Standard Chartered Stock

Good morning and good afternoon, everyone. Thank you for joining us today. I'm here in London, and Bill is dialing in from Dubai and will join me for Q&A. I'll take you through our third quarter results before we move to questions. Unless otherwise stated, my comparisons will be year-on-year at constant currency, and I'll highlight notable items where relevant.

We delivered a record third quarter performance with income increasing 14% and profit before tax growing 29%. Growth was broad-based with Wealth Solutions and Global Markets, both delivering double-digit income growth alongside further momentum in Global Banking and Transaction Services. These results are another demonstration of how our strategy is translating into sustainably higher returns. The combination of income growth, operating leverage and capital return continues to drive strong compounding growth in earnings per share with year-to-date EPS up 27%.

Our performance gives us the confidence to upgrade our full year guidance. We now expect income growth to be above the 5% to 7% range, excluding notable items, and we expect a return on tangible equity of around 14%, up from our previous guidance of over 12%. I'll return to our revised 2026 guidance at the end. But first, let me take you through the quarterly results.

Operating income was $5.8 billion, up 14%. Net interest income increased by 9% year-on-year, while noninterest income grew 19% and accounted for around half the group income. Expenses were up 9% against a low comparator. And with income growth significantly ahead of expense growth, pre-provision operating profit increased by 22% to $2.4 billion. Credit impairment was only $90 million, including a net charge of $34 million from overlays relating to the Middle East conflict. Our tangible net asset value per share was up 2% to $17.26.

Looking more closely now at the drivers. Net interest income grew 3% quarter-on-quarter to just under $3 billion. NII growth was driven by volumes as we continue to grow customer lending in the quarter. The rates and margin impact was broadly neutral quarter-on-quarter as the early benefit from rate rises was offset by margin pressure on term deposits. With NII up 6% year-to-date, we're upgrading our full year NII growth guidance to around 4%. For the remainder of the year, we expect these trends to continue.

Rate benefits will be offset by mix changes as well as further margin compression in term deposits and the continued headwind from WRB portfolio exits. We also expect volume growth to moderate versus Q3. It was another strong quarter for noninterest income, which increased by 19% year-on-year to $2.8 billion. I'll discuss the key business drivers in more detail on the segment slides.

Turning now to expenses. Operating expenses were approximately $3.4 billion, up 9%. This was against a low comparator in the third quarter of 2025, which was flattered by the phasing of costs in the second half of last year. The Fit for Growth program remains on track with $128 million of cost to achieve booked this quarter. We continue to expect to close the program in 2026. We are now moving to a cost/income ratio approach when guiding on costs, consistent with our 2028 targets. As such, for the full year 2026, we now expect a cost/income ratio, excluding notable items of around 60%, a 300 basis point improvement on 2025 and a meaningful step towards our target of around 57% in 2028.

Credit quality remained resilient, benefiting from our ongoing derisking of the balance sheet with impairment of $90 million this quarter. Given the continuing conflict in the Middle East, we took a net charge of $34 million of overlays during the quarter. This included a new $63 million overlay to reflect the impact of an expanded scenario on broader sectors that are impacted by the Middle East conflict and higher oil prices. This was offset by $29 million of releases, mainly in the petrochemical sector and sovereigns due to portfolio moves.

Despite these overlays, CIB recorded a net recovery of $24 million with portfolio upgrades and repayments more than offsetting the additional provisions. WRB impairment was $114 million, broadly unchanged quarter-on-quarter, reflecting continued credit discipline across the portfolio. Our loan loss rate year-to-date was 20 basis points. As a reminder, our RoTE targets are based on a through-the-cycle loan loss rate of 30 to 35 basis points. Our overall high-risk assets were down $1.2 billion quarter-on-quarter, driven by reductions across both Early Alerts and Credit Grade 12 portfolios from exposure movements and repayments.

Moving to the balance sheet. Underlying customer loans and advances increased by 4% during the quarter. In WRB, this reflected higher mortgage demand and strong growth in secured wealth lending, including inflows relating to the FCNR scheme for nonresident Indians, which drove about half of the growth in WRB this quarter. CIB growth came largely from Global Banking as well as trade. Underlying customer deposits were broadly flat quarter-on-quarter and are up 5% year-to-date.

Within WRB, net new money flows were once again supported by growth in term deposits. This was offset by lower CIB CASA due to outflows towards the end of the quarter, some of which have already reversed. Overall, we continue to grow customer lending where the returns support our financial targets.

Turning to capital. Risk-weighted assets increased by $1.8 billion during the quarter to $263 billion. Asset growth and mix was partially offset by a reduction in market risk RWAs and improvement in asset quality. Looking ahead, we now expect Basel 3.1 to lead to an increase in risk-weighted assets on the 1st of January 2027, net of management actions, which were underway in Q3 and will continue in Q4. This revised expectation of the Basel 3.1 impact reflects the changing shape of our balance sheet and the finalization of rule interpretations. Given these factors, our current expectation is for 1st of January 2027 RWA to be around $275 billion, inclusive of the usual operational risk RWA increase in Q4.

The Basel 3.1 RWA impact will be spread across both CIB and WRB. Our CET1 ratio was 13.8% at the end of the quarter. Excluding the 38 basis point impact of the $1 billion share buyback announced at Q2, the ratio was broadly unchanged quarter-on-quarter. We will benefit from a further 30 basis point reduction in our CET1 Pillar 2A requirement from the 1st of January 2027, which partly reflects Basel 3.1 implementation. Together with the 20 basis point reduction we received in Q3 2025, this will lead to a cumulative decrease of around 50 basis points in our minimum CET1 requirement since last year.

This will take our CET1 requirement to around 10%. The reduction in regulatory requirements further enhances our capital flexibility while maintaining a prudent capital position. Turning now to the businesses. WRB delivered another excellent quarter with income increasing 10% to $2.5 billion. Wealth Solutions income grew 26% to $1.1 billion, marking our third consecutive quarter above $1 billion. Investment products and bancassurance income increased 28% and 18%, respectively. Deposits and mortgages income declined by 1%. Credit cards, personal loans and other unsecured lending income fell by 13%, reflecting continued portfolio optimization. Expenses were up 8%, reflecting ongoing investment in the affluent business.

We delivered record net new money of $20 billion, including around $5 billion of deposit inflows from the FCNR scheme for nonresident Indians, which has now closed. This brings our year-to-date net new money to $52 billion. Assets under management were broadly stable at $472 billion. This includes the impact of client mandate changes from wealth AUM to assets under custody, which broadly offset the strong net new money performance. We continued to onboard affluent clients at a strong pace with 76,000 new-to-bank affluent clients during the quarter.

Overall, these results demonstrate the continued strength of our affluent proposition and our ability to attract new clients. CIB performance was also strong in the quarter, with income increasing 16% to $3.4 billion. Transaction services income was up 9%, driven by pricing discipline in our payments and liquidity products as well as volume growth and further mandate wins in securities and prime services. Global Banking income was up 7% against a strong comparator in Q3 2025. This was driven by momentum in lending and financing solutions with resilient origination volumes.

Global Markets had a strong quarter with income up 21%, driven by broad-based growth across products. Flow income increased 21%, reflecting sustained momentum in client activity and cross-selling and the continued benefit of our investment in electronic platforms. Expenses increased by 8%, significantly below income growth. Including the net recovery mentioned earlier, CIB profit before tax increased 38% to $1.6 billion.

So moving to our updated guidance. Performance has been strong year-to-date with income growth above our target 5% to 7% range. The breadth, quality and consistency of that performance gives us the confidence to upgrade our full year guidance. We now expect NII growth of around 4% and total income growth above the 5% to 7% range at constant currency and excluding notable items. We expect a cost/income ratio, excluding notable items, of approximately 60%, representing a significant improvement on 2025 and demonstrating continued positive operating leverage across the business. We remain well on track to deliver a cost/income ratio of around 57% in 2028.

We are continuing to balance the investment priorities of the business against the significant revenue opportunities we see in the franchise. And we are upgrading our RoTE guidance to around 14%, reflecting continued progress from the 11.9% we achieved in 2025. And as you can see, our performance this quarter shouldn't be seen in isolation. It builds on our recent momentum and execution. We have shown ongoing improvement in earnings per share over the last 6 years, and we're not done yet. We remain confident in delivering our high teens EPS CAGR target for 2028.

So to conclude, our results demonstrate once again that our strategy is working, and we continue to deliver sustainably higher returns. That momentum gives us confidence not only in our upgraded guidance for 2026, but also in our ability to deliver on our medium-term framework. And looking ahead, we'll be hosting a webinar in early December, showcasing our Singapore and ASEAN businesses and their contribution to group strategy and performance. Further details will be available on our website in the coming weeks.

Thank you. And with that, I'll hand over to Bill for some remarks before we take your questions.

That's great, Manus. Thanks very much for the summary. I just want to take a bit of a step back and reflect a little bit on the quarter, but in the context of the past few years and then obviously looking forward to the next few years. And obviously, the results are strong, and we're very happy with those. But more than the numbers themselves, which, of course, in and of themselves, we're quite satisfied with, it's the consistency with which we're delivering the numbers, and it's the quality that's coming through pretty much in every line.

So it's each of the client segments, each of the products, each of the regions is generating progress in what to us is a very satisfactory way. Probably most encouraged by the fact that with each step forward that we take on the path to this 18% or so RoTE by 2030, our confidence is built based on the success that we generated. So we've had a very deliberate investment program over the past several years. You've been indulgent of that investment program because not all of them paid off in the short term, but they're all paying off now.

So the investments that we made across wealth, both technology and relationship managers, breadth of products and quality of advice, shifting to an ever more advice-driven and client-oriented model from a more product sales approach, it's paying off. The breadth and depth of the financial markets capabilities are paying off. The very long history we have in the full range of global banking products, financing and associated products are paying off.

And the investments that we have continued to make in transaction services in terms of being at the cutting edge of payments, trade, security services in our markets are paying off. So quality is good. The diversification is good. The balance sheet has remained strong, and we are steadily cracking away at the productivity challenges that we know we have. We talked about compounding back in May, and we think that we put the basic foundations in place to compound for a consistent period of time from here, obviously helped by good structural tailwinds in terms of the themes against which we're operating. We talked about those in some detail back in May.

That all said, we're keeping a very keen eye on the many challenges that we face as well. Most obvious are the geopolitical challenges. They're real. They're consequential, and they're certainly not resolved as yet. We can be hopeful of decent resolution, in particular, in the region, which I sit right now in the Middle East, but we know that we're all watching this one extremely carefully. We've seen bits and pieces of strain emerging in different financing markets.

While this hasn't impacted us, and I don't think they will, there are signs that there's -- there are elements of indigestion in the system and that indigestion obviously can turn into something a little bit more painful, very, very aware of that, managing those risks extremely carefully. But the combination of things, of course, could impact volumes at some period of time. And while we're very reassured that we demonstrated strong resilience through different crises or challenges in the market, we're acutely aware that the challenges that we face right now are real. And no doubt we can talk about that.

So continue to focus on risk management. We're not going to screw up a really good set of progress strategically and financially by taking our eye off the ball from a risk perspective. We are going to continue to invest in these core strengths that we have, and that gives us a very strong guidance that they're on the right track, very strong confidence, I should say, they're on the right track to deliver our 2028 and 2030 ambitions as we have set them out.

So with that, operator, we can take the first question and take as much time as you like on that.

[Operator Instructions] And we're going to take the first question on audio line, and it comes from the line of Joseph Dickerson from Jefferies.

Two, if I may. I guess with the cumulative 50 basis points decline in your MDA since the third quarter of last year, as you look forward from '27 and beyond, do you feel that running a 300 to 400 basis points targeted CET1 over your MDA is really the right level? Or could that be ratcheted down, I don't know, 50 bps? And within that, what's the ability and appetite to repatriate down to the low level now that you've got a lot of visibility on the capital?

And then second, just on the deposit mix, you've seen a decline in the CASA mix in both CIB and WRB. Could you just discuss that move somewhat in terms of the behavior? Is this competitive pressure? Or is it simply that typically, the affluent customer has seen in the third quarter, slightly weaker equity markets, certainly weaker in the footprint combined with higher rates and is parking liquidity in TD? Or is it rates have surpassed a certain level at which the nominal amount the customer receives is meaningful? Or is it a competitive angle? I'd really appreciate some color on that. And then what you're seeing as you've mentioned some reversals in Q4. I guess, what you're seeing on the ground so far in October?

That's great. Thanks for the questions, Joe. I'll take -- just make a couple of comments and hand it over to Manus for both of those questions. On the Pillar 2A reduction, of course, we're encouraged by that. And the 2 reductions combined substantially offset the other impact that we think we'll see from Basel 3.1, and we guided to where we think we'll end up this year, obviously, incorporating some business growth as well.

But I would just, I guess, remind everybody that we were managing the -- I'd say we have the luxury of managing the business for a capital ratio that we think is appropriate for our business, business mix, risk environment, et cetera. So we're obviously not constrained by the MDA right now and the further increase in buffer removes that constraint even further away or moves that constraint further away. Of course, we keep an eye on what regulators expect. We keep an eye on what rating agencies expect. As you know, we've got multiple legal entities around the group, not least to our subsidiaries in Hong Kong and Singapore that have their own capital ratios that we have to watch and manage as well.

But the capital that we've been running is what we think is consistent with a cautious but very appropriate approach for the business that we're running. Will we take a fresh look at that on the back of a few things. One is the MDA dropping? Yes, of course. But maybe more importantly is it's steady improvement in the asset quality in our portfolio, a steady improvement in the profitability of our business and steady improvement in the quality of that profitability. All of those things are helpful in terms of helping us to manage around our capital ratio.

So we'll look at all those things. We'll come back when we have a more fulsome update at the full year and provide some fresh guidance to what our precise thinking is on capital. But the question that you pose, of course, is very relevant. And then just on deposits, the only comment I'll make is I mean there there are 2 ways to gather CASA or lower cost deposits. One is to offer a better price and the other is to offer a better service. And of course, there's a trade-off between those 2 things. But as we become the primary transacting bank or settlement bank for our wealth management clients and for our corporate and financial institution operating accounts, they're more inclined to leave their excess deposits with us, always limited in terms of their own efficiency and willingness.

But clearly, what we're seeing is as our customer satisfaction improves, our CASA ratio relative to anything else improves, even if the rate environment has the CASA proportion going down.

But with those 2 upfront comments, I'll hand it to Manus for the correct answer.

Thanks, Bill, and thanks, Joe. I'll build on your already correct answer, Bill, with a bit more detail. On capital, I would just reiterate the fact that we have said, Joe, that we will operate across the range, and that's our intention. We don't manage, as Bill said, to a specific buffer to MDA. Of course, it's helpful to have a bigger buffer, but that's not the way that we think about our capital. And I'll also just add the more general perhaps obvious comment that nothing has actually changed in the risk profile that we've got on the balance sheet, either from changes in RWAs or from our Pillar 2A change. As far as we see it, back to Bill's point, the risks that we're taking remain as they were before.

So we'll come back to you at the full year, but operating across the range remains the message that we're happy to stick to.

On deposits and on the mix, look, we said at the second quarter already that we were seeing a bit of pressure in TDs in WRB that competition had stepped up, and we're calling that out in the third quarter and saying that we expect it to continue for the full year. So there's no real change in the pace of that or in the messaging that we want to give. I would note, though, if you want to look at our disclosures on Slide 22, you'll see that in WRB yes, the TDs are growing, but the CASA is also growing as well. So this is a case of us growing both pieces of the deposit franchise. And that's something which, as Bill said, we would look to continue.

I'd also note that within the term deposits, there is some impact from the FCNR scheme, which came through as well because that's a global number. But just taking a step back, I think you need to consider the fact that we're happy with the momentum that we saw in the third quarter in our net interest income overall. And we're obviously happy enough to upgrade our net interest income guidance for the full year. We're also happy that we've got a balanced mix between NII and noninterest income, and that's something which is obviously a target of ours and something which continues. And so I don't think there's anything particular to call out that's different.

On the last point, you were asking about the Q4 reversal. Specifically, we called out in CIB, there was just some end of third quarter moves out, which came back again in the fourth quarter, largely came back in the fourth quarter. So we just wanted to call that out for CIB specifically as a slightly odd period-end move at the end of the third quarter.

And now we're going to take our next question, and the question comes from the line of Jason Napier from UBS.

First one, just on the cost outlook and the momentum into 2027, please. Huge amount of market feedback this morning on the sort of cost/income approach. I guess if you take the $600 million of Fit for Growth plus whatever potential efficiency gains that should deliver, it's plausible that you could have been offering sort of no cost inflation into 2027, and that sort of makes positive jaws not a particularly binding constraint or a helpful guide as to what actually happens next.

Could you just talk a little bit about the shape, please, of cost/income progression or the destination for the cost inflation that appears to be in consensus? Because if you take away the $600 million and put in some gains on that spend, it looks like we're in a high single-digit investment and underlying cost inflation territory. And I think the market is very keen to understand what we sort of get in exchange for that if indeed we are looking at the right kind of shape of cost inflation.

And then secondly, perhaps for Manus, on the 4% NII guide, I guess we're looking to flat to slightly down NII in the fourth quarter. Anything you could say about sort of the various puts and takes into 2027 and how NII might or might not contribute to the sort of 5% to 7% revenue growth in '27? That would be really helpful.

Good. Thanks very much, Jason, for both those questions. Again, I'll make a quick comment upfront and then hand over to Manus. Maybe take a step back on Fit for Growth for starters. That was, as you know, it was a 3-year program where we said we would invest roughly $1.5 billion. We ended up investing $1.3 billion to generate a similar amount in structural savings with a relatively quick payback. And that was a different program than the ordinary productivity programs that we've had every year, certainly since I've been in the bank and no doubt before that in the sense that it was much more structured with much more -- with obviously very specific tracking and program management guidelines that we found to be extremely helpful in terms of reinforcing the sort of the core capabilities around finding these productivity opportunities.

And this is everything from automating manual processes to reengineering end-to-end processes to changing our organization to be fit for purpose against the current set of opportunities and associated items. As we come to the end of that formal program, and obviously, along the way, we changed the accounting, so no longer putting things below the line. That's with no consequence one way or the other. But as we come to the end of the program, we said we're not done with our productivity investment. And we got a very good return on the first $1.3 billion that we spent, and we want to complete the task of simplifying our processes, automating our processes. And of course, we've got the new introduction of super powerful AI tools where we feel very well equipped to continue to sort of prosecute that agenda going forward.

So the idea that somehow one, the expense -- the productivity program is done or that, two, that the the opportunities are not as substantial going forward as they have been over the past 3 years, we'd just like to shift the notion a bit. And this is a little bit more of making some very good investments today that will pay off in the years to come. We've also got stepped up investments, of course, in the areas of strength and not least in wealth, but that's completely consistent with the guidance that we've offered so far.

Let me hand back to Manus for more color, but I wanted to put the FFG program into a bit of context that I think might have been missing.

Thanks, Bill. Thanks, Jason. Look, on the switch to the cost/income ratio approach in terms of our guidance, we thought it was the right time to do that, Jason. We've given cost/income ratio guidance within the 3-year plan as we talked about. So we thought it made sense for us to talk in those terms. So that's why we've decided to talk about cost/income ratio now. And we've given you a cost/income ratio target for 2026. And you know, obviously, our approach for 2028. We're not saying anything about 2027 despite the questions that you're asking.

But we are saying that we'll deliver positive jaws each year of the plan, and that's something that we'll commit to. And we are saying to follow through from what Bill said, that we will continue to invest in the business. And I think what's really Important if you look at the numbers today and you look at the guidance that we're giving is what it means as it drops through the rest of the P&L. We're talking about a RoTE now of around 14%. If we deliver what we're planning to this year, you'll be looking at income to cost jaws of around 500 basis points this year. And of course, we're driving the top line above the top end of the range. So what you're really getting is strong top line momentum, which is dropping through to improved RoTE and improved outcome overall. So hopefully, that gives you some thinking about what our approach is. and how we will continue to think about it in the future.

In terms of net interest income, your math is what it is for the fourth quarter, you're right. There is -- if I think about the fourth quarter impacts that come through, the impact from higher rates, if they come through as the forward curve suggests is not actually that significant for us in the quarter. And as we say, there is still a bit of impact from term deposit spread and mix coming through, which will help offset that. And remember also, that in the fourth quarter, as for the rest of the year, we've had some headwind from those WRB portfolio runoffs and sales. We'll have to see where we come out in 2027. And I'm not going to get drawn into giving guidance now on that.

We said that we would provide updates for that in February next year, and I will stick to that. But I will remind you that over the course of the plan, our goal is to grow noninterest income faster than net interest income as we are at the moment in '26.

And now we're going to take our next question. And the question comes from the line of Perlie Mong from Bank of America.

Can I pick up on NII and deposits again. So I think for this quarter, I think you said rates are broadly offsetting some of the deposit margin compression and the Q-on-Q growth was reflecting of the AIEA growth. So I suppose a couple of things here. One is that it's probably a little bit unusual in the context that I think in some of your peers and other markets as well. We've seen deposit competition and that pressure sort of offsetting some of the volume growth, but we're not really seeing that for you.

But if I look at Q4 as well, like obviously back solving from the guidance, if we were to assume that the rate impact and deposit margin competition, maybe with a little bit of WRB exit broadly offsetting each other, why should we not expect volume growth to drive some of the -- more of the NII growth given that and loan demand seems to be pretty strong still for now? And just as a follow-up to that, just deposit competition as well. I guess, in the last couple of months, there seems to be a lot of talks about deposit competition across many markets. That hasn't really affected your margins all that much, it feels despite the fact that there is a bit of CASA TD mix change in the quarter. So can you just help us understand like where are you seeing most deposit competition? So clearly, Hong Kong possibly is one area like one of your peers had said yesterday. But just how are the other markets shaping up in terms of that deposit competition piece?

So we're definitely operating in the same markets as all of our competitors, but there's a lot of detail in your question. So I'm going to flip straight to Manus.

Let me start with the second question first in terms of deposit competition. As I mentioned previously, we have -- we've talked about this for a few months now, and it has been something which has been evident across different markets. Hong Kong and Singapore would be 2 that it's obviously worth calling out. It's not something which we are particularly concerned about. It's not something which we think is intensifying at the moment. But it is baked into the guidance. It was baked into the guidance that we gave you at the second quarter stage, and it's baked into our guidance now.

So yes, we would expect as rates rise and as competition continues in the fourth quarter, as you rightly call out, some of that competition to mean that any benefit from rate rises is less pronounced. And then on the volume growth, look, we had a very strong third quarter in terms of the balance sheet growth that we saw. And that strength came across a number of different sectors, a number of different areas. Within WRB, remember that half of that volume growth, broadly half of that volume growth was related to the FCNR scheme.

And the rest came through in a combination of mortgages and wealth lending. So that will continue. And then in CIB, we've seen good growth across our infrastructure, across our commercial real estate, across our project financing pieces as well. So it's been good. All we're really saying as we come into the third quarter is that pace of growth is unlikely to continue. It will probably moderate somewhat. And that's why we've given an outlook for the full year, which is as the math implies, is no huge change between the fourth quarter and the third quarter in terms of NII. We'll see how the quarter develops, but that's our best look at this point.

Okay. And can I just ask a super quick follow-up. Your underlying loan growth is like 10%, but deposit is 5%. Like obviously, your loan-to-deposit ratio is still very low. But are you happy to keep on running lending ahead of deposits?

Yes. As you say, our loan-to-deposit ratio, our AD ratio ticked up a little bit this quarter, but that's after many quarters of decline. And we've got abundant liquidity to deploy if we find the right opportunities. But just to be clear, we will only deploy that where we think that we get the right returns, where we think that it drops through to good free capital generation for shareholders. We're not seeking to increase the loan-to-deposit ratio in any way. We're optimizing our liabilities and deploying capital on the asset side in the best way. So it will do what it will do, and we're very happy for it to rise if that's what generates the best returns for shareholders.

If I could just add -- I'll add a bit of color, and maybe this is all very obvious. But from a macro perspective, we're in a slightly different environment. We've got central banks that are on the margin are slightly tightening. So liquidity is very gently being withdrawn from the market. Obviously, that leads to competition for deposits. And we've got a CapEx cycle, which is extraordinarily robust and albeit concentrated in the broadly defined AI space. So that, not surprisingly, has the effect of having asset yields to be a little bit more attractive and deposit margins being a little bit more competitive. And if we can keep the balance right, i.e., capture the right assets and do that with an appropriate cost of funding, frankly, we are kind of well ahead of our own curve in terms of having a funding profile that we're very comfortable with today. That's going to be supportive for the business. But none of that is prescribed, but the macro trends are somewhat favorable.

And now we're going to take our next question, and it comes from the line of Guy Stebbings from BNP Paribas.

The first one was really a high-level question on RoTE. I mean, clearly, we're tracking ahead of prior expectations and the gap from this year to the '28 guide of greater than 15% looks relatively narrow. So as we look into next year and beyond, is there anything you would caution us against in terms of that better starting position, if you like, as we exit 2026?

And then the second question, which may play into your answer on the first is on impairments. I mean, another very reassuring quarter. I appreciate Q3 is not a time to change things like long-term cost of risk assumptions, but we are in an environment of higher rates, higher oil, geopolitical disturbance with model overlay build and yet still seeing charges below that long-run assumption. So does there come a point where if you keep seeing charges behave very nicely below that guidance, you might revisit? And perhaps are we getting closer to that point?

Great. Guy, thanks -- thanks for both those questions. Again, I'll turn to Manus in just a moment. But RoTE tracking ahead of prior expectations, yes. Anything to caution again? So I rattled off in my upfront comments, a few of the things that we're very focused on, which are exactly the same things that you're focused on. So I think the caution comes from the uncertainty in the macro environment rather than lurking demons in our books or in our earnings. So nothing specific to add there.

From my perspective, Manus may embellish a bit. And the cost of risk, we've tried looking back at -- through the years of our corporate existence, looking at peer groups and then looking at the current state of our book to judge whether we should be ratcheting down again or making any other adjustment to our through-the-cycle guidance. I will remind people that it's a through-the-cycle measure. And we've not had a downturn in the credit cycle yet. And we can say that there's lots of bad things happening in the world that should have caused a downturn in the credit cycle, but they haven't, not for us and not for anybody else, with a couple of exceptions, in particular, around real estate in Hong Kong and China, where, frankly, we're relatively underexposed or not exposed in the case of Hong Kong.

So looking at -- keeping at reducing our expected through-the-cycle cost, I think it's a little bit premature to do that. Hence, we're not changing the guidance. But of course, like everything else, we'll take a look at that when we update our guidance more holistically. Manus?

Thanks, Bill. Thanks, Guy. Look, on the RoTE, I would remind you that our guidance is for an over 15% RoTE in '28. And as you point out, we made a very good start to that, and we're very confident in making progress. As Bill said, the impairment run rate so far this year is below the guidance on which we've predicated our RoTE. We're running at about 20 basis point loan loss rate at the moment so far year-to-date, which would obviously have an impact as it flows through into '27 and '28 back to normalization levels. But we've clearly made a good start. I mean, bear in mind, we're looking at over 200 basis points of RoTE improvement year-on-year, which is a really great performance if we are able to deliver against it this year.

In the longer run, thinking about your question about loan loss assumptions, I think I would tap back to what Bill highlighted. We do remain in quite a volatile macro environment, and yet it's one where there hasn't been a significant turn in the credit cycle, which has impacted the sector or us. We're pretty confident that we come into that from a CIB perspective in -- well, across the bank, but I'm talking CIB here in good shape. You'll see that the proportion of investment-grade corporate exposures we've got has gone up from 75% to 77% this quarter.

So we're continuing to see better quality on our balance sheet. For the bank overall, we've got about $0.5 billion of overlays in total in our ECL, of which about $270 million relates to the Middle East. So we think we're well provided, and we've got good overlays going forward. But of course, events could turn out differently in future. The one area I would point your attention to, though, is something that we talked about a bit in May, which is the derisking of the WRB portfolio.

We said there that we have been deliberately structurally reducing the proportion of unsecured lending that we do in WRB, and that has continued. You can see the impact of that in our income. I mean you can see it in our credit card and personal lending income this quarter, in fact, which was down 13%. And as we run off those portfolios or sell some of those businesses, of course, that has an impact on income, but it also drops through, I think, to a structurally better outcome in our RWB, I think it generates a better quality of business for shareholders going forward and a better return on tangible equity for people going forwards as well. But that is one area where I would highlight that there is a structural change in what we're doing.

Now we're going to take our next question, and it comes from the line of Ed Firth from KBW.

I've just got 2. The first one is on costs. This is an uncertainty -- broadly speaking, it looks like your cost guidance is around $200 million or $300 million higher than we had before. And I'm just trying to ask you a little bit talk about where that's going because some of this income, but the income has been beating all year, you didn't upgrade your cost guidance before. And it does sort of imply quite a big cost number for Q4. So can you talk a little bit about what those additional costs are going and how we should think about that into '27? Is Q4 a step off of '27? Or is it more of a catch-up for cost during '26? That's my first question.

Ed, if I could just interrupt, it's very difficult to hear you. I think you've got a bad connection or something. What I heard and Manus would correct was the kind of a fourth quarter cost challenge and then into 2027. That I think was the first question. But if there's any way for you to...

That's fair.

I don't know, maybe you're just far away from the speaker or something, but it was hard to hear.

Okay. And then my second question was, you often give us some sort of idea about how the quarter is shaping up in terms of revenue. We're sort of almost a month in. So any thoughts about how we're seeing performance in Q4 in terms of revenue?

Good. Thanks. That was much clearer on question 2. I'll let Manus...

Yes. Why don't I take question one, and then I'll leave question 2 to you, Bill. Ed, the cost/income ratio that we're guiding to today, in fact, is the same as what we were saying effectively at the second quarter. It's just we expressed it slightly differently. We'd always pegged our absolute cost guidance to an income guidance as well and the mathematical outcome ends up being the same.

Where it's going is, as Bill said, investing into the business, investing into ensuring that the strong performance that we're seeing in the top line is going to continue, building new RMs, wealth centers, powering that wealth business going forward, investing into our different platforms across our transaction bank, across our markets business and building out our capabilities in banking and coverage. So it really is investment into the business. But the cost/income ratio guidance, if you were to imply it back at what we said at the second quarter, is actually unchanged.

And Ed, Q4 is shaping up fine. And so the underlying trends in wealth, financial markets, banking are unchanged. I think we can obviously have the normal seasonal effects that we see always in the fourth quarter. And we've got a very keen eye to market disruption. So we've had some weaker equity markets in some periods of volatility, particularly weak equity markets in Asia, which while not affecting us directly, it does affect sentiment. So -- but that all said, the underlying trends are in line with what we've produced over the course of the year. And the structural features that have been benefiting our business for some time now are still very much in place.

Now we're going to take our next question. And the question comes from the line of Nick Lord from Morgan Stanley.

A couple of questions for me. First, just a little bit more detail on the wealth business. I just wonder if you could talk a little bit about that move from assets under management to assets under custody. Just sort of -- is that just a general move we see? Or is there something specific that drove it in the quarter?

And then if I look at sort of your investment products income as a percentage of your invested AUM, it seems to have been reasonably stable, actually gone up a little bit Q-on-Q. Obviously, at Q2, you were sort of suggesting that we may see a little bit less activity in the quarter. It doesn't seem to have come through. So I just wonder if you could talk a little bit about how clients have been behaving in a quarter where obviously, the macro environment has not been as good.

And then just any comment you might make on sort of bancassurance profit share in the quarter as well and what the impact of that might be if it drops out in Q4?

And then the second question is just on your -- I'm just trying to understand the trajectory of the unsecured lending sort of line. I mean it seems to be under pressure. Is that purely driven by an interest rate thing? Is it runoff the book? I'm just trying to understand what's happening to drive that down.

On your second question, it's the exits. We've sold portfolios and we've exited businesses outright, all of which we've -- that we've talked about. So that's -- there's nothing else going on there.

Just quickly on wealth, Manus will take you through the mechanics of AUM to AUC. But you'll recall that we had a big shift the other way a year and a bit back where we had a client with a large position held in custody with us that said we're going to actively manage that. And that's -- it's a reasonably precise set of criteria that go into the designation of AUM versus AUC. And we see just seen a partial reversal of that. So that -- but again, Manus can elaborate.

And investment product is a broad category, and there are more defensive and less defensive elements of our investment product universe. So while the overall proportion hasn't changed much, we have seen clients drift into slightly less risk inclined, i.e., less equity, more fixed income, less high-yield credit, more high-grade credit type product, which is fine, expected, expectable, and we're very happy that we've got the diversity of product offering that allows us to capture and retain client's flows whatever the risk appetite is and as those evolve.

And banca has just been a very strong performer for us consistently. It's a relatively defensive product. We accrued our full year bonus in the third quarter as we did last year, which means kind of by definition, we're not going to accrue the full year bonus in the fourth quarter, but that's fine. The reason that it is in the third quarter is that it's bigger than it would otherwise have been. And that relationship with Prudential and -- which is the big one, obviously, and our other banca relationships are in very good place, very good place. But Manus, anything on any of those?

On the AUC to AUM, this is actually something which happens all the time in the business. We had to call it out in Q4 '24, I think it was, because there was some particularly large moves in that quarter, which obviously impacted the moves in AUM. And we're calling it out again this quarter because, again, there have been some moves which impact the AUM when we move forward. But as Bill said, it's a normal course of business in terms of the way that we are serving certain customers. And it doesn't have a huge impact on the revenues that we're generating across the piece either. So it does, I appreciate, make modeling it a little bit more tricky. Sorry for that. But that's the way things move.

And the impact that it will then have on the return on assets or margin or however you want to think about it on the wealth product is something that you will need to factor in. When you think about that return on assets, remember that we nearly always see a drop in that in the fourth quarter because fourth quarter activity typically tends to be somewhat lower. And as I said, in the first half of the year, activity, in particular, in the first half was really strong. So we were above the kind of 1.1% to 1.3% range that we've talked about in the past. So just bear that in mind, it will seasonally drop as expected in the fourth quarter, and this year has been unusual in terms of the level of activity.

Okay. I just -- one other thing I'm just trying to understand if the product you're selling the lower-risk product versus the high-risk products, I mean, is there a different margin on that? Or are we -- should we read from the performance in Q3 that actually you're able to manage that wealth income reasonably successfully through different market environments?

Yes. I mean there are different margins on different products. Probably the biggest margin differential is a function more of liquidity than level of defensiveness. Less liquid product is typically higher margin, obviously comes with -- it has lower velocity as well kind of by its nature. So -- but yes, if the market went from an entirely sort of actively managed equity funds into money market funds, yes, there would be a very substantial margin impact, but that's not what's happening. We're seeing shades of differentiation on the spectrum.

Now we're going to take our next question. And the question comes from the line of Jiahui Kendra Yan from CICC.

It's really great to see such strong results. My question is about the 30% RoTE guidance for 2030. Bill has touched on this a little earlier, but would you mind to sharing more color on this. This target was first laid out back in May this year. And since then, actually a lot has changed, most notably rising interest rates. So I'd like to understand what core macro assumptions the 2030 guidance is built on. And conversely, what material shifts in the macro environment would lead you to revisit the target? And turning to bank's operational side, we've already seen solid progress in cost management and growing market share in wealth and CIB business. I was wondering what differentiated product innovations or strategies have helped you gain that market share?

Great. Kendra, thanks very much for the questions. I know you meant 18% RoTE guidance for 2030, not 30%, but I just want to make sure that everybody else on the call is aware of that, that impact is not in fact, our guidance. I mean 30% would be great. I said in Hong Kong that when we get to 18%, we're not going to be doing high fives because we think we can keep on moving. At 30%, we would be doing high fives just to repurpose there. But that is said, I certainly understand your question. And there's -- we haven't guided specifically to the 2018 number and because we just gave an RoTE target. We didn't break it out into the different components.

But when we look at the underlying business, and we guide to 5% to 7% income growth. And while we haven't guided to '29 and '30, the underlying drivers of that growth, the structural trends in terms of wealth accumulation, the geopolitical fragmentation, et cetera, et cetera, the things that we talked about in detail in May, there's nothing that suggests to us that those are going to disappear at the end of our 3-year guidance period in 2028. We think that they would likely carry on.

Now we do assume when we give this sort of guidance that we don't have a major disruption in terms of the macroeconomic impact or some fundamental geopolitical rupture that deprives us of some business flow or earnings stream. But I think that kind of would go with any guidance, I think, in any context. I would say that given our improving quality, improving level of diversification and our -- the very high quality of our asset book that -- and the solidity of our funding base, all those things make us much more resilient to a macro change than would otherwise be the case.

So not to say that we're unimpacted by anything that would be ridiculous. We -- of course are impacted, we would be impacted. But we see the structural drivers that could lead us to continuous improvement in returns up to 18% and then ideally, as we move forward well beyond that. But why don't I turn it back to Manus for that and the cost question.

Yes. Just on -- well, I think it was -- it was a fairly broad question about our differentiated products, which I could run out the call on discussing. So maybe Kendra, we should pick up on it in more detail later. But there's a whole range of different investments that we're making. But I'm glad you called out taking market share because I think it's been an important point, particularly if you look at our markets business and that strong growth that markets has been delivering 21% growth in flow this quarter. We told you back in 2019, when we looked at the nature of that markets business that we were looking to get a deeper wallet share indeed across the whole of CIB. But for markets specifically, we told you that 14 of our top 100 clients paid us over $5 million a year. This year, we expect all of the top 100 to pay us over $5 million a year.

And that's a question of us taking market share by offering better products, better service and deepening the relationships with customers. So I can pick up with you later with many more examples across the franchise, but I wanted to mention that one specifically.

And now we're going to take our next question, and the question comes from the line of James Invine from Rothschild & Co Redburn.

I've got 2, please. The first, I just wanted to pick up, Manus, on what you were saying about the flow income within Global Markets, really strong performance. You have given us -- just given us a little bit of flavor. But I was wondering, is there any kind of geographic color you can give either by region or by corridor? And then the second question is on the tax rate. So I know it bounces around a bit quarter-to-quarter. But if I look at the past 4 quarters together, it comes out at about 25% just below, but consensus is looking for a 27% tax rate for next year. So I was just wondering if you could kind of comment on that, please.

Go ahead, Manus.

Why don't I take the tax rate, and Bill, and maybe you can comment on the flow. I'd say we'd expect a tax rate of around 26% this year. There have been -- in the first 9 months of the year, there have been a few things that have helped us positively, as you say, stay slightly below that, including the Korea write-back in the second quarter. And we typically have a higher tax rate in the fourth quarter. But 26% will be guidance for this year. And we'll see going forward.

As you know, we're hoping to drive our tax rate down over time. But obviously, today, in the U.K. is a relevant day when people are going to talk about tax loss, and we'll have to see at the full year results, what we're going to think about for '27 and beyond. But 26% is the guidance for this year.

And on the -- I'm looking for a bit of color. First, I mean, we'll repeat this over and over and over again. We're really very happy with the progression of our FM business. And the bulk of the growth, virtually all of it is coming in really transaction-related flow business. And transaction-related meaning it's not people who are punting around in markets. It's people who have hedges or who have payment settlements or trade-related flows, et cetera.

And the -- so geographic color, it's very broad-based. It has been all year. We have -- as we've called out many times, we have a particular strength in all things China, and that has continued to perform for us. That obviously reflects the very, very strong trade growth and the shifting supply chains in China. So a lot of the -- while Chinese trade has grown significantly, the profile has changed even more significantly. So less trade with the U.S., more trade with Asia, with the Middle East and Africa. You recognize those geographies in terms of the rest of our footprint.

So that's been strong. We've obviously got a core strength in emerging markets in -- within our markets, Asia, Middle East and Africa. Very interesting dynamic in emerging markets. It's getting a little bit less attention at these days given how much drama there is in the developed markets. But the emerging markets have been extremely resilient. And South Asia, ASEAN, Sub-Saharan Africa and North Africa have been very resilient to energy and food price shocks and the various strains and stresses in capital markets. That's led to meaningful currency volatility and a lot of hedging activity. So I would just call out those 2 as particular. But Manus mentioned earlier actually in his script that we've been investing pretty heavily in electronic and algorithmic trading. And that is really paying off for us.

We were a little bit behind the curve. I think we're squarely on the curve, i.e., we can compete with best-in-class in those areas and it's profitable. So -- and that's flow. That's just customers coming in and hitting our screens all day long in dramatically increasing volumes, and we're capturing -- obviously, the margins are very small, but we're capturing those margins. So that's been a big contributor to flow that's not geographic specific.

Now we're going to take our next question. And the question comes from the line of Alastair Warr from Autonomous Research.

A question on wealth and jaws, if I may. You've got jaws not as strong in WRB as in CIB at the moment, but you're still getting the jaws, and you think that wealth should be contributing to that just because of the sheer level of revenue growth you've got at the moment. But if we push that further out and just stay with wealth specifically as a revenue line and look towards that 57% cost income target you're giving for the back end of our models, can wealth specifically keep contributing to jaws for the group as a whole out in the medium term on that sort of time frame?

Manus?

Yes. In any given quarter, Al, the precise allocation both between quarters and between businesses can create some noise on jaws in the quarter. So I wouldn't read too much into an individual quarter. But I know you were asking the broader point about whether or not we can continue to get operating leverage from the wealth business. And the answer is yes, absolutely. Some of the investments that we're putting in to make our RMs more productive are obviously paying off. We're putting in quite big capital investments to build out new physical infrastructure, wealth centers like the lovely one you visited in Hong Kong when you came over in May, and those will continue to mature and show a good yield.

And this is a business which as we've discussed in the past, because of the nature of the customer base that we are serving, we think has got real scalability. So absolutely, and the plan is for our affluent franchise to help us get down towards that 57% cost/income ratio. Just don't over-index to any individual quarter on it.

Yes. The only color I would add is this is sort of all before we get the full effect of AI. And in this case, the AI is customer satisfaction and revenue productivity as opposed to cost savings. There will also be efficiency gains to be had with AI in wealth. But it's the #1 use case for us in terms of our AI build-out is to have -- to be able to offer a much higher level of quality and consistency. And we feel extremely good with the tools that we have in place right now, and we're continuing to invest in those very substantially.

Now we're going to take our next question. And the question comes from the line of Rob Noble from Deutsche Bank.

Just a follow-up on costs, please. The 50% cost/income ratio guidance in 2028. So what scenario would you go lower than that number in '28? Should we be thinking about any efficiency gains or better revenues? Do they get absorbed by the cost/income ratio? Or is there a scenario where that's actually lower?

Manus?

Set of metrics that we set out, including the 57% come together as a package, right? So we talked about 5% to 7% CAGR and income growth. We talked about 57% cost/income ratio. We talked about through-the-cycle loan losses, and we talked about the RoTE that, that comes out. So our 57% is predicated on us being within those revenue parameters, and we'd have to see in either direction what that would do. But that's what comes together, Rob.

And I would also -- sorry, just to build on that. Of course, as we get productivity elsewhere in the business, we'll continue to invest to make sure that we're able to drive the top line in the business. I know we've banged this drum earlier in the call, but we'll keep banging the drum. There are things that we are investing in and very happy to invest in because they're building the long-term franchise and building the long-term growth of the bank beyond 2028, and we will continue to do so.

Now we're going to take our next question. And the question comes from the line of Aman Rakkar from Barclays.

Could I -- just 2 questions. So one of them, I hate to return back to costs. I think your cost outlook, it is ultimately a really positive message, right, because it's reflective of a stronger revenue outturn. And that's positive and it clearly improves the operating leverage and the return on tangible equity in the business. But I think we're in a little bit of dangerous slightly -- it's becoming a bit of a frustrating discussion because you are ultimately guiding for a very substantial increase in costs in Q4 and in the outer years.

So -- and I know we're talking about investing back into the business, but I think it would be really, really helpful to have a clearer sense of the payback on this investment in future years. But I guess in terms of an actual question, could you help me understand what your approach would be when you've got a revenue windfall or a gain over and above your expectations, the decision that you -- how do you decide whether to let that drop to the bottom line versus reinvesting that in the business? So very specifically, if it's a rates-driven net interest income, outperformance next year. Are you inclined to reinvest that into your business? Or is there a scope for that to kind of hit the bottom line and be the benefit of shareholders? It would be really interesting to understand what your algorithm and approach is to that.

And then stepping back more broadly, I was interested in just your broader take, I guess, really helpful net interest income guidance for Q4. And I totally understand the moving parts around deposit mix and cost. But could you help us just think about the moving parts into next year? You don't necessarily have to quantify them, but are you expecting a positive benefit from interest rates from here net of any rise in funding costs from here? And presumably, the momentum in the balance sheet from lending is quite meaningful into next year. It would be really helpful for any color you can give us there, please.

Let me take a stab at your -- at the first set of cost questions, and then you can see if there's any space between me and Manus, I don't think so. Yes, good. We have made some good progress. I take the point that these are -- it's a good trend overall. But are we getting a good investment? And how much -- how do we think about flow-through for any period of outperformance through to profits versus reinvesting in the business.

So we're investing at a pretty full pace right now. And as we said this -- I've said this for several years that we're not capacity constrained. I mean we're not like at the limit in terms of what we could possibly invest. But we feel that we are fully investing in the opportunities that we see in the business. And a period of outperformance wouldn't change that realization. So what we haven't done and we won't do is to frivolously spend something that wasn't in the original plan or whatever. Certainly, not if it was coming from something as indirect as interest rates. So no, that we would expect to drop virtually entirely to the bottom line. And that was the case when we had the first increase in interest rates, right?

You didn't see a big pickup in the comp line, for example, because we didn't take that money and distribute it to employees rather than distributing it to shareholders. We put that into buybacks at the time. You see the return on investments in a few areas that we called out very specifically. The first obvious one is Fit for Growth, $1.3 billion in, $1.3 billion of structural gains. Obviously, a very good return with a very short-term payback. And you've seen the particular $1.5 billion that we set out multiyear for investment in wealth, which isn't the only reason that we're generating the strong wealth results, but it's certainly contributing to those.

So -- and there's kind of no question that the returns on those 2 big chunks of investment totaling $2.8 billion over 3 or 4 years are generating very good returns. But there's a big chunk of the rest of the investment portfolio, which is much more fixed. So when we talk about core banking systems and major data center projects, investments in cybersecurity, upgrading financial crime compliance, a complete revamp of our payments platform, much more difficult to identify what the specific economic return is on that. Some of that is hygiene. We have no choice.

Some of that is efficiency that we know we're generating the benefits in terms of customer satisfaction or stability or regulatory allowances, et cetera. So I would be big a bit of indulgence on that to say we're investing wisely. That said, we can't turn those projects up materially or down materially and we can always cancel them. But it's not like we have a windfall or we have excess and we're going to throw it into a bunch of our core projects.

We have a windfall, we're going to ask whether it's structural and something into which we should be investing like wealth, and we will. But we've already got very, very robust expectations for our wealth business, and we're investing commensurate with those expectations. So I won't beat around that one any longer. Manus?

I would question the characterization of our results year-to-date as being a windfall as well. Look, I think you're seeing really strong performance, but I don't think what you're seeing is a windfall that's coming through this year. And as I mentioned before, we are delivering -- we should be delivering 500 basis points of positive jaws this year and investing into the business to keep that top line growth going while promising to deliver positive jaws each year across the plan. So hopefully, the color from Bill on how we're thinking about investment and the numbers that I've laid out will give you some comfort that it's something which we think through very carefully, and we're confident that we can get the balance right.

On your question on NII, Aman, the rate outlook, as you'll see from our weighted average curve, is a bit higher than it was before, about 25 bps higher in '27 than it was when we last spoke to you. So a bit, but not much. We'll see where that comes out after the FOMC later today. But there isn't a huge impact from that change you would have seen. We will give 2027 guidance in terms of what we expect from rates, from volumes, from margins in February next year. So I think we'll defer that until then.

Now we're going to take our next question. And the question comes from the line of Katherine Lei from JPMorgan.

I have one question, and then I have 2 follow-up questions to the replies by management just now. The one question is on like the FVOCI portfolio basically on the bond portfolio, right? I think previously, when there was a rise in the long bond yield, there were some in the markets on the MTN losses. Like how do we manage this portfolio? Can you give us some color on like, say, duration or like a hedging position and things like that?

The second one I want to follow up is that just now management talked about the LDR that you are not aiming to increase the LDR, but are you aiming to reduce it, i.e., are you happy with the current deposit market shares or loan-to-deposit ratios? Are you looking to further gain deposit market share?

And also another follow-up is on the return to AUM. Just now I think Manus mentioned about there is seasonal volatility to the return to AUM. But it's like, say, should we benchmark to 4Q '25? Is that a good reference point when we are modeling for 4Q this year?

Manus, I'll let you take all those questions. I maybe you need some clarity on the third question, but...

Yes, I'll do the first 2. I didn't quite hear the last one. On the fair value through OCI, we keep our book pretty short tenor, which is why you'll see that there hasn't been that much of a move. If you look on the capital slide that we show, we disclosed that there's about a 9 basis point move on our CET1 ratio quarter-on-quarter. So yes, of course, we have fair value through OCI securities for liquidity purposes, but has had minimal impact on our CET1 ratio this quarter despite the moves.

On the question on loan-to-deposit ratio, I'd come back to the point that it's an output, not an input. We're very happy at certain times to grow deposits faster than loans if we think that's where the best returns will come from. And we're also happy to grow loans faster than deposits in other periods. There is no binding constraint on us in either direction. All we're trying to do is generate the best economic value for our shareholders. Katherine, sorry, can you just -- the final question, I didn't quite hear.

Sure. It's on wealth income. Like you have a very strong wealth income and also that you flagged that in the 4Q, there will be like a decline on the return to AUM. Like if we just look at the wealth income divided by the AUM, there will be some like a decline in return to AUM in the fourth Q due to seasonality reason. Should we benchmark to 4Q '25 when we are modeling for 4Q '26?

I see. No, it's -- thank you. That's clear. No, it's a full year number that we talk about when we're thinking about how things go forward. The reason I mentioned the fourth quarter is that it's always seasonally lower, and I wouldn't expect this year will be any different. But that then obviously impacts the margin as you're thinking about it as a run rate. So you should think about the full year run rate. And as I mentioned in a previous answer, the very strong first half of this year meant that we were somewhat above what we would expect for the longer-term range, certainly in the first half of this year, we'll see where we come out for the rest of the year.

Dear speakers, there are no further questions for today. I would now like to hand the conference over to your speaker, Bill Winters, for any closing remarks.

Great. Thank you again, everyone, for joining us. I know it's a very, very busy day, and you've got tons to do. Thanks for the great questions. And thanks for sticking close to the themes that we set out for all of you back in May and tracking our progress against those outlays, we feel very good about the business and see good times ahead. So with that, we'll get back to the rest of the day and look forward to an even more fulsome discussion in February.

This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.

Good morning, everyone. Welcome back. It's my pleasure to welcome Bill Winters, CEO of Standard Chartered on stage with me this morning. Bill, thank you very much for coming.

So it's been a busy few months since you set out your medium-term strategy at the Capital Markets Day in Hong Kong. How do you feel about the progress so far?

Well, first of all, thanks for having me, Perlie, and thanks for joining. Well, we feel good so far. And we've -- in many ways, the strategy that we set out in May is the one that has been the strategy for the past 15 years. But of course, we took some steps to focus, refine and maybe explain a little bit differently since we had many of -- the attention of many of you for a longer period of time than normal. And we set out a few key tenets, which is to focus on this affluent client proposition that we've got across Asia, Middle East and Africa. That obviously is continuing to go very well.

There's been noise along the way is that, is China imposing capital controls or not. No doubt you'll ask a question about that. But long and the short of it is that business continues to perform extremely well. And what we're seeing is that our strategy of investing and focusing on that set of capabilities is really paying off in terms of clients, net new money and obviously through to Wealth income. So that's going well.

The second big theme is our cross-border business, which is an umbrella for really corporate and financial institution activity, institutional, but also wealth clients who, for whatever reason, operate cross-border. The obvious reason is they have cross-border business or operations or they invest in cross-border or they want to diversify their portfolios. And while many banks have a network, nobody has our network. I'm not saying our network is better or worse. It's just our network, and it's unique, which gives us entry to lots of different institutional clients through Africa or through South Asia other than India or through ASEAN other than Singapore.

These are our home markets, and that continues to go very well as well. I won't give my whole set of messages on the back of one question. Last year, you accused me of answering all your questions in my first response. So I'll take a breath. I'll let you come back and steer me where you want to steer me.

Sure. Well, Wealth, starting with that, why don't we? Q2 was a fantastic quarter for you. Can you talk us through what you're seeing in terms of client behavior given the market movements and increased geopolitical tensions in the last few months? Any change in risk appetite?

No, no change in risk appetite. But I'd say our level of awareness and caution is extremely high. So as you've seen and you commented earlier, through the years, we've improved the credit quality of our portfolio substantially. We don't have big concentrations, and we don't have -- we don't have troubles in the book, but we can see plenty of problems that could come if things got much worse. It's not our expectation that things are going to get much worse, but obviously, we can have that debate any time. But we've maintained a very cautious stance with the vast majority of our credit book being investment grade and continuing to improve with loan losses that are very low.

And we've exited not for credit reasons, but for strategic reasons. We've exited a lot of the mass market retail business that was anchored in credit card and personal loan relationships. So that obviously frees up capital. It also frees up the exposure that we would have to an adverse scenario in some of these markets. The reason we exited is because we were subscale in many of these markets, and we're just focusing on things where we have a really differentiated proposition, which is cross-border and affluent credit cards -- of course, we offer credit cards to our affluent customers. We just sold a lot of the portfolios.

So how do we feel since second quarter? Very good. The -- each of the trends is reassuring. Obviously, interest rates are trending up. In this zone, it's still -- I would put it in for us, the Goldilocks zone. It's still a good thing. Obviously, if inflation becomes very sticky and interest rates go up substantially, we would expect a slowdown in economic activity. We're not seeing that yet.

Okay. Well, so continuing on wealth, just in terms of client activities, et cetera, clearly, some of the markets have had a bit of correction in the summer. And also as you've mentioned that there are some regulatory tightening from the Chinese authorities. So what are you seeing in terms of client flows, if any changed behavior at all?

Yes. Structurally not seeing any change. Of course, clients are responding to the market environment. What we've seen actually through several cycles now, I call it mini market cycles as opposed to the big economic cycles, is clients absolutely rotate between outright equities with or without leverage, structured products, Bancassurance, which is typically the most defensive product that our clients invest in. Obviously, deposits. It's a structurally defensive product. So we've seen from an extremely frothy first half of the year where I think we cautioned that we won't be able to grow our Wealth income consistently at 35%, but we do.

Or 43%.

Or 43%. But we do think that the underlying growth is structural. That's exactly what we're seeing. And we're seeing some rotation out of the, call it, the riskier, more idiosyncratic asset classes. But we fully expect that that's a timing issue. So there's a lot of, I'd say, hesitation going into the FOMC meeting. Are they going to hike? Well, they hiked. It's now clear. Warsh has put his marker down. And I think we're seeing the risk appetite resume.

Great. And then moving on to the CIB. The Markets business has grown strongly and consistently in recent years. How is the business performing in the second half of the year? And what has been driving that consistent growth that you've seen in flow income? And how should we think about the longer-term opportunities for the business?

Yes, it continues to perform extremely well. We know that in the first half of last year, so '25 was a very strong period, in particular for financial markets. So the comparator year-on-year in the first half was weaker in financial markets, was much stronger in banking. In the second half of the year, it, kind of, flips. We had a very strong comparator last year. But cutting through the year-over-year changes, all of which are fine as an aside, the performance in the third quarter is very encouraging.

And I would say it reflects -- to the heart of your question, it reflects investments that we've made across a range of areas. I mean I've commented, I think, on this stage before that 7, 8 years ago, our Financial Markets business was very FX anchored. And we were a good global FX house and a very good emerging markets FX house. We now are still a very good emerging markets FX house. We're, depending on how you want to measure it, top 5, certainly top 10 in G3 or G7 FX. But we're also a very substantial rates house, a very substantial commodity house in our chosen areas with a full range of derivative products and associated structured products.

So it's just a much higher quality, better diversified business, which also allows us to rotate through cycles a little bit more effectively. We've done that in a very disciplined way. The flow income is increasing because we're increasing the number of clients that we cover. We're covering them better. We've built really good electronic trading and algorithmic trading platforms that those clients can attach to. And we've got much better linkages from our custody and cash management and trade finance businesses. So those links were always there, but we're just capturing a much higher proportion of the flows that our clients were engaging with us on, but then doing their ultimate hedging with somebody else.

So without compulsion, we're bringing that back home. That is, I think, a gift that keeps on giving. So we've been growing that flow income at 10% plus for some period. That has continued through this year and into the third quarter. The episodic income, which is on average, 25% or so of income but quite volatile, had a weak fourth quarter. It had a fine first half of the year, but against a very strong comparator last year and is having a fine third quarter against a weaker comparator last year. So the percentage changes may look great. But underlying, what we're seeing is good, steady growth and progress in each aspect of that business.

Banking, of course, part of what's going on in banking is the AI feeding frenzy, which is data center capacity being built at length. We participated in that in the huge market, which is the U.S., but a lot of our growth is coming in the rest of the world, where these aren't the 10 gigawatt projects that you see consuming half of the state of Texas, but rather these are much more tactical. In many cases, they're not AI training model-based data centers. They're either inference or just cloud-based data centers. But that said, there's almost insatiable appetite for these products.

We've been very cautious in terms of what we keep on our own balance sheet, but very active in terms of passing these things through. I think the other thing to note has been the surge in private financing in the Gulf. Obviously, there's a war, and they've not been accessing public markets. I think they don't -- they could, for sure, if they wanted to. But they've been a little bit averse to public markets given the likelihood that they would be printing at a wider spread than they would like to have, but they also want to bolster their cash reserves. They've been doing a disproportionate amount of that capital raising through us.

I see. What about banking then? What's the pipeline looking like for the second half of the year? Any particular sectors or geographies that you're seeing particularly strong momentum?

And banking, that was the segment I was just talking about. Pipeline is good. The activity is robust. Of course, we saw a dip in capital markets activity in -- over the summer months, also during the period when the Gulf conflict was more uncertain, which I guess is still quite uncertain. But people are getting on with business. So whether it's in the AI space, where caution has definitely become a buzzword, spreads have widened quite a bit even for the hyperscalers. But that build-out is unfettered. The capital raising in the conflict zones is unfettered. And our market share would appear to be going up quite a bit.

I see. Well, I mean, fee income has clearly been one of the main growth driver in the last few years. But with loan growth really picking up quite substantially in some of your key markets like Hong Kong and Singapore this year and rates where they are, NII is looking quite interesting as well. So is loan growth something that you are leaning more into in this environment? And if loan demand were to stay strong, does that change your thinking about the mix between NII and fee income?

Where we start and certainly where we start in terms of assets that we are intending to retain either in whole or in part, we start and we end with returns. So we targeted 15% over 15% RoTE in '28 and then out to 18% plus or 18% to be precise, by around 18%, I think, is what we're saying by 2030. And so we want to add assets that are accretive to those targets. If we can do that by growing our NII, super. But we're not going to grow NII at a dilutive level period. So we are seeing opportunities to deploy our balance sheet, both tactically, i.e., underwriting positions and structurally, i.e., buy and hold, that are more attractive than they have been for some time.

And that, I think, reflects the fact that there's been a bit of a scramble for deposits and funding where we have some strong positions, in particular in Hong Kong, but also in Singapore and elsewhere. But there's also been a huge demand for borrowing. So when we see the opportunities, we'll take them. I would still fully expect that our non-NII is going to grow substantially faster than our NII, and it's obviously higher returning. So the equation is good. But we absolutely have the ability to accrete towards that 15% and 18% RoTE by growing our assets and where we have that opportunity, we're set up to take advantage.

And then on margins, well, interest rates and expectations of rates have increased quite a lot in the last few months. So how should we think about the impact of that on your business? And with loan growth demand coming back more strongly, as you say, have you seen any increase in deposit competition?

There's absolutely an increase in deposit competition, in particular, in Hong Kong and Singapore. And it's interesting to, kind of, probe the question, how much of the competition that we're seeing is because people need the funding and how much is because they want to show a good net new money figure because the entry point is deposits and you put a teaser out for deposits, you print big net new money, it gets written up by Bank of America and others as some sort of great wealth business. It may or may not stick past the deposit.

We are not competing in terms of net new money. We're not trying to hit net new money targets or AUM targets through deposits. The deposits that we take, we're taking because people want to put money on deposit with us. We've got a very good track record now of converting those deposits over a period of time into wealth products. The deposits themselves, I mean, certainly without -- because we're not subsidizing our deposit levels in any meaningful way. We're very happy to take the deposits. That's a valuable accretive business. We like the deposits. We like the wealth products more.

So we just want to make sure that the relationship is set up for people to keep their money with us as they go into riskier assets. But I mean, there is definitely competition for deposits. The -- but broadly, are we looking to shift the mix? No, we're not looking to shift the mix. We're looking to optimize our returns.

And to bring it all together, your income guidance for the year is around the middle of the 5% to 7% range. Given your performance in half 1 was already up 9% year-on-year ex the Solv India gain in 2025. What are you watching out for the second half of the year that might explain some of that conservativeness in your guidance?

Yes. Well, I mean, the good news is we're completely focused on exceeding every target that we've set. We haven't changed our guidance, and you're not going to hear that from me today. But the focus for the team is to maximize that if we can hit all these targets earlier or better, I can assure you we're going to do that. There's none of this "let's get it in the bag and save it for next year" stuff that doesn't happen. If it does, it's totally invisible to me, which is -- so the -- what could go wrong? Well, obviously, we had relatively brief periods of, kind of, risk off when it looked like the -- both the war in the Middle East and the war in Europe, Ukraine was hotting up in a disruptive way.

Market seems to have gotten over that to a significant degree. I think there's probably some hope built into the markets right now that there will be some sort of a diplomatic breakthrough, at least in the Middle East conflict during the time when UN leaders are together or global leaders are together at the UN. I wouldn't attach a whole lot of hopefulness to that. I would hope there could be some progress because this thing is going nowhere and it's very damaging to the world and all participants. But it's hard to see that anybody is ready to capitulate.

But beyond that, I think we were all keen to see whether and how the market reacted to central bank action, whether they had cut or not cut -- sorry, raised or not raised. As it turns out, the Fed raised, other developed market central banks are clearly raising led by the ECB. And emerging economies have been ahead of the curve on that. So far, no markets have taken the new rate stance badly in terms of a significant risk reversion. But we'll continue to watch that quite carefully to see if the market is at some sort of a tipping point, but you're all watching the same things as we are.

Of course. That's all I have on the income side of things. So I'm going to ask you a couple of questions on cost. Total costs are broadly flat this year on your guidance. So the operating leverage would be pretty significant at 6%, if not higher. Clearly, that reflects some efficiency investments in the last few years. And going forward, what do you think is the right relationship between income and costs? And how are you thinking about AI in that context?

I mean the things that we're looking at quite carefully are, of course, the outright expense level. We've guided to a 57% cost-income ratio, which was part of a steady improvement in that cost/income ratio over time. That, of course, will require us to maintain consistently positive jaws in order to achieve that. That all feels achievable.

So the AI dynamic is really interesting. On the one hand, I'd say most of the investment capital from our bank and others that's gone into the AI space has been productivity related. It started with code completion and coding tools, which I won't say it's a no-brainer, but it's pretty straightforward to reduce the number of coders that you have and allow the coders to focus on value-added work, which is -- by the way, the number of coders we have has increased, not decreased because we're building stuff. But clearly, they're doing less of the mundane, kind of, entry-level coding work.

At the other end of the spectrum, are the revenue opportunities, probably the most obvious for us is deploying agentic AI capabilities into our wealth platform and doing that in a way that is highly supportive of our relationship managers rather than displacing our relationship managers. That's what our customers want. They want the human interface, but they want to know that they've got the best tools that AI allows, directly supporting them in terms of research and things, but through their RM where it require some interpretation or a stamp of trust. And those are the areas where we have focused most of ourselves.

But as I mentioned in May and as Noel, our Head of Technology and Tanuj mentioned in their full presentation in May, we've spent the past several years building our foundation layer to be fit for purpose in the AI world. And some of that was, call it, ordinary course foundation building, but very few people have done it. We have a single core banking system across -- which is cloud-based and proprietary -- across all of our markets, we have 3 to go, which is Korea, Taiwan and Thailand. But we had completed Hong Kong at the time that we met in May and 50 other markets. So we've had no incident in any of those migrations.

That and having for 2/3 of the world, our data centers in the East, we have a state-of-the-art set of data center capabilities in our case between Hong Kong and Singapore that enables the quick and safe and maybe I really underscore the safe introduction of AI tools onto a platform that is built for that environment. We'll complete the West, which is our U.K. data centers over the course of the next 12 months or 18 months or so. At that point, we'll have a really, really strong underlying infrastructure.

The other thing we did though was we backed away from the 50 or 60 different use cases being developed by businesses and functions and AI into building a single AI platform. So our Service Bench, our foundation layer. We slowed things down a couple of years ago, but then came full speed at the -- towards the middle of last year. We've added, I think, 500 applications onto that AI factory in the meantime. Some of them are exactly the, kind of, code completion, technology enhancement, system testing, controls testing, financial crime compliance monitoring, et cetera, et cetera. Some are revenue enhancing, algorithmic trading enhancements, market signaling distillation. The -- I mentioned the agentic AI in the context of wealth advice. So things are accelerating. It's very exciting. Does it contribute to our cost and cost income targets? Absolutely.

But there's something else going on at the same time, which is the flip side of the AI opportunities are the AI threats. Cybersecurity concerns are enormous right now. These concerns have not penetrated the banking -- we've not seen evidence of attacks on the banking sector as yet, typically because banks are the hardest to penetrate because we've invested billions of dollars to have the protections in place to prevent exactly the kind of attacks that would come in through these vulnerabilities that are being identified. But as we know, if OpenAI itself can be penetrated, if Microsoft itself can be penetrated, eventually with enough time and effort, they'll be able to penetrate a bank at some level.

Our response to that, of course, is to have the AI tools ourselves. We get the question all the time, "Are you in Glasswing?", which is obviously the Anthropic Mythos test case. We are in Mythos. We are -- we have access to Mythos. We got it late, later than the Americans, but together with others outside of the U.S. But what we found is that 97%, 98% of the vulnerabilities that we and others can identify in Mythos, we had already found using other frontier models that weren't as advanced, but were advanced enough to spot these vulnerabilities.

But we also see Microsoft came out a couple of weeks ago with 969 new vulnerabilities. Many of those will attach to us as they attach to anybody using Microsoft Office or Azure and just to pick a couple. And they had patches for 960, 30, they didn't. Are we going to get better at spotting these things ourselves so that we don't have to hear it from Microsoft? And when I say we, I mean the industry because I'm not aware that anybody had either identified or exploited these vulnerabilities before they were identified by Microsoft. But we don't know. We don't know. So definitely stepping up our spend on cyber in order to protect against a much more substantial threat.

That makes sense. Speaking of threats, et cetera. So I might take the opportunity to ask you about some of the headlines today on AML. Would you like to make a comment on that?

Sure. Yes. I mean for those of you that have read the Financial Times, the first you'll keep in mind, it's the Financial Times, and you read that whatever you want. But the -- they did some -- actually quite good investigative work. I think somebody did a data dump. So somebody leaked some documents from some investigation about a money laundering network out of Russia called A7. The headline was Standard Chartered and a few other banks were engaged somehow. We were victims or we transfer money for bad guys, which is true. Of course, we knew about this network. We identified the nodes in the network. We closed the accounts. We filed the suspicious activity reports, which no doubt helps the investigators to understand how this very sophisticated Russian money laundering network work.

That's what we do. We do that all the time. We file tens -- hundreds of thousands of SARs, Suspicious Activity Reports. When we see something untowards and if we see enough of a pattern, we shut the account. This is maybe just a little bit of explanation the way things work in the financial crime space. If a party is sanctioned, we immediately are aware of that. We put it into our transaction monitoring systems. We have no transactions with sanctioned parties. It never happens, right? So if they're sanctioned, they -- somebody tries -- some sanctioned party tries to deal to us, it's blocked -- transactions ever initiated.

For payments that we get through our correspondent banking network, and in these cases, I believe, are all correspondent banking situations. Our respondent bank, so it's the bank that uses us to effectively get to the some end client, they make the payment to us. We were the receiving bank in these cases. That process goes straight through. The payments are straight through process unless it's blocked because the sender is a sanctioned party. These are not sanctioned parties, right? These are respondent banks in China or elsewhere. We then review every transaction as it comes through to see if there's a pattern of payments or a pattern of beneficiaries that says to us, we should be concerned about this.

If we're concerned, we file a SAR, like I say, hundreds of thousands of SARs. If we're not concerned, it goes straight through. Sometimes it requires quite an elaborate bit of data analysis to understand the patterns of money movement. Where was it coming from back in the chain? Where is it going to? Is the payment pattern unusual in some way? So it could take a day, it could take a month, it could take 6 months for us to determine enough of the fact pattern to warrant closing the account. In every one of the cases that were mentioned in the Financial Times, we've closed the account before it was ever public, before we ever had any word from investigators or OFSI or OFAC or the HKMA's financial crime surveillance authorities.

So this is what we do. We did it in this case. Good for the FT who have uncovered this Russian money laundering. Why they put in the headline, "Standard Chartered, Citibank, DBS, HSBC are involved," go figure. Because you have to get to Paragraph 22 before you see where they say, well, and by the way, Standard Chartered exited all those relationships. And when they did exit, it seems that the money laundering ring circumvented someplace else, the UAE or something.

Anyway, that's what we do. We're very, very happy. We're very proud of it actually. We have state-of-the-art systems. But money laundering is -- especially when you've got people who are determined to break the law, it's a tough one to catch in the first instance, but we do catch it.

That's great to hear. So capital then, we've gone through all the P&L lines. At the CMD, you've guided to a broadly even split between growth, dividends and buybacks. So starting with growth, where are you most actively deploying capital at the moment? And you've talked a lot about AI spend and resources that need to be spent on cybersecurity, et cetera. So how are you deploying that capital at the moment? And over time, how are you thinking about the balance between dividends and buybacks?

Yes. Well, I mean, there's capital and there's expense. So obviously, they're correlated, but they're not exactly the same. The expense is clearly going into our growth areas of all things cross-border and affluent. And so that's continuing to build out our FX capabilities, continuing to build out our transaction banking, with a particular focus on what's becoming quite a substantial area of activity around digital assets. As you know, we've been invested in that space for quite a while. And now we're seeing the real use cases come through in the institutional world, well beyond the crypto world.

So that's -- these are areas of ongoing focus and expense accretion. In terms of capital, the -- as you mentioned before, we have seen some -- I would call it modest loan growth in a very attractive environment. More of that is showing up in our banking book than our -- sorry, in our trading book than our banking book. And more of that is transitory, i.e., they're underwriting positions rather than buy and hold. But frequently, we'll have an underwriting position where we retain a piece. So those opportunities, which are supporting the big growth in banking are interesting incremental areas to deploy capital.

And of course, we're always weighing the trade-off between using capital for underlying business growth keeping in mind that the fastest-growing RWA area is actually operational risk for, kind of, all the obvious reasons. The business is growing, transaction volumes are growing. The threat environment is substantial. But we also have some loan growth, and we've had quite modest growth in markets despite the growth in the business. But we'll always look at any incremental growth of capital deployment against what we could do alternatively in terms of returning that to shareholders.

Different calculation at 1.7x book than it was at 0.6x book. But nevertheless, we're very, very, very comfortable buying back our shares at this price because we think we've got quite a long way to go. So -- but it does cause us to think about how we balance buybacks versus dividends. We're 2.3% or 2.4% dividend yield right now, which we're fully aware is below the level that some income funds would be comfortable engaging. Obviously, we're at 2.4% because our share price has gone up, not because we've dropped the dividend. Would we think about how we balance that as we go through our dividend versus buyback versus organic growth? Yes, we'll consider all those things.

Of course. We've got about 10 minutes left, so I'll take the opportunity to ask the floor for questions. There's one over there.

Quick question with respect to the -- what's your thought or view around how the risk management landscape or transformation is happening to keep speed with the pace of AI adoption and digital capabilities?

I feel like I missed the operative word, what risk management?

Just your thought around how the risk management landscape is evolving, transforming...

Generally.

To keep up with the pace of AI adoption and digital capabilities.

Yes. Well, it's -- I don't think we've changed anything in terms of our orientation. I know when I speak to our CISO, Cyber Information Security Officer, probably every other day these days and whenever there's an event or a piece of news. And I mean, going back 2 years when the frontier models, it was becoming clear that this was a new threat or at least a new form of threat. His response to me was, "What part of this do you think we haven't been preparing for, for the past 5 years?" What part of segmenting our network, layering our defenses, monitoring network traffic, like, nothing's changed. The only thing that's changed is it's happening faster.

The time between the identification of a vulnerability and the ability for a bad actor to exploit that has gone from 10 to 12 days to 10 to 12 minutes as a practical matter. So what we have to do to respond to that is to have AI tools that ideally are identifying the vulnerability before the bad guys do. But if we have no edge in identifying that, then we have to assume we're going to find it at about the same time as the bad guys do, which means that we immediately have to put a mitigating action in place. And we used to -- I remember when I first joined Standard Chartered, our internal SLA for addressing a high-risk vulnerability was 4 days. Now it's 4 minutes.

So -- and if we don't have a patch for the vulnerability that's been identified, which typically is going to come from a vendor or Microsoft or somebody else, then we have to put some mitigants in place in terms of monitoring the network traffic. And we have to be prepared to pull the plug on that Internet-facing whatever it is, whatever the vulnerability is embedded in, we may just have to shut that channel down. If it's -- if we're shutting down some sort of internal data communication channel, it may not matter. If we're shutting down online banking to our customers in Hong Kong, it matters. So we obviously take that very seriously. But we'll shut down a channel.

If we haven't built the resiliency to fail over to something else, which in some cases, that may be the case in some cases, then we'll put the mitigants in place to address that as best we can. So nothing has changed in the risk management framework, but, kind of, everything has changed in terms of the speed that we have to respond and address these issues.

Any more questions? Well, if not, maybe I can ask you a question, maybe just stepping back on the regulatory environment because obviously, we've seen some headlines on various Chinese authorities tightening. But if you look at things like the Hong Kong's new 5-year plan, the direction of travel regarding structural themes like RMB internationalization is still very much supported by the government. So maybe from your perspective, why do you think we are seeing a slight disconnect in some of these things?

Yes. I think you're right that the headlines are the headlines, and they came in waves. We saw the crackdown on the -- what would appear to be illegally operating Hong Kong-based securities companies that didn't have a license to operate in China, but were harvesting lots of money through third-party agents in the Mainland into their accounts in Hong Kong, right? Well, they were identified, sanctioned, fined. They're still there, but I'm sure they're much more careful about the way they go about their activity.

We have a bank in Mainland China. The majority of the clients that opened up with us in Hong Kong or Singapore already have an account with us in Shenzhen or Beijing or Shanghai. So that's -- we've never done things the wrong way in terms of opening up accounts offshore China vis-a-vis the onshore authorities. So there was no change in our activity. There's no change in our protocols. And we actually saw a slight increase in the levels of activity. I think because clients were probably a little bit wary of going with some of these other companies. That's normalized subsequently normalized, but still at quite a high level.

There's a crackdown on various offshore disclosure and tax issues, in particular, offshore trust. This to me is normal stuff in a maturing economy. And of course, China has the same fiscal pressures that everybody else. And they say, "Okay, we're perfectly willing" I don't know if they're happy or unhappy, but perfectly willing to have their citizens diversify their wealth holdings across a range of instruments. There are capital controls internally, currency controls internally. So if they're going to get diversification, it's going to be offshore. They clearly are comfortable with that trend.

But they do want people to pay taxes on the things that they're obliged to pay taxes on. In some cases, the tax rules are unclear. They clarify them. In some cases, there was active avoidance, the trust structures in particular. No material impact on our business. We've never organized or oriented ourselves to tax avoidance or certainly not tax evasion. And our trust business is relatively small, and that trust business itself has a small proportion of Mainland Chinese customers. So no material impact for us. But when you string the things together, you think you could think, it looks like they're cracking down on offshore money.

But at the same time, the instruments and tools that they're putting in place around the internationalization of the RMB, the substantial issuance of RMB-denominated bonds offshore China, typically in Hong Kong, the active promotion of payment platforms that will have the effect of encouraging the deployment of RMB and a diversity of -- diversification of other currencies offshore, that's all happening. So I think it'd be safe to say that we're not concerned at all. But of course, we have to watch because it's a -- China is gradually relaxing its capital controls. They're gradually relaxing their currency restrictions. They're gradually increasing the attractiveness of the RMB as an international currency of trade and investment.

They're creating or allowing for a portfolio or collection of RMB instruments to be to be created offshore. Thankfully, these are all things that are right in our sweet spot. And I mean, dare I be mercantilist about it, too, we make a lot of money. As China opens up in this way, we are the primary -- we're the leading RMB bank in the world. And I'd say that's recognizing that there are other big banks that might make a similar claim. Every indication is that we are at the cutting edge of the internationalization of the RMB. You may ask, "Is that going to get you in trouble with the U.S.?" I think not because the way we're going about this business is highly responsibly. So when the EU or the U.K. or the U.S. imposes a sanction on some party that may have some Chinese connection, we impose that sanction. We filed the SARs. We engage.

So I think we're seen as a force for good by all sides. And we're keeping in mind that the United States still buys a lot of product that has -- either comes directly or indirectly from China. And those trading relationships need to remain strong and strong enough that the two presidents are meeting together this week. So yes, overall, I would say, keep a watchful eye, but there's nothing that we're seeing that's concerning.

Okay. Any last-minute questions for Bill? If not, then we are almost out of time. So I -- oh, there is one.

Carlo Moccia from Bank of America. We've seen that in Europe, the ECB has recently launched its digital euro through the wholesale banking channel. Do you see any governments in the countries that you operate in following suit? And if so, is that a threat or an opportunity for you?

It's an opportunity, I think, everywhere. I think you know our view that the money will go digital one way or another faster or slower. And Europe and the U.K. have been pretty slow in terms of adoption. The U.K., as you know, is not adopting at a government level. The EU said, "We're only adopting at a government level." So it's been difficult for stablecoins to operate in the same way in the EU as they had elsewhere and -- or in some other markets. So I think the wholesale digital euro, it's good. It's extremely well designed. It's consistent with the regulatory format in Europe, MiCA. And there will be take up over time. But I think it will be sitting side-by-side with U.S. dollar stablecoins and perhaps other countries' digital currencies.

China, of course, has had a central bank digital currency for some time. It's not actively used, but it is used on -- let's say, for example, on their mBridge platform, which is central bank to central bank. And they've got a new platform of which we are a pilot member as well that's bilateral, but still central bank to central bank. So I think central bank issued digital currencies have a place in the armory of tools that people will use to move money. I think we can assume that they'll be safe and well regulated. And we can also assume that they're not going to be as flexible or agile in terms of adapting to customer needs, which is why we will have privately issued stablecoins.

We're issuing stablecoins in Hong Kong. And we're finding hundreds of use cases. And we just got the license 2 months ago. We're up and running now with the initial transactions, hundreds and hundreds of use cases in the crypto world, which is where stablecoins are native, but also in terms of cross-border trade, cross-border payments, treasury operations. So I'm very optimistic about there being a plethora of digital -- forms of digital money that will work for different people in different circumstances. Central bank digital currency has one place.

Great. And we're almost out of time now. Thank you very much, Bill, for joining us today.

Thank you for having me.

Good morning and good afternoon, everyone, and thank you for joining us.

Before I get into the second quarter performance, I want to step back and touch on a few things we discussed at our investor event in May. It was great to host many of you in Hong Kong. I hope the energy from the presentations and the discussions resonated with you and was a reminder of the momentum in our franchise. Our message was clear. We built a bank capable of delivering durable returns by sharpening our strategy, improving the balance sheet, investing in infrastructure and focusing on areas where we have real competitive advantage.

And most importantly, we're now moving from durable returns into compounding growth. Our super connector model is hard to replicate and highly valued by clients. Our strategy is aligned to long-term structural growth drivers. We have clear and measurable plans for continuous improvement in our productivity. Together, this supports exceptional growth and sustainably higher returns. Manus and I will cover these points over the course of the presentation.

All of this gives us confidence to maintain clear milestones. Above 15% RoTE in 2028 and around 18% in 2030. They are the output of a strategy that is working and a franchise positioned to compound over time.

Turning to the quarter, we delivered another strong performance. The business continued to perform well with momentum across areas where we have been investing, our cross-border network, wealth, CIB, financial institutions and increasingly capital-light client-led business. This resulted in a record first half performance with earnings per share up 17% year-on-year. We're upgrading our 2026 guidance for income to be around the middle of our 5% to 7% growth range year-on-year. This reflects the confidence on our strategy, the momentum we're seeing across multiple areas and the relevance of our business model in this evolving multipolar world.

Our capital position remains strong. We're announcing a $1 billion share buyback and an interim dividend of $0.204 per share. We're continuing to invest to grow and returning surplus capital in a disciplined way to shareholders. Finally, we will remain watchful. The external environment is uncertain, but uncertainty reinforces the value of a bank that helps clients move money, manage risk and deploy capital across complex markets.

With that, I'll hand over to Manus to walk through the numbers in more detail.

Thank you, Bill. Good morning and good afternoon, everyone. In my remarks, I will be comparing the second quarter 2026 performance year-on-year at constant currency, unless otherwise stated. The group delivered operating income of $5.7 billion, up 3% or up 8%, excluding the gain associated with the Solv transaction last year. This performance was supported by continued strong delivery in Wealth Solutions, Global Banking and flow income in Global Markets. Expenses were broadly flat or up 3%, excluding notable items.

Given the continued tension in the Middle East, we took $44 million of additional management overlays in the quarter. But even including these overlays, our loan loss rate was just 20 basis points this quarter. Profit from associates was lower, mainly due to the change in our approach to recognizing the group's share of Bohai's profit since Q4 2025. Put together, we delivered a profit before tax of $2.3 billion and a return on tangible equity of 17.9%. We closed the quarter with a net tangible asset value per share of $7.55, up 4% year-on-year.

Now I'll talk you through the detail on each component. Net interest income was up 1% quarter-on-quarter. We saw a benefit from volume growth as well as an improvement in mix from a lower proportion of treasury assets. These were partially offset by rate and margin headwinds as well as the previously flagged WRB portfolio actions. We are upgrading our NII guidance for 2026, and we now expect it to increase by a low single-digit percentage year-on-year at constant currency. When we compare second half of 2026 versus the first half, we expect continued volume growth in our businesses as well as continued mix benefits from a lower proportion of treasury assets.

We expect these will be offset by a shift in deposit mix in WRB towards term deposits as rates rise and as we grow our affluent client franchise. Additionally, we expect to see a higher impact from WRB portfolio actions in the second half, and we continue to expect these actions to reduce NII by around 2% overall in 2026.

Noninterest income remained resilient against a tough comparator in Q2 last year, where we had a $238 million gain relating to the Solv India transaction. If we exclude this, noninterest income was up 9% year-on-year. I will speak to the product drivers in more detail when I get to the business segments.

Turning to operating expenses. Q2 expenses were broadly flat year-on-year but up 3%, excluding $74 million of a provision release relating to Korea equity-linked securities, which we classify as a notable item. Business growth and inflation in the quarter were largely offset by Fit for Growth savings and other efficiencies. On Fit for Growth, we booked $128 million of cost to achieve, bringing the year-to-date spend to around $250 million, and we continue to be on track with the program.

Based on the upgraded income target that Bill mentioned earlier, we expect 2026 expenses, excluding notable items, to be around $13.3 billion at constant currency. As a reminder, the phasing of our costs was uneven in 2025, with Q3 costs unusually low due to certain expenses being delayed into Q4. This year, we would expect a more even phasing of costs between Q3 and Q4.

And as I said at our May investor event, we are moving into a process of continuous improvement, growing the top line each year, improving efficiency and returns as we become simpler, faster and more connected. Credit impairment for the quarter was $150 million. This includes an additional $44 million of management overlays in respect to the Middle East conflict, mainly for the petrochemical sector and potential sovereign downgrades. This brings the total management overlays in relation to the Middle East conflict to $234 million.

CIB impairment was $39 million, reflecting incremental overlays partly offset by net recoveries in the rest of the portfolio. WRB recorded lower impairment in the quarter, benefiting from continued portfolio optimization actions. Our annualized loan loss rate for the first half of the year was 26 basis points. And as we laid out in May, we expected through-the-cycle loan loss rate of 30 to 35 basis points. There was around an $800 million increase in the Early Alerts portfolio in the quarter, largely from some sovereign-related names as a result of the Middle East conflict. While Credit Grade 12 and Net Stage 3 assets remained broadly stable.

As we mentioned last quarter, our exposure to the Middle East remains around 6% of the group's exposures. With over 90% in CIB weighted to sovereigns and financial institutions, while WRB exposures are mostly secured. Our overall credit quality has remained resilient in a volatile environment and we will continue to monitor for potential impacts.

Moving on to the balance sheet. We saw 2% underlying growth in customer loans and advances in the quarter, primarily driven by the strong momentum in Global Banking while we also saw some increase from secured wealth lending and mortgages. On a year-to-date basis, underlying growth in customer loans and advances was 5.7%. Note, this was higher than the growth in average interest-earning assets, which was up around 1%, reflecting the continuing optimization of treasury assets, which we discussed at our May investor event. In customer deposits, we saw underlying growth of 2% in the quarter with increases across WRB and CIB. Risk-weighted assets were down $4.7 billion or 2% quarter-on-quarter, which we expect to largely reverse in the second half of the year.

The quarter-on-quarter reduction was due to a decrease in credit risk RWAs towards the end of the quarter, where asset growth was offset by lower counterparty credit risk and the impact of optimization. Market risk-weighted assets were also down $1.4 billion in the quarter. In the second half of 2026, we expect RWAs to include business growth and the annual increase in operational risk-weighted assets.

As a reminder, we expect the day 1 Basel 3.1 impact to be broadly neutral post management actions. Our CET1 ratio was 14.2%, driven by the robust amount of capital we generated in the quarter. And as Bill mentioned earlier, we are announcing a $1 billion share buyback and an interim dividend of $0.204 per share.

Now let's take a look at our business segments. WRB Q2 income was up 18% to $2.5 billion, Wealth Solutions delivered another record quarter with income of $1.1 billion, up 43% year-on-year. This was driven by a broad-based performance across geographies and products. We raised $15 billion of net new money with $9 billion coming from wealth. Our first half new money is equivalent to a 15% annualized growth in assets under management. Momentum in client acquisition also continued as we onboarded 76,000 new-to-bank affluent clients in the second quarter. We have not seen any material change in client behavior throughout the quarter.

Overall, the first half Wealth Solutions income was exceptionally strong and in buoyant equity market conditions. Whilst we remain very confident in the outlook for our wealth business, we would caution against annualizing the pace of growth seen in the first half of 2026.

Turning to CIB. Q2 income was $3.3 billion, up 2% year-on-year. Transaction services income was up 5%, benefiting from higher volumes and fees with broad-based growth across payments and liquidity, security services and trade. We saw continued momentum in Global Banking in Q2 with income up 18% on the back of increased origination volumes and distribution activity.

In Global Markets, flow income remained strong at 16% growth, benefiting from the continued investments in technology and electronic platforms, which drove improved FX performance. Episodic income was lower against a strong comparator in Q2 last year. Given the strong performance we've delivered in the first half of the year, we are upgrading our 2026 income guidance to be around the middle of the 5% to 7% growth range. Within that, we expect NII to be up by a low single-digit percentage.

Based on the upgraded income outlook, we expect expenses, excluding notable items, to be around $13.3 billion. We are maintaining our guidance for return on tangible equity to be greater than 12% in 2026.

With that, I will hand you back to Bill to take you through some of our strategic highlights. Thank you.

Thank you, Manus. In the next few slides, I want to cover a few key elements of the strategic update we gave in May. As a reminder, we see structural trends that are playing to our strengths. While they hide some risks, they are also creating exciting opportunities. Trends are coming through in our 2 major client businesses, WRB and CIB. I'd like also to touch on the digitization of money and what we're doing in that critical space. Let me start with the structural trends.

We set these out at the full year and at the investor event because it remains central to how we think about the business. Emergence of a multi-polar and multi-aligned world is increasing cross-border complexity. Digital transformation and the digitization of money, changing financial infrastructure and client expectations. The role of banks is evolving as capital increasingly moves between banks and nonbanks. Wealth participation is rising, particularly in our footprint, and the transition economy continues to reshape capital allocation.

For many situations, these trends are disruptive. For us, they are also opportunities because they play directly to what we've been building for years. We have a network across dynamic markets and corridors that is hard to replicate. We originate, structure and distribute assets combining local insight and cross-border expertise. We're also building market-leading capabilities in digital finance. The world is getting more complex. Our job is to make that complexity easier for clients to navigate and generate attractive and sustainable returns by doing so.

Turning now to Wealth and Retail Banking. WRB continues to be underpinned by structural wealth flows we're seeing sustained growth in affluent net new money with around $84 billion achieved over the last 6 quarters against our $200 billion 2025 to 2028 target. This net new money is diversified with around 2/3 coming from international clients. Our Wealth Solutions income is also diversified. The 38% year-on-year growth in the first half was broad-based across clients, products and markets. We saw double-digit income growth in high net worth international and domestic client groups as well as across investment funds, capital markets and bancassurance products. And reflective of our geographic diversity, we recorded double-digit Wealth Solutions income growth in 13 markets.

We're also benefiting from deeper collaboration across group, bringing together our wealth banking and markets capabilities to serve clients more holistically. This is helping us capture a greater share of client wallet and further improve the quality and resilience of our earnings. We developed a recognized platform that's coveted by the world's most successful asset managers. This helps us attract, retain and develop the best relationship managers in the market. Together with our ongoing investments in cutting-edge technology, we believe we're building the basis for continued strong momentum in our business.

Turning now to Corporate and Investment Banking. Our Transaction Services, Global Banking and Global Markets businesses continue to benefit from the same structural trends that underpin our broader strategy. As supply chains evolve, capital flows shift and clients navigate a more complex and increasingly multipolar world, the value of our network continues to increase. Clients are looking for a partner that can connect markets, provide local expertise and support increasingly sophisticated cross-border activity that plays directly to Standard Chartered's strengths. We're seeing that reflected in the continued growth in network income, which is up 8% year-on-year in the first half, and our financial institutions business has generated higher returns on risk-weighted assets in the first half than the CIB average as we continue to focus on this client segment.

More importantly, we're seeing strong client engagement across a growing number of corridors and products as clients adapt their supply chains, investment decisions and operating models. We're also seeing how geopolitical and market shifts are creating new opportunities for our network. In the Middle East, for example, issuers have increasingly turned to private capital solutions as public markets have become more challenging. Our ability to connect liquidity across regions and investor bases has allowed us to remain at the forefront of that activity, including maintaining our leadership in Sukuk and supporting clients as funding needs evolve.

In 2026, banking has grown at a supernormal rate, again, with the first half income up 19% year-on-year as we support corporate and FI clients. Our originate-to-distribute model continues to grow with origination and distribution volumes up 37% and 15%, respectively, and the pipeline continues to be very robust. As a result, we're not just growing. We're continuing to improve the quality of the franchise with a greater proportion of income coming from network led and higher-returning activities where we have a clear competitive advantage.

Turning to our digital asset capabilities. This is an area you've heard me talk about in previous quarters, and we continue to see significant growth in activity and client engagement. When we talk about digital assets, we're not talking about a separate business. We're talking about the next evolution, the financial infrastructure. And now Standard Chartered remains at the center of global trade, payments and capital flows.

Our approach is built around 3 areas: first, the blockchain as infrastructure. Helping clients connect to new rails for issuance settlement and payments alongside existing systems; second, banking the digital ecosystem, providing regulated banking, payments, liquidity and risk management services as digital asset firms mature; and third, with digital assets as an asset class, enabling clients to access, transact and custody assets in a safe, regulated institutional grade environment.

What ties this together is our role as a super connector clients come to us to move money, assets and risk efficiently across markets, jurisdictions and time zones. A good example is the first digitally traded intraday FX swap completed in the first half. The transaction was small, but the significance goes beyond a single trade. This demonstrated a pathway to faster settlement and a more efficient 24/7 financial system, practical innovation that can improve client outcomes and our own infrastructure. We've also seen material tokenized deposit growth in 2026 with around $11 billion monthly run rate, primarily from the e-CNY cross-border settlements on Enbridge and our multicurrency work with various clients.

The message is straightforward. We're investing in the infrastructure that will support the next generation of our cross-border trade, payments and investment flows, which we believe will allow us to consolidate our leading position in our markets. Bringing this together, we unveiled a new set of targets for 2028 at our investor event day.

We're targeting 5% to 7% income CAGR between 2025 and 2028 with a cost income ratio of around 57% in 2028. We expect loan loss rates through the cycle of 30 to 35 basis points and will continue to operate within our 13% to 14% CET1 range. This will lead to a high-teens EPS CAGR through to 2028 alongside a greater than 15% RoTE in 2028 and around 18% RoTE in 2030. We remain committed to at least a 30% dividend payout ratio with a progressive dividend per share.

They're not isolated metrics. They are the output of a better bank, more client led, more productive, more capital efficient and more capable of compounding over time. And we have made a great start on this plan.

So to conclude, we delivered a strong performance in the first half. We're upgrading our 2026 income guidance. We're announcing a $1 billion share buyback and an interim dividend of $0.204 per share.

Now the bigger message. The strategy is working. The structural trends we've highlighted are resonating within our business. Our network is more valuable as the world becomes more complex, Wealth is benefiting from affluent flows. CIB is increasingly focused on higher returning network-led and FI led activity, digital assets position us for changing financial infrastructure and continuous improvement gives us a path to operating leverage and compounding growth.

Of course, we remain alert to the more fragmented geopolitical environment, shifts in client activity and the pace of technological change. Our task is to say, close to clients, adapt quickly, continue executing against the opportunities where our network capabilities and international footprint give us a clear advantage.

Lastly, I want to note that building on our Hong Kong event, we plan to host over the course of the next 18 months or so, a series of network spotlight seminars, showcasing how our regional strength underpins our network advantage and creates value for our clients and shareholders.

With that, I'll hand over to the operator for Q&A.

[Operator Instructions]

We will now take our first question from the line of Joseph Dickerson from Jefferies.

Congratulations on a very robust set of numbers for Q2. Bill, you were in the media earlier talking about the China crackdown on compliance. Clearly, it looks like your business, at least for Q2, actually saw a modest step-up in the run rate of new-to-bank customers. I guess, are you -- how does this play in the Standard Chartered? And are you seeing any spillover in the legitimate banking and insurance channels? Or does this play to your hand, that's the first question.

And then the second question is just on the gross movement into stage 2, the $2.6 billion quarter-on-quarter. I guess a question for Manus. Could you just discuss what you mean by transfers of exposures impacted by the Middle East conflict. Is this being prudent in moving them into Stage 2?

Well, thanks very much for the questions, Joe. I'll take a stab at the first one, and as you said, Manus can pick up on the credit reclassification.

Look, for a long time, we've had the sense that being an extremely compliant sort of institutional trust level player, that we would gain some competitive advantage at a point. And that's -- I'm talking about financial crime -- nonfinancial crime compliance and obviously, more recently, a lot of the news around China tracking down on various types of noncompliant activity as noncompliance with the rules that China has set up. As you would expect, number one, we're compliant by orientation and by nature. That's just -- that's the way we approach all our businesses. Number two, we're particularly focused on making sure that we're complying both with the spirit and letter of law in things that are very important to us and things that are very important to our stakeholders, including the government in which countries in which we operate.

So a long way of saying, yes, we're completely focused on doing business the right way in terms of helping our Chinese clients, be they're onshore or offshore, to broaden out their range of investments opportunities and the channel and come into the places or channel wealth into the places that make most sense for them. Yes. So we're very, very, very focused on that.

The results of that is that no, we didn't see any change in activity and we wouldn't have expected to because we didn't see a change in orientation from the Chinese leadership itself. What we did see was a focus on compliance. So we've got some rules. I believe everybody follows the rules, if you don't, we're going to call you out and find you or play other sanctions. Of course, we've not been on the receiving end of that because we are compliant in the first instance. So we don't see any underlying or structural shift in attitude. In fact, a lot of the rhetoric and action, since this business came out 6 weeks or so ago, has been further reinforcing the ongoing policy of internationalizing the RMB, whether that's cross-border payments, expanding the connect schemes and encouraging and appropriate migration of wealth into a broader investment basket, which is obviously what we're providing. So yes, I'd say so far so good and....

It's interesting you say that Bill because...

Thank you, Joe. So the movement in Stage 2 assets is the result of the overlays that we've taken. When we take those overlays, we have to move a proportion of the assets which they refer to into Stage 2 as well, which is why you've seen a tick up in stage 2. You'll also note there the differential on Slide 8 between the move in Stage 2 and the move in Stage 3 and credit grade trial, which is de minimis and a much smaller pickup in early alerts as well. So you should really see it as part of our precautionary overlays, Joe, rather than anything indicating any significant increase in credit risk across those items.

We will now take the next question from the line of Andrew Coombs from Citi.

Just 1 follow-up, and then I'll switch gears to capital and capital return I think the MOF issued a document on the 24th of July tightening up personal income tax laws on offshore trusts. So just interested in any thoughts you have on that and any implications that has for your wealth business, please?

And then secondly, on capital, I'm going to ask 2 parts of this question, forgive me. But the first part is you've had a very good reduction in RWA this quarter down 2% but you said that's going to reverse in the second half. So can you just explain the dynamics there? And secondly, how are you thinking about the capital return mix because the dividends come in a bit better than consensus, but the buyback is a bit lower. So happy for any comments on that.

Great, Andrew. Thanks very much for the questions. Per my earlier answer, I think we have seen and you should probably expect to see an ongoing focus around compliance. And -- in the case of your question is compliance around the way trusts are established and the motivation for those trusts and the way that they're managed. So the first thing, of course, we have a trust business. There's a small -- I would call it, close to immaterial proportion of our AUM that is sitting in trusts. Number two, the responsibility for the tax affairs of our clients that are operating in those trust is with the client. And number three, we -- as part of our ongoing due diligence and onboarding process or inclusion in a trust, satisfy ourselves that the client is discharging her or his appropriate responsibilities vis-a-vis different tax authorities, compliance authorities, et cetera. But it's not ultimately something we can police entirely.

But we -- so we see no material or practical impact on our business. And when we step back and say, does it make sense for tax authorities around the world to crack down on activities that they deem to be outside of the spirit of their intentions, yes, I mean I think that's quite normal. I think we see that from those countries.

Capital -- I'll let Manus dig into the details, but broadly, especially as we come into the rest of this year, we would expect to see some RWAs moving around a little bit, including operational risk capital, obviously, market risk capital moves around a bit. And the things that we're putting on our balance sheet are taking off will also be a little bit volatile from quarter-to-quarter, which is why we called out specifically why the slight downdraft towards the end of Q2 is likely to reverse in the second half. So I wouldn't read anything in particular into that.

But in terms of capital return mix, of course, we're going to debate regularly and openly how we combine the ongoing buyback program that we've had with dividends. And we've been very clear about 30%-plus payout ratio on earnings and our desire to have a dividend per share that's progressive. And that is sort of first and foremost. We're also going to look at the value of our company from time to time. And I can tell you we're very happy to buy back $1 billion worth of shares at this price. And even after today, we'll still be very happy to buy back $1 billion of shares at this price. But we're going to make that judgment from period to period. Manus?

Thanks, Bill. Just to give a bit more detail on the RWAs. And -- there was some timing of some flows, Andrew, which -- Andy, which came across in the quarter. So some banking deals move towards the end of the quarter and some deposit flows came in as well, which is why we saw a bit of a dip and then a pickup at the beginning of the third quarter. So hopefully, that's clear in the way that we've talked about it and presented it.

In terms of the dividend and the mix of dividend versus buyback for capital return, I think Billy explained the longer-term philosophy quite well. Bear in mind that the interim dividend is worked out on a mechanical basis, we do it as 1/3 of the previous year's full year dividend. So we're not making any commentary with our interim dividend here. It's the same policy that we've introduced before. And when we get to the end of the year, we'll take that view on dividend versus buyback versus growth that we've talked about in the past.

We will now take our next question from the line of Perlie Mong from Bank of America.

Can I just unpack the wealth trends a little bit because 43% is very, very impressive. But investment product is up over 50%, and bancassurance is 9%. So there's just a very big gap. So how do you see maybe especially bancassurance going through in the next few quarters? Because I mean, 9% is obviously still very good, but maybe a little bit below the level of growth that we've been seeing in recent quarters?

And then on investment products. How -- is there anything -- well, I guess historically, you don't talk about a correlation with the stock market, but clearly, Q2 was very, very strong in equities across many of the markets that you have footprints in Korea, Taiwan, et cetera. And since then, I guess, a lot of those markets have come down a lot. So how do we think of that, please? Was there a lot of sentiment uplift from the stock market activities in the quarter.

So that's on the wealth side of things. And then on CIB, I guess, again, it's probably 2 parts, so excuse me for that. The first one is episodic income was obviously against a strong comparator last year. But I suppose listening to peers and across most metrics, it doesn't look like capital markets strong in Asia this quarter. So I'm just somewhat surprised by the episodic coming down a little bit. So if you could just help us understand what drives your episodic income a little bit. That would be really, really helpful.

And then secondly, if I look at income over RWAs, it's pretty much flattish versus last year this time. And with RWA also actually may be benefiting from some of the timing benefits that you've talked about. And you've guided to income over to improving in the next couple of years. So I suppose the question is when would we expect to see more of a significant pickup in that?

Great, Perlie. Thanks for that whole slew of questions. We'll try to take them in turn. The -- well -- yes, thanks for noting the very strong wealth quarter. It has been strong in investment products. I think 9% growth in bancassurance is also strong, but you point to the gap. A couple of things to remind ourselves. One is we have been in a risk-on environment for sure. And while we think that the structural flow of net new money, new clients, AUM, we really think of that's structural. We're going to see behavior trends, which are a function of risk appetite in the market. And in a very compelling risk on period, which is the first half of the year has clearly been we're going to see relative outperformance in investment products relative to banca, which is a relatively defensive product. So that's -- that mix is not surprising at all in the context of the sentiment to the market.

The correlation to equity markets is always an interesting one to try to assess and analyze as well. I think the good news, if I can make a general comment is that we have a very diversified set of wealth products. And obviously, it starts with deposits. Costs and time deposits, which are the most defensive, very attractive for us to generate, but defensive obviously, at the other end of the spectrum, we've got equity-linked products and variations in structured notes and things like that.

So what we found through different, I call the mini cycle so far, is that as the risk appetite for the more levered equity type products comes down, people are migrating into fixed income or other investment products or banca or into deposits, all of which is fine for us. Should we expect with the market becoming -- I wouldn't say we're risk off today by any means, although obviously, we're seeing a tiny bit of a correction relative to the enormous jumps that we've had in for example, the chip companies, in particular, in Korea, I mean, these stocks are still way, way, way up from where they were just a year or 18 months ago. So I think this kind of a correction is quite healthy. if we had a more substantial correction in equity markets, is at the end of our growth in Wealth Management, I don't think so because of that diversification that we talked about just a moment ago.

Maybe I'll just stop on the wealth. You get any additional color from Manus and then we can come back on the CIB questions.

Just on the bancassurance question specifically, I would just highlight the fact that, that line across the year can be somewhat distorted sometimes by the timing of some of our bonuses with our bancassurance partners. And that was the case this quarter. If you actually look at the underlying momentum that we've got in that business, it was very steady across the year. So what you're really looking at is bonus timing differences throughout the year. We're very happy with the ongoing performance there.

Great. And on CIB, the -- we've got to focus on the good first. The episodic income is a meaningful positive. That's a good thing. Although it's down from an extraordinary positive later. So no concerns about our ability to deliver returns on large customer deals and our ability to capture value on substantial market moves. That continues to be very strong. The flow income up 17%, 18% is just fantastic. And that, of course, is the thing that we're investing in consistently in terms of client-facing professionals, interaction between our transaction banking business and financial markets, interaction between the retail business and our structured note origination volumes and the financial market business, et cetera.

So I'd say that flow income is the gift that keeps on giving, and that's into that, which we are investing. The episodic is obviously materially positive, but often compared to a very, very strong year last year. which as we will recall was the year or the period that tariffs were announced and we had very, very substantial movement in markets, especially in our developing economies.

The income return on risk-weighted assets. look, I mean, the RoRWA that we're generating is consistent with the -- with our target return on tangible equity. And we will add risk-weighted assets to the extent that it's accretive to our return on tangible equity and generating positive EVA against our forward view of what our returns should be, and we've guided to those 16% to 18% numbers So a flat RoRWA at a high level is just fine in terms of RWA -- sorry, in terms of EVA accretion -- that's what we're focusing on. And we found some really interesting opportunities to deploy assets in the second quarter, notwithstanding the reduction that Manus has talked about in terms of end of quarter RWA reductions versus some kind of return of those RWAs in the second half of the year.

We do think structurally, over time, as we continue to optimize our portfolio as we continue to have a higher proportion of our income coming from financial institution clients rather than corporate clients as we continue to develop our originate to distribute underlying credit intermediation model, we think that there's structural opportunity to increase our RoRWA. But we're very happy with the returns that we're generating now. And if we could deploy another $10 billion of RWAs at the returns that we're generating here, we would do that.

Just to follow up on the calculation of return on risk-weighted assets. Remember, partly that we do calculate that on an average RWAs across the quarters. So it's not just on the spot at the end. And in fact, if you look I think you were comparing Q2 to Q2 last year, our RWAs were actually higher in the second quarter of this year than they were in the second quarter of last year. And as Bill said, we had a very strong episodic print in the second quarter of 2025. So all told, that return on risk-weighted asset number we think will move up over time. We've given you structural drivers behind why we think that will move up. Obviously, quarter-to-quarter, there can be some noise in it, but we're happy with the trends, as Bill said.

The next question comes from the line of Aman Rakkar from Barclays.

Yes, 2 questions, please. One is on net interest income. So obviously, good to see the guidance uplift in the quarter. It looks like for -- the full year, sorry. And it looks like you're stepping away from this expectation that pass-through rates should normalize in your footprint? But I am struggling to make sense of what looks to be a relatively conservative guidance for the full year. I think your guidance at face value implies net interest income flat in H2 relative to H1.

Secondly, can we talk about the degree of conservatism that's embedded in that? And I guess, you're pointing to WRB deposit mix dynamics. That would be great to give us a sense of how much additional mix shift you're kind of embedding in that guide?

Second question was, unfortunately, also about income guidance. On the non net interest income front. If I again, just take your guidance at face value, it would actually imply an H2 outturn for non-net interest income that I think would be actually somewhere below what consensus is factoring in phase 2. So I'm just interested if you could comment on that, would you encourage us not to overinterpret the guidance at face value? And is it conservative? Or would you call out any particular line items and consensus for the full year that you think might look a bit rich?

Great. Thanks, Aman. I'm going to let Manus dig in on both those questions. I'd just say that we've guided to an RoTE in excess of 12%. And obviously, the operative words there are in excess of rather than the 12% itself. As always, we would hope to deliver performance as we did in the first half that suggests that there's an underlying strength that would allow us to surpass any of the guidance numbers that we give. But fine-tuning, especially in an environment like this from quarter-to-quarter. It just seems a little bit unwise or imprudent. So we can get into all the details that you talk about, but there's nothing that we see in terms of the momentum of the business or the degree to which we've started with a perfectly fine July or Q3 that suggests that we can't maintain the kind of seasonally adjusted run rate that we've been talking about in our businesses, both on the NII side and on the non-NII side. Manus.

On the question on NII, specifically, Aman, coming into the second half, I think you should think about a number of factors. There'll be hopefully some more volume growth as we discussed on the slides and in the script. And offsetting that, I think there will be this impact from the WRB deposit mix. You'll have seen that we grew our TD base the first half more quickly than we grew our CASA and those TDs are slightly lower margin. That's a result of both our growth in the affluent business and the fact that rates on TDs were a bit more attractive for customers during that period. So the flow-through of that into the second half will have some minimal impact. And I think you also need to bear in mind as well, we've talked to you about a 2% impact from some of our business exits and portfolio rundowns across the course of the year, that's more weighted to the second half than the first half.

So if you piece those things together, I think you'll see why we end up with the kind of guidance we've got of low single-digit NII growth. The impact of rates on the second half of the year will not be material at this point, if you look at what we're saying about the curve and flow that through into the second half.

On noninterest income, I think to pick up on Bill's comments, I think I wouldn't overinterpret or think of things through in the kind of way that you are. I think that we have seen a very good first half. We're very comfortable with the momentum that we're seeing. As Bill said, we've made a good start to Q3, but there's a long way to go, and we want to make sure that we're in a good position come the end of the year. So we're very comfortable with where that comes out in terms of that midpoint of the 5% to 7% guidance range for the income overall.

Our next question comes from the line of Guy Stebbings from BNP Paribas.

I was going to ask something pretty similar to Aman, but maybe I'll just briefly call out on 1 point there and then ask something else. In terms of net interest income and rate assumptions, saying not a big support in the second half of the year. I think you did call out that sort of the reason for the negative deposit mix is higher rates. And if I look at your currency rate curve does imply some support in the second half year. So can you just help me think about the rate impact, the headwind you get on the mix effects without the kind of the more pure margin benefit from that.

And then the second question was just on Slide 16, you showed progress on affluent income share in WRB. It looks like you're well on track to really outperform that 2028 target. Just interested how we should think about the economics there, if you did come in better than your expectations there?

Great. Thanks for the question, Guy. I'll turn to Manus on further detail on the NII and rates sensitivities. But the affluent income has been strong. And if we can continue with the pace of net new money growth and that translating through to wealth income. It's also obviously flowing through into an attractive deposit mix. Then there's plenty of upside. And that's -- I think that's what we've been calling out in terms of the structural strength. And how much of that upside shows up in the second half of this year versus in future period is going to be somewhat dependent on the market. But I think our competitive positioning is quite good from what we can see. And I think it's a combination of being present.

So having the onshore capability across a number of markets. And I know that there's -- even on this call, there's been a bit of a focus on the China component, but the Mainland China component of our -- the growth in our wealth income is something like 1/3 with another 1/3 coming from our other core markets and the 1/3 coming from onshore. Including China, India, Korea, Taiwan, et cetera. So it's really a broad-based business. And the sources of new money are broad-based. The range of investment products that we're offering is broad-based, I guess, as broad as anybody offers.

Reminder, we have open architecture. So we were not sort of compelled to sell the stuff that we have to produce. We're selling the stuff that we think is the best to put our clients. which makes us a very desirable intermediary for the world's best manufacturers. So I mean the repeating things that we talked about as recently as may, but I think it's worth repeating that we think that this is really a very high-quality business. It's very broad-based, well diversified. We commented on -- I commented earlier on the risk sentiment sensitivity to the business. It's there. We're not -- definitely not going to pretend that it's not. But the structural drivers really are quite structural. So if we can continue to beat the kind of guidance that we've given ourselves, of course, we would expect that to flow straight to the bottom line? Manus?

Yes, on the NII point, look, if you look at our curve, rates are up 20 basis points in the second half versus the first half, so that's not a huge delta on a 6-month basis. And I'd also point out as well that as we know the rates environment remains volatile. So that's why I was saying, I don't think that move will have a meaningful impact on the second half on first half. And if you think about the mix, we grew within our largest retail market, our TD based by $6 billion in the first half, and I paid by $3 billion in the first half. So you can see that kind of switch happening within that business. there'll be a bunch of different things that play through in the second half as to how much of that gets deployed into wealth products, what the outlook is in terms of the way that people want to move in when we're gathering new wealth products into -- whether it's into wealth or into TDs.

But putting those in the round, we were comfortable to come out with an upgrade to our NII guidance of moving up low single digit versus where we were.

Our next question comes from the line of James Invine from Rothschild & Co Redburn.

I've got 2 on WRB, please. The first is back on wealth revenues. I think the investment products margin, I think when you first kind of talked to us about it, you're suggesting a range of 1.2% to 1.5%. I think if you add in the 35 basis point drag from the transferred custody portfolio, we're kind of well out the top end of that range. So to what extent do you think that this quarter is really just driven by a hot market? And how much do you think actually the long-term ongoing range might be a bit higher than you previously suggested to us. That's the first one.

And then the second one is, again, on WRB. If we do go into a less good revenue environment for this wealth business, what ability do you have to flex the cost base? And I ask that in the context of a division that has shown really very, very strong operating leverage. So does that mean that if the revenues do start to dip down a bit, you wouldn't have much flexibility to respond through costs? .

Thanks for those questions, James. They're both very good. We can dig in a little bit on the margins. But obviously, the margin outcome is to a significant degree, a function of the product mix. So there are products that are structurally more profitable. They tend to be correlated with more risk on environments. But imagine a scenario where people are much more neutral on risk. They want to have the exposure to the upside, but they want a higher degree downside protection, i.e., they're more likely to buy options or structure no type strategies with embedded options. Those can be high margin in some circumstances. So it's not necessarily correlated to risk appetite, although I think broadly, a risk on environment will lead to slightly higher structural margin trends. But we can parse this very, very many different ways. And on the operating leverage, the -- we obviously don't pay commissions, right? We pay our relationship managers based on customer outcomes. And one very important outcome that we're measuring is customer satisfaction. So the quality of advice is the consistency, operational performance, et cetera. That said, we expect our RMs expected, we expect that they're going to make more money if they're making customers happier, i.e., delivering more products with more value, more consistent advice, et cetera.

So in the kind of downside scenario that I think you're describing, which is for any number of reasons, revenue is growing less strongly than what we've been experiencing recently. We would absolutely expect the associated expense to flex down commensurately. And I think that's been our experience in the past. That would be our expectation going forward. I would just maybe a word of caution in that regard is that we think we've got something that's very special in terms of the country of relationship managers that we've got, they're just exceptional, and they're doing very, very well. It's a very attractive platform. for the best RMs in the market to come and sit on and apply their trade.

So we would be very, very careful not to disincentivize what we consider to be investment class cohort on the basis of a quarter or a month's or half year's blip in delivered earnings. So maybe that's a slight caveat to the perfect flexibility in the cost base that you're probing around.

.

On the question on wealth margins, you're absolutely right, James. The first -- the second quarter and indeed, the first half overall has been very strong. It's been very strong, both in terms of our net new money generation and in terms of our realization of that in terms of revenue. So we're very pleased with the outcome. You're right to point out that, that takes us above the range that we've seen historically. We will, of course, seek to monetize the asset base over time. We will seek to provide products which are suitable for customers and which are good for us as well. And look to monetize that. But I do think the current level of margin that you've seen or return on assets that you've seen in the first half, as you point out, is not something that we'd encourage you to move forward.

On the question on cost, absolutely, as Bill said, this is a business where there is some flexibility in the compensation that we can pay people to adjust if revenues are weaker. We've also laid out for you investment plans over the course of the next few years, which we are working on busily, which we can obviously speed up or slow down as we see appropriate.

But what I can say is, to Bill's point, about the strength of that franchise. We see this as a key differentiator for us. We see it as a structural growth opportunity across the market, and we're very keen to continue to invest in that opportunity. So we would look to keep on investing, but we do obviously have levers that we can pull if there were a prolonged downturn.

Our next question comes from Rob Noble from Deutsche Bank.

Just 2, please. One on RWAs. I think you added a line on the Basel IV impact, which was neutral before and now being post management actions. So -- could you tell us what the gross impact of Basel IV in January would be what the management actions are and how they would align in terms of timing, so we get an idea of what happens to RWAs in Q1 next year.

Cost of risk, second question, it's very, very low. If you strip out the Middle East top-up as well. So when you get to the end of your portfolio optimization in retail away from unsecured, is there a potential to reduce the through-the-cycle cost of risk range from your current levels?

Great. Thanks for those questions, Rob. I just repeat that the guidance we've offered, which is that we have consistently said that we expected the impact of Basel III to be broadly neutral. Obviously, as the rules shape up, we decide what management actions we want to take. And we are able to repeat the guidance that the impact will be broadly neutral. Of course, there will be some activities that are relatively more attractive, some that are relatively less attractive based on the finalization of rules but we don't see any of that being in any way inconsistent with any of the guidance that we've given, both the Basel III impact but also the revenue guidance that we've given. So no real news there.

And on the cost of risk, it's very low. I mean we don't think we can go through a full cycle. With having essentially no cost of risk on the CIB side of the business. But you correctly point out that as we shift the business mix on WRB from unsecured consumer credit that, that is removing what has -- one would expect to be a consistent level of loan impairments. Would that be enough to offset what would be some kind of normalization on the CIB side. Well, so far, the answer has been yes. But we continue to guide to 30 to 35 basis points through the cycle. On the assumption that at some point, the credit cycle will be a little bit less benign for the market. Just one final footnote there. We would expect to outperform -- famous last words, but we would expect to outperform in a more adverse credit environment because we so significantly increased the investment-grade proportion of our book remains a short-dated book. We have been very, very careful on the concentrations in the portfolio and have been consistently for many years now.

So yes, while we guide to some normalization over time, we don't expect to be in a position where we're having to explain why we're not doing as well as the market at any point in time. We would expect to outperform.

And on the Basel 3.1 comments, we have talked about management actions in our guidance in the past and our broadly neutral language is consistent with what we've said before. In terms of the timing of those actions, Rob, it could happen in the first half of next year. Some of it could happen in the fourth quarter of this year. It depends on what we decide and when we decide to act. The kind of things that we could do are looking at unsecured lines -- looking at unutilized lines of credit in our WRB business, for example, looking at securitization of certain kinds of products in our CIB space if we want to.

But the important thing to note is that those will not have any material revenue impact. It's all obviously embedded within our guidance on revenues and the outcome will be that we'll have a broadly neutral impact as we come through Basel 3.1.

Our next question comes from the line of Nick Lord from Morgan Stanley.

Just a couple of follow-ups on credit quality. I just wonder if you could talk a little bit about what led you to make the incremental overlays for the Middle East and whether you think that's it? Or what would drive that to improve or see write-backs from here? I'm just trying to work out if there is any more credit risk there, now you think you capture the whole thing.

And then secondly, just if there's any comment or update on credit quality in Hong Kong CRE? Or is there no change?

Great. Thanks very much, Nick, for those questions. Manus can get into [indiscernible] reverse on the specifics of the overlay, but as we described before, we look at scenarios. We look at very adverse scenarios. And we imagine what the ratings migration could be in our portfolio in those very adverse scenarios and then we try to wait them. The longer the conflict in the Middle East persists, the more the scenario is expected to bite.

So it's a mechanical process in the sense that we're translating scenarios that we've determined somewhat subjectively, into credit rating migration and taking an overlay on the back of that. So it's not just a finger in the air. But the scenarios themselves, you can say our finger in the air. And as we've seen even in the last week, the volatility of kind of expected outcomes in this conflict move around a lot from day to day.

That said, we're not seeing any signs of stress directly. So we can imagine and we can feel that there are pressures building on some of our more fragile emerging market sovereigns who are experiencing now a sustained period of higher energy prices. The -- there's other supply chain challenges that are coming in, in different ways. But we also see governments reacting and taking more over steps to manage the fluctuations of their own currencies, et cetera. So nothing in particular to read into this other than that we do have a framework for assessing when the observed credit ratings in the market or our own assessments of those credits may not be consistent with a forward view based on some scenarios and that's hence the overlays.

Hong Kong, we've not seen any change. As you know, it's not a big exposure for us. and that which we have had, this has been managed very well for some time. But the residential market is continuing to steadily improve. The office market continues to be in the doldrums, but it's certainly not getting worse and maybe in some cases, getting better. So overall, nothing to report there. Manus?

If you look at the incremental overlays that we've taken this quarter, Nick, you'll see that they're kind of broadly split between the petrochemical sector and the sovereign sector. And as Bill said, those are based on us taking a cautious view of the outlook and thinking about the volatility in the market overall, but not indicative of any concerns on underlying asset quality. So I think that's consistent with the tenor of your question on what you were asking.

And then Hong Kong CRE, as Bill said, it's not a huge exposure for us. Clearly, the signs in the market are somewhat more encouraging. There's a reduced office vacancy rate at the moment in prime locations. Residential prices are obviously up year-to-date. But it was -- it's not a huge exposure for us. It hasn't been a big downside for us. And we're comfortable with the position the book is in at the moment and the upturn in that market.

Our next question comes from the line of Ed Firth from KBW.

I apologize. My questions have all been answered.

Thank you, Ed. Let's move to the next one.

Our next question comes from the line of Aman Rakkar from Autonomous Research.

If I could just return to a little bit of nuance on this capital return question, you said that the DPS is basically mechanistic. -- but the buyback is down a little bit year-on-year. Is there any small comment in there on expectations for balance sheet growth? Or just a little bit more caution on where you want CET1 to come out within your range for now? Or is, in fact, a little bit more nothing to see in here, maybe consider it more on a rolling annual basis.

Manus, I'll take the first pass to see if you can reinforce.

I think it's the latter part of your question, Aman, it's nothing to see here. I think what you've seen is it is a mechanical move for the dividend, but it's also a very significant step-up in the dividend in the first half, right? So because we had a very strong growth in the dividend in the full year last year. And the share buyback is what we think is the right level to take us to at the moment, given where we're at on CET1 and given the moves in RWAs that I spoke about.

Over time, we have provided for you the capital return framework. We presented that in May, and you'll see that our dividend payout ratio there, as Bill mentioned earlier, is at least 30%, and that will see us step-up in terms of dividend distributions, and we pay a progressive dividend. But I wouldn't overread into the size of the buyback this half versus the first half last year.

I hope that answers your question Aman.

Yes.

We will now take the next question from the line of [ Chen Li ] from China Securities.

I think we better move on.

We will now take the next question from the line of [ Lin Yu ] from JPMorgan Securities.

Sorry, here's Katherine from JPMorgan. My questions, most of them have been answered, but I just want to have a follow-up on asset quality as well. The first one is that on asset quality, we see that the management overlay related to the Middle East situation has stepped down in second quarter compared to the one that you made in the first quarter. But however, in July, we saw some re-escalation of the situation. Is it fair to say that like this is not the end yet. We may continue to see you may see a jump in management overlay into the third quarter? This is my first question.

Second question, I want to ask about RMB internationalization because in Hong Kong, I think regulators announced some broadening of RMB internationalizations by the PBOC Governor. Like how would this impact the bank's business? Like do we have any numbers to work around, like, say, for example, what percentage of your non-NII of your revenue is from RMB internationalization related to that program.

Thanks for the questions, Katherine. So we'll form a review over the course of Q3, whether the underlying scenarios and probability of those adverse scenario is happening takes place. This is not a day-to-day thing. Obviously, the volatility in the markets is day to day, we fully understand that. But the scenarios themselves will evolve as we try as best we can to form a view of the duration of the conflict, the impact on energy prices, the impact on supply chain disruptions. And that's not so influenced by what happens from one day to the next. It is influenced by what we see as likely in states.

And obviously, we've been, I'd say, conservative in terms of how we approach to that question, how we've addressed the scenarios. RMBI, we're not giving you very specific breakdowns by product around how much is directly related to RMBI. And in some cases, it's hard to tell. I mean say RMBI is the internationalization of the RMB is becoming it's not as much a program. It's just -- it's a trend, it's a thing. So China is continuing to internationalize its currency and open up its capital account. Sometimes in very predictable ways, sometimes in slightly surprising ways, i.e., the changing the pace or changing the areas of focus.

But the RBI manifests itself in our earnings in many different ways. So we have a leading RMB trading franchise. And relatively unusually positioned as a single trading operation across Shanghai, Shenzhen and Hong Kong, under a single trading operation. That has worked really, really well for us, and it puts us in the business where we think we are amongst the strongest and not the strongest participant in these markets. We're the strongest participant in the various Connect schemes, the Bond Connect, the elements of stock connect where we operate. Wealth Connect is coming on relatively strong as well.

And the other areas on back to the olden days of Belt and Road financing, it remains very, very strong. And the Chinese companies are investing internationally. They're doing that in many different forms. So sometimes hard to distinguish what do we want to call RMBI versus what we would just call the business that we do because they're highly correlated. But the underlying growth trends are very strong. And obviously, that manifests itself for the most part, in our cross-border income rather than in our domestic Chinese income. And hence, the overall franchise value of our broadly defined China strategy relative to the onshore income that were done to profit that we report. Manus, anything.

Just on the 2 questions. First of all, on the Middle East, of course, we are cognizant of the situation, of course, we are as up-to-date as possible in the overlays that we take. I'd encourage you Katherine to go back to the answer that I gave previously and look at the asset quality, the underlying asset quality that we've got, which remains quite strong. So these are very much precautionary overlays that we're taking at the moment with a mind to the environment remaining somewhat volatile.

On RMB, in particular. If you go back, if you remember, it was in May last year, we did our CIB investor event. We did have some more information on RMB trading as a proportion of markets. And we showed, I think, that it had moved there from about 5% to 10% on of the markets business overall. So there is a bit of additional data there, specific to the markets business. Now there's broader business that we do across RMB in terms of lending, in terms of cash management as well, but you have got a bit of extra information in there at the CIB day from last year. So I hope that's useful to you.

Excellent. I think that's the last question. So 2 final words from me. First is thank you for joining us today. I know it's a super busy day and a super busy week, and you've all been very generous with your time and your questions and your preparation. So thank you for that.

Second is huge thanks to Manus. Manus is now our official Chief Financial Officer, having been interim the last time he spoke to you, and I just couldn't be happier to have my partner to my left here. And third is to say, of course, we're very happy with the progress in our business. We feel that the underlying drivers are very much in place. We're continuing to invest in them, and it's showing up in the numbers. So I hope to be able to continue to report on our progress in the quarters to come.

So thanks, and have a good rest of the week.

So thank you, everyone, for joining us today. I'm delighted to welcome Manus Costello, the new Interim CFO of StanChart. Congratulations on your appointment.

Thank you.

So Manus joined StanChart in 2024 as the Head of Investor Relations. And previously, he was the founding partner of Autonomous.

So Manus, in terms of the Investor Day in Hong Kong that you have done, you've laid out some strategies in the mid-term, and also, we focus on some of the divisions and what you'll be doing there. But in terms of getting to those plans, we'll get to them shortly, but can we look about -- look a little bit more near term in what's happening? 1Q was very, very strong, as we've seen, 9% in terms of operating income growth. How has that worked out in May? What are we seeing? Are we still seeing the same momentum? And -- or are we kind of looking at cooler trends? And what you're expecting in June and July?

Well, first of all, thank you very much for inviting me. Thank you very much for attending the investor event in Hong Kong a couple of weeks ago as well. I hope you found it useful.

As you mentioned, we had a strong first quarter. Our income was up 9%, and we saw a diverse array of different growth opportunities that we're able to take advantage of and deploy into. And as we've continued through into the second quarter, much as we said at the time of the first quarter and as we updated on when we were in Hong Kong, a lot of those trends have continued, and we've been quite happy with the momentum of the business overall. So the Markets business saw strong flow income in the first quarter, and activity on the flow side has remained decent. It's remained good during the course of the last couple of months, and we are comfortable with our position there, both in the near term and the long term.

We did flag at the time that the episodic income that we generated in the first half of '25 set us up for a more difficult comp in the first half of '26. And so a more subdued outlook year-on-year for episodic income is in line with what we said previously and in line with where we are expecting at the moment as well.

Our Banking business had a very strong first quarter. We're happy with the strength of that business, the health of the origination that we're seeing. There's some good momentum within the Banking business.

And then, of course, Wealth, which I'm sure we'll come on to, to discuss in more detail later, we had a very strong first quarter. We had very strong net new money. We had very strong client activity. The conditions which generated that remain in place. We are still seeing good levels of client activity. We're still very pleased with the momentum of that business. The first quarter, we said it at the time, and I'd reiterate it again, that absolute amount of net new money that we generated in the first quarter isn't a number that should necessarily be annualized as a run rate, but the flows and the activity levels in that Wealth business remain very healthy.

The only extra caveat that I would add is that we did flag that in the second quarter of last year, we had a gain in our Ventures business. So when you're thinking about how our second quarter develops year-over-year, bear in mind that we had a $240 million gain that we booked in our Ventures business in Q2 last year, which is not expected to repeat this year.

Right. So on that note, in terms of 2026 targets, you're still guiding to the low end of the 5% to 7% range. So as you explained earlier about the gains, is that one big reason why we're still at the low end of the guidance? Or is there any other things that you are concerned about macro-wise or business-wise that's not allowing you to kind of move your guidance?

So we're only -- not even halfway into the year at the moment, and we will obviously provide further updates as the year continues. But yes, we did say at the time that a combination of those 2 factors that I mentioned already, the gain in the Ventures business and the very strong episodic income in the first half of last year meant that as we came through Q2, the year-on-year trend of that top line would look -- would come up against those challenges versus last year. So those are exactly in line with what we said previously.

The other factors that I think you need to bear in mind are on NII. We've guided that we expect NII to be broadly flat, and we maintain that guidance. That is a combination of factors driving that, including the fact that the interest rate environment remains broadly unchanged versus where it was. And we have, as you well know, some of our wealth -- some of our WRB, our retail portfolios, we are divesting of and exiting some of our unsecured relationships, which means that we'll have about a 2% headwind to NII as we come into the second half of the -- as we come in through the full year, and that will continue to pick up through the second half of the year. So that is something you need to bear in mind.

And then look, as I said, we're not even halfway through the year. The global environment remains volatile and uncertain. We're confident and comfortable with the start we've made to the year, but we don't think it was the right time either with Q1 or with the investor event or now to change that guidance for the year.

Right, right. So Wealth has been a big topic, and we hear things in Hong Kong that's developing. So maybe we can turn our attention to Wealth a little bit more. As you mentioned, the 1Q net new money was pretty strong, and we shouldn't look at it and take it going forward. But if we look at in terms of activity levels, the ADT levels in Hong Kong Exchange, SGX is still remaining very robust despite what happened, even June data, June 1, June 2, was still very, very robust. So in terms of these flows, and in terms of what's happening in this space, maybe can you give us a little bit more comment? And do you see any impact from the additional regulatory focus?

Sure. So I think there's a number of different points about the business in there. Just to take a step back and to remind people of the business structure within our Wealth business and why we think we've done very well so far. So of our net new money that we generate, about 60% is generated from what we call international customers. So those are customers who are booking money with us not in their domicile and 40% is generated domestically. And that international flow has been significant and has really been able to help us drive that business forward.

The business overall is benefiting both from that continued trend, and we'll come on to discuss that, if you want, in a bit more detail later, but also from the strong platform that we built over the years. And that platform includes our very well-trained and very effective relationship managers. It includes the open architecture product suite that we've got, which we think is somewhat differentiated and which enables us to curate products and design and sell products very effectively. And of course, we've got a very good technology architecture in place.

And if you put that against what we call our client continuum, so the fact that we have clients across the different range of Wealth, where we can migrate clients upwards through that client continuum, it provides us with what we think is a very strong platform to take advantage of those good trends that we're seeing.

Specifically, to your point about client activity in the second quarter, yes, client activity, you mentioned exchange volumes, we're not directly correlated. We don't have a huge trading business, cash equity trading business per se, but that indicates the fact that sentiment has been positive and activity has remained good during the course of the second quarter. So I think I would place the strength that we've seen in the first quarter and the continued activity that we're seeing in the second quarter in that broader context of the platform that we've built over time.

In terms of the regulatory need to do a bit more KYC that you need to do, does it kind of slow the net new money inflows? Or do we see a slowdown first before we start picking it back up once everybody gets used to it and a bit more comfortable?

So perhaps just to make sure that everybody is aware of what Melissa is referring to, the CSRC, the Chinese Securities Regulator, took some actions about 10 days ago in the brokerage space for offshore funds for Mainland customers. And the HKMA followed up with some circulars about activities or actions that the banks would need to take in order to ensure compliance. I think the first thing to say is that the majority of what's being looked at is in the brokerage space, not in the banking space. That seems to be the thrust of the focus.

Secondly, if you look at the kind of actions that the regulator is asking to take, our existing policies are very much in line with that. So we're very careful about how we open new accounts. We're very careful about the client documentation that we have in opening new accounts. We're very careful about making sure we understand the source of funds. We have very close transaction monitoring, and we make sure that we comply very carefully with the marketing of our activities, of our offshore activities on the Mainland. So we are very much directionally aligned with the circulars that have been put out.

That said, there are some additional things that have been asked of the banks. So for example, the banks have been asked to close zero-balance accounts that have been around for a while. The banks have been asked to get some client attestations about sources of funds. And so there is some stuff that the banks will need to do and that we will need to do. But we're very confident that our policies have been tight and that we are in the right place already.

And we do also want to remind people that of the money that we generate from what we call the global Chinese, so I said previously that 60% of the net new money that we generate is from international clients, about half of that, so 30% is from global Chinese, the vast majority of that global Chinese money is already sitting offshore. So that would not be impacted at all. So we are obviously taking it very seriously. We're obviously reviewing our policies, procedures and making sure that we're compliant. We haven't seen any impact so far, and we don't think it changes the picture from what I was explaining to you previously about the way our business is set up.

Right. That's good. So moving on to CIB, I think we also hear a few circulars coming through on the Chinese side for that. Maybe we can address that as well within these questions. But also, in terms of the CIB, we've seen a bit of softness in the transaction services portion of your CIB in the first quarter. How do you think about the growth trajectory of this business?

So let me take the transaction banking piece first, and we can come back to the more recent decrees, if you want later on. Our transaction services business is comprised of a range of different businesses, from cash management, payments and liquidity, our security services business. The biggest source of income that we generate from that is net interest income, and that's mostly net interest income generated from the liability base. And the reason that we have seen pressure on the Transaction Services businesses overall over the last couple of years, it's been down in '24 and down in '25, and it was down in the first quarter of '26 as well, is net interest margin pressure. It's simply an effect of yield curves coming through and NIM pressure flowing through into that business.

Actually, some of the other elements of the business, fee income from things like security services, fee income from things like FX transactions, has been growing quite well. It's just a smaller piece of the overall pie in terms of the revenues in transaction services. As we go forward, it will align more closely with our net interest income outlook. So the curve is looking like there is less pressure. There is pressure this year. The pressure will abate towards the end of this year and into next year.

And what you look -- if you look at what is driving the underlying structural growth of that business, the liability base, our core operating deposits have been growing at around a mid-single-digit rate. And that's something which we think we can continue to grow, we would hope. And we think we can grow fee income off the back of that as well. So once we get through that piece of the NIM compression that we've been seeing, and as our hedging starts to take more effect and as the yield curve has less impact, we should see that business return to growth.

All of that said, we have laid out at the Investor Day that we do expect our noninterest income businesses to grow more quickly than our net interest income businesses. So we will still expect to see higher fee growth and NII growth across the bank for the next couple of years.

So you highlighted deposit growth. I just wanted to understand, I mean, we are in an environment where liquidity is very strong at the moment. So deposit growth seems to be quite easy. But you don't have really a big franchise in a lot of countries that you operate in. So how should we think about your ability to garner more deposit growth or grow above the market in terms of gaining market share?

I would question your characterization as us not having a big franchise in some of the markets in which we operate. We have very significant market shares in our 2 largest markets, in Hong Kong and Singapore. And we have within our client segments that we look for, and this would be true whether it's in the retail space, in the affluent client base or whether it's true in the segments of the CIB space that we go after as well, we have very good market shares. I think you need to understand what our addressable market is as opposed to looking at the broader piece of the market overall.

That said, we are generating strong deposit growth at the moment. And we're generating strong deposit growth partly because -- I mean, you can see the macro stats of Hong Kong, for example, deposit generation in Hong Kong is high. But I think you also need to look at what we're doing organically. So as we are growing the affluent business and the retail business, often you see the net new money that comes in will come in, in the form of a deposit, a CASA or a time deposit, which we will either keep as a deposit or ultimately look to convert to a wealth product over time. So the strong performance of the wealth product -- of the affluent product is helping to drive deposit growth in WRB.

And, then if I look at our CIB business, which is mostly -- most of that deposit generation would come through the transaction bank as we were just discussing, we've invested a lot in the technology in that space. We've invested a lot in the customer relationships in that space. As I said, there is an underlying rate of growth of core operating accounts, which we've observed in the past and which we think we can deliver against in the future. And that will continue to drive strong liquidity.

So I think characterizing us as lacking in market share is not something I would agree with, but I would point you towards the areas in which we are competing effectively to win. And I think you can see the strength of our liability growth bearing that out.

Right. So maybe moving ahead in terms of cost of risk. You did the $190 million overlays in the first quarter. We've seen you classifying $700 million increase in high-risk assets. So given the tensions are ongoing, do you think that this provisioning is sufficient? And maybe perhaps explain whether or not we need more and in the 30 to 35 basis kind of credit cost, can that still be achieved in the year?

So we have guided in the past, and we continue to guide to expect our through-the-cycle credit loss rate to be 30 to 35 basis points of loans. And we reiterate -- we've had that in the past, and we reiterated it at our Investor Day, and that's what underwrites our RoTE targets in the future. I think it's important to note within that, a lot of business mix shift that's happened over the course really of a decade, but it's continued more recently as well. And we laid out quite a lot of information about this in the decks that we put out last week.

So if you look at our CIB business, for example, in our corporate exposures, we've moved from 40% investment grade to 75% investment grade. We had some interesting information about the average PD of our corporate book from our Pillar III data, which if you look, has fallen quite precipitously over the course of the last 5 years as well as we've really selected customers in a slightly different way.

And if you look in our WRB business, as we focus more on the affluent business, we have been able to exit some particularly single product unsecured relationships. So we've seen about a 7 percentage point reduction in our unsecured balances as a proportion of our WRB balance sheet over the course of time. So structurally, those factors, which, by the way, I think will continue, have been driving the business towards a place where we believe we are a lower-risk institution, and we're quite comfortable, a, that those trends will continue; and b, that, that 30 to 35 basis points remains the right range for us going forward.

More specifically to your question about the Middle East, yes, we took an overlay, we took $190 million of incremental ECL in the first quarter. That was split between some nonlinearity, so the models that we employ across our Monte Carlo simulations and overlay on the petrochemical sector and some sovereign overlays as well. We think those were absolutely the right things to do at the time. And we will see where we come out in the second quarter.

Clearly, and this is a macro comment rather than a Standard Chartered comment specifically, the longer the Strait of Hormuz remains closed, the longer pressures in the energy markets build up, the greater risk there is from a macro perspective, the greater risk there might be of incremental overlays or incremental provisions being required. But I think that's a statement about the macro situation rather than anything that we're seeing specifically because as we said in Q1 and as we reiterated a couple of weeks ago in Hong Kong, we remain very comfortable in the shape of the balance sheet and in the performance of our book at the moment.

So about second order, third order impacts, have we actually seen anything coming out of those?

By second and third order impacts, I presume you're talking outside of the Middle East.

Yes.

So across oil importing economies, for example, in some of our footprints. The truth is that so far, we have -- and in some of the overlays we've taken, we've tried to anticipate some of those second order and third order impacts. That's why we've taken some skew in the model in terms of the downside scenarios. That's why we've taken some of the overlays. Because of some of the actions that we have taken previously on the balance sheet, the sharper end of where that might be felt has not necessarily flowed through to us at the moment.

What do I mean by that? We don't have a very large unsecured book. And typically, as consumers are feeling pressure, the area that you most immediately feel it will be in the unsecured book and the credit card book. Most of our unsecured lending is now towards more affluent customers. So they're not at the sharper end of the inflation pinch that you might see.

Over time, our CIB book has concentrated in larger corporates who may well encounter problems in the future if energy prices remain difficult, but are not likely to be in the first wave of impacts that see problems emerging. So because we don't have that large commercial base that we had previously or that some other banks have, we haven't seen any direct impact there so far. So I would say really what we're doing at the moment is trying to anticipate the effects that we could see on customers rather than being concerned about the immediate effect that we're seeing.

Right. Maybe just on this point, we also know that you have been looking at your RWAs and those that are not that suitable, remove them from the book and try to improve that. In terms of that, how do you think after this goes through that it will impact the RWAs and also the cost of risk, right? You say 30 to 35 is your target until 2030. But could we have an upward surprise to that number?

So we get asked that question. And if you look at our RoTE for what our planning assumptions are for our 2028 RoTE, you'll see that we've got -- we did 19 basis points last year. We assume that we go back to the midpoint of that 30 to 35 basis point range. Of course, the actions that we're taking, as I described previously, are driving us towards a balance sheet, which we think is both lower risk and more efficient from a capital perspective, which I will come back to.

But you also have to bear in mind that we operate across a network of 54 markets. We operate in some sovereign environments, which can be somewhat volatile. The nature of what we do, the services that we offer our clients are quite bespoke and require us to be in some situations where, of course, there is credit risk, there is counterparty risk. And so we think it's -- while we continue to move the balance sheet in a direction which we think is lower risk, we think it's sensible for us to maintain, and our models would suggest we maintain that 30 to 35 basis point range. And so that's absolutely where we're comfortable with.

In terms of the capital efficiency, we've guided to expect RWA growth -- average RWA growth to be below income growth. And as you know, we've guided income growth to be between 5% and 7% CAGR over the course of our plan. So the goal is for us to continue improving capital efficiency. And we will continue to improve that capital efficiency in a number of ways. It's partly about that mix shift that we're seeing. So as we exit, for example, some unsecured relationships in our retail business and do more business with the affluent customer base, that itself should drive a better return on capital, a better return on risk-weighted assets going forward.

Similarly, within the CIB business, we've said that there are 2 pivots that we're making or continuing, I should say, within the CIB business. One is that we're moving from our financial institutions customer base up to 60% of our revenues, and our network income up to 70% of revenues over time. Those shifts, which are gradual, but happen over time, come with better income return on risk-weighted assets because those customer bases, the customers in the financial institution space and the customers who bank with us cross-border generate better income return on risk-weighted assets. So as we move through that period, we should naturally see an improvement.

The other area is in what I think you were referring to previously, our suboptimal RWAs. Over time, our RWAs have actually shrunk quite dramatically since 2015, that there's been very minimal growth. And we've had a pool of RWAs, which have had various suboptimal characteristics over time. So initially, there was a concentration in some assets, which have much higher credit risk than we wanted, and it's taken time to move through those.

What we're into now is a smaller pool of suboptimal assets than we've had in the past. There are still suboptimal risk-weighted assets that we want to work on. But in most cases now, those are not suboptimal because they're problematic from a credit perspective. They're suboptimal because we need to improve returns on those. So the game for us now is to ensure that we keep recycling the capital from those clients. There will always be a pool of customers, and it's quite right that there's a pool of customers who generate less good returns because there are reasons why you would invest in those customers to grow better returns over time. So that number should never be 0.

But what we want to do is continually raise the bar to make sure that we're recycling the capital out of those customers who are generating relatively lower returns into the higher returning customers. And that's what will deliver for us the revenue growth and the revenue growth ahead of the risk-weighted asset growth over time.

Great. So in terms of capital, you were talking a little bit about this. But in terms of the strategy you set out, now we are diverting some of the capital, 1/3 of it looking for growth. In the past, we don't have that kind of large amount set aside, right? So in terms of the growth portion, can you maybe give a little bit more color as to where we want to do this growth? And what are you looking?

So we laid out that in the past couple of years, the split of how -- we've generated a lot of capital, and the split of that capital usage has been about 25% to RWA growth and about 75% to distributions. Looking forward, we expect to generate more capital because we're going to become more profitable. So the returns will improve, and we'll generate more capital. And we said that broadly speaking, we think about 1/3 of that will be deployed into RWA growth, 1/3 will be for the dividend and 1/3 will be available capital. And that available capital, we made clear at the investor event is most likely to be used for share buybacks.

So while, yes, there is a move to RWA growth to a small extent, I wouldn't overplay the fact that, that RWA growth is about 1/3 as opposed to the 25% that we've seen before. But I do think it's important to note that we have options to deploy capital, which are different to peers, and I think improved for us versus where they were several years ago. They're different to peers because of our footprint, because of the nature of our business, because of the clients that we've got.

They're different to what we were able to do previously because we have a different client base. We have different revenue streams. We have more high income to risk-weighted asset opportunities to deploy that into. And so the right outcome, we think, for shareholders, what we're always seeking to do, is to generate the maximum EVA for shareholders. The right outcome in our view is to make sure that we are generating strong customer relationships, strong EVA over the course of a prolonged timeframe because that's what will drive maximum value for shareholders. And that's the philosophy that underpins the strategy that we laid out a couple of weeks ago.

Right. So maybe moving on to 2030 guidance. So you target 18% RoTE by 2028 and then -- sorry, 2028, and then, we move to 2030, quite a big jump then to 18%, right? So just in 2 years spend time, we need to move quite fast up in terms of RoTE. So what is the key additional step-up that we are seeing that's going to drive it? And what is the single key upside risk or downside risk? Are we looking to that 18% target?

Sure. Well, look, first of all, our target for 2028 is over 15%. So we laid out some of the building blocks for how we think we can get from the 11.9% we did last year to over 15%. The biggest portion of what we think we can deliver is that mix shift that I talked about previously. And so that mix shift is being driven with -- not necessarily between the WRB and CIB businesses, but within those businesses. It's as our WRB business becomes more focused on affluent, and we'll move up to 75% of our revenue coming from the affluent client base. And as our CIB business becomes more focused on those multinational corporates with -- and FIs and more focused on FIs specifically, and we'll grow our portion of revenues there.

What that enables for us is the improvement in returns on risk-weighted assets that I just mentioned previously, but it does more than that for us as well because it enables us to tap into better growth opportunities, we think, with those customers. We think those are higher-growth segments for the market and for us specifically as well. And it also enables us to take advantage of the core platform that we've already built. So because we are growing into a base where we've got a good installed engine already, we can get good operating leverage.

I would encourage you if you get the chance to take a look at the transformation deck that we put out with our May Investor Day, which was a very interesting, I think, analysis of what we've achieved so far in terms of improving the core of the bank and what we're looking to do in the future. And I think what you should understand from that message is that we've taken some very substantial actions. For example, we've just a couple of months ago upgraded our entire core banking system in Hong Kong, a huge project, unlocks all sorts of incremental opportunities for us, helps us scale that business much more effectively, and that was very successfully completed, and we were very pleased with the reception that we got to that in March of this year.

We've got some new data centers, which are bigger, more agile, much more geo-resilient, much more resilient to data attack as well. And those have enabled us to operate much more effectively. And because we've got some of these core building blocks in place, it will now enable us to get that strong operating leverage that will benefit from that mix shift that I talked about.

Now, I've talked about the shift from here to 2028 to the greater than 15%. The truth is that those trends continue beyond 2028 and into 2030. We outlined -- Bill outlined when he was talking at the investor event, the big 5 macro themes, which we think will dominate the macro outlook for our bank specifically. I won't run through the 5 trends. We've got plenty of materials and some very nice videos about them if you want to look at them. Those trends aren't 2-year trends. Those are multiyear trends. And the changes in our business, which I've been talking about today, which take us to that '28 RoTE -- over 15% in '28 RoTE are also what will take us on to 2030 as well.

Right. So -- I mean, I just want to sneak in one last question before we open up. So given you used to be Head of IR and you were at Autonomous, valuations for Stan still very appealing, although it's ran up quite a lot, but it's still very appealing. So what do you think is the most misunderstood story for Stan?

Clearly, I agree with you, the valuation is very appealing. That's why we're very happy to continue buying back shares at these levels. And I think there is a huge amount of runway for the story going forward. I think there are a couple of elements that we need still to convince the market of. We talked a lot about the growth opportunities. We've delivered against those growth opportunities in the course of the last couple of years in particular, but also over a longer time frame. But I do think that we need to continue to execute against that to convince people that, that is organic growth opportunity and not just conducive market conditions, and that's something that we're committed to doing.

I think secondly, that transformation piece that I talked about, engaging investor reaction to that presentation that we gave, I don't think people have recognized how far we've come in the bank in terms of modernizing. There's still more to do. There's still plenty more to do. We've got lots more projects that we're working on. But I don't think people understand how far up the curve we've come in that.

And then, I talked about the balance sheet shift that we've seen. I think this is a fading, but still lingering issue that people have. People remember, I was an analyst covering Standard Chartered, and I remember the time pre-2015 when the bank encountered lots of credit issues. Some of you in the room may remember those times as well. It is interesting how long those memories have lingered, and that does still sometimes impact our conversations with investors who want to see an even longer time frame for us to deliver against that. But I'm confident we can deliver against that.

And I would say, look, while we're very pleased with the progress that we've made, and we're very confident in the outlook, we only delivered an 11.9% return on tangible equity last year, right? So we've got a lot to do. Everything I've laid out for you today, and all the presentations we gave to you in Hong Kong, give you a lot more color, but we've got a lot to do. We're confident that we can do it, but we're looking forward to showing the market and seeing that share price realize its true value.

Right. That's good. So we still have about 3 minutes. We'll open up to Q&A now. Does anyone have any questions? No. So maybe I'll just ask Ventures. So we've seen some milestones on Mox and Trust finally, right? But what do you think in this day and age in terms of -- in Hong Kong and in Singapore? Because we've seen a lot of these online banks, right? They have come, they have gone, some stay, not really that successful, especially in that part where you are operating. So how can we think about these 2 entities? And how that will deliver for you?

Sure. So Mox and Trust are our digital banks in Hong Kong and Singapore, respectively, which are now 6, 7 years old. And we've been very pleased with progress. They've had very effective capacity to access new clients and a very effective ability to gather deposits and increasingly to grow revenues. And the milestones that Melissa is referring to is the fact that they were profitable or returned profitable during the course of first quarter, breakeven during the course of the first quarter this year.

So on a stand-alone basis, I think those businesses have achieved a huge amount, and we're very proud of what we were able to achieve. If you look at what Judy, our Head of WRB of Retail, presented when we were in Hong Kong, we now see an opportunity for those digital banks to operate alongside the main bank in terms of 2 ways, both helping us to serve the mass market populations in Hong Kong and Singapore. And you've already seen us transfer some of our unsecured portfolio from the main bank into Mox in Hong Kong because it's a very cost-efficient and very customer-friendly way for those customers to interact with the bank. But also, the demographic, and we had some data on this for those banks tends to skew somewhat younger and somewhat less affluent than our core bank proposition.

So ultimately, over time, what those will enable us to do is to access a customer base, which aren't necessarily coming into the more affluent end of what we're looking at in the main bank and give us opportunities to grow wealth products with those customers, and there are different kinds of wealth offerings that we're starting to offer to those customers and then also to migrate those customers as they become affluent, as they become priority customers, maybe even private bank customers to offer more sophisticated wealth products to those. So it serves a nice dual purpose for us, helping to serve certain customers in the mass market and providing us with avenues for growth for that retail business going forward.

Right. Is there any last comments you'd like to make before we close the session?

I would just like to say thank you very much for inviting me. Thank you very much, everyone, for listening. And please look at the 200 slides we posted online of all of the work that we did in Hong Kong a couple of weeks ago.

All right. Thank you very much. Thank you, everyone. Thank you, Manus. Thank you.

Good morning. A very warm welcome to all of you here in the Hong Kong. The last time we had 1 of these overseas investor trip was back in 2023. Some of you partook in it, including our newly minted CFO.

Much has changed over the last few years. We've seen significant changes, structural changes and shifts in the way flows are being wired and configured, whether they're in trade, supply chain, investment FDI capital, in wealth flows and currency mixes, all accelerated also by the advent and acceleration of digital transformation.

Now we're here in Hong Kong. Hong Kong has been very active over the last few years in this whole reconfiguration process. The industry is actually very, very vibrant, whether you look at the IPO market, the issuances are hitting record levels, sustainability angles. If you think about insurance sectors, it's really, really writing -- underwriting record levels of APE, family offices, wealth, et cetera. Our own businesses are also delivering consecutive years of record performance.

Obviously, the question near ahead is, is this going to be just a flash in the pan or something structural? And perhaps this is something that you can judge yourself over the next couple of days by being here.

Now we are here in what we called One Causeway Bay, which is our seventh and newest wealth and priority banking -- sorry, priority private wealth center in Hong Kong. So we have pioneered this and we now have the broadest network of its kind, and you're experiencing firsthand because this is not quite open yet. This will be open next month.

Now if you look at that direction, just 30 kilometers, you will be -- sorry, you can't see because it's blocked by the mountains and whatnot. But 30 kilometers this way would be the China border, okay? If you take the high-speed rail, it takes less than 15 minutes. On this end, literally 300 meters will be where the world's highest level of average rent per square foot. It's higher than new born, higher than Upper Fifth. So this is where mainland Chinese all love to come to stay, to eat, to shop and increasingly to do banking and do their wealth. And that's why we're set up here.

Now if you look just right down, we'll get to do at the coffee break, right down, that is actually where the first plot of public land was auctioned and sold in Hong Kong in 1860. And since then, every day, there's a firing of the noon day gun, okay? That has been a history, marking time. You might hear a bang at around noon time, but that's also part of the tradition of Hong Kong.

Now obviously, you hear also the primary focus also for us to deliver you with our new 3-year plan because we achieved our previous 1 ahead of time. So part of the process is also for us to share with you our aspirations and what we would like you to measure us against and hold us to in the foreseeable 3 years, okay? So hopefully, our objective for the 2 days is very, very simple. To share with you what we believe are durable and structural trends and opportunities that continue that we will face and how the bank is going to position ourselves against these opportunities.

So I'm going to run very quickly with you with agenda here. So Bill and Manus will cover the next chapter, 3-year plans, financial targets, followed by Noelle and Tanuj, which will go through the transformation agenda, followed by business updates by Roberto and Judy. And then we're going to have a very, very quick speed date breakout session. Just to give you a sense of experience of some of the aspects we're doing on the ground here. And then we're going to have drinks and dinner on the opposite side of the harbor at Mplus, which is a West Kowloon cultural district. This is the world's most ambitious art and cultural center covering 40 hectares, and we're going to be taking -- this is an underpass here that we can take a boat here, just a 15-minute boat ride over there. If you're a sea sick or worried about that, there's a shuttle bus option both towing and throwing from that venue, okay?

And the next day, we will actually have to start off our Central Banker, Chief Executive of HKMA to cover what's on his mind in terms of policies and what are his priorities for Hong Kong's financial services covered by a bit of deep dive with myself and Jean and Mary really going through the structural themes that Bill will be sharing shortly. And then we've got to have some fireside chat with clients, just for you to get a sense of what is on their mind in terms of their priorities for their individual corporates followed by digital assets, what we're doing around there.

So this is really the kind of next couple of days. And hopefully, there's enough time through presentations and more importantly, through interactions because most of the insights may actually come outside of slides, okay? So wishing you a very, very fruitful next couple of days.

With that, I'm going to hand over to Bill.

Well, thanks very much, Ben. Thanks, Ben, Mary, as always for the great hospitality in Hong Kong. Sorry about the weather. I hope we get a chance to actually observe what's out there.

If you go into your pockets and you pull out your Standard Chartered issued bank notes, $20, $50, $100, $500, put them together, you'll see the profile of the mountain range out there with Lions Rock, which is the local benchmark. And if we get a sunny day later today, you'll be able to see it out there. If you don't, then you can just go into your pockets, take out your bank notes, leave them on the desk when you leave, and that will have been your small contribution to our event.

We are super excited about what we're going to do here today. And before we get into the cut and thrust, I just wanted to hit a couple of things that we hope you take away from this because it will resonate throughout each of the discussions that we have -- we hope. First, that's Standard Chartered, whatever -- wherever we come from, and we're going to spend a little bit of time on how we got to where we are is a growth company. We're growing at a really good pace. We're growing, leveraging key competitive advantages that we cultivated for some time. We've been investing into those. We focus our strategy on those growth opportunities. And we would like that to come through a little bit more clearly. Of course, you see it in financial targets getting to 18% return on tangible equity by 2030. Obviously, we have to grow to get there. But we want to explain how we're going to grow, why we're so confident that we can deliver that. And what's structural and differentiated about our bank.

Second, we want to underscore the degree to which we have shifted our business mix very much with that growth and exploitation of those competitive advantages in mind. We're a very different bank today than we were 5 years ago or 10 years ago. We may continue to be a different bank going forward, but anchored in a set of very consistent strategic themes and areas of thematic change in financial markets that we've been focused on for some time. We want to share that with you and put that into the context of our business.

And third, we'd like to build your confidence in the same way that our confidence has been built that our consistent track record over now a good period of time, positions us very well to deliver on the rest of the plan that we're talking about.

So those are just 3 sort of high-level thematic things that I want to call out our front. And hopefully, we'll be able to point to what's really going on to support each of those statements as we go through the next couple of days.

So a few high-level thematic issues. First is you'll hear the term superconnector a lot. You saw it in the video, you heard it from Ben, you'll hear it from others. What we mean by that is that we have a network, which is unique. Other people have networks. It's just ours is our network. It happens to be anchored in the fastest growing markets of the world, connecting those to all of the major economic centers of the world with really good underlying financial infrastructure and products that are supporting that. That superconnector role is at the heart of what Standard Chartered does. It's leaves us saying that the -- our network is our home market. Of course, we have a home market right here in Hong Kong, in Singapore, in London, in Dubai, et cetera. But the real home for us is our network, and we are the super connector. We're going to talk about the strategic growth drivers in just a few moments. We've identified 5 that I outlined back in our annual report, but we'll dig in on that. And I think you'll see those underlying driver themes present throughout the presentations because everything that we're doing 1 way or the other is either anchored in or heavily influenced by those key themes. Needless to say, we think we're very well positioned for those teams.

We've got very clear plans to take the substantial investments with our shareholder dollars over years into our core infrastructure and into our products and services built off those core infrastructures to become an increasingly more productive bank. So you see that in terms of outcomes of financial guidance, which you've already seen with cost-to-income ratios at 57%, et cetera. But we want you to understand a little bit better what we've done to get here in terms of being able to be increasingly more productive from here, and of course, we'll set out those plans. And this is what's going to drive our growth. This is what's going to allow us to achieve what we think are probably super normal growth rates and super normal returns a super differentiated franchise that has a very long history very strong underlying brand. But now we're sitting here in 2026, and we see a future that's super exciting.

We're not going to spend a lot of time on history. And I don't know why we started in 2015 as sort of a fluky coincidence. But in 2015, certainly, when I joined the bank, the assessment I made as best I could, was that this is a super franchise that had made some mistakes and fallen on some hard times, and that we could rectify the mistakes and the franchise could flourish.

As you can see, we kind of split the history very broadly into 3 groupings. The reposition phase, you could call it cleanup, which was getting the balance sheet in place. But in many ways, introducing the disciplines that had allowed us to stray with the super franchise into some not good areas at all. It took a while. We repositioned a lot. We took a lot of the income out of the bank in doing that. It was low returning income, but it was income. So it looked like the bank wasn't growing. Actually, the things that mattered and the things that we're doing today, we're growing quite nicely, but it was obfuscated by that cleanup phase. We then moved into the execute phase. So we were clean. We were ready to go, and we were investing in the growth engines. There was still a little bit of -- quite a bit, in fact, of capital reallocation, you could call it reducing suboptimal risk-weighted assets, things like that, that continue to suppress the top line but led to the steady improvement in returns.

We now think we're in the compounding phase. The bank infrastructure is good. The core products and services are good. The strategic positioning is good. The areas of focus in the markets on which we're focused are good. And we think we can now compound. And by the way, the economic backdrop is good, and we can talk about what could take that off track. We think that at this point, we can compound. And ultimately, compounding is what it's about. This is how we think we can get to 15% return above that by 2028 and then continue to grow to around 18% in 2030.

That's not where we stop. And -- but we will focus increasingly on how we generate maximum shareholder value. You could say we could anchor that in measures of EDA where ROT will become 1 measure that we look at, but the generation of EVA by getting an extraordinary return on capital that we deploy will become increasingly important during that period as well. That's for the future.

Okay. We think we have a distinctive growth offering today. We are a scale player. And I remember when I joined the bank 11 years or so ago, the number of times people -- 1 of them may be sitting in the front row right now, said, you're not you're just not fully scaled. How can you compete against local banks here or global behemoths there, like that 1 global behemoth that you used to work for, who's got a gillion dollar tech budget. How can you compete? The answer is -- of course, I don't know the answer when I joined the bank. But when I looked in, I said, what we do, when we do it well and 2 are very scaled to be the #2 transaction bank in Asia, to be the #2 global trade bank period to be the #3 wealth manager in Asia with the fastest growth, right? It's not just that we've got the size. We're also outperforming in terms of growth. How can that be for a bank that's not the same size as others with whom we compete. It comes through focus. It comes through focus. It comes through and you'll hear Noelle, and Tanuj talked about this quite a bit. The fact that we've converged onto technology platforms that are almost uniquely uniform for a global bank across the world, which allow us to actually be more effective in these areas where scale is important. That's led to network income growth. It's led to the measures of network income and affluent income within CIB and WRB that are improving in a way that obviously is continuing to improve returns. But our cross-border affluent strategy, where we have scale and the things that matter is what will allow us to continue to exploit our competitive differentiation.

We're also quite diversified, not because we chose to be diversified. I'm 1 of these corporate finance theoretical people who think a diversification in its own right is not so valuable. We have a diverse combination, whether it's by income type, interest income, noninterest income, whether it's by geography, whether it's by the product type, we're quite dispersed. Why? Because our customers are highly sophisticated, they -- whether they're cross-border multinational corporations or governments or financial institutions or affluent individuals. They're sophisticated. They have multiple and deep and sophisticated banking needs, and we've met those needs over generations in many cases, which has led to a dispersed business model, which is somewhat differentiated. It's also diverse, which is helpful because there are cycles that move in different ways. And I think this builds resilience together with our much stronger balance sheet, and we'll talk about that in some detail. This allows us to continue this growth at a super normal rate.

Now these 5 themes, you'll see sort of weaving throughout the sessions that we have. I covered these in the annual report in a little bit more detail, if you want to go back for reference. But we took a step back as a team and we said, "What are the thematic areas of change in financial markets that are relevant for us -- are we positioned for these? If not, what are we going to do to address that? This just didn't come up in February of 2026. We've been working on these for years. But we thought it was helpful to put this down into a single schematic and then explore these seems in some detail. I'm going to cover each of these in turn in the following pages in the slide deck, but the emergence of multipolar, multialigned world, we all want to know what that means. It's a fact. Threat or opportunity. The answer is yes. But we've been investing in being the superconnector in a fragmented world, solving the complicated client problems, which is driving our outperformance in network income growth, right? It's nice to talk about themes. Where is the money? The money is you see it. That's what's driving the growth in Standard Chartered. The digital transformation, this is not -- customers want to do their banking online. That's 1 small part of it. The financial infrastructure is changing fundamentally into digitized money and supporting agentic commerce, all of which is very early stage. We've been investing in this for 7 years. It's going to happen. Like mark my word, it's going to happen. It will happen slower than we think for a little while and then much faster than we think. We're right at the inflection point, in my opinion. You'll all have your own views. We're positioned for that. This to us will be 1 of our biggest opportunities, getting it wrong, could be 1 of the biggest threats. Obviously, we think we're well positioned. The changing role of banks in the economy. You know the stats, we'll go into the shift of capital from banks to nonbanks. Threat or opportunity. Yes, we positioned ourselves overwhelmingly as a bank that's going to be servicing the nonbank sector. We always have. We will continue to. It's a huge area of growth for us. It's been a big driver of the improvement of our returns.

Rising wealth participation, I don't need to tell you here. Ben's comment about the real estate up the road being more expensive than anywhere in the world, is a reflection of the fact that this is a very attractive destination for wealth to congregate. And frankly, we have an extremely strong position to receive and help manage that wealth as well as Singapore as well in Dubai and the U.K., and we will continue to expand that business. And we'll explore those trends in some detail. and the transition economy, which people aren't talking about as much as they did, we are because we're continuing to grow our sustainable finance income line at a rate that's faster than the rest of the bank. And that's because the clients that we serve are increasingly focused on executing their own transitions. That will accelerate with the disruption in the Middle East and higher energy prices. So this is not a flash in the pan. This is not a political fad or political correctness. This is money, and we're doing a good job.

By the way, the fact that we're doing the right thing and our thought and action leader really helps us to attract good people and retain them. And then we can make money on top of that, Nirvana.

Okay. Looking at these themes in turn. We're not going to go slavishly go through these slides. But the multialigned multipolar world, which, in our case, it substantially means very strong anchor in Hong Kong and China, very strong anchor in the U.S., given our leading position as a U.S. dollar clearer. Very strong position in South Asia, ASEAN, Middle East, Africa and an increasingly strong position with clients in North America and Europe. That's our network. It is fragmenting at almost every figure point. And it makes transaction flows harder on the margin. I mean makes regulation fragmented, which means duplication of underlying services and capabilities. We see that the underlying trend is a positive one. So Asia Pacific is becoming an increasing percentage of GDP and global trade, obviously, seeing that the China continues to be a major and growing exporter.

At the same time, capital controls were actually going down, not going up. So Ben will talk in some detail, and I think quite insightfully, when we get to that session on Thursday about why the opening up of China in particular, we think is an exorable and why it's actually in the Chinese policymakers interest. How are we positioned for that? Our transaction banking role, our leading role as an RMB bank globally, #1 in 20 markets, leading FX and FM cross-border dealing capability, Bond Connect, Stock Connect, Wealth Connect. These are all positions where Standard Chartered is a leader in connecting across the fragmented world to the advantage of ourselves and our shareholders. The digital transformation, we can just -- we can talk about a couple of things. One is I will proposition, as I have many times, and you've heard me say it, that the blockchain-based settlements are inevitable for much of what happens in financial markets. It's cheaper ultimately. It's easier. It's more transparent. It's 24/7. It's real time. The underlying money is -- and contracts are programmable. That's all sort of good stuff in and of itself. The game changer and the accelerator of this trend to digitization of money will be AI and Agentic commerce. The agentic commerce, meaning agents are executing with agents that's already happening in many securities markets. Look at Jane Street and Citadel's financial results, that's Agentic Commerce in it large. AI-enabled, low latency, 24/7 core infrastructure. We can go head-to-head with those guys. We're not making their P&L. That's the next objective. But that would take us well beyond 18% RoTE.

We are completely focused on serving our customers in the agented commerce world. We've been investing in this trend for 8 years. And when Alex and I first started talking about investing in digital assets within a market maker and a custodian and a tokenization engine, 8, 9 years ago, I don't think we had Agentic commerce in mind specifically. But we knew that this is a super powerful tool that we had to understand well as a bank. We build capabilities. We've built those capabilities in the bank. You can see that we're a 20% market share in the minting and burning of USDC. We're the third largest minter and burner. You know, but minting and burning is the conversion from Fiat to digital, digital to Fiat, through USEC, which is the most consistently used stable coin in compliant markets.

The #1 and #2 are crypto-native companies. Most stable client activity is confined to the crypto world today. We're #3 with a 20% share of the conversions because we're the destination for people who are converting from the economy to the digital economy and back again. We could not be better positioned for the next wave of evolution in the digitization of money. The AI tools that we built that Noelle and Tanuj are going to talk about in some detail, the infrastructure that we've put in place, which you can't see today, if we can just talk about it, that infrastructure is designed for this world, and we will absolutely be a leader in this space as we are today. We know that the migration of capital from banks to nonbanks. You can see it in notional loan outstanding. So you can see it in the improving RWAs and return on RWAs for us, but also other banks. The -- you can see that in the NII as a proportion of our bank's income, which is a little bit over half that has been decreasing consistently and will most likely continue to decrease. Obviously, there's a rate sensitivity component to that.

But that aside, the structural trend is clear. We had a financial crisis. Banks per week going into the financial crisis, regulators have stepped up their strengthening of banks, nonbanks are not regulated in the same way. That's not a problem, and it's not wrong. They're also not leveraged the way banks are. And if I were the desire financial system regulation. I would also be aggressively strengthening the banking system and allowing nonbanks to take the unlevered risk that's going to happen. We can either fight it and go to Washington and win or go to London and wind or buzz or we can say, yes, there's a trend here that we can be part of. We can be the facilitator given our origination capabilities, given our underlying financial plumbing capabilities, we can be the guys that are shepherding in this new world, making good money, improving returns dramatically while we do that.

The wealth participation is clear. Asian Wealth, Chinese wealth in particular, is still a small proportion of global AUM, but it's growing very fast, and we're extremely well positioned for that. It's not just China, it's ASEAN, it's in India and the rest of South Asia. Of course, it's the Middle East, which is going to go through its own set of changes as we know. But we've matched that underlying growth trend with a set of products, capabilities, partnerships that are differentiated. And Judy and Ryan will talk about that, Jean, will talk about it in some detail. I don't want to get into too much on this other than to say we are 100% buying this trend and have been for a couple of decades, right? This 1 preceded me by quite a bit, but we're definitely into acceleration mode and full credit to the team for having done that. And sustainable finance and the transition economy, we've not seen a material slowdown in the pace of spend in sustainable infrastructure. That is actually going to increase now with the price of oil at $110 a barrel and the price of a PV cell pretty much unchanged. It's pretty obvious where the incremental power generating dollars are going to go. And by the way, those PV cells are local. They're not going through the Strait of Hormuz or anywhere else.

So the underlying -- I think the underlying economics are very compelling, but the policy objectives are also clear in most parts of the world. In our markets, there's been no pulling back. In China, there's been no pulling back on sustainability investments. In India, South Asia, no pulling back. And we're capitalizing on that with the increasing income. So these measures here are their outcome measures. The -- we focus on the changing role of the banks that has the effect of reducing our NII as a percentage of income, increasing our non-NII as a percentage of income. Obviously, we're growing the non-NII because we're growing wealth. We're growing financial markets. We're growing our fees around our transaction banking services, the non-NII is growing, it's not growing as fast because we're optimizing returns. And increasingly, those RWAs are going into the nonbanking sector, where they probably belong.

Network income reflects the fact that we've got a distinct position vis-a-vis our sophisticated cross-border clients. They turn to us. It grows faster, less capital intense generates higher returns. Financial institutions, same thing. We've always been a banker's bank. I mean the a correspondidg banking is, in a lot of ways, where Standard Chartered started 170 years ago. But we've expanded that sort of deep knowledge of, frankly, the most sophisticated treasury clients in the world are other banks. Two, the broad range of financial institutions, asset managers, sovereign wealth funds, financial sponsors, et cetera.

And then obviously, affluent, we've just talked about. And all of these are significantly improving trends. Call them outputs. There are outputs, but they're coming on the back of very deliberate choices that we've made along the way.

Our resilience is substantially improved. And I mean, from time to time. I'm not -- none of us are super big at like back patting ourselves we'll let you do that at the end of the session. The I mean, this is just like just a quick snapshot. We've improved our returns from 0 or negative to 12% on the way to 15% and 18%. We've done that with doubling our capital position over that period. We've done that while reducing our risk-weighted assets, dramatically improving the quality of our underlying loan book, which, of course, has led to the improvement in risk on -- return on risk-weighted assets. If I said that 10 years ago, we're going to significantly derisk the bank to grow income and dramatically improve returns and profits. You're going to say, "Well that's kind of stupid because that's not banking as we know it. But that's what the bank has done, not because we set out to do it. because we just kind of look and talk to clients every day and said, what do you need? And what are you going to pay us for? I mean we're quite mercantilist as well, what are you going to pay us for. And so we're not going to pay you for your money because it's undifferentiated. We are going to pay you for all these interesting products and services where you're somewhat unique. Of course, we invested heavily in those products and services. We invested with your money, for which I thank you. But we're getting a good return on those investments, and we're much more resilient than we are today.

Now Manus will talk about this in some detail, but over the past several years, obviously, when we were going through the cleanup phase, the reposition we weren't paying dividends. We weren't buying back stock, and we were conserving capital to reposition the bank. We began -- the software is quite cheap in our estimation. We as we entertained shareholder returns, we focused on buybacks. We introduced a dividend a little bit later, still skewed to buybacks. We're now sitting with a stock price that's higher than it was. I won't say where it is relative to fair value. We think there's still tremendous value in our stock. We're very happy to buy that stock. We also want to make sure that the shareholders of ours that would like to have a steady dividend, see that we will pay out in excess of 30% of our profits and dividends, and that given our expectations for the company, would cause our dividend to continue to increase a progressive dividend strategy.

When we think about what the balance is now going forward of what are we going to do with our capital, the substantial capital that we're -- a substantial and increasing capital that we're generating, we will continue to invest in our business first and foremost. We're getting a very good return on organic investment in each of the strategic areas in which we focus. We feel like we are fully investing in our strategic areas today, which is why we then turn to returning capital via buybacks or increasing dividend. At the current share price, we would see a rebalancing of the distributions between dividends and buybacks. So we'll talk about roughly 1/3, 1/3, 1/3 between organic buyback, dividend. But of course, we're going to look at that as a function of the investment opportunities, the share price relative to what we would consider to be fair value. And any changing expectations as it relates to dividends. As I said, Manus -- by the way, congratulations, Manus. Manus, he's been acting like the CFO for some time. So I mean, sometimes he acts like the CEO. We'll keep them in that box. But that's okay. But we couldn't be happier with the team. And congratulations to Tanuj, our Chief Operating Officer, who you're going to hear from shortly, and you'll see why. Tanuj is partnered up with Noelle during the session as our Chief Operating Officer. So congratulations to both of them.

So productivity is a huge area of focus for us. It has been for some time. We've gone through different phases of focus on productivity, a lot of core infrastructure building in recent years. You've heard me and others talk about the massive investment that we made in financial crime compliance going back 10 or 15 years -- 12 years. We have very, very solid compliance infrastructure today. Of course, it always needs to be refreshed. Very substantial investments in cybersecurity. We feel like we're well positioned. There's 0 complacency at Standard Charter Bank about cybersecurity. Mythos, non Mythos, Codex55, anything. We've invested heavily in migrating our finance infrastructure from Oracle to a private cloud-based SAP platform for both finance and all of our HR applications. SAP considers us to be a poster child for large-scale migrations. You can hear that from them. But it reflects the focus and investment we made in the bank. We've migrated our data centers in the Eastern 2/3 of the world into a highly sophisticated private cloud. with geo resilience, i.e., Hong Kong, Singapore, Dubai, when the drones took out the AWS servers in Dubai, we were able -- I'm going to still want to have Newell's line to adjust your script, but we were able to migrate our entire data estate from Dubai to Singapore in hours. And it continues to be mutually backed up. We had no impact in Dubai, just to be clear, that was precautionary, but we're not on the AWS cloud there. But I mean this would have been impossible a year ago, much less 5 years ago.

So we've made those core investments in infrastructure. Now we can build the super productive machines on top of that. And that's exactly what we'll do. You'll hear about that in the transformation session. the income employee income per employee increasing substantially is a result obviously of income growth, but also of a fundamentally different infrastructure, growing in its cost at a very different pace than has been the case in the past or then certainly relative to revenue. And that's delivering that step change in cost income ratio. We'll be digging in on this. Manus will -- Noelle and Tanuj will be digging in on this, plenty of opportunities. I just wanted to hit the high-level thematic. We're 100% focused on becoming a fundamentally more productive organization, and we've made the investments to do that. All of this is going to be enabled by AI. I can -- again, Noelle will speak in some detail about where we are in AI.

I'm super proud of what our bank has done because we took the step back 2 years ago to build a core AI platform that's now hosting hundreds of models and use cases, tens of billions of tokens being processed on a very regular basis, done efficiently, safely and soundly right? So everybody stands up and gives a lot of BS, frankly, about AI. You'll probably get some best from us as well. But fundamentally, this is real, and we're using this. It's making a difference. I think we're extremely well positioned, both for defense and for offense.

Now our transformation through the years has been powered by many, many episodes of innovation. This innovation has happened in SE Ventures, which we focused on specifically for a while, we were calling that out as a specific business line. A lot of the innovation is happening right in the core of the business. And given the core foundations that we built the innovation machine can accelerate from here, not decelerate. These are just a few of the debentures or other initiatives that we've undertaken, consistent with the 5 themes that we've talked about. I'll let you prove those. We have sessions that cover most of this. You can ask some questions about each of those we go through this.

Just restating the financial targets you've already seen from your -- no doubt, your quick release this morning. In a way, I'm most excited about the high-teens CAGR for EPS. I think that's fundamentally, what should drive recognition of value in a growth company. And I think if we can deliver consistently as we have high teens growth in earnings per share through that combination of earnings growth and share count and management, I just think this is a fabulous growth opportunity, that it is our job to demonstrate to you why that's the case and why you want to buy these shares. But there's no hype in there. These are just the numbers. the 15%, 18% ROTE, we think, is a good benchmark. But fundamentally, what we want to do is deploy capital where we can get a great return, positive EVA and to do that increasingly. So as we get into the higher teens, ROTE, you probably focus a little bit less on ROTE and a lot more on EBA just to make this bank bigger and bigger and bigger because we've got a super, super franchise. But Tony is not about EVA. Manus didn't want me to say that at all. Once he's fully feet under the table as CFO, he's going to introduce an EBA framework, which he's going to take credit for, and I'm going to applaud him.

With that, we're going to have -- you'll see over the course of the sessions, we've actually got 5 outside perspectives from experts or world-class characters that are related to the 5 themes that we've got. The first that we've got is Parag Khanna, he'll be known to many of you as an academic and geopolitical commentator talking about what this fragmentation means for all of us. There will be 4 others related to the other themes, interest first throughout the session. So thank you again for joining us. Thanks for listening to all of us, and please enjoy this video.

[Presentation]

Hello, everybody, and welcome to Hong Kong I am delighted to say that I know most of you in the room already. But for those online who are less familiar, my name is Manus. And for the avoidance of doubt, I have not Manus the AI agent, which appears to have appropriated my unusual Irish name and nor has Meta tried to invest $2 billion in recently. I am, in fact, the Head of Investor Relations at Standard Chartered and for the last 24 hours, the interim CFO. I joined the bank a couple of years ago. and I have been looking at the bank for a very long time because I was a sell-side analyst previously. And so I have seen Standard Chartered through many different cycles. And I can genuinely say that this is an extremely exciting time to be taking on this role. It's exciting because of the foundations that we have built. Those are foundations in terms of client relationships, foundations in terms of our core technology and foundations in terms of our strategy. And it is because of the strength of those foundations, that we are now ready to enter into a phase of acceleration against the backdrop of those trends that Bill has talked about.

But before we get into the future, let's just look a little bit about those 3 phases that Bill talked about already: reposition, execute and compound. Back in 2015, the bank had to go through a significant period of repositioning and restructuring as it removed a number of high-risk assets from the balance sheet. And that meant that for a period of time, both income and costs were broadly flat. By 2019, the bank was ready to grow again and to distribute capital again. In fact, we'd initiated a share buyback at that time. But of course, just as we got going, COVID hit, which slowed our momentum, in particular, had an impact on net interest income.

Coming out of COVID, growth has accelerated. But the important thing to understand is that, that acceleration in growth has not just been because markets have been conducive. It's been the direct result of the foundations that we have put in place over time. And we are now poised to continue that and to compound that growth going forward.

Let's look at the last couple of years in a bit more detail. Back in February 24, we laid out a 3-year plan, and I'm delighted to say that we're able to deliver on that 3-year plan in 2 years. We managed to deliver revenue growth of 16%, which exceeded our 3-year growth targets within 2 years. We delivered positive income to cost jaws over that time frame. We delivered an underlying return on tangible equity of 14.7%, which well exceeded the 13% we were targeting and which itself had already been upgraded, and we were able to distribute capital. But not only did we do well, we did well relative to peers, we think as well. We showed the best RoTE improvement amongst our peers over that time frame. We showed the strongest income growth, and we had exceptional EPS growth and TNAV per share growth as well. Those latter 2 were powered by a 15% reduction in our share count over that period, and that was enabled by the over $9 billion of capital distributions that we've announced since February 24. That $9 billion, just to take a pause on it, represented 45% of the market capitalization of the bank when we announced it.

But I know you know these numbers already. There's also an awful lot that's been going on beneath the surface during the course of that last couple of years. We have fundamentally been engaged in the transformation of the core of our bank, and you will hear more about that through the course of today. We have changed our organizational design and made our processes significantly simpler across the bank. And I think, I hope we now present the bank to you in a way which is easier for you to understand. And on a reported basis, more accurately represents the banks that you own our shareholders.

So let's look at the financial targets. Bill has already mentioned, the ROTE and the EPS targets. I'm going to spend time talking to you about the building blocks to get there. First of all, we will deliver a CAGR in our income of 5% to 7%. That will be driven both by the macro trends, but also importantly, by the investments that we've made to take advantage of those trends. We will deliver a cost-to-income ratio of 57% in 2028. That is down from 63% last year. We continue to expect our loan loss rate through the cycle to be 30 to 35 basis points, and we will operate across our CET1 ratio range of 13% to 14%.

And lastly, we will deliver a dividend payout ratio of at least 30%, which will lead to a progressive dividend per share over the course of the plan. Combined, those are the factors which are going to take us to a greater than 15% rate in '28 and to a high-teens EPS CAGR over the course of that period.

So how does that look in terms of our RoTE walk? Well, I've given you 2 separate ways to think about the RoTE walk here. The first is a more simple P&L view. But simply, we're going to grow revenues more quickly than we grow our expenses. And that's because we believe we have powerful top line trends, and we are investing to ensure that we can scale our revenues at lower marginal cost. A topic will come back to frequently. This will be offset by an assumption that there will be some normalization of impairment if our impairment moves back to the 30 to 35 basis point range, which we see is through the cycle. We delivered 19 basis points of impairment last year. For the avoidance of doubt, we're not seeing any new risks on the balance sheet at the moment, but 30 to 35 basis points is the assumption for planning purposes. And we will see a small uplift from operating dynamically across the CET1 ratio range.

But I think more interesting, and then I'm going to spend more time on is the second part of this throw because really what drives this ROTE improvement is a mix shift in our business. We are going to continue to see our WRB business, our retail business, move towards the affluent space and our CIB business will continue to see its growth being driven by the network and by financial institutions, clients. And combined, those 2 factors will drive an uplift in RoTE of almost 400 basis points over the course of this period.

So let's take a look at that mix shift in a bit more detail. You know about our CIB WRB businesses because we've had investor seminars on them over the course of the last 18 months. In CIB, we are expecting our revenues to move from 54% financial institutions to 60% over the medium term. Our network income will move from about 2/3 of income to 70% of income by 28%. And in WIB, our affluent business will move from 70% to 75% between last year and 2028. Those are the mix shifts we're seeing, and they have a number of important impacts, which will drive our returns higher going forward.

Firstly, moving into these businesses means we are moving into businesses which are higher income return on risk-weighted assets. So within CIB, our network income and our financial institution FI business are both about 200 basis points higher in terms of income ROA than the domestic business and the corporate business, respectively. And within our affluent business is much higher return on risk-weighted assets than our nonaffluent business. But this is about more than just a more efficient use of capital from that mix shift.

Moving ourselves into those customer segments also allows us to move into much better areas of growth, which really tap into the areas that Bill has talked about already and which you will hear plenty about during the course of today. We also think that by moving into those areas, the customers that we serve will be stickier and they'll be stickier because they tend to bank with us across different geographies and because they take multiple products from us. So it's a higher growth, stickier customer base that we're moving into. And the great thing is we have already invested in the platforms, which are allowing us to deliver that growth. So we expect to see strong operating leverage by focusing on those customer segments, which we know well.

And lastly, we think that, that mix shift will lead us to a lower risk profile as a bank overall, which I'll come back to discuss in more detail later, and we think it will drive higher connectivity between our affluent client base and CIB. It's not just about a revenue mix shift though. There is also a shift that we expect in the balance sheet as a result of our business moving. But simply, we are seeing an increasing surplus in our WRB business as it generates cheaper liabilities. The cheapest form of funding we have comes from WRB, or cast liabilities in WRB. And we are continuing to generate a surplus of liabilities, i.e., there's more deposits than ways to deploy them at the moment. in WRB. And within CIB, our lower cost, higher quality deposits in our CASA based there, the operating accounts are also continuing to grow very effectively.

What that means is 2 things. First of all, of course, it means a lower cost of funding going forward. But secondly, by having those high-quality liabilities, we have options for deployment of those liabilities into different areas of the balance sheet, be that into the banking book or into the trading book.

Now that means that the treasury portion of our balance sheet, which has already fallen in recent years is likely to continue to fall. And that's important because we estimate that going forward, it will generate about a 50 basis point uplift to our OT through the course of the plan.

Now that 50 basis points, to be clear, is already embedded in the relative walks that I've given you, so it's not incremental. But I thought it was very important to highlight it to you because it is very fundamental to what we are doing as an institution. It's something that we've seen over recent years. It's something that we think is durable and will continue over the course of this plan. And we think it will carry on for the future, driving the synergies between our WRB business and our CIB business on the balance sheet as well as operation.

Let's look at the revenues in a bit more detail. We've grown revenues by 16%, as I said, over the last couple of years. And that's despite NII headwinds because of the rate environment. Rates have really affected the blue bits of this chart. So our transaction services business has seen good growth in operating accounts and good growth in fee income, but it's had NIM headwinds, which means it's gone backwards for the last couple of years in revenue terms.

Similarly, our deposit and mortgage business within WRB has been broadly flat, largely as a result of net interest margin headwinds. The real drivers of growth have been coming from what we call our engines of noninterest income growth. Our Global Banking business, which has grown at 13% compound adjusting for our aviation finance business, our Global Markets business, which has grown at 12% compound and our Wealth Solutions business, which has grown at a fantastic 26% compound. And together, those noninterest income engines have meant that we have managed to grow our noninterest income by a 13% compound rate over the course of the last couple of years. And that is what we expect to continue going forward. So we are expecting growth of 5% to 7% compound over the next 3 years. Within that, we think that noninterest income will continue to grow faster than net interest income. We already generate 47% of our income from noninterest income, which is higher than peers. And because of that momentum that we're seeing, we expect that to move to north of 50% by 2028, well higher than peers.

It is a unique feature of Standard Chartered that we are able to continue that growth and something which we think is critical to the future for the bank. For the avoidance of doubt, we're not changing our net interest income guidance for 2026. We continue to expect 2026 NII to be broadly flat on 2025, but we do expect some modest growth in net interest income thereafter.

Now turning to expenses. We've talked a lot about revenues, but we know that we have structural inefficiencies in the bank, which we need to address. We have invested including through FFG, in efficiency programs, which have allowed us to keep our back office costs broadly flat over the course of the last couple of years. We know that we now need to ensure that we can deliver improved efficiency for you going forward without asking for any additional large below-the-line charges, and that is the commitment that we're going to make for you today. We know that our operations and functions continue to benchmark somewhat less efficient than peers. And you're going to hear later today from Noelle and Tanuj about all the efforts that we are making to ensure that our bank becomes simpler, more connected and faster to drive better efficiency going forward, because the outcome for you as shareholders is clear. We are going to move from a cost income ratio of 63% to 57% over the course of this plan, and we will deliver positive income to cost jaws in each year during the course of the plan. We will also ensure that the revenue productivity of our employee base continues to improve. And that will be enabled partly through a rationalization of our operations. We are a bank that is investing to grow. We have tremendous opportunities, and we will continue to invest to grow. But I know that there are still efficiencies -- inefficiencies in this organization, which we need to address. Our challenge now is to move to a process of continuous improvement to ensure that not only do we grow the top line each year, but that we also improve efficiency and returns each year. And that is what we're aiming to deliver.

Let me be clear. We know and we are committed to ensure that the top line growth that the bank is going to deliver over the next few years will deliver the maximum possible profitability for shareholders.

Let's look a bit at risk now. I talked before about how the business model is moving us into lower-risk customer segments. And I think that is really fundamental to what we're doing. This is not just about taking individual underwriting decisions differently. This is about an entire shift in the way that we think about the business. But let's look at it in numbers, first of all. So within our CIB business, you probably know already that the investment-grade proportion of our exposures has moved from 42% to 74% and over the course of the last decade. And even in more recent years, if we look at the probability of default, within our corporate book. It's continued to fall -- this is based on Pillar II data. It's continued to fall quite sharply in recent years, and we think it now benchmarks very well versus peers, and we're very pleased with that. within WIB, we have been moving to focus on affluent clients for some time, and that has enabled us to exit certain single product unsecured relationships with customers, which means that the proportion of unsecured balances on the WRB balance sheet have moved from 19% to 12%, a 7 percentage point drop over the course of the last decade. So again, moving us to a lower risk place.

Now having said that, the world is an uncertain place, and we are very happy to continue to guide to an expected through-the-cycle loan loss rate of 30 to 35 basis points. But we fundamentally believe that the mix shift that I talked about previously will not only drive better income to return on risk-weighted assets, but will also drive us into a lower-risk business model that is enduring.

Let's talk about the balance sheet and capital. We have maintained a very strong balance sheet over the course of the last decade, and we certainly intend to maintain that position going forward. We have a CET1 ratio target range of 13% to 14%, and we've tended to operate if you look back at the last 7 years at the upper end or even above that range. Indeed, at Q1 2026, we had a CET1 ratio of 13.4%. And that gives you an indication of where we expect to operate going forward. We will now operate dynamically across the range such that on average, you should assume we'll be at the midpoint of the range. We are a very capital-generative bank and we have generated more than 330 basis points of capital since 2023. And if you look at the uses of that capital in the last couple of years, we've retained about 25% and distributed about 3/4 of that capital to shareholders via dividends and share buybacks.

Going forward, we expect to generate more capital because we're going to be a more profitable institution. And very broadly speaking, you should assume that the uses of that capital will be about 1/3 for RWA growth 1/3 for dividends and 1/3 will be available capital, including for buybacks.

Let's look at that framework in a little bit more detail. Our first use of capital, as Bill mentioned, will be to support our business growth. We expect to grow the top line, as I said, between 5% and 7%. And we expect our average risk-weighted assets to grow less than that. In other words, we are expecting our income return on risk-weighted assets to improve over the course of the plan.

Secondly, as I've mentioned, we will deliver a dividend payout ratio of at least 30% with a progressive dividend per share. We believe after those to uses of capital, we will continue to have significant available capital for us.

The first and most likely use of that capital will be for share buybacks because as Bill said, we continue to think that our shares represent exceptional value at these levels. However, we need to be aware as well that we operate in markets which offer us growth opportunities which we think many of our peer set do not have. And therefore, if we are able to find opportunities to deploy our capital in a way which both drives income growth above that 5% to 7% expectation and meets our income return on risk-weighted asset hurdles, we will consider that as an option.

Lastly, we will continue to consider inorganic growth opportunities, but these will always be in line with our strategy. And for the avoidance of any doubt, there is nothing included in the plan for inorganic growth and we don't have anything that we are planning at the moment, and there's nothing on the table for that.

The guiding principle of our capital allocation is actually relatively straightforward. We will allocate capital in order to drive the maximum economic value for our shareholders. So let me summarize what we have been saying, both Bill and I, during the course of today. We're going to deliver a ROTE in 2028 of over 15%. What's going to take us from that 12% level we did last year, up to 15% is income growth driven by some structural trends supplemented by the investments that we've made in core areas.

We are shifting our business mix into areas which enable us to access that growth and deliver higher returns at the same time. Because of the work that we have done on transforming the core of the bank and will continue to do. We're going to be able to scale at a lower marginal cost. So we will see strong operating leverage during the course of the plan. We will maintain tight discipline on risk we will maintain a strong balance sheet. And of course, we will continue to distribute excess capital to shareholders. All of those factors can take us from 12% to north of 15% in 2028. But importantly, all of those factors continue past 2028, and it is exactly the continuation of those factors that we have enormous confidence in and which will take us to an 18% RoTE in 2030. We've repositioned the bank. We've been executing very strongly against the plan, and we're now excited to be entering into a phase of compounding growth.

Thank you. With that, Ben and I are happy to take some of your questions.

Let's get ready. Just a reminder that if you're asking a question, please wait for the microphone to come to you and speak really clearly so that everyone on the webcast can hear what you're saying. Thank you.

Jason Napier from UBS. Thank you for having us here in Hong Kong. First of all, to Manus, and on behalf of the sell side, congratulations. There's certainly hope for us. Manus, the first question for you on the capital allocation piece that you were just describing RWA growth is going to be a big focus, right? So you've mentioned that about 1/3 of capital generation goes to grout then in the third but you also got RWA growth. And a lot of the income growth is balance sheet light. So you can be a little bit more precise about what do you think maybe your footprint demands or some other way to add color on RWA outlook?

And then, Bill, for you, please. Like really clear sort of analytical framework for the way you think the world is moving. I use words like inevitable and inexorable. Could you talk about what that means for the balance between income growth and cost growth. You want to be ahead of everything. You want to be in the right places and invest it appropriately. How do you balance those sort of factors in the delivery of jaws over the next 3 years and indeed, over the next 2?

Yes. Let me start with the second question, and then I make a little bit of a tee-up question on the RWA comment. And I know you directed that one to Manus appropriately. Yes, we do have a -- I mean, analytical framework sounds a bit rigid, but I think we identified -- I mean we're going back years, some underlying trends. And we have been investing in that. We also understood, and you'll hear a lot about this for Noelle and Tanuj so we needed to new need to invest in our underlying infrastructure.

If you're trying to optimize ROTE in the coming year, those aren't investments that you make, right? But we have. And there certainly during that repositioning period when income was flattish and costs were flattish, both down 1% per Manus' side. The -- we definitely could have cut costs faster at the expense of the future. And we definitely could have flattered income by not exiting those suboptimal RWAs which would have had the unfortunate effect of not having that nice upward sloping ROTE line over that period. So we -- maybe out of naivety, maybe out of confidence, maybe just because it's the right thing to do, we've been investing in the future all the way through. We're not going to stop now. Now we've got a more balanced payoff. The things that we've been investing in are paying off. So it gets to a 12% underlying 1.9 ROTE on the way to '15 and '18. Obviously, a chunk of that also reflects stepped-up investment in Fit for Growth and other things. The -- but we're not going to stop investing in the future. We are going to see an increasing amount of the fruits of our earlier labor flow to improving ROTE and EVA.

So which then takes me just very quickly to RWAs. The our RWAs have decreased significantly, but our balance sheet is more or less the same, my intensity has decreased. So we're finding some very attractive ways to use our balance sheet in a higher returning way. What we've always been focused on is returns. So optimized returns. Of course, we have an eye to client franchise and having gone through these RWA optimization efforts and other banks. I mean several of them, they're all called JPMorgan, but we kept on going through the same thing with different owners. The -- you can go too fast. You can also go to slow. And then you can get it just right. And only time will tell whether we got it just right, but it feels pretty good to us in terms of pacing. A little bit slower than 1 might have liked, might explain why our share price went no place for the better part of 5 years. But we're definitely ending up in a good place. And as the saying goes all as well that ends well. Now the word on Manus.

Yes, it's not ended, though, it's just beginning. So Jason, on the capital allocation framework, just to clarify, we're expecting 5% to 7% revenue growth. And what I was saying on stage was that our RWA growth within our base case, we'll be below that 5% to 7%. That's what will drive the improvement in return on risk-weighted assets. I was also saying that over the course of this time frame, it is possible that there will be opportunities to deploy capital, which will take us above that 5% to 7%. And if it can take us above that 5% to 7%, and if it meets our income return on risk-weighted asset hurdles, we will consider it. But just for the avoidance of doubt, that gray bar that you saw the available capital, our planning assumption is that, that will be delivered back by share buybacks. That's what we built into the model. We are not assuming any incremental RWA growth. We are simply retaining the ability to commit to that RWA growth if it is EVA generative and if it is the right thing to do for shareholders.

This is Kunpeng, China Securities. Congratulations for this very strong guidance, and thank you so much for the very nice presentation just now. I also have 2 questions but first for Manus, and I'm so happy to see the exact numbers of the royalty contribution from the 2 core businesses, CIB and WRB. But can you give us a little bit more color the exact product categories or income categories of this royalty contributions of these 2 businesses.

And second is for Bill because this question is a bit rough, so I put in the second. So as we have the guidance until 2030. So does this mean you're going to stay with us for the next 4.5 years?

Let's go Manus first of and Ill think about that. I'll think about that second question because it hadn't occurred to me that, that might come up. Okay.

So thank you, Kunpeng, for the question. So look, we don't give ROTE by product. I know some of you have asked about in the past. It is complex to give it by product because the reality is that we look at our RoTE on a client basis and on a full relationship basis. So looking by product is not right. Hopefully, what you'll be able to take away from the presentation is that if you look at our CIB business, it's like the rest of the group, we'll see it's growth driven more likely by the engines of noninterest income. So we would expect the banking business the markets business to continue to grow more quickly. You've seen the good growth there. We think that will continue. And of course, within WRB, we expect to see our wealth business continue to grow at a double-digit rate as you'll hear from Judy a bit later on. But those are the trends that both underlie the group. They underline the improvement in RoTE within those divisions and then what we're comfortable in going forward. I would just caveat that because I'm now a CFO and I need to caveat things, but it is based on the current interest rate outlook. So we're using current cures for that, of course, that could vary.

To your second question, Kunpeng. The -- am I going to be around to deliver this plan. Let me say what I'm going to do for sure. None of us can control perfectly our destiny from day to day. The number 1 is we're going to take the team that you're going to see today and on Thursday that you're seeing from time to time, and continue to strengthen that as a team. I think where we are -- now this is obviously my personal opinion, but where we are right now, especially with the addition of Manus as a CFO, it's the best team that I've had the pleasure of working with in Standard Chartered. I'm not saying that everyone is better than somebody else. I'm saying that as a team, it's exceptionally capable. And this team to different degrees has been driving the improvement that we've had. I want to really lock that down.

Second is the delivery of this strategy. So there's no major step change in the strategy that we're laying out in these 3 days. What we're doing is taking a step back and saying the direction of travel that we've been undertaking a join will carry on, but with the need for very, very significant ongoing modifications, in particular, is the state of the world changes, those external conditions. And we think the strategy is quite clear. It's working for us, really want to bed this down and make sure that we're in an excellent position to deliver that 18% in 2030.

I can tell you, in 2030, if we're generating 18%, I'm not going to be doing high fives with the team. I don't think that, that's the potential of this back. But I'm not allowed to say that because the slide says 18% by around 18% by 2030. But I mean, this potential of this bank is far greater. I want to do everything that I can to make sure we land that. And we have, obviously, new members of the team, not least manage that I want to make sure are completely bedded down.

The final thing is I would really like when it's time for me to hang up the spurs or get my spurs hung up, but the next CEO comes from inside Standard Chartered. That's -- I would -- I can't control that. It won't be my choice. All I can do is prepare the team to the greatest extent possible, giving people the best opportunities. I think we have that talent inside our bank. The Board will always, when they come to that review the external marketplace as we did for CFO, which is why we only announced this yesterday, whatever we might have thought the outcome was likely to be. But the -- I'm not taking anything away from what I think the Board will do. But that -- those are my objectives. Now can I get that done in 6 months? Definitely not. Do I need 10 years? Definitely not. Some place in between.

Chris Hallam from Goldman Sachs. It feels just 1 question. It feels as though perhaps the core message so far is you're sort of in this event asking shareholders to entrust you with a license to redeploy additional capital into some growth opportunities as and when they may become available as suppose you kind of saw that a little bit already in Q1. And that would naturally cause a pivot in the way that the capital is distributed versus investors. With that in mind, it sort of begs the question, how big is the growth runway you can see? And perhaps more importantly, as you get to 2030, you've got the 18% target. When does that become a question of what you could do versus what you should do because you, the leadership team and the Board need to think about do we keep going and try and maximizing returns? Or is there broadly on the product suite? Is there EVA opportunities that maybe 17.5%, not 20%. So where do you try and balance that RET maximization versus what's right for the year or what if the business comes from this?

No, it's an excellent question. And it's definitely the framework that we're considering. We're already making ROTE versus EVA trade-off decisions, right? I mean we've got a wealth business with a super strong ROE it could go further and further. If the -- if there are -- and Judy will talk about this, if there are opportunities to deploy capital around that opportunity. to generate meaningful EVA that may not take the ROTE from 35% to 45%. That's still good for shareholders. So the mindset is already there in terms of the incremental decisions that we're taking. I think you're asking, at what point does that sort of flip the center focus for the entire group. We'll get there, right? And we'll be watching that very carefully. I think we've executed in a very disciplined way, and we will continue to excel and a very -- execute in a very disciplined way. But Manus?

I -- the driving focus will continue to be to grow income in excess of risk-weighted assets. So let's not take away from that as a very important focus we want to look forward to. I would just add to Bill's comment, you mentioned Q1. I think the point about Q1 demonstrates that quite nicely. We grew income year-over-year significantly faster than we grew RWAs year-over-year. So all we're saying is that we see tremendous opportunities within our footprint to generate very strong value, and we have opportunities to deploy our capital to do that. And we will do that in service of delivering that 15% -- greater than 15% royalty, driving up towards 18%. And I look forward to the debate about at what point we should stop and maximize on EVA, but we've got to way to go.

Yes, we do. I want to get back to -- when we talk about growth, we inevitably are first drawn to income growth. and the areas of profitable income growth. One of the great enablers of our growth is going to be what we have done and are doing on the infrastructure side. And you will obviously talk about that in the context of transformation. But the opportunity for us to take these really, really solid foundations. You're going to have to form your own view is just how solid they are. We think they're exceptionally solid at this point and to be able to deploy capital, deploy resources quickly and with super normal profits by virtue of the underlying infrastructure that we built. I mean you work at Goldman Sachs. You have a reputation as a firm for having done that for a long time. I won't say that, that's a role model. I don't think we're that far away from being recognized as a player that can deliver a best-in-class infrastructure that allows very aggressive tactical reallocation of business lines and capital. you'll form your own views of how close we are to that. But we feel pretty good. And that's at the thrust at the heart of what Noel and Tanuj will be talking about. And that will absolutely enable growth in ways that we couldn't have imagined growing years ago or maybe even 3 years ago.

Let's go to the back. I can't see the faces all the way, but.

Ed and James at the back.

Why don't we start.

Great. It's Ed Firth from KBW. I suppose 1 area I was very interested in hearing about was the financial institutions and sort nonbank-funded institutions, and that seems to be a very big area of growth for you and emphasis. It's also an area where I think a number of regulators have expressed concerns and I guess, there've been a number of market concerns about what's going on in some of those areas. So I just wondered if you could give us a little more color about what exact areas of growth you're seeing and what sort of competitive advantages you see that you have and perhaps how you're navigating some of the risks that do seem to be out there?

That's great. Thanks for that question. And Roberto will be talking about that in some detail when we get to the CIB section. But the nonbank financial institutions is a pretty broad sway of activity. So I think maybe at the beginning of your question, you probably had private credit in mind, and that's -- obviously, it's been a lot in the press. We think and have thought for some time that the extension of credit from things other than bank balance sheets was absolutely inevitable. It happened in the U.S. for decades. Now it's happening in a slightly accelerated way. and it happened more recently post the natural crisis in Europe and Asia. But it's happening for good reasons, and we are leaning into it. but we're also leaning into it very cautiously. I mean, Jason, our Chief Risk Officer, is here, who will be available to answer these questions if you want to get an offline perspective as well. But the -- we don't have a big proportion of our loan book to private credit companies. We don't provide a lot of back leverage to private credit portfolios. We do a bit of each. We do some subscription line to underlying funds. Mostly what we do with the private credit companies is we originate credit and sell it to them. And sometimes, we sell it's clean as in the way we bought it, sometimes it gets restructured or slice or dice in some way. But the that we do that because they've got a lower cost of capital than we do in some areas or they're just a better bid for some other reason. That is something that I think is an extra role. So we've seen the mood music change in regulation. The U.S., obviously, has gone from seeking to add a material amount of capital to U.S. bank requirements, but kind of back down to where they started. They haven't gone backwards. The U.K. and Europe have also stopped advancing the capital engine as it were, but they haven't gone backwards. I don't think we're going to see big releases of capital by regulation. And I don't think we're going to see a big increase in cost of capital from the nonbanks on the back of the credit cycle. They may converge a little bit, but it just makes sense for credit to reside in the hands of people that aren't carrying a lot of leverage and that aren't undertaking a lot of maturity transformation. And that's not a bad thing as long as we can continue to originate credit and distribute it.

Insurance companies are kind of the same thing, but obviously under a different regulatory umbrella. But insurance companies have reasonably complex operational requirements, and we are, amongst many other things, an operational bank. So we have very deep relationships with institutional asset managers represented by many of the people in the room, insurance companies, pension funds directly. Sovereign wealth funds globally who need us for operational reasons. They need us for acquisition of assets. They need us for managing of risk associated with their portfolios in the markets where we operate. we needed to build quite a strong service infrastructure around those nonbank institutions. We were very poor 14 years ago. I've mentioned in this kind of grouping before, 1 of the very large asset managers of the world, it was happened under the principles quite well. I said to me on my first day in standard charter in the first few days. We rank our broker dealers, you're 17 out of 17 and frankly, you're only in the list of backings because we have to deal with you because of the markets where you operate. Otherwise, we wouldn't be talking to you at all. That's very helpful.

What do we need to do to get into your top 3 or 5, excluding equity trading, which we don't do. You're going to have to handle the inclusion of multiple funds for a particular trading strategy. You're going to have to cover the markets where we operate. You're going to have the an account opening and compliance regime that isn't -- that doesn't incur massive amounts of brain cell lossage every time we talk to you, et cetera. And we invested very deliberately for years after that. And we're now top 1, 2, 3 always in the markets where we operate in top 3, 4, 5 in G10 ex equity trading through operational improvement and then the hard work and personal relationships developed by our relationship managers. But none of that came easy, but it was very deliberate.

And -- but where did it start? We heard from customers what they wanted us to do and then we did it. Not different than what you'll hear from Judy. I'm not changing the subject, but the customer improvement -- the customer satisfaction improvements. In wealth management, during Judy and Ben's and Mary's time running that function, have gone from bottom quartile to number one. It didn't happen because we had better products. It happened because we invested in customer service and customer satisfaction. So for nonbanks, being relevant, understanding what they want, originating product for them, providing the ancillary services that come along with that and then continuing to grow.

It's Joe Dickerson from Jefferies. I that it was very interesting, the point you made on the efficiencies that come from the liability serves. So this is the first question. What deposit growth have you assumed over plan, roughly in line with the income growth because there's clearly a very favorable trend coming from the mainland, particularly this year in terms of deposit maturities which could make their way south of the quarter. So what's the deposit growth there? And could there be any scope to augment the 50 basis points? And then I'm sure this will come up in another session, but you mentioned in the release today the migration of some of the WRB clients into MOX. What is across the franchise in WRB. What is the opportunity for lack of a better work push clients or transition with them into digital banking, is there a broader opportunity of borrowing income here for the bank?

Quickly, Judy is going to cover the second question very directly in her comments, so I'll save that for her but, you've seen a changing composition of our retail business. Obviously, the 70% up to 75% of income coming from athlete, but you've seen a very aggressive reshaping of our mass market portfolio. including the investments in the digital banks, but also the divestitures of a number of the mass market businesses across, in particular, our smaller markets, which is ongoing as we speak. And the migration of individual, you've also seen asset dispositions of unsecured loan books or asset pools in India, Korea, et cetera. And we'll continue to optimize there. But then in Hong Kong and Singapore, you're seeing a migration of unsecured assets into the digital banks, lower cost to serve surplus deposits in those entities that can deploy effectively into those asset bases. This is all in the spirit of ongoing optimization, but also recognizing that in some very important markets like Hong Kong, Mass market banking is very profitable, and its own right, we have a good position, and we want to make sure that we grow that. But again, I don't want to take too much away from a duty saying. But that's sort of it leads into the deposit cut.

Yes. You'll note, Joe, that we haven't put out loan growth targets or deposit growth targets for a reason because we see those as outputs rather than inputs to what we're going to achieve as we seek to move our business to improve return on risk-weighted assets going forward. Your assumption about what underlies the plan will be broadly correct. And within that, you should assume, as I was implying on the slide, that our WRB base will grow somewhat faster than our CIB deposit base. But actually, on that side, it may be worth just asking our Treasurer, Dan, who is here, Dan Hodge, if you want to say a couple of words about future expectations on how you think that will impact returns.

Yes, absolutely. Thanks very much for the question. No, I mean I completely agree with that. We're not sort of giving overall sort of targets for growth in the funded balance sheet, but it's very much a sort of the mix improvement. And so -- what we're saying is that the 50 basis points is coming from 2 areas. Firstly, the weighted average cost of funding of our liabilities is going to default. And that's because we're actually growing all sources of funding that getting impression we're sort of starting to shrink to the corporate cash flow wholesale. We're growing them all, but we're growing the sort of cheaper stable retail funding at a faster rate than the other sources of funding, so you get that mix enhancement. And because you're growing sort of the more stable deposits at a faster rate, you mean you actually need to hold less liquidity per dollar of funded balance sheet. And obviously, so the average treasury is going to yield a lower spread and that will lower sort of NIM than the average commercial assets. So there's a combination of those things together that generates 50. Can we do more than 50. Obviously, we'd like to and we constantly seek to try and optimize the cancer and so the volume and the mix of our funding and what we do with our funding across our various legal entities.

It's Andrew Coombs from Citi. I'd just like to come back to capital allocation. Slide 5 your uses of capital over the last 2 years versus the indicative using capital going forward. It is quite a marked step change. You're obviously very heavily weighted towards buybacks. You're now talking about this mix. So just in terms of the RWA development from here, is it because you think you've already transitioned to a more capital-light and efficient model and there's less to do on RWA takeout? Or is it because you see more opportunistic ways to deploy RWAs going forward? I'm just trying to think the gross part RWA equation.

And then the second part to it I appreciate there's nothing inorganic in the plan. But at the same time, I think this is the first 1, I remember you explicitly calling out in the slides as a potential. So can you just talk about how hard where you obvious gaps in the franchise, et cetera, et cetera?

Let me start and Manus will definitely fill in. The -- I mean we had $80 billion of suboptimal RWAs when we started this, we're down into the -- depending on how you look at it at the 9% to 19% range. Some of that is just stable. I mean there's always going to be an in and out of clients that haven't generated strong returns over the past 3 years, but that we are continue -- we are happy to continue to invest in. So we can definitely squeeze a bit more out of the low-returning RWAs. But that's just a matter of hygiene and ongoing discipline. I think it's very well embedded. Roberto will talk about that. There's not a huge opportunity to expunge big chunks of RWAs in the ordinary course. Obviously, we could divest things and then some of the mass market retail divestitures are expanding some RWAs, they're not low returning. They're high returning, and we're getting paid a premium for those assets as it happens. So that's not really the point. The opportunities to deploy assets are quite interesting. Now right now, obviously, we've had some mini wobbles in the market on the back of some of the private credit noise and the couple of frauds that have caused spreads to increase a bit this spreads are still quite tight. So the deployment opportunities are likely to be episodic and idiosyncratic. But we've got the capital to deploy there if we want, which is why we give ourselves some breathing room. We're only going to deploy capital into RWAs if we're getting a good return. There's nothing that we have to do. So those are just opportunities, and that's why Manus refers to available capital being deployable into a number of things, including RWA growth, if we can generate accretive returns.

In terms of the inorganic, I think we went to the great lines, of course, everybody would want to know exactly what the criteria are. Kind of we'll know it when we see it. But we know that the bar for strategic relevance is very high. We spent a lot of time focusing our bank into things where we see core competitive advantages, highly unlikely to deploy capital into something that isn't directly related to 1 of those core and tried and tested competitive advantages. And we further said that we are very happy to buy back shares at anything like this price because we see -- we've guided you to an 18% return on tangible equity from 11.9%, and we think that the market is pricing in something a lot closer to 11.9% than 18%. So that's kind of simple observation. We would love to own more and more of our shares. Something inorganic would have to exceed the financial returns and be strategically relevant. If we had something in mind, we could talk about it, we don't. So it's -- beyond that, it becomes hypothetical.

And then maybe the first time you've seen it on the slide, Andy, but it's not the first time that we've said it, it's a statement of what we've been saying previously. So there's no change in our position just because it's on a slide. I don't assume there's any change. in direct answer to your question on RWAs, I think it's both really. It is because, as Bill said, we've been very successful in driving down the level of suboptimal RWAs that we've got on the bank balance sheet. We still have more to do. We'll always have some suboptimal, but we will continue to work on that. But that pool of suboptimal is somewhat lower. And it's because we are more confident in the outlook, we are more confident on being able to see ways to deploy our capital. But just to be clear, again, deploying capital is not the objective. The objective is to maximize growth and returns. We will use the capital to do that in any way that we can. But we have regular conversations at a client level, at a business level than at a bank level about how we can make ourselves more efficient, both in our new business and in our existing business. So deploying capital is not an end on its own. The end is driving the business forward in the maximum value generating way possible.

Yes. Sixth on the front row.

It's Guy Stebbings from BNP Paribas. Another question on capital, but this time on the CET1 target, which you kept with 13 to 14, which I guess is expected. We talked about more operating perhaps in the middle of that range on average rather than slightly [indiscernible] it. I guess the context here is some U.S. banks have obviously seen a reduction, the bank ongoing talk about changes, but without necessarily moving things materially at the stage in terms of the real core requirements. I guess I'm thinking out to 2030 and how much we think about target is very much it's going to stay there or whether it was sort of considered that you might to more or whether there's much you would need to see from the regulator before that target could be shifted down side?

We actually have a fair amount of capacity above our regulatory minimum. So we have quite a large buffer. That's part of what gave us comfort going -- being more actively dynamic throughout the 13% to 14% range. We just reset that that's the verbiage around our capital range. So we're unlikely to change that anytime soon. but we are perfectly comfortable as we've already demonstrated, going down into the bottom half of the range. It's not because the world is a perfectly wonderful and PCL place, plenty of scenarios that we could worry about. But we think that we built in a resilience in our business that allows us to be just much more dynamic than we have been. It would be interesting as we go out to 2030, and we imagine the kind of capital generation around an 18% return on tangible equity and the business mix shift that would -- that we've indicated quite clearly in my and Manus' comments, and it will be very clear through the subsequent presentations. That structural business mix shift also makes the bank much more resilient. Manus made the point about the lower risk profile of the bank. A more resilient bigger profitability buffer and different mix shift, higher quality and mix shift business may very well allow a structurally lower level of capital to be run. It's not in our models. It's not something that we're guiding to. But it's -- when we're thinking about upside from here, that's certainly 1 source of upside in terms of incremental capital returns. It just comes from the fact that we've built a more resilient, we will have built a more resilient business.

But it's not -- just to clarify, the assumption out to 2030 is the midpoint of the range. We continue to have that within our model.

That's what I tried to say.

Just clarifying.

But good to clarify.

We will be around, obviously. So please, if you don't get a question now.

I'll just break through as well. We'll go Kian and then Perlie and then...

One is on cost. You clearly outlined some further opportunity on costs. I'm just trying to see if you can unpack cost a little bit more in terms of how you think about cost inflation, hiring and the offsets around that? And then the second question is a bit -- and also platforms is you've done this back office platform and middle-office platform as it first investments to go.

And then the second question is regarding more second order effects from the energy crisis that we're seeing because you operate in a lot of countries which are energy deficits countries. And I'm just wondering how -- what risk do you see in those countries and how we should think about the risk going forward, impacting you in particular?

I guess some quick answer is because we've got a whole section in transformation that Noel and are going to take us through. There's more platform investment to go, but we've broken the back of the -- the major infrastructure is in place. We have some fill-in to do, including completing the rollout of our core banking platform to places like Korea and Taiwan as a significant 2 remaining markets.

The -- I say that there's an obsessive cost focus. There is for me, and I know there is for Manus, but also from the rest of the management team in terms of becoming a more productive company. It's not about cost cutting. It's -- although that will be the result for sure. It's about having a structurally more productive environment that is fit for future given the financial markets and the financial infrastructure world that we're going into. It's design right in the first place and then allow for genuine scale and growth with none linear cost increases, like far less. So -- but that's an obsessive focus because we know that in this agent commerce world and the digital money world, margins are coming down. Margins are always coming down in our business, but they will come down faster than in the core plumbing businesses in a completely AI-driven agenetic world. We have to be ahead of that. So there's an obsessive focus, I think we can win in that race. But obviously, we have to do that. And the -- sorry, the second question?

Geopolitical risk.

Yes, we watch very carefully. There's -- the global macro impact of structurally higher energy prices. Obviously, it's driving inflation, which is leading to higher interest rates. We're seeing that in every market we see a pickup in inflation. Up to a point, that's a helpful thing for us. Beyond that, it becomes obviously growth suppressive and negative. And then we're looking at the vulnerable -- the particularly vulnerable parts of our footprint where the higher energy prices are taking -- what was, in many cases, a fragile recovery from the kind of the restructuring post-COVID increased inflation period, higher interest rates. A number of the markets in our footprint, we're beginning to recover. It's more challenging for them. We don't see anything that's flashing red, but there's plenty that's amber that we're watching and pulling that out along the way. Manus?

Just to add on cost, we've given you our guidance for '26, which I should have made sure you've seen in the back of the pack that remains unchanged, given you the 2028 guidance. But really we have a wonderful session coming up with Noelle and Tanuj to talk about those platforms more. So I'll leave it there.

Last but not least.

It's Perlie from -- I could just be loud enough. It's Perlie Mong from Bank of America. Just a quick follow-up on cost. AI investment. It looks like a lot of your cost planning is based on productivity probably help our AI. I think it's probably fair to say that as a sector, we're still quite early in the investment cycle just because how quickly things have moved on. So how are you thinking about that investment piece. And I can't help but notice that Fit for Growth, we still have about 1/3 left of that. So how much of that would be potentially in a for AI type investments? So that's number one.

And number two, very quickly on wells, I don't think there debate that the well flows on coming and coming ticking fast. But in terms of the channels it's coming, so far, we've seen a lot of growth from that affluent. But it looks like a lot of people are now talking about the generation of wealth transfer and offices. So how do you see the different segments of the those coming through and to tie that into the AUM, I've noticed that you've brought forward that net in piece, which is about $50 billion per year average now, which is actually quite similar to what you've done in the last 5 quarters, average. Now how do we think about the margin piece? Because if you're doing similar 1 money, mechanically, you would expect the fee income growth to slow down. But in Q1, we see 3% growth. So how do we square that, please?

We're going to -- I'm going to kick the wealth question entirely to Judy. I think we've given the high level. You understand our conviction, and we'll get to that. And look, we don't -- we've not broken out an AI cost number because we've -- having built this -- the platform that Noelle will describe in just a few minutes, the AI is now embedded in everything that we do. Almost every process, almost every productivity program, almost every revenue investment has an AI component it's almost meaningless at this point to say what are we investing in AI. It was not meaningless to get the infrastructure layer right in the first place. That was a meaningful investment, but it's built at this point. And it's working. And as you know, I will say, there's hundreds of models that are operating on that platform and billions and billions and billions of tokens being processed in the various use cases. So AI will be centrally important to the productivity initiatives from here as well, both from a diagnostic perspective, identifying the inefficiencies and vulnerabilities. But also in automating process and removing burdensome either human or machine interventions, that cannot be done much more efficiently through a Gen AI machine. So -- but Noelle and Tanuj are going to talk about that in some detail. So let's just save that.

And on the Fit for Growth program, we remain committed to finishing it this year. The numbers are, as we've guided to previously, we will stick to it. There's been no question of redirecting those funds into some other ways to discrete program, which we've talked about. You'll hear, and this is a good tee up for the coffee break in the next session about how we are turning the learnings from Fit for Growth into a muscle that we're using going forward.

That's great. There will be more time for interaction and more time for questions, and you'll have all of our colleagues on the management team available during their presentations for some of the deep dive. So let's carry on. Next up, and David, are you going to compare and direct us?

Yes. We'll be back here at 10:45.

[Break]

Welcome back, everyone. We're now going to move into our transformation session. So I'd like to invite up Tanuj and Noelle. Thank you.

Good morning, and good afternoon, everyone. Good afternoon to the ones joining virtually. I did check there are some colleagues joining from Australia today. So thank you very much for joining us. I'm Tanuj Kapilashrami. I'm the Chief Operating Officer. I'm joined by Noelle, our Global Head of Technology and Transformation.

In my role, I look after strategy transformation and our corporate functions. I've been in financial services, specifically banking for over 25 years. I've had the great fortune of living and working across many of our footprint markets, including Lovely Hong Kong. Delighted to be talking to you today about our transformation journey, both what has been delivered and what's going to happen next.

Bill started the session today by saying that Standard Chartered has a very clear ambition. We want to be the world's superconnector not just a global bank, but a global financial network connect solving for transborder needs of our clients, connecting capital trade, payments across the network in a world that is becoming increasingly fragmented.

Delivering on this ambition requires more than geographic reach. It requires an operating model, encompassing people, processes and technology that is interconnected and purpose built. An operating model that can be scalable, reusable and is standardized. And that's what I'm hoping we are going to be talking to you today.

The world is not standing still and neither is our response. Our transformation is not technology led for the sake of technology. It is strategy-led with increasingly sophisticated interplay between people, processes and technology to deliver very differentiated outcomes for our clients, colleagues and for our shareholders. Noelle will get in a minute to talk about the tech architecture, but I really wanted to highlight the fact that this is not just a tech story for us. It's a process people technology story. And that's 1 of the key reasons why Noelle and I have chosen to do the session jointly today.

I want to be clear from the start, and Bill said this as well that this is not a defensive cost action for us. Our whole transformation agenda is about creating operating leverage to deliver exponential growth. That's the objective of our transformation work. They are cost targets that I'm going to get into, which is an outcome of the work, but that's not the real objective. And a lot of the work that we are going to be talking about today is the work that's already been done, which is enabling growth and how we feel by enabling AI on top of it, that growth is going to be delivered further.

The other thing that Bill said, which I want to double-click on is that we are a global bank. We don't have 1 or 2 home markets. Our network is our home and that is 1 of our biggest structural strength. So to build a model -- an operating model that leverages the value of the network to deliver on our superconnector aspiration requires a response, which is a very distinctive response. So like I said, we are going to be telling you today the investments that have already been made, the outcomes they have achieved and what happens next, especially with the advent of AI. At its heart, our ambition is to deliver a bank that is simple, connected and fast. Simple means global core platforms, fewer variants and standardization where it creates scale, Connected means shared cross-border capabilities that serve multiple markets. First means executing at pace but Jason will love this with very, very clear guardrail. So that is simple connected fast. We're going to talk about simple Connected faster lot today.

We are not measuring our transformation just by program volume KPIs end dates, et cetera. We've got very clear financial metrics that we are linking these 2 very clear commercial outcomes. A 20% increase in income per employee by 2028, 15% reduction in our corporate functions, headcount. This is technology operations, all of our support areas resulting in ultimately a structurally lower cost base. So a cost-income ratio of 57% by 2028. Our transformation is not new to us. This has been a journey that's been on. The first slide that Bill flash today in his presentation outlines the financial outcomes. We started our transformation by tackling our operating model because we firmly believe that technology follows the operating model. If your operating model is complex, technology will be complex. And I think, candidly speaking, if you go back a couple of years, we did operate in a matrix with a very strong local orientation. What that did for us is resulted in duplication inefficient capital allocation and unscalable investment decision.

So 1 of the big pieces of work that's been happening for a long time, predating FFG, but accelerated by FFG was the work that we have done in simplifying our operating model. We stripped out regional layers radically simplified our executive and leadership bench and clarify division rights between our global businesses and market leaders.

To just give you a sense of numbers. We moved in my time in the bank from 8 regions to 4 and now 3. We've got our market CEOs double hatting with 1 of the 2 global businesses. Today, almost 80% of our market CEOs double had with 1 of the 2 global businesses. And 1 of the big changes we did was align all of our markets to 1 of the 2 global businesses. So this is not just a reporting line change. This is the way we do capital allocation. This is the way we report on performance. This is the way we take investment decisions. It's been a pretty fundamental change. What this has done, and again, not just a cost outcome. What this has done for us is accelerated decision-making is reduce the path to decision-making. But what it's also done is got accountability much closer to our clients. And that's been the 2 big outcomes of the operating model changes that we have done.

One number on this slide, I want to double-click on is the size of our workforce in our global capability centers. We call them GBSs, Global Business Services, 43% of our head count now sits in 1 of our capability centers. Again, this is not just a defensive cost action play. What it does for us is by co-locating a critical mass of our processes and people it gives us -- it puts us in a position to be able to standardize, automate and AI and deploy AI scale, far difficult to do when you're trying to do it in a much more geographically fragmented model. So these organizational changes have been the foundation of everything that we have done till now.

And with that, I'm going to pass on to Noelle, who is going to talk about modernization of our tech architecture.

Thank you. Hello, everyone. Process of elimination, I'm Noelle. And here's the good news for you today. Bill and Manus, we're so excited about the talk that I'm about to give that they gave a good portion of it already. So what you all know is we have BCP in our management team in case anything happens to me up here, we know they can step in. So I've been in technology and operations for a little more than 30 years. And so I've been leading change across technology cycles and across multiple organizations in different sectors. So I know when you hear the word transformation. It sounds a bit lofty, maybe there are a couple of skeptical people in the room.

But what I -- what Tanuj and I are going to share with you today, I think, is a very -- based on my experience, is a very credible story, about people and technology coming together and changing what this bank is capable of doing.

Okay? So I'm going to start by talking about significant work that's been underway for the last few years. Bill talked a little bit about it. Manas talked a little bit about it. Where we have been modernizing our technology foundations for resilience and growth. And that work is now starting to pay off.

So Bill talked about our journey in cybersecurity and our journey in financial crime or anti-crime and we then focused on 3 additional pillars and all of these things together form the very core of this bank, okay? So those 3 critical pillars are what I'm going to talk to you about for the next few minutes.

First, in the fourth quarter of last year, we completed our global private cloud. We now have 10x the processing horsepower that we had previously. And we have geographic resilience against domestic disturbances, data center outages, subsea cable disruptions, climate issues with unprecedented levels of automation. We have redesigned and rebuilt our connections to third parties. We use a concept called abstraction, which means that we can move them to any location. So put simply, we can be in any market quickly in any market with Internet access. So that's the first thing. And I want to pause there for just a moment because that wasn't just a feed of engineering. It was actually a feat of engineering, but to have a global private cloud to have geo resilience and to have third-party flex the way that flexibility, the way that we have it is really quite differentiated and very, very important for a network bank like ours.

Second, in March of this year, we migrated our largest market, which we're all sitting in Hong Kong from the mainframe to our global core banking platform. We now have more than 90% of our markets on a single platform. And what that means is we can build, we can test and we can deploy code much more quickly. And because we own the source code, we are no longer beholden to third-party road maps or geopolitical tensions. We can and have started integrating digital assets, blockchain and AI natively on our own terms at commodity prices and sustainable scale. Okay? That's the second thing.

Third thing, our modern payments platform, okay? So we're at the infrastructure core banking, now we're up at payments. Payments is out of the back service, offering the same levels of choice and service excellence consistently across markets. What this means is that our businesses can open new digital services, new payment corridors and facilitate trade quickly and easily, okay? So those are the 3 things that we've been focused on for the last several years, significant investment has gone in. And you might be able to tell that we're quite proud of them. And so these systems are future ready and resilience is built in, and I'm going to give you 4 reasons why that's true.

First, they're commodity based. So what that means is they're scalable, they're standardized, they're performing at the best possible price. Second, they're cloud native. So we are significantly moving away from mainframes. Third, they're API first. So no more bespoke integrations. And last, the source code is owned by us, as I already mentioned.

Now we did not set out to rebuild everything everywhere all at once. Even though there might be somebody in the room who published tax just a little while ago, we focused on creating operating leverage for the bank by targeting the systems, modernizing the systems that all of our products rely on. We made them industrial grade and future ready, okay?

Now we can extend up above that core where differentiation matters at the client interface level, okay? So we're standardizing it at the core and we're differentiated at the client edge. And the balance between the 2 is critical, okay? Standardization gives us speed and efficiency and specialization and configuration gives us new products, new services and new experiences for clients.

Our transformation program is -- it doesn't have an end date, okay? It is increasingly the way that we operate. We've gone from large infrequent releases to small frequent changes every day. Feedback loops, whether they're customer operational or risks are built into these platforms. And data is not an output. It is a live signal. And what that means is it streams and it's analyzed in real time. and it drives decisions and it drives improvements every single day.

Now let's talk a little bit about the results we're seeing from all of the work that I just described. So as Tanuj mentioned earlier, we've been on a continuous improvement journey. So over the last couple of years, we've seen a 30% improvement in operations in throughput per FTE. Our digital services are now always on in any market, 24/7. We've seen a ninefold increase in transactions process per second, supported by, as I mentioned earlier, a 10x increase in processing power and our downtime has been reduced by 80% while run costs have remained flat. So we think our results are getting better. We expect more, as you probably heard from Bill, we're constructively dissatisfied fairly frequently.

So the key point is this, scale, speed and resilience are no longer constrained by linear cost increases. And for network bank, that's pretty transformational. So that's our modern foundation, okay? Now we're going to talk about the people and processes that sit on top of it and bring it to life because tech for tech's sake is not what we're about, right? We are an applied technology company and people and process bring this to life for us, okay?

Thanks. Thank you, Noelle. Continuous improvement is the word that we've spoken about quite a bit. Our transformation is not a program with an end date we were transforming before Fit for Growth, but Fit for Growth was a very important accelerant and we can pick up your question when we get to later today. We are on track to deliver $1.3 billion, which is going to be a 1:1 ratio in terms of spend and cost saves. Over 300 initiatives across all parts of the organization driving improved customer experience, increased straight-through processing rate, much faster turn time on our applications. Perhaps what's been less visible on Fit for Growth is the amount of investment we have done in securing plumbing. I wasn't going to use the word, but that Bill used it in his opening, so I'm going to use it. we have mapped 100% of our processes in the organization. And we have mapped a consistent set of skills that underpin all of those processes.

And that road map, heat map blueprint that we have developed becomes incredibly important when we talk to you about AI deployment going later. So 100% of processes map, consistent set of underlying skills such a map which gives us a very good sense of how work gets done. Some really clear outcomes on the slide, 53% straight-through processing rates increase in wealth solution. What's not here is a 10% reduction in our technology estate that has happened because of all of the work that we have done.

So what Fit for Growth has helped us do is build that muscle of continuous improvement. So it's not just a one-off efficiency gain, but a muscle that sort of sustains beyond the program, which is going to finish by end of this year. So moving on, we call this the bridging slide because we will talk about having secured the foundation, what happens to our snacks. But I will go back to why simple connected is not just a transformation pipeline for us. It's an economic logic that helps a super connector bank delivered to its full potential and beyond.

So again, I've said this a few times, we are not anchored to a single market. And for us, that's a structural strength. That means we are not constrained by 1 growth cycle, 1 domestic balance sheet, 1 regulatory environment quite the opposite. We are very well positioned to be able to capitalize on opportunities that arise anywhere in our network. To do that, we do need an operating model, which is simply connected fast, which basically means we want to scale without multiplying cost. And for that, the bank has to be simple to harness the power of our network, the bank has to be connected and to do this safely and repeatedly at the speed required across the bank -- across the globe, the bank has to be fast. And what that does, collectively for all of you, is high income growth, greater operating leverage and a much -- and a workforce that is much more upskilled to be able to compete with the future direction of the bank and compete with the future of banking.

So like I said, not just a transformation tagline for us, but an economic logic that helps superconnector bank deliver on its aspirations.

So let's go just a little bit deeper into how we're transforming to be simple, connected and fast, okay? We've modernized our technology through a simplification approach that retains optionality, standardized at the core differentiated at the client edge. And our principles are straightforward, build once and deploy across markets and businesses, differentiate through configuration rather than custom code and reduce fragmentation. This lowers the unit cost to serve. It improves resilience and it makes growth more scalable, easier to achieve.

Let me just give you a couple of examples to try to bring this to life. First -- the first 1 is the 1 I've mentioned already, standardizing on commodity infrastructure, 1 pattern across the estate. Second, we have a single identity and access management layer for Standard Charter. Three, we have on payments backbone for the company. And fourth, we have a single enterprise AI platform with reusable services.

We built in operations. This is a good example. We've unified over 100 applications into 30 standardized workflows accessible for our operations, people through a single user interface. Over time, that interface becomes a single pane of glass to manage client onboarding, servicing, risk and governance workflows and more around the world.

What it really means for our client is that a capability that we build in 1 market, let's say, a real-time payment solution can be deployed in multiple markets at fraction of cost and in a far more speedy deployment way. So that's the real value of the model that we are doing. We are constantly simplifying, standardizing our processes and data. And a lot of that leveraging of it for growth investments has happened in our capability centers. So we have demonstrated reduced time lines, more efficient processes in our KYC, onboarding, customer due diligence processes. So we talked about simple.

Now we're going to move on to connected, okay? So the power of a superconnector is in the connections. A superconnector creates network value. So a single capability can be reused across clients, products and markets. Our platform architecture is designed so that 1 client engaging with us in a single product and a single market has access to our full capability globally. So trade finance will link to payments and cash management will link to foreign exchange, the client doesn't see seems they see a network. And the real unlock over time is deeply integrated client and transactional data, which gives us advanced analytics more precise personalization, more seamless payments across geographies, more straight-through processing for our teams. And that reduces friction, it improves the client experience, and it helps our businesses deepen relationships with their customers.

So basically, what happens is clients don't see product market boundaries, they see 1 Standard Chartered. The -- at the beginning of the slide when I spoke about the work we have done on our global capability centers, that's a really good proof point that helps deliver on connected because by centralizing processes and people in big shared service centers, we are able to drive that connectivity across the network, and which was not possible in a geography by geography model. So a really good example of leveraging our shared service centers to drive that level of connectivity.

Agreed. So we've talked about simple. We talked about connected. The 2 together have a multiplicative effect on making us fast, okay? So we're not just digitizing. We're building the capability to operate in a fundamentally different ecosystem, and Bill talked about it this morning. agent commerce, the digitization of money, the speed at which financial services will move. I think in the not-too-distant future, is something that we are preparing ourselves for. The winners will be those who can sense, decide and act in real time, dynamically changing products, dynamically managing risk and strengthening with scale. The most important part about this ecosystem from my perspective and perhaps this is somebody from technology talking that serving customers has to be quick, easy and fast, whether they're human or machine, right? But always, and we've referred to Jason in this conversation, he happens to be our Chief Risk Officer, but always with the guardrails that this industry requires. Architecturally, we've separated our foundations from our product delivery. And we're running those foundations as utilities, okay? So our run costs are predictable time to market is faster and scaling across borders is easier. One example for you, in technology delivery, we've moved from 18 manual approvals to get code across our markets to clients. We now have an automated pipeline based process, okay? So those -- that's the from 2 in the kind of ecosystem we're building. And we're preparing all of these systems for AI by rolling out standards-based APIs across them all. What that means is that these systems can be orchestrated by humans and by machines. The result, our product owners can make changes much more quickly and be able to respond to the dynamic markets that we operate in.

So in summary, simple reduces friction and risk. Connected removes latency and together, they multiply so we can execute much faster at scale and with the right level of control, just leaving you with some numbers before we move to AI. Our clients are already seeing results. 97% of our tech releases are now fully automated. We are deploying products 30% faster than we have done previously. And we have reported 28%. Judy will share some of the customer satisfaction data later, but 28% reduction in manual client payment queries in a relatively short period of time. So that's been the impact of this work that has been seen by our customers, all of this resulting in much better client experience, which is what this work is in service of ultimately. The foundations are now in place for us. And the focus goes from building to scaling, and that's where the beauty of AI comes in.

Yes. So now we're going to talk about AI, and I wrote down some of the questions that were asked. So if I don't get to them, we're going to have a little session at the end, where you can ask us questions. So the scale that Tanuj talked about, really only matters if complexity is reduced and it stays reduced. AI exposes complexity immediately through data quality issues, through hidden dependencies through technical debt, and its capability curve is exponential, not linear. So the pace is not just fast. This thing is structurally different from any technology advancement that comes before it. So we are increasingly simple. We're more standardized and more connected across platforms. At our core, we are increasingly 1 unified financial platform across 54 markets. That creates a simple ambition that we work on every single day, build a bank that gets better with every transaction and every client interaction.

Our next frontier is to take that AI platform that Bill described and embed it deeply into the foundation as a structural capability not as a bolt-on. So the bank in every transaction learns from each one. And we're doing that through 3 reinforcing elements. First, 1 enterprise AI platform, as I mentioned earlier, with intelligence built in. So AI can scale consistently across markets and businesses. Second, an operating model that identifies and automates routine, repeatable transactions while keeping human judgment where trust matters most. And third, a data and AI architecture that learns, improving accuracy, improving cycle times and improving marginal cost as we scale.

So what this enables is a business that can sense change, adapt faster and act more quickly. So let's double-click on the platform for just a moment because it has 3 key characteristics to it that are really important to us as we continue to scale it. First, risk management. As I mentioned, we are, after all, a bank. And so regulatory change, regulatory standards, the control environment are critical to us and they absorb significant capacity across the organization. An AI platform in a network bank in particular, must be able to codify controls monitor them through automated guardrails and be able to absorb regulatory change that happens very frequently with ease, okay? Second productivity. Our AI platform can handle routine initiation, validation, approvals. And again, that frees up people to focus on trust, clients, advice, relationships, and third, precision. And in my opinion, this is the game changer for an AI platform because it's all about data and the quality and accessibility of data and -- so we're moving from 150 fragmented day lakes across the estate to a single global data supply chain. That's cloud native, standards-based with compliance built in. Better data improves model accuracy. Model accuracy gives us more straight-through processing, straight through processing, frees up capacity for clients and for growth.

So what you see on the slides behind me are really just examples. They're not an exhaustive list, but they are the kinds of outcomes that we're experiencing now as we scale into this capability. And we can see this very clearly across the bank as AI is applied end-to-end. In payment operations, our AI platform can route routine transactions while surfacing exceptions in context so that people can make decisions more quickly. That improves our client experience, and it lowers our unit cost per transaction over time. AI-enabled software engineering. So in our SDLC, software development life cycle, AI is helping us develop faster, increasing our time to market, with fewer defects across the estate. And we've also deployed Copilot across the enterprise, and you can see the numbers behind me. And we are targeting work that has low value where time can be reallocated to higher order judgment led client-focused work. So for us, the logic is very clear. We lower run costs, we lower production incidents. We increase time to market and capacity for differentiation. So stepping back, a platform changes the economics of change itself. Each new capability builds on what's -- what's come before it. So AI deployments become faster and cheaper over time. It also changes how work scales. So growth no longer requires proportional cost increases because machines handle speed and volume while humans focus on clients, trust, relationships and growth. That creates flexible AI-enabled capacity, and it's a powerful lever on cost to income over time. And because the system learns the economics improve in a reinforcing loop, better data, better models, more straight-through processing, more capacity free. So the investment thesis is straightforward. We're building a bank where the marginal cost of growth declines with scale. And we believe that's what an AI-native enterprise delivers, and it's already underway here.

Thank you, Noelle. This brings us to a really critical inflection for -- in turn, I'm conscious we are running on time, so I'll make this very quick. We have secured our foundations. The work now is for us to accelerate transformation by embedding AI into our business processes. And that's the work that we've already started, and that's really going to be the focus over the next couple of years.

A key enabler of this work has been the work we have done to identify our processes and pivot the organization to becoming a much more skill-based organization. This is not a tagline. But by deconstructing work, into a set of consistent skills and identifying the activities that sit under the work, we can be very precise on what gets automated, what gets augmented and what needs to remain human-led. And that's really the embedding of AI into the -- into our processes that sits on top of the foundation. So just to bring this to life by giving you some examples. In Singapore and India, where we have more than 50% of our hiring demand we have launched agent-enabled employee onboarding. So AI agents coordinate end-to-end onboarding, manage tasks, data exceptions across systems, while humans retain the final decision on risk management and the end decision of the process. This work has reduced having managed our effort by 35%. And has led to a value creation framework, which we are deploying into sizing the size of our HR operations outlet. So it's a really tangible example of deconstruct work, decide where we deploy agents, what gets left behind on humans. And that is the process that we have been deploying across multiple of our processes. Treasury is another area where there's been some fabulous AI deployments that we have done. So we have driven AI dividend decision-making in enhancing liquidity management with faster clearer insight demonstrating how we can scale AI, deploy AI in complex regulated environments. Across both of these examples, returns compound as each AI deployment accelerates the next and that's when our economics start improving. And that's when we structurally start decoupling volume growth in our businesses from head count growth. So that is the way we see -- we already are, but we see deploying AI across our business processes.

So look. bringing you back to where this all started our transformation, it's a journey. It's a continuum. What we are sharing with you today is a point in time as we see it today. What are the outcomes, a very clear set of productivity metrics. Bill has alluded to them menus. I won't go through the numbers, but you can see it, 20% increase in revenue per FTE at least a 15% reduction in back-office head count over the longer term and a structurally efficient organization with a much improved cost income ratio.

There are 3 messages before we open for Q&A, that Noelle and I want to leave with you today. First, we have delivered significant structural change in our organization, simplified the organization, modernized our core and addressed complexity and risk. It's creating a more resilient and scalable foundation for the bank. Second, our transformation is about building an agile operating model, an agile operating system. This is what allows us to operate as a single global network so we can scale without rebuilding costs every time. And the third, we are not standing still, that we are continuously improving, innovating and harnessing AI to accelerate better outcomes for our clients.

Thank you very much. And Noelle and I will take any questions that you might have for us now.

Okay. Thank you, Noelle Eder and Tanuj. So we're going to do questions, but I think we already had -- Perlie had asked a couple of questions on this. So why don't we just take those first, which I think was -- there was 1 around Fit for Growth to how this was different Fit for Growth. So maybe if Tanuj could take that. And then there was a second one, which was around AI and how much AI adoption is embedded into the revenue FTE targets that we've announced, so Noelle after that one. So Tanuj, first.

I exceeded the time limit on my presentation to answer your question in more detail. So, we are going to complete FFG by end of the year. And I think the point I was hoping that I make, it's not just on the $1.3 billion that we are delivering, but it's the investments that have been made in our foundation work that we've done, including a lot of the core investments that we have made on AI. So things like AI factory, the foundational work on AI did come out of FFG. So it was a very important accelerator. The program will finish by the end of the year, and we'll give back $1.3 billion in terms of cost saves.

Let me ask if we answered your question -- your second question already or if you -- if there's a nuance to it, you'd like us to address?

No, I think no, I think you've very much answered it already. I think it's just about because AI is moving very fast and then it's 1 of those things that we are all trying to adapt to. And in terms of the way you think on cost like at what point do you see the next version of [indiscernible], whichever technology comes through, how do you think about investing in that and good close maybe by just working with what you have?

Yes. So you want me to take that one? Okay. So let me talk about how we think about our AI stack and maybe that will help a little bit. So at the foundational layer, I've mentioned commodity, right? I mean we're very, very interested in ensuring that we have best possible pricing for GPUs, et cetera and so forth. Above that, we're at the data layer, we have a partnership with Databricks to help us really get to that high-quality accessible data in the global data supply chain that I talked about. And above that is the model layer, and we are agnostic at the model layer. And the reason we're agnostic is because we agree with you, the capability curve here is like nothing we have seen before. And so the idea that we're going to out-innovate the market or any particular third-party relationship we have is going to out-innovate the market is unlikely. And so we deploy a concept called portability as much as possible. We are not perfect, but we deploy portability as much as we can. And what that means is there are architectural patterns where you can move your models from 1 place to another. And so we try to help our businesses be agnostic and be able to ascertain for themselves based on the value created for their clients and for their businesses, which model is best over time. But we don't think for a moment that the world will remain static.

Okay. Any questions in the room? Okay, Nick.

It's Nick Lord from Morgan Stanley. The first is just about Mythos and sort of how you are thinking about that? I mean I presume you've not seen it yet. But I'd be interested from what I do here, there's quite a lot of work that is required once you've seen it. So I'd be interested to know how you're thinking about that. And second, you might have partly answered this already with the earlier question, but which models are you using at the moment to using open source models as well as sort of your Anthropics and your GPTs are you using some of the Chinese models as well as some of the U.S. models? Just be interested in more detail on that.

So I think both of those of you, Noelle. So Mythos first.

Sure. So Mythos and we talked a lot about this as a management team. We've talked a lot about it with our Board, obviously, with our CSO. I think we think Mythos can best be interpreted as a signal in a much broader trend around sort of the curve on vulnerabilities. I think everybody knows what Mythos says, but just in case you don't, it's a frontier model that reports to be able to sort of detect and move to exploitation on zero-day vulnerabilities. And so the bank has a sort of a -- we have a 2-part response. The first part is very operational in orientation. We have vulnerability management practices. We have software development practices. We have a defense in-depth set of controls implemented in the bank. And so we continue to tune those and advance those and both our software development organization and our architecture and cybersecurity organizations have been on top of this trend since long ago. And so Mythos is a point in time on a curve, but the trend has existed for quite some time. And so we have really been putting our energy into shifting left across the capability growth. So software and how AI is used inside the software development life cycle, as I mentioned earlier, to help our software developers sort of identify, predict, determine where they might need to resolve something before it goes out the door.

From a more strategic standpoint, vulnerabilities take advantage of complexity they take advantage of technical debt, legacy architecture, et cetera. And so you heard us talk today about our technology and really our bank game plan, which is to resolve the questions about technology life cycle funding and obsolescence and really take that estate to the next level of modernization. That is as large a defense against vulnerabilities as anything else. And so our cybersecurity perimeter defenses, our threat intelligence is really, really quite strong. We have a defense and depth strategy. We're shifting left. And then from a technology standpoint, overall, the strategy helps by eliminating complexity and legacy technical depth.

Nick can I just add, 1 of the points I made when we were talking about FFG is the 10% reduction in our tech estate as 1 of the outcomes of the world just as -- last 2.5 years, we are doing the same with very clear targets on reducing our third-party supplier. So this idea is how do we contain that estate in a way that we can mitigate against the risks metal.

Yes. And it's a great point because the third-party ecosystem, obviously not under immediate and direct control by Standard Chartered, right? And so advancing our third-party security assessments in partnership with Tanuj's organization who has procurement and relationship management for us with third parties has been an integral part of the last year, and we're well served by it now in my view.

I think Nick had a second question just on which models specifically we're using at the moment.

Yes. So our businesses predominantly make choices around models because they really create the business cases, they create the value propositions. They are closest to our clients and can really ascertain. So my suggestion would be that Judy is going to be speaking this afternoon. She's very well versed on this and can discuss it at length in terms of WRB and what we're doing there with regard to models. But I would just say to you, yes, in answer to your question about which models are being used, right? We're quite agnostic. We're a pretty large bank. We have a large number of businesses and they have different needs and different interest levels. And so over time, from a technology strategy standpoint, what we endeavor to do is make sure that we are precise with regard to model utilization so that the value matches the cost of model, the improvement of the model matches the value and the expectations of the client. And so that's what we try to do to enable the businesses.

Jason.

Jason Napier from UBS. Tanuj, with Fit for Growth restructuring charges and gross saves, we slightly lost track of what organic cost inflation in the bank is if you could give us a sense as to what the underlying rate of inflation cost is. And then Noel,within that context, I think we all agree that the AI companies are today are not making any money and are spending a lot of it what proportion of group costs is IT broadly defined? And is it a problem that we don't really know how they'll be charging in a year or 2 from now?

Okay. So I think on -- the first one, I'll probably turn our sheet to Manus to help comment on that and then on the second to Tanuj.

Thanks, Jason. I mean obviously, what we're doing is Tanuj and I and the rest of the team, we're working very closely together on managing the cost of the bank going forward. We've given you an indication in the past of what the inflation and growth rates of the bank are. And you've seen those walks previously. And I think you should assume that that's a natural run rate that we will be at. But you should also assume that we have flexibility ourselves both in terms of what we see in the environment and in terms of how we want to invest at the pace of investment that we go at. So you've seen we've called out in historic cost works in the past. And I'm not calling out anything differently now, but you should place that in the context of what we think we can achieve in terms of the top line and what you think we can achieve in terms of improving on this efficiency as well.

So managing the cost of tech and I know -- I'd like Noelle to comment on this as well. I mean 1 of the big things that we are doing is being very, very thoughtful on the cost of AI. So I mean the big 1 was Copilot, which we did very recently rolled out to a large percentage of our workforce. And I'm going to be very honest to say we did our time -- we took our time doing it quite intentionally. We took our time to roll out in a way, which was a much more structured way deep analysis across to our families, what is the value creation framework for job family that we roll it out in, et cetera. So I guess, we are incurring the cost but developing a very clear value creation framework to ensure that we have the right return on investment that we are doing with our colleagues from an augmentation perspective.

In terms of buying tech with the overlay of AI, I know that's something you've been thinking a lot about, Noelle.

Yes. I mean, I think Bill sort of referenced the points earlier today that I would give you first. I think it may appear to people that we're a little -- we might be a little slower than others with regard to AI we don't publish numbers on sort of massive amounts of use cases and all these kinds of things that we see in the press. What we spent our time doing was investing in a platform, because we fundamentally believe that the platform gives us scale, it gives us reusable capabilities, and it helps us sharpen our value creation framework whether that is with regard to revenue and growth and client experience or whether that is operational efficiency. And our book is about -- our AI book is about 50-50 across both. But the marginal cost of reusing these capabilities is much lower than sort of a significant new build every time we have an idea. And so then 1 more thing I would add, which is I mentioned in my remarks that we have moved from large infrequent releases to small frequent changes daily, okay? So in my experience and in my opinion, that's how AI works best because oftentimes in generative AI, in particular, doesn't come out of the box behaving itself like you 1 might hope, right? And so what you're doing is sort of constantly tuning your hypothesis around the problem statement and you're tuning the model to sort of get it to work. So if you go big in that free, you're going to spend a lot of money trying to get to an outcome that you could have proven at much lower cost. So we try to have that discipline and the fact that we took our time on this platform I think gave us the opportunity to really establish those frameworks and we have 2 co-heads of AI. We have 2 folks leading it on the tech side. They work together on this framework to help our businesses and our functional groups really use this effectively.

Here is Katherine from JPMorgan. So I have 2 questions. One is that operates across like many jurisdictions, and I think different governments may have different guardrails when it comes to AI implementations, right? So how do we reconcile that? So say, for example, 1 example in China, I think they have very specific requirement of data storage and how to use data. So something that you build outside of China may be very challenging to implement the onshore, right? I'm not so sure about the other jurisdictions. I think they may have their own thing. So how do you reconcile that and make sure that within this connected bank, this would still work for spend? I think this is question number one. Maybe this question first and I have question 2, if it's possible.

Why don't you give the second question and then we will...

Okay. I think for the second question, I think -- okay, it's not easy to -- let me think about how to put it. It's about layoff, it's about staff management, right? Now we have AI. I think just now you mentioned a very good point is that AI handles the process where human handles like the trust, the relationship, the growth, right? I think that's a very ideal picture. But in reality, I think some of our existing staff may not be the best fit in this type of model. So how do we handle that relationship? Like some of the tech companies in the U.S. they're making very, I would say, chunky cuts, like 20% of the workforce and all those as a bank, how do we think about like human resources and staff management on that part.

Sure. So I think the first 1 on jurisdictions and AI restrictions, Noelle. And then we'll turn to the second for Tanuj.

So it's a good question, and we are in 54 different markets. So there are a lot of rules. The majority of rules are around data sovereignty and data storage. That really -- that's the majority of the rise. The AI framework from a regulatory standpoint are coming forward. But I don't think they're substantiated enough to sort of for me to comment on them really at the moment. So let me tell you about our architectural approach to AI because we saw this coming, right? And we've had a lot of experience over a lot of years in all of these markets. And so we use 2 concepts that are really quite important to this thesis.

The first is orchestration. And what that means is essentially where data is rule-based at rest, meaning it needs to be kept inside of a particular country and come to rest there and stay there and be encrypted, we honor that. And what orchestration does is it will pull that data across the network if a client who owns that data wants access to that data. And so we manage the complexity in the network itself. And so the network really becomes part of -- a big part of the strength.

The second concept I mentioned earlier is portability and portability is a concept that says essentially if something happens, I can move from 1 market to another market. And I'll give you an example it's not in AI, but it is in data and Bill referenced it this morning, when Amazon had 3 availability zones taken out in the Middle East, when we do a lot of business in the Middle East, we have data stored in the Middle East. We have regulatory considerations about that data in the Middle East. And so what we did is partnering with our regulators and our risk teams and our businesses to move that data to the geo resilient data centers that I spoke about earlier in my remarks, and we did it in a matter of hours. And so that kind of concept is the portability concept. And so we are employing that concept. Again, we're not perfect, but we are employing that concept as much as we can to be able to facilitate on behalf of our clients across multiple jurisdictions, which is really 1 of the huge value propositions of the banks.

Let's go to sort of people. I mean before that, I'd say we had a responsible AI Council in our bank before generative AI became a thing. So even before generative AI came up, we were talking about exactly the kind of questions you're asking today. How do you kind of compete with AI-native companies when you have multi-geography, multi-regulatory set of framework. So this is something we obsess about a lot, as you would expect us to.

The -- on people -- I mean we -- I spoke in my presentation about becoming a skill -- a much more skills-based organization, and we've been on this journey now 6, 7 years. It's really not a tagline, but it is this realization that with the AI coming in, the construct of jobs that we understand today is going to become irrelevant. So AI is going to impact every job, all of our jobs. We believe there'll be very few jobs that will fully go away, but we believe there'll be lots of activities in the jobs that we all do that will go away. So I think that mindset of what does it mean to become a company where people's work is defined by the jobs they occupy to a company where you underpin all of the work by a consistent set of skills has been a journey we've been on for the last 5 years, and we've made a huge amount of progress on it. And what that has led is a big focus in our company on reskilling and redeployment. And I looked at the numbers just last week. If I look at last year, over 50% of the new jobs that have been created in the bank have been filled by people internally by reskilling and redeployment that number was less than 30% even 18 months ago. So this idea that these are skills here for the future. We are going to upskill our colleagues and deploy them in those roles is going to go away. We have been very clear in our presentation that structurally, our back office or our corporate functions will be 15% lesser. And that means people's jobs are going to be impacted. We are going to give our colleagues all the support for them to be able to reskill themselves for opportunities within our bank or opportunities outside. So that's going to be the philosophy within which we will operate.

Thank you I know there's a few more questions, but I think we are going to have to stop there. But Noelle and Tanuj will be around the next break, if you want to ask them any other questions. So thank you, Noelle and Tanuj.

[Break]

Roberto, just confirming you can hear us?

I can hear you, David.

Excellent. Yes, we can. Off you go. Thank you.

Great. Thank you very much, and thank you, Matt. Hello, everyone, and many apologies for not being able to join you live in person today.

Now many things could have kept me from being in Hong Kong with all of you and the team, but my son's University graduation is 1 of them, and that's happening tomorrow morning. A year ago, we delineated our CIB business strategy as an investor seminar in London. And today, we're going to focus on how this strategy links to the themes that Bill has already outlined and how the areas that we are confident will continue to drive momentum in our business. CIB has several competitive advantages that we've built over the past few years.

One, our network is critical for our clients, and it can be reconfigured quickly in anticipation of supply chains and capital flows. Network income is higher returning than single market domestic income and is growing rapidly.

Two, our corporate business is unique due to our footprint and trusted long-term relationships. Credit origination from the corporate franchise and risk distribution into our global FI client base have driven balance sheet velocity and significantly higher returns. We're focused on significantly scaling this activity.

Third, our sustainable finance income has crossed the $1 billion mark in 2025. We've had great results by introducing new sustainable technology into emerging markets and then financing it by our global FI client base.

In digital assets, we have shown the ability to compete at the front end of the pack. We're moving from thought leadership to monetization, having completed a variety of transactions, including some firsts for G-SIB, as you will hear from Jeff Cott on Thursday. Rising wealth participation in our footprint is a big opportunity for our business and 1 that we're positioned to capitalize on across our WRB and CIB franchises. CIB has the products, advice and solutions that our wealth clients seek. Ray Ang, our Global Head of Private Banking, will talk to you about this later.

Before we drill down, it's worth recapping a little bit on where we've come from in the past 10 years. Our financial performance has improved as we've narrowed our focus to areas of competitive differentiation. We've become much more disciplined in how we allocate capital using metrics and incentives that are directly linked to our desired client outcomes.

Having established network income as our sweet spot, we've made it the biggest contributor to our revenue. Clients value our ability to originate and transform risk by our markets and banking teams. In price, how the transaction services business can facilitate the seamless movement of cash, trade and custody around the global network. We returned to accretive growth. We exited business lines that were not aligned to our strategy, such as principal finance and aviation leasing, and we reduced our exposure to local corporates.

All of this has put us in a position where we can focus on structural long-term value creation. This makes us more resilient. Top line growth slowed a little over the last 2 years due to the falling rate headwind and we have increased the quantum of our rates hedge to decrease sensitivity. We've built technology solutions that our clients value, making it easier for them to transact whilst improving our own operating efficiency.

To take a very topical example, we now provide digital front-end solutions for Fiat underlying, which will also manage digital asset underlying in the medium term. We can deliver Fiat and digital, whether 1 ends up dominating or whether they will end up coexisting. From a platform point of view, deploying the straight bank engine in payments for the SABRE tool at the heart of our risk management offering in markets reflect our successful execution of single solutions. This makes us simpler, faster and less error prone. We target international corporates and financial institutions that need our network for distribution, execution and sourcing risk and the league tables bear testament to what we have achieved in our chosen products and geographies. Importantly, we've not yet maximized the addressable wallet that is available from our largest multinational FI and corporate clients. This presents a very significant upside opportunity. We're driving the cross-sell between products by measuring and then rewarding collaboration that delivers a tangible client outcome. We're building a far more sophisticated client wallet measuring tools and align our resources accordingly. Client review meetings and discipline around wallet planning have been introduced with a new level of focus, all led by a coverage banking division. Our MIS tracks performance daily and measures how effective our resource deployment is in generating accretive shareholder returns.

As we look to the future, the goal is simple, deliver a best-in-class experience to our clients with a relevant product suite by innovative platforms. We're nowhere near saturation point, and this is very exciting for the short, medium and long-term prospects of our business.

There are good reasons why we talk about our network, how it is unique and how it drives high returns. Clients need a bank that can provide deposits, financing and derivative solutions at speed with seamless pricing and execution across the globe. We historically focused on domestic local market corporate business, where we've been aggressively pivoting by exiting or up-tiering clients for whom we cannot deliver the best value and by serving corporate and FIs who treasure our cross-border strategy.

This is why network income is now over 2/3 of our total income. Network income is growing faster than many of the external benchmarks that we all monitor, such as global market and trade volume growth, credit growth, global GDP growth and SWIFT payment volume growth. Our goal is to take network income above 70% of our total revenue stream, and we're well on the way to reaching that target.

If we now look at the patterns in our network, our corridors are reconfiguring and growing as the world's trade and investment destinations shift. This plays entirely to our existing competitive advantage. Our clients are showing a resilience to the change in the macro environment, and we are able to follow them. The fact that we have multiple corridors and no singular dominant corridor diversifies our revenue stream.

China, for example, is one end of many of these corridors. They have adapted their supply chains and distribution channels, and we have facilitated this change across our footprint, and we've located native speakers in relevant markets to best service our clients' needs wherever they operate. We see China into ASEAN and China into South Asia as growth corridors now and in the future.

Looking at the Middle East, the region has increasingly been providing an attractive investment in recent years. We participated in this trend with people, technology and capital. We expect the geopolitical situation to amplify inbound opportunities into the GCC, particularly from North Asia.

We've discussed the income growth from our network and our ability to evolve and reconfigure corridors as needed. When we supply our capital-light solutions across borders, we enjoy a far better return. Through time, we managed to go deeper with our clients by adding new markets and new products. We solved their complex issues, and we gained positive wallet share convexity. Our network deals enjoy an excess return on RWA of more than 200 basis points relative to domestic income flows.

Our stats on cross-sell and the positive linkage between product penetration and the income multiplier tell a very good story. The multiple we achieve as we go deeper with a client is clear. We make 25x more from the clients in the green box versus those in the gray box. We now transact in 3 or more products or markets with 44% of our clients, up from 32% in 2019, and we still see further room for improvement. When the Venn diagrams of our network and clients' needs overlap, we build an enduring, valuable and trusted relationship.

Having discussed the overall trends for trade and investment corridors, I'd like to give you a snapshot of what this means for corporates and financial institutions. MNCs are having to adapt to evolving legal frameworks, regulation, technology and the impact of climate change. The importance of operational resiliency is increasing year-by-year. COVID, tariffs, deglobalization, geopolitical changes are all leading to an increased need for infrastructure spend, [ trend shoring ], defense spend, energy and food security, amongst others.

Certainty of delivery is becoming more important than price. It is unrealistic that we will revert to a world where all goods are manufactured locally for domestic needs only. A new equilibrium will be found with key players expecting sovereignty over the key nodes in their supply chains. All of this creates enormous opportunity for our network business, playing to our strengths in the corridors that matter regardless of whether they already exist or will emerge in the coming years.

Now the corridors for our financial institution client base are often quite different to those of the MNCs. Developed market FI clients want access to yield and new markets. Our footprint offers risk diversification and returns enhancement, and few banks can grant the access, liquidity and structured solutions that we do by our branch and subsidiary network. This has been a huge strength of ours for many years, but only in more recent history have we really concentrated on targeting FI flows.

Conversely, the developing and emerging markets in our network need developed market solutions as populations age. Their need for long-term assets and asset liability management structures to fund pension and life insurance products is very real and tangible. We're in the right places at exactly the right time to meet the demand from local market insurance companies, pension funds and asset managers who rely on our capabilities to solve their issues in an increasingly affluent, aging world.

FI is 54% of our CIB business today. The client base within FI is highly diversified, and we see growth opportunities in each and every one of these client segments. Banks and broker-dealers value our clearing licenses and access to markets where they lack presence and scale. Investors look to us for yield enhancement. We source [ EN macro ] and credit risk via our corporate and FI footprint engines, and we then distribute this risk. From vanilla to more complex structures such as TRS and CLOs, our clients value our offerings tremendously. The ability to originate and transform risk to suit client preferences is something we excel at and something that sets us apart from our competition.

Network income and FI income offer superior returns on RWA, which is why we're optimizing the allocation of our financial resources towards these lines. Our aim is to maintain our trajectory in FI, which as mentioned, currently makes up 54% of our income today, and our goal is to have this reach 60% by 2030.

Last year, we spoke to you about O2D, originate to distribute, at our CIB Investor Day. It's a model that has existed since the 1970s, when banks started evolving from originate to hold, where they were long-term holders of credit risk, into arrangers, structures and distributors of risk. I highlight this because O2D represents one of the most impactful chapters in the convergence of commercial banking and investment banking, but also in the development of Standard Chartered over the last 10 years.

We have shown an ability to push origination higher by taking market share and by adding new product capabilities. Our corporate clients value us addressing their financing needs in terms of capital and solutions, and our FI clients reward us as we enable access to diversified structures with attractive yields. This is still a massive opportunity for us. Our goal is to grow origination at double-digit percentages and then distribute at even higher levels, and this will enable double-digit income growth and single-digit balance sheet growth.

The reason we've built this capability over time, and we continue to do so, is because it is absolutely critical to our client strategy. Growing the FI client base and expanding CIB's capabilities in Europe and the U.S. has given us a far better traction on the distribution side. The very clear headroom to expand this space is why we're so focused on growing both our origination and distribution engines.

Another most recent strategic priority among which we are now amongst the market leaders is deploying capital towards sustainable solutions. The world clearly needs energy. And in the long term, it needs it to be plentiful and clean. Demand from clients and investors remains very tangible even in a universe of shifting priorities. The $1 billion we made in this segment last year achieved this public commitment 1 year early.

A couple of real-world examples. We financed the world's first greenfield sustainable aviation fuel project and the U.K.'s largest battery storage asset. We provide sustainability-linked sovereign lending and nonrecourse nature-based project finance. These transactions demonstrate our ability to combine balance sheet strength, structuring capabilities and risk-bearing capacity to unlock new markets, mobilize capital and deliver tangible decarbonization and resilience outcomes in both developed and emerging economies.

So in terms of CIB priorities, you can think of them as follows: growing the FI client base, improving our originate-to-distribute capabilities, developing a leading sustainable and transition finance franchise and building a world-class digital assets offering. On the latter, client demand is increasing as use cases become reality, whether that be for access, execution, custody, tokenization or interoperability. In the last 2 years, we've executed payments on chain and distributed notes on chain, and we provide liquidity in crypto.

We keep adding capabilities. As of today, the pure-play stablecoin and tokenized deposit providers are limited by licenses, regulation and access to central bank windows. Each of these barriers will potentially drop away, and we'll be ready for a world where assets and liabilities move in real time and on a 24/7 basis. CIB is investing in people and tech so that we will continue to deliver for our clients as we enter a highly disruptive period for the banking sector. We see opportunity in this disruption, and we're investing for growth. With our recent hire of Ole Matthiessen, we're creating a single digital stream that works across all our product horizontals with full implementation and P&L accountability.

As Bill has said, we've positioned ourselves as a trusted bridge between [ TradFi ] and [ DeFi ], providing institutional-grade advice and rails to access, transact, trade, store and manage digital asset risk safely and efficiently. And we are deeply involved in the development of market infrastructure, working with regulators and governments to help create secure and interoperable ecosystems for digital assets. We've been experimenting in this space since 2016 and now see an inflection point with stablecoins and related tokenized assets finding their way into the mainstream.

Using transaction services as an example of monetization, having a single payments platform across the network in the form of S2B NextGen makes us simpler and faster to scale. Clients connect their platforms via APIs into our easy-to-use solutions, and we're seeing rapid growth in products such as digitized cash and FX as a result. Simple and effective connectivity to our platforms translate into steady, repeatable business. Other client use cases in addition to custody and real-time settlements include tokenized money market funds, risk mitigation by hedging of crypto and collateral mirroring.

Beyond digital assets, we'll continue to invest more broadly into our technology capabilities across CIB. In Global Markets, this means building scalable platforms and infrastructure that meet the needs of an increasingly sophisticated client base. Our markets business is being transformed. We focus on client needs and build content, products, risk transformation capability and technology to service them with intent and purpose, delivering value at speed.

We moved away from being a largely FX-dependent business to one that competes in rates, commodities and credit. We're a leading diversified [ EM6 ] franchise and have increased market share significantly with key clients across the globe. We're now top 3 in EMFX on rates in APAC and a top 5 EM6 franchise. A core outcome of our focus has been the growth in flow income, which we've shown you before. This is our income from regular, predictable and consistent client deals as they transact in relatively liquid products.

Flow business is high-quality, recurring and stable, and it is not dependent on market movements or outsized financing or M&A, and we focused on growing this income stream steadily. In the last year, we've hired exceptional talent and deployed technology to keep growing our market share by streaming more products and prices to venues where we have the expertise to assess risk and provide liquidity. These investments enable the expansion of the business, and we will continue to further scale this model, driving a growing and even more resilient flow income stream.

So in conclusion, our strategy will drive the group outlook of 5% to 7% income growth from 2025 to 2028. FIs and corporates value our ability to originate, transform and distribute risk by our markets and banking teams. In markets, we'll keep growing our client flows. And in banking, we will keep origination and distribution growth at double-digit levels. And clients rely on the transaction service business for the seamless movement of cash, trade and custody around the globe.

We will expand the transaction services business as the rate headwind is slowing, and we are better hedged. We will continue to innovate within the digital asset space. Lastly, we'll continue to upskill our coverage banking team to provide more value to clients by ensuring that all our products are delivered seamlessly, and Jan Metzger will be joining us soon to lead this effort.

Our income outlook is underpinned by the 5 long-term structural shifts that I've talked you through. Network as a percentage of our income stands at 67% today, and we're looking to push this past 70% by 2028. FI income makes up 54% of CIB today, and our goal is to reach 60% by 2030.

Sustainable finance will continue to be an area of differentiation for us. The investments we're making in technology are getting us ready for the fiat and digital worlds to coexist and compete. And rising wealth participation is reshaping our markets, and we're perfectly aligned to capture this trend. These 5 long-term strategic focus areas will be supported by cost discipline in line with group targets. Improving capital return remains our North Star for resource allocation decisions.

I'll now hand over to [ Ray ], who will talk more about the opportunity we see to supply CIB products and risk management advice to our affluent clients, and then I look forward to seeing you in the Q&A. Thank you. [ Ray ]?

Thank you, Roberto, and good afternoon. Bill started by talking about us being a super connector. And I thought I just had one slide to describe how we are super connected within the bank, right, between WRB and CIB. Now in the afternoon, when Judy presents, you will hear an affluent section that will talk about a very fast-scaling private bank.

Today, we are a top 5 player in Asia, including Dubai in terms of AUM. Now with this fast growth, we have attracted a lot of ultra-high net worth clients. And these ultra-high net worth clients come in the form of individuals, family offices or multifamily offices. Their needs are evolving to be very, very sophisticated, right? And this is where we need to deploy the CIB solutions, right, to solution the corporates and also the trading teams that they have in their family offices.

Now we -- to meet this demand, we have formed [ Vertex ], right? [ Vertex ] is a team, right? It's a sales coverage team for such family offices. And this is a big investment for the bank, right? We actually started 2 years ago, but we are really formalizing it this year, right? Tanuj spoke about one SCB, and this is exactly what one SCB is. The promoters, the individuals, the family offices, they want to talk to 1 group of people, right, instead of 2. So with one group of very specialized individuals that knows promoters, individuals, family offices, there are nuances in family offices. And also technical CIB solutions, we believe we can scale this franchise a lot, lot bigger.

Now you can see that in the last couple of years -- I mentioned we started 2 years ago. There's a lot of strong 2-way referrals, right? You see that clients which are onboarded in CIB referred by private banking and the other way around has really grown by double-digit CAGRs. Now these clients have real needs. Right? These clients have companies, they have trading platforms, et cetera. And you can now see in the pie chart in the last couple of years -- and these are completed deals -- that we have facilitated many of such transactions within the bank. So private banking clients, ultra-high net worth, family offices, in the pie chart, these are the transactions that we have done so far in the last 2 years.

Moving forward, we also have a very, very strong pipeline. In fact, year-to-date, right, I'm just counting the pipeline, right? We have probably 20 mandated pipelines just year-to-date with a bigger pipeline, which is we hope to be mandated. We will go into other solutions that CIB offers in terms of hedging, in terms of M&A and also bespoke lending. We spoke about RWA, and we have excess deposits for a lot of these promoters and individuals in their companies. If we bank them on both sides, we are safer.

So with that, thank you very much, and I think we're open for questions.

Okay. Thank you. So we've got Roberto on the line. We also have Mark Bailey, the CFO of CIB, and we also have Ray. So I'm going to try -- we're a bit tight on time, so we're going to try and get around as many of you as we can. James, at the back, you haven't had a question yet.

It's James here from Rothschild & Co Redburn. Roberto, a question for you, please. Just on Page 70, you broke down the return on risk-weighted assets or financial institutions versus the corporate business. But given that the world is an increasingly uncertain place, we've got supply chain diversification, more liquidity preference, I think, especially since Liberation Day, do you think there's potential for that 6.1% return on risk-weighted asset on the corporate side to kind of move closer to the financial institutions bucket?

Thank you for the question. Look, the first thing I'd like to address is, obviously, we don't target the subsegment specifically because they are a continuum, particularly in a world where we're really focused on originate to distribute. The trades work because they're circular. And the value we provide to one set of clients is also because of the value we provide to other sets of clients with an intermediary.

We've been on a journey to really improve corporate returns by decreasing our suboptimal book and really trying to cross-sell more, as I mentioned in one of the other slides, multiple products per client. So if you ask me as a manager of the business, I think there's upside with all our client segments. But the point you make that as the supply chain shift, there is more opportunity or more wallet probably to have fee income as opposed to sort of capital-heavy lending income for solutions as those corporates shift. So the answer is yes. I think there's an opportunity to do that and then raise the profile of our returns across both segments.

[ Aman ]?

Two questions. Could you help us -- what percentage of your AUM in your wealth business is a referral from the commercial bank would be really helpful. And the second is in relation to the 5% to 7% revenue CAGR you've given us at the group level, can you help us think about the contributions from the 3 main CIB business lines? So within transaction banking -- transaction services, global markets and global banking, what's the growth rate that you would encourage us to kind of model as the contribution towards the 5% to 7% at the group level?

Okay. So on the Private Banking, I'll turn to Ray. And on the 5% to 7% contributions, I'll turn to Mark.

Sure. So with regards to the referrals from commercial banking or corporate banking into WRB, it happens in 2 forms, right? The first is on the priority side, which -- where we do employee banking of our corporates into WRB. And there, we see a lot of traction, right? Because these are regular savings and salary accounts across a lot of our corporate companies, right? Now I don't have the specific number, right? But in every single year, we see a lot of these corporates being serviced, and the employees in WRB.

For private banking, I think it has just started, right? You saw the numbers there, right? The last 2 years, we are talking about hundreds of clients, right, being referred from CIB into private banking. The AUM, again, in absolute terms, I do not have. But one thing that Judy will share is for all of the corporate referrals into private banking, the private banking AUM of these individuals are 4x larger than the average private banking clients, right? And this represents that we are truly -- and it doesn't happen overnight, right? When they first come, it's not 4x. But as we keep doing One SCB via platforms like this, when they get happier, they give us more on both sides.

Okay. I'll jump in. On transaction services, I really encourage you to think of we have spent an awful lot of time trying to build a kind of super connector that gives you the ability to do payments of volume at speed. Last May, we pointed out to the fact that this business had some headwinds because of rates. And if we look forward now, we've hedged the book very well, and we're more optimistic about the profile of that business.

And then I would just sort of rewind your mind back maybe 12 months to what I said about the banking and market segments being fee engines for this business, O2D driving that kind of banking segment, you've seen some really good numbers coming out of that. And when you look at the flow business or the flow element of markets, you can see that differentiation coming through. So those are the sort of 3 pillars we think of.

Okay. Let's go to Amit.

It's Amit Goel from Mediobanca. Yes, maybe it's actually a bit of a follow-up. But just wanted to make sure I understand as well, when we talk about the target of supporting group 5% to 7% income growth, I think on the group level, there's obviously greater weighting into noninterest income and maybe on the WB side, more on the liability piece. So I just wanted to understand what you mean by supporting it. I mean, should you then expect the growth here to be stronger than the 5% to 7% or in line or just to check the thinking on that.

Well, by my question. So we're really committed to just delivering a group outcome. If you think about what Mana spoke about and what Dan spoke about in terms of raising liabilities and where we deploy them, the game the standard charges is to work as a group and to walk toward as a group goal where we're efficient in our balance sheet deployment. So we are not giving a specific target for you, but at a group level, you should be very confident in our outlook.

Chris Hallam from Goldman Sachs. Just 2. So first, you talked about global markets being capital-light. Maybe if you could just speak about the different levels of capital intensity across rates, credit, EM, both comparing those businesses to each other and also comparing those other franchises that people may look at as well. And then the second question on FX. I guess that 4% growth is maybe a little bit lighter than one would have assumed looking back in the past. So maybe where do you see the growth in FX going ahead? And what is Prism and custody going to do to support that growth rate?

So I think I'll pass that one to Roberto. Do you hear the question?

Yes. Thank you. So yes, our markets business, if you think of the continuum of FX rates and then to the credit business, that is the way you think about the RWA density going. Obviously, FX is very light, a little bit heavier than that. And then the credit -- the flow credit business, a little bit heavier than that. It's got some structured financing the repo business, et cetera, et cetera. The balance of those is something that we feel is very agile compared to other FICC franchises. There's very little asset-heavy business in them.

And if you look at the flow businesses, the ones that are delineated in the flow chart, they are effectively largely going electronically, largely very low consumers of RWA. Occasionally, obviously, the macro business will have RWAs and deal contingent forward, things like that in the episodic space, but the business is largely capital.

It's Andrew Coombs from Citi. I had a question on Slide 63, which is on the network growth. you provided this exact same chart a year ago at the seminar. But one thing stood out to me, which is that the total FCIB income used to be the third highest bar on this chart. It used to be above the peers. And now you get slightly below. I'm assuming it's the transaction services business you just touched on the hedging. But perhaps you could just elaborate on what happened last year, why you think you saw slightly lower growth than the peers? And if that was driven by the nonnetwork side or a combination of both?

[ Mark ]?

Thank you. I think you've answered my question for me. So if you think of in 2023, what you saw is really a surge in the transaction services platform in terms of income. And then what we have done, and you can see this in our IRBB disclosures, you can see that we've hedged our portfolio, extended the WAM on our portfolio. And therefore, as we have done that, we've locked in forwards at current rates, but that means that you're not seeing growth in '24 or '25 at the sort of '22, '23 levels.

Okay. Joe?

One thing that seems to be changing is [indiscernible] trend fossil fuels versus renewables for a long time. If you look at the 5-year plan out of Beijing in March, clearly this is [indiscernible] partly in China. How have you sized the RMB international for the CIB is fairly shorter?

Manus, do you want to take them?

Yes. I mean that is a question that we could spend the next 2 hours on -- it's a very interesting question. So we think it is an unstoppable trend. And there's -- and in fact, we've made the announcement where we are actually having someone who will be one of my direct reports of the CIB management team who will focus [ Jerry Zeng ] on RMBI on public and as a P&L opportunity in its own right.

So you can think of the macro environment in a couple of ways. One, the market is still short Chinese duration and RMB. If you look at by any sort of metric, the amount of government bonds of CGBs owned outside China and the amount of FX flows versus global trade percentages, all this sort of stuff is not an equilibrium. And so there's this trend towards equilibrium that will -- even at sort of everything else as air leads to an increase in R&D business where we have all the licenses. We're a very strong market maker in bonds and FX, and we're one of the leading banks that provide those in and out of China. So just the data environment from that -- reaching that equilibrium, I think, is very exciting for us.

Now on top of that, when you add in digital assets, that's quite interesting. You have dollar stablecoins, which clearly are, in my view, a way to increase dollar money, right? They have backstop for U.S. treasuries. And they, in theory, can create instant settlement transactions to dollars whoever is trading. We don't have the equivalent of the trusted stablecoin dollar stablecoins now in -- out of China. And let's see what happens there. But clearly, as the world is evolving, you can see that, that's becoming an interesting space as well.

So when I look at CIB or Chart's capability in China and RMB in general as a theme in our corridors, the importance of China in the corridors to various parts of the world and the growth in digital assets, which I don't know where digital assets end up. But I do know that if they become a primary source of the monetary system, I doubt very much China will not be part of that. If you look at these 2 trends together, and they see very excited for having significant growth in this opportunity for us. But ideally, we have the resources. We have the tech spend going from it. You heard from Noel earlier today, just before. So we find that, that is a very, very positive lever for operating leverage in our business.

And Joe, just to remind you, we have a separate breakout session on RMI later. Kian?

You don't have an equity business, but there -- and I'm not expecting to build one, but there are a lot of off-the-shelf products you can buy white label, I'm not advertising, but just trying to understand why are you doing that?

Look, I think there's traditional equity businesses, which we're not in and you're not asking why we're not in. We have a strong history of partnering with clients on a variety of inorganic transactions. We are users of equities and equity derivatives and structured solutions. And we feel that we have a very complete offering to our clients for their capital needs across the spectrum.

It's -- if you look at the completeness of everything, it's a missing link. It's a very expensive link, as you know, to bring in. And going forward, that we will have an equities business. But if going forward, the right partner appears to do certain transactions, certainly in a space of technology, digitalization, et cetera, and distribution, we may well look at.

Perlie?

It's Perlie from Bank of America. So maybe just following up a little bit on equity markets. IPO market is red hot at the moment. So I suppose any way that you think you can benefit from that any product suite you want to build in order to take some advantage of that trend. And also, I suppose one of the trends we keep hearing is that a lot of realization will happen as a result of these IPOs and that would have an intern with the private bank business.

So given that you're not so involved in the equity markets, do you think you've got those relationships anyway and that when these entrepreneurs become billionaires, then you have that relationship to bring them to the private bank. So that's number one. And number two, very quickly with Mark on income return on RWA. So target is now greater than 25% in '28. It looks to me that last few years were maybe flattish or if not down a little bit year-on-year. So when do we expect the inflection point?

Okay. Ray, could you take the first one?

Sure. So I guess the best example is Hong Kong, right, because Hong Kong is experiencing a big equity IPO, well, last year and this year. Actually, we do have a lot of relationships. And I think the relationships, right, for equities in the case of Hong Kong starts from China, right? We have a strong commercial banking, SME banking, right, business in China. And it's been there for hundreds of years, right? So the relationship starts there, where these are all smaller enterprises, right needing some maybe capital, before advisory, before they come in for IPO. So a lot of these, we do have the relationships.

So what can we do without an equities franchise? We can't take them to IPO. But we have been doing a couple of things with them, right? The first is when they IPO in Hong Kong, right, they need salary accounts. So on the individual perspective, they -- we actually bank the employees that are based in Hong Kong, right? That's one. Two, for the companies that we know very well because we have known them for many years, with some level of balance sheet, we can also give them some financing before the IPO. And this financing could be maybe not to the company, but to the individual, right? Because they've been sitting in China's experience, a lot of tech-led kind of IPOs. They have been sitting on PO money for a long time, right?

And what they do want is to buy maybe a simple insurance, right? And they need liquidity for that to buy, right? When they IPO, the lockup period in Hong Kong is 6 months, okay? The equity bank that will bring them for IPO does have the first of the cherry ring in terms of subsidizing their shares. But after 6 months, we, again, will knock on their doors to say diversify, right? Why would a promoter having now liquidated a few billion dollars put all their monies in one bank. So after 6 months, we are in the play again. So maybe a short answer to that.

Mark?

Yes. Thank you for your question, Per. So when we look at 2025 numbers, I think the critical sort of point that you're making out is that we dropped off from sort of $720 million down to $700 million. That is a factor of just the fact we had the 400 -- $600 million rather of rate headwind. So if you normalize for that and then you recognize that what we did is we deployed into the fee income of markets and banking, then it's perfectly rationable the actions that we took.

As you look forward, we do see opportunities to now accrete from here. We've targeted a lot of time and resources to going after the suboptimal RWA layer. But as Roberto sort of spelled out, the target now is to kind of go up against the clients where we can go deeper with who we've got technological advantages where we have a history with those clients, and we think we can generate greater returns.

Great. I think we've got time for one more question. Can't say you've been waiting on time.

I have 2 questions. The first is on market business because for some trading activities, even if they are client-driven in some extreme market conditions, it might also have some earnings volatility on the banks, like we have said, we have seen of the summer trading on one of the U.S. top banks in the first quarter. So how do you plan your trading across different asset classes to try to keep a quite stable or less volatile earnings of the bank?

The second is on the 2 map charts of the network income growth on Page 66 and 67. Yes, about the China MENA flow. On the FI side, there is a 8% jump. So I want to know what is behind this kind of big jump. But on the other hand, on the MNC side, there's no number I assume which could quite small. So I also want to know why the China to MENA MNC income is not that high because we know a lot of Chinese companies are moving there.

Thank you. So on your first one around how the market trading desk is set up, I'll pass that to Roberto. And on the second, I'll pass it to Mark.

Yes. Thank you for your question. So obviously, we have a very developed risk framework together with our second-line colleagues on where we deploy across our markets business. Obviously, what you say is correct, if there's massive market dislocation and one has large positions, that can create negative P&L event. However, we feel that over the cycles, you've seen in our numbers, we're pretty good at managing those. We don't tend to have short game positions. We're not enormous bulk traders in terms of structures like some other houses are, be it FX or equity derivative. And we kind of do most business based on very strong client flow.

So to me, if I think of what I worry about for the market business and the flow business, it isn't massive volatility. As long as volatility is tradable, we tend to do very well because of the flows, our risk management system, our trading and sales collaboration, the incentives are completely aligned. So the collaboration on the flow business is the strongest I've seen in my career also because of that.

To me, the thing that I don't like and none of our traders like is when clients don't do anything and nothing moves. that is more risky, I think, for our revenues. And we haven't seen that, I don't really foresee that than big sort of discrete volatility. So basically, we have a risk management framework and the kind of business that isn't really at risk to these big gamma shocks, largely speaking.

Thank you. Okay. Can I just add to that point and reference you to when Rebecca was talking about the single platforms that we have built. We spent a lot of time building a platform called SE, which is our market risk platform that allows us to see the risk across multiple products, which I think is talks to that thesis that we have of you build a platform and you replicate it and it helps you monetize flows.

The second question that you had around network. What we have seen is clearly financial institutions from China investing into the Middle East. So the Middle East area has been traditionally kind of, I guess, investing into other areas, and we've seen that flow kind of change, and they've been attracting investment. When it comes to the corporates, what we have seen is the flows are kind of going from China into ASEAN, and we've seen them going into kind of Africa region, less so in terms of the Middle East for us at this stage. But we've seen a significant pickup in corporates in Africa and Middle East.

So just to make one last comment. I expect that, that corridor of China into the Gulf, as I also mentioned in the presentation, to be a big growth opportunity going forward. The operational resilience spend, which we've already seen some announcements, for example, by ADNOC is going to be significant post this geopolitical situation. And I would expect China and some other North Asian countries to be front center in winning mandates to help infrastructure builds in the GCC in the years to come. Thank you.

Okay. Thank you very much to Roberto, Mark and Ray. I'm pleased to say it's now lunch. So...

[Break]

Okay. Welcome back, everyone. We're going to have a short video, and then we're going to have Judy from WRB to present. Thank you.

[Presentation]

Good afternoon, everybody. Welcome back. Hope you had a good lunch. I'm Judy Hsu, CEO for Wealth and Retail. It's a real privilege to be here to talk to you about our wealth and retail business. About 18 months ago, we had an affluent seminar. My colleagues and I talked a lot about our pivot to affluent wealth and international. At that seminar, we also shared with you a number of medium-term targets. Well, since then, we've been executing strongly with pretty exceptional results.

Today, we have a much larger, higher returning business with very strong underlying momentum. More importantly, our growth -- sorry, I was supposed to click to the first slide. More importantly, our growth is built on a scalable and a durable engine, enabling us to capture the changing needs of our clients on the back of these very strong powerful trends that Bill and the team talked about. We sit at the intersection of structural wealth flows. Everybody knows this.

In Asia, wealth is growing at a much higher pace than global average, creating a much larger base of clients, of affluent clients. a high percentage of those clients are business owners. And we see a very similar trend within our client base, and that creates opportunities for us to do more with our clients across both their personal wealth and their business. And that's something we're pursuing, and I will talk a little bit more later.

Hong Kong and Singapore are emerging as the fastest-growing wealth hubs. We have very strong franchises in Hong Kong. Earlier, you heard Bill talk about us as being one of the no issuer. In Singapore, we are known as the fourth local bank. Now these positions are hard, hard to beat. More importantly, we have a trusted brand and coupled with our well-established domestic franchises in India, China, Taiwan, Malaysia, Indonesia, it really gives us a really privileged access to the wealth flows across our footprint.

Intergenerational wealth transfer is accelerating, and you heard that from Anil as well. And that's creating demand for advisory, structuring and international diversification. We are investing behind those capabilities. And you heard from Ray, our private bank is growing very rapidly, and we are helping our clients in these very critical transitions. Younger investors are entering the markets earlier. We are positioning our 2 digital banks, Mox and Trust to capture that trend.

I talked about us executing strongly with exceptional results. Let's start with optimization. We've been driving optimization of our business quite relentlessly. We've exited a number of markets, 10 markets to be exact. These are subscale off-strategy markets. We've also exited a large number of unsecured portfolios. These are really undifferentiated businesses where we don't think we can -- we have the right to win. We've also tail managed more than 2 million clients. Our RWA from unsecured is down $5 billion, and our headcount has been -- has reduced by 20%. So really a lot of work on optimizing the business and creating capacity to invest, and we are investing.

At the seminar 18 months ago, we had told everybody that we were going to invest $1.5 billion over 5 years, and that investment is happening at pace in all the areas that we said we would in relationship managers and specialists, strengthening our international banking platform and of course, our wealth capabilities, extending our affluent segment to focus on private and priority private and of course, advancing our digital platforms and elevating our brand, especially in affluent. We've grown our AUM. We've doubled our AUM in the last 5 years. And as you can see, at a much faster pace over the last 2 or 3 years.

Now executing such a transformation really requires everybody aligned behind a common North Star and a common set of goals. And you can see what we're focused on, acquiring the right clients, serving them well so that we can deepen those relationships, on capacity, but more importantly, productivity, digital transformation and of course, most importantly, continue to serve our clients and improving that client experience. And the results are very, very consistently strong. We've acquired 130,000 new affluent clients for 13 consecutive quarters. We've doubled our net new money to $52 billion, and we've grown our RMs by 18%. And these are all over the last 2 years. We've reduced our time for onboarding our clients by 2/3, working very closely with Noelle and the team. That's something we're really focused on. And this is what we're really proud of. We've achieved best-in-class Net Promoter Scores in 8 out of our 9 markets. We've done that in 3 consecutive years. Our clients are actively advocating for us. 1 out of 5 new-to-bank clients is coming through referrals from our clients.

So we are firing on all cylinders and pulling in the same direction behind a very clear growth strategy. And those efforts are leading to very strong growth and improved returns. Our income is up 9% CAGR. Our Wealth Solutions income is up 26% CAGR, underpinned by very strong growth in our AUM at 28% CAGR. And earlier, you also heard from [ Menus ] that we are creating a much higher level of net liquidity for the group.

RoTE is up 300 basis points to 19.4%, and that's on the back of our income having a bigger share from our affluent business now at 70%. You've seen some of these numbers earlier. When we are building a Wealth Business, it's just not about growing very fast, but it's also building a business that is sustainable, that is well diversified. And we have built a very well-diversified wealth solutions business. The double-digit wealth income number that I talked about earlier that I referred to is not coming from just 1 or 2 markets, 15 markets from across our network delivered double-digit wealth income. And we've done that by replicating success -- successful wealth capabilities, products across our network very, very quickly. So when something works in one market, we will roll that out in another similar market. And that is really, again, the strength of our network that you heard a lot about today.

Our Wealth Solutions income is also very well diversified by asset classes, bancassurance, capital markets, investment funds and others. Now the capital markets, as you can see, the blue part of that bar chart, it's a very large part of our business. It's grown very, very strongly at 32%, but that is not consist of just one asset class. It's FX, it's fixed income, it's hundreds of different payoffs and structured products, it's investment funds. So it's very, very well diversified. Now this diversification has enabled us to maintain a very healthy return on asset despite our AUM being doubled.

Somebody is doing this because they don't want me to say that I'm outperforming the market, right? I wonder who. No, we are outperforming the market in both AUM. That's grown 29%, double that of our peers in Asia and net new money also more than doubled. And we are taking market share. We are -- you heard from Bill, the third largest wealth manager in Asia.

Now I'm going to spend a bit of time to talk about the how. I'm going to unpack how 2 mutually reinforcing engines are driving our performance. Starting with our client ecosystem. It is differentiated because we don't source our clients from any one channel. It's not dependent on any one channel. In fact, this client ecosystem gives us very steady, repeatable, high-quality clients from our connected network, network referral, from upgrading from our very strong client continuum, from SME and corporate connectivity. We do a lot of brand and marketing led marketing programs that bring in new clients, of course, RM-led client growth. And we're also adding in, as I mentioned earlier, the 2 digital banks to our client continuum.

So at the end of the day, it's also not just about more clients, about higher-quality clients at a lower cost of acquisition, again, creating that operating leverage that we've spoken about. This is our client continuum. I believe some of you may have seen this in the affluent seminar. We serve more than 2.6 million affluent clients across the continuum. This gives us a repeatable, scalable pipeline for upgrades along the continuum. The largest segment is our Priority Banking segment. This segment contributes to 50% of our income. It's a rich source of sticky deposits and of course, a feeder to our next segment, Priority Private. Now we've been investing in the top end of our wealth continuum, Priority Private and the Private Bank, anchored on our international banking proposition. These 3 segments are doing extremely well, and I'm going to go through each of them with you.

Starting with International Banking. We stepped up our activation of our network, and that has led to very strong cross-border network referrals, which is up 30%. Our international banking clients is up 40%. We now have 400,000 international banking clients. That's led to our income growing 50% in this segment, net new money 2x, and more importantly, 1/3 of our international banking clients use us in more than one market. And in fact, you can see from these bar charts, when they use us in more than 1 market, the AUM goes up 2x, 3 markets, the AUM goes to 2.7x. And more and more of our clients are using us in more than 2 markets.

Global Chinese is a big thrust for us, just given the opportunity. But if you look at our net new money mix, it remains very well diversified, 1/3 from global Chinese, 1/3 from domestic. We have a very strong franchise in Hong Kong. So we continue to grow our domestic business here. And another 1/3 from other international clients like Global Indian, ASEAN, et cetera. So it remains quite diversified.

Priority Private. Priority Private is our high net worth segment that sits between priority and private. We've launched Priority Private in 7 markets across our network to just phenomenal success. Earlier, you heard from Ben, this is our newest yet to open Priority Private wealth center. He didn't mention to you that wealth sits at the heart of the shopping district of [ Coway ] Bay. We chose this place because of the fabulous Feng shui. We're not doing the Feng shui for ourselves. We're doing the Feng shui for our clients. When they bank with us, when they place their wealth with us, they want to go to a place where they feel, hey, this is a good place. It is a good place. These wealth centers, now we have 20 of them across our network. This is where we hold a lot of client events, market updates, networking sessions, lifestyle events. And we encourage many of our clients to bring their friends, relatives, associates. And this is another -- a very strong source of member get member when clients come here and they bring their friends and we open many new accounts, priority private accounts.

But the biggest source of our -- as I mentioned earlier, the biggest source of Priority Private clients is upgrade. 3/4 of our priority private clients come from upgrade, which makes this model highly, highly scalable. As you can see, the income here is pretty amazing. It's up 80% priority private, net new money 10x, number of clients, 70% up. And when a client move up from priority to private, their AUM with us triples. This is one of our highest returning segments. And over time, we have the scope to double this client base.

You heard a lot about the Private Bank already from Ray. We are fast scaling the private bank. We are now #5 in Asia. We're investing in RMs. Our RM base here is up 30%, working closely with our colleagues in CIB to better serve our ultra-high net worth clients. It's a very exciting segment. Our private bank is profitable and highly accretive. RMs, very often, when I do these investment seminars, people always ask us about RMs. I'm going to talk a little bit about how we think about RMs. We've done very well in terms of bringing in new RMs. As you can see, we've grown our RMs by 18%, and we have disproportionately invested in more senior RMs. Now that population has grown by 40%, double the number of the overall growth.

But it's not just about adding RMs and growing linearly. When we bring in RMs, our job is to support them well so they become productive and successful as soon as possible. And we've done that. You can see that our RM breakeven is very, very healthy. This is really important because when an RM joins a new organization, if he or she becomes productive quickly because we enable them with onboarding, very strong onboarding client support, giving them training, giving them specialists, they bring other RMs on board. In fact, 30% of our RMs are referred by our existing RMs. And that's a fabulous -- I think that speaks incredibly about our reputation in the market and the momentum as an employer of choice. And you can see our RM value proposition, actually one of which is our international and internal RM mobility. We don't only have a client continuum. We have a talent continuum. Many of our RMs grow with us as well, which is super important. I talked earlier about the opportunity to bank business owners across both sides of the bank.

The biggest opportunity, I think, would be China Plus One. We're seeing more and more Chinese SMEs, mainly MEs are expanding their businesses overseas. And given our strong corridors and network, we've been supporting them in that expansion. And as they bring their businesses overseas and they create wealth overseas, we are then, of course, the natural partner for helping them manage their wealth. So I see that as a really big opportunity. Now 20% of our SME RMs are already our affluent clients. And when they give us both sides of their business, their AUM goes up by 5x. So again, it really speaks to, I think earlier, Ray also talked about CIB and the private bank. So doing more with clients really helps us increase that wallet. We have our SME RMs and our affluent RMs working together to visit our clients and our referrals are -- the referral is up 3x.

The digital banks, Mox and Trust, they have reached meaningful scale. And in the next phase of growth, they will continue to bank the mass market, retail clients in Hong Kong and Singapore. But at the same time, we're strengthening the digital wealth capabilities to really be the attractive place to be, the platform to be for their investments. And we see both Mox and Trust as the incubator of next generation of wealth clients for the group.

Leading wealth engine. This is the other engine of our 2 engines that I talked about. I think you're more familiar with this. We have been investing a lot in our CIO capabilities so that we can provide much deeper, much broader insights for our clients. So that's the brain. Our open architecture product platform is a real differentiator. We work very closely with our partners, be it asset managers or investment banks to innovate, create exclusive products first to market, and we've been doing that very well, and you can see that driving a lot of our sales as well.

We've been digitizing many of our journeys. I gave you some numbers earlier. And now we are adding AI to power our entire advisory process. This is the engine that drives speed, scale delivery and performance for our clients. Speaking about AI, and you're going to hear more from my colleagues, Mohammed and [ Lei Chu ] in the breakout room. And of course, you heard from Noelle earlier. What we're building is an operating model that will leverage our Agentic AI to support the entire life cycle of a client from prospecting, onboarding, advisory, deepening and servicing. And through that, we believe that it will create even greater value for the business. You hear more and really welcome you to look at what we're thinking around this area.

Okay. Moving to our targets. Our strategy is working. Momentum is strong. I think we have a very, very strong, resilient business. And we are committed to reach $200 billion -- cumulative $200 billion net new money from 2025 to 2028. Also, we're committing to delivering double-digit wealth income from 2026 to 2028 and bringing forward 1 year in reaching our assent income of 70% of our total income by 2028. And that, of course, will help the group deliver our 15% RoTE by 2028. I just want to end by saying that we are extremely proud of what this franchise has become. And we are super, super excited, my colleagues and I about what where we will go from here.

And now I would like to invite Jean for Q&A. Thank you.

By the way, sorry, Jean is the CFO for WRB.

Yes. Thank you, everyone. We had a couple of questions earlier that I think might make sense to start with first. So the first one, I think it was in [indiscernible] management's section, which was around the net new money and how sustainable that $50 billion could be beyond 2028, but also the potential for that to drive higher. And there was also a second question, I think, around the margin on the assets under management and how sustainable that was.

So maybe, Jean, you could take the first and then -- sorry, Jean take the second.

Yes. Net new money is a result of us growing our clients and keeping that relationship. So if I look at the net new money, the strong growth in the last few years, it is really from both new clients and existing relationships. The other driver is also the mix of our business. We've invested heavily in international. at Priority Private and the Private Bank. And what we've seen, and you saw from my slide that those segments are growing very, very fast. And I think the momentum we are seeing in the business is very strong. And hence, we're confident to upgrade our target to reach the $200 billion now, bringing that target 1 year forward.

Just keep in mind that this is a pretty aggressive target. We are growing faster than our competitors. We are taking market share. And I think it's also important to grow quality rather than quantity. So I hope that answers your question on net new money. And Jean?

Yes. So turning to return on AUM, you saw the chart which Judy shared before. We have been hovering around 130 to 140 basis points over a fairly large number of years. But more recently, as we converted a few client mandates in custody to AUM, our ROA levels are now at 1%. Underlying this, we see strong monetization of our AUM and deepening of clients. What will drive sustainability here is essentially the diversification of our business. We are building very strong affluent franchises in multiple markets. You saw the double-digit CAGR growth in wealth income in more than 15 markets. Judy talked about the diversification of our products, which both capital market products and managed investments growing strong, double digit, 30% plus. And finally, it is our client continuum. We operate across the client continuum with different profile of clients from investors, transactors, savers. And together, this will help us to maintain sustainability in our ROE.

Great. So okay. I'm going to go to James at the back.

James [indiscernible] from Redburn. I've got 2, please. The first is on the custody portfolio, you transfer, I think, very much for kind of calling out exactly the impact that it's had. But that's still a big chunk of AUM. How long does it take that to get fully invested because that could be really quite a material movement on your revenue line if you get it up to the kind of [ 140 ] adjusted level.

And then the second question is your affluent business, everything you say about, it sounds really good. But then I guess what it implies is that the mass market retail is much less profitable -- what are the plans there do you have? You've still got, I think, $130 billion of loans in WRB. I presume that not much of that relates to the affluent. So where do you take the mass market business from the openings?

So I think on the first one, I'll ask Gene to come in on the custody portfolio. And on the second, Judy.

Yes. So coming to the custody portfolio. These are long-term relationships, right? And we don't expect them to fully monetize. Really, it depends on the client needs and what he wants to do with that portfolio. In the short term, sometimes it is about using it for leveraged lending. But in the longer term, as they think about diversifying the well, that creates opportunities for us to move them across asset classes.

But larger custody mandates typically held by promoters take a fairly long period of time for monetization. And before I pass to Judy, in terms of our lending book, $130 billion, A large part of that is mortgages and secured lending. The unsecured as we already talked about running that business down.

Yes. exactly what Jane said, our lending book is predominantly to -- now to serve our affluent clients mortgages and secured letting wealth lending, which is a growing piece. As to our personal banking or mass market segment, Singapore, Hong Kong, these are attractive markets that we will continue to pursue. We are bringing, as I mentioned earlier, the 2 digital banks into the continuum to capture the growth in this opportunity. In the other markets, what we're doing is, as we -- you heard from Manny as we are exiting the single lending relationships like personal loans, many of the books we've decided to exit it.

We are reallocating the resource to actually go out and acquire upper end of the personal banking clients, creating a much richer source of clients for upgrade into priority. So you can say that everything we do now is quite focused on supporting the growth of the affluent business in the long run.

Do you want to just comment on the proportion that mortgages?

Yes. So yes, I can share. So around 20% of that is wealth lending, the leverage rental lending we talked about. The remaining around 50% plus is mortgages and then there's a little bit of SME and rest is our unsecured CCPL. That's kind of the broad mix of the...

The largest is mortgages.

The largest is mortgages, yes.

[indiscernible].

No, we're not exiting-- we're not exiting. Yes. Okay. Yes. Yes. And many of the mortgages are, like I said, supporting our affluent client.

Okay. I'm going to go to Melissa. I don't think she's asked the question yet.

Melissa from Goldman Sachs. Just in terms of market share, you said you have been increasing over time. In terms of your targets, do you see yourselves being able to overtake the next position in terms of market share? Or do you think like you do it slowly and just because it's growing as a pie will all be growing together.

The other thing is within the segment and global Chinese other international and domestic. Where do you see as the biggest growth cycle in the next like 5 years as we see it? And also in China as property markets get better, are we a bit more concerned whether or not the -- coming here. So it's that a bit?

Okay. So I think the -- well, I think both of those probably to Judy. So the first one around AUM. So we're -- I think you were referencing AUM, right in terms of our ranking and how soon we could get to number 2? That was the question.

Yes. And the third is the -- where do I see the opportunity Well, we are closing the gap with #2. And we would like to close that gap faster. But we also acknowledge that this is a highly competitive market. We are investing. We're growing fast, and we hope to accelerate that closing of the gap.

Can I just -- in terms of posting the gap, is there any consideration for acquisition of portfolios to accelerate that a little bit more all organic?

Well, if there are opportunities and we're always reviewing, we will definitely explore. But as Bill mentioned yesterday, currently, we don't see anything yet also because I think you can see, organically, we're growing really, really fast.

On the second question on the diversification. I think the global Chinese will still be a huge I think, part of the future growth in the next 5 years, not necessarily from growth -- the flow from China into Hong Kong and Singapore.

We talked about the IPO earlier that's one that the wealth is -- of course, that liquidity sort of event is one. But I talk about the business -- the large number of businesses coming out of China into ASEAN. In fact, Malaysia, I don't know, people are familiar with Asian. The Malaysian government has this program called Malaysia my second home. And recently, we had a global Chinese event in Malaysia, where we had more than 200 global Chinese attending that event. They may all business people, we're banking them on both sides. We have SME, and we have affluent franchise.

In fact, we have extended our global Chinese proposition to Malaysia just because there's such a large and growing population of Chinese often community. So I still see that and they're doing business outside and growing their wealth. ASEAN is growing not as fast, and we are taking market share in parts of Malaysia, Indonesia, but that Vietnam, right, but we have to be very selective. -- in terms of -- Vietnam. So I think that Global Indian, so I would still think that these are the larger client segments that will continue to be the biggest thrust for us from an international banking perspective.

Thank you very much. I wanted to check, so the framework that you've painted for thinking about Wealth Solutions revenue growth, the double digit. I think that's a pretty consistent framework that you've presented for a few years, which is double-digit AUM formation, some view of margins and that kind of underpins the double-digit revenue guide. But you're clearly materially outperforming that a sustained period of time. I mean looking at your wealth invested assets in Q1 are up 1% year-on-year. Obviously, you revenue growth rate was 35% higher year-on-year within Wealth Solutions. So can you help us kind of marry the disconnect, the massive disconnect, which is between the double-digit revenue CAGR in the medium term. and the current outsized level of growth that we'll deliver. And is that simply driven by transactional activity, brokerage revenues, what's driving it? And I guess, when we're trying to project forward, should we continue to think an upward SKU versus whatever this double-digit revenue CAGR is?

And the second question, I was just wondering, in terms of your net new money, could you help us kind of roughly break out how much of that is coming from your existing customer base versus the new to bank customers, if you've got a rough split, that would be really helpful.

Okay. So I think on the first one, I think I'll turn to Judy and on the second one on the split of the net new money for Jean.

So when we think about our double-digit target, it's really a medium-term target, right? And it's not trying to predict the next quarter or even for 2026. We want to grow this compound business in double-digit growth rate. And that's the vision for this business. There will be some quarters where you're going to see higher growth rate and there will be some quarters where you won't. There are uncertainties in the markets, inflationary pressure and other potential shock that we would want to take into consideration as we set the double-digit target.

But right now, the underlying momentum is strong. We are getting net new money. We're deepening with existing clients, which I think that's the next question that Jean can share with you. And we continue to be very excited around the opportunity of how this business will continue to grow. And hence, we are committing a double-digit CAGR and really is from 2026 to 2028. So it is an upgrade of our target actually.

Yes. So coming back to your question, first of all, you can split it into 3 client types, right, new to bank, upgrades and then the existing plans. When it comes to upgrades last year, 10% of our net new money, around 8% of our AUM came from upgraded clients. When we measure new to bank clients, we typically look at their contribution to our growth.

So around 2/3 of our net new money comes from a little less -- when it comes from new-to-bank clients. And they also delivered 2/3 of our wealth income growth. Of course, the absolute comes from the existing client base as well. So that's how we kind of think about the mix of our business.

But let me just define the new to bank. New to bank is not somebody who just came in yesterday. We count you to bank as somebody who's been onboarded for the last 12 months because it does take time for us to onboard the clients, build a relationship deepen. And so the net new money and even our wealth income is a bit of a lag, right? So the leading indicators would be are you onboarding new clients.

The other thing I want to add is we're changing the mix of our clients. right? So today, it could be 2/3 from new clients, but we're continuing upgrading the quality of our clients as we pivot to affluent and more of the net new money will come from existing clients because we also upgrading the mix and the quality of our existing clients. So I just want to add those 2 points.

[indiscernible] Bank of America, you mentioned that the market is quite competitive. But just to understand your proposition is a little bit better because as I can tell, a lot of success comes from a lot of lifestyle branded initiatives, including the very famous tape partnership. So can you help us understand, first of all, the economics of these things, I can't imagine that partnership will come cheap, but also just in terms of proposition, it's sort of a lifestyle element. Is that one of the ways to think about it? And also like giving miles in terms of like I think the payroll accounts as there are a lot of these initiatives I would love to hear a bit more about it?

Sure. So the initiatives you talk about those initiatives for us to acquire local clients. The Cate car is fabulous partnership. It's true. It's not cheap, but it more than the return on that is fabulous. And if you look at our partnership, we've aligned our propositions within the Cafe cards. It also has a priority private card. I hope you have that one.

Anyway, it's a fabulous card. You earn miles. We get a lower -- when we buy miles because of the bulk that we buy, we're able to acquire those miles obviously at a lower rate than the retail clients. And then we use our mile clients who bring in net new money, right? And it's entirely accretive. We don't give that to anybody.

We are very, very -- one of the KPI is not just growing clients, grow the right clients. we look at the channels, new clients from various channels, the quality, the return, the ability to deepen and we get better and better at going out then to target the right client, right? So channel acquisition, the position in which you target our marketing program as well as these rewards is very, very important for us to break even on a lot of these lifestyle privileges. So those privileges are predominantly for local clients. Now international clients, the acquisitions is is generally a lot of referrals through the ecosystem that I spoke about.

It's Gary Lam from HSBC. The question is more on bank insurance. We noticed that bank insurance growth has exceeded agency growth in Hong Kong for a couple of years. among the leading banks around versus the 2 larger bank the presence here. The other 2 banks have an in-house insurance manufacturing arm. So as Standard Chartered grow in scale, would you consider strategically to explore an in-house manufacturing durability?

And maybe the second question is on the data, it shows the time deposit growth materially exceeded your competitors who focus more on CASA. I was wondering whether it's a related observation that because your competitors sell more insurance policies, versus in Standard Chartered maybe you've been selling more structured deposits That's how to explain the difference in the deposit growth?

You're talking Hong Kong, right?

Yes.

First one for Julian for a second, I think for Gene, we also have a separate session on Hong Kong and Thursday as well.

I think we -- in our management team, we talked about should we think about becoming an asset management firm many times, given that we are focused on wealth. And should we also think about becoming insurance. But at this point, we're growing the business and focusing on serving the affluent clients, working with CIB on the CIB product capabilities. We have a great partnership with Prudential that's like more than 25 years. We've outpaced the agency model because they -- this partnership, they know who we are. They understand our clients, they understand the needs -- we work very, very well together, and that partnership has grown. So from a client perspective, from a product capability perspective, I don't think we need to go into insurance just to support the clients. So I guess, in other words, no. According to...

Yes. Coming to the deposit mix. I think if you see every quarter, we published a statistic, right? More than 50% of our deposits are in CASA. More recently, when the rates were higher, yes, we saw a faster growth of TDs and a bit more migration from CASA and to TDs. But our CASA mix remains healthy at over 50%.

In a high interest rate environment, there are different ways in which a client could take advantage of the rate environment, TDs is one of them. It could be fixed income products. And of course, it could be savings products, which come from our bancassurance team. So really, it's a function of where the -- how the client wants to benefit from that rate environment. From our perspective, we grow strongly in deposits in Hong Kong. We have a very high market share, including Mark. I think it's close to 10% here.

I have this question is about PB because I think one of the...

Private bank?

A private bank, yes. One of the takeaway for me is that I didn't know that Stand is that strong in PB because perception-wise, that strong? Like that is not the focus, right? So my questions will then be how did you get to #5. And then what is the competitive advantage of Stand's Private Bank? Because I think private bank clients are very well sought after by every player on the streets, right? So what is your competitive advantage. My guess, I don't know if it's right or wrong, will be that very good -- and is very good at like, say, safe -- leveraging and CIB capacity by servicing FI clients, some of the products you may be able to take and make for the -- client versus the other shops may not have that capacity. I know if that is one of those capacity. So can you elaborate a bit on that? How did you get those clients and then grow the AUM at a much faster rate than the number of client growth, right, for PB?

The second question is a minor one. I saw that there's a 20% reduction in headcount. But then on the other side, you also have 80% increase in RM. So how do you reconciliate that spend? Is it -- does it mean that in terms of, like, say, the back office, the middle office, you have a lot of reductions on that part? And then so that you can grow your RM and reduce the overall head count?

Yes. So I'll answer the second question. Nobody knows this better than Ray. He built the business -- is it okay if Rey answers the private bank question. So I'll just quickly talk about the headcount. The 20% is overall WRB. So it's a bigger number. The 18% is just the relationship manager, which is, I would say, 15%, 20% of our headcount.

It's a historic figure clear.

And that headcount includes our operations. So we -- in WRB, we have a larger operations team as well.

It was also driven then and mass market branches. And mass market branches. Yes, yes, exactly. So the 20% is not the same denominator as the 18%.

Ray, do you want to?

Yes. So on the private line, we've been growing rate -- if you set back, I think, in Judy's slide, top 5 today, right, 2 years ago, 8, right, 5 years ago, 4, right, in terms of AUM days.

I would answer it in 3 parts, right? One, people, process, right, and product, right? From products, I think we have -- the auto platform really comes into play for private bank. You see just now capital markets. So what do private banking clients -- one? They want shop, right best execution. So capital markets, when your open platform for the high network -- all-time network, they're really rate-sensitive, right? So see, right, and best execution and sharp rates come from open platform rather than buying in-house. So that's products, process.

I think process is super important, right? Because for affluent client, you really cannot afford to make mistakes. So with Noel and -- morning, like you see a lot of the investment into our platform and process. And that's not -- this is quite unique. I came from a pure play a couple of years ago, right? The level of dollar investment on product and process for pure play is far smaller compared to a universal bank letters because we have scale, right? So we can leverage best practices and scale and digitalization for process. So speed is one.

Now the last, I guess, it would be people, right? Probably the most important. When you go from 14 to 18 -- to the RMs out there, they notice is, right? So success beat success. So people under how you can grow so well, and they come knocking to say, "Hey, actually, what's your formula, right? And we have seen other RMs come here and succeed very well. So more will come. It's not only the Rx, I think the seniority of the managers also the MT, right, when we go for events every year, the whole GMT is there, right? Think about that. The whole bank is really coordinated. And now with Vertex, I think we will just go even further.

Great. Think we've got time for one more question before we need to move to the speed dating sessions campaign.

I have a very quick question about numbers. About the 400,000 international clients. I assume all the global Chinese, global Indian and Global ASEAN clients are within that number, right? So we have some breakdowns of this international clients across the 4 layers of the affluent client base. both in terms of the numbers and AUM and incomes.

I'll just say which is the fastest-growing which is global Chinese and global Indian. I won't -- we don't disclose the mix. But the fastest growing is global Chinese and global Indian -- and these are our 2 biggest thrusts. We have designed a very curated and targeted propositions to help our global Chinese. In fact, our program for the global Chinese is called departure hall to arrival haul.

So we support our clients when they move to Malaysia, Singapore, Vietnam to make sure that, that whole experience onboarding is seamless. So you can see where we're investing. But we don't disclose the mix. Thank you.

Okay. With that, I think we are closing this session, and we're going to move to the speed, but thank you very much.

Thank you.

Good morning, and good afternoon, everyone. Thank you for joining us today. I'll take a few minutes to lead you through our first quarter 2026 results. Then Bill, Manus and I will take your questions. In my remarks, I'll be comparing performance year-on-year at constant currency, unless otherwise stated.

As a reminder, these results are now presented on a reported basis as outlined in the press release we published on March 25. We had a strong start to the year, delivering record income on the back of continued momentum in Wealth Solutions, Global Banking and Global Markets Flow Income. We are maintaining our 2026 guidance, and we continue to expect return on tangible equity to be greater than 12% this year. Since we last spoke to you, the conflict in the Middle East has developed. Our priority remains the safety of our people and serving our clients' needs. While, there's been no material impact on our portfolios, we have taken precautionary ECL overlays in order to affect the risk of a prolonged conflict. We remain watchful of the external environment, and we will continue to support our clients as they adjust to this evolving landscape.

I'll now take you through the numbers in more detail. First quarter income of $5.9 billion was up 9%. This was driven by strong non-interest income growth, particularly in Wealth Solutions and Global Banking. Expenses were up 1%, with business growth largely funded by Fit for Growth and other efficiency savings. Credit impairment of $296 million included $190 million of precautionary overlays in relation to the Middle East conflict. Put together, we delivered $2.5 billion in profit before tax, a return on tangible equity of 17.4% and a 31% increase in our EPS.

I will now cover each component in detail. NII was down 3% quarter-on-quarter as volume growth and mix benefits were offset by the impact of lower rates during the quarter, especially HIBOR. Volume growth was supported by an increase in client activity in Global Banking, and we also saw a positive impact from improved liability mix, especially in transaction services and WRB CASA. While interest rate expectations have been volatile in recent months, our weighted average rate outlook remains largely unchanged, indicating a 42 basis point reduction in 2026. We continue to expect pass-through rates to normalize over time. And as a reminder, WRB portfolio actions are expected to reduce NII by around 2% in 2026. These headwinds are expected to be mitigated by volume growth. And as a result, we continue to expect NII to be broadly flat in 2026.

Non-interest income, which was around 51% of group income in Q1, was up 16% year-on-year. This was driven by significant growth in Wealth Solutions and Global Banking. I'll talk to the product performance in more detail when I come to the business segments.

Turning to expenses. Q1 operating expenses were up 1% year-on-year as business growth and inflation was largely offset by FFG. We incurred $119 million of FFG cost to achieve in the quarter and have achieved an exit run rate savings of around $900 million so far. We continue to expect expenses to remain broadly flat in 2026 at constant currency and excluding material notable items. Credit impairment for the quarter was $296 million, including $190 million of management overlays and post-model adjustments relating to the Middle East conflict. This includes a new downside scenario, which considers the impact of a prolonged geopolitical crisis in the Middle East, leading to sustained disruptions in energy supply and elevated global commodity prices.

In addition, we've taken overlays for the petrochemical sector and for potential sovereign downgrades, which could result from a sustained conflict. CIB credit impairment was $111 million, reflecting a portion of these overlays, offset by net recoveries across the rest of the portfolio. WRB remained resilient and continued to benefit from portfolio optimization actions with impairment broadly flat despite the overlays. Our annualized loan loss rate in the quarter, including the overlays, was 32 basis points within our 30 to 35 basis point through the cycle guidance. Overall credit quality remained resilient. Our high-risk assets were up around $700 million in the quarter due to an increase in early alerts as a result of the Middle East conflict, while credit grade 12 and net Stage 3 remained broadly stable. The Middle East represents around 6% of the group's exposures. More than 90% is in CIB and weighted towards sovereigns and financial institutions, while WRB exposures are mostly secured. We've included details on this later in the deck.

Moving on to the balance sheet. We continue to see growth in underlying loans and advances to customers, which were up 3% or $10 billion in the quarter, primarily from Global Banking and secured wealth lending. Underlying customer deposits were up 3% with strong growth in CASA across WRB and CIB. Risk-weighted assets were up 3% in the quarter, primarily driven by asset growth and mix as well as $3 billion increase in market risk RWA as we continue to help clients capture market opportunities. These were partly offset by FX and optimization actions. Our CET1 ratio was 13.4% in the quarter as capital generation was offset by distributions and business growth.

Now let's take a look at our business segments. CIB income was $3.6 billion, up 6%. We saw continued momentum in Global Banking with income up 19% on the back of increased origination volumes. Within Global Markets, we delivered record flow income, up 17%. We saw increased client activity across rates and FX products, while we also benefited from our continued investments in electronic platforms and people. Episodic income was lower against a strong comparator in Q1 2025, with 12-month rolling income now around $800 million.

Turning to WRB. Income was up 13% to $2.5 billion. This was driven by a record quarter in affluent net new money and Wealth Solutions income. Wealth Solutions was up 32% with strong client activity across multiple asset classes and investment products, while bancassurance was up 20%. Affluent net new money inflow of $18 billion was equivalent to 16% annualized growth in affluent AUM and was driven primarily by wealth products. This demonstrates our strength in engaging a growing affluent client base, rapid idea execution on our open architecture platform, enabling value creation amidst market volatility.

As a reminder, the digital banks are now reported within WRB. Mox was profitable in the first quarter and Trust also turned profitable in March.

So to conclude, we've had a strong start to the year with a standout performance in Wealth Solutions, Global Banking and Global Markets Flow income. This reflects the continued success of our cross-border and affluent strategy. Our credit quality remains resilient, and we are watchful of the external environment. As mentioned, 2026 guidance remains unchanged, and we have provided a medium-term financial framework at our investor event in May.

With that, I'll hand back to the operator, and Bill, Manus and I will be happy to take your questions. Thank you.

[Operator Instructions]

Going to proceed with our first question.

The questions come from the line of Joseph Dickerson from Jefferies.

Really good quarter here pretty much across the board. Maybe slightly an unfair question, but just on the 2026 guide, I guess we've started off the year very strong on NII and deposits and margin. It looks like your CASA is tracking ahead. I suspect Q2, if you want to engage in my comments, I suspect Q2 is probably at a pretty good start on wealth deposits as well. So I guess I'm wondering why there's -- why you're keeping the guidance so conservative for this year? Or is it just because you want to focus more on the medium term in a few weeks in May?

And then I guess, secondly, and I suspect you'll touch on this in May as well. How do you think about -- because you now have a return of loan demand in the footprint that's driving asset growth, but it's also driving some RWA growth on the credit side, obviously. I guess how do you think about the RWA density of the group going forward? Should we expect this to continue to improve? Or do you think that now that loan demand seems to be coming back, that, that's a nice profitable activity to continue to drive growth for you?

Yes. Thanks, Joe, very much for the question. And I'll turn to guidance -- turn to Manus for the guidance question, but just a couple of upfront comments. Yes, the first quarter showed really strong momentum across the board. That momentum is carrying through into the early part of the second quarter. So we are encouraged by the business.

The loan demand -- maybe a better way to put it is lending opportunities for us, opportunities to use our balance sheet profitably. So -- that has been a feature in the first quarter, hence, the improvement in returns despite the RWA increases. And that has also carried through to the second quarter, although one would imagine that if this conflict in the Middle East persists, that we would see some shifting there, probably both in returns but also in loan demand. But overall, we're certainly confident about the prospects for the business.

I'll turn to Manus for specific questions on guidance.

Thanks, Bill. And thanks, Joe, for noting that, yes, we did have a very good first quarter, a good start to the year, up 9% in income terms. As you think about the year going forward, I would remind you of a couple of factors. Firstly, in the second quarter, remember that we are cycling a couple of events in Q2 '25 when we had a gain in our ventures business, and we also had a very strong episodic print in Q2 '25 as well. So when thinking about growth year-on-year do bear those things in mind for the second quarter.

The second thing is, of course, our NII guidance remains broadly flat. I'm sure we'll discuss that more later, but we still have some headwinds both from the curve and from our own portfolio actions in WRB. So do bear those in mind when you're thinking forward despite the strong start to the year.

And I ask a follow-up, if you don't mind.

Go ahead, Joe.

Yes. Just on your overlays, you called out, I guess it links to the RWA point. You called out some overlays you were taking regarding sovereign risk. Is there -- do you have any -- I'll have to look in the annual report perhaps, but do you have any sensitivities on what sovereign downgrades could mean on RWAs, any RWA inflation that we could take a look at?

I'll turn to Peter on that one. But we've always called out in the past the impact on our RWAs from sovereign risk downgrades. They were unrelated to the conflict. But so to the extent that we've got material changes, we will certainly call them out directly. Pete?

With regards to the overlays that we took for sovereign risk we are really looking at countries that are potentially more sensitive to higher oil price, oil importing countries and might not have the fiscal headroom. As far as RWA potential impact of that, I guess I would say they're manageable, not material, and well within our guidance.

Great. Operator, can we take the next question, please?

We are now going to proceed with the next question.

And the questions come from the line of Amit Goel from Mediobanca.

So yes, so 2 for me. One, actually, just coming on to the kind of capital and capital efficiency. So obviously, it was a very strong quarter, deployed a bit more balance sheet to generate some more earnings. But then I guess the net capital generation was a bit more limited. And it seems like with the targets, at least for this year unchanged, it's potentially using a bit more capital. So I'm just wondering whether going forward, you're thinking that growth is a little bit more expensive from a capital standpoint or whether we should see capital generation kind of building from here?

And then secondly, just -- just curious in terms of the sensitivity on your overlays to the conflict, I mean, I guess if -- just if you could give us a little bit more color in terms of some of the assumptions there and what could lead to some write-back or incremental charges being taken?

Thanks for the questions. I'll turn to Pete for some color on both of those. But the way I think about the capital maybe more appropriately, the return story in the first quarter is we had great volumes coming through both in terms of lending opportunities, but also obviously, financial markets. We captured those volumes and have retained that value. We grew some risk-weighted assets on the back of volumes, but also on the back of heightened volatility. We've said consistently that we'll operate throughout the 13% to 14% CET1 range, and we're obviously coming in at 13.4%, which is consistent with that.

So where we see opportunities to deploy capital profitably and accretively and obviously, a 17% RoTE quarter suggested that's what we did. We're going to use the capital for that. Where we don't see the same opportunities, we'll be in a position to either redeploy that into other parts of our business or give it back. So overall, I think this is a very, very strong and reassuring story. We're very happy, and we'll continue to manage capital in exactly that way.

But I'll turn to Pete for more color and then to pick up on the credit points.

Thanks, Bill. Thanks for the question. Just to build a little bit on what Bill said on capital. I guess I would point out that Q1 -- Q4 tends to be low in market risk and markets activity more generally. And so Q1 tends to be when market risk RWA comes back on as well as there's a bit of counterparty credit risk due to what Bill mentioned as far as volatility in the markets in Q1. So while I guess I'm trying to say that the rate of growth through the rest of the year won't be as great as it was in Q1. So it would -- it should be more flattish and less growth in RWA through the remainder of the year.

On the sensitivity on overlays, so 2 things to call out and think about when you're thinking about the overlays. So one is the introduction of the new sustained Middle East conflict. And if you look at our longer press release, there's actually quite a bit of detail on Page 22 on all the various assumptions on GDP growth, oil price, et cetera, et cetera. But the other component of that is the weighting. So right now, we have 70% on the 2 downside scenarios. I would point out that actually the DCST or the bank capital stress test scenario is the more stressful of the 2 scenarios rather than the sustained Middle East conflict. So we've got 45% on the sustained Middle East conflict, 25% on the harder downside. So we believe we are appropriately -- what's the right word, thoughtful about how that could play out. And the reason we've gone over 50% for those 2 is because the base was a pre-war base case scenario.

So I would expect that next time we do this, the base will reflect a different outlook, and we'll judge the weightings appropriately. But if you take a look at the details that we provided in the longer deck, you can get some of those more granular assumptions. But I hope that helps.

We are now going to proceed with our next question.

And the questions come from the line of Andrew Coombs from Citi.

If I could just do a couple of follow-ups. Just firstly on wealth, a stellar first quarter. But obviously, the wealth AUM has drifted down 4% Q-on-Q given the market moves, and that's despite the very strong net new money. And you specifically called out heightened transaction activity in the first quarter. So just interested in your thoughts on to what extent we can extrapolate the Q1 result or if you think there are -- there is a degree of abnormally strong activity in that first quarter.

And second, you alluded to it on the rate assumptions, if I look at the slide in the back, I think you've now got lower Q1 and Q2 rate assumptions but higher Q3 and Q4, so that would kind of explain why your NII guide is unchanged for 2026. But does it mean that you now have a better exit run rate than you expected at the start of the year? So are you more confident on the NII trajectory going into 2027?

Thanks, Andy. I'm going to turn to Manus on both those questions. But just a little bit of color on the wealth business. Clearly, a strong set of results. And what we look at, first and foremost, is all the leading indicators. So new clients, the money that they're bringing in, the migration then from deposits where the new money typically starts into wealth products. And in this quarter, very importantly, the resilience to shifting market dynamics, whether that's in credit markets or in equity markets. And all of those leading indicators are pretty encouraging for us.

So when you say can we extrapolate the first quarter? I don't think we can extrapolate 30% plus growth ad infinitum. But the structural drivers are very clear, very consistent. They're supported by the ongoing investments that we're making that we've called out in each of our earnings presentations over the past several quarters and which are ongoing. And supported by what is increasingly just a strong brand, if I could call it that. The clients in Asia, Middle East and Africa recognize Standard Chartered as a good and safe place to go in good times and bad. So I can't extrapolate -- I mean, I would love to compound at 30% for the rest of my working life, but we can certainly see good structural drivers for a long time to come. Manus?

Thanks, Bill. The only thing to add on the wealth comment when you're looking at the AUM moves that you need to factor in FX as well, Andy, given that the dollar was strong during the quarter. So that also has an impact. But as Bill said, the underlying momentum remains very strong. On your question on rates, I would just first of all point out that then our assumptions that we're using, it's market implied forward rates that we get from derivative markets. So there's no assumptions that we've made in here.

I also am not going to get into talking about our guidance for 2027, which won't surprise you. But you're right that if you look at the curve on Slide 16, the shape of the curve has changed somewhat. I would just add a couple of cautionary caveats. Firstly, our guidance for this year includes the impact of our WRB actions and of PTRs coming down during the course of this year. So that's something to bear in mind. And also, of course, just to state the obvious, the market is quite volatile. The move in rates can change quite materially week-by-week, quarter-by-quarter. So we think that at the moment, given those different crosswinds, maintaining our guidance of broadly flat is still the right position for NII.

Great. Thanks, operator. Can we take the next question, please?

We are now going to proceed with our next question.

And the questions come from the line of Kunpeng Ma from China Securities.

This is Kunpeng from China Securities. Congratulations to this very strong quarter. And I have 2 questions. The first is a quick follow-up on the Middle Eastern overlays. I'm not sure if the current situation persists for a while, say, in the second quarter, is there any incremental overlays to be charged in the second quarter? And if you do so, will the credit cost still be in the range of 30 to 35 bps? And also, is there any chance in the future that if we can see any write-backs of these overlays if the situation recovers?

The second is on the Global Markets business, which is also very strong. And you mentioned the contribution from the investment in the electronic platform for your clients. So I want to know more about -- more color about your investments in such infrastructure and human resources to support you to capture more market share in the global markets business. I think this is quite -- this is a very promising business for banks for the next few years. Yes.

Thanks for the questions, Ken. I'll hand over to Pete for color on the overlays. But I just said, of course, we're all watching every day, every minute, what the likelihood is for the duration of this conflict and the closure of the straits and the prospect for supply shocks. Independent of the price movements, but the supply shocks coming from limited access to some key feedstocks for other manufacturing processes. And no one knows, obviously, exactly how long this conflict will last. I think the key manufacturers in the world have been buffering. I'd say most notably in China have been buffering the impact of higher prices and supply shortages by drawing down strategic stocks. There will be a limit to how much drawdown of strategic stocks can take place. And the supply shock is ongoing. So I don't know whether it's 1 month or 3 months or 6 months from now that we start to see some sort of an economic inflection point.

So far, the markets are quite resilient. Processes are quite resilient. Trade is quite resilient. And therefore, credit has been quite resilient. Hence, we're taking overlays as opposed to recognizing any actual losses or specific impairments. But we'll watch. We'll continue to watch. I would say we remain hopeful that this conflict will resolve before there's acute damage to the economy, but you can't preclude that possibility in our stress scenarios try to capture as much of that as possible. They're quite similar scenarios, right? We need to get right down to it. But I'll turn to be. We haven't changed our guidance in terms of expected credit costs through the cycle of 30 to 35 basis points. That's not a comment on this conflict. That's a comment on what we can expect through the cycle. Cycles are obviously much longer than this conflict. Let's hope.

In terms of the investments in markets, you watched our financial markets earnings evolve over the past 7, 8 years with good strong underlying growth, but also a much higher quality of income and returns. From an income stream that was very focused and concentrated in FX trading through to a really good build-out of our rates business, associated options, commodities increasingly and credit, all very consistent with the broader strategic thrust of the bank, which includes having a much higher velocity balance sheet, both in financial markets, but also more broadly in the bank as a whole, originating and distributing more. So the investments that we have been making will continue to make are with those strategic directions in mind.

In terms of specifics in Q2, the 17% increase -- sorry, Q1, the 17% increase in flow income is really very encouraging for us. As I mentioned earlier, it suggests a couple of things. One is clients are turning to us during a time of stress or anxiety in markets. Two, we're able to capture those flows. It's always competitive. And third, we're able to capture the profitability, hence, the substantially positive episodic income. Those things are all extremely encouraging. And they reflect investments in e-trading platforms, improvements in portals, but also improvements in our observed latency in terms of the messaging within our systems, to allow us to go head-to-head with the most sophisticated traders in the market who have invested massively in very low latency algorithmic trading. We can -- we hold our own in those markets, and we'll continue to improve and continue to capitalize on the flows that we see to be ever better traders.

And I'd make another observation, then I'll hand over to Pete. As I said, the investments that we've made to improve the connectivity within the flows of the bank, so between our cash management business, our trade finance business, our private banking and wealth management business through to the financial markets dealing desks have improved dramatically. So it's just much easier for clients to execute their risk management transactions along with their other transaction banking or day-to-day banking activities, which has been a material source of incremental profit for us, and we think we have much further to go on that. So encouraging progress so far, but I'd say that we're not yet quite halfway there. Pete?

So thanks. I think Bill covered the second question pretty thoroughly. Going back on the overlay, highly uncertain exactly how this is going to play out. We've tried to take as much of what we could potentially see as a downside through the overlays already in the first quarter, as you can see by the weighting of 70% towards pretty severe outcomes on downside scenarios. Now as Bill mentioned, those aren't things that have actually happened. Those are things that could happen and trying to guess what the second order impact will be. We'll update those every quarter. I would point out, though, that we were within the 30 to 35 basis point guidance this quarter despite the fact that we took that overlay. So as Bill mentioned, it's not a quarterly forecast. It's a through-the-cycle forecast, but we're still comfortable with that and don't see any reason to change that.

Too early to start talking about kind of write-backs or reversals. I will point out, though, that -- we now have almost $200 million in kind of downside risk protection within the portfolio through those -- just the downside scenarios themselves. So it's quite significant. We hope we've broken the back of it, but too early to call it in.

[Operator Instructions]

We are now going to proceed with our next question.

The questions come from the line of Perlie Mong from Bank of America.

I just wanted to ask about deposit behavior. So have you seen any behavioral change in terms of customers holding on to maybe deposits a little bit more because we've seen CASA deposit was quite strong this quarter. And certainly, some of the Hong Kong government officials have talked about Hong Kong potentially being a beneficiary of sort of flight to safety flows. Have you seen that happening? And if so, does that give you more scope to price deposits assertively? And just how do we think about that NII piece going forward even aside of the rate moves? So that's number one.

And number two, in following up on this impairment scenario. So thank you very much for the details you've given. I think you mentioned nonlinearity a little bit in the scenario. And I suppose the question I'm trying to get to is that qualitatively, what triggers that nonlinearity because clearly something that worries people a lot. And we've seen oil prices go up 90 days and it's $125. I think in the scenario, the peak it's $135. So I understand that there's a lot of moving parts in how the events are unfolding. But in this scenario, in the one scenario that you have looked at, what triggers the nonlinearity -- and sort of how does it unfold in your planning assumptions?

Great. Thanks very much for those questions. I'm going to turn to Pete for the detail. I will observe that this market shock, we've had quite a few in the past decade or so. This market shock has been a little bit different in terms of the way that it's played out in first and equity markets, which have obviously remained very strong, but also in terms of the -- our wealth investors' engagement with us and with their portfolios. We have seen very little stepping away from the market. We've seen -- absolutely seen some reallocations within portfolios. But one, the funds have stayed within the bank. And two, it wouldn't -- it doesn't represent a wholesale shift into risk off assets. So the second thing to note is that the steady migration that we've seen of net new money into deposits and then flowing through to various wealth products is largely unchanged in Q1 and for what we've seen so far in Q2, which, as I said, the investment mix is changing a bit, but investors are staying very engaged. And hence, we're seeing that good steady migration from deposits into our products as relationships mature.

But I hand over to Pete for any further color on that and then back into the impairment question.

So thanks. Maybe covering off the first question on deposits. I wouldn't call out any specific behavioral change, as Bill mentioned. And I think you can see that through the inflows in wealth being actually predominantly wealth solutions rather than deposits as well as growth in deposits. And the strong above 30% outcome in Wealth Solutions tells you that the clients are still active in investing and not, if you will, just solely focused on deposits. So pleased with the deposit growth, but not seeing any particular flight to safety or any particular change in client behavior on that front.

On impairments, so we think about the scenario holistically. So we -- when we run the models, we say, what is the impact on oil price, what is the impact on GDP, unemployment, interest rates, et cetera, et cetera. We've laid out on Page 22 of the longer press release, all those various assumptions. I'm not going to -- we don't break down how much of that was GDP in this country versus that country, how much of that was oil price. So we really look at those holistic scenarios and try to think about how it could play out more broadly and impact and estimate the impact of that. The nonlinearity is kind of the impact of everything other than the base case. So by definition, it's the impact of those 2 downside scenarios that we've laid out, both sustained Middle East conflict scenario, which is the new one, but also the bank capital stress test. We replaced an older scenario, which actually was a kind of inflation down, rates down scenario, which we didn't think was terribly relevant in the current period. So it's a combination of what you're seeing in the quarter of changing scenarios and changing weightings, but they're very broad-based across the various inputs. So I hope that helps you understand a bit better, Perlie.

And can I just ask a follow-up in terms of drawdowns, I don't know whether I've missed that in the report, but if the sustained lease conflict situation were to play out, like on a stand-alone basis, what would the drawdown be?

Drawdowns on client facilities, revolvers, things like that. We haven't seen material drawdowns as a result of the conflict, if that's what you're referring to.

I was more just thinking like what the credit loss -- I think in the annual report for each of the scenario, you can see sort of what the implied impairment losses would be in that scenario. I don't know whether you've given that disclosure for this scenario.

We haven't. But I would point out -- thanks for the question, that the bank capital stress test scenario, we did disclose in the annual report. I think it was around EUR 500 million was the downside for that one. And that is the more severe of the scenarios, and we've already weighted that scenario at 25%. So I think we are well covered. We didn't provide what is the downside for the SEC, but it's less severe than the BCST scenario that's included in the annual report.

We are now going to proceed with our next question. And the questions come from the line of Ed Firth from KBW.

I just have 2 questions. One, on Slide 8 on your capital bridge. I'm just wondering if you could explain a little bit more about the 02 other because I mean that's about 1/3 of the money you made in the first quarter. So just what should we think about that? Is that just like a first quarter thing, employee share options and stuff? Or is that something that we should persist as a headwind? Or perhaps even though should we see that reverse as it's going forward? How should we think about how that might play out on a sort of quarterly basis? That's the first question.

And then the second question is just a sort of broader question, and I don't know if there's a precise answer to this. But looking at Standard Chartered today, it just sort of feels like you're more of a volatility play than a credit play. Is that a fair observation? And I guess if it is, -- how should we expect that to play out if there is to be a peaceful settlement around Iran? If we see markets go back to a more stable environment without volatility, in theory, we thought that was a net positive for you, but is there a risk that actually that's a net negative?

Thanks for those questions, Ed. I'm going to turn to Pete on the capital point. But on the second question, I'm going to agree with you wholeheartedly on the fact that we're no longer a credit play. I don't think we've been a credit player for quite some time. I'm not sure what it means to be a volatility play. But I think we think of ourselves as being as a sort of a client excellence play. So during kind of good times and bad, increasingly, clients are turning to us for their financial solutions, whether that's the way they interact with markets, the way they manage the risk, the way they raise their financing. And of course, different pieces of that will play out in different ways. The increase in flow in financial markets and the strong episodic quarter in episodic, no doubt had something to do with -- or maybe a lot to do with the volatility in the market. But we've had really good 10% compound growth on average or 10% compound growth in that flow income over a long period of time through volatile periods and not. And it's not because of the volatility, it's because of the quality of the service that we're providing.

And the fact that we've had a super strong quarter in Global Banking, up over 20% on the back of a strong year last year is -- and obviously, it's been quite volatile in the first quarter. Oftentimes, you see financing volumes drop during volatile times. Our experience has been the opposite. We've been able to address customer needs in the first quarter in a kind of an extraordinary way across the financing piece. So I don't think we're a vol play at all. I think we are a customer excellence play. And I have to say, I think those indicators are extremely encouraging. Pete?

Thanks, Ed. On your capital question, the 20 basis points of other movements within our capital walk. So you hit on one of them, which is employee share awards, which does tend to be a Q1 impact. The other things in there tend to be, I mean, valuation adjustments. So DVA shows up in income and then comes out in capital because it doesn't get to be counted for capital. So we did have a DVA gain this quarter. There's PVA Prudential Valuation Adjustments when you have volatility in financial markets, sometimes you have to take a bit more haircuts from a capital standpoint. So it's things like that. There's a tiny bit of FVOCI, but it wasn't a material driver this quarter. So those are the main moving pieces. I hope that helps.

So going forward, that should be 0 broadly.

So it's hard to predict. I mean the share awards is clearly skewed more towards Q1. I'm not going to predict how markets are going to play into DVA and PVA and some of the other things that's why it's in other, but it shouldn't have the same impact that it had in Q1.

We are now going to proceed with our next question.

And the questions come from the line of Aman Rakkar from Barclays.

I had a couple, please. So could I just trouble you for somewhat of a kind of trading update for the quarter to date. I guess the Middle East conflict only directly impacted 1/3 of the performance in the quarter. And I think you guys normally do give us some kind of trading commentary. I think you've kind of pointed to elements of it. But I was just wondering if I could kind of firm that up in terms of what you're seeing on wealth momentum in markets and banking, please, that would be really helpful.

And then the second question was around net interest income. So obviously, you're run rating well ahead of your full year expectations. And I guess you tell us not to take Q1 as a start point for a number of reasons, I do note that rates are actually not projected to be a headwind versus Q1. But presumably, there's some conservatism there. But I want to drill back into this point around pass-through rates because I think we've been talking about a normalization of pass-through rates for a very long time now. And I wonder if this is a stale comment because the liquidity dynamic is so abundant in your footprint and it continues to outperform. So can you give us some color as to exactly what you are referencing around this normalization of pass-through rates? And if you could help us quantify it. It seems like it's a couple of hundred million dollars that you're projecting to come out of net interest income. If you could help us with that, it would be really appreciate that.

Thanks very much, Aman, for those questions. I mentioned earlier that the first quarter momentum and trends have carried through to the second quarter. If Manus chooses to go beyond that with additional Q2 guidance, I'll let him do that. And then Manus will take up the NII questions as well.

No, I'm not going to go any further than that. That, I think, is a decent start. And obviously, we're seeing you in a few weeks in May. So we'll continue to discuss that as well. In terms of PTRs and NII, look, first of all, the comment is focused on CIB at the moment rather than WRB. It's in CIB where the PTRs are elevated. I would note that we have still been in an environment where rates are falling. So there can be a lagged effect of PTRs, -- and that's really what we've been thinking about in terms of continuing to expect it to flow through that it's not until you reached a stable or a turn in interest rates in the cycle that you'd really be able to see how those rates were flowing through. And our models would still suggest that we will see some pressure going forward from PTRs in CIB. And we've seen nothing in the structure of our liability base or in the way that the market is behaving, which would suggest otherwise. I'm not going to quantify exactly what the PTR pressure is that's in guidance. We've told you, Aman, that every point of PTR is about $30 million of NII pressure that comes through. So I think if you go through the rest of the guidance on NII, you can do the math on where you think we are on the PTR curve. I know you think it's a stale piece of commentary and piece of guidance, but the reality is that we're still working through the cycle, and our model suggests that it's still the right way for us to think about things.

Please. Just around your income expectations for the full year bottom end of 5% to 7%, which is exactly where consensus is for the full year. But I guess the Q1 beat in and of itself is a 2% beat versus market expectations. So the question is, why do you not see a more constructive outlook for revenues? And is there any -- what would you encourage us to think about as the key area of uncertainty into the kind of remainder of the year as to why you wouldn't lift that guide at this stage?

I mean I think there's lots of areas of uncertainty in the world and on banks P&L. So there's lots of different areas which can be better or worse than expected through the course of the year. And Bill talked about each of the different areas where we've been very happy with performance so far, but it's very difficult to see too far ahead. I would also just come back, Aman, to the comment that I made, I think, in response to the first question about remembering that in the second quarter, we do have a couple of items which we're cycling, which will make that year-over-year revenue growth more challenging to match that 9% level that we saw in the first quarter. So do bear that in mind when you're modeling going forward as well as the uncertain outlook.

We are now going to proceed with the next question. And the questions come from the line of James Invine from Rothschild & Co Redburn.

I'd like to ask Aman's first question again, please, but in a slightly different way. I was just wondering if you could give us a little bit of color about how some of your franchises have performed in March, so since the Middle East conflict started. So specifically, some of these really strong wealth flows that you've seen. Is that being driven by Middle East money that is looking to kind of move? And then similarly, for your markets flow business, how much of that -- did that really kind of step up in March? How much of that is driven by increased hedging of the oil price or whatever since the conflict has started?

Thanks, James. I won't go too much further in terms of the trends into Q2. But just on -- let's take the net new money first. The net new money is coming from the same places it's been coming from for the past couple of years. So we've had obviously Global Indian, Global Chinese, the rest of Asian, Middle East are all growing. We've had some reallocation of portfolios, not enormous, but some reallocation within our network.

So of course, there were some outflows from the Middle East, but we captured the vast majority of that into the network, primarily in Hong Kong, but some obviously, in Singapore, some interestingly back onshore in some markets like India. So that -- it's not a source of net new money. It is a source of some reconfiguring within the portfolio. And I don't know if that's completely run its course, but the underlying new money and new client trends are pretty consistent with what we've seen over the past period of time. The flow income is -- was pretty consistent throughout the quarter, actually. So of course, we saw a pickup leading into the conflict and immediately afterwards. But a lot of that flow volume is coming out of transaction flows one way or the other. And transaction flows have remained strong for the bank. So not too much that we can say was specifically sort of conflict or incident driven. But clearly, the overall volatility in the market, has increased the opportunity for us to capture these flows.

Specifically, in energy trading, it's actually been quite tough to trade. I mean we've been fine. Our commodity results are fine. But the -- it's been volatile in ways that, as you will have observed, is very sensitive to the overnight tweet or X or through social or whatever we call it. And the -- so as a result, we've tried to stay relatively close to home in terms of satisfying the demand for customer hedging in the energy markets. I suspect some in the market will have had a bit of noise in that line. Thankfully, we've come out okay.

But Pete, any additional color?

I think you've covered it thoroughly. So nothing to add from my side.

[Operator Instructions]

We have no further questions at this time. So I'll now hand back to Bill Winters for closing remarks.

I think that's a wrap. Thanks, everyone, for joining the call for the good questions as always, and really very much look forward to seeing all of you in Hong Kong in a few weeks' time.

This concludes today's conference call. Thank you all for participating. You may now disconnect your lines. Thank you.

Okay. Good morning, everybody. Welcome to this session with Pete Burrill, who is the Interim CFO of Standard Chartered. Thank you very much for joining us today, Pete.

Thanks for inviting.

We're going to run through -- I've got some questions. We're going to run through, and then we'll open it up to the audience for Q&A. But before we do any of that, we've got our polling question, which is going to come up now. So I'll just read it out to you. So what is the most important thing for Standard Chartered to focus on in its May strategic update? Answer one, revenue opportunities in Wealth and Capital Markets; answer two, capital return strategy; three, cost management; or four, long-term risks and opportunities from AI and tokenization. So if you wouldn't mind pressing the button on your little device, we'll see what the answer is.

Okay. Revenue opportunities.

Glad to see that.

Clearly seen as a growth opportunity. So we'll be able to dig into all of those as we go through the next 45 minutes or so. But maybe, Peter, we can start off and talk a little bit about sort of what's happening now. So obviously, 2025 results, you sort of exceeded or met your goals for '26. You set '26 targets of over 12% RoTE, mid-single-digit income growth and broadly flat costs. So what progress have we made towards that in the first quarter?

So thanks. So look, I think it is worth pausing a bit to reflect on the '25 outcomes and then jumping into '26. I mean we had set out in '24 3-year targets on income, RoTE, capital distributions, cost, a whole variety, and we're very pleased at year-end to be able to, as you said, meet or exceed all of those targets a year early. We were reporting on an underlying basis then, but we had delivered the income growth. We had delivered underlying RoTE of 14.7%, well ahead of our 13% target. We had kept costs in check and credit quality in check as well. We had exceeded our distribution target and at year-end, not just exceeded the distribution target, but also increased not just buybacks, but also dividends, increased our dividend quite a bit. So quite pleased starting '26 in a real position of strength.

To your specific question, which is how is Q1 going so far and what are we seeing? I think the trends that we saw last year continue in the areas of strength continued to perform well. We called out when we did our year-end results, a strong start to the year in wealth. Nothing's changed in those trends. The last few weeks haven't impacted that. We've continued to see strong net new money and continue to see growth in wealth. So pleased with the progress there. In markets, when we sat down and discussed our year-end results, it seems like a long time ago, it was only a few weeks ago. We had some slight loss in what we call episodic in Q4. As we start Q1, markets has been good. Flow has continued to grow in as it has last year and in previous years. Episodic has rebounded from Q4, but Q1 is obviously a bit volatile, and we had quite a strong Q1 compared to last year. But pleased with the progress so far across our businesses in Q1.

Okay. And just sort of -- let's delve a little bit more into that. I mean, obviously, a few things have changed in the last few weeks. So how do you think of sort of recent events and what risks that might pose to those 2026 targets?

So as you might expect, I'm going to first focus on luckily, our staff and our operations and everything are -- have not been impacted and no direct impacts there. When we think about the first order impacts, clearly, we start to think about credit quality, anything on the radar screen there. And you really have to think about and look at the types of business we have in the Middle East. So for us, we have -- our primary operations are CIB in UAE, Qatar and Saudi Arabia. It's vast majority, over 80% investment grade, largely financial institutions, multinational corporations, government related. So no immediate kind of first order signs of concern there. Clearly, we're cautious as to how this develops, but nothing kind of flashing amber or red on that side.

On our WRB side, so in the -- we -- it's primarily UAE and almost all of that now is secured mortgages with low LTVs. We don't have an SME business in the UAE anymore. We shut that down a number of years ago. So it's, again, feeling cautious but comfortable when it comes to what we've seen so far on the first order impact. I think as most of the people at this conference probably would have said, when it comes to the broader second order impact, it very much depends on how long this lasts, what the broader impacts are on oil prices, inflation, interest rates, GDP, which it's just too early to tell. But nothing that causes us, as I sit here today, to change any of the guidance that we put out for 2026 a few weeks ago.

Okay. Perfect. And then if we look beyond 2026, I mean, there's obviously all sorts of things changing. I think increased business disruption is sort of how we think of the world going forward as we move to a multipolar world. Obviously, we're getting disruption from tech and the like. So longer term, how do you think about that when you are sort of constructing credit portfolios? How are you embedding disruption risk into your sort of credit policies? And you've obviously guided to that sort of 30 to 35 basis points medium-term or through the cycle credit charge. Like is that something that maintains in a more disruptive environment?

So well, I would argue it's not the beginning of a disruptive cycle if you look at the last number of years, and I was reflecting actually the last time I sat on the stage was a number of years ago after Silicon Valley Bank had gone down. So we've been through quite a few cycles. And I think I would focus on a few things. One, our CIB business, the focus has been much more on origination and distribution and much more investment grade, large multinationals, et cetera. our loan losses last year were 19 basis points overall with virtually nothing in CIB. It was a $4 million charge in CIB. And the year before, we had net recovery. So our 30 to 35 basis points bakes in some unforeseen events that we don't have line of sight. We haven't called out any particular risks or -- but we do recognize that 0 is not normal. So we feel comfortable that, that 30 to 35 basis points caters for a wide variety of potential outcomes.

On the WRB side, we've really been shifting that business to focus much more on affluent and wealth management. And within that, we've had both geographical exits as well as portfolio exits that are focused on the consumer unsecured space. So we're kind of reducing risk in consumer unsecured portfolios. And as I mentioned, our kind of SME type lending is not a main portfolio in either our WRB or CIB business. So we feel comfortable with that through the cycle. There's nothing that we see today that would change that. It's not that '26 kind of specific. We've had that guidance out for a number of years, and we feel comfortable with the diversity of our portfolio.

We pay a lot of attention to concentrations, be that geography, be that industry, quite cautious about going into kind of the new exciting next big thing unless we really understand it and can get comfortable underwriting it. So while I do expect unexpected things to happen beyond 2026, we think we're well positioned to weather that within our existing guidance.

Perfect. So let's maybe go on and talk a little bit about some of the revenue opportunities. I mean that was obviously the #1 thing that people want you to focus on at your Strategy Day. So let's start off and just talk about Wealth & Retail Banking. I mean, obviously, very, very strong momentum, especially in the wealth management lines in 2025. I wonder if you can talk a little bit to sort of the sustainability of that, what's driving that? And also, if you can talk a little bit about how the competitive environment is changing in that Asian and Middle Eastern wealth management market.

Sure. So we are very pleased with the growth that we've seen in the Wealth business. And if you take a look and you zoom out a bit, that business has grown for us, I mean, it was exceptional growth, I guess, I would say, or very strong. I don't want to use the word exceptional in the last couple of years, but it's been on a -- for the last 10 years, it's been roughly 10% growth. So it's not a temporary phenomenon. It has accelerated recently, and we've obviously made it a key core of our strategic focus in WRB. Competition is there, for sure. But we are, as it stands, the third largest wealth manager in Asia. And we've been growing faster than the competition.

We had our net new money growth last year of $52 billion was 14% of AUM in 1 year. So we are confident in our ability to compete. We continue to see structural tailwinds, I guess, when it comes to the growing wealth in our footprint, in our markets across Asia. So we do believe and we are investing heavily into that. We announced when we had our -- I think it was 18 months ago or so when we had a WRB focus that we were going to be investing $1.5 billion into that business, both in RMs, but also in technology platforms real estate, we've got priority private centers across a number of our markets. I was in one in Korea a couple of weeks ago and really trying to make sure our brand is premium in that marketplace. And we have that in a number of markets in Asia, and we're confident that we can continue to grow. So we do think it is sustainable.

Obviously, our revenue guidance for the year, while we don't have a specific wealth, well you mentioned in your opening question, mid-single digits, that's with guidance to be flat on NII, which implies if you do the math and everyone here is a numbers people, continued confidence in the ability to grow non-NII, of which wealth is a significant contributor.

And your -- I mean, in terms of the -- I mean, just digging a little bit more into that. I mean, as you say, your net new money growth is ahead of peers. I mean, what would you attribute that to, do you think?

It's always interesting sitting here in London talking about Standard Chartered, and you mentioned it earlier when we were discussing. I mean if you go to Singapore or Hong Kong, which are the 2 major centers for us, we are quite a prominent brand. We're on the money in Hong Kong. It's -- we're quite visible in that connectivity to China as well, and we have an on-the-ground retail business in China. So we do think that, that brand presence is really important. We also -- our diverse product offering, our open architecture, the fact that we don't manufacture product. We -- it's not completely open. We select products, but we -- and the clear focus, I mean, that is our reason for being in WRB, right? It is when you think about all of our strategic focus, it is cross-border and affluent, cross-border and affluent. And all of our businesses across all of our markets are really focused on that as the key driver rather than trying to be everything for everyone in WRB.

Okay. Great. And then if we maybe move on to the other part of the business in terms of the corporate side. I mean, obviously, trade and again, that international connectivity you mentioned is an important driver of growth. And I guess the markets business and your FI business, and these are all the drivers of that. So I just wonder if you can talk a little bit about how you continue to progress that business in an environment where maybe we get trade disruption, traditional routes are less sort of clear, where capital flows are beginning to change as well.

I mean what are -- and geopolitics, I think, continues to be a challenge. I mean people are talking about sort of technology threats and stablecoins and the like. So what do you think are the things that you need to do to continue to drive growth in that business? And are the -- what would be the threats to growth in that business?

Thanks. So it's interesting. If we had -- if we were sitting here a year ago, all the focus would have been on tariffs and how that was going to disrupt and stop global trade. And we -- I remember IR's favorite ribbon chart that we put out to show basically our cross-border flows from the kind of the catch and the throw in the to and the front countries. And I think if you go back and you look at that, what's somewhat unique about Standard Chartered is that there's not one corridor or one geography, which is kind of the key driver of our outcomes. The power is really in the network. So that -- and we have a strong belief that trade will continue to flow. It may change directions. It may change corridors, but we believe that with our footprint and our network, we are well positioned to capture that so long as it continues to flow.

And we've seen through the tariff. I don't know what's called the tariff situation, the tariff noise, shall we call it, that global trade has continued. And we have seen strong growth in both our banking and our Markets business and across our CIB businesses more broadly with the exception of rates hitting our transaction services business. So I think history and the variety of shifts, whether that's China Plus One, whether that's tariffs, whether that's the -- our network and the value of the advice that we can provide to our clients and trying to navigate those challenges positions us well for whatever that turbulence, geopolitical trade, tariff or otherwise. Clearly, that's not to say that nothing could happen, but we are strong believers that global trade will continue, that the areas where we have the biggest footprint. So we are across pretty much all markets in ASEAN. We are quite big in North Asia, China, Hong Kong, et cetera. Middle East, we are well positioned to capture those shifting trade flows wherever they may come.

And then if we sort of look at the markets business, I mean that's obviously been a big driver of growth on the CCIB side. I mean, what -- how can you give us assurance on sort of growth prospects there? What's going to drive growth there?

So when we think about our markets business, and it's always -- we disclose and split it between what we call flow and what we call episodic. And flow to us is off of the back of that trade activity or capital movement, the -- our clients wanting to hedge, whether that's rates, FX, commodities, we've got our commodities business as well. And that activity has been growing 10% double digit per year over a number of years. So we think that, that flow business will and can continue to grow alongside those trade flows. That is a natural extension of the business and one that we have been leaning into and expanding our product offering quite a bit to make sure that we can continue to capture those flows.

The episodic bit is by nature, episodic. It's been largely range bound, if you will. If you look at our history, it's between $0.7 billion and $1 billion, $1.1 billion. So it bounces around from quarter-to-quarter. But over a trailing 12 month, it tends to be quite stable and less important to the overall markets business as a percentage terms as the flow continues to grow and the episodic. So we feel comfortable and confident. It's quite a capital efficient business, which is why we're comfortable growing that and are happy with the results that we've seen to date. So I think it's a natural play to our offerings and our client base. And we're happy with the growth so far.

Great. Can I move a little bit down the P&L now and I guess, to the cost line? Obviously, good performance in '25, 4% jaws, I think. And we've still got savings to come as the Fit to Growth program sort of comes to its conclusion in 2026. But longer term, I mean, what are you doing to make sure that you can keep that cost discipline? And how are you going to sort of pace that cost growth with revenue growth in the future? So...

I think pointing out the 4% positive jaws last year is important. We also had 6% positive jaws the year before that. So I think it is kind of a mindset that we have that we recognize our RoTE needs to go up. Our cost-to-income ratio as a result needs to go down, and we will continue to drive that. But you also touched on another important point, which is we do have growth opportunities. So for us, it is about the productivity of our cost base and making sure that we're able to invest into areas of growth while continuing to maintain cost discipline and focus on how to get more productive. So Fit for Growth was a big contributor to that, but cost discipline and focus on productivity across the bank will continue so that we can continue to make progress on positive jaws.

I think positive jaws is a bit of a mindset for us that we need to make sure that we are tailoring our investment profile depending on those growth opportunities that we see rather than it being some natural growth of the cost base that is passive rather than active. So we will maintain the discipline. We've provided specific guidance for 2026 on costs being broadly flat, and we will continue to be disciplined thereafter. But for any guidance beyond '26, you'll have to come to our Capital Markets Day in May or maybe dial into our Capital Markets Day as the IR guys will tell me that we're probably full. And I can't invite anybody else to our Capital Markets Day in May.

And I mean if we think about that cost discipline, I mean, there's obviously, I guess, a couple of different elements. I mean I think Fit for Growth was very much focused on finding lots of pockets of inefficiency that you could drive out of the business. I don't know how far progressed you -- I don't know if there's still more to be done there. But obviously, there's technology side as well, and that helps you control BAU. So what will be the drivers of that discipline? How do you maintain that discipline?

So we're not -- Fit for Growth will not be the end of our search for productivity. I mean we have through Fit for Growth, done a lot on standardize, simplify, digitize. A key component of that is also technology simplification to that point and automation. That while there's been a huge emphasis in Fit for Growth, that is -- will not stop when Fit for Growth stops. Technology continues to change, offers us new avenues to pursue when it comes to streamlining operations, making sure that more of our cost base is focused on revenue generation and less of our cost base is focused on, if you will, back office, for lack of a better term and that continues. And I think technology has been a key enabler and will continue to be a key enabler to that.

So I don't know that productivity, the search for productivity ever comes to a complete stop as -- but we will continue to ensure that we invest into that productivity and drive it beyond Fit for Growth.

If we sort of move on to capital. Obviously, you've paid back more than the original $8 billion, which you targeted. The $1.5 billion share buyback announced with the 4Q results and big 65% increase in the dividend, which I think you mentioned before. As we go forward, I mean, how do we think about that capital that you're generating? How much of it goes into growing the business? What are the opportunities there? And what's left? How should we think about the framework in terms of buybacks, dividends and the like?

So we have consistently said our first priority is to give the business the capital it needs to grow and to drive the revenues. Now over the last number of years, we have shifted our business model to be much more capital light. We -- on the -- which means that we have not had to grow RWA a lot, and we've been able to really rationalize and look at suboptimal RWA, where we're deploying RWA, we're deploying our balance sheet and we're deploying our capital without getting the returns from our clients. So that has allowed us to grow revenue.

And again, some of the things we're talking about wealth management is not a capital-intensive business, right? It doesn't need capital and RWA to grow that business. So there's been a mix shift. But our first priority has always been if we can generate the right returns, give our businesses the capital they need to grow. Dividends you mentioned, dividends, it's been important to us to have a dividend and increase it. We found we're a bit lower than most of our peers.

So we did make a sizable increase in dividend at year-end because we recognize that it's important to have a dividend, but that it should be sustainable and it should grow kind of as earnings grow. Buybacks have been a critical component over the last number of years, and we continue to think buybacks are important. And we don't have a particular trigger point on either price to book or whatever where we say, oh, we stop kind of doing that. Obviously, we need to consider what opportunities are there at the time, how we view our share price in relation to other opportunities. But I would say it's kind of business growth sustainable dividend and growing as earnings grow and buybacks continue to be a tool in our arsenal. Any further guidance beyond that, we'll have to defer to May to talk a bit more about how we think about that going forward.

Perfect. I'm going to just pause for a minute. I've got a lot more questions, but I just want to check if there's anybody in the audience who would like to ask a question. I'm sorry, I'm going to have to put my glasses on so I can see you. That gentleman there.

Just wondering if you could drill down a little bit into your credit exposure, particularly in the Middle East and mortgages in UAE and things like that. And just elaborate a little bit more on that.

Sure. Our mortgage portfolio in UAE, I believe is LTVs are sub-50. So it's quite a conservatively underwritten portfolio, and we're a retail bank in -- we're a Wealth & Retail Bank in UAE and have been there for quite a while. So not seeing any particular signs of stress. And the vast majority of the portfolio in WRB is that UAE mortgage portfolio. So nothing that would cause me to change any of our guidance or call out any particular area of concern in our Middle East portfolios.

Rest of the lending book in Middle East?

So the rest of the lending book in the Middle East is primarily CIB. Our CIB lending is primarily UAE, Qatar and Saudi Arabia. The vast majority of that over 80% is investment grade. It's largely financial institutions, government-related and investment grade. So again, no particular signs of challenge that we've seen to date.

Yes. And just on the kind of private credit kind of question, I guess, like on balance sheet asset exposure may be low in Asia or the U.S. But in terms of the Wealth business kind of client exposure and what they're doing, obviously, lots of headlines.

So we do have -- we do distribute a small amount of that, but it tends to be the larger names. We haven't seen any unusual outflows or activity in that, and it's not a major part of our offering in wealth. So it's -- we do have some clients that invest in that because clients want to invest in that, but it's not a major offering and we're not seeing any unusual outflows.

Maybe I can broaden that out because I know you've been active in working with private market players on sort of originate to distribute type dynamics, and that's been great for improving the efficiency of the balance sheet. I guess that gives you an interesting insight into that ecosystem. What are you seeing? What are you thinking? Is there anything change in your outlook for the ability to continue to sort of recycle the balance sheet the way you've been able to?

So thanks for the question. I do think when we look at our originate to distribute, it's a variety of different types of distribution. In Asia, a lot of it is whole loan sales. There's also credit insurance. And when it comes to private credit, I guess it's not one size fits all. And I think we continue to focus on our underwriting criteria when we get involved in a transaction and make sure that we're comfortable with the transaction, not just from a distribution angle, but also to hold a component of that. So we're aware of what's going on. We're thoughtful about what we underwrite, but we're comfortable with our position and what we've seen to date and are thoughtful about which transactions we get involved in.

On the Hong Kong business, can you comment on the situation in the commercial real estate? I know your exposure is not large, but what are you seeing there in terms of provisions and price performance?

So for our book, as you mentioned, I mean, we -- our exposures are reasonably limited. They have not deteriorated. We are well provided where we need to, but we don't have a lot of Stage 3. It's mostly Stage 1 and 2, and we've got, we still have overlays for potential -- any potential downgrades. So it's -- and we think that the market, especially office buildings is recovering, is showing signs of recovery. Our exposures tend to be to the larger players in that. So we're thoughtful about it. We have overlays in case things develop. But I think if anything, we're seeing signs of recovery rather than deterioration in the areas that we're involved in.

Just to get your thoughts on stablecoin and the likes. And what does that mean for liquidity margins or even like broader kind of tokenization, what that means for kind of fee businesses.

So I think we've been quite active and proactive when it comes to digital assets more broadly. We launched Zodia Market, Zodia Custody. We have a tokenization platform as well. We are applying for a stablecoin license in Hong Kong with the HKMA. So we want to be and expect to be part of that ecosystem as it develops. As far as U.S. dollar stablecoins, as far as what we're seeing so far, while client -- there's an increasing interest from clients, it has yet to really have a significant impact, but we want to make sure that we're prepared to participate in that ecosystem.

Again, not necessarily as an issuer as we are in Hong Kong. That's a bit of a unique situation, but that we are prepared that when our clients want to use stablecoins to move money cross-border or to make payments that we are able to facilitate that. And the stablecoin to fiat leg is still going to be an important component of that where we expect to continue to be able to serve our clients. So we are -- it's one of our core thesis that kind of digital assets and stablecoins are going to be part of the future, and we've been, I think, very proactive in leaning into that and making sure that we have the capabilities to serve that ecosystem as well as the current, but not seeing a significant impact to date.

Your stablecoin retain kind of deposits on your balance sheet and therefore, if I think about the flight deposits from the bank and potential cost of funds, liquidity, how that plays out?

So it really depends on the market. I mean if you look at Hong Kong, for example, the HKMA is the one driving the stablecoin process, and they want to make sure that it's appropriately regulated. And I think in a lot of markets, regulators are quite thoughtful about the interplay between stablecoins and the banking deposit base. So in tokenized deposits, we're yet to see, obviously, that could be another area where it's using similar technology, but stays within the banking system, and we're also experimenting with that. So not seeing any signs of that to date, especially in our footprint and where they are, but thoughtful about how it may develop going forward and want to make sure that we are prepared for that.

Okay. Have we got any more questions?

Can I just maybe follow up a little bit on my question there on tokenized deposits and stablecoin? I mean in terms of the HKMA stablecoin, I mean is it use case primarily going to be an on-ramp and off-ramp into sort of digital investments? Or do you sort of see wider use cases coming about?

I expect in the Hong Kong situation, it could have wider use cases, but it's a Hong Kong dollar. So it's primarily domestic. There's not a lot of cross-border activity in Hong Kong dollars. But we'll see how the market develops. I think ultimately, I think the HKMA wants to make sure that the appropriate safeguards are in place -- or sorry, it's not the HKMA, I think it's the Hong Kong Exchange, but the regulators in Hong Kong want to make sure that it's not a way around checks and controls over things like KYC and AML and all those types of things. So I don't think it's exclusively going to be for digital assets. I think it should have a broader utility, but we'll have to see how the market develops.

And on -- have you got -- are you doing tokenized deposits yet? Have you got...

We have the capability. We have experimented and done some pilots on tokenized deposits. I think, again, we haven't necessarily seen that big take-up from clients, but we want to make sure that if that is the direction of travel and that is where our clients want to utilize that we have the capabilities to be able to transact in that way.

And I guess staying on that theme, if we look at AI, which is obviously another topic du jour, how are you using it? And how do you think that will change over the next 12, 18 months?

So AI, I think it's fair to say for us, we're in the early innings of AI adoption. I think we have -- where we -- where it's been most impactful for us so far has been in enabling our RMs in the wealth management space. So not in the direct interaction with the client, but allowing our RMs to be more productive in the way that they prepare for client meetings and the way that they propose ideas to the clients. So we have kind of invested to make sure that we are on the front foot when it comes to AI in our wealth business.

I think on the use cases that are more efficiency related or more broad use, we have a lot of pilots in train, but we have not yet kind of seen the big impact. But we are continuing to focus on that. And I do think that, that is an area, if you will, on whether that's transaction monitoring screening, whether that's the things that require a vast amount of data and AI is very suited to, we will continue to look. I think when it comes to banks and AI, the regulatory dynamic is one that has to be very thoughtfully considered as far as being responsible for the decisions that are made by AI as well as the access to confidential client information, et cetera, across the footprint.

So really, I think there are lots of opportunities to come. I'm pleased with what we've seen to date, primarily in the wealth space as far as -- and that efficiency that we've seen on the wealth space has enabled us to grow revenues faster than assets under management faster than RM. So I mean, I think we are seeing the benefits from a productivity standpoint on being able to do to do more business with our clients as a result of enabling our RMs with AI.

And just in terms, I mean one of the things you did at the reporting in the last set of results is you announced that you're going to fold ventures into the main business units. And I guess the bigger part of that operationally is going to be Trust and Mox. So I just wonder if you could comment on what some of the advantages might be of moving those businesses into WRB. And also sort of what have you taken from the ownership or the build-out of those businesses back into the business and what has WRB learned from this?

Sure. So we launched Mox and Trust, Mox is our Hong Kong Digital Bank Trust is our Singapore digital bank a number of years ago when digital banks were kind of new. And I think for us, it was an exciting opportunity to try to participate in that market. And as you said, take learnings from what can you learn in setting up a digital bank. So I think now 4 or 5 years on, depending on how long the digital banks are at a point of maturity where that kind of interaction with our WRB business makes sense to help serve our clients across the various offerings from mass being better served through digital banks, lower cost to serve, lower cost to onboard, but not suitable for all product types. I think the more you get into individual wealth or advisory, that tends to be more in the main bank.

So we're seeing some synergies of working more closely and collaboratively between our digital banks and our kind of Standard Chartered brands in those markets. We even had one portfolio transfer in Hong Kong where we -- digital banks are very good at raising liabilities. It's a bit more of a challenge on assets. So we did move some assets in Hong Kong from the main bank into the digital bank. So that kind of broader service offering, we think there's some benefits.

What did we learn in the WRB business? I think that kind of digital-first mindset and that interaction with the client through digital channels, I think there was a lot of learnings there, which has pushed us to be much better in the mobile offering and the digital offering that we have in kind of the core bank as well. So we do think now is the right time, both based on the maturity of those digital banks as well as the collaboration possibilities that we have between the digital banks and the main bank that it's a good time to manage them a bit more cohesively and collectively rather than treating them as a separate thing from a reporting standpoint.

As a result of that, we also took the remainder of what was in our ventures. As you mentioned, Mox and Trust for the vast majority. And what's left is kind of experimentation and innovation, but it's not a material number. So we just decided we'll move that into C&O central and other, sorry, to report on that going forward.

And how do you manage -- I mean, obviously, you've got other shareholders in Mox and Trust. So how do you manage that relationship as you merge it in?

It's not merged in. I mean it's a reporting change, not a merger change, right? They're still independent entities with different investors. And if we do transactions between the main bank and the digital banks, they have to be at arm's length. We have to make sure that the pricing and everything is on an arm's length basis. But -- so no change from that. It's a reporting change and how do we manage them internally rather than a structural change from an entity or a governance standpoint.

We got a few minutes left. Have we got any more questions in the audience? Yes, gentlemen there.

I wanted to ask about digital currencies. Andre mentioned before that it was one of the threats to the banking system and they were lobbying to Europe to be part of it. So the enbridge project in Asia, how is it evolving? And what's your participation there? Can it be a threat? Can you update us on what is going on?

Sorry, which I didn't hear you correctly. Which project is that?

Which project of the central banks to do a digital currency -- enbridge, Hong Kong, China, UAE, et cetera.

Yes. It -- I think regulators across the globe are thoughtful and conscious about introducing digital currencies and what that could mean to central banks, what that could mean to banking systems. And so I think it's going to be market by market. That one particularly, I don't view that as a huge disruptor in the near term. We'll have to see how it develops. I think it's still early days, and there's not a cohesive effort across. There's not a clear direction of travel yet, I think when it comes to central bank digital currencies, stablecoins, tokenized deposit and what role each plays. I think a lot of countries are quite cautious on central bank digital currencies as far as disruption of the banking industry.

And I think a lot of consumers are quite cautious about central bank digital currencies and the amount of control that, that may lead to. So we'll keep an eye on it. We'll stay engaged in it, but nothing I would call out specifically on that one.

Okay. Just one last one for me. Net interest income, obviously, very strong in Q4. We've seen HIBOR come off a little bit into Q1. How should we be thinking about the drivers of that going into 2026?

So we put out guidance with our year-end results on NII being broadly flat year-on-year. And it's a variety of things. I think at least as we said a few weeks ago, rates were a headwind to that. We published a currency weighted average interest rate curve, which was negative 44 basis points kind of year-on-year. So rates are a headwind. That's changed slightly in the last number of weeks, but not directionally. So rates are one headwind for us when it comes to that. The other headwind that is probably more unique to us or is more unique to us is our portfolio actions where we have taken both geographic as well as portfolio-specific actions to reduce our unsecured portfolios.

It's good from an RoTE standpoint. It's good from a focus standpoint, but it does have a negative on NII. So we've called that out as about a 2% headwind to NII. Now offsetting, we've also called out the fact that our pass-through rates have been higher than our historical average, and that may prove to be a headwind if rates come down and we're not able to hold those pass-through rates. We are assertively managing those pass-through rates, but we're conscious that, that may change.

Against those potential headwinds, we have volume growth because we do believe that we grew volumes at roughly 5% last year. We're not calling out a specific volume growth, but we do believe that we've got the ability to grow volumes in that a lower -- if rates do go lower, that there should be some offset in volumes. We've also got potential mix shifts as far as both liabilities, quality of liabilities, growth in liabilities and deployability of those liabilities as well as on the asset side. So we think they tend, those various factors balance themselves out, which is why we've given guidance to broadly flat. Nothing that I see as we sit here today would change my views on that guidance.

All right. Well, Pete, thanks very much for joining us today. Thank you for your insights, and thank you, everybody, for listening in.

Thank you.

Good morning and good afternoon, everyone, and welcome to our full year 2025 results call. I'm joined here in London by Pete Burrill, our Interim Group CFO; and Manus Costello, our Global Head of Investor Relations. We'll take you through our results and outlook before opening up for questions.

Now 2025 was an extraordinary year by any measure. It tested the resilience of the global system and the relevance of institutions operating within it. It was a year shaped by heightened geopolitical tension, tariff announcements and periods of significant financial market volatility across multiple asset classes. But it was also a year that demonstrated something fundamental, that global trade, capital flows and economic connectivity endure and even thrive and that institutions built to support them responsibly and at scale matter more than ever.

Now when I spoke to you at our first quarter results in the immediate aftermath of the tariff announcements, I said that we were entering that period of global volatility from a position of strength. Our results for 2025 demonstrate exactly what that strength looks like in practice. Our underlying return on tangible equity for the year was 14.7%. This is not just a financial outcome. It's evidence of a strategy that's working and a franchise that's delivering with consistency.

We delivered record annual income of $20.9 billion, up 8% year-on-year. That growth was very broad-based. Global Markets and Global Banking both achieved double-digit growth for the year. Our Wealth business grew by 24%, supported by record net new money of $52 billion. Importantly, this growth was delivered despite interest rate headwinds and a softer fourth quarter for episodic income in markets. It speaks to the depth of our client relationships, the relevance of our capabilities and our ability to deploy them precisely where our clients need us most. And whilst it's early days, we're encouraged by the start of 2026 across the engines of non-NII growth, even against what was the strong first quarter last year.

Our strong capital position allows us to grow while continuing to deliver attractive returns to shareholders. Today, we're announcing a further share buyback of $1.5 billion, which will start imminently. We're also proposing a full year dividend per share up 65% year-on-year. And as you'd expect, we're stepping up our shareholder distributions while maintaining a full investment program intended to build on the strong momentum in our business.

The outcomes we delivered in 2025 mean that across income growth, return on tangible equity and shareholder distributions, we've achieved the objectives of our 3-year plan, and we've done so a year earlier than initially guided. Our 2025 underlying return on tangible equity was well above the target we set ourselves for 2026 and income met our 2026 guidance a year early. And we did this while achieving strong underlying positive income to cost jaws in both 2024 and 2025. We've returned significant value to our shareholders by announcing distributions exceeding the $8 billion target since February 2024.

These results highlight our strong financial performance and the success of our strategy. As we have exceeded our 2024 to 2026 group targets already, we're introducing new guidance for 2026, which we'll set out later. Additionally, going forward, we'll be presenting our results on a reported basis, shifting away from underlying financials. This move has been in the pipeline for some time. We intend for this to provide ever more focus on a single set of financial outcomes. We believe it will provide a clearer and more consistent framework for both our financial disclosures and future guidance.

Our performance is the result of sustained execution over a long period of time. It reflects long-term strategic choices, disciplined focus and an increasingly high performance culture that prioritizes collaboration and delivery across markets, products and sectors. But this plan was only ever a milestone for us. Reaching it sooner is significant because it encourages us to pursue our ambitions with even greater determination.

I want to thank our clients for the trust they place in us. I want to thank our partners for working with us in increasingly integrated ways. And I want to thank our colleagues across the group for their professionalism, resilience and commitment. These results are a direct reflection of their efforts.

2025 marks our fifth consecutive year of improvement in both underlying and statutory return on tangible equity. We've taken advantage of a generally supported business environment with shifts in trade and investment flows working in our favor and growth remaining strong in most of our key markets. But we've amplified these long-term trends by growing our franchise in a focused, disciplined and responsible way, by managing costs and capital rigorously and by communicating clearly and transparently with all of our stakeholders. I am committed to maintaining that focus so that we continue to deliver sustainably higher shareholder value over the long term.

At our event in May, I and our team will set out our strategy and associated medium-term targets in more detail. We'll explain how we see the evolution of the global economy and trading systems, as I set out in the annual report. We'll discuss how these themes affect us and how we intend to build on the momentum that we have created, how Standard Chartered is playing an increasingly distinctive and valuable role in the global financial system, and we are doing so profitably. We'll discuss how our footprint and connectivity, our expertise and our differentiated capabilities position us well, not just to perform, but to lead in the environment ahead.

Pete will now take you through the 2025 performance in more detail and the outlook for 2026. I'll then return to discuss how we continue to support our clients across our business segments, after which, Pete, Manus and I will be happy to take your questions.

Pete, over to you.

Thanks, Bill. Good morning and good afternoon, everyone. I will now take you through our 2025 4th quarter and full year results. In my remarks, I will be comparing underlying performance year-on-year at constant currency, unless otherwise stated.

Our full year 2025 income was $20.9 billion, up 6% or 8% excluding notable items. The performance was primarily attributable to our growth drivers of Wealth Solutions, Global Markets and Global Banking. These areas delivered strong results, underlying our ability to capture opportunities in our targeted business segments. Q4 income was broadly flat due to weaker Global Markets, which I will talk about in more detail on the CIB slide.

On a full year basis, costs were up 4%, and we delivered 4% positive income-to-cost jaws. Profit before tax for the year was up 18% to $7.9 billion, and our underlying return on tangible equity was 14.7%, including around 70 basis points of FVOCI gains from Ventures. Our reported profit before tax was up 18% to $7 billion in 2025 with a statutory return on tangible equity of 11.9%. Our earnings per share increase of 37% reflects the strong underlying performance and ongoing reduction in share count.

Now let's look at the performance components in detail. Fourth quarter NII came in slightly higher than expected and was up around $200 million quarter-on-quarter. This is primarily due to the movement in HIBOR during the quarter, where we benefited from both improved CASA pass-through rates and treasury-related timing differences. As a result, our full year NII was $11.2 billion, up 1% with a negative impact from rates and WRB portfolio actions, offset by volume growth and mix improvement.

In 2026, we expect NII to be broadly flat year-on-year based on several factors. First, as mentioned, NII in Q4 was higher than anticipated due to HIBOR increases. This has already reversed in Q1. Second, we outperformed on pass-through rates during 2025, but we expect these to normalize over time. Third, our currency weighted average rate outlook indicates a 44 basis point reduction in 2026 and, consequently, we anticipate a continued headwind due to movements in interest rates throughout the year. Lastly, the impact from WRB portfolio actions is expected to be around a 2% headwind to NII this year. These impacts will be mitigated by volume growth, but the pace and extent of volume growth remains uncertain.

Moving on to non-NII. In 2025, our non-NII increased 13% year-on-year or 17% excluding notable items. This robust growth was primarily driven by the strong performance in Wealth Solutions, Global Markets and Global Banking. In addition, the year's performance benefited from gains realized on the SOLV transaction. I'll talk to the products performance in more detail when I come to the business segments.

Now turning to expenses. Q4 operating expenses were higher quarter-on-quarter, driven by a number of factors. First, we continue to invest in our people and businesses. Second, we took some regulatory charges related to a pension code change in India and a PRA rule allowing accelerated vesting of shares. Lastly, during the quarter, we had an increase due to the rise in our share price and the associated impact on deferred compensation costs.

In some of our markets, regulatory restrictions such as exchange controls prevent us from settling deferred compensation in the form of shares. In such instances, we settle those awards in cash, and therefore, the material increase in the share price witnessed in 2025 and especially in the last 2 months of the year impacted deferred compensation costs. As a result, full year 2025 operating expenses were up 4% with the increase from business growth and inflation partly offset by Fit for Growth savings.

We delivered 4% positive income-to-cost jaws excluding notable items, and our underlying cost/income ratio improved 80 basis points to 59%. Our Fit for Growth program continued to progress with over 300 initiatives driving simplification, standardization and digitization. We have spent close to $700 million in cost to achieve, or CTA, since its inception and have achieved over $700 million in run rate savings. As we have been explicit in the past, we have remained disciplined on how we spend the CTA, ensuring that we deliver one-for-one return on investment in FFG and finish the program in 2026.

As we enter the final year of the FFG program and we reflect on the broader investment opportunities across our business, some of which were not visible at the outset of the program, we have revised our estimates of both CTA and savings from FFG. We now expect FFG savings and total CTA to be around $1.3 billion rather than our initial expectation of $1.5 billion. As a reminder, from 2026, all financial results and guidance will be based on reported figures.

However, to clarify how our costs will evolve this year, we have shown on this page that our 2026 underlying costs would have been $12.6 billion at constant currency compared to the $12.3 billion in the previous plan. Two things drive the increase. Our business has demonstrated strong performance, consistently exceeding our established targets, including significantly positive income-to-cost jaws. That gives us confidence to invest into initiatives which will deliver both productivity and growth benefits in the years ahead, such as data infrastructure and AI enablement. This represents the majority of the difference.

The remainder is due to higher performance rated costs, for example, the need to pay our relationship managers for exceptional performance in affluent. As we move toward a reported basis this year, we are now targeting costs to be broadly flat in 2026 at constant currency, which would mean around $13.3 billion. Credit impairment for 2025 was $676 million, up around $100 million as 2024 included significant net recoveries in CIB. The level of impairment in WRB improved year-on-year, reflecting the impact of portfolio optimization actions, while CIB impairment remained benign at $4 million.

Our overall loan loss rate of 19 basis points was broadly flat year-on-year. We expect this to normalize towards the historical through-the-cycle 30 to 35 basis points over time. Asset quality remains resilient in the face of a volatile environment and our high-risk assets were down $1 billion quarter-on-quarter. The $1.5 billion reduction in early alerts was due to a combination of client upgrades, repayments and a sovereign downgrade from early alerts into stage 3. We continue to monitor our credit portfolio closely, and we are not seeing any significant signs of new stress emerging across the group.

Moving on to the balance sheet. Underlying customer deposits were up 12% in the year with growth in CASA and term deposits across WRB and CIB. Turning now to capital. Risk-weighted assets were $258 billion, up 4% in 2025. As previously guided, we took the annual increase in operational risk RWA in the fourth quarter, which we would usually have taken in the first quarter of the following year. This has resulted in 2 increases in operational risk RWA in 2025. Going forward, this will be taken every fourth quarter.

We closed the year with a CET1 ratio of 14.1%. And as Bill mentioned, we are announcing a new $1.5 billion share buyback, which will take our pro forma CET1 ratio to 13.5%. Since the beginning of 2024, we have announced $9.1 billion of shareholder distributions, including the buyback and dividends announced today. This exceeds our 3-year target of at least $8 billion ahead of schedule. On a per share basis, we have increased our full year dividend and tangible book value by 65% and 12%, respectively.

Now let's take a look at our business segments. CIB income for the year was $12.4 billion, up 4%. Global Banking was up 15% driven by strong growth in both origination and distribution. The 7% decline in Transaction Services was a result of lower rates. Global Markets was up 12% as we delivered consistent growth in flow income above our long-term trajectory. Episodic income was a small negative in Q4 and down significantly from last year.

This was due to the timing of large client deals and broad-based market movements across a range of asset classes, which impacted inventory held for client activity towards the end of the year. As we've noted in the past, episodic income is less predictable and can be volatile from quarter-to-quarter. But on a 12-month rolling basis, it continues to be within its historical range and remains a meaningful contributor to our Global Markets income.

Moving to WRB. 2025 income of $8.5 billion was up 6% driven by consistent strong growth in Wealth Solutions, up 24%. During Q4, we generated $10 billion in affluent net new money. This contributed to a cumulative total of $52 billion net new money for 2025, equivalent to 14% growth in affluent AUM, reflecting excellent momentum in the affluent segment. We onboarded 275,000 new-to-bank affluent clients in the year and up-tiered over 300,000 individual clients across the continuum.

As I mentioned earlier, we will be making some changes to our financial disclosures effective from the first quarter of 2026. We will be moving away from presenting our financials on an underlying basis by allocating restructuring and other items from below the line to above the line. We are also going to report our Digital Banks within WRB and SC Ventures will be reported within the Central & other segment. We will publish a data pack showing the representation of financial data on this basis prior to our Q1 results.

So to conclude, we expect 2026 year-on-year income growth to be around bottom end of our historical 5% to 7% range at constant currency with adjusted NII expected to be broadly flat. Our reported costs for 2026 are expected to be broadly flat at constant currency. We will no longer provide underlying cost disclosures. And we are now targeting a statutory return on tangible equity of greater than 12% in 2026. Our medium-term financial framework will be provided at our investor event in May.

With that, I will hand back to Bill to give you an update on our strategic progress. Over to you, Bill.

Thank you, Pete. First, let me talk about CIB. At Q1, we told you that our network business, which represents around 60% of our CIB income, is highly diversified, resilient and agile. And that has continued to be the case. Our strength in providing network services in and around China, payments, FX, financing, et cetera, has been a key part of our outperformance as Chinese and international corporates diversify manufacturing and ship their supply chains.

We often play a central role in those shifts as demonstrated in our China corridors to markets across Asia and South Asia, the Middle East and Africa. Trade and investment flows are also picking up pace as regions seek elements of self-sufficiency, in search for more resilient middle power status. Regional and bilateral trade pacts in South Asia, the Middle East, Africa, and ASEAN will support growth in trade and investments across our footprint markets, playing to our core cross-border strengths.

Now as you can see, our network income remains diversified by product. It's not just trade. And despite interest rate headwinds in Transaction Banking, our network business has continued to grow. We also have continued to see growth in income from financial institution clients, and we've made further progress towards our 60% medium-term target. The financial institutions client segment, which generally delivers a higher return on risk-weighted assets, remains an attractive area for Standard Chartered. We stand out in serving financial institution clients due to our differentiated products, extensive local market and global networks and specialized capabilities in areas like security services, financial markets and financing.

These trends enable us to meet the diverse needs of a wide range of clients, including banks and broker-dealers, investors, sponsors, insurers and sovereign wealth funds. Meanwhile, we've remained disciplined in managing resources within CIB to make sure that we were focusing on serving our top tier clients and doing so more effectively. These are the ones where we can provide more value.

In 2024, we spoke about how we were planning to exit around 3,000 clients by the end of 2025, and I can confirm that we have hit this target with minimal loss to income. Our focus on optimization does not end here, and we continue to manage our RWAs in order to maximize the returns for shareholders and invest to serve our client needs. Now if I can shift to our wealth and retail business. We announced just over a year ago that we were targeting $200 billion of net new money over 5 years. In the first year, we've been ahead of that pace, delivering $52 billion, which is equivalent to 14% growth of AUM and makes us the fastest-growing wealth manager in Asia.

We also now rank as the #3 wealth manager overall across Asia with affluent AUM of $447 billion. Our Wealth Solutions income continues to grow strongly across asset classes. Our product innovation and advisory capabilities, including initiatives in AI, put us in a great position to capture market opportunities and cater to changing client preferences. The growth in Wealth Solutions, combined with the decisions we made to exit single product relationships and the entirety of our retail operations in certain markets, have helped us drive affluent to 70% of WRB income. This is great progress towards our 75% medium-term target.

Turning to Ventures. We have made strong progress across the digital banks. In 2025, Mox continued its strong growth trajectory, achieving a 15% year-on-year increase in customer base and reaching around 750,000 customers. Trust Bank also continued its momentum with customer numbers up 15% year-on-year, reaching over 1 million customers and taking its share of the adult population of Singapore beyond 20%.

Within our SC Ventures portfolio, we're building ecosystems in areas of the future of finance, including digital assets, tokenization and blockchain settlements as well as data and technology capabilities that will serve our bank and our clients well in future years. We actively manage the portfolio, building ongoing momentum across a number of fronts. You'll recall that we had a successful merger of SOLV India into Jumbotail in the first half of 2025. We've also seen unrealized gains, particularly from our stakes in Ripple and Toss, which have contributed around 70 basis points to our underlying RoTE in 2025.

Now as Pete mentioned earlier, this is the final quarter that we're reporting the Ventures segment separately. We'll be reporting Digital Banks as a product within WRB, reflecting how they're managed within the group and the increasing synergy we see between the Digital Banks and the rest of our WRB business. Given the maturity of the portfolio of investments, SC Ventures will be reported as part of Central & other going forward, but we'll continue to call out key investments, gains and disposals as and when they occur.

Now if you only listen to the noise in the markets, you might think that sustainable and transition finance was going the way of the dodo. This could not be further from the truth. Our clients are sticking with their commitments and our capabilities continue to improve. We've exceeded our income target of at least $1 billion in 2025 and see further growth from here. With $157 billion mobilized in sustainable finance since the beginning of 2021, we're over halfway towards our commitment to mobilize $300 billion by 2030.

Highlights in the year include our EUR 1 billion inaugural green senior bond, and we're proud to be ranked first in the Global Bank Climate Adaptation Assessment 2025, ranking the world's 50 largest commercial banks on their adaptation maturity. Bottom line, we're committed to our sustainable finance agenda, seeking to do the right thing and earn good returns doing that.

So to conclude, 2025 including Q4 was very strong for us, and we're delighted with the outcome even with some noise in the fourth quarter. We completed our 3-year plan in just 2 years, which speaks to our disciplined execution and momentum. We started the first quarter of 2026 strongly, particularly across our growth engines in CIB and WRB, where we see continued client activity and opportunity. We're announcing a new $1.5 billion share buyback and a 65% increase in full year dividend per share. This is a clear signal of confidence in our performance today and in the strength of our outlook. We're targeting a statutory RoTE of over 12% in 2026.

Before we move to questions, I want to lift the lens and look ahead a bit. As mentioned earlier and in the annual report, we see a number of major structural trends, long-term shifts that are reshaping global trade, capital flows and growth. These are not short cycle opportunities. They're powerful forces that will play out over many years and will play directly to our strengths. We've already positioned against those trends. And importantly, we continue to invest in and sharpen our focus on our critical and relevant competitive advantages.

Our ambition is clear: to create an ever more distinctive, exciting and high-performing Standard Chartered, one that delivers growth across every dimension that matters for our clients, for our communities, for our top line, our bottom line and, of course, for our shareholders. We'll go into this in much greater detail in May. But the direction of travel is clear. The momentum is real, and we're building a business that is set up for sustained high-quality growth.

And with that, I'm going to hand you over to the operator, and Pete, Manus and I can take your questions.

[Operator Instructions] And we're going to take the first question on audio line. And it comes to line of Joseph Dickerson from Jefferies.

Two questions, if I may. The first, on the investments that you're making in the business, I guess, is the 60,000 per quarter of accounts that you opened in Wealth, is that capacity constrained? And if so, are some of the investments that you intend to make or are making designed to remove processing constraints and effectively increase account opening capacity on the Wealth side?

And then secondly, if I can invite you to comment further on the start to the year on Wealth. Is this coming from the deposit side of the equation? Or the investment side of the equation or both? And I guess do you have an outlook for this year on the deposit side given there's a fair amount of maturities on the Mainland that will be happening this year that could send further flow your direction in Hong Kong?

Great. Thanks for the question, Joe. I'm going to start it off, I'm going to pass to Manus for some color. And first of all, it's a pleasure for me to be sitting here with Manus and Pete, just to call that out, because it's not the same as last time.

So first on the investment in the business. So of course, we're delivering the 60,000 of clients with the current capacity. So it's not something that we're experiencing any particular constraints. We're significantly adding both tech and RMs. That's the $1.5 billion program that we announced last year that we're well on the way to deploying, and I think we will continue to make those investments, which should not so much increased capacity, it will, of course, but remove bottlenecks along the way. We still have a largely RM-driven business model, and we're increasingly supporting those RMs with technologies and AI and otherwise, which is going really well for us. But we see the RMs as a critical part of the future and as they are an essential part of the present. And any capacity constraints that we've got our bottlenecks, we are going to remove. Anyway, it's not a constraint today.

The start of the year in Wealth has been broad-based as we've seen a reasonably predictable now migration from deposit products into wealth products. And we're seeing that continue into the first part of this year. I won't get too much more detail because, obviously, we're just 7 weeks in or something like that. But the start of the year is both substantial in quantity but also quality. Manus?

Thanks, Bill, and thanks, Joe, for the question. I'll note that in the fourth quarter, we actually delivered 72,000 new clients into WRB, into the affluent segment. So it was actually a very good end of the year. And that momentum has continued into Q1, as Bill said. I think if we look forward, you'll see that in the fourth quarter, we actually delivered a slightly higher mix of wealth versus deposits than we did in the fourth quarter of last year. And we have said that, over time, we do think that we will continue to grow that Wealth business as quickly as possible and likely ahead of the deposit piece. So we're continuing that momentum. It will change quarter-by-quarter, obviously, but we're confident in how we ended last year and how we started this year.

The question comes from the line of Jason Napier from UBS.

Bill, Pete and Manus, the first one, just on episodic income. Quite clearly, I think the fourth quarter print, disappointing relative to the bank's expectations sort of as shared earlier in the fourth quarter. I wonder whether you can just provide additional color on what happened there and whether it actually means anything for the business model or for the approach going forward, what it says about the business as it's being conducted?

And then secondly, somewhat inevitably, and I'm sorry, it's regretful, but the move to stated costs in '26 has prompted some questions from investors as to whether this gives you room to spend more in '27, if you, in consensus, have restructuring expenses going from $800 million to $200 million in '27 whether you are actually going to deliver an absolute decline in costs in '27. So without putting too fine a point on it, I wonder whether you could just talk about without Fit for Growth continuing, whether it would be our expectation, the cost could be flat or perhaps slightly down in '27 in line with existing consensus?

Great. Thanks very much, Jason. I'll take the FM question and move to Pete for the cost question. So as we said a few times as we set up here, we do break out our income between episodic and flow. The flow, it tends to be transactions that are ordinary course coming from our clients, frequently but not exclusively, coming from our transaction banking franchise broadly. But they tend to be operating flows. That flow income has been growing at a pretty steady 10%, plus or minus just a little bit, as was the case in the fourth quarter as well and as we are starting off well in Q1 of 2026.

The episodic is really comprised of two things. First is large customer transactions, so the kind of things that we called out are deal contingent forwards, where there's a possibility for higher profitability, higher returns. There's also the possibility that you can lose money in some cases. The fourth quarter for us in client, these large client transactions was weak. The first 3 quarters of the year were strong. The first half in particular was very strong. So overall, the episodic income for the year is good.

The second component, though, of episodic is gain or losses on risk position. So we play a very important role in the markets in which we operate, in particular in the emerging markets with less developed underlying currency and hedging instruments. And when we get delivered customer transactions, we warehouse that risk until we can work it out over a period of time. And while we had no large losses in Q4, we had no gains either. And small losses, some small gains, it netted out to approximately 0. So you had minus $16 million.

Change in business model? Absolutely not. I mean, we're super happy with the growth of our FM business. Good strong growth year-on-year. Yes, fourth quarter was weak. But this is not a quarter-to-quarter business. We've been building a franchise for the very long term. We have delivered that substantial increase both in profitability levels, both income and bottom line returns. And it comes from being able to warehouse risk in these markets on behalf of our clients. That's what we're doing. We do it well. 2025 was a good year.

2026 is starting off very well both in flow income and episodic. Absolutely no discomfort with the business model. I can tell you, we have an A team. The financial markets team that we are running today is as good as any I've seen, and I've been doing this stuff one way or another for 3 decades. It is an excellent, excellent team, very differentiated positions in our market. It doesn't mean to get it right on every trade in every market. But overall, we're super happy with '25.

Pete, do you want to take the cost question?

Thanks, Bill. Thanks, Jason, for the question. Thinking about costs, maybe a couple of thoughts here. First, zooming back on the change from underlying to reported. And I know in the way you phrased your question, you're asking if it gives us more room. We're doing this because this is what shareholders have been asking for. We think it's a positive. The benefit of being able to focus on one set of numbers both internally and externally, we think, is a big benefit.

What we tried to do is, on Slide 11, give you the component parts, as you've pointed out, on how to think about costs. So we provide kind of a onetime bridge on an old underlying basis. And you can see the moving pieces that we've got there. To your point, in '27, while I'm not going to comment on specific direction of travel, you should think that, yes, we will continue to invest in business growth as we see the opportunities in front of us that Bill's already spoken about.

The FFG CTA will go away. There's usually some level of other restructuring, which, obviously, we'll only call out if and when it's material. But I do want to leave two thoughts. We maintain focus on positive jaws, we maintain focus on improving our cost-to-income ratio, and we maintain focus on productivity. So don't read too much into the move to statutory. We think it's just an overall benefit and something our investors have been asking for. And we've tried to give you as much transparency as we can about how we think about costs. But any guidance beyond 2026, you're going to have to wait for our discussions in May.

I just want to give a little color on the accounting change, the presentation change. We're going to find it really useful to have a single set of numbers that our team focuses on. And the idea that there was the above the line, below the line, the suggestion which was never the where we operated, but nevertheless you wonder, is somebody thinking that below the line doesn't count or I get a freebie or it's not going to affect my bonus pool. It wasn't in my LTIP.

So in theory, I was incentivized to jam stuff below the line as was the previous CFO. The new CFO will not be incentivized that way because we've just got a single measure. It is above the line. Everything is above the line. I just think we're going to get focused. And of course, that's what you, shareholders and analysts, have been encouraging us to do as well. So I'm glad that we got there.

And on Fit for Growth as well, I want to say, that program was a success. I mean, we've deployed $1.3 billion of capital in an accelerated way. Extremely rigorous at the outset in terms of defining the benefit cases and extremely rigorous in terms of tracking whether those benefits are coming through. Two years into the program, I think we all looked at that and said, yes, first of all, we constrained ourselves in terms of the productivity investments that we're making around a particular set of program guidelines.

We don't need to have those guardrails in place anymore. We do need to internalize completely that discipline in terms of the way that we both measure and then track our investments. And I think that we can safely say that, that is now BAU for us. So as Pete said, the productivity gains that we've generated through the Fit for Growth program, we would expect to generate in an accelerating way with future investments into our business.

With that, we will go back to the operator for the next question.

We're going to take our next question, and it comes from the line Andrew Coombs from Citi.

If I just start with net interest income. You talked about timing benefit in Treasury income and how also the move in HIBOR temporarily improved your pass-through metrics. Perhaps you can just elaborate there on the magnitude of the temporary benefit across those factors. And linked to that, are you kind of alluding to the fact that Q4 is not an appropriate jumping off point from which we should extrapolate? We should be more thinking Q3 rather than Q4?

And then the second question is a more specific one. I was slightly surprised that you called out Ripple and Toss as being a 70 basis point benefit. I think previously, you talked about $72 million unrealized gain on that in the first half. So can you just help us how you get to the 70 basis points?

Great, Andy, I'm going to turn to Manus for both of those. Just a couple of headline comments for me. First is we're really quite happy. The combination of a sort of pass-through rate management and volume growth has allowed us to keep our NII in the zone of flats, including '26 guidance despite some obvious headwinds. We consider that to be a good outcome. And second, of course, the 70 basis point RoTE benefit of Ripple and Toss is part of the 14.7% RoTE outturn, which is a really good number as far as we're concerned.

But yes, I mean, we want to call out anything that's specific. And as we get into -- I know this wasn't your question, but as we get into the separation of the Ventures segment into WRB for the Digital Banks, Mox and Trust, and the Central & other for the rest of SC Ventures, we will continue to call out these kinds of things so that you get the same color that you're getting now while it's separately reported. But Manus, please.

Thanks, Bill. Yes, on the NII move and the impact of HIBOR, you should have seen that the majority of the increase quarter-on-quarter was the result of that HIBOR move. It was split between treasury, as you point out, where there were some timing differences between repricing of liabilities and assets. And some of it came through in retail within our deposit and mortgages line as we delivered strong PTRs in that quarter.

As you think about where we go to '26, we're using 2025 as a full year as the base because there were a number of different moves in HIBOR during the course of 2025 in different directions. So taking any given quarter as a jump-off point, certainly the fourth quarter, would not be the right approach, which is why when you think about how to roll forward NII using our guidance that we provided for you, you should really take the full year '25 and then apply the different metrics that we've given you there. So hopefully, that gives you a bit more color, Andy.

Do you want to comment on the 70 basis points from Ripple and Toss?

It's included within the way that we report the underlying RoTE, as we've stated before in the past. It's not included in the statutory RoTE in the way that we talk about it. And clearly, we will continue to call out any gains that we have in the future, but it's not included in the measure of statutory RoTE that we put in for '25 or that we're guiding to in '26.

Maybe it's worth noting that while Ripple has observable market prices, we're not fully marched to the last transaction. We form a judgment based on a combination of broker quotes, actual traded volumes in that company, and we have positioned historically conservatively against whatever the last price is. Obviously, cryptocurrencies and XRP in particular, have dropped quite a bit since the last valuation. We still think we're appropriately valued at this point.

Toss is a private company, Toss Bank, in which we helped create that bank in Korea. It's an outstanding bank. It does have a peer that's public, just Kakao Bank. And Toss Bank is performing extremely well. And again, very little observable volume in terms of share transactions. So these are both judgment calls. I think you've come to understand that we're quite conservative in terms of the way that we assess these things where there's judgement required.

And the question comes line of Perlie Mong from Bank of America. .

I'm just trying to understand the guidance a little bit better. So the income guidance is bottom end of the 5% to 7% range. I suppose, firstly, what will make it higher versus lower. And then within that, because NII is relatively flat in the year '26. And that would imply that noninterest income, it's probably double digit and obviously with the SOLV India in '25. So if you strip that out, it's probably going closer to 14%, 15%.

And I would just love to hear about how you're thinking about the different business lines. So episodic, a bit weaker in Q4, but flow income is up 15%. So would you expect something similar? Is it 15% across the majority of the main business lines? Or are you expecting something closer to, say, 20% for Wealth, given your comments on how strong the front-end flows are and maybe a little bit more conservative on banking and markets just because of the natural volatility in those lines. So that's number one.

And then number two, just quickly on distribution. Dividend is one of big [indiscernible] of today and it's now looking at about 30% payout ratio to reported EPS. Is that roughly right? So would you expect that to be something that you would continue doing and do more dividends versus buyback?

Great. Perlie, thanks for the question. For some reason, your audio quality was quite poor. So I'm not sure we got everything correct that. I'll try to repeat some of the questions because I'm not sure that others on the line could hear either.

I think your first question was on guidance. I'm going to turn it to Manus in a moment. We're at the lower end of the 5% to 7% range. You note with NII roughly flat, that must mean double-digit growth in the non-NII. That is mathematically correct. And of course, that's what we've been doing for some time, is really strong double-digit growth in non-NII. And maybe to one of your subsequent questions, yes, the early part of the year also supports -- the early part of 2026 supports that trend, and we're extremely happy with that progress.

I'll go to Manus, just quickly running through the questions, your second was around episodic, which was weaker in Q4. For sure. I commented on that earlier. I'm not sure I mentioned I've repeated what we said in the past, which is that the episodic will tend to vary between 0% of income, where we came out in Q4, and 50%, was up by $16 million at the bottom end, it was 0 because we obviously lost a little bit of money. Maybe we'll be off up by $16 million in some future quarter, I don't know, at the top end.

But it is volatile. But it's a decreasing percentage of our overall FM income. And you can see from Page 29 in the deck, the steady progression, this sort of 10% compound rate in flow income, not quite a straight line, but pretty close, with the episodic on a rolling 12-month basis being more volatile, a shrinking percentage, but still a meaningful contributor to our business and extremely important for facilitating customer flows. So we're very happy with the overall mix. And then...

I'm sorry about that. Can you hear me better now? I don't know what happened with my headset.

We can hear you better now.

No, I was just going to say, with implied noninterest income looking to be up maybe 15% if you exclude SOLV India, where is that going to come from? Is it more wealth versus more markets and banking? Episodic was a bit weaker, but obviously flows are very strong, still about plus 15% year-on-year. So are we thinking about maybe 15% across markets as well as wealth? Or are we going to see a bit more from wealth, maybe closer to 20% and maybe a little bit less on markets given the natural volatility in that business?

Well, I'm going to let Manus take the details of the question. I think you're right in terms of the sources of growth. I mean, the good news is in 2025, wealth banking, financial markets and key elements of transaction banking, especially when you strip out the interest rate impact, we're all firing. And in fact, our bank is firing on all strategic cylinders. And while we had a weak fourth quarter in episodic income, flow is firing across the board and financial markets year-on-year for the full year is very strong. And that has continued into '26.

Manus, fill in the gaps?

Yes. To carry on from where you left off, Bill, I mean, we had a very strong year in 2025. Wealth was up 24%. Markets was up 12%. Banking was up 15%. As you know, the majority of those businesses is noninterest income, and we're saying that we started the year well. What we're really trying to say is across all of those 3 engines, as Bill said, they're all firing. They're all doing well, and we're comfortable with broad-based growth across all of them.

What you should not take away is that there's anything hidden or any kind of individual element which is driving that guidance to 2026. It just speaks really to our confidence in how we ended last year and how we're coming into this year and how we're set up for the business going forward.

Understood. And my second question was just on distribution because dividend was a lot higher than expected. It will be about 30% payout ratio. Is that something that you would expect to continue? And given the share price has done very well in the last 12, 18 months, would you expect to do more dividends versus buyback? Or how are you thinking about distribution?

Thanks again for that. I'll start on this and let Manus finish up. Obviously, we've got quite a healthy buyback as well. $1.5 billion, I think it's a little bit higher than what the market was probably expecting with a substantial increase in the dividend. And we think we're getting to something like a 30% payout ratio in this environment makes sense. And we have every intention of continuing to grow our earnings and continuing to grow our dividend.

We'll give a little bit more color on the way we're thinking about capital allocation in the capital markets event in May. But clearly, we've had a substantial increase in dividends, which I think positions us well in a number of regards, together with a big potential share buyback after completing a very robust aggregate investment program in our business. So the organic investments have been at record levels for our banks. So we're really not scrimping on anything at the moment. But Manus, anything to add?

Just as you say, we'll talk about it in more detail in May, obviously, about our capital allocation priority, Perlie. I think you should just see the increase that we have delivered so far in total distributions, both dividends and buybacks, as evidence of our confidence in our ability to generate capital and as evidence of our discipline in distributing that capital when we're not using it. We're a business that can deliver strong top line growth and distribute plenty of capital at the same time, and we'll update you more on that in May.

Now we're going to take our next question, and the question comes from the line of Aman Rakkar from Barclays.

Hopefully, you can hear me fine. I had 2.5 questions, I'm going to try. On net interest income, could you just help us with -- you've referenced this deposit be to catch-up or kind of normalization of pass-through rates for a number of quarters now, primarily on the CIB, but now presumably in the retail business as well. Could you help us kind of put numbers on this? I know you've given us sensitivities before about 1% shifted pass-through assuming 100 bp cut. Can you just kind of quantify the range of potential outcomes here on this deposit beta catch up, please? Because it just feels like a big source of uncertainty that's very hard to quantify.

The related question on the interest income, the deposit growth, 12% deposit growth, we actually completely glossed over it in the presentation. It's a standout number. And I'm struggling to work out what to do with this data point because it doesn't really seem to be informing any confidence around the NII outlook. And I'm not really sure why. I mean, it's presumably because you're investing in markets and some of it's going to go into wealth. But can you help us kind of think about quantifying the forward look on this deposit base? How sustainable is that as a growth rate going forward? And what's the benefit to your P&L from deposits. It is major driver of net interest income, and I'm struggling to work out what to do with that.

There was a question on costs around Fit for Growth. I was just kind of reviewing the 2023 full year results update when Diego kind of announced the Fit for Growth plan. And there's a lot of talk around needing to address the inherent complexity and inefficiency in the business. So it is kind of curious that there was an investment envelope that we're not actually putting fully to work. And just taking a step back from the numbers, I'm just kind of I'm interested in your take around what is it you're telling us about how efficient Standard Chartered is from here that actually we tried to spend this money, but we can't because we're actually -- we're very efficient or whatever? It'd be good to kind of hear about the kind of approach and philosophy to the kind of the operational makeup of the business.

And my half question was just on Ventures, the $200 million of cumulative losses. I think you've basically done something like $170 million to date. So does that mean there's not much coming from here on in? Or it's going to be very hard for us to kind of assess that going forward? So if you could just kind of update us on that would be great.

Super. I'll just give a couple of editorial comments upfront. I may come back with some color at the end. I think your 2.5 questions was actually 3.5, but that's okay. And you use terms like feeling uncertain, lacking confidence. I'm going to say, what feels uncertain to you just feels good to us. And the lacking confidence, we hope, is a track record that can be evidenced through time so that you can feel very confident about the quality of the business that we're generating, in particular on the deposit side.

But I'm going to turn to Manus on the NII, Pete on the cost, and then maybe I'll add some color on the NII, and I can comment on Fit for Growth as well if they don't cover it. Manus?

Thanks. So on the NII on the PTRs, the deposit beta as you call it Aman, first of all, it's primarily in the CIB segment that we're talking about this. And you're right that we've said that we are above the ranges that we've guided to in the past for CIB of 60% to 75%, and we expect that to normalize again through 2026. The truth is market is quite conducive. It's been conducive for a while for us to maintain those PTRs at very disciplined levels. We obviously hope that could continue, but we think it's conservative and prudent for us to assume that we come back within the longer-term ranges that we've seen in the past.

I'm not going to quantify it exactly. If you go through the maths of the guidance we've given, you can kind of work out where you think the gap will be that PTRs would fill. But of course, there's give and take about different parts of that guidance. And what I would say on that as well, over time, longer term, and this links to your second question actually, is that we continue to improve the quality of our liabilities, both in CIB, where we're focusing on operating accounts, and across the bank as a whole, where our deposit growth, to segue into that, as you pointed out, was 12% for the year. And the majority of that or a lot of that was driven actually in the WRB business.

I don't think that, that necessarily speaks to directly a correlation with NII into the course of 2026. A lot of that deposit growth in wealth is obviously driven as future wealth flows. A lot of money comes into the bank through deposits, which is then converted into wealth. But I do think it speaks about the improving liability mix of the bank overall that we're continuing to attract these deposits, and there could be benefits from a mix perspective going forward.

But all of these, you have to place against the backdrop, of course, of the fact that we do have headwinds within NII from the rate environment, as we've called out, that 44 basis points. And we do also have a couple of percentage points of headwind from the actions we're taking in WRB. So it all goes into the mix but with an underlying story of a longer-term improvement in liability, Aman.

And to pick up on your questions on FFG in costs, I guess, a few things. FFG was always intended to simplify, standardize and digitize the bank. And we're really happy with the progress that we've made to date. You can see we've got over 300 initiatives in flight, delivering a broad range of benefits. And that's really been the focus that we've had. When it comes to the spending, we wanted to ensure that we kept to a kind of -- we were focused on productive spending and that we could keep the 1:1 ratio spend to save. And we also didn't want it to be an everlasting program. So it was important to us that FFG as a program and as a series of programs comes to a conclusion in 2026.

We will continue to invest in productivity initiatives to simplify the bank from an ongoing basis. And again, made some really good progress. We've got some of our mortgage platforms. The turnaround times have gone from 14 days to 5 days in some of our largest markets. We've significantly reduced the number of applications that we have within the bank. We've taken third-party risk systems from 10 systems to 1 system. So a lot of really productive investments. We're happy with where it is. I wouldn't take it that we couldn't spend it. I think it was just about discipline and looking beyond 2026 as far as future opportunities.

Yes. We're very happy with Fit for Growth, the progress that we've made. And while that program is going to stop at $1.3 billion, and we have some big execution still to do in 2026, we've got plenty of other programs for creating productivity in the bank, including things that are much longer term in duration, so outside of the scope of Fit for Growth. We also, since the time that we announced this program or started conceiving it 2.5 years ago or so, we have had plenty of new information about the things that we should be deploying our shareholder dollars into.

And whether that's into some other longer-term productivity opportunities, whether it's related to AI or other things, where we've got some super interesting and exciting projects underway that will produce productivity type returns that match anything that we could be doing otherwise within a more constrained, heavily guardrailed Fit for Growth project. We just said this is the right time to complete the first phase of this productivity agenda, bringing all of that into our business as usual for continuous improvement and then obviously shift some of our resources on the margin to these other longer-term or other projects that will make us much more productive through time.

So no big story here. But I think you would expect us to reflect and adjust our business approach as circumstances change. This one is a success. And we're on to the next one.

The last question you asked, the last half question was on SC Ventures, the $200 million of losses. Obviously, the bulk of the Venture segment has been the Digital Banks. That's been the biggest single component. And those have always been managed by the WRB management chain, so up into Judy Hsu. We're increasingly looking at and acting on the opportunities between the Digital Banks and the main bank. So the distinction became a little bit more artificial than has been the case. And those banks are mature. They're doing very well, and we will continue to evolve those. And you'll see them in terms of the breakout within the WRB presentations.

The rest of SC Ventures is a collection of things, including stakes and, as we mentioned earlier, companies like Toss and Ripple, including ventures that we built, like SOLV, which we've merged in Jumbotail but continue to have a stake in the resulting company. And our digital assets businesses, Zodia Markets, Zodia Custody, Libeara, et cetera. And as we reposition that into Central & other, of course, we'll continue to call out anything that's of any note. But you would want us and expect us to invest in things that are leveraging the key strengths that we've got. And you would want us and you would expect us to manage that portfolio actively.

So cutting out either things that aren't working out, which we do regularly. I mean, we've had thousands of ideas that have been killed at different points of gestation, hundreds that we put more than $20,000 into that we've killed and, of course, the ones that have succeeded we've run with. So the constraints -- I mean the $200 million is fine. We'll be within that level by almost any measure. But the value of calling that out as a specific metric is just not so relevant anymore.

[Operator Instructions] And now we're going to take our next question on the audio line. And it comes from the line of Ed Firth from KBW.

I have two questions on costs actually. I mean the first one was in Q4. I just wondered what the costs were related to episodic income because you pulled that out on the revenue line, but it doesn't seem to be any mention in the cost line. I would have thought it would have a highly variable cost base related to that. So I just wondered why that's not the case? Or could you give us some quantum of the sort of costs that go with that revenue and whether or not it is variable? That would be my first question.

And then the second question is back to Jason's question at the beginning. If I look at Slide 10 and looking at your Fit for Growth, it looks to me -- I know you're going to want to talk about this more in May, but I guess we have to fill in numbers before then. You've broadly got about $600 million of CTA cost dropping away and about $300 million of savings next year. So am I right that when I look at my '27 cost base to start with, the sort of lumpiness should take just short of $1 billion out of the cost base.

And that other than that, it should just be there's no other lumpiness that we should know about or think about when we look at '27 costs and beyond? But that is the sort of right base level, somewhere around $1 billion below the $13.3 billion, I think you said for this year.

Well, again, I'll make a couple of comments upfront and hand to Pete for both questions. On the cost associated with episodic, it's not really the way we run the business. I think what you might have in mind is that traders get paid bonuses that are a function of results. And if they don't make money in trading, their bonuses will go down. That's true. That is a truism, in fact. But cost base -- the cost -- the resources supporting the episodic income are the cost of the financial markets. So we don't allocate the cost between what's flow and what's episodic in any macro way. Pete, you can offer some more color on that if you have it.

And then on the Fit for Growth, I mean, we're running a business here. And while the productivity investments and then associated savings coming in current in the later periods are material associated with Fit for Growth, we will continue to be investing in productivity-related initiatives, which will continue to produce savings and expense and also produce income in terms of revenue. So I'm definitely not guiding to $1 billion out of the cost base. But Pete?

Thanks, Bill. Bill covered most of this when it comes to any cost related to episodic. And when we do look at markets, we look at it on a whole year basis rather than a particular quarter-on-quarter, and markets had a very strong year in 2025. So I wouldn't read anything into quarterly volatility in that number and no direct read across to the cost base.

When it comes to your question on how to think about 2027 costs, you noted all the downs, and I noticed you kind of somewhat skipped the ups on Slide 11. So there's two areas to think about, right, which is we've called out -- you called out the FFG CTA going away and the ongoing savings. We will invest and continue to invest in business growth. We see great opportunities and we're going to make sure that we invest into those and lean into those, not least of which in our affluent and wealth space.

And secondly, what we've termed other restructuring in there is kind of our historical run rate of other stuff we don't have below the line anymore. So that will be above the line. But I just want to make sure you're thinking about all the various components rather than just the FFG-specific CTA and savings in 2027. So I hope that helps.

Unless anybody think -- I was just going to say unless anybody think otherwise, we're still very focused on generating positive jaws.

Now we're going to take our next question, and the question comes from line of Alastair Warr from Autonomous Research.

Just a couple of detailed questions really. Could you just say, sticking with this cost point, was there anything you actually pulled the plug on in the Fit for Growth program, programs you've been working on, lots of granular stuff you flagged before in the last year or 2. Is there anything that dropped off the list? And then just a couple of things on asset quality. Could you add any color or anything on the outlook in relation to that sovereign downgrade, anything we should be extrapolating or be concerned about or just one lump?

And finally, a couple of your peers in Singapore, Bank of East Asia saw some movement on Hong Kong property, something you have called out a little bit before but not at this time. Is that just nothing to report here as a topic?

That's great. Thanks, Al. I'm going to turn to Pete for all of those. Certainly, the headline on the second set of questions, there's nothing to call out. We're just in good shape all around. The sovereign downgrade is what it is. It's a sovereign downgrade you've seen not associated with any material ECL that you can fill in the blanks there. Pete?

Thanks. So focusing on the first one on FFG, yes, of course. I mean, it was a dynamic portfolio. I think important, if you look at the types of areas that we've laid out on Slide 10, those are broadly the similar proportion as what we laid out originally that we thought we had a hypothesis. But of course, you test and learn and you try some. They don't work out and you stop them. So yes, it was a very dynamic portfolio. 343 initiatives currently in the pipeline that we're focused on executing in 2026. But yes, there were some that came in and out of that portfolio over time.

On asset quality, I mean, Bill gave the headlines. We've provided a bit more detail in some of our slides with regards to Hong Kong and China CRE, where the overall view is things have gotten slightly better. It's not a major issue. We've still got overlays. So we feel quite comfortable with that. When it comes to the sovereign downgrade, as Bill mentioned, no significant ECL in Q4 as a result of that downgrade. So it moves the numbers as far as the what we call high-risk accounts. But we feel quite comfortable and confident and no significant areas to point out that we're concerned about heading into 2026. Thanks for the question.

And the next question comes from the line of Amit Goel from Mediobanca.

So 2 kind of follow-ups from me. But firstly, just on the income guidance for '26 to be around the bottom end of the kind of 5% to 7% growth range. Just want to double check, is 5% kind of like the floor? So you would expect to be 5% or better? Or are you thinking that the income depending on obviously external variables, it could actually be a touch below the 5% as well as being potentially above the 5%?

And then secondly, again, just following up on the costs. So obviously, a large part of the delta was the investment into initiatives in terms of cost of '26 underlying. Would you mind just giving me a little bit more color in terms of what those investments initiatives were and how that will help productivity and growth in the future? So what's the kind of payoff or what exactly have you invested in there?

Great. I'll turn to Manus on the guidance question and Pete on cost. But let me say, I'm pretty sure that our bankers, RMs, traders don't pay a lot of attention to the guidance that we're discussing on this call. They don't shoot for 5.0% and then take the rest of the day off. These guys are, all of them, ladies and gentlemen, are very focused on generating growth. Super excited about the growth that we've generated so far, which has been well ahead of the guidance that we set out. And I can tell you, every undertaking will be to continue to do the same. Then we get into levels of precision that are probably not so meaningful given what's going on in the rest of the world. Manus?

Yes. No, I'm not going to add those levels of precision either. I would just say the guidance is around 5%. It's neither a floor nor a ceiling. It's how we see things at the moment. We'll obviously update you during the course of the year on how that progresses. But that you shouldn't take it as either a floor or a ceiling specifically, Amit.

And Pete, do you want to talk about the change in investments?

Yes. Thanks for the question. When looking at '26 and the business investments, it's a variety of things, as you pointed out, both productivity and growth oriented. So on the growth side, we've been talking about our investments into wealth management and affluent. And those, we want to continue. And so those are a key component of that. On the productivity and growth side, you've got enabling technologies as well as data infrastructure and AI initiatives to really take advantage both to grow as well as to become more efficient. So that's a few types of examples of the things that we're leaning into in 2026 with the confidence that we've got in the business momentum.

And now we're going to take our final question for today, and it comes the line of Chen Li from China Securities.

This is Chen Li from China Securities. The first question about the credit cost. Although through the cycle, credit costs are 30 to 35 bps, but it has remained at around 20 bps in the past few years. So what is your outlook for the credit cost trend in 2026?

And the second question is about Global Markets. Since Global Markets revenue tends to fluctuate significantly with market conditions, so what about the trend of the net interest comp about the Global Markets in 2026?

Great. Thanks for the question, Chen Li. I'm going to turn to Pete on the credit question, but I'll just again give a little bit of a high level first pass. The 30 to 35 basis points is what we estimate are through the cycle credit cost to be. Of course, we've not been operating at that level for some time. And we see nothing in the portfolio today that gives us any particular cause for concern. We've also substantially improved the credit quality of the portfolio over the past, call it, 10 years, but I think continuing over the past, call it, the post-COVID environment, with over 70% of our portfolio being investment grade, et cetera, with much lower concentrations than we've had at times in the past.

So none of this is to say that our guidance of 30 to 35 basis points is inaccurate. It's just we haven't been tested in a down credit cycle with our current portfolio. I guess kind of it's a truism. But I will say that I think we've managed our capital allocation quite carefully. So I would hope that we can demonstrate an outperformance relative to the guidance that we've given. But we can't prudently suggest anything other than what our data analysis would suggest we should be prudently guiding towards.

And I think we covered it before on the financial markets. The flow income is not that volatile. It's actually quite steady. It's been growing 10% year after year after year after year after year, including 2025 and into the start of 2026. That's 70% pushing to 75% or, possibly over some period of time, 80% of financial markets income. The remainder is volatile. But it's tended to be volatile above 0. And you can give us a big old knock for being $16 million negative in the fourth quarter of 2025, still a good overall episodic year for the full year 2025. Volatile but positive and with the underlying core of the business being very stable and growing quite nicely. Pete, do you want to add anything on either of those?

I think you covered the Global Markets. On the credit cost, just a couple of data points. If you look at our CIB portfolio, we actually had only $4 million of credit cost this year and a net recovery last year. We don't see anything concerning on the radar screen. But we're just cautious that expecting net recoveries or virtually 0, we want to be aware that situations can change. But read into that along through the cycle rather than anything specific looking at 2026. So feel comfortable with where we are there.

Good. Well, I think we've exhausted the questions for this morning. And thank you enormously for the time that you spent with us. I know it's been a long earnings season, and no doubt, you've got a lot to do for the rest of the week. But I really appreciate the focus and attention.

Just a couple of parting thoughts for me just in case you didn't pick it up from our earlier answer or the presentation. We feel super good about the franchise right now. It is firing on all cylinders. Really anything that matters strategically, we're doing well. We're investing in the things that are producing those kinds of results. We have an excellent team, of course, starting with the gentlemen on either side of me. But the rest of the management team, as I've said, is as good as any -- I'll say better, than any team I've ever worked with. And that's the team that's generated these results.

So we are full speed ahead. I personally am full speed ahead. I may not look like it, but I definitely am. And I look forward to future outings where we can continue to talk about the great progress that we're making on our cross-border and affluent strategy. Thanks.

Thank you very much for joining us with Standard Chartered CFO, Diego. Diego, you started as CFO in January '24. The stock is up, I think since you joined, I checked yesterday, 150% roughly. [indiscernible] up 110s. So there's a track record here.

No bad.

Not bad, not bad. And...

Testament to the great guys of Standard Chartered, I agree.

And now the pressure is on, of course, to continue with that.

Let's talk about the business because you guys have done extremely well. And maybe we go by business first and go a little bit into the key drivers, and then we go a little bit into group and future as well as group P&L. So in terms of business, if we maybe start with wealth. And can you just explain to the audience the conversion, especially also what we see in Hong Kong of customers coming into retail and your acquisition of customers, deposits, conversion into wealth. And in that context, what is the structural wealth growth and what is the market share gain? So just unpicking really all of these items that are driving a lot of your wealth revenues.

Absolutely. So you say, Kian, that this is Hong Kong. It's really a little bit everywhere. In Hong Kong, it's particularly true because in Hong Kong, we do operate a true universal bank model. And as a consequence, the funnel of retail customers that we migrate up to affluent and then eventually to the private bank is particularly visible. But that dynamic exists everywhere across our network where we operate our Wealth Management activities.

The fundamental thing to remember about our Wealth Management is that it is propelled by incredible secular forces. The growth of the middle class in Asia, the increasing sophistication of investors in those areas of the world, the fact that Hong Kong is the fastest-growing by far wealth center in the world and by the end of this decade, will be also the largest one by absolute size, and by the way, the third fastest -- the second fastest one and the third largest is Singapore, which is also one of our homes, all of these, the growth of global Chinese, the growth of global Indian, the fact that global Indians are active almost in a perfect overlap to our network and to our footprint from the East Coast of Africa up to the Middle East to India, down to Southeast Asia, all of these are very, very powerful secular forces.

It's clear that more cyclical trends at times do help us. But I think we have shown in recent quarters, in particular, that the resilience of our business model really works in more volatile and in less volatile times. In the second quarter, just after April 2, we attracted $15 billion of net new money in Wealth Management, which was an absolute all-time record. And it was mostly -- and this will allow me then to go to your second part of the question or to the first part of the question, which was mostly skewed towards deposits.

And in this quarter, in the third quarter that we just reported on, we attracted $13 billion of net new money, which is a good number, but it was mostly skewed towards Wealth Solution products. And that gives you a sense of how these flows move over time. We attract a balanced level of deposits and Wealth Solutions. But when times are more uncertain, there is more weight towards the deposits. We like the deposits anyway. They are a good way for us to fund. They are definitely cheaper than for us to fund with time deposits from corporates.

But over time, they have the beauty that they then become Wealth Solution products and the Q2 to Q3 dynamic is a perfect example of that. What helps us in this and makes this an even more resilient and more structural and more long-term trend is the fact that our clients, although we are -- we operate across the spectrum from mass retail all the way to the private bank in certain of our locations, but the reality is that our laser focus is on affluent customers, $1 million to $10 million. They are lower cost to acquire. They are lower cost to serve. They are extremely loyal. They don't move when their relationship managers move in the way that the private banking clients move. And they are very anchored to the bank by some anchor products like life insurance or mortgages, and then we build portfolios around with our managed investment portfolios. So overall, a very strong and very secular-based type of growth.

And we've seen net new money flows growing at 15% year-to-date. We've seen your wealth income growing 25%. Can you also talk a little bit about the structural elements versus more if you're thinking you're gaining market share in this segment as well?

I think it's undeniably the case because if you look at the growth of other wealth managers, it's not at our levels. I think we gained share in 2 different ways. We gained share from more global players by the fact that we are laser-focused on what we do. And servicing affluent customers is not the same thing as servicing mass, and it's definitely not the same thing as servicing ultra. And that is how it works. And where we really gain market share is from the local players.

And we gain even more market share from the local players when times are more discombobulated like they are right now. Of the $15 billion of net new money in Q2, it's very obvious that there is a strong element of haven factor of people bringing money to Standard Chartered because in many cases, we are one of the few international banks in that country. And in some cases, we might very well be the only one.

And you have clearly adviser higher targets. Can you just update us where you are as well on your net new money flow guide?

So we have -- we guide for $200 billion of affluent net new money over the course of the next 5 years, which means roughly $10 billion per quarter, pretty obvious that with $15 billion and $13 billion in the last 2, we are doing very well. But on the other hand, we are a few quarters into putting out these targets. So we will have plenty of time to look at them. But so far, so good. It's working nicely. We have also said that we are going to invest $1.5 billion in our Wealth Management activities, largely by refocusing out of more mass business in our Wealth & Retail business. We are doing fine. 50% of that money is, as you say, Kian, aimed at hiring relationship managers. And we say that we are going to add about 50% to our number of relationship managers. We are continuing to progress well.

What I think is important to remember from that point of view is that when you think about the fact that we are saying that we are growing -- as you said, we are growing our assets under management definitely more than 10% per annum. When you look at that, it's clear that we do need more relationship managers, of course, to service more customers, but there is an element of productivity gain that is very, very important. We train them. We provide them with technology. Part of the $1.5 billion spend, 25% of it is in technology meant to empower the relationship managers. So that's what propels this very important part of our story that is the Wealth Management business.

And shifting over to the cross-border income, you're a network bank, and it's not always easy for us to compare network banks. There's not a lot of data. So maybe you can explain a little bit your strengths in the network bank, the corridors where you see the most potential, where you're strong as well and how you compete compared to some of your competitors? What's differentiating you from some of the larger competitors, which are also in the space?

Absolutely. Look, it's -- first of all, it's fierce competition, as you can imagine. We give you a sense of our network in our various publications that is beautiful, in my humble opinion. Rebound chart that shows the ins and outs, flows in the various parts of our network. And when you look at that chart, you realize immediately that our network is our strength. And it's true that there are other network banks, but there isn't another network bank that is present in all of the ASEAN countries, another network banks that has the kind of exposure we have to some of the fastest-growing economies in Africa and some of the fastest commodities-led areas around our footprint.

And so it's the network, it's agility, it's diversity, it's diversification effect is what is very important, combined with the fact that we have very active cross-selling between our banking business and our markets business, which I'm sure we will talk about at some stage, but our markets business is a giant risk management machine. And when we -- when you marry that kind of network with a risk management machine that spans across all fixed income, currency and commodities, including commodities, particularly at this time of high volatility, you see where our competitive advantages lie.

In terms of corridors, since April 2, the theory that in the world that the world -- that the globalization is far from dead. It just flows in different ways and that the fastest-growing regions are in Asia are proven by our network flows. By far, the most powerful network, part of the network is the intra-Asia. Within intra-Asia, India to ASEAN, Middle East to ASEAN and China down to ASEAN remain the most important one. And when you look at the network, remember, the network is very far from meaning trade. Trade is less than 5% of what we do. Network is all of the flows of capital of FTI, of FCI, of trade, of goods, of services, of wealth across our piece, you really see that, that is the power of it.

And your growth rate has been quite high, 9% CAGR in the cross-border income since 2019, adjusting for interest rates, which really have an impact. So it seems like you're gaining market share if you compare that with your peers. Is there, again, some rationale that you can give us of what you're doing or where you are that leads to the outperformance?

We are steadfast. We are steadfast on our network, and we are steadfast in our presence on the network, even though our network is a living organism. So some parts of it are exited, some parts of it are entered over time. But by focusing on the network and maximizing it, we are taking advantage of the fact that some people are somewhat retreating and retrenching towards other areas and that the domestic banks find it very difficult to compete with us at a time of very high volatility of supply chains and exit markets.

If you are a large corporation and all of a sudden, you find that the particular location in which you were manufacturing in, let's say, in ASEAN doesn't work for your exit markets, it's very difficult to use a local bank to take -- to affect the changes. And it's what you saw during Q3 when volatility abated a little bit and when our clients had again the conviction of putting in place strategic solutions, our banking business had its best quarter ever at almost $600 million, so.

And as you mentioned, we should really put that in context also the financial market business where we saw quite strong growth again in the third quarter. But also, can you talk about the business mix? What are your strengths in that business? And how you see that the combination with the network bank in terms of captive business, but also in terms of multiplier effect from your relationships?

Spot on in linking the 2. I mean, you link them in exactly the way that we think about it in managing them, which is, our markets business is for 70% a big risk management machine. And it's a risk management machine that we put at the service of corporates, of financial institutions worldwide. And bear in mind, when we talk about financial institutions, we are talking about the likes of us or the likes of you, JPMorgan. We also do a lot with the likes of our audience, i.e., with investors. But we are fundamentally a bank to banks and broker-dealers, to security services houses, to global custodians, giving them access to our regions in a way that for them is a lot more effective and a lot more cost efficient.

So that's how we link our market business and the risk management part of our market business. And that is about 70% of that particular activity. It grows very well. It grows at 10%. There's a page in our Q3 release that shows that over the course of the last almost 6 years, we've grown at 10% per annum in a very, very consistent way in flow, in what we call the flow business. And then we add on top of it what we call the episodic business, which is business that is related either to capital market activities or to flares of volatility, big events where larger trades happen because the other beautiful characteristic of the flow business is that it's programmatic, it's small, it's digital, it's low cost to execute.

The episodic can be different from that point of view, but obviously, it's a nice addition to what we do. And if you think about the long term, the flow business grows at 10% per annum consistently. The episodic business ebbs and flows on top of it. But as our banking business will continue to grow, the episodic business will also continue to grow because part of it comes from the activities that lie in banking. That's how we integrate the 2 businesses.

So if we put this all together, from a business perspective, you're doing very well. Clearly, there is this overhanging risk and concern in the market on tariffs and the potential tariff impact on business activity. It doesn't feel like much to be -- we haven't really seen much in the numbers so far. How do you think about business activity with that uncertainty that comes on top?

I would say -- I promise you, I'm not joking. I would say that we have seen the results in the numbers. The numbers have been excellent. They've been excellent in Q2, and they've been excellent in Q3 after the announcement of tariffs for 2 different reasons. And that's how we think of it and how I think when we speak to our clients, where do we see the action. You have to imagine -- you have to remember, not imagine that April 2 was a big shock to the system. As the shock to the system took place, the banking business activity was abated to a certain extent as people were trying to figure out what to do.

The market business activity flared up immediately because volatility flared, and that was the story of Q2. As the situation has stabilized, the thing has reversed. Episodic activity has gone down. Flow has remained strong. In Q2, flow was not up 10%. It was up 12%. So it's done particularly well. But banking had the best quarter ever because our clients restarted doing strategic projects. And from that point of view, the thing that is really important to think about us and how we are very, very different from many of the other banks that we compete with is that we are very clear about what we do and what we don't do.

We work in corporate and investment banking with our -- with the largest corporations on the face of the planet. Those corporations, when a shock happens, are quick to react. They have the wherewithal to do it, they have the capabilities and they rely on someone like us to shift things around. We deal a lot less, very little in actual facts with the small and medium enterprises of the world. And if there is one thing that I always say in this kind of situation is that it's in the small and medium enterprises of the world that the risks lie in this very fragmented world. Because if you are a small and medium enterprise and your one supply chain gets cut, how are you going to change it? How can you change it efficiently and quickly? If you are Apple and something changes, you'll move at the speed of light. We deal with the Apples of this world, not with the small and medium enterprises.

And putting that picture together in terms of RoTE, you are already reaching in '25, you guided with the third quarter your RoTE target for '26, the original target of 13%. You're going to give us an update with the full year results for '26. And then when I really do the projection, at least in our forecast, we already get towards 14% in '27. But clearly, what we are interested in, and you will have an update in May on your more medium-term targets. But can you talk maybe about sustainability of RoTE? How can we get comfortable that these levels are sustainable?

In very many different ways. First of all, because we've now been producing it for quite some time, and we've made it very clear that it's a staging post. And all of the trends that we have discussed so far in the first 20 minutes of conversation are all very secular. I appreciate that you can say tariffs are not secular. They are not going back into the bottle. So the world will stay a more fragmented and more complicated world than it was before April 2. So the trends -- the structural trends play to our strength.

If you think about our -- we are a very balanced bank from this point of view. I love the fact that I get a disproportionate number of questions, you and I joke about it every quarter about net interest income. But the reality is that net interest income for us is about 50% and noninterest revenues are about 50%. Net interest income, we have derisked it very intensely with the building of our structural hedge. And the sensitivity to rates that we report through the IRBB is down from $1.5 billion to $600 million in the course of a few years. And from a certain point of view, you can expect it to continue to trend in that direction as we continue to hedge ourselves.

And on noninterest revenues, we have powerful engines of growth, the banking, the markets and the Wealth Management, where we started from engines of growth. So these are important propelling forces that are going to be helped at the margin by a number of other things that continue to spice it up, but it's really at its heart, it's the delivery of less risky NII and powerfully growing noninterest revenues that is going to propel our return on tangible equity, of which, as you can imagine, I'm not going to give you a number now because we're going to do it in February and then again in May in Hong Kong.

It feels so what we've seen so far in the different markets that you operate in. And clearly, with your strategy, which really -- I think really in the first third quarter, you could see it's really all going in the right direction, it's just a continuation of that on what we -- what you expect going forward?

We are not about the revolution. We are about evolution. The strategy has been in place for a long time. We know very well that resources are finite. We invest very heavily in our CIB cross-border and very heavily in our Wealth Management. We deemphasize the rest and we fuel the machine. And by the way, because we have strong earnings of earning generation engines. And I think we manage our capital and our risk-weighted assets very dynamically. Capital velocity is a mantra at Standard Chartered. That enables us to invest in increasing return on tangible equity and return capital to our shareholders.

So shifting gears a little bit and talking about some of the growth elements of the future, I would call them. So one of them is clearly digital assets. I think Bill Winters really started talking about digital assets when we really, as analysts weren't really that focused on it very, very early on, probably the first CEO to talk about it, so digital money. And you have this nice chart in your presentation. You basically have your fingers in everything in the pie, custody, crypto, but utradigital money movement, tokenized deposits, tokenized assets, et cetera, et cetera. I can go on. So can you talk about your strategy there, how you're positioned? How do you see that enhancing your franchise?

So Bill has positioned us incredibly well. I mean Bill is a visionary and Bill was particularly a visionary in this particular aspect. So we started investing a long time ago. We are also blessed by the fact that the regions in which we operate want to be at the forefront of the digital asset revolution. Think about the Hong Kong Monetary Authority sponsoring the stablecoins, and we are the only money printing bank in Hong Kong that is going to have -- that work with them in a sandbox to work on that.

We are working with the providers of Singapore dollar stablecoins. We are experimenting with tokenized deposits with the likes of Ant. So we are a little bit of everywhere by design because our view is that this is still a fast-moving environment. And what exact form will it take? We don't know. It might very well be that it will bifurcate in ways that we can only imagine. It might be that stablecoins end up being fundamentally a retail product and tokenized deposits end up being, for example, an institutional product, something that your house believes in pretty strongly, right, like us.

But the way that we really think about it, what we want to be is we want to be a portal at the center of what our clients do. We go where our clients want to go. That's what inspires us. By being at the center of what they do, whichever way something will -- whichever form something will take, if it's going to be a payment, it's going to be a Swift, it's going to be a Swift type of coin. It's going to be a tokenized deposit. It's going to be a Central Bank deposit -- Central Bank digital currency. We want to sit at the center because we know that by sitting in the center of what our clients do, we will reduce the threat from nonbank actors which is very important and we will figure out ways of making money.

And another one of the potential growth segments and interested in your view on the realization of that value is clearly your Trust and Mox, which are your digital banking platforms in Hong Kong and Singapore, expected to be profitable in 2026 still and how do you think longer term monetizing these 2 assets?

So first of all, I think that these are assets that as they reach maturity in terms of the number of customers, and we've been doing very well, both in Hong Kong and particularly in Singapore, where our partner, NTUC with FairPrice, et cetera, has been a phenomenal customer acquisition and deposit acquisition approach. First of all, as they mature, as they reach maturity on number of customers, but we continue to add products and they become profitable in 2026, these are very high return on tangible equity businesses. So we love having them.

And as the world will continue to develop, we use them to understand where our clientele is moving. Remember, these are in the 2 places in the world where we truly operate a universal bank approach. In Hong Kong, we are 1 of the 3 money printers. And in Singapore, we are the only so-called significantly rooted foreign bank, i.e., we have fundamentally the same rights as the 3 large Singaporean banks, and we compete head-to-head with them.

So we can follow the clientele. We can provide them with more services. We are adding more and more. We are adding Wealth Management in both places. But let me give you an example of how they are very, very different. In Hong Kong, our clientele skews younger, skews younger and skews more mass. And as we think of Wealth Management, we think of Wealth Management for that type of clientele. In Singapore, on the other hand, Singapore is a culture where people like having multiple credit cards and like having multiple banking relationships. Trust has actually gained a lot of real affluent clients that are the natural clients of someone like Standard Chartered.

So the Wealth Management offering there will skew more towards that type of product. And it will be, if you wish, a little bit more sophisticated and a bit less transactional. The other one will be more sophisticated in the transactional sense. So that allows us to continue to experiment. And frankly, we are not yet at the point where we know where the limit is, but we will know a little bit more in May, and we will give an update on that.

That's great. So you have something to look forward to on Mox and for us.

I know you can't wait to trust Hong Kong with us.

We'll wait till May. We will hold off. And if you look at some of the areas that have been challenging in the past, geographically, I'm thinking Korea, India, Indonesia, UAE, can you talk about the turnaround there and how you see these businesses progressing for regions?

Sure. So let's start from the start. The fact that it's a bit strange to me because it was before my time at Standard Chartered, but the concept that the UAE was once a challenging place for us makes me laugh because right now, it's our third largest Wealth Management hub. It's a place where we are investing a lot in Wealth Management. We have completely refocused our business all around Wealth Management. There's 10,000 billionaire -- not billionaires, 10,000 billionaires will be too much, 10,000 millionaires that are going to join Dubai as Dubai population, the Emirates population continues to grow.

That is -- and by the way, that is the blueprint [indiscernible] because they are not as large wealth centers, but it's exactly the blueprint that we're going to follow in the other places with some changes. So think Korea. Korea is definitely a difficult market from a retail point of view. We will continue to shift very heavily towards Wealth Management, which means we are upgrading, we will continue to reduce our footprint there, we continue to upgrade the quality of our footprint. We opened a great Wealth Management center in Gangnam that is proving the fact that our proposition there with our signature funds and our open architecture is working really, really well in that market. And it's a wealthy market.

I mean the growth of wealth in the affluent segment of the population in Korea is in the very high single digits. So no doubt, it's going well there. In India, India is another place where we will pivot towards wealth. And pivoting towards wealth in India, we now have 3 wealth centers in Mumbai and 1 in Chennai that are fundamentally solely aimed at the global Indian population. I've said before, we exist -- our footprint seems tailor-made for serving that population. You think about those investments, that's the direction of travel in India, while our CIB business, of course, in India does extremely well because for a decade, we have been the main provider of dollar financing to Indian corporations. We are the dollar clearer of GIFT City. We are growing in GIFT City, our activities, et cetera, et cetera.

So that is where we are going. In all of these geographies, it's deemphasizing the mass -- the single product customer relationship. We sold a large portfolio. You will remember last year, a large portfolio of personal loans in India. We have deemphasized certain of our digital activities with mass customers and invest into wealth. That is the footprint, that is the blueprint and Dubai shows us that we know how to do it.

And if we maybe switch from these potential turnaround/growth opportunities to more the group P&L and maybe start with NII. And we're not going to talk fourth quarter. You've given guidance for the fourth quarter, but more longer-term trends, balance sheet mix, balance sheet growth, especially lending, what do we need to really see lending picking up, both on the retail corporate side? And in that context, clearly, you structural hedge, how should we think about the dynamics, the challenges as well more from a top-down perspective?

So as you probably -- probably the best way to that works to break down NII is to think about its components. And let's think about -- you mentioned one super important component, volumes. But let's start for a second from rates. If we start from rates, our footprint has a lot of rates. Never read what happens to software in the U.S. and think that that's what's happening to Standard Chartered. That's a small component of what we do. In fact, that's why we publish our own index weighted by our level of activity by countries of how interest rates affect us.

But it's clear that -- 2 things are clear. One is that next year, there is still some headwind coming our way and a little bit than we were expecting before. But it's also very clear that a large amount of the headwind has already taken place this year. So from a rate point of view, there is nothing to be particularly afraid if you believe the forwards, which are the only thing we look at. We don't make -- we are not JPMorgan. We don't make our own forecast and predictions. We love taking the forwards and managing ourselves based on what the market expects.

The second big influence on NII, of course, ought to be volumes. But as you say, when are we going to see volumes? Now the interesting thing is at the beginning of the plan, at the beginning of '24, we said that we thought we were in a subdued period for volumes and that we would see volumes growing at low single digits. This year-to-date, customer loans and advances have actually grown at 4%. Our risk-weighted assets on a constant currency basis has grown at 3%. So it's growing a little bit better than what we expected, but it's definitely below the natural rate of growth of our footprint, which is more in the 5% plus region.

If you believe that there is an inverse correlation between rates and volumes, you got to believe that next year, it's going to be a little bit better as rates continue to decline. Are we going to go back to the average trend line? I doubt it because the decrease in interest rates is not particularly marked, at least right now, we don't expect it, but volumes should come to help a little bit.

The third component of NII and one that I am very, very happy with the way we are handling it is the pass-through rates. And on pass-through rates, we are currently operating at pass-through rates that are nicely in excess of the top end of what we normally operate in, in the Corporate and Investment Bank, and we are operating within normal framework in Wealth & Retail. What does -- why is that? Two reasons. One, because we are disciplined, because that's what we believe is -- because we believe it's really important to manage pass-through rates well. But the second, we are also helped by the environment. Particularly post April 2, the entire world is running itself a little bit more liquid.

And certainly, corporations are running themselves as substantially more liquid, which means that there are a lot of dollars around, which means that we can be a little bit discriminant in what do we want to pay up for and what we don't want to pay up for. So pass-through rates right now are doing very well. Do I believe that we can continue to keep them there? Well, we will do our best from our point of view. But in lower interest rates, pass-through rates become more difficult to manage, of that, there is simply no doubt.

Fourth, very importantly, the mix. And there, there are several parts where we push the mix very aggressively. First of all, in assets, we obviously want to have as much commercial assets and as little treasury assets as possible. So we move aggressively trying to provide credit to clients, but there is a limit to how much volumes they will want. And on the liability side, we are very clear that one of our big pushes continues to be higher quality liabilities, which means Wealth & Retail over Corporate & Investment Bank.

And within Wealth & Retail, maximize as much as possible the CASA that we attract, bearing in mind that for someone like Standard Chartered, time deposits are not a bad word, quite the contrary. We like time deposits in Wealth & Retail because they are cheaper than in the corporate bank and by the way, because eventually, they become Wealth Solution sales to our customers. So we really like that. These are the 4 big influences.

There is a fifth little influence, but that's the tail rather than the dog, which is the fact that several of the initiatives that we are doing in the Wealth & Retail side in order to reduce single customer relationships and reduce credit card and personal loans come with a little loss of NII in the region of $100 million, which is not the end of the world, but it is a little bit of a headwind, which is good to take because it leads to higher return on tangible equity.

And if you shifting to cost, you have the Fit for Growth program, $1.5 billion, your run rate is around $600 million and you indicated around 80% will be achieved next year. So let's say, we will double roughly, I assume $1.2 billion or so. So at the same time, we're seeing this growth in wealth. We're seeing activity levels picking up, especially on the fee side in Asia. How should we think about growth cost going forward in terms of cost management, the program that you have and going forward in terms of cost pressure versus further productivity gains that you can take?

So you'll forgive me for this because you've heard it many times, but maybe some people in the audience haven't heard it. I always say that the diet of a CFO is a pretty varied diet. We eat, we are omnivorous, but there are 2 things that I eat every day. One is cost and the other is balance sheet optimization. So costs, there is no doubt that they will remain an important focus. I think we have demonstrated that we are managing them pretty well, pretty assertively.

But you are very right. Growth is important and revenues are important. And we always say that there are certain costs that are the cost of success, and we need to feed the machine in order to achieve the results. Fit for Growth was ideated for that. It's a transformational program. It's a program that has helped us reshape the way that the bank does many things. Also, it has helped to reshape the way that our people think about transformation. Our people are more cost attuned, are more transformation attuned today than they were 2 years ago.

Having said that, Fit for Growth definitely finishes next year. There isn't Fit for Growth #2. Our cost to achieve finishes being spent next year. We are being careful in how we spend it. As you continue spending in a program, you realize that some of the things that you are spending, you need to stop spending and redeploy it somewhere else. And you need to always make sure that you are spending for growth. So within that context, we will deliver what we have promised for 2025, we will get into 2026. What you didn't mention is that there is a portion of the -- sorry, you actually did -- that there is a portion of the benefits that actually accrue after 2026. And I think that you will continue to see a very cost-conscious Standard Chartered going forward, and we will tell you which form that will take once again.

So I think with that, we open up for questions.

There should be a microphone on the table. Do you have questions? I have a few more questions, but let's see.

The key end reserve.

It's Gigi Sparling from JPMorgan. You talked a lot with other bank management teams today about M&A, but we never seem to talk about it with Standard Chartered. So is that something that you're discussing, please, at a management level?

So not much, I would say, in the sense that M&A -- you do M&A for various reasons. But fundamentally, you do M&A because you need to create growth in one way or the other of revenues, of synergies, of cost synergies or whatever it is. We are blessed with a naturally growing footprint where we can grow very well organically, where our return on tangible equity is continuing to increase. And when our shareholders, many of whom sit in the audience today, are happy to see us reinvest in our organic growth because we are doing it at increasing levels of return on tangible equity.

So the answer is not much. It is true that as time evolves, as we are at a higher level of return on tangible equity, we generate a lot of earnings. Would we be able to look at small bolt-ons or infills or things that can help us accelerate the growth? Possibly. But it's far from that -- it's very low on the level of management discussions inside Standard Chartered.

I mean you generate about 200 basis points of capital when we do the calculation. How do you think about optimizing also from a capital return perspective? So there's M&A, but there's also clear capital return. You're now at tangible book value. So does that change things about the mix between buybacks and dividends? And how do you think about the hurdle rate, which is clearly getting higher?

So I think that in -- I cannot imagine a state of affairs at Standard Chartered today in 3 years, in 6 years, in which we are not going to always have at the top of our capital allocation hierarchy investing in our own business because it's at increasing levels of return on tangible equity, and they are increasingly attractive. So that part is and will remain, I believe, the most important part of our capital allocation hierarchy.

But as you say, we generate plenty of capital. And we intend to continue returning capital to our shareholders aside from the commitments we have made of over $8 billion in the '24 to '26 period. In May, once again, we will put out a capital allocation hierarchy. I think dividends and buybacks will continue to feature. Why? For a number of reasons because although we are above tangible book value, and we are far from happy about being only above tangible book value, buybacks, you do them for as long as you believe that your stock is undervalued, and we think that we are still undervalued.

It also has the beautiful side effect of increasing those lovely per share numbers of earning per share, TNAV per share, et cetera, which we know are important contributors to the happiness of our shareholders and to the health of our stock price. And so they will continue. It is true that the higher level of return on tangible equity and the recurrent nature of generation of earnings of our franchise make it so that over the course of the next few periods, we will have to think about what do we do from a dividend point of view. It's entirely possible that we decide to increase the payout ratio from that point of view because we are in a position where we can do it, but it's a bit early to discuss that in more details.

And we very much agree with you, 1x tangible 27% on our numbers versus 14% return. So it's still very cheap.

Thank you. Can we restart this?

But we take further questions.

Could I ask again on wealth? Given the wealth is a secure story, what could go wrong? Is it higher competition from relationship managers, margin on product offering or flows? If you could elaborate on that.

I struggle to believe on any of those. First of all, I'll tell you what can go wrong on wealth. We can have a 9-month market recession with every asset class down 30%. That is not going to be good for our Wealth Management business or any other Wealth Management business. On the more idiosyncratic points that you pointed out, we're going to grow our relationship managers by 50% over 5 years. We are perfectly in line with the 10% that we need to grow for this year. It's a constant J-curve because it takes them 12 to 18 months to come up to speed and be at their most productive.

Relationship managers for affluent love to come to work for us because we are open architecture, we are an international bank. We are in the right places in the world. There is no shortage of talent out there. Competition is undoubtedly carnivorous. But we have added to assets under management through our net new money very, very consistently, and we've maintained good return on asset level of margins. So I think -- and the flows, the nature of the flows, we are very balanced.

Last quarter, yes, it's true that international clients, what we like to call increasingly the globally minded affluent are the most important part of our clientele, but they were 60% and 40% were domestic. And within the 60%, we have global Chinese, we have global Indians, we have expatriates, we have other internationally minded people that are moving to places like the Middle East or inside India. We have a lot of different opportunities. I struggle to think of any of the various very well-diversified parts of Wealth Management as one that could weigh layers, but there is no doubt that an outside market-based recession is not good.

Any further questions? We're actually out of time. I'll stop here, yes. Otherwise, I get in trouble. Thank you very much, Diego. It was very comprehensive, and we look forward to May and of course, also the full year results with the guidance for '26.

We'll do. Thank you, everyone. Thank you.

Good morning, and good afternoon, everyone. Thank you for joining us today. First, I will take you through our third quarter results. After this, I will be joined by Bill, who is dialing in from our Dubai office today, and we will be happy to take your questions. In my remarks, I will be comparing the third quarter underlying performance year-on-year at constant currency, unless otherwise stated.

It has been another strong quarter. We delivered 9% growth in profit before tax on the back of a 5% increase in income. Our growth engines have continued to deliver consistently with a record quarterly performance in Wealth Solutions and Global Banking. As a result, we are upgrading our 2025 income growth guidance to be towards the upper end of the 5% to 7% range at constant currency, excluding notable items.

We had previously guided this to be at the lower end of the range. And more importantly, we now expect to deliver a return on tangible equity of around 13% in 2025. This exceeds our previous guidance of approaching 13% in 2026 and accelerates our delivery by a year. As Bill set out in the press release this morning, performance has been broad-based and is a testament to our sharper strategic focus on servicing our clients' cross-border and affluent banking needs.

Looking now at the numbers for the quarter. The group delivered operating income of $5.1 billion, which was up 5%. This was underpinned by the strong performance in Wealth Solutions and Global Banking in the quarter. Operating expenses were up 4% and credit impairment was $195 million. As a result, profit before tax was up 9% to $2 billion, and our tangible net asset value per share was up $1.75 year-on-year.

Now let me take you through the performance drivers in details. NII was up 1% on a quarter-on-quarter basis, largely driven by volume growth. Lower rates in Singapore led to a reduction in NII, but this was partly offset by improved WRB pass-through rates in Hong Kong as HIBOR rebounded. We have continued to manage our pass-through rates assertively. And although they remain above our medium-term expectations in CIB, we expect pass-through rates to reduce over time. Putting this all together, we still expect our 2025 NII to be down by a low single-digit percentage year-on-year.

As usual, we have updated our currency weighted average interest rate outlook in the appendices to this presentation. This shows that we now expect a 55 basis point headwind in 2026, slightly higher than the 44 basis points when we last reported. Our non-NII engines continued to drive strong growth, and I will talk to each product driver in the segment section.

Now turning to expenses. Operating expenses remained well controlled and were up 4% year-on-year, mainly driven by business growth initiatives and investments, which were partly funded by Fit for Growth and efficiency saves. We have achieved $566 million of run rate savings from our Fit for Growth program and have taken $454 million of restructuring charges since inception. Our 2026 total expense guidance remains unchanged at below $12.3 billion on a constant currency basis, which would be $12.4 billion at current FX forward rates.

Credit impairment for the quarter was $195 million with an annualized loan loss rate of 24 basis points. WRB impairment was down in the quarter, largely due to optimization actions in our unsecured portfolios. In CIB, we took an impairment charge of $64 million, included within this is an additional precautionary $25 million overlay for clients who have exposure to Hong Kong commercial real estate. You will see more details in the appendices as usual, but nothing has materially changed since we last spoke to you.

Our high-risk assets were up around $650 million quarter-on-quarter. This was driven by a sovereign downgrade into early alerts, partly offset by a reduction in the credit grade 12 portfolio. We continue to monitor our credit portfolio closely, and we are not seeing any new significant signs of stress emerging across the group.

Underlying loans and advances to customers were up 1% or $2 billion quarter-on-quarter with the increase largely coming from wealth lending and mortgages. We have seen 4% underlying growth year-to-date, driven broadly across Global Banking, Wealth Lending and Mortgages. We continue to guide to low single-digit percentage growth in underlying customer loans and advances. Underlying customer deposits were up 2% or $11 billion quarter-on-quarter with growth largely from WRB.

Turning now to capital. Risk-weighted assets were down $1 billion in the quarter. The increase in asset growth and mix was offset by a $1 billion reduction in market risk RWA and another $1 billion impact from FX. I would highlight that the annual operational risk or RWA increase, which is mechanically calculated from historical income, will take place in Q4 2025 rather than Q1 2026, bringing us into line with most other U.K. banks. We closed the quarter with a CET1 ratio of 14.2%, up 32 basis points quarter-on-quarter, excluding the impact of the $1.3 billion share buyback we announced in July this year.

Now let's look at our business segments. CIB income for the quarter was $3 billion, up 2% year-on-year. This was driven by an impressive performance in Global Banking with income up 23%, supported by strong origination and distribution volumes and a solid performance in our financing, capital markets and advisory businesses. Transaction Services income was down 6% due to falling rates and margin compression in payments and liquidity, although it was up slightly when compared to the second quarter.

Within our Global Markets business, Flow income was up 12% as we continue to support clients across the footprint. Episodic income was softer due to a lower level of market volatility relative to Q3 last year. On the next page, we have shown a long-term view of our Flow and Episodic income trend on a 12-month rolling basis since 2019.

As a reminder, Flow is the larger part of our global markets income and primarily relates to client hedging activity. As such, it tends to be recurrent and programmatic. You will see that our Flow income is growing consistently at a double-digit CAGR as we illustrated at our CIB seminar. This growth has been driven by the investments we have made over the years in digitizing and expanding our product and geographical offering in order to drive future opportunities.

Episodic income, on the other hand, is less predictable quarter-to-quarter as it tends to be event-driven. But as you can see from the chart, it has been a meaningful contributor to our Global Markets income over time. Looking forward, Flow income will continue to be a larger contributor to our Global Markets income, and we will continue to support our clients episodically as market opportunities present themselves.

Moving to WRB. Q3 income was up 7% to $2.3 billion with another record quarter in Wealth Solutions, where income was up 27%. This was largely driven by structured products and managed investments, helping to increase investment products income by 35%. Bancassurance income was up 5%. Our affluent net new money in Q3 was $13 billion with a higher proportion of wealth sales than in the previous quarter as clients showed a higher propensity to buy Wealth Solutions given conducive markets. This brings total net new money year-to-date to $42 billion and puts us well on track to our $200 billion medium-term target for net new money.

We onboarded 67,000 new-to-bank affluent clients in the quarter, continuing the trend of onboarding over 60,000 clients each quarter. Our affluent business benefits from our high levels of customer satisfaction as demonstrated by the fact that we now rank #1 in Net Promoter Score across 8 of our top 9 affluent markets as we continue to invest heavily within the affluent space.

So to conclude, Q3 was another strong quarter as we continue to deliver consistently. Q4 has also started positively. We are upgrading our 2025 income growth guidance to be towards the upper end of the 5% to 7% range at constant currency, excluding notable items. We continue to track towards the upper end of this range for the 2023 to 2026 income CAGR. We now expect our return on tangible equity in 2025 to be around 13%, reaching our target a year early. But there is still much more to do as we reinvest into our differentiated areas of strength, delivering income growth and more importantly, improving returns.

We will present updated 2026 return on tangible equity guidance at our full year results in February next year, and we will provide more details on our medium-term financial framework at our investor seminar in May.

With that, I will hand over to the operator, and Bill and I can take your questions. Thank you.

[Operator Instructions] And now we're going to take our first question, just give us a moment. And the question comes from the line of Joseph Dickerson from Jefferies.

Great set of results here. Can you just discuss in the Wealth Business, the type of -- if you're able to, the type of margin pickup you get on the wealth investments? Because clearly, that's -- if you look at the year-on-year attribution of net new money, you're getting about 80% of the year-on-year growth now from wealth. I suppose some of that is as you say, linked to the markets, but could you discuss the type of margin pickup there?

And then secondly, on capital, I note the reduction in your capital requirement by 22 basis points. I presume that that's not going to change your operating range number. But if you could comment on still the preference would be to do buybacks or I guess, how you think about returning excess capital? And then on the op risk point, I guess linked to that, is the op risk point going to have much of an impact on capital in Q4?

That's great, Joe. Thanks very much for the questions. I'm going to turn to Diego for both, but just a couple of high points. First is to note that the Wealth Business has demonstrated the net new money that comes into the bank via deposits is migrating at more or less the pace that we've always suggested would be the case into wealth products, and that's a good thing.

Second is that the deposits themselves are profitable for us. But of course, you're asking about the margin pickup, which we can address in a little bit of detail.

And third is that the leading indicators continue to be strong, which is new clients who are bringing new money into the bank. And as Diego mentioned in his opening comments, the fact that we continue to receive top marks in terms of customer satisfaction is a big driver there.

Maybe just quickly before handing to Diego, I'll say I'm in Dubai for amongst other things, we're hosting what we call a leadership network of about 150 of the wealthiest families in our network. Last year, we did it in Hong Kong, this year in Dubai. Dubai is an up-and-coming booking center for us and wealth coming out of this region is an incremental driver beyond what has been driving wealth so far, which has been a broad range of our client base, but most specifically, as we called out, global Indians and global Chinese. The growth opportunities for us ahead are very, very strong. And the willingness of people to fly all over the world to spend a couple of days with us is a key indicator of that.

So I just -- at the moment, building on some good feelings that's been building up for the past decade or so, feeling very good about this business. But over to Diego to expand on that and also talk to the capital point.

Thank you, Bill. So on Wealth Management and margins, Joe, you will have seen that -- you are right, our return on assets has picked up a bit this quarter. You will also remember that we had a large conversion from assets under custody to assets under management a few quarters ago in the region of $40 billion, so a meaningful number on our total of assets under management, and we had signaled at the time that, that would reduce the return on assets for some time as they slowly find their way into Wealth Solutions. That is happening, and hence, that pickup.

I think that as the business continues to shift towards Wealth Management and as the situation unfolds with highs and lows in the market, return on assets will continue to fluctuate like on many other metrics. I know I sound like a broken record. I always caution not to look at things too much on a simple quarterly basis. But it's true that the trend from that point of view is good, and it's certainly something that we encourage in terms of our actions as much as we can.

22 basis points on Pillar 2A indeed does not change our calculations in and by itself. And the op risk change in terms of moving it to the fourth quarter of this year, neither does that affect it in any way. It's just to get us more in line with how other U.K. banks are reporting. And the basis for calculation and everything else remains absolutely the same. So it's just a matter of timing. It doesn't impact our numbers in any way.

Operator, next question, please.

And now we're going to take our next question. And it comes the line of Kunpeng Ma from China Securities.