REG - Standard Chrtrd PLC - Additional Financial Information - Part 2
21/02/2025 07:15
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RNS Number : 9809X Standard Chartered PLC 21 February 2025
Standard Chartered PLC - Additional Financial information
Highlights
Standard Chartered PLC (the Group) today releases its results for the year
ended 31 December 2024. The following pages provide additional information
related to the announcement.
Table of contents
Financial statements
Independent Auditor's report 2
Consolidated income statement 16
Consolidated statement of comprehensive income 17
Consolidated balance sheet 18
Consolidated statement of changes in equity 19
Cash flow statement 20
Notes to the financial statements 21
Shareholder information 122
Page 1
Independent Auditor's Report to the members of Standard Chartered PLC
Opinion
In our opinion:
• Standard Chartered plc's group financial statements and parent
company financial statements (the "financial statements") give a true and fair
view of the state of the group's and of the parent company's affairs as at 31
December 2024 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 (UK IAS) and
International Financial Reporting Standards (IFRS) as adopted by the European
Union (EU IFRS);
• the parent company financial statements have been properly
prepared in accordance with UK 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 Standard Chartered plc (the
'Company' or the 'Parent Company') and its subsidiaries, interests in
associates, and jointly controlled entities (together with the Company-the
'Group') for the year ended 31 December 2024 which comprise:
Group Company
Consolidated income statement for the year ended 31 December 2024; Balance sheet as at 31 December 2024;
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 2024; 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 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 IAS and EU IFRS; and as regards the Parent Company
financial statements, UK 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 the 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 consideration of
principal and emerging risks;
• assessing management's going concern assessment, including the
Group's forecast capital, liquidity and leverage ratios over the period of
twelve months from 21 February 2025, to evaluate the headroom against minimum
regulatory requirements and the risk appetite set by the directors;
• engaging EY valuation and economic specialists to assess and
challenge the reasonableness of assumptions used to develop the forecasts in
the Corporate Plan (5-year forward looking plan of the business) 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 21 February
2025;
• understanding and evaluating credit rating agency ratings;
• engaging EY 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 to assess that the disclosure was 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 the Parent Company's
ability to continue as a going concern for a period of twelve months from 21
February 2025.
In relation to the Group and the Parent Company's reporting on how they have
applied the UK Corporate Governance Code, we have nothing material to add or
draw attention to in relation to the directors' statement in the 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'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 8 components in 7 countries.
• We performed central procedures for certain audit areas and balances as
outlined in Tailoring the scope section of our report.
Key audit matters • Credit impairment
• Basis of accounting and impairment assessment of China Bohai Bank
(interest in associate)
• Impairment of investments in subsidiary undertakings
• Valuation of financial instruments held at fair value with higher risk
characteristics.
Materiality • Overall group materiality of $340m which represents 5% of adjusted
profit before tax.
Page 3
An overview of the scope of the parent company and group audits
Tailoring the scope
In the current year our audit scoping has been updated to reflect the new
requirements of ISA (UK) 600 (Revised). We have followed a risk-based approach
when developing our audit approach to obtain sufficient appropriate audit
evidence on which to base our audit opinion. We performed risk assessment
procedures, with input from our component auditors, to identify and assess
risks of material misstatement of the Group financial statements and
identified significant accounts and disclosures. When identifying components
at which audit work needed to be performed to respond to the identified risks
of material misstatement of the Group financial statements, we considered our
understanding of the Group and its business environment, the applicable
financial framework, the Group's system of internal control at the entity
level, the existence of centralised processes, IT application environment, and
any relevant internal audit results.
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 the Group's Global Business Services shared services centre (SSC),
Corporate and Investment Banking (CIB) SSC, Credit Impairment SSC and
Technology.
We determined that centralised audit procedures can be performed across
certain components for the key audit matters outlined later in this report,
and for other audit areas, including: Revenue recognition; Management override
of controls; Technology costs; Impairment of goodwill; Going concern and
long-term viability; Hedge accounting; Climate risk; Share based payments;
Taxation; Legal and regulatory matters; Centralised reconciliations; Onerous
contracts, including impairment of leased properties; IT matters; and certain
restructuring and transformation programmes.
In addition to the above areas, for selected components in Germany, Japan,
South Africa, Iraq and Singapore, the primary audit engagement team (the
'Primary Audit Team') performed certain procedures centrally over the cash
balances as at 31 December 2024. These components are separate to those
described below.
We identified 18 components in 14 countries as individually relevant to the
Group due a significant risk or an area of higher assessed risk of material
misstatement of the group financial statements being associated with the
components, or due to financial size of the component relative to the group.
For those individually relevant components, we identified the significant
accounts where audit work needed to be performed at these components by
applying professional judgement, having considered the group significant
accounts on which centralised procedures are performed, the reasons for
identifying the financial reporting component as an individually relevant
component and the size of the component's account balance relative to the
group significant financial statement account balance.
We then considered whether the remaining group significant account balances
that are not subject to audit procedures, in aggregate, could give rise to a
risk of material misstatement of the group financial statements.
Having identified the components for which work will be performed, we
determined the scope to assign to each component.
Of the 18 components selected, we designed and performed audit procedures on
the entire financial information of 10 components ("full scope components").
For 5 components, we designed and performed audit procedures on specific
significant financial statement account balances or disclosures of the
financial information of the component ("specific scope components"). For the
remaining 3 components, we performed specified audit procedures to obtain
evidence for one or more relevant assertions.
Group`s Absolute PBT Group Total Assets Group`s Absolute Operating Income
2024 2023 2024 2023 2024 2023
Full Scope 64% 62% 87% 87% 72% 72%
Specific Scope 10% 15% 5% 7% 9% 14%
Specified Procedures 2% 1% 0.30% 0.10% 2% 1%
Total 76% 78% 92% 94% 83% 87%
Page 4
Of the remaining components that together represent 24 per cent of the Group's
absolute PBT, none are individually greater than 1.9 per cent. For certain of
these components, we performed other procedures at the Group level which
included: performing analytical reviews at the Group financial statement
level, evaluating entity level controls, performing audit procedures on the
centralised shared service centres, testing of consolidation journals and
intercompany eliminations, inquiring with certain 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. We also had regard for the extent of centralised procedures in
respect of key audit matters.
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 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 was one non-EY component team auditing a single component in a single
location, which was instructed by a direct component of the Group.
Audit procedures were performed on 3 full scope components (including the
audit of the Company) directly by the Primary Audit Team (EY London) in the
United Kingdom. Where components were audited by the Primary Audit Team, this
was under the direction and supervision of the Senior Statutory Auditor. For
the remaining 15 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:
• Hong Kong
• India (including the shared services centre)
• 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 involved discussing the audit approach with the component team
and any issues arising from their work, meeting with local management,
attending planning and closing meetings, and reviewing relevant audit working
papers on 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 that risk by the Group is explained in the 'Risk Review and
Capital Review' section, and in the 'Sustainability review' section of the
Annual Report, where management 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 change impact on the Group's balance sheet' of note 1 to the
financial statements. As stated in these disclosures, the Group has considered
climate change to be an area which can impact accounting estimates and
judgements through the uncertainty of future events and the impact of that
uncertainty on the Group's assets and liabilities.
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 has been appropriately reflected in the valuation of
assets and liabilities, where material and where it can be reliably measured,
following the currently effective requirements of UK IAS and EU IFRS. This was
in the context of the Group's process being limited, given that this is a
highly evolving area, as a result of limitations in the data available and the
nascent modelling capabilities, 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 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 described above.
Based on our work, we have considered the impact of climate change on the
financial statements to impact certain key audit matters. 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
Credit Impairment We evaluated the design of controls relevant to the Group's systems and
processes over material ECL balances, involving EY specialists to assist us in
Refer to the Audit Committee Report; Note 8 of the financial statements; and performing our procedures where relevant. Based on our evaluation we selected
relevant credit risk disclosures the controls upon which we intended to rely and tested those for operating
effectiveness.
At 31 December 2024, the Group reported total credit impairment balance sheet
provision of $5,267 million (2023: $5,601 million). We performed an overall stand-back assessment of the ECL allowance in total
and by stage to determine if the ECL was reasonable. We considered the overall
Management's judgements and estimates are highly subjective as a result of the credit quality of the Group's portfolios, risk profile, the impact of
significant uncertainty associated with the estimation of expected future sovereign risk, challenges facing the Commercial Real Estate sector in
credit losses. Assumptions with increased complexity in respect of the timing Mainland China and Hong Kong and the impact of higher interest rates for
and measurement of expected credit losses (ECL) include: longer in certain markets. We performed peer benchmarking to the extent that
this was considered relevant and investigated and sought explanations for any
• Staging - the determination of what constitutes significant increase in areas identified as being outliers. Our assessment also included the
credit risk and consequent timely allocation of qualifying assets to the evaluation of the macroeconomic environment by considering trends in the
appropriate stage in accordance with IFRS 9; economies and countries to which the Group is exposed.
• Model output and adjustments - Accounting interpretations, modelling Staging - We evaluated the criteria used to determine significant increase in
assumptions and data used to develop, monitor and run the models that credit risk including quantitative backstops with the resultant allocation of
calculate the ECL, including the appropriateness, completeness and valuation financial assets to stage 1, 2 or 3 in accordance with IFRS 9. We reperformed
of post-model adjustments applied to model output to address identified model the staging distribution for a sample of financial assets and assessed the
deficiencies or risks not fully captured by the models; reasonableness of staging downgrades applied by management. We assessed the
appropriateness of changes to the staging criteria.
• Economic scenarios - Significant judgements involved in the
determination of the appropriateness of economic variables, the future To test the completeness of the identification of significant increase in
forecasting of these variables and the parameters used in both the base case credit risk, we challenged the credit risk ratings (including appropriate
forecast and the Monte Carlo Simulation. The assessment of non-linearity operation of quantitative backstops) for a sample of performing accounts and
produced by the Monte Carlo simulation, the benchmarking of the output to other accounts exhibiting risk characteristics such as financial difficulty,
backstop discrete scenarios and the evaluation of the need for any Post Model deferment of payment, late payment and heightened risk accounts appearing on
adjustments; the watchlist.
• Management overlays - Appropriateness, completeness and valuation of Modelled output and adjustments - With the support of our EY credit risk
risk event overlays to capture risks not identified by the credit impairment modelling specialists, we performed a risk assessment on models involved in
models, including the consideration of the risk of management override; and the ECL calculation using EY independently determined quantitative and
qualitative criteria and used this risk rating as a basis to select a sample
• Individually assessed ECL allowances - Measurement of individual of models to test. Based on this risk assessment, we evaluated a sample of ECL
provisions including the assessment of probability weighted recovery models by assessing the reasonableness of underpinning assumptions, inputs and
scenarios, exit strategies, collateral valuations, expected future cashflows formulae used. This included a combination of assessing the appropriateness of
and the timing of these cashflows. model design, model implementation and validation, sensitivity testing and
recalculating the Probability of Default, Loss Given Default and Exposure at
In 2024, the most material factors impacting the ECL were in relation to the Default parameters. Together with our modelling specialists, we also assessed
Commercial Real Estate portfolio in Mainland China and Hong Kong, geopolitical material post-model adjustments that were applied as a response to risks not
uncertainty and the continuing impact of higher interest rates and inflation. fully captured by the models or for known model deficiencies. This included
In addition, we have considered the impact of climate on the impairment the completeness and appropriateness of these adjustments.
provisions.
We did not rely on controls over model monitoring and therefore adopted a
Overall, in line with the prior year the level of judgement and estimation substantive approach comprising reperformance of model monitoring procedures
remains elevated as a result of the factors above and consequently the risk of for models classified as significant or higher risk in accordance with our EY
a material misstatement to the ECL remained consistent with that of the prior independent risk assessment.
year.
In response to the Bank's model simplification program that resulted in a
number of low risk or immaterial models moving to a loss rate approach, we
challenged whether there was a need for an overlay as result of the models no
longer including a forward looking element as required by IFRS 9.
To evaluate data quality, we performed sample testing over the completeness
and accuracy of key data elements assessed to be material to the modelled ECL
output, back to source evidence.
Page 7
Risk Our response to the risk
Credit Impairment continued Economic scenarios - In collaboration with our economists, 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 a sample of macroeconomic
variables most relevant for the Group's ECL calculation. Procedures performed
included benchmarking the forecast for a sample of macroeconomic variables to
peers, historical data and a variety of global external sources. We assessed
the output for a sample of economic variables across different markets from
the Monte Carlo simulation for reasonableness. We reviewed and challenged the
appropriateness of the underlying coding, assumptions, and output of the Monte
Carlo simulation.
We assessed the reasonableness of the non-linearity impact on ECL allowances.
We engaged our economists, 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 on pages 242 and 243 in the
annual report. This challenge included the choice of narrative scenarios and
the weights applied to each scenario. We also performed a stand-back
assessment by benchmarking the uplift 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 Commercial Real Estate in Mainland China and Hong Kong, the increasing
levels of uncertainty in the outlook for Bangladesh given the political
situation and the introduction of a new overlay relating to Bank's exposure to
clients trading on two failed e-commerce platforms in South Korea. Our
procedures included assessing the need for management overlays, evaluating the
assumptions and judgments used to determine the overlays taking current market
conditions into account, and computing independent ranges where appropriate.
In addition, with the support from our climate risk modelling specialists we
evaluated the initial ECL produced by management's models and assessed the
appropriateness of the adjustments to the model output to determine the
overall climate overlay.
Individually assessed ECL allowances - We selected a sample of individually
assessed provisions to recalculate. Our recalculation procedures included
challenging management's forward looking economic assumptions of the recovery
outcomes identified, cashflow profiles and timings and the individual
probability weightings used for each scenario.
We also engaged our valuation specialists to test the value of the collateral
used in management's calculations on a sample basis.
Key observations communicated to the Audit Committee
We communicated that we are satisfied the Bank's ECL provisions were
reasonably estimated and materially in compliance with IFRS 9. We highlighted
the following matters to the Audit Committee that contributed to our overall
conclusion:
• Our evaluation of the appropriateness of the significant increase in
credit risk triggers, and the results of our staging reperformance.
• For individually assessed ECL allowances, the overall reasonableness of
the provisions, including assumptions applied, with a focus on exposures on
Commercial Real Estate in Mainland China and Hong Kong.
• Our assessment of the appropriateness of post model adjustments and
overlays, including overlays relating to Commercial Real Estate in Mainland
China and Hong Kong, and non-linearity.
• Our assessment of the appropriateness of the Group's models to generate
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.
• Our assessment of the appropriateness of the Group's climate models to
compute the impact of climate related risks on the portfolio, noting the
judgmental nature of the output and that these first generation models are
expected to evolve significantly over time.
We also highlighted to the Committee that there remains increased uncertainty
and volatility in determining expected credit losses due to the elevated risks
in the macroeconomic and geopolitical landscape.
How we scoped our audit to respond to the risk and involvement with component
teams
For the purposes of determining the scope of work to be conducted centrally
and by component teams, we considered the following:
• The Bank's material IFRS 9 systems and processes, including modelled
ECL, and where those systems and process were located
• The Groups gross exposure and ECL by jurisdiction
• The Bank's and EY's independent sovereign risk assessment
• Jurisdiction of origin for individual stage 3 exposures
Based on this assessment, we determined that credit related procedures were
required to be performed centrally and by 9 full scope, 5 specific scope and 2
specified scope locations.
The Group audit team`s involvement with the component teams and procedures
performed are detailed in the "Involvement with component teams" section of
our report.
Page 8
Risk Our response to the risk
Basis of accounting and impairment assessment of China Bohai Bank (Interest in We obtained an understanding of management's process and evaluated the design
Associate) of controls. Our audit strategy was fully substantive.
Refer to the Audit Committee Report; Accounting policies; and Note 32 of the Basis of accounting
financial statements
We evaluated the evidence that the Group presented to demonstrate that it
• Interest in Associate - China Bohai Bank $738 million (2023: $700 exercises significant influence over China Bohai Bank, through Board
million). representation, membership of Board Committees and sharing of technical
advice.
• Other impairment - China Bohai Bank - NIL (2023: $850 million).
We observed certain meetings alongside Group management and China Bohai Bank
• Cumulative impairment: $1,459 million (2023: $1,459 million). management to identify facts and circumstances impacting the assessment of
significant influence exercised by the Group.
At 31 December 2024, the Group's share of China Bohai Bank's market
capitalisation was $400m lower than the carrying value of $738m. Impairment testing
We focused on judgements and estimates, including the appropriateness of the We assessed the appropriateness of the Group's VIU methodology for compliance
equity accounting treatment under IAS 28 and the assessment of whether the with the accounting standards. We tested the mathematical accuracy of the VIU
investment was impaired. model and engaged our valuation and modelling specialists to support the audit
team in calculating an independent range for the VIU.
Basis of accounting
We performed audit procedures to assess the reasonableness of the Group's
The Group holds a 16.26 per cent stake in China Bohai Bank and equity accounts forecast of the future cashflows relating to Bohai, and other key assumptions
for the investment as an associate, on the grounds that the Group is able to with regard to the relevance and reliability of data inputs.
exercise significant influence over China Bohai Bank.
We performed a stand-back assessment to determine whether the carrying value
IAS 28 states that if the entity holds, directly or indirectly, less than 20 of the Group's investment in China Bohai Bank was reasonable. We considered
per cent of the voting power of the investee, it is presumed that the entity the macroeconomic environment in China, ratings agency reports and public
does not have significant influence, unless such influence can be clearly disclosures by Bohai. We benchmarked the forecasts to reputable broker reports
demonstrated. published for comparable companies.
There is a risk that the equity accounting treatment may not be appropriate, We assessed the appropriateness of disclosures in the annual report in
if the Group cannot demonstrate that it exerts significant influence over relation to China Bohai Bank, including the impact of reasonably possible
China Bohai Bank. changes in key assumptions on the carrying value of the investment.
The risk in respect of significant influence has not changed compared to the
prior year.
Impairment testing
At 31 December 2024, 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 2024 and
China Bohai Bank did not pay a dividend for a second year.
These matters are indicators of impairment.
Impairment of the investment in China Bohai Bank is determined by comparing
the carrying value to the higher of value in use (VIU) and fair value less
costs to sell. The VIU is modelled by reference to future cashflow forecasts
(forecast profit, including a haircut for regulatory capital), exit multiples,
discount rate and macroeconomic assumptions such as forward market interest
rate curves. The assumptions underpinning management's assessment of the 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.
Key observations communicated to the Audit Committee
On the basis of the evidence, we concluded that the Group continues to
maintain significant influence over China Bohai Bank as at 31 December 2024.We
highlighted our assessment of the impairment methodology, its consistency
year-on-year and our view on significant assumptions to the VIU.
We concluded that the Interest in Associate - China Bohai Bank balance and the
associated financial statement disclosures were not materially misstated as at
31 December 2024.
How we scoped our audit to respond to the risk and involvement with component
teams
We performed centralised audit procedures over the risk, with the support of
the EY Hong Kong and non-EY Component team in performing certain procedures to
address the risk.
The Group audit team`s involvement with the component teams and procedures
performed are detailed in the Involvement with component audit teams' section
of our report.
Page 9
Risk Our response to the risk
Impairment assessment of investments in subsidiary undertakings We obtained an understanding of management's process and evaluated the design
of controls. Our audit strategy was fully substantive.
Impairment of investments in subsidiary undertakings: Accounting policies; and
Note 32 of the financial statements. Refer to the Audit Committee Report. We assessed the appropriateness of the Group's methodology for testing the
impairment of investments in subsidiary undertakings for compliance with
In the Parent Company financial statements as at 31 December 2024, the accounting standards.
investment in subsidiary undertakings balance was $61,593 million (2023:
$60,791 million). We agreed the NAV of the subsidiaries to their carrying value to confirm
impairment or reversal of impairment recognised in the Parent`s Company
On an annual basis, management is required to perform an impairment assessment financial results.
for indicators of impairment in respect of investments in subsidiary
undertakings. Where indicators of impairment are identified, the recoverable We agreed the inputs in the VIU model to their source and tested the
amount of the investment should be estimated. mathematical accuracy of the VIU model. We engaged EY specialists to support
the audit team in assessing reasonableness of the regulatory haircut
The Group identified indicators of impairment of investments in subsidiary adjustment to future profitability forecasts and calculating an independent
undertakings, including macroeconomic and geopolitical factors which have an range for assumptions underlying the VIU calculations, such as the discount
impact on the financial position and performance of the subsidiaries. rate and long-term growth rate.
In assessing for indicators of impairment, among other procedures, management We also reconciled the future profitability forecasts of each subsidiary to
compares the Net Asset Value ('NAV') of the subsidiary to the carrying value the Group's approved Corporate Plan ('the Plan'). We engaged our specialist
of each direct subsidiary of the Parent Company. Where the net assets do not team to determine the reasonableness of the forward macroeconomic inputs used
support the carrying value, the recoverable amount is estimated by determining in the Plan.
the higher of VIU or fair value less cost to sell.
We assessed the appropriateness of disclosures for impairment of investments
Where the recoverable amount is based on the VIU, this is modelled by in subsidiary undertakings in accordance with IAS 36.
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 investments in subsidiaries
balances may be misstated.
The level of risk remains consistent with the prior year.
Key observations communicated to the Audit Committee
Investments in subsidiary undertakings balance reported in the Parent Company
financial statements and the associated disclosures, are not materially
misstated as at 31 December 2024.
How we scoped our audit to respond to the risk and involvement with component
teams
All audit work performed to address this risk was materially undertaken
centrally by the Group audit team.
Page 10
Risk Our response to the risk
Valuation of financial instruments held at fair value with higher risk We evaluated the design and operating effectiveness of controls relating to
characteristics the valuation of financial instruments, including Independent Price
Verification (IPV), model validation, fair value adjustments, and significant
Refer to the Audit Committee Report; Accounting policies; and Note 13 of the deal review.
financial statements.
Among other procedures, we engaged our valuation specialists to assist the
At 31 December 2024, the Group reported financial assets measured at fair audit team in performing the following testing on a risk-assessed sample
value of $348,408 million (2023: $301,976 million), and financial liabilities basis:
at fair value of $167,526 million (2023: $139,157 million), of which financial
assets of $8,053 million (2023: $6,714 million) and financial liabilities of • Test valuations dependent on complex models by independently revaluing
$4,937 million (2023: $2,960 million) are classified as Level 3 in the fair Level 3 and certain Level 2 derivative financial instruments (including those
value hierarchy. embedded within customer accounts, debt securities in issue, and deposits by
banks) to assess the appropriateness of models and the adequacy of assumptions
The fair value of financial instruments with higher risk characteristics and inputs used by the Group;
involves the use of management judgement in the selection of valuation models
and techniques, pricing inputs and assumptions and fair value adjustments. • Test valuations of other Level 3 financial instruments with higher
estimation uncertainty, such as equity shares, loans and advances to
A higher level of estimation uncertainty is involved for financial instruments customers, reverse repurchase agreements and other similar secured lending,
valued using complex models; pricing inputs that have limited observability; and debt securities and other eligible bills. Where appropriate, we compared
and fair value adjustments, including Credit Valuation Adjustments for management's valuation to our own independently developed range;
illiquid counterparties.
• Assessed the appropriateness of pricing inputs as part of the
We considered the following portfolios presented a higher level of estimation
IPV process; and
uncertainty:
• Compared the methodology used for fair value adjustments to current
• Derivatives: Level 3 and certain Level 2 derivatives (including those market practice. We revalued a sample of valuation adjustments, compared
embedded within customer accounts, debt securities market inputs to third party data, and challenged the basis for determining
in issue, and deposits by banks) whose valuation involves the use of complex illiquid credit spreads.
models; and
Where differences between our independent valuation and management's valuation
• Other Level 3 financial instruments: equity shares, loans and advances were outside our thresholds, we performed additional testing to assess the
to customers, reverse repurchase agreements and other similar secured lending, impact on the valuation of financial instruments.
and debt securities and other eligible bills 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.
Key observations communicated to the Audit Committee
We concluded that assumptions used by management to estimate the fair value of
financial instruments with higher risk characteristics, and the recognition of
related income, were reasonable. We highlighted the following matters to the
Audit Committee:
• We did not identify material differences arising from our independent
testing of valuations dependent on complex models;
• The fair values of other Level 3 financial instruments, valued using
pricing inputs with limited observability, were not materially misstated as at
31 December 2024, based on our independent calculations; and
• Valuation adjustments, including Credit Valuation Adjustments for
illiquid counterparties, were appropriate, based on our analysis of market
data and benchmarking of pricing information.
How we scoped our audit to respond to the risk and involvement with component
teams
We performed centralised audit procedures over this risk. These procedures
were performed by the Primary Team and CIB SSC, covering 99.1 per cent of the
risk amount.
In the prior year, our auditor's report included key audit matters in relation
to privileged access management and the valuation of goodwill. In the current
year, following the implementation of management's remediation programme, the
risk relating to privileged access, has reduced below the threshold for being
a key audit matter. Also, due to a reduction of the risk of material
impairment of goodwill, we no longer consider it a key audit matter.
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 $340 million (2023: $274
million), which is 5 per cent (2023: 5 per cent) of adjusted profit before
tax. This reflects statutory profit before tax adjusted for certain
non-recurring items. We believe that adjusted profit before tax provides us
with the most appropriate and relevant measure for the users of the financial
statements, given the Group is profit-making, it is consistent with the wider
industry, and it is the standard for listed and regulated entities. This
increase from prior year is driven by an increase in our materiality basis of
adjusted profit before tax and is reflected in all materiality thresholds
discussed below.
Page 11
We determined materiality for the Parent Company to be $306 million (2023:
$247 million), which represents 90 per cent of Group materiality (2023:90 per
cent) and equates to 0.6 per cent (2023: 0.5 per cent) 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.
Starting basis
· Reported profit before tax - $6,014m
Adjustments
· Non-recurring items: $793m
Materiality
· Adjusted profit before tax - $6,807m
· Materiality of $340m (5% of adjusted profit before tax)
During the course of our audit, we reassessed initial materiality. This
assessment resulted in a higher final materiality calculated based on the
actual financial performance of the Group for the year.
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 assessments, together with our assessment of the
Group's overall control environment, our judgement was that performance
materiality was 50 per cent (2023: 50 per cent) of our planning materiality,
namely $170m (2023: $137m). We have set performance materiality at this
percentage due to a variety of risk factors, such as the expectation of
misstatements, internal control environment considerations, and other factors
such as the global complexity of the Group.
Audit work was undertaken at component locations for the purpose of responding
to the assessed risks of material misstatement of the group financial
statements. 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 $16m to $46m
(2023: $11.4m to $26.2m).
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 $17m (2023: $14m), which is set at
5 per cent 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
set out on pages 1 to 406, including the Strategic report (pages 1 to 46), the
Financial Review (pages 47 to 56), the Sustainability Review (pages 57 to
102), the Directors' report (pages 103 to 191), the Statement of directors'
responsibilities (page 192) and the information not marked as 'audited' in the
Risk review and Capital review section (pages 193 to 274), and the
Supplementary information (pages 381 to 406), other than the financial
statements and our auditor's report thereon. The directors are responsible for
the other information contained within the annual report.
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.
Page 12
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 UK 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 13
• 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 entity 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, India, Republic of Korea,
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 would have resulted in it being
identified as a key audit matter.
Page 14
• 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.
• 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 correspondence from the relevant
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 on 10 May 2024 to audit the financial statements
for the year ending 31 December 2024 and subsequent financial periods.
• The period of total uninterrupted engagement including previous
renewals and reappointments is five years, covering the years ending 31
December 2020 to 31 December 2024.
• 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
21 February 2025
Page 15
Consolidated income statement
For the year ended 31 December 2024
Notes 2024 2023
$million
$million
Interest income 27,862 27,227
Interest expense (21,496) (19,458)
Net interest income 3 6,366 7,769
Fees and commission income 4,623 4,067
Fees and commission expense (889) (815)
Net fee and commission income 4 3,734 3,252
Net trading income 5 9,615 6,292
Other operating income 6 (172) 706
Operating income 19,543 18,019
Staff costs (8,510) (8,256)
Premises costs (401) (422)
General administrative expenses (2,465) (1,802)
Depreciation and amortisation (1,126) (1,071)
Operating expenses 7 (12,502) (11,551)
Operating profit before impairment losses and taxation 7,041 6,468
Credit impairment 8 (547) (508)
Goodwill, property, plant and equipment and other impairment 9 (588) (1,008)
Profit from associates and joint ventures 32 108 141
Profit before taxation 6,014 5,093
Taxation 10 (1,972) (1,631)
Profit for the year 4,042 3,462
Profit attributable to:
Non-controlling interests 29 (8) (7)
Parent company shareholders 4,050 3,469
Profit for the year 4,042 3,462
cents cents
Earnings per share:
Basic earnings per ordinary share 12 141.3 108.6
Diluted earnings per ordinary share 12 137.7 106.2
The notes form an integral part of these financial statements.
Page 16
Consolidated statement of comprehensive income
For the year ended 31 December 2024
Notes 2024 2023
$million
$million
Profit for the year 4,042 3,462
Other comprehensive income
Items that will not be reclassified to income statement: (181) 239
Own credit (losses)/gains on financial liabilities designated at fair value (426) 212
through
profit or loss
Equity instruments at fair value through other comprehensive income 71 181
Actuarial gains/(losses) on retirement benefit obligations 30 52 (47)
Revaluation Surplus 25 -
Taxation relating to components of other comprehensive income/(loss) 10 97 (107)
Items that may be reclassified subsequently to income statement: (389) 562
Exchange differences on translation of foreign operations:
Net losses taken to equity (1,423) (734)
Net gains on net investment hedges 14 678 215
Share of other comprehensive income/(loss) from associates and joint ventures 32 9 (7)
Debt instruments at fair value through other comprehensive income
Net valuation gains taken to equity 283 383
Reclassified to income statement 6 237 115
Net impact of expected credit losses (35) (48)
Cash flow hedges:
Net movements in cash flow hedge reserve 14 (101) 767
Taxation relating to components of other comprehensive income 10 (37) (129)
Other comprehensive (loss)/income for the year, net of taxation (570) 801
Total comprehensive income for the year 3,472 4,263
Total comprehensive income attributable to:
Non-controlling interests 29 (22) (38)
Parent company shareholders 3,494 4,301
Total comprehensive income for the year 3,472 4,263
Page 17
Consolidated balance sheet
As at 31 December 2024
Notes 2024 2023
$million
$million
Assets
Cash and balances at central banks 13,35 63,447 69,905
Financial assets held at fair value through profit or loss 13 177,517 147,222
Derivative financial instruments 13,14 81,472 50,434
Loans and advances to banks 13,15 43,593 44,977
Loans and advances to customers 13,15 281,032 286,975
Investment securities 13 144,556 161,255
Other assets 20 43,468 47,594
Current tax assets 10 663 484
Prepayments and accrued income 3,207 3,033
Interests in associates and joint ventures 32 1,020 966
Goodwill and intangible assets 17 5,791 6,214
Property, plant and equipment 18 2,425 2,274
Deferred tax assets 10 414 702
Retirement benefit schemes in surplus 30 151 -
Assets classified as held for sale 21 932 809
Total assets 849,688 822,844
Liabilities
Deposits by banks 13 25,400 28,030
Customer accounts 13 464,489 469,418
Repurchase agreements and other similar secured borrowing 13,16 12,132 12,258
Financial liabilities held at fair value through profit or loss 13 85,462 83,096
Derivative financial instruments 13,14 82,064 56,061
Debt securities in issue 13,22 64,609 62,546
Other liabilities 23 44,681 39,221
Current tax liabilities 10 726 811
Accruals and deferred income 6,896 6,975
Subordinated liabilities and other borrowed funds 13,27 10,382 12,036
Deferred tax liabilities 10 567 770
Provisions for liabilities and charges 24 349 299
Retirement benefit schemes in deficit 30 266 183
Liabilities included in disposal groups held for sale 21 381 787
Total liabilities 798,404 772,491
Equity
Share capital and share premium account 28 6,695 6,815
Other reserves 8,724 9,171
Retained earnings 28,969 28,459
Total parent company shareholders' equity 44,388 44,445
Other equity instruments 28 6,502 5,512
Total equity excluding non-controlling interests 50,890 49,957
Non-controlling interests 29 394 396
Total equity 51,284 50,353
Total equity and liabilities 849,688 822,844
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 21 February 2025 and signed on its behalf by:
José
Viñals
Bill
Winters
Diego De Giorgi
Group Chairman
Group Chief
Executive
Group Chief Financial Officer
Page 18
Consolidated statement of changes in equity
For the year ended 31 December 2024
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 01 January 2023 5,436 1,494 17,338 (63) (1,116) 206 (564) (7,636) 28,067 43,162 6,504 350 50,016
Profit for the year - - - - - - - - 3,469 3,469 - (7) 3,462
Other comprehensive income/(loss)12 - - - 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 expense, net of taxation - - - - - - - - 173 173 - - 173
Dividends on ordinary shares - - - - - - - - (568) (568) - - (568)
Dividends on preference shares and AT1 securities - - - - - - - - (452) (452) - - (452)
Share buyback3,4 (115) - 115 - - - - - (2,000) (2,000) - - (2,000)
Other movements - - - - - - - 125 6 18 85 1106 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
Profit for the year - - - - - - - - 4,050 4,050 - (8) 4,042
Other comprehensive (loss)/income12 - - - (377) 442 (26)10 (87) (735) 2272,11 (556) - (14) (570)
Distributions - - - - - - - - - - - (43) (43)
Other equity instruments issued, net of expenses - - - - - - - - - - 1,56813 - 1,568
Redemption of other equity instruments - - - - - - - - - - (553)14 - (553)
Treasury shares net movement - - - - - - - - (168) (168) - - (168)
Share option expense, net of taxation - - - - - - - - 269 269 - - 269
Dividends on ordinary shares - - - - - - - - (780) (780) - - (780)
Dividends on preference shares and AT1 securities - - - - - - - - (457) (457) - - (457)
Share buyback8,9 (120) - 120 - - - - - (2,500) (2,500) - - (2,500)
Other movements - - - (1) 7 - - 2105 (131)7 85 (25)14 636 123
As at 31 December 2024 5,201 1,494 17,573 (278) (241) 304 4 (8,638) 28,969 44,388 6,502 394 51,284
1 Includes capital reserve of $5 million, capital redemption reserve of
$457 million and merger reserve of $17,111 million
2 Includes actuarial gain, net of taxation on Group defined benefit
schemes
3 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
4 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
5 Movement related to Translation adjustment and AT1 Securities charges
(2023). December 2024 movement includes realisation of translation adjustment
loss from sale of SCB Zimbabwe Limited ($190 million), SCB Angola S.A. ($31
million), SCB Sierra Leone Limited ($25 million) transferred to other
operating income
6 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) in 2023. Movements in 2024 are primarily from
non-controlling interest pertaining to Mox Bank Limited ($14 million) and
Trust Bank Singapore Limited ($55 million) offset by SCB Angola S.A. ($6
million)
7 Mainly includes movements related to Ghana hyperinflation
8 On 23 February 2024, 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, the total consideration paid was $1,000 million and
the buyback completed on 25 June 2024. The total number of shares purchased
was 113,266,516, representing 4.25 per cent of the ordinary shares in issue at
the beginning of the programme. The nominal value of the shares was
transferred from the share capital to the capital redemption reserve account.
9 On 30 July 2024, the Group announced the buyback programme for a share
buyback of its ordinary shares of $0.50 each. Nominal value of share purchases
was $63 million, as at December 2024 the buyback is ongoing, with the total
number of shares purchased of 126,262,414 representing 4.95 per cent of the
ordinary shares in issue at the beginning of the programme, the total
consideration was $1,355 million, and a further $145 million relating to
irrevocable obligation to buyback shares under the buyback programme has been
recognised. The nominal value of the shares was transferred from the share
capital to the capital redemption reserve account.
10 Includes $174 million gain on sale of equity investment transferred
to retained earnings partly offset by $76 million reversal of deferred tax
liability and $72 million mark-to-market gain on equity instrument
11 Includes $174 million gain on sale of equity investment in other
comprehensive income reserve transferred to retained earnings partly offset by
$13 million capital gain tax
12 All the amounts are net of tax
13 Includes $993 million and $575 million (SGD 750 million) fixed rate
resetting perpetual subordinated contingent convertible AT1 securities issued
by Standard Chartered PLC
14 Relates to redemption of AT1 securities of SGD 750 million ($553
million) and realised translation loss ($25 million) reported in other
movements
Note 28 includes a description of each reserve.
The notes form an integral part of these financial statements.
Page 19
Cash flow statement
For the year ended 31 December 2024
Notes Group Company
2024 2023 2024 2023
$million
$million
$million
$million
Cash flows from operating activities:
Profit before taxation 6,014 5,093 3,424 4,269
Adjustments for non-cash items and other adjustments included within income 34 2,668 3,274 (1,670) (2,847)
statement
Change in operating assets 34 (66,431) (14,458) 682 (3,819)
Change in operating liabilities 34 39,373 1,977 (864) 3,239
Contributions to defined benefit schemes 30 (68) (81) - -
UK and overseas taxes paid 10 (2,045) (1,367) - -
Net cash (used in)/from operating activities (20,489) (5,562) 1,572 842
Cash flows from investing activities:
Internally generated capitalised software 17 (953) (1,124) - -
Disposal of Internally generated Capitalised Software 17 5 - - -
Purchase of property, plant and equipment 18 (456) (159) - -
Disposal of property, plant and equipment 18 56 53 - -
Disposal of held for sale property, plant and equipment 21 53 191 - -
Acquisition of investment associates, and joint ventures 32 (12) (47) - -
Dividends received from subsidiaries, associates and 32,34 36 11 4,101 4,738
joint ventures
Disposal of investment in subsidiaries, associates, and 74 3,603 - -
joint ventures1
Purchase of investment securities (217,448) (229,302) (1,287) (423)
Disposal and maturity of investment securities 230,098 242,585 1,273 2,000
Net cash from investing activities 11,453 15,811 4,087 6,315
Cash flows from financing activities:
Exercise of share options 33 26 33 26
Purchase of own shares (201) (215) (201) (215)
Cancellation of shares including share buyback (2,500) (2,000) (2,500) (2,000)
Premises and equipment lease liability principal payment (205) (234) - -
Issue of Additional Tier 1 Capital net of expenses 28 1,568 - 1,568 -
Redemption of Tier 1 Capital 28 (553) (1,000) (553) (1,000)
Gross proceeds from issue of subordinated liabilities 34 - 18 - -
Interest paid on subordinated liabilities 34 (519) (563) (505) (545)
Repayment of subordinated liabilities 34 (1,517) (2,160) (1,517) (2,160)
Proceeds from issue of senior debts 34 11,044 15,261 3,887 5,105
Repayment of senior debts 34 (11,185) (6,471) (2,619) (2,037)
Interest paid on senior debts 34 (1,366) (1,145) (708) (434)
Net cash inflow from Non-controlling interest 29 55 116 - -
Distributions and dividends paid to non-controlling interests, preference (500) (478) (457) (452)
shareholders and AT1 securities
Dividends paid to ordinary shareholders (780) (568) (780) (568)
Net cash (used in)/from financing activities (6,626) 587 (4,352) (4,280)
Net (decrease)/increase in cash and cash equivalents (15,662) 10,836 1,307 2,877
Cash and cash equivalents at beginning of the year 107,635 97,595 10,294 7,417
Effect of exchange rate movements on cash and (2,045) (796) - -
cash equivalents
Cash and cash equivalents at end of the year 35 89,928 107,635 11,601 10,294
1 2024 balance includes disposal of SCB Zimbabwe Limited ($24 million), SCB
Angola S.A. ($10 million), SCB Sierra Leone Limited ($17 million), Shoal
limited ($17 million) and Autumn life Pte. Ltd ($6 million). 2023 balance
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).
Interest received was $28,224 million (31 December 2023: $27,136 million),
interest paid was $21,776 million (31 December 2023: $18,379 million).
Page 20
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 21
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) (Accounting Standards) 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
• 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)
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:
Page 22
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:
• Taxation (Note 10)
• Goodwill and intangible assets - Goodwill impairment and Capitalisation
of internally generated software intangibles (Note 9 and Note 17)
• Provisions for liabilities and charges - Other provisions (Note 24)
• Legal and regulatory matters (Note 26)
• Retirement benefit obligations (Note 30)
• Share-based payments (Note 31)
Climate change impact on the Group's balance sheet
Climate, and the impact of climate on the Group's balance sheet is considered
as an area which can impact accounting estimates and judgments through the
uncertainty of future events and the impact of that uncertainty on the Group's
assets and liabilities. However, the Group has concluded that Climate Change
does not have a financially material impact at this time.
The Group has assessed the impact of climate risk on the financial report.
This is set out within the Sustainability Overview and Sustainability Review
chapter which incorporate 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, which is integrated across relevant
Principal Risk Types (PRTs) and is managed via the ESGR Risk Type framework.
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.
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, which as of this annual report covers our 12 highest
emitting sectors, manages transition risk. Net zero targets enable the
portfolio managers to work with our clients on their transition and deploy
capital to those clients which are engaged and have adequate transition
pathways. All of these actions manage the Group's transition risk and engage
clients before transition risk manifests itself into credit losses. We have
also evaluated transition risk to achieve net zero in our own operations.
While physical risk is included within the majority of our mortgage lending
decisions, we have applied scenario analysis against the pathways of different
temperature outcomes to examine exposure concentration risk in key markets
subject to the extreme risk of floods and storms to assess the acute physical
risk, and sea level rise to assess the chronic physical risk. Stranded assets
analysis was conducted for residential mortgages to identify properties that
are expected to become uninhabitable and/or unusable due to increased
frequency and intensity of physical risk events from acute and chronic risks.
We assess the physical risk vulnerabilities of our existing sites on a regular
basis and for new sites during the onboarding process. Additionally, we assess
the impact of climate risk on the classification of financial instruments
under IFRS 9, when Environmental, Social or Governance (ESG) triggers may
affect the cash flows received by the Group under the contractual terms of
the instrument.
The ESGR Risk team has performed a quantitative assessment of the impact of
climate risk on the IFRS 9 ECL provision. This assessment has been performed
across both the CIB and WRB portfolios. The Climate risk impact assessment on
IFRS 9 business as usual ECL has been conducted based on newly developed and
enhanced internal climate risk models for corporates across six priority
sectors (Oil and Gas, Power, Steel, Mining, Shipping, and Automotive), one
Generic model for the remaining corporate sectors and Sovereigns, while the
top-down approach developed in 2022 was used for the remaining portfolios. The
impact assessment, which primarily focused on transition risk, resulted in
only a marginal ECL increase across CIB and WRB, which has been recorded as a
management overlay for the 2024 year end.
Page 23
The Group's corporate plan has a 5 year outlook and considers the highest
emitting sectors the Group finances. The majority of the Group 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, while
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 third
time in the 2025 corporate plan included anticipated credit impairment
charges, now across seven sectors (Oil and Gas, Metals and Mining, Power, and
Transport, along with Cement, Automobile, and Commercial Real Estate which
have been newly added this year). This addition of credit impairment has not
in itself, materially impacted the recoverability of assets supported by
discounted cash flow models (such as Value in Use) which utilise the Corporate
plan.
The Group has 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 across CIB and WRB
portfolios. While we have taken the first step in our journey to transition
from our reliance on vendor models to in-house capabilities, challenges
underpin the scenario analysis, such as reliance on nascent methodologies,
dependencies on first generation models and data limitations. 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 is
expected to 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.
Standard Chartered PLC has fully complied with the new treasury share regime
introduced under the revised Hong Kong Listing Rules from 11 June 2024 onwards
and will continue to comply with the new regime.
New accounting standards in issue but not yet effective
There were no new accounting standards or interpretations that had a material
effect on the Group's Financial Statements in 2024.
IAS 21 Amendment - Lack of Exchangeability
In August 2023, the IASB issued amendments to IAS 21 The Effects of Changes in
Foreign Exchange Rates to specify how an entity should assess whether a
currency is exchangeable and how it should determine a spot exchange rate when
exchangeability is lacking. The amendments also require disclosure of
information that enables users to understand the impact of a currency not
being exchangeable. The amendments will be effective for annual reporting
periods beginning on or after 1 January 2025. The amendment is not expected to
have a material impact on the Group's financial statements.
IFRS 18 Presentation and Disclosure in Financial Statements
The new standard IFRS 18 was issued in April 2024 and is effective for annual
reporting periods beginning on or after January 1, 2027 but earlier
application is permitted. This new standard replaces IAS 1 Presentation of
Financial Statements and amends IAS 7 Statement of Cash Flows. IFRS 18
introduces three defined categories for income and expenses-operating,
investing and financing-to improve the structure of the income statement, and
requires all companies to provide new defined subtotals, including operating
profit. IFRS 18 will require disclosure of explanations of company-specific
measures that are related to the income statement, referred to as
management-defined performance measures. IFRS 18 sets out enhanced guidance on
how to organise information and whether to provide it in the primary financial
statements or in the notes. The Group will apply IFRS 18 for annual reporting
periods beginning on January 1, 2027 and is currently not expected to have a
material impact on the Group's financial statements other than a change in the
presentation of the primary statements.
Page 24
IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures
Amendments
In May 2024, the IASB issued Amendments to the Classification and Measurement
of Financial Instruments which amended requirements related to settling
financial liabilities using an electronic payment system and assessing
contractual cash flow characteristics of financial assets, including those
with environmental, social and governance (ESG)-linked features. The IASB also
amended disclosure requirements relating to investments in equity instruments
designated at fair value through other comprehensive income and added
disclosure requirements for financial instruments with contingent features
that do not relate directly to basic lending risks and costs. The amendments
will be effective for annual reporting periods beginning on or after 1 January
2026. The amendments are not expected to have a material impact on the Group's
financial statements.
Going concern
These financial statements were approved by the Board of directors on 21
February 2025. 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, including the annual
budget
• An assessment of the actual performance to date, loan book quality,
credit impairment, legal and regulatory matters, compliance matters, recent
regulatory developments
• 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
• Analysis of the capital 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
• Analysis of the funding and liquidity position of the Group, including
the 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. Further, funding and liquidity was considered in the context of the
risk appetite metrics, including the LCR ratio
• 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
• The Group's portfolio of debt securities held at amortised cost
• A detailed review of all principal risks as well as topical 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 21 February 2025.
For this reason, the Group continues to adopt the going concern basis of
accounting for preparing the financial statements.
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.
Client segments
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.
Page 25
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 loss of $441 million primarily relate to the exits in AME,
Aviation finance business and reflect the impact of actions to transform the
organisation to improve productivity, primarily additional redundancy charges,
simplifying technology platforms and optimising the Group's office space and
property footprint, Fit For Growth costs that are primarily severance costs,
costs of staff working on FFG initiatives and legal and professional fees. The
Group is also reclassifying the movements in the Debit Valuation Adjustment
(DVA) into restructuring and other items.
Reconciliations between underlying and reported results are set out in the
tables below:
2024
Underlying Restructuring³ Net (loss)/Gain on businesses disposed of/ Goodwill impairment⁴ Other items2 DVA Reported
$million
$million
held for sale1
$million
$million
$million
$million
$million
Operating income 19,696 103 (232) - - (24) 19,543
Operating expenses (11,790) (612) - - (100) - (12,502)
Operating profit/(loss) before impairment losses and taxation 7,906 (509) (232) - (100) (24) 7,041
Credit impairment (557) 10 - - - - (547)
Other impairment (588) - - - - - (588)
Profit from associates and joint ventures 50 58 - - - - 108
Profit/(loss) before taxation 6,811 (441) (232) - (100) (24) 6,014
2023
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
1 Net loss on businesses disposed of/ held for sale 2024 includes $172 million
primarily relating to recycling of FX translation losses from reserves into
P&L on the sale of Zimbabwe, $26 million loss on sale of Angola, $19
million loss on Sierra Leone Partial exit and $15 million loss on the Aviation
business disposal
2 Other items 2024 include $100 million charge relating to Korea equity linked
securities (ELS) portfolio
3 Restructuring Operating expenses 2024 includes $156m of Fit For Growth costs
that are primarily severance costs, costs of staff working on FFG initiatives
and legal and professional fees
4 Goodwill and other impairment include $850 million impairment charge
relating to the Group's investment in its associate China Bohai Bank (Bohai)
Page 26
Underlying performance by client segment
2024 2023
Corporate & Investment Banking Wealth & Retail Banking Ventures Central & other items Total Corporate & Investment Banking Wealth & Retail Banking Ventures Central & other items Total
$million
$million
$million
$million
$million
$million
$million
$million
$million
$million
Operating income 11,818 7,816 183 (121) 19,696 11,218 7,106 156 (1,102) 17,378
External 10,363 3,328 184 5,821 19,696 8,543 3,902 157 4,776 17,378
Inter-segment 1,455 4,488 (1) (5,942) - 2,675 3,204 (1) (5,878) -
Operating expenses (6,033) (4,589) (464) (704) (11,790) (5,627) (4,261) (429) (819) (11,136)
Operating profit/(loss) before impairment losses and taxation 5,785 3,227 (281) (825) 7,906 5,591 2,845 (273) (1,921) 6,242
Credit impairment 106 (644) (74) 55 (557) (123) (354) (85) 34 (528)
Other impairment (310) (120) (18) (140) (588) (32) (4) (26) (68) (130)
Profit from associates and joint ventures - - (17) 67 50 - - (24) 118 94
Underlying profit/(loss) 5,581 2,463 (390) (843) 6,811 5,436 2,487 (408) (1,837) 5,678
before taxation
Restructuring (179) (170) (3) (89) (441) 32 (60) (4) 18 (14)
Goodwill and other impairment⁴ - - - - - - - - (850) (850)
DVA (24) - - - (24) 17 - - - 17
Other items³ - (100) - (232) (332) 262 - - - 262
Reported profit/(loss) 5,378 2,193 (393) (1,164) 6,014 5,747 2,427 (412) (2,669) 5,093
before taxation
Total assets 485,662 122,404 6,399 235,223 849,688 403,058 128,768 4,009 287,009 822,844
Of which: loans and 197,608 119,242 1,388 21,319 339,557 189,395 126,117 1,035 28,939 345,486
advances to customers
loans and advances 139,089 119,236 1,388 21,319 281,032 130,897 126,104 1,035 28,939 286,975
to customers
loans held at fair value through profit or loss (FVTPL)1 58,519 6 - - 58,525 58,498 13 - - 58,511
Total liabilities 476,502 220,501 5,277 96,124 798,404 464,968 200,263 3,096 104,164 772,491
Of which: customer accounts2 297,005 216,476 5,028 4,754 523,263 328,211 195,678 2,825 7,908 534,622
1 Loans held at FVTPL includes $51,441 million (2023: $51,299 million) of
reverse repurchase agreements
2 Customer accounts includes $21,772 million (2023: $17,248 million) of FVTPL
and $37,002 million (2023: $47,956 million) of repurchase agreements
3 Other items 2024 includes $100 million charge relating to Korea equity
linked securities (ELS) portfolio, $172 million primarily relating to
recycling of FX translation losses from reserves into P&L on the sale of
Zimbabwe, $26 million loss on sale of Angola, $19 million loss on Sierra Leone
Partial exit and $15 million loss on the Aviation business disposal
4 Goodwill and other impairment include $850 million impairment charge
relating to the Group's investment in its associate China Bohai Bank (Bohai)
Operating income by client segment
2024 2023
Corporate & Investment Banking Wealth & Retail Banking Ventures Central & other items Total Corporate & Investment Banking Wealth & Retail Banking Ventures Central & other items Total
$million
$million
$million
$million
$million
$million
$million
$million
$million
$million
Underlying versus reported:
Underlying operating income 11,818 7,816 183 (121) 19,696 11,218 7,106 156 (1,102) 17,378
Restructuring 69 23 - 11 103 291 45 - 26 362
DVA (24) - - - (24) 17 - - - 17
Other items1 - - - (232) (232) 262 - - - 262
Reported operating income 11,863 7,839 183 (342) 19,543 11,788 7,151 156 (1,076) 18,019
Additional segmental income:
Net interest income 2,090 5,175 100 (999) 6,366 4,541 4,970 81 (1,823) 7,769
Net fees and commission income 1,938 1,855 52 (111) 3,734 1,753 1,538 43 (82) 3,252
Net trading and other income 7,835 809 31 768 9,443 5,494 643 32 829 6,998
Reported operating income 11,863 7,839 183 (342) 19,543 11,788 7,151 156 (1,076) 18,019
1 Other items 2024 includes $172 million primarily relating to recycling of FX
translation losses from reserves into P&L on the sale of Zimbabwe, $26
million loss on sale of Angola, $19 million loss on Sierra Leone Partial exit
and $15 million loss on the Aviation business disposal
Page 27
Additional segmental information (reported)
2024
Hong Kong Korea China Taiwan Singapore India UAE UK US Other Group
$million
$million
$million
$million
$million
$million
$million
$million
$million
$million
$million
Net interest income 790 723 410 177 462 646 369 (1,002) 540 3,251 6,366
Net fees and commission income 726 185 181 212 716 236 99 112 480 787 3,734
Net trading and other income 3,281 177 736 188 1,395 441 369 1,168 268 1,420 9,443
Operating income 4,797 1,085 1,327 577 2,573 1,323 837 278 1,288 5,458 19,543
2023
Net interest income 1,946 684 520 154 937 654 390 (930) 170 3,244 7,769
Net fees and commission income 615 171 149 182 576 221 81 18 441 798 3,252
Net trading and other income 2,052 216 487 214 929 330 330 1,277 263 900 6,998
Operating income 4,613 1,071 1,156 550 2,442 1,205 801 365 874 4,942 18,019
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.
2024 2023
$million
$million
Balances at central banks 2,520 2,833
Loans and advances to banks 2,368 2,095
Loans and advances to customers 16,179 15,518
Debt securities 5,165 5,005
Other eligible bills 1,495 1,596
Accrued on impaired assets (discount unwind) 135 180
Interest income 27,862 27,227
Of which: financial instruments held at fair value through other comprehensive 3,773 3,445
income
Deposits by banks 806 796
Customer accounts1 16,276 14,292
Debt securities in issue 3,610 3,367
Subordinated liabilities and other borrowed funds 744 951
Interest expense on IFRS 16 lease liabilities 60 52
Interest expense 21,496 19,458
Net interest income 6,366 7,769
1 Deposit insurance premiums of $147 million have been reclassified from
customer accounts related interest expense to general operating expenses in
2024. The prior year has not been reclassified as it is not deemed material
Page 28
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.
Global 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.
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.
Page 29
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.
2024 2023
$million
$million
Fees and commissions income 4,623 4,067
Of which:
Financial instruments that are not fair valued through profit or loss 1,436 1,374
Trust and other fiduciary activities 632 508
Fees and commissions expense (889) (815)
Of which:
Financial instruments that are not fair valued through profit or loss (245) (169)
Trust and other fiduciary activities (50) (52)
Net fees and commission 3,734 3,252
2024 2023
Corporate & Investment Banking $million Wealth & Retail Banking $million Ventures $million Central & other items $million Total $million Corporate & Investment Banking $million Wealth & Retail Banking $million Ventures $million Central & other items $million Total $million
Transaction Services 1,456 26 - - 1,482 1,415 25 - - 1,440
Payments and Liquidity 634 - - - 634 567 - - - 567
Securities Services 254 - - - 254 271 - - - 271
Trade & Working Capital 568 26 - - 594 577 25 - - 602
Global Banking 937 - - - 937 694 - - - 694
Lending & Financial Solutions 633 - - - 633 499 - - - 499
Capital Market & Advisory 304 - - - 304 195 - - - 195
Global Markets 36 - - - 36 55 - - - 55
Macro Trading (3) - - - (3) (20) - - - (20)
Credit Trading 40 - - - 40 69 - - - 69
Valuation & Other Adj (1) - - - (1) 6 - - - 6
Wealth solutions - 1,598 2 - 1,600 - 1,225 - - 1,225
Investment Products - 929 2 - 931 - 633 - - 633
Bancassurance - 669 - - 669 - 592 - - 592
CCPL & Other Unsecured Lending - 321 42 - 363 - 372 32 - 404
Deposits - 143 2 - 145 - 163 - - 163
Mortgages & Other Secured Lending - 79 - - 79 - 70 - - 70
Treasury - - - (22) (22) - - - (15) (15)
Other Products - 1 32 (30) 3 - 2 35 (6) 31
Fees and commission income 2,429 2,168 78 (52) 4,623 2,164 1,857 67 (21) 4,067
Fees and commission expense (491) (313) (26) (59) (889) (411) (319) (24) (61) (815)
Net fees and commission 1,938 1,855 52 (111) 3,734 1,753 1,538 43 (82) 3,252
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 $419 million (31
December 2023: $474 million). Following renegotiation of the contract in
2023, the life of the contract was extended for a further 3 years and the
income will be earned evenly till June 2032. For the twelve months ended 31
December 2024, $56 million of fee income was released from deferred income (31
December 2023: $75 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.
Page 30
Income is recognised from the sale and purchase of trading positions, margins
on market making and customer business and fair value changes.
2024 2023
$million
$million
Net trading income 9,615 6,292
Significant items within net trading income include:
Gains on instruments held for trading1 7,418 4,625
Gains on financial assets mandatorily at fair value through profit or loss 5,392 4,270
Gains on financial assets designated at fair value through profit or loss 8 10
Losses on financial liabilities designated at fair value through profit or (3,252) (2,649)
loss
1 Includes $583 million gain (31 December 2023: $299 million loss) from the
translation of foreign currency monetary assets and liabilities, out of which
$157 million (31 December 2023: $nil) relates to Egypt FX revaluation impact
6. Other operating income
2024 2023
$million
$million
Other operating income includes:
Rental income from operating lease assets 40 375
Net loss on disposal of fair value through other comprehensive income debt (237) (115)
instruments
Net loss on amortized cost financial assets (27) (94)
Net (loss)/gain on sale of businesses¹ (210) 351
Dividend income 5 15
Other² 257 174
Other operating income (172) 706
1 2024 includes loss on disposal of Africa subsidiaries $217 million (SCB
Zimbabwe Limited: $172 million, SCB Angola S.A.: $26 million and SCB Sierra
Leone Limited: $19 million) of which $246 million relates to realization of
translation adjustment loss, partly offset by gain of $17 million from
disposal of Venture entities (Shoal limited and Autumn life Pte. Ltd), Total
cash consideration received was $74 million (SCB Zimbabwe Limited: $24
million, SCB Angola S.A.: $10 million, SCB Sierra Leone Limited: $17 million,
Shoal Limited: $17 million and Autumn life Pte. Ltd: $6 million). 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 Africa subsidiary
2 2024 includes IAS 29 adjustment Ghana hyperinflationary impact ($139
million), research and development expenditure credit ($32 million),
rebates/incentives received from VISA card ($25 million), Gain on disposal of
property plant and equipment ($23 million), mark-to-market gains from deferred
compensation income ($17 million), and immaterial balances across other
geographies. 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
2024 2023
$million
$million
Staff costs:
Wages and salaries 6,567 6,459
Social security costs 246 233
Other pension costs (Note 30) 451 431
Share-based payment costs (Note 31) 334 226
Other staff costs 912 907
8,510 8,256
Premises and equipment expenses: 401 422
General administrative expenses:
UK bank levy 90 111
Other general administrative expenses 2,375 1,691
2,465 1,802
Depreciation and amortisation:
Property, plant and equipment:
Premises 299 315
Equipment 128 103
Operating lease assets - 27
427 445
Intangibles:
Software 695 625
Acquired on business combinations 4 1
1,126 1,071
Total operating expenses 12,502 11,551
Other staff costs include redundancy expenses of $186 million (31 December
2023: $106 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.
Page 31
Transactions with directors, officers and other related parties are disclosed
in Note 36.
Operating expenses include research expenditures of $1,187 million (31
December 2023: $996 million), which was recognized as an expense in the year
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 and0.05 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.
Page 32
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.
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.
Page 33
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).
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 & Investment Banking 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.
Page 34
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 geopolitical
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.
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.
Page 35
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.
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.
2024 2023
$million
$million
Net credit impairment on loans and advances to banks and customers 590 606
Net credit impairment on debt securities1 (58) (50)
Net credit impairment relating to financial guarantees and loan commitments 18 (48)
Net credit impairment relating to other financial assets (3) -
Credit impairment1 547 508
1 Includes impairment release of $14 million (2023: $1 million charge) on
originated credit-impaired debt securities
Page 36
9. Goodwill, property, plant and equipment and other impairment
Accounting policy
Refer to the below referenced notes for the relevant accounting policy.
2024 2023
$million
$million
Impairment of property, plant and equipment (Note 18) 11 12
Impairment of other intangible assets (Note 17) 561 112
Other 16 884¹
Goodwill, fixed assets and other impairment 588 1,008
1 Includes $850 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, as well as banking industry challenges and
property market uncertainties in China, that may impact Bohai's future
profitability
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:
2024 2023
$million
$million
The charge for taxation based upon the profit for the year comprises:
Current tax:
United Kingdom corporation tax at 25 per cent (2023: 23.5 per cent):
Current tax charge on income for the year 16 (48)
Adjustments in respect of prior years (including double tax relief) 1 14
Foreign tax:
Current tax charge on income for the year 1,752 1,695
Adjustments in respect of prior years (8) (11)
1,761 1,650
Deferred tax:
Origination/reversal of temporary differences 198 (22)
Adjustments in respect of prior years 13 3
211 (19)
Tax on profits on ordinary activities 1,972 1,631
Effective tax rate 32.8% 32.0%
Page 37
The tax charge for the year of $1,972 million (31 December 2023: $1,631
million) on a profit before tax of $6,014 million (31 December 2023: $5,093
million) reflects the impact of tax losses for which no deferred tax assets
are recognised, non-creditable withholding taxes and other taxes and
non-deductible expenses. These are partly offset by countries with tax rates
lower than the UK, the most significant of which are Hong Kong and Singapore,
and tax exempt income.
Foreign tax includes current tax of $272 million (31 December 2023: $201
million) on the profits assessable in Hong Kong. Deferred tax includes
origination or reversal of temporary differences of $8 million (31 December
2023: $nil million) provided at a rate of 16.5 per cent (31 December 2023:
16.5 per cent) on the profits assessable in Hong Kong.
The Group falls within the Pillar Two global minimum tax rules which apply in
the UK from 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. The current tax charge for the period ended 31
December 2024 includes $17m in respect of Pillar Two income taxes
(31 December 2023: N/A).
Tax rate: The tax charge for the year is higher than the charge at the rate of
corporation tax in the UK, 25 per cent. The differences are explained below:
2024 2023
$million % $million %
Profit on ordinary activities before tax 6,014 5,093
Tax at 25 per cent (2023: 23.5 per cent) 1,504 25.0 1,197 23.5
Lower tax rates on overseas earnings (425) (7.1) (330) (6.5)
Higher tax rates on overseas earnings 269 4.5 306 6.0
Tax at domestic rates applicable where profits earned 1,348 22.4 1,173 23.0
Non-creditable withholding taxes and other taxes 260 4.3 85 1.7
Tax exempt income (133) (2.2) (131) (2.6)
Share of associates and joint ventures (6) (0.1) (14) (0.3)
Non-deductible expenses 243 4.0 219 4.3
Bank levy 23 0.4 26 0.5
Non-taxable losses on investments1 35 0.6 64 1.3
Payments on financial instruments in reserves (72) (1.2) (68) (1.3)
Deferred tax not recognised 298 5.0 278 5.4
Deferred tax rate changes (3) - (1) -
Adjustments to tax charge in respect of prior years 6 0.1 6 0.1
Other items (27) (0.5) (6) (0.1)
Tax on profit on ordinary activities 1,972 32.8 1,631 32.0
1 2024 Includes tax impact of $55m (2023:$nil) relating to loss on sale of
subsidiaries in Africa and $nil relating to China Bohai impairment
(2023:$140m).
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 2024 2023
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 (16) 113 97 - (107) (107)
Own credit adjustment 1 49 50 - (49) (49)
Equity instruments at fair value through other comprehensive income (17) 76 59 - (69) (69)
Retirement benefit obligations - (12) (12) - 11 11
Items that may be reclassed subsequently to income statement (7) (30) (37) - (129) (129)
Debt instruments at fair value through other comprehensive income (7) (44) (51) - (17) (17)
Cash flow hedges - 14 14 - (112) (112)
Total tax credit/(charge) recognised (23) 83 60 - (236) (236)
in equity
Page 38
Current tax: The following are the movements in current tax during the year:
Current tax comprises: 2024 2023
$million
$million
Current tax assets 484 503
Current tax liabilities (811) (583)
Net current tax opening balance (327) (80)
Movements in income statement (1,761) (1,650)
Movements in other comprehensive income (23) -
Taxes paid 2,045 1,367
Other movements 3 36
Net current tax balance as at 31 December (63) (327)
Current tax assets 663 484
Current tax liabilities (726) (811)
Total (63) (327)
Deferred tax: The following are the major deferred tax liabilities and assets
recognised by the Group and movements thereon during the year:
Deferred tax comprises: At 1 January 2024 Exchange & other (Charge)/credit (Charge)/credit At 31 December 2024
$million
adjustments
to profit
to equity
$million
$million
$million
$million
Accelerated tax depreciation (424) 7 40 (3) (380)
Impairment provisions on loans and advances 286 (2) (94) - 190
Tax losses carried forward 97 (24) 1 - 74
Equity Instruments at Fair value through other comprehensive income (144) 6 - 76 (62)
Debt Instruments at Fair value through other comprehensive income 27 3 (16) (44) (30)
Cash flow hedges (25) 2 - 14 (9)
Own credit adjustment (71) 26 - 49 4
Retirement benefit obligations 4 (5) 6 (12) (7)
Share-based payments 43 (1) 12 - 54
Other temporary differences 139 (1) (160) 35 13
Net deferred tax assets (68) 11 (211) 115 (153)
At 1 January 2023 Exchange & other adjustments (Charge)/credit (Charge)/credit At 31 December 2023
$million
$million
to profit
to equity
$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
Cash flow 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 65 84 19 (236) (68)
Page 39
Deferred tax comprises assets and liabilities as follows:
2024 2023
Total Asset Liability Total Asset Liability
$million
$million
$million
$million
$million
$million
Deferred tax comprises:
Accelerated tax depreciation (380) 19 (399) (424) 3 (427)
Impairment provisions on loans and advances 190 139 51 286 282 4
Tax losses carried forward 74 51 23 97 49 48
Equity Instruments at Fair value through other comprehensive income (62) (12) (50) (144) (1) (143)
Debt Instruments at Fair value through other comprehensive income (30) (14) (16) 27 29 (2)
Cash flow hedges (9) - (9) (25) 12 (37)
Own credit adjustment 4 4 - (71) (1) (70)
Retirement benefit obligations (7) 16 (23) 4 13 (9)
Share-based payments 54 12 42 43 9 34
Other temporary differences 13 199 (186) 139 307 (168)
(153) 414 (567) (68) 702 (770)
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 $74 million relating to tax losses carried forward, of which $23
million arises in legal entities with offsetting deferred tax liabilities. The
remaining deferred tax assets on losses of $51 million are forecast to be
recovered before expiry and within five years.
Unrecognised deferred tax
Net Gross Net Gross
2024
2024
2023
2023
$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 and (611) (6,827) (653) (7,685)
associates
Tax losses 2,494 10,414 2,242 9,326
Held over gains on incorporation of overseas branches (360) (1,366) (366) (1,389)
Other temporary differences 356 1,363 397 1,516
11. Dividends
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.
Dividends on equity instruments are recognized as a liability once they have
been declared and no longer at the discretion of the directors, and in certain
situations, approved by shareholders.
Ordinary equity shares
2024 2023
Cents per share $million Cents per share $million
2023/2022 final dividend declared and paid during the year 21 551 14 401
2024/2023 interim dividend declared and paid during the year 9 229 6 167
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.
2024 recommended final ordinary equity share dividend
The 2024 final ordinary equity share dividend recommended by the Board is 28
cents per share. The financial statements for the year ended 31 December 2024
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
2025.
The dividend will be paid in either pounds sterling, Hong Kong dollars or US
dollars on 19 May 2025 to shareholders on the UK and HK register of members at
the close of business in the UK on 28 March 2025.
Page 40
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.
2024 2023
$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 54 50
107 103
Additional Tier 1 securities: fixed rate resetting perpetual subordinated 350 349
contingent convertible securities
457 452
1 Floating rate is based on Secured Overnight Financing Rate (SOFR), average
rate paid for floating preference shares is 7.21% (2023: 6.62%)
12. Earnings per ordinary share
Accounting policy
The Group also measures earnings per share on an underlying basis. This
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.
2024 2023
$million
$million
Profit for the period attributable to equity holders 4,042 3,462
Non-controlling interest 8 7
Dividend payable on preference shares and AT1 classified as equity (457) (452)
Profit for the period attributable to ordinary shareholders 3,593 3,017
Items normalised¹:
Restructuring 441 14
Goodwill & other impairment - 850
Net loss/(gain) on sale of businesses 232 (262)
DVA 24 (17)
Other items 100 -
Tax on normalised items (114) (21)
Underlying profit attributable to ordinary shareholders 4,276 3,581
Basic - weighted average number of shares (millions) 2,543 2,778
Diluted - weighted average number of shares (millions) 2,610 2,841
Basic earnings per ordinary share (cents) 141.3 108.6
Diluted earnings per ordinary share (cents) 137.7 106.2
Underlying basic earnings per ordinary share (cents) 168.1 128.9
Underlying diluted earnings per ordinary share (cents) 163.8 126.0
1 Refer note 2 segmental information for normalised items
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 the 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 SC PLC totalling 59 million
(2023: 56 million). The total number of share options outstanding, under
schemes considered to be potentially dilutive, was 7 million (2023: 7
million). These options have strike prices ranging from $3.93 to $7.64.
Of the total number of employee share options and share awards at 31 December
2024 there were nil share options and share awards which were anti-dilutive.
The 235 million decrease (2023: 188 million decrease) in the basic weighted
average number of shares is primarily due to the impact of the share buyback
programmes completed in the year.
Page 41
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 flows.
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
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 • Global Banking • Loans and advances
the contractual cash flows over the term of the instrument primary income stream
• Transaction Banking • Debt securities
• Performing credit risk management activities
• Retail Lending
• Costs include funding costs, transaction costs and
impairment losses • 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 • Treasury 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
• Reverse repos
• Income streams are from fair value changes or trading gains or losses
• Bond and Loan Syndication
Page 42
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.
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 separately value, and thus
bifurcate, 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.
Page 43
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.
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. In those cases 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, it will be recognised in profit or loss 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 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.
Page 44
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.
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.
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 45
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 cost
$million
$million
Trading Derivatives held for hedging Non-trading mandatorily Designated Fair value Total financial assets at
$million
$million
at fair value through profit or loss
at fair value through profit or loss
through other comprehensive income
fair value
$million
$million
$million
$million
Cash and balances at central banks¹ - - - - - - 63,447 63,447
Financial assets held at fair value through profit or loss
Loans and advances to banks2 2,213 - - - - 2,213 - 2,213
Loans and advances to customers2 6,912 - 172 - - 7,084 - 7,084
Reverse repurchase agreements and other similar secured lending 16 336 - 85,859 - - 86,195 - 86,195
Debt securities, alternative tier one and other eligible bills 76,329 - 140 70 - 76,539 - 76,539
Equity shares 5,285 - 201 - - 5,486 - 5,486
Other assets - - - - - - - -
91,075 - 86,372 70 - 177,517 - 177,517
Derivative financial instruments 14 78,906 2,566 - - - 81,472 - 81,472
Loans and advances to banks2,3 15 - - - - - - 43,593 43,593
of which - reverse repurchase agreements and other similar secured lending 16 - - - - - - 2,946 2,946
Loans and advances to customers2 15 - - - - - - 281,032 281,032
of which - reverse repurchase agreements and other similar secured lending 16 - - - - - - 9,660 9,660
Investment securities
Debt securities, alternative tier one and other eligible bills - - - - 88,425 88,425 55,137 143,562
Equity shares - - - - 994 994 - 994
- - - - 89,419 89,419 55,137 144,556
Other assets 20 - - 34,585 34,585
Assets held for sale 21 - - - 5 - 5 884 889
Total at 31 December 2024 169,981 2,566 86,372 75 89,419 348,413 478,678 827,091
Cash and balances at central banks¹ - 69,905 69,905
Financial assets held at fair value through profit or loss
Loans and advances to banks2 2,265 - - - - 2,265 - 2,265
Loans and advances to customers2 6,930 - 282 - - 7,212 - 7,212
Reverse repurchase agreements and other similar secured lending 16 9,997 - 71,850 - - 81,847 - 81,847
Debt securities, alternative tier one and other eligible bills 52,776 - 98 78 - 52,952 - 52,952
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 to banks2,3 15 - - - - - - 44,977 44,977
of which - reverse repurchase agreements and other similar secured lending 16 - - - - - - 1,738 1,738
Loans and advances to customers2 15 - - - - - - 286,975 286,975
of which - reverse repurchase agreements and other similar secured lending - - - - - - 13,996 13,996
Investment securities
Debt securities, alternative tier one and other eligible bills - - - - 103,328 103,328 56,935 160,263
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 Comprises cash held at central banks in restricted accounts of $ 7,799
million (2023: $ 6,153 million), or on demand, or placements which are
contractually due to mature over-night 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
3 Loans and advances to banks include amounts due on demand from banks other
than central banks
Page 46
Liabilities Notes Liabilities at fair value Amortised cost Total
$million
$million
Trading Derivatives held for hedging Designated at fair value through profit or loss Total
$million
$million
$million
financial liabilities at
fair value
$million
Financial liabilities held at fair value through profit or loss
Deposits by banks - - 1,893 1,893 - 1,893
Customer accounts - - 21,772 21,772 - 21,772
Repurchase agreements and other similar 16 925 - 32,614 33,539 - 33,539
secured borrowing
Debt securities in issue 22 1 - 13,730 13,731 - 13,731
Short positions 14,527 - - 14,527 - 14,527
Other liabilities - - - - - -
15,453 - 70,009 85,462 - 85,462
Derivative financial instruments 14 80,037 2,027 - 82,064 - 82,064
Deposits by banks - - - - 25,400 25,400
Customer accounts - - - - 464,489 464,489
Repurchase agreements and other similar secured borrowing 16 - - - - 12,132 12,132
Debt securities in issue 22 - - - - 64,609 64,609
Other liabilities 23 - - - - 44,047 44,047
Subordinated liabilities and other borrowed funds 27 - - - - 10,382 10,382
Liabilities included in disposal groups held for sale 21 - - - - 360 360
Total at 31 December 2024 95,490 2,027 70,009 167,526 621,419 788,945
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
Deposits by banks - - - - 28,030 28,030
Customer accounts - - - - 469,418 469,418
Repurchase agreements and other similar secured borrowing 16 - - - - 12,258 12,258
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
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 47
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.
Gross amounts Impact of Net amounts Related amount not offset Net amount
of recognised financial
offset in the
of financial instruments presented in the balance sheet
in the balance sheet
$million
instruments
balance sheet
$million
$million
$million
Financial instruments Financial
$million
collateral
$million
At 31 December 2024
Derivative financial instruments 97,902 (16,430) 81,472 (60,280) (15,005) 6,187
Reverse repurchase agreements and other similar secured lending 137,115 (38,314) 98,801 - (98,801) -
Total Assets 235,017 (54,744) 180,273 (60,280) (113,806) 6,187
Derivative financial instruments 98,494 (16,430) 82,064 (60,280) (11,046) 10,738
Repurchase agreements and other similar secured borrowing 83,985 (38,314) 45,671 - (45,671) -
Total Liabilities 182,479 (54,744) 127,735 (60,280) (56,717) 10,738
At 31 December 2023
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) -
Total Assets 209,342 (61,327) 148,015 (39,293) (106,021) 2,701
Derivative financial instruments 105,556 (49,495) 56,061 (39,293) (10,337) 6,431
Repurchase agreements and other similar secured borrowing 65,373 (11,832) 53,541 - (53,541) -
Total Liabilities 170,929 (61,327) 109,602 (39,293) (63,878) 6,431
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 such opinion
• 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
2024 2023
$million
$million
Carrying Balance aggregate fair value 70,009 69,551
Amount Contractually obliged to repay at maturity 70,166 71,240
Difference between aggregate fair value and contractually obliged to repay at (157) (1,689)
maturity
Cumulative change in Fair Value accredited to Credit Risk Difference (276) 156
The net fair value loss on financial liabilities designated at fair value
through profit or loss was $3,252 million for the year (31 December 2023: net
loss of $2,649 million).
Further details of the Group's own credit adjustment (OCA) valuation technique
is described later in this Note.
Page 48
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 49
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 - unlisted equity investments: The majority of
unlisted equity investments are valued based on market multiples, including
Price to Book (P/B), Price-to-Earnings (P/E) or enterprise value to earnings
before income tax, depreciation and amortisation (EV/EBITDA) ratios of
comparable listed companies. The primary inputs for the valuation of these
investments are the actual financials or forecasted earnings of the investee
companies and market multiples obtained from 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 market 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. Where available,
loan 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 50
- 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 proxies from internal assessments of the underlying
cash flows
- Loans and advances to banks and customers: For loans and advances
to banks, the fair value of floating rate placements and overnight deposits is
their carrying amounts. The estimated fair value of fixed interest-bearing
deposits is based on discounted cash flows using the 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 of 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:
01.01.24 Movement 31.12.24 01.01.23 Movement 31.12.23
$million
during the year
$million
$million
during the year
$million
$million
$million
Bid-offer valuation adjustment 115 2 117 118 (3) 115
Credit valuation adjustment 119 15 134 171 (52) 119
Debit valuation adjustment (129) 24 (105) (112) (17) (129)
Model valuation adjustment 4 1 5 3 1 4
Funding valuation adjustment 33 8 41 46 (13) 33
Other fair value adjustments 25 1 26 23 2 25
Total 167 51 218 249 (82) 167
Income deferrals
Day 1 and other deferrals 109 29 138 186 (77) 109
Total 109 29 138 186 (77) 109
Note: Bracket represents an asset and credit to the income statement
Page 51
• 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 52
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
to 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 unobservable
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 53
The following tables show the classification of financial instruments held at
fair value into the valuation hierarchy:
Assets 2024 2023
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
$million
$million
$million
$million
$million
$million
$million
$million
Financial instruments held at fair value through profit or loss
Loans and advances to banks - 2,213 - 2,213 - 2,265 - 2,265
Loans and advances to customers - 5,147 1,937 7,084 - 5,252 1,960 7,212
Reverse repurchase agreements and other similar secured lending 19 82,937 3,239 86,195 - 79,484 2,363 81,847
Debt securities and other eligible bills 32,331 42,615 1,593 76,539 27,055 24,635 1,262 52,952
Of which:
Issued by Central banks & Governments 30,278 13,355 9 43,642 23,465 6,557 - 30,022
Issued by corporates other than financial institutions1 7 4,860 399 5,266 4 4,062 346 4,412
Issued by financial institutions1 2,046 24,400 1,185 27,631 3,586 14,016 916 18,518
Equity shares 5,287 8 191 5,486 2,386 370 184 2,940
Derivative financial instruments 386 80,958 128 81,472 954 49,400 80 50,434
Of which:
Foreign exchange 140 72,870 37 73,047 129 42,414 25 42,568
Interest rate 27 6,296 80 6,403 37 6,293 6 6,336
Credit - 388 9 397 - 438 47 485
Equity and stock index options - 349 2 351 - 73 2 75
Commodity 219 1,055 - 1,274 788 182 - 970
Investment securities
Debt securities and other eligible bills 50,249 38,176 - 88,425 55,060 48,196 72 103,328
Of which:
Issued by Central banks & Governments 41,395 16,916 - 58,311 47,225 18,983 51 66,259
Issued by corporates other than financial institutions1 - 490 - 490 820 3,236 - 4,056
Issued by financial institutions1 8,854 20,770 - 29,624 7,015 25,977 21 33,013
Equity shares 27 2 965 994 199 6 787 992
Other Assets - - - - - - 6 6
Total assets at 31 December2 88,299 252,056 8,053 348,408 85,654 209,608 6,714 301,976
Liabilities
Financial instruments held at fair value through profit or loss
Deposits by banks - 1,522 371 1,893 - 1,560 334 1,894
Customer accounts - 19,058 2,714 21,772 - 15,970 1,278 17,248
Repurchase agreements and other similar secured borrowing - 33,539 - 33,539 - 41,283 - 41,283
Debt securities in issue - 12,317 1,414 13,731 - 9,776 1,041 10,817
Short positions 8,789 5,558 180 14,527 7,152 4,591 103 11,846
Derivative financial instruments 419 81,387 258 82,064 749 55,116 196 56,061
Of which:
Foreign exchange 183 69,684 8 69,875 122 45,314 10 45,446
Interest rate 14 8,586 23 8,623 46 8,262 5 8,313
Credit - 2,131 189 2,320 - 945 162 1,107
Equity and stock index options - 157 37 194 - 147 19 166
Commodity 222 829 1 1,052 581 448 - 1,029
Other Liabilities - - - - - - 8 8
Total liabilities at 31 December 9,208 153,381 4,937 167,526 7,901 128,296 2,960 139,157
1 Includes covered bonds of $3,727 million (2023: $7,509 million), securities
issued by Multilateral Development Banks/International Organisations of
$10,679 million (2023: $24,192 million), and State-owned agencies and
development banks of $16,759 million(2023: $7,564 million)
2 The table above does not include held for sale assets of $5 million (2023:
$nil) .These are reported in Note 21 together with their fair value hierarchy
Page 54
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 $739 million (2023: $940 million) and $320 million (2023: $288
million) respectively.
There were no significant changes to valuation or levelling approaches in
2024.
There were no significant transfers of financial assets and liabilities
measured at fair value between Level 1 and Level 2 during the year.
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.
2024 2023
Carrying value Fair value Carrying value Fair
$million
$million valu
e
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
$million
$million
$million
$million
$million
$million
$million
$million
Assets
Cash and balances at central banks¹ 63,447 - 63,447 - 63,447 69,905 - 69,905 - 69,905
Loans and advances to banks 43,593 - 43,430 165 43,595 44,977 - 44,921 - 44,921
of which - reverse repurchase agreements and other similar secured lending 2,946 - 2,948 - 2,948 1,738 - 1,738 - 1,738
Loans and advances to customers 281,032 - 40,582 238,986 279,568 286,975 - 53,472 226,211 279,683
of which - reverse repurchase agreements and other similar secured lending 9,660 - 9,618 42 9,660 13,996 - 13,827 169 13,996
Investment securities² 55,137 - 53,050 24 53,074 56,935 - 54,419 33 54,452
Other assets¹ 34,585 - 34,585 - 34,585 38,140 - 38,140 - 38,140
Assets held for sale 884 58 353 473 884 701 101 541 59 701
Total assets at 31 December 478,678 58 235,447 239,648 475,153 497,633 101 261,398 226,303 487,802
Liabilities
Deposits by banks 25,400 - 25,238 - 25,238 28,030 - 28,086 - 28,086
Customer accounts 464,489 - 461,549 - 461,549 469,418 - 460,224 - 460,224
Repurchase agreements and other similar secured borrowing 12,132 - 12,133 - 12,133 12,258 - 12,258 - 12,258
Debt securities in issue 64,609 32,209 32,181 - 64,390 62,546 31,255 30,859 - 62,114
Subordinated liabilities and other borrowed funds 10,382 9,599 429 - 10,028 12,036 11,119 336 - 11,455
Other liabilities¹ 44,047 - 44,047 - 44,047 38,663 - 38,663 - 38,663
Liabilities held for sale 360 89 271 - 360 726 54 672 - 726
Total liabilities at 31 December 621,419 41,897 575,848 - 617,745 623,677 42,428 571,098 - 613,526
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 $23,150 million at 31
December 2024 (31 December 2023: $19,422 million)
Loans and advances to customers by client segment1
2024 2023
Carrying value Fair value Carrying value Fai
r
val
ue
Stage 3 Stage 1 and Total Stage 3 Stage 1 and Total Stage 3 Stage 1 and Total Stage 3 Stage 1 and Total
$million
stage 2
$million
$million
stage 2
$million
$million
stage 2
$million
$million
stage 2
$million
$million
$million
$million
$million
Corporate & Investment Banking 1,298 137,006 138,304 1,174 137,234 138,408 1,975 128,430 130,405 1,910 125,841 127,751
Wealth & Retail Banking 858 118,390 119,248 858 116,823 117,681 724 125,335 126,059 721 120,701 121,422
Ventures 1 1,388 1,389 - 1,388 1,388 - 1,033 1,033 - 1,032 1,032
Central & other items 98 21,993 22,091 98 21,993 22,091 209 29,269 29,478 209 29,269 29,478
At 31 December 2,255 278,777 281,032 2,130 277,438 279,568 2,908 284,067 286,975 2,840 276,843 279,683
1 Loans and advances includes reverse repurchase agreements and other similar
secured lending: carrying value $9,660 million and fair value $9,660 million
(31 December 2023: $13,996 million and $13,996 million respectively)
Page 55
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:
Instrument Value as at Principal valuation Significant Range1 Weighted average2
31 December 2024
technique
unobservable inputs
Assets Liabilities
$million
$million
Loans and advances to customers 1,937 - Discounted cash flows Price/yield 1.0% - 100% 20.8%
Recovery rate 93.2% - 95.6% 95.1%
Reverse repurchase agreements and other similar secured lending 3,239 - Discounted cash flows Repo curve 2.0% - 7.6% 6.2%
Price/yield 2.3% - 10.5% 6.4%
Debt securities, alternative tier one and other eligible securities 1,584 - Discounted cash flows Price/yield 0.7% - 15.3% 6.9%
Recovery rate 0.01% - 16.3% 9.2%
Government bonds and treasury bills 9 - Discounted cash flows Price/yield 23.5% - 23.5% 23.5%
Equity shares (includes private equity investments) 1,156 - Comparable pricing/yield EV/EBITDA multiples 5.3x - 18.1x 14.8x
EV/Revenue multiples 8.5x - 12.9x 9.0x
P/E multiples 17.9x - 48.3x 46.9x
P/B multiples 0.3x - 3.2x 1.3x
P/S multiples 0.2x - 1.3x 0.2x
Liquidity discount 10.0% - 30.0% 16.8%
Discounted cash flows Discount rates 8.3% - 20.4% 10.1%
Option pricing model Equity value based on EV/Revenue multiples 5.7x - 23.6x 16.2x
Equity value based on EV/EBITDA multiples 10.1x - 10.1x 10.1x
Equity value based on volatility 30.2% - 50.0% 30.5%
Derivative financial instruments of which:
Foreign exchange 37 8 Option pricing model Foreign exchange option implied volatility 10.2% - 46.2% 42.0%
Interest rate curves 3.5% - 9.0% 4.2%
Foreign exchange curves (0.03)% - 34.3% 6.1%
Commodity - 1 Discounted cash flows Commodity prices $383.0 - $391.0 $387.0
CM-CM correlation 73.7% - 97.9% 86.0%
Interest rate 80 23 Discounted cash flows Interest rate curves 3.5% - 43.9% 5.1%
Option pricing model Bond option implied volatility 2.3% - 4.7% 3.5%
Credit 9 189 Discounted cash flows Credit spreads 0.1% - 1.9% 0.9%
Price/yield 4.8% - 6.6% 5.5%
Equity and stock index 2 37 Internal pricing model Equity-Equity correlation 44.9% - 100% 80.0%
Equity-FX correlation (36.4)% - 48.9% 5.0%
Deposits by banks - 371 Discounted cash flows Credit spreads 0.2% - 3.5% 1.5%
Customer accounts - 2,714 Internal pricing model Equity-Equity correlation 44.9% - 100% 80.0%
Equity-FX correlation (36.4)% - 48.9% 5.0%
Discounted cash flows Interest rate curves 1.4% - 4.4% 4.0%
Price/yield 0.7% - 13.0% 8.5%
Debt securities in issue - 1,414 Discounted cash flows Credit spreads 0.05% - 2.0% 0.8%
Price/yield 6.2% - 14.8% 12.7%
Interest rate curves 3.5% - 4.4% 4.1%
Internal pricing model Equity-Equity correlation 44.9% - 100% 80.0%
Equity-FX correlation (36.4)% - 48.9% 5.0%
Option pricing model Bond option implied volatility 4.0% - 15% 12.5%
Short positions - 180 Discounted cash flows Price/yield 5.9% - 12.7% 6.3%
Total 8,053 4,937
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 2024. 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 56
13. Financial instruments continued
Instrument Value as at Principal valuation Significant Range1 Weighted average2
31 December 2023
technique
unobservable inputs
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 treasury bills 51 - Discounted cash flows Price/yield 17.7% - 21.8% 20.6%
Equity shares (includes private equity investments) 971 - Comparable pricing/yield EV/EBITDA multiples 13.8x - 15.6x 14.9x
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 position - 103 Discounted cash flows Price/yield 7.1% - 7.1% 7.1%
Other Liabilities - 8 Comparable pricing/yield EV/EBITDA multiples 5.8x - 11.2x 8.5x
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 57
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, an interest rate correlation
refers to the correlation between two swap rates, while commodity correlation
is correlation between two commodity underlying prices
• Commodity price curves is the term structure for forward rates
over a specified period
• 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 58
Level 3 movement tables - financial assets
The table below analyses movements in Level 3 financial assets carried at fair
value.
Assets Held at fair value through profit or loss Derivative financial instruments Investment securities Total
$million
$million
Loans and advances to banks Loans and advances to customers Reverse repurchase agreements and other similar secured lending Debt securities, alternative Equity Other Debt securities, alternative Equity
$million
$million
$million
tier one
shares
Assets
tier one
shares
and other eligible bills
$million
$million
and other eligible bills
$million
$million
$million
At 01 January 2024 - 1,960 2,363 1,262 184 6 80 72 787 6,714
Total (losses)/gains recognised in income statement (1) 8 73 (114) (15) - (57) - - (106)
Net trading income (1) 8 73 (56) (15) - (57) - - (48)
Other operating income - - - (58) - - - - - (58)
Total (losses)/gains recognised in other comprehensive income (OCI) - - - - - - - (11) 50 39
Fair value through - - - - - - - - 74 74
OCI reserve
Exchange difference - - - - - - - (11) (24) (35)
Purchases - 1,853 6,161 1,337 24 - 227 - 145 9,747
Sales - (2,062) (4,716) (907) (2) - (160) - (19) (7,866)
Settlements (7) (42) (782) - - - - - - (831)
Transfers out1 (13) (263) - (1) - (6) (1) (61) (2) (347)
Transfers in2 21 483 140 16 - - 39 - 4 703
At 31 December 2024 - 1,937 3,239 1,593 191 - 128 - 965 8,053
Recognised in the income statement3 - 7 1 7 (13) - (9) - - (7)
At 01 January 2023 21 1,805 1,998 1,153 182 7 44 - 655 5,865
Total (losses)/gains recognised in income statement - (35) (107) (292) 4 (1) 12 - - (419)
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
Recognised in the income statement3 - (3) 3 (1) 4 - (12) - - (9)
1 Transfers out includes loans and advances, debt securities, alternative tier
one and other eligible bills, equity shares, 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 relate to loans and advances, repurchase agreements,
debt securities, alternative tier one and other eligible bills, equity shares
and derivative financial instruments where the valuation parameters become
unobservable during the year
3 Represents Total unrealised (losses)/gains recognised in the income
statement, within net trading income, relating to change in fair value of
assets
Page 59
Level 3 movement tables - financial liabilities
Deposits Customer accounts Debt Derivative financial instruments Short Other Total
by banks
$million
securities
$million
positions
liabilities
$million
$million
in issue
$million
$million
$million
At 01 January 2024 334 1,278 1,041 196 103 8 2,960
Total losses/(gains) recognised in income statement - net trading income 49 (27) 48 (6) 3 (8) 59
Issues 388 3,068 4,244 507 177 - 8,384
Settlements (400) (1,627) (2,795) (438) (103) - (5,363)
Transfers out1 - (26) (1,194) (7) - - (1,227)
Transfers in2 - 48 70 6 - - 124
At 31 December 2024 371 2,714 1,414 258 180 - 4,937
Recognised in the income statement3 29 5 2 (13) - - 23
At 01 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
Recognised in the income statement3 - (21) 6 (47) - - (62)
1 Transfers out during the year primarily relate to customer accounts, debt
securities in issue 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 relate to customer accounts, debt
securities in issue and derivative financial instruments where the valuation
parameters become unobservable during the year
3 Represents Total unrealised losses/(gains) recognised in the income
statement, within net trading income, relating to change in fair value of
liabilities
Page 60
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 Fair value through other comprehensive income
Net exposure Favourable Unfavourable changes Net exposure Favourable Unfavourable changes
$million
changes
$million
$million
changes
$million
$million
$million
Financial instruments held at fair value
Loans and advances 1,937 1,985 1,862 - - -
Reverse Repurchase agreements and other similar secured lending 3,239 3,339 3,138 - - -
Debt securities, alternative tier one and other eligible bills 1,593 1,643 1,542 - - -
Equity shares 191 210 172 965 1,032 888
Other Assets - - - - - -
Derivative financial instruments (130) (115) (147) - - -
Customers accounts (2,714) (2,540) (2,883) - - -
Deposits by banks (371) (371) (371) - - -
Short positions (180) (178) (182) - - -
Debt securities in issue (1,414) (1,352) (1,476) - - -
Other Liabilities - - - - - -
At 31 December 2024 2,151 2,621 1,655 965 1,032 888
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
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
Possible increase Po
ss
ib
le
de
cr
ea
se
2024 2023 2024 2023
$million
$million
$million
$million
Held at fair value through profit or loss 470 324 (496) (362)
Fair value through other comprehensive income 67 85 (77) (85)
Page 61
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, as a policy choice to
continue to apply hedge accounting in accordance with IAS 39. The Group
applied IBOR reform Phase 2 reliefs in respect of hedging relationships
directly affected by IBOR 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
• This is tested using regression analysis where the slope of the
regression line must be between -0.80 and -1.25 and the data pairs between the
hedged item and the hedging instrument are regressed to a 95% confidence
interval. 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.
Page 62
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.
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 2024 2023
Notional principal amounts Assets Liabilities Notional principal amounts Assets Liabilities
$million
$million
$million
$million
$million
$million
Foreign exchange derivative contracts:
Forward foreign exchange contracts 4,923,991 54,913 51,128 3,628,067 30,897 32,601
Currency swaps and options 1,377,308 18,104 18,720 1,145,702 11,671 12,845
6,301,299 73,017 69,848 4,773,769 42,568 45,446
Interest rate derivative contracts:
Swaps 6,267,261 20,600 22,282 4,841,616 53,735 55,241
Forward rate agreements and options 294,705 2,233 2,771 313,253 2,057 2,520
6,561,966 22,833 25,053 5,154,869 55,792 57,761
Exchange traded futures and options 383,528 30 27 325,051 39 47
Credit derivative contracts 227,675 397 2,320 281,130 485 1,107
Equity and stock index options 10,678 351 194 8,671 75 166
Commodity derivative contracts 142,393 1,274 1,052 117,436 970 1,029
Gross total derivatives 13,627,539 97,902 98,494 10,660,926 99,929 105,556
Offset1 - (16,430) (16,430) - (49,495) (49,495)
Total derivatives 13,627,539 81,472 82,064 10,660,926 50,434 56,061
1 In 2024, the Group migrated contracts from Collateralized to Market (CTM) to
Settled to Market (STM) for house cleared contracts with London Clearing House
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 derivative 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.
Page 63
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.
Included in the table above are derivatives held for hedging purposes as
follows:
2024 2023
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 63,840 763 1,679 69,347 1,264 2,397
Currency swaps 1,035 - 56 115 10 6
64,875 763 1,735 69,462 1,274 2,403
Derivatives designated as cash flow hedges:
Interest rate swaps 49,309 165 282 41,834 184 537
Forward foreign exchange contracts 9,193 609 1 12,071 420 183
Currency swaps 14,305 729 2 14,321 191 150
72,807 1,503 285 68,226 795 870
Derivatives designated as net investment hedges:
Forward foreign exchange contracts 14,137 300 7 15,436 32 41
Total derivatives held for hedging 151,819 2,566 2,027 153,124 2,101 3,314
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 2024 the Group held the following interest rate and cross
currency swaps as hedging instruments in fair value hedges of interest and
currency risk.
Page 64
Hedging instruments and ineffectiveness
Interest rate1 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 notes issued 46,832 283 1,643 46 2
Interest rate swaps - loans and advances to customers 1,334 10 12 (5) -
Interest rate swaps - debt securities and other eligible bills 15,674 470 24 142 2
Interest and currency risk1
Cross currency swaps - debt securities/subordinated notes issued 1,035 - 56 (52) (1)
Cross currency swaps - debt securities and other eligible bills - - - (10) -
Total at 31 December 2024 64,875 763 1,735 121 3
Interest rate swaps - debt securities/subordinated notes issued 45,455 381 2,267 271 (4)
Interest rate swaps - loans and advances to customers 1,203 26 1 (20) -
Interest rate swaps - debt securities and other eligible bills 22,689 857 129 (459) (17)
Interest and currency risk1
Cross currency swaps - debt securities/subordinated notes issued 70 - 6 (2) -
Cross currency swaps - debt securities and other eligible bills 45 10 - 11 -
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
Hedged items in fair value hedges
Carrying Amount Accumulated amount of fair value hedge adjustments included in the carrying Change in the Cumulative
amount
value used for calculating hedge ineffectiveness1
balance of
$million
fair value adjustments from
de-designated hedge
relationships2
$million
Asset Liability Asset Liability
$million
$million
$million
$million
Debt securities/subordinated notes issued - 49,616 - 1,485 7 178
Debt securities and other eligible bills 15,183 - (353) - (130) 235
Loans and advances to customers 1,330 - (4) - 5 4
Total at 31 December 2024 16,513 49,616 (357) 1,485 (118) 417
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
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
2024 2023
$million
$million
Change in fair value of hedging instruments 121 (199)
Change in fair value of hedged risks attributable to hedged items (118) 178
Net ineffectiveness gain/(loss) to net trading income 3 (21)
Amortisation gain to net interest income 153 232
Page 65
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
Notional Carrying Amount Change in fair value used to calculate hedge ineffectiveness1 Gain recognised Ineffectiveness (loss)/gain recognised in net trading income Amount reclassified from reserves to income
$million
$million
in OCI
$million
$million
$million
Asset Liability
$million
$million
Interest rate risk
Interest rate swaps 49,309 165 282 (131) (125) (6) -
Currency risk
Forward foreign exchange contract 9,193 609 1 45 45 - -
Cross currency swaps 14,305 729 2 650 648 2 -
Total as at 31 December 2024 72,807 1,503 285 564 568 (4) -
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 -
1 This represents a gain/(loss) change in fair value used for calculating
hedge ineffectiveness
Hedged items in cash flow hedges
2024 2023
Change in fair Cash flow Cumulative balance in the cash flow hedge reserve from de-designated hedge Change in Cash flow Cumulative balance in the cash flow hedge reserve from de-designated hedge
value used for calculating hedge ineffectiveness1
hedge reserve relationships
fair value used for calculating hedge ineffectiveness1
hedge reserve relationships
$million
$million
$million
$million
$million
$million
Customer accounts (199) (38) 104 (421) (114) 136
Debt securities and other eligible bills (354) (10) (5) (98) (22) (15)
Loans and advances to customers 124 (27) (7) (312) 134 -
Intragroup lending currency hedge (55) (2) - (64) - -
Intragroup borrowing currency hedge (84) 4 - - - -
Total at 31 December (568) (73) 92 (895) (2) 121
1 This represents a gain/(loss) change in fair value used for calculating
hedge ineffectiveness
Page 66
Impact of cash flow hedges on profit and loss and other comprehensive income
2024 2023
$million
$million
Cash flow hedge reserve balance as at 1 January 91 (564)
Gains recognised in other comprehensive income on effective portion of changes 568 895
in fair value of hedging instruments
Gains reclassified to income statement when hedged item affected net profit (669) (128)
Taxation charge relating to cash flow hedges 14 (112)
Cash flow hedge reserve balance as at 31 December 4 91
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
Derivative forward currency contracts1 Carrying amount Change in fair value used to calculate hedge ineffectiveness2 Changes in the value of the hedging instrument recognised Ineffectiveness recognised in profit or loss Amount reclassified from reserves to income
$million
in OCI
$million
$million
$million
Notional Asset Liability
$million
$million
$million
As at 31 December 2024 14,137 300 7 678 678 - -
As at 31 December 2023 15,436 32 41 215 215 - -
1 These derivative forward currency contracts have a maturity of less than one
year. The hedges are rolled on a periodic basis
2 This represents a gain/(loss) change in fair value used for calculating
hedge ineffectiveness
Hedged items in net investment hedges
2024 2023
Change in the Translation Balances remaining in the translation reserve from hedging relationships for Change in the Translation Balances remaining in the translation reserve from hedging relationships for
value used for calculating hedge ineffectiveness1
reserve² which hedge accounting is no longer applied
value used for calculating hedge ineffectiveness1
reserve² which hedge accounting is no longer applied
$million
$million
$million
$million
$million
$million
Net investments (678) 293 - (215) (9) -
1 This represents a gain/(loss) change in fair value used for calculating
hedge ineffectiveness
2 This represents the mark-to-market including accrued interest on live hedges
at 31 December
Impact of net investment hedges on other comprehensive income
2024 2023
$million
$million
Gains recognised in other comprehensive income 678 215
Page 67
Maturity of hedging instruments
Fair value hedges 2024 2023
Less than More than One to More than Less than More than One to More than
one month
one month
five years
five years
one month
one month and less than
five years
five years
and less than
one year
one year
Interest rate swap
Notional $million 2,763 11,260 32,030 17,787 3,242 9,789 41,545 14,771
Cross currency swap
Notional $million - - 1,035 - - 115 - -
Average fixed interest rate (to USD) (%) EUR - - 2.40 - - - - -
GBP - - - - - 1.33 - -
CNH - - - - - 3.17 - -
Average exchange rate EUR/USD - - 0.91 - - - - -
GBP/USD - - - - - 0.66 - -
CNH/USD - - - - - 6.37 - -
Cash flow hedges
Interest rate swap
Notional $million 2,428 15,589 25,943 5,349 2,129 27,634 11,664 407
Average fixed USD 5.09 4.62 4.05 3.74 5.10 3.45 4.70 3.16
interest rate (%)
Cross currency swap
Notional $million 880 12,232 1,193 - 166 10,794 3,361 -
Average fixed HKD - 4.07 0.21 - - 4.97 0.21 -
interest rate (%)
KRO - 2.85 - - 1.96 3.58 0.62 -
USD - 5.64 - -
TWD (3.68) 0.77 0.81 -
JPY/HKD - (0.05) - - - - - -
TWO 0.53 1.04 - - - - - -
CNO 2.45 1.54 - - - - - -
JPY 0.01 0.08 - - - (0.07) (0.05) -
Average exchange rate HKD/USD - 7.78 7.85 - - 7.83 7.85 -
KRO/USD - 1,386.94 1,300.90 - 1,192.20 1,321 1,285 -
USD/HKD - 0.13 - -
TWD/USD 30.63 31.53 32.22 -
TWO/USD 31.83 32.22 - - - - - -
CNO/USD 7.18 7.20 - - - - - -
JPY/HKD - 18.12 - - - 17.86 18.09 -
Forward foreign exchange contracts
Notional $million 2,044 7,149 - - 2,194 9,877 - -
Average exchange rate BRL/USD - 6.54 - - - 5.17 - -
TWD/HKD - - - - - 3.81 - -
JPY/USD 147.38 145.65 - - 130.49 136 - -
Net investment hedges
Foreign exchange derivatives
Notional $million 14,137 - - - 15,436 - - -
Average exchange rate CNY/USD 7.13 - - - 7.12 - - -
KRW/USD 1,364.97 - - - 1,283 - - -
AED/USD - - - - 3.67 - - -
HKD/USD 7.77 - - - 7.80 - - -
INR/USD 84.07 - - - - - - -
Page 68
15. Loans and advances to banks and customers
Accounting policy
Refer to Note 13 Financial instruments for the relevant accounting policy.
2024 2023
$million
$million
Loans and advances to banks 43,609 45,001
Expected credit loss (16) (24)
43,593 44,977
Loans and advances to customers 285,936 292,145
Expected credit loss (4,904) (5,170)
281,032 286,975
Total loans and advances to banks and customers1 324,625 331,952
1 Includes $2.5 billion (31 December 2023: $3.6 billion) of assets pledged as
collateral. For more information, please refer to page 127 of Pillar 3
disclosures
The Group has outstanding residential mortgage loans to Korea residents of
$13.7 billion (2023: $17.2 billion) and Hong Kong residents of $31.1 billion
(2023: $32.7 billion).
Analysis of loans and advances to customers by key geographies 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). 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
2024 2023
$million
$million
Banks 37,700 32,286
Customers 61,101 65,295
98,801 97,581
Of which:
Fair value through profit or loss 86,195 81,847
Banks 34,754 30,548
Customers 51,441 51,299
Held at amortised cost 12,606 15,734
Banks 2,946 1,738
Customers 9,660 13,996
Page 69
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:
2024 2023
$million
$million
Securities and collateral received (at fair value) 103,007 101,935
Securities and collateral which can be repledged or sold (at fair value) 102,741 101,845
Amounts repledged/transferred to others for financing activities, to satisfy 27,708 34,154
liabilities under sale and repurchase agreements (at fair value)
Repurchase agreements and other similar secured borrowing
2024 2023
$million
$million
Banks 8,669 5,585
Customers 37,002 47,956
45,671 53,541
Of which:
Fair value through profit or loss 33,539 41,283
Banks 7,759 4,658
Customers 25,780 36,625
Held at amortised cost 12,132 12,258
Banks 910 927
Customers 11,222 11,331
The tables below set out the financial assets provided as collateral for
repurchase and other secured borrowing transactions:
Collateral pledged against repurchase agreements 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 4,698 6,366 7,592 - 18,656
Off-balance sheet
Repledged collateral received - - - 27,708 27,708
At 31 December 2024 4,698 6,366 7,592 27,708 46,364
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
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 generate
separate cash inflows and at which the goodwill is monitored for internal
management purposes. These are equal to or smaller than the Group's reportable
segments (as set out in Note 2) as the Group views its reportable segments on
a global basis. The major CGUs to which goodwill has been allocated are set
out in the CGU table.
Page 70
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.
Page 71
Software as a Service (SaaS) and similar cloud service models 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.
2024 2023
Goodwill Acquired intangibles Computer software Total Goodwill Acquired intangibles Computer software Total
$million
$million
$million
$million
$million
$million
$million
$million
Cost
At 1 January 2,429 278 6,168 8,875 2,471 295 5,178 7,944
Exchange translation differences (42) (18) (109) (169) (24) (12) 21 (15)
Additions - 1 952 953 - - 1,124 1,124
Disposals - - (5) (5) - - - -
Impairment - - (663)¹ (663) - - (151)² (151)
Amounts written off - (9) (42) (51) (18) (5) (4) (27)
At 31 December 2,387 252 6,301 8,940 2,429 278 6,168 8,875
Provision for amortisation
At 1 January - 265 2,396 2,661 - 276 1,799 2,075
Exchange translation differences - (20) (48) (68) - (12) 11 (1)
Amortisation - 4 695 699 - 1 625 626
Impairment charge - - (102)¹ (102) - - (39)² (39)
Amounts written off - - (41) (41) - - - -
At 31 December - 249 2,900 3,149 - 265 2,396 2,661
Net book value 2,387 3 3,401 5,791 2,429 13 3,772 6,214
1 During 2024, the Group performed a review of its computer software
intangibles which were capitalised as at 31 December 2023, and impaired $483
million of the 2024 net book value due to limitations in the available
evidence to support the continued capitalisation of the assets. The Group has
made improvements in its processes and controls to capture the required
evidence going forward. The Group has also performed its annual review of
computer software intangibles to determine instances when the Group is no
longer using certain applications in its ongoing business and impaired $78
million. A total of $561 million is recorded within impairment to reflect the
above
2 Computer software impairment includes $82.8 million charge relating to
write off on SaaS (Software as a Service) applications capitalised in previous
years
At 31 December 2024, accumulated goodwill impairment losses incurred from 1
January 2005 amounted to $3,331 million (31 December 2023: $3,331 million),
of which $nil was recognised in 2024 (31 December 2023: $nil).
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 2029. 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.
The cash flows used as an input to the VIU calculations used in determining
whether goodwill allocated to CGUs should be impaired were amended during 2024
to reflect changes to the basis on which business performance is monitored.
There has been no impact from the change estimated in the current period. It
is impracticable for the Group to estimate the amount of the effect of this
change in future periods.
Page 72
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.
Cash generating unit 2024 2023
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 1,014 1,036
Hong Kong 359 13.0 1.1 357 12.9 1.6
Taiwan 316 12.2 1.5 333 12.4 1.5
Singapore 339 13.0 2.3 346 13.9 2.1
Africa & Middle East 81 80
Pakistan 32 35.9 3.3 31 35.5 3.2
Bahrain 49 12.4 0.8 49 12.4 0.5
Global CGUs 1,292 1,313
Wealth Management 83 15.0 1.8 83 15.3 1.9
Corporate & Investment Banking 1,209 15.5 2.3 1,230 15.7 2.3
2,387 2,429
In the current year, there are no CGUs for which any individual movement on
key estimates (cashflow, discount rate and GDP growth) would cause an
impairment.
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),
American Express Bank and ABSA's custody business in Africa.
The acquired intangibles are amortised over periods from four years to a
maximum of 16 years. The constituents are as follows:
2024 2023
$million
$million
Acquired intangibles comprise:
Brand names 1 -
Customer relationships - 1
Licenses 2 12
Net book value 3 13
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
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 73
Premises Equipment Operating Leased Leased Total
$million
$million
lease assets
premises
equipment
$million
$million
assets
assets
$million
$million
Cost or valuation
At 1 January 2024 1,741 810 - 1,864 18 4,433
Exchange translation differences (41) (31) - (38) (4) (114)
Additions 112(1) 194(1) - 213 150(1) 669
Disposals and fully depreciated assets written off (61)(2) (37)(2) - (13) (1) (112)
Other movements (25) - - - - (25)
As at 31 December 2024 1,726 936 - 2,026 163 4,851
Depreciation
Accumulated at 1 January 692 535 - 914 18 2,159
Exchange translation differences (28) (15) - (40) (14) (97)
Charge for the year 79 92 - 220 36 427
Impairment charge 2 - - 9 - 11
Attributable to assets sold, transferred or written off (29)(2) (37)(2) - (7) (1) (74)
Accumulated at 31 December 2024 716 575 - 1,096 39 2,426
Net book amount at 31 December 2024 1,010 361 - 930 124 2,425
Cost or valuation
At 1 January 2023 1,773 840 4,420 1,652 29 8,714
Exchange translation differences (27) (22) - (5) (3) (57)
Additions 45(1) 114(1) - 286 1 446
Disposals and fully depreciated assets written off (68)(2) (122)(2) (4,420)(3) (69) (9) (4,688)
Transfers to assets held for sale 18 - - - - 18
As at 31 December 2023 1,741 810 - 1,864 18 4,433
Depreciation
Accumulated at 1 January 2023 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 or written off (47)(2) (122)(2) (1,213)3 (38) (9) (1,429)
Transfers to assets held for sale 2 - - - - 2
Accumulated at 31 December 2023 692 535 - 914 18 2,159
Net book amount at 31 December 2023 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
$456 million (2023: $159 million)
2 Disposals for property, plant and equipment during the year of $56million
(2023: $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
19. Leased assets
Accounting policy
Where the Group is a lessee and the lease is deemed in scope of IFRS 16, 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.
Page 74
The key judgement in determining lease balances is the determination of the
lease term, in particular 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. When there are changes to assumptions the lease balances are
remeasured.
The estimates involved 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
$265 million (2023: $283 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.
Maturity analysis
The maturity profile for lease liabilities associated with leased premises and
equipment assets is as follows:
2024 2023
One year or less $million Between one year and two years $million Between two years and five years $million More than five years $million Total $million One year or less $million Between one year and two years $million Between two years and five years $million More than five years $million Total $million
Other liabilities - lease liabilities 279 223 443 414 1,359 248 203 373 410 1,234
20. Other assets
Other assets include: 2024 2023
$million
$million
Financial assets held at amortized cost (Note 13):
Hong Kong SAR Government certificates of indebtedness (Note 23)¹ 6,369 6,568
Cash collateral3 11,046 10,337
Acceptances and endorsements 5,476 5,326
Unsettled trades and other financial assets 11,694 15,909
34,585 38,140
Non-financial assets:
Commodities and emissions certificates² 8,358 8,889
Other assets 525 565
43,468 47,594
1 The Hong Kong SAR Government certificates of indebtedness are subordinated
to the claims of other parties in respect of bank notes issued
2 Physically held commodities and emission certificates are inventory that is
carried at fair value less costs to sell, $5.6 billion (31 December 2023: $5.1
billion) are classified as Level 1 and $2.7 billion are classified as Level 2
(31 December 2023: $3.7 billion). For commodities, the fair value is derived
from observable spot or short-term futures prices from relevant exchanges
3 Cash collateral are margins placed to collateralize net derivative
mark-to-market (MTM) positions
Page 75
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 2025.
Assets held for sale
The financial assets reported below are classified under Level 1 $58 million
(31 December 2023: $101 million), Level 2 $353 million (31 December 2023: $541
million) and Level 3 $473 million (31 December 2023: $59 million).
2024 2023
$million
$million
Financial assets held at fair value through profit or loss 5 -
Loans and advances to banks 5 -
Financial assets held at amortised cost 884 701
Cash and balances at central banks 109 246
Loans and advances to banks 18 24
Loans and advances to customers 656² 251
Debt securities held at amortised cost 101 180
Property, plant and equipment 15 59
Vessels1 - 43
Others 15 16
Others 28 49
932 809
1 Consideration on disposal of Property, plant and equipment classified under
assets held for sale during 31 December 2024 was $53 million (31 December
2023: $149 million)
2 Includes $414 million unsecured personal loan business from SC Bank India
which was disposed on 23 January 2025 (refer note 37 - Post balance sheet
events)
Liabilities held for sale
The financial liabilities reported below are classified under Level 1 $89
million (2023: $54 million) and Level 2 $271 million (2023: $672 million).
2024 2023
$million
$million
Financial liabilities held at amortised cost 360 726
Deposits by banks - 3
Customer accounts 360 723
Other liabilities 16 51
Provisions for liabilities and charges 5 10
381 787
22. Debt securities in issue
Accounting policy
Refer to Note 13 Financial instruments for the relevant accounting policy.
2024 2023
Certificates Other debt Total Certificates Other debt Total
of deposit of $100,000
securities
$million
of deposit of $100,000
securities
$million
or more
in issue
or more
in issue
$million
$million
$million
$million
Debt securities in issue 18,113 46,496 64,609 15,533 47,013 62,546
Debt securities in issue included within:
Financial liabilities held at fair value through profit or loss (Note 13) - 13,731 13,731 - 10,817 10,817
Total debt securities in issue 18,113 60,227 78,340 15,533 57,830 73,363
Page 76
In 2024, the Company issued a total of $7.4 billion senior notes for general
business purposes of the Group as shown below:
Securities $million
$1,500 million fixed-rate senior notes due 2035 (callable 2034) 1,500
SGD 335 million fixed-rate senior notes due 2030 (callable 2029) 246
EUR1,000 million fixed-rate senior notes due 2032 (callable 2031) 1,035
HKD 1,100 million fixed-rate senior notes due 2027 (callable 2026) 142
$500 million floating-rate senior notes due 2028 (callable 2027) 500
$1,000 million fixed-rate senior notes due 2028 (callable 2027) 1,000
$1,500 million fixed-rate senior notes due 2035 (callable 2034) 1,500
$1,500 million fixed-rate senior notes due 2030 (callable 2029) 1,500
Total Senior Notes issued 7,423
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
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.
2024 2023
$million
$million
Financial liabilities held at amortised cost (Note 13)
Notes in circulation1 6,369 6,568
Acceptances and endorsements 5,476 5,386
Cash collateral2 15,005 8,440
Property leases 1,041 1,054
Equipment leases 115 4
Unsettled trades and other financial liabilities 16,041 17,211
44,047 38,663
Non-financial liabilities
Cash-settled share-based payments 131 102
Other liabilities 503 456
44,681 39,221
1 Hong Kong currency notes in circulation of $6,369 million (31 December 2023:
$6,568 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 Cash collateral are margins received against collateralize net derivative
mark-to-market (MTM) positions
Page 77
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.
2024 2023
Provision Other Total Provision Other Total
for credit commitments1
provisions2
$million
for credit commitments1
provisions2
$million
$million
$million
$million
$million
At 1 January 227 72 299 280 103 383
Exchange translation differences 10 (5) 5 (5) 4 (1)
Charge/(release) against profit⁴ 18 136 154 (48) 42 (6)
Provisions utilised⁴ - (121) (121) - (71) (71)
Other movements3 - 12 12 - (6) (6)
At 31 December 255 94 349 227 72 299
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
4 $136 million (charge) and $121 million (provision utilised) includes
provision for Korea equity linked securities (ELS) portfolio
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.
Page 78
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.
2024 2023
$million
$million
Financial guarantees and other contingent liabilities
Financial guarantees, trade credits and irrevocable letters of credit 90,632 74,414
90,632 74,414
Commitments
Undrawn formal standby facilities, credit lines and other commitments to lend
One year and over 76,915 78,356
Less than one year 29,249 33,092
Unconditionally cancellable 76,365 70,942
182,529 182,390
Capital Commitments
Contracted capital expenditure approved by the directors but not provided for 123 217
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
Where appropriate, the Group recognises a provision for liabilities when it is
probable that an outflow of economic resources embodying economic benefits
will be required, and for which a reliable estimate can be made of the
obligation. The uncertainties inherent in legal and regulatory matters affect
the amount and timing of any potential outflows with respect to which
provisions have been established. These uncertainties also mean that it is not
possible to give an aggregate estimate of contingent liabilities arising from
such legal and regulatory matters.
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,
Afghanistan and Israel. 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 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. The trial of these lawsuits is due to
start in late 2026. The claimants have alleged that their losses are in the
region of £1.56 billion (excluding any pre-judgment interest that may be
awarded). In addition to having denied any and all liability, Standard
Chartered PLC will contest claimants' alleged losses.
Page 79
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 $300
million, excluding any pre-judgment interest that may be awarded. Three of the
four lawsuits commenced by the Fairfield funds' liquidators have been
dismissed and the appeals of those dismissals by the funds' liquidators are
ongoing. The fourth lawsuit has been dismissed and is not the subject of any
further appeal. The Group continues to defend the lawsuit brought by the BMIS
bankruptcy trustee.
A number of Korean banks, including Standard Chartered Bank Korea, sold equity
linked securities (ELS) to customers, the redemption values of which are
determined by the performance of various stock indices. From January 2021 to
May 2023 Standard Chartered Bank Korea sold relevant ELS to its customers with
a notional value of approximately $900 million. Due to the performance of the
Hang Seng China Enterprise Index, several thousand Standard Chartered Bank
Korea customers have redeemed their ELS at a loss. Standard Chartered Bank
Korea has offered compensation to impacted customers. Standard Chartered Bank
Korea may also receive a regulatory penalty. A $100 million provision had been
recognised as at Q1 2024 with respect to anticipated losses, $24 million of
which remains recorded on the Group's balance sheet as at 31 December 2024.
With the exception of the Korea ELS matter described above, 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.
27. Subordinated liabilities and other borrowed funds
2024 2023
$million
$million
Subordinated loan capital - issued by subsidiary undertakings
$700 million 8.0 per cent subordinated notes due 20311 326 342
NPR2.4 billion fixed sub debt rate 10.3 per cent2 18 18
344 360
Subordinated loan capital - issued by the Company3
£900 million 5.125 per cent subordinated notes due 2034 601 644
$2 billion 5.7 per cent subordinated notes due 2044 2,179 2,197
$1 billion 5.2 per cent subordinated notes due 2024 - 1,001
$750 million 5.3 per cent subordinated notes due 2043 691 697
€500 million 3.125 per cent subordinated notes due 2024 - 536
$1.25 billion 4.3 per cent subordinated notes due 2027 1,174 1,154
$1 billion 3.516 per cent fixed rate reset subordinated notes due 2030 996 964
(callable 2025)
$500 million 4.866 per cent fixed rate reset subordinated notes due 2033 478 481
(callable 2028)
£96.035 million 7.375 per cent Non-Cum Pref Shares (reclassed as Debt) - 121 122
Other borrowings
£99.250 million 8.25 per cent Non-Cum Pref Shares (reclassed as Debt) - Other 124 126
borrowings
$750 million 3.603 per cent fixed rate reset subordinated notes due 2033 634 648
(callable 2032)
€ 1 billion 2.5 per cent fixed rate reset subordinated notes due 2030 1,015 1,044
(callable 2025)
$1.25 billion 3.265 per cent fixed rate reset subordinated notes due 2036 1,032 1,040
(callable 2030)
€1 billion 1.200 per cent fixed rate reset subordinated notes due 2031 993 1,022
(callable 2026)
10,038 11,676
Total for Group 10,382 12,036
1 Issued by Standard Chartered Bank
2 Issued by Standard Chartered Bank Nepal Limited. NPR refers to Nepalese
Rupee
3 In the balance sheet of the Company the amount recognised is $10,338 million
(2023: $11,945 million), with the difference on account of hedge accounting
achieved on a Group basis
2024 2023
USD EUR GBP NPR Total USD EUR GBP NPR Total
$million
$million
$million
$million
$million
$million
$million
$million
$million
$million
Fixed rate subordinated debt 7,510 2,008 846 18 10,382 8,524 2,602 892 18 12,036
Total 7,510 2,008 846 18 10,382 8,524 2,602 892 18 12,036
Page 80
Redemptions and repurchases during the year.
Standard Chartered PLC exercised its right to redeem $1 billion 5.2 per cent
subordinated notes 2024 and €500 million 3.125 per cent subordinated notes
2024
Issuance during the year
There was no issuance during the period.
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 equity instruments
ordinary shares
share capital1
Share premium
Share premium2
capital and
$million
millions
$million
$million
$million
share premium
$million
At 1 January 2023 2,895 1,447 3,989 1,494 6,930 6,504
Cancellation of shares including share buy-back (230) (115) - - (115) -
Additional Tier 1 Redemption - - - - - (992)
At 31 December 2023 2,665 1,332 3,989 1,494 6,815 5,512
Cancellation of shares including share buy-back (240) (120) - - (120) -
Additional Tier 1 equity issuance - - - - - 1,568
Additional Tier 1 Redemption - - - - - (553)
Other movements3 - - - - - (25)
At 31 December 2024 2,425 1,212 3,989 1,494 6,695 6,502
1 Issued and fully paid ordinary shares of 50 cents each
2 Includes preference share capital of $75,000
3 Relates to realised translation loss on redemption of AT1 securities of SGD
750 million
Share buyback
On 23 February 2024, 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, the total consideration paid was $1,000 million, and the
buyback completed on 25 June 2024. The total number of shares purchased was
113,266,516, representing 4.25 per cent of the ordinary shares in issue at the
beginning of the programme. 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, by private arrangement.
On 30 July 2024, the Group announced the buyback programme for a share buyback
of its ordinary shares of $0.50 each. As at FY 2024 the buyback is ongoing,
with the total number of shares purchased of 126,262,414 representing 4.95 per
cent of the ordinary shares in issue at the beginning of the programme, the
total consideration was $1,355 million and a further $145 million relating to
irrevocable obligation to buyback shares under the buyback programme has been
recognised. The nominal value of the shares was transferred from the share
capital to the capital redemption reserve account.
Page 81
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 2024 6,418,285 6.6920 6.3700 6.5039 41,743,905 52,831,654
March 2024 45,113,015 7.0000 6.4400 6.6765 301,197,187 383,771,653
April 2024 24,716,649 7.1300 6.3800 6.7727 167,398,467 209,475,694
May 2024 19,525,751 7.9540 6.9080 7.6883 150,119,738 189,885,098
June 2024 17,492,816 7.8840 7.1220 7.3676 128,879,487 164,035,854
August 2024 27,834,474 7.8340 6.6740 7.3594 204,843,866 264,717,166
September 2024 33,245,826 8.1120 7.4260 7.7103 256,333,914 338,823,108
October 2024 34,497,109 9.1700 7.6880 8.3791 289,055,494 377,008,057
November 2024 20,250,801 9.8600 9.0240 9.4021 190,399,354 243,785,545
December 2024 10,434,204 10.0950 9.6380 9.8709 102,994,626 130,375,125
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 2024, 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
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 of Interest rate1 Coupon payment dates each year2 First reset dates3 Conversion
issue costs
price per
ordinary share⁵
26 Jun 2020 $1,000 million $992 million 6% 26 January, 26 July 26 January 2026 $5.331
14 January 2021 $1,250 million $1,239 million 4.75% 14 January, 14 July 14 July 2031 $6.353
19 August 2021 $1,500 million $1,489 million 4.30% 19 February, 19 August 19 August 2028 $6.382
15 August 2022 $1,250 million $1,239 million 7.75% 15 February, 15 August 15 February 2028 $7.333
08 March 2024 $1,000 million $993 million 7.875% 8 March, 8 September 8 September 2030 $8.216
19 Sep 2024 SGD750 million $575 million 5.300% 19 March, 19 September 19 March 2030 SGD12.929
Total⁴ $6,527 million
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
4 Excludes realised translation loss ($25 million) on redemption of AT1
securities of SGD 750 million
5 Conversion price set at the time of pricing with reference to closing share
price and any applicable discount
Page 82
Standard Chartered PLC redeemed SGD 750 million Fixed Rate Resetting Perpetual
Contingent Convertible Securities on its first optional redemption date of 3
October 2024 for $578 million (realised translation loss of $25 million).
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 970 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.
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
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. Gains and losses on financial liabilities
designated at fair value through profit or loss relating to own credit in the
year have been taken through other comprehensive income into this reserve. On
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 and
taxation. 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.
Page 83
• FVOCI equity reserve represents unrealised fair value gains and
losses in respect of financial assets classified as FVOCI, net of taxation.
Gains and losses are recorded in this reserve and never recycled to the income
statement
• Cash flow hedge reserve represents the effective portion of the
gains and losses on 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
buybacks
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 2024, the distributable reserves of Standard Chartered PLC
(the Company) were $14.1 billion (31 December 2023: $14.7 billion).
Distributable reserves of SC PLC were $14.1 billion, which is calculated from
the Merger reserve and Retained earnings with consideration for restricted
items in line with sections 830 and 831 of the Companies Act 2006.
Own shares
The 2004 Employee Benefit Trust (2004 Trust) is used in conjunction with the
Group's employee share schemes and other employee share-based payments (such
as upfront shares and salary shares). Computershare Trustees (Jersey) Limited
is the trustee of the 2004 Trust. Group companies fund the 2004 Trust from
time to time to enable the trustees to acquire shares in Standard Chartered
PLC to satisfy these arrangements.
Details of the shares purchased and held by the 2004 Trust are set out below.
2004 Trust
2024 2023
Shares purchased during the period 19,604,557 29,069,539
Market price of shares purchased ($million) 223 237
Shares held at the end of the period 17,589,987 28,095,542
Maximum number of shares held during the period 28,085,688 28,893,930
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, on another exchange, by private arrangement, or
by way of a general offer 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,
waive any dividend on the balance of ordinary shares that have not been
allocated to employees, except for 0.01p per share.
Page 84
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 D2 paragraph 10.
Name Description of Issued/(redeemed) Shares Issued/(redeemed)
Shares
capital
Standard Chartered Bank Nigeria Limited NGN1.00 Ordinary 8,581,235,698 NGN11,081,235,698
Furaha Finserve Uganda Limited USD1.00 Ordinary 199,500 USD199,500
SCV Research and Development Pvt. Ltd. INR10.00 Ordinary 10,000 INR100,000
Furaha Holding Ltd USD1.00 Ordinary 6,500,000 USD6,500,000
Qatalyst Pte. Ltd. USD1.00 Ordinary 1,099,999 USD1,099,999
Standard Chartered I H Limited USD1.00 Ordinary 52,086,333 USD 52,086,333
Standard Chartered Strategic Investments Limited USD1.00 Ordinary 16,086,333 USD 16,086,333
Standard Chartered Capital Limited INR10.00 Equity 32,269,750 INR322,697,500
SC Ventures Holdings Limited USD1.00 Ordinary 59,386,000 USD 59,386,000
Standard Chartered Holdings Limited USD2.00 Ordinary 25,043,166 USD 50,086,332
Standard Chartered Luxembourg S.A. EUR1.00 Ordinary 125,000 EUR125,000
Mox Bank Limited HKD Ordinary 54,740,000 HKD547,400,000
Standard Chartered Research and Technology India Private Limited INR10 Equity Class - A 10,821,311 INR108,213,110
myZoi Financial Inclusion Technologies LLC AED1.00 Ordinary 25,000,000 AED25,000,000
Zodia Holdings Limited USD1.00 A Ordinary 18,000,000 USD18,000,000
Audax Financial Technology Pte. Ltd USD Ordinary-A 8,500,000 USD8,500,000
Trust Bank Singapore Limited SGD Ordinary 185,000,000 SGD185,000,000
Zodia Markets Holdings Limited USD1.00 Ordinary 5,580 USD 5,580
Letsbloom Pte. Ltd. USD Ordinary-A 9,406,219 USD9,406,219
Zodia Custody (Ireland) Limited USD1.00 Ordinary 1,000,000 USD1,000,000
SCV Research and Development Pte. Ltd. USD Ordinary-A 11,440,850 USD11,440,850
SCV Master Holding Company Pte. Ltd. USD Ordinary 63,299,999 USD63,299,999
Financial Inclusion Technologies Ltd USD Ordinary-A 6,700,000 USD6,700,000
Appro Onboarding Solutions FZ-LLC AED1,000 Ordinary 21,670 AED21,670,000
Solv-India Pte. Ltd. USD Ordinary 38,963,752 USD38,963,752
Solvezy Technology Kenya Limited KES1,000.00 Ordinary 196,448 KES196,448,000
Tawi Fresh Kenya Limited KES1,000.00 Ordinary 454,890 KES454,890,000
Libeara Pte. Ltd. USD Ordinary 10,258,400 USD10,258,400
CashEnable Pte. Ltd. USD Ordinary-A 9,300,000 USD9,300,000
Solvezy Technology Ghana Ltd GHS Ordinary 18,000,441 GHS18,000,441
Libeara (Singapore) Pte. Ltd. USD Ordinary 10,258,400 USD10,258,400
Standard Chartered Securities (Africa) Holdings Limited USD1.00 Ordinary (8,002,228) USD(8,002,228)
Banco Standard Chartered en Liquidacion USD75.133 Ordinary (133,930) USD(10,062,563)
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
2024 2023
$million
$million
As at 1 January 396 350
Comprehensive income for the year (22) (38)
Income in equity attributable to non-controlling interests (14) (31)
Other profits attributable to non-controlling interests (8) (7)
Distributions (43) (26)
Other increases1 63 110
As at 31 December 394 396
1 Movements in 2024 are primarily from non-controlling interests
pertaining to Trust Bank Singapore Limited ($55 million) and Mox Bank Limited
($14 million) partly offset by disposal of SCB Angola S.A. ($6 million). Cash
received from additional investment was $55 million (2023: $116 million).
Movements in 2023 primarily from non-controlling interest pertaining to Mox
Bank Limited ($48 million), Trust Bank Singapore Limited ($34 million) and
Zodia Custody Limited ($28 million).
Page 85
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 recognized 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:
Assumption Detail
Discount rate Determined by reference to market yields at the end of the reporting period on
high-quality corporate bonds (or, in countries where there is no deep market
in such bonds, government bonds) of a currency and term consistent with the
currency and term of the post-employment benefit obligations. This is the
approach adopted across all our geographies.
Inflation Where there are inflation-linked bonds available (e.g. United Kingdom and the
eurozone), the Group derives inflation based on the market on those bonds,
with the market yield adjusted in respect of the United Kingdom to take
account of the fact that liabilities are linked to Consumer Price Index
inflation, whereas the reference bonds are linked to Retail Price Index
inflation. Where no inflation-linked bonds exist, we determine inflation
assumptions based on a combination of long-term forecasts and short-term
inflation data.
Salary growth Salary growth assumptions reflect the Group's long-term expectations, taking
into account future business plans and macroeconomic data (primarily expected
future long-term inflation).
Demographic assumptions Demographic assumptions, including mortality and turnover rates, are typically
set based on the assumptions used in the most recent actuarial funding
valuation, and will generally use industry standard tables, adjusted where
appropriate to reflect recent historic experience and/or future expectations.
The sensitivity of the liabilities to changes in these assumptions is shown in
the Note below.
Net Retirement benefit obligation and charge comprise:
Net Obligation Charge1,2
2024 2023 2024 2023
$million
$million
$million
$million
Defined benefit plans 101 166 62 66
Defined contribution plans1 14 17 389 365
Total2 115 183 451 431
1 The Group during the year utilised against defined contribution payments,
$5m forfeited pension contributions in respect of employees who left before
their interests vested fully. The residual balance of forfeited contributions
is $17m
2 Refer note 7: "Operating expenses"
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.
Page 86
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 increases in discount rates in most geographies over 2024
have led to lower liabilities. These have been partly offset by decreases in
the value of bonds held, however growth assets such as equities and property
performed well over 2024, leading to a fall 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 helped to reduce 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 2024.
UK Fund
The Standard Chartered Pension Fund (the 'UK Fund') is the Group's largest
pension plan, representing 46 per cent (31 December 2023: 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 2023 was completed
in December 2024 by the Scheme Actuary, T Kripps of Willis Towers Watson,
using assumptions different from those used for IAS19, and agreed with the UK
Fund trustee. It showed that the UK Fund was 96% funded at that date,
revealing a past service deficit of $48 million (£38 million).
To repair the deficit, three annual cash payments each of $13 million (£10
million) were agreed, with the first of these paid in December 2024, and two
further instalments to be paid in December 2025 and December 2026. However,
the agreement allowed that the payments due in 2025 and 2026 may be varied
depending on the funding position at the preceding 30 June provided that total
payments over the three year recovery plan period do not exceed $38 million
(£30 million). As part of the 2023 valuation agreement, it was agreed that
gilts with a nominal value of $200 million (£160 million) would remain in
escrow to provide additional security the Trustee.
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.
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 accrual of future benefits.
Key assumptions
The principal financial assumptions used at 31 December 2024 were:
2024 2023
UK Funded Overseas Plans1 Unfunded Plans2 UK Funded Overseas Plans1 Unfunded Plans2
% % %
% % %
Discount rate 5.5 1.6 - 6.9 2.5 - 6.9 4.6 1.2-4.9 3.1-7.4
Price inflation 2.5 2.0 - 5.0 2.0 - 5.0 2.5 2.0-2.9 2.0-5.0
Salary increases n/a 3.5 - 8.5 4.0 - 8.5 n/a 3.5-4.5 4.0-8.5
Pension increases 2.3 2.9 0.0 - 2.3 2.3 2.9 0.0-2.3
Post-retirement medical rate n/a 8% in 2024 reducing 8% in 2023 reducing
by 0.5%
by 0.5%
per annum to 5% in 2030
per annum to 5% in 2029
1 The range of assumptions shown is for the funded defined benefit overseas
plans in Hong Kong, India, Jersey, Korea, Taiwan, and the US. These comprise
around 85 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 over 90 per
cent of the total liabilities of unfunded plans
Page 87
The principal non-financial assumptions are those made for UK life expectancy.
The UK mortality tables are S4PMA for males and S4PFA for females, projected
by year of birth with the CMI 2023 improvement model with a 1.25 Per cent
annual trend and initial addition parameter of 0.25 Per cent. Scaling factors
of 81 Per cent for male pensioners, 93 Per cent for female pensioners, 81 Per
cent for male dependants and 81 Per cent 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 28 years (2023: 27 years) and a female
member for 29 years (2023: 30 years) and a male member currently aged 40 will
live for 29 years (2023: 29 years) and a female member for 31 years (2023: 32
years) after their 60th 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 $25 million for the UK Fund (2023: $35 million)
and $20 million for the other plans (2023: $20 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 $15 million for the UK Fund (2023: $20
million) and $15 million for the other plans (2023: $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 (2023:
nil) and approximately $10 million for the other plans (2023: $10 million)
• If longevity expectations increased by one year the liability
would increase by approximately $35 million for the UK Fund (2023: $35
million) and $10 million for the other plans (2023: $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.
Profile of plan obligations
Funded plans Unfunded
plans
UK Fund Overseas
Duration of the defined benefit obligation (in years) 10 8 8
Duration of the defined benefit obligation - 2023 11 8 8
Benefits expected to be paid from plans
Benefits expected to be paid during 2025 83 76 20
Benefits expected to be paid during 2026 85 115 17
Benefits expected to be paid during 2027 88 97 17
Benefits expected to be paid during 2028 90 104 17
Benefits expected to be paid during 2029 92 113 16
Benefits expected to be paid during 2030 to 2034 495 526 82
Page 88
Fund values:
2024 2023
UK Fund Overseas plans UK Fund Ove
rse
as
pla
ns
Quoted assets Unquoted assets Total Quoted assets Unquoted assets Total Quoted assets Unquoted assets Total Quoted assets Unquoted assets Total
$million
$million
assets
$million
$million
assets
$million
$million
assets
$million
$million
assets
$million
$million
$million
$million
At 31 December 2024
Equities 2 - 2 132 - 132 2 - 2 160 - 160
Government bonds 342 - 342 269 - 269 443 - 443 173 - 173
Corporate bonds 357 126 483 291 - 291 360 113 473 179 - 179
Hedge funds - 5 5 - - - - 9 9 - - -
Infrastructure - 170 170 - - - - 166 166 - - -
Property - 81 81 - 15 15 - 84 84 - - -
Derivatives 22 (1) 21 - - - 2 5 7 - - -
Cash and equivalents 35 - 35 60 153² 213 66 - 66 37 166 203
Others 7 2 9 - 156 156 7 2 9 - 145 145
Total fair value 765 383 1,148 752 324 1,076 880 379 1,259 549 311 860
of assets1
1 Self-investment is monitored closely and is less than $1 million of Standard
Chartered equities and bonds for 2024 (31 December 2023: <$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
2 Cash and equivalents includes the value of insurance contracts held in Korea
which invest only in short term money market instruments
At 31 December 2024 At 31 December 2023
Funded plans Unfunded Funded plans Unfunded
Plans
Plans
$million
$million
UK Fund Overseas Plans UK Fund Overseas Plans
$million
$million
$million
$million
Total fair value of assets 1,148 1,076 N/A 1,259 860 N/A
Present value of liabilities (1,070) (1,075) (180) (1,219) (877) (189)
Net pension plan asset/(obligation) 78 1 (180) 40 (17) (189)
Of which: Total pension assets in respect of plans in surplus 78 73 - 40 54 -
Of which: Total pension obligations in respect of plans in deficit - (72) (180) - (71) (189)
The pension cost for defined benefit plans was:
2024 2023
Funded plans Unfunded plans Total Funded plans Unfunded plans Total
$million
$million
$million
$million
UK Fund Overseas plans UK Fund Overseas plans
$million
$million
$million
$million
Current service cost1 - 44 8 52 - 39 11 50
Past service cost and curtailments2 - 2 (1) 1 8 - 1 9
Settlement cost3 - 3 - 3 - 2 - 2
Interest income on pension plan assets (56) (41) - (97) (57) (43) - (100)
Interest on pension plan liabilities 54 41 8 103 56 41 8 105
Total charge to profit before deduction of tax (2) 49 15 62 7 39 20 66
Losses/(gains) on plan assets4 78 (32) - 46 (18) (52) (70)
Losses/(gains) on liabilities (103) 6 (1) (98) 30 79 8 117
Total losses/(gains) recognised directly (25) (26) (1) (52) 12 27 8 47
in statement of comprehensive income before tax
Deferred taxation 5 7 - 12 (1) (10) - (11)
Total losses/(gains) after tax (20) (19) (1) (40) 11 17 8 36
1 Includes administrative expenses paid out of plan assets of $1 million
(2023:$1 million ) and actuarial losses of $1 million (2023: $2 million) that
are immediately recognised through P&L in line with the requirements of
IAS 19
2 Relates to plan amendments in India
3 Termination benefits paid from the pension plan in Indonesia
4 The actual return on the UK Fund assets was a loss of $22 million (2023: $75
million gain) and on overseas plan assets was a gain of $73 million (2023: $95
million gain)
Page 89
Movement in the deficit during the year comprise:
2024 2023
Funded plans Unfunded plans Total Funded plans Unfunded plans Total
$million
$million
$million
$million
UK Fund Overseas plans UK Fund Overseas plans
$million
$million
$million
$million
Surplus/(Deficit) 40 (17) (189) (166) 48 1 (177) (128)
Contributions 13 39 16 68 8 59 14 81
Current service cost1 - (44) (8) (52) - (39) (11) (50)
Past service cost and curtailments - (2) 1 (1) (8) - (1) (9)
Settlement costs and transfers impact - (3) - (3) - (2) - (2)
Net interest on the net defined benefit asset/liability 2 - (8) (6) 1 2 (8) (5)
Actuarial (losses)/gains 25 26 1 52 (12) (27) (8) (47)
Asset held for Sale - - - - - (7) 6 (1)
Other Movement2 - (1) - (1) - - - -
Exchange rate adjustment (2) 3 7 8 3 (4) (4) (5)
Surplus/(Deficit) 78 1 (180) (101) 40 (17) (189) (166)
1 Includes administrative expenses paid out of plan assets of $1 million (31
December 2023: $1 million)
2 This relates to the Standard Chartered India Provident Fund, which has
previously been treated as a defined contribution plan. However, with effect
from November 2024, a minimum rate of return is applicable to the plan, and so
going forward it will be treated as a defined benefit plan as required by IAS
19. For 2023 this included the impact of plans in Cameroon, Cote D'Ivoire,
Jordan and Zimbabwe being excluded from the closing balances and classified
separately under Assets held for Sale
The Group's expected contribution to its defined benefit pension plans in 2025
is $ 68 million.
2024 2023
Assets Obligations Total Assets Obligations Total
$million
$million
$million
$million
$million
$million
At 1 January 2024 2,119 (2,285) (166) 2,004 (2,132) (128)
Contributions1 69 (1) 68 82 (1) 81
Current service cost2 - (52) (52) - (50) (50)
Past service cost and curtailments - (1) (1) - (9) (9)
Settlement costs3 - (3) (3) - (2) (2)
Interest cost on pension plan liabilities - (103) (103) - (105) (105)
Interest income on pension plan assets 97 - 97 100 - 100
Benefits paid out2 (169) 169 - (161) 161 -
Actuarial gains/(losses)4 (46) 98 52 70 (117) (47)
Asset held for Sale - - - (7) 6 (1)
Other Movement5 212 (213) (1) - - -
Exchange rate adjustment (58) 66 8 31 (36) (5)
At 31 December 2024 2,224 (2,325) (101) 2,119 (2,285) (166)
1 Includes employee contributions of $1 million (31 December 2023: $1 million)
2 Includes administrative expenses paid out of plan assets of $1 million (31
December 2023: $1 million)
3 Impact of settlements relates termination benefits paid out in Indonesia
4 Actuarial gain on obligation comprises of $127 million gain (31 December
2023: $50 million loss) from financial assumption changes, $1 million gain (31
December 2023: $1 million loss) from demographic assumption changes and $30
million loss (31 December 2023: $66 million loss) from experience
5 These are assets and liabilities of the Standard Chartered India Provident
Fund, which has previously been treated as a defined contribution plan.
However, with effect from November 2024, a minimum rate of return is
applicable to the plan, and so going forward it will be treated as a defined
benefit plan as required by IAS 19
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 90
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.
Page 91
Other accounting estimates and judgements
Share-based payments involve judgement and estimation uncertainty exists when
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.
2024¹ 2023¹
Cash $million Equity $million Total $million Cash $million Equity $million Total $million
Deferred share awards 31 160 191 34 103 137
Other share awards 34 109 143 19 70 89
Total share-based payments2 65 269 334 53 173 226
1 No forfeiture assumed
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 2024 with $2 million (2023: $14 million) in cash settled
and $14 million (2023: $3 million) equity settled deferred awards spread
across 19 entities
Discretionary share plans
The 2021 Standard Chartered Share Plan (the '2021 Plan') was approved by
shareholders in May 2021 and is the Group's main share plan, replacing the
2011 Standard Chartered Share Plan (the '2011 Plan') for new awards from June
2021. It is used to deliver various types of share awards to employees and
former employees of the Group, including directors and former executive
directors:
Award type Description and performance measures Valuation
Long-Term Incentive Plan (LTIP) awards The vesting of awards granted in 2024, 2023 and 2022 are subject to the The fair value of the relative TSR component is calculated using the
following performance measures: probability of meeting the measures over a three-year performance period,
using a Monte Carlo simulation model.
• relative total shareholder return (TSR);
The value of the remaining components is based on the expected performance
• return on tangible equity (RoTE) (with a Common Equity Tier 1 (CET1) against the RoTE and strategic measures in the scorecard and the resulting
underpin); and estimated number of shares expected to vest at each reporting date. These
combined values are used to determine the accounting charge.
• strategic measures (including targets set for sustainability linked to
business strategy) No dividend equivalents accrue for the LTIP awards made in 2024, 2023 or 2022
and the fair value takes this into account, calculated by reference to market
Each measure is assessed independently over a three-year period. LTIP awards consensus dividend yield.
have an individual conduct gateway requirement that results in the award
lapsing if not met.
Deferred shares Used to deliver: The fair value for deferred shares, which are granted to employees who are not
categorised as material risk takers, is based on 100 per cent of the face
• the deferred portion of year-end variable remuneration, in line with value of the shares at the date of grant as the share price will reflect
both market practice and regulatory requirements. These awards vest in expectations of all future dividends.
instalments on anniversaries of the award date specified at the time of grant.
This enables the Group to meet regulatory requirements relating to deferral For awards granted to material risk takers in 2024, the fair value of awards
levels, and is in line with market practice. takes into account the lack of dividend equivalents, calculated by reference
to market consensus dividend yield.
• 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.
Deferred share awards are not subject to any performance measures.
The remaining life of the 2021 Standard Chartered Share Plan during which new
awards can be made is seven years.
Page 92
LTIP awards
2024 2023
Grant date 12-March 13-March
Share price at grant date (£) 6.60 7.40
Vesting period (years) 3-7 3-7
Expected divided yield (%) 4.2 3.1
Fair value (RoTE) (£) 1.55, 1.61, 1.68 1.91, 1.85
Fair value (TSR) (£) 0.95, 1.01, 1.06 1.08, 1.04
Fair value (Strategic) (£) 2.06, 2.15, 2.24 2.54, 2.46
Deferred shares - year-end
Grant date 2024
17 June 11 March
Share price at grant date (£) 7.24 6.56
Vesting period (years) Expected Fair value Expected Fair value
dividend yield
(£)
dividend yield
(£)
(%)
(%)
1-3 years N/A 9.17 4.2, 4.2 7.65, 8.30
1-5 years 3.8, 3.8, 3.8 8.05, 8.20, 8.35 4.2, 4.2, NA 7.19, 7.49, 8.30
3-7 years 4.2, 4.2 6.49, 6.76
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, 6.65, 6.75, 6.35, 6.16
3.1, 3.1
Deferred shares - buy-outs
Grant date 2024
18-Nov 23-Sep 17-Jun 11-Mar
Share price at grant date (£) 9.43 7.59 7.24 6.56
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 4.2 9.59 3.8 9.07 4.2 8.22
4 months 4.2 11.83
6 months 4.2 9.49 3.8 8.99 4.2 8.14
7 months 4.2 11.69
9 months 4.2 9.4 3.8 8.90 4.2 8.06
10 months
1 year 4.2 11.22, 11.36 4.2 9.02, 9.11, 9.21, 9.30 3.8 8.58, 8.66, 8.74 4.2 7.73, 7.81, 7.89, 7.97
2 years 4.2 10.77, 10.90 4.2 8.65, 8.74, 8.83, 8.93 3.8 8.26, 8.34 4.2 7.42, 7.50, 7.57, 7.65
3 years 4.2 10.46 4.2 8.39 4.2 7.20, 7.34
4 years 4.2 10.04 4.2 7.05
5 years
Page 93
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, 6.95, 7.01 3.3 5.98, 6.18, 6.33 3.1 6.91, 6.96
3 years 3.0 5.94, 5.98, 6.03 3.0 6.65, 6.7, 6.8 3.3 5.79, 5.98, 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
All Employee Sharesave Plans
Under the 2023 Sharesave Plan, employees may open a savings contract and save
up to £500 (increased from £250 since 2024) per month over three years to
purchase ordinary shares in the Company at a discount of up to 20 per cent
(the 'option exercise price'). The discount applies to higher of: the 5-day
average share price prior to the invitation or the closing share price on the
last trading day prior to the invitation. At the end of the savings contract
they have a period of six months to exercise the option. There are no
performance measures attached to Sharesave options, and no exercise price is
payable to receive an option. In some countries in which the Group operates,
it is not possible to operate equity-settled Sharesave, 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 nine years.
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)
2024 2023
Grant date 23 September 18 September
Share price at grant date (£) 7.59 7.35
Exercise price (£) 6.10 5.88
Vesting period (years) 3 3
Expected volatility (%) 32.9 36.7
Expected option life (years) 3.5 3.5
Risk-free rate (%) 3.88 4.48
Expected dividend yield (%) 4.2 3.0
Fair value (£) 2.73 3.05
The expected volatility is based on historical volatility over the last three
years, or the 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 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 10 per cent of the ordinary share capital of Standard
Chartered PLC in issue at that time.
Page 94
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 to an individual under the 2021 or 2023 Plan in any
12-month period must not exceed 1 per cent of the ordinary share capital of
Standard Chartered PLC in issue at that time.
As at 1 January 2024 and 31 December 2024, the shareholder dilution under our
discretionary and Sharesave plans adopted by Standard Chartered PLC and its
subsidiaries represented 4.5 per cent and 4.9 per cent of the issued ordinary
share capital of Standard Chartered PLC respectively. Accordingly, the number
of Standard Chartered PLC shares available to be granted under all
discretionary and Sharesave plans at the beginning and the end of the year
ended 31 December 2024 were 147,876,885 and 123,504,051 respectively.
The maximum number of Standard Chartered PLC shares that may be issued in
respect of share options and awards granted under the discretionary and
Sharesave plans during the year ended 31 December 2024 divided by the weighted
average number of Standard Chartered PLC shares in issue for the year ended 31
December 2024 is 1.5 per cent.
Standard Chartered PLC has been granted a waiver 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 announcement made on 30 March 2023. In relation to the waiver of
strict compliance with Note 1 to 17.03(18), in 2024 no changes to the plan
rules have been proposed that fall within scope of disclosure requirements
under the terms of the waiver.
Reconciliation of share award movements for the year to 31 December 2024
Discretionary1 Sharesave4,5 Weighted
average
Sharesave
exercise price
(£)
LTIP Deferred shares
Outstanding at 1 January 2024 10,947,382 47,068,204 16,902,217 4.49
Granted2,3 2,320,695 25,712,216 9,707,454 -
Lapsed6 (2,703,518) (1,431,969) (1,289,780) 4.88
Vested/Exercised (923,866) (19,654,725) (4,754,780) 3.42
Outstanding at 31 December 2024 9,640,693 51,693,726 20,565,111 5.48
Total number of securities available for issue under the plan 9,640,693 51,693,726 20,565,111 5.48
Percentage of the issued shares this represents as at 31 December 2024 0.40 2.13 0.85
Exercisable as at 31 December 2024 - 250,094 1,121,867 3.78
Range of exercise prices (£)3 - - 3.67 - 6.10
Intrinsic value of vested but not exercised options ($ million) - 3.10 8.57
Weighted average contractual remaining life (years) 7.32 8.22 2.58
Weighted average share price for awards exercised during the period (£) 6.60 6.68 8.20
1 Granted under the 2021 Plan and 2011 Plan. Employees do not contribute
to the cost of these awards
2 2,315,422 (LTIP) granted on 12 March 2024; 5,059 (LTIP) granted as a
notional dividend on 1 March 2024; 214 (LTIP) granted as a notional dividend
on 8 August 2024. 24,381,791 (Deferred shares) granted on 11 March 2024;
229,896 (Deferred shares) granted as a notional dividend on 1 March 2024;
463,694 (Deferred shares) granted on 17 June 2024; 86,702 (Deferred shares)
granted as a notional dividend on 8 August 2024; 287,533 (Deferred shares)
granted on 23 September 2024; 262,600 (Deferred shares) granted on 18 November
2024. 9,707,454 (Sharesave) granted on 23 September 2024
3 No discretionary awards (LTIP or deferred/buy-out awards) have been
granted in the form of options since June 2015. For historic awards granted as
options and exercised in the period to 31 December 2024, the exercise price of
deferred/ buy-out shares options was nil
4 For Sharesave granted in 2024 the exercise price is £6.10 per share, a
20% discount from the closing share price on 16 August 2024 (£7.624). The
average of the closing prices over the five days to the invitation date of 19
August 2024 was £7.421
5 All Sharesave awards are in the form of options. The exercise price of
Sharesave options is £ 6.10 for options granted in 2024 £ 5.88 for options
granted in 2023, £4.23 for options granted in 2022, £3.67 for options
granted in 2021 and £3.14 for options granted in 2020
6 No options or share awards were cancelled in the period
Page 95
Reconciliation of share award movements for the year to 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, 1318 (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 2013
was £7.214
See pages 211 and 212 of the Standard Chartered PLC Annual Report 2023 for
information specific to Directors
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.
Page 96
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.
Investments in subsidiary undertakings 2024 2023
$million
$million
As at 1 January 60,791 60,975
Additions1 1,631 1,566
Disposal2 (803) (1,750)
Other Movements3 (26) -
As at 31 December 61,593 60,791
1 Includes internal Additional Tier 1 Issuances of $980 million by Standard
Chartered Bank, $600 million by Standard Chartered Bank (Hong Kong) Limited
(31 December 2023: Includes internal Additional Tier 1 Issuances of $992
million by Standard Chartered Bank, $575 million additional investment in
Standard Chartered Holdings Limited)
2 Includes redemption of Preference share capital of $553 million by Standard
Chartered Bank Singapore Limited and additional Tier 1 capital of $250 million
by Standard Chartered Bank (Hong Kong) Limited (31 December 2023: Additional
Tier1 capital of $1,000 million by Standard Chartered Bank)
3 Relates to realised translation gain ($26 million) on redemption of AT1
securities of SGD 750 million ($553 million)
At 31 December 2024, the principal subsidiary undertakings, all indirectly
held except for Standard Chartered Bank (Hong Kong) Limited, and principally
engaged in the business of banking and provision of other financial services,
were as follows:
Principal subsidiary¹ Main areas of operation Group interest Total Issued share capital (millions)
in ordinary
share capital
%
Standard Chartered Bank Refer footnote³ 100 US$ 20,597⁴
Standard Chartered Bank (Hong Kong) Limited Hong Kong 100 Refer footnote⁵
Standard Chartered Bank (Singapore) Limited Singapore 100 Refer footnote⁶
Standard Chartered Bank Korea Limited Korea 100 KRW 1,313,043
Standard Chartered Bank (China) Limited² China 100 CNY 10,727
Standard Chartered Bank (Taiwan) Limited Taiwan 100 TWD 29,106
Standard Chartered Bank AG Germany 100 EUR 180
Standard Chartered Bank Malaysia Berhad Malaysia 100 RM 880⁷
Standard Chartered Bank (Thai) Public Company Limited Thailand 99.87 THB 14,837
Standard Chartered Bank (Pakistan) Limited Pakistan 98.99 PKR 38,716
Standard Chartered Bank Botswana Limited Botswana 75.83 BWP 298
Standard Chartered Bank Kenya Limited Kenya 74.32 KES 2,169⁸
Mox Bank Limited Hong Kong 71.58 HKD 5,279
Standard Chartered Bank Nepal Limited Nepal 70.21 NPR 9,429
Standard Chartered Bank Ghana PLC Ghana 69.42 GHS 409⁹
1 Unless other wise stated the share capital comprises of ordinary or common
shares refer to note 40 for proportion of shares held and for country of
incorporation
2 Registered as a Limited company under the Law of China
3 Includes United Kingdom, Middle East, South Asia, Asia Pacific, Americas
and, through Group companies, Africa
4 US$1.00 Ordinary 20,596,529,642; US$0.01 Non-Cumulative Irredeemable
Preference 24,000 and US$5.00 Non-Cumulative Redeemable Preference 37500
5 HKD Ordinary-A 12,502,836,515; HKD Ordinary-B -78,000,000; US$ Ordinary-C
2,698,156,122 and US$ Ordinary-D 3,010,485,610
6 SGD Ordinary-A 1,653,000,000; SGD Non-cumulative Class D Tier-1 Preference
400,000,000; US$ Ordinary-A 3,383,000,000; US$ Non-cumulative Class B Tier-1
Preference 500,000,000; US$ Ordinary-B 733,000,000 and US$ Ordinary-C
333,000,000
7 RM Ordinary 499,999,988 and RM Irredeemable Convertible Preference
380,190,000
8 KES5.00 Ordinary 1,889,252,945 and KES5.00 Preference 280,000,000
9 GHS Ordinary 400,000,000 and GHS0.52 Non-cumulative Irredeemable
Preference Shares 9,092,858
A complete list of subsidiary undertaking is included in Note 40.
Page 97
The Group does not have any material non-controlling interest except as listed
above, which contribute $36 million (31 December 2023: $35 million) of the
(loss)/Profit attributable to non-controlling interest and $292 million (31
December 2023: $290 million) of the equity attributable to non-controlling
interests
During 2024 the Group disposed of its investments in subsidiaries and the
gain/loss on disposal was SCB Zimbabwe Limited & Africa Enterprise Network
Trust (loss:$172 million including translation adjustment loss: $190 million),
SCB Angola S.A. (loss: $26 million including translation adjustment loss:$31
million), SCB Sierra Leone Limited (loss: $19 million including translation
adjustment loss:$25 million), Shoal Limited (gain:$14 million) and Autumn life
Pte. Ltd. (gain:$3 million).
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.
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 2024, the total cash and balances with central banks was $63 billion
(31 December 2023: $70 billion) of which $8 billion (31 December 2023: $6
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:
2024 2023
$million
$million
Loss from Investment in Joint Ventures (10) (13)
Profit from Investment in Associates 118 154
Total 108 141
Interests in associates and joint ventures 2024 2023
$million
$million
As at 1 January 966 1,631
Exchange translation difference (40) 16
Additions1 22 64
Share of profits 108 141
Dividend received2 (36) (11)
Impairment - (872)
Share of FVOCI and Other reserves 9 (7)
Other movements3 (9) 4
As at 31 December 1,020 966
1 Includes non-cash consideration of $6.4 million (disposal of Autumn Life)
from Vault 22 Solutions Holdings Ltd and $3.6 million (convertible notes) from
Verified Impacts Holdings Pte Ltd
2 Includes $30 million capital distribution from Ascenta IV
3 Includes Investment in Seychelles International Mercantile Banking
Corporation Limited classifieds as held for sale
Page 98
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 Group interest
of operation
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%.
Although the Group's investment in China Bohai Bank is less than 20 per cent,
it is an associate because of the significant influence the Group can 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.
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.
Bohai publishes their results 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 2024 in the Group's consolidated
statement of income and consolidated statement of comprehensive income for the
year ended 31 December 2024, also considering any known changes or events in
the subsequent period from 1 October 2024 to 31 December 2024 that would have
materially affected Bohai's results.
Impairment testing
On 31 December 2024, the listed equity value of Bohai is below the carrying
amount of the Group's investment in associate. The Group assessed the carrying
value of its investment in Bohai for impairment and concluded that no
impairment was required for the period ended 31 December 2024 ($850 million
for the year ended 31 December 2023; $1,459 million of accumulated impairment
as at 31 December 2024) . The carrying value of the Group's investment in
Bohai of $738 million (2023: $700 million) represents the higher of the value
in use and fair value less costs of disposal. The financial forecasts used in
the recoverable amount, a value in use (VIU) calculation, reflects Group
management's best estimate of Bohai's future earnings, in line with current
economic conditions and latest Bohai's reported results.
Bohai 31.12.24 31.12.23
$million
$million
VIU 738 700
Carrying amount1 738 700
Market capitalisation2 338 418
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
period end
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 dispose,
with its carrying amount.
The 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 Price to Earnings (P/E) exit multiple.
The key assumptions in the VIU are as follows:
• Short to medium term projections are based on Group management's
best estimates of future profits available to ordinary shareholders and have
been determined with reference to the latest published financial results, the
historical performance of Bohai and forward looking macro-economic variables
for Mainland China.
Page 99
• The projections use available information and include normalised
performance over the forecast period, inclusive of: (i) balance sheet growth
assumptions based on the short to medium term GDP growth rates for Mainland
China; (ii) Net Interest Income (NII) projecting interest income (primarily
the 1-year Loan Prime Rate, 1-year LPR, as basis) and interest expenses
(Shanghai Interbank Offered Rate, 3m SHIBOR, as basis) which reference to
forecast third party market interest rates plus/minus a observed historical
spread to the benchmark rate; (iii) Non-interest income estimated according to
the latest available performance of Bohai, with consideration of the
contribution of the constituent parts of the non-interest income; (iv) 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; and (v) Statutory tax rate of 25% was applied to the
taxable profit of Bohai, after consideration of taxable and non-taxable
elements, consistent with historical reported results;
• The distributable reserves under the DDM are calculated as the
difference between the capital resources and the capital requirements in each
of the forecast periods. The calculation assumes a target CET 1 capital ratio
and risk weighted asset (RWA) growth consistent with total assets.
• The discount rate applied to these cash flows was estimated with
reference to a capital asset pricing model (CAPM), which includes a long-term
risk-free rate, beta, and company risk premium assumptions for Bohai; and
• A long-term average P/E multiple of comparable companies is used
to derive a TV after the 5-year forecast period.
The VIU model was refined during 2024 to include more granular forecasting
assumptions for each period. While it is impracticable for the Group to
estimate the impact on future periods, the key changes to the 2024 model are
summarised as follows:
• Separately forecast interest income and interest expenses, by
applying an estimated yield and cost to forecasted interest-earning assets and
interest-bearing liabilities of each forecast period. In the previous model,
net interest income was estimated by applying a net interest margin (NIM)
percentage to the interest earning assets of each period.
• Non-interest income was calculated by applying the historical
average return on the respective components of the non-interest income, grown
at the relevant GDP rate for Mainland China, over the forecasted period. In
the previous model, the non-interest income was projected based on the latest
actual results reported by Bohai and grown according to long-term GDP rate
• A statutory tax rate of 25% was applied to the taxable profit of
Bohai, after consideration of taxable and non-taxable elements, consistent
with the 5yr-average of historical reported results. In previous model, the
calculation of the tax expenses was based on the reported effective tax rate
as per published financial statements of Bohai; and
• A P/E multiple was used to calculate the TV. The Gordon Growth
model was used in the previous period . The Group will continue to evaluate
the TV under both methods.
The key assumptions used for the VIU calculation:
31.12.24 31.12.23
Post-tax discount rate1 10.5% 11.0%
Total balance-sheet (and risk weighted assets) growth rate 3.77% - 4.52% 4.00%
P/E multiple used to calculate TV² 5.6x N/A
Interest income3 3.00%-3.56% N/A
Interest expense3 1.77%-2.01% N/A
Net fee income growth rate 3.77%-4.52% 4.00%
Expected credit losses as a percentage of customer loans4 0.84%-1.36% 0.80%-1.24%
Expected credit losses as a percentage of financial investments measured at 0.48%-1.26% 0.35%-0.67%
amortised cost and FVOCI4
Tax expense5 5.4% - 14.1% 12.0% - 16.0%
Capital maintenance ratio 8.00% 8.00%
1 Pre-tax Discount rate of 15.31% was used in 2024 (2023: 13.68%). The
difference in pre-tax discount rates relates to changes in effective tax rate
2 P/E multiple approach was introduced in 2024, therefore comparative not
applicable to previous period
3 1yr LPR and 3m SHIBOR rate forecasts were sourced from an external
third-party provider, and with a spread derived from long term historical
averages, are used to produce the interest income and interest expense
forecasts. These assumptions were introduced in 2024 and are therefore not
applicable to previous period. For 31 December 2023, NIM range of 1.21%-1.48%
was used in the model
4 The low end of the range is based on historical loss rates, and the high
end of the range includes adjustments for incremental judgemental management
overlays
5 The tax rates disclosed are the implied effective tax rates (%) over the
5-yr forecast period. The 31 December 2024 tax expense forecasts, calculated
from the taxable profit, considered the 5-year historical average of
non-taxable income (16.09%) and non-deductible expenses (12.53%). A statutory
tax rate of 25% was applied to the taxable profit of Bohai, after
consideration of taxable and non-taxable elements. In periods when losses are
forecast, the effective tax rate applied was 0%. For the 31 December 2023 VIU,
the calculation of the tax expenses was based on the reported effective tax
rate. The 5-year historical average effective tax rate (2019 to 2023) of Bohai
is 11.5%, with the 5-year low being 1.6% (2023) and the 5-year high being
17.3% (2019)
Page 100
The table below discloses sensitivities to the key assumptions of Bohai,
according to management's 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.
Sensitivities basis points Key assumption increase Key assumption decrease
Increase/(decrease) Increase/(decrease)
in VIU
in VIU
$ million
$ million
Discount Rate 100 (31) 33
Total balance sheet (and risk weighted asset) growth rate 100 (26) 24
P/E multiple used to calculate TV 1.0x 120 (120)
Net interest income - Scenario 1¹ 10 (15) 15
Net interest income - Scenario 2² Various² 360 (230)
Net fee income 100 43 (42)
Expected credit losses as a percentage of customer loans 10 (147) 145
Expected credit losses as a percentage of financial investments measured at 10 (78) 77
amortised cost and FVOCI
Tax expense3 300 23 (23)
Capital maintenance ratio 50 (142) 142
1 In September 2024, the People's Bank of China announced a stimulus
package aimed at guiding the loan prime rate and deposit rates downward in
tandem, ensuring the stability of commercial banks' net interest margins. This
scenario assumes that 1yr LPR and 3m SHIBOR increase or decrease by the same
amount, to demonstrate the impact on the VIU of a similar scenario
2 An alternative scenario is that Bohai's asset yield and liability cost move
in the same direction, albeit by different amounts, through the five year
forecast period including the terminal value. The key assumption increase
sensitivity assumes that asset yields increase by 25 basis points and
liability costs increase by 10 basis points in each period. The key assumption
decrease sensitivity assumes that asset yields decrease by 25 basis points and
liability costs decrease by 15 basis points in each period
3 Changes in tax expense applied only to both average percentages of
non-taxable income (16.09%) and non-deductible expenses (12.53%). Refer to
footnote 5 of the key assumptions table for more details
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:
30.09.24 30.09.23
$million
$million
Total assets 244,510 246,212
Total liabilities 229,259 230,101
Operating income1 3,583 3,640
Net profit2 681 811
Other comprehensive income1 69 (38)
1 This represents twelve months of earnings (1 October to 30 September)
2 Bohai only publishes its effective tax rate on a semi-annual basis. The
effective tax rate of Bohai for the period that ended 30 June 2024 was 10.1%
(1.6%, 31 December 2023)
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 101
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.
31.12.24 31.12.23
$million
$million
Shipping lease 14 52
Principal and other structured finance 474 353
Total 488 405
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. 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.
2024 2023
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 1,222 255 178 124 - 1,779 954 269 143 137 - 1,503
Loans and advances/Investment securities at amortised cost 16,305 16,735 12,656 - 97 45,793 17,795 15,105 13,353 - 190 46,443
Investment securities (fair value through other comprehensive income) 2,371 - - - - 2,371 2,443 - - - - 2,443
Other assets - - 1 - - 1 - - 34 - - 34
Total assets 19,898 16,990 12,835 124 97 49,944 21,192 15,374 13,530 137 190 50,423
Off-balance sheet - 11,075 6,901 63 73 18,112 - 8,869 6,691 - 20 15,580
Group's maximum exposure to loss 19,898 28,065 19,736 187 170 68,056 21,192 24,243 20,221 137 210 66,003
Total assets of structured entities 129,864 17,579 14,758 226 - 162,427 191,627 15,374 31,806 250 1,688 240,745
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 102
• 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.
• 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
2024 2023 2024 2023
$million
$million
$million
$million
Amortisation of discounts and premiums of investment securities (815) (704) - -
Interest expense on subordinated liabilities 744 951 578 632
Interest expense on senior debt securities in issue 2,584 2,068 1,855 1,434
Other non-cash items (122) (227) (12) 8
Net loss/(gain) on sale of businesses 210¹ (351) - -
Pension costs for defined benefit schemes 62 61 - -
Share-based payment costs 334 219 - -
Impairment losses on loans and advances and other credit risk provisions 547 508 - -
Dividend income from subsidiaries - - (4,101) (4,738)
Other impairment 588 1,008 - -
Gain on disposal of property, plant and equipment (23) (31) - -
Loss on disposal of FVOCI and AMCST financial assets 264 209 - -
Depreciation and amortisation 1,126 1,071 - -
Fair value changes taken to income statement (2,140) (1,666) 9 (202)
Foreign Currency revaluation (583) 299 1 19
Profit from associates and joint ventures (108) (141) - -
Total 2,668 3,274 (1,670) (2,847)
1 Refer note 6
Page 103
Change in operating assets
2024 2023 2024 2023
$million
$million
$million
$million
(Increase)/decrease in derivative financial instruments (31,939) 13,061 (32) (19)
(Increase)/decrease in debt securities, treasury bills and equity shares held (25,823) (29,477) 376 (4,068)
at fair value through profit or loss
Increase in loans and advances to banks and customers (13,776) (787) - -
Net (increase)/decrease in prepayments and accrued income (224) 82 - -
Net decrease in other assets 5,331 2,663 338 268
Total (66,431) (14,458) 682 (3,819)
Change in operating liabilities
2024 2023 2024 2023
$million
$million
$million
$million
Increase/(decrease) in derivative financial instruments 26,951 (13,629) (39) (239)
Net increase in deposits from banks, customer accounts, debt securities in 7,253 17,877 613 4,479
issue, Hong Kong notes in circulation and short positions
Increase in accruals and deferred income 79 1,106 101 153
Net increase/(decrease) in other liabilities 5,090 (3,377) (1,574) (1,154)
Increase in amount due to parents/subsidiaries/other related parties - - 35 -
Total 39,373 1,977 (864) 3,239
Disclosures
Group Company
2024 2023 2024 2023
$million
$million
$million
$million
Subordinated debt (including accrued interest):
Opening balance 12,216 13,928 12,123 13,895
Proceeds from the issue - 18 - -
Interest paid (519) (563) (505) (545)
Repayment (1,517) (2,160) (1,517) (2,160)
Foreign exchange movements (191) 146 (190) 146
Fair value changes from hedge accounting 48 311 97 271
Accrued interest and Others 499 536 483 516
Closing balance 10,536 12,216 10,491 12,123
Senior debt (including accrued interest):
Opening balance 41,350 32,288 17,518 14,080
Proceeds from the issue 11,044 15,261 3,887 5,105
Interest paid (1,366) (1,145) (708) (434)
Repayment (11,185) (6,471) (2,619) (2,037)
Foreign exchange movements (454) (21) (248) (2)
Fair value changes from hedge accounting 42 119 6 188
Accrued interest and Others 1,145 1,319 824 618
Closing balance 40,576 41,350 18,660 17,518
35. Cash and cash equivalents
Accounting policy
Cash and cash equivalents includes:
• Cash on hand and balances at central banks' that are on demand
or placements which are contractually due to mature overnight only, 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 (only non
demand or non overnight placements at central banks), which are held for
appropriate business purposes. On demand accounts with non central banks are
reported as part of 'Loans & Advances to banks'.
Page 104
Group Company
2024 2023 2024 2023
$million
$million
$million
$million
Cash and balances at central banks 63,447 69,905 - -
Less: restricted balances (7,799) (6,153) - -
Treasury bills and other eligible bills 5,472 5,931 - -
Loans and advances to banks 9,654 11,879 - -
Loans and advances to Customers 18,120 25,829 - -
Investments 1,034 244 - -
Amounts owed by and due to subsidiary undertakings - - 11,601 10,294
Total 89,928 107,635 11,601 10,294
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.
2024 2023
$million
$million
Salaries, allowances and benefits in kind 41 42
Share-based payments 38 26
Bonuses paid or receivable 7 5
Termination benefits 2 -
Total 88 73
Transactions with directors and others
As at 31 December 2024, 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:
2024 2023
Number $million Number $million
Directors1 3 - 4 -
1 Outstanding loan balances were below $50,000
The loan transactions provided to the directors of Standard Chartered PLC were
a connected transaction under Chapter 14A of the 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 2024, Standard Chartered Bank had in place a charge over $68
million (31 December 2023: $68 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 below.
Page 105
Company
The Company has received $1,838 million (31 December 2023: $1,469 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.
2024 2023
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 11,318 135 147 10,208 60 25
Derivative financial instruments 98 - - 62 12 -
Debt securities 18,124 5,512 1,221 20,524 4,775 1,070
Total assets 29,540 5,647 1,368 30,794 4,847 1,095
Liabilities
Derivative financial instruments 1,042 23 - 1,104 - -
Total liabilities 1,042 23 - 1,104 - -
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:
2024 2023
$million
$million
Assets
Financial Assets held at FVTPL - 14
Derivative assets 5 12
Total assets 5 26
Liabilities
Deposits 209 959
Derivative liabilities 4 -
Other Liabilities - 2
Total liabilities 213 961
Loan commitments and other guarantees¹ 14 113
1 The maximum loan commitments and other guarantees during the period were $14
million (31 December 2023:$113 million)
37. Post balance sheet events
On 16 January 2025 Standard Chartered PLC issued AT1 of $1.0 billion and on 21
January 2025 Standard Chartered PLC issued $1.0 billion 6.228 per cent Fixed
Rate Reset Notes due 2036, $1.0 billion 5.545 per cent Fixed Rate Reset Notes
due 2029 and $0.5 billion Floating Rate Notes due 2029. Standard Chartered
PLC redeemed $2.0 billion senior debt on 30 January 2025 and redeemed $1.0
billion subordinated debt on 12 February 2025.
On 23 January 2025, the Indian branch of Standard Charted Bank sold its
Unsecured Personal Loan business to Kotak Mahindra Bank Limited for a purchase
consideration of INR32 billion ($375 million) against a book value of $389
million on that date, giving rise to a loss on disposal of $14 million.
A share buyback for up to a maximum consideration of $1.5 billion has been
declared by the directors after 31 December 2024. This will reduce the number
of ordinary shares in issue by cancelling the repurchased shares.
A final dividend for 2024 of 28 cents per ordinary share was declared by the
directors after 31 December 2024.
Page 106
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.
2024 2023
$million
$million
Audit fees for the Group statutory audit 31.3 27.8
Of which fees for the audit of Standard Chartered Bank Group 23.2 20.6
Fees payable to EY for other services provided to the SC PLC Group:
Audit of Standard Chartered PLC subsidiaries 13.5 13.4
Total audit fees 44.8 41.2
Audit-related assurance services 6.6 6.0
Other assurance services 5.4 7.0
Other non-audit services 0.4 0.8
Transaction related services 0.6 0.3
Total non-audit fees 13.0 14.1
Total fees payable 57.8 55.3
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 $1 million (2023: $0.9 million).
39. Standard Chartered PLC (Company)
Classification and measurement of financial instruments
Financial assets 2024 2023
Derivatives held for hedging Amortised cost Non-trading mandatorily at fair value through profit or loss Total Derivatives held for hedging Amortised cost Non-trading mandatorily at fair value through profit or loss Total
$million
$million
$million
$million
$million
$million
$million
$million
Derivatives 112 - - 112 80 - - 80
Investment securities - 5,808 19,0491 24,857 - 6,944 19,4251 26,369
Amounts owed by subsidiary undertakings - 11,601 - 11,601 - 10,294 - 10,294
Total 112 17,409 19,049 36,570 80 17,238 19,425 36,743
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 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 $5,808 million (31 December 2023: $6,944 million).
Page 107
In 2024 and 2023, amounts owed by subsidiary undertakings have a fair value
equal to carrying value.
Financial liabilities 2024 2023
Derivatives held for hedging Amortised cost Designated at fair value through profit or loss Total Derivatives held for hedging Amortised cost Designated at fair value through profit or loss Total
$million
$million
$million
$million
$million
$million
$million
$million
Derivatives 1,065 - - 1,065 1,104 - - 1,104
Debt securities in issue - 18,167 14,175 32,342 - 17,142 14,007 31,149
Subordinated liabilities and other borrowed funds - 7,661 2,677 10,338 - 9,248 2,697 11,945
Amounts owed to subsidiary undertakings - 35 - 35 - - - -
Total 1,065 25,863 16,852 43,780 1,104 26,390 16,704 44,198
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 $18,313
million (2023: $17,195 million).
The fair value of subordinated liabilities and other borrowed funds held at
amortised cost is $7,336 million (2023: $8,717 million).
Derivative financial instruments
Derivatives 2024 2023
Notional principal amounts Assets Liabilities Notional principal amounts Assets Liabilities
$million
$million
$million
$million
$million
$million
Foreign exchange derivative contracts:
Forward foreign exchange 9,077 46 30 8,968 32 -
Currency swaps 545 20 - 563 - 35
Interest rate derivative contracts:
Swaps 14,863 32 1,035 14,819 43 1,069
Forward rate agreements and options - - - - - -
Credit derivative contracts 4,030 14 - 4,030 5 -
Total 28,515 112 1,065 28,380 80 1,104
Credit risk
2024 2023
$million
$million
Derivative financial instruments 112 80
Debt securities 24,857 26,369
Amounts owed by subsidiary undertakings 11,601 10,294
Total 36,570 36,743
In 2024 and 2023, amounts owed by subsidiary undertakings were neither past
due nor impaired; the Company had no individually impaired loans.
In 2024 and 2023, 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 108
Liquidity risk
The following table analyses the residual contractual maturity of the assets
and liabilities of the Company on a discounted basis:
2024
One month Between one month and three months Between Between Between Between Between More than Total
or less
$million
three months and six months
six months and nine months
nine months and one year
one year and two years
two years and five years
f ive years and undated
$million
$million
$million
$million
$million
$million
$million
$million
Assets
Derivative financial instruments 45 23 - 20 - 24 - - 112
Investment securities - - - - - 1,725 7,205 15,927 24,857
Amount owed by subsidiary undertakings 1,763 1,536 1,931 110 53 2,355 2,695 1,158 11,601
Investments in subsidiary undertakings - - - - - - - 61,593 61,593
Other assets - - - - - - - - -
Total assets 1,808 1,559 1,931 130 53 4,104 9,900 78,678 98,163
Liabilities
Derivative financial instruments 30 - 22 - - 53 147 813 1,065
Senior debt - - 992 - - 4,979 12,887 13,484 32,342
Amount owed to subsidiary undertakings 35 - - - - - - - 35
Other liabilities 304 512 126 14 3 - - - 959
Subordinated liabilities and other borrowed funds 2 46 14 187 - 376 1,995 7,718 10,338
Total liabilities 371 558 1,154 201 3 5,408 15,029 22,015 44,739
Net liquidity gap 1,437 1,001 777 (71) 50 (1,304) (5,129) 56,663 53,424
2023
One month Between one month and three months Between Between Between Between Between More than Total
or less
$million
three months and six months
six months and nine months
nine months and one year
one year
two years and five years
five years and
$million
$million
$million
$million
$million
and two years
$million
undated
$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
Page 109
Financial liabilities on an undiscounted basis
2024
One month Between one month and three months Between Between Between Between Between More than Total
or less
$million
three months and six months
six months and nine months
nine months and one year
one year and two years
two years and five years
five years
$million
$million
$million
$million
$million
$million
$million
and undated
$million
Derivative financial instruments 30 - 22 - - 53 147 813 1,065
Debt securities in issue 276 151 1,355 368 308 6,333 15,780 15,635 40,206
Subordinated liabilities and other borrowed funds 33 134 34 206 - 407 2,261 13,473 16,548
Other liabilities - 959 - - - - - - 959
Total liabilities 339 1,244 1,411 574 308 6,793 18,188 29,921 58,778
2023
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
Page 110
40. Related undertakings of the Group
As at 31 December 2024, the Group's interests in related undertakings are
disclosed below. Unless otherwise stated, the share capital disclosed
comprises ordinary or common shares which are held by 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. Unless
otherwise stated, the principal country of operation of each subsidiary is the
same as its country of incorporation Note 32 details undertakings that have a
significant contribution to the Group's net profit or net assets.
Subsidiary Undertakings
Name Proportion of Footnotes
shares held
(%)
FinVentures UK Limitedv 100 1 , 163, 166
SC (Secretaries) Limitedx 100 1
SC Transport Leasing 1 LTDvi 100 1, 163, 166
SC Transport Leasing 2 Limitedvi 100 1, 163, 166
SC Ventures G.P. Limitedv 100 1
SC Ventures Innovation Investment L.P.v 100(Y) 1
SCMB Overseas Limitedv 100 1, 163, 166
Standard Chartered Africa Limitedv 100 1, 163, 166
Standard Chartered Banki 100; 100Q,T 1
Standard Chartered Foundationx 100AE 1 , 158
Standard Chartered Health Trustee (UK) Limitedx 100 1
Standard Chartered I H Limitedv 100 1, 163, 166
Standard Chartered Leasing (UK) Limitedvi 100 1, 163, 166
Standard Chartered Nominees (Private Clients UK) Limitedi 100 1
Standard Chartered Securities (Africa) Holdings Limitedv 100 1, 163, 166
Standard Chartered Strategic Investments Limitedv 100 1, 163, 166
Standard Chartered Trustees (UK) Limitedx 100 1
SC Ventures Holdings Limitedv 100; 100(M) 1
The SC Transport Leasing Partnership 1vi 100Y 1, 163, 166
The SC Transport Leasing Partnership 2vi 100Y 1, 163, 166
The SC Transport Leasing Partnership 3vi 100Y 1, 163, 166
The SC Transport Leasing Partnership 4vi 100Y 1, 163, 166
Zodia Markets (UK) Limitedi 100 1
Zodia Markets Holdings Limitedv 83.96 1
Bricks (C&K) LPx 100Y 2 , 158
Bricks (C) LPx 100Y 2 , 158
Bricks (T) LPx 100Y 2 , 158
Corrasi Covered Bonds LLPx 75AA 3
Zodia Custody Limitediv 95.1; 15.132K 107
Zodia Holdings Limitedv 100A 107
Assembly Payments UK Ltdiv 100 4 , 158
CurrencyFair (UK) Limitedi 100 4 , 158
Zai Technologies Limitediv 100 4 , 158
Standard Chartered Grindlays Pty Limitedv 100 5
Assembly Payments Australia Pty Ltdiv 100 131 , 158
Zai Australia Pty Ltdiv 100 131
CurrencyFair Australia Pty Ltdiv 100 6 , 158
Standard Chartered Bank Insurance Agency (Proprietary) Limitedi 100 7
Standard Chartered Investment Services (Proprietary) Limitedi 100 7
Standard Chartered Bank Botswana Limitedi 75.827 7
Standard Chartered Botswana Nominees (Proprietary) Limitedi 100 7
Standard Chartered Botswana Education Trustx 100AB 7
Standard Chartered Representação e Participações Ltdai 100 8
Standard Chartered Securities (B) Sdn Bhdi 100 108
Standard Chartered Bank Cameroon S.A.i 100 9
CurrencyFair (Canada) Ltdiv 100 10 , 158
Page 111 Proportion of Footnotes
shares held
(%)
Name
SCB Investment Holding Company Limitedv 99.999A 114
Standard Chartered Global Business Services Co., Ltdviii 100 12 , 160
Standard Chartered Global Business Services (Guangzhou) Co., Ltd.viii 100 121 , 160
Guangzhou CurrencyFair Information Technology Limitediv 100 13,166
Standard Chartered Bank Cote d'Ivoire SAi 100 14
Standard Chartered Bank Gambia Limitedi 74.852 15
Standard Chartered Bank AGi 100 16
Solvezy Technology Ghana Ltdiv 100 17
Standard Chartered Bank Ghana PLCi 69.416; 87.043T 18
Standard Chartered Ghana Nominees Limitedi 100 18
Standard Chartered Wealth Management Limited Companyi 100 19
Standard Chartered PF Real Estate (Hong Kong) Limitedv 100 81
Standard Chartered Private Equity Limitedv 100 20
Standard Chartered Asia Limitedv 100; 100AD 20
Assembly Payments HK Limitediv 100 21 , 158
CurrencyFair Asia Limitediv 100 91 , 158
Zodia Custody (Hong Kong) Limitediv 100 132
Assembly Payments India Private Limitediv 100 92
Standard Chartered Global Business Services Private Limitedix 100 22
Standard Chartered Finance Private Limitedix 98.675 23
St Helen's Nominees India Private Limitedi 100 24
Standard Chartered Private Equity Advisory (India) Private Limitedix 100 24
Standard Chartered Research and Technology India Private Limitediv 100A,R 136
Standard Chartered Capital Limitedi 100 153
Standard Chartered Securities (India) Limitedi 100 93
Standard Chartered (India) Modeling and Analytics Centre Private Limitedix 100 26
SCV Research and Development Pvt. Ltd.iv 100 117
PT Labamu Sejahtera Indonesiaiv 100 27
CurrencyFair (Canada) Limitediv 100 28
CurrencyFair Limitediv 27.951; 100A 28 , 158, 165
CurrencyFair Nominees Limitediv 100 28 , 158
Zodia Markets (Ireland) Limitedi 100 133
Zodia Custody (Ireland) Limitediv 100 134
Standard Chartered Assurance Limitedi 100; 100M 29
Standard Chartered Isle of Man Limitedi 100 29
Standard Chartered Securities (Japan) Limitedi 100 30
SCB Nominees (CI) Limitedi 100 31
Solvezy Technology Kenya Limitediv 100 32
Standard Chartered Bancassurance Intermediary Limitedi 100 32
Standard Chartered Investment Services Limitedv 100 32
Standard Chartered Bank Kenya Limitedi 74.318; 100J 32
Standard Chartered Securities (Kenya) Limitedi 100 32
Standard Chartered Financial Services Limitedi 100 32
Standard Chartered Kenya Nominees Limitedi 100 32
Tawi Fresh Kenya Limitediv 100 32
Standard Chartered Metropolitan Holdings SALv 99.9(A) 33
Cartaban (Malaya) Nominees Sdn Berhadi 100 34
Cartaban Nominees (Asing) Sdn Bhdi 100 34
Cartaban Nominees (Tempatan) Sdn Bhdi 100 34
Golden Maestro Sdn Bhdv 100 34
Price Solutions Sdn Bhdi 100 34
SCBMB Trustee Berhadx 100 34
Standard Chartered Bank Malaysia Berhadi 100; 100(S) 34
Standard Chartered Saadiq Berhadi 100 34
Resolution Alliance Sdn Bhdv 91 35
Standard Chartered Global Business Services Sdn Bhdix 100 115
Page 112 Proportion of Footnotes
shares held
(%)
Name
Assembly Payments Malaysia Sdn. Bhd.iv 100 37 , 158
Standard Chartered Bank (Mauritius) Limitedi 100 38
Standard Chartered Private Equity (Mauritius) Limitedi 100 113
Standard Chartered Private Equity (Mauritius) II Limitedi 100 113
Standard Chartered Private Equity (Mauritius) lll Limitedi 100 113
Subcontinental Equities Limitedv 100 39
Actis Treit Holdings (Mauritius) Limitedv 62.001A; 62.001B 149 , 158
Standard Chartered Bank Nepal Limitedi 70.21 40
Standard Chartered Holdings (Africa) B.V.v 100 1 , 161
Standard Chartered Holdings (Asia Pacific) B.V.v 100 1 , 161
Standard Chartered Holdings (International) B.V.v 100 1 , 161
Standard Chartered MB Holdings B.V.v 100 1 , 161
PromisePay Limitediv 100 41 , 158
Standard Chartered Bank Nigeria Limitedi 100; 100N,T 42
Standard Chartered Capital & Advisory Nigeria Limitedi 100 42
Standard Chartered Nominees (Nigeria) Limitedi 100 42
Standard Chartered Bank (Pakistan) Limitedi 98.986 43
Standard Chartered Group Services, Manila Incorporatedix 100 44
Standard Chartered Global Business Services spółka z ograniczoną 100 45
odpowiedzialnościąix
Standard Chartered Capital (Saudi Arabia)i 100 116
Actis Treit Holdings No.1 (Singapore) Private Limitedv 100 156
Actis Treit Holdings No.2 (Singapore) Private Limitedv 100 156
Standard Chartered Private Equity (Singapore) Pte. Ltdv 100 46
Standard Chartered Real Estate Investment Holdings (Singapore) Private 100 46
Limitedv
Raffles Nominees (Pte.) Limitedi 100 47
SCTS Capital Pte. Ltdi 100 48
SCTS Management Pte. Ltd.i 100 48
Standard Chartered Bank (Singapore) Limitedi 100A, B, C, U, V, W 48
Standard Chartered Trust (Singapore) Limitedx 100 48
Standard Chartered Holdings (Singapore) Private Limitedv 100 48
Standard Chartered Nominees (Singapore) Pte Ltdi 100 48
Audax Financial Technology Pte. Ltdiv 100A 90
CashEnable Pte. Ltd.iv 100A 90
Letsbloom Pte. Ltd.iv 100A 90
Libeara (Singapore) Pte. Ltd.iv 100 90
Libeara Pte. Ltd.v 100 90
SCV Research and Development Pte. Ltd.iv 100A 90
Zodia Custody (Singapore) Pte. Ltd.iv 100 46
Pegasus Dealmaking Pte. Ltd.iv 100 46
Power2SME Pte. Ltd.v 90.6 90
SCV Master Holding Company Pte. Ltd.v 100 46
Solv-India Pte. Ltd.v 100 90
Trust Bank Singapore Limitedi 60 130
CurrencyFair (Singapore) Pte.Ltdiv 100 49 , 158
Assembly Payments SGP Pte. Ltd.iv 100 50 , 158
Assembly Payments Pte. Ltd.iv 100; 100J 50 , 158
Standard Chartered Nominees South Africa Proprietary Limited (RF)i 100 52
Promisepay (PTY) Ltdiv 100 137 , 158
Standard Chartered Bank Tanzania Limitedi 100; 100J 53
Standard Chartered Tanzania Nominees Limitedi 100 53
Standard Chartered Bank (Thai) Public Company Limitedi 99.871 54
Standard Chartered Yatirim Bankasi Turk Anonim Sirketi 100 55
Standard Chartered Bank Uganda Limitedi 100 56
Furaha Finserve Uganda Limitedi 100 57
Appro Onboarding Solutions FZ-LLCiv 100 58
Financial Inclusion Technologies Ltdv 100A 94
Furaha Holding Ltdv 100; 100B 59
Page 113 Proportion of Footnotes
shares held
(%)
Name
myZoi Financial Inclusion Technologies LLCiv 100 61
Standard Chartered Bank International (Americas) Limitedi 100 111
Standard Chartered Holdings Inc.v 100 62
Standard Chartered Securities (North America) LLCi 100AA 62
CurrencyFair (USA) Inciv 100AC 64 , 158
Standard Chartered Trade Services Corporationi 100 89
Standard Chartered Bank (Vietnam) Limitedi 100X 65
Sky Harmony Holdings Limitedv 100 118
Standard Chartered Bank Zambia Plci 90 119
Standard Chartered Zambia Securities Services Nominees Limitedi 100 138
Stanchart Nominees Limitedi 100 1 , 164
Standard Chartered Holdings Limitedv 100 1 , 163, 164, 166
Standard Chartered NEA Limitedv 100 1 , 163, 166
Standard Chartered Nominees Limitedi 100 1 , 164
Standard Chartered (Guangzhou) Business Management Co., Ltd.ii 100 120, 166
Standard Chartered Bank (China) Limitedi 100 75 , 160, 166
Standard Chartered Securities (China) Limitedi 100 76, 166
Horsford Nominees Limitedi 100 77
Marina Acacia Shipping Limitedvi 100 78
Marina Amethyst Shipping Limitedvi 100 78
Marina Angelite Shipping Limitedvi 100 78
Marina Beryl Shipping Limitedvi 100 78
Marina Emerald Shipping Limitedvi 100 78
Marina Flax Shipping Limitedvi 100 78
Marina Gloxinia Shipping Limitedvi 100 78
Marina Hazel Shipping Limitedvi 100 78
Marina Ilex Shipping Limitedvi 100 78
Marina Iridot Shipping Limitedvi 100 78
Marina Mimosa Shipping Limitedvi 100 78
Marina Moonstone Shipping Limitedvi 100 78
Marina Peridot Shipping Limitedvi 100 78
Marina Sapphire Shipping Limitedvi 100 78
Marina Tourmaline Shipping Limitedvi 100 78
Standard Chartered Securities (Hong Kong) Limitedi 100 78
Marina Leasing Limitedvi 100 78
Standard Chartered Leasing Group Limitedv 100 78
Standard Chartered Trade Support (HK) Limitedi 100 78
Mox Bank Limitedi 71.579 79
Standard Chartered Bank (Hong Kong) Limitedi 100A,B,C,D 80
Standard Chartered Trust (Hong Kong) Limitedi 100 82
Standard Chartered Trustee (Hong Kong) Limitedx 100 82
Standard Chartered Funding (Jersey) Limitedv 100 83
Standard Chartered Bank Korea Limitedi 100 84
Standard Chartered Securities Korea Co., Ltdi 100 85
Marina Morganite Shipping Limitedvi 100 125 , 162
Marina Moss Shipping Limitedvi 100 125 , 162
Marina Tanzanite Shipping Limitedvi 100 125 , 162
Marina Angelica Shipping Limitedvi 100 86 , 162
Marina Aventurine Shipping Limitedvi 100 86 , 162
Marina Citrine Shipping Limitedvi 100 86 , 162
Marina Dahlia Shipping Limitedvi 100 86 , 162
Marina Dittany Shipping Limitedvi 100 86 , 162
Marina Lilac Shipping Limitedvi 100 86 , 162
Marina Lolite Shipping Limitedvi 100 86 , 162
Marina Obsidian Shipping Limitedvi 100 86 , 162
Marina Quartz Shipping Limitedvi 100 86 , 162
Marina Remora Shipping Limitedvi 100 86 , 162
Page 114 Proportion of Footnotes
shares held
(%)
Name
Marina Turquoise Shipping Limitedvi 100 86 , 162
Marina Zircon Shipping Limitedvi 100 86 , 162
Price Solution Pakistan (Private) Limitedi 100 87
Marina Partawati Shipping Pte. Ltd.vi 100 152
Standard Chartered Bank (Taiwan) Limitedi 100 88
CMB Nominees (RF) Proprietary Limitedx 100 52
Letsbloom India Private Limitediv 100 97
PointSource Technologies Pte. Ltd.x 100 90
Qatalyst Pte. Ltd.iv 72.727 90
SC Ventures Management Consulting (Shenzhen) Limitedx 100 74, 154, 166
Solv Vietnam Company Limitediv 100X 98
Standard Chartered Funds VCCx 100 48
TASConnect (Hong Kong) Private Limitediv 100 99
TASConnect (Malaysia) Sdn. Bhd.iv 100 36
TASConnect (Shanghai) Financial Technology Pte. Ltdiv 100 151
NewCo Holding EUR 19 S.A.x 100 128
Zodia Custody Australia Pty. Ltd.iv 100 126
Zodia Markets (AME) Limitediv 100 127
Zodia Markets (Jersey) Limitediv 100 129
Standard Chartered Luxembourg S.A.i 100 106
Solv Holding Ltdv 100 155
Joint ventures
Name Proportion of Footnotes
shares held
(%)
Olea Global Pte. Ltd.iv 47; 100J 46
Global Digital Asset Holdings Limitedv 100 60
Associates
Name Proportion of Footnotes
shares held
(%)
Clifford Capital Holdings Pte. Ltd.v 9.9 109
Verified Impact Exchange Holdings Pte. Ltdi 13.421 110
Seychelles International Mercantile Banking Corporation Limited.i 22 66
SWIAT GmbHiv 30 67
SBI Zodia Custody Co. Ltdiv 100 68
Partior Holdings Pte. Ltd.i 25; 25H; 11.111(I) 69
China Bohai Bank Co., Ltd.i 16.263 95, 166
Vault22 Solutions Holdings Ltdiv 100E 135
Significant investment holdings and other related undertakings
Name Proportion of Footnotes
shares held
(%)
Corrasi Covered Bonds (LM) Limitedi 20 3
ATSC Cayman Holdco Limitedv 5.272A; 100(B) 140
Actis Temple Stay Holdings (HK) Limitedv 39.689A; 39.689B 141
Mikado Realtors Private Limitedx 26 142
Industrial Minerals and Chemical Co. Pvt. Ltdx 26 157
Ascenta IIIv 31G 70
SCIAIGF Liquidating Trustv 43.96AB 112
Paxata, Inc.iii 40.74O; 8.908P 64
Page 115
Subsidiary/Associate Undertakings - In liquidation
Name Proportion of Footnotes
shares held
(%)
Standard Chartered Masterbrand Licensing Limitedx 100 122
Standard Chartered Leasing (UK) 3 Limitedvi 100 122
Birdsong Limitedx 100 71
Nominees One Limitedx 100 71
Nominees Two Limitedx 100 71
Songbird Limitedx 100 71
Standard Chartered Secretaries (Guernsey) Limitedx 100 71
Standard Chartered Trust (Guernsey) Limitedx 100 71
Standard Chartered Financial Services (Luxembourg) S.A.x 100 72
Standard Chartered IL&FS Management (Singapore) Pte. Limitedx 50 51
Banco Standard Chartered en Liquidacionx 100 123
Standard Chartered Uruguay Representacion S.A.x 100 73
Marina Opah Shipping Pte. Ltd.vi 100 152
Marina Cobia Shipping Pte. Ltdvi 100 152
Marina Aquata Shipping Pte. Ltd.vi 100 152
Marina Aruana Shipping Pte. Ltd.vi 100 152
Fintech for International development Ltdx 58.901A 96
Ascenta IVx 39.1Z 70
Cerulean Investments LPx 100Y 11
Subsidiary/Associate undertakings and Significant investment holdings -
Liquidated/dissolved/sold
Name Proportion of Footnotes
shares held
(%)
Assembly Payments, Inci 100 143
Assembly Escrow Inci 100 144 , 158
Shoal Limitediv 100 1
Standard Chartered Bank Zimbabwe Limitedi 100 145
Africa Enterprise Network Trustx 100AB 145 , 159
Standard Chartered Nominees Zimbabwe (Private) Limitedx 100 145
Standard Chartered Trading (Shanghai) Limitedx 100 148 , 160
Standard Chartered Bank Angola S.A.i 60 146
Standard Chartered Bank Sierra Leone Limitedi 80.656 147
Marina Fatmarini Shipping Pte. Ltd.vi 100 152
Marina Frabandari Shipping Pte. Ltd.vi 100 152
Marina Gerbera Shipping Pte. Ltd.vi 100 152
The BW Leasing Partnership 1 LPvi 100Y 107
The BW Leasing Partnership 2 LPvi 100Y 107
The BW Leasing Partnership 3 LPvi 100Y 107
The BW Leasing Partnership 4 LPvi 100Y 107
The BW Leasing Partnership 5 LPvi 100Y 107
Standard Chartered Overseas Investment, Inc.v 100 63
Actis Rivendell Holdings (HK) Limitedv 39.671A,B 141
Autumn Life Pte. Ltd.iv 100A 46
Page 116
Footnotes
Registered address
Address in country of incorporation
1 1 Basinghall Avenue, London, EC2V 5DD, United Kingdom
2 2 More London Riverside, London, SE1 2JT, United Kingdom
3 1 Bartholomew Lane, London, EC2N 2AX, United Kingdom
4 1 Poultry, London, EC2R 8EJ, United Kingdom
5 Level 5, 345 George St, Sydney NSW 2000, Australia
6 Milsons Landing, Level 5, 6A Glen Street, Milsons Point NSW 2061, Australia
7 5th Floor Standard House Bldg, The Mall, Queens Road, PO Box 496, Gaborone,
Botswana
8 Avenida Brigadeiro Faria Lima, no 3.477, 6º andar, conjunto 62 - Torre Norte,
Condominio Patio Victor Malzoni, CEP 04538-133, Sao Paulo, Brazil
9 1155, Boulevard de la Liberté, Douala, B.P. 1784, Cameroon
10 66 Wellington Street, West, Suite 4100, Toronto Dominion Centre, Toronto ON
M5K 1B7, Canada
11 Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman,
KY1-1104 , Cayman Islands
12 No. 35, Xinhuanbei Road, TEDA, Tianjin, 300457, China
13 Room 2619, No 9, Linhe West Road, Tianhe District, Guangzhou, China
14 23 Boulevard de la République, Abidjan 17, 17 B.P. 1141, Cote d'Ivoire
15 8 Ecowas Avenue, Banjul, Gambia
16 Taunusanlage 16, 60325, Frankfurt am Main, Germany
17 Standard Chartered Bank Building, 87 Independance Avenue, Ridge, ACCRA,
Greater ACCRA, GA-016-4621, Ghana
18 Standard Chartered Bank Building, No. 87, Independence Avenue, P.O. Box 768,
Accra, Ghana
19 87, Independence Avenue, Post Office Box 678, Accra, Ghana
20 13/F Standard Chartered Bank Building, 4-4A Des Voeux Road Central, Hong Kong
21 31/F, Tower 2 Times Square, 1 Matheson St, Causeway Bay, Hong Kong
22 1st Floor, Europe Building, No.1, Haddows Road, Nungambakkam, Chennai, 600
006, India
23 90 M.G.Road, II Floor, Fort, Mumbai, Maharashtra, 400001, India
24 Ground Floor, Crescenzo Building, G Block, C 38/39 , Bandra Kurla Complex,
Bandra (East) , Mumbai , Maharashtra , 400051, India
25 Crescenzo, 6th Floor, Plot No 38-39 G Block , Bandra Kurla Complex, Bandra
East , Mumbai , Maharashtra , 400051, India
26 Vaishnavi Serenity, First Floor, No. 112, Koramangala Industrial Area, 5th
Block, Koramangala, Bangalore, Karnataka, 560095, India
27 The Icon Business Park Blok P Nomor 03, RT 03/RW 09Sampora, Kec, Cisauk,
Kabupaten Tangerang, Banten, 15345, Indonesia
28 91 Pembroke Road, Dublin 4, Ballsbridge, Dublin, DO4 EC42, Ireland
29 1st Floor, Goldie House, 1-4 Goldie Terrace, Upper Church Street, Douglas, IM1
1EB, Isle of Man
30 21/F, Sanno Park Tower, 2-11-1 Nagatacho, Chiyoda-ku, Tokyo, 100-6155, Japan
31 15 Castle Street, St Helier, JE4 8PT, Jersey
32 Standard Chartered@Chiromo, 48 Westlands Road, P. O. Box 30003 - 00100,
Nairobi , Kenya
33 Atrium Building, Maarad Street, 3rd Floor, P.O. Box 11-4081 Raid El Solh,
Beirut Central District, Lebanon
34 Level 25, Equatorial Plaza, Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia
35 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
36 12th Floor, Menara Symphony , No. 5, Jalan Prof. Khoo Kay Kim, Seksyen 13,
46200 Petaling Jaya , Selangor, Malaysia
37 Level 13, Menara 1 Sentrum 201, Jalan Tun Sambanthan, Brickfields, 50470 Kuala
Lumpur, Malaysia
38 6th Floor, Standard Chartered Tower , 19, Bank Street, Cybercity, Ebene,
72201, Mauritius
39 Mondial Management Services Ltd, Unit 2L, 2nd Floor Standard Chartered Tower,
19 Cybercity, Ebene, Mauritius
40 Madan Bhandari Marg. Ward No.31, Kathmandu Metropolitan City, Kathmandu
District, Bagmati Province, Kathmandu, 44600, Nepal
41 PromisePay, 4 All good Place, Rototuna North, Hamilton, 3210, New Zealand
42 142, Ahmadu Bello Way, Victoria Island, Lagos, 101241, Nigeria
43 P.O. Box No. 5556, I.I. Chundrigar Road , Karachi , 74000, Pakistan
44 8th Floor, Makati Sky Plaza Building 6788, Ayala Avenue San Lorenzo, City of
Makati, Fourth District, National Capi, 1223, Philippines
45 Rondo Ignacego Daszyńskiego 2B, 00-843, Warsaw, Poland
46 9 Raffles Place, #26-01 Republic Plaza, 048619, Singapore
47 7 Changi Business Park Crescent, #03-00 Standard Chartered @ Changi, 486028,
Singapore
48 8 Marina Boulevard, #27-01 Marina Bay Financial Centre Tower 1, 018981,
Singapore
49 1 Robinson Road, #17-00, AIA Tower, 048542, Singapore
50 38 Beach Road, #29-11 South Beach Tower, 189767, Singapore
51 Abogado Pte Ltd, No. 8 Marina Boulevard, #05-02 MBFC Tower 1, 018981,
Singapore
52 2nd Floor, 115 West Street, Sandton, Johannesburg, 2196, South Africa
53 1 Floor, International House, Shaaban Robert Street/Garden Avenue, PO Box
9011, Dar Es Salaam, Tanzania, United Republic of
Page 117
Address in country of incorporation
54 No. 140, 11th, 12th and 14th Floor, Wireless Road, Lumpini, Patumwan, Bangkok,
10330, Thailand
55
Buyukdere Cad. Yapi Kredi Plaza C Blok, Kat 15, Levent, Istanbul, 34330,
Turkey
56 Standard Chartered Bank Bldg, 5 Speke Road, PO Box 7111, Kampala, Uganda
57 14 Mackinnon Road, Nakasero, Kampala, 141769, Uganda
58 EX-26, Ground Floor, Bldg 16-Co Work, Dubai Internet City, Dubai, United Arab
Emirates
59 Unit GV-00-10-07-OF-02, Level 7, Gate Village Building 10, Dubai International
Financial Centre, Dubai, United Arab Emirates
60 7th Floor, Building One, Gate Precinct, DIFC, PO Box 999, Dubai, United Arab
Emirates
61 Part of Level 15, Standard Chartered Bank Building, Plot 8, Burj Downtown,
Dubai, United Arab Emirates
62 Corporation Trust Center, 1209 Orange Street, Wilmington DE 19801, United
States
63 50 Fremont Street, San Francisco CA 94105, United States
64 251 Little Falls Drive, Wilmington DE 19808, United States
65 Level 3, #CP1.L01 and #CP2.L01, Capital Place, 29 Lieu Giai Street, Ngoc Khanh
Ward, Ba Dinh District, Ha Noi, 10000, Vietnam
66 Victoria House, State House Avenue, Victoria, MAHE, Seychelles
67 Gervinusstrasse 17, 60322, Frankfurt am Main, Hesse, Germany
68 Izumi Garden Tower 19F, 1-6-1 Roppongi, Minato-ku, Tokyo, Japan
69 60B, Orchard Road, #06-18, Tower 2, The Atrium @ Orchard, 238891, Singapore
70 17F, 47, Jong-ro, Jongno-gu, (17F, 100, Gongpyeong-dong, Jongno-gu), Seoul,
Korea, Republic of
71 Bucktrout House, Glategny Esplanade, St Peter Port, GY1 3HQ, Guernsey
72 30 Rue Schrobilgen, 2526, Luxembourg
73 Luis Alberto de Herrera 1248, Torre II, Piso 11, Esc. 1111, Uruguay
74 8A, Hony Tower, 1st Financial Street, Nanshan District, Shenzen, China
75 Standard Chartered Tower, 201 Century Avenue, Pudong, Shanghai, 200120, China
76 1201 1-2, 15-16, 12/F, Unit No.1, Building No.1, No. 1 Dongsanhuan Zhong Road,
Chaoyang District, Beijing, China
77 18/F., Standard Chartered Tower, 388 Kwun Tong Road, Kwun Tong, Kowloon, Hong
Kong
78 15/F., Two International Finance Centre, No. 8 Finance Street, Central, Hong
Kong
79 39/F., Oxford House, Taikoo Place, 979 King's Road, Quarry Bay, Hong Kong
80 32/F., 4-4A Des Voeux Road, Central , Hong Kong
81 14th Floor, One Taikoo Place, 979 King's Road, Quarry Bay, Hong Kong
82 14/F, Standard Chartered Bank Building, 4-4A Des Voeux Road , Central, Hong
Kong
83 IFC 5, St Helier, JE1 1ST, Jersey
84 47, Jong-ro, Jongno-gu, Seoul, 110-702, Korea, Republic of
85 2F, 47, Jong-ro, Jongno-gu, Seoul, Korea, Republic of
86 Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, MH96960,
Marshall Islands
87 3rd Floor Main SCB Building, I.I Chundrigar Road, Karachi, Sindh, 74000,
Pakistan
88 1F, No.177 & 3F-6F, 17F-19F, No.179, Liaoning Street, Zhongshan Dist.,
Taipei, 104, Taiwan
89 C/O Corporation Service Company, 251 Little Falls Drive, Wilmington DE 19808,
United States
90 16 Raffles Quay, #16-02, Hong Leong Building, Singapore, 048581, Singapore
91 Suite 12100, 12/F., YF Life Tower, 33 Lockhart Road, Wan Chai, Hong Kong
92 1st Floor, UB Plaza, No. 1 & 2, Vittal Mallya Road, Bengalur, India
93 2nd Floor, 23-25 M.G. Road, Fort, Mumbai 400 001, India
94 16th Floor, WeWork Hub 71, Al Khatem Tower, ADGM Square, Al Maryah Island, Abu
Dhabi, United Arab Emirates
95 218 Haihe East Road, Hedong District, Tianjin, 300012, China
96 Parker Andrews Ltd, 5th Floor. The Union Building, 51-59 Rose Lane, Norwich,
NR1 1BY
97 Unit 1 - 127A, WeWork Futura, Magarpatta Road, Kirtane Baug, Hadpsar I.E.,
Pune - 411013, Maharashtra, India
98 L17-11, Floor 17, Vincom Center, 72 Le Thanh Ton, Ben Nghe Ward, District 1,
Ho Chi Minh City, Vietnam
99 30th floor, One Taikoo Place, 979 King's Road, Hong Kong, Hong Kong
100 Ground Floor, Two Dockland Central, Guild Street, North Dock, Dublin, D01
K2C5, Ireland
101 2701, 27th Floor, Central Plaza, 18 Harbour Road, Wanchai, Hong Kong
102 12E, rue Guillaume Kroll, L-1882 Helios, Luxembourg
103 1 Raffles Place, #36-01, One Raffles Place, 048616, Singapore
104 Duo, Level 6, 280 Bishopsgate, London, EC2M 4RB, United Kingdom
105 138 Arab Street , 199826, Singapore
106 53 Boulevard Royal, Grand Duchy of Luxembourg, 2449, Luxembourg
107 5th Floor, Holland House, 1-4 Bury Street, London, EC3A 5AW, United Kingdom
108 G01-02, Wisma Haji Mohd Taha Building, , Jalan Gadong, BE4119, Brunei
Darussalam
109 1 Raffles Quay , #23-01 , One Raffles Quay, 048583 , Singapore
110 10 Marina Boulevard #08-08, Marina Bay Financial Centre, 018983, Singapore
111 1095 Avenue of Americas, New York City NY 10036, United States
Page 118
Address in country of incorporation
112 3 Jalan Pisang, c/o Watiga Trust Ltd, 199070, Singapore
113 c/o Ocorian Corporate Services (Mauritius) Ltd, 6th Floor, Tower A,1, Exchange
Square, Wall Street, Ebene, Mauritius - 72201, Mauritius
114 c/o Maples Finance Limited, PO Box 1093 GT, Queensgate House, Georgetown,
Grand Cayman, Cayman Islands
115 Level 1, Wisma Standard Chartered, Jalan Teknologi 8, , Taman Teknologi
Malaysia, Bukit Jalil, , 57000 Kuala Lumpur, Wilayah Persekutuan, Malaysia
116 Al Faisaliah Office Tower Floor No 7 (T07D) , King Fahad Highway, Olaya
District, P.O box 295522 , Riyadh, 11351 , Saudi Arabia
117 B001, Metrotech Forest View, Sy No 67/5 BSK, 6th Stage, Thalaghattapura
Bengaluru , Karnataka, India, 560062
118 The Company's Registered Office, Vistra Corporate Services Centre, Wickhams
Cay II, Road Town, Tortola, VG1110, Virgin Islands, British
119 Standard Chartered House, Stand No. 4642, Corner of Mwaimwene Road and Addis
Ababa Drive, Lusaka, Lusaka, 10101, Zambia
120 Units 1101B (Office use only), No. 235 Tianhebei Rd., Tianhe District,
Guangzhou City, Guangdong Province, China
121 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
122 C/O Teneo Financial Advisory Limited, The Colmore Building, 20 Colmore Circus,
Queensway, Birmingham, B4 6AT, United Kingdom
123 Jiron Huascar 2055, Jesus Maria, Lima, 15072, Peru
124 77 Robinson Road, #13-00, Robinson 77, 068896, Singapore
125 TMF Trust Labuan Limited, Brumby Centre, Lot 42, Jalan Muhibbah, 87000 Labuan
F.T., Malaysia
126 c/o King & Wood Mallesons, Level 61, Governor Phillip Tower, 1 Farrer
Place, Sydney NSW 2000, Australia
127 2402C, 24th Floor, Tamouh Tower, Tamouh, Abu Dhabi, Al Reem Island, United
Arab Emirates
128 8-10 Avenue de la Gare, 1610, Luxembourg
129 No 1 Grenville Street, St Helier, JE2 4UF, Jersey
130 77 Robinson Road, #25-00 Robinson 77, 068896, Singapore
131 Level 22, 120 Spencer Street, Melbourne VIC 3000 VIC 3000, Australia
132 5/F, Manulife Place, 348 Kwun Tong Road, Kowloon, Hong Kong
133 32 Molesworth Street, Dublin 2, D02Y512, Ireland
134 27 Fitzwilliam Street, Dublin, D02 TP23, Ireland
135 Dubai International Financial Centre, Level 14 , The Gate , PO Box 74777,
Dubai, United Arab Emirates
136 No. 2734, Sector-I, HSR Layout, HSR Layout, Bangalore , Bangalore South,
Karnataka, 560102, India
137 1st Floor Building 33, Waterford Office Park, Waterford Drive, Fourways,
Gauteng, 2191, South Africa
138 Stand No. 4642 , Corner of Mwaimwena Road and Addis Ababa Drive, Lusaka,
10101, Zambia
139 3 Jalan Pisang, c/o Watiga Trust Ltd, 199070, Singapore
140 Intertrust Corporate Services (Cayman) Limited, 190 Elgin Avenue,George Town,
Grand Cayman , KY1-9005, Cayman Islands
141 Unit 605-07, 6/F Wing OnCentre, 111 Connaught Road, Central,Sheung Wan, Hong
Kong
142 1221 A, Devika Tower, 12th Floor, 6 Nehru Place, New Delhi 110019
143 555 Washington Av, St Louis, MO, United States of America, 63101
144 25 Taylor St, San Francisco CA 94102-3916, United States
145 Africa Unity Square Building, 68 Nelson Mandela Avenue, Harare, Zimbabwe
146 Edifício Kilamba, 8º Andar Avenida 4 de Fevereiro, Marginal, Luanda, Angola
147 9 & 11, Lightfoot Boston Street, Freetown, Sierra Leone
148 No. 188 Yeshen Rd, 11F, A-1161 RM,Pudong New District, Shanghai, 31, 201308,
China
149 IQEQ Corporate Services (Mauritius) Ltd, 33, Edith Cavell Street, Port Louis,
11324, Mauritius
150 9 Raffles Place, #27-00 Republic Plaza, 048619, Singapore
151 Level C, No. 888 2nd Huanhu West Road, Nanhui New Town, Pudong New Area,
Shanghai
152 8 Marina Boulevard, Level 26, Marina Bay Financial Centre, Tower 1, 018981,
Singapore
153 12th Floor, Parinee Crescenzo Building, Plot C-38 & 39, G Block Bandra (E)
Opp. MCA Ground, Mumbai, 400051, India
154 Unit 8C-17B, Xinlikang Building, 3044 Xinghai Blvd, Nanshan District,
Shenzhen, China
155 Dedicated desk # 14-123-039, 15th Floor, Al Khatem Tower, ADGM Square, Abu
Dhabi, United Arab Emirates
156 6 Battery Road #13-01, 049909, Singapore
157 4thFloor, 274, Chitalia House, Dr. Cawasji Hormusji Road, Dhobi Talao, Mumbai
City, Maharashtra, India 400 002, Mumbai, 400 002, India
Page 119
Other notes
158 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.
159 No share capital by virtue of being a trust
160 Limited liability company
161 The Group has determined the prinicpal place of operation to be United Kingdom
162 The Group has determined the prinicpal place of operation to be Hong Kong
163 Company is exempt from the requirement of an audit of its individual accounts
by virtue of Section 479A of the Companies Act 2006. Company names and
associated numbers of the qualifying subsidiaries taking an audit exemption
for the year ended 31 December 2024 are: Finventures UK Limited 04275894,
Standard Chartered I H Limited 08414408, Standard Chartered Strategic
Investments Limited 01388304, Standard Chartered Holdings Limited 02426156,
Standard Chartered NEA Limited 05345091, SCMB Overseas Limited 01764223,
Standard Chartered Africa Limited 00002877, Standard Chartered Securities
(Africa) Holdings Limited 05843604, Standard Chartered Leasing (UK) Limited
05513184, SC Transport Leasing 2 Limited 06787090 and SC Transport Leasing 1
LTD 06787116, The SC Transport Leasing Partnership 1 LP13441, The SC Transport
Leasing Partnership 2 LP13440, The SC Transport Leasing Partnership 3 LP13442,
The SC Transport Leasing Partnership 4 LP13443. In line with section 479C of
the Companies Act 2006, the Parent undertaking (Standard Chartered PLC
Company) guarantees all outstanding liabilities to which the subsidiary
company is subject at the end of the financial year including external
liabilities of Finventures UK Limited ($2.3million), Standard Chartered NEA
Limited ($15.6million) and SCMB Overseas Limited ($5.9million)
164 Directly held related undertaking
165 Group's ultimate ownership for CurrencyFair entities is 43.422%
166 Registered as a Limited company under the Law of China
Description of shares
A Class A Ordinary shares
B Class B Ordinary shares
C Class C Ordinary shares
D Class D Ordinary shares
E Class A2 shares
F Class B Shares
G Class B Equity interest
H Series A Preferred
I Series B Preferred
J Preference shares
K Series A preference shares
L Series B preference shares
M Redeemable preference shares
N Series B Redeemable preference shares
O Series C2 preference shares
P Series C3 preference shares
Q Redeemable non-cumulative preference shares
R Compulsory convertible cumulative preference shares
S Irredeemable convertible preference shares
T Irredeemable non-cumulative preference shares
U Class B Non-cumulative preference shares
V Class C Non-cumulative preference shares
W Class D Non-cumulative preference shares
X Charter capital
Y Limited Partnership
Z Partnership Interest
AA Membership interest
AB Trust
AC Uncertificated
AD Deferred shares
AE Guarantee
Page 120
Business activity
i Banking & Financial Services
ii Commercial real estate
iii Data Analytics
iv Digital Venture
v Investment holding company
vi Leasing and Finance
vii To manage intellectual property for Group
viii Research & development
ix Support Services
x Others
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.
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, on another exchange, by private arrangement, or
by way of a general offer during the period. Details of the shares purchased
and held by the trusts are set out below.
2004 Trust
2024 2023
Shares purchased during the period 19,604,557 29,069,539
Market price of shares purchased ($million) 223 237
Shares held at the end of the period 17,589,987 28,095,542
Maximum number of shares held during the period 28,085,688 28,893,930
42. Corporate governance
The directors confirm that Standard Chartered PLC (the Company) has complied
with all of the provisions set out in the 2018 UK Corporate Governance Code
during the year ended 31 December 2024. 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 121
Shareholder information
Dividend and Interest Payment Dates
Ordinary Shares Final Dividend
Results and dividend announced 21 February 2025
Ex-dividend date 27 (UK) 26 (HK) March 2025
Record date for dividend 28 March 2025
Last date to amend currency election instructions for cash dividend* 24 April 2025
Dividend payment date 19 May 2025
* In either United States dollars, sterling or Hong Kong dollars
Preference Shares 1st half yearly dividend 2nd half yearly dividend
73∕8 per cent non-cumulative irredeemable preference shares of £1 1 April 2025 1 October 2025
81∕4 per cent non-cumulative irredeemable preference shares of £1 each 1 April 2025 1 October 2025
6.409 per cent non-cumulative redeemable preference shares of $5 each 30 January and 30 April 2025 30 July and 30 October 2025
7.014 per cent non-cumulative redeemable preference shares of $5 each 30 January 2025 30 July 2025
Annual General Meeting
The Annual General Meeting (AGM) will be held on Thursday, 8 May 2025 at
11.00am UK time (6.00pm Hong Kong time). Further details regarding the format,
location and business to be transacted at the meeting will be disclosed within
the 2025 Notice of AGM.
Interim results
The interim results will be announced to the London Stock Exchange and the
Stock Exchange of Hong Kong Limited and put on the Company's website.
Country-by-Country Reporting
In accordance with the requirements of the Capital Requirements
(Country-by-Country Reporting) Regulations 2013, the Group will publish
additional country-by-country information in respect of the year ended 31
December 2024, on or before 31 December 2025. We have also published our UK
Tax Strategy.
Pillar 3 Reporting
In accordance with the Pillar 3 disclosure requirements, the Group will
publish the Pillar 3 Disclosures in respect of the year ended 31 December
2024, on or before 21 February 2025.
ShareCare
ShareCare is available to shareholders on the Company's UK register who have a
UK address and bank account. It allows you to hold your Standard Chartered PLC
shares in a nominee account. Your shares will be held in electronic form so
you will no longer have to worry about keeping your share certificates safe.
If you join ShareCare, you will still be invited to attend the Company's AGM
and you will receive any dividend at the same time as everyone else. ShareCare
is free to join and there are no annual fees to pay.
Donating shares to ShareGift
Shareholders who have a small number of shares often find it uneconomical to
sell them. An alternative is to consider donating them to the charity
ShareGift (registered charity 1052686), which collects donations of unwanted
shares until there are enough to sell and uses the proceeds to support UK
charities. There is no implication for capital gains tax (no gain or loss)
when you donate shares to charity and UK taxpayers may be able to claim income
tax relief on the value of their donation.
Bankers' Automated Clearing System (BACS)
Dividends can be paid straight into your bank or building society account.
Registrars and shareholder enquiries
If you have any enquiries relating to your shareholding and you hold your
shares on the UK register, please contact our registrar at
investorcentre.co.uk/contactus. Alternatively, please contact Computershare
Investor Services PLC, The Pavilions, Bridgwater Road, Bristol, BS99 6ZZ or
call the shareholder helpline number on 0370 702 0138. If you hold your shares
on the Hong Kong branch register and you have enquiries, please contact
Computershare Hong Kong Investor Services Limited, 17M Floor, Hopewell Centre,
183 Queen's Road East, Wan Chai, Hong Kong.
Page 122
Substantial shareholders
The Company and its shareholders have been granted partial exemption from the
disclosure requirements under Part XV of the Securities and Futures Ordinance
(SFO). As a result of this exemption, shareholders, directors and chief
executives, no longer have an obligation under Part XV of the SFO (other than
Divisions 5, 11 and 12 thereof) to notify the Company of substantial
shareholding interests, and the Company is no longer required to maintain a
register of interests of substantial shareholders under section 336 of the
SFO, nor a register of directors' and chief executives' interests under
section 352 of the SFO. The Company is, however, required to file with The
Stock Exchange of Hong Kong Limited any disclosure of interests made in the
UK.
Taxation
No tax is currently withheld from payments of dividends by Standard Chartered
PLC. Shareholders and prospective purchasers should consult an appropriate
independent professional adviser regarding the tax consequences of an
investment in shares in light of their particular circumstances, including the
effect of any national, state or local laws.
Chinese translation
If you would like a Chinese language version of the 2024 Annual Report, please
contact Computershare Hong Kong Investor Services Limited, 17M Floor, Hopewell
Centre, 183 Queen's Road East, Wan Chai, Hong Kong.
二〇二四年年報之中文譯本可向香港中央證券登記有限公司索取,
地址：香港灣仔皇后大道東183號合和中心17M樓。
Shareholders on the Hong Kong branch register who have asked to receive
corporate communications in either Chinese or English can change this election
by contacting Computershare. If there is a dispute between any translation and
the English version of this Annual Report, the English text shall prevail.
Electronic communications
If you hold your shares on the UK register and in future you would like to
receive the Annual Report electronically rather than by post, please register
online at: investorcentre.co.uk. Click on 'register now' and follow the
instructions. You will need to have your Shareholder or ShareCare reference
number to hand. You can find this on your share certificate or ShareCare
statement. Once you have registered and confirmed your email communication
preference, you will receive future notifications via email enabling you to
submit your proxy vote online. In addition, as a member of Investor Centre,
you will be able to manage your shareholding online and change your bank
mandate or address information.
Page 123
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 the Annual Report
and the 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 the 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.
Non-IFRS performance measures and alternative performance measures
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. Standard
Chartered PLC's financial statements have been prepared in accordance with
UK-adopted international accounting standards (IAS) as applied in conformity
with section 408 of the Companies Act 2006. This document may contain
financial measures and ratios not specifically defined under IFRS or IAS
and/or alternative performance measures as defined in the European Securities
and Market Authority guidelines. Such measures may exclude certain items which
management believes are not representative of the underlying performance of
the business and which distort period-on-period comparison. These measures are
not a substitute for IAS or IFRS measures and are based on a number of
assumptions that are subject to uncertainties and change. Please refer to the
Annual Report and the financial statements of the Group for further
information, including reconciliations between the underlying and reported
measures.
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 124
Caution regarding climate and environment related information
Some of the climate and environment related information in this document is
subject to certain limitations, and therefore the reader should treat the
information provided, as well as conclusions, projections and assumptions
drawn from such information, with caution. The information may be limited due
to a number of factors, which include (but are not limited to): a lack of
reliable data; a lack of standardisation of data; and future uncertainty. The
information includes externally sourced data that may not have been verified.
Furthermore, some of the data, models and methodologies used to create the
information is subject to adjustment which is beyond our control, and the
information is subject to change without notice.
General
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.
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. disclosures in the Strategic report, Sustainability review, Directors'
report, Risk review and Capital review and Supplementary information are
unaudited unless otherwise stated;
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
repaired 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;
Page 125
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;
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 of, and may only be reproduced with permission of an authorised
signatory of, the Group.
Copyright in materials, text, articles and information created by third
parties and the rights under copyright of such parties are hereby
acknowledged. Copyright in all other materials not belonging to third parties
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
for business purposes on behalf of the Group or save with the express prior
written consent of an authorised signatory of the Group.
All rights reserved.
Page 126
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