHS Ordinary 100
Page 130
The following company has the address of 31/F, Tower 2 Times Square, 1
Matheson St, Causeway Bay, Hong Kong
Assembly Payments HK Limited ¹ 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 Limited ¹ Foreign Currency conversion services. Hong Kong HKD Ordinary 100
The following company has the address of 18/F., Standard Chartered Tower, 388
Kwun Tong Road, Kwun Tong, Kowloon, Hong Kong
Horsford Nominees Limited Nominee Services Hong Kong HKD Ordinary 100
The following companies have the address of 15/F., Two International Finance
Centre, No. 8 Finance Street, Central, Hong Kong
Marina Acacia Shipping Limited Leasing Business Hong Kong US$ Ordinary 100
Marina Amethyst Shipping Limited Leasing Business Hong Kong US$ Ordinary 100
Marina Angelite Shipping Limited Leasing Business Hong Kong US$ Ordinary 100
Marina Beryl Shipping Limited Leasing Business Hong Kong US$ Ordinary 100
Marina Emerald Shipping Limited Leasing Business Hong Kong US$ Ordinary 100
Marina Flax Shipping Limited Leasing Business Hong Kong US$ Ordinary 100
Marina Gloxinia Shipping Limited Leasing Business Hong Kong US$ Ordinary 100
Marina Hazel Shipping Limited Leasing Business Hong Kong US$ Ordinary 100
Marina Ilex Shipping Limited Leasing Business Hong Kong US$ Ordinary 100
Marina Iridot Shipping Limited Leasing Business Hong Kong US$ Ordinary 100
Marina Mimosa Shipping Limited Leasing Business Hong Kong US$ Ordinary 100
Marina Moonstone Shipping Limited Leasing Business Hong Kong US$ Ordinary 100
Marina Peridot Shipping Limited Leasing Business Hong Kong US$ Ordinary 100
Marina Sapphire Shipping Limited Leasing Business Hong Kong US$ Ordinary 100
Marina Tourmaline Shipping Limited Leasing Business Hong Kong US$ Ordinary 100
Standard Chartered Securities (Hong Kong) Limited Corporate Finance & Advisory Services Hong Kong HKD Ordinary 100
Marina Leasing Limited Leasing Business Hong Kong US$ Ordinary 100
Standard Chartered Leasing Group Limited Investment Holding Company Hong Kong US$ Ordinary 100
Standard Chartered Trade Support (HK) Limited Corporate Finance & Advisory Services Hong Kong HKD Ordinary 100
The following company has the address of 39/F., Oxford House, Taikoo Place,
979 King's Road, Quarry Bay, Hong Kong
Mox Bank Limited Banking & Financial Services Hong Kong HKD Ordinary 68.291
The following company has the address of 13/F Standard Chartered Bank
Building, 4-4A Des Voeux Road Central, Hong Kong,
Standard Chartered Asia Limited Investment Holding Company Hong Kong HKD Deferred 100
HKD Ordinary 100
The following company has the address of 32/F., 4-4A Des Voeux Road, Central ,
Hong Kong
Standard Chartered Bank (Hong Kong) Limited⁹ Banking & Financial Services Hong Kong HKD Ordinary-A 100
HKD Ordinary-B 100
US$ Ordinary-C 100
US$ Ordinary-D 100
The following company has the address of 14th Floor, One Taikoo Place, 979
King's Road, Quarry Bay, Hong Kong
Standard Chartered PF Real Estate (Hong Kong) Limited Ultimate Holding Company Hong Kong US$ Ordinary 100
The following company has the address of 13/F Standard Chartered Bank
Building, 4-4A Des Voeux Road Central, Hong Kong
Standard Chartered Private Equity Limited Investment Holding Company Hong Kong HKD Ordinary 100
Page 131
The following companies have the address of 14/F, Standard Chartered Bank
Building, 4-4A Des Voeux Road , Central, Hong Kong
Standard Chartered Trust (Hong Kong) Limited Investment Management Hong Kong HKD Ordinary 100
Standard Chartered Trustee (Hong Kong) Limited Trustee Services Hong Kong HKD Ordinary 100
The following company has the address of 5/F, Manulife Place, 348 Kwun Tong
Road, Kowloon, Hong Kong
Zodia Custody (Hong Kong) Limited Custody Services Hong Kong US$0.01 Ordinary 100
The following company has the address of 2 Floor Sabari Complex 24 Field
Marshal, Capriappa RD Shanthala Nagar, Ashok Nagar, Bangalore, Karnataka,
560025, India
Assembly Payments India Private Limited ¹ Activities auxiliary to financial intermediation India INR100.00 Ordinary 100
The following companies have the address of Ground Floor, Crescenzo Building,
G Block, C 38/39 , Bandra Kurla Complex, Bandra (East) , Mumbai , Maharashtra
, 400051, India
St Helen's Nominees India Private Limited Nominee Services India INR10.00 Equity 100
Standard Chartered Private Equity Advisory (India) Private Limited Support Services India INR1,000.00 Equity 100
The following company has the address of Vaishnavi Serenity, First Floor, No.
112, Koramangala Industrial Area, 5th Block, Koramangala, Bangalore,
Karnataka, 560095, India
Standard Chartered (India) Modeling and Analytics Centre Private Limited Support Services India INR10.00 Equity 100
The following company has the address of Crescenzo, 6th Floor, Plot No 38-39 G
Block , Bandra Kurla Complex, Bandra East , Mumbai , Maharashtra , 400051,
India
Standard Chartered Capital Limited Banking & Financial Services India INR10.00 Equity 100
The following company has the address of 90 M.G.Road, II Floor, Fort, Mumbai,
Maharashtra, 400001, India
Standard Chartered Finance Private Limited Support Services India INR10.00 Ordinary 98.683
The following company has the address of 1st Floor, Europe Building, No.1,
Haddows Road, Nungambakkam, Chennai, 600 006, India
Standard Chartered Global Business Services Private Limited Offshore Support Services India INR10.00 Equity 100
The following company has the address of Second Floor, Indiqube Edge, Khata
No. 571/630/6/4, Sy.No.6/4, Ambalipura Village, Varthur Hobli, Marathahalli
Sub-Division, Ward No. 150, Bengaluru, 560102, India
Standard Chartered Research and Technology India Private Limited Support Services India INR10.00 Compulsory Convertible Cumulative Preference 100
INR10.00 Equity Class - A 100
The following company has the address of 2nd Floor, 23-25 M.G. Road, Fort,
Mumbai 400 001, India
Standard Chartered Securities (India) Limited Banking & Financial Services India INR10.00 Equity 100
The following company has the address of B001, Metrotech Forest View, Sy.No,
67/5 BSK 6th Stage, Thalaghattapura Bengaluru 560062, Karnataka, India
SCV Research and Development Pvt. Ltd. Others India INR 10.00 Ordinary 100
Page 132
The following company has the address of The Icon Business Park Blok P Nomor
03, RT 03/RW 09Sampora, Kec, Cisauk, Kabupaten Tangerang, Banten, 15345,
Indonesia
PT Labamu Sejahtera Indonesia Others Indonesia IDR10,000.00 Ordinary 100
The following companies have the address of 91 Pembroke Road, Dublin 4,
Ballsbridge, Dublin, DO4 EC42, Ireland
CurrencyFair (Canada) Limited¹ Digital Payment platform Ireland €1.00 Ordinary 100
CurrencyFair Limited1,10 FX transfer services Ireland €0.001 A Ordinary 100
€0.001 Ordinary 27.951
CurrencyFair Nominees Limited ¹ Nominee company Ireland €1.00 Ordinary 100
The following company has the address of 27 Fitzwilliam Street, Dublin, D02
TP23, Ireland
Zodia Custody (Ireland) Limited Custody Services Ireland US$1.00 Ordinary 100
The following company has the address of 32 Molesworth Street, Dublin 2,
D02Y512, Ireland
Zodia Markets (Ireland) Limited Banking & Financial Services Ireland US$1.00 Ordinary 100
The following companies have the address of 1st Floor, Goldie House, 1-4
Goldie Terrace, Upper Church Street, Douglas, IM1 1EB, Isle of Man
Standard Chartered Assurance Limited Insurance Services Isle of Man US$1.00 Ordinary 100
US$1.00 Redeemable Preference 100
Standard Chartered Isle of Man Limited5 Insurance & Reinsurance Company Isle of Man US$1.00 Ordinary 100
The following company has the address of 21/F, Sanno Park Tower, 2-11-1
Nagatacho, Chiyoda-ku, Tokyo, 100-6155, Japan
Standard Chartered Securities (Japan) Limited Banking & Financial Services Japan JPY Ordinary 100
The following company has the address of 15 Castle Street, St Helier, JE4 8PT,
Jersey
SCB Nominees (CI) Limited Nominee Services Jersey US$1.00 Ordinary 100
The following company has the address of IFC 5, St Helier, JE1 1ST, Jersey
Standard Chartered Funding (Jersey) Limited 5,⁹ Investment Holding Company Jersey £1.00 Ordinary 100
The following companies have the address of Standard Chartered@Chiromo, 48
Westlands Road, P. O. Box 30003 - 00100, Nairobi , Kenya
Standard Chartered Bancassurance Intermediary Limited Insurance Services Kenya KES100.00 Ordinary 100
Standard Chartered Bank Kenya Limited Banking & Financial Services Kenya KES5.00 Ordinary 74.318
KES5.00 Preference 100
Standard Chartered Financial Services Limited Merchant Banking Kenya KES20.00 Ordinary 100
Standard Chartered Investment Services Limited Investment services Kenya KES20.00 Ordinary 100
Standard Chartered Kenya Nominees Limited1 Nominee Services Kenya KES20.00 Ordinary 100
Standard Chartered Securities (Kenya) Limited Corporate Finance & Advisory Services Kenya KES10.00 Ordinary 100
Solvezy Technology Kenya Limited Digital Venture Kenya KES1,000.00 Ordinary 100
Tawi Fresh Kenya Limited Digital Marketplace, Ecommerce Kenya KES1,000.00 Ordinary 100
The following company has the address of 47, Jong-ro, Jongno-gu, Seoul,
110-702, Korea, Republic of
Standard Chartered Bank Korea Limited Banking & Financial Services Korea, Republic of KRW5,000.00 Ordinary 100
Page 133
The following company has the address of 2F, 47, Jong-ro, Jongno-gu, Seoul,
Korea, Republic of
Standard Chartered Securities Korea Co., Ltd Asset Management Korea, Republic of KRW5,000.00 Ordinary 100
The following company has the address of Atrium Building, Maarad Street, 3rd
Floor, P.O. Box 11-4081 Raid El Solh, Beirut Central District, Lebanon
Standard Chartered Metropolitan Holdings SAL Investment Holding Company Lebanon US$10.00 Ordinary A 100
The following company has the address of Level 13, Menara 1 Sentrum 201, Jalan
Tun Sambanthan, Brickfields, 50470 Kuala Lumpur, Malaysia
Assembly Payments Malaysia Sdn. Bhd. ¹ Other financial service activities Malaysia RM Ordinary 100
The following companies have the address of Level 25, Equatorial Plaza, Jalan
Sultan Ismail, 50250 Kuala Lumpur, Malaysia
Cartaban (Malaya) Nominees Sdn Berhad Nominee Services Malaysia RM Ordinary 100
Cartaban Nominees (Asing) Sdn Bhd Nominee Services Malaysia RM Ordinary 100
Cartaban Nominees (Tempatan) Sdn Bhd Nominee Services Malaysia RM Ordinary 100
Golden Maestro Sdn Bhd Investment Holding Company Malaysia RM Ordinary 100
Price Solutions Sdn Bhd Direct Sales/Collection Services Malaysia RM Ordinary 100
SCBMB Trustee Berhad Trustee Services Malaysia RM Ordinary 100
Standard Chartered Bank Malaysia Berhad Banking & Financial Services Malaysia RM Irredeemable Convertible Preference 100
RM Ordinary 100
Standard Chartered Saadiq Berhad Banking & Financial Services Malaysia RM Ordinary 100
The following companies have the address of TMF Trust Labuan Limited, Brumby
Centre, Lot 42, Jalan Muhibbah, 87000 Labuan F.T., Malaysia
Marina Morganite Shipping Limited6 Ownership and Leasing of vessels Malaysia US$ Ordinary 100
Marina Moss Shipping Limited6 Ownership and Leasing of vessels Malaysia US$ Ordinary 100
Marina Tanzanite Shipping Limited6 Ownership and Leasing of vessels Malaysia US$ Ordinary 100
The following company has the address of Suite 18-1, Level 18, Vertical
Corporate Tower B, Avenue 10, The Vertical, Bangsar South City , No. 8, Jalan
Kerinchi , 59200 Kuala Lumpur, Wilayah Persekutuan, Malaysia
Resolution Alliance Sdn Bhd Investment Holding Company Malaysia Ordinary 91
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 digital platform offering financial services Malaysia RM5.00 Ordinary 100
The following company has 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 Bhd Offshore Support Services Malaysia RM Ordinary 100
Page 134
The following companies have the address of Trust Company Complex, Ajeltake
Road, Ajeltake Island, Majuro, MH96960, Marshall Islands
Marina Angelica Shipping Limited6 Ownership and Leasing of vessels Marshall Islands USD1.00 Ordinary 100
Marina Aventurine Shipping Limited6 Ownership and Leasing of vessels Marshall Islands USD1.00 Ordinary 100
Marina Citrine Shipping Limited6 Ownership and Leasing of vessels Marshall Islands USD1.00 Ordinary 100
Marina Dahlia Shipping Limited6 Ownership and Leasing of vessels Marshall Islands USD1.00 Ordinary 100
Marina Dittany Shipping Limited6 Ownership and Leasing of vessels Marshall Islands USD1.00 Ordinary 100
Marina Lilac Shipping Limited6 Ownership and Leasing of vessels Marshall Islands USD1.00 Ordinary 100
Marina Lolite Shipping Limited6 Ownership and Leasing of vessels Marshall Islands USD1.00 Ordinary 100
Marina Obsidian Shipping Limited6 Ownership and Leasing of vessels Marshall Islands USD1.00 Ordinary 100
Marina Quartz Shipping Limited6 Ownership and Leasing of vessels Marshall Islands USD1.00 Ordinary 100
Marina Remora Shipping Limited6 Ownership and Leasing of vessels Marshall Islands USD1.00 Ordinary 100
Marina Turquoise Shipping Limited6 Ownership and Leasing of vessels Marshall Islands USD1.00 Ordinary 100
Marina Zircon Shipping Limited6 Ownership and Leasing of vessels Marshall Islands USD1.00 Ordinary 100
The following company has the address of 6th Floor, Standard Chartered Tower ,
19, Bank Street, Cybercity, Ebene, 72201, Mauritius
Standard Chartered Bank (Mauritius) Limited Banking & Financial Services Mauritius Ordinary No Par Value 100
The following companies have the address of c/o Ocorian Corporate Services
(Mauritius) Ltd, 6th Floor, Tower A, 1 Cybercity, Ebene, 72201, Mauritius
Standard Chartered Private Equity (Mauritius) II Limited Investment Management Mauritius US$1.00 Ordinary 100
Standard Chartered Private Equity (Mauritius) Limited Investment Management Mauritius US$1.00 Ordinary 100
Standard Chartered Private Equity (Mauritius) lll Limited Investment Management Mauritius US$1.00 Ordinary 100
The following company has the address of Mondial Management Services Ltd, Unit
2L, 2nd Floor Standard Chartered Tower, 19 Cybercity, Ebene, Mauritius
Subcontinental Equities Limited Investment Holding Company Mauritius US$1.00 Ordinary 100
The following company has the address of IQEQ Corporate Services (Mauritius)
Ltd, 33, Edith Cavell Street, Port Louis, 11324, Mauritius
Actis Treit Holdings (Mauritius) Limited1 Investment Holding Company Mauritius Class A $1.00 Ordinary 62.001
The following company has the address of Standard Chartered Bank Nepal
Limited, Madan Bhandari Marg. Ward No.31, Kathmandu Metropolitan City,
Kathmandu District, Bagmati Province, Kathmandu, 44600, Nepal
Standard Chartered Bank Nepal Limited Banking & Financial Services Nepal NPR100.00 Ordinary 70.21
Page 135
The following companies have the address of 1 Basinghall Avenue, London, EC2V
5DD, United Kingdom
Standard Chartered Holdings (Africa) B.V.5 Holding Company Netherlands €4.50 Ordinary 100
Standard Chartered Holdings (Asia Pacific) B.V.5 Holding Company Netherlands €4.50 Ordinary 100
Standard Chartered Holdings (International) B.V.5 Holding Company Netherlands €4.50 Ordinary 100
Standard Chartered MB Holdings B.V.5 Holding Company Netherlands €4.50 Ordinary 100
The following company has the address of PromisePay, 4 All good Place,
Rototuna North, Hamilton, 3210, New Zealand
PromisePay Limited¹ Payment Services Provider New Zealand NZD Ordinary 100
The following companies have the address of 142, Ahmadu Bello Way, Victoria
Island, Lagos, 101241, Nigeria
Standard Chartered Bank Nigeria Limited Banking & Financial Services Nigeria NGN1.00 B Redeemable Preference 100
NGN1.00 Irredeemable Non Cumulative Preference 100
NGN1.00 Ordinary 100
Standard Chartered Capital & Advisory Nigeria Limited Corporate Finance & Advisory Services Nigeria NGN1.00 Ordinary 100
Standard Chartered Nominees (Nigeria) Limited Custody Services Nigeria NGN1.00 Ordinary 100
The following company has the address of 3rd Floor Main SCB Building, I.I
Chundrigar Road, Karachi, Sindh, 74000, Pakistan
Price Solution Pakistan (Private) Limited Banking & Financial Services Pakistan PKR10.00 Ordinary 100
The following company has the address of P.O. Box No. 5556, I.I. Chundrigar
Road , Karachi , 74000, Pakistan
Standard Chartered Bank (Pakistan) Limited Banking & Financial Services Pakistan PKR10.00 Ordinary 98.986
The following company has the address of 8th Floor, Makati Sky Plaza Building
6788, Ayala Avenue San Lorenzo, City of Makati, Fourth District, National
Capi, 1223, Philippines
Standard Chartered Group Services, Manila Incorporated Offshore Support Services Philippines PHP1.00 Ordinary 100
The following company has the address of Rondo Ignacego Daszyńskiego 2B,
00-843, Warsaw, Poland
Standard Chartered Global Business Services spółka z ograniczoną Offshore Support Services Poland PLN50.00 Ordinary 100
odpowiedzialnością
The following company has the address of Al Faisaliah Office Tower Floor No 7
(T07D) , King Fahad Highway, Olaya District, Riyadh P.O box 295522 , Riyadh,
11351 , Saudi Arabia
Standard Chartered Capital (Saudi Arabia) Custody Services Saudi Arabia SAR10.00 Ordinary 100
The following company has the address of 9 & 11, Lightfoot Boston Street,
Freetown, Sierra Leone
Standard Chartered Bank Sierra Leone Limited Banking & Financial Services Sierra Leone SLL1.00 Ordinary 80.656
The following company has the address of 9 Raffles Place, #27-00 Republic
Plaza, 048619, Singapore
Actis Treit Holdings No.1 (Singapore) Private Limited1 Investment Holding Company Singapore SGD Ordinary 100
Actis Treit Holdings No.2 (Singapore) Private Limited1 Investment Holding Company Singapore SGD Ordinary 100
Page 136
The following companies have the address of 38 Beach Road, #29-11 South Beach
Tower, 189767, Singapore
Assembly Payments Pte. Ltd. ¹ Investment Holding Company Singapore US$ Ordinary 100
US$ Preference 100
Assembly Payments SGP Pte. Ltd. ¹ Transaction/Payment Processing Services Singapore SGD Ordinary 100
The following companies have the address of Raffles Place, #26-01 Republic
Plaza, Singapore , 048619, Singapore
Audax Financial Technology Pte. Ltd Support Services Singapore US$ Ordinary-A 100
Autumn Life Pte. Ltd. Support Services Singapore US$ Ordinary-A 96.623
CashEnable Pte. Ltd. Digital Venture: Financial Services Singapore US$ Ordinary-A 100
Huma.Eco Pte. Ltd. Support Services Singapore US$ Ordinary 100
Letsbloom Pte. Ltd. Others Singapore US$ Ordinary-A 100
Libeara (Singapore) Pte. Ltd. Digital Venture: Investment Services Singapore US$ Ordinary 100
Libeara Pte. Ltd. Digital Venture: Investment Services Singapore US$ Ordinary 100
Pegasus Dealmaking Pte. Ltd. Mergers and Acquisitions (M&A) marketplace Singapore US$ Ordinary 100
The following company has the address of 1 Robinson Road, #17-00, AIA Tower,
048542, Singapore
CurrencyFair (Singapore) Pte.Ltd ¹ Foreign Currency conversion services. Singapore SGD Ordinary 100
The following companies have the address of 9 Raffles Place, #26-01 Republic
Plaza, 048619 , Singapore
SCV Research and Development Pte. Ltd. Others Singapore US$ Ordinary-A 100
Zodia Custody (Singapore) Limited Custody Services Singapore US$ Ordinary 100
Inveco Pte. Ltd. Venture: Carbon Credit Marketplace Singapore US$1.00 Ordinary 100
The following companies have the address of 8 Marina Boulevard, Level 26,
Marina Bay Financial Centre, Tower 1, 018981, Singapore
Marina Aquata Shipping Pte. Ltd. Leasing Business Singapore US$ Ordinary 100
Marina Aruana Shipping Pte. Ltd. Leasing Business Singapore SGD Ordinary 100
US$ Ordinary 100
Marina Cobia Shipping Pte. Ltd. Leasing Business Singapore SGD Ordinary 100
US$ Ordinary 100
Marina Fatmarini Shipping Pte. Ltd. Leasing Business Singapore US$ Ordinary 100
Marina Frabandari Shipping Pte. Ltd. Leasing Business Singapore US$ Ordinary 100
Marina Gerbera Shipping Pte. Ltd. Leasing Business Singapore US$ Ordinary 100
Marina Opah Shipping Pte. Ltd. Leasing Business Singapore SGD Ordinary 100
US$ Ordinary 100
Marina Partawati Shipping Pte. Ltd. Leasing Business Singapore US$ Ordinary 100
The following company has the address of Tricor WP Corporate Services Pte Ltd,
80 Robinson Road #02-00, 068898, Singapore
Solv-India Pte. Ltd. Investment Holding Entity Singapore US$ Ordinary 100
The following companies have the address of 9 Raffles Place, #26-01 Republic
Plaza , Singapore , 048619, Singapore
Power2SME Pte. Ltd. Investment Holding Entity Singapore US$ Ordinary 90.6
SCV Master Holding Company Pte. Ltd. Investment Holding Entity Singapore US$ Ordinary 100
The following company has the address of 7 Changi Business Park Crescent,
#03-00 Standard Chartered @ Changi, 486028, Singapore
Raffles Nominees (Pte.) Limited Nominee Services Singapore SGD Ordinary 100
Page 137
The following companies have the address of 8 Marina Boulevard, #27-01 Marina
Bay Financial Centre Tower 1, 018981, Singapore
SCTS Capital Pte. Ltd Nominee Services Singapore SGD Ordinary 100
SCTS Management Pte. Ltd. Nominee Services Singapore SGD Ordinary 100
Standard Chartered Bank (Singapore) Limited Banking & Financial Services Singapore SGD Non-cumulative Class C Tier-1 preference 100
SGD Non-cumulative Class D Tier-1 Preference 100
SGD Ordinary-A 100
US$ Non-cumulative Class B Tier-1 Preference 100
US$ Ordinary-A 100
US$ Ordinary-B 100
US$ Ordinary-C 100
Standard Chartered Holdings (Singapore) Private Limited Investment Holding Company Singapore SGD Ordinary 100
US$ Ordinary 100
Standard Chartered Nominees (Singapore) Pte Ltd Nominee Services Singapore SGD Ordinary 100
Standard Chartered Trust (Singapore) Limited Trustee Services Singapore SGD Ordinary 100
The following company has the address of Abogado Pte Ltd, No. 8 Marina
Boulevard, #05-02 MBFC Tower 1, 018981, Singapore
Standard Chartered IL&FS Management (Singapore) Pte. Limited Investment Management Singapore USD Ordinary 50
The following companies have the address of 9 Raffles Place, #26-01 Republic
Plaza, 048619, Singapore
Standard Chartered Private Equity (Singapore) Pte. Ltd Investment Holding Company Singapore US$ Ordinary 100
Standard Chartered Real Estate Investment Holdings (Singapore) Private Limited Investment Holding Company Singapore US$ Ordinary 100
The following company has the address of 77 Robinson Road, #25-00 Robinson 77,
068896, Singapore
Trust Bank Singapore Limited Banking & Financial Services Singapore SGD Ordinary 60
The following companies have the address of 2nd Floor, 115 West Street,
Sandton, Johannesburg, 2196, South Africa
CMB Nominees (RF) PTY Limited Nominee Services South Africa ZAR1.00 Ordinary 100
Standard Chartered Nominees South Africa Proprietary Limited (RF) Nominee Services South Africa ZAR Ordinary 100
The following company has the address of 6 Fort Street, PO 785848, , Birnam,
Sandton, 2196 2146, South Africa
Promisepay (PTY) Ltd¹ Payment Services Provider South Africa ZAR1.00 Ordinary 100
The following company has the address of 1F, No.177 & 3F-6F, 17F-19F,
No.179, Liaoning Street, Zhongshan Dist., Taipei, 104, Taiwan
Standard Chartered Bank (Taiwan) Limited Banking & Financial Services Taiwan (Province of China) TWD10.00 Ordinary 100
The following companies have the address of 1 Floor, International House,
Shaaban Robert Street / Garden Avenue, PO Box 9011, Dar Es Salaam, Tanzania,
United Republic of
Standard Chartered Bank Tanzania Limited Banking & Financial Services Tanzania, United Republic of TZS1,000.00 Ordinary 100
TZS1,000.00 Preference 100
Standard Chartered Tanzania Nominees Limited Nominee Services Tanzania, United Republic of TZS1,000.00 Ordinary 100
Page 138
The following company has the address of No. 140, 11th, 12th and 14th Floor,
Wireless Road, Lumpini, Patumwan, Bangkok, 10330, Thailand
Standard Chartered Bank (Thai) Public Company Limited Banking & Financial Services Thailand THB10.00 Ordinary 99.871
The following company has the address of Buyukdere Cad. Yapi Kredi Plaza C
Blok, Kat 15, Levent, Istanbul, 34330, Turkey
Standard Chartered Yatirim Bankasi Turk Anonim Sirketi Banking & Financial Services Turkey TRL0.10 Ordinary 100
The following company has the address of Standard Chartered Bank Bldg, 5 Speke
Road, PO Box 7111, Kampala, Uganda
Standard Chartered Bank Uganda Limited Banking & Financial Services Uganda UGS1,000.00 Ordinary 100
The following company has the address of 14 Mackinnon Road, Nakasero, Kampala,
141769, Uganda
Furaha Finserve Uganda Limited Banking & Financial Services Uganda US$1.00 Ordinary 20
The following company has the address of EX-26, Ground Floor, Bldg 16-Co Work,
Dubai Internet City, Dubai, United Arab Emirates
Appro Onboarding Solutions FZ-LLC IT solutions provider and support service provider. United Arab Emirates AED1,000.00 Ordinary 100
The following company has the address of Suites 508, 509, 15th Floor, Al Sarab
Tower, Adgm Square, Al Maryah Island, Abu Dhabi, United Arab Emirates
Financial Inclusion Technologies Ltd Digital wallet and technology payments platform United Arab Emirates US$ Ordinary-A 100
The following company has the address of Unit GV-00-10-07-OF-02, Level 7, Gate
Village Building 10, Dubai International Financial Centre, Dubai, United Arab
Emirates
Furaha Holding Ltd Micro-lending Company United Arab Emirates US$1.00 Ordinary 100
The following company has the address of Standard Chartered Bank, 7th Floor,
Building One, Gate Precinct, DIFC, PO Box 999, Dubai, United Arab Emirates
Global Digital Asset Holdings Limited Investment vehicle - Strategic investment United Arab Emirates US$ Ordinary 100
The following company has the address of Part of Level 15, Standard Chartered
Bank Building, Plot 8, Burj Downtown, Dubai, United Arab Emirates
myZoi Financial Inclusion Technologies LLC Digital Venture: Activity auxiliary to financial intermediation United Arab Emirates AED1.00 Ordinary 100
The following company has the address of 25 Taylor St, San Francisco CA
94102-3916, United States
Assembly Escrow Inc¹ Payment Services Provider United States US$0.0001 Ordinary 100
The following company has the address of 251 Little Falls Drive, Wilmington DE
19808, United States
CurrencyFair (USA) Inc¹ Digital Payment platform United States US$1.00 Uncertificated 100
The following company has the address of 1095 Avenue of Americas, New York
City NY 10036, United States
Standard Chartered Bank International (Americas) Limited Banking & Financial Services United States US$1,000.00 Ordinary 100
Page 139
The following companies have the address of Corporation Trust Center, 1209
Orange Street, Wilmington DE 19801, United States
Standard Chartered Holdings Inc. Investment Holding Company United States US$100.00 Common 100
Standard Chartered Securities (North America) LLC Banking & Financial Services United States Membership Interest 100
The following company has the address of 50 Fremont Street, San Francisco CA
94105, United States
Standard Chartered Overseas Investment, Inc. Ultimate Holding Company United States US$10.00 Ordinary 100
The following company has the address of C/O Corporation Service Company, 251
Little Falls Drive, Wilmington DE 19808, United States
Standard Chartered Trade Services Corporation Trade Services United States US$0.01 Common 100
The following company has the address of Level 3, #CP1.L01 and #CP2.L01,
Capital Place, 29 Lieu Giai Street, Ngoc Khanh Ward, Ba Dinh District, Ha Noi,
10000, Vietnam
Standard Chartered Bank (Vietnam) Limited Banking & Financial Services Vietnam VND Charter Capital 100
The following company has the address of The Company's Registered Office,
Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110,
Virgin Islands, British
Sky Harmony Holdings Limited6 Investment Holding Company Virgin Islands, British USD1.00 Ordinary 100
The following companies have the address of Stand No. 4642, Corner of
Mwaimwena Road and Addis Ababa Dri, Lusaka, 10101, Zambia
Standard Chartered Bank Zambia Plc Banking & Financial Services Zambia ZMW0.25 Ordinary 90
Standard Chartered Zambia Securities Services Nominees Limited Nominee Services Zambia ZMW0.0203 Ordinary 100
The following companies have the address of Africa Unity Square Building, 68
Nelson Mandela Avenue, Harare, Zimbabwe
Africa Enterprise Network Trust2 Investment Holding Company Zimbabwe Trust Interest 100
Standard Chartered Bank Zimbabwe Limited Banking & Financial Services Zimbabwe US$1.00 Ordinary 100
Standard Chartered Nominees Zimbabwe (Private) Limited Ultimate Holding Company Zimbabwe US$2.00 Ordinary 100
1. The Group has determined that these undertakings are excluded from being
consolidated into the Groups accounts, and do not meet the definition of a
Subsidiary under IFRS. See note 32 for the consolidation policy and disclosure
of the undertaking.
2. No share capital by virtue of being a trust
3. Limited liability company
4. The Group has determined the prinicpal place of operation to be
Ireland
5. The Group has determined the prinicpal place of operation to be
United Kingdom
6. The Group has determined the prinicpal place of operation to be Hong
Kong
7. Company is exempt from the requirements of the companies Act
relating to the audit of individual accounts by virtue of S479A
8. Company numbers of the subsidiaries taking an audit exemption are SC
Transport Leasing 1 LTD 06787116, SC Transport Leasing 2 Limited 06787090,
Standard Chartered Leasing (UK) Limited 05513184, Standard Chartered Africa
Limited 00002877, Standard Chartered Securities (Africa) Holdings Limited
05843604 and Standard Chartered Strategic Investments Limited 01388304
9 Directly held related undertaking
10 Group's ultimate ownership for CurrencyFair entities is 43.422%
Joint ventures
Name and registered address Activity Place of incorporation Description of shares Proportion of shares held (%)
The following company has the address of Tricor WP Corporate Services Pte Ltd,
80 Robinson Road #02-00, 068898, Singapore
Olea Global Pte. Ltd. Provision of trade finance products and services. Singapore $ Ordinary 41
$ Preference 100
Page 140
Associates
Name and registered address Activity Place of incorporation Description of shares Proportion of shares held (%)
The following company has the address of 41 Luke Street, London, EC2A 4DP,
United Kingdom
Fintech for International Development Ltd Financial intermediation United Kingdom $0.0001 Ordinary-A 58.9
The following company has the address of Bohai Bank Building, No.218 Hai He
Dong Lu, Hedong District, Tianjin, China, 300012, China
China Bohai Bank Co., Ltd. General commercial banking businesses China CNY1.00 Ordinary 16.263
The following company has the address of 17/F, 100, Gongpyeong-dong,
Jongno-gu, Seoul, Korea, Republic of
Ascenta IV Investment making Korea, Republic of Partnership Interest 39.100
The following company has the address of 1 Raffles Quay, #23-01, One Raffles
Quay, 048583, Singapore
Clifford Capital Holdings Pte. Ltd. Investment Holding Company Singapore $1.00 Ordinary 9.9
The following company has the address of 10 Marina Boulevard #08-08, Marina
Bay, Financial Centre, 018983, Singapore
Verified Impact Exchange Holdings Pte. Ltd Exchange offering liquidity of trade Singapore SGD Ordinary 15
The following company has the address of Victoria House, State House Avenue,
Victoria, MAHE, Seychelles
Seychelles International Mercantile Banking Corporation Limited. Commercial Bank Seychelles SCR1,000.00 Ordinary 22
The following company has the address of Gervinusstrasse 17, 60322, Frankfurt
am Main, Hesse, Germany
SWIAT GmbH Digital Venture: Financial Services Germany €1.00 Ordinary 30
The following company has the address of Izumi Garden Tower 19F, 1-6-1
Roppongi, Minato-ku, Tokyo, Japan
SBI Zodia Custody Co. Ltd Others Japan JPY50,000.00 Ordinary 100
The following company has the address of 60B, Orchard Road, #06-18, Tower 2,
The Atrium @ Orchard, 238891, Singapore
Partior Holdings Pte. Ltd. Financial Services Singapore SGD1.00 Ordinary 24.999
SGD1.00 Series A Preferred 25.014
Page 141
Significant investment holdings and other related undertakings
Name and registered address Activity Place of incorporation Description of shares Proportion of shares held (%)
The following company has the address of 1 Bartholomew Lane, London, EC2N 2AX,
United Kingdom
Corrasi Covered Bonds (LM) Limited Liquidation member United Kingdom £1.00 Ordinary 20
(Bond holders)
The following company has the address of Intertrust Corporate Services
(Cayman) Limited, 190 Elgin Avenue, George Town, Grand Cayman , KY1-9005,
Cayman Islands
ATSC Cayman Holdco Limited 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) Limited Investment holding Hong Kong $ Class A Ordinary 39.689
$ Class B Ordinary 39.689
Actis Rivendell Holdings (HK) Limited 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 Limited Other business activities India INR10.00 Ordinary 26
The following company has the address of 4thFloor, 274, Chitalia House, Dr.
Cawasji Hormusji Road, Dhobi Talao, Mumbai City, Maharashtra, India 400 002,
Mumbai, 400 002, India
Industrial Minerals and Chemical Co. Minerals and Chemical India INR100.00 Ordinary 26
Pvt. Ltd
The following company has the address of 17F, 47, Jong-ro, Jongno-gu, (17F,
100, Gongpyeong-dong, Jongno-gu), Seoul, Korea, Republic of
Ascenta III Investment making Korea KRW1.00 Class B Equity Interest 31
The following company has the address of 3 Jalan Pisang, c/o Watiga Trust Ltd,
199070 Singapore
SCIAIGF Liquidating Trust1 Investment Holding Company Singapore Trust Interest 43.96
The following company has the address of 251 Little Falls Drive, Wilmington,
New Castle DE 19808, United States
Paxata, Inc. Data Analytics United States US$0.0001 Series C2 Preferred Stock 40.74
US$0.0001 Series C3 Preferred Stock 8.908
1. The Group has determined the principal place of operation to be
Singapore
Page 142
In liquidation
Subsidiary Undertakings
Name and registered address Activity Place of incorporation Description of shares Proportion of shares held (%)
The following companies have the address of C/O Teneo Financial Advisory
Limited, The Colmore Building, 20 Colmore Circus, Queensway, Birmingham, B4
6AT, United Kingdom
Standard Chartered Masterbrand Licensing Limited To manage intellectual property for Group United Kingdom $1.00 Ordinary Shares 100
The following companies have the address of Bucktrout House, Glategny
Esplanade, St Peter Port, GY1 3HQ, Guernsey
Birdsong Limited Fiduciary Services Guernsey £1.00 Ordinary shares 100
Nominees One Limited Fiduciary Services Guernsey £1.00 Ordinary shares 100
Nominees Two Limited Fiduciary Services Guernsey £1.00 Ordinary shares 100
Songbird Limited Fiduciary Services Guernsey £1.00 Ordinary shares 100
Standard Chartered Secretaries (Guernsey) Limited Fiduciary Services Guernsey £1.00 Ordinary shares 100
Standard Chartered Trust (Guernsey) Limited Fiduciary Services Guernsey £1.00 Ordinary shares 100
The following company has the address of 30 Rue Schrobilgen, 2526, Luxembourg
Standard Chartered Financial Services (Luxembourg) S.A. Corporate Finance & Advisory Services Luxembourg €25.00 Ordinary shares 100
The following company has the address of Jiron Huascar 2055, Jesus Maria, Lima
15072, Peru
Banco Standard Chartered en Liquidacion Banking services Peru $75.133 Ordinary shares 100
The following company has the address of Luis Alberto de Herrera 1248, Torre
II, Piso 11, Esc. 1111, Uruguay
Standard Chartered Uruguay Representacion S.A. Financial counselling services Uruguay UYU1.00 Ordinary shares 100
The following company has the address of 555 Washington Av, St Louis, MO,
United States of America, 63101
Assembly Payments, Inc¹ Payment services provider United States $0.0001 Ordinary 100
The following companies have the address of C/O Teneo Financial Advisory
Limited, The Colmore Building, 20 Colmore Circus, Queensway, Birmingham, B4
6AT, United Kingdom
Standard Chartered Leasing (UK) 3 Limited Leasing Business United Kingdom $1.00 Ordinary shares 100
Page 143
Liquidated/dissolved/sold
Subsidiary/Associate undertakings and Significant investment holdings
Name and registered address Activity Place of incorporation Description of shares Proportion of shares held (%)
The following companies have the address of C/O Teneo Financial Advisory
Limited, 156 Great Charles Street, Queensway, Birmingham, West Midlands, B3
3HN, United Kingdom
Standard Chartered Leasing (UK) 2 Limited Leasing Business United Kingdom $1.00 Ordinary shares 100
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 Limited Investment Holding Entity Cayman Islands $0.01 Ordinary shares 100
The following companies have the address of TMF Trust Labuan Limited, Brumby
Centre, Lot 42,, Jalan Muhibbah, 87000 Labuan F.T., Malaysia
Pembroke Leasing (Labuan) 3 Berhad Leasing Business Malaysia $ Ordinary shares 100
The following companies have the address of c/o Ocorian Corporate Services
(Mauritius) Ltd, 6th Floor, Tower A, 1 Cybercity, Ebene, 72201, Mauritius
Standard Chartered Financial Holdings Investment Holding Company Mauritius $1.00 Ordinary shares 100
The following companies have the address of 142, Ahmadu Bello Way, Victoria
Island, Lagos, 101241, Nigeria
Cherroots Nigeria Limited Investment Holding Company Nigeria NGN1.00 Ordinary Shares 100
The following companies have the address of 80 Robinson Road, #02-00, 068898,
Singapore
Cardspal Pte. Ltd. Support Services Singapore $ Ordinary shares 100
The following companies have the address of Vistra Corporate Services Centre,
Wickhams Cay II, Road Town, Tortola, VG1110, Virgin Islands, British
Sky Favour Investments Limited Investment Holding Company Virgin Islands, British $1.00 Ordinary shares 100
The following companies have the address of 14th Floor, One Taikoo Place, 979
King's Road, Quarry Bay, Hong Kong.
Kozagi Limited Investment Holding Company Hong Kong HKD Ordinary shares 100
The following company has the address of Hoogoorddreef 15, 1101 BA, Amsterdam,
Netherlands
Pembroke Holland B.V. Leasing Business Netherlands €450.00 Ordinary shares 100
Page 144
The following companies have the address of 32 Molesworth Street, Dublin 2,
D02Y512, Ireland
Inishbrophy Leasing Limited Leasing Business Ireland €1.00 Ordinary shares 100
Inishcannon Leasing Limited Leasing Business Ireland $1.00 Ordinary shares 100
Inishcrean Leasing Limited Leasing Business Ireland $1.00 Ordinary shares 100
Inishdawson Leasing Limited Leasing Business Ireland €1.00 Ordinary shares 100
Inisherkin Leasing Limited Leasing Business Ireland $1.00 Ordinary shares 100
Inishoo Leasing Limited Leasing Business Ireland $1.00 Ordinary shares 100
Nightjar Limited Leasing Business Ireland $1.00 Ordinary shares 100
Pembroke Aircraft Leasing 1 Limited Leasing Business Ireland €1.00 Ordinary shares 100
Pembroke Aircraft Leasing 2 Limited Leasing Business Ireland €1.00 Ordinary shares 100
Pembroke Aircraft Leasing 3 Limited Leasing Business Ireland $1.00 Ordinary shares 100
Pembroke Aircraft Leasing 4 Limited Leasing Business Ireland $1.00 Ordinary shares 100
Pembroke Aircraft Leasing 5 Limited Leasing Business Ireland $1.00 Ordinary shares 100
Pembroke Aircraft Leasing 6 Limited Leasing Business Ireland $1.00 Ordinary shares 100
Pembroke Aircraft Leasing 7 Limited Leasing Business Ireland $1.00 Ordinary shares 100
Pembroke Aircraft Leasing 8 Limited Leasing Business Ireland $1.00 Ordinary shares 100
Pembroke Aircraft Leasing 9 Limited Leasing Business Ireland $1.00 Ordinary shares 100
Pembroke Aircraft Leasing 10 Limited Leasing Business Ireland $1.00 Ordinary shares 100
Pembroke Aircraft Leasing 11 Limited Leasing Business Ireland $1.00 Ordinary shares 100
Pembroke Aircraft Leasing 12 Limited Leasing Business Ireland $1.00 Ordinary shares 100
Pembroke Aircraft Leasing 13 Limited Leasing Business Ireland $1.00 Ordinary shares 100
Pembroke Aircraft Leasing 14 Limited Leasing Business Ireland $1.00 Ordinary shares 100
Pembroke Aircraft Leasing 15 Limited Leasing Business Ireland $1.00 Ordinary shares 100
Pembroke Aircraft Leasing 16 Limited Leasing Business Ireland $1.00 Ordinary shares 100
Pembroke Aircraft Leasing Holdings Limited Leasing Business Ireland $1.00 Ordinary shares 100
Pembroke Capital Limited Leasing Business Ireland €1.25 Ordinary shares 100
US$1.00 Ordinary 100
Skua Limited Leasing Business Ireland $1.00 Ordinary shares 100
The following company has the address of First Names House, Victoria Road,
Douglas, IM2 4DF, Isle of Man
Pembroke Group Limited Aircraft leasing, fleet advisory and technical services Isle of Man $0.01 Ordinary shares 100
The following company has the address of No. 1034, Managed by Tianjin
Dongjiang Secretarial Services , Co., Ltd., Room 202, Office Area of
Inspection Warehouse,, No.6262 Ao Zhou Road, Dongjiang Free Trade Port Zone,,
Tianjin Pilot Free Trade Zone, China
Pembroke Aircraft Leasing (Tianjin) Limited Holding Company China $1.00 Ordinary shares 100
The following company has the address of No. 1035, Managed by Tianjin
Dongjiang Secretarial Services , Co., Ltd., Room 202, Office Area of
Inspection Warehouse,, No.6262 Ao Zhou Road, Dongjiang Free Trade Port Zone,,
Tianjin Pilot Free Trade Zone, China
Pembroke Aircraft Leasing Tianjin 1 Limited SPV for Aircraft Operating Lease Business China CNY1.00 Ordinary shares 100
The following company has the address of No. 1036, Managed by Tianjin
Dongjiang Secretarial Services , Co., Ltd., Room 202, Office Area of
Inspection Warehouse,, No.6262 Ao Zhou Road, Dongjiang Free Trade Port Zone,,
Tianjin Pilot Free Trade Zone, China
Pembroke Aircraft Leasing Tianjin 2 Limited SPV for Aircraft Operating Lease Business China CNY1.00 Ordinary shares 100
Page 145
The following companies have the address of 1 Basinghall Avenue, London, EC2V
5DD, United Kingdom
Pembroke Aircraft Leasing (UK) Limited Leasing Business United Kingdom £1.00 Ordinary shares 100
The following companies have the address of Trust Company Complex, Ajeltake
Road, Ajeltake Island, Majuro, MH96960, Marshall Islands
Marina Alysse Shipping Limited Ownership and Leasing Marshall Islands $1.00 Ordinary shares 100
of vessels
Marina Amandier Shipping Limited Ownership and Leasing Marshall Islands $1.00 Ordinary shares 100
of vessels
Marina Ambroisee Shipping Limited Ownership and Leasing Marshall Islands $1.00 Ordinary shares 100
of vessels
Marina Buxus Shipping Limited Ownership and Leasing Marshall Islands $1.00 Ordinary shares 100
of vessels
Marina Dorado Shipping Limited Ownership and Leasing Marshall Islands $1.00 Ordinary shares 100
of vessels
Marina Protea Shipping Limited Ownership and Leasing Marshall Islands $1.00 Ordinary shares 100
of vessels
The following company has the address of 3, Floor 1, No.1, Shiner
Wuxingcaiyuan, West Er Huan Rd, , Xi Shan District, Kunming, Yunnan Province,
PRC , China
Yunnan Golden Shiner Property Development Co., Ltd. Real Estate Developers China CNY1.00 Ordinary shares 42.5
The following companies has the address of 49, Sungei Kadut Avenue, #03-01
S729673, Singapore
Omni Centre Pte. Ltd. Real Estate Owners & Developers Singapore SGD Redeemable Convertible Preference shares 99.998
The following company has the address of 505 Howard St. #201, San Francisco,
CA 94105, United States
SC Studios, LLC Offshore Support Services United States US$1.00 Membership Interest 100
The following company has the address of Avenue de Tivoli 2, 1007, Lausanne,
Switzerland
Metaco SA Integrated infrastructure solutions Switzerland CHF 0.01 Preference A Shares 29.505
Save for those disclosed in this Annual Report , there were no other
significant investments held, nor were there material acquisitions or
disposals of subsidiaries during the year under review. Apart from those
disclosed in this Annual Report, there were no material investments or
additions of capital assets authorised by the Board at the date of this Annual
Report.
Page 146
41. Dealings in Standard Chartered PLC listed securities
This is also disclosed as part of Note 28 Share capital, other equity and
reserves.
Except as disclosed, neither the Company nor any of its subsidiaries has
bought, sold or redeemed any securities of the company listed on The Stock
Exchange of Hong Kong Limited during the period. Details of the shares
purchased and held by the trusts are set out below.
1995 Trust 2004 Trust Total
2023 2022 2023 2022 2023 2022
Shares purchased during the period - - 29,069,539 30,203,531 29,069,539 30,203,531
Market price of shares purchased ($million) - - 237 218 237 218
Shares held at the end of the period - - 28,095,542 27,525,624 28,095,542 27,525,624
Maximum number of shares held during the period 28,893,930 27,976,046
42. Corporate governance
The directors confirm that Standard Chartered PLC (the Company) has complied
with all of the provisions set out in the UK Corporate Governance Code 2018
during the year ended 31 December 2023. The directors also confirm that,
throughout the year, the Company has complied with the code provisions set out
in the Hong Kong Corporate Governance Code contained in Appendix C1 of the
Hong Kong Listing Rules. The Group confirms that it has adopted a code of
conduct regarding directors' securities transactions on terms no less exacting
than required by Appendix C3 of the Hong Kong Listing Rules and that the
directors of the Company have complied with the required standards of the
adopted code of conduct. The directors also confirm that the announcement of
these results has been reviewed by the Company's Audit Committee.
Page 147
Shareholder information
Important notices
Forward-looking statements
The information included in this document may contain 'forward-looking
statements' based upon current expectations or beliefs as well as statements
formulated with assumptions about future events. Forward-looking statements
include, without limitation, projections, estimates, commitments, plans,
approaches, ambitions and targets (including, without limitation, ESG
commitments, ambitions and targets). Forward-looking statements often use
words such as 'may', 'could', 'will', 'expect', 'intend', 'estimate',
'anticipate', 'believe', 'plan', 'seek', 'aim', 'continue' or other words of
similar meaning to any of the foregoing. Forward-looking statements may also
(or additionally) be identified by the fact that they do not relate only to
historical or current facts.
By their very nature, forward-looking statements are subject to known and
unknown risks and uncertainties and other factors that could cause actual
results, and the Group's plans and objectives, to differ materially from those
expressed or implied in the forward-looking statements. Readers should not
place reliance on, and are cautioned about relying on, any forward-looking
statements.
There are several factors which could cause the Group's actual results and its
plans and objectives to differ materially from those expressed or implied in
forward-looking statements. The factors include (but are not limited to):
changes in global, political, economic, business, competitive and market
forces or conditions, or in future exchange and interest rates; changes in
environmental, geopolitical, social or physical risks; legal, regulatory and
policy developments, including regulatory measures addressing climate change
and broader sustainability-related issues; the development of standards and
interpretations, including evolving requirements and practices in ESG
reporting; the ability of the Group, together with governments and other
stakeholders to measure, manage, and mitigate the impacts of climate change
and broader sustainability-related issues effectively; risks arising out of
health crises and pandemics; risks of cyber-attacks, data, information or
security breaches or technology failures involving the Group; changes in tax
rates or policy; future business combinations or dispositions; and other
factors specific to the Group, including those identified in this Annual
Report and financial statements of the Group. To the extent that any
forward-looking statements contained in this document are based on past or
current trends and/or activities of the Group, they should not be taken as a
representation that such trends or activities will continue in the future.
No statement in this document is intended to be, nor should be interpreted as,
a profit forecast or to imply that the earnings of the Group for the current
year or future years will necessarily match or exceed the historical or
published earnings of the Group. Each forward-looking statement speaks only as
of the date that it is made. Except as required by any applicable laws or
regulations, the Group expressly disclaims any obligation to revise or update
any forward-looking statement contained within this document, regardless of
whether those statements are affected as a result of new information, future
events or otherwise.
Please refer to this Annual Report and the financial statements of the Group
for a discussion of certain of the risks and factors that could adversely
impact the Group's actual results, and cause its plans and objectives, to
differ materially from those expressed or implied in any forward-looking
statements.
Financial instruments
Nothing in this document shall constitute, in any jurisdiction, an offer or
solicitation to sell or purchase any securities or other financial
instruments, nor shall it constitute a recommendation or advice in respect of
any securities or other financial instruments or any other matter.
Page 148
Basis of Preparation and Caution Regarding Data Limitations
This section is specifically relevant to, amongst others, the sustainability
and climate models, calculations and disclosures throughout this report.
The information contained in this document has been prepared on the following
basis:
i. certain information in this document is unaudited;
ii. all information, positions and statements set out in this document are
subject to change without notice;
iii. the information included in this document does not constitute any
investment, accounting, legal, regulatory or tax advice or an invitation or
recommendation to enter into any transaction;
iv. the information included in this document may have been prepared using
models, methodologies and data which are subject to certain limitations. These
limitations include: the limited availability of reliable data, data gaps, and
the nascent nature of the methodologies and technologies underpinning this
data; the limited standardisation of data (given, amongst other things,
limited international coordination on data and methodology standards); and
future uncertainty (due, amongst other things, to changing projections
relating to technological development and global and regional laws,
regulations and policies, and the current inability to make use of strong
historical data);
v. models, external data and methodologies used in information included in
this document are or could be subject to adjustment which is beyond our
control;
vi. any opinions and estimates should be regarded as indicative, preliminary
and for illustrative purposes only. Expected and actual outcomes may differ
from those set out in this document (as explained in the "Forward-looking
statements" section above);
vii. some of the related information appearing in this document may have been
obtained from public and other sources and, while the Group believes such
information to be reliable, it has not been independently verified by the
Group and no representation or warranty is made by the Group as to its
quality, completeness, accuracy, fitness for a particular purpose or
noninfringement of such information;
viii. for the purposes of the information included in this
document, a number of key judgements and assumptions have been made. It is
possible that the assumptions drawn, and the judgement exercised may
subsequently turn out to be inaccurate. The judgements and data presented in
this document are not a substitute for judgements and analysis made
independently by the reader;
ix. any opinions or views of third parties expressed in this document are
those of the third parties identified, and not of the Group, its affiliates,
directors, officers, employees or agents. By incorporating or referring to
opinions and views of third parties, the Group is not, in any way, endorsing
or supporting such opinions or views;
x. whilst the Group bears primary responsibility for the information
included in this document, it does not accept responsibility for the external
input provided by any third parties for the purposes of developing the
information included in this document;
xi. the data contained in this document reflects available information and
estimates at the relevant time;
xii. where the Group has used any methodology or tools developed by a third
party, the application of the methodology or tools (or consequences of its
application) shall not be interpreted as conflicting with any legal or
contractual obligations and such legal or contractual obligations shall take
precedence over the application of the methodology or tools;
xiii. where the Group has used any underlying data provided
or sourced by a third party, the use of the data shall not be interpreted as
conflicting with any legal or contractual obligations and such legal or
contractual obligations shall take precedence over the use of the data;
xiv. this Important Notice is not limited in applicability
to those sections of the document where limitations to data, metrics and
methodologies are identified and where this Important Notice is referenced.
This Important Notice applies to the whole document;
Page 149
xv. further development of reporting, standards or other principles could
impact the information included in this document or any metrics, data and
targets included in this document (it being noted that ESG reporting and
standards are subject to rapid change and development); and
xvi. while all reasonable care has been taken in preparing
the information included in this document, neither the Group nor any of its
affiliates, directors, officers, employees or agents make any representation
or warranty as to its quality, accuracy or completeness, and they accept no
responsibility or liability for the contents of this information, including
any errors of fact, omission or opinion expressed.
You are advised to exercise your own independent judgement (with the advice of
your professional advisers as necessary) with respect to the risks and
consequences of any matter contained in this document.
The Group, its affiliates, directors, officers, employees or agents expressly
disclaim any liability and responsibility for any decisions or actions which
you may take and for any damage or losses you may suffer from your use of or
reliance on the information contained in this document. Copyright in all
materials, text, articles and information contained in this document (other
than third party materials, text, articles and information) is the property
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and copyright in these materials as a compilation vests and shall remain at
all times copyright of the Group and should not be reproduced or used except
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written consent of an authorised signatory of the Group. All rights reserved.
Page 150
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