![]() Standard Chartered Bank # Reference Number ZC18 # Directors’ Report and Financal Statements 31 December 2021 ## Incorporated in England with limted liablity by Royal Charter 1853 Princpal Office: 1 Basinghall Avenue, London, EC2V 5DD, England ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 ## Contents Page Strategic report 1 – 48 Our business1 Market environment8 Business model11 Our strategy14 Client segment reviews17 Regional reviews18 Financal review20 Underlying versus statutory results reconcilations24 Risk review29 Stakeholders and responsiblites37 Directors’ report 49 – 53 Statement of directors’ responsiblites 54 Risk review and Capital review 55 – 154 Financal Statements and Notes 155 – 324 Independent auditors’ report155 Consolidated income statement167 Consolidated statement of comprehensive income168 Balance sheets169 Consolidated statement of changes in equity170 Cash flow statements171 Company statement of changes in equity172 Notes to the financal statements173 Glossary 325-334 ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 1 ## Strategic report ## Our business ## The bank for the new economy ## We are the bank for the new economy – of people and ideas, of technology ## and trade. We have built a strong foundation in the world’s most dynamic markets, serving the people and businesses that drive their growth. We thrive at the frontline of today’s biggest challenges and are taking a stand for impact – on climate change, economic particpation and globalisaton. Our collaborative approach to innovaton and drive to be diverse and inclusve mean we can do more, better and faster. Our purpose to drive commerce and prosperity through our unique diversty, and our heritage and values are expressed in our brand promise, Here for good. The following are company designatons as described in the document: Standard Chartered Bank Group (Group) – being Standard Chartered Bank and its subsidaries Standard Chartered PLC Group (PLC Group) – being the ultimate parent and its subsidaries Standard Chartered Bank (Company) – being the standalone Bank legal entity Standard Chartered PLC (PLC) – being the standalone legal entity of the ultimate parent About this report Sustainablity reporting – We adopt an integrated approach to corporate reporting, embedding non-financal informaton throughout our Annual Report. Alternative performance measures – The Group uses a number of alternative performance measures in the discusson of its performance. These measures exclude certain items which management believe are not representative of the underlying performance of the business and which distort period-on-period comparison. They provide the reader with insght into how management measures the performance of the business. For moreinformaton pleasevist sc.com linkedn.com/company/standard-chartered-bank facebook.com/standardchartered Unless another currency is specifed, the word ‘dollar’ or symbol ‘$’ in this document means US dollar and the word ‘cent’ or symbol ‘c’ means one-hundredth of one USdollar. All disclosures in the Strategic Report, Directors’ Report and the Risk Review and Capital Review are unaudited unless otherwise stated. Unless the context requires, withn this document, ‘China’ refers to the People’s Republic of China and, for the purposes of this document only, excludes Hong Kong Special Adminstrative Region (Hong Kong), Macau Special Adminstrative Region (Macau) and Taiwan. ‘Korea’ or ‘South Korea’ refers to the Republic of Korea. Asia includes Australia, Bangladesh, Brunei, Cambodia, India, Indonesia, Laos, Malaysia, Myanmar,Nepal, Philppines, Singapore, Sri Lanka, Thailand and Vietnam; Africa and Middle East (AME) includes Angola, Bahrain, Botswana, Cameroon, Côte d’Ivoire, Egypt, The Gambia, Ghana, Iraq, Jordan, Kenya, Lebanon, Mauritus, Nigera, Oman, Pakistan, Qatar, Saudi Arabia, Sierra Leone, South Africa, Tanzania, the United Arab Emirates (UAE), Uganda, Zambia and Zimbabwe; and Europe and Americas (EA) includes Argentina, Brazil, Colombia, Falkland Islands, France, Germany, Ireland, Jersey, Poland, Sweden, Turkey, the UK and the US. Withn the tables in this report, blank spaces indcate that the number is not disclosed, dashes indcate that the number is zero and nm stands for not meaningful. Standard Chartered Bank is incorporated in England and Wales with limted liablity and is headquartered in London. The Group’s head office provides guidance on governanceand regulatory standards. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 2 Strategic report continued ## Our business ## Confidence in our purpose and strategy Despite external challenges, we have continued to make good progress against the strategy we set out in February 2019 and are on track to deliver our objectves. As highlghted in last year’s report, we refreshed our 2019 strategy into four strategic priorties and three enablers to guide us from our transformational phase to becoming a leader in global finance. In light of the pandemic, we have reviewed our strategy and are confident that it remains fit for purpose and will enable us to realise our ambitons. We measure our progress against Group key performance indcators (KPIs), a selection of which are below. Our Group KPIs include non-financal measures reflecting our commitment to sustainable social and economic development across our business, operations and communites. Our Sustainablity Aspiratons, aligned tothe UN Sustainable DevelopmentGoals, providetangibletargets to drivesustainablebusiness outcomes. Urgent climate change, stark inequalty and unfair aspects of globalisaton impact everyone and the planet. We are setting long-term ambitons to play our part in tackling these issues. Together with the people and businesses we serve, we can be central to the transiton to a fair, sustainable future. This is why we have committed to three Stands: Accelerating Zero, Liftng Particpation and Resetting Globalisaton. FINANCIAL KPIs AND MEASURES Underlyingbasis Statutory basis Return on tangible equity 6.9% 645bps Read moreon (page20) Return on tangible equity 5.5% 747bps Read moreon (page21) Operating income $8,914m 4% Read moreon (page20) Operating income $8,860m 4% Read moreon (page21) Profit before tax $2,748m 131% Read moreon (page20) Profit before tax $2,381m 344% Read moreon (page21) Common Equity Tier 1 ratio 12.3% 41bps Read moreon (page20) NON-FINANCIAL KPIs Diversty and incluson: Women insenior roles 28.7% 1.7 ppt Basis point (bps) and percentage movements are in relation to 31 December 2020, with brackets representing negativemovements ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 3 Strategic report continued ## Our business Standard Chartered Bank is authorised by the Prudential Regulation Authority (PRA) and regulated by the PRA and by the Financal Conduct Authority (FCA). The PRA is the consolidated supervisor in respect of the Group (of which PLC is the ultimate parent). Standard Chartered Bank is a material subsidary of the PLC Group for the purposes of the Bank of England led single point of entry preferred resolution strategy for the PLC Group. The Group is a core part of, and critcal provider of essential services to the PLC Group and is fundamental to the delivery of the PLC Group’s purpose, franchise and strategy. The formation of an ASEAN hub was completed in 2021, following the transfers of Malaysia, Thailand and Vietnam subsidaries under our existng Singapore subsidary entity, which itself remains under Standard Chartered Bank. Clients •The Group remains the largest CCIB orignation hub supporting a signficant part of CCIB revenues and is key to the global network propositon •The Group is the relationshp hub for the majorty of key CCIB clients, particularly Organisaton for Economic Co-operation and Development (OECD) clients •The Group holds the majorty of the PLC Group’s corporate and financal insttutions deposits, a signficant part of the PLC Group’s USD funding base Capabilties •The Group holds key licenses and hosts infrastructure vital for the global franchise such as global USD & EUR clearing •The Group is the main Financal Markets (FM) booking centre supporting the majorty of global FM revenues •The Group remains a main access point to high quality USD funding Critcal infrastructure •The Group is the key liqudity management centre: holding the majorty of the PLC Group’s high-quality liqud assets for regulatory purposes •The Group provides functional support on a global basis •The Group operates global business services hubs for the benefit of the PLC Group includng shared service centres and centres of excellence Investors •The Group’s UK domicle underpins a unique investor propositon: emerging markets access from a UK regulated platform •A signficant number of PLC Group’s equity and debt investors are based in the Group’s footprint Recovery and resolution •Standard Chartered Bank is the largest material subsidary for the purposes of minmum requirement for own funds and eligble liablites (MREL) and total loss-absorbing capital (TLAC) •The Group is critcal to the delivery of capital and liqudity generating management actions in PLC Group’s recovery planning •The Group houses various critcal services and critcal functions in resolution and resolution management The Group’s Credit Ratings The Group remains a highly rated insttution (in both absolute and relative terms) with the following long and short-term issuer ratings all with a stable outlook. S&P upgraded Standard Chartered Bank in December 2021 to A+ from A. The upgrade was driven by a methodology change, supported by strengthened risk management, COVID-19 resilence and an increase in loss-absorbing capacity. S&PMoody’sFitch Long TermA+A1A+ Short TermA-1P-1F1 OutlookStableStableNegative ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 4 ## Our business Who we are and what we do Our purpose is to drive commerce and create prosperity through our unique diversty. We serve two client segments in three regions, supported by nine global functions. Our client segments Corporate, Commercial & Institutonal Banking Corporate, Commercial and Institutonal Banking supports clients with their transaction banking, financal markets, corporate finance andborrowing needs across our markets. We provide solutions to our clients in some of the world’s fastest-growingeconomies and mostactive trade corridors. Operating income $5,703m$5,670m Underlying basisStatutory basis Consumer, Private & Business Banking Consumer, Private and Business Bankingserves indviduals and small businesses, with a focus on affluent and emerging affluent in many of the world’s fastest growing cites. Operating income $2,679m$2,679m Underlying basisStatutory basis Central & other items Operating income $532m$511m Underlying basisStatutory basis Total operating income Operating income $8,914m $8,860m Underlying basisStatutory basis Strategic report continued ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 5 ## Our business Our regions Asia Our largest markets by income are Singapore and India. Operating income $4,274m$4,263m Underlying basisStatutory basis Europe & Americas Centred in London, with a growing presence across continental Europe, and New York, with presence in both North America and several markets in Latin America. A key income generatorfor the Group. Operating income $2,006m $1,975m Underlying basisStatutory basis Africa & Middle East Present in 25 markets, of which the most sizeable by income are United Arab Emirates (UAE), Nigera and Kenya. Operating income $2,435m$2,438m Underlying basisStatutory basis Central & other items (region) Operating income $199m$184m Underlying basisStatutory basis Total operating income Operating income $8,914m $8,860m Underlying basisStatutory basis Strategic report continued ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 6 ## Global functions Guidng and supporting our businesses Our client-facing businesses are supported by our global functions, which work together to ensure the Group’s operations run smoothly and consistently Human Resources Maximses the value of our investment in people through recruitment, development and employee engagement. Legal Enables sustainablebusiness and protects the Group from legal-related risk. Technology & Innovation Responsible for the Group’s systems development and technology infrastructure. Risk Responsible for the sustainablity of our business through good management of risk by providng oversight and challenge, ensuring that business is conducted in line with regulations. Operations Responsible for all client operations end-to-end and ensures meeting the needs of our clients is at the heart of our operational framework. The function’s strategy is supported by consistent performance metrics, standards and practices that are aligned to client outcomes. Group CFO Comprises seven support functions: Finance, Treasury,Strategy, Investor Relations, Corporate Development, Supply Chain Management and Property. Corporate Affairs & Brand and Marketing Manages the Group’s communicatons and engagement with stakeholders toprotect ourreputation andpromote our brand and services. Group InternalAudit An independent function whose primary role is to help the Court and Executive Management to protect the assets, reputation and sustainablity of the Group. Conduct, Financal Crime and Compliance Enables sustainablebusiness bydeliverng the rightoutcomes for ourclients andour markets by drivng thehigheststandards in conduct, compliance and fightng financal crime. ## Valued behaviours Our valued behaviours demand that we do things differently, in order for us to succeed. Only then will we realise our potential and truly be Here for good. Never settle • Continuously improve and innovate • Simplfy • Learn from your successes and failures Better together • See more in others • “How can I help?” • Build for the long term Do the right thing • Live with integrty • Think client • Be brave, be the change Strategic report continued ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 7 Strategic report continued Where we operate Our unique footprint connects emerging and high-growth markets with more established economies, allowing us to channel capital where it’s needed most. These are the markets we call home, and our deep roots in them enable us to make things happen. For over 160 years, we have used the power of our network to help customers who trade, operate or invest in these regions. Our deep roots in our markets enable us to make things happen. We are shaping our bank to drive their success – and ours – in the new economy of the future. What sets us apart is our diversty – of people, cultures and networks. We are present in 58 markets. Asia We have a long-standing and deep franchise across some of the world’s fastest-growing economies in Asia. The two markets contributng the highest income are Singapore and India. Australia Japan Philppines Bangladesh Laos Singapore Brunei Macau Sri Lanka Cambodia Mainland China Taiwan Hong Kong Malaysia Thailand IndiaMyanmar Vietnam Indonesia Nepal Africa & Middle East We have a deep-rooted heritage, in Africa & Middle East and have been present in the region for more than 160 years. We are present in the largest number of sub-Saharan African markets of any internatonal banking group. Angola Jordan Sierra Leone Bahrain Kenya South Africa Botswana Lebanon Tanzania Cameroon Mauritus UAE Cote d’Ivoire Nigera Uganda Egypt Oman Zambia The Gambia PakistanZimbabwe Ghana Qatar Iraq Saudi Arabia Europe & Americas We support clients in Europe & Americas through hubs in London and New York and also have a strong presence in several European and Latin American markets. Argentina France Poland Brazil Germany Sweden Colombia Ireland Turkey Falkland Islands Jersey UK US ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 8 ## Market environment ## Macroeconomic factors affecting the global landscape Global macro trends Trends in 2021 • Global GDP recovered sharply in 2021, likely by 5.8 per cent, following the 3.3 per cent contraction in 2020. • Asia was the best performing region, recording growth of 7.2 per cent, driven by positve growth in China of 8.1 per cent. • Amongst the majors, the US recorded growth of 5.7 per cent helped by signficant fiscal stimulus. The UK recorded the strongest growth (likely 7.5 per cent), following a near-10 per cent contraction in 2020. • The euro-area economy grew by 5.2 per cent in 2021 following a 6.4 per cent contraction in 2020; the economic activty was constrained in Q1 as COVID-19 cases were elevated, but improved into Q2 and Q3 as the vaccine rollout picked up momentum, allowing restrictons to be eased. • Policy makers continued to provide signficant emergency support, but risng inflaton across the world as a result of supply chain disruptons and energy shortages has prompted some central banks to begin tightenng policy and others to acceleratetheir timetables. Outlook for 2022 • Global growth is expected to moderate to 4.4 per cent in 2022. • Asia will remain the fastest growing region in the world and will continue to drive global growth, expanding by 5.7 per cent. • Amongst the majors, the euro-area is expected to record a larger bounce (4.0 per cent) than the US (3.4 per cent) but largely as there will still be spare capacity to unwind. • The COVID-19 outbreak is likely to remain a drag on growth in regions where vaccinaton rates are low but should become a secondary risk for most developed markets. • Policy support will be scaled back as more central banks shift towards tightenng policy to counter inflaton, and fiscal programmes are eased as governments shift their focus towards returning public finances to a sustainable footing. • There are several downside risks to this outlook includng further delays to the roll-out of COVID-19 vaccines in emerging markets, longer-than-expected supply chain disruptons, higher inflaton becoming embedded in households’ and firms’ expectations, or a geopolitcal event risk resulting in another commodity price spike. Medium and long-term view Legacy of COVID-19 • Better vaccine access has helped developed markets recover faster than emerging markets. As the pace of vaccinatons improves in emerging markets, allowing greater resumption of economic activty, growth in emerging markets will improve over the medium-term • Inflation concerns are likely to fade over the medium-term as energy prices likely moderate and supply chain bottlenecks are resolved. This is likely to mean only limted policy tightenng by central banks that should be broadly supportive of growth • Fiscal policy might turn from a tailwnd to a headwind for growth. High public debt and government deficts also mean that most economies are looking to tighten fiscal policy over the medium-term following the signficant stimulus that accompanied COVID-19 • COVID-19 has brought a renewed focus on supply chain concentration risks. Companies are likely to continue to accelerate the shortening and simplfying of supply chains • As companies aim to reduce concentration risks, they may diversfy production away from China, the world’s mega-trader. However, Global research surveys of firms in the Greater Bay area indcate that China remains a preferred destinaton for most, followed by Associaton of South East Asian Nation (ASEAN) economies Strategic report continued ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 9 Strategic report continued Broader global trends • The world economy could see a permanent loss of economic output or ‘scarring’ due to the recession that followed the pandemic. This would make it harder for emerging markets to catch-up with developed markets • COVID-19 has accelerated the pace of digtalisaton of economies. Higher capex and moves towards digtalisaton could boost productivty growth, proving an anti-dote to economic scarring concerns. Withn emerging markets, countries in Asia are best placed to take advantage of digtalisaton • Long-term growth in the developed world is constrained by ageing populations and high levels of debt, exacerbated by the policy response to COVID-19 • Relatively younger populations, as well as the adoption of digtal technology, will allow emerging markets to become increasngly important to global growth • Risng nationalsm, anti-globalisaton and protectionsm are a threat to long-term growth prospects in emerging markets Regional outlooks Actual and projected growth by country in 2021 and 2022 per cent 2022 2021 AsiaChina5.3 per cent 8.1 per cent Hong Kong2.3 per cent 6.3 per cent Korea2.9 per cent 3.9 per cent India8.0 per cent 9.5 per cent Indonesia4.8 per cent 3.6 per cent Singapore4.1 per cent 7.0 per cent Africa & Middle EastNigera3.1 per cent 2.5 per cent UAE3.0 per cent 2.5 per cent Europe & AmericasUK5.0 per cent 7.5 per cent US3.4 per cent 5.7 per cent Trends and outlook for our three regions Asia • China’s GDP grew by 8.1 per cent in 2021, benefitng from strong external demand and a low base. We forecast 2022 growth at 5.3 per cent, closer to the lower bound of its estimated potential growth range of 5-6 per cent. We see upside risk from an easing of auto chip shortages and downside risk from prolonged weak housing demand amid expectations of a price correction. • While innovaton, decarbonisaton and common prosperity rank high on China’s long-term agenda, the government has put growth stabilsation as the top priorty in 2022. We expect macro polices to be eased, especially in H1, and the pace and intensty of regulatory tightenng to be finetuned to bolster domestic demand. • We expect Hong Kong’s economy to grow by 2.3 per cent in 2022 supported by global (and especially China) trade as post-COVID normalisaton broadens, and the continued improvement in the local job market supporting domestic consumption. We expect South Korea’s economy to grow 2.9 per cent in 2022 supported by economic reopening and external trade. • We expect ASEAN as a region to play catch up in terms of economic growth recovery versus developed markets (DMs) in 2022. Economic growth should improve as restrictons are eased and as higher vaccinaton rates limt the severity of any new lockdowns. The recovery may however be bumpy, especially in economies where current vaccinaton rates are still below herd levels, for example, Indonesia, and Philppines • We expect inflaton in ASEAN to remain manageable for most regional economies although upside risk comes from prolonged supply side disruptons and as demand recovers in the region through 2022. This should allow monetary policy to remain accommodative in H1-2022. • India is likely to clock two successive years of high single digt growth buoyed by favourable base effect and recovering economic activty. We expect FY23 GDP growth of 8 per cent as more contact intensve sectors revert to normalised activty with increased vaccinaton coverage continued fiscal policy support and better real wages. Inflation has been persistently high since late 2019 and better recovery is likely to push policy rate normalisaton in 2022. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 10 Strategic report continued Africa & Middle East • We expect the continuaton of a modest economic recovery in the Sub-Saharan Africa (SSA) region, with our coverage economies growing at an average of 3.1 per cent in 2022, from c.3.8 per cent in 2021. • Although the pace of vaccine adminstration has been slower in SSA compared with elsewhere, economic reopening in trading partners, risng global demand, and higher commodity prices have helped to provide firmer underpinnngs to SSA growth. We do not expect signficant new containment measures in 2022, with earlier lockdowns and curfews having an increasngly less severe impact on the economy. • Despite risng inflaton on higher food and fuel prices, we expect monetary policy in the region to remain largely accommodative,with modest normalisatonmeasures in most markets. • Given that the COVID-shock left most SSA economies with elevated public debt ratios, fiscal policy consolidaton will remain a key ambiton, as SSA economies attempt to safeguard market access. In the case of East African economies, adoption of IMF programmes is meant to send a signal on the intent to pursue fiscal consolidaton in order to stabilse debt ratios. • The Middle East region is likely to be on a divergent recovery path with oil exporting countries bouncing back faster versus oil importng countries, which remain constrained by high levels of debt. The pace of vaccinaton rollout proved more rapid among oil exporters, with countries like the UAE leading the charge. The strong outlook for hydrocarbon prices and expected relaxation of targets for OPEC members is set to underpin the region’s liqudity prospects in 2022. Improvements in oil exporters’ fiscal and current account balances will boost the region’s reserve positon, leading to lower funding needs and preserving $ currency pegs. Europe & Americas • Growth in Europe and Americas is likely to slow in 2022 as output gaps shrink and policy support is gradually eased back. • COVID-19 will still present risks in early 2022 given the threat of new variants, and as booster vaccine programmes will take time to fully roll out, but supply chain disruptons (along with higher energy costs and potential shortages in Europe) will be the major headwind to growth. • We expect inflatonary pressures to remain high at least through H1 2022, but disnflation should kick in heading into H2. • A further escalation in tensions between Russia and Ukraine and the potential introducton of sanctions could have a negative impacton European economies andbanks. • The Fed is likely to begin hikng rates by Q1 2022, but only gradually thereafter, with one more hike in June 2022 and two further 25bps hikes expected in 2023. The European Central Bank (ECB) is likely to begin rate hikes in H2-2022. Both the Fed and ECB are in the process of tapering their assets purchase programmes. • The trade environment is likely to continue improvng, but there are risks to the EU-UK trade agreement amid a broader rise in politcal tensions. • In Latin America, we expect growth to moderate in 2022 as domestic demand normalizes, while exports are expected to remain strong amid high commodity prices and improved supply-side constraints. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 11 ## Business model We help internatonal companies to connect across our global network and help indviduals and local business grow their wealth. Our business Corporate, Commercial and Institutonal Banking (CCIB) We support companies across the world, from small and medium-sized enterprises to large corporates and insttutions, both digtally and in person. Consumer, Private and Business Banking (CPBB) We support small businesses and indviduals, from mass retail clients to affluent and high-net-worth indviduals, both digtally and in person. Starting Q1 2022, we will be disclosng SC Ventures and related entites as a separate client segment. Our products and services Financal Markets • Project and transportation finance • Debt capital markets and leveraged finance • Macro, commodites and credit trading • Financngand securites services • Sales andstructuring Transaction Banking • Cash management • Trade finance • Working capital Wealth Management • Investments • Insurance • Wealth advice • Portfolio management Retail Products • Deposits • Mortgages • Credit cards • Personal loans How we generate returns We earn net interest on the margin for loans and deposit products, fees on the provison of advisory and other services and trading income from providng risk management in financal markets. Income • Net interest income • Fee income • Trading income Profits • Income gained from providng our products and services minus expenses and imparments Return on tangible equity • Profit generated relative to tangible equity invested Strategic report continued ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 12 Strategic report continued What makes us different Our purpose is to drive commerce and prosperity through our unique diversty – this is underpinned by our brand promise, Here for good. Our Stands – aimed at tackling the world’s biggest issues – Accelerating Zero, Liftng Particpation and Resetting Globalisaton, challenge us to use our unique positon to help. Client focus Our clients are our business. We build long-term client relationshps through trusted advice, expertise and best-in-class capabilties. Robustrisk management We are here for the long-term. Effective risk management allows us to grow a sustainable business. Distnct propositon Our understanding of the markets and our extensive internatonal network allow us to offer a tailored propositon to our clients, combinng global expertise and local knowledge. Sustainable and responsible business We’re committed to sustainable social and economic development across our business, operations and communites. How we are shaping our future We are continuously looking for ways to improve our business model to accelerate returns In January 2021, we further streamlined our Corporate, Commercial & Institutonal Banking (CCIB) segment, integratng our Corporate Finance and Financal Markets businesses. The integraton will create a simplfied orignation and distrbution engine drivng balance sheet velocity and an improved client offering. In additon, we remain focused on productivty. In 2021, we have digtised businesses, drivng process improvements through automation and simplficaton, optimsed target operating models, reduced property space and changed the way we work, to achieve productivty improvements and cost reduction. We continue to seek further opportunites to generate productivty saves to continue to ensure we remain benchmarked against peers. Going forward, we aim to deliver a return on tangible equity (RoTE) of around 10%, by focusing on drivng improved returns in CCIB, transforming profitablity in CPBB, improvng efficency through creating operational leverage and deliverng sustainableshareholderdistrbutions. We are committng resources to grow our franchise in the large and high-returns markets, sustainng and accelerating progress in the three optimal” markets announced in February 2019 (India, UAE, Indonesia). We have also stepped up our review of each of our client segments, markets and products and services. The sources of value we rely on We aim to use resources in a sustainable way, to achieve the goals of our strategy. Human capital Diversty differentates us. Deliverng our Purpose and Stands rests on how we continue to invest in our people, the employee experience we further enhance and the culture we strengthen. How we’re enhancing our resources • More than 16,500 colleagues have completed learning courses in 2021 to build the future skills that we need – includng analytics, data, digtal, cybersecurity andsustainablefinance • We continue to create a work environment that supports resilence, innovaton and incluson, with ongoing focus on mental, physical, social and financal well-being. This includes rolling out hybrid-working arrangements across our markets. Strong brand We are a leading internatonal banking group with more than 160 years of history. In many of our markets we are a household name. How we’re enhancing our resources • In 2021 we evolved our brand identty to become a digtal-first brand, reflecting the innovaton that drives our business forward. The refreshed Standard Chartered identty is modern, dynamic and agile, adapted for the digtal world and representing our commitment to stay relevant to our clients and their evolving needs • We have been successful in leveraging brand and insghts to support business growth. The Group successfully improved its reputation in 2021, exceeding the average score for the banking sector, and ranking top three in the majorty of our key markets over 2021 International network We have an unparalleled internatonal network, connecting companies, insttutions, and indviduals to, and in, some of the world’s fastest growing and most dynamic regions. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 13 Strategic report continued How we’re enhancing our resources • We continue to invest in transforming our core business into a leading digtal first and data-driven platform, positoning us to deliver superior client experiences, access new high-growth segments, grow wallet with existng clients and create new business model opportunites • Our network remains one of our key competitve advantages and we continue to leverage our network to drive growth in Trade from “West to East” corridors and financal markets solutions for our clients Localexpertise We have a deep knowledge of our markets and an understanding of the drivers of the real economy, offering us insghts that help our clients achieve their ambitons. How we’re enhancing our resources • We continue to support small and medium businesses (SMEs), providng them with much needed funding to restart and growtheir businesses amid there-opening ofeconomies. • We increased our focus on SMEs particpating in the New Economy, in particular those who are part of e-commerce ecosystems Financal strength With $545 billon in assets on our balance sheet, we are a strong, trusted partner for our clients. How we’re enhancing our resources • Stronger capital and much more resilent balance sheet with growth in high quality deposits. • Common Equity Tier 1 (CET1) ratio at 12.3 per cent Technology We possess leading technological capabilties to enable best-in-class customer experience, operations and risk management. How we’re enhancing our resources • We value the engineerng excellence culture. Globally over 10,000 engineers are designng and buildng the best-in-class technology stack which is highly scalable and supports a fast turnaround of ideas into service • We are accelerating our cloud transformation journey, moving signficant applicatons to be cloud-based includng our core banking, payment and trading systems and new digtal ventures • We adopt next-generation technologiesto better serve our customers, improvesefficencies anddelivernew business opportunites. The value we create We aim to create long-term value for a broad range of stakeholders in a sustainable way Clients We want to deliver easy, everyday banking solutions to our clients in a simple and cost-effective way, and with a great customer experience. We enable indviduals to grow and protect their wealth; we help businesses trade, transact, invest, and expand; and we also help a variety of financal insttutions, includng banks, public sector and development organisatons, with their banking needs. Employees We believe great employee experience drives great client experience. We want all our people to pursue their ambitons, deliver with purpose and have a rewarding career enabled by great people leaders. Society We strive to operate as a sustainable and responsible company, drivng prosperity through our core business, and collaborating with local partners to promote social and economic development. Suppliers We engage diverse suppliers, both locally and globally, to provide efficent and sustainable goods and services for our business. Regulators and governments We engage with relevant authorites to play our part in supporting the effective functionng of the financal system and the broader economy. Investors We aim to deliver robust returns and long-term sustainable value for our investors. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 14 ## Our strategy ## To become a leader in global finance Over the past several years, we have conducted a bottom-up review of our strategy. While we could have done more in a few areas, such as faster tackling of low returning risk weighted assets (RWA) in CCIB, further simplfying the way we operate, and being even more aggressive in transforming our business processes and generating additonal savings, we still believe our strategy is the right one. We have made good progress in the year, and are on track to deliver our objectves. Going forward, we remain committed to these objectves to achieve PLC Group’s ambitons by 2025: • To be the number one wholesale digtal banking platform • To be among the top three affluent brands • Double our mass presence • Become a market leader in sustainablity We will continue to focus on: • Four strategic priorties: wholesalenetwork business, affluentclientbusiness, mass retail business and sustainablity • Three critcal enablers: people and culture, new ways of working and innovaton We are anchoring our strategic priorties and enablers are in our three Stands. They are: Accelerating Zero; Liftng Particpation and Resetting Globalisaton. More details on our Stands are described on pages 15 – 16. Throughout this section, we will highlght the linkages of our strategic priorties to our Stands. Strategic priorties Wholesale networkbusiness Through our unique network, we faciltate investment, trade and capital flows, providng a starting point in achievng our stand of resetting globalisaton. We have also started on our journey towards our stand of accelerating zero, by focusing on sustainablefinance. We are the one of the leading internatonal wholesale banks in our emerging markets footprint through: • Taking leading positons in high-returning, high-growth sectors • Deliverng a market-leading digtal platform by continung to invest in core digtal capabilties • Drivng ‘capital lite’ products while buildng a sustainable finance franchise and expanding our orignation and distrbution ecosystem e.g. accelerating our Financal markets growth • Speeding up growth in large markets while expanding in growing markets and corridors e.g. intra-Asia and East-West Affluent client business We offer outstanding personalised advice and exceptional experiences for our Private,Priorty and Premium Banking clients to help them grow and prosper internatonally and at home. Providng access to sustainable investments is a key differentator, supporting our Stand ofAcceleratingZero. As a leading internatonal wealth manager in Asia across the Affluent continuum, we are: • Unlocking the value of the Affluent client continuum across Asia, Africa and the Middle East, with suitable client propositons, coverage models and advisory capabilties • Maximsing the reach of our diverse network through internatonal banking, complemented by a strong focus on developing Hong Kong and Singapore as key internatonal wealth centres • Continung to grow our wealth business, which saw double digt asset growth over the last three years, with propositons anchored in investment thought leadership, an open architecture approach, personalised advice at scale and an integrated digtal-hybrid experience Mass retail business We help our clients prosper and deliver everyday banking solutions by integratng our services into their digtal lives. New digtal solutions, strategic partnerships and advanced analytics are instrumental to our business, enabling us to signficantly increase our reach and relevance to serve clients in a meaningful way, supporting our stand of liftng particpation. We are: • Transforming to a digtal first model and buildng enablers to be the partner of choice to leading global and regional companies • Enhancing our value propositon and deepening our capabilties across digtal sales and marketing as well as data and analytics Strategic report continued ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 15 • Growing the share of our mass retail client income from new innovatve business models Sustainablity In Sustainablity, we continue to focus on sustainable and transiton finance, supporting our stand of accelerating zero. We provide access to finance, networks and trainng to young people, contributng to our stand of liftng particpation of communites across our network. We support companies in improvng social, environmental and governance standards, supporting our stand ofresetting globalisaton. Our goal is to become the world’s most sustainable and responsible bank and the leading private sector catalyser of finance for UN Sustainable Development Goals (SDGs) where it matters most – in Asia, Africa and Middle East we are: • Leveraging climate risk management to support clients in managing climate risk and identfying transiton opportunites e.g. mobilse green and transiton finance • Integratingsustainable financeas a core componentof our customer value propositon anddeliverngsustainable financesolutions • Continung to promote economic incluson and tackle inequalty in our footprint through Futuremakers by StandardChartered • Targeting net zero carbon emissons from our operations by 2025, and from our financng by 2050 People andculture We are continung to invest in our people to build future-ready skills, provide them a differentated experience and strengthen our culture of innovaton and incluson. This includes: • Expanding hybrid working across our footprint, with 83% of colleagues across 25 markets already on hybrid-working arrangements in 2021 • Embedding our refreshed approach to performance, reward and recogniton that puts greater focus on outperformance through collaboration and innovaton • Increasingre-skillng andupskillng opportunitestowards future roles thatare aligned withthe business strategy and indviduals’aspiratons • Focusing on well-being to enhance indvidual resilence, productivty and performance New ways of working We continue to embrace client first, mature our operating rhythm in organizatonal agilty and empower our people to continuously improve the way we work. We are working on identfying ways to track derived value and enhance our speed of decisonmaking and delivery, asa key sourceof competitveadvantage. Innovation We have a three-pronged innovaton approach to transform the bank, to achieve our goal of 50% income from new businesses. • Transform our core via digtizaton • Leverage partnerships to drive scale and extend reach • Build new business models to create value We will also establish SC Ventures and related entites as a separate client segment in 2022, to further drive innovaton differentation and disruptve growth. Our Stands The severe impacts of climate change, stark inequalty and unfair aspects of globalisaton impact everyone on the planet. We are taking a stand, setting long-term ambitons for our role on these issues where they matter most. This works in unison with our strategy, stretching our thinkng, our action and our leadership to accelerate our growth. • We have defined three ‘stands’ – which is our name for long-term ambitons on societal challenges • These are not separate from our strategy. They are integral to deliverng and accelerating our strategy, because they will stretch our thinkng, our action and our leadership • We will use our unique abilties to connect the capital, people and ideas needed to address the signficant socio-economic challenges and opportunites of our time • Each of these stands will impact how we engage with our clients and define the future of our societes • We already have signficant progress to show in each area and we will be setting long-term goals as we deliver near term Strategic report continued ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 16 Strategic report continued • This is not philanthropy: we will drive scalable, sustainable commercial growth and transform our franchise. You will see us increasngly active in these areas AcceleratingZero We’re helping emerging markets in our footprint reduce carbon emissons as fast as possible, without slowing development, putting the world on a sustainable path to net zero by 2050. We stand for a rapid, just transiton to net zero where it matters most. Our plan to achieve net zero targets has three aims: reduce emissons, catalyse finance and partnerships, and accelerate new solutions. • The world needs to reach net zero by 2050 or face a climate catastrophe with increasng extreme weather events and climate-induced migraton • We have a unique role to play in faciltating a just transiton to net zero carbon where it matters most: across Asia, Africa and the Middle East • We aim to reduce the emissons associated with our financng activties to net zero by 2050, with 2030 interm targets in our most carbon-intensvesectors • We aim to reduce absolute financed thermal coal-minng emissons by 85 per cent by 2030, in additon to a prohibtion on financng new or expanding coal-fired power plants, and revenue based carbon-intensty of 63 per cent for power, 33 per cent respectively for steel and minng (excluding thermal coal minng), 30 per cent for oil and gas • We aim to catalyse finance and partnerships to scale impact, capital and climate solutions to where they are needed most, includng a plan for PLC Group to mobilse USD300 billon in green and transiton finance between 2021 and 2030 • We aim to accelerate new solutions to support a just transiton in our markets, includng a new dedicated Transiton Acceleration Team to support clients in high-emittng sectors, and launch sustainable products • We aim to reach net zero carbon emissons from our own operations by 2025 Liftng Particpation We’re determined to improve the lives of 1 billon people and their communites by unleashing the financal potential of women and small businesses in our core markets. We stand for equitable access to financal support for women and small business. • Inequality, along with gaps in economic incluson in our key markets, means that many young people, women and small businesses struggle to gain access to the financal system to save for their futures and grow their businesses. We want to democratise wealth management and make it easily accessible to the mass segment at low cost • Through partnerships and technology, we can expand the reach and scale of financal services – drivng accessible banking at scale and connecting clients to opportunites that promote access to finance and economic incluson. By developing new digtal business models, we’re able to grow our business while unleashing opportunity for millons more people Resetting Globalisaton It’s PLC Group’s goal to support 500,000 companies to improve working and environmental standards and give everyone the chance to particpate in the world economy, so growth becomes fairer and more balanced. We stand for a new model of globalisaton based on transparency, incluson and dialogue. Globalisaton has lifted millons out of poverty, but too many people have been left behind, and divsion and inequalty have grown, along with negative impacts on our planet. We believe in the potential of globalisaton to enable economic growth and increase particpation in the world economy – but in its current form, it must be reimagned to ensure that it best serves all people, everywhere. We advocate a new, more inclusve model of globalisaton based on transparency and fairness, buildng trust, and promoting the exchange of views and innovaton to solve the world’s toughest problems. As a leading trade bank, we can connect the capital, expertise and ideas needed to drive new standards and create innovatve solutions for more equitable and sustainable growth. Specifcally, we aim to: • Increase transparency across supply chains to enable consumer choice and drive responsible trade • Bring enhanced levels of security, tracking and confidence to financal activty • Provide access to the best and most innovatve solutions to both private and public sector • Support several companies to improve working and environmental standards and givng everyone the chance to particpate in the world economy, so growth becomes fairer and more balanced • Make global trade more equitable by improvng access to finance for smaller suppliers who often lack adequate financng ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 17 ## Client segment reviews Corporate, Commercial & Institutonal Banking Profit before taxation $2,289m$2,181m Underlying basisStatutory basis Segment overview Corporate, Commercial & Institutonal Banking supports clients with their transaction banking, financal markets, corporate finance and borrowing needs across 49 markets. We provide solutions to several clients in some of the world’s fastest-growing economies and mostactive tradecorridors. Our clients include governments, banks, investors and local and large corporations operating or investng mainly in Asia, Africa and the Middle East. Our strong and deep local presence across these markets enables us to help co-create bespoke financng solutions and to connect our clients multi-laterally to investors, suppliers, buyers and sellers, enabling them to move capital, manage risk and invest to create wealth. Our clients represent a large and important part of the economies we serve. Corporate, Commercial & Institutonal Banking is at the heart of the Group’s shared purpose to drive commerce and prosperity through our unique diversty. We are committed to Sustainable Finance, deliverng on our ambitons to increase support and funding for financal products and services that have a positve impact on our communites and the environment and support sustainable economic growth. Performance highlghts • Underlying operating profit before taxation of $2,289 millon up 91 per cent, primarly driven by credit imparment releases partially offset by lower income and higher expenses • Underlying operating income of $5,703 millon was down 3 per cent primarly due to lower Macro Trading income on the back of reduced market volatilty and tighter spreads as well as lower Cash management income impacted by a low interest rate environment. This was partially offset by strong performance in Credit Markets and Trade. • Credit imparment is a net writeback, driven by ECL releases, due to improved macro conditons, lower Stage 3 imparments andloan recoveries • Good balance sheet momentum with total assets up by 4 per cent. Total Liablites down marginally Consumer, Private & Business Banking Profit before taxation $502m $455m Underlying basisStatutory basis Segment overview Consumer, Private and Business Banking serves indviduals and small businesses, with a focus on affluent and emerging affluent in many of the world’s fastest-growing cites. We provide digtal banking services with a human touch to our clients, with services spanning across deposits, payments, financng products and Wealth Management. We also support our clients with their business banking needs. Private Banking offers a full range of investment, credit and wealth planning products to grow, and protect, the wealth of high net-worth indviduals. We are closely integrated with the Group’s other client segments; for example, we offer employee banking services to Corporate, Commercial & Institutonal Banking clients, and Consumer, Private and Business Banking also provides a source of high-quality liqudity for the Group. Increasing levels of wealth across Asia, Africa and the Middle East support our opportunity to grow the business sustainably. We aim to uplift client experience, improvng productivty by drivng digtisaton and cost efficencies, and simplfying processes. Performance highlghts • Underlying profit before taxation of $502 millon up $399m driven by higher income and lower credit imparments. • Expenses were up 1 per cent year-on-year but were down excluding our investment in our digtal Ventures business • Underlying operating income of $2,679 millon was up 2 per cent, primarly on account strong performance in Wealth Management and Mortgages, partly offset by margin compression in Retail deposits due to lower interest rates • Credit imparment dropped 68% due to lower expected credit loss provisons, reflecting improvement in macroeconomic conditons • Total assets and liablites grew 11 per cent and 6 per cent respectively Strategic report continued ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 18 Strategic report continued ## Regional reviews Asia Profit before taxation $1,527m $1,443m Underlying basisStatutory basis Region overview The Asia region has a long-standing and deep franchise across the markets and some of the world’s fastest-growing economies. The region generated 48 per cent of the Group’s income benefittng from our extensive network of markets. Of these, the two markets in the region contributng the highest income are Singapore and India, underpinned by a diversfied franchise and deeply rooted presence. The region is highly interconnected, with China’s economy at its core. Our global footprint and strong regional presence, distnctive propositon and continued investment positon us strongly to capture opportunites as they arise from the continung opening up of China’s economy. The region is benefitng from risng trade flows, includng activty generated from the Belt & Road intiatve, continued strong investment, and a risng middle class which is drivng consumption growth and improvng digtal connectivty. Performance highlghts • Underlying operating profit before tax of $1,527 millon was up 100 per cent mainly due to lower credit imparment. • Underlying operating income of $4,274 millon down 1 per cent, due to margin compression in cash management and retail deposits and lower treasury product income, partially offset by strong performance in Wealth Management. • Credit imparment down 90 per cent, due to material specifc provisons taken in previous year, and release of ECL provisons on the back ofimproved macroeconomic environment • Strong balance sheet momentum with assets up 5 per cent and liablites up 9 per cent Africa & Middle East Profit before taxation $858m $832m Underlying basisStatutory basis Region overview We have a deep-rooted heritage in Africa & Middle East and are present in 25 markets, of which the UAE, Nigera, Pakistan, Kenya, and Ghana are the largest by income. We are present in the largest number of sub-Saharan African markets of any internatonal banking group. A rich history, deep client relationshps and a unique footprint in the region, as well as across centres in Asia, Europe and the Americas enable us to seamlessly support our clients. Africa & Middle East is an important element of global trade and investment corridors, includng those on China’s Belt and Road intiatve and we are well placed to faciltate these flows. We have strengthened our footprint with a branch set-up in Saudi Arabia in 2021. Positve macro-tends (oil, commodity and UAE property prices) & market opportunites, but challenges and uncertaintes remain. We’re confident that the opportunites in the region will support long-term sustainable growth for the Group. We continue to invest selectively and drive efficencies. Performance highlghts • Underlying operating profit before tax of $858millon was the highest since 2015, driven by reduced credit imparments, higher income and lower expenses • Signficant turnaround in UAE with a return to profitablity in 2021 • Underlying operating income of $2,435 millon was up 3 per cent mainly due to growth in Financal Markets and Wealth Management income. • Total assets were down 1 per cent and total liablites were up 3 per cent ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 19 Strategic report continued Europe & Americas Profit before taxation $715m$626m Underlying basisStatutory basis Region overview The Group supports clients in Europe & Americas through hubs in London, Frankfurt and New York as well as a presence in several other markets in Europe and Latin America. Our expertise in Asia, Africa and the Middle East allows us to offer our clients in the region unique network and product capabilties. The region generates signficant income for the Group’s Corporate, Commercial & Institutonal Banking business. In additon to being a key orignation centre for Corporate, Commercial & Institutonal Banking, the region offers local, on-the-ground expertise and solutions to help internatonally minded clients grow across Europe & Americas. The region is home to the Group’s two biggest payment clearing centres and the largest trading floor. More than 80 per cent of the region’s income derives from Financal Markets and Transaction Banking products. Our Private Banking business focuses on serving clients with links to our footprint markets. Performance highlghts • Underlying operating profit before taxation of $715 millon improved 16 per cent driven by lower imparments, partly offset by lower income and higher costs • Underlying operating income of $2,006 millon was down 3 per cent largely due to lower Financal Markets performance and lower realisaton gains from Treasury, partly offset by higher Trade and Lending income • Expenses increased 12 per cent due to normalisaton of performance-related pay, and increased investment and technology expense • Total assets and liablites grew 9 per cent year-on-year ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 20 ## Financal review Summary of financal performance 2021 $millon 2020 $millon Change % Net Interest income 4,056 4,100(1) Other income 4,858 5,185(6) Underlying operating income8,914 9,285(4) Other underlying expenses (6,104) (5,963)(2) UK bank levy (100) (331)70 Underlying operating expenses(6,204) (6,294)1 Underlying operating profit before imparment and taxation2,710 2,991(9) Credit imparment release/(charge) 28 (1,948)101 Other imparment release 9 147(94) Profit from associates and jont ventures 1 1– Underlying profit before taxation2,748 1,191131 Restructuring (325) (272)(19) Goodwill imparment – (403)nm¹ Other items (42) 20nm¹ Statutory profit before taxation2,381 536344 Taxation (743) (514)(45) Profit after tax1,638 22nm¹ Underlying return on tangible equity (%) 6.9 0.4 Common Equity Tier 1 (%) 12.3 12.7 1Not meaningful Operating income declined 4 per cent primarly with both net interest income and other income down year-on-year. Net interest income decreased 1 per cent with increased volumes more than offset by a 7 per cent or 9 basis point reduction in net interest margin. Net interest income included a positve $163millon IFRS9 interest income catch-up adjustment in respect of interest earned on historcally impared assets, increasng the net interest margin by 5 basis points. Other income reduced 6 per cent, due to lower Financal Markets and lower realisaton gains in Treasury Operatingexpenses excluding the UK bank levy are up 2 per cent primarly reflecting the Group’s continued investment in transformational digtal capabilties and the normalisaton of an increase in performance related pay. The cost-to-income ratio (excluding the UK bank levy) increased 4 percentage points to 68 per cent. The UK bank levy decreased by $231 millon to $100 millon reflecting a change in basis of calculation as it is now chargeable only on the Group’s UK balance sheet. Credit imparment is a net credit of $28m and declined by $1,976 millon from prior year. This is driven primarly by lower stage 3 imparment, loan recoveries and release of expected credit loss provisons, reflecting an improvement in macroeconomic conditons. Other imparment down 94 per cent due to non-recurrence of benefit arisng from reversal of previously impared assets in previousyear. Charges relating to restructuring and other items increased by $53 millon and $62 millon respectively and was more than offset by a non-repeat of $403millon goodwill imparment primarly relating to India and UAE booked in 2020. Taxation of $743 millon for the year represents an effective tax rate of 31 per cent and is lower than FY2020’s effective tax rate of 96 per cent. Return on tangible equity increased by 645 basis points to 6.9 per cent driven by higher profits. Strategic report continued ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 21 Strategic report continued Statutory financalperformance summary 2021 $millon 2020 $millon Change % Net Interest income 4,052 4,100(1) Other income 4,808 5,136(6) Statutory operating income8,860 9,236(4) Statutory operating expenses (6,480) (6,463)– Statutory operating profit before imparment and taxation2,380 2,773(14) Credit imparment release/(charge) 30 (1,976)102 Goodwill & Other imparment (30) (262)89 Profit from associates and jont ventures 1 1– Statutory profit before taxation2,381 536344 Taxation (743) (514)(45) Profit after tax1,638 22nm¹ Statutory return on tangible equity (%) 5.5 (2.0) 1Not meaningful Underlying profit/(loss) before tax by client segment and geographic region 2021 $millon 2020 (Restated)¹ $millon Change % Corporate, Commercial & Institutonal Banking 1 2,289 1,19691 Consumer, Private & Business Banking 1 502 103387 Central & other items (client) (43) (108)60 Underlying profit before taxation2,748 1,191131 Asia 1,527 762100 Africa & Middle East 858 16nm Europe & Americas 715 61616 Central & other items (geographic) (352) (203)(73) Underlying profit before taxation2,748 1,191131 1Following an organisatonal restructure that came into effect on 1 January 2021, the new structure results in the creation of two new client segments: Corporate, Commercial & Institutonal Banking, serving larger companies and insttutions, and Consumer, Private & Business Banking, serving Indivdual and business clients Net Interest Margin 2021 $millon 2020 $millon Change 1 $millon Adjusted net interest income 2 4,052 4,100(1) Average interest-earning assets 323,145 311,1464 Average interest-bearing liablites 258,360 254,6201 Gross yield (%) 3 1.91 2.51(59) Rate paid (%) 3 0.83 1.49(66) Net interest margin (%) 4 1.26 1.35(9) 1Variance is better/(worse) other than assets and liablites which is increase/(decrease) 2Adjusted net interest income is statutory net interest income less funding costs for the trading book and financal guarantee fees on interest earning assets 3Change in the basis points (bps) difference between two periods rather than the percentage change 4Adjusted net interest income divded by average interest-earning assets, annualised Adjusted net interest income was down 1 per cent driven by a 7 per cent decline in net interest margin which fell 9 basis point year-on-year, reflecting the continued low interest rate environment following the cut in policy rates which occurred in early 2020. Excluding the $163 millon benefit from IFRS9 income adjustments booked during the year, the net interest margin in 2021 would have averaged 121 basis points. Average interest-earning assets increased 4 per cent driven by higher investment securites balances. Gross yields declined 59 basis points compared to the average in 2020 predominantly reflecting the impact of continued compression of key interest rates. Average interest-bearing liablites increased 1 per cent driven by growth in customer accounts. The rate paid on liablites decreased by 66 basis points year-on-year reflecting interest rates movements. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 22 Strategic report continued Credit quality The solid risk management foundations that the Group has built over time has allowed the Group to focus on emerging strongly from the COVID-19 pandemic, despite the uneven recovery across markets and industres. In spite of the challenging conditons that remain, the Group has seen improvement in number of credit metrics with the stock of high-risk assets reducing over 6 consecutive quarters and a $1.9 billon reduction in credit imparment year-on-year. The Group is well positoned to support our clients as economies recover but continues to remain viglant to the continued impact of COVID-19. 2021 $millon 2020 $millon Gross loans and advances to customers 1 149,672 146,778 Of which stage 1 129,990 122,883 Of which stage 2 12,741 15,606 Of which stage 3 6,941 8,289 Expected credit loss provisons(4,873) (5,917) Of which stage 1 (266) (331) Of which stage 2 (381) (619) Of which stage 3 (4,226) (4,967) Net loans and advances to customers144,799 140,861 Of which stage 1 129,724 122,552 Of which stage 2 12,360 14,987 Of which stage 3 2,715 3,322 Cover ratio of stage 3 before/after collateral (%) 61 / 78 60 / 77 Credit grade 12 accounts ($millon) 1,639 2,039 Early alerts ($millon) 4,285 8,526 Investment grade corporate exposures (%) 71 63 1Includes reverse repurchase agreements and other simlar secured lending held at amortised cost of $3,764 millon at 31 December 2021 (2020: $2,919 millon) Restructuringand other items The Group’s statutory performance is adjusted for profits or losses of a capital nature, amounts consequent to investment transactions driven by strategic intent, other infrequent and/or exceptional transactions that are signficant or material in the context of the Group’s normal business earnings for the period and items which management and stakeholders would ordinarly identfy separately when assessing underlying performance period-by period. Restructuring charges of $325 millon for 2021 reflect the impact of actions to transform the organisaton to improve productivty, primarly redundancy related charges. Other items include a $62 millon regulatory financal penalty and a $20millon fair value gain relating to a SC Ventures investment. 2021 $millon 2020 $millon RestructuringGoodwillOther items RestructuringGoodwillOther items Operating income (74)–20 (55)–6 Operating expenses (214)–(62) (183)–14 Credit imparment 2–– (28)–– Other imparment (39)–– (6)(403)– (Loss)/profit before taxation(325)–(42) (272)(403)20 ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 23 Strategic report continued Balance sheet and liqudity 2021 $millon 2020 (Restated)¹ $millon Assets Loans and advances to banks 29,999 27,666 Loans and advances to customers 144,799 140,861 Other assets 369,993 345,066 Total assets544,791 513,593 Liablites Deposits by banks 25,205 23,761 Customer accounts 242,331 216,719 Other liablites 241,818 239,884¹ Total liablites509,354 480,364 Equity 35,437 33,229 Total equity and liablites544,791 513,593 Advances-to-deposits ratio (%) 1,2 52% 57% SC Bank is not regulated for Liqudity Coverage Ratio (LCR), however, the bank and material subsidaries in the consolidaton have standalone LCR ratios above 100 per cent. 1Includes correctionof $81millonfair value hedge accounting adjustment 2In calculating the advances-to-deposits ratio, the Group now excludes $15,168 millon held with central banks (2020: $14,296 millon) that have been confirmed as repayable at the point of stress The Group’s balance sheet is strong, highly liqud and diversfied. Loans and advances to customers increased 6 per cent since December 2020 to $145 billon driven mainly by growth in Financal Markets. Customer accounts of $242 billon increased 12 per cent since December 2020 driven largely by an increase in operating account balances withn Cash Management Other assets increased 7 percent since December 2020 while other liablites were 1 percent higher. The growth in other assets was driven by increased revenue purchase agreement volumes and an increase in investment securites held withn Treasury Markets. The growth in other liablites reflects increased repurchase agreements and issued debt securites offset by reduced derivatve balances The advances-to-deposits ratio reduced from 57 per cent to 52 per cent year on year as the Group continued to focus on improvng the quality and mix of its liablites ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 24 Strategic report continued Capital base and ratios 2021 $millon 2020¹ $millon CET1 capital 23,884 23,898 Additonal Tier 1 capital (AT1) 5,872 4,551 Tier 1 capital 29,756 28,449 Tier 2 capital 12,075 12,263 Total capital 41,831 40,712 CET1 capital ratio (%) 12.3% 12.7% Total capital ratio (%) 21.6% 21.7% Leverage ratio (%) 4.5% 4.7% 1Restatement of 2020 includes correction of fair value hedge accounting adjustment of $81 millon. Standard Chartered Bank is authorised by the PRA and regulated by the Financal Conduct Authority and the PRA as StandardChartered Bank (SoloConsolidated). The Group successfully completed the formation of an ASEAN hub during 2021 in which the Group’s existng businesses in Malaysia, Thailand and Vietnam were moved under the Group’s existng Singapore subsidary entity, which itself remains under Standard Chartered Bank. Standard Chartered Bank continues to operate through its branches and a number of subsidaries, all of which remain well capitalsed in line with their applicable Court-approved Risk Appetites which takes into account local regulations, Pillar 1 and 2 requirements and regulatory and management buffers as applicable. The Group’s CET1 capital ratio remained strong at 12.3 per cent at FY2021 with leverage at 4.5 per cent. The Group maintans high levels of loss absorbing capacity. Compared to 31 December 2020, the Group’s CET1 capital ratio decreased 41 basis points mainly due to RWA increasng by $6.1 billon to $194.0 billon. Underlying versus statutory results reconcilations Reconcilations between underlying and statutory results are set out in the tables below: Operating income by client segment 2021 Corporate, Commercial & Institutonal Banking $millon Consumer, Private & Business Banking $millon Central & other items $millon Total $millon Underlying operating income 5,7032,6795328,914 Restructuring (33)–(41)(74) Other items ––2020 Statutory operating income5,6702,6795118,860 2020 (Restated)¹ Corporate, Commercial & Institutonal Banking $millon Consumer, Private & Business Banking $millon Central & other items $millon Total $millon Underlying operating income5,8582,6198089,285 Restructuring(41)–(14)(55) Other items––66 Statutory operating income 5,8172,6198009,236 1Following an organisatonal restructure that came into effect on 1 January 2021, the new structure results in the creation of two new client segments: Corporate, Commercial & Institutonal Banking, serving larger companies and insttutions, and Consumer, Private & Business Banking, serving Indivdual and business clients. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 25 Strategic report continued Operating income by region 2021 Asia $millon Africa & Middle East $millon Europe & Americas $millon Central & other items $millon Total $millon Underlying operating income 4,2742,4352,0061998,914 Restructuring (11)3(31)(35)(74) Other items –––2020 Statutory operating income4,2632,4381,9751848,860 2020 (Restated)¹ Asia $millon Africa & Middle East $millon Europe & Americas $millon Central & other items $millon Total $millon Underlying operating income4,3372,3562,0655279,285 Restructuring(3)(1)–(51)(55) Other items–––66 Statutory operating income 4,3342,3552,0654829,236 1Following the Group’s change in organisatonal structure, there has been an integraton of Greater China & North Asia and ASEAN & South Asia to Asia. Prior year has been restated. Profit before taxation (PBT) 2021 Underlying $millon Regulatory Fine $millon Restructuring $millon Net gain on businesses disposed/held for sale $millon Goodwill imparment $millon Statutory $millon Operating income 8,914–(74)20–8,860 Operating expenses (6,204)(62)(214)––(6,480) Operating profit/(loss) before imparment losses and taxation2,710(62)(288)20–2,380 Credit imparment release 28–2––30 Other imparment release/(charge) 9–(39)––(30) Profit from associates and jont ventures 1––––1 Profit/(loss) before taxation2,748(62)(325)20–2,381 2020 Underlying $millon Regulatory fine $millon Restructuring $millon Net gain on businesses disposed/held for sale $millon Goodwill imparment $millon Statutory $millon Operating income9,285–(55)6–9,236 Operating expenses(6,294)14(183)––(6,463) Operating profit/(loss) before imparment losses and taxation 2,99114(238)6–2,773 Credit imparment(1,948)–(28)––(1,976) Other imparment release/(charge)147–(6)–(403)(262) Profit from associates and jont ventures1––––1 Profit/(loss) before taxation 1,19114(272)6(403)536 ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 26 Strategic report continued Profit before taxation (PBT) by client segment 2021 Corporate, Commercial & Institutonal Banking $millon Consumer, Private & Business Banking $millon Central & other items $millon Total $millon Operating income5,7032,6795328,914 External 5,5602,3221,0328,914 Inter-segment 143357(500)– Operating expenses(3,591)(2,008)(605)(6,204) Operating profit/(loss) before imparment losses and taxation2,112671(73)2,710 Credit imparment release/(charge) 216(169)(19)28 Other imparment (charge)/release (39)–489 Profit from associates and jont ventures ––11 Underlying profit/(loss) before taxation2,289502(43)2,748 Restructuring (108)(47)(170)(325) Goodwill imparment & other items ––(42)(42) Statutory profit/(loss) before taxation2,181455(255)2,381 2020 (Restated)¹ Corporate, Commercial & Institutonal Banking $millon Consumer, Private & Business Banking $millon Central & other items $millon Total $millon Operating income 5,8582,6198089,285 External6,0462,1191,1209,285 Inter-segment(188)500(312)– Operating expenses (3,538)(1,983)(773)(6,294) Operating profit before imparment losses and taxation 2,320636352,991 Credit imparment(1,402)(523)(23)(1,948) Other imparment release/(charge)278(10)(121)147 Profit from associates and jont ventures––11 Underlying profit/(loss) before taxation 1,196103(108)1,191 Restructuring(142)(49)(81)(272) Goodwill imparment & other items––(383)(383) Statutory profit/(loss) before taxation 1,05454(572)536 1Following an organisatonal restructure that came into effect on 1 January 2021, the new structure results in the creation of two new client segments: Corporate, Commercial & Institutonal Banking, serving larger companies and insttutions, and Consumer, Private & Business Banking, serving Indivdual and business clients. Profit before taxation (PBT) by region 2021 Asia $millon Africa & Middle East $millon Europe & Americas $millon Central & other items $millon Total $millon Operating income4,2742,4352,0061998,914 Operating expenses(2,635)(1,610)(1,444)(515)(6,204) Operating profit/(loss) before imparment losses and taxation1,639825562(316)2,710 Credit imparment (charge)/release (112)34120(14)28 Other imparment (charge)/release –(1)33(23)9 Profit from associates and jont ventures –––11 Underlying profit/(loss) before taxation1,527858715(352)2,748 Restructuring (84)(26)(89)(126)(325) Goodwill imparment & other items –––(42)(42) Statutory profit/(loss) before taxation1,443832626(520)2,381 ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 27 Strategic report continued 2020 (Restated)¹ Asia $millon Africa & Middle East $millon Europe & Americas $millon Central & other items $millon Total $millon Operating income 4,3372,3562,0655279,285 Operating expenses (2,608)(1,672)(1,286)(728)(6,294) Operating profit/(loss) before imparment losses and taxation 1,729684779(201)2,991 Credit imparment (charge)/release(1,130)(654)(171)7(1,948) Other imparment release/(charge)163(14)8(10)147 Profit from associates and jont ventures–––11 Underlying profit/(loss) before taxation 76216616(203)1,191 Restructuring(41)(87)(32)(112)(272) Goodwill imparment & other items–––(383)(383) Statutory profit/(loss) before taxation 721(71)584(698)536 1Following the Group’s change in organisatonal structure, there has been an integraton of Greater China & North Asia and ASEAN & South Asia to Asia. Prior period has been restated. Return on tangible equity (RoTE) 2021 $millon 2020 $millon Average parent company Shareholders’ Equity 29,204 28,790 Less Preference share premium (1,500) (1,500) Less Average intangble assets (3,618) (3,406) Average Ordinary Shareholders’ Tangible Equity24,086 23,884 Profit for the year attributable to equity holders1,638 22 Non-controlling interests (29) (47) Divdend payable on preference shares and AT1 classifed as equity (292) (458) Profit/(loss) for the year attributable to ordinary shareholders1,317 (483) Items normalised: Regulatory fine 62 (14) Restructuring 325 272 Goodwill Impairment – 403 Net gains on sale of Businesses (20) (6) Tax on normalised items (27) (71) Underlying profit for the year attributable to ordinary shareholders1,657 101 Underlying Return on Tangible Equity6.9% 0.4% Statutory Return on Tangible Equity5.5% (2.0)% 2021 % 2020 % Underlying RoTE6.9 0.4 Regulatory fine (0.3) 0.1 Restructuring Of which: Income (0.3) (0.2) Of which: Expenses (0.9) (0.8) Of which: Credit imparment – (0.1) Of which: Other imparment (0.1) – Net gains on disposal of available for sale instruments 0.1 – Goodwill imparment – (1.7) Tax on normalised items 0.1 0.3 Statutory RoTE5.5 (2.0) ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 28 Strategic report continued Alternative performancemeasures An alternative performance measure is a financal measure of historcal or future financal performance, financal positon, or cash flows, other than a financal measure defined or specifed in the applicable financal reporting framework. The following are key alternative performance measures used by the Group to assess financal performance and financal positon. MeasureDefintion Constant currency basis A performance measure on a constant currency basis (ccy) is presented such that comparative periods are adjusted for the current year’s functional currency rate. The following balances are presented on a constant currency basis when described as such: •Operating income •Operating expenses •Profit before tax •RWAs or Risk-weighted assets Underlying/ Normalised A performance measure is described as underlying/normalised if the statutory result has been adjusted for restructuring and other items representing profits or losses of a capital nature; amounts consequent to investment transactions driven by strategic intent; and other infrequent and/or exceptional transactions that are signficant or material in the context of the Group’s normal business earnings for the period, and items which management and investors would ordinarly identfy separately when assessing performance period-by-period. A reconcilation between underlying/normalised and statutory performance is contained in Note 2 to the financal statements. The following balances and measures are presented on an underlying basis when described as such: •Operating income •Operating expense •Profit before tax •Earnings per share (basic and diluted) •Cost-to-income ratio •Jaws •RoTE or Return on tangible equity Advances-to- deposits/customer advances-to- deposits (ADR) ratio The ratio of total loans and advances to customers relative to total customer accounts, excluding approved balances held with central banks, confirmed as repayable at the point of stress. A low advances-to-deposits ratio demonstrates that customer accounts exceed customer loans resulting from emphasis placed on generating a high level of stable funding from customers. Cost-to-income ratio The proportion of total operating expenses to total operating income. Cover ratio The ratio of imparment provisons for each stage to the gross loan exposure for each stage. Cover ratio after collateral/cover ratio includng collateral The ratio of imparment provisons for Stage 3 loans and realisable value of collateral held against these non- performing loan exposures to the gross loan exposure of Stage 3 loans. Gross yield Statutory interest income divded by average interest earning assets. Jaws The difference between the rates of change in revenue and operating expenses. Positve jaws occurs when the percentage change in revenue is higher than, or less negative than, the corresponding rate for operating expenses. Loan loss rate Total credit imparment for loans and advances to customers over average loans and advances to customers. Net tangible asset value per share Ratio of net tangible assets (total tangible assets less total liablites) to the number of ordinary shares outstanding at the end of a reporting period. Net yield Gross yield less rate paid. NIM or Net interest margin Net interest income adjusted for interest expense incurred on amortised cost liablites used to fund the Financal Markets business, divded by average interest-earning assets excluding financal assets measured at fair value through profit or loss. RAR per FTE or Risk adjusted revenue per full-time equivalent Risk adjusted revenue (RAR) is defined as underlying operating income less underlying imparment over the past 12 months. RAR is then divded by the 12 month rolling average full-time equivalent (FTE) to determine RAR per FTE. Rate paid Statutory interest expense adjusted for interest expense incurred on amortised cost liablites used to fund financal instruments held at fair value through profit or loss, divded by average interest bearing liablites. RoE or Return on equity The ratio of the current year’s profit available for distrbution to ordinary shareholders to the weighted average ordinary shareholders’ equity for the reporting period. RoTE or Return on ordinary shareholders’ tangible equity The ratio of the current year’s profit available for distrbution to ordinary shareholders, to the weighted average tangible equity, being ordinary shareholders’ equity less the average goodwill and intangble assets for the reporting period. Where a target RoTE is stated, this is based on profit and equity expectations for future periods. TSR or Total shareholder return The total return of the Group’s equity (share price growth and divdends) to investors. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 29 ## Risk review ## “Staying viglant in the face of an uneven global economic recovery” 2021 was a challenging year on the macroeconomic front, driven by the ongoing pandemic. The COVID-19 recovery has continued to be uneven, with unbalanced vaccine roll-outs between developed markets and emerging markets and easing of restrictons in some markets even as other locations and sectors continued to lag. The potential impact from new variants has also contributed to further uncertainty. Multiple sectors of the global economy have been impacted by the pandemic, and liqudity pressures in the commercial real estate sector in China have arisen during the year, although the long-term impact remains to be seen. A rapid recovery in demand following the easing of restrictons, and existng supply chain disruptons has in turn contributed to elevated inflaton levels, with many markets seeing a signficant rise in prices. The accumulation ofworldwide debt could also pose further risks to the economic environment. The Group has built a strong foundation with solid risk fundamentals, and we are focussed on emerging strongly from the pandemic. We continue to scan the horizon for emerging risks and collaborate with internal and external partners to proactively mitgate risks as they are identfied. Asset quality has improved, as evidenced by the increase in percentage of investment grade corporate exposure (2021: 71 per cent, 2020: 63 per cent), among others, though we remain watchful in the face of ongoing uncertainty. We continue to demonstrate resilence as evidenced by strong capital and liqudity metrics. As a result of the changes in internal and external operating environment due to the pandemic, non-financal risk areas such as Fraud, Information and Cyber Security, Privacy and Conduct remain heightened. We continue to enhance our operational resilence and defences against these risks, especially as we adapt to more agile ways of working. The PLC Group is also working to ensure a successful transiton from the Interbank Offered Rate (IBOR) to alternative risk-free rates. Digtalisaton and technological development remain key items on the Group’s agenda. We continue to ensure that our control frameworks and Risk Appetite evolve accordingly to keep pace with new business developments and asset classes. Earlier in the year, we defined three Stands to use our unique abilty to work across boundaries and connect capital, people, ideas and best practices to help address some key socio-economic challenges of our time. Accelerating Zero is one of the Stands, and our aim is to reduce the emissons associated with our financng activties to net zero by 2050, which includes interm 2030 targets for the most carbon-intensve sectors. We are supporting our clients in the transiton to a low-carbon economyby developing transiton frameworks and sustainable financngsolutions. We have integrated ESG Risk management into our Reputational Risk Type Framework. Sustainablity is a core part of our strategy and our ambiton to become the world’s most sustainable and responsible bank. Further details on our overall approach to net zero can be found at sc.com/netzero . To support Liftng Particpation, we are helping our clients by buildng partnerships to expand their access to financal services. For these new business intiatves, we have developed new risk management and risk assessment approaches across our Princpal Risk Types to address these unique risks. We further support our clients by promoting financal wellbeing through financal education and personalised services includng digtalised solutions for lending and wealth management. We are also focused on drivng customer awareness of environmental sustainablity concerns through green products. As part of our aim to Reset Globalisaton, we welcome digtal-asset-related opportunites. The PLC Group has enhanced its Digtal Asset Risk management approach and policy to ensure that digtal asset activties across PLC Group are appropriately managed, and withn overall PLC Group Risk Appetite. An update on our key risk priorties 2021 presented a challenging risk landscape, however, we faced this from an intrnsically strong positon. Our risk management approach is at the heart of our business and is core to us achievng sustainable growth and performance. We have made progress on the key priorties set out at half year, as follows. Strengthening the Group’s risk culture and conduct: We remain committed to promoting a healthy risk culture and drivng the highest standards in conduct. Both risk culture and conduct are integral components of our Risk Management Framework (RMF). Our RMF sets out the guidng princples for our colleagues, enabling us to have integrated and holistc risk conversations across the Group and the three lines of defence. It underpins an enterprise-level abilty to identfy and assess, openly discuss, and take prompt action to address existng and emerging risks. Senior management across the Group promote a healthy risk culture by rewarding risk-based thinkng (includng in remuneration decisons), challenging status quo, and creating a transparent and safe environment for employees to communicate risk concerns. We strive to uphold the highest standards of conduct through delivery of conduct outcomes, acknowledging that while incdents cannot be entirely avoided, the Group has no appetite for wilful or negligent misconduct. More broadly, we are continung to focus on strengthening first-line Conduct Risk ownership, includng helping to draw enhanced Conduct Risk insghts through the development of better conduct analytics as part of the new Conduct Risk management approach. Strategic report continued ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 30 Strategic report continued As part of the PLC Group’s Future of Work Now intiatve, moving to large-scale working from home arrangements has been formalised and rolled out to the majorty of the PLC Group’s markets. Risks arisng from the new working model have been assessed, with controls strengthened where appropriate. We remain viglant to the need to increase staff awareness of fraud and cyber security risks, alongside other targeted mitgating actions to improve oversight and internal controls. Enhancing informaton and cyber security (ICS) capabilties: The Group remains focused on pursuing a culture of cyber resilence as we progress with more agile ways of working. We are focused on maintaning client services and protecting our most critcal assets, remainng viglant to evolving cyber threats. Our cyber security framework has been further enhanced to underpin our management and mitgation of ICS Risk and support of our businesses and functions in their adoption of key controls. We plan to further enhance our key ICS Risk metrics to support strategic oversight and decison-making. Strengthening our oversight of third-party ICS Risk also remains an area of focus, considerng external threats and the continued prevalence of third-party ICS incdents. We are ensuring we develop our internal talent pool and recruit external talent where required to support these critcal capabilties. Embedding Climate Risk management: The PLC Group has continued to embed Climate Risk management, starting with, among others, understanding the impact of physical and transiton risks on our credit portfolio and climate-related reputational risks for clients in high transiton sectors. In 2022, PLC Group will extend this to cover other relevant Princpal Risk Types. Climate scenario analysis across our markets, includng the Bank of England’s 2021 Biennal Exploratory Scenario, have helped improve our understanding in identfying key portfolios vulnerable to Climate Risk. At the PLC Group level, we reached out to around 2,000 of our clients globally, to understand their transiton and physical risk profiles, adaptation plans, mitgation measures and approach to disclosure, enhancing the granularity of data available for risk identficaton and deepening client engagement. Climate Risk assessments are now considered as part of Reputational and Sustainablity transaction reviews for impacted clients in high-carbon sectors, and a first phase of integraton into credit decisoning for the transaction review process is under way for our Corporate, Commercial and Institutonal Banking business. As our experience of quantifyng Climate Risk grows, we are moving from measurement to management, while working closely with external partners, industry and academia to move forward on Climate Risk together. As part of the ongoing partnership with Imperial College London, the PLC Group supported new climate research on the potential for nature-based solutions (actions to protect, restoreand enhance ecosystems) to tacklethe interlnkagesbetween agriculture, land-use and climatechange.The 2021 Task Force on Climate-related Financal Disclosures (TCFD) Report released provides further details on the PLC Group’s progress in managing climate risks and opportunites, includng the PLC Group’s net zero target by 2050. ++More details on the Group’s approach to Climate Risk can be found at sc.com/tcfd Managingour ESGrisk: The Group remains committed to being the world’s most sustainable and responsible bank. At the start of the year the PLC Group expanded the Reputational Princpal Risk Type by adding Sustainablity and proposed new Risk Appetite metrics covering environmental and social (E&S) risks as well as ensuring no Modern Slavery risks in our supply chain. We continue to invest in infrastructure and technology to keep pace with the emerging ESG regulatory obligatons across our markets. The PLC Group has developed an internal Environmental and Social Risk Catalogue that will be piloted to ensure that risk identficaton, assessment and enhanced due dilgence, are underpinned by a standard classifcation system. Using the Catalogue, an intial heatmap of E&S risks has been developed for our clients and suppliers on an industry-portfolio level through a top-down risk assessment approach. The assessment is used to identfy key areas of priorty for E&S risks where safeguards could be further strengthened. From 2022 onwards, we plan to incorporate the findngs of this risk assessment in our regular review of our PLC Group positon statements and supply chain onboarding to ensure that our businesses and supply chains continue to support our sustainablity ambiton. Managing Financal Crime Risks: External developments continue to create new risks and control challenges, particularly with respect to rapidly changing geopolitcal events. There is a heightened level of Fraud Risk in the environment due to new methods, schemes and technology, and we continue to increase our investment in fraud prevention and detection capabilties to protect the Group and our clients. Our Financal Crime Compliance team continues to identfy and prevent fraud and money launderingusing next-generation surveillance and financal crime monitorng infrastructure and machine learning. We are focused on strengthening our three lines of defence by transitoning certain responsiblites for financal crime surveillance from the second line to the first line while reinforcng the oversight and monitorng role of the second line. The Group continues to partner to lead the fight against financal crime through informaton sharing about threats to protect clients and the wider financal system. We continue an active industry engagement to address new regulatory and statutory intiatves, focusing on enhancing the effectiveness of financal crime compliance and contributng useful informaton to law enforcement. We have made continued progress in resolving long-standing enforcement actions and related remediaton, and continue to work to strengthen compliance and improve customer experience in areas of greater implementaton challenge such as records management and transaction monitorng. ++More informaton about the Group’s commitment to fightng financal crime can be found at sc.com/fightngfinancalcrime ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 31 Strategic report continued Innovation – Risk and CFCC infrastructure: We continue to focus on simplfying our approach to enable more effective first-line risk management, supported with SmartBot-enabled self-service platforms. Flexible strategic risk reporting with centralised data and advanced analytical capabilties enabled a timely and an agile response to the challenges of COVID-19. Continued integraton of our risk aggregation platform with front office data provides near real-time bespoke exposure analysis forfinancal risks, decisoning and reporting, and ourstress testingscenarios have been expanded toinclude the impact of the pandemic and Climate Risks. We are implementng an Enterprise GRC (Governance, Risk and Compliance) platform to integrate dataand processes across Operational Risk, polices andstandards, complianceand assurance activties, and have made signficant progress in the year. We have clear priorties to build a more digtal and data-driven control function with scalable self-service solutions and partnerships with our internal innovaton centre, SC Ventures. Hubs continue tobe utilsed for centralised specialst knowledge anddelivery of data visualsation, reporting, change management, model development, validaton and governance,with automation of supporting processes to reduce operational risks. Embedding Model Risk management: Model Risk management has seen a notable step forward in 2021. The PLC Group enhanced its risk management framework earlier in the year to strengthen model issue management and the governance framework for artifcial intellgence and machine learning. The Model Inventory across the PLC Group has undergone many enhancements through the year to be an industry-level model inventory tool, enabling increased coverage of informaton with a higher level of accuracy. Regulatory model delivery has been a key focus area related to new European Banking Authority standards and the cessation of IBOR. We have adopted the PLC Group’s Model Risk Type Framework and implemented Group level Model Risk Appetite and this will continue to be an area of focus to ensure we effectively embed awareness of Model Risk management across the Group. Our risk profile and performance in 2021 Despite the challenges of the ongoing pandemic, our solid foundation has helped us to deliver a good performance with a resilent risk profile and improved asset quality. 2021 demonstrates our commitment to strong and sustainable growth, with continued improvements across several metrics reflecting our robust risk management during the pandemic. We remain viglant to the continued impact of COVID-19 and an uneven recovery across markets and industres. In 2021, we have seen a 50 per cent decrease in early alerts exposure (2021: $4.3 billon, 2020: $8.5 billon), mainly due to reductions in counterparty exposure and clients being removed from early alert. While early alerts have decreased compared with December 2020, the Group remains viglant in view of persistent challenging conditons in some markets and sectors. Credit Grade 12 balances reduced to $1.6 billon due to repayments and outflows to non-performing loans, that were partially offset bysovereign ratingdowngrades. The percentage of investment grade corporate exposure has also increased to 71 per cent compared with 63 per cent a year ago, reflecting an increase in repurchase agreement balances and high-quality orignations. The total credit imparment charge is a release of $28 millon compared to a charge of $1.9 billon last year. Stage 3 imparment decreased by $1.3 billon, of which majorty is from releases in Corporate, Commercial and Institutonal Banking. Stage 1 and 2 imparment decreased by $762 millon, due to reduction in exposures from lower levels of early alert portfolio, new guarantees and improvement in probabilty of default, with the remainder due to improvng macroeconomic forecasts and reduction in COVID-19 management overlays. Overall stage 3 loans and advances to customers decreased from $8.3 billon to $6.9 billon, while stage 3 provisons were lower by $0.7 billon at $4.2 billon. The stage 3 cover ratio (excluding collateral) in the total customer loan book increased to 61 per cent (2020: 60 per cent). Average Group Value at Risk (VaR) in 2021 was 38.5 per cent lower at $41.1 millon (2020: $66.9 millon), driven by the extreme market movements from 2020 dropping out of the one-year VaR time horizon. However, volatilty started to increase in the second half of 2021 driven by the impact of new COVID variants. > Further details of the risk performance for 2021 are set out in the Risk profile section. An update on our risk management approach Our RMF outlines how we manage risk across the Group, consistent with the PLC Group’s risk management and governance approach. It gives us the structure to manage existng risks effectively in line with our Risk Appetite, as well as allowing for holistc risk identficaton. As part of the annual review of the RMF, we have repositoned our Cross-Cutting Risks to Integrated Risk Types (IRT), which are defined as “risks that are signficant in nature and materialse primarly through the relevant Princpal Risk Types (PRT)”. The RMF sets out the roles and responsiblites and minmum governance requirements for the management of IRTs. Additonally, the Capital and Liqudity Princpal Risk Type has been renamed to Treasury Risk and the scope of the risk type has been expanded to cover Interest Rate Risk in the Banking Book (IRRBB). Given their integrated nature, Digtal Asset and Third-Party Risks, have been newly identfied as IRTs in the RMF, in additon to Climate Risk. As outlined in the Group RMF, we manage and control our PRTs as well as IRTs in line with the PLC Group’s Risk Type Frameworks, which are implemented at the Company level via an addendum. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 32 Princpal and Integrated Risk Types Princpal risks are risks inherent in our strategy and business model. These are formally defined in our RMF which provides a structure for monitorng and controlling these risks through the Court-approved Risk Appetite. We will not compromise adherence to our Risk Appetite in order to pursue revenue growth or higher returns. The table below provides an overview of the Group’s princpal and integrated risks and how these are managed. In additon to princpal risks, the Group has defined a Risk Appetite Statement for Climate Risk and will give consideraton to standalone Risk Appetite Statements for additonal integrated risks in 2022. Further details can be found on pages 129 to 143 of our 2021 Annual Report. Princpal Risk TypesHow these are managed Credit Risk The Group manages its credit exposures following the princple of diversficaton across products, geographies, client segments and industry sectors Traded Risk The Group should control its trading portfolio and activties to ensure that Traded Risk losses (financal or reputational) do not cause material damage to the Group or PLC Group’s franchise Treasury Risk Indivdual regulated entites withn the Group should maintan a strong capital and liqudity positon and meet their minmum capital and liqudity requirements Operational and Technology Risk The Group aims to control Operational and Technology Risks to ensure that operational losses (financal or reputational), includng any related to conduct of business matters, do not cause material damage to the Group or PLC Group’s franchise Information and Cyber Security Risk The Group seeks to minmise ICS Risk from threats to the Group’s most critcal informaton assets and systems, and has a low appetite for material incdents affecting these or the wider operations and reputation of the Group and PLC Group Compliance Risk The Group has no appetite for breaches in laws and regulations related to regulatory non-compliance; recognisng that whilst incdents are unwanted, they cannot be entirely avoided Financal Crime Risk The Group has no appetite for breaches in laws and regulations related to Financal Crime, recognisng that while incdents are unwanted, they cannot be entirely avoided Model Risk The Group has no appetite for material adverse implcations arisng from misuse of models or errors in the development or implementaton of models; whilst accepting model uncertainty Reputational and Sustainablity Risk The Group aims to protect the franchise from material damage to its reputation by ensuring that any business activty is satisfactorly assessed and managed by the appropriate level of management and governance oversight. This includes a potential failure to uphold responsible business conduct or lapses in our commitment to do no signficant environmental and social harm. Integrated Risk TypesHow these are managed Climate Risk The Group aims to measure and manage financal and non-financal risks from climate change, and reduce emissons related to our own activties and those related to the financng of clients, in alignment with the Paris Agreement Digtal Asset Risk This IRT is currently supported by Risk Appetite metrics embedded withn relevant Princpal Risk Types Third Party Risk This IRT is currently supported by Risk Appetite metrics embedded withn relevant Princpal Risk Types Strategic report continued ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 33 Emerging risks Emerging risks refer to unpredictable and uncontrollable events with the potential to materially impact our business. As part of our continuous risk identficaton process, we have updated the Group’s emerging risks from those disclosed in the 2020 Annual Report. A detailed explanation of the changes to our emerging risks compared with 2020 can be found on page 144. The table below summarises our current list of emerging risks, outlinng the risk trend changes since the end of 2020, the reasons for any changes and the mitgating actions we are taking based on our current knowledge and assumptions. This reflects the latest internal assessment as identfied by senior management. The list is not exhaustive and there may be additonal risks which could have an adverse effect on the Group. Our mitgation approach for these risks may not elimnate them but shows the Group’s attempt to reduce or manage the risk. As certain risks develop and materialse over time, management will take appropriate steps to mitgate the risk based on its impact on the Group. Emerging Risks Risk trend since December 2020 1 Key risk trend driversHow these are mitgated Expanding array of global tensions Relations between China and the West remain fragile and tensions are increasng regarding Russia’s presence on the Ukrainan border. There has also been increasng fricton between historc allies on issues such as the withdrawal from Afghanistan and AUKUS, as well as protectionst polices in the wake of COVID-19 Global supply chain disrupton could tip the balance of power towards producers and potentially lead to an increased focus on local security over global collaboration •Sharp slowdowns in the US, China, and more broadly, world trade and global growth are a feature of PLC Group, Solo ² and country level stress scenarios. The Group relies on these stress tests to assess key Group level vulnerabilties and to be able to implement timely interventons •Detailed portfolio reviews are conducted at a PLC Group, country and business level on an ongoing basis, most recently regarding increasng tensions around Ukraine, and action is taken where necessary •We are closely monitorng the China-G7 relationshp and assessing the impact on our business with dedicated teams in the first and second line of defence •We remain viglant in monitorng geopolitcal relationshps. Increased scrutiny is applied when onboarding clients in sensitve industres and in ensuring compliance with sanctions requirements Energy security Increased industral demand and an accelerated transiton to cleaner energy sources have put a strain on supply lines. This has increased tensions between nations as power shifts towards energy exporters, and energy security decreases across developed markets and emerging markets alike. A lack of investment by oil producers as we transiton could also lead to an increase in oil prices in the short term •The Group relies on stress tests conducted at a PLC Group, Solo and country level, where an oil shock scenario was developed •Sovereign ratings, outlooks and country risk limts are regularly monitored with periodc updates to senior stakeholders •The PLC Group is implementng a Climate Risk work plan and aims to embed Climate Risks across all relevant Princpal Risks in 2022. This includes scenario analysis and stress-testing capabilty to understand financal risks and opportunites from climate change Crystallisaton of inflaton fears Interest rates have already increased or are likely to rise in several countries as central banks respond to inflatonary pressure Drivers of price increases include recent shortages of materials and labour, and long-term monetary stimulus and there is growing acceptance that the inflatonary shock will last longer than intially expected Nevertheless, there is still a lack of firm consensus withn the industry on some key inflaton questions, as well as other potential scenarios such as slow economic growth and risng prices leading to stagflation •The Group relies on stress tests conducted at a PLC Group, Solo and country level to assess the impact of a severe stress in the global economy associated with a sharp slow-down. •Both PLC Group-wide management and Traded Risk scenarios are being developed to examine the impact of a rapid build-up in inflatonary pressures around the world •Sovereign ratings, outlooks and country risk limts are regularly monitored with periodc updates to senior stakeholder Strategic report continued 1The risk trend refers to the overall risk score trend, which is a combinaton of potential impact, likelhood and velocity of change 2The solo regulatory group as defined in the Prudential Regulation Authority waiver letter dated 10 August 2020 differs from Standard Chartered Bank Company in that it includes thefull consolidaton ofninesubsidaries,namely StandardCharteredHoldings (International) B.V., StandardChartered MBHoldingsB.V., Standard Chartered UK Holdings Limted, Standard Chartered Grindlays PTY Limted, SCMB Overseas Limted, Standard Chartered Capital Management (Jersey) LLC, Cerulean Investments L.P., SC Ventures Innovation Investment L.P. and SCVentures G.P. Limted. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 34 Strategic report continued Emerging Risks Risk trend since December 2020 1 Key risk trend driversHow these are mitgated Adapting to endemic COVID-19 and a K-shaped recovery 2 Although countries with higher vaccinaton rates are moving towards accepting COVID-19 as endemic, the threat of new variants and increased restrictons remains Vast differences in the pace and scale of vaccine roll-outs and financal resources have widened the recovery gap and threaten a K-shaped global recovery, where countries or sectors recover at a different rate depending on their abilty to adapt to a post-COVID world There are deeper structural impacts on traditonal economic systems, includng shifts in labour demographics •A severe stress in the global economy associated with a sharp slow-down is a feature of the stress tests conducted at a PLC Group, Solo and country level •Sensitve sectors (e.g. aviaton and hospitalty) are regularly reviewed and exposures to these sectors are actively managed as part of Credit Risk reviews •Exposures that could result in material credit imparment charges and RWA inflaton under stress tests are regularly reviewed and actively managed •The Group’s priorty remains the health and safety of our clients and employees and continuaton of normal operations by leveraging our robust Business Continuty Plans which enable the majorty of our colleagues to work remotely where possible Supply chain dislocatons A combinaton of supply and demand factors, some transitory and some more structural, have led to global supply chain disruptons, especially as some markets have started to emerge from the pandemic There may also be a fundamental shift in supply chains of the future, with increased contingency costs and potential shifts to move production closer to consumers •Exposures that may result in material credit imparment and increased RWA are closely monitored and actively managed •Sectors which exhibt high supply chain pressure and vulnerabilty are regularly reviewed and exposures to these sectors are actively managed as part of Credit Risk reviews •We actively utilse Credit Risk mitgation techniques includng credit insurance and collateral Emerging markets sovereign risk COVID-19 has caused liqudity and potential solvency issues for some of the world’s poorest countries, with several negative sovereign rating actions observed Tightenng of financal conditons in developed markets may lead to local currency depreciatons against the US dollar, pushing up debt reservicng costs •Exposures that may result in material credit imparment and increased RWA are closely monitored and actively managed •We rely on stress tests and portfolio reviews conducted at a PLC Group, Solo, country, and business level to assess the impact of extreme but plausible events and manage the portfolio accordingly •We actively utilse Credit Risk mitgation techniques includng credit insurance and collateral •We actively track the particpation of our footprint countries in G20’s Common Framework Agreement and Debt Service Suspension Initative for Debt Treatments and the associated exposure 1The risk trend refers to the overall risk score trend, which is a combinaton of potential impact, likelhood and velocity of change 2A K-shaped global recovery occurs where countries or sectors recover at different rates following a recession ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 35 Emerging Risks Risk trend since December 2020 1 Key risk trend driversHow these are mitgated Expanding stakeholder expectations for environmental, social and corporate governance There are risks if the Group is unable to adapt to new regulation quickly, as well as meeting publicly stated sustainablity goals and helping clients transiton Environmental targets are being incorporated into many countries’ domestic polices and corporations’ business models with increased pressure to set ambitous sustainablity goals. This includes an increase in disclosure requirements There is fragmentation in the pace and scale of adoption around the world, which adds complexity in managing a global business. There is a risk that focus on environmental goals over social and governance concerns, as well as fragmentation in ESG taxonomies, may lead to unintended consequences •We remain committed to being a responsible bank, minmisng our environmental impact and embedding our values through our strengthened Positon Statements for sensitve sectors and a list of prohibted activties that the Group will not finance •The PLC Group is proactively particpating in industry intiatves and framework development on both climate and biodversity, to help inform our internal efforts and capabilties. Increased scrutiny is applied to environmental and social standards in providng services to clients •We rely on detailed portfolio reviews and stress tests conducted at a PLC Group, Solo and country level to test resilence to climate-related risks in line with local regulatory requirements and take action where necessary •The PLC Group has released net zero targets and specifc emisson reduction targets for carbon-sensitve sectors. The PLC Group’s TCFD Report includes more details on climate risk and net zero •Our Green and Sustainable Product Framework, developed with the support of Sustainalytcs, has been informed by industry and supervisory princples and standards such as the Green Bond Princples and EU Taxonomy for sustainable activties •We have defined three Stands to use our unique abilty to work across boundaries and connect capital, people, ideas and best practices to help address some key socioeconomc challenges and enable a just transiton •The PLC Group is developing an approach to further integrate ESG risk management across the ERMF Social unrest COVID-19 has restricted the abilty to demonstrate in some markets, although the prolonged nature of the pandemic and imposed vaccine and lockdown mandates have led to tensions in some countries Inequality has increased as a result of the pandemic, which may give rise to societal disturbances. Other causes such as climate and social justce also remain a focus •The Group is committed to managing human rights impacts through our social safeguards in our Positon Statements •The PLC Group’s Human Rights Working Group has developed an approach to monitor, report and escalate human rights issues to our Management Team for consideraton with PLC Group’s strategy •We continue to support our operations and communites who are greatly impacted by COVID-19 through various aid programmes and financng •The Group relies on portfolio reviews at a PLC Group, country and business level to assess the impact of extreme but plausible geopolitcal events Data and digtal Regulatory requirements and client expectations relating to data management, data protection, data sovereignty and privacy are increasng, includng the ethical use of data and artifcial intellgence. The Group, as well as the industry, continues to face challenges to keep pace with the volume of data-related regulatory change Rapid adoption and increased sophistcation of new technologies may expose the Group to new technology-related risks, includng heightened cyber security risks Data is becoming more concentrated in the hands of governments and big private companies. There are also relatively few providers of new technologies such as cloud computing services •There is active monitorng, both in house and through external counsel, of regulatory developments in relation to data management, includng records management, data protection and privacy, data sovereignty and artifcial intellgence •The PLC Group has further embedded the existng risk control framework for data management risks, which has strengthened and streamlined risk oversight •Strict processes exist withn the Group to ensure that only authorised indviduals with sound justficaton are given access to Group client data. These processes are continuously refined to ensure efficacy and compliance with current legislaton •The PLC Group has established a dedicated Data and Privacy Operations team and mobilsed a Groupwide transformation programme to build data management capabilties and expertise across the Group to ensure compliance with data management regulations Strategic report continued 1The risk trend refers to the overall risk score trend, which is a combinaton of potential impact, likelhood and velocity of change ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 36 Strategic report continued Emerging Risks Risk trend since December 2020 1 Key risk trend driversHow these are mitgated New business structures, channels and competiton There are signficant shifts in customer value propositons. Fintechs are deliverng digtal- only banking offerings with a growing usage of machine learning to provide highly personalised services In additon, digtal assets are gainng adoption and linked business models are increasng in prominence. These present material opportunites as well as risks. Failure to adapt and harness new technologies and new business models would place banks at a competitve disadvantage. There is an increasng usage of partnerships and alliances by banks to respond to disrupton and changes in the industry. However, this exposes banks to third-party risks •We monitor emerging trends, opportunites and risk developments in technology that may have implcations for the banking sector •We are enhancing capabilties to ensure our systems are resilent, we remain relevant and can capitalse quickly on technology trends •Enhanced digtal capabilties have been rolled out in Consumer, Private and Business Banking, particularly around onboarding, sales and marketing •A risk management approach to address the specifc risks arisng from digtal asset activties, as well as internal guidance on how to leverage existng risk management practices for new activties and nascent risks, is developed and implemented at the PLC Group •Strategic partnerships and alliances are being set up with fintechs to better compete in the markets in which we operate •Third-Party Risk management polices, procedures and governance are being reviewed to ensure adequate coverage across all PLC Group activties Talent pools of the future COVID-19 accelerated the move towards remote working for employees. However, this has raised concerns around effective mitgation and management of Operational, ICS, Compliance, and Conduct Risks. The extended nature of the COVID-19 pandemic is continung to restrict employees’ abilty to operate in their preferred hybrid working location format (between home and office), causing potential risks to wellbeing, ease of collaboration and learning from others A shortage of key skills is drivng a war for talent which, combined with cross-border mobilty restrictons and government protectionst polices, will especially intensfy competiton for local talent •We assess and manage people-related risks, for example, organisaton, capabilty, conduct and culture, as part of our Group risk management framework and our People Strategy •The PLC Group undertook a Future of Work change risk assessment which considered Operational, Compliance, Data Privacy and ICS Risks, in additon to wellbeing, culture and leadership •The Group has rolled out hybrid-working options in 25 markets and over 83 per cent of employees in these locations are now on flexi-working arrangements. Toolkits have been provided to managers and employees on managing ‘macro’ and ‘micro’ moments in a hybrid- working world •Wellbeing is one of the key pillars of the Group’s diversty and incluson strategy and we have embedded multiple tools and resources to support colleague wellbeing. These include toolkits for managers and employees, a confidental Employee Assistance Programme, an online programme to support physical wellbeing, increased trainng for Mental Health First Aiders, an on-the-go mobile app and proactive trainng in resilence •The PLC Group has embarked on a multi-year journey focused on upskillng and re-skillng our workforce by buildng a culture of continuous learning and leveraging technology to enable employees to build future-ready skills through content and cross-functional experiences Risk heightened in 2021Risk reduced in 2021Risk remained consistent with 2020 levels Summary We remain fully committed to robust risk management, embracing innovaton while ensuring that we achieve the right risk outcomes when adopting newtechnologies and digtal capabilties. The COVID-19 pandemicdominated theeconomic climate throughout 2021 and recovery remains uneven. Continued focus on enhancing risk management capabilties and leveraging technology will help the Group to emerge stronger from the pandemic, as a more sustainable, innovatve, resilent and client-centred bank. 1The risk trend refers to the overall risk score trend, which is a combinaton of potential impact, likelhood and velocity of change ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 37 Strategic report continued ## Stakeholders and responsiblites As an internatonal bank working in 58 markets, stakeholder engagement is central in ensuring we understand local, regional and global perspectives and trends that inform our approach to doing business. This section forms our Section 172 disclosure, describng how the directors considered the matters set out in section 172(1)(a) to (f) of the Companies Act 2006. It also forms the directors’ statement required under section 414CZA of the Act. This section sets out how: • we engagestakeholders to understand their interests • we engageemployees andrespond to their interests • we respond to stakeholder interests through sustainable and responsiblebusiness • the Court considers stakeholders interests This section also forms our key non-financal disclosures in relation to sections 414CA and 414CB of the Companies Act. Our non-financal informaton statement can be found at the end of this section. Princpal Court decison – net zero pathway As part of the consideraton process for approving the net zero pathway, the Court had to ensure it was comfortable with the methodology,the potential outcome of applying the methodology andthe substanceof the pathway, all setwithn the context of an agreed and robust risk management framework. Stakeholder consideratons were taken into account in the Court’s discusson of the net zero pathway amongst many other factors. The Court, cognisant of the methodological approach and interest in the pathway by shareholders and other stakeholders, approved the recommended pathway andcommunicatons plan. Engaging stakeholders Listenng and responding to stakeholder priorties and concerns is critcal to achievng our purpose and deliverng on our brand promise, Here for good. We strive to maintan open and constructive relationshps with a wide range of stakeholders includng regulators, lawmakers, clients, investors, civl society, and community groups. In 2021, our engagement took many forms, includng one-to-one sessions using online channels and calls, virtual roundtables, written responses, and targeted surveys. These conversations, and theissues that underpin them, helpinform our business strategy andenable us tooperate asa responsibleand sustainable business. Stakeholder feedback is communicated internally to senior management through the relevant forums and governing committees such as the Sustainablity Forum, and to the PLC Board’s Culture and Sustainablity Committee (CSC) which oversees the PLC Group’s approach to its main relationshps with stakeholders. We communicate progress regularly to external stakeholders through channels such as sc.com and this report. More detailed informaton on material sustainablity topics can be found in the Sustainable and Responsible Business section. Clients How we create value We want to deliver easy, everyday banking solutions to our clients in a simple and cost-effective way, and with a great customer experience. We enable indviduals to grow and protect their wealth; we help businesses to trade, transact, invest and expand; and we also help a variety of financal insttutions, includng banks, public sector and development organisatons with their banking needs. How we serve and engage Clients are at the heart of everything we do. In 2021, we used regular surveys, experience forums and digtal channels to continue to strengthen our abilty to understand and meet client needs as they emerge. In Corporate, Commercial and Institutonal Banking (CCIB) we strengthened our annual feedback process by capturing how clients feel about what we offer them (advice, service, digtal channels, etc) and ensuring our relationshp managers can then engage with their clients to address their feedback. We also launched a ‘Voice of Client’ e-learning module to train our colleagues to obtain and leverage client insghts and respond with enhanced innovatve propositons. In Consumer, Private and Business Banking (CPBB) we take seriously our responsiblity to support our more vulnerable clients. A global framework is in place to ensure the fair treatment of vulnerable customers in product development and throughout the whole customer journey. Trainng is provided to front-line staff across our branch, contact centre and digtal channels to identfy and appropriately handle vulnerable clients, and we have also implemented an educational trainng programme for those clients who require assistance in navigatng online and mobile channels. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 38 Strategic report continued In order to act in the best interests of our clients, we use our client insghts, alongside our robust polices, procedures and the Group risk appetite to design and offer products and services which meet client needs, regulatory requirements and Group performance targets whilst contributng to a sustainable and resilent environment. For example, through understanding the challenges some of our clients face in balancing their financal management needs with their growing commitments to sustainablity, in 2021 welaunched a market-first sustainable trade finance propositon to support sustainable supply chains for our clients. We also launched our Sustainable Account in the UK and UAE, a new solution that enables corporate clients to contribute to sustainable development, while maintaning daily access to their cash. All new products are subject to a comprehensive approvals process to test design effectiveness and robustness of the implementaton process. For investment products sold to indviduals, this includes risk scores which aid our assessment of client suitablity. For indvidual clients, we consider each client’s financal needs and personal circumstances to assist us in offering suitable product recommendations. We achievethis using aglobally consistentmethodology that takesinto consideraton localregulatory requirements to review product risks against the client’s risk appetite, considerng financal objectves, financal abilty and knowledge. Clients are also provided with clear and simple documentation that outlines key product features and risks prior to executing a transaction. Fees and charges are disclosed to clients in line with regulatory requirements and industry best practice, and where available, benchmarkedagainst competitors. For Personal and Business Banking products, accurateinterestrates charged, fees and other charges as billed to clients are monitored and assessed locally, with global oversight. Triggers for outlier prices are defined and subject to annual review. A process is in place to review complaints prior to amendments to annual interest, fees and charges. We also continuously assess our product portfolio for new risks to ensure they remain appropriate for client needs and aligned to emerging regulation. These quantitatve and qualitatve assessments enable a complete view of whether to continue,growor retire products. Throughout 2021 we also maintaned our sharp focus on improvng client experience across the Bank. In CCIB, we focused on deliverng a consistent global experience for larger clients across our proprietary platforms. Deploying our agile working practices have enabled us to increase our speed of decison-making and change delivery to meet client needs faster. Where concerns are found, we have processes and guidelnes in place, specifc to each of our client businesses, to understand and respond to client issues and promptly resolve complaints. In 2022, we will continue to strengthen our digtal transformation and innovaton capabilties. Their interests • Differentated product and service offering • Digtally enabled and positve experience • Sustainablefinance Regulators and Governments How we create value We engage with public authorites to play our part in supporting the effective functionng of the financal system and the broader economy. How we serve and engage We actively engage with governments, regulators and policymakers at global, regional and national levels to share insghts and support the development ofbest practice and adoption of consistent approachesacross our markets. In 2021, we engaged with regulators, government officalsand trade associatons on a broadrange of topics that included recovery from COVID-19, internatonal trade, sustainable finance, data, cybersecurity, digtal adoption, and innovaton. We also engaged with officals on the financal services regulatory environment, in particular prudential, conduct, markets and financal crime polices. In support of this, we have a unifed Public and Regulatory Affairs team responsible for engagement as well as identfying and analysing relevant polices, legislaton and regulation. This work is overseen by several governance forums withn the Bank which comprise senior executives representing business and control functions to ensure alignment between advocacy and business strategies. We meet all relevant transparency requirements and engage through ongoing dialogue with regulators and governments, submittng responses to formal consultations and by particpating in industry working groups. We comply with legislaton, rules and other regulatory requirements applicable to our businesses and operations in the jursdictons withn which we operate. This ensures that the PLC Group meets its obligatons and supports the resilence and effective functionng of the broader financalsystem and economy. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 39 Strategic report continued In 2022, we expect to engage on regulation and legislaton associated with recovery from COVID-19, internatonal trade, Sustainable Finance digtal innovaton, data, privacy, artifcial intellgence and cybersecurity. Their interests • Strong capital base and liqudity positon • Robuststandardsfor conductand financal crime • Healthyeconomies and competitve markets • Positve sustainable development • Digtal innovaton in financal services Debt investors and credit rating agencies How we create value We aim to deliver robust returns and long-term sustainable value for our investors. How we serve and engage Our Debt Investor Relations team has primary responsiblity for managing the Group’s relationshps with debt investors and the three major rating agencies, with local market chief executives and chief financal officers leading on smaller subsidary ratings. In 2021, management met mostly virtually with debt investors across Europe, North America and Asia, and maintaned a regular dialogue with rating agencies. It is important that the Group, as an issuer of senior debt, such as commercial paper and certifcates of deposit, maintans regular contact with investors and other counterparts to support continued appetite for the Group’s credit. The Group’s credit ratings are a key part of the external perception of our financal strength and creditworthness. Their interests • Safe, strong and sustainable financal performance • Opportunites for sustainable investment Suppliers How we create value We engage diverse suppliers, both locally and globally, to provide efficent and sustainable goods and services for our business. How we serve and engage We follow a comprehensive and transparent vendor selection process, guided by the PLC Group’s Supplier Charter, which sets out our expectations in relation to ethics, human rights, Diversty and Inclusion (D&I) and environmental performance. Our suppliers must recommit to the Charter annually, and performance monitorng is built into our contracts, procurement practicesand standards. In 2021 we made tangible progress against our supply chain sustainablity agenda and began to integrate environmental and social risks into our third-party risk management framework. In pursuit of the Group’s ambiton to be net zero in our operations by 2025, we offset emissons from our business flights, and in 2021 we developed a methodology to estimate our Scope 3 emissons from suppliers. Using this, we engaged our highest emittng vendors to agree a pathway for transparent supply chain emissons measurement. We also began to embed emissons-related clauses into relevant supplier contracts, such as printng services, to reduce our consumption and mitgate remainder emissons. Our Stands have served to further embed our Supplier Diversty & Inclusion approach, and the majorty of our markets now have supplier D&I objectves to take action, and accelerate progress and impact, and supplier diversty targets have been defined in key global procurement categories. In additon, we established partnerships with multiple local and global NGOs to identfy and onboard more sustainable and diverse-owned vendors across all our markets. Our efforts were rewarded with internal and external recogniton, includng the Supplier Diversty Programme of the Year in the European Diversty Awards. During 2021 we also partnered with several suppliers to provide additonal benefits to our organisaton and clients. For example, we partnered with Doconomy, an innovatve fintech supplier, to introduce a digtal app to help indvidual clients track, measure and manage their impact on both carbon emissons and freshwater consumption based on the goods and services they have purchased, as identfied through their credit and debit card transactions. The app provides enriched customer data and automaticallycalculatesthe CO 2 footprint for every transaction, as well as providng the abilty for clients to select and purchase offsetting options for each transaction all withn the app. The technology is currently being piloted in Pakistan with further global release planned in 2022. The Standard Chartered - Doconomy collaboration has the potential to allow millons of consumers over time to learn how their consumption behaviours impact the climate. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 40 Strategic report continued In 2022, supply chain sustainablity will continue to be a primary focus as we roll out intiatves to address and control social risk, and further reduce carbon emissons withn our own operations and supply chain. Our Supplier Charter canbe viewed at sc.com/suppliercharter Read more about our supplier diversty standard: sc.com/supplierdversity Their interests • Sustainablity and diversty • Open, transparent and consistent tendering process • Willngness to adopt supplier driveninnovatons • Accurate and on-time payments Society How we create value We strive to operate as a sustainable and responsible company, collaborating with local partners to promote social and economic development. How we serve and engage We engage with a wide range of civl society and internatonal and local non-governmental organisatons (NGOs), from those focused on environmental and public policy issues to partners deliverng our community programmes. To shape our strategy, we aim for constructive dialogue that helps ensure we understand alternative perspectives and that our approach to doing business is understood. This includes working with NGOs who approach us about a specifc client transaction or policy. In 2021, climate change, the Group’s net zero roadmap, human rights, and biodversity continued to underpin many of our conversations. We also ran a pilot survey on sustainablity which targeted selected suppliers, think tanks and NGOs, and intend to conduct a broader survey during 2022. In additon, we continued to engage NGOs, charites, and other organisatons to promote youth economic incluson through Futuremakers by Standard Chartered, the Group’s global intiatve to tackle inequalty by promoting greater economic incluson in our markets. We hosted a second editon of the Futuremakers Forum, bringng Futuremakers particpants together with business leaders, policy experts and clients to build partnerships and create economic opportunites focused on young people. As the global pandemic escalated across our markets in 2021, we continued to deliver COVID-19 economic recovery projects to support young people. Their interests • Positve socialand economic contributon • COVID-19 longer-term economic recovery support • Climate change and environmental issues Employees How we create value We recognise that our workforce is a signficant source of value that drives our performance and productivty and that the diversty of our people, cultures and networks sets us apart. To lead the way in addressing the evolving needs of our clients and the advances in technology, we are developing a workforce that is future-ready and are co-creating with our employees a culture that is inclusve, collaborative, and innovatve. How we serve and engage By engaging employees and fostering a positve experience for them, we can better serve our clients and deliver on our purpose and Stands. An inclusve culture enables us to unlock innovaton, make better decisons, deliver our business strategy, live our valued behaviours, and embody our brand promise Here for good. We proactively assess and manage people- related risks, for example, organisaton, capabilty, and culture, as part of the PLC Group’s risk management framework. Our People Strategy, as approved by the PLC Board in July 2019, continues to stay relevant and future-focused, with the ongoing pandemic having accelerated many of the future of work trends which informed our approach. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 41 Strategic report continued Their interests In 2018, we conducted research to understand our Employee Value Propositon (EVP) – the value that employees, or potential employees, feel they gain from being part of our organisaton. Our employees told us they want to: have interestng and impactful jobs; innovate withn a unique set of markets and clients; cultivate a brand that sustainably drives commerce and offers enrichng careers and development; and be supported by great people leaders. They want these elements to be anchored in competitve rewards and a positve work-life balance. The EVP is a key input to our People Strategy which supports the delivery of our business strategy. Listenng toemployees Frequent feedback from employee surveys helps us identfy and close gaps between colleagues’ expectations and their experience. In additon to our annual survey, in 2021 we have started deploying continuous listenng mechanisms that capture colleague sentiment more frequently such as a continuous listenng culture survey and surveys at moments-that-matter, such as at onboarding and exit. This year our annual My Voice survey was conducted in June and July. Our key measures of employee satisfacton indcate that we have continued to improve as a place to work over the duration of deliverng on our People Strategy. Key measures of employee satisfacton fell in 2021, includng the employee engagement index and the employee net promoter score (which measures how likely employees are to recommend working for us). Employee engagement had signficantly improved in 2020 as people rallied to address the challenges created by the pandemic, but the prolonged nature of the criss has seen many of these positve emotions being balanced out. We remain encouraged that 96 per cent of employees feel committed to doing what is required to help the Bank succeed, 90 per cent feel proud about working for the Bank and 81 per cent say the Bank meets or exceeds their expectations. Investments in people leader capabilty and the way in which our people leaders have responded to the pandemic has also translated into a three point increase in our manager net promoter score in the 2021 My Voice survey – buildng leadership capabilty continues to be important as the demands on our people leaders increase. Based on the positve lessons learnt from the pandemic around productivty and employee experience as well as listenng to our employees’ preferences on flexiblity, in 2021 we implemented a hybrid working model in a phased manner across our markets, combinng virtual and office-based working with greater flexiblity in working patterns and locations. This is a signficant step towards being more inclusve of the diverse needs of our workforce and supporting their wellbeing by consciously balancing indvidual choice and flexiblity with business and client needs. While we continue to roll out the model across our markets, enforced absence from offices during the pandemic has also highlghted the benefit of face-to-face interacton and we continue to value our physical workspaces as hubs of teamwork, collaboration and learning. Toolkits and guidance have been provided to colleagues and leaders to help navigate hybrid ways of working, especially at key moments such as onboarding new team members, returning from parental leave and during performance conversations, as well as to help re-create ‘water cooler’ moments in hybrid work environments. As employees operated in a variety of these hybrid-working formats through 2021 – either as part of our flexi-working programs or due to ongoing pandemic restrictons – supporting their wellbeing, health, safety and resilence continued to be a key priorty. In some markets, that were acutely impacted by the pandemic during 2021, such as India, the Philppines, Sri Lanka, Nigera and Zimbabwe, we provided additonal financal assistance to employees, includng access to increased credit facilties and extended medical coverage, in some cases also for extended to familes. Teams partnered across our markets to organize emergency medical support for colleagues and their extended familes, and at locations where permissble, in partnership with government intiatves, we organized camps to accelerate vaccinaton. Further, with our aim to provide employees the skills, tools and motivaton to manage their wellbeing proactively and to deal with challenges effectively, we continue to drive awareness of our wellbeing resources that are available to all globally. These include a mental health app, a physical wellbeing online platform, an upgraded employee assistance programme, wellbeing toolkits, learning programmes on mental health and resilence as well as an expanded network of trained Mental Health First Aiders. In parallel, we are seeking to mitgate the causes of work-related stress and encourage a focus on supportive behaviours withn existng processes and all decison making. In additon to leveraging inputs from employee surveys, the Court also engages with and listens to the views of the colleagues through virtual, interactve engagementsessions. Developing skills of future strategic value The world of work continues to change rapidly. Our employees need a combinaton of human and technical skills to succeed both today and in the future. We’re buildng a culture of continuous learning, empowering employees to grow, follow their aspiratons and embrace the skills needed for the future. Employees are actively using our online learning platform diSCover that we had launched in 2020, and which is now accessible via a mobile app as well, includng to build future skills around Data & Analytics, Digtal, Cyber, Client Advisory and Sustainable Finance. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 42 Strategic report continued We have focussed over 2021on designng and deploying targetedupskillng and re-skillng pilotprogrammesdirected towards critcal ‘future’ roles where our Strategic Workforce Planning analysis has predicted the increasng need for talent, such as universal banker, cloud security engineerng, data translator and cyber security analyst. This approach has united our recruitment, talent management and learning efforts to target, upskill and deploy employees into new roles. Creating a Culture of Inclusion andInnovation We believe that incluson is how we will enable our diverse talent to truly deliver impact. As the pandemic extended into 2021, the need to lead inclusvely in a hybrid-working set-up continued to be a key expectation of our people leaders. With the focus on buildng a culture of incluson, colleagues are undertaking the ‘ When We’re all included’ learning programme, centred on increasng awareness around diversty and incluson princples, tackling issues such as unconscious bias and micro behaviours as well as emphasizng the importance of creating an inclusve environment. As we listened to employee feedback and responded to theneed to better develop psychological safety, wealso released an inclusve language guide and continue to review business terms to be more inclusve moving forward. In our annual My Voice survey, 79.46 per cent of employees reported positve sentiments around our culture of incluson. Read ourinclusvelanguage guideat sc.com/inclusvelanguageguide Our commitment to Diversty & Inclusion (D&I) is now supported by more than 50 employee resource groups (ERGs) across our markets that help provide learning, development and networking opportunites. The ERGs align to our focus areas of gender, ethnicty and nationalty, generations, sexual orientaton, disablity and wellbeing. Our gender diversty continues to grow with more female leaders moving up to more senior roles. By the numbers, females currently represent 31 per centof the Court, and femalerepresentation in senior leadership roles increased by 1.7 percentage points to 28.7 per cent at the end of 2021. We remain focused on buildng a workforce that is truly representative of our client base and footprint, and we have developed strategic partnerships in the US and extended our Futuremakers RISE programme to increase the diversty of our talent pipelnes. As we work towards achievng our 2025 UK and US ethnicty senior leadership aspiratons which were defined last year, we continue focus on nurturing local talent in markets across Asia, Africa and Middle East to ensure we reflect the diversty of our global clients. In 2021, we provided employees, where legally permissble, the abilty to self-identfy ethnicty data through our online systems and started educating on the value and purpose of collecting this informaton. We expect increased particpation and self-declaration of ethnicty to allow us additonal insghts towards buildng an even more representative workforce. We recognise six key ¹ D&I dates across the year and use these as focal points to faciltate open dialogue on incluson internally and externally. Through these global campaigns we have engaged and strengthened relationshps with clients and external stakeholders collectively raisng awareness, promoting bestpracticesand committng to take practical stepsto advance the D&I agenda in the community. Our progress continues to be recognised externally – we are the first financal services organisaton to achieve the second highest level of EDGE Strategy Certifcation in Sri Lanka; we have ranked as a Diversty Leader for the second consecutive year in the Financal Times report on Diversty and Inclusion in Europe, ranked for the first time withn the Top 100 organisatons Refintiv (formerly Thomson Reuters) Diversty and Inclusion Index; ranked as one of the World’s Best Employers in Forbes for the first time and also recognised at the European Diversty Awards for Supplier Diversty Programme. As the Bank continues to transform to achieve our strategic ambitons, we are also refreshing the way we manage and recognise performance. Moving forward, we aim to build an even stronger culture of high performance by focusing on continuous feedback, coaching, and open two-way performance anddevelopmentconversations. We will place greater emphasis on recognisng outperformance driven by collaboration and innovaton, encourage more flexiblity and aspiraton during goal setting, and remove indvidual performance ratings. During 2021, we piloted aspects of this refreshed approach with a select first adopter population of employees and will be further embedding the approach across the organizaton in 2022. 1International Day Against Homophobia, Transphobia and Biphoba, International Day of Persons with Disablites, International Men’s Day, International Women’s Day, and World Day for Cultural Diversty for Dialogue and Development, World Mental Health Day. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 43 Strategic report continued Sustainable and responsible business Our core markets represent unique challenges and opportunites, with rapid urbanisaton, heightened vulnerabilty from climate change, and signficant social and economic disrupton brought by the COVID-19 pandemic. Yet these regions only receive a fraction of the capital flows they urgently need. At Standard Chartered, we have the financal expertise, governance frameworks, technology and geographical reach to unlock capital for sustainable development, where it matters most. We have set ourselves the vison to become the world’s most sustainable and responsible bank, committed to sustainable social and economic development through our business , operations and communites . In pursuit of this, and in alignment with stakeholder priorties, in 2021 we formally elevated sustainablity to be a pillar of our strategy. We have also set long-term ambitons for our role in tackling the severe impacts of climate change, stark inequalty and unfair aspects of globalisaton that impact everyone and the planet. This enhanced focus ensures sustainablity is embedded across our business and integrated into all our decison making, with robust governance provided by the PLC Board. Management Team and multiple supporting sub-committees. Our Sustainablity Aspiratons Our approach is underpinned by a suite of Sustainablity Aspiratons at PLC Group level, that set out how we aim to promote social and economic development, and deliver sustainable outcomes in the areas in which we can make the most material contributon to the delivery of the UN Sustainable Development Goals (SDGs). We review and refresh our Sustainablity Aspiratons annually to ensure they reflect our stakeholders’ priorties and evolving strategy. For example, in 2021, we committed to consult with shareholders, investors, clients and civl society to develop a defintion, methodology, targets and timelne todevelopour ambiton to measuring, managingand reducingemissons associated with our financng of clients to support our objectve to achieve net zero by 2050. We measure progress against the targets set out in our Sustainablity Aspiratons and incorporate selected Aspiratons into the PLC Group Scorecard to drive widespread awareness and support delivery. The following pages setout our approach andprogress towardsour most materialsustainable and responsible business topics. Further informaton on our approach to climate change can also be read in our 2021 Task Force on Climate-related Financal Disclosures report at sc.com/tcfd in Q1 2022. Pillar 1: Business Our main impact on the environment and society is through the business activties we finance. Through our core business, we promote sustainable finance in our markets, expanding renewables, and financng and investng in sustainable infrastructure where it is needed most. We want to make the world a better, cleaner and safer place and minmise the negative impact of our financng. In other words, do more good and less harm. Do more good – promoting Sustainable Finance We create and offer sustainable finance products that support sustainable development. PLC Group’s Green and Sustainable Product Framework guides our labelling of sustainable assets internally. The Framework was developed, and is reviewed annually, in collaboration with the leading provider of ESG and corporate governance research, Sustainalytcs. In 2021, this review led to the Framework being updated to include additonal green buildngs certifcations as well as tightenng eligbilty critera where market expectations have evolved. Alongside our net zero approach in October 2021, we also launched our new Transiton Finance Framework. This outlines the activties that we consider eligble for labelling as ‘transiton’ and is intended to support our clients in their journey to a lower carbon future. In 2022, we expect growth of our sustainable finance asset base to continue at pace, both as the market develops and also as we further expand and embed our sustainable finance product offering with our clients. Read our Sustainable Finance Impact Report: sc.com/SFimpactreport ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 44 Strategic report continued Do less harm – managing Environmental and Social risk We have a comprehensive approach to managing Environmental and Social(E&S) risk. We work with clients, regulators and peers across the finance sector to continuously improve E&S standards and mitgate the impact that stems from our financng decisons. We have a suite of detailed policy frameworks and our Positon Statements draw on global best practice, includng the InternationalFinance Corporation (IFC)PerformanceStandards and the Equator Princples(EP), tooutline thecross-sector standards we expect of ourselves and our clients. Sector-specifc guidance is also provided for clients operating in sectors with high environmental or social impact potential, and our Prohibted Activties list sets out the activties we do not finance. We will not provide financal services to clients who breach, or show insuffcient progress in alignng with our positon statements. In 2021, we updated our Positon Statements covering all sensitve sectors. We introduced enhanced requirements which will become effective from 2022, with the exception of additonal restrictons placed on thermal coal dependent clients, which were effective immedately. We identfy and assess (E&S) risks related to our Corporate & Institutonal, Commercial and Business Banking clients, and embed our E&S risk framework directly into our credit approval process. Where required, we proactively engage with clients to mitgate identfied risks and impacts and support them to improve their environmental and social performance over time. All relationshp managers and credit officers are provided with access to detailed online resources and E&S guidelnes and offered trainng in assessing E&S risk against our critera. Our approach remains to work with clients to improve their E&S performance with specifc timebound action plans. Where clients are unable or unwillng to meet our requirements, we will ultimately exit those relationshps. During 2021, the PLC Group continued to hold the positon of Chair of the EP Associaton, and member of the Board of Governors of the Roundtable for Sustainable Palm Oil.In additon, PLC Group adopted the Poseidon Princples. In 2022, we will priortise our approach to biodversity, and update our Environmental and Social Risk Management Framework in support of our ambiton to become the world’s most responsible and sustainable bank. We will also further expand our capacity to conduct E&S due dilgence on clients by leveraging our Global Business Service centre in Warsaw. Read more about our positon statements: sc.com/positonstatements Read more about our prohibted activties at sc.com/prohibtedactivties. Read more about PLC Group’s reporting against the Equator Princples: https://www.sc.com/en/sustainablity/positon-statements/our-framework/equator-princples-reporting/ Responding to climate change We believe that climate change is one of the greatest challenges facing the world today and that its impact will hit hardest in the communites and markets where we operate, namely Asia, the Middle East and Africa. Our climate strategy is structured around three pillars: accelerating sustainable finance; reducing our direct and financed emissons; and managing the financal risk from climate change. These focus areas reflect the ways in which we contribute and are exposed to the risks arisng from climate change. Accelerating sustainable finance The need for a just transiton to an inclusve, net-zero economy brings with it a huge opportunity for innovaton and growth for our clients and our Bank. We are uniquely placed to help by directng capital to markets that have both the greatest opportunity to adoptlow-carbon technology, and some ofthe toughest transiton-financngand climate challenges. Reducing our direct and financed emissons Since 2018, we have been working on alignng the emissons from both our own operations and our financng activties to the Paris Agreement goal of below two degrees of global warming. During 2021, we set out our plan to reach net zero in our financng by 2050, with ambitous interm targets to substantially reduce our financed carbon emissons by 2030. To achieve this, the PLC Group has set out a roadmap to reduce financed emissons, finance transiton projects and accelerate new solutions. Read more about our approach to net zero at Net zero | Standard Chartered (sc.com). We continue to innovate and strive to accelerate new solutions to climate change, such as launching and growing sustainable products; reporting on wealth management emissons; and deploying a new Transiton Acceleration Team to provide our clients in carbon-intensve sectors with deep expertise on how to accelerate their low-carbon transitons, and tools to measure their progress. We have also set out our plan to reducing the emissons we produce, and in 2021 we advanced our target to achieve net zero in our operations from 2030 to 2025. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 45 Strategic report continued We also recognise that we have signficant indrect contributon and exposure to climate impacts through the goods and services we procure from our suppliers. In 2021, we developed a methodology to measure our supplier Scope 3 emissons and used this to engage our top emittng suppliers to understand their climate-related actions, goals and overall alignment with our Sustainablity agenda. As a result, sustainablity factors have been embedded into our Spend Category Plans, includng targeting specifc areas to drive emissonreductions. We also began to embed emissons-relatedclauses into relevantsupplier contracts to reduce our consumption andmitgate remainder emissons. Managing the financal risk from climate change Managing the financal risks from climate change remains a key priorty for the organisaton. Throughout 2021 we continued to embed climate risk management into our Enterprise Risk Management Framework, with a particular focus on financal risk. Climate stress tests across our markets, includng the Bank of England’s 2021 Biennal Exploratory Scenario, have improved our understanding ofclimaterisk, strengthened our scenario analysiscapabilties and deepened client engagement. In partnership with peers, industry and academia, we are transitoning from measurement to management of climate risk. Through ongoing partnership with Imperial College London, we supported the publicaton of a new climate research which revealed the potentialfor nature-based solutions to tackle the interlnkages between agriculture,land-useand climate change. Standard Chartered PLC Group has publicly committed to the recommendations of the Financal Stabilty Board’s Task Force on Climate-related Financal Disclosures (TCFD) recommendations since 2017. Our comprehensiveTCFD disclosureis published in a standalone report which provides informaton in a readily identfiable and accessible format for all interested stakeholders. This can be accessed at sc.com/tcfd. Pillar 2: Operations We strive to be a responsible business, drawing on our purpose, brand promise, valued behaviours and Code of Conduct to help us fight financal crime, minmise our impact and embed our values across our business. Drivng good conduct andethics Good conduct is critcal to deliverng positve outcomes for our clients, markets and stakeholders. In 2021, Conduct Risk became an integral component of the Enterprise Risk Management Framework, ensuring it is considered withn each princpal risk type. A new management approach using targeted metrics, analytics and data to enhance our conduct risk identficaton and mitgation will be rolled out in phases across 2022. In October 2021 we updated our operational risk management system, introducng a new field to tag each issue logged with the most appropriate conduct outcome. This has enabled the data to be included as a baseline conduct metric in the PLC’s Group Conduct Dashboard to faciltate data and insght analysis. The PLC’s Group Conduct Dashboard collates a diverse array of data to present a visual summary of potential Conduct Risks. The PLC’s Group Code of Conduct (the Code) remains the primary tool through which we set our conduct expectations. The Code supports all our polices, setting out minmum standards and reinforcng our valued and expected behaviours. It also outlines a decison-marking framework to help colleagues make good decisons. To reinforce our shared commitment to the highest possible standards of conduct, each year we ask our colleagues to reconsider what the Code means to them through a refresher e-learning, and recommit to it. In 2021, 99.5% per cent of our colleagues completed this. The abilty to raise concerns is essential to upholding the PLC Group’s Here for good brand and valued behaviours. Early disclosure of concerns reduces the risk of financal and reputational loss caused by misconduct. We encourage colleagues, contractors, suppliers and members of the public to raise concerns to our Speaking Up whistleblowng programme which offers secure, independent and confidental channels to report any concerns without fear of retaliaton. Examples of whistleblowngconcerns include breachesof regulatory requirements, breaches of Group policy and/or standards, or behaviour that has adverse effects on colleagues or on the Group’s reputation. In 2021, we united our Conduct and Speaking Up teams to form a new Conduct & Ethics (C&E) team. This enables us to leverage synergies and apply increased focus on the prevention of misconduct alongside our detection capabilties. In 2022, we will continue to enhance our conduct polices and standards so that they remain current, clear and effective. We will also roll out C&E engagement intiatves to unite colleagues and lift particpation across the Group ensuring a Group-wide focus on livng the Group Code of Conduct. Furthermore, we will continue to develop our Group Conduct Dashboard to derive deeper conduct insghts that will enable us to drive action and remediaton in a more targeted manner across the Conduct Programme. Download our Group Code of Conduct at sc.com/codeofconduct and vist sc.com/speakingup to find more about how our Speaking Up programme works ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 46 Strategic report continued Fightng financal crime Our ambiton is to tackle some of today’s most damaging crimes by making the financal system a hostile environment for crimnals and terrorists. Our Conduct, Financal Crime & Compliance (CFCC) team leads our financal crime risk management activties. We safeguard against money laundering, terrorist financng, sanctions, fraud and other risks, applying core controls such as client due-dilgence screening and monitorng. In additon,anti-bribery and corruption (ABC) polices aimto prevent colleagues, or third parties working on our behalf, from engaging in bribery. We frequently inform and alert clients about the fraud threats and have robust controls and processes in place to help clients identfy false actors and alert us shouldthey encounter any phishng or fraudulent transaction attempts. Withn CPBB, we are continuously investng in product systems upgrades to enhance our capabilties with respect to fraud detection, and embed preventative controls across new product sales and client transactions. We have invested signficantly to ensure our employees are properly equipped to combat financal crime. In 2021, 99.9 per cent of colleagues completed trainngs onABC trainng, anti-moneylaundering and sanctionsand fraud. In additon to internal trainng, our Supplier Charter sets out our expectations and minmum standards related to ABC. In 2021, we continued our viglance around COVID-19 related risks, leveraging controls implemented in 2020 to identfy red flags in relation to fraud, money laundering, bribery and corruption and share insghts with our clients, colleagues, and partners. Aside from our response to the pandemic we have continued to strengthen our controls by innovaton and investment in technology. In 2022, we will continue to adapt our controls to emerging threats by ensuring we have highly trained and experienced employees working with new technologies to detect any abuse of the financal system. We will also continue to partner with, and educate, peer banks and clients in the detection and control of financal crime risks. For more vist sc.com/fightngfinancalcrime Respecting human rights We are committed to respecting human rights and ensuring they are not adversely impacted in our role as an employer, financal services provider and procurer of goods and services. We recognise that our footprint and supply chain give us the opportunity to raise awareness of human rights and modern slavery in a wide range of markets and industres. The PLC Group’s Positon Statement on Human Rights outlines our approach, reflecting frameworks includng the International Bill of Human Rights, the UN Guidng Princples and the UK Modern Slavery Act. This is embedded across a range of internal polices and risk management frameworks, includng our Group Code of Conduct and Supplier Charter. The PLC Group’s Modern Slavery Statement details the actions we are taking to tackle modern slavery and human traffickng in our business and operations. In 2021, we commissoned an external consultancy to review our human rights practices and, following their recommendation, we updated our E&S risk assessment process. We now require additonal due dilgence checks for those clients identfied as having a heightened modern slavery risk. A human rights specialst consultancy database was established to assist in conducting this due dilgence and to support clients to implement corrective action plans when human rights allegations are flagged. We also produced guidance for clients to support the development of their own human rights polices and procedures. Withn our supply chain, we provided trainng, digtal documents and internal communicatons to raise awareness of modern slavery across all Supply Chain Category Managers and Contract Owners. Modern slavery risk is now highlghted at the vendor onboarding stage, and Procurement Category Plans have been enhanced for all supplier categories found to have heightened risk. For those suppliers determined by our internal modern slavery risk review to require additonal due dilgence as a conditon to continue with the supplier engagement, on-site audits are also conducted. To promote human rights in our workforce, we updated our Human Rights Positon Statement to incorporate new frameworks and practices relating to the human rights of our employees. We also updated our Supplier Charter to encourage our suppliers to promote fair pay practices withn their workforce, includng the development of their own understanding of livng wage. Read our 2021 Modern Slavery Statement at sc.com/modernslavery ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 47 Strategic report continued Managing our environmental footprint We are committed to improvng our environmental performance and reducing the direct environmental impact of our branches and offices. To do this, we measure and manage energy, water efficency and greenhouse gas (GHG) emissons closely, verifyng our performance through third-party assurance. We also measure the amount of non-hazardous waste our branches and offices generate and recycle. We do not produce or handle, and therefore do not report informaton on, material quantites of hazardous waste. We have measured and reduced our GHG emissons since 2008. Our Scope 1 and 2 emisson reduction target has been validated by the Science-based Targets Initative (SBTi) as being in line with a well below two degrees centigrade scenario. Through our Sustainablity Aspiratons, we have set more ambitous targets to achieve net zero emissons and ensure we only consume renewable energy across our portfolio by 2025. In partnership with our long-term strategic real estate suppliers such as CBRE and JLL, we are continually reviewng our direct fuels, on-site renewable energy sources and constantly improvng our facilties to deliver the efficency improvements needed across our properties to meet these challenging targets. Water availablity remains a growing challenge in many of our markets. Although we did not face any issues sourcing potable water in 2021, we continue to take a sustainable and responsible approach to managing water across the Group. We are committed to reducing waste in all its forms and since 2019, have been committed to reducing waste to 40 kilograms per employee and recycling 90 per cent of our waste by 2025. Each year, we prevent more than one millon disposable cups going to landfill and non-recyclable waste is sent for energy generation or compost to limt our impact on landfill where possible. In 2021, energy and emissons reductions intiatves included clean power purchase agreements, water recycling, solar rooftops and on-site waste composting. These direct intiatves reduced our CO 2 emissons by 33 per cent, and our energy consumption by 25 per cent year-on-year to 121 GWh. Specifcally, investment in energy efficent products accounted for 8 GWh of this reduction, resulting in a lower carbon and more efficent portfolio. During 2022 we will intiate a new True Zero Waste certifcation programme in our Changi Business Park campus, Singapore. True Zero Waste certifes 90 per cent of waste diverted from landfill or incneration and will require a signficant step up in waste management and avoidance. This will be in additon to certifyng more single-use-plastic free buildngs and reducing paper consumption globally. Our reporting critera sets out the princples and methodology for measuring our emissons, and our PLC Group Scope 1 and 2 emissons, as well as water and waste data, are independently assured by Global Documentation. Read the princples and methodology for measuring our greenhouse gas emissons at sc.com/environmentcritera Pillar 3: Communites Stakeholders: Society, Regulators and Governments We aim to create more inclusve economies by sharing our skills and expertise and developing community programmes that transform lives. We continue to support our communites through Futuremakers by Standard Chartered, our global intiatve to tackle youth economic incluson and enable the next generation to learn, earn and grow. In 2021, our employees and partners continued to support Futuremakers and its related COVID-19 economic recovery projects. Goal, our Futuremakers girls’empowerment programme totackle negative gender and socialnorms, implemented face-to- face sessions where possible and combined these with a digtal curriculum delivered through phone messaging, radio or online. We also supported the FREE (Financal Resilence and Economic Empowerment) Fund, a funding mechanism led by our Goal partner Women Win, to further long-term investment in the economic empowerment of adolescent girls and young women whohavebeen heavily impactedbyCOVID-19. Through additonal funding allocated in 2020 to support COVID-19 economic recovery, this year we signficantly scaled-up our livelhoodprogrammes. The second editon of our virtual Futuremakers Forum to create partnerships and opportunites for young people engaged particpants includng business leaders and policy experts in collective skills and knowledge-sharing on the future of work. The event was an opportunity for us to seek out best practice to support the livelhoods of young people and find business leaders who are committed to ensuring that the next generation is prepared for success. Despite COVID-19 restrictons limting face to face volunteering, 17 per cent of employees volunteered, contributng more than 16,260 volunteering days with many contributng through new opportunites for virtual volunteering. During 2022, we will continue to deliver and expand Futuremakers programmes, realign our Community Aspiratons to reflect the growth of Futuremakers, launch new partnerships to increase employee volunteering, release a Futuremakers impact report and host the third Futuremakers Forum, focused on entrepreneurs and liftng particpation. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 48 ## Non-financal informaton statement This table sets out where shareholders and stakeholders can find informaton about key non-financal matters in this report, in compliance with the non-financal reporting requirements contained in sections 414CA and 414 CB of the Companies Act 2006. Further disclosures are available on sc.com and in our 2021 ESG report released in Q1 2022. Reporting requirement Where to read more in this report about polices, impact (includng risks, policy embedding, due dilgence and outcomes) Business modelPages 11 to 13 Non-financal KPIsPage 2 Risk Review (princpal and emerging risks)Pages 129 to 152 Environment •Sustainable & Responsible BusinessPages 42 to 47 •Directors ReportPages 49 to 54 EmployeesPages 40 to 42 Human rightsPage 45 Social mattersPage 43 Anti-corruption and anti-briberyPage 45 Authority The strategic report up to page 48 has been issued by order of the Court. Bill Winters Director 17 February 2022 Company Reference Number: ZC18 Strategic report continued ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 49 ## Directors’ Report The directors present their report and the audited financal statements of Standard Chartered Bank and its subsidaries (the ‘Group’) and Standard Chartered Bank (the ‘Company’) for the year ended 31 December 2021. Activties The activties of the Group are banking and providng other financal services. The Group comprises a network of branches and offices in 58 markets. The Financal Review on pages 20 to 24 contains a review of the business during 2021. Key stakeholders The long-term success of the Group is dependent on its relationshps with its key stakeholders. On pages 37 to 47 we outline the ways in which we have engaged with key stakeholders, the material issues that they have raised with us, and how these issues have been taken into account in the Court’s decison-making processes. Results and divdends The results for the year are given in the income statement on page 167. Divdends of $1,511 millon were paid during the year to ordinary shareholders (2020 $Nil). Share capital Details of the Company’s share capital are given in Note 27 to the accounts. Loan capital Details of the loan capital are given in Note 26 to the accounts. Property,plant and equipment Details of the property, plant and equipment of the Company are given in Note 17 to the accounts. Financal instruments Details of financal instruments are given in Note 12 to the accounts. Details of exposure to credit, traded, liqudity and funding risk can be found in the Risk Profile section of the accounts. Post balance sheet events Details of post balance sheet events are given in Note 36 to the accounts. Research and development During the year, the Group invested in research and development, primarly relating to the planning, analysis, design, development, testing, integraton, deployment and intial support of technology systems. Future developments in the business of the Group An indcation of likely future developments in the business of the Group is provided in the Strategic report. Directors and their interests The directors of the Company during the year were as follows: Mr A N Halford Mr M Smith Mr W T Winters, CBE Mr D P Conner Ms G Huey Evans, CBE Mr N Kheraj Dr N Okonjo-Iweala (Resigned 28 February 2021) Mr D Tang Mr C Tong Dr J Viñals Ms J M Whitbread Mr P Rivett Ms M Ramos (Appointed 1 January 2021) Ms A Mcfadyen (Appointed 23 February 2021) Following her appointment as the new Director-General of the World Trade Organizaton, Dr Ngozi Okonjo-Iweala stepped down from the Court on 28 February 2021. None of the directors have a benefical or non-benefical interest in the shares of the Company or in any of its subsidary undertakings. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 50 Directors’ Report continued Details of directors’ pay and benefits are disclosed in Note 38 to the accounts. All of the directors as at 31 December 2021, except Mr Smith, Ms Mcfadyen and Dr Ngozi Okonjo-Iweala (who stepped down from the Court on 28 February 2021) are directors of the Company’s ultimate holding company, Standard Chartered PLC. Going concern In considerng the going concern status of the Group, the directors have assessed the key factors, includng the current and anticpated impact of COVID-19 likely to affect the Group’s business model and strategic plan, future performance, capital adequacy, solvency and liqudity taking into account the emerging risks as well as the princpal risks. This year, the primary focus has been on the evolving macro-financal stress caused by the response of governments, businesses and indviduals to COVID-19, with scenario analysis focused on mild, moderate, severe and extreme variants across the Group’s footprint markets to ensure that the Group has sufficent capital to withstand this shock. Under this range of scenarios, the results of these stress tests demonstrate that the Company and the Group as a whole have sufficent capital and liqudity to continue as a going concern and meet regulatory minmum capital and liqudity requirements. Having made appropriate enquires, the Court is satisfed that the Company and the Group as a whole have adequate resources to continue operational businesses for a period of 12 months from 17 February 2022 and therefore continue to adopt the goingconcern basis in preparingthe financal statements. Politcal donations The Group has a policy in place which prohibts donations being made that would: (i) improperly influence legislaton or regulation, (i) promote politcal views or ideologes, (ii) fund politcal causes. In alignment to this, no politcal donations were made in the year ended 31 December 2021. Qualifyng Third Party Indemnites The Company has granted indemnties to all of its directors on terms consistent with the applicable statutory provisons. Qualifyng third-party indemnty provisons for the purposes of section 234 of the Companies Act 2006 were accordingly in force during the course of the financal year ended 31 December 2021 and remain in force at the date of this report. Qualifyng Pension Scheme Indemnites Qualifyng pension scheme indemnty provisons (as defined by section 235 of the Companies Act 2006) were in force during the course of the financal year ended 31 December 2021 for the benefit of the directors of the UK’s pension fund corporate trustee (Standard Chartered Trustees (UK) Limted) and remain in force at the date of this report. Areas of operation The Company operates through branches and subsidaries in 58 markets across Asia, the Middle East, Africa, Europe and the Americas. Relatedparty transactions Details of transactions with directors and officers and other related parties are set out in Note 35 to the financal statements. Corporate Governance Statement Following the consolidaton of the Greater China and North Asia Hub (“GCNA”) and the ASEAN and South Asia Hub (“ASA”) which formed the Asia Hub in 2021, countries in the Asia Hub have operated under an Asia governance model. However, as the Group continues to cover the vast majorty of PLC Group’s total footprint, the governance arrangements of the Company and PLC simlarly reflect this overlap and are represented by a predominately mirrored board structure between PLC and the Company. By virtue of the continued alignment with PLC, and the mirrored boards, the Company follows a modifed version of UK Corporate Governance Code 2018 (the “Code”) based on its positon as a wholly-owned subsidary of a listed PLC and its governance structure as a company established by Royal Charter, and complies with expectations set for premium listed companies with respect to board leadership, responsiblites, compositon (includng succession) to ensure that the Group is well managed, with appropriate oversight and control. Princples under the Code relating to certain matters, such as remuneration, values, and external audit, are set at PLC Group level and considered or approved, if appropriate, by the Court. The reason for these departures from the Code is because it is considered more appropriate for the purposes of Group wide consistency that these princples are set at PLC Board level and then dissemnated through the Group to be approved by subsidary boards. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 51 Directors’ Report continued The Court is supported by four primary committees: Audit Committee; Risk Committee; Nominaton Committee; and US Risk Committee. Each of the primary committees and the Court have implemented clear lines of responsiblity and polices to support the Court in its effective decison making. The Court also has a Standing Committee with a remit to approve matters, on behalf of the Court, where a formal resolution is required for legal and regulatory purposes. The Court, and its Audit and Risk Committees have simlar membership as the Board of PLC and its Audit and Risk Committees, with the appropriate balance, skills, background and experience to make a valued contributon. For further informaton on how the Audit Committee and Risk Committee operate (includng in respect of their compliance with the Code), please see pages 116 to 122 and 123 to 129 of PLC’s 2021 Annual Report. The Court, together with the PLC Group, are committed to high standards of engagement with employees, suppliers and other stakeholders. For a descripton of how the directors engaged with stakeholders, includng as to how such engagement has been considered in the Court’s decison making, please refer to page 37 to 47. Employee involvement We work hard to ensure that our employees are kept informed about matters affecting or of interest to them, but more importantly to provide opportunites for feedback anddialogue. We continue to listen and act on feedback from colleagues to ensure internal communicatons remain impactful and meaningful, in support of the Group’s strategy and transformation. In additon to the Bridge (our internal business collaboration platform) which allows colleagues to receive key timely updates, exchange ideas and provide feedback, we also leverage a range of channels includngemail broadcasts, newsletters with customised content for each employee segment, audio and video calls, town halls and other staff engagement and recogniton events. To continue to improve the way we communicate and ensure our employee communicatons remains relevant, we also periodcally analyse and measure the impact of our communicatons through a range of survey and feedback tools. Our senior leaders and People Leaders continue to play a critcal role in engaging our teams across the network, ensuring that they are kept up to date on key business developments related to our performance and strategy. Our People Leaders also provide guidance and help colleagues understand their role in executing and deliverng on the bank’s strategy. With the ongoing impact of the global pandemic, the bank has also endeavoured to dissemnate timely informaton that has enabled our colleagues to stay informed of the various national/internatonal developments and more importantly, to ensure they are supported in terms of their physical and mental safety and wellbeing. Across theorganisaton, regular team meetings with People Leaders, one-to-ones andvarious managementmeetings provide an important platform for colleagues to discuss and clarify key issues. The bank’s senior leadership (Group Chairman, CEO, Board) also regularly shares global, regional and country updates on financal performance, strategy, structural changes, HR programmes, performance reviews and campaigns. The Court engages with and listens to the views of the workforce through several sources, includng through virtual, interactve engagement sessions. Employees, past, present and future can follow our progress through the Group’s LinkedIn network and Facebook page, and other social network channels, which collectively have over 2.2 millon followers. The diverse range of communicaton tools and channels we have put in place, ensures that all our colleagues regardless of where they sit withn our organisatonal network receive timely and relevant informaton (in channels of their choosing) to support them in being effective in their various roles. The wellbeing of our employees is central to our thinkng about benefits and support, so they can thrive at work and in their personal lives. Our Group minmum standards provide employees with a range of flexible working options, and, in terms of leave, at least 30 days’ leave (through annual leave and public holidays), a minmum of 20 calendar weeks’ fully paid maternity leave, a minmum of two calendar weeks of leave for spouses or partners, and two calendar weeks for adoption leave. Combined, this is above the International Labour Organisaton minmum standards. We seek to build productive and enduring partnerships with various employee representative bodies (includng unions and work councils). In our recogniton and interactons, we are heavily influenced by the 1948 United Nations Universal Declaration of Human Rights (UDHR), and several International Labour Organisaton (ILO) conventions includng the Right to Organise and Collective Bargainng Convention, 1949 (No. 98) and the Freedom of Associaton and Protection of the Right to Organise Convention, 1948 (No. 87). The PLC Group Grievance Standard provides a formal framework to deal with concerns that employees have in relation to their employment or another colleague, which affects them directly, and cannot be resolved through informal mechanisms, such as counselling, coaching or mediaton. This can include issues of bullying, harassment, discrminaton and victmizaton, as well as concerns around conditons of employment (e.g. health and safety, new working practices or the working environment). There is a distnct Speaking Up Policy which covers instances where an employee wishes to ‘blow the whistle’ on actual, planned or potential wrongdoing by another employee or the Group. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 52 Directors’ Report continued The Group is committed to creating a fair,consistent, and transparent approach to making decisons in a discplinary context. This commitment is codifed in our Fair Accountabilty Princples, which underpins our PLC Group Discplinary Standard. Dismssals due to misconduct issues and/or performance (where required by law to follow a discplinary process) are governed by the PLC Group Discplinary Standard. Where local law or regulation requires a different process with regards to dismssals and other discplinary outcomes, we have country variatons in place. Diversty and Inclusion Our PLC Group Diversty and Inclusion Standard has been developed to ensure a respectful workplace, with fair and equal treatment, diversty and incluson, and the provison of opportunites for employees to particpate fully and reach their full potential in an appropriate working environment. All indviduals are entitled to be treated with dignty and respect, and to be free from harassment, bullying, discrminaton and victmisaton. Thishelps to support productive working conditons, decreased staff attriton, positve employee morale and engagement, and maintans employee wellbeing, and reduced risk. The Group aims to operate diversty and incluson polices, standards and practices that provide equality of opportunity for all, protect the dignty of employees and promote respect at work. All employees and contractors are required to take personal and indvidual responsiblity to comply with the Standard, behave in a non-discrminatory way and not to particpate in acts of inapproprate behaviour or conduct, harassment or bullying. The Group is committed to provide equal opportunites and fair treatment in employment. We do not accept unlawful discrminaton in our recruitment or employment practices on any grounds includng but not limted to; sex, race, colour, nationalty, ethnic, national or indgenous orign, disablity, age, marital or civl partner status, pregnancy or maternity, sexual orientaton, gender identty, expression or reassignment, HIV or AIDS status, parental status, miltary and veterans status, flexiblity of working arrangements, religon or belief. We strive for recruitment, employment, redundancy and redeployment, trainng, development, succession planning and promotion practices that are inclusve and accessible; and that do not directly or indrectly discrminate. Recruitment, employment, trainng, development and promotion decisons are based on the skills, knowledge and behaviour required to perform the role to the PLC Group’s standards. Implied in all employment terms is the commitment to provide equal pay for equal work. We also make reasonable workplace adjustments (includng during the hirng process), to ensure all indviduals feel supported and are able to particpate fully and reach their full potential. If employees become disabled, we will proactively seek to support them with appropriate trainng and workplace adjustments where possible and explore every opportunity to ensure their employment continues. Health and safety Our Health, Safety and Wellbeing (HSW) programme covers both mental and physical health and wellbeing. The Group complies with both external regulatory requirements and internal policy and standards for HSW in all markets. It is Group policy to ensure that the more stringent of the two requirements is always met, ensuring our HSW practices meet or exceed the regulatory minmum. Compliance rates are reported at least biannually to each country’s management team. HSW performance and risks are reported annually to the PLC Group Risk Committee and Bank Court Risk Committee. We use a health and safety management system across all countries to ensure a consistently high level of health and safety reporting for all our colleagues and clients. The Bank sponsors medical and healthcare services for all employees, except in markets where cover is provided through State-mandated healthcare, which represent less than 0.5 per cent of the PLC Group’s employees. All staff also have access to professional counselling via our Employee Assistance Program. Furthermore, we consider and treat mental health issues requirng first aid in the same way that we would treat physical inuries. Our global Mental Health First Aid (MHFA) program offers help to someone developing a mental health problem, experiencng a worsening of an existng mental illness or a mental health criss. The mental health support is given until appropriate professional help is received, or thecriss resolved. In 2021, we worked with an external certifed provider to develop our previously classroom-based MHFA trainng program into a virtual program which can be accessed by any colleague regardless of their location. In 2021, we recorded no work-related fatalites or serious long-term work-related health issues in our staff. Throughout 2021, the COVID-19 pandemic continued to impact health, safety and wellbeing. With lockdowns and restrictons continung across our markets throughout the year, we accelerated our Future Workplace Now plans and the majorty of colleagues adopted working from home arrangements. Workplace closures and restricted operations resulted ina reduction in workplace accidents and incdents; however, home working introduced new and emerging risks to manage across health, safety and wellbeing. A H&S inspecton checklist is available for staff to assess their working area for hazards, and virtual assessments by H&S experts are organised if required. All staff opting to work flexibly receive an allowance to purchase ergonomic office equipment. Our work inury insurance covers all staff working from home. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 53 Directors’ Report continued Supply Chain Management To support the operation of our branches, offices, businesses and functions we source a variety of goods and services. The majorty of our expenditure is on services and is managed through a third-party governance framework which ensures that we follow the highest standards in terms of sourcing, awarding and onboarding suppliers. For informaton about how the PLC Group engages with suppliers on environmental and social matters, please see our Supplier Charter and Supplier Diversty and Inclusion Standard. As set out under the UK Modern Slavery Act 2015, the PLC Group is required to publish a Modern Slavery Statement annually. The PLC Group’s 2021 Modern Slavery Statement will be issued at the same time as the Annual Report. This document will give further detail on how the PLC Group has prevented modern slavery and human traffickng in its operations, financng and supply chain during 2021. Our Supplier Charter and Supplier Diversty and Inclusion standard can be viewed at https://www.sc.com/en/group/ suppliers/ Product Responsiblity We aim to design and offer products based on client needs to ensure fair treatment and outcomes for clients. The PLC Group has in place a risk framework, comprisng polices and standards, to support these objectves in alignment with our Conduct Risk Framework. This framework covers sales practices, client communicatons, appropriateness and suitablity, and post-sales practice. As part of this, we ensure products sold are suitable for clients and comply with relevant laws and regulations. We have processes and guidelnes specifc to each of our client businesses, to promptly resolve client complaints, understand and respond to client issues. Conduct consideratons are given signficant weightng in front-line incentve structures to drive the right behaviours. For more informaton on our approach to product design, product pricng, treating customers fairly and protecting vulnerable customers, and incentvisng our frontline employees, see pages 37 to 42. For more informaton on fraud identficaton see page 45. Environmental impact of our operations We aim to minmise the environmental impact of our operations as part of our commitment to be a responsible company. We report on energy, water and non-hazardous waste data which become the basis of our Greenhouse Gas (GHG) emissons management, as well as the targets we have set to reduce energy, water and waste consumption. In 2021, energy and emissons reductions intiatves included clean power purchase agreements, water recycling, solar rooftops and on-site waste composting. These direct intiatves reduced our CO2 emissons by 33 per cent, and our energy consumption by 25 per cent year-on-year to 121 GWh. Specifcally, investment in energy efficent products accounted for 8 GWh of this reduction, resulting in a lower carbon and more efficent portfolio. Our reporting critera document sets out the princples and methodology used to calculate the GHG emissons of the PLC Group. For more informaton, review the reporting critera at sc.com/environmentcritera Reporting period The reporting period of our environmental data is from 1 October 2020 to 30 September 2021. This allows sufficent time for independent assurance to be gained prior to the publicaton of results. Accordingly, the operating income used in this inventory corresponds to the same time period rather than the calendar year used in financal reporting. Auditor The Audit Committee reviews the appointment of the Group statutory auditor, its effectiveness and its relationshp with the Group, which includes monitorng our use of the auditors for non-audit services and the balance of audit and non-audit fees paid. Each director believes that there is no relevant informaton of which our Group statutory auditor is unaware. Each has taken all reasonable steps necessary as a director to be aware of any relevant audit informaton and to establish that Ernst & Young LLP (EY) is made aware of any pertinent informaton. A resolution to re-appoint EY as auditor will be proposed at the 2022 PLC Annual General Meeting. By order of the Court Bill Winters Director 17 February 2022 Company Reference Number: ZC18 ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 54 ## Statement of directors’ responsiblites The directors are responsible for preparing the Directors’ Report and the Group and Company Financal Statements in accordancewith applicable law andregulations. Company law requires the directors to prepare Group and Company financal statements for each financal year. Under that law they are required to prepare the Group financal statements in accordance with UK - adopted internatonal accounting standards in conformity with the requirements of the Companies Act 2006. • The Group financalstatements have beenprepared inaccordance with UKadopted internatonal accounting standards and International Financal Reporting Standardsas adopted by the European Union; • The Company financal statements have been properly prepared in accordance with UK adopted internatonal accounting standards as applied in accordance with section 408 of the Companies Act 2006; and • The financal statements have been prepared in accordance with the requirements of the Companies Act 2006. Under company law the directors must not approve the financal statements unless they are satisfed that they give a true and fair view of the state of affairs of the Group and Company and of their profit or loss for that period. In preparing each of the Group and Company financal statements, the directors are required to: • Select suitable accountingpolices andthen apply them consistently; • Make judgements and estimates that are reasonable, relevant and reliable; • State whether they have been prepared in accordance with UK and EU IFRS; • Assess the Group and the Company’s abilty to continue as a going concern, disclosng, as applicable, matters related to going concern;and • Use the going concern basis of accounting unless they either intend to liqudate the Group or the Company or to cease operations or have no realistc alternative but to do so. The directors are responsible for keeping adequate accounting records that are sufficent to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financal positon of the Company and enable them to ensure that its financal statements comply with the Companies Act 2006. They are responsible for such internal control as they determine is necessary to enable the preparation of financal statements that are free from material misstatement, whether due to fraud or error, and have general responsiblity for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularties. Under applicable law and regulations, the directors are also responsible for preparing a Strategic Report and Directors’ Report that complies with that law and those regulations. Responsiblity statement of the directors in respect of the Directors’ Report and Financal Statements We confirm that to the best of our knowledge: • The financal statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liablites, financal positon and profit or loss of the Company and the undertakings included in the consolidaton taken as a whole; and • The Strategic Report includes a fair review of the development and performance of the business and the positon of the Company and the undertakings included in the consolidaton taken as a whole, together with a descripton of the emerging risks and uncertaintes that they face. We consider the Directors’ Report and Financal Statements, taken as a whole, is fair, balanced and understandable and provides the informaton necessary to assess the Group’s positon and performance, business model and strategy. By order of the Court Andy Halford Director 17 February 2022 Directors’ Report continued ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 55 Risk Index Annual Report and AccountsPillar 3 Report Risk profileOur Risk Profile 57 Credit Risk 58109-118 Basis of preparation58 Credit Risk overview58 IFRS 9 expected credit loss princples and approaches58 Maximum exposure to Credit Risk61 Analysis of financal instrument by stage63 Credit quality analysis67115-117 •Credit quality by client segment68 Movement in gross exposures and credit imparment for loans and advances, debt securites, undrawn commitments and financal guarantees 72 Movement of debt securites, alternative Tier 1 and other eligble bills75 Credit imparment charge80 COVID-19 relief measures81 Problem credit management and provisoning83 •Forborne and other modifed loans by client segment83 •Credit-impared (stage 3) loans and advances by client segment84 Credit Risk mitgation85118 •Collateral85 •Collateral held on loans and advances86 •Collateral – Corporate, Commercial and Institutonal Banking88 •Collateral – Consumer, Private and Business Banking89 •Mortgage loan-to-value ratios by geography89 •Collateral and other credit enhancements possessed or called upon90 •Other credit risk mitgation90 Other portfolio analysis91 •Maturity analysis of loans and advances by client segment91 •Credit quality by industry92 •Debt securites and other eligble bills97 IFRS 9 expected credit loss methodology99 Traded Risk 108 Market risk changes108 Counterparty Credit Risk110 Derivatve financal instruments Credit Risk mitgation110 Liqudity and Funding Risk 111 Liqudity and Funding Risk metrics111 Liqudity analysis of the Group’s balance sheet113 Interest Rate Risk in the Banking Book 119 Operational and Technology Risk 120 Operational Risk profile120 Operational Risk events and losses 121 Other princpal risks 121 Risk management approach Risk Management Framework122 Princpal Risks129 Emerging Risks144 Capital Capital Summary153 Capital ratios153 CRD Capital base154107-108 Risk-weighted asset154 Leverage ratio154121 ## Risk review and Capital review ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 56 The following parts of the Risk review and Capital review form part of these financal statements: • a) Risk review: Disclosures marked as ‘audited’ from the start of Credit Risk section (page 58) to the end of other princpal risks in the same section (page 121) • b) Capital review: ‘CRD Capital base’ to the end of ‘Total capital’ (page 154). Risk review and Capital review continued ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 57 Our risk profile in 2021 Our Risk Management Framework (RMF) enables us to closely manage enterprise-wide risks with the objectve of maximsing risk-adjusted returns while remainng withn our Risk Appetite. Identifcation and assessment of potentially adverse risk events is an essential first step in managing the risks of any business or activty and in order to faciltate that, the Group maintans a dynamic risk-scanning process with inputs from the internal and external risk environment, as well as potential threats and opportunites from the business and client perspectives, enabling us to proactively manage our portfolio. The Group maintans a taxonomy of the Princpal Risk Types (PRTs), Integrated Risk Types (IRTs) and risk sub-types that are inherent to the strategy and business model; as well as an emerging risks inventory that includes near-term risks as well as longer-term uncertaintes. Despite the challenges brought on by the ongoing pandemic, we have built a strong foundation that has helped us to deliver a sustained strong performance with a resilent risk profile. Our corporate portfolios remain predominantly short-tenor and diversfied across industry sectors, products and geographies. We have seen improvements in a number of our metrics that reflect our robust risk management during the pandemic. We remain viglant to the continued impact of COVID-19 and an uneven recovery acrossmarkets and industres. The table below highlghts the Group’s overall risk profile associated with our business strategy. We have a robust risk management approach supported through our well-established RMF Our portfolios exhibt a resilent risk profile despite a challenging macroeconomic environment Our capital and liqudity positons continue to be at healthy levels •Cross-cutting risks have been repositoned as IRTs and are defined as risks that are signficant in nature and materialse primarly through the relevant PRTs •Given their integrated nature, Digtal Asset Risk and Third-Party Risk, in additon to Climate Risk, have been categorised as IRTs in the RMF •The Capital and Liqudity PRT has been renamed to Treasury Risk and the scope of the risk type has been expanded to cover Interest Rate Risk in the Banking Book •Self-assessment performed at Group level affirms the overall effectiveness of the RMF adoption •The Group aims to further strengthen its risk management practices in 2022, through further improvng on the management of non-financal risks withn its businesses, functions and across the footprint, as well as management of risks which are integrated in nature Further details on the RMF can be found in the Risk management approach section (Page 122 to 128) •The proportion of the Group’s loans and advances to customers in stage 1 and 2 has improved to 87 per cent and 9 per cent respectively (from 84 per cent and 11 per cent respectively in 2020) •Exposure to investment grade clients has increased to 71 per cent (2020: 63 per cent) reflecting an increase in repurchase agreement balances and high-quality orignations •There has been a 50 per cent decrease to $4.3 billon (2020: $8.5 billon) in early alerts exposure, mainly due to reductions in counterparty exposure and clients being removed from early alert •The total credit imparment charge is a release of $28 millon compared to a charge last year (2020: $1.9 billon) •Stage 3 loans decreased to $6.9 billon (2020: $8.3 billon), with the overall contributon to the total reduced to 5 per cent (2020: 6 per cent). The overall Stage 3 cover ratio increased to 61 per cent (2020: 60 per cent) •The majorty of our Consumer, Private and Business Banking products continue to be fully secured loans (stable at 84 per cent of the portfolio). The overall average loan-to-value of the mortgage portfolio is low at 46.5 per cent •Our capital and liqudity positons remain above current requirements •Our Liqudity Coverage Ratio continues to be above 100 per cent •Our advances-to-deposits ratio decreased by 4.7 per cent to 52.1 per cent, driven by an increase in overall deposits •Our customer deposit base is diversfied by type and maturity ## Risk profile ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 58 ## Credit Risk Basis of preparation Unless otherwise stated the balance sheet and income statement informaton presented withn this section is based on the Group’s management view. This is princpally the location from which a client relationshp is managed, which may differ from where it is financally booked and may be shared between businesses and/or regions. This view reflects how the client segments and regions are managed internally. Loans and advances to customers and banks held at amortised cost in this Risk profile section include reverse repurchase agreement balances held at amortised cost, as per Note 14 Reverse repurchase and repurchase agreements includng other simlar secured lending and borrowing. Credit Risk overview Credit Risk is the potential for loss due to the failure of a counterparty to meet its obligatons to pay the Group. Credit exposures arise from both the banking and trading books. Impairment model IFRS 9 requires an imparment model that requires the recogniton of expected credit losses (ECL) on all financal debt instruments held at amortised cost, fair value through other comprehensive income (FVOCI), undrawn loan commitments and financalguarantees. Staging of financal instruments Financal instruments that are not already credit-impared are orignated into stage 1 and a 12-month expected credit loss provison is recognised. Instruments will remain in stage 1 until they are repaid, unless they experience signficant credit deterioraton (stage 2) or they becomecredit-impared (stage 3). Instruments will transfer to stage 2 and a lifetme expected credit loss provison recognised when there has been a signficant change in the credit risk compared to what was expected at orignation. The framework used to determine a signficant increase in credit risk is set out below. Stage 1Stage 2Stage 3 •12-month ECL •Performing •Lifetme expected credit loss •Performing but has exhibted signficant increase in Credit risk (SICR) •Credit-impared •Non-performing IFRS 9 expected credit loss princples and approaches The main methodology princples and approach adopted by the Group are set out in the following table. TitleDescriptonSupplementary informatonPage Approach to determinng expected credit losses For material loan portfolios, the Group has adopted a statistcal modelling approach for determinng expected credit losses that makes extensive use of credit modelling. These models leveraged existng advanced Internal Ratings Based (IRB) models, where these were available. Where model performance breaches model monitorng thresholds or validaton standards, a post model adjustment may be required to correct for identfied model issues, which will be removed once those issues have been remedied. IFRS 9 methodology Determinng lifetme expected credit loss for revolving products 99 99 Incorporation of forward-looking informaton The determinaton of expected credit loss includes various assumptions and judgements in respect of forward-looking macroeconomic informaton. Refer to page 100 for incorporation of forward-looking informaton, forecast of key macroeconomic variables underlying the expected credit loss calculation and the impact on non-linearty and sensitvity of expected credit loss calculation to macroeconomic variables. Management overlays may also be used to capture risks not identfied in the models. Incorporation of forward-looking informaton Forecast of key macroeconomic variables underlying the expected credit loss calculation Management overlay and sensitvity to macroeconomic variables 100 100 102 Risk profile continued ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 59 Risk profile continued TitleDescriptonSupplementary informatonPage Signficant increase in credit risk (SICR) Expected credit loss for financal assets will transfer from a 12-month basis (stage 1) to a lifetme basis (stage 2) when there is a signficant increase in credit risk (SICR) relative to that which was expected at the time of orignation, or when the asset becomes credit-impared. On transfer to a lifetme basis, the expected credit loss for those assets will reflect the impact of a default event expected to occur over the remainng lifetme of the instrument rather than just over the 12 months from the reporting date. SICR is assessed by comparing the risk of default of an exposure at the reporting date with the risk of default at orignation (after considerng the passage of time). ‘Signficant’ does not mean statistcally signficant nor is it reflective of the extent of the impact on the Group’s financal statements. Whether a change in the risk of default is signficant or not is assessed using quantitatve and qualitatve critera, the weight of which will depend on the type of product and counterparty. Quantitatve critera Signficant increase in credit risk thresholds Specifc qualitatve and quantitatve critera per segment: Corporate, Commercial & Institutonal Banking clients Consumer and Business Banking clients Private Banking clients Debt securites 104 104 104 105 105 105 106 Assessment of credit-impared financal assets Credit-impared (stage 3) financal assets comprise those assets that have experienced an observed credit event and are in default. Default represents those assets that are at least 90 days past due in respect of princpal and interest payments and/or where the assets are otherwise considered unlikely to pay. This defintion is consistent with internal credit risk management and the regulatory defintion of default. Unlikely to pay factors include objectve conditons such as bankruptcy, debt restructuring, fraud or death. It also includes credit-related modifcations of contractual cashflows due to signficant financal diffculty (forbearance) where the Group has granted concessions that it would not ordinarly consider. Interest income for stage 3 assets is recognised by applying the orignal effective interest rate to the net asset amount (that is, net of credit imparment provisons). When financal assets are transferred from stage 3 to stage 2, any contractual interest recovered in excess of the interest income recognised while the asset was in stage 3 is reported withn the credit imparment line. Consumer and Business Banking clients Corporate, Commercial & Institutonal Banking clients 106 106 Transfers between stages Assets will transfer from stage 3 to stage 2 when they are no longer considered to be credit-impared. Assets will not be considered credit-impared only if the customer makes payments such that they are paid to current in line with the orignal contractual terms. Assets may transfer to stage 1 if they are no longer considered to have experienced a signficant increase in credit risk. This will be immedate when the orignal PD based transfer critera are no longer met (and as long as none of the other transfer critera apply). Where assets were transferred using other measures, the assets will only transfer back to stage 1 when the conditon that caused the signficant increase in credit risk no longer applies (and as long as none of the other transfer critera apply). Movement in loan exposures and expected credit losses 72 Modifed financal assets Where the contractual terms of a financal instrument have been modifed, and this does not result in the instrument being derecognised, a modifcation gain or loss is recognised in the income statement representing the difference between the orignal cashflows and the modifed cashflows, discounted at the effective interest rate. The modifcation gain/loss is directly applied to the gross carrying amount of the instrument. If the modifcation is credit related, such as forbearance or where the Group has granted concessions that it would not ordinarly consider, then it will be considered credit-impared. Modifcations that are not credit related will be subject to an assessment of whether the asset’s credit risk has increased signficantly since orignation by comparing the remainng lifetme PD based on the modifed terms with the remainng lifetme PD based on the orignal contractual terms. COVID-19 relief measures Forbearance and other modifed loans 81 83 ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 60 Risk profile continued TitleDescriptonSupplementary informatonPage Governance and applicaton of expert credit judgement in respect of expected credit losses The models used in determinng ECL are reviewed and approved by the PLC Group Credit Model Assessment Committee and have been validated by Group model validaton, which is independent of the business. A quarterly model monitorng process is in place that uses recent data to compare the differences between model predictons and actual outcomes against approved thresholds. Where a model’s performance breaches the monitorng thresholds then an assessment of whether an ECL adjustment is required to correct for the identfied model issue is completed. The determinaton of expected credit losses requires a signficant degree of management judgement which had an impact on governance processes, with the output of the expected credit models assessed by the IFRS 9 Impairment Committee. PLC Group Credit Model Assessment Committee IFRS 9 Impairment Committee 107 107 ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 61 Risk profile continued Maximum exposure to Credit Risk (audited) The table below presents the Group’s maximum exposure to Credit Risk for its on-balance sheet and off-balance sheet financal instruments as at 31 December 2021, before and after taking into account any collateral held or other Credit Risk mitgation. The Group’s on-balance sheet maximum exposure to Credit Risk increased by $26 billon to $517 billon (2020: $491 billon). This was largely driven by an increase of $16 billon in Investment securites debt and an increase of $20 billon in fair value through profit and loss instruments offset by a reduction of derivatve instruments of $16 billon. Off-balance sheet instruments increased by $5.6 billon, of which undrawn commitments increased by $1.8 billon and financal guarantee, trade credit and irrevocable letters of credit increased by $3.8 billon from additonal commitments provided to clients. Group 2021 2020 Maximum exposure $millon Credit risk management Net Exposure $millon Maximum exposure $millon Credit risk management Net exposure $millon Collateral 8 $millon Master netting agreements $millon Collateral 8 $millon Master netting agreements $millon On-balance sheet Cash and balances at central banks 61,96361,963 58,11758,117 Loans and advances to banks 1 29,99995629,043 27,66680926,857 of which – reverse repurchase agreements and other simlar secured lending⁷ 956956– 809809– Loans and advances to customers 1 144,79943,172101,627 140,86141,93698,925 of which – reverse repurchase agreements and other simlar secured lending 7 3,7643,764– 2,9192,919– Investment securites – debt securites and other eligble bills 2 101,705101,705 85,75985,759 Fair value through profit or loss 3, 7 101,94478,986–22,958 81,91762,807–19,110 Loans and advances to banks 3,6223,622 2,7712,771 Loans and advances to customers 3,9323,932 3,2133,213 Reverse repurchase agreements and other simlar lending 7 78,98678,986– 62,80762,807– Investment securites – debt securites and other eligble bills 2 15,40415,404 13,12613,126 Derivatve financal instruments 4,7 53,2457,75742,5772,911 69,2259,18452,3087,733 Accrued income 996996 1,0881,088 Assets held for sale 5252 8383 Other assets 5 22,28122,281 25,87325,873 Total balance sheet516,984130,87142,577343,536 490,589114,73652,308323,545 Off-balance sheet 6 Undrawn commitments 100,6862,65898,028 98,8822,66396,219 Financal guarantees and other equivalents 49,2351,81347,422 45,4181,74243,676 Total off-balance sheet149,9214,471–145,450 144,3004,405–139,895 Total666,905135,34242,577488,986 634,889119,14152,308463,440 1Net of credit imparment. An analysis of credit quality is set out in the credit quality analysis section (page 67). Further details of collateral held by client segment and stage are set out in the collateral analysis section (page 85) 2Excludes equity and other investments of $575millon (31 December 2020: $328 millon). Further details are set out in Note 12 Financal instruments 3Excludes equity and other investments of $4,585millon (31 December 2020: $3,037millon). Further details are set out in Note 12 Financal instruments 4 The Group enters into master netting agreements, which in the event of default result in a single amount owed by or to the counterparty through netting the sum of the positve and negative mark-to-market values ofapplicablederivatvetransactions 5Other assets include cash collateral, and acceptances, in additon to unsettled trades and other financal assets 6Excludes ECL allowances which are reported under Provisons for liablites and charges 7Collateral capped at maximum exposure (over-collateralised) 8Adjusted for over-collateralisaton, which has been determined with reference to the drawn and undrawn component as this best reflects the effect on the amount arisng from expected credit losses. Loans and advances to customers collateral now re-presented between on and off -balance sheet as it also includes guarantees ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 62 Risk profile continued Company 2021 2020 Maximum exposure $millon Credit risk management Net Exposure $millon Maximum exposure $millon Credit risk management Net exposure $millon Collateral⁸ $millon Master netting agreements $millon Collateral⁸ $millon Master netting agreements $millon On-balance sheet Cash and balances at central banks 48,16548,165 46,47646,476 Loans and advances to banks 1 16,11743815,679 14,9975514,942 of which – reverse repurchase agreements and other simlar secured lending 7 438438– 5555– Loans and advances to customers 1 71,16117,05354,108 72,96917,85455,115 of which – reverse repurchase agreements and other simlar secured lending 7 3,0473,047– 2,2832,283– Investment securites – debt securites and other eligble bills 2 86,02886,028 70,87270,872 Fair value through profit or loss 3,7 95,28477,655–17,629 77,71562,262–15,453 Loans and advances to banks 3,5703,570 2,7712,771 Loans and advances to customers 3,2073,207 2,5812,581 Reverse repurchase agreements and other simlar lending 7 77,65577,655– 62,26262,262– Investment securites – debt securites and other eligble bills 2 10,85210,852 10,10110,101 Derivatve financal instruments⁴ ,7 53,4787,03343,7882,657 68,9108,58153,0917,238 Accrued income 659659 733733 Assets held for sale 4949 8383 Other assets 5 19,86019,860 23,49523,495 Total balance sheet390,801102,17943,788244,834 376,25088,75253,091234,407 Off-balance sheet 6 Undrawn commitments 66,6781,82064,858 69,8902,00867,882 Financal guarantees and other equivalents 37,4651,58135,884 36,1421,53434,608 Total off-balance sheet104,1433,401–100,742 106,0323,542–102,490 Total494,944105,58043,788345,576 482,28292,29453,091336,897 1Net of credit imparment. An analysis of credit quality is set out in the credit quality analysis section (page 67). Further details of collateral held by client segment and stage are set out in the collateral analysis section (page 85) 2Excludes equity and other investments of $361millon (31 December 2020: $230millon). Further details are set out in Note 12 Financal instruments 3Excludes equity and other investments of $4,421millon (31 December 2020: $2,911millon). Further details are set out in Note 12 Financal instruments 4The Group enters into master netting agreements, which in the event of default result in a single amount owed by or to the counterparty through netting the sum of the positve and negative mark-to-market values ofapplicablederivatvetransactions 5Other assets include cash collateral, and acceptances, in additon to unsettled trades and other financal assets 6Excludes ECL allowances which are reported under Provisons for liablites and charges 7Collateral capped at maximum exposure (over-collateralised) 8Adjusted for over-collateralisaton, which has been determined with reference to the drawn and undrawn component as this best reflects the effect on the amount arisng from expected credit losses. Loans and advances to customers collateral now re-presented between on and off -balance sheet as it also includes guarantees ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 63 Risk profile continued Analysis of financal instrument by stage (audited) This table shows financal instruments and off-balance sheet commitments by stage, along with the total credit imparment loss provison against each class of financal instrument. The proportion of financal instruments held withn stage 1 increased to 93 per cent (2020: 92 per cent). Total stage 1 balances increased by $30 billon, of which around $14 billon is in Debt Securites and other eligble bills and a $9 billon increase in loans and advances. Off-balance sheet exposures also increased, up $7 billon, in undrawn commitments and financal guarantees, trade credits and irrevocable letters of credit. Stage 2 financal instruments decreased to 5 per cent (2020: 6 per cent) from exposures changes and upgrades to stage 1 mostly Early Alert and in High Risk clients. Stage 3 financal instruments was at 1.5 per cent (2020:1.9 per cent) due to repayments and write-offs during the year. Group 2021 Stage 1Stage 2Stage 3Total Gross balance 1 $millon Total credit imparment $millon Net carrying value Gross balance 1 $millon Total credit imparment $millon Net carrying value Gross balance 1 $millon Total credit imparment $millon Net carrying value $millon Gross balance 1 $millon Total credit imparment $millon Net carrying value $millon Cash and balances at central banks 61,901–61,90166(4)62–––61,967(4)61,963 Loans and advances to banks (amortised cost) 29,422(11)29,411561(4)55731–3130,014(15)29,999 Loans and advances to customers (amortised cost) 129,990(266)129,72412,741(381)12,3606,941(4,226)2,715149,672(4,873)144,799 Debt securites and other eligble bills 5 96,350(58)5,315(42)113(66)101,778(166) Amortised cost 28,978(10)28,9681963199113(66)4729,287(73)29,214 FVOCI 2 67,372(48)5,119(45)––72,491(93) Accrued income (amortised cost) 4 996–996––––––996–996 Assets held for sale 4 52–52––––––52–52 Other assets 4 22,281–22,281–––3(3)–22,284(3)22,281 Undrawn commitments 3 94,170(23)6,516(53)––100,686(76) Financal guarantees, trade credits and irrevocable letters of credit 3 45,916(12)2,522(21)797(207)49,235(240) Total481,078(370)27,721(505)7,885(4,502)516,684(5,377) 1Gross carrying amount for off-balance sheet refers to notional values 2These instruments are held at fair value on the balance sheet. The ECL provison in respect of debt securites measured at FVOCI is held withn the OCI reserve 3These are off-balance sheet instruments. Only the ECL is recorded on-balance sheet as a financal liablity and therefore there is no “net carrying amount”. ECL allowances on off-balance sheet instruments are held as liablity provisons to the extent that the drawn and undrawn components of loan exposures can be separately identfied. Otherwise they will be reported against the drawn component 4Stage 1 ECL is not material 5Stage 3 includes $33 millon orignated credit-impared debt securites ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 64 Risk profile continued 2020 Stage 1Stage 2Stage 3Total Gross balance 1 $millon Total credit imparment $millon Net carrying value $millon Gross balance 1 $millon Total credit imparment $millon Net carrying value $millon Gross balance 1 $millon Total credit imparment $millon Net carrying value $millon Gross balance 1 $millon Total credit imparment $millon Net carrying value $millon Cash and balances at central banks58,054–58,05467(4)63–––58,121(4)58,117 Loans and advances to banks (amortised cost)27,356(10)27,346323(3)320–––27,679(13)27,666 Loans and advances to customers (amortised cost)122,883(331)122,55215,606(619)14,9878,289(4,967)3,322146,778(5,917)140,861 Debt securites and other eligble bills 5 82,230(50)3,488(26)114(58)85,832(134) Amortised cost14,219(13)14,206177(2)175114(58)5614,510(73)14,437 FVOCI 2 68,011(37)3,311(24)––71,322(61) Accrued income (amortised cost) 4 1,088–1,088––––––1,088–1,088 Assets held for sale 4 83–83––––––83–83 Other assets25,873–25,873–––3(3)–25,876(3)25,873 Undrawn commitments 3 91,641(23)7,240(73)1–98,882(96) Financal guarantees, trade credits and irrevocable letters of credit 3 41,479(16)3,175(25)764(194)45,418(235) Total 450,687(430)29,899(750)9,171(5,222)489,757(6,402) 1Gross carrying amount for off-balance sheet refers to notional values 2These instruments are held at fair value on the balance sheet. The ECL provison in respect of debt securites measured at FVOCI is held withn the OCI reserve 3These are off-balance sheet instruments. Only the ECL is recorded on-balance sheet as a financal liablity and therefore there is no “net carrying amount”. ECL allowances on off-balance sheet instruments are held as liablity provisons to the extent that the drawn and undrawn components of loan exposures can be separately identfied. Otherwise they will be reported against the drawn component 4Stage 1 ECL is not material 5Stage 3 includes $38 millon orignated credit-impared debt securites ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 65 Risk profile continued Company 2021 Stage 1Stage 2Stage 3Total Gross balance 1 $millon Total credit imparment $millon Net carrying value $millon Gross balance 1 $millon Total credit imparment $millon Net carrying value $millon Gross balance 1 $millon Total credit imparment $millon Net carrying value $millon Gross balance 1 $millon Total credit imparment $millon Net carrying value $millon Cash and balances at central banks 48,165–48,165––––––48,165–48,165 Loans and advances to banks (amortised cost) 15,882(9)15,873247(3)244–––16,129(12)16,117 Loans and advances to customers (amortised cost) 59,760(151)59,6099,795(235)9,5605,019(3,027)1,99274,574(3,413)71,161 Debt securites and other eligble bills 5 82,388(32)3,603(21)82(36)86,073(89) Amortised cost 25,828(8)25,820130(1)12982(36)4626,040(45)25,995 FVOCI 2 56,560(24)3,473(20)––60,033(44) Accrued income (amortised cost) 4 659–659––––––659–659 Assets held for sale 4 49–49––––––49–49 Other assets 4 19,860–19,860––––––19,860–19,860 Undrawn commitments 3 61,792(9)4,886(35)––66,678(44) Financal guarantees, trade credits and irrevocable letters of credit 3 34,709(9)2,047(17)709(175)37,465(201) Total 6 323,264(210)20,578(311)5,810(3,238)349,652(3,759) 1Gross carrying amount for off-balance sheet refers to notional values 2These instruments are held at fair value on the balance sheet. The ECL provison in respect of debt securites measured at FVOCI is held withn the OCI reserve 3These are off-balance sheet instruments. Only the ECL is recorded on-balance sheet as a financal liablity and therefore there is no “net carrying amount”. ECL allowances on off-balance sheet instruments are held as liablity provisons to the extent that the drawn and undrawn components of loan exposures can be separately identfied. Otherwise they will be reported against the drawn component 4Stage 1 ECL is not material 5Stage 3 includes $33 millon orignated credit-impared debt securites 6Excludes 'Amounts due from subsidary undertakings and other related parties' of $10,741 millon. The amounts are held withn stage 1 and rated as 'strong' at 31 December 2021 and is net of an expected credit loss of $26 millon ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 66 Risk profile continued 2020 Stage 1Stage 2Stage 3Total Gross balance 1 $millon Total credit imparment $millon Net carrying value $millon Gross balance 1 $millon Total credit imparment $millon Net carrying value $millon Gross balance 1 $millon Total credit imparment $millon Net carrying value $millon Gross balance 1 $millon Total credit imparment $millon Net carrying value $millon Cash and balances at central banks46,476–46,476––––––46,476–46,476 Loans and advances to banks (amortised cost)14,829(5)14,824174(1)173–––15,003(6)14,997 Loans and advances to customers (amortised cost)60,252(188)60,06410,891(387)10,5045,993(3,592)2,40177,136(4,167)72,969 Debt securites and other eligble bills 5 68,742(19)2,083(10)84(29)70,909(58) Amortised cost12,713(8)12,705116–11684(29)5512,913(37)12,876 FVOCI 2 56,029(11)1,967(10)––57,996(21) Accrued income (amortised cost) 4 733–733––––––733–733 Assets held for sale 4 83–83––––––83–83 Other assets 4 23,495–23,495––––––23,495–23,495 Undrawn commitments 3 64,701(15)5,188(61)1–69,890(76) Financal guarantees, trade credits and irrevocable letters of credit 3 33,037(10)2,422(17)683(191)36,142(218) Total 6 312,348(237)20,758(476)6,761(3,812)339,867(4,525) 1Gross carrying amount for off-balance sheet refers to notional values 2These instruments are held at fair value on the balance sheet. The ECL provison in respect of debt securites measured at FVOCI is held withn the OCI reserve 3These are off-balance sheet instruments. Only the ECL is recorded on-balance sheet as a financal liablity and therefore there is no “net carrying amount”. ECL allowances on off-balance sheet instruments are held as liablity provisons to the extent that the drawn and undrawn components of loan exposures can be separately identfied. Otherwise they will be reported against the drawn component 4Stage 1 ECL is not material 5Stage 3 includes $38 millon orignated credit-impared debt securites 6Excludes 'Amounts due from subsidary undertakings and other related parties' of $10,885 millon. The amounts are held withn stage 1 and rated as 'strong' at 31 December 2020 and is net of an expected credit loss of $61 millon ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 67 Risk profile continued Credit quality analysis (audited) Credit quality by client segment For the Corporate, Commercial & Institutonal Banking portfolios, exposures are analysed by credit grade (CG), which plays a central role in the quality assessment and monitorng of risk. All loans are assigned a CG, which is reviewed periodcally and amended in light of changes in the borrower’s circumstances or behaviour. CGs 1 to 12 are assigned to stage 1 and stage 2 (performing) clients or accounts, while CGs 13 and 14 are assigned to stage 3 (defaulted) clients. The mapping of credit quality is as follows. Mapping of credit quality The Group uses the following internal risk mapping to determine the credit quality for loans. Credit quality descripton Corporate, Commercial & Institutonal BankingPrivate Banking 1 Consumer and Business Banking Internal Grade mapping S&P external ratings equivalent Regulatory PD range (%)Internal ratingsNumber of days past due Strong1A to 5BAAA to BB+0 to 0.425Class I and Class IVCurrent loans (no past dues nor impared) Satisfactory6A to 11CBB to B-/CCC 2 0.426 to 15.75Class II and Class IIILoans past due till 29 days Higher RiskGrade 12CCC/C15.751-99.999GSAM managedPast due loans 30 days and over till 90 days 1For Private Banking, classes of risk represent the type of collateral held. Class I represents facilties with liqud collateral, such as cash and marketable securites. Class II represents unsecured/partially secured facilties and those with illquid collateral, such as equity in private enterprises. Class III represents facilties with residental or commercial real estate collateral. Class IV covers margin trading facilties 2Rating for Corporate/NBFIs. Banks’ rating: BB to CCC/C The table overleaf sets out the gross loans and advances held at amortised cost, expected credit loss provisons and expected credit loss coverage by business segment and stage. Expected credit loss coverage represents the expected credit loss reported for each segment and stage as a proportion of the gross loan balance for each segment and stage. Stage 1 Stage 1 gross loans and advances to customers increased by $7 billon compared with 31 December 2020 and represent 87 per cent of loans and advances to customers (2020: 84 per cent). In Corporate, Commercial & Institutonal Banking the percentage of stage 1 loans rated as strong is higher at 61 per cent (2020: 55 per cent) as the Group continues to focus on the orignation of investment grade lending. Stage 1 loans increased by $1.6 billon, primarly in the Financng, insurance and non-banking and Manufacturing sector offset by reduction in Commercial real estate and Transport, telecom and utilties sector. Central and other items increased by $1 billon from exposures to Government sector. Consumer, Private & Business Banking stage 1 loans increased by $4 billon primarly driven by new lending in mortgage products and secured wealth products. The proportion rated as strong increased by 2 per cent to 93 per cent (2020: 91 per cent). The stage 1 coverage ratio decreased 10 basis points to 0.2 per cent compared with 31 December 2020. Stage 2 Stage 2 loans and advances to customers decreased by $2.9 billon compared with 31 December 2020, with the proportion of stage 2 loans decreasing 2.5 per cent to 8.5 per cent. This was largely due to a $2.3 billon decrease in Corporate, Commercial & Institutonal Banking in Manufacturing and Commercial real estate offset by Transport, telecoms and utilties sector. Stage 2 loans to customers classifed as ‘Higher risk’ decreased by $0.8 billon, with the majorty of the decrease in Corporate, Commercial & Institutonal Banking from repayments. Consumer, Private & Business Banking stage 2 loans saw a decrease of $0.6 billon to $1.2 billon mainly driven by mortgage loans movement from stage 2to stage 1 dueto forward-looking macroeconomicoutlook improvement. The overall stage 2 cover ratio decreased by 1 per cent. Stage 3 Stage 3 loans and advances to customers decreased by $1.3 billon and Stage 3 provisons reduced by $0.7 billon to $4.2 billon. The stage 3 cover ratio (excluding collateral) increased by 1 percentage point to 61 per cent, largely driven by new provisons in Consumer, Private & Business Banking. In Corporate, Commercial & Institutonal Banking, gross stage 3 loans decreased by $1.4 billon driven by repayments and write-offs. Stage 3 cover ratio remained stable at 62 per cent. Consumer, Private & Business Banking stage 3 loans remained broadly stable at $1.2 billon. Cover Ratio increased by 7 per cent due to a new provison taken on a Business Banking client. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 68 Risk profile continued Loans and advances by client segment (audited) Group Amortised cost 2021 Banks $millon Customers Undrawn commitments $millon Financal Guarantees $millon Corporate, Commercial & Institutonal Banking $millon Consumer, Private & Business Banking $millon Central & other items $millon Customer Total $millon Stage 129,42266,47144,64518,874129,99094,17045,916 – Strong 17,58240,69941,59818,768101,06582,10831,200 – Satisfactory 11,84025,7723,04710628,92512,06214,716 Stage 256111,4211,21011012,7416,5162,522 – Strong 1192,016673–2,6891,787580 – Satisfactory 1048,214251–8,4653,7371,387 – Higher risk 3381,1912861101,587992555 Of which (stage 2): – Less than 30 days past due –77251–328–– – More than 30 days past due –49286–335–– Stage 3, credit-impared financal assets 315,7501,191–6,941–797 Gross balance¹30,01483,64247,04618,984149,672100,68649,235 Stage 1 (11)(54)(212)–(266)(23)(12) – Strong (3)(23)(129)–(152)(10)(3) – Satisfactory (8)(31)(83)–(114)(13)(9) Stage 2 (4)(258)(123)–(381)(53)(21) – Strong (3)(2)(62)–(64)(5)(1) – Satisfactory (1)(158)(28)–(186)(40)(9) – Higher risk –(98)(33)–(131)(8)(11) Of which (stage 2): – Less than 30 days past due –(2)(28)–(30)–– – More than 30 days past due –(3)(33)–(36)–– Stage 3, credit-impared financal assets –(3,563)(663)–(4,226)–(207) Total credit imparment(15)(3,875)(998)–(4,873)(76)(240) Net carrying value29,99979,76746,04818,984144,799 Stage 1 0.0%0.1%0.5%0.0%0.2%0.0%0.0% – Strong 0.0%0.1%0.3%0.0%0.2%0.0%0.0% – Satisfactory 0.1%0.1%2.7%0.0%0.4%0.1%0.1% Stage 2 0.7%2.3%10.2%0.0%3.0%0.8%0.8% – Strong 2.5%0.1%9.2%0.0%2.4%0.3%0.2% – Satisfactory 1.0%1.9%11.2%0.0%2.2%1.1%0.6% – Higher risk 0.0%8.2%11.5%0.0%8.3%0.8%2.0% Of which (stage 2): – Less than 30 days past due 0.0%2.6%11.2%0.0%9.1%0.0%0.0% – More than 30 days past due 0.0%6.1%11.5%0.0%10.7%0.0%0.0% Stage 3, credit-impared financal assets (S3) 0.0%62.0%55.7%0.0%60.9%0.0%26.0% Cover ratio0.0%4.6%2.1%0.0%3.3%0.1%0.5% Fair value through profit or loss Performing 22,33062,398–1,77464,172–– – Strong 19,88848,426–1,77250,198–– – Satisfactory 2,44213,972–213,974–– – Higher risk ––––––– Defaulted (CG13-14) –38––38–– Gross balance (FVTPL) 2 22,33062,436–1,77464,210–– Net carrying value (incl FVTPL)52,329142,20346,04820,758209,009–– 1Loans and advances includes reverse repurchase agreements and other simlar secured lending of $3,764 millon under Customers and of $956 millon under Banks, held at amortised cost 2Loans and advances includes reverse repurchase agreements and other simlar secured lending of $60,278 millon under Customers and of $18,708 millon under Banks, held at fair value through profit or loss ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 69 Risk profile continued Group Amortised cost 2020 (Restated) Banks $millon Customers Undrawn commitments $millon Financal Guarantees $millon Corporate, Commercial & Institutonal Banking 3 $millon Consumer, Private & Business Banking 3 $millon Central & other items $millon Customer Total $millon Stage 127,35664,87840,55017,455122,88391,64141,479 – Strong 4 19,07335,90536,95217,19490,05176,84925,663 – Satisfactory 4 8,28328,9733,59826132,83214,79215,816 Stage 232313,7471,859–15,6067,2403,175 – Strong921,787896–2,6832,155238 – Satisfactory2109,942581–10,5234,4652,256 – Higher risk212,018382–2,400620681 Of which (stage 2): – Less than 30 days past due–179579–758–– – More than 30 days past due5148392–540–– Stage 3, credit-impared financal assets–7,1101,179–8,2891764 Gross balance¹ 27,67985,73543,58817,455146,77898,88245,418 Stage 1(10)(69)(261)(1)(331)(23)(16) – Strong⁴(4)(26)(183)–(209)(10)(10) – Satisfactory⁴(6)(43)(78)(1)(122)(13)(6) Stage 2(3)(430)(189)–(619)(73)(25) – Strong–(32)(67)–(99)(2)(3) – Satisfactory(3)(246)(75)–(321)(40)(18) – Higher risk–(152)(47)–(199)(31)(4) Of which (stage 2): – Less than 30 days past due–(6)(75)–(81)–– – More than 30 days past due–(6)(47)–(53)–– Stage 3, credit-impared financal assets–(4,389)(578)–(4,967)–(194) Total credit imparment (13)(4,888)(1,028)(1)(5,917)(96)(235) Net carrying value 27,66680,84742,56017,454140,861 Stage 10.0%0.1%0.6%0.0%0.3%0.0%0.0% – Strong0.0%0.1%0.5%0.0%0.2%0.0%0.0% – Satisfactory0.1%0.1%2.2%0.4%0.4%0.1%0.0% Stage 20.9%3.1%10.2%0.0%4.0%1.0%0.8% – Strong0.0%1.8%7.5%0.0%3.7%0.1%1.3% – Satisfactory1.4%2.5%12.9%0.0%3.1%0.9%0.8% – Higher risk0.0%7.5%12.3%0.0%8.3%5.0%0.6% Of which (stage 2): – Less than 30 days past due0.0%3.4%13.0%0.0%10.7%0.0%0.0% – More than 30 days past due0.0%4.1%12.0%0.0%9.8%0.0%0.0% Stage 3, credit-impared financal assets (S3)0.0%61.7%49.0%0.0%59.9%0.0%25.4% Cover ratio 0.0%5.7%2.4%0.0%4.0%0.1%0.5% Fair value through profit or loss Performing20,97647,757–1247,769–– – Strong17,04524,822–824,830–– – Satisfactory3,93122,853–422,857–– – Higher risk–82––82–– Defaulted (CG13-14)–46––46– – Gross balance (FVTPL) 2 20,97647,803–1247,815–– Net carrying value (incl FVTPL) 48,642128,65042,56017,466188,676–– 1Loans and advances includes reverse repurchase agreements and other simlar secured lending of $2,919 millon under Customers and of $809 millon under Banks, held at amortised cost 2Loans and advances includes reverse repurchase agreements and other simlar secured lending of $44,602 millon under Customers and of $18,205 millon under Banks, held at fair value through profit and loss 3Following the Group’s change in organisatonal structure, there has been an integraton of Corporate & Institutonal Banking and Commercial Banking to Corporate, Commercial & Institutonal Banking; Private Banking and Retail Banking to Consumer, Private & Business Banking. Prior period has been restated. 4FY 2020 Consumer, Private & Business Banking Stage 1 Gross: Strong restated from $35,826 millon to $36,952 millon and Satisfactory restated from $4,724 millon to $3,598 millon. Stage 1 ECL: Strong restated from $161 millon to $183 millon and Satisfactory restated from $100 millon to $78 millon. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 70 Risk profile continued Loans and advances by client segment (audited) Company Amortised cost 2021 Banks $millon Customers Undrawn commitments $millon Financal Guarantees $millon Corporate, Commercial & Institutonal Banking $millon Consumer, Private & Business Banking $millon Central & other items $millon Customer Total $millon Stage 115,88245,65911,6122,48959,76061,79234,709 – Strong 8,56628,9089,7672,41241,08752,27624,136 – Satisfactory 7,31616,7511,8457718,6739,51610,573 Stage 22479,1944911109,7954,8862,047 – Strong 811,609271–1,8801,144512 – Satisfactory 386,75094–6,8443,0061,045 – Higher risk 1288351261101,071736490 Of which (stage 2): – Less than 30 days past due –6994–163–– – More than 30 days past due –36126–162–– Stage 3, credit-impared financal assets –4,353666–5,019–709 Gross balance¹16,12959,20612,7692,59974,57466,67837,465 Stage 1 (9)(30)(121)–(151)(9)(9) – Strong (3)(13)(63)–(76)(5)(4) – Satisfactory (6)(17)(58)–(75)(4)(5) Stage 2 (3)(178)(57)–(235)(35)(17) – Strong (2)(4)(22)–(26)(2)– – Satisfactory (1)(115)(11)–(126)(28)(7) – Higher risk –(59)(24)–(83)(5)(10) Of which (stage 2): – Less than 30 days past due –(2)(11)–(13)–– – More than 30 days past due ––(24)–(24)–– Stage 3, credit-impared financal assets –(2,637)(390)–(3,027)–(175) Total credit imparment(12)(2,845)(568)–(3,413)(44)(201) Net carrying value16,11756,36112,2012,59971,161 Stage 1 0.1%0.1%1.0%0.0%0.3%0.0%0.0% – Strong 0.0%0.0%0.6%0.0%0.2%0.0%0.0% – Satisfactory 0.1%0.1%3.1%0.0%0.4%0.0%0.0% Stage 2 1.2%1.9%11.6%0.0%2.4%0.7%0.8% – Strong 2.5%0.2%8.1%0.0%1.4%0.2%0.0% – Satisfactory 2.6%1.7%11.7%0.0%1.8%0.9%0.7% – Higher risk 0.0%7.1%19.0%0.0%7.7%0.7%2.0% Of which (stage 2): – Less than 30 days past due 0.0%2.9%11.7%0.0%8.0%0.0%0.0% – More than 30 days past due 0.0%0.0%19.0%0.0%14.8%0.0%0.0% Stage 3, credit-impared financal assets (S3) 0.0%60.6%58.6%0.0%60.3%0.0%24.7% Cover ratio0.1%4.8%4.4%0.0%4.6%0.1%0.5% Fair value through profit or loss Performing 21,95060,672–1,77462,446–– – Strong 19,54346,971–1,77248,743–– – Satisfactory 2,40713,701–213,703–– – Higher risk ––––––– Defaulted (CG13-14) –36––36–– Gross balance (FVTPL) 2 21,95060,708–1,77462,482–– Net carrying value (incl FVTPL)38,067117,06912,2014,373133,643–– 1Loans and advances include reverse repurchase agreements and other simlar secured lending for $3,047 millon under Customers and for $438 millon under Banks, held atamortised cost 2Loans and advances include reverse repurchase agreements and other simlar secured lending for $59,275 millon under Customers and for $18,380 millon under Banks, held at fair value through profit and loss ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 71 Company Amortised cost 2020 (Restated) Banks $millon Customers Undrawn commitments $millon Financal Guarantees $millon Corporate, Commercial & Institutonal Banking 3 $millon Consumer, Private & Business Banking 3 $millon Central & other items $millon Customer Total $millon Stage 114,82946,56511,3822,30560,25264,70133,037 – Strong 4 9,79227,8099,1552,05939,02352,92720,668 – Satisfactory 4 5,03718,7562,22724621,22911,77412,369 Stage 217410,280611–10,8915,1882,422 – Strong271,303360–1,6631,56775 – Satisfactory1267,30179–7,3803,3031,787 – Higher risk211,676172–1,848318560 Of which (stage 2): – Less than 30 days past due–12277–199–– – More than 30 days past due571182–253–– Stage 3, credit-impared financal assets–5,290703–5,9931683 Gross balance¹ 15,00362,13512,6962,30577,13669,89036,142 Stage 1(5)(43)(145)–(188)(15)(10) – Strong(2)(16)(102)–(118)(7)(6) – Satisfactory(3)(27)(43)–(70)(8)(4) Stage 2(1)(300)(87)–(387)(61)(17) – Strong–(24)(58)–(82)(1)(1) – Satisfactory(1)(157)(7)–(164)(33)(14) – Higher risk–(119)(22)–(141)(27)(2) Of which (stage 2): – Less than 30 days past due––(7)–(7)–– – More than 30 days past due–(2)(22)–(24)–– Stage 3, credit-impared financal assets–(3,244)(348)–(3,592)–(191) Total credit imparment (6)(3,587)(580)–(4,167)(76)(218) Net carrying value 14,99758,54812,1162,30572,969–– Stage 10.0%0.1%1.3%0.0%0.3%0.0%0.0% – Strong0.0%0.1%1.1%0.0%0.3%0.0%0.0% – Satisfactory0.1%0.1%1.9%0.0%0.3%0.1%0.0% Stage 20.6%2.9%14.2%0.0%3.6%1.2%0.7% – Strong0.0%1.8%16.1%0.0%4.9%0.1%1.3% – Satisfactory0.8%2.2%8.9%0.0%2.2%1.0%0.8% – Higher risk0.0%7.1%12.8%0.0%7.6%8.5%0.4% Of which (stage 2): – Less than 30 days past due0.0%0.0%9.1%0.0%3.5%0.0%0.0% – More than 30 days past due0.0%2.8%12.1%0.0%9.5%0.0%0.0% Stage 3, credit-impared financal assets (S3)0.0%61.3%49.5%0.0%59.9%0.0%28.0% Cover ratio 0.0%5.8%4.6%0.0%5.4%0.1%0.6% Fair value through profit or loss Performing20,65446,911–1246,923–– – Strong16,72324,202–824,210–– – Satisfactory3,93122,627–422,631–– – Higher risk–82––82–– Defaulted (CG13-14)–37–– 37–– Gross balance (FVTPL) 2 20,65446,948–1246,960–– Net carrying value (incl FVTPL) 35,651105,49612,1162,317119,929–– 1Loans and advances include reverse repurchase agreements and other simlar secured lending of $2,283 millon under Customers and of $55 millon under Banks, held at amortised cost 2Loans and advances include reverse repurchase agreements and other simlar secured lending of $44,379 millon under Customers and of $17,883 millon under Banks, held at fair value through profit and loss 3Following the Group’s change in organisatonal structure, there has been an integraton of Corporate & Institutonal Banking and Commercial Banking to Corporate, Commercial & Institutonal Banking; Private Banking and Retail Banking to Consumer, Private & Business Banking. Prior period has been restated. Risk profile continued ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 72 Movement in gross exposures and credit imparment for loans and advances, debt securites, undrawn commitments and financal guarantees (audited) The tables overleaf set out the movement in gross exposures and credit imparment by stage in respect of amortised cost loans to banks and customers, undrawn commitments, financal guarantees and debt securites classifed at amortised cost and FVOCI. The tables are presented for the Group and debt securites and other eligble bills. Methodology The movement lines withn the tables are an aggregation of monthly movements over the year and will therefore reflect the accumulation of multiple trades during the year. The credit imparment charge in the income statement comprises the amounts withn the boxes in the table below less recoveries of amounts previously written off. Discount unwind is reported in net interest income and related to stage 3 financal instruments only. The approach for determinng the key line items in the tables is set out below. • Transfers – transfers between stages are deemed to occur at the beginnng of a month based on prior month closing balances • Net remeasurement from stage changes – the remeasurement of credit imparment provisons arisng from a change in stage is reported withn the stage that the assets are transferred to. For example, assets transferred into stage 2 are remeasured from a 12-month to a lifetme expected credit loss, with the effect of remeasurement reported in stage 2. For stage 3, this represents the intial remeasurement from specifc provisons recognised on indvidual assets transferred into stage 3 in the year • Net changes in exposures – new business written less repayments in the year. Withn stage 1, new business written will attract up to 12 months of expected credit loss charges. Repayments of non-amortisng loans (primarly withn Corporate, Commercial & Institutonal Banking) will have low amounts of expected credit loss provisons attributed to them, due to the release of provisons over the term to maturity. In stages 2 and 3, the amounts princpally reflect repayments although stage 2 may include new business written where clients are on non-purely precautionary early alert, are a credit grade 12, or when non-investment grade debtsecurites areacquired. • Changes in risk parameters – for stages 1 and 2, this reflects changes in the probabilty of default (PD), loss given default (LGD) and exposure at default (EAD) of assets during the year, which includes the impact of releasing provisons over the term to maturity. It also includes the effect of changes in forecasts of macroeconomic variables during the year and movements in management overlays. In stage 3, this line represents additonal specifc provisons recognised on exposures held withn stage 3 • Interest due but not paid – change in contractual amount of interest due in stage 3 financal instruments but not paid, being the net of accruals, repayments and write-offs, together with the corresponding change in credit imparment Changes toECLmodels, which incorporates changesto model approaches andmethodologies, is not reported as a separate line item as it has an impact over a number of lines and stages. Movements during the year Stage 1 gross exposures increased by $30 billon to $396 billon when compared with 31 December 2020. About half of the increase in exposures was in debt securites. Corporate, Commercial & Institutonal Banking increased by $8 billon from new orignations and transfers from stage 2. There was a $6 billon increase in Consumer, Private & Business Banking which was mainly driven by new orignations in mortgage and secured wealth products. Total stage 1 provisons decreased by $60 millon to $370 millon, primarly in Consumer, Private & Business Banking unsecured lending, due to an improvement in macroeconomic forecasts and remeasurement of balances from upgrades into stage 1. Corporate, Commercial & Institutonal Banking provisons declined by $19 millon primarly due to improvement in probabilty of default. Stage 2 gross exposures decreased by $2 billon to $28 billon, primarly driven by $3 billon of net outflows from exposure changes and transfers to stage 1 in Corporate, Commercial & Institutonal Banking, particularly in the Manufacturing and Commercial real estate sectors. Consumer, Private & Business Banking exposures decreased by $0.7 billon, of which $0.4 billon was from the secured portfolio and $0.3 billon was from unsecured portfolios. Debt securites increased by $1.8 billon mainly due to the Sri Lanka sovereign downgrade. Stage 2 provisons decreased by $245 millon compared to 31 December 2020, $192 millon of which was in Corporate, Commercial & Institutonal Banking as a result of exposure changes and transfers to stage 1, repayment of exposures and a net reduction of $81 millon in judgemental management overlays (which are reported in 'Changes in risk parameters' in the table) as early alert balances fell. Consumer, Private & Business Banking provisons decreased by $70 millon, mainly in unsecured lending from improvement in macroeconomic forecasts, lower delinquences as conditons normalised in a number of our markets and decline in judgemental management overlays of $31 millon. Stage 3 exposures decreased by $1.3 billon to $7.9 billon, primarly in Corporate, Commercial & Institutonal Banking driven by repayments and write-offs. Stage 3 provisons also decreased by $0.7 billon to $4.5 billon, also due to repayments and write-offs. Risk profile continued ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 73 All segments – Group (audited) Amortised cost and FVOCI Stage 1Stage 2Stage 3Total Gross balance⁷ $millon Total credit imparment $millon Net $millon Gross balance⁷ $millon Total credit imparment $millon Net $millon Gross balance⁷ $millon Total credit imparment $millon Net $millon Gross balance⁷ $millon Total credit imparment $millon Net $millon As at 1 January 2020 364,769(332)364,43728,639(345)28,2947,351(4,883)2,468400,759(5,560)395,199 Transfers to stage 131,468(440)31,028(31,427)440(30,987)(41)–(41)––– Transfers to stage 2(59,857)376(59,481)59,954(377)59,577(97)1(96)––– Transfers to stage 3 (450)–(450)(3,916)177(3,739)4,366(184)4,182–(7)(7) Net change in exposures27,828(99)27,729(24,983)109(24,874)(1,261)216(1,045)1,5842261,810 Net remeasurement from stage changes–8282–(319)(319)–(705)(705)–(942)(942) Changes in risk parameters–4343–(507)(507)–(955)(955)–(1,419)(1,419) Write-offs––––––(1,508)1,508–(1,508)1,508– Interest due but unpaid––––––228(228)–228(228)– Discount unwind –––––––7777–7777 Exchange translation differences and other movements¹1,831(60)1,7711,565761,641130(66)643,526(50)3,476 As at 31 December 2020² 365,589(430)365,15929,832(746)29,0869,168(5,219)3,949404,589(6,395)398,194 Income statement ECL (charge)/ release 3 26(717)(1,444)(2,135) Recoveries of amounts previously written off––157157 Total credit imparment (charge)/ release 26(717)(1,287)(1,978) Risk profile continued ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 74 Amortised cost and FVOCI Stage 1Stage 2Stage 3Total Gross balance⁷ $millon Total credit imparment $millon Net $millon Gross balance⁷ $millon Total credit imparment $millon Net $millon Gross balance⁷ $millon Total credit imparment $millon Net $millon Gross balance⁷ $millon Total credit imparment $millon Net $millon As at 1 January 2021 365,589(430)365,15929,832(746)29,0869,168(5,219)3,949404,589(6,395)398,194 Transfers to stage 1 18,004(452)17,552(17,956)452(17,504)(48)–(48)––– Transfers to stage 2 (40,145)145(40,000)40,465(154)40,311(320)9(311)––– Transfers to stage 3 (126)1(125)(2,166)216(1,950)2,292(217)2,075––– Net change in exposures 5 60,165(87)60,078(22,135)99(22,036)(2,180)617(1,563)35,85062936,479 Net remeasurement from stage changes –4646–(129)(129)–(99)(99)–(182)(182) Changes in risk parameters –5151–9898–(752)(752)–(603)(603) Write-offs ––––––(957)957–(957)957– Interest due but unpaid ––––––(187)187–(187)187– Discount unwind⁶ –––––––211211–211211 Exchange translation differences and other movements¹ (7,639)356(7,283)(385)(337)(722)114(193)(79)(7,910)(174)(8,084) As at 31 December 2021²395,848(370)395,47827,655(501)27,1547,882(4,499)3,383431,385(5,370)426,015 Income statement ECL (charge)/ release 3 1068(234)(156) Recoveries of amounts previously written off ––186186 Total credit imparment (charge)/ release 4 1068(48)30 1Includes fairvalueadjustments and amortisatonon debtsecurites 2Excludes Cash and balances at central banks, Accrued income, Assets held for sale and Other assets 3Does not include $Nil (31 December 2020: $2 millon release) relating to Other assets 4Statutory basis 5Stage 3 gross includes $33 millon (31 December 2020: $38 millon) orignated credit-impared debt securites 6Includes $163 millon adjustment in relation to interest earned on impared assets 7The gross balance includesthe notional amountof offbalancesheet instruments Risk profile continued All segments – Group (audited) continued ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 75 Of which movement of debt securites, alternative Tier 1 and other eligble bills (audited) Amortised cost and FVOCI Stage 1Stage 2Stage 3Total Gross balance $millon Total credit imparment $millon Net $millon Gross balance $millon Total credit imparment $millon Net $millon Gross balance $millon Total credit imparment $millon Net $millon Gross balance $millon Total credit imparment $millon Net 3 $millon As at 1 January 2020 84,609(47)84,5624,607(23)4,58475(45)3089,291(115)89,176 Transfers to stage 11,732(28)1,704(1,732)28(1,704)–––––– Transfers to stage 2(1,151)18(1,133)1,151(18)1,133–––––– Transfers to stage 3–––––––––––– Net change in exposures(4,665)(28)(4,693)(452)11(441)39–39(5,078)(17)(5,095) Net remeasurement from stage changes–1616–(26)(26)––––(10)(10) Changes in risk parameters–1111–(11)(11)–(6)(6)–(6)(6) Write-offs–––––––––––– Interest due but unpaid–––––––––––– Exchange translation differences and other movements 1 1,70581,713(86)13(73)–(7)(7)1,619141,633 As at 31 December 2020 82,230(50)82,1803,488(26)3,462114(58)5685,832(134)85,698 Income statement ECL (charge)/release(1)(26)(6)(33) Recoveries of amounts previously written off–––– Total credit imparment (charge)/release (1)(26)(6)(33) Risk profile continued ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 76 Amortised cost and FVOCI Stage 1Stage 2Stage 3Total Gross balance $millon Total credit imparment $millon Net $millon Gross balance $millon Total credit imparment $millon Net $millon Gross balance $millon Total credit imparment $millon Net $millon Gross balance $millon Total credit imparment $millon Net 3 $millon As at 1 January 202182,230(50)82,1803,488(26)3,462114(58)5685,832(134)85,698 Transfers to stage 1 403(11)392(403)11(392)–––––– Transfers to stage 2 (2,358)16(2,342)2,358(16)2,342–––––– Transfers to stage 3 –––––––––––– Net change in exposures 2 18,789(42)18,747(136)(18)(154)–1118,653(59)18,594 Net remeasurement from stage changes –1313–(26)(26)––––(13)(13) Changes in risk parameters –1818–3434–(3)(3)–4949 Write-offs –––––––––––– Interest due but unpaid –––––––––––– Exchange translation differences and other movements 1 (2,714)(2)(2,716)8(1)7(1)(6)(7)(2,707)(9)(2,716) As at 31 December 202196,350(58)96,2925,315(42)5,273113(66)47101,778(166)101,612 Income statement ECL (charge)/release (11)(10)(2)(23) Recoveries of amounts previously written off –––– Total credit imparment (charge)/release(11)(10)(2)(23) 1Includes fairvalueadjustments and amortisatonon debtsecurites 2Stage 3 gross includes $33 millon (31 December 2020: $38 millon) orignated credit-impared debt securites 3FVOCI instruments are not presented net of ECL. While the presentation is on a net basis for the table, the total net on-balance sheet amount is $101,705 millon (31 December 2020: $85,759 millon). Refer to the Analysis of financal instrument by stage table on page 63 Risk profile continued Of which movement of debt securites, alternative Tier 1 and other eligble bills (audited) continued ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 77 All segments – Company (audited) Amortised cost and FVOCI Stage 1Stage 2Stage 3Total Gross balance⁷ $millon Total credit imparment $millon Net $millon Gross balance⁷ $millon Total credit imparment $millon Net $millon Gross balance⁷ $millon Total credit imparment $millon Net $millon Gross balance⁷ $millon Total credit imparment $millon Net $millon As at 1 January 2020 245,350(176)245,17416,893(181)16,7125,838(3,924)1,914268,081(4,281)263,800 Transfers to stage 121,378(229)21,149(21,338)229(21,109)(40)–(40)––– Transfers to stage 2(41,156)142(41,014)41,215(143)41,072(59)1(58)––– Transfers to stage 3 (150)1(149)(2,683)112(2,571)2,833(113)2,720––– Net change in exposures15,439(25)15,414(14,878)68(14,810)(962)125(837)(401)168(233) Net remeasurement from stage changes–5050–(121)(121)–(209)(209)–(280)(280) Changes in risk parameters–66–(418)(418)–(436)(436)–(848)(848) Write-offs––––––(1,018)1,018–(1,018)1,018– Interest due but unpaid––––––185(185)–185(185)– Discount unwind–––––––4646–4646 Exchange translation differences and other movements¹ 700(6)6941,549(22)1,527(16)(135)(151)2,233(163)2,070 As at 31 December 2020² 241,561(237)241,32420,758(476)20,2826,761(3,812)2,949269,080(4,525)264,555 Income statement ECL (charge)/release31(471)(520)(960) Recoveries of amounts previously written off––6969 Total credit imparment (charge)/release 31(471)(451)(891) Risk profile continued ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 78 Amortised cost and FVOCI Stage 1Stage 2Stage 3Total Gross balance⁷ $millon Total credit imparment $millon Net $millon Gross balance⁷ $millon Total credit imparment $millon Net $millon Gross balance⁷ $millon Total credit imparment $millon Net $millon Gross balance⁷ $millon Total credit imparment $millon Net $millon As at 1 January 2021241,561(237)241,32420,758(476)20,2826,761(3,812)2,949269,080(4,525) 264,555 Transfers to stage 1 13,549(223)13,326(13,501)223(13,278)(48)–(48)––– Transfers to stage 2 (29,383)47(29,336)29,594(56)29,538(211)9(202)––– Transfers to stage 3 (94)1(93)(1,598)171(1,427)1,692(172)1,520––– Net change in exposures 4 34,059(56)34,003(14,441)80(14,361)(1,611)407(1,204)18,00743118,438 Net remeasurement from stage changes –1414–(57)(57)–(79)(79)–(122)(122) Changes in risk parameters –1818–9393–(449)(449)–(338)(338) Write-offs ––––––(592)592–(592)592– Interest due but unpaid ––––––(143)143–(143)143– Discount unwind⁶ –––––––170170–170170 Exchange translation differences and other movements¹ (5,161)226(4,935)(234)(289)(523)(38)(47)(85)(5,433)(110)(5,543) As at 31 December 2021²254,531(210)254,32120,578(311)20,2675,810(3,238)2,572280,919(3,759)277,160 Income statement ECL (charge)/release (24)116(121)(29) Recoveries of amounts previously written off ––6767 Total credit imparment (charge)/release 3 (24)116(54)38 1Includes fairvalueadjustments and amortisatonon debtsecurites 2Excludes Cash and balances at central banks, Accrued income, Assets held for sale and Other assets 3Does not include $Nil (31 December 2020: $2 millon release) relating to Other assets 4Statutory basis 5Stage 3 gross includes $33 millon (31 December 2020: $38 millon) orignated credit-impared debt securites 6Includes $137 millon adjustment in relation to interest earned on impared assets 7The gross balance includesthe notional amountof offbalancesheet instruments Risk profile continued All segments – Company (audited) continued ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 79 Of which Movement of debt securites – Company (audited) Amortised cost and FVOCI Stage 1Stage 2Stage 3Total Gross balance $millon Total credit imparment $millon Net $millon Gross balance $millon Total credit imparment $millon Net $millon Gross balance $millon Total credit imparment $millon Net $millon Gross balance $millon Total credit imparment $millon Net $millon As at 1 January 2020 70,515(29)70,4861,117(5)1,11243(17)2671,675(51)71,624 Transfers to stage 141(19)22(41)19(22)–––––– Transfers to stage 2(537)11(526)537(11)526–––––– Transfers to stage 3–––––––––––– Net change in exposures(2,717)(6)(2,723)556155739–39(2,122)(5)(2,127) Net remeasurement from stage changes–33–(10)(10)––––(7)(7) Changes in risk parameters–1212–44–(6)(6)–1010 Write-offs–––––––––––– Interest due but unpaid–––––––––––– Exchange translation differences and other movements 1 1,44091,449(86)(8)(94)2(6)(4)1,356(5)1,351 As at 31 December 2020 68,742(19)68,7232,083(10)2,07384(29)5570,909(58)70,851 Income statement ECL (charge)/release9(5)(6)(2) Recoveries of amounts previously written off–––– Total credit imparment (charge)/release 9(5)(6)(2) Risk profile continued ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 80 Amortised cost and FVOCI Stage 1Stage 2Stage 3Total Gross balance $millon Total credit imparment $millon Net $millon Gross balance $millon Total credit imparment $millon Net $millon Gross balance $millon Total credit imparment $millon Net $millon Gross balance $millon Total credit imparment $millon Net $millon As at 1 January 202168,742(19)68,7232,083(10)2,07384(29)5570,909(58)70,851 Transfers to stage 1 265(6)259(265)6(259)–––––– Transfers to stage 2 (1,740)5(1,735)1,740(5)1,735–––––– Transfers to stage 3 –––––––––––– Net change in exposures 2 17,227(25)17,202110(1)109–––17,337(26)17,311 Net remeasurement from stage changes –44–(16)(16)––––(12)(12) Changes in risk parameters –1919–(5)(5)–(4)(4)–1010 Write-offs –––––––––––– Interest due but unpaid –––––––––––– Exchange translation differences and other movements 1 (2,106)(10)(2,116)(65)10(55)(2)(3)(5)(2,173)(3)(2,176) As at 31 December 202182,388(32)82,3563,603(21)3,58282(36)4686,073(89)85,984 Income statement ECL (charge)/release (2)(22)(4)(28) Recoveries of amounts previously written off –––– Total credit imparment (charge)/release(2)(22)(4)(28) 1Includes fairvalueadjustments and amortisatonon debtsecurites 2Stage 3 gross includes $33 millon (31 December 2020: $38 millon) orignated credit-impared debt securites 3FVOCI instrument are not presented net of ECL. While the presentation is on a net basis for the table, the total net on-balance sheet amount is $86,028 millon (31 December 2020: $70,872 millon). Refer to the Analysis of financal instrument by stage table on page 65 Credit imparment charge (audited) The underlying credit imparment charge is a release of $28 millon compared to a charge of $1.9 billon in 2020. Stage 3 is charge of $48 millon mainly driven by charge-offs in Consumer, Private & Business Banking of $192 millon in Bangladesh, Malaysia and India. This is offset by release of $144 millon in Corporate, Commercial & Institutonal Banking from client repayments during the year. Stage 1 & 2 is release of $76 millon with release of $74 millon in Corporate, Commercial & Institutonal Banking, release of $23 millon in Consumer, Private & Business Banking and charge of $21 millon in Central and other items. Corporate, Commercial & Institutonal Banking stage 1 and 2 release is due to reduction in management overlay $81 millon, repayments, decline in stage 2 exposures and improvement in probabilty of defaults offset by charge from multiple economic scenarios post model adjustment of $25 millon and macroeconomic variables charge of $9 millon. Consumer, Private & Business Banking stage 1 and 2 imparments reduced to a release of $23 millon at the end of 2021 (2020: $316 milon) mainly due to ECL reversals as the forward looking macroeconomic outlook improved in relative terms. Risk profile continued Of which Movement of debt securites – Company (audited) continued ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 81 Risk profile continued Central and other items charge of $21 millon is mainly due to multiple economic scenarios post model adjustment 2021 2020 (Restated) Stage 1 & 2 $millon Stage 3 $millon Total $millon Stage 1 & 2 $millon Stage 3 $millon Total $millon Ongoing business portfolio Corporate, Commercial & Institutonal Banking 1 (74)(144)(218) 3431,0581,401 Consumer, Private & Business Banking 1 (23)192169 316208524 Central & other items 21–21 27(5)22 Credit imparment charge/(release)(76)48(28) 6861,2611,947 Restructuring business portfolio Others 2 (2)–(2) 22729 Credit imparment charge/(release)(2)–(2) 22729 Total credit imparment charge/(release)(78)48(30) 6881,2881,976 1Following the Group’s change in organisatonal structure, there has been an integraton of Corporate & Institutonal Banking and Commercial Banking to Corporate, Commercial & Institutonal Banking; Private Banking and Retail Banking to Consumer, Private & Business Banking. Further, certain clients have been moved between the two new client segments. Prior period has been restated 2There was a net ($2) millon imparment release ( 31 December 2020: $29 millon) from the Group’s discontnued businesses COVID-19 relief measures COVID-19 payment-related relief measures have been in place across most of our markets during 2020 and 2021, particularly focused on Consumer, Private & Business Banking customers. Measures in most markets have now expired, although moratoria schemes in certain Africa & Middle East countries have been extended to 30 June 2022. These schemes are generally intiated by country regulators and governments. These measures include princpal and/or interest moratoria and term extensions and are generally available to eligble borrowers (those that are current or less than 30 days past due, unless local regulators have specifed different critera). Certain schemes may be restricted to those in industres signficantly impacted by COVID-19, such as aviaton or consumer services, but are not borrower-specifc in nature. Relief measures are generally mandated or supported by regulators and governments and are available to all eligble customers who request it. However in a number of countries, particularly in Asia and Africa & Middle East, compulsory (regulatory approved) moratoria reliefs are applied to all eligble loans unless a customer has specifcally asked to opt out. In most major Consumer, Private & Business Banking markets, the intial period of relief provided was between 6 and 12 months. In some smaller markets, the intial period of relief was for 3 months. COVID-19 related tenor extensions have also been made available to Corporate, Commerical & Institutonal Banking clients, primarly for periods between 3 to 9 months, if they are expected to return to normal payments withn 12 months. Assessment for expected credit losses COVID-19 payment reliefs that are generally available to a market or industry as a whole and are not borrower-specifc in nature have not, on their own, resulted in an automatic change in stage (that is, indvidual customers are not considered to have experienced a signficant increase in credit risk or an improvement in credit risk) nor have they been considered to be forborne. A customer’s stage and past due status reflects their status immedately prior to the granting of the relief, with past due amounts assessed based on the new terms as set out in the temporary payment reliefs. If a customer requires additonal support after the expiry of generally available payment reliefs, these will be considered at a borrower level, after taking into account their indvidual circumstances. Depending on the type of subsequent support provided, these customers may be classifed withn stage 2 or stage 3. Where client level government guarantees are in place, these do not affect staging but are taken into account when determinng the level of credit imparment. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 82 Risk profile continued Impact from temporary changes to loan contractualterms Approximately $1.3 billon of outstanding loan balances have been subject to payment relief measures. This represents 0.4 per cent of the Group’s gross loans and advances to banks and customers. The granting of COVID-19 payment-related relief measures may cause a time value of money loss for the Group where interest is not permitted to be compounded (that is, interest charged on interest) or where interest is not permitted to be charged or accrued during the relief period. As set out above, such reliefs do not impact a customer’s stage and are not considered to be forborne even though a time value of money loss arises. As the relief periods are relatively short-term in nature, and a small percentage of the total loans outstanding, this has not resulted in a material impact for the Group. The table below sets out the extent to which payment reliefs are in place across the Group’s loan portfolio based on the amounts outstanding at 31 December 2021. The total exposure of the Consumer, Private & Business Banking portfolio under moratoria is $1.0 billon, of which $0.5 billon (50 per cent) is from residental mortgage. A large part of moratoria has ended with the remainng balance primarly concentrated in Asia, which are largely secured. 30 per cent of the total amounts approved are to Business Banking customers, concentrated in industres that have been materially disrupted, of which over 79 per cent is collateralised by commercialimmovableproperty. In Corporate, Commercial & Institutonal Banking, around 64 per cent of the amounts approved are for tenor extensions of 90 days or less. Around 17 per cent of the reliefs granted are to clients in vulnerable sectors. Segment/Product TotalAsiaAfrica & Middle East 1 Europe & Americas Outstanding $ millon % of portfolio 2 Outstanding $ millon % of portfolio 2 Outstanding $ millon % of portfolio 2 Outstanding $ millon Credit Cards & Personal Loans2053.2%621.7%1437.7% Mortgages & Auto5212.1%5112.6%100.6% Business Banking3047.0%3047.2%–0.0% Total Consumer, Private & Business Banking1,0301.0%8772.7%1533.1% Corporate, Commercial & Institutonal Banking4450.3%32211310 Total at 31 December 20211,4750.4%1,19926610 Total Consumer, Private & Business Banking1,7203.9%1,554166 Corporate, Commercial & Institutonal Banking8820.7%43342920 Total at 31 December 20202,6021.5%1,98759520 1Bahrain's moratoria scheme expired on 31 December 2021. The scheme has been further extended to 30 June 2022 on an opt-in basis. Amount includes $151 millon of customers who were under moratoria schemes that expired on 31 December 2021 have opted to continue under the extended scheme up to 31 January 2022. 2Percentage of portfolio represents the outstanding amount at 31 December 2021 as a percentage of the gross loans and advances to banks and customers by product and segment and total loans and advances to banks and customers at 31 December 2021 and 2020. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 83 Risk profile continued Problem credit management and provisoning Forborne and other modifed loans by client segment (audited) A forborne loan arises when a concession has been made to the contractual terms of a loan in response to a customer’s financal diffculties. Net forborne loans decreased by $481 millon compared with 31 December 2020, $718 millon of which was in performing forborne loans offset by an increase of $236 millon in non-performing forborne. For net performing forborne loans, just over half of the total decrease in forborne loans was in Corporate, Commercial & Institutonal Banking primarly driven by cures out of performing forborne loans, with the remainder of the decrease due to lower performing forborne loans in Consumer, Private & Business Banking mainly driven by one big ticket sized account in Private Banking which was fully repaid. The table below presents loans with forbearance measures by segment. Group Amortised cost 2021 2020 (Restated) Corporate, Commercial & Institutonal Banking $millon Consumer, Private & Business Banking $millon Total $millon Corporate, Commercial & Institutonal Banking³ $millon Consumer, Private & Business Banking³ $millon Total $millon All loans with forbearance measures2,3342712,605 2,6855213,206 Credit imparment (stage 1 and 2)(4)–(4) (3)(1)(4) Credit imparment (stage 3)(1,159)(126)(1,285) (1,294)(111)(1,405) Net carrying value1,1711451,316 1,3884091,797 Included withn the above table Gross performing forborne loans23853291 6763341,010 Modifcation of terms and conditons¹23853291 6743341,008 Refinancng²––– 2–2 Impairment provisons(3)–(3) (3)(1)(4) Modifcation of terms and conditons 1 (3)–(3) (3)(1)(4) Refinancng 2 ––– ––– Net performing forborne loans23553288 6733331,006 Collateral365692 31523338 Gross non-performing forborne loans2,0952182,313 2,0091872,196 Modifcation of terms and conditons¹1,9372182,155 1,8411872,028 Refinancng²158–158 168–168 Impairment provisons(1,159)(126)(1,285) (1,294)(111)(1,405) Modifcation of terms and conditons¹(1,028)(126)(1,154) (1,164)(111)(1,275) Refinancng²(131)–(131) (130)–(130) Net non-performing forborne loans936921,028 71576791 Collateral20853261 26135296 1Modifcation of terms is any contractual change apart from refinancng, as a result of credit stress of the counterparty, i.e. interest reductions, loan covenant waivers 2Refinancng is a new contract to a lender in credit stress, such that they are refinanced and can pay other debt contracts that they were unable to honour 3Following the Group’s change in organisatonal structure, there has been an integraton of Corporate & Institutonal Banking and Commercial Banking to Corporate, Commercial & Institutonal Banking; Private Banking and Retail Banking to Consumer, Private & Business Banking. Prior period has been restated. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 84 Risk profile continued Company Amortised cost 2021 2020 (Restated) Corporate, Commercial & Institutonal Banking $millon Consumer, Private & Business Banking $millon Total $millon Corporate, Commercial & Institutonal Banking³ $millon Consumer, Private & Business Banking³ $millon Total $millon All loans with forbearance measures1,630341,664 1,9623282,290 Credit imparment (stage 1 and 2)(2)–(2) (1)(1)(2) Credit imparment (stage 3)(789)(2)(791) (892)(7)(899) Net carrying value83932871 1,0693201,389 Included withn the above table Gross performing forborne loans16418182 618314932 Modifcation of terms and conditons¹16418182 618314932 Refinancng²––– ––– Impairment provisons(2)–(2) (1)–(1) Modifcation of terms and conditons1(2)–(2) (1)–(1) Refinancng 2 ––– ––– Net performing forborne loans16218180 617314931 Collateral321850 2963299 Gross non-performing forborne loans1,466161,482 1,344141,358 Modifcation of terms and conditons¹1,313161,329 1,182141,196 Refinancng²153–153 162–162 Impairment provisons(789)(2)(791) (892)(6)(898) Modifcation of terms and conditons¹(662)(2)(664) (766)(6)(772) Refinancng²(127)–(127) (126)–(126) Net non-performing forborne loans67714691 4528460 Collateral13013143 1758183 1Modifcation of terms is any contractual change apart from refinancng, as a result of credit stress of the counterparty, i.e. interest reductions, loan covenant waivers 2Refinancng is a new contract to a lender in credit stress, such that they are refinanced and can pay other debt contracts that they were unable to honour 3Following the Group’s change in organisatonal structure, there has been an integraton of Corporate & Institutonal Banking and Commercial Banking to Corporate, Commercial & Institutonal Banking; Private Banking and Retail Banking to Consumer, Private & Business Banking. Prior period has been restated. Credit-impared (stage 3) loans and advances by client segment (audited) Gross Stage 3 loans for the Group decreased by $1.3 billon from $8.3 billon in 2020 to $6.9 billon in 2021 primarly driven by repayments in Asian and South Asia region in Corporate, Commercial & Institutonal Banking. Corporate, Commercial & Institutonal Banking stage 3 loans decreased $1.4 billon from $7.1 billon to $5.8 billon. Consumer, Private & Business Banking stage 3 loans remained broadly stable at $1.2 billon Stage 3 cover ratio (audited) The stage 3 cover ratio measures the proportion of stage 3 imparment provisons to gross stage 3 loans, and is a metric commonly used in considerng imparment trends. This metric does not allow for variatons in the compositon of stage 3 loans and should be used in conjuncton with other Credit Risk informaton provided, includng the level of collateral cover. The balance of stage 3 loans not covered by stage 3 imparment provisons represents the adjusted value of collateral held and the net outcome of any workout or recovery strategies. Collateral provides risk mitgation to some degree in all client segments and supports the credit quality and cover ratio assessments post imparment provisons. Further informaton on collateral is provided in the Credit Risk mitgation section. The Corporate, Commercial & Institutonal Banking cover ratio remains broadly stable at 62 per cent as coverage reduced from repayments offset by write-offs and new downgrades. Cover ratio after collateral remained stable at 74 per cent. The Consumer, Private & Business Banking cover ratio improved by 7 per cent to 56 per cent as a new provison was taken on a Business Banking client. Cover Ratio after collateral increased by 2 per cent to 97 per cent due to additonal stage 3 provisons. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 85 Risk profile continued Group Amortised cost 2021 2020 (Restated) Corporate, Commercial & Institutonal Banking $millon Consumer, Private & Business Banking $millon Total $millon Corporate, Commercial & Institutonal Banking¹ $millon Consumer, Private & Business Banking¹ $millon Total $millon Gross credit-impared 5,7501,1916,941 7,1101,1798,289 Credit imparment provisons (3,563)(663)(4,226) (4,389)(578)(4,967) Net credit-impared2,1875282,715 2,7216013,322 Cover ratio62%56%61% 62%49%60% Collateral ($ millon) 7004871,187 8795391,418 Cover ratio (after collateral)74%97%78% 74%95%77% 1Following the Group’s change in organisatonal structure, there has been an integraton of Corporate & Institutonal Banking and Commercial Banking to Corporate, Commercial & Institutonal Banking; Private Banking and Retail Banking to Consumer, Private & Business Banking. Prior period has been restated. Company Amortised cost 2021 2020 (Restated) Corporate, Commercial & Institutonal Banking $millon Consumer, Private & Business Banking $millon Total $millon Corporate, Commercial & Institutonal Banking¹ $millon Consumer, Private & Business Banking¹ $millon Total $millon Gross credit-impared 4,3536665,019 5,2907035,993 Credit imparment provisons (2,637)(390)(3,027) (3,244)(348)(3,592) Net credit-impared1,7162761,992 2,0463552,401 Cover ratio61%59%60% 61%50%60% Collateral ($ millon) 479241720 592342934 Cover ratio (after collateral)72%95%75% 73%98%76% 1Following the Group’s change in organisatonal structure, there has been an integraton of Corporate & Institutonal Banking and Commercial Banking to Corporate, Commercial & Institutonal Banking; Private Banking and Retail Banking to Consumer, Private & Business Banking. Prior period has been restated. Credit risk mitgation Potential credit losses from any given account, customer or portfolio are mitgated using a range of tools such as collateral, netting arrangements, credit insurance and credit derivatves, taking into account expected volatilty and guarantees. The reliance that can be placed on these mitgants is carefully assessed in light of issues such as legal certainty and enforceabilty, market valuation correlation andcounterparty risk of the guarantor. Collateral (audited) The requirement for collateral is not a substitute for the abilty to repay, which is the primary consideraton for any lending decisons. The collateral values in the table below (which covers loans and advances to banks and customers, excluding those held at fair value through profit or loss) are adjusted where appropriate in accordance with our risk mitgation policy and for the effect of over-collateralisaton. The extent of over-collateralisaton has been determined with reference to both the drawn and undrawn components of exposure as this best reflects the effect of collateral and other credit enhancements on the amounts arisng from expected credit losses. We have remained prudent in the way we assess the value of collateral, which is calibrated for a severe downturn and backtested against our prior experience. On average, across all types of non-cash collateral, the value ascribed is approximately half of its current market value. In the Consumer, Private & Business Banking segments, a secured loan is one where the borrower pledges an asset as collateral of which the Group is able to take possession in the event that the borrower defaults. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 86 Risk profile continued Collateral held on loans and advances (audited) The table below details collateral held against exposures, separately disclosng stage 2 and stage 3 exposure and correspondingcollateral. Group Amortised cost 2021 Net amount outstandingCollateralNet exposure Total $millon Stage 2 financal assets $millon Credit- impared financal assets $millon Total 2 $millon Stage 2 financal assets $millon Credit- impared financal assets $millon Total $millon Stage 2 financal assets $millon Credit- impared financal assets $millon Corporate, Commercial & Institutonal Banking 1 109,76611,7202,21818,4633,47970091,3038,2411,518 Consumer, Private & Business Banking 46,0481,08752827,32270748718,72638041 Central & other items 18,984110–2,814––16,170110– Total174,79812,9172,74648,5994,1861,187126,1998,7311,559 Amortised cost 2020 (Restated) Net amount outstandingCollateralNet exposure Total $millon Stage 2 financal assets $millon Credit- impared financal assets $millon Total 2 $millon Stage 2 financal assets $millon Credit- impared financal assets $millon Total $millon Stage 2 financal assets $millon Credit- impared financal assets $millon Corporate, Commercial & Institutonal Banking 1,3 108,51313,6372,72118,2144,50987990,2999,1281,842 Consumer, Private & Business Banking 3 42,5601,67060126,8831,10153915,67756962 Central & other items17,454––2,053––15,401–– Total 168,52715,3073,32247,1505,6101,418121,3779,6971,904 1Includes loans and advances to banks 2Adjusted for over-collateralisaton based on the drawn and undrawn components of exposures 3Following the Group’s change in organisatonal structure, there has been an integraton of Corporate & Institutonal Banking and Commercial Banking to Corporate, Commercial & Institutonal Banking; Private Banking and Retail Banking to Consumer, Private & Business Banking. Prior period has been restated ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 87 Risk profile continued Company Amortised cost 2021 Net amount outstandingCollateralNet exposure Total $millon Stage 2 financal assets $millon Credit- impared financal assets $millon Total 2 $millon Stage 2 financal assets $millon Credit- impared financal assets $millon Total $millon Stage 2 financal assets $millon Credit- impared financal assets $millon Corporate, Commercial & Institutonal Banking 1 72,4789,2601,71612,8922,84047959,5866,4201,237 Consumer, Private & Business Banking 12,2014342765,9132952416,28813935 Central & other items 2,599110–2,087––512110– Total87,2789,8041,99220,8923,13572066,3866,6691,272 Amortised cost 2020 (Restated) Net amount outstandingCollateralNet exposure Total $millon Stage 2 financal assets $millon Credit- impared financal assets $millon Total 2 $millon Stage 2 financal assets $millon Credit- impared financal assets $millon Total $millon Stage 2 financal assets $millon Credit- impared financal assets $millon Corporate, Commercial & Institutonal Banking 1,3 73,54510,1532,04612,9693,41659260,5766,7371,454 Consumer, Private & Business Banking 3 12,1165243557,1324283424,9849613 Central & other items2,305––1,350––955–– Total 87,96610,6772,40121,4513,84493466,5156,8331,467 1Includes loans and advances to banks 2Adjusted for over-collateralisaton based on the drawn and undrawn components of exposures 3Following the Group’s change in organisatonal structure, there has been an integraton of Corporate & Institutonal Banking and Commercial Banking to Corporate, Commercial & Institutonal Banking; Private Banking and Retail Banking to Consumer, Private & Business Banking. Prior period has been restated ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 88 Risk profile continued Collateral – Corporate, Commercial & Institutonal Banking (audited) Collateral held against Corporate, Commercial & Institutonal Banking exposures amounted to $18 billon. 65 per cent of tangible collateral held comprises physical assets or is property based, with the remainder largely in cash and investment securites. Non-tangible collateral such as guarantees and standby letters of credit is also held against corporate exposures, although the financal effect of this type of collateral is less signficant in terms of recoveries. However, this is considered when determinng probabilty of default and other credit-related factors. Collateral isalso held against off-balance sheet exposures, includng undrawn commitments and trade-related instruments. The following table provides an analysis of the types of collateral held against Corporate, Commercial & Institutonal Banking loan exposures. Group Corporate, Commercial & Institutonal Banking (restated²) Amortised cost 2021 $millon 2020 $millon Maximum exposure 109,766 108,513 Property 4,004 5,660 Plant, machinery and other stock 1,331 1,559 Cash 2,595 1,686 Reverse repos 1,920 1,734 A- to AA+ – – BBB- to BBB+ 483 742 Unrated 1,437 992 Financal guarantees and insurance 5,513 4,354 Commodites 36 46 Ships and aircraft 3,064 3,175 Total value of collateral 1 18,463 18,214 Net exposure91,303 90,299 Company Corporate, Commercial & Institutonal Banking (restated²) Amortised cost 2021 $millon 2020 $millon Maximum exposure 72,478 73,545 Property 2,253 3,639 Plant, machinery and other stock 876 1,073 Cash 1,979 1,224 Reverse repos 1,387 974 A- to AA+ – – BBB- to BBB+ 2 1 Unrated 1,385 973 Financal guarantees and insurance 4,327 3,991 Commodites 35 45 Ships and aircraft 2,035 2,023 Total value of collateral 1 12,892 12,969 Net exposure59,586 60,576 1Adjusted for over-collateralisaton based on the drawn and undrawn components of exposures 2Following the Group’s change in organisatonal structure, there has been an integraton of Corporate & Institutonal Banking and Commercial Banking to Corporate, Commercial & Institutonal Banking Prior period has been restated ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 89 Risk profile continued Group Collateral – Consumer, Private & Business Banking (audited) In Consumer, Private & Business Banking, the portfolio remains stable with 84 per cent of the portfolio is fully secured, 2 per cent partially secured and the remainng 14 per cent is unsecured. The following table presents an analysis of loans to indviduals by product; split between fully secured, partially secured and unsecured: Amortised cost 2021 2020 Fully secured $millon Partially secured $millon Unsecured $millon Total $millon Fully secured $millon Partially secured $millon Unsecured $millon Total $millon Maximum exposure38,9168566,27646,048 36,2514445,86542,560 Loans to indviduals Mortgages 23,915––23,915 22,914––22,914 CCPL 148–5,7385,886 142–5,7665,908 Auto 542––542 536––536 Secured wealth products 14,196––14,196 12,550––12,550 Other 1158565381,509 10944499652 Total collateral 1 27,322 26,883 Net exposure 2 18,726 15,677 Percentage of total loans84%2%14% 85%1%14% 1Collateral values are adjusted where appropriate in accordance with our risk mitgation policy and for the effect of over-collateralisaton 2Amounts net of ECL Company Collateral – Consumer, Private & Business Banking (audited) In Consumer, Private & Business Banking, the portfolio remains stable with 72 per cent of the portfolio is fully secured, 7 per cent partially secured and the remainng 21 per cent is unsecured. The following table presents an analysis of loans to indviduals by product; split between fully secured, partially secured and unsecured: Amortised cost 2021 2020 Fully secured $millon Partially secured $millon Unsecured $millon Total $millon Fully secured $millon Partially secured $millon Unsecured $millon Total $millon Maximum exposure8,7818412,57912,201 9,4694442,20312,116 Loans to indviduals Mortgages 4,802––4,802 5,377––5,377 CCPL 148–2,2292,377 143–2,1842,327 Auto 38––38 58––58 Secured wealth products 3,786––3,786 3,891––3,891 Other 78413501,198 –44419463 Total collateral 1 5,913 7,132 Net exposure 2 6,288 4,984 Percentage of total loans72%7%21% 78%4%18% 1Collateral values are adjusted where appropriate in accordance with our risk mitgation policy and for the effect of over-collateralisaton 2Amounts net of ECL Mortgage loan-to-value ratiosby geography (audited) Loan-to-value (LTV) ratios measure the ratio of the current mortgage outstanding to the current fair value of the properties on which they are secured. In mortgages, the value of property held as security signficantly exceeds the value of mortgage loans. The average LTV of the overall mortgage portfolio is low at 46.5 per cent. Singapore, which represents 65 per cent of the mortgage portfolio as at 31 December 2021 has an average LTV of 43.2 per cent. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 90 Risk profile continued An analysis of LTV ratios by geography for the mortgage portfolio is presented in the table below. Amortised cost 2021 Asia % Gross Africa & Middle East % Gross Europe & Americas % Gross Total % Gross Less than 50 per cent 43.927.616.840.7 50 per cent to 59 per cent 20.318.619.920.3 60 per cent to 69 per cent 20.219.637.521.4 70 per cent to 79 per cent 12.516.517.113.1 80 per cent to 89 per cent 2.59.18.73.4 90 per cent to 99 per cent 0.44.8–0.7 100 per cent and greater 0.23.8–0.4 Average portfolio loan-to-value 44.361.960.846.5 Loans to indviduals – mortgages ($millon)20,4551,6511,80823,914 Amortised cost 2020 (Restated) Asia 1 % Gross Africa & Middle East % Gross Europe & Americas % Gross Total % Gross Less than 50 per cent41.522.116.437.6 50 per cent to 59 per cent18.115.028.018.8 60 per cent to 69 per cent21.019.629.021.6 70 per cent to 79 per cent16.320.721.717.2 80 per cent to 89 per cent2.27.43.72.8 90 per cent to 99 per cent0.56.00.60.9 100 per cent and greater0.49.20.61.1 Average portfolio loan-to-value52.264.760.453.8 Loans to indviduals – mortgages ($millon) 18,8871,8712,15622,914 1Following the Group’s change in organisatonal structure, there has been an integraton of Greater China & North Asia and ASEAN & South Asia to Asia. Prior period has been restated Collateral and other credit enhancements possessed or called upon The Group obtains assets by taking possession of collateral or calling upon other credit enhancements (such as guarantees). Repossessed properties are sold in an orderly fashion. Where the proceeds are in excess of the outstanding loan balance the excess is returned to the borrower. Certain equity securites acquired may be held by the Group for investment purposes and are classifed as fair value through profit or loss, and the related loan written off. The carrying value of collateral possessed and held by the Group as at 31 December 2021 is $11.8 millon (2020: $23.2 millon). 2021 $millon 2020 $millon Property, plant and equipment 5.8 18.2 Guarantees 6.0 4.8 Other 0.0 0.2 Total11.8 23.2 Other Credit Risk mitgation (audited) Other forms of Credit Risk mitgation are set out below. Credit default swaps The Group has entered into credit default swaps for portfolio management purposes, referencing loan assets with a notional value of $12.1 billon (2020: $10.5 billon). These credit default swaps are accounted for as financal guarantees as per IFRS 9 as they will only reimburse the holder for an incurred loss on an underlying debt instrument. The Group continues to hold the underlying assets referenced in the credit default swaps and it continues to be exposed to related Credit and Foreign Exchange Risk on these assets. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 91 Risk profile continued Credit linked notes The Group has issued credit linked notes for portfolio management purposes, referencing loan assets with a notional value of $10.0 billon (2020: $8.0 billon). The Group continues to hold the underlying assets for which the credit linked notes provide mitgation. Derivatve financal instruments The Group enters into master netting agreements, which in the event of default result in a single amount owed by or to the counterparty through netting the sum of the positve and negative mark-to-market values of applicable derivatve transactions. These are set out in more detail under Derivatve financal instruments Credit Risk Mitgation (page 110). Off-balancesheet exposures For certain types of exposures, such as letters of credit and guarantees, the Group obtains collateral such as cash depending on internal Credit Risk assessments, as well as in the case of letters of credit holding legal title to the underlying assets should a default take place Other portfolio analysis This section provides maturity analysis of loans and advances by business segment. Maturity analysis of loans and advances by client segment (audited) Loans and advances to the Corporate, Commercial & Institutonal Banking segments remain predominantly short-term, with 64 per cent (2020: 58 per cent) maturing in less than one year. 97 per cent (2020: 96 per cent) of loans to banks mature in less than one year. Shorter maturites give us the flexiblity to respond promptly to events and rebalance or reduce our exposure to clients or sectors that are facing increased pressure or uncertainty. The Consumer, Private & Business Banking loan book continues to be longer-term in nature with 49 per cent (2020: 51 per cent) of the loans maturing over five years, as mortgages constitute the majorty of this portfolio. Group Amortised cost 2021 One year or less $millon One to five years $millon Over five years $millon Total $millon Corporate, Commercial & Institutonal Banking 53,44920,9739,22083,642 Consumer, Private & Business Banking 18,7025,47122,87347,046 Central & other items 18,758222418,984 Gross loans and advances to customers90,90926,66632,097149,672 Impairment provisons (4,409)(355)(109)(4,873) Net loans and advances to customers86,50026,31131,988144,799 Net loans and advances to banks29,06078515429,999 Amortised cost 2020 (Restated) One year or less $millon One to five years $millon Over five years $millon Total $millon Corporate, Commercial & Institutonal Banking 1 49,87825,15810,69985,735 Consumer, Private & Business Banking 1 16,1605,32422,10443,588 Central & other items17,013441117,455 Gross loans and advances to customers 83,05130,92332,804146,778 Impairment provisons(5,191)(608)(118)(5,917) Net loans and advances to customers 77,86030,31532,686140,861 Net loans and advances to banks 26,5591,105227,666 1Following the Group’s change in organisatonal structure, there has been an integraton of Corporate & Institutonal Banking and Commercial Banking to Corporate, Commercial & Institutonal Banking; Private Banking and Retail Banking to Consumer, Private & Business Banking. Prior period has been restated ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 92 Risk profile continued Company Amortised cost 2021 One year or less $millon One to five years $millon Over five years $millon Total $millon Corporate, Commercial & Institutonal Banking 36,69114,5617,95459,206 Consumer, Private & Business Banking 5,8403,0453,88412,769 Central & other items 2,598–12,599 Gross loans and advances to customers45,12917,60611,83974,574 Impairment provisons (3,093)(235)(85)(3,413) Net loans and advances to customers42,03617,37111,75471,161 Net loans and advances to banks15,32164215416,117 Amortised cost 2020 (Restated) One year or less $millon One to five years $millon Over five years $millon Total $millon Corporate, Commercial & Institutonal Banking 1 35,38818,0378,71062,135 Consumer, Private & Business Banking 1 5,5922,8584,24612,696 Central & other items2,055250–2,305 Gross loans and advances to customers 43,03521,14512,95677,136 Impairment provisons(3,649)(439)(79)(4,167) Net loans and advances to customers 39,38620,70612,87772,969 Net loans and advances to banks 14,052943214,997 1Following the Group’s change in organisatonal structure, there has been an integraton of Corporate & Institutonal Banking and Commercial Banking to Corporate, Commercial & Institutonal Banking; Private Banking and Retail Banking to Consumer, Private & Business Banking. Prior period has been restated Credit quality by industry Loans and advances This section provides an analysis of the Group’s amortised cost portfolio by industry on a gross, total credit imparment and net basis. From an industry perspective, loans and advances increased by $2.9 billon compared with 31 December 2020, of which $3.5 billon increase is in Consumer, Private & Business Banking offset by $0.5 billon decrease in Corporate, Commercial & Institutonal Banking. In Stage 1, the increase in the corporate book is largely a $3 billon in lending to Manufacturing, Financng, insurance and non banking sector offset by Commercial real estate and Transport and telecom sectors. In Stage 2, the decrease of $2.2 billon is largely in Manufacturing and Commercial real estate due to exposure changes and upgrades to stage 1. The Mortgage portfolio continues tobe the largest portion of theConsumer, Private & Business Banking portfolio.Mortgages form 51 per cent and Secured wealth products form 31 per cent of total Consumer, Private & Business Banking portfolio. The increase of $3.5 billon in Consumer, Private & Business Banking is from Mortgages and secured wealth products with increase in stage 1 of $4 billon offset by reduction in stage 2 exposures of $0.7 billon. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 93 Risk profile continued Group Amortised cost 2021 Stage 1Stage 2Stage 3Total Gross balance $millon Total credit imparment $millon Net carrying amount $millon Gross balance $millon Total credit imparment $millon Net carrying amount $millon Gross balance $millon Total credit imparment $millon Net carrying amount $millon Gross balance $millon Total credit imparment $millon Net carrying amount $millon Industry: Energy 9,219(14)9,2051,898(71)1,827889(629)26012,006(714)11,292 Manufacturing 10,837(6)10,831788(26)762757(510)24712,382(542)11,840 Financng, insurance and non-banking 15,338(6)15,332720(11)709247(206)4116,305(223)16,082 Transport, telecom and utilties 6,691(3)6,6884,368(47)4,321938(282)65611,997(332)11,665 Food and household products 6,048(7)6,041563(26)537370(266)1046,981(299)6,682 Commercial real estate 5,876(8)5,868695(10)685385(211)1746,956(229)6,727 Minng and quarrying 2,887(2)2,885419(19)400261(179)823,567(200)3,367 Consumer durables 2,203(2)2,201251(8)243360(323)372,814(333)2,481 Construction 1,171(1)1,170491(19)472914(624)2902,576(644)1,932 Trading companies & distrbutors 554–55420(6)14159(131)28733(137)596 Government 21,663(2)21,661624(2)622155(8)14722,442(12)22,430 Other 2,860(3)2,857694(13)681316(194)1223,870(210)3,660 Retail Products: Mortgage 23,156(19)23,137506(19)487449(159)29024,111(197)23,914 CCPL and other unsecured lending 5,678(141)5,537373(75)298244(193)516,295(409)5,886 Auto 541(1)5402–2–––543(1)542 Secured wealth products 13,821(44)13,777254(9)245441(267)17414,516(320)14,196 Other 1,447(7)1,44075(20)5556(44)121,578(71)1,507 Total value (customers)¹129,990(266)129,72412,741(381)12,3606,941(4,226)2,715149,672(4,873)144,799 1Includes reverse repurchase agreements and other simlar secured lending held at amortised cost of $3,764 millon ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 94 Risk profile continued Amortised cost 2020 Stage 1Stage 2Stage 3Total Gross balance $millon Total credit imparment $millon Net carrying amount $millon Gross balance $millon Total credit imparment $millon Net carrying amount $millon Gross balance $millon Total credit imparment $millon Net carrying amount $millon Gross balance $millon Total credit imparment $millon Net carrying amount $millon Industry: Energy9,429(20)9,4091,651(78)1,573932(702)23012,012(800)11,212 Manufacturing9,379(8)9,3711,895(60)1,8351,415(968)44712,689(1,036)11,653 Financng, insurance and non-banking13,339(5)13,334427(2)425258(209)4914,024(216)13,808 Transport, telecom and utilties8,348(10)8,3383,326(112)3,2141,009(467)54212,683(589)12,094 Food and household products6,042(6)6,036646(24)622515(334)1817,203(364)6,839 Commercial real estate6,464(7)6,4571,247(20)1,227366(172)1948,077(199)7,878 Minng and quarrying2,796(5)2,791738(19)719269(190)793,803(214)3,589 Consumer durables1,725(2)1,723657(29)628465(378)872,847(409)2,438 Construction1,301(2)1,299806(29)7771,059(526)5333,166(557)2,609 Trading companies & distrbutors481(1)480157(7)150289(225)64927(233)694 Government20,487(1)20,486883(2)881220(11)20921,590(14)21,576 Other2,542(3)2,5391,314(48)1,266313(207)1064,169(258)3,911 Retail Products: Mortgage21,750(16)21,734951(35)916441(177)26423,142(228)22,914 CCPL and other unsecured lending5,549(198)5,351628(147)481255(179)766,432(524)5,908 Auto531(1)5305–51–1537(1)536 Secured wealth products12,111(43)12,068249(6)243442(203)23912,802(252)12,550 Other609(3)60626(1)2540(19)21675(23)652 Total value (customers)¹ 122,883(331)122,55215,606(619)14,9878,289(4,967)3,322146,778(5,917)140,861 1Includes reverse repurchase agreements and other simlar secured lending held at amortised cost of $2,919 millon ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 95 Risk profile continued Company Amortised cost 2021 Stage 1Stage 2Stage 3Total Gross balance $millon Total credit imparment $millon Net carrying amount $millon Gross balance $millon Total credit imparment $millon Net carrying amount $millon Gross balance $millon Total credit imparment $millon Net carrying amount $millon Gross balance $millon Total credit imparment $millon Net carrying amount $millon Industry: Energy 6,519(13)6,5061,518(61)1,457559(339)2208,596(413)8,183 Manufacturing 5,929(3)5,926583(16)567628(402)2267,140(421)6,719 Financng, insurance and non-banking 13,229(4)13,225440(1)439204(167)3713,873(172)13,701 Transport, telecom and utilties 3,674(1)3,6734,004(43)3,961696(152)5448,374(196)8,178 Food and household products 3,310(2)3,308342(13)329174(152)223,826(167)3,659 Commercial real estate 3,934(2)3,932436(5)431353(205)1484,723(212)4,511 Minng and quarrying 2,133(1)2,132296(17)279160(152)82,589(170)2,419 Consumer durables 1,363(1)1,362156(3)153315(280)351,834(284)1,550 Construction 847(1)846410(6)404804(547)2572,061(554)1,507 Trading companies & distrbutors 246–2469(5)475(74)1330(79)251 Government 4,993(1)4,992615(2)613155(7)1485,763(10)5,753 Other 1,971(1)1,970495(6)489231(159)722,697(166)2,531 Retail Products: Mortgage 4,468(7)4,461205(16)189259(107)1524,932(130)4,802 CCPL and other unsecured lending 2,336(86)2,250161(34)12738(38)–2,535(158)2,377 Auto 37–371–1–––38–38 Secured wealth products 3,601(23)3,57894(6)88354(234)1204,049(263)3,786 Other 1,170(5)1,16530(1)2914(12)21,214(18)1,196 Total value (customers)¹59,760(151)59,6099,795(235)9,5605,019(3,027)1,99274,574(3,413)71,161 1Includes reverse repurchase agreements and other simlar secured lending held at amortised cost of $3,047 millon ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 96 Risk profile continued Amortised cost 2020 Stage 1Stage 2Stage 3Total Gross balance $millon Total credit imparment $millon Net carrying amount $millon Gross balance $millon Total credit imparment $millon Net carrying amount $millon Gross balance $millon Total credit imparment $millon Net carrying amount $millon Gross balance $millon Total credit imparment $millon Net carrying amount $millon Industry: Energy6,827(13)6,8141,202(52)1,150531(420)1118,560(485)8,075 Manufacturing6,285(5)6,2801,406(49)1,3571,157(765)3928,848(819)8,029 Financng, insurance and non-banking10,866(2)10,864349(2)347215(170)4511,430(174)11,256 Transport, telecom and utilties5,780(6)5,7742,662(103)2,559636(277)3599,078(386)8,692 Food and household products3,754(3)3,751277(8)269285(196)894,316(207)4,109 Commercial real estate4,288(5)4,283838(11)827317(158)1595,443(174)5,269 Minng and quarrying2,039(4)2,035608(16)592159(142)172,806(162)2,644 Consumer durables1,105(1)1,104474(17)457403(328)751,982(346)1,636 Construction905(1)904731(25)706949(457)4922,585(483)2,102 Trading companies & distrbutors230–23072(1)71187(146)41489(147)342 Government5,172(1)5,171806(1)805220(11)2096,198(13)6,185 Other1,619(2)1,617855(15)840231(174)572,705(191)2,514 Retail Products: Mortgage4,871(8)4,863377(28)349296(131)1655,544(167)5,377 CCPL and other unsecured lending2,320(117)2,203172(57)11538(29)92,530(203)2,327 Auto58(1)571–1–––59(1)58 Secured wealth products3,676(18)3,65859(2)57363(187)1764,098(207)3,891 Other457(1)4562–26(1)5465(2)463 Total value (customers)¹ 60,252(188)60,06410,891(387)10,5045,993(3,592)2,40177,136(4,167)72,969 1Includes reverse repurchase agreements and other simlar secured lending held at amortised cost of $2,283 millon ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 97 Risk profile continued Debt securites and other eligble bills (audited) This section provides further detail on gross debt securites and treasury bills. The standard credit ratings used by the Group are those used by Standard & Poor’s or its equivalent. Debt securites held that have a short-term rating are reported against the long-term rating of the issuer. For securites that are unrated, the Group applies an internal credit rating, as described under the credit rating and measurement section (page 130). Total gross debt securites and other eligble bills increased by $15.9 billon to $101.8 billon. The increase in holdings of debt securites and other eligble bills is mainly due to Treasury Markets utilsing excess liqudity from the growth in the Group's balance sheet. Of the total increase, 89 per cent is in stage 1 with the remainng 11 per cent in stage 2. Most securites held are highly rated to meet liqudity regulatory requirement. This can be observed in the increase of stage 1 securites rated A- and above of $14.9 billon. Group Amortised cost and FVOCI 2021 2020 Gross $millon ECL $millon Net 2 $millon Gross $millon ECL $millon Net 2 $millon Stage 196,350(58)96,292 82,230(50)82,180 AAA 58,836(18)58,818 49,721(7)49,714 AA- to AA+ 12,584(5)12,579 8,324(1)8,323 A- to A+ 8,142(2)8,140 6,598(1)6,597 BBB- to BBB+ 11,071(27)11,044 12,072(31)12,041 Lower than BBB- 1,123(1)1,122 398(1)397 Unrated 4,594(5)4,589 5,117(9)5,108 Stage 25,315(42)5,273 3,488(26)3,462 AAA 641(7)634 24–24 AA- to AA+ 592(3)589 ––– A- to A+ 22(1)21 50(2)48 BBB- to BBB+ 2,869(9)2,860 2,693(7)2,686 Lower than BBB- 809(20)789 397(11)386 Unrated 382(2)380 324(6)318 Stage 3113(66)47 114(58)56 Lower than BBB- ––– ––– Unrated 113(66)47 114(58)56 Gross balance¹101,778(166)101,612 85,832(134)85,698 1Stage 3 includes $33 millon orignated credit-impared debt securites 2FVOCI instruments are not presented net of ECL. While the presentation is on a net basis for the table, the total net on-balance sheet amount is $101,705 millon (31 December 2020: $85,759 millon). Refer to the Analysis of financal instrument by stage table on page 63 ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 98 Risk profile continued Company Amortised cost and FVOCI 2021 2020 Gross $millon ECL $millon Net² $millon Gross $millon ECL $millon Net² $millon Stage 182,388(32)82,356 68,742(19)68,723 AAA 56,041(17)56,024 45,360(6)45,354 AA- to AA+ 10,585(5)10,580 8,036(1)8,035 A- to A+ 6,450(2)6,448 4,784(1)4,783 BBB- to BBB+ 6,263(6)6,257 7,391(7)7,384 Lower than BBB- 1,123(1)1,122 383(1)382 Unrated 1,926(1)1,925 2,788(3)2,785 Stage 23,603(21)3,582 2,083(10)2,073 AAA 641(7)634 24–24 AA- to AA+ 592(3)589 ––– A- to A+ 22(1)21 50(2)48 BBB- to BBB+ 1,672(2)1,670 1,670(4)1,666 Lower than BBB- 589(7)582 225(4)221 Unrated 87(1)86 114–114 Stage 382(36)46 84(29)55 Lower than BBB- ––– ––– Unrated 82(36)46 84(29)55 Gross balance¹86,073(89)85,984 70,909(58)70,851 1Stage 3 includes $33 millon orignated credit-impared debt securites 2FVOCI instrument are not presented net of ECL. While the presentation is on a net basis for the table, the total net on-balance sheet amount is $86,028 millon (31 December 2020: $70,872 millon). Refer to the Analysis of financal instrument by stage table on page 65 ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 99 Risk profile continued IFRS 9 expected credit loss methodology (audited) Approach for determinng expected credit losses Credit loss terminology ComponentDefintion Probabilty of default (PD) The probabilty that a counterparty will default, over the next 12 months from the reporting date (stage 1) or over the lifetme of the product (stage 2), incorporating the impact of forward-looking economic assumptions that have an effect on Credit Risk, such as unemployment rates and GDP forecasts. The PD estimates will fluctuate in line with the economic cycle. The lifetme (or term structure) PDs are based on statistcal models, calibrated using historcal data and adjusted to incorporate forward-looking economic assumptions. Loss given default (LGD) The loss that is expected to arise on default, incorporating the impact of forward-looking economic assumptions where relevant, which represents the difference between the contractual cashflows due and those that the bank expects to receive. The Group estimates LGD based on the history of recovery rates and considers the recovery of any collateral that is integral to the financal asset, taking into account forward-looking economic assumptions where relevant. Exposure at default (EAD) The expected balance sheet exposure at the time of default, taking into account expected changes over the lifetme of the exposure. This incorporates the impact of drawdowns of facilties with limts, repayments of princpal and interest and amortisaton. To determine the expected credit loss, these components are multipled together: PD for the reference period (up to 12 months or lifetme) x LGD x EAD and discounted to the balance sheet date using the effective interest rate as the discount rate. IFRS 9 expected credit loss models have been developed for the Corporate, Commercial & Institutonal Banking business on a global basis, in line with their respective portfolios. However, for some of the key countries, country-specifc models have also been developed. The calibraton of forward-looking informaton is assessed at a country or region level to take into account local macroeconomic conditons. Retail expected credit loss models are country and product specifc given the local nature of the retail business. For less material retail portfolios, the Group has adopted less sophistcated approaches based on historcal roll rates or loss rates: • For medium-sized retail portfolios, a roll rate model is applied, which uses a matrix that gives the average loan migraton rate between delinquency states from period to period. A matrix multiplcation is then performed to generate the final PDs by delinquency bucket over different time horizons. • For smaller retail portfolios, loss rate models are applied. These use an adjusted gross charge-off rate, developed using monthly write-off and recoveriesover the preceding 12months and totaloutstanding balances. • While the loss rate models do not incorporate forward looking informaton, to the extent that there are signficant changes in the macroeconomic forecasts an assessment will be completed on whether an adjustment to the modelled output is required. For a limted number of exposures, proxy parameters or approaches are used where the data is not available to calculate the orignation PDs for the purpose of applying the SICR critera; or for some retail portfolios where a full history of LGD data is not available, estimates based on the loss experience from simlar portfolios are used. The use of proxies is monitored and will reduce over time. The following processes are in place to assess the ongoing performance of the models: • Quarterly model monitorng that uses recent data to compare the differences between model predictons and actual outcomes against approved thresholds. • Annual independent validatons of the performance ofmaterial models byGroup Model Valuation (GMV); an abridged validaton is completed for non-material models. Applicaton of lifetme Expected credit loss is estimated based on the period over which the Group is exposed to Credit Risk. For the majorty of exposures this equates to the maximum contractual period. For retail credit cards and corporate overdraft facilties however, the Group does not typically enforce the contractual period, which can be as short as one day. As a result, the period over which the Group is exposed to Credit Risk for these instruments reflects their behavioural life, which incorporates expectations of customer behaviour and the extent to which Credit Risk management actions curtail the period of that exposure. The average behavioural life for retail credit cards is between 3 and 6 years across our footprint markets. In 2021, the behavioural life for corporate overdraft facilties was re-estimated using recent data, and it was confirmed that the existng lifetme of 24 months remains appropriate. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 100 Risk profile continued Key assumptions and judgements in determinng expected credit loss Incorporation of forward-looking informaton The evolving economic environment is a key determinant of the abilty of a bank’s clients to meet their obligatons as they fall due. It is a fundamental princple of IFRS 9 that the provisons banks hold against potential future credit risk losses should depend not just on the health of the economy today but should also take into account potential changes to the economic environment. For example, if a bank were to anticpate a sharp slowdown in the world economy over the coming year, it should hold more provisons today to absorb the credit losses likely to occur in the near future. To capture the effect of changes to the economic environment, the PDs and LGDs used to calculate ECL incorporate forward- looking informaton in the form of forecasts of the values of economic variables and asset prices that are likely to have an effect on the repayment abilty of the Group’s clients. The ‘Base Forecast’ of the economic variables and asset prices is based on management’s view of the five-year outlook, supported by projectons from the Group’s in-house research team and outputs from a third-party model that project specifc economic variables and asset prices. The research team takes consensus views into consideraton and senior management reviews projectons for some core country variables against consensus when forming their view of the outlook. For the period beyond five years, management utilses the in-house research view and third-party model outputs, which allow for a reversion to long-term growth rates or norms. All projectons are updated on a quarterly basis. Forecast of key macroeconomic variables underlying the expected credit loss calculation and the impact on non-linearty In the Base Forecast – management’s view of the most likely outcome –the world economy is expected to grow by just over 4 per cent in 2022, easing from an almost 6 per cent expansion in 2021. The strong growth last year was driven by vaccine rollouts and government stimulus and follows a contraction of more than 3 per cent in 2020, the worst performance since the Great Depression of 1929-31.Currently the near-term recovery momentum is being curtailed by supply side disruptons and elevated inflaton. Despite this, world GDP growth in 2022 is still expected to be above the average of 3.7 per cent for the 10 years between 2010 and 2019. Vaccines against COVID-19 have allowed economies to reopen, but constantly evolving virus strains have resulted in intermttent recoveries, and sectors like hospitalty and tourism remain under pressure. In general, developed markets have been much better than emerging markets in rolling out vaccines; it is therefore not surprisng that developed markets have led the recovery so far. The improvement in vaccine access in emerging markets in recent months should help to narrow the growth gap in 2022. The balance of risks to the 2022 growth forecast is to the downside. The emergence of the new Omicron variant across many markets is likely to be felt in slowing the pace of reopening of economies or the re-introducton of restrictons limting public contact and movement. This will pose downside risks to economic activty and employment. A delayed employment recovery would likely extend supply chain disruptons, weakening growth and keeping inflaton elevated for longer. This combinaton will create challenges for policy makers globally as they attempt to strike a delicate balance between responding to upward inflatonary pressures and managing downside risks to the economic outlook. While the quarterly Base Forecasts inform the Group’s strategic plan, one key requirement of IFRS 9 is that the assessment of provisons should consider multiple future economic environments. For example, the globaleconomymay grow more quickly or more slowly than the Base Forecast, and these variatons would have different implcations for the provisons that the Group should hold today. As the negative impact of an economic downturn on credit losses tends to be greater than the positve impact of an economic upturn, if the Group sets provisons only on the ECL under the Base Forecast it might maintan a level of provisons that does not appropriately capture the range of potential outcomes. To address this property of skewness (or non-linearty), IFRS 9 requires reported ECL to be a probabilty-weighted ECL calculated over a range of possible outcomes. To assess the range of possible outcomes the Group simulates a set of 50 scenarios around the Base Forecast, calculates the ECL under each of them and assigns an equal weight of 2 per cent to each scenario outcome. These scenarios are generated by a Monte Carlo simulaton, which addresses the challenges of crafting many realistc alternative scenarios in the many countries in which the Group operates by means of a model, which produces these alternative scenarios while considerng the degree of historcal uncertainty (or volatilty) observed from Q1 1990 to Q3 2020 around economic outcomes and how these outcomes have tended to move in relation to one another (or correlation). This naturally means that each of the 50 scenarios do not have a specifc narrative, although collectively they explore a range of hypothetical alternative outcomes for the globaleconomy, includng scenarios that turn out betterthan expected and scenariosthat amplify anticpated stresses. The table on page 101 provides a summary of the Group’s Base Forecast for key markets, alongside the corresponding range seen across the multiple scenarios. The peak/trough amounts in the table show the highest and lowest points withn the Base Forecast. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 101 Risk profile continued China’s growth is expected to ease from over 8 per cent in 2021 to 5.6 per cent in 2022. After excluding the COVID-19 related weakness of 2020 when the economy grew by 2.3 per cent this will be the slowest pace of expansion since 1990 when GDP grew by 3.9 per cent. Headwinds to China’s outlook include the spread of the new variant of COVID-19 and concerns over the real estate sector. In Singapore and India growth rates are also expected to ease in 2022 but will remain relatively robust at 3.6 per cent and 8 per cent, respectively. In Singapore progress with border reopening and a high domestic vaccinaton rate should support economic activty. Simlarly in India a rapid pick-up in vaccine distrbution, along with expansionary polices will support the recovery there. Growth in the United Arab Emirates is expected to pick up to over 4 per cent from 2.5 per cent in 2021, with growth supported by EXPO 2020, high vaccinaton rate and increased oil production. Momentum from the strong rebound in 2021 is also expected ease in western economies. The United States is facing increasng headwinds in 2022. This follows robust growth last year as the rapid pace of vaccinatons in the first half of 2021 allowed activty to normalise. US GDP growth is expected to moderate to 3.7 per cent in 2022 from 5.7 per cent in 2021 as supply-side constraints start to bite and high inflaton squeezes real incomes. Europe also faces simlar challenges with the growth in the eurozone expected to ease to around 4 per cent from 4.9 per cent in 2021. The slowdown in world GDP growth will translate to a softening in the growth of demand for commodites in 2022. Supply disruptons from COVID-19 are also expected to dimnish this year. The tightness in the supply-demand balance in the oil market is therefore likely to ease and the price of Brent Crude oil is expected to average $66.6 in 2022 compared with $70.0 in2021. 2021 ChinaUAESingaporeIndia 5 yr average base forecast Base forecast peak/ troughLow 2 High 3 5 yr average base forecast Base forecast peak/ troughLow 2 High 3 5 yr average base forecast Base forecast peak/ troughLow 2 High 3 5 yr average base forecast Base forecast peak/ troughLow 2 High 3 GDP growth (YoY%) 5.46.1/ 4.72.68.33.76.5/1.31.88.22.54.8/1.8(4.0)9.46.4 16.6/4.2 2.010.5 Unemployment (%) 3.43.4/3.43.33.5N/AN/AN/AN/A3.13.4/3.02.14.5N/AN/AN/AN/A 3 month interest rates (%) 2.83.1/2.11.34.61.52.2/0.60.04.41.42.2/0.50.14.25.46.2/4.03.28.8 House prices (YoY%) 4.04.5/1.8(2.8)11.11.40.6/(1.0)(4.4)11.93.64.2/3.3(4.1)15.47.17.2/5.8(1.9)24.9 2020 ChinaUAESingaporeIndia 5 yr average base forecast Base forecast peak/ troughLow 2 High 3 5 yr average base forecast Base forecast peak/ troughLow 2 High 3 5 yr average base forecast Base forecast peak/ troughLow 2 High 3 5 yr average base forecast Base forecast peak/ troughLow 2 High 3 GDP growth (YoY%) 6.019.4/3.21.920.43.09.0/(3.7)0.912.02.8 13.7/(2.3) (5.4)17.56.432.6/0.0(2.1)34.9 Unemployment (%) 3.43.7/3.43.33.7N/AN/AN/AN/A3.54.3/3.12.05.5N/AN/AN/AN/A 3 month interest rates (%) 2.32.4/2.20.94.50.81.2/0.6(0.1)3.30.71.2/0.50.02.24.35.4/3.32.06.9 House prices (YoY%) 5.86.2/4.71.28.70.92.0/(6.4)(5.1)6.54.04.3/1.5(4.4)16.96.77.2/4.8(4.1)21.8 2021 2020 5 yr average base forecast Base forecast peak/troughLow 2 High 3 5 yr average base forecast Base forecast peak/troughLow 2 High 3 Brent Crude, $ pb 63.773.5/60.08.9211.4 53.860.9/39.022116 1N/A – Not available 2Represents the 10th percentile in the range of economic scenarios used to determine non-linearty 3Represents the 90th percentile in the range of economic scenarios used to determine non-linearty 4Base forecasts are evaluated from Q1 2022 to Q4 2026. The forward-looking simulaton starts from Q1 2022 ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 102 Risk profile continued Management overlay As at 31 December 2021, the Group held a $233 millon (31 December 2020: $322 millon) management overlay relating to uncertaintes as a result of the COVID-19 pandemic, $93 millon (31 December 2020: $174 millon) of which relates to Corporate, Commercial & Institutonal Banking and $140 millon (31 December 2020: $148 millon) to Consumer, Private & Business Banking. The overlay is re-assessed quarterly and are reviewed and approved by the IFRS 9 Impairment Committee. COVID-19 overlay Corporate, Commercial & Institutonal Banking Although the amount of loans placed on non-purely precautionary early alert has decreased compared with 31 December 2020, balances remain higher than before the pandemic. The impact of the rapid deterioraton in the economic environment in 2020 has not yet been fully observed in customers’ financal performance, in part due to ongoing government support measures across the Group’s markets. Accordingly, we have not yet seen a signficant increase in the level of stage 3 loans relating to COVID-19 up to 31 December 2021. To take account of the heightened Credit Risk and the continung uncertaintes in the pace and timng of economic recovery, a judgemental overlay has been taken by estimatng the impact of further deterioraton to the non-purely precautionary early alert portfolio. The overlay is held in stage 2. Consumer, Private and Business Banking A number of components contribute to the judgemental overlay for Consumer, Private & Business Banking. Withn Business Banking, the Group has evaluated those sectors that have been adversely impacted by COVID-19, both through internal credit processes as well as through a ‘Voice of Customer’ survey to understand how customers have been affected. The Group has also considered the extent to which lockdowns have impacted collections and recoveries, and the extent to which payment reliefs may mask underlying credit risks, particularly in those markets in ASEAN & South Asia where compulsory moratoria schemes were in place. For those markets, the Group has estimated the impact of increased delinquences and flows to defaults when the moratoria are lifted as well, as the extent to which customers in stage 1 may have experienced a signficant increase in credit risk if not for the moratoria. The Group assessment also considered employee banking relationshps with high-impact sectors, such as airlnes, and the impact on Mortgages in Africa & the Middle East which generally have high LTVs. $80 millon of the overlay is held in stage 1, $39 millon in stage 2 and $21 millon in stage 3. Stage 3 assets Credit-impared assets managed by GroupSpecial Assets Management incorporate forward-looking economic assumptions in respect of the recovery outcomes identfied, and are assigned indvidual probabilty weightngs. These assumptions are not based on a Monte Carlo simulaton but are informed by the Base Forecast. Sensitvity of expected credit loss calculation to macroeconomic variables The ECL calculation relies on multiple variables and is inherently non-linear and portfolio-dependent, which imples that no single analysis can fully demonstrate the sensitvity of the ECL to changes in the macroeconomic variables. The Group has conducted a series of analyses with the aim of identfying the macroeconomic variables which might have the greatest impact on overall ECL. These encompassed single variable and multi-variable exercises, using simple up/down variaton and extracts from actual calculation data, as well as bespoke scenario design and assessments. The primary conclusion of these exercises is that no indvidual macroeconomic variable is materially influental. The Group believes this is plausible as the number of variables used in the ECL calculation is large. This does not mean that macroeconomic variables are uninfluental; rather, that the Group believes that consideraton of macroeconomics should involve whole scenarios, as this aligns with the multi-variable nature of the calculation. The Group faces downside risks in the operating environment related to the uncertaintes surrounding the macroeconomic outlook. To explore this, a sensitvity analysis of ECL was undertaken to explore the effect of slower economic recoveries across the Group’s footprint markets. Two downside scenarios were considered. In the first scenario the current supply chain disruptons prove more persistent than expected. Labour and material shortages persist throughout 2022 and higher commodity and other input prices add to inflatonary pressure. The global recovery in investment and consumption disapponts and financal markets weaken. The impact on the global economy is temporary, however. Supply chain disruptons ease signficantly from 2023. In the second scenario, new COVID-19 virus variants are assumed to lead to a new infecton wave in emerging markets and developing economies, resulting in the re-introducton of severe lockdown measures. Travel restrictons signficantly impact the Aviaton and Hotels & Tourism sectors. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 103 Risk profile continued BaselineSupply chain disruptonNew COVID-19 variant Five year averagePeak/Trough Five year averagePeak/Trough Five year averagePeak/Trough China GDP5.46.1/4.75.05.5/3.65.213.4/(5.2) China unemployment3.43.4/3.43.54.0/3.44.15.9/3.4 China property prices4.04.5/1.83.44.5/(1.5)3.86.6/(1.6) UAE GDP3.76.5/1.33.66.2/1.03.710.3/(2.3) UAE property prices1.42.0/(1.0)1.22.6/(3.2)1.37.3/(6.8) US GDP2.34.7/1.71.64.0/(0.4)2.013.1/(11.6) Singapore GDP2.54.8/1.81.93.3/(0.2)2.211.1/(8.9) India GDP6.416.6/4.25.415.0/1.46.019.3/(12.4) Crude Oil63.773.5/60.066.376.2/62.049.457.0/32.7 The total reported stage 1 and 2 ECL provisons (includng both on and off-balance sheet instruments) would be approximately $95 millon higher under the supply chain disrupton scenario and $417 millon higher under the new COVID-19 variant scenario than the baseline ECL provisons (which excluded the impact of multiple economic scenarios and management overlays which may already capture some of the risks in these scenarios). The proportion of stage 2 assets would increase from 4.5 per cent to 4.9 per cent and 7.6 per cent respectively under the supply chain disrupton and new COVID-19 variant scenarios. This includes the impact of exposures transferring to stage 2 from stage 1 but does not consider an increase in stage 3 defaults. Under both scenarios the majorty of the increase was in Corporate, Commercial & Institutonal Banking with the main corporate portfoliosin the United Kingdom and the United States beingimpacted. For the Consumer, Private and Business Banking portfolios most of the increases came from the big unsecured retail portfolios with the Malaysia and Singapore Credit Cards portfolios impacted. There was no material change in modelled stage 3 provisons as these primarly relate to unsecured retail exposures for which the LGD is not sensitve to changes in the macroeconomic forecasts. There is also no material change for non-modelled stage 3 exposures as these are more sensitve to client specifc factors than to alternative macroeconomic scenarios. The actual outcome of any scenario may be materially different due to, among other factors, the effect of management actions tomitgatepotential increases in riskand changesin the underlying portfolio. Modelled provisons Supply chain disrupton increase $m New COVID-19 variant $m Corporate, Commercial & Institutonal Banking60314 Consumer, Private & Business Banking3392 Central & other items210 Total95416 Proportion of assets in stage 2 ¹ Base Forecast scenario % Moderate downside scenario % Severe downside scenario % Corporate, Commercial & Institutonal Banking6.37.212.5 Consumer, Private & Business Banking3.94.25.3 Central & other items2.42.52.5 Total4.54.97.6 1Excludes cash and balances at central banks, accrued income, assets held for sale and other assets ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 104 Risk profile continued Signficant increase in credit risk (SICR) Quantitatvecritera SICR is assessed by comparing the risk of default at the reporting date to the risk of default at orignation. Whether a change in the risk of default is signficant or not is assessed using quantitatve and qualitatve critera. These quantitatve signficant deterioraton thresholds have been separately defined for each business and where meaningful are consistently applied across business lines. Assets are considered to have experienced SICR if they have breached both relative and absolute thresholds for the change in the average annualised lifetme probabilty of default over the residual term of the exposure. The absolute measure of increase in credit risk is used to capture instances where the PDs on exposures are relatively low at intial recogniton as these may increase by several multiples without representing a signficant increase in credit risk. Where PDs are relatively high at intial recogniton, a relative measure is more appropriate in assessing whether there is a signficant increase in credit risk, as the PDs increase more quickly. The SICRthresholds havebeen calibrated based on thefollowing princples: • Stabilty – The thresholds are set to achieve a stable stage 2 population at a portfolio level, trying to minmise the number of accounts moving back and forth between stage 1 and stage 2 in a short period of time • Accuracy – The thresholds are set such that there is a materially higher propensity for stage 2 exposures to eventually default than is the case for stage 1 exposures • Dependency from backstops – The thresholds are stringent enough such that a high proportion of accounts transfer to stage 2 due to movements in forward-looking PDs rather than relying on backward-looking backstops such as arrears • Relationshp with business and product risk profiles – The thresholds reflect the relative risk differences between different products, and arealignedto business processes For Corporate, Commercial & Institutonal Banking clients, the relative threshold is a 100 per cent increase in PD and the absolute change in PD is between 50 and 100 bps. For Consumer Private and Business Banking clients, the relative threshold is a 100 per cent increase in PD and the absolute change in PD is between 100 and 350 bps depending on the product. Certain countries have a higher absolute threshold reflecting the lower default rate withn their personal loan portfolios compared with the Group’s other personal loan portfolios. Private Banking clients are assessed qualitatvely, based on a delinquency measure relating to collateral top-ups or sell- downs. Debt securites orignated before 1 January 2018 with an internal credit rating mapped to an investment grade equivalent are allocated to stage 1 and all other debt securites to stage 2. Debt securites orignated after 1 January 2018 apply the same approach and thresholds as for Corporate, Commercial & Institutonal Banking clients. Qualitatve critera Qualitatve factors that indcate that there has been a signficant increase in credit risk include processes linked to current risk management, such as placing loans on non-purely precautionary early alert. Backstop Across all portfolios, accounts that are 30 or more days past due (DPD) on contractual payments of princpal and/or interest that have not been captured by the critera above are considered to have experienced a signficant increase in credit risk. Expert credit judgement may be applied in assessing signficant increase in credit risk to the extent that certain risks may not have been captured by the models or through the above critera. Such instances are expected to be rare, for example due to events and material uncertaintes arisng close to the reporting date. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 105 Risk profile continued Corporate, Commercial & Institutonal Banking clients Quantitatvecritera Exposures are assessed based on both the absolute and the relative movement in the PD from orignation to the reporting date as described above. To account for the fact that the mapping between internal credit grades (used in the orignation process) and PDs is non- linear (e.g. a one-notch downgrade in the investment grade universe results in a much smaller PD increase than in the sub-investment grade universe), the absolute thresholds have been differentated by credit quality at orignation, as measured by internal credit grades being investment grade or sub-investment grade. Qualitatve critera All assets of clients that have been placed on early alert (for non-purely precautionary reasons) are deemed to have experienced a signficant increase in credit risk. An account is placed on non-purely precautionary early alert if it exhibts risk or potential weaknesses of a material nature requirng closer monitorng, supervison or attention by management. Weaknesses in such a borrower’s account, if left uncorrected, could result in deterioraton of repayment prospects and thelikelhood of beingdowngraded. Indicators could include a rapid erosion of positon withn the industry, concerns over management’s abilty to manage operations, weak/ deterioratng operating results, liqudity strain and overdue balances, among other factors. All client assets that have been assigned a CG12 rating, equivalent to ‘Higher risk’, are deemed to have experienced a signficant increase in credit risk. Accounts rated CG12 are managed by the GSAM unit. All Corporate, Commercial & Institutonal Banking clients are placed in CG12 when they are 30 DPD unless they are granted a waiver through a strict governance process. Consumer and Business Banking clients Quantitatvecritera Material portfolios (defined as a combinaton of country and product) for which a statistcal model has been built, are assessed based on both the absolute and relative movement in the PD from orignation to the reporting date as described previously (page 103). For these portfolios, the orignal lifetme PD term structure is determined based on the orignal Applicaton Score or Risk Segment of the client. Qualitatve critera Accounts that are 30 DPD that have not been captured by the quantitatve critera are considered to have experienced a signficant increase in credit risk. For less material portfolios, which are modelled based on a roll-rate or loss-rate approach, SICR is primarly assessed through the 30 DPD trigger. Private Banking clients For Private Banking clients, SICR is assessed by referencing the nature and the level of collateral against which credit is extended (known as ‘Classes of Risk’). Qualitatve critera For all Private Banking classes, in line with risk management practice, an increase in credit risk is deemed to have occurred where marginng or loan-to-value covenants have been breached. For Class I assets (lending against diversfied liqud collateral), if these marginng requirements have not been met withn 30 days of a trigger, a signficant increase in credit risk is assumed to have occurred. For Class I and Class III assets (real-estate lending), a signficant increase in credit risk is assumed to have occurred where the bank is unable to ‘sell down’ the applicable assets to meet revised collateral requirements withn five days of a trigger. Class II assets are typically unsecured or partially secured, or secured against illquid collateral such as shares in private companies. Signficant credit deterioraton of these assets is deemed to have occurred when any early alert trigger has been breached. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 106 Risk profile continued Debt securites Quantitatvecritera For debt securites orignated before 1 January 2018, the bank is utilsing the low credit risk simplfied approach, where debt securites with an internal credit rating mapped to an investment grade equivalent are allocated to stage 1 and all other debt securites are allocated to stage 2. Debt securites orignated after 1 January 2018 are assessed based on the absolute and relative movements in PD from orignation to the reporting date. Qualitatve critera Debt securites utilse the same qualitatve critera as the Corporate, Commercial & Institutonal Banking client segments, includng being placed on early alert or being classifed as CG12. Assessment of credit-impared financal assets Consumer and Business Banking clients The core components in determinng credit-impared expected credit loss provisons are the value of gross charge off and recoveries. Gross charge off and/or loss provisons are recognised when it is established that the account is unlikely to pay through the normal process. Recovery of unsecured debt post credit imparment is recognised based on actual cash collected, either directly from clients or through the sale of defaulted loans to third-party insttutions. Release of credit imparment provisons for secured loans is recognised if the loan outstanding is paid in full (release of full provison), or the provison is higher than the loan outstanding (release of the excess provison). Corporate, Commercial & Institutonal Banking, and Private Banking clients Credit-impared accounts are managed by the Group’s specialst recovery unit, Group Special Assets Management (GSAM), which is independent from its main businesses. Where any amount is considered irrecoverable, a stage 3 credit imparment provison is raised. This stage 3 provison is the difference between the loan-carrying amount and the probabilty-weighted present value of estimated future cash flows, reflecting a range of scenarios (typically the best, worst and most likely recovery outcomes). Where the cash flows include realisable collateral, the values used will incorporate the impact of forward-looking economic informaton. The indvidual circumstances of each client are considered when GSAM estimates future cash flows and the timng of future recoveries which involves signficant judgement. All available sources, such as cash flow arisng from operations, selling assets or subsidaries, realisng collateral or payments under guarantees are considered. In any decison relating to the raisng of provisons, the Group attempts to balance economic conditons, local knowledge and experience, and the results of independent asset reviews. Write-offs Where it is considered that there is no realistc prospect of recovering a portion of an exposure against which an imparment provison has been raised, that amount will be written off. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 107 Risk profile continued Governance and applicaton of expert credit judgement in respect of expected credit losses The Group applies PLC Group’s Credit Policy and Standards framework which details the requirements for continuous monitorng to identfy any changes in credit quality and resultant ratings, as well as ensuring a consistent approach to monitorng, managing and mitgating credit risks. The framework aligns with the governance of ECL estimaton through the early recogniton of signficant deterioratons in ratings which drive stage 2 and 3 ECL. The Group relies on the PLC Group committees for the assessment of ECL. The models used in determinng expected credit losses are reviewed and approved by the PLC Group Credit Model Assessment Committee (CMAC) which is appointed by the PLC Group Model Risk Committee. CMAC has the responsiblity to assess and approve the use of models and to review all IFRS 9 interpretatons related to models. CMAC also provides oversight on operational matters related to model development, performance monitorng and model validaton activties includng standards, regulatory and Group Internal Audit matters. Prior to submisson to CMAC for approval, the models are validated by Group Model Validaton (GMV), a function which is independent of the business and the model developers. GMV’s analysiscomprises reviewof model documentation, model design andmethodology, data validaton, review of the model development and calibraton process, out-of-sample performance testing, and assessment of compliance review against IFRS 9 rules and internal standards. A quarterly model monitorng process is in place that uses recent data to compare the differences between model predictons and actual outcomes against approved thresholds. Where a model’s performance breaches the monitorng thresholds an assessment of whether a PMA is required to correct for the identfied model issue is completed. Key inputs into the calculation and resulting expected credit loss provisons are subject to review and approval by the IFRS 9 Impairment Committee (IIC) which is appointed by the PLC Group Risk Committee. The IIC consists of senior representatives from Risk, Finance, and Group Economic Research. It meets at least twice every quarter, once before the models are run to approve key inputs into the calculation, and once after the models are run to approve the expected credit loss provisons and any judgemental overrides that may be necessary. The IFRS 9 Impairment Committee: • Oversees the appropriateness ofallBusiness Model Assessment and Solely Payments of Princpal andInterest (SPPI) tests; • Reviews and approves expected credit loss for financal assets classifed as stages 1, 2 and 3 for each financal reporting period; • Reviews andapproves stageallocation rules and thresholds; • Approves material adjustments in relation to expected credit loss for fair value through other comprehensive income (FVOCI) and amortised cost financal assets; • Reviews, challenges and approves base macroeconomic forecasts and the multiple macroeconomic scenarios approach that are utilsed in the forward-looking expected credit loss calculations The IFRS 9 Impairment Committee is supported by an Expert Panel which also reviews and challenges the base case projectonsand multiplemacroeconomic scenarios. The Expert Panel consists of members of Enterprise RiskManagement (which includes the Scenario Design team), Finance, Group Economic Research and country representatives of major jursdictons. PMAs may be applied to account for identfied weaknesses in model estimates. The processes for identfying the need for, calculating the level of, and approving PMAs are prescribed in the Credit Risk IFRS9 ECL Model Family Standards which are approved by the Global Head, Model Risk Management. PMA calculation methodologies are reviewed by GMV and submitted to CMAC as the model approver or the IIC. All PMAs have a remediaton plan to fix the identfied model weakness, and these plans are reported to and tracked at CMAC. In additon, Risk Event Overlays account for events that are sudden and therefore not captured in the Base Case Forecast or the resulting ECL calculated by the models. All Risk Event Overlays must be approved by the IIC having considered the nature of the event, why the risk is not captured in the model, and the basis on which the quantum of the overlay has been calculated. Risk Event Overlays are subject to quarterly review and re-approval by the IIC and will be released when the risks are no longer relevant. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 108 Risk profile continued Traded Risk Traded Risk is the potential for loss resulting from activties undertaken by the Group in financal markets. The PLC Group’s Traded Risk Type Framework, which is adopted by the Company through an addendum, brings together Market Risk, Counterparty Credit Risk and Algorithmc Trading. Traded Risk Management isthe core risk management function supporting market-facing businesses, predominantly Financal Markets and Treasury Markets. Market Risk (audited) Market Risk is the potential for loss of economic value due to adverse changes in financal market rates or prices. The Group’s exposure to Market Risk arises predominantly from the following sources: • Trading book: The Group provides clients access to financal markets, faciltation of which entails the Group taking moderate Market Risk positons. All trading teams support client activty; there are no proprietary trading teams. Hence, income earned from Market Risk-related activties is primarly driven by the volume of client activty rather than risk-taking. • Non-trading book: – The Treasury Markets desk is required to hold a liqud assets buffer, much of which is held in high-quality marketable debt securites – The Group has capital investedand relatedincome streamsdenominated in currencies other thanUS dollars. To the extent that these are not hedged, the Group is subject to Structural Foreign Exchange Risk which is reflected in reserves A summary of our current polices and practices regarding Market Risk management is provided in the Princpal risks section (page 132 to 133). The primary categories of Market Risk for the Group are: • Interest Rate Risk: arisng from changes in yield curves and impled volatilties on interest rate options • Foreign Exchange Rate Risk: arisng from changes in currency exchange rates and impled volatilties on foreign exchange options • Commodity Risk: arisng from changes in commodity prices and impled volatilties on commodity options; covering energy, precious metals, base metals and agriculture as well as commodity baskets • Credit Spread Risk: arisng from changes in the price of debt instruments and credit-linked derivatves, driven by factors other than thelevel of risk-free interest rates • Equity Risk: arisng from changes in the prices of equites, equity indces, equity baskets and impled volatilties on related options Market risk changes (audited) Value-at Risk (VaR) allows the Group to manage market risk across the trading book and most of the fair valued non-trading books 1 . The scope of instruments included in the VaR was changed in 2021 to exclude instruments held at amortised cost. The 2020 VaR numbers presented reflect the revised scope. The average level of total trading and non-trading VaR in 2021 was $41.1 millon, 38.5 per cent lower than in 2020 ($66.9 millon). The actual level of total trading and non-trading VaR as at the end of 2021 was $30.2 millon, 67.2 per cent lower than in 2020 ($92.1 millon). The decrease in total average VaR was driven by the extreme market movements from 2020 dropping out of the one-year VaR timeseres. However, during the second half of 2021 volatilty started to increase driven by the impact of new COVID variants. For the trading book, the average level of VaR in 2021 was $15.6 millon, 1.9 per cent lower than in 2020 ($15.9 millon). Trading activtieshave remained relativelyunchanged andclient-driven. Daily value at risk (VaR at 97.5%, one day) (audited) Trading and non-trading 1 2021 2020 Average $millon High 2 $millon Low 2 $millon YearEnd $millon Average $millon High 2 $millon Low 2 $millon Year End $millon InterestRateRisk⁶ 24.953.9 13.2 19.3 24.5 30.2 15.9 26.7 Credit Spread Risk⁶ 27.7 82.4 12.1 15.9 56.8 85.915.9 66.1 Foreign Exchange Risk 6.9 16.5 4.0 7.0 5.6 13.9 3.0 13.9 Commodity Risk 4.5 10.8 2.3 3.8 2.4 5.2 0.8 5.2 Equity Risk 1.3 1.7 1.0 1.4 2.6 5.4 1.51.5 Total 3 41.1 99.9 20.9 30.2 66.996.9 20.2 92.1 ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 109 Risk profile continued Trading 4 2021 2020 Average $millon High 2 $millon Low 2 $millon YearEnd $millon Average $millon High 2 $millon Low 2 $millon Year End $millon InterestRateRisk⁶ 7.1 9.4 5.1 6.2 7.8 12.1 4.35.7 Credit Spread Risk⁶ 7.417.0 3.9 5.0 11.5 17.7 4.014.0 Foreign Exchange Risk 6.9 16.5 4.0 7.0 5.6 13.9 3.0 13.9 Commodity Risk 4.5 10.8 2.3 3.8 2.4 5.2 0.8 5.2 Equity Risk 0.00.00.00.0 0.00.00.00.0 Total 3 15.6 28.7 11.4 14.0 15.9 26.4 7.7 26.1 Non-trading 1 2021 2020 Average $millon High 2 $millon Low 2 $millon YearEnd $millon Average $millon High 2 $millon Low 2 $millon Year End $millon InterestRateRisk⁶ 26.8 52.3 14.9 18.3 22.9 31.3 13.6 29.3 Credit Spread Risk⁶ 22.7 61.3 11.3 14.9 43.9 66.5 14.6 46.8 Equity Risk 5 1.3 1.7 1.0 1.4 2.6 5.41.4 1.5 Total 3 36.3 78.7 19.5 28.8 53.4 71.0 20.9 58.7 1The non-trading book VaR does not include syndicated loans. 2020 non-trading book VaR is restated to reflect the revised scope. 2Highest and lowest VaR for each risk factor are independent and usually occur on different days 3The Total VaR is not equal to the sum of the component risks due to offsets between them 4Trading book for Market Risk is defined in accordance with the UK onshored Capital Requirements Regulation Part 3 Title I Chapter 3, which restricts the positons permitted in the trading book Non-trading Equity risk VaR includes onlylisted equites 6Comparative informaton for 2020 has been represented to reflect the split between Interest Rate Risk and Credit Spread Risk The following table sets out how trading and non-trading VaR is distrbuted across the Group’s products: 2021 2020 Average $millon High 2 $millon Low 2 $millon YearEnd $millon Average $millon High 2 $millon Low 2 $millon Year End $millon Trading andnon-trading 1 41.1 99.9 20.9 30.2 66.996.9 20.2 92.1 Trading 4 Rates 6.4 9.1 4.7 6.0 6.7 10.4 3.7 6.8 Foreign Exchange 6.9 16.5 4.0 7.0 5.6 13.9 3.0 13.9 Credit Trading & Capital Markets 6.8 18.2 3.5 4.9 7.6 14.3 3.1 9.2 Commodites 4.6 10.8 2.4 3.8 2.4 5.2 0.8 5.2 Equites 0.00.00.00.0 0.00.00.00.0 XVA 5.1 10.3 2.8 2.9 8.1 12.7 3.1 8.7 Total 3 15.6 28.7 11.4 14.0 15.9 26.4 7.7 26.1 Non-trading 1 Treasury Markets 29.5 64.0 16.5 26.7 40.9 63.2 19.8 45.1 Treasury Capital Management 9.2 22.7 4.9 6.5 10.2 14.9 4.6 14.4 Global Credit 12.4 24.8 4.1 8.7 29.1 58.0 0.8 14.4 Listed Private Equity 1.3 1.7 1.0 1.4 2.6 5.41.4 1.5 Total 3 36.3 78.7 19.5 28.8 53.4 71.0 20.9 58.7 1The non-trading book VaR does not include syndicated loans. 2020 non-trading book VaR is restated to reflect the revised scope. 2Highest and lowest VaR for each risk factor are independent and usually occur on different days 3The Total VaR is not equal to the sum of the component risks due to offsets between them 4Trading book for Market Risk is defined in accordance with the EU Capital Requirements Regulation (CRD IV/CRR) Part 3 Title I Chapter 3 (as it forms part of UK domestic law), which restricts the positons permitted in the trading book ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 110 Risk profile continued Average daily income earned from Market Risk-related activties ¹ Trading 2 2021 $millon 2020 $millon InterestRateRisk 1.6 1.7 Credit Spread Risk 0.6 0.6 Foreign Exchange Risk 3.4 3.8 Commodity Risk 0.6 0.6 Equity Risk – – Total6.2 6.7 Non-trading 2 $millon $millon InterestRateRisk 0.3 1.2 Credit Spread Risk (0.1) (0.1) Equity Risk – – Total 0.2 1.1 1Reflects total product income which is the sum of client income and own account income. Includes elements of trading income, interest income and other income which are generated from Market Risk-related activties. Rates, XVA and Treasury income are included under Interest Rate Risk whilst Credit Trading income is included under Credit SpreadRisk 22020 figures have been restated to exclude income from non fair value positons Structural foreign exchange exposures The table below sets out the princpal structural foreign exchange exposures (net of investment hedges) of the Group. 2021 $millon 2020 $millon Indian rupee 4,323 4,223 Renminb 36 35 Singapore dollar 2,228 2,543 Taiwanese dollar 49 50 UAE dirham 643 1,863 Malaysian ringgt 1,532 1,575 Thai baht 775 892 Indonesian rupiah 289 332 Pakistan rupee 429 466 Other 4,976 4,437 15,280 16,416 As at 31 December 2021, the Group had taken net investment hedges using derivatve financal investments to partly cover its exposure to the UAE dirham of $1,198 millon (2020: Nil), Singapore dollar of $729 millon (2020: Nil) and Indian rupee of $656 millon (2020: $652 millon). An analysis has been performed on these exposures to assess the impact of a 1 per cent fall in the US dollar exchange rates, adjusted to incorporate the impacts of correlations of these currencies to the US dollar. The impact on the positons above would be an increase of $156 millon (2020: $147 millon). Changes in the valuation of these positons are taken to reserves. For analysis of the Group’s capital positon and requirements, refer to the Capital Review (page 153). Counterparty credit risk Counterparty Credit Risk is the potential for loss in the event of the default of a derivatve counterparty, after taking into account the value of eligble collaterals and risk mitgation techniques. The Group’s counterparty credit exposures are included in the Credit Risk section. Derivatve financal instruments credit risk mitgation The Group enters into master netting agreements, which in the event of default result in a single amount owed by or to the counterparty through netting the sum of the positve and negative mark-to-market values of applicable derivatve transactions. The value of exposure under master netting agreements is $42,577 millon (2020: $52,308 millon). In additon, the Group enters into credit support annexes (CSAs) with counterparties where collateral is deemed a necessary or desirable mitgant to the exposure. Cash collateral includes collateral called under a variaton margin process from counterparties iftotal uncollateralisedmark-to-marketexposure exceeds the threshold andminmumtransfer amount specifed in the CSA. With certain counterparties, the CSA is reciprocal and requires us to post collateral if the overall mark-to- market values of positons are in the counterparty’s favour and exceed an agreed threshold. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 111 Risk profile continued Liqudity and Funding risk Liqudity and Funding Risk is the risk that we may not have sufficent stable or diverse sources of funding to meet our obligatons as they fall due. The Group follows the PLC Group’s Liqudity and Funding Risk framework, which requires each country to ensure that it operates withn predefined liqudity limts and remains in compliance with PLC’s Group liqudity polices and practices, as well as local regulatory requirements. The table below shows the compositon of liablites in which customer deposits make up 56 per cent of total liablites and equity as at 31 December 2021, the majorty of which are current accounts, savings accounts and time deposits. Our largest customer deposits base by geography is Europe & Americas which holds 51 per cent of Group customer accounts. Compositon of liablites and equity Percentage Geographic distrbutionof customer accounts balances Percentage Equity 6.5% Asia 37.9% Subordinatedliablites and other borrowed funds 2.7% Africa & Middle East 11.4% Debt securites in issue 7.4% Europe & Americas 50.7% Derivatve financal instruments 9.8% Total 100.0% Customer accounts 56.1% Deposit by banks 5.6% Other liablites 11.9% Total 100.0% Liqudity and Funding risk metrics We monitor key liqudity metrics regularly on a country basis across the Group. The following liqudity and funding Board Risk Appetite metrics define the maximum amount and type of risk that the Group is willng to assume in pursuit of its strategy: liqudity coverage ratio (LCR), liqudity stress survival horizons, external wholesale borrowing, and advances-to-deposits ratio. As of January 2022, the Net Stable Funding Ratio will also be included withn Board Risk Appetite. Liqudity coverage ratio (LCR) The Liqudity Coverage Ratio (LCR) aims to ensure that a bank has sufficent unencumbered high-quality liqud assets to meet its liqudity needs in a 30-calendar-day liqudity stress scenario. SC Bank is not regulated for LCR, however, the bank and material subsidaries in the consolidaton have standalone LCR ratios above 100 per cent at 31 December 2021, calculated under UK onshored CommissonDelegated Regulation2015/61. Stressedcoverage Stress testing and scenario analysis are used to assess the financal and management capabilty to continue to operate effectively under extreme, but plausible, operating conditons and to understand the potential threats to the PLC Group’s liqudity and other financalresources. The PLC Group’s internal liqudity stress testing framework covers the following stress scenarios: Standard Chartered-specifc – Captures the liqudity impact from an idosyncratic event affecting Standard Chartered only i.e. the rest of the market is assumed to operate normally. Market wide – Captures the liqudity impact from a market wide criss affecting all particpants in a country, region or globally. Combined – Assumes both Standard Chartered-specifc and Market-wide events affecting the PLC Group simultaneously and hence is the most severe scenario. All scenarios include,but arenot limted to,modelled outflows for retail andwholesale funding, Off-Balance Sheet Funding Risk, Cross-currency Funding Risk, Intraday Risk, Franchise Risk and risks associated with a deterioraton of a firm’s credit rating. As of 31 December 2021, all entites withn the Group follow a consistent approach and met their indvidual stress test requirements withn Risk appetite, and as a result, ensure Group has surplus liqudity when combined. External wholesaleborrowing This metric seeks to prevent excessive reliance on wholesale borrowing. Limts/targets are applied to branches and operating subsidaries in the Group. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 112 Risk profile continued Advances-to-deposits ratio This is defined as the ratio of total loans and advances to customers relative to total customer accounts. An advances-to- deposits ratio of below 100 per cent demonstrates that customer deposits exceed customer loans as a result of the emphasis placed on generating a high level of funding from customers. Limts/targets are applied to all branches and operating subsidaries in the Group. Advances-to-deposits ratio has decreased by 4.7 per cent to 52.1 per cent, driven primarly by robust growth in deposits from corporate customers. 2021 $millon 2020 $millon Total loans and advances to customers 1,2 129,799 126,859 Total customer accounts 3 249,299 223,472 Advances-to-deposits ratio 52.1% 56.8% 1Excludes reverse repurchase agreement and other simlar secured lending of $3,764 millon and includes loans and advances to customers held at fair value through profit and loss of $3,932 millon 2Loans and advances to customers for the purpose of the advances-to-deposits ratio excludes $15,168 millon of approved balances held with central banks, confirmed as repayable at the point of stress (31 December 2020: $14,296 millon) 3Includes customer accounts held at fair value through profit or loss of $6,968 millon (31 December 2020: $6,753 millon) Net stable funding ratio (NSFR) The NSFR is a balance sheet metric which requires insttutions to maintan a stable funding profile in relation to an assumed duration of their assets and off-balance sheet activties over a one-year horizon. It is the ratio between the amount of available stable funding (ASF) and the amount of required stable funding (RSF). ASF factors are applied to balance sheet liablites and capital, based on their perceived stabilty and the amount of stable funding they provide. Likewse, RSF factors are applied to assets and off-balance sheet exposures according to the amount of stable funding they require. SC Bank is not regulated for NSFR, however, the bank and material subsidaries in the consolidaton have standalone NSFR ratios above 100 per cent at 31 December 2021, calculated under UK onshored Commisson Delegated Regulation 2015/61. Liqudity pool The liqudity value of the Group’s LCR eligble liqudity pool at the reporting date was $131 billon. The figures in the below table account for haircuts, currency convertiblity and portabilty constraints, and therefore are not directly comparable with the consolidated balance sheet. Liqudity pool is held to offset stress outflows as defined in UK onshored Commisson Delegated Regulation 2015/61. Group 2021 Asia $ millon Africa & Middle East $ millon Europe & Americas $ millon Total $ millon Level 1securites Cash and balances at central banks 20,626 890 46,973 68,489 Central banks, governments/public sector entites 13,607 2,096 27,389 43,092 Multilateraldevelopmentbanks and internatonal organisatons 727 356 7,366 8,449 Other –– 478478 Total Level 1 securites 34,960 3,34282,206 120,508 Level 2A securites 3,447 187 5,047 8,681 Level 2B securites 114 – 1,620 1,734 Total LCR eligble assets 38,5213,529 88,873 130,923 ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 113 Risk profile continued 2020 (Restated) Asia¹ $ millon Africa & Middle East $ millon Europe & Americas $ millon Total $ millon Level 1 securites Cash and balances at central banks 21,878 1,421 42,502 65,801 Central Banks, governments/public sector entites 9,627 1,569 33,652 44,848 Multilateraldevelopmentbanks and internatonal organisatons 453 236 6,818 7,507 Other – 14 1,6451,659 Total Level 1 securites 31,958 3,240 84,617 119,815 Level 2A securites 1,878 79 2,891 4,848 Level 2B securites 207 – 287 494 Total LCR eligble assets 34,043 3,319 87,795 125,157 Company 2021 Asia $ millon Africa & Middle East $ millon Europe & Americas $ millon Total $ millon Level 1securites Cash and balances at central banks 3,801 476 40,983 45,260 Central banks, governments/public sector entites 6,599 1,608 27,388 35,595 Multilateraldevelopmentbanks and internatonal organisatons – 356 7,3667,722 Other –– 478478 Total Level 1 securites 10,400 2,440 76,215 89,055 Level 2A securites 695 187 5,047 5,929 Level 2B securites –– 1,6181,618 Total LCR eligble assets 11,095 2,627 82,880 96,602 2020 (Restated) Asia¹ $ millon Africa & Middle East $ millon Europe & Americas $ millon Total $ millon Level 1 securites Cash and balances at central banks 6,166 1,065 37,501 44,732 Central Banks, governments /public sector entites 5,410 1,493 33,651 40,554 Multilateraldevelopmentbanks and internatonal organisatons –236 6,818 7,054 Other – 14 1,6451,659 Total Level 1 securites 11,576 2,808 79,615 93,999 Level 2A securites 454 79 2,891 3,424 Level 2B securites –– 286286 Total LCR eligble assets 12,030 2,88782,792 97,709 1Following the Group’s change in organisatonal structure, there has been an integraton of Greater China & North Asia and ASEAN & South Asia to Asia. Prior period has been restated Liqudity analysis of the Group’s balance sheet (audited) Contractual maturity of assets and liablites The following table presents assets and liablites by maturity groupings based on the remainng period to the contractual maturity date as at the balance sheet date on a discounted basis. Contractual maturites do not necessarily reflect actual repayments or cashflows. Withn the tables below, cash and balances with central banks, interbank placements and investment securites that are fair value through other comprehensive income are used by the Group princpally for liqudity management purposes. As at the reporting date, assets remain predominantly short-dated, with 67 per cent maturing in under one year. Our less than three-month cumulative net funding positon remained in surplus and the scale of the surplus increased from the previous year, largely due to an increase in customer accounts as the Group focused on improvng the quality of its deposit base. In practice, these deposits are recognised as stable and have behavioural profiles that extend beyond their contractual maturites. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 114 Risk profile continued Group 2021 One month or less $millon Between one month and three months $millon Between three months and six months $millon Between six months and nine months $millon Between nine months and one year $millon Between one year and two years $millon Between two years and five years $millon More than five years and undated $millon Total $millon Assets Cash and balances at central banks 58,904 –––––– 3,059 61,963 Derivatve financal instruments 16,174 9,643 6,531 3,159 2,509 4,246 5,927 5,056 53,245 Loans and advances to banks 1,2 15,511 16,075 9,535 4,018 4,145 1,308 1,442 295 52,329 Loans and advances to customers 1,2 64,975 51,711 17,984 6,817 6,639 11,320 17,572 31,991 209,009 Investment securites 4,143 8,488 6,516 6,046 5,624 13,489 35,855 42,108 122,269 Other assets 16,75716,438 702 66 288 34 325,424 39,741 Due from subsidary undertakings andother related parties 6,235 ––––––– 6,235 Total assets 182,699 102,355 41,268 20,106 19,205 30,397 60,828 87,933 544,791 Liablites Deposits by banks 1,3 28,048 849 1,032 83 224 96 22 2 30,356 Customer accounts 1,4 233,858 38,901 17,994 6,069 4,111 3,433 1,139 334 305,839 Derivatve financal instruments 16,149 10,433 6,503 3,488 2,513 4,429 6,521 3,550 53,586 Senior debt⁵ 187 473 563 314 299 456 1,289 2,060 5,641 Other debt securites in issue 1 2,210 12,470 7,168 2,8923,248 3,132 3,022 637 34,779 Due to parent companies and otherrelated undertakings 30,998 ––––––– 30,998 Other liablites 9,440 17,583 598 166 354 759 861 3,779 33,540 Subordinated liablites and otherborrowedfunds 4 35 96 113 1,063 2,348 1,076 9,880 14,615 Total liablites 320,894 80,744 33,954 13,125 11,812 14,653 13,930 20,242 509,354 Net liqudity gap (138,195) 21,611 7,314 6,981 7,393 15,744 46,898 67,691 35,437 1Loans and advances, investment securites, deposits by banks, customer accounts and debt securites in issue include financal instruments held at fair value through profit or loss, see Note 12 Financal instruments pages 198 to 241 2Loans and advances include reverse repurchase agreements and other simlar secured lending of $83.7 billon 3Deposits by banks include repurchase agreements and other simlar secured borrowing of $5.1 billon 4Customer accounts include repurchase agreements and other simlar secured borrowing of $56.5 billon 5Senior debt maturity profiles are based upon contractual maturity, which may be later than call options over the debt held by the Group ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 115 Risk profile continued 2020 One month or less $millon Between one month and three months $millon Between three months and six months $millon Between six months and nine months $millon Between nine months and one year $millon Between one year and two years $millon Between two years and five years $millon More than five years and undated $millon Total $millon Assets Cash and balances at central banks 55,434 –––––– 2,683 58,117 Derivatve financal instruments 12,478 20,593 7,948 4,907 3,423 5,091 8,571 6,214 69,225 Loans and advances to banks 1,2 19,881 13,572 6,956 3,612 2,0581,0831,203 277 48,642 Loans and advances to customers 1,2 61,17534,171 17,375 5,150 5,714 10,570 21,731 32,790 188,676 Investment securites 4,357 9,466 5,507 7,240 6,181 14,630 28,80326,066 102,250 Other assets 16,318 16,3711,039 187 53 40 37 7,026 41,071 Due from subsidary undertakings and other relatedparties 5,612 ––––––– 5,612 Total assets 175,255 94,173 38,825 21,096 17,429 31,414 60,34575,056 513,593 Liablites Deposits by banks 1,3 26,015 989 2,249 137201 21 1 42 29,655 Customer accounts 1,4 200,223 39,776 11,319 3,868 4,496 4,599 608 138 265,027 Derivatve financal instruments 13,575 19,765 8,338 4,773 3,580 5,351 10,066 3,620 69,068 Senior debt⁵ 214 1,742 299 79 168 327 1,149 2,0856,063 Other debt securites in issue¹ 1,207 6,751 9,842 2,697 2,422 3,197 1,208329 27,653 Due to parent companies and otherrelated undertakings 32,326 ––––––– 32,326 Other liablites⁶ 11,927 16,693 2,272 288 109 483 214 3,707 35,693 Subordinated liablites and otherborrowedfunds ––––– 960 2,037 11,88214,879 Total liablites 285,487 85,716 34,319 11,842 10,976 14,938 15,283 21,803480,364 Net liqudity gap (110,232) 8,457 4,506 9,254 6,453 16,476 45,062 53,253 33,229 1Loans and advances, investment securites, deposits by banks, customer accounts and debt securites in issue include financal instruments held at fair value through profit or loss, see Note 12 Financal instruments pages 198 to 241 2Loans and advances include reverse repurchase agreements and other simlar secured lending of $66.5 billon 3Deposits by banks include repurchase agreements and other simlar secured borrowing of $5.8 billon 4Customer accounts include repurchase agreements and other simlar secured borrowing of $41.5 billon 5Senior debt maturity profiles are based upon contractual maturity, which may be later than call options over the debt held by the Group 6Includes correction of fair valuehedge accountingadjustment $81millon ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 116 Risk profile continued Company 2021 One month or less $millon Between one month and three months $millon Between three months and six months $millon Between six months and nine months $millon Between nine months and one year $millon Between one year and two years $millon Between two years and five years $millon More than five years and undated $millon Total $millon Assets Cash and balances at central banks 47,004 –––––– 1,16148,165 Derivatve financal instruments 11,901 10,740 7,068 3,506 2,820 4,734 6,974 5,735 53,478 Loans and advances to banks 1,2 10,742 12,682 6,314 2,817 2,810 1,133 1,274 295 38,067 Loans and advances to customers 1,2 49,367 31,122 13,598 4,733 3,595 8,802 10,672 11,754 133,643 Investment securites 2,257 4,4794,418 4,335 4,091 10,367 31,343 40,372 101,662 Investment in subsidary undertaking ––––––– 9,6949,694 Other assets 16,128 10,465 367 52 233 31 21 3,130 30,427 Due from subsidary undertakings andother related parties 10,741 ––––––– 10,741 Total assets 148,140 69,488 31,765 15,443 13,549 25,067 50,284 72,141 425,877 Liablites Deposits by banks 1,3 21,971 364 991 80 188 52 20 – 23,666 Customer accounts 1,4 145,292 27,787 15,276 4,380 2,420 2,130 911 323 198,519 Derivatve financal instruments 11,941 11,743 6,985 3,894 2,666 4,888 7,488 4,23053,835 Senior debt⁵ 152396 368 200 299 364 1,187 2,041 5,007 Other debt securites in issue 1 2,010 12,447 6,184 2,8923,248 1,682 3,022 1,420 32,905 Due to parent companies and otherrelated undertakings 40,745 ––––––– 40,745 Other liablites 8,474 11,262 516 130 309 643 666 3,47725,477 Subordinated liablites and otherborrowedfunds 4 35 96 113 1,063 2,348 1,076 9,341 14,076 Total liablites 230,589 64,034 30,416 11,689 10,19312,107 14,370 20,832 394,230 Net liqudity gap (82,449) 5,454 1,349 3,754 3,356 12,96035,914 51,309 31,647 1Loans and advances, investment securites, deposits by banks, customer accounts and debt securites in issue include financal instruments held at fair value through profit or loss, see Note 12 Financal instruments pages 198 to 241 2Loans and advances include reverse repurchase agreements and other simlar secured lending of $81.1 billon 3Deposits by banks include repurchase agreements and other simlar secured borrowing of $4.7 billon 4Customer accounts include repurchase agreements and other simlar secured borrowing of $56.4 billon 5Senior debt maturity profiles are based upon contractual maturity, which may be later than call options over the debt held by the Group ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 117 Risk profile continued 2020 One month or less $millon Between one month and three months $millon Between three months and six months $millon Between six months and nine months $millon Between nine months and one year $millon Between one year and two years $millon Between two years and five years $millon More than five years and undated $millon Total $millon Assets Cash and balances at central banks 45,544 –––––– 932 46,476 Derivatve financal instruments 13,786 13,945 9,372 5,515 3,714 5,598 9,984 6,99668,910 Loans and advances to banks 1,2 14,263 11,239 4,3792,081 1,388 979 1,045 277 35,651 Loans and advances to customers 1,2 42,805 20,654 14,471 3,804 3,058 7,226 14,93112,980 119,929 Investment securites 1,800 7,423 4,288 6,120 5,545 11,055 23,321 24,562 84,114 Investment in subsidary undertaking ––––––– 8,2588,258 Other assets 15,98012,908 430 178 58 35 27 4,084 33,700 Due from subsidary undertakings andother related parties 10,885 ––––––– 10,885 Total assets 145,063 66,169 32,940 17,698 13,763 24,893 49,308 58,089 407,923 Liablites Deposits by banks 1,3 20,934 741 2,205 122 182 20 –40 24,244 Customer accounts 1,4 120,212 34,388 8,497 2,689 2,594 1,237 514 124 170,255 Derivatve financal instruments 14,382 13,118 9,576 5,478 3,843 5,684 11,498 4,844 68,423 Senior debt⁵ 30 1,055 198 79 168 322 1,023 2,013 4,888 Other debt securites in issue 1 1,207 6,751 9,842 2,697 2,412 1,747 1,208 1,112 26,976 Due to parent companies and otherrelated undertakings 43,012 ––––––– 43,012 Other liablites⁶ 11,415 11,962 713 238 80 364 178 2,295 27,245 Subordinated liablites and otherborrowedfunds ––––– 960 2,037 11,342 14,339 Total liablites 211,192 68,01531,03111,303 9,279 10,334 16,458 21,770 379,382 Net liqudity gap (66,129) (1,846) 1,909 6,395 4,484 14,559 32,850 36,319 28,541 1Loans and advances, investment securites, deposits by banks, customer accounts and debt securites in issue include financal instruments held at fair value through profit or loss, see Note 12 Financal instruments pages 198 to 241 2Loans and advances include reverse repurchase agreements and other simlar secured lending of $64.6 billon 3Deposits by banks include repurchase agreements and other simlar secured borrowing of $5.7 billon 4Customer accounts include repurchase agreements and other simlar secured borrowing of $41.5 billon 5Senior debt maturity profiles are based upon contractual maturity, which may be later than call options over the debt held by the Group 6Includes correction of fair valuehedge accountingadjustment $81millon ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 118 Risk profile continued Behavioural maturity of financal assets and liablites The cashflows presented in the previous section reflect the cashflows that will be contractually payable over the residual maturity of the instruments. However, contractual maturites do not necessarily reflect the timng of actual repayments or cashflow. In practice, certain assets and liablites behave differently from their contractual terms, especially for short-term customer accounts, credit card balances and overdrafts, which extend to a longer period than their contractual maturity. On the other hand, mortgage balances tend to have a shorter repayment period than their contractual maturity date. Expected customer behaviour is assessed and managed on a country basis using qualitatve and quantitatve techniques, includng analysis of observed customer behaviour over time. Maturity of financal liablites on an undiscounted basis The following table analyses the contractual cashflows payable for the Group’s financal liablites by remainng contractual maturites on an undiscounted basis. The financal liablity balances in the table below will not agree to the balances reported in the consolidated balance sheet as the table incorporates all contractual cashflows, on an undiscounted basis, relating to both princpal and interest payments. Derivatves not treated as hedging derivatves are included in the ‘On demand’ time bucket and not by contractual maturity. Withn the ‘More than five years and undated’ maturity band are undated financal liablites, the majorty of which relate to subordinated debt, on which interest payments are not included as this informaton would not be meaningful, given the instruments are undated. Interest payments on these instruments are included withn the relevant maturites up to five year. Group 2021 One month or less $millon Between one month and three months $millon Between three months and six months $millon Between six months and nine months $millon Between nine months and one year $millon Between one year and two years $millon Between two years and five years $millon More than five years and undated $millon Total $millon Deposits by banks 28,048 850 1,032 83 224 96 22 3 30,358 Customer accounts 233,879 38,922 18,017 6,084 4,145 3,461 1,152 334 305,994 Derivatve financal instruments 1 53,377 7 19 53 23 73 79 53,586 Debt securites in issue 2,414 12,946 7,752 3,221 3,572 3,652 4,428 6,875 44,860 Due to parent companies and otherrelated undertakings 30,998 ––––––– 30,998 Subordinated liablites and other borrowed funds 37 59 129125 1,089 2,423 1,252 16,483 21,597 Other liablites 12,992 17,561 589 166 354 759 861 1,201 34,483 Total liablites 361,745 70,345 27,538 9,6849,387 10,414 7,788 24,975 521,876 2020 One month or less $millon Between one month and three months $millon Between three months and six months $millon Between six months and nine months $millon Between nine months and one year $millon Between one year and two years $millon Between two years and five years $millon More than five years and undated $millon Total $millon Deposits by banks 26,032 992 2,250 138 201 22 1 41 29,677 Customer accounts 200,420 39,820 11,338 3,879 4,531 4,609 611 138265,346 Derivatve financal instruments 1 68,628 4 21 33 24 101 224 33 69,068 Debt securites in issue 1,422 8,349 10,153 2,784 2,600 3,5582,398 2,446 33,710 Due to parent companies and otherrelated undertakings 32,326 ––––––– 32,326 Subordinated liablites and other borrowed funds – 71 100 71 236 1,438 3,282 17,232 22,430 Other liablites² 11,910 16,670 2,272 287 109 481 217 1,548 33,494 Total liablites 340,738 65,906 26,134 7,1927,701 10,209 6,733 21,438 486,051 1Derivatves are on a discounted basis 2Includes correction offair value hedge accounting adjustment$81 millon ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 119 Risk profile continued Company 2021 One month or less $millon Between one month and three months $millon Between three months and six months $millon Between six months and nine months $millon Between nine months and one year $millon Between one year and two years $millon Between two years and five years $millon More than five years and undated $millon Total $millon Deposits by banks 21,971 364 991 80 188 52 22 – 23,668 Customer accounts 145,311 27,800 15,2894,391 2,429 2,151 915 322 198,608 Derivatve financal instruments 1 53,634 5 19 53 19 70 8053,835 Debt securites in issue 2,179 12,846 6,570 3,105 3,572 2,110 4,326 3,490 38,198 Due to parent companies and otherrelated undertakings 40,745 ––––––– 40,745 Subordinated liablites and otherborrowedfunds 37 59 129125 1,089 2,423 1,252 15,353 20,467 Other liablites 11,716 11,249 516 130 309 643 666 717 25,946 Total liablites 275,593 52,323 23,514 7,8367,590 7,398 7,251 19,962 401,467 2020 One month or less $millon Between one month and three months $millon Between three months and six months $millon Between six months and nine months $millon Between nine months and one year $millon Between one year and two years $millon Between two years and five years $millon More than five years and undated $millon Total $millon Deposits by banks 20,936 744 2,206 123 182 21 –40 24,252 Customer accounts 120,276 34,417 8,508 2,698 2,604 1,243 516 124 170,386 Derivatve financal instruments 1 68,043 4 20 29 22 73 199 33 68,423 Debt securites in issue 1,237 7,662 10,052 2,784 2,590 2,103 2,273 3,157 31,858 Due to parent companies and otherrelated undertakings 43,012 ––––––– 43,012 Subordinated liablites and otherborrowedfunds – 71 100 71 236 1,438 3,274 16,288 21,478 Other liablites² 11,337 11,940 713 238 81 363 181 798 25,651 Total liablites 264,841 54,838 21,599 5,943 5,715 5,241 6,443 20,440385,060 1Derivatves are on a discounted basis 2Includes correction offair value hedge accounting adjustment$81 millon Interest Rate Risk in the Banking Book The following table provides the estimated impact to a hypothetical base case projecton of the Group’s earnings under the following scenarios: • A 50 basis point parallel interest rate shock (up and down) to the current market-impled path of rates, across all yield curves. • A 100 basis point parallel interest rate shock (up) to the current market-impled path of rates, across all yield curves. These interestrate shockscenarios assumeall othereconomic variables remain constant. The sensitvites shown represent the estimated change in base case projected net interest income (NII), plus the change in interest rate impled income and expense from FX swaps used to manage Banking Book currency positons, under the different interest rate shock scenarios. The interest rate sensitvites are indcative and based on simplfied scenarios, estimatng the aggregate impact of an instantaneous parallel shock across all yield curves over a one-year horizon, includng the time taken to implement changes to pricng before becoming effective. The assessment assumes that non-interest rate sensitve aspects of the size and mix of the balance sheet remain constant and that there are no specifc management actions in response to the change in rates. Furthermore, revenue associated with trading book income positons is recognised in trading book income and is therefore excluded from the reported sensitvites. No assumptions are made in relation to the impact on credit spreads in a changing rate environment. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 120 Risk profile continued Signficant modelling and behavioural assumptions are made regarding scenario simplficaton, market competiton, pass- through rates, asset and liablity re-pricng tenors, and price flooring. In particular, the assumption that interest rates of all currencies and maturites shift by the same amount concurrently, and that no actions are taken to mitgate the impacts arisng from this are considered unlikely. Reported sensitvites will vary over time due to a number of factors includng changes in balance sheet compositon, market conditons, customer behaviour and risk management strategy and should therefore not be considered an income or profit forecast. Estimated one-year impact to earnings from a parallel shift in yield curves at the beginnng of the period of: 2021 USD bloc $millon SGD bloc $millon Other currency bloc $millon Total $millon + 50 basis points 140 70 90 300 - 50 basis points (120) (70) (60) (250) + 100 basis points 260 120200 580 Estimated one-year impact to earnings from a parallel shift in yield curves at the beginnng of the period of: 2020 USD bloc 1 $millon SGD bloc $millon Other currency bloc $millon Total 1 $millon + 50 basis points 70 50 40 160 - 50 basis points (100) (60) (50) (210) + 100 basis points 140 100 80 320 1Sensitvity for 2020 has been restated due to correction of interest rate basis for certain USD denominated interest rate swaps As at 31 December 2021, the Group estimates the one-year impact of an instantaneous, parallel increase across all yield curves of 50 basis points to increase projected NII by $300 millon. The equivalent impact from a parallel decrease of 50 basis points would result in a reduction in projected NII of $250 millon. The Group estimates the one-year impact of an instantaneous, parallel increase across all yield curves of 100 basis points to increase projected NII by $580 millon. The benefit from risng interest rates is primarly from reinvestng at higher yields and from assets re-pricng faster and to a greater extent than deposits. NII sensitvity in all scenarios has increased versus 31 December 2020 due to changes in modelling assumptions to reflect expected re-pricng activty on Retail and Transaction Banking current accounts and savings accounts in the current interest rate environment, and to recognise the interest rate sensitvity of banking book income when providng funding to the trading book. The incluson of this item now aligns the measurement scope to that used for the calculation of the Group’s net interest margin and has increased the reported sensitvity to the 50 basis point parallel shocks by $130 millon, and to a 100 basis point parallel up shock by $260 millon, primarly in US dollars. The asymmetry between the up and down 50 basis point shock is primarly due to the low level of interest rates, which may constrain the Group’s abilty to reprice assets and liablites should rates fall by a further 50 basis points, as well as differng behavioural assumptions, which are scenario specifc. The level of asymmetry has changed since 31 December 2020 due to an increase in the proportion of the Group’s assets whose pricng is assumed to be floored under the 50 basis point parallel down shock, and which now more than offset the assumed impact of flooring liablity pricng under the same scenario. The decison to pass on changes in interest rates is highly subjectve and depends on a range of factors includng market environment and competitor behaviour. Operational and Technology Risk Operational Risk is defined as the “Potential for loss from inadequate or failed internal processes, technology, human error, or from the impact of external events (includng legal risks)”. It is inherent in the Group carrying out business and can be impacted from a range of operationalrisks. Operational Risk profile In 2021, the PLC Group has taken steps for further embedding of the enhanced framework to augment the management of operational risk with the aim of ensuring that risk is managed withn Risk Appetite and we continue to deliver services to our clients. The PLC Group’s Framework has been adopted by the Group via an addendum. The Group has continued to provide a stable level of service to clients during the period of COVID-19 and adapted swiftly to changes in operations brought by the pandemic. As a result of the changes in internal and external operating environment due to COVID-19, particular areas of focus are Fraud, Information & Cyber Security, Privacy, Conduct and Resilence. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 121 Risk profile continued Operational Risk events and losses Operational losses are one indcator of the effectiveness and robustness of the non-financal risk control environment. As at 31 December 2021, recorded impact from operational losses for the year was higher than 2020, primarly driven by the regulatory penalty of $61.7 millon imposed by the PRA on the back of liqudity misreportng between 2018 and 2019 due to executiondelivery and process management issues. The Group’s profile of operational loss events in 2021 and 2020 is summarised in the table below. It shows the percentage distrbution of gross operational losses by Basel business line. Distrbution of Operational Losses by Basel business line % Loss 2021 2020¹ Agency Services 0.0% 0.3% Asset Management 0.0% – Commercial Banking 6.6% 20.7% Corporate Finance – – CorporateItems 42.6% 28.0% Payment and Settlements 38.6% 18.9% Retail Banking 7.1% 20.8% RetailBrokerage 0.0% 0.3% Trading and Sales 5.2% 11.0% 1Losses in 2020 have been restated to include incremental events recognised in 2021 The Group’s profile of operational loss events in 2021 and 2020 is also summarised by Basel event type in the table below. It shows the percentage distrbution of gross operational losses by Basel event type. Distrbution of OperationalLosses by Basel eventtype % Loss 2021 2020¹ Business disrupton and system failures 3.9% 2.0% Clients products and business practices 0.1% 3.8% Damage to physicalassets 0.0% 0.1% Employmentpractices and workplace safety 0.0% 0.4% Execution delivery and process management 80.6% 76.4% External fraud 7.5% 16.9% Internal fraud 7.9% 0.4% 1Losses in 2020 have been restated to include incremental events recognised in 2021 Other princpal risks Losses arisng from operational failures for other princpal risks are reported as operational losses. Operational losses do not include Operational Risk-related credit imparments. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 122 Risk profile continued Risk Management Framework Effective risk management is essential in deliverng consistent and sustainable performance for all of our stakeholders and is a central part of the financal and operational management of the Group. The Group adds value to clients and the communites in which they operate by taking and managing appropriate levels of risk, which in turn generates returns for shareholders. The Risk Management Framework (RMF) enables the Group to manage enterprise-wide risks, with the objectve of maximsing risk-adjusted returns while remainng withn our Risk Appetite. The RMF has been designed in accordance with the PLC Group’s Enterprise Risk Management Framework (ERMF), and since its approval in June 2020, it has been implemented with the explict goal of improvng the Group’s risk management. In 2021, we completed a comprehensive review of the RMF, and the following changes were approved by the Court: • Cross-cutting risks have been repositoned as Integrated Risk Types (IRT) and are defined as “risks that are signficant in nature and materialse primarly through the relevant Princpal Risk Types”. The RMF sets out the roles and responsiblites and minmum governance requirements for management of IRTs. • Given their integrated nature, Digtal Asset Risk and Third-Party Risk, in additon to Climate Risk, have been categorised as Integrated Risk Types in the RMF. • The Capital and Liqudity Princpal Risk Type has been renamed to Treasury Risk and the scope of the risk type expanded to cover Interest Rate Risk in the Banking Book (IRRBB). The revised RMF was approved in February 2022 and will become effective in March 2022. Risk culture The Group’s risk culture provides guidng princples for the behaviours expected from our people when managing risk. The Court has approved arisk culturestatement thatencourages thefollowing behaviours and outcomes: • An enterprise-level abilty to identfy and assess current and future risks, openly discuss these and take prompt actions. • The highest level of integrty by being transparent and proactive in disclosng and managing all types of risks. • A constructive and collaborative approach in providng oversight and challenge, and taking decisons in a timely manner. • Everyone to be accountable for their decisons and feel safe in using their judgement to make these considered decisons. We acknowledge that banking inherently involves risk-taking and undesired outcomes will occur from time to time; however, we shall take the opportunity to learn from our experience and formalise what we can do to improve. We expect managers to demonstrate a high awareness of risk and control by self-identfying issues and managing them in a manner that will deliver lasting change. Strategic risk management The Group approaches strategic risk management as follows: • By conducting an impact analysis on the risk profile from growth plans, strategic intiatves and business model vulnerabilties, with the aim of proactively identfying and managing new risks or existng risks that need to be repriortised as part of the strategy review process. • By confirmng that growth plans and strategic intiatves can be delivered withn the approved Risk Appetite and/or proposing additonal Risk Appetite for Court consideraton as part of the strategy review process. • By validatng the Corporate Plan against the approved or proposed Risk Appetite Statement to the Court. The Court approves the strategy review and the five-year Corporate Plan with a confirmaton from the Group Chief Risk Officer that it is aligned with the RMF and the Group Risk Appetite Statement where projectons allow. • Country Risk management approach and Country Risk reviews are used to ensure the country limts and exposures are reasonable and in line with Group strategy, country strategy, and the operating environment, considerng the identfied risks. The Group leverages the PLC Group’s framework for country risk management. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 123 Risk profile continued Roles and responsiblites Senior Managers Regime¹ Roles and responsiblites under the RMF are aligned to the objectves of the Senior Managers Regime. The Group Chief Risk Officer is responsible for the overall development and maintenance of the Group’s RMF and for identfying material risk types to which the Group may be potentially exposed. The Group Chief Risk Officer delegates effective implementaton of the PLC Group Risk Type Frameworks (RTFs) through the RMF to Risk Framework Owners who provide second line of defence oversight for the Princpal Risk Types (PRTs). In additon, the Group Chief Risk Officer has been formally identfied as the relevant senior manager responsible for the development of the Group’s Digtal Asset Risk Assessment Approach, as well as the senior manager responsible for Climate Risk management as it relates to financal and non-financal risks to the Group arisng from climate change. This does not include elements of corporate social responsiblity, the Group’s contributon to climate change and the Sustainable Finance strategy supporting a low-carbon transiton, which are the responsiblity of other relevant senior managers. The Risk function The Risk function is responsible for the sustainablity of our business through good management of risk across the Group by providng oversight and challenge, thereby ensuring that business is conducted in line with regulatory expectations. The Group Chief Risk Officer directly manages the Risk function, which is separate and independent from the orignation, trading and sales functions of the businesses. The Risk function is responsible for: • Maintaning the RMF, ensuring that it remains relevant and appropriate to the Group’s business activties, and is effectively communicated and implemented acrossthe Group,and adminstering related governance and reporting processes • Upholding the overall integrty of the Group’s risk and return decisons to ensure that risks are properly assessed, that these decisons are made transparently on the basis of proper assessments and that risks are controlled in accordance with the PLC Group’s standards and Risk Appetite • Overseeing and challenging the management of Princpal Risk Types and Integrated Risk Types under the RMF The independence of the Risk function ensures that the necessary balance in making risk and return decisons is not compromised byshort-term pressures to generaterevenues. In additon, the Risk function is a centre of excellence that provides specialst capabilties of relevance to risk management processes in the broader organisaton. The Risk function supports the Group’s commitment to be ‘Here for good’ by buildng a sustainable framework that places regulatory and compliance standards and a culture of appropriate conduct at the forefront of the Group’s agenda, in a manner proportionate to the nature, scale and complexity of the Group’s business. Conduct, Financal Crime and Compliance (CFCC), under the Management Team leadership of the Group Head, CFCC, works alongside the Risk function withn the framework of the RMF to deliver a unifed second line of defence. 1Senior managers refer to indviduals designated as senior management functions under the FCA and PRA Senior Managers Regime (SMR). ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 124 Risk profile continued Three lines of defence model Roles and responsiblites for risk management are defined under a three lines of defence model. Each line of defence has a specifc set of responsiblites for risk management and control as shown in the table below. Lines of defence DefintionKey responsiblites include 1stThe businesses and functions engaged in or supporting revenue-generating activties that own and manage the risks •Propose the risks required to undertake revenue-generating activties •Identify, assess, monitor and escalate risks and issues to the second line and senior management 1 and promote a healthy risk culture and good conduct •Validate and self-assess compliance to RTFs and polices, confirm the quality of validaton, and provide evidence-based affirmaton to the second line •Manage risks withn Risk Appetite, set and execute remediaton plans and ensure laws and regulations are being complied with •Ensure systems meet risk data aggregation, risk reporting and data quality requirements set by the second line 2ndThe control functions independent of the first line that provide oversight and challenge of risk management to provide confidence to the Group Chief Risk Officer, senior management and the Court •Identify, monitor and escalate risks and issues to the Group Chief Risk Officer, senior management and the Court and promote a healthy risk culture and good conduct •Oversee and challenge first-line risk-taking activties and review first-line risk proposals •Propose Risk Appetite to the Court, monitor and report adherence to Risk Appetite and intervene to curtail business if it is not in line with existng or adjusted Risk Appetite, there is material non-compliance with policy requirements or when operational controls do not effectively manage risk •Set risk data aggregation, risk reporting and data quality requirements •Ensure that there are appropriate controls to comply with applicable laws and regulations, and escalate signficant non-compliance matters to senior management and the appropriate committees 3rdThe Internal Audit function provides independent assurance on the effectiveness of controls that support first line’s risk management of business activties, and the processes maintaned by the second line •Independently assess whether management has identfied the key risks in the businesses and whether these are reported and governed in line with the established risk management processes •Independently assess the adequacy of the design of controls and their operating effectiveness 1Senior management in this table refers to indviduals designated as senior management functions under the FCA and PRA Senior Managers Regime (SMR). Risk Appetite and profile We recognise the following constraints which determine the risks that we are willng to take in pursuit of our strategy and the development of asustainable business: • Risk capacity is the maximum level of risk the Group can assume, given its current capabilties and resources, before breaching constraints determined by capital and liqudity requirements and internal operational capabilty (includng but not limted to technical infrastructure, risk management capabilties, expertise), or otherwise failng to meet the expectations of regulators and lawenforcement agencies • Risk Appetite is defined by the Group and approved by the Court. It is the maximum amount and type of risk the Group is willng to assume in pursuit of its strategy. Risk Appetite cannot exceed risk capacity The Court has approved a Risk Appetite Statement, which is underpinned by a set of financal and operational control parameters known as Risk Appetite metrics and their associated thresholds. These directly constrain the aggregate risk exposures that can be taken across the Group. The Group Risk Appetite is reviewed at least on an annual basis to ensure that it is fit for purpose and aligned with strategy, and focus is given to emerging or new risks. The Risk Appetite Statement is supplemented by an overarching statement outlinng the Group’s RiskAppetite princples. Risk Appetite princples The Group Risk Appetite is defined in accordance with risk management princples that inform our overall approach to risk management and our risk culture. We follow the highest ethical standards and ensure a fair outcome for our clients, as well as faciltating the effective operation of financal markets, while at the same time meeting expectations of regulators and law enforcement agencies. We set our Risk Appetite to enable us to grow sustainably and to avoid shocks to earnings or our general financal health, as well as manage our Reputational Risk in a way that does not materially undermine the confidence of ourinvestors and all internaland external stakeholders. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 125 Risk profile continued Risk Appetite Statement The Group will not compromise adherence to its Risk Appetite in order to pursue revenue growth or higher returns. The Group Risk Appetite is supplemented by risk control tools such as granular level limts, polices, standards and other operational control parameters that are used to keep the Group’s risk profile withn Risk Appetite. The Group’s risk profile is its overall exposure to risk at a given point in time, covering all applicable risk types. Status against Risk Appetite is reported to the Court, Court Risk Committee and the Standard Chartered Bank Executive Risk Committee, includng the status of breaches and remediaton plans where applicable. In additon to Risk Appetite Statements for the Princpal Risk Types, the Group also has a Risk Appetite Statement for Climate Risk which is an Integrated Risk Type that can manifest through other risk types. Consideraton for standalone Risk Appetite Statements will be given in 2022 for additonal integrated risks such as Third-Party Risk and Digtal Asset Risk. Where relevant, these risk types are currently supported by Risk Appetite metrics embedded withn the respective PRTs. The Standard Chartered Bank Executive Risk Committee and the Solo & Standard Chartered Bank UK (Branch) Asset and Liablity Management Committee are responsible for ensuring that our risk profile is managed in compliance with the Risk Appetite set by the Court. The Court Risk Committee advises the Court on and monitors the Group’s compliance with the Risk Appetite Statement. The indvidual Princpal Risk Types’ Risk Appetite Statements approved by the Court are set out in the Princpal Risks section (pages 129 to 143]) Risk identficaton and assessment Identifcation and assessment of potentially adverse risk events is an essential first step in managing the risks of any business or activty. To ensure consistency in communicaton we use Princpal Risk Types to classify our risk exposures. Nevertheless, we also recognise the need to maintan a holistc perspective since a single transaction or activty may give rise to multiple types of risk exposure, risk concentrations may arise from multiple exposures that are closely correlated, and a given risk exposure may change its form from one risk type to another. There are also sources of risk that arise beyond our own operations such as the Group’s dependency on suppliers for the provison of services and technology. As the Group remains accountable for risks arisng from the actions of such third parties, failure to adequately monitor and manage these relationshps could materially impact the Group’s abilty to operate and could have an impact on our abilty to continue to provide services that are material to the Group. To faciltate risk identficaton and assessment, the Group leverages the PLC Group’s dynamic risk-scanning process with inputs from the internal and external risk environment, as well as potential threats and opportunites from the business and client perspectives. The Group maintans a taxonomy of the Princpal Risk Types, Integrated Risk Types and risk sub-types that are inherent to the strategy and business model; as well as an emerging risks inventory that includes near-term as well as longer-term uncertaintes. Near-term risks are those that are on the horizon and can be measured and mitgated to some extent, while uncertaintes are longer-term matters that should be on the radar but are not yet fully measurable. The Group Chief Risk Officer and the Standard Chartered Bank Executive Risk Committee review regular reports on the risk profile for the Princpal Risk Types, adherence to the approved Risk Appetite and the Group risk inventory includng emerging risks. They use this informaton to escalate material developments in each risk event and make recommendations to the Court annually on any potential changes to our Corporate Plan. Further informaton on the Group’s emerging risks can be found on (pages 144 to 152) Stress testing Stress tests are performed at PLC Group, Solo, country, business and portfolio level under a wide range of risks and at varying degrees of severity. Unless set by the Bank of England, scenario design is a bespoke process that aims to explore risks that can adversely impact the PLC Group. The objectve of stress testing is to support the PLC Group in assessing that it: • Does not have a portfolio with excessive risk concentration that could produce unacceptably high losses under severe but plausible scenarios • Has sufficent financal resources to withstand severe but plausible scenarios • Has the financal flexiblity to respond to extreme but plausible scenarios • Understands the key business model risks and considers what kind of event might crystallise those risks - even if extreme with a low likelhood of occurring - and identfies as required, actions to mitgate the likelhood or impact as required The PLC Group enterprise stress tests incorporate Capital and Liqudity Adequacy Stress Tests, includng in the context of capital adequacy,recovery and resolution, and stresstests that assess scenarios whereour business model becomes challenged, such as the BoE Biennal Exploratory Scenario, or unviable, such as reverse stress tests. The Group relies on these stress tests to understand the Group level vulnerabilties. Based on the stress test results, the Group Chief Financal Officer and Group Chief Risk Officer can recommend strategic actions to the Court to ensure that the Group strategy remains withn the Court-approved Risk Appetite. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 126 Risk profile continued PrincpalRisk Types Princpal Risk Types are risks that are inherent in our strategy and business model and have been formally defined in the Group’s RMF. These risks are managed in line with the PLC Group RTFs which are adopted by the Company via an addendum to each RTF. The Princpal Risk Types and associated Risk Appetite Statements are approved by the Court. The Group currently recognises Climate Risk, Digtal Asset Risk and Third-Party Risk as Integrated Risk Types. Climate Risk is defined as “the potential for financal loss and non-financal detriments arisng from climate change and society’s response to it”; Digtal Asset Risk is defined as “the potential for regulatory penalties, financal loss and or reputational damage to the Group resulting from digtal asset exposure or digtal asset related activties arisng from the Group’s Clients, Products and Projects” and Third-Party Risk is defined as “the potential for loss or adverse impact from failure to manage multiple risks arisng from the use of third-parties, and is the aggregate of these risks.” In line with the Group’s strategy to explore digtal-asset related opportunites, the Group has continued to develop and enhance its Digtal Asset Risk Management approach during 2021 in order to further embed risk management practices and ensure that digtal asset activties across the Group are appropriately risk managed, and withn the Group’s Risk Appetite. The approach requires comprehensive assessments of risks arisng from such intiatves and seeks to integrate the approach withn existng risk management practices. The approach recognises the need for digtal asset subject matter experts to assess and advise on the specifc risks presented by digtal assets. The Group applies the PLC Group Digtal Assets Risk Management policy for the management of Digtal Asset Risk and relies on the PLC Group committee to oversee digtal asset related risks. In future reviews, we will continue to consider if existng Princpal Risk Types or incremental risks should be treated as Integrated Risk Types. The table below shows the Group’s current Princpal Risk Types. Princpal Risk TypesDefintion Credit Risk •Potential for loss due to the failure of a counterparty to meet its agreed obligatons to pay the Group Traded Risk •Potential for loss resulting from activties undertaken by the Group in financal markets Treasury Risk •Treasury Risk is formed of Capital and Liqudity Risk, and Interest Rate Risk in the Banking Book. Capital Risk is the potential for insuffcient level, compositon or distrbution of capital, own funds and eligble liablites to support our normal activties. Liqudity Risk is the risk that we may not have sufficent stable or diverse sources of funding to meet our obligatons as they fall due. Interest Rate Risk in the Banking Book is the potential for a reduction in earnings or economic value due to movements in interest rates on banking book assets, liablites and off-balance sheet items Operational and Technology Risk •Potential for loss resulting from inadequate or failed internal processes, technology events, human error, or from the impact of external events (includng legal risks) Information and Cyber Security Risk •Risk to the Group’s assets, operations and indviduals due to the potential for unauthorised access, use, disclosure, disrupton, modifcation, or destruction of informaton assets and/or informaton systems Compliance Risk •Potential for penalties or loss to the Group or for an adverse impact to our clients, stakeholders or to the integrty of the markets we operate in through a failure on our part to comply with laws or regulations Financal Crime Risk •Potential for legal or regulatory penalties, material financal loss or reputational damage resulting from the failure to comply with applicable laws and regulations relating to internatonal sanctions, anti-money laundering, anti-bribery and corruption and Fraud Model Risk •Potential loss that may occur as a consequence of decisons or the risk of misestmation that could be princpally based on the output of models, due to errors in the development, implementaton or use of such models Reputational and Sustainablity Risk •Potential for damage to the franchise (such as loss of trust, earnings or market capitalsation) because of stakeholders taking a negative view of the Group through actual or perceived actions or inactons, includng a failure to uphold responsible business conduct or lapses in our commitment to do no signficant environmental and social harm through our client, third-party relationshps or our own operations Further details of our princpal risks and how these are being managed are set out in the Princpal Risks section (pages 129 to 143) ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 127 Risk profile continued RMF effectiveness reviews Effectiveness review of the RMF is managed as part of the PLC Group ERMF effectiveness review. At Group level, a self- assessment is conducted to assess the overall effectiveness of the RMF, and the results are taken into consideraton in the ERMF effectiveness review. The Group Chief Risk Officer is responsible for annually affirmng the effectiveness of the RMF to the Court Risk Committee. The RMF effectiveness review is conducted annually since its implementaton in 2020 and enables measurement of progress against the 2020 baseline. Over the course of 2022, the Group aims to further strengthen its risk management practices through further improvng on the management of non-financal risks and risks which are integrated in nature. Executive and Court risk oversight Overview The Court comprises of the independent non-executive directors from the PLC Board (“Dual Non-executive Directors”), executive directors from the PLC Board (“Dual Executive Directors”) and executive directors who are appointed solely to the Court (“Independent Executive Directors”) with the specifc purpose of providng independent decison making at the Court meetings. The Court discharges its responsiblites directly or, in order to assist it in carrying out its function of ensuring effective independent oversight, delegates specifc responsiblites to its four primary committees. The Court has ultimate responsiblity for risk management and approves the RMF based on the recommendation from the Court Risk Committee, which also recommends the Group Risk Appetite Statement for all Princpal Risk Types. Court and Executive level risk committee governance structure The Committee governance structure below presents the view as of 2021. COURT COURT LEVEL COMMITTEES¹ Court Risk Committee Court Audit Committee Combined United States Operations and Risk Committee (US Risk Committee) Court Nominaton Committee Court Risk Committee: The Court Risk Committee is concerned with the oversight and review of princpal risks. Court Audit Committee: The Court Audit Committee is concerned with the oversight and review of financal, audit, internal control and non-financal crime issues. Combined UnitedStates Operations and Risk Committee (US Risk Committee): The US Risk Committee is required to meet the requirements of the Dodd-Frank Act Section 165 Enhanced Prudential Standard Final Rules as released by the Federal Reserve Bank. It has prescribed responsiblites in relation to overseeing the risk management framework, approving and overseeing the implementaton of the risk management polices and also specifc review and approval responsiblites in relation to liqudity risk management. Membership of the Committee is comprised of directors of the Company or PLC, includng at least one independent non-executive director and one with signficant risk management experience. 1The Court also has a Standing Committee with a remit to approve matters, on behalf of the Court, where a formal resolution is required for legal and regulatory purposes. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 128 Risk profile continued Standard Chartered Bank Executive Risk Committee Solo & Standard Chartered Bank UK (Branch) Asset and Liablity Management Committee EXECUTIVE LEVEL COMMITTEES The Company’s Management Team comprises of the members of the PLC Group Management Team includng the Group Chief Executive Officer, the Group Chief Risk Officer and the Group Chief Financal Officer. Their responsiblites under the Senior Managers Regime cover both the PLC Group and the Group. The Company has two management level committees, namely the Standard Chartered Bank Executive Risk Committee and Solo & Standard Chartered Bank UK (Branch) Asset and Liablity Management Committee. Standard Chartered BankExecutive RiskCommittee The Standard Chartered Bank Executive Risk Committee is responsible for ensuring the effective management of risk throughout the Group in support of the Group’s strategy. The Group Chief Risk Officer chairs the Committee, whose members are drawn from the PLC Group’s Management Team. The Committee determines the RMF, includng the delegation of any part of its authorites to appropriate indviduals or properly constituted sub-committees. The Group relies key PLC Group level committees to provide oversight of the Princpal Risk Types across clients, businesses, products and functions. The Committee requests and receives relevant informaton to fulfil its governance mandates relating to the risks to which the Group is exposed. As with the Court Risk Committee, the Standard Chartered Bank Executive Risk Committee and Solo & Standard Chartered Bank UK (Branch) Asset and Liablity Management Committee receive reports that include informaton on risk measures, Risk Appetite metrics and thresholds, risk concentrations, forward-looking assessments, updates on specifc risk situatons and actions agreed by these committees to reduce or manage risk. Solo & Standard Chartered Bank UK (Branch) Asset and Liablity Management Committee The Solo & Standard Chartered Bank UK (Branch) Asset and Liablity Management Committee is chaired by the CEO, Corporate, Commercial & Institutonal Banking, Europe & Americas. The Committee is responsible for determinng the Group’s approach to balance sheet management and ensuring that, in executing the Group’s strategy, the Group operates withn internally approved Risk Appetite and external requirements relating to capital, loss-absorbing capacity, liqudity, leverage, Interest Rate Risk in the Banking Book, Banking Book Basis Risk and Structural Foreign Exchange Risk, and meets internal and external recovery planning requirements. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 129 Risk profile continued Princpal risks We manage and control our Princpal Risk Types in line with the PLC Group Risk Type Frameworks, polices and Court- approved Risk Appetite. These are implemented at the Company level via addenda to the PLC Group Risk Type Frameworks. Credit Risk The Group defines Credit Risk as the potential for loss due to the failure of a counterparty to meet its agreed obligatons to pay the Group. Risk Appetite Statement The Group manages its credit exposures following the princple of diversficaton across products, geographies, client segments and industry sectors. Roles and responsiblites The Company addenda to the Credit Risk Type Frameworks for the Group are set and owned by the Chief Risk Officers for the business segments. The CreditRisk functionis the second-linecontrol functionresponsible forindependent challenge, monitorng and oversight of the Credit Risk management practices of the business and functions engaged in or supporting revenue- generating activties which constitute the first line of defence. In additon, they ensure that credit risks are properly assessed and transparent; and that credit decisons are controlled in accordance with the Group’s Risk Appetite, PLC Group’s credit polices and standards. Mitgation We apply segment-specifc PLC Group polices for the management of Credit Risk. The Credit Policy for Corporate, Commercial and Institutonal Banking Client Coverage sets the princples that must be followed for the end-to-end credit process includng credit intiaton, credit grading, credit assessment, product structuring, Credit Risk mitgation, monitorng and control, anddocumentation. The Consumer, Private and Business Banking Credit Risk Management Policy sets the princples for the management of Consumer, Private and Business Banking segments, that must be followed for end-to-end credit process includng credit intiaton, credit assessment and monitorng for lending to these segments. In additon, there are other PLC Group-wide polices integral to Credit Risk management such as those relating to Risk Appetite, Model Risk, Stress Testing, and Impairment Provisoning. We also apply the PLC Group standards for the eligbilty, enforceabilty and effectiveness of Credit Risk mitgation arrangements. Potential credit losses from a given account, client or portfolio are mitgated using a range of tools such as collateral, netting agreements, credit insurance, credit derivatves and guarantees. Risk mitgants are also carefully assessed for their market value, legal enforceabilty, correlation and counterparty risk of the protection provider. Collateral must be valued prior to drawdown and regularly thereafter as required, to reflect current market conditons, the probabilty of recovery and the period of time to realise the collateral in the event of liqudation. We also seek to diversfy our collateral holdingsacross asset classes and markets. Where guarantees, credit insurance, standby letters of credit or credit derivatves are used as Credit Risk mitgation, the creditworthness of the protection provider is assessed and monitored using the same credit approval process applied to the obligor. Governance committee oversight At Court level, the Court Risk Committee oversees the effective management of Credit Risk. At the executive level, the Standard Chartered Bank Executive Risk Committee is responsible for the management of Credit Risk for the Group, and relies on other key PLC Group committees – in particular the Corporate, Commercial and Institutonal Banking Risk Committee (CCIBRC), Consumer, Private and Business Banking Risk Committee (CPBBRC), and the regional risk committees for Asia, and Africa & Middle East. These committees are responsible for overseeing the Credit Risk profile of the Group withn the respective business areas and regions. Decison-making authorites and delegation The Credit Risk Type Frameworks are the formal mechanism which delegate Credit Risk authorites cascading from the Group Chief Risk Officer, as the Senior Manager of the Credit Risk Type, to indviduals such as the business segments’ Chief Risk Officers. Named indviduals further delegate credit authorites to indvidual credit officers based on risk-adjusted scales by customer type or portfolio. The decison-making authorites and delegations are set out at the Group level via the Company addenda to the Credit Risk Type Frameworks. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 130 Credit Risk authorites are reviewed at least annually to ensure that they remain appropriate. In Corporate, Commercial and Institutonal Banking Client Coverage, the indviduals delegating the Credit Risk authorites perform oversight by reviewng a sample of the limt applicatons approved by the delegated credit officers on a monthly basis. In Consumer, Private and Business Banking, in most cases credit decison systems and tools (e.g. applicaton scorecards) are used for credit decisoning. Where manual or discretonary credit decisons are applied, these are subject to periodc quality control assessment and assurance checks. Monitorng We regularly monitor credit exposures, portfolio performance, and external trends that may impact risk management outcomes. Internal risk management reports that are presented to risk committees contain informaton on key politcal and economic trends across major portfolios and countries, portfolio delinquency and loan imparment performance. The Industry Portfolio Mandate, developed jontly by the Corporate, Commercial and Institutonal Banking Client Coverage business and the Risk function, provides a forward- looking assessment of risk using a platform from which business strategy, risk consideratons and client planning are performed with one consensus view of the external industry outlook, portfolio overviews, Risk Appetite, underwritng princplesand stress testinsghts. In Corporate, Commercial and Institutonal Banking Client Coverage, clients and portfolios are subjected to additonal review when they display signs of actual or potential weakness; for example, where there is a decline in the client’s positon withn the industry,financal deterioraton,a breach of covenants, or non-performance of anobligatonwithn the stipulated period. Such accounts are subjected to a dedicated process overseen by the Credit Issues Committees in the relevant countries where client account strategies and credit grades are re-evaluated. In additon, remedial actions, includng exposure reduction, security enhancement or exitng the account, could be undertaken, and certain accounts could also be transferred into the control of Group Special Assets Management (GSAM), which is our specialst recovery unit for Corporate, Commercial and Institutonal BankingClientCoverage that operates independently fromour mainbusiness. For Consumer, Private and Business Banking, exposures and collateral monitorng are performed at the counterparty and/or portfolio level across different client segments to ensure transactions and portfolio exposures remain withn Risk Appetite. Portfolio delinquency trends are monitored on an ongoing basis. Accounts that are past due (or perceived as high risk but not yet past due) are subject to a collections or recovery process managed by a specialst function independent from the orignation function. In some countries, aspects of collections and recovery activties are outsourced. Oversight and assurance are undertaken in risk committees and various governance forums. For discretonary lending portfolios, simlar processes as of Commercial client coverage are followed. In additon, an independent Credit Risk Review team (part of Enterprise Risk Management) performs judgement-based assessments of the Credit Risk profiles at various portfolio levels, with focus on selected countries and segments through deep dives, comparative analysis, and review and challenge of the basis of credit approvals. The review ensures that the evolving Credit Risk profiles of Corporate, Commercial and Institutonal Banking and Consumer, Private and Business Banking are well managed withn our Risk Appetite and polices through prompt and forward-looking mitgating actions. Credit rating and measurement All credit proposals are subject to a robust Credit Risk assessment. It includes a comprehensive evaluation of the client’s credit quality, includng willngness, abilty and capacity to repay. The primary lending consideraton is based on the client’s credit quality and the repayment capacity from operating cashflows for counterparties; and personal income or wealth for indvidual borrowers. The risk assessment gives due consideraton to the client’s liqudity and leverage positon. Where applicable, the assessment includes a detailed analysis of the Credit Risk mitgation arrangements to determine the level of reliance on such arrangements as the secondary source of repayment in the event of a signficant deterioraton in a client’s credit quality leading to default. Risk measurement plays a central role, along with judgement and experience, in informng risk-taking and portfolio management decisons. Since 1 January 2008, we have used the advanced internal ratings-based approach under the Basel regulatory framework to calculate Credit Risk capital requirements. The PLC Group has also established a global programme to undertake a comprehensive assessment of capital requirements necessary to be implemented to meet the latest revised Basel III finalsation (Basel IV) regulations. A standard alphanumeric Credit Risk grade system is used for Corporate, Commercial and Institutonal Banking Client Coverage. The numeric grades run from 1 to 14 and some of the grades are further sub-classifed. Lower numeric credit grades are indcative of a lower likelhood of default. Credit grades 1 to 12 are assigned to performing customers, while credit grades 13 and 14 are assigned to non-performing or defaulted customers. Consumer, Private and Business Bankinginternal ratings-based portfolios use applicatonand behaviouralcredit scores that are calibrated to generate a probabilty of default and then mapped to the standard alphanumeric Credit Risk grade system. We refer to external ratings from credit bureaus (where these are available); however, we do not rely solely on these to determine CPBB credit grades. Risk Decison Framework (RDF) as a credit rating system supports the delivery of optimum risk-adjusted-returns with controlled volatilty and is used to define the portfolio/new booking segmentation, shape and decison critera for unsecured consumer business segment. Risk profile continued ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 131 Risk profile continued Advanced internal ratings-based models cover a substantial majorty of our exposures and are used in assessing risks at a customer and portfolio level, setting strategy and optimsing our risk-return decisons. Material internal ratings-based risk measurement models are approved by the PLC Group Model Risk Committee. Prior to review and approval, all internal ratings- based models are validated in detail by a model validaton team, which is separate from the teams that develop and maintan the models. Models undergo annual validaton by an independent model validaton team. Reviews are also triggered if the performance ofa model deteriorates materially against predetermined thresholds during the ongoing model performance monitorng process which takes place between the annualvalidatons. Credit Concentration Risk Credit Concentration Risk may arise from a single large exposure to a counterparty or a group of connected counterparties, or from multipleexposures across the portfolio thatare closely correlated.Large exposure Concentration Riskis managed through concentration limts set for a counterparty or a group of connected counterparties based on control and economic dependence critera. Risk Appetite metrics are setat portfolio level and monitored to controlconcentrations, where appropriate, by industry, specifc products, tenor, collateralisaton level, top clients and exposure to holding companies. Single name credit concentration thresholds are set by client group depending on credit grade, and by customer segment. For concentrations that are material at a Group level, breaches and potential breaches are monitored by the respective governance committees and reported to the Standard Chartered Bank Executive Risk Committee and Court Risk Committees. Credit imparment Expected credit losses (ECL) are determined for all financal assets that are classifed as amortised cost or fair value through other comprehensive income. ECL is computed as an unbiased, probabilty-weighted provison determined by evaluating a range of plausible outcomes, the time value of money, and forward-looking informaton such as critcal global or country- specifc macroeconomic variables. For more detailed informaton onmacroeconomic datafeeding into IFRS 9 ECL calculations, please referto page 99. At the time of orignation or purchase of a non-credit- impared financal asset (stage 1), ECL represent cash shortfalls arisng from possible default events up to 12 months into the future from the balance sheet date. ECL continue to be determined on this basis until there is a signficant increase in the Credit Risk of the asset (stage 2), in which case an ECL is recognised for default events that may occur over the lifetme of the asset. If there is observed objectve evidence of credit imparment or default (stage 3), ECL continueto be measured on alifetme basis. In Corporate, Commercial and Institutonal Banking Client Coverage, a loan is considered credit- impared where analysis and review indcate that full payment of either interest or princpal, includng the timelness of such payment, is questionable, or as soon as payment of interest or princpal is 90 days overdue. These credit-impared accounts are managed by our specialst recovery unit (GSAM). Where appropriate, non-material credit-impared accounts are co-managed with the business under the supervison of GSAM. In Consumer, Private and Business Banking, a loan is considered credit-impared as soon as payment of interest or princpal is 90 days overdue or meets other objectve evidence of imparment such as bankruptcy, debt restructuring, fraud or death. Financal assets are written-off when it meets certain threshold conditons which are set at the point where empircal evidence suggests that the client is unlikely to meet their contractual obligatons, or a loss of princpal is expected. Estimatng the amount and timng of future recoveries involves signficant judgement and considers the assessment of matters such as future economic conditons and the value of collateral, for which there may not be a readily accessible market. The total amount of the Group’s imparment provison is inherently uncertain, being sensitve to changes in economic and credit conditons across the regions in which the Group operates. For further details on sensitvity analysis of expected credit losses under IFRS 9, please refer to page 102. Stress testing Stress testing is a forward-looking risk management tool that constitutes a key input into the identficaton, monitorng and mitgation of Credit Risk, as well as contributng to Risk Appetite calibraton. Periodc stress tests are performed on credit portfolios/segments to anticpate vulnerabilties from stressed conditons and intiate timely right-sizng and mitgation plans. Additonally, multiple enterprise-wide and country-level stress tests are mandated by regulators to assess the abilty of the PLC Group and its subsidaries to continue to meet their capital requirements during a plausible, adverse shock to the business. These regulatory stress tests are conducted in line with the princplesstated inthe Enterprise Stress Testing Policy. The Group relies on these stress tests to understand the Group level vulnerabilties given the signficant overlap between Group and PLC Group credit risk profile. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 132 Traded Risk The Group defines Traded Risk as the potential for loss resulting from activties undertaken by the Group in financal markets Risk Appetite Statement The Group should control its trading portfolio and activties to ensure that Traded Risk losses (financal or reputational) do not cause material damage to the Group’s or PLC Group’s franchise. The Company addendum to the Traded Risk Type Framework (TRTF) brings together all risk sub-types exhibting risk features common to Traded Risk. These risk sub-types include Market Risk, Counterparty Credit Risk and Algorithmc Trading. Traded Risk Management (TRM) is the core risk management function supporting market-facing businesses, specifcally Financal Markets and Treasury. Roles and responsiblites The Company addendum to the TRTF, which sets the roles and responsiblites in respect of Traded Risk for the Group, is owned by the Global Head, Traded Risk Management. The business, acting as first line of defence, is responsible for the effective management of risks withn the scope of its direct organisatonal responsiblites set by the Court. The TRM function is the second-line control function that performs independent challenge, monitorng and oversight of the Traded Risk management practices of the first line of defence. The first and second lines of defence are supported by the organisaton structure, job descriptonsand authorites delegated by Traded Risk control owners. Mitgation We apply the PLC Group polices for management of Traded Risk The Group controls its trading portfolio and activties withn Risk Appetite by assessing the various Traded Risk factors. These are captured and analysed using proprietary analytical tools, in additon to risk managers’ specialst market and product knowledge. The Group’s Traded Risk exposure is aligned with its Risk Appetite for Traded Risk, and assessment of potential losses that might be incurred by the Group as a consequence of extreme but plausible events. All businesses incurrng Traded Risk must be in compliance with the TRTF. The Company addendum to the TRTF requires that Traded Risk limts are defined at a level appropriate to ensure that the Group remains withn Traded Risk Appetite. The Company addendum to the TRTF, and underlying polices and standards ensure that these Traded Risk limts are implemented. All Traded Risk exposures throughout the Group aggregate up to TRM’s Group-level reporting. This aggregation approach ensures that the limts structure across the Group is consistent with the Group’s Risk Appetite. The Company addendum to the TRTF and Enterprise Stress Testing Policy ensure that adherence to stress-related Risk Appetite metrics is achieved. Stress testing aims at supplementing other risk metrics used withn the Group by providng a forward-looking view of positons and an assessment of their resilence to stressed market conditons. Stress testing is performed on all Group businesses with Traded Risk exposures, either where the risk is actively traded or where material risk remains. This additonal informaton is used to inform the management of the Traded Risk taken withn the Group. The outcome ofstress tests is discussed across the various business linesand management levels so thatexistngand potential risks can be reviewed, and related management actions can be decided upon where appropriate. Governance committee oversight At Court level, the Court Risk Committee oversees the effective management of Traded Risk. At the executive level, the Standard Chartered Bank Executive Risk Committee is responsible for the governance and oversight of Traded Risk for the Group, and relies on other key PLC Group committees for the management of Traded Risk – in particular CCIBRC and Model Risk Committee. Where Traded Risk limts are set at a country level, committee governance is: • Subsidary authority for setting Traded Risk limts, where applicable, is delegated from the local board to the local risk committee, Country Chief Risk Officer and Traded Risk managers. • Branch authority for setting Traded Risk limts remains with TRM which retains responsiblity for monitorng and reporting excesses. Decison-making authorites and delegation The Group’s Risk Appetite Statement, along with the key associated Risk Appetite metrics, is approved by the Court. The Group Chief Risk Officer delegates authority for all Traded Risk limts to the TRTF Owner (Global Head, TRM) who in turn delegates approval authorites to indvidualTraded Risk managers. Additonal limts are placed on specifc instruments, positons, and portfolio concentrations where appropriate. Authorites are reviewed at least annually to ensure that they remain appropriate and to assess the quality of decisons taken by the authorised person. Key risk-taking decisons are made only by certain indviduals with the skills, judgement and perspective to ensure that the Group’s controlstandards andrisk-return objectves are met. Authority delegators are responsiblefor monitorng the quality of the risk decisons taken by their delegates and the ongoing suitablity of their authorites. Risk profile continued ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 133 Risk profile continued MarketRisk The Group uses a Value at Risk (VaR) model to measure the risk of losses arisng from future potential adverse movements in market rates, prices and volatilties. VaR is a quantitatve measure of Market Risk that applies recent historcal market conditons to estimate the potential future loss in market value that will not be exceeded in a set time period at a set statistcal confidence level. VaR provides a consistent measure that can be applied across trading businesses and products over time and can be set against actual daily trading profit and loss outcomes. For day-to-day risk management, VaR is calculated as at the close of business, generally at UK time for expected market movements over one business day and to a confidence level of 97.5 per cent. Intra-day risk levels may vary from those reported at the end of the day. The Group applies two VaR methodologies: • Historcalsimulaton: this involves the revaluation ofall existng positons toreflect theeffect of historcally observed changes in Market Risk factors on the valuation of the current portfolio. This approach is applied for general Market Risk factors and the majorty of specifc (credit spread) risk VaRs • Monte Carlo simulaton: thismethodology is simlar to historcal simulaton but with considerably more inputrisk factor observations. These are generated by random sampling techniques, but the results retain the essential variablity and correlations of historcally observed risk factor changes. Thisapproach isapplied forsome of the specifc (credit spread)risk VaRs in relation to idosyncratic exposures in credit markets A one-year historcal observation period is applied in both methods. As an input to regulatory capital, trading book VaR is calculated for expected movements over 10 business days and to a confidence level of 99 per cent. Some types of Market Risk are not captured in the regulatory VaR measure, and these Risks-not-in-VaR (RNIVs) are subject to capital add-ons. Counterparty Credit Risk The Counterparty Credit Risk arisng from activties in financal markets is in scope of the Risk Appetite set by the Group for Traded Risk. The Group uses a Potential Future Exposure (PFE) model to measure the credit exposure arisng from the positve mark-to- market of traded products and future potential movements in market rates, prices and volatilties. PFE is a quantitatve measure of Counterparty Credit Risk that applies recent historcal market conditons to estimate the potential future credit exposure that will not be exceeded in a set time period at a confidence level of 97.5 per cent. PFE is calculated for expected market movements over different time horizons, based on the tenor of the transactions. The Group applies two PFE methodologies, simulaton-based, which is predominantly used, and an add-on based PFE methodology. Monitorng TRM monitors the overall portfolio risk and ensures that it is withn specifed limts and therefore Risk Appetite. Limts are typically reviewed twice a year. Most of the Traded Risk exposures are monitored daily against approved limts. Traded Risk limts apply at all times, unless separate intra-day limts have been set. Limt excess approval decisons are based on an assessment of the circumstances drivng the excess and of the proposed remediaton plan. Limts and excesses can only be approved by a Traded Risk manager with the appropriate delegated authority. TRM reports and monitors limts applied to stressed exposures. Stress scenario analysis is performed on all Traded Risk exposures in financal markets and in portfolios outside financal markets such as syndicated loans and princpal finance. Stress loss excesses are discussed with the business and approved where appropriate, based on delegated authority levels. Stress testing The VaR and PFE measurements are complemented by weekly stress testing of Market Risk and Counterparty Credit Risk to highlght the potential risk that may arise from severe but plausible market events. Stress testing is an integral part of the Traded Risk management framework and considers both historcal market events and forward-looking scenarios. A consistent stress testing methodology is applied to trading and non- trading books. The stress testing methodology assumes that scope for management action would be limted during a stress event, reflecting the decrease in market liqudity that often occurs. Regular stress test scenarios are applied to interest rates, credit spreads, exchange rates, commodity prices and equity prices. This covers all asset classes in the Financal Markets and Treasury books. Ad hoc scenarios are also prepared, reflecting specifc market conditons and for particular concentrations of risk that arise withn the business. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 134 Stress scenarios are regularly updated to reflect changes in risk profile and economic events. The TRM function reviews stress testing results and, where necessary, enforces reductionsin overall Traded Risk exposures. TheStandardChartered Bank Executive Risk Committee considers the results of stress tests as part of its supervison of Risk Appetite. Where required, PLC Group and business-wide stress testing will be supplemented by entity stress testing at a country level. This stress testing is coordinated at the country level and subject to the relevant local governance. Treasury Risk Treasury Risk is formed of Capital and Liqudity Risk, and Interest Rate Risk in the Banking Book. Capital Risk is the potential for an insuffcient level, compositon or distrbution of capital, own funds and eligble liablites to support our normal activties. Liqudity Risk is the risk that we may not have sufficently stable or diverse sources of funding to meet our obligatons as they fall due. Interest Rate Risk in the Banking Book is the potential for a reduction in earnings or economic value due to movements in interest rates on banking book assets, liablites, and off-balance sheet items. Risk Appetite Statement Indivdual regulated entites withn the Group should maintan a strong capital and liqudity positon and meet their minmum capital and liqudity requirements. Roles and responsiblites The Global Head, Enterprise Risk Management is the Risk Framework Owner for Treasury Risk under the Risk Management Framework. The Group Treasurer is supported by teams in Treasury and Finance to implement the Treasury Risk Type Framework as the first line of defence, and is responsible for managing Treasury Risk. From 2022, the second line of defence responsiblity for Pension risk sub-type will move from Traded Risk to Treasury Risk and the risk will be governed under the Treasury Risk Type Framework. Mitgation We apply the PLC Group polices for the management of material Treasury risks and closely monitor our risk profile through Risk Appetite metrics set at Solo and country level. Capital Risk In order to manage Capital Risk, strategic business and capital plans are drawn up covering a five-year horizon and are approved by the Court annually. The capital plan ensures that adequate levels of capital, includng loss-absorbing capacity, and an efficent mix of the different components of capital are maintaned to support our strategy and business plans. Treasury is responsible for the ongoing assessment of the demand for capital and the updating of the Group’s capital plan. Solo level Risk Appetite metrics includng capital and minmum requirement for own funds and eligble liablity (MREL) are assessed withn the Corporate Plan to ensure that our business plan can be achieved withn risk tolerances. Structural FX Risk The Group’s structural positon results from the Company’s non-US dollar investment in the share capital and reserves of subsidaries and branches. The FX translation gains, or losses are recorded in the Company’s translation reserves with a direct impact on the PLC Group and Solo’s Common Equity Tier 1 ratio. Structural FX positon is monitored and managed at PLC Group level as part of overall PLC Group foreign exchange exposure. Liqudity and Funding Risk At Solo and country level we implement various risk appetite metrics and monitor these against limts and management action triggers. This ensures that the Group entites maintan an adequate and well-diversfied liqudity buffer, as well as a stable funding base, and that they meet their liqudity and funding regulatory requirements. Interest Rate Risk in the Banking Book This risk arises from differences in the repricng profile, interest rate basis, and optionalty of banking book assets, liablites and off-balance sheet items. IRRBB represents an economic and commercial risk to the Group and its capital adequacy. Recovery and Resolution Planning In line with PRA requirements, the PLC Group maintans a Recovery Plan which is a live document to be used by management in the event of stress in order to restore the PLC Group to a stable and sustainable positon. The Recovery Plan includes a set of Recovery Indicators, an escalation framework, and a set of management actions capable of being implemented in a stress. A Recovery Plan is also maintaned withn each major entity includng those under Solo, and all recovery plans are subject to periodc fire-drill testing. The Group follows the PLC Group’s Recovery Plan. As the UK resolution authority, the Bank of England (BoE) is required to set a preferred resolution strategy for the PLC Group. The BoE’s preferred resolution strategy is whole PLC Group single point of entry bail-in at the ultimate holding company level (Standard Chartered PLC) and would be led by the BoE as the PLC Group’s home resolution authority. In support of this strategy, the PLC Group has been developing a set of capabilties, arrangements and resources to achieve the required outcomes. The PLC Group expects to disclose a summary of its preparations in 2022, alongside a public statement from the BoE on the resolvabilty of each in-scope firm. Risk profile continued ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 135 Risk profile continued Governance committee oversight At Court level, the Court Risk Committee oversees the effective management of Treasury Risk. At the executive level, the Solo & Standard Chartered Bank UK (Branch) Asset and Liablity Management Committee ensures the effective management of risk throughout the Group in support of the Group’s strategy, guides the Group’s strategy on balance sheet optimsation and ensures thatthe Group operateswithn theinternallyapproved RiskAppetite and other internal and externaltreasury requirements. Regional and country oversight resides with regional and country Asset and Liablity Committees. Regions and countries must ensure that they remain in compliance with PLC Group Treasury polices and practices, as well as local regulatory requirements. Decison-making authorites and delegation The Group Chief Financal Officer has responsiblity for capital, funding and liqudity under the Senior Managers Regime. The Group Chief Risk Officer has delegated the Risk Framework Owner responsiblites associated with Treasury Risk to the Global Head, Enterprise Risk Management. The Global Head, Enterprise Risk Management delegates second-line oversight and challenge responsiblites to relevant and suitably qualifed Treasury Chief Risk Officer and Country Chief Risk Officers. Monitorng On a day-to-day basis, the management of Treasury Risk is performed by the Group Treasurer, Country Chief Executive Officer and Treasury Markets. The Group regularly reports and monitors Treasury Risk inherent in its business activties and those that arisefrom internal and externalevents. Internal risk management reports covering the balance sheet and the capital and liqudity positon are presented to the Solo & Standard Chartered Bank UK (Branch) Asset and Liablity Management Committee. The reports contain key informaton on balance sheet trends, exposures against RiskAppetite and supporting risk measures which enable members to make informed decisons around the overall management of the balance sheet. In additon, an independent Treasury Chief Risk Officer as part of Enterprise Risk Management reviews the prudency and effectiveness of Treasury Risk management. Stress Testing Stress testing and scenario analysis are an integral part of the Treasury Risk framework and are used to ensure that the PLC Group and Solo’s internal assessment of capital and liqudity considers the impact of extreme but plausible scenarios on its risk profile. A number of stress scenarios, some designed internally, some required by regulators, are run periodcally. They provide an insght into the potential impact of signficant adverse events on the PLC Group and Solo’s capital and liqudity positon and how this could be mitgated through appropriate management actions to ensure that the PLC Group and Solo remain withn the approved Risk Appetite and regulatory limts. Daily liqudity stress scenarios are also run to ensure that the PLC Group and Solo hold sufficent high-quality liqud assets to withstand extreme liqudity events. The Group relies on these stress tests to understand the Group level vulnerabilties given the signficant overlap between the Group and PLC Group’s Treasury Risk. Operational and Technology Risk The Group defines Operational and Technology Risk as the potential for loss resulting from inadequate or failed internal processes, technology events, human error or from the impact of external events (includng legal risks) Risk Appetite Statement The Group aims to control operational and technology risks to ensure that operational losses (financal or reputational), includng any related to conduct of business matters, do not cause material damage to the Group or PLC Group’s franchise Roles and responsiblites The Company addendum to the Operational and Technology Risk Type Framework (O&T RTF) sets the roles and responsiblites in respect of Operational Risk for the Group, and is owned by the Global Head of Risk, Functions and Operational Risk (GHRFOR). This framework collectively defines the Group’s Operational Risk sub-types which have not been classifed as Princpal Risk Types (PRTs) and sets standards for the identficaton, control, monitorng and treatment of risks. These standards are applicable across all PRTs and risk sub-types in the O&T RTF. These risk sub-types relate to execution capabilty, governance, reporting and obligatons, legal enforceabilty, and operational resilence (includng client service, change management, people management, safety and security,and technology risk). The O&T RTF reinforces clear accountabilty for managing risk throughout the PLC Group and delegates second line of defence responsiblites to identfied subject matter experts. For each risk sub-type, the expert sets polices and standards for the organisaton to comply with, and provides guidance, oversight and challenge over the activties of the PLC Group. They ensure that key risk decisons are only taken by indviduals with the requiste skills, judgement, and perspective to ensure that the PLC Group’s risk-return objectves are met. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 136 Mitgation The Company addendum to the O&T RTF sets out the Group’s overall approach to the management of Operational Risk in line with the Group’s Operational and Technology Risk Appetite. This is supported by Risk and Control Self-Assessment (RCSA) which defines roles and responsiblites for the identficaton, control and monitorng of risks (applicable to all PRTs and risk sub-types). The RCSA is used to determine the design strength and reliablity of each process, and requires: • the recording of processes run by client segments, products, and functions into a process universe • the identficaton of potential breakdowns to these processes and the related risks of such breakdowns • an assessment of the impact of the identfied risks based on a consistent scale • the design and monitorng ofcontrols to mitgate priortised risks • assessments of residual risk and timely actions for elevated risks. Risks that exceed the Group’s Operational and Technology Risk Appetite require treatment plans to address underlying causes. Governance committee oversight At Court level, the Court Risk Committee oversees the effective management of Operational Risk. At the executive level, the Standard Chartered Bank Executive Risk Committee is responsible for the governance and oversight of Operational Risk for the Group, monitors the Group’s Operational and Technology Risk Appetite and relies on other key PLC Group committees for the management of Operational Risk in particular the PLC Group Non-Financal Risk Committee (GNFRC). Regional business segments andfunctional committees also provide enterprise oversightof theirrespective processes and related operational risks. In additon, Country Non-Financal Risk Committees (CNFRCs) oversee the management of Operational Risk at the country (or entity) level. In smaller countries, the responsiblites of the CNFRC may be exercised directly by the Country Risk Committee (for branches) or Executive Risk Committee (for subsidaries). Decison-making authorites and delegation The Company addendum to the O&T RTF is the formal mechanism through which the delegation of Operational Risk authorites is made. The GHRFOR places reliance on the respective Senior Managers who are outside the Risk function for second-line oversight of the risk sub-types through this Company addendum. The Senior Managers may further delegate their second-line responsiblites to designated indviduals at a global business, product and function level, as well as regional or country level. Monitorng To deliver services to clients and to particpate in the financal services sector, the Group runs processes which are exposed to operational risks. The Group priortises and manages risks which are signficant to clients and to the financal services sectors. Control indcators are regularly monitored to determine the residual risk the Group is exposed to. The residual risk assessments and reporting of events form the Group’s Operational Risk profile. The completeness of the Operational Risk profile ensures appropriate priortisaton and timelness of risk decisons, includng risk acceptances with treatment plans for risks that exceed acceptable thresholds. The Court is informed on adherence to Operational and Technology Risk Appetite through metrics reported for selected risks. These metrics are monitored, and escalation thresholds are devised based on the materialty and signficance of the risk. These Operational and Technology Risk Appetite metrics are consolidated on a regular basis and reported to the Standard Chartered Bank Executive Risk Committee and Court Risk Committee. This provides senior management with the relevant informaton toinform their risk decisons. Stress testing Stress testing and scenario analysis are used to assess capital requirements for operational risks. This approach considers the impact of extreme but plausible scenarios on the PLC Group’s Operational Risk profile. A number of scenarios have been identfied to test the robustness of the PLC Group’s processes and assess the potential impact on the PLC Group. These scenarios include anti-money laundering, sanctions, as well as informaton and cyber security. The Group relies on these stress tests to understand the Group-level vulnerabilties given the signficant overlap between the Group and PLC Group operational risk profile. Information and Cyber Security Risk The Group defines Information and Cyber Security Risk as the risk to the Group’s assets, operations and indviduals due to the potential for unauthorised access, use, disclosure, disrupton, modifcation, ordestruction of informatonassets and/or informaton systems. Risk Appetite Statement The Group seeks to minmise ICS risk from threats to the Group’s most critcal informaton assets and systems, and has a low appetite for material incdents affecting these or the wider operations and reputation of the Group. Risk profile continued ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 137 Risk profile continued Roles and responsiblites The Company addendum to the PLC Group’s Information and Cyber Security Risk Type Framework (ICS RTF) defines the roles and responsiblites of first and second lines of defence in managing and governing ICS Risk respectively across the Group with emphasis on business ownership and indvidual accountabilty. The Group Chief Operating Officer has overall first line of defence responsiblity for ICS Risk and holds accountabilty for the Group’s ICS strategy. The Group Chief Information Security Officer (CISO) leads the development and execution of the ICS strategy. The Group Chief Information Security Risk Officer (CISRO) function withn Group Risk, led by the Group CISRO, operates as the second line of defence and sets the strategy and methodology for assessing, scoring and priortisng ICS risks across the Group. This function has overall responsiblity for governance, oversight and independent challenge of ICS Risk. Mitgation The Group applies the PLC Group polices for the management of ICS Risk. ICS Risk is managed through a structured ICS Risk framework comprisng a risk assessment methodology and supporting policy, standards and methodologies which are aligned to industry best practice models. In 2021, the ICS RTF was extended to include ICS end-to-end Risk Management and Governance and an enhanced threat-led risk assessment. The Group CISRO function monitors compliance to the ICS framework through the review of the ICS risk assessments conducted by Group CISO. All key ICS risks, breaches and risk treatment plans are managed under Group CISRO oversight and assurance. ICS Risk posture, Risk Appetite breaches and remediaton status are reported at key Group, business, functional andcountry governance committees. Governance committee oversight At Court level, the Court Risk Committee oversees the effective management of ICS Risk. The Standard Chartered Bank Executive Risk Committee is responsible for the governance and oversight of ICS Risk for the Group, and relies on other key PLC Group Committees and fora to ensure effective implementaton of the ICS RTF - in particular, the PLC Group Non- Financal Risk Committee and the CyberSecurity Advisory Forum. The Standard Chartered Bank Executive Risk Committee and PLC Group GNFRC are responsible for oversight of ICS Risk posture and Risk Appetite breaches rated very high and high. Sub-committees of the GNFRC have oversight of ICS Risk management arisng from business, country and functional areas. Decison-making authorites and delegation The Company addendum to the ICS RTF defines how ICS Risk Management will operate withn the Group. The Group CISRO delegates authority to designated indviduals through the ICS Risk Type Framework, includng second-line ownership at a business and function level as well as regional or country level. The Group CISO is responsible for implementng and operating ICS Security Risk Management withn the Group, leveraging business Heads of ICS to extend ICS risk management into the businesses, functions, countries and Information Asset and System owners to comply with the ICS RTF, policy and standards. Monitorng The risk assessment is performed by Group CISO to identfy key ICS risks, breaches and weaknesses, and to ascertain the severity of the Risk posture. The Risk postures of all businesses, functions and countries are consolidated to present a holistc Group-level ICS Risk posture for ongoing ICS Riskmonitorng. During these reviews, the status of each risk is assessed to identfy any changes to materialty, impact and likelhood, which in turn affects the overall ICS Risk score and rating. Risks which exceed defined thresholds are reviewed with Group CISRO for approval, and escalated to appropriate Group governance committees. Monitorng and reporting on the ICS Risk Appetite profile ensures that performance which falls outside the approved Risk Appetite is highlghted and reviewed at the appropriate governance committee or authority levels and ensures that adequate remediatonactions arein place wherenecessary. Stress Testing The Group’s cyber resilencetesting approach entails: • The Group CISRO is responsible for risk based, intellgence led, scenario driven assessments that simulate the actions of real-world cyber adversaries targeting the organisaton. This layered testing approach is used to validate the effectiveness of the measures taken to prevent, detect and respond to cyber threats targeting our critcal business. • Group CISO is responsible for supporting control improvement and risk reduction by emulating cyber attacks in collaboration with ICS defence and business-facing teams to enhance the Group’s cyber defence capabilties. The Group relies on these testing to understand Group-level vulnerabilties given the signficant overlap between the Group and PLC Group ICS risk profile. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 138 Compliance Risk The Group defines Compliance Risk as the potential for penalties or loss to the Group or for an adverse impact to our clients, stakeholders or to the integrty of the markets which we operate in through a failure on our part to comply with laws, or regulations. Risk Appetite Statement The Group has no appetitefor breaches inlaws and regulations related to regulatory non-compliance; recognisng that whilst incdents are unwanted, they cannot be entirely avoided. Roles and responsiblites The Group Head, Conduct, Financal Crime and Compliance (Group Head, CFCC) as Risk Framework Owner for Compliance Risk provides support to seniormanagement on regulatory and compliancematters. The Company addendum to the PLC Group Compliance RTF sets out the Group’s overall approach to the management of Compliance Risk and the roles and responsiblites in respect of Compliance Risk for the Group. All activties that the Group engages in must be designed to comply with the applicable laws and regulations in the countries in which we operate. The CFCC function is the second-line that provides oversight and challenge of the first-line risk management activties that relate to ComplianceRisk. Where Compliance Risk arises, or could arise, from failure to manage another Princpal Risk Type or sub-type, the Compliance RTF outlines that the responsiblity rests with the respective Risk Framework Owner or control function to ensure that effective oversight and challenge of the first line can be provided by the appropriate second-line function. Eachof the assigned second-line functions has responsiblitesincludngmonitorng relevant regulatory developments from Non-Financal Services regulators at both Group and country levels, policy development, implementaton, and validaton as well as oversight and challenge of first-line processes and controls. In additon, the Compliance RTF has been simplfied in 2021 via rationalzation of the Compliance Risk types. Mitgation We apply the PLC Group’s polices for management of Compliance Risk. The CFCC function develops and deploys relevant polices and standards setting out requirements and controls for adherence by the Group to ensure continued compliance with applicable laws and regulations. Through a combinaton of standard setting, risk assessment, control monitorng and assurance activties, the Compliance Risk Framework Owner seeks to ensure that all polices are operating as expected to mitgate the risk that they cover. The installaton of appropriate processes and controls is the primary tool for the mitgation of Compliance Risk. In this, the requirements of the Operational and Technology Risk Type Framework are followed to ensure a consistent approach to the management of processes and controls. Deployment of technological solutions to improve efficencies and simplfy processes has continued in 2021. These include further expansion of digtal chatbots. Governance committee oversight At a management level, the Standard Chartered Bank Executive Risk Committee is responsible for the governance and oversight of Compliance Risk, and relies on other key PLC Group level committees for the management of Compliance Risk – in particular, the PLC Group Non-Financal Risk Committee and the Risk and CFCC Non-Financal Risk Committee. Compliance Risk and the risk of non-compliance with laws and regulations resulting from failed processes and controls are overseen by the respective Country, Business, Product and Function Non-Financal Risk Committees includng the Risk and CFCC Non- Financal Risk Committee for CFCC owned processes. Relevant matters, as required, are further escalated to the PLC Group Non-Financal Risk Committee and Standard Chartered Bank Executive Risk Committee. The Group also relies on the PLC Group CFCC Oversight Group, while not a formal committee, to provide oversight of CFCC risks includng the effective implementaton of the Compliance RTF. At Court level, oversight of Compliance Risk is primarly provided by the Court Audit Committee, and also by the Court Risk Committee for relevant issues. Decison-making authorites and delegation The Companyaddendum to the Compliance Risk Type Framework is the formalmechanism throughwhich the delegation of Compliance Risk authorites is made. The Group Head, CABM has the authority to delegate second-line responsiblites withn the CFCC function to relevant and suitably qualifed indviduals. Monitorng The monitorng ofcontrols designed to mitgatethe risk of regulatory non-compliance in processes is governed in line with the Operational and Technology Risk Type Framework. The Group has a monitorng and reporting process in place for Compliance Risk, which includes escalation and reporting to Risk and CFCC Non-Financal Risk Committee, PLC Group Non-Financal Risk Committee, Standard Chartered Bank Executive Risk Committee, Court Risk Committee and Court Audit Committee, as appropriate. Risk profile continued ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 139 Risk profile continued Stress testing Stress testing and scenario analysis are used to assess capital requirements for Compliance Risk and form part of the overall scenario analysis portfolio managed under the Operational and Technology Risk Type Framework. Specifc scenarios are developed annually with collaboration between the business, which owns and manages the risk, and the CFCC function, which is second line to incorporate signficant Compliance Risk tail events. This approach considers the impact of extreme but plausible scenarios on the PLC Group’s Compliance Risk profile. The Group relies on these stress tests to understand the Group-level vulnerabilties given the signficant overlap between the Group and PLC Group activties. Financal Crime Risk The Group defines Financal Crime Risk as the potential for legal or regulatory penalties, material financal loss or reputational damage resultingfrom the failureto comply with applicablelaws and regulations relating to internatonal sanctions, anti-money laundering, anti-bribery & corruption, and fraud. Risk Appetite Statement The Group has no appetite for breaches in laws and regulations related to financal crime, recognisng that while incdents are unwanted, they cannot be entirely avoided. Roles and responsiblites The Group Head, CFCC has overall responsiblity for Financal Crime Risk and is responsible for the establishment and maintenance of effective systems and controls to meet legal and regulatory obligatons in respect of Financal Crime Risk. The Group Head, CFCC is the Group’s Compliance and Money-Laundering Reporting Officer and performs the Financal Conduct Authority (FCA) controlled function and senior management function in accordance with the requirements set out by the FCA, includng those set out in their handbook on systems and controls. As the first line, the business unit process owners have responsiblity for the applicaton of policy controls and the identficaton and measurement of risks relating to financal crime. Business units must communicate risks and any policy non-compliance to the second line for review and approval following the model fordelegation of authority. Mitgation We apply the four PLC Group polices in support of the Financal Crime Risk Type Framework • Group Anti-Bribery and Corruption Policy • Group Anti-Money Laundering andCounter Terrorist FinancngPolicy • Group Sanctions Policy • Group Fraud Risk Management Policy The PLC Group operates risk-based assessments and controls in support of its Financal Crime Risk programme, includng (but not limted to): • Group Risk Assessment-the PLC Group monitors enterprise-wide Financal Crime Risks through the CFCC Risk Assessment process consistng of Financal Crime Risk and Compliance Risk assessments. The Financal Crime Risk assessment is a PLC Group-wide risk assessment undertaken annually to assess the inherent Financal Crime Risk exposures, and the associated processes andcontrols by whichthese exposures are mitgated. • Financal Crime Surveillance – risk-based systems and processes to prevent and detect financal crime. The strength of controls is tested and assessed through the PLC Group’s Operational and Technology RTF, in additon to oversight by CFCC Assurance and Group Internal Audit. Governance committee oversight At Court level, the Court Risk Committee oversees the effective management of Financal Crime Risk. At the executive level, the Standard Chartered Bank Executive Risk Committee is responsible for the governance and oversight of Financal Crime Risk for the Group, and relies on other key PLC Group committees for the management of Financal Crime Risk, in particular the PLC Group Financal Crime Risk Committee and the PLC Group Non-Financal Risk Committee for Fraud Risk. Both committees are responsible for ensuring effective oversight of Operational Risk relating to Financal Crime Risk and Fraud Risk, respectively, throughout the PLC Group. Decison-making authorites and delegation The Company addendum to the PLC Group Financal Crime Risk Type Framework is the formal mechanism through which the delegation of Financal Crime Risk authorites is made. The Group Head, CFCC is the Risk Framework Owner for Financal Crime Risk under the Group’s Risk Management Framework. Certain aspects of Financal Crime Compliance, second-line oversight and challenge, are delegated withn the CFCC function. Approval frameworks are in place to allow for risk-based decisons onclient onboarding, potential breaches ofsanctions regulationor policy,situatons of potentialmoney laundering (and terrorist financng), bribery and corruption or internal and external fraud. Monitorng The Group monitors Financal Crime Risk compliance against a set of Risk Appetite metrics that are approved by the Court. These metrics are reviewed periodcally and reported regularly to the Standard Chartered Bank Executive Risk Committee and Court Risk Committee. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 140 Stress testing The assessment of Financal Crime vulnerabilties under stressed conditons or extreme events with a low likelhood of occurring is carried out through enterprise stress testing conducted at PLC Group level. The Group relies on these stress tests to understand the Group level vulnerabilties given the signficant overlap between the Group and PLC Group activties. Model Risk The Group defines Model Risk as potential loss that may occur as a consequence of decisons or the risk of mis-estimaton that could be princpally based on the output of models, due to errors in the development, implementaton or use of such models. Risk Appetite Statement The Group has no appetite for material adverse implcations arisng from misuse of models or errors in the development or implementatonof models; whilstaccepting model uncertainty. Roles and responsiblites The Global Head, Enterprise Risk Management is the Risk Framework Owner for Model Risk under the Group’s Risk Management Framework. Responsiblity for the oversight and implementaton of the Model Risk Type Framework is delegated to the Global Head, Model Risk Management. The PLC Group’s Model Risk Type Framework sets out clear accountabilty and roles for Model Risk management through a three lines of defence model. First-line ownership of Model Risk resides with Model Sponsors, who are the business or function heads and assign a Model Owner for each model. Model Owners mainly represent model developers and users, and are responsible for end-to-end model development, ensuring model performance throughregular model monitorng,and communicatng model limtations, model assumptions and risks. Model Owners also coordinate the submisson of models for validaton and approval and ensure appropriate model implementaton and use. Second-line oversight is provided by Model Risk Management, which comprises Group Model Validaton and Model Risk Policy and Governance. Group Model Validaton independently reviews and grades models, in line with design objectves, business uses and compliance requirements, and highlghts identfied model risks by raisng model related issues. The Model Risk Policy and Governance team provide oversight of Model Risk activties, performing regular Model Risk Assessment and risk profile reporting to senior management. We will rely on the PLC Group’s workplan and embed model risk into the Group’s risk management approach accordingly. Mitgation We apply the PLC Group polices for Model Risk Management. The Model Risk policy and standards define requirements for model development and validaton activties, includng regular model performance monitorng. Any model issues or deficencies identfied through the validaton process are mitgated through the applicaton of model monitorng, model overlays and/or a model redevelopment plan, which undergo robust review, challenge and approval. Operational controls govern all Model Risk-related processes, with regular risk assessments performed to assess appropriateness and effectiveness of those controls, in line with the Operational and Technology Risk Type Framework, with remediaton plans implemented where necessary. Governance committee oversight At Court level, the Court Risk Committee exercises oversight of Model Risk withn the Group. At the executive level, the Standard Chartered Bank Executive Risk Committee is responsible for the governance and oversight of Model Risk for the Group and relies on other PLC Group committees to ensure effective measurement and management of Model Risk, in particular the Model Risk Committee. Sub-committees such as the Credit Model Assessment Committee and Traded Risk Model Assessment Committee oversee their respective in-scope models and escalate material model risks to the Model Risk Committee. In parallel, business and function-level risk committees provide governance oversight of the models used in their respectiveprocesses. Decison-making authorites and delegation The Company addendum to the PLC Group Model Risk Type Framework is the formal mechanism through which the delegation of Model Riskauthorites is made.The Global Head, Enterprise Risk Managementdelegates authorites to designated indviduals or Policy Owners through the Company addendum to RTF. The Model Risk Committee is responsible for approving models for use. Model approval authority is also delegated to the Credit Model Assessment Committee, Traded Risk Model Assessment Committee and indvidual designated model approvers for less material models. Monitorng The Court approved the Risk Appetite metrics for Model Risk in 2021. Adherence to Model Risk Appetite and any threshold breaches will be reported regularly to the Court Risk Committee and SC Bank Executive Risk Committee. These metrics and thresholds will be reviewed on an annual basis to ensure that threshold calibraton remains appropriate and the themes are adequately covering the current risks. Models undergo regular monitorng based on theirlevelof perceivedModel Risk, with monitorng results and breaches presented to Model RiskManagement and delegated modelapprovers. Model Risk Management producesModel Risk reports covering the model landscape, which include performance metrics, identfied model issues and remediaton plans. These are presented for discusson at the Model Risk governance committees on a regular basis. Risk profile continued ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 141 Risk profile continued Stress testing Models play an integral role in the PLC Group’s stress testing and are rigorously user-tested to ensure that they are fit-for-use under stressed marketconditons. Compliance with Model Riskmanagement requirements and regulatory guidelnes are also assessed as part of each stress test, with any identfied gaps mitgated through model overlays and defined remediaton plans. Reputational & Sustainablity Risk The Group defines Reputational and Sustainablity Risk as the potential for damage to the franchise (such as loss of trust, earnings or market capitalsation), because of stakeholders taking a negative view of the Group through actual or perceived actions or inactons, includng a failure to uphold responsible business conduct or lapses in our commitment to do no signficant environmental and social harm through our client, third-party relationshps or our own operations. Risk Appetite Statement The Group aims to protect the franchise from material damage to its reputation by ensuring that any business activty is satisfactorly assessed and managed by the appropriate level of management and governance oversight. This includes a potential failure to uphold responsible business conduct or lapses in our commitment to do no signficant environmental and social harm. Sustainablity Risk continues to be an area of growing importance, drivng a need for strategic transformation across business activties and risk management to ensure that we uphold the princples of Responsible Business Conduct and continue to do the right thing for our stakeholders, the environment and affected communites. Throughout 2021, the PLC Group has laid the foundation to integrate Sustainablity Risk management for clients, third parties and our operations and continued to invest in infrastructure and technology to keep pace with emerging ESG regulatory obligatons and accelerating commitments across our markets. Roles and responsiblites The Global Head, Enterprise Risk Management is the Risk Framework Owner for Reputational and Sustainablity Risk under the Group’s Risk Management Framework. The responsiblity for Reputational andSustainablity Risk managementis delegated toReputational andSustainablity Risk Leads in ERM as well as Chief Risk Officers at region, country and client-business levels. They constitute the second line of defence, overseeing and challenging the first line of defence, which resides with the Chief Executive Officers, Business Heads, Product Heads and Function Heads in respect of risk management activties of reputational and sustainablity-related risks respectively. The Environmental and Social Risk Management team (ESRM), which is in the first line of defence, also provides dedicated support on the management of environmental and social risks and impacts arisng from the Group’s client relationshpsand transactions. Mitgation In line with the princples of Responsible Business Conduct and Do No Signficant Harm, the Group deems Reputational and Sustainablity Risk to be driven by: • negative shifts in stakeholder perceptions due to decisons related to clients, products, transactions, third parties and strategic coverage • potential material harm or degradation tothe natural environment (environmental)through actions/inactons of the Group • potential material harm to indviduals or communites (social) risks through actions/inactons of the Group We apply the PLC Group’s polices for management of Reputational and Sustainablity Risk. The PLC Group’s Reputational Risk policy sets out the princpal sources of Reputational Risk driven by negative shifts in stakeholder perceptions as well as responsiblites, control and oversightstandardsfor identfying, assessing, escalatingand effectively managing Reputational Risk. The PLC Group takes a structured approach to the assessment of risks associated with how indvidual client, transaction, product and strategic coverage decisons may affect perceptions of the organisaton and its activties, based on explict princples includng, but notlimted to gambling, defenceand dualuse goods. Whenever potentialfor stakeholder concerns is identfied, issues are subject to prior approval by a management authority commensurate with the materialty of matters being considered. Such authorites may accept or decline the risk or impose conditons upon proposals, to protect the PLC Group’s reputation. The PLC Group’s Sustainablity Risk policy sets out the requirements and responsiblites for managing environmental and social risks for the Group’s operations, clients and third parties, as guided by various industry standards such as the OECD’s Due Dilgence Guidance for Responsible Business Conduct, Equator Princples, UN SustainableDevelopmentGoals and the Paris Agreement. Through our operations, the PLC Group seeks to minmise its impact on the environment and have targets to reduce energy, water and waste. Clients are expected to adhere to minmum regulatory and compliance requirements, includng critera from the PLC Group’s Positon Statements. Suppliers must comply with the PLC Group’s Supplier Charter which sets out the PLC Group’s expectations on ethics, anti-bribery and corruption, human rights, environmental, health and safety standards, labour and protection of the environment. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 142 Governance committee oversight The PLC’s Culture and Sustainablity Committee provides oversight across PLC Group for our Sustainablity strategy while the Court Risk Committee oversees Reputational and Sustainablity Risk as part of the Group RMF. The Standard Chartered Bank Executive Risk Committee provides executive-level committee oversight and relies on other key PLC Group committees for the effective management of Reputational and Sustainablity Risk, in particular the PLC Group Responsiblity and Reputational Risk Committee (GRRRC), the Sustainable Finance Governance Committee and the PLC Group Non-Financal Risk Committee. Decison-making authorites and delegation The Company addendum to the PLC Group’s Reputational and Sustainablity RTF is the formal mechanism through which the delegation of Reputational andSustainablity Risk authoritesis made. TheGlobal Head, Enterprise Risk Management delegates risk acceptance authorites for stakeholder perception risks to designated indviduals in thefirst line andsecond line or to Committees such as the GRRRC via risk authority matrices. These risk authority matrices are tiered at country, regional, business segment or Group levels and are established for risks incurred in strategic coverage, clients, products or transactions. For environmental and social risks, the ESRM must review and support the risk assessments for clients and transactions and escalate to the Reputational and Sustainablity Risk leads as required. Monitorng Reputational and Sustainablity Risk polices and standards are applicable to all PLC Group entites. However, local regulators in some markets may impose additonal requirements on how banks manage and track Reputational and Sustainablity Risk. In such cases, these are complied with in additon to PLC Group polices and standards. Exposure to stakeholder perception risks arisng from transactions, clients, products and strategic coverage are monitored through established triggers outlined in risk materialty matrices to prompt the right levels of risk-based consideraton by the first line and escalations to the second line where necessary. Risk acceptance decisons and thematic trends are also being reviewed on a periodc basis. Exposure to Sustainablity Risk is monitored through triggers embedded withn the first-line processes where environmental and social risks are considered for clients and transactions via the Environmental and Social Risk Assessments; and considered for vendors in our supply chain through the Modern Slavery questionnares. In 2021, the Group has approved new Risk Appetite metrics for Environmental and Social risks. New metrics for modern slavery risks in our supply chain was also introduced at PLC Group level. Stress testing Reputational Risk outcomes are taken into account in enterprise stress tests, and incorporated into the PLC Group’s stress testing scenarios. For example, the PLC Group might consider what impact a hypothetical event leading to loss of confidence among liqudity providers in a particular market might have, or what the implcations might be for supporting part of the organisaton in order to protect the brand. As Sustainablity Risk continues to evolve as an area of emerging regulatory focus with various markets developing ESG regulatory guidance, we are keeping pace with external developments to enable us to explore meaningful scenario analysis with the aim of advancing Reputational and Sustainablity Risk management. Climate Risk The Group recognises Climate Risk as an Integrated Risk Type. Climate Risk is defined as the potential for financal loss and non-financal detriments arisng from climate change and society’s response to it. Risk Appetite Statement The Group aims to measure and manage financal and non-financal risks from climate change, and reduce emissons related to our own activties and those related to the financng of clients in alignment with the Paris Agreement. Climate Risk has been recognised by the PLC Group as an emerging risk since 2017 and was elevated to an Integrated Risk Type (previously known as material cross-cutting risk) withn the RMF our central risk framework in 2019. The PLC Group has introduced Climate Risk into mainstream risk management in alignment with the Bank of England’s Supervisory Statement 3/19 requirements and in 2021 greatly improved our scenario analysis and stress testing abilties to deliver the 2021 Climate Biennal Exploratory Scenario (CBES). However, it is still a relatively nascent risk area which will mature and stabilse over the years to come. We will rely on the PLC Group’s workplan and integrate Climate Risk into the Group’s risk management approach accordingly. Roles and responsiblites The three lines of defence model as per the Group’s Risk Management Framework applies to Climate Risk. The Group Chief Risk Officer (GCRO) has the ultimate second-line and senior management responsiblity for Climate Risk. The GCRO is supported by the Global Head, Enterprise Risk Management who has day-to-day oversight and central responsiblity for second-line Climate Risk activties. As Climate Risk is integrated into the relevant Princpal Risk Types (PRTs), second-line responsiblites lie with the Risk Framework Owner (at Group, regional and country level), with subject matter expertise support from the central Climate Risk team. Risk profile continued ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 143 Risk profile continued Mitgation As an Integrated Risk Type manifests through other PRTs, risk mitgation activties are specifc to indvidual PRTs. The Group has undertaken intial development and integraton of Climate Risk into PRT processes. Climate Risk assessments are considered as part of Reputational and Sustainablity transaction reviews for clients and transactions in high carbon sectors. We have directly engaged with clients on their adaptation and mitgation plans using client level Climate Risk questionnares and a first phase of integraton into credit decisoning process is underway for CCIB Credit Risk. As part of quarterly credit portfolio reviews in CPBB, physical risk assessments for the residental mortgage portfolios are also being monitored for concentration levels. Withn Traded Risk, a physical risk scenario is now part of their stress testing framework. While the focus for Operational and Technology Risk, has been on Resilence and Third-Party Risk management. Relevant polices and standards across PRTs have been updated to factor in Climate Risk consideratons and a focus area in 2022 will be to deliver the implementaton of these requirements. The Group will adopt changes to the relevant polices and standards across PRTs to factor in climaterisk consideratons, whereapplicable, via the Company addenda. Governance committee oversight Court-level oversight is exercised through the Court Risk Committee (CRC), and regular Climate Risk updates are provided to the Court and CRC. At the executive level, the Standard Chartered Bank Executive Risk Committee oversees implementaton of the Climate Risk workplan and relies on other key PLC Group committees and fora for the management of Climate Risk, includng the Climate Risk Management Forum. The Climate Risk Management Forum, appointed by the GCRO, consists of senior representatives from the business, risk, strategy and other functions such as sustainablity and legal. The Climate Risk Management Forum meets quarterly to discuss development and implementaton of the Climate Risk as it continues moves from development to BAU, and to provide structured governance around engagement with the relevant PRTs impacted by Climate Risk. Through 2022, the PLC Group will strengthen country and regional governance oversight for the Climate Risk profile across our key markets. Tools andmethodologies Applying existng risk management tools to quantify Climate Risk is challenging given inherent data and methodology challenges, includng the need to be forward-looking over long time horizons. To quantify climate physical and transiton risk we leverage and have invested in a number of areas, includng tools and partnerships at the PLC Group level: • Munich Re – we are using Munich Re’s physical risk assessment tool, which is built on extensive re-insurance experience • Baringa Partners – we are using Baringa’s flagship climate models to understand climate scenarios, and compute transiton risk and temperature alignment • Standard & Poor – we are leveraging S&P and Trucost’s wealth of climate data covering asset locations, energy mixes and emissons • Imperial College – we are leveraging Imperial’s academic expertise to advance our understanding of climate science, upskill our staff and senior management, and progress the state of independent research on climate risks with an acute focus on emerging markets Decison-making authorites and delegation The Global Head, Enterprise Risk Management is supported by a centralised Climate Risk team withn the ERM function. The Global Head, Climate Risk and Net Zero Oversight is responsible for ensuring and executing the delivery of the Climate Risk workplan whichwill definedecison-making authorites and delegations across the PLC Group. Monitorng The Climate Risk Appetite Statement is approved and reviewed annually by the Court. The PLC Group has developed its first-generation Climate Risk reporting and Management Team Level Risk Appetite metrics. The first version of these metrics was shared with the relevant committees as part of the PLC Group Risk Information Report and Board Risk Information Report, respectively, in September 2021. The management informaton is also being progressively rolled out at the regional and country level and will be considered for roll out at the Group level accordingly. Stress testing Climate Risk intensfies over time, and future global temperature rises depend on today’s transiton pathway. Considerng different transiton scenarios is crucial to assessing Climate Risk over the next 10, 20 and 50 years. Stress testing and scenario analysis are used to assess capital requirements for Climate Risk and since 2020 physical and transiton risks have been included in the PLC Group Internal Capital Adequacy Assessment Process (ICAAP). In 2021, the PLC Group undertook a number of Climate Risk stress tests, includng by the Hong Kong Monetary Authority and the Bank of England’s Climate Biennal Exploratory Scenario (CBES). This required signficant client engagement and helped grow our understanding and management of Climate Risk. We will rely on these stress tests to understand the Group level vulnerabilties given the signficant overlap between the Group and PLC Group’s activties. In 2022, the PLC Group intends todevelop managementscenarios, strengthening business strategy and financalplanning and supporting the PLC Group’s net zero journey. Details on the PLC Group’s Taskforce on Climate-related Financal Disclosures can be found on sc.com/tcfd ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 144 Risk profile continued Emerging Risks In additon to our Princpal Risk Types that we manage in line with the PLC Group Risk Type Frameworks, polices and the Court approved Risk Appetite, we also maintan an inventory of emerging risks. Emerging risks refer to unpredictable and uncontrollable events with the potential to materially impact our business. These include near-term risks that are on the horizon and can be measured or mitgated to some extent, as well as longer-term uncertaintes that are on the radar but not yet fully measurable. In 2021, we undertook a thorough review of our Emerging Risks, using the approach described in the Risk Management Framework section (page 122 to 128). The key results of the review are detailed below. Key changesto our emerging risks: The following items have been removed as emerging risks: • ‘Middle East geopolitcal tensions’ – The risk has been removed as the immedate impact to the Group’s credit portfolio is manageable • ‘Interbank Offered Rate discontnuation and transiton’ – This risk has been removed given the PLC Group has a well- established global IBOR Transiton Programme to consider all aspects of the transiton and how risks from the transiton can be mitgated The following items have been amended or added as new emerging risks: • ‘Crystallisaton of inflaton fears’ - Interest rates have already increased or are likely to rise in several countries as central banks respond to inflatonary pressure. Drivers of price increases include shortages of materials and labour, increased demand as economic recoveriestakehold andlong-term monetary stimulus, with growingacceptancethat the inflatonary shock will last longer than intially expected • ‘Energy security’ - Increased industral demand and accelerated transitons to cleaner energy sources have put a strain on supply lines. This has increased tensions between nations as power shifts towards energy exporters, and energy security becomes questionable across developed markets and emerging markets alike. A lack of investment by oil producers as we transiton could also lead to an increase in oil prices in the short term • ‘Supply chain dislocatons’ - Global supply chains have been disrupted both by COVID-19 lockdowns and deglobalisaton. As economies recover there are shortages in some key source materials and delivery delays which are affecting many industres’ abilty to meet the rapid increase in demand • ‘Expanding stakeholder expectations for environmental, social and corporate governance (ESG)’ – Added as an emerging risk to reflect the broader sustainablity agenda of the Group and capture ESG concerns beyond Climate Risk such as biodversity loss and depletion of natural resources, which are increasng areas of focus for regulators, investors and non-governmental organisatons. The speed of transiton to meet the requirements could be faster in developed markets • ‘Expanding array of global tensions’ – Expanded to cover a proliferaton of global politcal and economic agenda items that createdisrupton andpotential flashpoints between countries. Theseare reshaping global politcal alliancesand disruptng traditonal economic corridors • ‘Adapting to endemic COVID-19 and a K-shaped recovery’ - Encapsulates the shift towards livng with COVID-19 and what the new post-COVID normal will look like. Varying vaccinaton rates and levels of economic stimulus have widened the recovery gap and threatened a K-shaped global recovery, where countries and sectors recover at different rates depending on their abilty to adapt to a post-COVID world • ‘New business structures, channels and competiton’ - Reflects the linkage between the Group’s increasng reliance on partnerships and alliancesin exploringnew technologies anddigtal enhancement, and the heightened risks that are intrnsically linked to such activties. Digtal assets are also covered withn this emerging risk • ‘Talent pools of the future’ – Expanded to consider the risks of widenng skills gaps and shiftng expectations of the future workforce,beyondjust thepractical challenges of increased remote working Our list of emerging risks, based on our current knowledge and assumptions, is set out below, with our subjectve assessment of their impact, likelhood and velocity of change. This reflects the latest internal assessment of material risks that the Group faces as identfied by senior management. This list is not designed to be exhaustive and there may be additonal risks which could materialse or have an adverse effect on the Group. Our mitgation approach for these risks may not elimnate them but shows the Group’s attempt to reduce or manage the risk. As certain risks develop and materialse over time, management will take appropriate steps to mitgate the risk based on its impact on the Group. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 145 Risk profile continued Geopolitcal consideratons (Risk ranked according to severity) Emerging Risk Risk trend since 2020 1 ContextHow these are mitgated/next steps Expanding array of global tensions 2 Potential impact: High Likelhood: Medium Velocity of change: Moderate •Relations between China and the West remain fragile. The US and China are engaged in a security competiton that has ramifcations across many aspects of their complex interdependences •There has also been increasng volatilty withn China, with turbulence in the property development sector and targeted legislaton for specifc industres such as education, technology and real estate, which could have spillover effects into other markets given the size of China’s economy •Tensions are also increasng regarding Russia’s presence on the Ukrainan border. Although the Group’s exposure to the region is limted, the potential impact on the rest of the world from economic or miltary action could be signficant, and cause further fractures between East and West •In additon, tensions are risng between historc allies withn NATO and the G7, around flashpoints such as the withdrawal from Afghanistan, the launch of AUKUS, and tensions on the Korean peninsula. These may intensfy with elections due in some major countries in 2022 •Areas of collaboration exist – such as agreements made at the COP26 climate summit – but there are a number of issues that remain, includng public health and safety, trade, national security, sovereignty, and territoral disputes •A focus on domestic recovery in the wake of COVID-19 has led to protectionst polices and disrupton to global supply chains •Some governments have used the pandemic as an opportunity to consolidate power, which could lead to further tension and potential retaliatory actions •Increased demand has created shortages in some key sectors, such as electronics and energy, which could tip the balance of power towards producers. Investment in local technological infrastructure has become a key focus to reduce dependence on external counterparties and ensure national security •The PLC Group, with its notable exposure and presence in China, faces a high risk of being caught in the crossfire of escalating geopolitcal tensions between the East and West •The Group also derives signficant revenues from supporting cross-border trade and material offshore support operations •Sharp slowdowns in the US, China, and more broadly, world trade and global growth are a feature of PLC Group, Solo and country level stress scenarios. The Group relies on these stress tests to assess key Group level vulnerabilties and to be able to implement timely interventons. •Detailed portfolio reviews are conducted at a PLC Group, country and business level on an ongoing basis, most recently regarding increasng tensions around Ukraine, and action is taken where necessary •We are closely monitorng the China-G7 relationshp and assessing the impact on our business with teams in the first and second line of defence •We remain viglant in monitorng geopolitcal relationshps •Increased scrutiny is applied when onboarding clients in sensitve industres and in ensuring compliance with sanctions requirements Energy security Potential impact: High Likelhood: Medium Velocity of change: Fast •Increased demand for energy, bottlenecks in the production of renewables and pressure to accelerate the transiton to new clean sources are drivng an emerging energy supply shortage, causing price inflaton and exacerbating disruptons in global supply chains •Emerging markets which rely on imports of energy risk being disadvantaged due to the massive energy needs required to develop •Developed nations also face a trade-off, as pressure to adopt clean energy has constrained their abilty to rely on traditonal sources to meet demand, likely leading to signficant price volatilty until production capacity for renewable sources is sufficent to meet the energy gap •There are increasng geopolitcal tensions as the balance of power shifts towards energy exporters. The reluctance of some nations to commit to climate goals also adds to pressure for a global transiton, and the politcal advantage accruing to traditonal oil-producing nations may further complicate the goals of a net zero economy •The Group relies on stress tests conducted at a PLC Group, Solo and country level, where an oil shock scenario was developed •Sovereign ratings, outlooks and country risk limts are regularly monitored with periodc updates to senior stakeholders •The PLC Group is implementng a Climate Risk work plan and aims to embed climate risks across all relevant princpal risks in 2022. This includes scenario analysis and stress testing capabilty to understand financal risks and opportunites from climate change 1The risk trend refers to the overall risk score trend, which is a combinaton of potential impact, likelhood and velocity of change 2This theme was previously covered under ‘US-China trade tensions driven by geopolitcs and trade imbalance’ ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 146 Risk profile continued Macroeconomic consideratons (Risk ranked according to severity) Emerging Risk Risk trend since 2020 1 ContextHow these are mitgated/next steps Crystallisaton of inflaton fears 3 Potential impact: High Likelhood: High Velocity of change: Moderate •In the second part of 2021 several key developed economies experienced rates of inflaton that far exceeded central bank forecasts. Several central banks have acknowledged their surprise and altered their stance on monetary policy, starting to raise rates or signallng their willngness to do so •There is a risk that the confluence of supply and demand pressures could have effects on inflaton that are longer- lasting than expected •The easing of COVID-19 restrictons has created a demand surge in developed markets economies that have reopened, and labour supply shortages have compounded price pressures •There is still a lack of firm consensus withn the industry on some key inflaton questions, such as whether it is transitory or unlikely to ease in the near future, caused by excess demand or limted supply, and whether it is limted to specifc industres or a general problem for the economy. Risng interest rates also introduce a risk of a stagflation in 2022 where economic growth is muted but inflaton persists •It is possible that monetary policy tightenng in Western countries could lead to a depreciaton in emerging markets currencies versus the US dollar, increasng debt refinancng costs for emerging market economies. Sharp increases in the price of energy and agricultural products also pose risks to emerging markets that will face higher import costs, feeding into higher domestic inflaton •The prices of risky financal assets have been artifcially supported through the criss following multi-trillon dollar central bank asset purchases and record low interest rates. As fiscal and monetary support is withdrawn and countries start to raise interest rates, there is an elevated risk of widespread price corrections •The Group relies on stress tests conducted at a PLC Group, Solo and country level to assess the impact of a severe stress in the global economy associated with a sharp slow-down •Both PLC Group-wide management and Traded Risk scenarios are being developed to examine the impact of a rapid build-up in inflatonary pressures around the world. •Sovereign ratings, outlooks and Country Risk limts are regularly monitored with periodc updates to senior stakeholders 3This theme was previously covered under ‘Unintended consequences of accommodative monetary policy and the risk of asset bubbles and inflaton’ ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 147 Risk profile continued Emerging Risk Risk trend since 2020 1 ContextHow these are mitgated/next steps Adapting to endemic COVID-19 and a K-shaped recovery 4,5 Potential impact: High Likelhood: High Velocity of change: Moderate •Countries with high vaccinaton rates are moving towards accepting COVID-19 as endemic. Nevertheless, domestic polices on managing the spread of the virus differ vastly among nations, and the longer-term impacts (includng health and mental wellbeing) are still uncertain •The effectiveness of vaccines is confirmed to dimnish after several months, thus the policy response to new waves of infecton or new variants tends to quickly revert to forms of restricton, includng lockdowns, as seen with the recent Omicron variant •COVID-19 continues to disrupt economies, however another notable emerging effect is on politcs. The COVID-19 theme is increasngly inter-woven with both domestic social unrest and the geopolitcal agenda •Differences in the pace and scale of vaccine rollouts and disparties in financal resources have widened the recovery gap and threaten a K-shaped global recovery, where countries or sectors recover at a different rate depending on their abilty to adapt to a post-COVID world •Emerging markets have lagged behind in their abilty to combat the pandemic which may result in longer-term economic scarring. There has been limted fiscal stimulus for the third world, and short-term support may take precedence over longer-term structural transformation, which is especially relevant for the Group’s footprint •Deeper structural transformations of traditonal economic systems are being observed. A shift in priorties, particularly among younger generations, may lead to fundamental changes in the workforce, includng a permanent drop in the labour supply and a desire to move away from traditonal industres. Vaccine mandates are causing domestic tensions, and may lead to labour shortages in some states or industres •There is a risk that further variants or other diseases may emerge •A severe stress in the global economy associated with a sharp slow-down is a feature of the stress tests conducted at a PLC Group, Solo and country level •Sensitve sectors (e.g. aviaton and hospitalty) are regularly reviewed and exposures to these sectors are actively managed as part of Credit Risk reviews •Exposures that could result in material credit imparment charges and risk weighted asset inflaton under stress tests are regularly reviewed and actively managed •The Group’s priorty remains the health and safety of our clients and employees and continuaton of normal operations by leveraging our robust Business Continuty Plans which enable the majorty of our colleagues to work remotely where possible Supply chain dislocatons 6 Potential impact: High Likelhood: Medium Velocity of change: Moderate •The emergence of supply chain disruptons can be attributed to a combinaton of demand and supply factors, some of which may prove to be transitory while others remain more entrenched. A key risk is that supply chain disruptons raise inflaton expectations on a sustained basis, prompting central banks to tighten monetary policy •Pandemic-related changes, such as a surge in demand for electronics and furniture, has resulted in a rundown of inventores. Furthermore, the shift towards online shopping tends to be more import intensve and Asia- focused, thereby exacerbating shippng backlogs •Severe weather events have caused a reduction in supplies of natural gas and some agricultural products. Supply of goods such as semi-conductors has also been hampered by labour lockdowns and shortages, licensng regulations and backlogs at ports •As well as disrupton to existng chains, there may be a fundamental shift in the supply chains in the future. Companies may be required to set up parallel supply chains as contingences, as well as moving production closer to the end user. Some of this may also be mandated by protectionst polices which drive fragmentation for strategic industres •Exposures that may result in material credit imparment and increased risk-weighted assets are closely monitored and actively managed •Sectors which exhibt high supply chain pressure and vulnerabilty (e.g. electronics) are regularly reviewed and exposures to these sectors are actively managed as part of Credit Risk reviews •We actively utilse Credit Risk mitgation techniques includng credit insurance and collateral 4A K-shaped global recovery occurs when countries or sectors recover at different rates following a recession 5This theme was previously covered under ‘The COVID-19 outbreak and the emergence of new diseases’ 6This theme was previously covered under ‘Rise of populism and nationalsm driven by unemployment and a shift in global supply chains’ ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 148 Risk profile continued Emerging Risk Risk trend since 2020 1 ContextHow these are mitgated/next steps Emerging markets sovereign risk 7 Potential impact: Medium Likelhood: Medium Velocity of change: Moderate •COVID-19, and the response to it, have exacerbated already deterioratng market conditons, causing liqudity and potentially solvency issues for a number of the world’s poorest countries •Declinng government revenue combined with higher spending, has raised government deficts and debt to unprecedented levels across all country income groups •Several Emerging Markets have seen negative sovereign rating and country risk limt actions, reflecting the higher level of sovereign risk as compared to pre-pandemic levels •48 countries have requested particpation in the G20 Debt Service Suspension Initative (DSSI), while three countries (Zambia, Ethiopa, Chad) have requested debt restructuring as part of the Common Framework beyond DSSI •A sharp tightenng of financal conditons, possibly triggered by a rise in bond yields in advanced economies or a deterioraton in global risk sentiment, could push up debt-servicng costs for emerging markets •Exposures that may result in material credit imparment and increased risk-weighted assets are closely monitored and actively managed •We rely on stress tests and portfolio reviews conducted at a PLC Group, Solo, country, and business level to assess the impact of extreme but plausible events and manage the portfolio accordingly. •We actively utilse Credit Risk mitgation techniques includng credit insurance and collateral •We actively track the particpation of our footprint countries in G20’s Common Framework Agreement and Debt Service Suspension Initative for Debt Treatments and the associated exposure 7This theme was previously covered under ‘Risng sovereign default risk and private sector creditor particpation in the Common Framework Agreement’ ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 149 Risk profile continued Environmental and social consideratons (Risk ranked according to severity) Emerging Risk Risk trend since 2020 1 ContextHow these are mitgated/next steps Expanding stakeholder expectations for environmental, social and corporate (ESG) governance Potential impact: High Likelhood: High Velocity of change: Fast •There are risks if the Group is unable to adapt to new regulation quickly, as well as meeting publicly stated sustainablity goals and helping clients transiton •Environmental targets are being incorporated into many countries’ domestic policy, with increased pressure to set ambitous sustainablity goals. However, complexity remains in drivng sustainablity across diverse markets which priortise topics differently •Climate change is a factor in biodversity loss, pollution and depletion of resources. This poses a risk to food and health systems, energy security and the disrupton of supply chains. Understanding of other environmental risks remains limted •Sustainable Finance and Climate Risk continue as a core focus of regulatory policy making across all jursdictons, enhanced by COP26-related intiatves. Corporations are expected to incorporate environmental risks and sustainablity in their business models. This exposes the Group to transiton risks and emerging themes in regulatory compliance •Disclosure requirements are increasng each year as regulators and other stakeholders require greater transparency. There is a clear trend toward mandatory disclosures with developed markets leading the way. We expect the regulatory focus to gradually expand beyond climate to other environmental risks. There is risk of fragmentation of requirements across regions over time •The speed of transiton to meet requirements could be faster for UK entites than those in emerging markets, and we are already observing fragmentation in the pace and scale of adoption around the world •Banks are already making commercial decisons on account of emissons and lack of credible reduction targets. At the same time, companies are being celebrated for progress around reducing emissons despite the presence of other social and governance risks – highlghting a tension between Environmental and Social risk assessments. This ‘carbon-tunnel-vison’, combined with increasng fragmentation in ESG taxonomies, may lead to unintended consequences •The COVID-19 pandemic, climate change and geopolitcal risk have underscored the importance of supply chain transparency. This is creating pressure to expand supply chain metrics to include greater visbilty around human rights issues, carbon emissons, and governance factors •We remain committed to being a responsible bank, minmisng our environmental impact and embedding our values through our strengthened Positon Statements for sensitve sectors and a list of Prohibted Activties that the Group will not finance •The PLC Group proactively particpates in industry intiatves and framework development on both climate and biodversity, to help inform our internal efforts and capabilties. Increased scrutiny is applied to environmental and social standards in providng services to clients •We rely on detailed portfolio reviews and stress tests conducted at a PLC Group, Solo and country level to test the resilence to climate-related risks in line with local regulatory requirements and take action where necessary •The PLC Group has released net zero ambitons and specifc emisson reduction targets for carbon sensitve sectors. The PLC Group’s TCFD report includes more details on Climate Risk and net zero •Our Green and Sustainable Product Framework, developed with the support of Sustainalytcs, has been informed by industry and supervisory princples and standards such as the Green Bond Princples and EU Taxonomy for sustainable activties •We have defined three Stands to use unique abilty to work across boundaries and connect capital, people, ideas and best practices to help address some key socioeconomc challenges and enable a just transiton •The PLC Group is developing an approach to further integrate ESG risk management across the ERMF + Read more about our positon statements: sc.com/positonstatements Social unrest 8 Potential impact: Medium Likelhood: Medium Velocity of change: Moderate •Governmental restrictons on movement as a result of the COVID-19 pandemic, combined with longer-term trends of resurgent nationalsm and ideology, have heightened existng social tensions •Vaccine mandates are causing domestic tensions and may lead to labour shortages in some states or industres such as healthcare and aviaton. There have also been tensions in some markets where lockdowns have been reintroduced despite higher vaccinaton rates •In additon, COVID-19 has continued to exacerbate economic equality, includng reducing the availablity or quality of work. Collectively, these issues have given rise to societal disturbances in a number of markets. There have also been thematic disturbances connected to a common cause such as Black Lives Matter, or climate protests around high-profile events such as the COP26 climate summit •Longer term impacts of climate change may force mass relocation in some areas which could heighten local tensions •The Group is committed to managing human rights impacts through our social safeguards in our Positon Statements. •The PLC Group’s Human Rights Working Group has developed an approach to monitor, report and escalate human rights issues to our Management Team for consideraton with our PLC Group’s strategy •We continue to support our operations and communites who are greatly impacted by COVID-19 through various aid programmes and financng •The Group relies on portfolio reviews conducted at a PLC Group, country, and business level to assess the impact of extreme but plausible geopolitcal events 8This theme was previously covered under ‘Social unrest driven by economic downturns, water crises, medical provison and food security’ ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 150 Risk profile continued Technological consideratons (Risk ranked according to severity) Emerging Risk Risk trend since 2020 1 ContextHow these are mitgated/next steps Data and digtal 9 Potential impact: High Likelhood: High Velocity of change: Moderate •Regulatory requirements and client expectations are increasng in areas such as data management, data protection and data sovereignty and privacy, includng the ethical use of data and artifcial intellgence •The Group, as well as the industry, continues to face challenges to keep pace with the volume of data related regulatory change. Regulatory drivers such as BCBS 239’s requirements on effective risk data aggregation and risk reporting require enhanced controls over data lineage and quality. There has been increased use of powers afforded under data legislaton by regulators to impose punitve fines or to demand data disclosures. Regulatory drivers and requirements vary by market, and the risk of fragmentation of requirements across our markets is growing over time •There are increased bilateral geopolitcal disputes, prompting some governments to issue data sovereignty legislaton, in some cases extraterritoral in nature, which may impact Group processes. In some instances there is conflictng guidance from different regulatory authorites withn the same jursdicton •Rapid adoption of new technologies such as Big Data requires that we need to determine how the Group’s Data Management Polices, Standards and Controls are updated and applied •As informaton assumes an increasngly fundamental role and the migraton to Cloud infrastructure continues, data is becoming concentrated in the hands of governments and large private companies. Data related risks need to be continuously gauged to ensure Group processes and controls are effective •There is an increasng trend of highly organised threat actors, both state sponsored and through organised crime. Tactics are becoming more sophistcated and attacks more targeted over time. New techniques and developments of weapons such as ransomware are available as a service, reducing the cost of complex attack methods •Increasing connectivty is drivng growth and new technologies, but also increasng the Group’s cyber-attack surface and possible entry points for cyber crimnals •The PLC Group accepts invtations from its regulators to lead on specifc data and artifcial intellgence (AI) related industry consultations and also actively work with AI industry bodies to help influence AI regulations •There is active monitorng, both in house and through external counsel, of regulatory developments in relation to data management, includng records management, data protection and privacy, data sovereignty and AI •The PLC Group has further embedded the existng risk control framework for data management risks, which has strengthened and streamlined risk oversight •Given the growth of AI tools and the inherent risks, the deployment and release into PLC Group operational processes is monitored through an AI Council •Controls from the cyber and cloud domains are leveraged for data management risks where appropriate •The PLC Group established a dedicated Data and Privacy Operations team and mobilsed a Groupwide transformation programme to build data management capabilties and expertise to ensure compliance with data management regulations •We have an inflght programme of work to drive compliance to BCBS 239 requirements on effective risk data aggregation and risk reporting •We continue to deliver new controls and capabilties to increase our abilty to identfy, detect, protect and respond to ICS threats 9This theme was previously covered under ‘Increased data privacy and security risks from strategic and wider use of data’ ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 151 Emerging Risk Risk trend since 2020 1 ContextHow these are mitgated/next steps New business structures, channels and competiton 10 Potential impact: High Likelhood: High Velocity of change: Fast •There is increasng usage of partnerships and alliances by banks to respond to disrupton and changes to the industry, particularly from new technologies. Thus partnerships and alliances are integral to banks’ emerging business models and value propositon to clients. However, this also exposes the banks to third-party risks. There are also new business models such as Revenue Sharing Partnerships that present new risks and due dilgence consideratons •Technological advances such as AI, Machine Learning (ML) and cloud-based systems are creating new opportunites but also bringng new challenges. There is also a risk that failure to expediently adapt and harness such technologies would place the Group at a competitve disadvantage •As new technologies grow in sophistcation and become further embedded across the banking and financal services industry, banks may become more susceptible to technology-related risks. Banks may also face increased risks of business model disrupton as new products and technologies continue to emerge. There is also potential for inadequate risk assessment for new and unfamilar activties •The health and social impact of COVID-19, the economic fallout and associated increased cyber threats have impacted companies globally, resulting in signficant pressure on the financal health and security of suppliers, vendors and other third parties that the Group relies on •A remote workforce introduces new vulnerabilties which were easier to manage in an office environment. Particular focus should be given to highly privleged or high-risk roles •The Group is subject to signficant competiton from local banks and other internatonal banks in the markets in which it operates, includng competitors that may have greater financal and other resources. In additon, the Group may experience increased competiton from new entrants such as fintechs deliverng digtal-only banking offerings with a differentated user experience, value propositon and product pricng •In Corporate, Commercial and Institutonal Banking, there is an increasng focus on process digtisaton to provide scalable and personalised solutions for corporate clients. There are a growing number of use cases for blockchain technologies •In additon, digtal assets are gainng adoption and linked business models are increasng in prominence. These present material opportunites as well as risks •We monitor emerging trends, opportunites and risk developments in technology that may have implcations on the banking sector •We are enhancing capabilties to ensure our systems are resilent, we remain relevant and can capitalse quickly on technology trends •Enhanced digtal capabilties have been rolled out in Consumer, Private and Business Banking, particularly around onboarding, sales, and marketing •A risk management approach to address the specifc risks arisng from digtal asset activties, as well as internal guidance on how to leverage existng risk management practices for new activties and nascent risks, is developed and implemented at the PLC Group •Strategic partnerships and alliances are being set up with fintechs to better compete in the markets in which we operate. A tiered security model has been established to ensure appropriate security oversight and governance is in place for different types of strategic partnerships •Third-Party Risk management polices, procedures and governance are being reviewed to ensure adequate coverage across all PLC Group activties 10This theme was previously covered under ‘Third-party dependency’ and ‘New technologies and digtisaton’ ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 152 Risk profile continued Emerging Risk Risk trend since 2020 1 ContextHow these are mitgated/next steps Talent pool of the future 11 Potential impact: Medium Likelhood: High Velocity of change: Moderate •COVID-19 accelerated the move towards remote working for employees. While this intially enabled better safety and was found to benefit productivty, it also raised concerns around effective mitgation and management of operational, informaton and cyber security, compliance, and conduct risks •The extended nature of the COVID-19 pandemic is continung to restrict employees’ abilty to operate in their preferred hybrid working location format (between home and office), causing potential risks to wellbeing, ease of collaboration and learning from others •As demand for new skills and capabilties gains momentum with the rapid change in technology and new ways of working, the shortage of key skills is drivng a war for talent in the financal services industry. This, combined with cross-border mobilty restrictons and government protectionst polices, will especially intensfy competiton for local talent. A compelling purpose, combined with flexible and agile working models, upskillng and reskillng opportunites and career mobilty options becomes critcal to attract, motivate and retain talent •Hybrid-working at-scale also demands concerted efforts towards inclusve behaviours and actions to ensure a consistent experience for employees working remotely, in office or hybrid, as well as those representing our diverse workforce or dealing with challenges that may not be visble or may be accentuated when working remotely •We proactively assess and manage people-related risks; for example, organisaton, capabilty, conduct and culture, as part of our Group Risk Management framework and our People Strategy •The PLC Group undertook a Future of Work change risk assessment which considered operational, compliance, data privacy and cyber security risks in additon to wellbeing, culture and leadership •The Group has rolled out hybrid-working options across 25 markets and over 83 per cent of colleagues in these locations are now on flexi-working arrangement contracts •Wellbeing is one of the key pillars of the Group’s Diversty and Inclusion strategy and we have embedded multiple tools and resources to support colleague wellbeing. These include toolkits for managers and employees, a confidental Employee Assistance Programme, an online programme to support physical wellbeing, increased trainng for Mental Health First Aiders, an on-the-go mobile app and proactive trainng in resilence •The PLC Group has embarked on a multi-year journey focused on upskillng and re-skillng our workforce by buildng a culture of continuous learning and leveraging technology to enable employees to build future ready skills through content and cross-functional experiences 11This theme was previously covered under ‘Increase in long-term remote working providng new challenges’ Risk heightened in 2021Risk reduced in 2021Risk remained consistent with 2020 levels Potential impact Refers to the extent to which a risk event might affect the Group Likelhood Refers to the possiblity that a given event will occur Velocity of change Refers to when the risk event might materialse High (signficant financal or non-financal risk) High (almost certain)Fast (risk of sudden developments with limted time to respond) Medium (some financal or non-financal risk) Medium (likely or possible)Moderate (moderate pace of developments for which we expect there will be time to respond) Low (marginal financal or non-financal risk)Low (unlikely or rare)Steady (gradual or orderly developments) ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 153 Capitalmanagement and governance The Group’s capital and leverage positon is managed withn the Court-approved Risk Appetite framework. Further detail is provided withn the Risk Management Framework section on page 122. Standard Chartered Bank is authorised by the PRA and regulated by the Financal Conduct Authority and the PRA as Standard Chartered Bank (Solo Consolidated). The Group successfully completed the formation of an ASEAN hub during 2021 in which the Group’s existng businesses in Malaysia, Thailand and Vietnam were moved under the Group’s existng Singapore subsidary entity, which itself remains under Standard Chartered Bank. Standard Chartered Bank continues to operate through its branches and a number of subsidaries, all of which remain well capitalsed in line with their applicable Court-approved Risk Appetites which takes into account local regulations, Pillar 1 and 2 requirements and regulatory and management buffers as applicable. The Group’s CET1 ratio remained strong at 12.3 per cent at FY2021 with leverage at 4.5 per cent. The Group maintans high levels of loss absorbing capacity. Compared to 31 December 2020, the Group’s CET1 ratio decreased 41 basis points as RWA increased by $6.1 billon to $194.0 billon. CET1 capital was flat compared to FY2020 as profits of $1.6 billon were offset by distrbutions of $0.6 billon, a foreign currency translation impact of $0.5 billon, movement in other comprehensive income of $0.2 billon and an increase in regulatory deductions of $0.4 billon. On 9 July 2021, the PRA published a policy statement on implementng Basel standards which confirmed that qualifyng software assets would need to be deducted from CET1 from January 2022. As at 31 December 2021, the current treatment of software assets provided around 32 basis points of benefit to the CET1 ratio. From 1 January 2022 RWA increases due to post model adjustments following new PRA rules on IRB models and the introducton of standardised rules for Counterparty Credit Risk on derivatves and other instruments. Capitalratios 2021 restated¹ 2020 CET112.3% 12.7% Tier 1 capital15.3% 15.1% Total Capital21.6% 21.7% 1Restatement of 2020 includes correction of fair value hedge adjustment of $81 millon ## Capital review ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 154 Capital review continued CRD Capital base¹ (audited) 2021 $millon restated 4 2020 $millon CET1 capital instruments and reserves Capital instruments and the related share premium accounts 20,893 19,620 Of which: share premium accounts 296 296 Retained earnings 2 9,831 11,674 Accumulated other comprehensive income (and other reserves) (4,245) (3,512) Non-controlling interests (amount allowed in consolidated CET1) 179 160 Independently audited year-end profits 1,639 (32) Foreseeable divdends (186) (162) CET1 capital before regulatory adjustments 28,111 27,748 CET1 regulatory adjustments Additonal value adjustments (prudential valuation adjustments) (453) (354) Intangible assets (net of related tax liablity) 3 (3,037) (2,943) Deferred tax assets that rely on future profitablity (excludes those arisng from temporary differences) (141) (133) Fair value reserves related to net losses on cash flow hedges 11 (5) Deduction of amounts resulting from the calculation of excess expected loss (416) (377) Net gains on liablites at fair value resulting from changes in own credit risk 3 28 Defined-benefit pension fund assets (114) (13) Fair value gains arisng from the insttution’s own credit risk related to derivatve liablites (51) (32) Exposure amounts which could qualify for risk weightng of 1250% (29) (21) Total regulatory adjustments to CET1 (4,227) (3,850) CET1 capital23,884 23,898 Additonal Tier 1 capital (AT1) instruments5,892 4,571 AT1 regulatory adjustments(20) (20) Tier 1 capital29,756 28,449 Tier 2 capital instruments12,105 12,293 Tier 2 regulatory adjustments(30) (30) Tier 2 capital12,075 12,263 Total capital41,831 40,712 Total risk-weighted assets (unaudited)193,988 187,901 1CRDcapital isprepared onthe regulatory scope ofconsolidaton 2Retained earnings include IFRS9 capital relief (Transitonal) of $299 millon includng dynamic relief of $88 millon 3The deduction of intangble assets includes software deduction relief of $714 millon, available as per CRR ‘Quick Fix’ measures (2020 software deduction relief of$464millon) 4Restatement of 2020 includes correction of fair value hedge adjustment of $81 millon. Leverage ratio Capital and total exposures 2021 $millon restated 1 2020 $millon Tier 1 capital29,258 27,453 Total leverage ratio exposures653,396 587,570 Leverage ratio4.5% 4.7% 1Restatement of 2020 includes correction of fair value hedge adjustment of $81 millon. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 155 ## Independent Auditor’s report to the members of Standard Chartered Bank Opinon In our opinon: • the financal statements of Standard Chartered Bank (the ‘Company’) and its subsidaries (the ‘Group’) give a true and fair view of the state of the Group’s and of the Company’s affairs as at 31 December 2021 and of the Group’s profit for the year then ended; • the Group financal statements have been properly prepared in accordance with UK adopted internatonal accounting standards (IAS) and International Financal Reporting Standards (IFRS) as adopted by the European Union (EU IFRS); • the Company financal statements been properly prepared in accordance with UK adopted internatonal accounting standards as applied in accordance with section 408 of the Companies Act 2006; and • the financal statements have been prepared in accordance with the requirements of the Companies Act 2006. We have audited the financal statements of the Group and the Company for the year ended 31December 2021 which comprise: GroupCompany Consolidated balance sheet as at 31 December 2021Balance sheet as at 31 December 2021 Consolidated income statement for the year then ended Cash flow statement for the year then ended Consolidated statement of comprehensive income for the year then ended Statement of changes in equity for the year ended 31December 2021 Consolidated statement of changes in equity for the year then endedRelated notes 1 to 40 to the financal statements includng asummary of signficant accounting polices Consolidated cash flow statement for the year then ended Related notes 1 to 40 to the financal statements, includng a summary ofsignficant accounting polices Risk and capital disclosures marked as ‘audited’ from page 55 to page154 The financal reporting framework that has been applied in their preparation is applicable law and UK adopted IAS, and asregard to the Group financal statements, EU IFRS, and as regards the Company financal statements, as applied in accordance with section 408 of the Companies Act 2006. Basis for opinon We conducted our audit in accordance with International Standards on Auditng (UK) (ISAs (UK)) and applicable law. Our responsiblites under those standards are further described in the Auditor’s responsiblites for the audit of the financal statements section of our report. We are independent of the Group and Company in accordance with the ethical requirements that are relevant to our audit of the financal statements in the UK, includng the Financal Reporting council's (FRC’s) Ethical Standard as applied to listed public interest entites, and we have fulfilled our other ethical responsiblites in accordancewith these requirements. We believe that the audit evidence we have obtained is sufficent and appropriate to provide a basis for our opinon. Conclusions relating to going concern In auditng the financal statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financal statements is appropriate. Our evaluation of the directors’ assessment of the Group and Company’s abilty to continue toadopt the goingconcern basis of accounting included: • Understanding management’sgoing concern assessment process, includng the impact ofthe COVID-19pandemic (COVID-19); • Review of the Corporate Plan, includng assessing the reasonableness of assumptions and historcal forecasting accuracy; • Assessing the results of management’s stress testing, includng consideraton of princpal and emerging risks, on funding, liqudity and regulatory capital; • Reviewng correspondence with prudential regulators and authorites formatters that may impact the going concern assessment; and • Evaluating the appropriateness ofthe going concern disclosure includedin Note 1to the financal statements. Based on the work we have performed, we have not identfied any material uncertaintes relating to events or conditons that, indvidually or collectively, may cast signficant doubt on the Group and Company’s abilty to continue as a going concern for a period of twelve months from 17 February 2022. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 156 Independent Auditor’s report to the members of Standard Chartered Bank continued Our responsiblites and the responsiblites of the directors with respect to going concern are described in the relevant sections of this report. However, because not all future events or conditons can be predicted, this statement is not a guarantee as to the Group’s abilty to continue as a going concern. Audit scope •We performed an audit of the complete financal informaton of 14 components across 10 countries and audit procedures on specifc balances for a further 4 components across 3 countries. •The components where we performed full or specifc audit procedures accounted for 76% of absolute adjusted profit before tax ( PBT) measure used to calculate materialty, 83% of absolute operating income and 93% of Total assets. Key audit matters •Credit imparment •User access management •Impairment of non-financal assets (Investments in subsidary undertakings and Goodwill) •Valuation of financal instruments held at fair value with higher risk characteristcs Materialty •Overall Group materialty of $137m which represents 5% of adjusted PBT. Overview of our audit approach An overview of the scope of the Company and Group audits Tailorng the scope Our assessment of audit risk, our evaluation of materialty and our allocation of performance materialty determine our audit scope for each component withn the Group. Taken together, this enables us to form an opinon on the consolidated financal statements. We took into account the size, risk profile, the organisaton of the Group and effectiveness of Group control environment, changes in the business environment and other factors such as material issues or misstatements noted in prior period when assessing the level of work to be performed at each component. In assessing the risk of material misstatement to the consolidated financal statements, and to ensure we had adequate quantitatve coverage of signficant accounts in the financal statements, of the 283 reporting components of the Group, we selected 18 components across 13 countries covering entites withn Bangladesh, Germany, India, Indonesia, Japan, Kenya, Malaysia, Nigera, Pakistan, Singapore, United Arab Emirates, United Kingdom, and the United States of America, which represent the princpal business units withn the Group. The defintion of a component is aligned with the structure of the Group’s consolidaton system, typically these are either a branch, group of branches, group of subsidaries, a subsidary or an associate. We took a centralised approach to auditng certain processes and controls, as well as the substantive testing of specifc balances. This included audit work over Global Business Services, Commercial, Corporate and Institutonal Banking, Credit Impairment and Technology. Of the 18 components selected in 13 countries, we performed an audit of the complete financal informaton of 14 components in 10 countries ('full scope components') which were selected based on their size or risk characteristcs. For the remainng 4 components in 3 countries ('specifc scope components'), we performed audit procedures on specifc accounts withn that component that we considered had the potential for the greatest impact on the signficant accounts in the financal statements either because of the size of these accounts or their risk profile. The reporting components where we performed audit procedures accounted for 76% (2020: 81%) of the Group’s absolute adjusted PBT, 83% (2020: 83%) of the Group’s absolute operating income and 93% (2020: 95%) of the Group’s Total assets. For the current year, the full scope components contributed 68% (2020: 77%) of the Group’s absolute adjusted PBT, 73% (2020: 76%) of the Group’s absolute operating income and 82% (2020: 85%) of the Group’s Total assets. The specifc scope component contributed 8% (2020: 4%) of the Group’s absolute adjusted PBT, 10% (2020: 7%) of the Group’s absolute operating income and 11% (2020: 10%) of the Group’s Total assets. The audit scope of these components may not have included testing of all signficant accounts of the component but will have contributed to the coverage of signficant accounts tested for the Group. Of the remainng 265 components that together represent 24% of the Group’s absolute adjusted PBT, none are indvidually greater than 2.5% of the Group’s absolute adjusted PBT. For these components, we performed other procedures at a Group level which included, performing analytical reviews at a Group financal statement line item level, testing entity level controls, performing audit procedures on the centralised shared service centres, testing of consolidaton journals and intercompany elimnations, inquring with local component teams and assessing the outcome of prior year local statutory audits to respond to any potential risks of material misstatement to the Group financal statements. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 157 Independent Auditor’s report to the members of Standard Chartered Bank continued The charts below illustrate the coverage obtained from the work performed by our audit teams. Absolute adjusted PBT 68% Full scope components 8% Specifc scope components 24%Other procedures Total assets 82% Full scope components 11% Specifc scope components 7% Other procedures Absolute operating income 73% Full scope components 10% Specifc scope components 17% Other procedures Changes from the prior year We assessed our 2021 auditscope with consideraton ofhistory or expectation ofunusual or complex transactions and potential for or history of material misstatements. We also kept our audit scope under review throughout the year. A total of 4 components in 3 countries which were previously included in our prior year audit scope, that together represent 2% of the Prior year adjusted absolute PBT have now been excluded from the Group audit scope in the current year based on our updated risk assessment. Bangladesh which was a full scope component in the prior year is designated as a specifc scope component in the current year based on our updated risk assessment. Involvement with component teams In establishng our overall approach to the Group audit, we determined the type of work that needed to be undertaken at each of the components by us, as the Group audit engagement team, or by component auditors from other EY global network firms operating under our instructon. Of the 14 full scope components, audit procedures were performed on 1 of these (the audit of the Company) directly by the Group audit engagement team (EY London) in the United Kingdom. For the 4 specifc scope components, where the work was performed by component auditors, we determined the appropriate level of involvement to enable us to determine that sufficent audit evidence had been obtained as a basis for our opinon on the Group as a whole. In additon, the Group has centralised processes and controls over key areas in its shared service centres. Members of the Group audit engagement team provide direct oversight, review and coordinaton of our shared service centre audits. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 158 Independent Auditor’s report to the members of Standard Chartered Bank continued Our programme of planned vists to components and shared service centres in several locations was impacted by the travel restrictons and other imposed government measures which are still in place from the prior year as a result of the ongoing COVID-19 pandemic. The audit was performed remotely at both Group audit engagement team and component locations supported through the use of EY software collaboration platforms for the secure and timely delivery of requested audit evidence. We also undertook virtual engagement vists with local audit teams and management. These virtual meetings involved discussng the audit approach with the component and shared service centres team and any issues arisng from their work, meeting with local management, attending meetings with the key audit partners of material components, attending interm and closing meetings and performing remote reviews of key audit workpapers. Furthermore, the Senior Statutory Auditor visted Singapore as it is the location where a signficant element of the work on risk areas such as credit and financal instrument valuation is performed. He attended key meetings with management and held discussons on the audit approach and any issues arisng from the work of the Singapore component and Shared Service Centre teams. As a result of COVID-19, we maintaned continuous involvement and oversight of the component teams. This includes the Group audit engagement partners and senior members of the primary audit team increasng regular interactons through calls and video conferences during various stages of the audit process, increasng our written communicatons to and reporting from the component teams and invting component teams to our virtual planning event and subsequent virtual events dedicated to specifc areas of the audit. For the majorty of the signficant and fraud risk areas, substantial elements of the audit work were led centrally, either withn the Group audit engagement team, or withn other teams performing centralised procedures. This, together with the additonal procedures performed at Group level, gave us appropriate evidence for our opinon on the Group financal statements. Climate change There has been increasng interest from stakeholders as to how climate change will impact the banking industry. The Group has determined climate risk to be a Primary Integrated Risk Type and the assessment of this risk is explained in the Risk Review section of the Strategic Report (the ‘Climate Disclosures’). The Climate Disclosures form part of the ‘Other informaton,’ rather than the audited financal statements. Our procedures on the Climate Disclosurestherefore consisted solely ofconsiderngwhether they are materially inconsstent with thefinancal statements or our knowledge obtained in the course of the audit or otherwise appear to be materially misstated. Governmental and societal responses to climate change risks are still developing and are interdependent upon each other; accordingly, financal statements cannot captureall possiblefuture outcomes as these are not yet known. Thedegree of uncertainty of these climate change risks may also mean that they cannot be taken into account when determinng asset and liablity valuations and the timng of future cash flows under the requirements of UK adopted IAS and EU IFRS. Our audit effort in considerng climate change risk was focused on evaluating whether the Group’s assessment of the effects of material climate change risks disclosed withn Basis of Preparation on page 174, have been appropriately reflected in the valuation of assets and liablites, where these can be reliably measured. This was in the context of the Group’s process over this emerging area being limted, as a result of limtations in the availablity of data and sophistcated models, and as the Group considers how it further embeds its climate ambitons into the planning process. We also understood the Directors’ consideratons of climate change in their assessment of going concern and the associateddisclosures. Whilst the Group has stated its commitment to the aspiratons of the Paris Agreement to achieve net zero emissons by 2050, the Group considers Climate Risk as a longer-term risk and will address the risk through its business strategy and financal planning as the Group implements its net zero journey. As set out above and on page 174 withn Basis of Preparation, the Group’s process is currently limted, and accordingly, the potential impacts of Climate Risk may not be fully incorporated in these financal statements. Key audit matters Key audit matters are those matters that, in our professional judgment, were of most signficance in our audit of the financal statements of the current period and include the most signficant assessed risks of material misstatement (whether or not due to fraud) that we identfied. These matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directng the efforts of the engagement team. These matters were addressed in the context of our audit of the financal statements as a whole, and in our opinon thereon, and we do not provide a separate opinon on these matters. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 159 Independent Auditor’s report to the members of Standard Chartered Bank continued RiskOur response to the risk Key observations communicated to the Audit Committee 1. Credit Impairment Accounting polices (page 187); Note 8 of the financal statements; and relevant credit risk disclosures (includng pages 63 and 65) At 31 December 2021, the Group reported total credit imparment balance sheet provison of $5,377 millon (2020: $6,402 millon). Management’s judgements and estimates are especially subjectve due to signficant uncertainty associated with the assumptions used. Assumptions with increased complexity in respect of the timng and measurement of expected credit losses (ECL) include: • Staging – Allocation of assets to stage 1, 2, or 3 on a timely basis using critera in accordance with IFRS 9; • Model output and adjustments – Accounting interpretatons, modelling assumptions and data used to build and run the models that calculate the ECL, includng the appropriateness, completeness and valuation of post-model adjustments applied to model output to address risks not fully captured by the models; • Economic scenarios – Signficant judgements involved with the determinaton of parameters used in Monte Carlo Simulaton and the evaluation of the appropriateness of using Monte Carlo Simulaton with regards to whether the simulaton can sufficently capture the non-linearty of ECL and appropriately generate a wide enough range of possible outcomes; • Management overlays – Appropriateness, completeness and valuation of risk event overlays to capture risks not identfied by the credit imparment models, includng the consideraton of the risk of management override; and • Indivdually assessed ECL allowances – Measurement of indvidual provisons includng the assessment of probabilty weighted recovery scenarios, exit strategies, collateral valuations and time to collect. The above complexites are further exacerbated by the ongoing COVID-19 pandemic, particularly due to its dynamic nature and the diversty of its impact across geographies and time. The most notable risk in this respect remains the appropriateness of the management COVID-19 overlay recognised withn the ECL. We evaluated the design and operating effectiveness of controls relevant to the Group’s processes over material ECL balances, includng the judgements and estimates noted, involvng EY specialsts to assist us in performing ourprocedures to the extent it was appropriate. These included: • credit monitorng; • controls over the allocation of assets into stages such asmanagement’s monitorng of stage effectiveness; • completeness and accuracy of data; • review and approval of multiple economic scenarios; • model governance, includng model monitorng, model validaton and review and approval of post model adjustments; • review and approval of management overlays; and • review and approval of the indvidually assessed ECL. In evaluating the controls, we obtained the relevant papers and minutes of the executive forums that discuss and approve the credit models and ECL allowances for evidence of executive review and challenge. We performed an overall stand-back assessment of the ECL allowance levels by stage to determine if they were reasonable by considerng the overall credit quality of the Group’s portfolios, risk profile, impact of COVID-19 includng geographic consideratons and vulnerable sectors. We also assessed the effect of government support measures in key locations (e.g., payment deferrals), which may delay or mask stage migratons. Our assessment also included the evaluation of the macroeconomic environment by considerng trends in the economies and industres to which the Group is exposed. We performed peer benchmarking where available to assess overall staging and provison coverage levels. Staging – We evaluated the critera used to allocate financal assets to stage 1, 2 or 3 in accordance with IFRS 9. We reperformed the staging distrbution for a sample of assets and assessed the reasonableness of staging downgrades applied by management. To test credit monitorng which largely drives the probabilty of default estimates used in the staging calculation, we challenged the risk ratings for a sample of performing accounts and other accounts exhibting risk characteristcs such as financal diffculties, deferment of payment, late payment and watchlist. We also considered the vulnerable sectors (as defined by the Group) impacted by COVID-19. Modelled output and adjustments – We performed a risk assessment on models involved in the ECL calculation to select a sample of models to test. We engaged our modelling specialsts to evaluate a sample of ECL models by assessing the reasonableness of underpinnng assumptions, inputs and formulae used. This included a combinaton of assessing the appropriateness of model design and formulae, and algorithms, alternative modelling techniques and recalculating the Probabilty of Default, Loss Given Default and Exposure at Default parameters. Together with our modelling specialsts, we also assessed material post-model adjustments which were applied as a response to risks not fully captured by the models, includng the completeness and appropriateness of these adjustments, for which we considered the applied judgments and methodology, and governance thereon. We concluded that management’s methodology, judgements and assumptions used in calculating credit imparment are in accordance with the accounting standard. We highlghted the following matters to the Audit Committee: •a number of control findngs in relation to the model governance framework; •some instances of over and under estimaton; •benchmarking impact of non-linearty from the baseline ECL against UK peers; and •the need for to continuously assess the compositon of the CPBB COVID-19 overlay to reflect the everchanging market uncertaintes. Overall modelled ECL levels, staging and indvidually assessed provisons were reasonable. We concluded that the Group’s ECL allowances were reasonable and recognised in accordance with IFRS 9. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 160 Independent Auditor’s report to the members of Standard Chartered Bank continued RiskOur response to the risk Key observations communicated to the Audit Committee 1. Credit Impairment (continued) In response to the new models implemented this year to address known weaknesses in previous models, we performed substantive testing procedures, includng code review and implementaton testing. To evaluate data quality, we agreed a sample of ECL calculation data points to source systems, includng, among other data points, balance sheet data used to run the models. We also tested a sample of the ECL data points from the calculation engine through to the general ledger and disclosures. We included COVID-19 specifc data points in this testing. Economic scenarios – For material models, in collaboration with our economists and modelling specialsts, we also challenged the completeness and appropriateness of the macroeconomic variables used as inputs to these models. Additonally, we involved our economic specialsts to assist us in evaluating the reasonableness of the base forecast for sample of macroeconomic variables most relevant for the Group’s ECL calculation influenced by the above assessment. Procedures performed included benchmarking the forecast for a sample of macroeconomic variables to a variety of external sources. Furthermore, we have assessed the reasonableness of the Furthermore, we assessed the reasonableness of the non-linearty impact on ECL allowances. By engaging our economists and modelling specialsts, we assessed the Group’s choice of scenarios and chosen weights used, and the underlying mechanics and formulae to determine the uplift in ECL. We also performed a stand-back assessment by benchmarking the uplift and overall ECL charge and provison coverage to peers. Management overlays – We challenged the completeness and appropriateness of overlays used for risks not captured by the models, particularly the uncertaintes as a result of the COVID-19 pandemic and observed in the China Commercial Real Estate sector. Our procedures included evaluating the underpinnng assumptions and judgments as to whether they are appropriate in prevailng market conditons. Indivdually assessed ECL allowances – Our procedures included challenging management's forward-looking economic assumptions of the recovery outcomes identfied and assigned indvidual probabilty weightngs, and recalculating a sample of indvidually assessed provisons. We also engaged our valuation specialsts to test the value of the collateral used in management’s calculations. Our sample was based on quantitatve thresholds and qualitatve factors includng vulnerable sectors. We considered the impact COVID-19 had on collateral valuations and time to collect. We also considered whether planned exit strategies remained viable under COVID-19. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 161 Independent Auditor’s report to the members of Standard Chartered Bank continued RiskOur response to the risk Key observations communicated to the Audit Committee 2. User access management - privleged access management IT General Controls (ITGCs) support the continuous operation of the automated and other IT dependent controls withn the business processes related to financal reporting. Effective IT general controls are needed to ensure that IT applicatons process business data as expected and that changes are made in an appropriate manner. During the 2020 audit, a number of signficant privleged identty management (PIM) control deficencies were identfied by us. Simlar deficencies were identfied by Group Internal Audit (GIA) and the predecessor auditor in 2018 and 2019. The possiblity of IT applicaton users gainng access privleges beyond those necessary to perform their assigned duties may result in breaches in segregation of duties, includng inapproprate manual interventon, unauthorised changes to systems or programmes. These deficencies are still in the process of being fully remediated. During the current year audit, we made further observations relating to the effectiveness of remediaton activties. The risk has decreased in the current year due to management’s remediaton program, which is still in progress as at the year-end date. We reviewed the results of management’s remediaton program and risk assessment for applicatons in our audit scope and assessed the impact on the financal statements for the year ended 31 December 2021. We tested IT compensating controls where possible, and also performed additonal IT substantive procedures to assess the impact of risks associated with the reported deficencies, on the financal statements. Where required, we tested business compensating controls and performed additonal business substantive procedures. •We communicated a weakness in internal control to the Audit Committee throughout the audit, in respect of the effectiveness of privleged identty management. •We explained the additonal procedures performed, includng IT substantive testing, testing of IT and business compensating controls, and where required, additonal substantive testing over impacted account balances. As a result of the procedures performed, we have reduced the risk that our audit has not identfied a material error in the Group and Company financal statements, related to user privleged access management, to an appropriate level. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 162 Independent Auditor’s report to the members of Standard Chartered Bank continued RiskOur response to the risk Key observations communicated to the Audit Committee 3. Impairment assessment of non-financal assets a) Impairment of Goodwill: Accounting polices (page 265); and Note 16 of the financal statements and b) Impairment of Investments in subsidary undertakings: Accounting polices (page 298); and Note 31 of the financal statements COVID-19 continues to have a signficant economic impact globally. As a result, the Group assessed for imparment its various non-financal assets during 2021, the most signficant of which are set out below. The Group performed an imparment test on goodwill amounting to $1,379 millon (2020: $1,408 millon) and, in the Company financal statements, Investments in subsidary undertakings amounting to $9,694 millon (2020: $8,258 millon). Impairment of goodwill and investments in subsidary undertakings is determined by comparing the carrying value to recoverable amount. Where the recoverable amount is based on value-in-use (VIU), this is modelled by reference to future cashflow forecasts (profit forecast includng a regulatory capital haircut adjustment), discount rates and macroeconomic assumptions such as long-term growth rates. Consequently, there is a risk that if the judgements and assumptions underpinnng the imparment assessments are inapproprate, then the goodwill and investments in subsidaries balances may be misstated. The level of risk remains consistent with the prior year. We obtained an understanding of management’s processes for assessing imparment and evaluated the design of controls. We took a fully substantive approach. We assessed the appropriateness of the Group’s methodology for testing the imparment of goodwill and investments in subsidary undertaking for compliance with the accounting standards. For goodwill, we assessed the appropriateness of the cash-generating units identfied by management, includng the change as a result of the Group’s organisatonal structure effective 1 January 2021. We tested the mathematical accuracy of the VIU model and engaged our specialsts to support the audit team in assessing reasonableness of the regulatory haircut adjustment¹ to future profitablity forecasts and calculatingan independent range for assumptions underlying the VIU calculations, such as the discount rateand long-term growth rate for each cash generating unit. We also reconciled the future profitablity forecasts tothe Group’s approved Corporate Plan (‘the Plan’). We performed audit procedures to assess the reasonableness of the forecasts by reviewng the Group Strategy, challenging key assumptions underpinnng the Plan, reviewng the feasiblity of management actions necessary to achieve the Plan, testing the reliablity of the Group’s historcal forecasting and benchmarking key metrics against broker reports published for comparable businesses. We performed a stand back test to evaluate the appropriateness of the audit evidence obtained and our conclusion in relation to these estimates. We performed sensitvity analysis to identfy the cash generating units that were most sensitve to potential changes in the assumptions set out above. We assessed the appropriateness of goodwill disclosures inaccordance with IAS 36. ¹The forecast profits are haircut using an internal risk appetite and forecast RWA, to reflect the amount of capital to be retained by each CGU before profits may be distrbuted. We concluded that the goodwill balance as at 31 December 2021 is not materially misstated. We alsoconcluded that the Investments in subsidary undertakings in Company financal statements is not materially misstated. We are satisfed that the change in cash-generating units, management methodologies, judgements and assumptions supporting the carrying value were reasonable and in accordance with internatonal accounting standards. We concluded that the disclosures were appropriate. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 163 Independent Auditor’s report to the members of Standard Chartered Bank continued RiskOur response to the risk Key observations communicated to the Audit Committee 4. Valuation of financal instruments held at fair value with higher risk characteristcs Refer to Accounting polices (page 198); Note12 of the financal statements. At 31 December 2021, the Group reported financal assets measured at fair value of $232,840 millon, and financal liablites at fair value of $129,138 millon, of which financal assets of $2,883 millon and financal liablites of $1,264millon are classifed as Level 3 in the fair value hierarchy. The fair value of financal instruments with higher risk characteristcs involves the use of management judgement in the selection of valuation models and techniques, pricng inputs and assumptions and fair value adjustments. A higher level of estimaton uncertainty is involved for financal instruments valued using complex models, pricng inputs that have limted observabilty, and fair value adjustments, includng the Credit Valuation Adjustment and Debit Valuation Adjustment, in relation to derivatve transactions with counterparties where credit spreads are less readily able to be determined. We considered the following portfolios presented a higher level of estimaton uncertainty: •Level 3 derivatve financal instruments and a portfolio of Level 2 derivatve financal instruments due to the use of complex models or illquid pricng inputs, and •Unlisted equity investments, loans at fair value, debt and other financal instruments classifed in Level 3 with unobservable pricng inputs. The level of risk remains consistent with the prior year. We evaluated the design and operating effectiveness of controls relating to the valuation of financal instruments, includng independent price verifcation, model review and approval, fair value adjustments, income statement analysis and reporting. Among other procedures, we engaged valuation specialsts to assist the audit team in performing the following procedures: •Test complex model-dependent valuations by independently revaluing a sample of Level 3 and complex Level 2 derivatve financal instruments, in order to assess the appropriateness of models and the adequacy of assumptions and inputs used by the Group; •Test valuations of other financal instruments with higher estimaton uncertainty, such as unlisted equity investments, loans at fair value, debt and other financal instruments. We compared management’s valuation to our own independently developed range, where appropriate; •Assessed the appropriateness of pricng inputs as part ofthe Independent Price Verifcation process; and •Compared the methodology used for fair value adjustments to current market practice. We revalued a sample of valuation adjustments, compared funding and credit spreads to third party data and challenged the basis for determinng illquid credit spreads. Where material differences between our independent valuation and management’s valuation were outside our thresholds, we performed additonal testing to assess the impact on the valuation of financal instruments. We concluded that assumptions used by management to estimate the fair value of financal instruments with higher risk characteristcs and the recogniton of related income were reasonable. We highlghted the following matters to the Audit Committee: •Complex model-dependent valuations were appropriate based on the output of our independent revaluations; •Fair values of derivatve transactions, unlisted equity investments, loans, debt and other financal instruments valued using pricng informaton with limted observabilty were not materially misstated as at 31 December 2021, based on the output of our independent calculations; and Valuation adjustments in respect of credit, funding and other risks applied to derivatve portfolios and debt securites issued were appropriate, based on our analysis of market data and benchmarking of pricng informaton Our applicaton of materialty We apply the concept of materialty in planning and performing the audit, in evaluating the effect of identfied misstatements on the audit and in forming our audit opinon. Materialty The magnitude of an omisson or misstatement that, indvidually or in the aggregate, could reasonably be expected to influence the economic decisons of the users of the financal statements. Materialty provides a basis for determinng the nature and extent of our audit procedures. We determined materialty for the Group to be $137 millon (2020: $88 millon), which is 5% (2020: 5%) of Adjusted PBT. This reflects actual PBT adjusted for non-recurring item relating to restructuring, regulatory fines and net gain on businesses disposed/held for sale. We believe that adjusted PBT provides us with the most appropriate measure for the users of the financal statements, given the Group is profit making; it is consistent with the wider industry and is the standard for listed and regulated entites and we believe it reflects the most useful measure for users of the financal statements. We also believe that the adjustments are appropriate as they relate to material non-recurring items. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 164 Independent Auditor’s report to the members of Standard Chartered Bank continued • Statutory profit before tax – $2,381m Starting basis • Restructuring – $325m • Regulatory fine – $62m • Net gain on businesses disposed/held for sale – ($20m) Adjustments • Totals $2,748m Adjusted PBT • Materialty of $137m (5% of Adjusted PBT) Materialty We determined materialty for the Company to be $137 millon (2020: $88 millon), which is aligned to the materialty of the Group since the financal statements covers both the Group and Company. Performance materialty The applicaton of materialty at the indvidual account or balance level. It is set at an amount to reduce to an appropriately low level the probabilty that the aggregate of uncorrected and undetected misstatements exceeds materialty. On the basis of our risk assessment, together with our assessment of the Group’s overall control environment, our judgement was that performance materialty was 50% (2020: 50%) of our planning materialty, namely $69m (2020: $44m). We have set performance materialty at this percentage based on a variety of risk assessment factors such as the expectation of misstatements, internal control environment consideratons and other factors such as the global complexity of the Group. Audit work at component locations for the purpose of obtainng audit coverage over signficant financal statement accounts is undertaken based on a percentage of total performance materialty. The performance materialty set for each component is based on the relative scale and risk of the component to the Group as a whole and our assessment of the risk of misstatement at that component. In the current year, the range of performance materialty allocated to components was $8m to $18m (2020: $7m to $13m). Reporting threshold An amount below which identfied misstatements are considered as being clearly trival. We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of $7m (2020: $5m), which is set at 5% of planning materialty, as well as differences below that threshold that, in our view, warranted reporting on qualitatve grounds. We evaluate any uncorrected misstatements against both the quantitatve measures of materialty discussed above and in light ofother relevant qualitatve consideratons in forming our opinon. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 165 Other informaton The other informaton comprises the informaton included in the annual report includng the Strategic report (page 1 to 48), the Directors’ report (page 49 to 53) and the informaton not marked as ‘audited’ in the Risk and capital review section (page 55 to 154), other than the financal statements and our auditor’s report thereon. The directors are responsible for the other informaton contained withn the annual report. Our opinon on the financal statements does not cover the other informaton and, except to the extent otherwise explictly stated in this report, we do not express any form of assurance conclusion thereon. Our responsiblity is to read the other informaton and, in doing so, consider whether the other informaton is materially inconsstent with the financal statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identfy such material inconsstencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financal statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of the other informaton, we are required to report that fact. We have nothing to report in this regard. Opinons on other matters prescribed by the Companies Act 2006 In our opinon, based on the work undertaken in the course of the audit: • the informaton given in the strategic report and the directors’ report for the financal year for which the financal statements are prepared is consistent with the financal statements; and • the strategic report and directors’ report have been prepared in accordance with applicable legal requirements. Matters on which we are required to report by exception In the light of the knowledge and understanding of the Group and the Company and its environment obtained in the course of the audit, we have not identfied material misstatements in the strategic report or the directors’ report. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinon: • adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received from branches not visted by us; or • the Company financal statements are not in agreement with the accounting records and returns; or • certain disclosures of directors’ remuneration specifed by law are not made; or • we have not received all the informaton and explanations we require for our audit Responsiblites of directors As explained more fully in the Statement of Directors’ Responsiblites on page 54, the directors are responsible for the preparation of the financal statements and for being satisfed that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financal statements that are free from material misstatement, whether due to fraud or error. In preparing the financal statements, the directors are responsible for assessing the Group and Company’s abilty to continue as a going concern, disclosng, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liqudate the Group or the Company or to cease operations, or have no realistc alternative but to do so. Auditor’s responsiblites for the audit of the financal statements Our objectves are to obtain reasonable assurance about whether the financal statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinon. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, indvidually or in the aggregate, they could reasonably be expected to influence the economic decisons of users taken on the basis of these financal statements. Explanation as to what extent the audit was considered capable of detecting irregularties, includng fraud Irregularites, includng fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsiblites, outlined above, to detect irregularties, includng fraud. The risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentonal misrepresentatons, or through collusion. The extent to which our procedures are capable of detecting irregularties, includngfraud is detailed below. However, the primary responsiblity for the prevention and detection of fraud rests with both those charged with governance of the company and management. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 166 Independent Auditor’s report to the members of Standard Chartered Bank continued • We obtained an understanding of the legal and regulatory frameworks that are applicable to the Group and determined that the most signficant are those that relate to the reporting framework (UK-adopted IAS and EU IFRS, the Companies Act 2006, regulations and supervisory requirements of the Prudential Regulation Authority (PRA), FRC, FCA and other overseas regulatory requirements, includng but not limted to regulations in its major markets such as India, Singapore, the United States of America, and the relevant tax compliance regulations in the jursdictons in which the Group operates. In additon, we concluded that there are certain signficant laws and regulations that may have an effect on the determinaton of the amounts and disclosures in the financal statements and those laws and regulations relating to regulatory capital and liqudity, conduct, financal crime includng anti-money laundering, sanctions and market abuse recognisng the financal and regulated nature of the Group’s activties. • We understood how the Group is complying with those frameworks by performing a combinaton of inquries of senior management and those charged with governance as required by auditng standards, review of board and committee meeting minutes, gainng an understanding of the Group’s approach to governance, inspecton of regulatory correspondence in the year and engaging with internal and external legal counsel. We also engaged EY financal crime and forensics specialsts to perform procedures on areas relating to anti-money laundering, whistleblowng, and sanctions. Through these procedures, we became aware of actual or suspected non-compliance. The identfied actual or suspected non-compliance was not sufficently signficant to our audit that would have resulted in them being identfied as a key auditmatter. • We assessed the susceptiblity of the Group’s financal statements to material misstatement, includng how fraud might occur by considerng the controls that the Group has established to address risks identfied by the entity, or that otherwise seek to prevent, deter or detectfraud. Our procedures to address the risks identfiedalso included incorporationof unpredictablity into the nature, timng and/or extent of our testing, challenging assumptions and judgements made by management in their signficantaccountingestimates andjournal entry testing. • Based on this understanding, we designed our audit procedures to identfy non-compliance with such laws and regulations. Our procedures involved inquries of the Group’s internal and external legal counsel, money laundering reporting officer, internal audit, certain senior management executives and focused testing on a sample basis, includng journal entry testing. We also performed inspecton of keyregulatory correspondence from the relevantregulatory authorites as well as review of board and committee minutes. • For instances of actual or suspected non-compliance with laws and regulations, which have a material impact on the financal statements, these were communicated by management to the Group audit engagement team and component teams (where applicable) who performed audit procedures such as inquries with management and external legal counsel, sending confirmatons to external lawyers, substantive testing and meeting with regulators. Where appropriate, we involved specialsts from our firm to support the audit team. • The Group is authorised to provide banking, insurance, mortgages and home finance, consumer credit, pensions, investments and other activties. The Group operates in the banking industry which is a highly regulated environment. As such, the Senior Statutory Auditor considered the experience and expertise of the Group audit engagement team, the component teams and the shared service centre teams to ensure that the team had the appropriate competence and capabilties, which included the use of specialsts where appropriate. A further descripton of our responsiblites for the audit of the financal statements is located on the Financal Reporting Council’s websiteat https://www.frc.org.uk/auditorsresponsbilties. This descripton forms part of our auditor’s report. Other matters we are required to address • Following the recommendation from the Audit Committee, we were appointed by the Company on 31 March 2020, and were appointed by the Company at the Annual General Meeting on 12 May 2021, to audit the financal statements for the year ending 31 December 2021 and subsequent financal periods. • The period of total uninterrupted engagement is two years, covering the years ended 31 December 2020 to 31 December 2021. • The audit opinon is consistent with the additonal report to the audit committee. Use of our report This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsiblity to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinons we have formed. David Canning-Jones (Senior statutory auditor) For and on behalf of Ernst & Young LLP, Statutory Auditor London 17 February 2022 ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 167 ## Consolidated income statement For the year ended 31 December 2021 Notes 2021 $millon 2020 $millon Interest income 6,185 7,807 Interest expense (2,133) (3,707) Net interest income 3 4,052 4,100 Fees and commisson income 2,972 2,601 Fees and commisson expense (576) (596) Net fee and commisson income 4 2,396 2,005 Net trading income5 2,280 2,606 Other operating income6 132 525 Operating income8,860 9,236 Staff costs (5,591) (5,128) Premises costs (224) (249) General adminstrative expenses (71) (414) Depreciaton and amortisaton (594) (672) Operating expenses 7 (6,480) (6,463) Operating profit before imparment losses and taxation2,380 2,773 Credit imparment8 30 (1,976) Goodwill, property, plant and equipment and other imparment9 (30) (262) Profit from associates and jont ventures31 1 1 Profit before taxation2,381 536 Taxation10 (743) (514) Profit for the year1,638 22 Profit attributable to: Non-controlling interests28 29 47 Parent company shareholders 1,609 (25) Profit for the year1,638 22 The notes on pages 174 to 324 form an integral part of these financal statements. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 168 ## Consolidated statement of comprehensive income For the year ended 31 December 2021 Notes 2021 $millon 2020 $millon Profit for the year1,638 22 Other comprehensive (loss)/income Items that will not be reclassifed to income statement:270 (14) Own credit gains/(losses) on financal liablites designated at fair value through profit or loss 28 (54) Equity instruments at fair value through other comprehensive income 161 71 Actuarial gains/(losses) on retirement benefit obligatons29 157 (17) Taxation relating to components of other comprehensive income10 (76) (14) Items that may be reclassifed subsequently to income statement:(869) 280 Exchange differences on translation of foreign operations: Net losses taken to equity (502) (213) Net losses on net investment hedges (19) (11) Reclassifed to income statement on sale of jont venture–246 Share of other comprehensive income from associates and jont ventures 3 – Debt instruments at fair value through other comprehensive income: Net valuation (losses)/gains taken to equity (331) 639 Reclassifed to income statement (96) (353) Net impact of expected credit losses 29 19 Cash flow hedges: Net losses taken to equity (35) (9) Reclassifed to income statement13 14 9 Taxation relating to components of other comprehensive income10 68 (47) Other comprehensive (loss)/income for the year, net of taxation(599) 266 Total comprehensive income for the year1,039 288 Total comprehensive income attributable to: Non-controlling interests28 4 44 Parent company shareholders 1,035 244 Total comprehensive income for the year1,039 288 ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 169 ## Consolidated balance sheet As at 31 December 2021 Notes GroupCompany 2021 $millon 2020 (Restated)¹ $millon 2021 $millon 2020 (Restated)¹ $millon Assets Cash and balances at central banks12, 34 61,963 58,117 48,165 46,476 Financal assets held at fair value through profit or loss12 106,529 84,954 99,705 80,626 Derivatve financal instruments12, 13 53,245 69,225 53,478 68,910 Loans and advances to banks12, 14 29,999 27,666 16,117 14,997 Loans and advances to customers12, 14 144,799 140,861 71,161 72,969 Investment securites12 102,280 86,087 86,389 71,102 Other assets19 31,970 33,390 25,688 28,896 Due from subsidary undertakings and other related parties 6,235 5,612 10,741 10,885 Current tax assets10 648 808 487 605 Prepayments and accrued income 1,317 1,357 905 958 Interests in associates and jont ventures31 156 79 – – Investments in subsidary undertakings31 – – 9,694 8,258 Goodwill and intangble assets16 3,800 3,496 2,121 1,958 Property, plant and equipment17 1,071 1,201 627 708 Deferred tax assets10 681 648 508 486 Assets classifed as held for sale20 98 92 91 89 Total assets544,791 513,593 425,877 407,923 Liablites Deposits by banks12 25,205 23,761 18,870 18,482 Customer accounts12 242,331 216,719 135,478 122,061 Repurchase agreements and other simlar secured borrowing12 325 20 283 – Financal liablites held at fair value through profit or loss12 75,552 59,714 73,902 59,101 Derivatve financal instruments12, 13 53,586 69,068 53,835 68,423 Debt securites in issue12,21 36,060 29,356 33,826 27,661 Other liablites22 26,013 29,788 20,460 23,434 Due to parent companies, subsidary undertakings & other related parties 30,998 32,326 40,745 43,012 Current tax liablites10 336 345 168 250 Accruals and deferred income 3,064 2,990 1,550 1,411 Subordinated liablites and other borrowed funds12, 26 14,615 14,879 14,076 14,339 Deferred tax liablites10 669 579 583 505 Provisons for liablites and charges23 396 400 298 336 Retirement benefit obligatons29 204 419 156 367 Total liablites509,354 480,364 394,230 379,382 Equity Share capital and share premium account27 22,393 21,120 22,393 21,120 Other reserves (4,231) (3,512) (2,089) (1,736) Retained earnings 11,278 11,367¹ 6,594 6,157¹ Total parent company shareholders’ equity29,440 28,975 26,898 25,541 Other equity instruments27 4,749 3,000 4,749 3,000 Total equity excluding non-controlling interests34,189 31,975 31,647 28,541 Non-controlling interests28 1,248 1,254 – – Total equity35,437 33,229 31,647 28,541 Total equity and liablites544,791 513,593 425,877 407,923 1Includes correctionof fairvaluehedge accountingadjustment $81millon The Company has taken advantage of the exemption in section 408 of the Companies Act 2006 not to present its indvidual statement of comprehensive income and related notes that form a part of these financal statements. The Company profit for the year after tax is $2,146 millon (31 December 2020: loss after tax $141 millon). The notes on pages 174 to 324 form an integral part of these financal statements. These financal statements were approved by the Court of Directors and authorised for issue on 17 February 2022 and signed on its behalf by: Bill Winters , Director Andy Halford , Director ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 170 ## Consolidated statement of changes in equity For the year ended 31 December 2021 Share capital and share premium account $millon Capital and merger reserves $millon Own credit adjustment reserve $millon Fair value through other comprehensive income reserve – debt $millon Fair value through other comprehensive income reserve – equity $millon Cash flow hedge reserve $millon Translation reserve $millon Retained earnings $millon Parent company shareholders’ equity $millon Other equity instruments $millon Non- controlling interests $millon Total $millon As at 1 January 2020 20,82040¹2420238(11)(4,106)11,826²28,8335,0001,28935,122 (Loss)/profit for the year –––––––(25)(25)–4722 Other comprehensive (loss)/ income ––(52)240441629(8)³269–(3)266 Distrbutions ––––––––––(79)(79) Shares issued, net of expenses 300–––––––300––300 Redemption of other equity instruments –––––––––(2,000)–(2,000) Share option expenses –––––––124124––124 Divdends on preference shares and AT1 securites –––––––(458)(458)––(458) Deemed distrbution to parent 4 –––––––(111)(111)––(111) Other movements ––––––2419⁵43––43 As at 31 December 2020 21,12040(28)442825(4,053)11,36728,9753,0001,25433,229 Profit for the year –––––––1,6091,609–291,638 Other comprehensive income/(loss) ––25(330)93(16)(501)155³(574)–(25)(599) Distrbutions ––––––––––(83)(83) Shares issued, net of expenses 1,273–––––––1,273––1,273 Other equity instruments issued, net of expenses –––––––––2,750–2,750 Redemption of other equityinstruments –––––––(41)(41)(1,001)–(1,042) Share option expenses –––––––137137––137 Divdends on ordinary shares –––––––(1,511)(1,511)––(1,511) Divdends on preference shares and AT1 securites –––––––(292)(292)––(292) Deemed distrbution to parent 4 –––––––(136)(136)––(136) Other movements ––––––10⁶(10)––73⁷73 As at 31 December 2021 22,39340(3)112175(11)(4,544)11,27829,4404,7491,24835,437 1Includes capital reserve of $35 millon, capital redemption reserve of $5 millon 2Includes to correctionof fairvaluehedge accountingadjustment $81 millon 3Comprises actuarial (loss)/gain, net of taxation on Group defined benefit schemes 4Relates to deemed capital contributon from parent company arisng from share-based payment net of taxation of $136millon (31 December 2020: $111 millon deemed capital contributon arisng from share-based payment net of taxation) 5Includes $24 millon loss related to prior period adjustments to reclass FX movements from translation reserve to retained earnings related to FX movements for monetary items, which were considered structural positons, offset by $34millon relating to prior year opening reserves adjustment 6Movementrelated to translationadjustment 7Movements related to non-controlling interest from Trust Bank Singapore Limted ($70 millon) and Zodia Markets Holdings Limted ($3 millon) Note 27 includes a descripton of each reserve. The notes on pages 174 to 324 form an integral part of these financal statements. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 171 Notes GroupCompany 2021 $millon 2020 $millon 2021 $millon 2020 $millon Cash flows from operating activties: Profit before taxation 2,381 536 2,496 255 Adjustments for non-cash items and other adjustments included withn income statement33 472 2,651 (659) 1,462 Change in operating assets33 (13,366) (15,363) (1,178) (3,622) Change in operating liablites33 37,603 21,612 18,902 13,290 Contributons to defined benefit schemes29 (94) (87) (82) (75) UK and overseas taxes paid10 (557) (689) (274) (418) Net cash from operating activties26,439 8,660 19,205 10,892 Cash flows from investng activties: Internally generated Capitalsed Software16 (738) – (503) – Purchase of property, plant and equipment17 (134) (170) (67) (69) Disposal of property, plant and equipment17 25 25 6 20 Acquistion of investment in subsidaries, associates, and jont ventures, net of cash acquired32 (35) (41) – – Divdends received from subsidaries, associates and jont ventures32 – – 1,626 403 Disposal of jont ventures, net of cash acquired20 – 1,066 – 1,281 Purchase of investment securites (171,609) (169,673) (131,168) (139,256) Disposal and maturity of investment securites 153,093 175,603 113,905 141,611 Net cash from/(used in)investng activties(19,398) 6,810 (16,201) 3,990 Cash flows from financng activties: Issue of ordinary and preference share capital, net of expenses27 1,273 300 1,273 300 Premises and equipment lease liablity princpal payment (112) (113) (72) (92) Issue of Additonal Tier 1 capital, net of expenses 2,750 –2,750– Redemption of Tier 1 capital27 (1,042) (2,000) (1,042) (2,000) Gross proceeds from issue of subordinated liablites33 – 4,630 – 4,630 Interest paid on subordinated liablites33 (479) (503) (456) (480) Repayment of subordinated liablites33 (16) (2,869) (16) (2,869) Proceeds from issue of senior debts33 2,833 1,984 660 650 Repayment of senior debts33 (3,250) (1,310) (422) (577) Interest paid on senior debts33 (16) (15) (16) (14) Investment from non-controlling interests 73 – – – Divdends paid to non-controlling interests, preference shareholders and AT1 securites (375) (537) (292) (458) Divdends paid to ordinary shareholders (1,511) – (1,511) – Net cash from/(used in)financng activties128 (433) 856 (910) Net increase in cash and cash equivalents7,169 15,037 3,860 13,972 Cash and cash equivalents at beginnng of the year 75,910 60,155 56,151 41,873 Effect of exchange rate movements on cash and cash equivalents (1,652) 718 (605) 306 Cash and cash equivalents at end of the year81,427 75,910 59,406 56,151 For Bank Group, interest received was $6,063millon (31 December 2020: $8,120 millon), interest paid was $2,216 millon (31 December 2020: $4,006 millon). For Bank Company, interest received was $3,583 millon (31 December 2020: $5,332 millon), interest paid was $1,627 millon (31 December 2020: $2,901 millon). ## Cash flow statement For the year ended 31 December 2021 ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 172 ## Company statement of changes in equity For the year ended 31 December 2021 Share capital and share premium account $millon Capital and merger reserves $millon Own credit adjustment reserve $millon Fair value through other comprehensive income reserve – debt $millon Fair value through other comprehensive income reserve – equity $millon Cash flow hedge reserve $millon Translation reserve $millon Retained earnings $millon Parent company shareholders’ equity $millon Other equity instruments $millon Non- controlling interests $millon Total $millon As at 1 January 2020 20,82040¹272865(27)(2,039)6,881²25,7955,000–30,795 Loss for the year –––––––(141)(141)––(141) Other comprehensive (loss)/income ––(52)14011(5)(56)(4)³34––34 Shares issued, net of expenses 300–––––––300––300 Redemption of other equity instruments –––––––––(2,000)–(2,000) Share option expenses –––––––7676––76 Divdends on preference shares and AT1 securites –––––––(458)(458)––(458) Deemed distrbution to parent 4 –––––––(65)(65)––(65) Other movements ––––––132(132)⁵–––– As at 31 December 2020 21,12040(25)16876(32)(1,963)6,15725,5413,000–28,541 Profit for the year –––––––2,1462,146––2,146 Other comprehensive income/(loss) ––26(258)72(7)(186)146³(207)––(207) Shares issued, net of expenses 1,273–––––––1,273––1,273 Other equity instruments issued, net of expenses –––––––––2,750–2,750 Redemption of other equity instruments –––––––(41)(41)(1,001)–(1,042) Share option expenses –––––––8686––86 Divdends on ordinary shares –––––––(1,511)(1,511)––(1,511) Divdends on preference shares and AT1 securites –––––––(292)(292)––(292) Deemed distrbution to parent 4 –––––––(85)(85)––(85) Other movements –––––––(12)⁶(12)––(12) As at 31 December 2021 22,393401(90)148(39)(2,149)6,59426,8984,749–31,647 1Includes capital reserve of $35 millon, capital redemption reserve of $5 millon 2Includes correction offair value hedge accounting adjustment$81 millon 3Comprises actuarial (loss) /gain, net of taxation on Group defined benefit schemes 4Relates to deemed capital contributon from parent company arisng from share-based payment net of taxation of $85 millon (31 December 2020: $65 millon deemed capital contributon arisng from share-based payment net of taxation) 5Relates to prior period adjustments to reclass FX movements from translation reserve to retained earnings related to FX movements for monetary items, which were considered structural positons 6Standard Chartered Bank Saudi Arabia branch start-up costs $(12) millon Note 27 includes a descripton of each reserve. The notes on pages 174 to 324 form an integral part of these financal statements. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 173 SectionNotePage Basis of preparation 1Accounting polices174 Performance/return 2Segmental informaton176 3Net interest income182 4Net fees and commisson183 5Net trading income185 6Other operating income185 7Operating expenses185 8Credit imparment187 9Goodwill, property, plant and equipment and other imparment191 10Taxation192 11Divdends197 Assets and liablites held at fair value 12Financal instruments198 13Derivatve financal instruments242 Financal instruments held at amortised cost 14Loans and advances to banks and customers261 15Reverse repurchase and repurchase agreements includng other simlar lending and borrowing 261 Other assets and investments 16Goodwill and intangble assets265 17Property, plant and equipment269 18Leased assets272 19Other assets273 20Assets held for sale and associated liablites274 Funding, accruals, provisons, contingent liablites and legal proceedings 21Debt securites in issue275 22Other liablites276 23Provisons for liablites and charges276 24Contingent liablites and commitments277 25Legal and regulatory matters279 Capital instruments, equity and reserves 26Subordinated liablites and other borrowed funds280 27Share capital, other equity instruments and reserves281 28Non-controlling interests283 Employee benefits 29Retirement benefit obligatons284 30Share-based payments294 Scope of consolidaton 31Investments in subsidary undertakings, jont ventures and associates298 32Structured entites302 Cash flow statement 33Cash flow statement304 34Cash and cash equivalents305 Other disclosure matters 35Related party transactions306 36Post balance sheet events308 37Auditor’s remuneration309 38Remuneration of directors309 39Related undertakings of the Group311 40Group Reorganisaton324 ## Contents – Notes to the financal statements ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 174 ## Notes to the financal statements 1. Accounting polices Statement of compliance The Group financalstatements consolidateStandardChartered Bank (the Company) and its subsidaries (together referred to as the Group) and equity account the Group’s interests in associates and jontly controlled entites. The Company financal statements present informaton about the Company as a separate entity. The Group financalstatements have beenprepared inaccordance with UK-adopted internatonal accounting standards and International Financal Reporting Standards (IFRS) as adopted by the European Union (EU IFRS). The Company financal statements have been prepared in accordance with UK-adopted internatonal accounting standards as applied in conformity with section 408 of the Companies Act 2006. The financal statements have been prepared in accordance with the requirements of the Companies Act 2006. Basis of preparation The Group and Company financal statements have been prepared on a going concern basis and under the historcal cost convention, as modifed by the revaluation of cash-settled share-based payments, fair value through other comprehensive income, and financal assets and liablites (includng derivatves) at fair value through profit or loss. The consolidated financal statements are presentedin UnitedStates dollars ($), being the presentation currency of the Group and functional currency of the Company, and all values are rounded to the nearest millon dollars, except when otherwise indcated. The Group has assessed the impact of climate risk on the Group’s financal report. The areas of impact were credit risk and the impact on lending portfolios; ESG features withn issued loans and bonds; physical risk on our mortgage lending portfolio; and, the corporate plan, in respect of which forward looking cash flows impact the recoverabilty of certain assets, includng of goodwill, deferred tax assets and investments in subsidary undertakings. This assessment was undertaken by considerng the maturity profile of the loan portfolio which is majorty shorter term. Transiton risk, as our clients move to lower carbon emittng revenues is considered with reference to client transiton pathways and manifests over a longer term than the maturity of the loan book (up to 2050). Physical risk is already included withn the majorty of our mortgage lending and we have applied scenario analysis against the pathways of different temperature additons and country policy scenarios. We also assess the impact of climate risk on the classifcation of financal instruments under IFRS 9, when Environmental, Sustainablity or Governance (ESG) triggers may affect the cash flows received by the Group under the contractual terms of the instrument. Our corporate plan has a 5 year outlook and already includes where we have set target to transiton away from certain high carbon sectors (i.e. coal), offset by transiton finance opportunites. This is shorter term than many of the climate scenario outlooks but seeks to capture the nearer term performance as required by recoverabilty models. Our process was limted in the context of this being an emerging area, particularly given of the availablity of data and the sophistcation of models, and so the potential impact of Climate Risk may not be fully reflected in these financal statements. The Group considers Climate Risk to have limted impact in the immedate term and as a longer term risk will be addressed through its business strategy and financal planning as the Group implements its net zero journey. Signficant accountingestimates and judgements In determinng the carrying amounts of certain assets and liablites, the Group makes assumptions of the effects of uncertain future events on those assets and liablites at the balance sheet date. The Group’s estimates and assumptions are based on historcal experience and expectation of future events and are reviewed periodcally. Further informaton about key assumptions concerning the future, and other key sources of estimaton uncertainty and judgement, are set out in the relevant disclosure notes for the following areas: • Credit imparment, includng evaluation of management overlays and post-model adjustments, and determinaton of probabilty weightngs for Stage 3 indvidually assessed provisons (Note 8) • Taxation (Note10) • Financal instruments measured at fair value (Note 12) • Goodwill imparment (Note 16) • Provisons for liablites and charges (Note 23) • Investments in subsidary undertakings, jont ventures and associates (Note 31) ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 175 Notes to the financal statements continued 1. Accounting polices continued Comparatives Certain comparatives have been represented in line with current year disclosures. Details of these changes are set out in the relevant sectionsand notes below: • Risk review: various credit risk tables for change in segment policy • Statement ofchanges inEquity • Note 2 Segmental informaton • Note 12 Financalinstruments • Note 16 Goodwill and intangble assets New accounting standards adopted by the Group Amendments to IFRS 16 Leases: Covid-19-Related Rent Concessions beyond 30 June 2021 The Group has adopted amendments to IFRS 16 that permit the Group not to assess whether a rent concession granted as a direct consequence of the COVID-19 pandemic is accounted for as a lease modifcation. In March 2021 the IASB extended the availablity of the practical expedient by one year and this was endorsed by the UK Endorsement Board on 12 May 2021, therefore a rent concession is deemed to be a direct consequence of COVID-19 if and only if all the following critera are met: • A change in lease payments results in revised consideraton for the lease that is substantially the same as, or less than, the consideraton for the lease immedately preceding the change; • Any reduction in lease payments affects only payments orignally due up to and includng 30 June 2022 (this includes thecase where the change results in reduced lease payments before this date and increased lease payments after this date);and • There is no substantive change to other terms and conditons of the lease The amendments have not had a material effect on the Group’s financal statements. New accounting standards in issue but not yet effective IFRS 17 Insurance Contracts IFRS 17 Insurance Contracts was issued in May 2017 to replace IFRS 4 Insurance Contracts and to establish a comprehensive standard for inceptors of insurance polices. The effective date is 1 January 2023. The Group is assessing the likely implementatonimpact on adoptingthe standards onits financal statements. Amendments to IFRS 9 Financal Instruments: Fees in the ’10 per cent’ test for derecogniton of financal liablites In May 2020 the IASB published its 2018-2020 annual improvements process which provides non-urgent but necessary amendments to IFRS. This publicaton included changes to IFRS 9 that will be effective prospectively from 1 January 2022, with early adoption permitted. Under these amendments, when assessing changes in terms of a financal liablity, the only fees considered in the assessment of whether the terms of a new or modifed financal liablity are substantially different (i.e. a change in present value of more than 10 per cent) from the terms of the orignal financal liablity are fees paid or received between the borrower or lender. This includes fees paid or received by either the borrower or lender on the other’s behalf. The effect of these amendments is not expected to be material to the Group’s financal statements. Going concern These financal statements were approved by the Court of directors on 17 February 2022. The directors have made an assessment of the Group’s abilty to continue as a going concern. This assessment has been made having considered the impact of COVID-19, macroeconomic and geopolitcal headwinds, includng: • A review of the Group Strategy and Corporate plan, both of which cover a year from the date of signng the annual report. • An assessment of the actual performance to date, loan book quality, credit imparment, legal, regulatory and compliance matters, and the updated annual revised budget. • Consideraton of stress testing performed by management, includng COVID additonal waves with the accompanying economic shocks, credit impact and short-term liqudity shocks, across the PLC Group’s footprint markets (Which includes the Group) to ensure that the Group has sufficent capital to withstand this shock, under a range of scenarios, the results of these stress tests demonstrate that the PLC Group has sufficent capital and liqudity to continue as a going concern and meet minmum regulatory capital and liqudity requirements. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 176 Notes to the financal statements continued 1. Accounting polices continued • Analysis of the capital, funding and liqudity positon of the Group, includng the capital and leverage ratios, and ICAAP which summarises the Group’s capital and risk assessment processes, assesses its capital requirements and the adequacy of resources to meet them. Further, funding and liqudity was considered in the context of the risk appetite metrics, includng the ADR and LCR ratios • The Group’s Internal Liqudity Adequacy Assessment Process (ILAAP), which considers the Group’s liqudity positon, itsframework and whether sufficent liqudity resources are being maintaned to meet liablites as they fall due, was alsoreviewed • The level of debt in issue, includng redemptions and issuances during the year, debt falling due for repayment in the next 12 months and further planned debt issuances, includng the appetite in the market for the Group’s debt • A detailed review of all princpal and emerging risks Based on the analysis performed, the directors confirm they are satisfed that the Group has adequate resources to continue in business for a period of 12 months from the 17 February 2022. For this reason, the Group continues to adopt the going concern basis of accounting for preparing the financal statements. 2. Segmental informaton Accounting policy The Group’s segmental reporting is in accordance with IFRS 8 Operating Segments and is reported consistently with the internal performance framework and as presented to the Group’s Management Team. The two client segments are Corporate, Commercial & Institutonal Banking and Consumer, Private and Business Banking. The three geographic regions are Asia, Africa & Middle East, and Europe & Americas. Activties not directly related to a client segment and/or geographic region are included in Central & other items. These mainly include Corporate Centre costs, treasury markets, treasury activties, certain strategic investments and the UK bank levy. The following shouldalso be noted: • Transactions and funding between the segments are carried out on an arm’s-length basis • Corporate Centre costs represent stewardship and central management services roles and activties that are not directly attributable to business orcountry operations • Treasury markets, jont ventures and associate investments are managed in the regions and are included withn the applicable region. However, they are not managed directly by a client segment and are therefore included in the Central & other items segment • In additon to treasury activties, Corporate Centre costs and other Group related functions, Central & other items for regions includes globally run businesses or activties that are managed by the client segments but not directly by geographicmanagement. These include Princpal Finance, SCVentures and Portfolio Management • The Group allocated central costs (excluding Corporate Centre costs) relating to client segments and geographic regions using appropriate business drivers (such as in proportion to the direct cost base of each segment before allocation of indrect costs) and these are reported withn operating expenses ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 177 Notes to the financal statements continued 2. Segmental informaton continued Basis of preparation The analysis reflects how the client segments and geographic regions are managed internally. This is described as the Management View (on an underlying basis) and is princpally the location from which a client relationshp is managed, which may differ from where it is financally booked and may be shared between businesses and/or regions. In certain instances this approach is not appropriate and a Financal View is disclosed, that is, the location in which the transaction or balance was booked. Typically, the Financal View is used in areas such as the Market and Liqudity Risk reviews where actual booking location is more important for an assessment. Segmental informaton is therefore on a Management View unless otherwisestated. Restructuring items excluded from underlying results The Group incurred net restructuring charges of $325 millon in 2021 (2020: $272 millon), of which $214 millon (2020: $183 millon) related to planned intiatves to reduce ongoing costs. Reconcilations between underlying and statutory results are set out in the tables below: Profit before taxation (PBT) 2021 Underlying $millon Regulatory fine $millon Restructuring $millon Net gains on disposal of available for sale instruments $millon Goodwill imparment $millon Statutory $millon Operating income 8,914–(74)20–8,860 Operating expenses (6,204)(62)(214)––(6,480) Operating profit/(loss) before imparment losses andtaxation2,710(62)(288)20–2,380 Credit imparment 28–2––30 Other imparment 9–(39)––(30) Profit from associates andjont ventures 1––––1 Profit/(loss) before taxation2,748(62)(325)20–2,381 2020 Underlying $millon Regulatory fine $millon Restructuring $millon Net gains on disposal of available for sale instruments $millon Goodwill imparment $millon Statutory $millon Operating income9,285–(55)6–9,236 Operating expenses(6,294)14(183)––(6,463) Operating profit/(loss) before imparment losses andtaxation 2,99114(238)6–2,773 Credit imparment(1,948)–(28)––(1,976) Other imparment147–(6)–(403)(262) Profit from associates and jont ventures1––––1 Profit/(loss) before taxation 1,19114(272)6(403)536 ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 178 Notes to the financal statements continued 2. Segmental informaton continued Underlying performance by clientsegment 2021 Corporate, Commercial& Institutonal Banking $millon Consumer Private & Business Banking $millon Central & other items $millon Total $millon Operating income5,7032,6795328,914 External 5,5602,3221,0328,914 Inter-segment 143357(500)– Operating expenses(3,591)(2,008)(605)(6,204) Operating profit before imparment losses and taxation2,112671(73)2,710 Credit imparment 216(169)(19)28 Other imparment (39)–489 Profit from associates and jont ventures ––11 Underlying profit/(loss) before taxation2,289502(43)2,748 Restructuring (108)(47)(170)(325) Goodwill imparment & other items ––(42)(42) Statutory profit/(loss) before taxation2,181455(255)2,381 Total assets 299,60847,548197,635544,791 Total liablites 340,80165,771102,782509,354 2020¹ Corporate, Commercial& Institutonal Banking $millon Consumer Private & Business Banking $millon Central & other items $millon Total $millon Operating income 5,8582,6198089,285 External6,0462,1191,1209,285 Inter-segment(188)500(312)– Operating expenses (3,538)(1,983)(773)(6,294) Operating profit before imparment losses and taxation 2,320636352,991 Credit imparment(1,402)(523)(23)(1,948) Other imparment278(10)(121)147 Profit from associates and jont ventures––11 Underlying profit before taxation 1,196103(108)1,191 Restructuring(142)(49)(81)(272) Goodwill imparment & other items––(383)(383) Statutory profit/(loss) before taxation 1,05454(572)536 Total assets287,16442,734183,695513,593 Total liablites341,77061,75876,836480,364 1Following an organisatonal restructure that came into effect on 1 January 2021, the new structure results in the creation of two new client segments: Corporate, Commercial & Institutonal Banking, serving larger companies and insttutions, and Consumer, Private & Business Banking, serving Indivdual and business clients Operating income byclient segment 2021 Corporate, Commercial& Institutonal Banking $millon Consumer Private & Business Banking $millon Central & other items $millon Total $millon Underlying operating income 5,7032,6795328,914 Restructuring (33) – (41)(74) Other items ––2020 Statutory operating income5,6702,6795118,860 ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 179 Notes to the financal statements continued 2. Segmental informaton continued 2020 (restated) 1 Corporate, Commercial& Institutonal Banking $millon Consumer Private & Business Banking $millon Central & other items $millon Total $millon Underlying operating income5,8582,6198089,285 Restructuring(41)–(14)(55) Other items––66 Statutory operating income 5,8172,6198009,236 1Following an organisatonal restructure that came into effect on 1 January 2021, the new structure results in the creation of two new client segments: Corporate, Commercial & Institutonal Banking, serving larger companies and insttutions, and Consumer, Private & Business Banking, serving Indivdual and business clients Underlying performance by region 2021 Asia $millon Africa & Middle East $millon Europe & Americas $millon Central & other items $millon Total $millon Operating income4,2742,4352,0061998,914 Operating expenses(2,635)(1,610)(1,444)(515)(6,204) Operating profit/(loss) before imparment losses and taxation1,639825562(316)2,710 Credit imparment (112)34120(14)28 Other imparment –(1)33(23)9 Profit from associates and jont ventures –––11 Underlying profit/(loss) before taxation1,527858715(352)2,748 Restructuring (84)(26)(89)(126)(325) Goodwill imparment & other items –––(42)(42) Statutory profit/(loss) before taxation1,443832626(520)2,381 Total assets 163,44157,404287,37236,574544,791 Total liablites 146,64441,257238,22083,233509,354 2020 (restated)¹ Asia $millon Africa & Middle East $millon Europe & Americas $millon Central & other items $millon Total $millon Operating income 4,3372,3562,0655279,285 Operating expenses (2,608)(1,672)(1,286)(728)(6,294) Operating profit before imparment losses and taxation 1,729684779(201)2,991 Credit imparment(1,130)(654)(171)7(1,948) Other imparment163(14)8(10)147 Profit from associates and jont ventures–––11 Underlying profit before taxation 76216616(203)1,191 Restructuring(41)(87)(32)(112)(272) Goodwill imparment & other items–––(383)(383) Statutory profit/(loss) before taxation 721(71)584(698)536 Total assets155,96158,068263,25836,306513,593 Total liablites134,85939,977217,96487,564480,364 1Following the Group’s change in organisatonal structure, there has been an integraton of Greater China & North Asia and ASEAN & South Asia to Asia. Prior year has been restated. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 180 Notes to the financal statements continued 2. Segmental informaton continued Operating income by region 2021 Asia $millon Africa & Middle East $millon Europe & Americas $millon Central & other items $millon Total $millon Underlying operating income 4,2742,4352,0061998,914 Restructuring (11)3(31)(35)(74) Other items –––2020 Statutory operating income4,2632,4381,9751848,860 2020 (restated) 1 Asia $millon Africa & Middle East $millon Europe & Americas $millon Central & other items $millon Total $millon Underlying operating income4,3372,3562,0655279,285 Restructuring(3)(1)–(51)(55) Other items–––66 Statutory operating income 4,3342,3552,0654829,236 1Following an organisatonal restructure that came into effect on 1 January 2021, the new structure results in the creation of two new client segments: Corporate, Commercial & Institutonal Banking, serving larger companies and insttutions, and Consumer, Private & Business Banking, serving Indivdual and business clients Additonal segmental informaton (statutory) 2021 Corporate, Commercial& Institutonal Banking $millon Consumer Private & Business Banking $millon Central & other items $millon Total $millon Net interest income 2,2671,4643214,052 Net fees and commisson income 1,3251,076(5)2,396 Net trading and other income 2,0781391952,412 Operating income5,6702,6795118,860 2020 (restated) 1 Corporate, Commercial& Institutonal Banking $millon Consumer Private & Business Banking $millon Central & other items $millon Total $millon Net interest income2,3291,5462254,100 Net fees and commisson income1,095916(6)2,005 Net trading and other income2,3931575813,131 Operating income 5,8172,6198009,236 1Following an organisatonal restructure that came into effect on 1 January 2021, the new structure results in the creation of two new client segments: Corporate, Commercial & Institutonal Banking, serving larger companies and insttutions, and Consumer, Private & Business Banking, serving Indivdual and business clients ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 181 Notes to the financal statements continued 2. Segmental informaton continued Operating income by Region 2021 Asia $millon Africa & Middle East $millon Europe & Americas $millon Central & other items $millon Total $millon Net interest income 2,1301,1885022324,052 Net fees and commisson income 1,234605563(6)2,396 Net trading and other income 899645910(42)2,412 Operating income4,2632,4381,9751848,860 2020 (restated) 1 Asia $millon Africa & Middle East $millon Europe & Americas $millon Central & other items $millon Total $millon Net interest income2,0581,2243364824,100 Net fees and commisson income1,010525523(53)2,005 Net trading and other income1,2666061,206533,131 Operating income 4,3342,3552,0654829,236 1Following the Group’s change in organisatonal structure, there has been an integraton of Greater China & North Asia and ASEAN & South Asia to Asia. Prior period has been restated Operating income by Key Countries 2021 Singapore $millon India $millon UAE $millon UK $millon US $millon Net interest income 730705228227198 Net fees and commisson income 66423110021428 Net trading and other income 187337215671201 Operating income1,5811,273543919827 2020 Singapore $millon India $millon UAE $millon UK $millon US $millon Net interest income66466428182170 Net fees and commisson income52219511154379 Net trading and other income350379173946241 Operating income 1,5361,2385651,082790 ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 182 Notes to the financal statements continued 3. Net interest income Accounting Policy Interest income for financal assets held at either fair value through other comprehensive income or amortised cost, and interest expense on all financal liablites held at amortised cost is recognised in profit or loss using the effective interest method. The effective interest method is a method of calculating the amortised cost of a financal asset or a financal liablity and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that discounts estimated future cash payments or receipts through the expected life of the financal instrument or, when appropriate, a shorter period, to the net carrying amount of the financal asset or financal liablity. When calculating the effective interest rate, the Group estimates cash flows considerng all contractual terms of the financal instrument (for example prepayment options) but does not consider future credit losses. The calculation includes all fees paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts. Where the estimates of cash flows have been revised, the carrying amount of the financal asset or liablity is adjusted to reflect the actual and revised cash flows, discounted at the instruments orignal effective interest rate. The adjustment is recognised as interest income or expense in the period in which the revison is made. Interest income for financal assets that are either held at fair value through other comprehensive income or amortised cost that have become credit-impared subsequent to intial recogniton (stage 3), is recognised using the orignal effective interest rate applied to the net carrying value. Interest income is therefore recognised on the amortised cost of the financal asset includng expected credit losses. Should the credit risk on a stage 3 financal asset improve such that the financal asset is no longer considered credit-impared, interest income recogniton reverts to a computation based on the gross carrying value of the financalasset. 2021 $millon 2020 $millon Balances at central banks 67 90 Loans and advances to banks 321 552 Loans and advances to customers 4,061 5,052 Debt securites 1,240 1,614 Other eligble bills 285 423 Accrued on impared assets (discount unwind) 211¹ 76 Interest income6,185 7,807 Of which: financal instruments held at fair value through other comprehensive income 1,018 1,397 Deposits by banks 68 156 Customer accounts 1,927 2,721 Debt securites in issue 98 251 Subordinated liablites and other borrowed funds 6 540 Interest expense on IFRS 16 lease liablites 34 39 Interest expense2,133 3,707 Net interest income4,052 4,100 1Includes a $163 millon adjustment in relation to interest earned on impared assets as required by IFRS9 Financal Instruments Recogniton and Measurement ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 183 Notes to the financal statements continued 4. Net fees and commisson Accounting policy Fees and commissons charged for services provided by the Group are recognised as or when the service is completed or signficant act performed. Loan syndicaton fees are recognised as revenue when the syndicaton has been completed and the Group retained no part of the loan package for itself, or retained a part at the same effective interest rate as for the other particpants. The Group can act as trustee or in other fiducary capacites that result in the holding or placing of assets on behalf of indviduals, trusts, retirement benefit plans and other insttutions. The assets and income arisng thereon are excluded from these financal statements, as they are not assets and income of the Group. The Group applies the following practical expedients: • informaton on amounts of transaction price allocated to unsatisfed (or partially unsatisfed) performance obligatons at the end of the reporting period is not disclosed as almost all fee-earning contracts have an expected duration of less than one year • promised consideraton is not adjusted for the effects of a signficant financng component as the period between the Group providng a service and the customer paying for it is expected to be less than one year • incremental costs of obtainng a fee-earning contract are recognised upfront in 'Fees and commisson expense' rather thanamortised, if the expected term of the contract is less than one year The determinaton of the services performed for the customer, the transaction price, and when the services are completed depends on the nature of the product with the customer. The main consideratons on income recogniton by product are asfollows: Transaction Banking The Group recognises fee income associated with transactional trade and cash management at the point in time the service is provided. The Group recognises income associated with trade contingent risk exposures (such as letters of credit and guarantees) over the period in which the service is provided. Payment of fees is usually received at the same time the service is provided. In some cases, letters of credit and guarantees issued by the Group have annual upfront premiums, which are amortised on a straight-line basis to fee income over the year. Financal Markets The Group recognises fee income at the point in time the service is provided. Fee income is recognised for a signficant non-lending service when the transaction has been completed and the terms of the contract with the customer entitle the Group to the fee. Fees are usually received shortly after the service is provided. Syndicaton fees are recognised when the syndicaton is complete. Fees are generally received before completion of the syndicaton, or withn 12 months of the transaction date. Securites services include custody services, fund accounting and adminstration, and broker clearing. Fees are recognised over the period the custody or fund management services are provided, or as and when broker services are requested. Wealth Management Upfront consideraton on bancassurance agreements is amortised straight-line over the contractual term. Commissons for bancassurance activties are recorded as they are earned through sales of third-party insurance products to customers. These commissons are received withn a short time frame of the commisson being earned. Target-linked fees are accrued based on percentage of the target achieved, provided it is assessed as highly probable that the target will be met. Cash payment is received at a contractually specifed date after achievement of a target has been confirmed. Upfront and trailng commissons for managed investment placements are recorded as they are confirmed. Income from these activties is relatively even throughout the period, and cash is usually received withn a short time frame after the commisson isearned Retail Products The Group recognises most income at the point in time the Group is entitled to the fee, since most services are provided at the time of the customer’s request. Credit card annual fees are recognised at the time the fee is received since in most of our retail markets there are contractual circumstances under which fees are waived, so income recogniton is constrained until the uncertaintes associated with the annual fee are resolved. The Group defers the fair value of reward points on its credit card reward programmes, and recognises income and costs associated with fulfillng the reward at the time of redemption. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 184 Notes to the financal statements continued 4. Net fees and commissoncontinued 2021 $millon 2020 $millon Fees and commissons income 2,972 2,601 Of which: Financal instruments that are not fair valued through profit or loss 962 873 Trust and other fiducary activties 276 127 Fees and commissons expense (576) (596) Of which: Financal instruments that are not fair valued through profit or loss (182) (175) Trust and other fiducary activties (9) (4) Net fees and commisson2,396 2,005 2021 Corporate, Commercial& Institutonal Banking $millon Consumer Private & Business Banking $millon Central & other items $millon Total $millon Transaction Banking 93627–963 Trade 48918–507 Cash Management 4479–456 Financal Markets 290––290 Lending and Portfolio Management 1041–105 Princpal Finance (5)––(5) Wealth Management –832–832 Retail Products –236–236 Treasury ––(21)(21) Others –(20)16(4) Net fees and commisson1,3251,076(5)2,396 2020 (Restated)1 Corporate, Commercial& Institutonal Banking¹ $millon Consumer Private & Business Banking¹ $millon Central & other items $millon Total $millon Transaction Banking82521–846 Trade43013–443 Cash Management3958–403 Financal Markets2131–214 Lending and Portfolio Management56––56 Princpal Finance1––1 Wealth Management–692–692 Retail Products–202–202 Treasury––(1)(1) Others––(5)(5) Net fees and commisson 1,095916(6)2,005 1Following the Group’s change in organisatonal structure, there has been an integraton of Corporate & Institutonal Banking and Commercial Banking to Corporate, Commercial & Institutonal Banking; Private Banking and Retail Banking to Consumer, Private & Business Banking. Further, certain clients have been moved between the two new client segments. Prior period has been restated Upfront bancassurance consideraton amounts are amortised on a straight-line basis over the contractual period to which the consideraton relates. Deferred income on the balance sheet in respect of these activties is $634 millon (31 December 2020: $718 millon). The income will be earned evenly over the next 7.5 years (31 December 2020: 8.5 years). For the twelve months ended 31 December 2021, $84 millon of fee income was released from deferred income (31 December 2020: $84millon). ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 185 Notes to the financal statements continued 5. Net trading income Accounting policy Gains and losses arisng from changes in the fair value of financal instruments held at fair value through profit or loss are recorded in net trading income in the period in which they arise. This includes contractual interest receivable or payable. Income is recognised from the sale and purchase of trading positons, margins on market making and customer business and fair value changes. When the intial fair value of a financal instrument held at fair value through profit or loss relies on unobservable inputs, the difference between the intial valuation and the transaction price is amortised to net trading income as the inputs become observable or over the life of the instrument, whichever is shorter. Any unamortised ‘day one’ gain is released to net trading income if the transaction is terminated. 2021 $millon 2020 $millon Net trading income 2,280 2,606 Signficant items withn net trading income include: Gains on instruments held for trading 1 2,291 2,205 Gains on financal assets mandatorily at fair value through profit or loss 136 619 Losses on financal assets designated at fair value through profit or loss (5) (5) Losses on financal liablites designated at fair value through profit or loss (53) (171) 1Includes $187 millon gain (31 December 2020: $275 millon loss) from the transaction of foreign currency monetary assets and liablites 6. Other operating income Accounting policy Operating lease income is recognised on a straight-line basis over the period of the lease unless another systematic basis is more appropriate. Divdends on equity instruments are recognised when the Group’s right to receive payment is established. On disposal of fair value through other comprehensive income debt instruments, the cumulative gain or loss recognised in other comprehensive income is recycled to the profit or loss in other operating income/expense. When the Group loses control of the subsidary or disposal group, the difference between the consideraton received and the carrying amount of the subsidary or disposal group is recognised as a gain or loss on sale of the business. 2021 $millon 2020 $millon Other operating income includes: Rental income from operating lease assets 2 2 Gains less losses on disposal of fair value through other comprehensive income debt instruments 96 353 Gains less losses on amortised cost financal assets 34 2 Net gain on sale of businesses 12 6 Divdend income 11 56 Other (23) 106 Other operating income132 525 7.Operatingexpenses Accounting policy Short-term employee benefits: salaries and social security expenses are recognised over the period in which the employees provide the service. Variable compensation is included withn share-based payments costs and wages and salaries. Further details are disclosed in the Directors’ remuneration report (pages 309 to 310). Pension costs: contributons to defined contributon pension schemes are recognised in profit or loss when payable. For defined benefit plans, net interest expense, service costs and expenses are recognised in the income statement. Further details are provided in Note 29. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 186 Notes to the financal statements continued 7. Operating expenses continued Share-based compensation: the Groupoperatesequity-settledand cash-settled share-based paymentcompensation plans. The fair value of the employee services (measured by the fair value of the option granted) received in exchange for the grant of the options is recognised as an expense. Further details are provided in Note 30. 2021 $millon 2020 $millon Staff costs: Wages and salaries 4,360 3,957 Social security costs 144 116 Other pension costs (Note 29) 274 263 Share-based payment costs 148 119 Other staff costs 665 673 5,591 5,128 Other staff costs include redundancy expenses of $88 millon (31 December 2020: $125 millon). Further costs in this category include trainng,travel costs and other staff related costs. The following table summarises the number of employees withn the Group and Company: Group 2021 2020 Business Support servicesTotal Business Support servicesTotal At 31 December 19,51545,75865,273 22,50743,34365,850 Average for the year 19,98645,48165,467 23,72242,74066,462 Company 2021 2020 Business Support servicesTotal Business Support servicesTotal At 31 December 8,03212,53420,566 9,56711,91821,485 Average for the year 8,21112,61820,829 9,75912,07321,832 Details of directors’ pay, benefits, pensions and benefits and interests in shares are disclosed in Note 38 Remuneration ofDirectors’ (page 309). Transactions with directors, officers and other related parties are disclosed in Note 35. 2021 $millon 2020 $millon Premises and equipment expenses 224 249 General adminstrative expenses: UK bank levy 100 331 Regulatory fine 62 (14) Other general adminstrative expenses¹ (91) 97 71 414 Depreciaton and amortisaton: Property, plant and equipment: Premises 160 168 Equipment 90 91 250 259 Intangibles: Software 339 409 Acquired on business combinatons 5 4 594 672 Total operating expenses6,480 6,463 1Includes costrecoveries forservices rendered toother Group entites Operating expenses include research expenditure of $705 millon (31 December 2020: $589 millon) recognised as an expense in the year. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 187 Notes to the financal statements continued 7. Operating expenses continued The UK bank levy is applied on the chargeable equity and liablites on the Group’s consolidated balance sheet. Key exclusions from chargeable equity and liablites include Tier 1 capital, insured or guaranteed retail deposits, repos secured on certain sovereign debt and liablites subject to netting. The rate of the levy for 2020 was 0.14 per cent for chargeable short- term liablites, with a lower rate of 0.07 per cent generally applied to chargeable equity and long-term liablites (i.e. liablites with a remainng maturity greater than one year). From 1 January 2021 the rates are 0.10 per cent for short-term liablites and 0.05 per cent for long-term liablites. In additon, the scope of the UK bank levy is restricted to the balance sheet of UK operations only from thisdate. 8. Credit imparment Accounting policy Signficant accountingestimates and judgements The Group’s expected credit loss (ECL) calculations are outputs of complex models with a number of underlying assumptions. The signficant judgements in determinng expected credit loss include: • The Group’s critera for assessing if there has been a signficant increase in credit risk; • Development of expected credit loss models, includng the choice of inputs relating to macroeconomic variables; • Evaluation of management overlays and post-model adjustments; • Determinaton of probabilty weightngs for Stage 3 indvidually assessed provisons The calculation of credit imparment provisons also involves expert credit judgement to be applied by the credit risk management team based upon counterparty informaton they receive from various sources includng relationshp managers and on external market informaton. Details on the approach for determinng expected credit loss can be found in the credit risk section, under IFRS 9 Methodology (page 58). Estimates of forecasts of key macroeconomic variables underlying the expected credit loss calculation can be found withn the Risk review, Key assumptions and judgements in determinng expected credit loss (page 100). Expected creditlosses Expected credit losses are determined for all financal debt instruments that are classifed at amortised cost or fair value through othercomprehensive income, undrawn commitments and financalguarantees. An expected credit loss represents the present value of expected cash shortfalls over the residual term of a financal asset, undrawn commitment or financal guarantee. A cash shortfall is the difference between the cash flows that are due in accordance with the contractual terms of the instrument and the cash flows that the Group expects to receive over the contractual life of the instrument. Measurement Expected credit losses are computed as unbiased, probabilty-weighted amounts which are determined by evaluating a range of reasonably possible outcomes, the time value of money, and considerng all reasonable and supportable informaton includng that which is forward-looking. For material portfolios, the estimate of expected cash shortfalls is determined by multiplyng the probabilty of default (PD) with the loss given default (LGD) with the expected exposure at the time of default (EAD). There may be multiple default events over the lifetme of an instrument. Further details on the components of PD, LGD and EAD are disclosed in the Credit risk section. For less material Retail Banking loan portfolios, the Group has adopted less sophistcated approaches based on historcal rollrates orloss rates. Forward-looking economic assumptions are incorporated into the PD, LGD and EAD where relevant and where they influence credit risk, such as GDP growth rates, interest rates, house price indces and commodity prices among others. These assumptions are incorporated using the Group’s most likely forecast for a range of macroeconomic assumptions. These forecasts are determined using all reasonable and supportable informaton, which includes both internally developed forecasts and those available externally, and are consistent with those used for budgeting, forecasting and capital planning. To account for the potential non-linearty in credit losses, multiple forward-looking scenarios are incorporated into the range of reasonably possible outcomes for all material portfolios. For example, where there is a greater risk of downside credit losses than upside gains, multiple forward-looking economicscenarios areincorporated into therange of reasonably possible outcomes, both in respect of determinng the PD (and where relevant, the LGD and EAD) and in determinng the overall expected credit loss amounts. These scenarios are determined using a Monte Carlo approach centred around the Group’s most likely forecast ofmacroeconomic assumptions. The period over which cash shortfalls are determined is generally limted to the maximum contractual period for which the Group is exposed to credit risk. However, for certain revolving credit facilties, which include credit cards or overdrafts, the Group’s exposure to credit risk is not limted to the contractual period. For these instruments, the Group estimates an appropriate life based on the period that the Group is exposed to credit risk, which includes the effect of credit risk management actions such as the withdrawal of undrawn facilties. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 188 Notes to the financal statements continued 8. Credit imparment continued For credit-impared financal instruments, the estimate of cash shortfalls may require the use of expert credit judgement. The estimate of expected cash shortfalls on a collateralised financal instrument reflects the amount and timng of cash flows that are expected from foreclosure on the collateral less the costs of obtainng and selling the collateral, regardless of whether foreclosure is deemed probable. Cash flows from unfunded credit enhancements held are included withn the measurement of expected credit losses if they are part of, or integral to, the contractual terms of the instrument (this includes financal guarantees, unfunded risk particpations and other non-derivatve credit insurance). Although non-integral credit enhancements do not impact the measurement of expected credit losses, a reimbursement asset is recognised to the extent of the expected credit losses recorded. Cash shortfalls are discounted using the effective interest rate (or credit-adjusted effective interest rate for purchased or orignated credit-impared instruments (POCI)) on the financal instrument as calculated at intial recogniton or if the instrument has a variable interest rate, the current effective interest rate determined under the contract. InstrumentsLocation of expected credit loss provisons Financal assets held at amortised costLoss provisons: netted against gross carrying value 1 Financal assets held FVOCI – Debt instrumentsOther comprehensive income (FVOCI expected credit loss reserve) 2 Loan commitmentsProvisons for liablites and charges 3 Financal guaranteesProvisons for liablites and charges 3 1Purchased or orignated credit-impared assets do not attract an expected credit loss provison on intial recogniton. An expected credit loss provison will be recognised only if there is an increase in expected credit losses from that considered at intial recogniton 2Debt and treasury securites classifed as fair value through other comprehensive income (FVOCI) are held at fair value on the face of the balance sheet. The expected credit loss attributed to these instruments is held as a separate reserve withn other comprehensive income (OCI) and is recycled to the profit and loss account along with any fair value measurement gains or losses held withn FVOCI when the applicable instruments are derecognised 3Expected credit loss on loan commitments and financal guarantees is recognised as a liablity provison. Where a financal instrument includes both a loan (i.e.financalasset component) and an undrawn commitment (i.e. loan commitment component), and it is not possible to separately identfy the expected credit losson these components, expected credit loss amounts on the loan commitment are recognised together with expected credit loss amounts on the financal asset. Totheextent the combined expected credit loss exceeds the gross carrying amount of the financal asset, the expected credit loss is recognised as a liablity provison Recogniton 12 months expected credit losses (Stage 1) Expected credit losses are recognised at the time of intial recogniton of a financal instrument and represent the lifetme cash shortfalls arisng from possible default events up to 12 months into the future from the balance sheet date. Expected credit losses continue to be determined on this basis until there is either a signficant increase in the credit risk of an instrument or the instrument becomes credit-impared. If an instrument is no longer considered to exhibt a signficant increase in credit risk, expected credit losses will revert to being determined on a 12-month basis. Signficant increase in credit risk (Stage 2) If a financal asset experiences a signficant increase in credit risk (SICR) since intial recogniton, an expected credit loss provison is recognised for default events that may occur over the lifetme of the asset. Signficant increase in credit risk is assessed by comparing the risk of default of an exposure at the reporting date to the risk of default at orignation (after taking into account the passage of time). Signficant does not mean statistcally signficant nor is it assessed in the context of changes in expected credit loss. Whether a change in the risk of default is signficant or not is assessed using a number of quantitatve and qualitatve factors, the weight of which depends on the type of product and counterparty. Financal assets that are 30 or more days past due and not credit-impared will always be considered to have experienced a signficant increase in credit risk. For less material portfolios where a loss rate or roll rate approach is applied to compute expected credit loss, signficant increase in credit risk is primarly based on 30 days past due. Quantitatve factors include an assessment of whether there has been signficant increase in the forward-looking probabilty of default (PD) since orignation. A forward-looking PD is one that is adjusted for future economic conditons to the extent these are correlated to changes in credit risk. We compare the residual lifetme PD at the balance sheet date to the residual lifetme PD that was expected at the time of orignation for the same point in the term structure and determine whether both the absolute and relative changebetween the two exceeds predetermined thresholds. To the extent thatthe differences between the measures of default outlined exceed the defined thresholds, the instrument is considered to have experienced a signficant increase in credit risk. Qualitatve factors assessed include those linked to current credit risk management processes, such as lending placed on non-purely precautionary early alert (and subject to closer monitorng). A non-purely precautionary early alert account is one which exhibts risk or potential weaknesses of a material nature requirng closer monitorng, supervison, or attention by management. Weaknesses in such a borrower’s account, if left uncorrected, could result in deterioraton of repayment prospects and thelikelhood of beingdowngraded. Indicators could include a rapid erosion of positon withn the industry, concerns over management’s abilty to manage operations, weak/ deterioratng operating results, liqudity strain and overdue balances among other factors. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 189 Notes to the financal statements continued 8. Credit imparment continued Credit-impared (or defaulted) exposures (Stage 3) Financal assets that are credit-impared (or in default) represent those that are at least 90 days past due in respect of princpal and/or interest. Financal assets are also considered to be credit-impared where the obligors are unlikely to pay on the occurrence of one or more observable events that have a detrimental impact on the estimated future cash flows of the financal asset. It may not be possible to identfy a single discrete event but instead the combined effect of several events may cause financal assets to become credit-impared. • Evidence that a financal asset is credit-impared includes observable data about the following events: • Signficant financal diffculty of the issuer or borrower; • Breach of contract such as default or a past due event; • For economic or contractual reasons relating to the borrower’s financal diffculty, the lenders of the borrower have granted the borrower concession/s that lenders would not otherwise consider. This would include forbearance actions (page 83); • Pendingor actual bankruptcy or other financal reorganisaton toavoid ordelay discharge ofthe borrower’s obligaton/s; • The disappearance of an active market for the applicable financal asset due to financal diffculties of the borrower; • Purchase or orignation of a financal asset at a deep discount that reflects incurred credit losses Lending commitments to a credit-impared obligor that have not yet been drawn down are included to the extent that the commitment cannot be withdrawn. Loss provisons against credit-impared financal assets are determined based on an assessment of the recoverable cash flows under a range of scenarios, includng the realisaton of any collateral held where appropriate. The loss provisons held represent the difference between the present value of the expected cash shortfalls, discounted at the instrument’s orignal effective interest rate, and the gross carrying value (includng contractual interest due but not paid) of the instrument prior to any credit imparment. The Group’s defintion of default is aligned with the regulatory defintion of default as set out in the UK’s onshored Capital Requirements Regulation (Article 178) and related guidelnes Expert credit judgement For Corporate, Commercial & Institutonal Banking, Consumer, Private and Business Banking, borrowers are graded by credit risk management on a credit grading (CG) scale from CG1 to CG14. Once a borrower starts to exhibt credit deterioraton, it will move along the credit grading scale in the performing book and when it is classifed as CG12 the credit assessment and oversight of the loan will normally be performed by Group Special Assets Management (GSAM). Borrowers graded CG12 exhibt well-defined weaknesses in areas such as management and/or performance but there is no current expectation of a loss of princpal or interest. Where the imparment assessment indcates that there will be a loss of princpal on a loan, the borrower is graded a CG14 while borrowers of other credit-impared loans are graded CG13. Instruments graded CG13 or CG14 are regarded as stage 3. For indvidually signficant financal assets withn stage 3, GSAM will consider all judgements that have an impact on the expected future cash flows of the asset. These include: the business prospects, industry and geo politcal climate of the customer, quality of realisable value of collateral, the Group’s legal positon relative to other claimants and any renegotiaton/ forbearance/ modifcation options. The future cash flow calculation involves signficant judgements and estimates. As new informaton becomes available and further negotiatons/ forbearance measures are taken the estimates of the future cash flows will be revised, and will have an impact on the future cash flow analysis. For financal assets which are not indvidually signficant, such as the Retail Banking portfolio or small business loans, which comprise a large number of homogenous loans that share simlar characteristcs, statistcal estimates and techniques are used, as well as credit scoring analysis. Retail Banking clients are considered credit-impared where they are more 90 days past due. Retail Banking products are also considered credit-impared if the borrower files for bankruptcy or other forbearance programme, the borrower is deceased or the business is closed in the case of a small business, or if the borrower surrenders the collateral, or there is an identfied fraud on the account. Additonally, if the account is unsecured and the borrower has other credit accounts with the Group that are considered credit-impared, the account may be also be credit-impared. Techniques used to compute imparment amounts use models which analyse historcal repayment and default rates over a time horizon. Where various models are used, judgement is required to analyse the available informaton provided and select the appropriate modelor combinaton of models to use. Expert credit judgement is also applied to determine whether any post-model adjustments are required for credit risk elements which are not captured by the models. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 190 Notes to the financal statements continued 8. Credit imparment continued Modifed financal instruments Where the orignal contractual terms of a financal asset have been modifed for credit reasons and the instrument has not been derecognised (an instrument is derecognised when a modifcation results in a change in cash flows that the Group would consider substantial), the resulting modifcation loss is recognised withn credit imparment in the income statement with a corresponding decrease in the gross carrying value of the asset. If the modifcation involved a concession that the bank would not otherwise consider, the instrument is considered to be credit-impared and is considered forborne. Expected credit loss for modifed financal assets that have not been derecognised and are not considered to be credit- impared will be recognised on a 12-month basis, or a lifetme basis, if there is a signficant increase in credit risk. These assets are assessed (by comparison to the orignation date) to determine whether there has been a signficant increase in credit risk subsequent to the modifcation. Although loans may be modifed for non-credit reasons, a signficant increase in credit risk may occur. In additon to the recogniton of modifcation gains and losses, the revised carrying value of modifed financal assets will impact the calculation of expected credit losses, with any increase or decrease in expected credit loss recognised withn imparment. Forborne loans Forborne loans are those loans that have been modifed in response to a customer’s financal diffculties. Forbearance strategies assist clients who are temporarily in financal distress and are unable to meet their orignal contractual repayment terms. Forbearance can be intiated by the client, the Group or a third-party includng government sponsored programmes or a conglomerate of credit insttutions. Forbearance may include debt restructuring such as new repayment schedules, payment deferrals, tenor extensions, interest only payments, lower interest rates, forgiveness of princpal, interest or fees, or relaxation of loan covenants. Forborne loans that have been modifed (and not derecognised) on terms that are not consistent with those readily available in the market and/or where we have granted a concession compared to the orignal terms of the loans are considered credit-impared if there is a detrimental impact on cash flows. The modifcation loss (see Classifcation and measurement – Modifcations) is recognised in the profit or loss withn credit imparment and the gross carrying value of the loan reduced by the same amount. The modifed loan is disclosed as ‘Loans subject to forbearance – credit-impared’. Loans that have been subject to a forbearance modifcation, but which are not considered credit-impared (not classifed as CG13 or CG14), are disclosed as ‘Forborne – not credit-impared’. This may include amendments to covenants withn the contractual terms. Write-offs of credit-impared instruments and reversal of imparment To the extent a financal debt instrument is considered irrecoverable, the applicable portion of the gross carrying value is written off against the related loan provison. Such loans are written off after all the necessary procedures have been completed, it is decided that there is no realistc probabilty of recovery and the amount of the loss has been determined. Subsequent recoveries of amounts previously written off decrease the amount of the provison for credit imparment in the income statement. Loss provisonson purchasedor orignatedcredit-impared instruments (POCI) The Group measures expected credit loss on a lifetme basis for POCI instruments throughout the life of the instrument. However, expected credit loss is not recognised in a separate loss provison on intial recogniton for POCI instruments as the lifetme expected credit loss is inherent withn the gross carrying amount of the instruments. The Group recognises the change in lifetme expected credit losses arisng subsequent to intial recogniton in the income statement and the cumulative change as a loss provison. Where lifetme expected credit losses on POCI instruments are less than those at intial recogniton, then the favourable differences are recognised as imparment gains in the income statement (and as imparment loss where the expected credit losses are greater). ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 191 Notes to the financal statements continued 8. Credit imparment continued Improvement in credit risk/curing A period may elapse from the point at which instruments enter lifetme expected credit losses (stage 2 or stage 3) and are reclassifed back to 12-month expected credit losses (stage 1). For financal assets that are credit-impared (stage 3), a transfer to stage 2 or stage 1 is only permitted where the instrument is no longer considered to be credit-impared. An instrument will no longer be considered credit-impared when there is no shortfall of cash flows compared to the orignal contractual terms. For financal assets withn stage 2, these can only be transferred to stage 1 when they are no longer considered to have experienced a signficant increase in credit risk. Where signficant increase in credit risk was determined using quantitatve measures, the instruments will automatically transfer back to stage 1 when the orignal PD based transfer critera are no longer met. Where instruments were transferred to stage 2 due to an assessment of qualitatve factors, the issues that led to the reclassifcation must be cured before the instruments can be reclassifed to stage 1. This includes instances where management actions led to instruments being classifed as stage 2, requirng that action to be resolved before loans are reclassifed to stage 1. A forborne loan can only be removed from being disclosed as forborne if the loan is performing (stage 1 or 2) and a further two-year probationperiod is met. In order for a forborne loan to become performing, the following critera have to be satisfed: • At least a year has passed with no default based upon the forborne contract terms • The customer is likely to repay its obligatons in full without realisng security • The customer has no accumulated imparment against amount outstanding (except for ECL) Subsequent to the critera above, a further two-year probation period has to be fulfilled, whereby regular payments are made by the customer and none of the exposures to the customer are more than 30 days past due. 2021 $millon 2020 $millon Net credit imparment on loans and advances to banks and customers (30) 1,858 Net credit imparment against profit or loss during the period relating to debt securites 23 32 Net credit imparment relating to financal guarantees and loan commitments (23) 88 Net credit imparment relating to other financal assets–(2) Credit imparment 1 (30) 1,976 1No material purchased or orignated credit-impared (POCI) assets 9. Goodwill, property, plant and equipment and other imparment Accounting policy Refer to the below referenced notes for the relevant accounting policy 2021 $millon 2020 $millon Impairment of goodwill (Note 16) – 403 Impairment of property, plant and equipment (Note 17) 39 – Impairment of other intangble assets (Note 16) 3 15 Other (12) (156) 1 Plant and equipment and other imparment30 (141) Goodwill, property, plant and equipment and other imparment30 262 1Includes a reversal in 2020 of $165 millon as a result of a recovery on a disputed derivatve receivable, following a favourable court ruling ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 192 Notes to the financal statements continued 10.Taxation Accounting policy Income tax payable on profits is based on the applicable tax law in each jursdicton and is recognised as an expense in the period in which profits arise. Deferred tax is provided on temporary differences arisng between the tax bases of assets and liablites and their carrying amounts in the consolidated financalstatements. Deferred tax is determined using taxrates (and laws) that have been enacted or substantively enacted as at the balance sheet date, and that are expected to apply when the related deferred tax asset is realised or the deferred income tax liablity is settled. Deferred tax assets are recognised where it is probable that future taxable profit will be available against which the temporary differences can be utilsed. Where permitted, deferred tax assets and liablites are offset on an entity basis and not bycomponent of deferred taxation. Current and deferred tax relating to items which are charged or credited directly to equity, is credited or charged directly to equity and is subsequently recognised in the income statement together with the current or deferred gain or loss. Signficant accountingestimates and judgements • Determinng the Group’s tax charge for the year involves estimaton and judgement, which includes an interpretaton of local tax laws and an assessment of whether the tax authorites will accept the positon taken. These judgements take account of external advice where appropriate, and the Group’s view on settling with the relevant tax authorites • The Group provides for current tax liablites at the best estimate of the amount that is expected to be paid to the tax authorites where an outflow is probable. In making its estimates, the Group assumes that the tax authorites will examine all the amounts reported to them and have full knowledge of all relevant informaton • The recoverabilty of the Group’s deferred tax assets is based on management’s judgement of the availablity of future taxable profits against which the deferred tax assets will be utilsed. In preparing management forecasts the effect of applicable laws and regulations relevant to the utilsation of future taxable profits have been considered. The following table provides analysis of taxation charge in the year: 2021 $millon 2020 $millon The charge for taxation based upon the profit for the year comprises: Current tax: United Kingdom corporation tax at 19 per cent (2020:19 per cent): Current tax charge on income for the year (1) – Adjustments in respect of prior years (includng double tax relief) – (44) Foreign tax: Current tax charge on income for the year 737 709 Adjustments in respect of prior years (40) (337) 696 328 Deferred tax: Orignation/reversal of temporary differences 112 (117) Adjustments in respect of prior years (65) 303 47 186 Tax on profits on ordinary activties743 514 Effective tax rate31.2% 95.9% The tax charge for the year of $743 millon (31 December 2020: $514 millon) on a profit before tax of $2,381 millon (31 December 2020: $536 millon) reflects the impact of non-deductible expenses, non-creditable withholdng tax and the impact of countries with tax rates higher or lower than the UK, the most signficant of which is India. The 2020 charge included adjustments in respect of prior years of $288 millon, between current and deferred tax, relating to the treatment ofloan imparments in India as deductible in the period they are impared. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 193 Notes to the financal statements continued 10. Taxation continued Tax rate: The tax charge for the year is higher than the charge at the rate of corporation tax in the UK, 19 per cent. Thedifferences are explained below: 20212020 $millon % $millon % Profit on ordinary activties before tax2,381 536 Tax at 19 per cent (2020: 19 per cent) 45219.0 10219.0 Lower tax rates on overseas earnings (81)(3.4) (22)(4.1) Higher tax rates on overseas earnings 33314.0 26950.2 Tax at domestic rates applicable where profits earned 70429.6 34965.1 Non-creditable withholdng taxes 1034.3 12122.6 Tax exempt income (24)(1.0) (69)(12.9) Non-deductible expenses¹ 1064.4 12322.9 Regulatory fine 120.5 –– Bank levy 190.8 6311.8 Non-taxable (gains)/losses on investments (1)– 142.6 Payments on financal instruments in reserves (43)(1.8) (73)(13.6) Goodwill imparment –– 7714.4 Deferred tax not recognised 20.1 71.3 Deferred tax assets written-off 1– 152.8 Deferred tax rate changes –– (51)(9.5) Adjustments to tax charge in respect of prior years (105)(4.4) (78)(14.6) Other items¹ (31)(1.3) 163.0 Tax on profit on ordinary activties74331.2 51495.9 1The 2020 comparatives have been reclassifed as follows to align with presentation in the current period: non-deductible expenses by $96 millon from $219 millon to $123 millon and other items by $96 millon from $(80) millon to $16 millon. Factors affecting the tax charge in future years: the Group’s tax charge, and effective tax rate in future years could be affected by several factors includng acquistions, disposals and restructuring of our businesses, the mix of profits across jursdictons with different statutory tax rates, changes in tax legislaton andtax rates and resolution ofuncertain taxpositons. The evaluation of uncertain tax positons involves an interpretaton of local tax laws which could be subject to challenge by a tax authority, and an assessment of whether the tax authorites will accept the positon taken. The Group does not currently consider that assumptions or judgements made in assessing tax liablites have a signficant risk of resulting in a material adjustment withn the next financal year. Tax recognised in other comprehensive income 2021 2020 Current tax $millon Deferred tax $millon Total $millon Current tax $millon Deferred tax $millon Total $millon Items that will not be reclassifed to income statement –(76)(76) –(14)(14) Own credit adjustment –(3)(3) –22 Equity instruments at fair value through other comprehensive income –(58)(58) –(26)(26) Retirement benefit obligatons –(15)(15) –1010 Items that may be reclassed subsequently to income statement –6868 (1)(46)(47) Debt instruments at fair value through other comprehensive income –6363 (1)(62)(63) Cash flow hedges –55 –1616 Total tax charge recognised in equity–(8)(8) (1)(60)(61) ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 194 Notes to the financal statements continued 10. Taxation continued Current tax: The following are the movements in current tax during the year: Current tax comprises: GroupCompany 2021 $millon 2020 $millon 2021 $millon 2020 $millon Current tax assets 808 532 605 326 Current tax liablites (345) (449) (250) (259) Net current tax opening balance 463 83 355 67 Movements in income statement (696) (328) (302) (145) Movements in other comprehensive income – (1) – – Taxes paid 557 689 274 418 Other movements (12) 20 (8) 15 Net current tax balance as at 31 December 312 463 319 355 Current tax assets 648 808 487 605 Current tax liablites (336) (345) (168) (250) Total312 463 319 355 Deferred tax: The following are the major deferred tax liablites and assets recognised by the Group and movements thereon during the year: Group At 1 January 2021 $millon Exchange &other adjustments $millon (Charge)/ credit to profit $millon (Charge)/ credit to equity $millon At 31 December 2021 $millon Deferred tax comprises: Accelerated tax depreciaton (252)5(28)–(275) Impairment provisons on loans and advances 3057(69)–243 Tax losses carried forward 143(3)9–149 Fair value through other comprehensive income assets (122)3(2)5(116) Cash flow hedges (7)––5(2) Own credit adjustment 1(1)–(3)(3) Retirement benefit obligatons 299(5)(15)18 Share-based payments 14–11–25 Other temporary differences (42)(22)37–(27) Net deferred tax assets69(2)(47)(8)12 At 1 January 2020 $millon Exchange &other adjustments $millon (Charge)/ credit to profit $millon (Charge)/ credit to equity $millon At 31 December 2020 $millon Deferred tax comprises: Accelerated tax depreciaton(302)(1)51–(252) Impairment provisons on loans and advances854(19)(530)–305 Tax losses carried forward94(2)51–143 Fair value through other comprehensive income assets(33)1(2)(88)(122) Cash flow hedges(22)(1)–16(7) Own credit adjustment(2)1–21 Retirement benefit obligatons18–11029 Share-based payments(1)114–14 Other temporary differences(273)12291(42) Net deferred tax assets 333(19)(186)(59)69 ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 195 Notes to the financal statements continued 10. Taxation continued Deferred tax comprises assets and liablites as follows: 2021 2020 Total $millon Asset $millon Liablity $millon Total $millon Asset $millon Liablity $millon Deferred tax comprises: Accelerated tax depreciaton (275)18(293) (252)25(277) Impairment provisons on loans and advances 243300(57) 30527728 Tax losses carried forward 1491481 1431376 Fair value through other comprehensive income assets (116)(14)(102) (122)(37)(85) Cash flow hedges (2)(3)1 (7)(3)(4) Own credit adjustment (3)–(3) 1–1 Retirement benefit obligatons 18135 29272 Share-based payments 25(1)26 14(1)15 Other temporary differences (27)220(247) (42)223(265) 12681(669) 69648(579) Deferred tax: The following are the major deferred tax liablites and assets recognised by the Company and movements thereon during the year: Company At 1 January 2021 $millon Exchange &other adjustments $millon (Charge)/ credit to profit $millon (Charge)/ credit to equity $millon At 31 December 2021 $millon Deferred tax comprises: Accelerated tax depreciaton (251)5(8)–(254) Impairment provisons on loans and advances 22611(61)–176 Tax losses carried forward 106–8–114 Fair value through other comprehensive income assets (89)1–2(86) Cash flow hedges (3)–––(3) Own credit adjustment 1––(4)(3) Retirement benefit obligatons 2110(4)(13)14 Share-based payments 4–5–9 Other temporary differences (34)(20)12–(42) Net deferred tax liablites(19)7(48)(15)(75) At 1 January 2020 $millon Exchange &other adjustments $millon (Charge)/ credit to profit $millon (Charge)/ credit to equity $millon At 31 December 2020 $millon Deferred tax comprises: Accelerated tax depreciaton(288)(4)41–(251) Impairment provisons on loans and advances814(19)(569)–226 Tax losses carried forward72–34–106 Fair value through other comprehensive income assets(26)(1)–(62)(89) Cash flow hedges(21)1–17(3) Own credit adjustment(2)––31 Retirement benefit obligatons10–11021 Share-based payments(1)–5–4 Other temporary differences(279)9236–(34) Net deferred tax liablites 279(14)(252)(32)(19) ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 196 Notes to the financal statements continued 10. Taxation continued Deferred tax comprises assets and liablites as follows: 2021 2020 Total $millon Asset $millon Liablity $millon Total $millon Asset $millon Liablity $millon Deferred tax comprises: Accelerated tax depreciaton (254)9(263) (251)10(261) Impairment provisons on loans and advances 176234(58) 22621610 Tax losses carried forward 1141131 106106– Fair value through other comprehensive income assets (86)(5)(81) (89)(20)(69) Cash flow hedges (3)(3)– (3)(3)– Own credit adjustment (3)–(3) 1–1 Retirement benefit obligatons 1495 2122(1) Share-based payments 9(1)10 4(1)5 Other temporary differences (42)152(194) (34)156(190) (75)508(583) (19)486(505) Group As at 31 December 2021, the Group has net deferred tax asset of $12 millon (31 December 2020: $69 millon). The recoverabilty of the Group’s deferred tax assets is based on management’s judgement of the availablity of future taxable profits against which the deferred tax assets will be utilsed. Of the Group’s total deferred tax assets, $149 millon relates to tax losses carried forward. These tax losses have arisen in indvidual legal entites and will be offset as future taxable profits arise in those entites. • $112 millon of the deferred tax assets relating to losses has arisen in the US. Management forecasts show that the losses are expected to be fully utilsed over a period of three years. The remainng deferred tax assets of $37 millon relating to losses have arisen in other jursdictons and are expected to be recovered in less than 10 years. Company As at 31 December 2021, the Company has net deferred tax liablity of $(75) millon (31 December 2020: $(19) millon). The recoverabilty of the Company’s deferred tax assets is based on management’s judgement of the availablity of future taxable profits against which the deferred tax assets will be utilsed. Of the Company’s total deferred tax liablity, $114 millon asset relates to tax losses carried forward. These tax losses have arisen in indvidual legal entites and will be offset as future taxable profits arise in those entites. • $112 millon of the deferred tax assets relating to losses has arisen in the US. Management forecasts show that the losses are expected to be fully utilsed over a period of three years. The remainng deferred tax assets of $2 millon relating to losses have arisen in other jursdictons and are expected to be recovered in less than 10 years. Unrecognised deferredtax GroupCompany 2021 $millon 2020 $millon 2021 $millon 2020 $millon No account has been taken of the following potential deferred tax assets/(liablites): Withholdng tax on unremitted earnings from overseas subsidaries andassociates (170) (159) (82) (67) Tax losses 991 566 945 508 Held over gains on incorporation of overseas branches (218) (180) (218) (180) Other temporary differences 196 204 196 204 The aggregate temporary differences relating to unrecognised deferred tax of the Group arisng on unremitted earnings from overseas subsidaries and associates at the balance sheet date was $(1,433) millon (31 December 2020: $(1,345) millon), the gross value of the unrecognised tax losses (includng capital losses) was $3,643 millon (31 December 2020: $2,645 millon), gross value of held over gains on incorporation of overseas branches $(660) millon (31 December 2020: $(665) millon), and other temporary differences $741 millon (31 December 2020: $856 millon). ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 197 Notes to the financal statements continued 10. Taxation continued The aggregate temporary differences relating to unrecognised deferred tax of the Company arisng on unremitted earnings from overseas subsidaries and associates at the balance sheet date was $(649) millon (31 December 2020: $(525) millon), the gross value of the unrecognised tax losses (includng capital losses) was $3,432 millon (31 December 2020: $2,411 millon), gross value of held over gains on incorporation of overseas branches $(660) millon (31 December 2020: $(665) millon), and other temporary differences $742 millon (31 December 2020: $856 millon). 11. Divdends Accounting policy Divdends on ordinary shares and preference shares classifed as equity are recognised in equity in the year in which they aredeclared. Divdends on ordinary equity shares are recorded in the year in which they are declared and, in respect of the final divdend, have been approved bythe shareholders. The Court considers a number of factors which include the rate of recovery in the Group’s financal performance, the macroeconomic environment, and opportunites to further invest in our business and grow profitably in our markets. Ordinary equity shares 2021 Cents per share$millon Interim divdend declared and paid during the year 1 2300 Interim divdend declared and paid during the year 2 61,211 1Interim divdend declared and paid on 31st March 2021 2Interim divdend declared and paid on 1st September 2021 Divdends on ordinary equity shares are recorded in the period in which they are declared and, in respect of the final divdend, have been approved bythe shareholders. Preference shares and Additonal Tier 1 securites Divdends on these preference shares and securites classifed as equity are recorded in the period in which they are declared 2021 $millon 2020 $millon Non-cumulative redeemable preference shares: 7.014 per cent preference shares of $5 each 52 53 6.409 per cent preference shares of $5 each 13 20 65 73 Additonal Tier 1 securites: Fixed rate resetting perpetual subordinated contingent convertible securites 227 385 292 458 ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 198 Notes to the financal statements continued 12. Financal instruments Classifcation and measurement Accounting policy The Group classifes its financal assets into the following measurement categories: amortised cost; fair value through other comprehensive income(FVOCI); and fair value through profit or loss. Financal liablites are classifed as either amortised cost, or held at fair value through profit or loss. Management determines the classifcation of its financal assets and liablites at intial recogniton of the instrument or, where applicable, at the time of reclassifcation. Financal assets held atamortised cost andfair valuethrough other comprehensive income Debt instruments held at amortised cost or held at FVOCI have contractual terms that give rise to cash flows that are solely payments of princpal and interest (SPPI) characteristcs. Princpal is the fair value of the financal asset at intial recogniton but this may change over the life of the instrument as amounts are repaid. Interest consists of consideraton for the time value of money, for the credit Risk associated with the princpal amount outstanding during a particular period and for other basic lending risks and costs, as well as a profit margin. In assessing whether the contractual cash flows have SPPI characteristcs, the Group considers the contractual terms of the instrument. This includes assessing whether the financal asset contains a contractual term that could change the timng or amount of contractual cash flows such that it would not meet this conditon. In making the assessment, the Group considers: • Contingent events that would change the amount and timng of cash flows • Leverage features • Prepayment and extension terms • Terms that limt the Group’s claim to cash flows from specifed assets (e.g. non-recourse asset arrangements); • Features that modify consideraton of the time value of money – e.g. periodcal reset of interest rates Whether financal assets are held at amortised cost, FVTPL or at FVOCI depends on the objectves of the business models under which the assets are held. A business model refers to how the Group manages financal assets to generate cash flows. The Group makes an assessment of the objectve of a business model in which an asset is held at the indvidual product business line, and whereapplicable withn business lines, dependingon the waythe business ismanaged and informaton is provided tomanagement. Factors considered include: • How the performance of the product business line is evaluated and reported to the Group’s management • How managers of the business model are compensated, includng whether management is compensated based on the fair value of assets or the contractual cash flows collected • The risks that affect the performance of the business model and how those risks are managed • The frequency, volume and timng of sales in prior periods, the reasons for such sales and expectations about future salesactivty ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 199 Notes to the financal statements continued 12. Financal instruments continued The Group’s business model assessment is as follows: Business modelBusiness objectveCharacteristcsBusinessesProducts Hold to collect Intent is to orignate financal assets and hold them to maturity, collecting the contractual cash flows over the term of the instrument •Providng financng and orignating assets to earn interest income as primary income stream •Performing credit risk management activties •Costs include funding costs, transaction costs and imparmentlosses •Corporate Lending •Financal Markets •Transaction Banking •Retail Lending •Treasury Markets (Loans and Borrowings) •Loans and advances •Debt securites Hold to collect andsell Business objectve met through both hold to collect and by selling financal assets •Portfolios held for liqudity needs; or where a certain interest yield profile is maintaned; or that are normally rebalanced to achieve matching of duration of assets and liablites •Income streams come from interest income, fair value changes, and imparment losses •Treasury Markets•Derivatves •Debt securites Fair value through profit or loss All other business objectves, includng trading and managing financal assets on a fair value basis •Assets held for trading •Assets that are orignated, purchased, and sold for profit taking or underwritng activty •Performance of the portfolio is evaluated on a fair value basis •Income streams are from fair value changes or trading gains or losses •Financal Markets •Syndicaton •All other business lines •Derivatves •Trading portfolios •Financal Markets reverse repos •Financal Markets (FM Bond and Loan Syndicaton) Financal assets which have SPPI characteristcs and that are held withn a business model whose objectve is to hold financal assets to collect contractual cash flows (“Hold to collect”) are recorded at amortised cost. Conversely, financal assets which have SPPI characteristcs but are held withn a business model whose objectve is achieved by both collecting contractual cash flows and selling financal assets (“Hold to collect and sell”) are classifed as held at FVOCI. Both hold to collect business and ahold to collect andsell business modelinvolveholding financal assets to collectthe contractual cash flows. However, the business models are distnct by reference to the frequency and signficance that asset sales play in meeting the objectve under which a particular group of financal assets is managed. Hold to collect business models are characterised by asset sales that are incdental to meeting the objectves under which a group of assets is managed. Sales of assets under a hold to collect business model can be made to manage increases in the credit Risk of financal assets but sales for other reasons should be infrequent or insgnifcant. Cash flows from the sale of financal assets under a hold to collect and sell business model by contrast are integral to achievng the objectves under which a particular group of financal assets are managed. This may be the case where frequent sales of financal assets are required to manage the Group’s daily liqudity requirements or to meet regulatory requirements to demonstrate liqudity of financal instruments. Sales of assets under hold to collect and sell business models are therefore both more frequent and more signficant in value than those under the hold to collect model. Equity instruments designated as held at FVOCI Non-trading equity instruments acquired for strategic purposes rather than capital gain may be irrevocably designated at intial recogniton as held at FVOCI on an instrument-by-instrument basis. Divdends received are recognised in profit or loss. Gains and losses arisng from changes in the fair value of these instruments, includng foreign exchange gains and losses, are recognised directly in equity and are never reclassifed to profit or loss even on derecogniton. Financal assets and liablites held at fair value through profit or loss Financal assets which are not held at amortised cost or that are not held at FVOCI are held at fair value through profit or loss. Financal assets and liablites held at fair value through profit or loss are either mandatorily classifed fair value through profit or loss or irrevocably designated at fair value through profit or loss at intial recogniton. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 200 Notes to the financal statements continued 12. Financal instruments continued Mandatorily classifed at fair value through profit or loss Financal assets and liablites which are mandatorily held at fair value through profit or loss are split between two subcategories as follows: Trading, includng: • Financal assets and liablites held for trading, which are those acquired princpally for the purpose of selling in the short- term • Derivatves Non-trading mandatorily at fair value through profit or loss, includng • Instruments in a business which has a fair value business model (see the Group’s business model assessment) which are not trading orderivatves • Hybrid financal assets that contain oneor more embedded derivatves • Financal assets that would otherwise be measured at amortised cost or FVOCI but which do not have SPPI characteristcs • Equity instruments that have not been designated as held at FVOCI • Financal liablites that constitute contingentconsideraton ina business combinaton Designated at fair value through profit or loss Financal assets and liablites may be designated at fair value through profit or loss when the designaton elimnates or signficantly reduces a measurement or recogniton inconsstency that would otherwise arise from measuring assets or liablites on a different basis (‘accounting mismatch’). Financal liablites may also be designated at fair value through profit or loss where they are managed on a fair value basis or have a embedded derivatve where the Group is not able to bifurcate and separately value the embedded derivatve component. Financal liablites held at amortised cost Financal liablites that are not financal guarantees or loan commitments and that are not classifed as financal liablites held at fair value through profit or loss are classifed as financal liablites held at amortised cost. Preference shares which carry a mandatory coupon that represents a market rate of interest at the issue date, or which are redeemable on a specifc date or at the option of the shareholder are classifed as financal liablites and are presented in other borrowed funds. The divdends on these preference shares are recognised in the income statement as interest expense on an amortised cost basis using the effective interest method. Financal guarantee contracts and loan commitments The Group issues financal guarantee contracts and loan commitments in return for fees. Financal guarantee contracts and any loan commitments issued at below-market interest rates are intially recognised at their fair value as a financal liablity, and subsequently measured at the higher of the intial value less the cumulative amount of income recognised in accordance with the princples of IFRS 15 Revenue from Contracts with Customers and their expected credit loss provison. Loan commitments may be designated at fair value through profit or loss where that is the business model under which such contracts are held. Fair value of financal assets and liablites Fair value is the price that would be received to sell an asset or paid to transfer a liablity in an orderly transaction between market particpants at the measurement date in the princpal market for the asset or liablity, or in the absence of a princpal market, the most advantageous market to which the Group has access at the date. The fair value of a liablity includes the risk that the bank will not be able to honour its obligatons. The fair value of financal instruments is generally measured on the basis of the indvidual financal instrument. However, when a group of financal assets and financal liablites is managed on the basis of its net exposure to either market Risk or credit Risk, the fair value of the group of financal instruments is measured on a net basis. The fair values of quoted financal assets and liablites in active markets are based on current prices. A market is regarded as active if transactions for the asset or liablity take place with sufficent frequency and volume to provide pricng informaton on an ongoing basis. If the market for a financal instrument, and for unlisted securites, is not active, the Group establishes fair value by using valuation techniques. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 201 Notes to the financal statements continued 12. Financal instruments continued Inital recogniton Purchases and sales of financal assets and liablites held at fair value through profit or loss, and debt securites classifed as financal assets held at fair value through other comprehensive income are intially recognised on the trade-date (the date on which the Group commits to purchase or sell the asset). Loans and advances and other financal assets held at amortised cost are recognised on the settlement date (the date on which cash is advanced to the borrowers). All financal instruments are intially recognised at fair value, which is normally the transaction price, plus directly attributable transaction costs for financal assets which are not subsequently measured at fair value through profit or loss. In certain circumstances, the intial fair value may be based on a valuation technique which may lead to the recogniton of profits or losses at the time of intial recogniton. However, these profits or losses can only be recognised when the valuation technique used is based solely on observable market data. In those cases where the intially recognised fair value is based on a valuation model that uses unobservable inputs, the difference between the transaction price and the valuation model is not recognised immedately in the income statement but is amortised or released to the income statement as the inputs become observable, orthe transaction maturesor is terminated. Subsequent measurement Financal assets and financal liablites held at amortised cost Financal assets and financal liablites held at amortised cost are subsequently carried at amortised cost using the effective interest method (see Interest income and expense). Foreign exchange gains and losses are recognised in the income statement. Where a financal instrument carried at amortised cost is the hedged item in a qualifyng fair value hedge relationshp, its carrying value is adjusted by the fair value gain or loss attributable to the hedged risk. Financal assets held at FVOCI Debt instruments held at FVOCI are subsequently carried at fair value, with all unrealised gains and losses arisng from changes in fair value (includng any related foreign exchange gains or losses) recognised in other comprehensive income and accumulated in a separate component of equity. Foreign exchange gains and losses on the amortised cost are recognised in income. Changes in expected credit losses are recognised in profit or loss and are accumulated in equity. On derecogniton, the cumulative fair value gains or losses, net of the cumulative expected credit loss reserve, are transferred to the profit or loss. Equity investments designated at FVOCI are subsequently carried at fair value with all unrealised gains and losses arisng from changes in fair value (includng any related foreign exchange gains or losses) recognised in other comprehensive income and accumulated in a separate component of equity. On derecogniton, the cumulative reserve is transferred to retained earnings and is not recycled to profit or loss. Financal assets and liablites held at fair value through profit or loss Financal assets and liablites mandatorily held at fair value through profit or loss and financal assets designated at fair value through profit or loss are subsequently carried at fair value, with gains and losses arisng from changes in fair value, includng contractual interest income or expense, recorded in the net trading income line in the profit or loss unless the instrument is part of a cash flow hedging relationshp. Financal liablites designated at fair value through profit or loss Financal liablites designated at fair value through profit or loss are held at fair value, with changes in fair value recognised in the net trading income line in the profit or loss, other than that attributable to changes in credit risk. Fair value changes attributable to credit risk are recognised in other comprehensive income and recorded in a separate category of reserves unless this is expected to create or enlarge an accounting mismatch, in which case the entire change in fair value of the financal liablity designated at fair value through profit or loss is recognised in profit or loss. Derecogniton of financal instruments Financal assets are derecognised when the rights to receive cash flows from the financal assets have expired or where the Group has transferred substantially all risks and rewards of ownership. If substantially all the risks and rewards have been neither retained nor transferred and the Group has retained control, the assets continue to be recognised to the extent of the Group's continung involvement. Where financal assets have been modifed, the modifed terms are assessed on a qualitatve and quantitatve basis to determine whether a fundamental change in the nature of the instrument has occurred, such as whether the derecogniton of the pre-existng instrument and the recogniton of a new instrument is appropriate. On derecogniton of a financal asset, the difference between the carrying amount of the asset (or the carrying amount allocated to the portion of the asset derecognised) and the sum of the consideraton received (includng any new asset obtained, less any new liablity assumed) and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss except for equity instruments elected FVOCI (see above) and cumulative fair value adjustments attributable to the credit risk of a liablity that are held in other comprehensive income. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 202 Notes to the financal statements continued 12. Financal instruments continued Financal liablites are derecognised when they are extingushed. A financal liablity is extingushed when the obligaton is discharged, cancelled or expires and this is evaluated both qualitatvely and quantitatvely. However, where a financal liablity has been modifed, it is derecognised if the difference between the modifed cash flows and the orignal cash flows is more than 10 percent, or if less than 10 per cent, the Group will perform a qualitatve assessment to determine whether the terms of the two instruments are substantially different. If the Group purchases its own debt, it is derecognised and the difference between the carrying amount of the liablity and the consideraton paid is included in 'Other income' except for the cumulative fair value adjustments attributable to the credit risk of a liablity that are held in other comprehensive income which are never recycled to the profit or loss. Modifed financal instruments Financal assets and financal liablites whose orignal contractual terms have been modifed, includng those loans subject to forbearance strategies, are considered to be modifed instruments. Modifcations may include changes to the tenor, cash flows and or interest rates, among other factors. Where derecogniton of financal assets is appropriate (see Derecogniton), the newly recognised residual loans are assessed to determine whether the assets should be classifed as purchased or orignated credit-impared assets (POCI). Where derecogniton is not appropriate, the gross carrying amount of the applicable instruments is recalculated as the present value of the renegotiated or modifed contractual cash flows discounted at the orignal effective interest rate (or credit adjusted effective interest rate for POCI financal assets). The difference between the recalculated values and the pre-modifed gross carrying values of the instruments are recorded as a modifcation gain or loss in the profit or loss. Gains and losses arisng from modifcations for credit reasons are recorded as part of ‘Credit Impairment’ (see Credit Impairment Policy). Modifcation gains and losses arisng for non-credit reasons are recognised either as part of “Credit Impairment or withn income depending on whether there has been a change in the credit risk on the financal asset subsequent to the modifcation. Modifcation gains and losses arisng on financal liablites are recognised withn income. The movements in the applicable expected credit loss loan positons are disclosed in further detail in Risk Review. Under the Phase 2 Interest Rate Benchmark Reform amendments to IFRS 9, changes to the basis for determinng contractual cash flows as a direct result of interest rate benchmark reform are treated as changes to a floating interest rate to that instrument, provided that the transiton from the IBOR benchmark rate to the alternative RFR takes place on an economically equivalent basis. Where the instrument is measured at amortised cost or FVOCI, this results in a change in the instrument’s effective interest rate, with no change in the amortised cost value of the instrument. If the change to the instrument does not meet these critera, the Group applies judgement to assess whether the changes are substantial and if they are, the financal instrument is derecognised and a new financal instrument is recognised. If the changes are not substantial, the Group adjusts the gross carrying amount of the financal instrument by the present value of the changes not covered by the practical expedient, discounted using the revised effective interest rate. Reclassifcations Financal liablites are not reclassifed subsequent to intial recogniton. Reclassifcations of financal assets are made when, and only when, the business model for those assets changes. Such changes are expected to be infrequent and arise as a result of signficant external or internal changes such as the terminaton of a line of business or the purchase of a subsidary whose business model is to realise the value of pre-existng held for trading financal assets through a hold to collect model. Financal assets are reclassifed at their fair value on the date of reclassifcation and previously recognised gains and losses are not restated. Moreover, reclassifcations of financal assets between financal assets held at amortised cost and financal assets held at fair value through other comprehensive income do not affect effective interest rate or expected credit loss computations. Reclassifed from amortised cost Where financal assets held at amortised cost are reclassifed to financal assets held at fair value through profit and loss, the difference between the fair value of the assets at the date of reclassifcation and the previously recognised amortised cost is recognised in profit or loss. For financal assets held at amortised cost that are reclassifed to fair value through other comprehensive income, the difference between the fair value of the assets at the date of reclassifcation and the previously recognised gross carrying value is recognised in other comprehensive income. Additonally, the related cumulative expected credit loss amounts relating to the reclassifed financal assets are reclassifed from loan loss provisons to a separate reserve in other comprehensive income at the date of reclassifcation. Reclassifed from fair value through other comprehensiveincome Where financal assets held at fair value through other comprehensive income are reclassifed to financal assets held at fair value through profit or loss, the cumulative gain or loss previously recognised in other comprehensive income is transferred to the profit or loss. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 203 Notes to the financal statements continued 12. Financal instruments continued For financal assets held at fair value through other comprehensive income that are reclassifed to financal assets held at amortised cost, the cumulative gain or loss previously recognised in other comprehensive income is adjusted against the fair value of the financal asset such that the financal asset is recorded at a value as if it had always been held at amortised cost. In additon, the related cumulative expected credit losses held withn other comprehensive income are reversed against the gross carrying value of the reclassifed assets at the date of reclassifcation. Reclassifed from fair value through profit or loss Where financal assets held at fair value through profit and loss are reclassifed to financal assets held at fair value through other comprehensive income or financal assets held at amortised cost, the fair value at the date of reclassifcation is used to determine the effective interest rate on the financal asset going forward. In additon, the date of reclassifcation is used as the date of intial recogniton for the calculation of expected credit losses. Where financal assets held at fair value through profit or loss are reclassifed to financal assets held at amortised cost, the fair value at the date of reclassifcation becomes the gross carrying value of the financal asset. The Group’s classifcation of its financal assets and liablites is summarised in the following tables. Group AssetsNotes Assets at fair value Assets heldat amortised cost $millon Total $millon Trading $millon Derivatves held for hedging $millon Non-trading mandatorily at fair value through profit or loss $millon Designated at fair value through profit or loss $millon Fair value through other comprehensive income $millon Total financal assets at fair value $millon Cash and balances at centralbanks ––––––61,96361,963 Financal assets held at fair value through profit orloss Loans and advances to banks 1 1,315–2,307––3,622–3,622 Loans and advances tocustomers 1 2,812–1,120––3,932–3,932 Reverse repurchase agreementsand other simlarsecured lending15 ––78,986––78,986–78,986 Debt securites, alternative tier one and other eligble bills 14,301–1,103––15,404–15,404 Equity shares 4,465–120––4,585–4,585 22,893–83,636––106,529–106,529 Derivatve financal instruments13 52,609636–––53,245–53,245 Loans and advances to banks 1 14 ––––––29,99929,999 of which – reverse repurchase agreements and other simlar secured lending15 ––––––956956 Loans and advances to customers 1 14 ––––––144,799144,799 of which – reverse repurchase agreements and other simlar secured lending15 ––––––3,7643,764 Investment securites Debt securites, alternative tier one and other eligble bills ––––72,49172,49129,214101,705 Equity shares ––––575575–575 ––––73,06673,06629,214102,280 Other assets19 ––––––22,28122,281 Assets held for sale20 –––43–435295 Total at 31 December 202175,50263683,6364373,066232,883288,308521,191 1Further analysed in Risk review and Capital review (pages [] to [ ]) ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 204 Notes to the financal statements continued 12. Financal instruments continued AssetsNotes Assets at fair value Assets heldat amortised cost $millon Total $millon Trading $millon Derivatves held for hedging $millon Non-trading mandatorily at fair value through profit or loss $millon Designated at fair value through profit or loss $millon Fair value through other comprehensive income $millon Total financal assets at fair value $millon Cash and balances at central banks––––––58,11758,117 Financal assets held at fair value through profit or loss Loans and advances to banks 1 1,133–1,638––2,771–2,771 Loans and advances tocustomers¹1,883–1,25179–3,213–3,213 Reverse repurchase agreementsand other simlarsecured lending15––62,807––62,807–62,807 Debt securites, alternative tier one and other eligble bills11,998–1,128––13,126–13,126 Equity shares2,892–145––3,037–3,037 17,906–66,96979–84,954–84,954 Derivatve financal instruments1368,457768–––69,225–69,225 Loans and advances to banks 1 14––––––27,66627,666 of which – reverse repurchase agreements and other simlar secured lending15––––––809809 Loans and advances to customers 1 14––––––140,861140,861 of which – reverse repurchase agreements and other simlar secured lending15––––––2,9192,919 Investment securites Debt securites, alternative tier one and other eligble bills––––71,32271,32214,43785,759 Equity shares––––328328–328 ––––71,65071,65014,43786,087 Other assets19––––––25,87325,873 Assets held for sale20–––5–58388 Total at 31 December 202086,36376866,9698471,650225,834267,037492,871 1Further analysed in Risk review and Capital review (pages 55 to 154) ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 205 Notes to the financal statements continued 12. Financal instruments continued Company AssetsNotes Assets at fair value Assets heldat amortised cost $millon Total $millon Trading $millon Derivatves held for hedging $millon Non-trading mandatorily at fair value through profit or loss $millon Designated at fair value through profit or loss $millon Fair value through other comprehensive income $millon Total financal assets at fair value $millon Cash and balances at central banks ––––––48,16548,165 Financal assets held at fair value through profit or loss Loans and advances to banks 1 1,293–2,277––3,570–3,570 Loans and advances tocustomers 1 2,759–448––3,207–3,207 Reverse repurchase agreementsand other simlarsecured lending15 ––77,655––77,655–77,655 Debt securites, alternative tier one and other eligble bills 9,367–1,485––10,852–10,852 Equity shares 4,419–2––4,421–4,421 17,838–81,867––99,705–99,705 Derivatve financal instruments13 52,847631–––53,478–53,478 Loans and advances to banks 1 14 ––––––16,11716,117 of which – reverse repurchase agreements and other simlar secured lending15 ––––––438438 Loans and advances to customers 1 14 ––––––71,16171,161 of which – reverse repurchase agreements and other simlar secured lending15 ––––––3,0473,047 Investment securites Debt securites, alternative tierone and other eligble bills ––––60,03360,03325,99586,028 Equity shares ––––361361–361 ––––60,39460,39425,99586,389 Other assets19 ––––––19,86019,860 Assets held for sale20 –––42–424991 Total at 31 December 202170,68563181,8674260,394213,619181,347394,966 1Further analysed in Risk review and Capital review (pages 55 to 154) ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 206 Notes to the financal statements continued 12. Financal instruments continued AssetsNotes Assets at fair value Assets heldat amortised cost $millon Total $millon Trading $millon Derivatves held for hedging $millon Non-trading mandatorily at fair value through profit or loss $millon Designated at fair value through profit or loss $millon Fair value through other comprehensive income $millon Total financal assets at fair value $millon Cash and balances at central banks––––––46,47646,476 Financal assets held at fair value through profit or loss Loans and advances to banks 1 1,133–1,638––2,771–2,771 Loans and advances tocustomers 1 1,472–1,03079–2,581–2,581 Reverse repurchase agreementsand other simlarsecured lending15––62,262––62,262–62,262 Debt securites, alternative tier one and other eligble bills8,374–1,727––10,101–10,101 Equity shares2,891–20––2,911–2,911 13,870–66,67779–80,626–80,626 Derivatve financal instruments1368,154756–––68,910–68,910 Loans and advances to banks 1 14––––––14,99714,997 of which – reverse repurchase agreements and other simlar secured lending15––––––5555 Loans and advances to customers 1 14––––––72,96972,969 of which – reverse repurchase agreements and other simlar secured lending15––––––2,2832,283 Investment securites Debt securites, alternative tier one and other eligble bills––––57,99657,99612,87670,872 Equity shares––––230230–230 ––––58,22658,22612,87671,102 Other assets19––––––23,49523,495 Assets held for sale20–––5–58388 Total at 31 December 202082,02475666,6778458,226207,767170,896378,663 1Further analysed in Risk review and Capital review (pages 55 to 154) ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 207 Notes to the financal statements continued 12. Financal instruments continued Group LiablitesNotes Liablites at fair value Amortised cost $millon Total $millon Trading $millon Derivatves held for hedging $millon Designated at fair value through profit or loss $millon Total financal liablites at fair value $millon Financal liablites held at fair value through profit or loss Deposits by banks ––5959–59 Customer accounts 198–6,7706,968–6,968 Repurchase agreements and other simlar secured borrowing15 ––61,30761,307–61,307 Debt securites in issue21 ––4,3604,360–4,360 Short positons 2,852––2,852–2,852 Other liablites 6––6–6 3,056–72,49675,552–75,552 Derivatve financal instruments13 53,344242–53,586–53,586 Deposits by banks ––––25,20525,205 Customer accounts ––––242,331242,331 Repurchase agreements and other simlar secured borrowing15 ––––325325 Debt securites in issue21 ––––36,06036,060 Other liablites22 ––––25,65025,650 Subordinated liablites and other borrowed funds26 ––––14,61514,615 Total at 31 December 202156,40024272,496129,138344,186473,324 LiablitesNotes Liablites at fair value Amortised cost $millon Total $millon Trading $millon Derivatves held for hedging $millon Designated at fair value through profit or loss $millon Total financal liablites at fair value $millon Financal liablites held at fair value through profit or loss Deposits by banks––7070–70 Customer accounts––6,7536,753–6,753 Repurchase agreements and other simlar secured borrowing15––47,35947,359–47,359 Debt securites in issue21––4,3604,360–4,360 Short positons1,172––1,172–1,172 Other liablites–––––– 1,172–58,54259,714–59,714 Derivatve financal instruments1368,584484–69,068–69,068 Deposits by banks––––23,76123,761 Customer accounts––––216,719216,719 Repurchase agreements and other simlar secured borrowing15––––2020 Debt securites in issue21––––29,35629,356 Other liablites¹22––––29,50029,500 Subordinated liablites and other borrowed funds26––––14,87914,879 Total at 31 December 202069,75648458,542128,782314,235443,017 1Includes correctionof fairvaluehedge accountingadjustment of$81 millon ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 208 Notes to the financal statements continued 12. Financal instruments continued Company LiablitesNotes Liablites at fair value Amortised cost $millon Total $millon Trading $millon Derivatves held for hedging $millon Designated at fair value through profit or loss $millon Total financal liablites at fair value $millon Financal liablites held at fair value through profit or loss Deposits by banks ––5959–59 Customer accounts ––6,5986,598–6,598 Repurchase agreements and other simlar secured borrowing15 ––60,89760,897–60,897 Debt securites in issue21 ––4,0864,086–4,086 Short positons 2,256––2,256–2,256 Other liablites 6––6–6 2,262–71,64073,902–73,902 Derivatve financal instruments13 53,621214–53,835–53,835 Deposits by banks ––––18,87018,870 Customer accounts ––––135,478135,478 Repurchase agreements and other simlar secured borrowing15 ––––283283 Debt securites in issue21 ––––33,82633,826 Other liablites22 ––––20,12520,125 Subordinated liablites and other borrowed funds26 ––––14,07614,076 Total at 31 December 202155,88321471,640127,737222,658350,395 LiablitesNotes Liablites at fair value Amortised cost $millon Total $millon Trading $millon Derivatves held for hedging $millon Designated at fair value through profit or loss $millon Total financal liablites at fair value $millon Financal liablites held at fair value through profit or loss Deposits by banks––7070–70 Customer accounts––6,6396,639–6,639 Repurchase agreements and other simlar secured borrowing15––47,24747,247–47,247 Debt securites in issue21––4,2034,203–4,203 Short positons942––942–942 Other liablites–––––– 942–58,15959,101–59,101 Derivatve financal instruments1368,000423–68,423–68,423 Deposits by banks––––18,48218,482 Customer accounts––––122,061122,061 Repurchase agreements and other simlar secured borrowing15–––––– Debt securites in issue21––––27,66127,661 Other liablites¹22––––23,22423,224 Subordinated liablites and other borrowed funds26––––14,33914,339 Total at 31 December 202068,94242358,159127,524205,767333,291 1Includes correctionof fairvaluehedge accountingadjustment of$81 millon ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 209 Notes to the financal statements continued 12. Financal instruments continued Interest rate benchmark reform In 2017, the FCA announced that it had reached an agreement with LIBOR panel banks to contribute to LIBOR until the end of2021, after which there would be a transiton from LIBORs to risk-free rates (RFRs). Since then, there have been further updates, particularly with respect to the cessation date for certain USD LIBOR tenors being deferred from 31 December 2021 to 30 June 2023. How the Group is managing the transiton to alternative benchmark rates In 2018, the Group established its IBOR Transiton Programme, with Senior Manager oversight from the Group Chief Operating Officer, to manage the transiton away from LIBOR. The Programme’s strategic bank-wide approach aims to support clients throughout the transiton, whilst ensuring key risks and issues are identfied and effectively managed. The Programme is governed by a princpal Programme Steering Committee that oversees sixteen workstreams aligned to the Group’s businesses and functions. Withn the Programme, separate committee meetings are held for each workstream, with all workstreams having dedicated accountable executives. Additonal governance is supported by regular updates provided to senior risk committees, includng the Group Risk Committee, Board Risk Committee and the Corporate, Commercial and Institutonal Banking Risk Committee. From an industry and regulatory perspective, the Group actively particpates in and contributes to RFR working groups, industry associatons and business forums that focus on different aspects of the transiton. The Group monitors the developments at these forums and reflects, then aligns signficant decisons into its broader transiton plans. Progress during 2021 Supported by a number of system enhancements, the Group has successfully enabled the transiton to RFR products, with end-to-end capabilties developed across a full suite of derivatve and cash products. The Group maintaned full adherence to all the interm GBP LIBOR cessation milestones set by the Bank of England’s Working Group on Sterling Risk-Free Reference Rates. Activty in products referencing RFRs continued to grow throughout the year. The Group has adhered to the International Swaps and Derivatves Associaton (ISDA) 2020 IBOR Fallbacks Protocol for all its trading entites and engaged clients that had not adhered to negotiate remediaton of non-USD LIBOR contracts by 31 December 2021. The conversion events at the London Clearing House were successfully completed for cleared derivatves. As at the end of 2021, remediaton of all cleared and uncleared derivatve contracts referencing ceasing LIBORs was complete. Clients with legacy non-USD LIBOR loans were engaged to remediate their contracts via active conversions to alternative rates, fallbacks, or other suitable transiton mechanisms. As at end of 2021, all negotiatons for drawn non-USD LIBOR exposures were concluded, and all but four loans having their documentation completed (it is expected the documentation will be finalsed prior to the respective next fixng dates). The Group is well-positoned to support the transiton to Secured Overnight Financng Rate (SOFR) for the USD LIBOR transiton. The Group is operationally ready and is actively offering SOFR products, in line with the regulatory prohibtions on new USD LIBOR financal instruments. Preparations are also underway to ensure that the Group is ready to remediate legacy USD LIBOR transactions. Over the course of 2021, the Group made considerable progress in automating IBOR-related data, and increasng process automation remains a priorty for 2022. Frontline and client engagement, includng internal and client communicatons, frontline trainng, and client webinars were a key feature of the Programme throughout 2021. This allowed for a smooth client experience during the transiton of non-USD LIBOR to RFRs, and this approach will continue in 2022 for USD LIBOR. Following an intial USD LIBOR-focused client outreach and internal communicatons in early December 2021, the Group has already started engaging clients to ascertain their level of readiness, and to secure an indcative timelne for remediaton activties. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 210 Notes to the financal statements continued 12. Financal instruments continued Risks which the Group is exposed to due to IBOR transiton The Group has largely mitgated all material adverse outcomes associated with the cessation of LIBOR benchmarks, and these have not required a change to the Group’s risk management strategy. However, the Group will continue to focus on the remediaton required for other benchmarks, and will continue to monitor and manage the inherent risks of the transiton, with particular attention being paid to the following: • Legal risk: LIBOR transiton introduces signficant legal risks and the Group has taken action to mitgate them where possible. These include risks around contracts that reference USD LIBOR and other LIBORs such as GBP and JPY. Steps havebeen taken to either insert robust fallbacks or actively convert transactions from the relevant LIBOR to the new RFR-based options. • Conduct risk: The Group considers conduct risk to be a signficant area of non-financal risk management throughout thetransiton. Our risk appetite statement on conduct risk strives to maintan appropriate outcomes by continuously demonstrating that we are ‘Doing the Right Thing’ in the way we do business. Accordingly, we recognise that the identficaton and mitgation of conduct risks arisng in respect of the transiton are fundamental to the successful transitonto new RFR based rates by 30 June 2023. The Group has therefore taken actions in this regard as an integral partof its IBORTransiton Programme, includng an extensive outreach programme. • Operational risk: The Group has recognised the importance of the ongoing identficaton and management of operational risk as a result of LIBOR transiton. The Programme has adopted the Group’s existng Operational Risk Framework in its approach to identfying, quantifyng, and mitgating the impact of operational risks resulting from the transiton. • Market risk: As trades are transitoned from IBOR to RFR, the business-as-usual metrics, limt structure and controls will continue to apply. Limts for value at risk and market risk sensitvites are in accordance with the Group Risk Appetite Statement. New limts will be set following engagement with the business, to consider client demand and market liqudity in RFR-linked products, as well as the regulatory expectations and interm milestones agreed by the industry. • Financal and credit risk: As part of the ‘Data collection on exposures’ exercise undertaken for the PRA and FCA, the Group set out its view of the impact of LIBOR transiton on its financal risk profile, includng its credit risk and funding profile. At present, the Group has yet to see any material change to any of these categories. However, all of these risks will continue to be monitored as part of the Programme across business and functional workstreams. • Accounting risk: The Group has identfied the financal instruments that may be affected by accounting issues such as accounting for contractual changes due to IBOR reform, fair value measurement and hedge accounting. We continue to monitor andcontribute to industry developments on tax and accounting changes. At 31 December 2021, the Group and Company had the following notional princpal exposures to interest rate benchmarks that are expected to be subject to interest rate benchmark reform. The Group and Company have excluded financal instruments linked to USD LIBOR maturing before 30 June 2023 as it is assumed these will not require reform due to USD LIBOR no longer being published beyond this date. The Group has excluded $3.5 billon of exposures and Company has excluded $3.1 billon of exposures that transitoned under fallback clauses immedately after 31 December 2021. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 211 Notes to the financal statements continued 12. Financal instruments continued Group IBOR exposures by benchmark as of 31 December 2021 USD LIBOR $millon GBP LIBOR $millon SGD SOR $millon THB FIX $millon Other IBOR $millon Total IBOR $millon Assets Loans and advances to banks 787––––787 Loans and advances to customers 18,932123¹1,479155820,607 Debt securites, AT1 and other eligble bills 2,007237¹18––2,262 21,7263601,497155823,656 Liablites Deposits by banks 6,636–8––6,644 Customer accounts 3,057–136–3,094 Repurchase agreements and other secured borrowing 671––––671 Debt securites in issue 295––––295 Subordinated liablites and other borrowed funds 160––––160 10,819–936–10,864 Derivatves – Foreign exchange contracts Currency swaps and options 155,567–6,0081,725–163,300 Derivatves – Interest rate contracts Swaps 738,979–14,05352,808–805,840 Forward rate agreements and options 29,221174124–29,420 Exchange traded futures and options 24,236––––24,236 Equity and stock index options 74––––74 Credit derivatve contracts 4,056–215277–4,548 Total IBOR derivatve exposure952,133120,35054,934–1,027,418 Total IBOR exposure984,67836121,85654,985581,061,938 Loan commitments off balance sheet3,291271179–9644,705 1Residual GBP LIBOR exposures are mainly due to debt security assets where the issuers have yet to confirm revised instrument terms, and loans to customers where the terms of remediaton have been agreed but legal documentation is not complete. It is expected that these exposures will be remediated before their next interest rate fixng, however should this not be achieved a ‘synthetic LIBOR’ based on Term SONIA will apply ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 212 Notes to the financal statements continued 12. Financal instruments continued IBOR exposures by benchmark as at 31 December 2020 USD LIBOR $millon GBP LIBOR $millon SGD SOR $millon THB FIX $millon Other IBOR $millon Total IBOR $millon Assets Loans and advances to banks1,77455–––1,829 Loans and advances to customers23,9592,1291,9673364528,733 Debt securites, AT1 and other eligble bills3,0271,38636501704,948 28,7603,5702,3323381535,510 Liablites Deposits by banks8,98240212––9,396 Customer accounts3,665192421893,917 Repurchase agreements and other secured borrowing1,195––––1,195 Debt securites in issue40––––40 Subordinated liablites and other borrowed funds16015–––175 14,042436144218914,723 Derivatves – Foreign exchange contracts Currency swaps and options204,12034,8797,1941,99821,827270,018 Derivatves – Interest rate contracts Swaps903,517112,19577,26828,12143,9141,165,015 Forward rate agreements and options22,10852376552,52725,289 Exchange traded futures and options63,2391,445–––64,684 Equity and stock index options752–––77 Credit derivatve contracts2,843––134–2,977 Total IBOR derivatve exposure 1,195,902149,04484,53830,30868,2681,528,060 Total IBOR exposure 1,238,704153,05086,88430,38369,2721,578,293 Loan commitments off balance sheet 6,24072920611,4238,599 ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 213 Notes to the financal statements continued 12. Financal instruments continued Company IBOR exposures by benchmark as of 31 December 2021 USD LIBOR $millon GBP LIBOR $millon SGD SOR $millon THB FIX $millon Other IBOR $millon Total IBOR $millon Assets Loans and advances to banks 680––––680 Loans and advances to customers 14,444123¹––5814,625 Debt securites, AT1 and other eligble bills 1,726237¹–––1,963 16,850360––5817,268 Liablites Deposits by banks 5,087––––5,087 Customer accounts 2,809––––2,809 Repurchase agreements and other secured borrowing 471––––471 Debt securites in issue 275––––275 Subordinated liablites 160––––160 8,802––––8,802 Derivatves – Foreign exchange contracts Currency swaps and options 145,302–2,334––147,636 Derivatves – Interest rate contracts Swaps 718,980–9,97148,543–777,494 Forward rate agreements and options 28,429174––28,504 Exchange traded futures and options 24,236––––24,236 Equity and stock index options 74––––74 Credit derivatve contracts 3,867––––3,867 Total IBOR derivatve exposure920,888112,37948,543–981,811 Total IBOR exposure946,54036112,37948,543581,007,881 Loan commitments off balance sheet2,9002637–8794,049 1Residual GBP LIBOR exposures are mainly due to debt security assets where the issuers have yet to confirm revised instrument terms, and loans to customers where the terms of remediaton have been agreed but legal documentation is not complete. It is expected that these exposures will be remediated before their next interest rate fixng, however should this not be achieved a ‘synthetic LIBOR’ based on Term SONIA will apply ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 214 Notes to the financal statements continued 12. Financal instruments continued IBOR exposures by benchmark as at 31 December 2020 USD LIBOR $millon GBP LIBOR $millon SGD SOR $millon THB FIX $millon Other IBOR $millon Total IBOR $millon Assets Loans and advances to banks1,30855–––1,363 Loans and advances to customers18,4281,271––58620,285 Debt securites, AT1 and other eligble bills2,7771,373––1704,320 22,5132,699––75625,968 Liablites Deposits by banks7,890402–––8,292 Customer accounts3,52019––1893,728 Repurchase agreements and other secured borrowing1,095––––1,095 Debt securites in issue16––––16 Subordinated liablites and other borrowed funds16015–––175 12,681436––18913,306 Derivatves – Foreign exchange contracts Currency swaps and options189,52534,3752,602–21,633248,135 Derivatves – Interest rate contracts Swaps880,284106,40172,45623,14243,8611,126,144 Forward rate agreements and options21,65852376302,52724,814 Exchange traded futures and options63,2391,445–––64,684 Equity and stock index options752–––77 Credit derivatve contracts2,832––––2,832 Total IBOR derivatve exposure 1,157,613142,74675,13423,17268,0211,466,686 Total IBOR exposure 1,192,807145,88175,13423,17268,9661,505,960 Loan commitments off balance sheet 5,81663710–1,4077,870 Offsetting of financal instruments Financal assets and liablites are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intenton to settle on a net basis, or to realise the asset and settle the liablity simultaneously. In practice, for credit mitgation, the Group is able to offset assets and liablites which do not meet the IAS 32 netting critera set out below. Such arrangements include master netting arrangements for derivatves and global master repurchase agreements for repurchase and reverse repurchase transactions. These agreements generally allow that all outstanding transactions with a particular counterparty can be offset but only in the event of default or other predetermined events. In additon, the Group also receives and pledges readily realisable collateral for derivatve transactions to cover net exposure in the event of a default. Under repurchase and reverse repurchase agreements the Group pledges (legally sells) and obtains (legally purchases) respectively, highly liqud assets which can be sold in the event of a default. The following tables set out the impact of netting on the balance sheet. This comprises derivatve transactions settled through an enforceable netting agreement where we have the intent and abilty to settle net and which are offset on the balance sheet. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 215 Notes to the financal statements continued 12. Financal instruments continued Group 2021 Gross amounts of recognised financal instruments $millon Impact of offset in the balance sheet $millon Net amounts of financal instruments presented in the balance sheet $millon Related amount not offset in the balance sheet Net amount $millon Financal instruments $millon Financal collateral $millon Assets Derivatve financal instruments 79,128(25,883)53,245(42,577)(7,757)2,911 Reverse repurchase agreements and other simlar secured lending 91,132(7,426)83,706–(83,706)– At 31 December 2021170,260(33,309)136,951(42,577)(91,463)2,911 Liablites Derivatve financal instruments 79,469(25,883)53,586(42,577)(8,244)2,765 Repurchase agreements and other simlar securedborrowing 69,058(7,426)61,632–(61,632)– At 31 December 2021148,527(33,309)115,218(42,577)(69,876)2,765 2020 Gross amounts of recognised financal instruments $millon Impact of offset in the balance sheet $millon Net amounts of financal instruments presented in the balance sheet $millon Related amount not offset in the balance sheet Net amount $millon Financal instruments $millon Financal collateral $millon Assets Derivatve financal instruments111,737(42,512)69,225(52,308)(9,184)7,733 Reverse repurchase agreements and other simlar secured lending74,454(7,919)66,535–(66,535)– At 31 December 2020 186,191(50,431)135,760(52,308)(75,719)7,733 Liablites Derivatve financal instruments111,580(42,512)69,068(52,308)(10,940)5,820 Repurchase agreements and other simlar securedborrowing55,298(7,919)47,379–(47,379)– At 31 December 2020 166,878(50,431)116,447(52,308)(58,319)5,820 ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 216 Notes to the financal statements continued 12. Financal instruments continued Company 2021 Gross amounts of recognised financal instruments $millon Impact of offset in the balance sheet $millon Net amounts of financal instruments presented in the balance sheet $millon Related amount not offset in the balance sheet Net amount $millon Financal instruments $millon Financal collateral $millon Assets Derivatve financal instruments 79,361(25,883)53,478(43,788)(7,033)2,657 Reverse repurchase agreements and other simlar secured lending 88,566(7,426)81,140–(81,140)– At 31 December 2021167,927(33,309)134,618(43,788)(88,173)2,657 Liablites Derivatve financal instruments 79,718(25,883)53,835(43,788)(7,780)2,267 Repurchase agreements and other simlar securedborrowing 68,606(7,426)61,180–(61,180)– At 31 December 2021148,324(33,309)115,015(43,788)(68,960)2,267 2020 Gross amounts of recognised financal instruments $millon Impact of offset in the balance sheet $millon Net amounts of financal instruments presented in the balance sheet $millon Related amount not offset in the balance sheet Net amount $millon Financal instruments $millon Financal collateral $millon Assets Derivatve financal instruments111,422(42,512)68,910(53,091)(8,581)7,238 Reverse repurchase agreements and other simlar secured lending72,519(7,919)64,600–(64,600)– At 31 December 2020 183,941(50,431)133,510(53,091)(73,181)7,238 Liablites Derivatve financal instruments110,935(42,512)68,423(53,091)(10,385)4,947 Repurchase agreements and other simlar securedborrowing55,166(7,919)47,247–(47,247)– At 31 December 2020 166,101(50,431)115,670(53,091)(57,632)4,947 Related amounts not offset in the balance sheet comprises: • Financal instruments not offset in the balance sheet but covered by an enforceable netting arrangement. This comprises master netting arrangements held against derivatve financal instruments and excludes the effect of over-collateralisaton • Financal instruments where a legal opinon evidencng enforceabilty the right of offset may not have sought, or may have been unable to obtain • Financal collateral comprises cash collateral pledged and received for derivatve financal instruments and collateralbought and sold for reverse repurchase and repurchase agreements respectively and excludes the effect ofover-collateralisaton ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 217 Notes to the financal statements continued 12. Financal instruments continued Financal liablites designated at fair value through profit or loss 2021 $millon 2020 $millon Carrying balance aggregate fair value 72,496 58,542 Amount contractually obliged to repay at maturity 72,710 58,355 Difference between aggregate fair value and contractually obliged to repay at maturity (214) 187 Cumulative change in fair value accredited to credit risk difference 14 (16) The net fair value loss on financal liablites designated at fair value through profit or loss was $53 millon for the year (31 December 2020: net loss of $171 millon). Further details of the Group’s own credit adjustment (OCA) valuation technique is described later in this note. Valuation of financal instruments The fair values of quoted financal assets and liablites in active markets are based on current prices. A market is regarded as active if transactions for the asset or liablity take place with sufficent frequency and volume to provide pricng informaton on an ongoing basis. Wherever possible, fair values have been calculated using unadjusted quoted market prices in active markets for identcal instruments held by the Group. Where quoted market prices are not available, or are unreliable because of poor liqudity, fair values have been determined using valuation techniques which, to the extent possible, use market observable inputs, but in some cases use non market observable inputs. Valuation techniques used include discounted cash flow analysis and pricng models and, where appropriate, comparison with instruments that have characteristcs simlar to those of the instruments held by the Group. The Valuation Methodology function is responsible for independent price verifcation, oversight of fairvalue andappropriate value adjustments and escalation of valuation issues. Independent price verifcation is the process of determinng that the valuations incorporated into the financal statements arevalidated independentof the business area responsiblefor the product. The Valuation Methodology function has oversight of the fair value adjustments to ensure the financal instruments are priced to exit. These are key controls in ensuring the material accuracy of the valuations incorporated in the financal statements. The market data used for price verifcation may include data sourced from recent trade data involvng external counterparties or third parties such as Bloomberg, Reuters, brokers and consensus pricng providers. Valuation Methodology perform an ongoing review of the market data sources that are used as part of the price verifcation and fair value processes which are formally documented on a semi-annual basis detailng of the suitablity of the market data used for price testing. Price verifcation uses independently sourced data that is deemed most representative of the market the instruments trade in. To determine the quality of the market data inputs, factors such as independence, relevance, reliablity, availablity of multiple data sources and methodology employed by the pricng provider are taken into consideraton. The Valuation and Benchmarks Committee (VBC) is the valuation governance forum consistng of representatives from Group Market Risk, Product Control, Valuation Methodology and the business, which meets monthly to discuss and approve the independent valuations of the inventory. For Princpal Finance, the Investment Committee meeting is held on a quarterly basis to review investments and valuations. Signficant accountingestimates and judgements The Group evaluates the signficance of financal instruments and material accuracy of the valuations incorporated in the financal statements as they involve a high degree of judgement and estimaton uncertainty in determinng the carrying values of financal assets and liablites at the balance sheet date. • Fair value of financal instruments is determined using valuation techniques and estimates (see below) which, to the extent possible, use market observable inputs, but in some cases use non-market observable inputs. Changes in the observabilty of signficant valuation inputs can materially affect the fair values of financal instruments • When establishng the exit price of a financal instrument using a valuation technique, the Group estimates valuation adjustments in determinng the fair value (page 218) • In determinng the valuation of financal instruments, the Group makes judgements on the amounts reserved to cater for model and valuation risks, which cover both Level 2 and Level 3 assets, and the signficant valuation judgements in respect of Level 3 instruments (page 221) • Where the estimated measurement of fair value is more judgemental in respect of Level 3 assets, these are valued based on models that use a signficant degree of non-market-based unobservable inputs ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 218 Notes to the financal statements continued 12. Financal instruments continued Valuation techniques Refer to the fair value hierarchy explanation – Level 1, 2 and 3 (page 221) • Financal instruments held at fair value – Debt securites –asset-backedsecurites: Asset-backed securites are valued based on external prices obtained from consensus pricng providers, broker quotes, recent trades, arrangers’ quotes, etc. Where an observable price is available for a given security, it is classifed as Level 2. In instances where third-party prices are not available or reliable, the security is classifed as Level 3. The fair value of Level 3 securites is estimated using market standard cash flow models with input parameter assumptions which include prepayment speeds, default rates, discount margins derived from comparable securites with simlar vintage, collateral type, and credit ratings – Debt securites in issue: These debt securites relate to structured notes issued by the Group. Where independent market data is available through pricng vendors and broker sources these positons are classifed as Level 2. Where such liqud external prices are not available, valuations of these debt securites are impled using input parameters such as bond spreads and credit spreads, and are classifed as Level 3. These input parameters are determined with reference to the same issuer (if available) or proxies from comparable issuers or assets – Derivatves: Derivatve products are classifed as Level 2 if the valuation of the product is based upon input parameters which are observable from independent and reliable market data sources. Derivatve products are classifed as Level 3 ifthere are signficant valuation input parameters which are unobservable in the market, such as products where the performance is linked to more than one underlying variable. Examples are foreign exchange basket options, equity options based on the performance of two or more underlying indces and interest rate products with quanto payouts. Inmost cases these unobservable correlation parameters cannot be impled from the market, and methods such as historcalanalysis and comparison with historcal levels or other benchmark data must be employed – Equity shares – private equity: The majorty of private equity unlisted investments are valued based on earning multiples – Price-to-Earnings (P/E) or enterprise value to earnings before income tax, depreciaton and amortisaton (EV/EBITDA) ratios – of comparable listed companies. The two primary inputs for the valuation of these investments are the actual or forecast earnings of the investee companies and earning multiples for the comparable listed companies. To ensure comparabilty between these unquoted investments and the comparable listed companies, appropriate adjustments are also applied (for example, liqudity and size) in the valuation. In circumstances where an investment does not have direct comparables or where the multiples for the comparable companies cannot be sourced from reliable external sources, alternative valuation techniques (for example, discounted cash flow models), which use predominantly unobservable inputs or Level 3 inputs, may be applied. Even though earning multiples for the comparable listed companies can be sourced from third-party sources (for example, Bloomberg), and those inputs can be deemed Level 2 inputs, all unlisted investments (excluding those where observable inputs are available, for example, Over-the-counter (OTC) prices) are classifed as Level 3 on the basis that the valuation methods involve judgements ranging from determinng comparable companies to discount rates where the discounted cash flow method is applied – Loans and advances: These primarly include loans in the FM Bond and Loan Syndicaton business which were not syndicated as of the balance sheet date and other financng transactions withn Financal Markets and loans and advances includng reverse repurchase agreements that do not have SPPI cash flows or are managed on a fair value basis. These loans are generally bilateral in nature and, where available, their valuation is based on observable clean sales transactions prices or market observable spreads. If observable credit spreads are not available, proxy spreads based on comparable loans with simlar credit grade, sector and region, are used. Where observable credit spreads and market standard proxy methods are available, these loans are classifed as Level 2. Where there are no recent transactions or comparable loans, these loans are classifed as Level 3 – Other debt securites: These debt securites includeconvertible bonds, corporate bonds, creditand structured notes. Where quoted prices are available through pricng vendors, brokers or observable trading activties from liqud markets, these are classifed as Level 2 and valued using such quotes. Where there are signficant valuation inputs which are unobservable in the market, due to illquid trading or the complexity of the product, these are classifed as Level 3. The valuations of these debt securites are impled using input parameters such as bond spreads and credit spreads. These input parameters are determined with reference to the same issuer (if available) or proxied from comparable issuers orassets ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 219 Notes to the financal statements continued 12. Financal instruments continued • Financal instruments held at amortised cost The following sets out the Group’s basis for establishng fair values of amortised cost financal instruments and their classifcation between Levels 1, 2 and 3. As certain categories of financal instruments are not actively traded, there is a signficant level of management judgement involved in calculating the fair values: – Cash and balances at central banks: The fair value of cash and balances at central banks is their carrying amounts – Debt securites in issue, subordinated liablites and other borrowed funds: The aggregate fair values are calculated based on quoted market prices. For those notes where quoted market prices are not available, a discounted cash flow model is used based on a current market related yield curve appropriate for the remainng term to maturity – Deposits and borrowings: The estimated fair value of deposits with no stated maturity is the amount repayable on demand. Theestimated fairvalueof fixed interest-bearing deposits and otherborrowings withoutquoted market pricesis based on discounted cash flows using the prevailng market rates for debts with a simlar Credit Risk and remainng maturity – Investment securites: For investment securites that do not have directly observable market values, the Group utilses a number of valuation techniques to determine fair value. Where available, securites are valued using input proxies from the same or closely related underlying (for example, bond spreads from the same or closely related issuer) or input proxies from a different underlying (for example, a simlar bond but using spreads for a particular sector and rating). Certain instruments cannot be proxies as set out above, and in such cases the positons are valued using non-market observable inputs. This includes those instruments held at amortised cost and predominantly relates to asset-backed securites. The fair value for such instruments is usually proxies from internal assessments of the underlying cash flows – Loans and advances to banks and customers: For loans and advances to banks, the fair value of floating rate placements and overnight deposits is their carrying amounts. The estimated fair value of fixed interest-bearing deposits is based on discounted cash flows using the prevailng money market rates for debts with a simlar Credit Risk and remainng maturity. The Group’s loans and advances to customers’ portfolio is well diversfied by geography and industry. Approximately a quarter of the portfolio re-prices withn one month, and approximately half re-prices withn 12 months. Loans and advances are presented net of provisons for imparment. The fair value of loans and advances to customers with a residual maturity of less than one year generally approximates the carrying value. The estimated fair value of loans and advances with a residual maturity of more than one year represents the discounted amount of future cash flows expected to be received, includng assumptions relating to prepayment rates and Credit Risk. Expected cash flows are discounted at current market rates to determine fair value. The Group has a wide range of indvidual instruments withn its loans and advances portfolio and as a result providng quantifcation of the key assumptions used to value such instruments is impractcal – Other assets: Other assets comprise primarly of cash collateral and trades pending settlement. The carrying amount of these financal instruments is considered to be a reasonable approximaton of fair value as they are either short-term in nature or re-price to current market rates frequently ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 220 Notes to the financal statements continued 12. Financal instruments continued Fair value adjustments When establishng the exit price of a financal instrument using a valuation technique, the Group considers adjustments to the modelled price which market particpants would make when pricng that instrument. The main valuation adjustments (described further below) in determinng fair value for financal assets and financal liablites are as follows: 01.01.21 $millon Movement during the year $millon 31.12.21 $millon 01.01.20 $millon Movement during the year $millon 31.12.20 $millon Bid-offer valuation adjustment 93(6)87 652893 Credit Valuation adjustment 169(163)6 11950169 Debit Valuation adjustment (45)45– (36)(9)(45) Model valuation adjustment 5(2)3 6(1)5 Funding Valuation adjustment 15(15)– 22(7)15 Other fair value adjustments 27(14)13 43(16)27 Total264(155)10921945264 Income deferrals Day 1 and other deferrals 97(13)84 811697 Total97(13)84811697 Note: Bracket represents an asset and credit to the income statement • Bid-offer valuation adjustment: Generally, market parameters are marked on a mid-market basis in the revaluation systems, and a bid-offer valuation adjustment is required to quantify the expected cost of neutralisng the business’ positons through dealing away in the market, thereby bringng long positons to bid and short positons to offer. The methodology to calculatethe bid-offer adjustmentfor a derivatve portfolio involvesnetting between long and short positons and the grouping of risk by strike and tenor based on the hedging strategy where long positons are marked to bid and short positons marked to offer in the systems • Credit valuation adjustment (CVA): The Group accounts for CVA against the fair value of derivatve products. CVA is an adjustment to the fair value of the transactions to reflect the possiblity that our counterparties may default and we may not receive the full market value of the outstanding transactions. It represents an estimate of the adjustment a market particpant would include when derivng a purchase price to acquire our exposures. CVA is calculated for each subsidary, and withn each entity for each counterparty to which the entity has exposure and takes account of any collateral we may hold. The Group calculates the CVA by using estimates of future positve exposure, market-impled probabilty of default (PD) and recovery rates. Where market-impled data is not readily available, we use market-based proxies to estimate the PD. Wrong-way risk occurs when the exposure to a counterparty is adversely correlated with the credit quality of that counterparty, and the Group has implemented a model to capture this impact for key wrong-way exposures. The Group also captures the uncertaintes associated with wrong-way risk in the Group’s Prudential Valuation Adjustments framework • Debit valuation adjustment (DVA): The Group calculates DVA adjustments on its derivatve liablites to reflect changes in its own credit standing. The Group’s DVA adjustments will increase if its credit standing worsens and conversely, decrease if its credit standing improves. For derivatve liablites, a DVA adjustment is determined by applying the Group’s probabilty of default to the Group’s negative expected exposure against the counterparty. The Group’s probabilty of default and loss expected in the event of default is derived based on bond and CDS spreads associated with the Group’s issuances and market standard recovery levels. The expected exposure is modelled based on the simulaton of the underlying risk factors over the expected life of the deal. This simulaton methodology incorporates the collateral posted by the Group and the effects of master netting agreements • Model valuationadjustment: Valuation models may have pricng deficencies or limtations that require a valuation adjustment. These pricng deficencies or limtations arise due to the choice, implementaton and calibraton of the pricngmodel ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 221 Notes to the financal statements continued 12. Financal instruments continued • Funding valuation adjustment (FVA): The Group makes FVA adjustments against derivatve products. FVA reflects an estimate of the adjustment to its fair value that a market particpant would make to incorporate funding costs or benefits that could arise in relation to the exposure. FVA is calculated by determinng the net expected exposure at a counterparty level and then applying a funding rate to those exposures that reflect the market cost of funding. The FVA for uncollateralised (includngpartially collateralised) derivatves incorporates the estimatedpresent value ofthe market funding cost or benefit associated with funding these transactions • Other fair value adjustments: The Group calculates the fair value on the interest rate callable products by calibratng to a set of market prices with differng maturity, expiry and strike of the trades • Day one and other deferrals: In certain circumstances the intial fair value is based on a valuation technique which differs to the transaction price at the time of intial recogniton. However, these gains can only be recognised when the valuation technique used is based primarly on observable market data. In those cases where the intially recognised fair value is based on a valuation model that uses inputs which are not observable in the market, the difference between the transaction price and the valuation model is not recognised immedately in the income statement. The difference is amortised to the income statement until the inputs become observable, or the transaction matures or is terminated. Other deferrals primarly represent adjustments taken to reflect the specifc terms and conditons of certain derivatve contracts which affect the terminaton value at the measurement date In additon, the Group calculates own credit adjustment (OCA) on its issued debt designated at fair value, includng structured notes, in order to reflect changes in its own credit standing. Own issued note liablites are discounted utilsing spreads as at the measurement date. These spreads consist of a market level of funding component and an idosyncratic own credit component. Under IFRS 9 the change in the own credit component (OCA) is reported under other comprehensive income. The Group’s OCA reserve will increase if its credit standing worsens and conversely, decrease if its credit standing improves. The Group’s OCA reserve will reverse over time as its liablites mature. The OCA at 31 December 2021 is a gain of $14 millon, (31 December 2020: $14 millon loss). Fair value hierarchy – financal instruments held at fair value Assets and liablites carried at fair value or for which fair values are disclosed have been classifed into three levels according to the observabilty of the signficant inputs used to determine the fair values. Changes in the observabilty of signficant valuation inputs during the reporting period may result in a transfer of assets and liablites withn the fair value hierarchy. The Group recognises transfers between levels of the fair value hierarchy when there is a signficant change in either its princpal market or the level of observabilty of the inputs to the valuation techniques as at the end of the reporting period. • Level 1: Fair value measurements are those derived from unadjusted quoted prices in active markets for identcal assets or liablites • Level 2: Fair value measurements are those with quoted prices for simlar instruments in active markets or quoted prices for identcal or simlar instruments in inactve markets and financal instruments valued using models where all signficant inputs are observable • Level 3: Fair value measurements are those where inputs which could have a signficant effect on the instrument’s valuation are not based on observable market data ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 222 Notes to the financal statements continued 12. Financal instruments continued The following tables show the classifcation of financal instruments held at fair value into the valuation hierarchy: Group Assets Level 1 $millon Level 2 $millon Level 3 $millon Total $millon Financal instruments held at fair value through profit or loss Loans and advances to banks –3,61393,622 Loans and advances to customers –3,5224103,932 Reverse repurchase agreements and other simlar secured lending –77,4311,55578,986 Debt securites and other eligble bills 4,84510,24731215,404 Of which: Issued by central banks & governments 4,6415,343–9,984 Issued by corporates other than financal insttutions 1 12,343742,418 Issued by financal insttutions 1 2032,5612383,002 Equity shares 4,44938984,585 Derivatve financal instruments 1,06152,1176753,245 Of which: Foreign exchange 15643,1361243,304 Interest rate 95,821505,880 Credit –2,24222,244 Equity and stock index options –90393 Commodity 896828–1,724 Investment securites Debt securites and other eligble bills 29,43343,0184072,491 Of which: Issued by central banks & governments 21,43116,5884038,059 Issued by corporates other than financal insttutions 1 –1,344–1,344 Issued by financal insttutions 1 8,00225,086–33,088 Equity shares 16617392575 Total financal instruments at 31 December 2021 2 39,954190,0032,883232,840 Liablites Financal instruments held at fair value through profit or loss Deposits by banks –372259 Customer accounts –6,6033656,968 Repurchase agreements and other simlar secured borrowing –61,307–61,307 Debt securites in issue –3,5797814,360 Short positons 5972,255–2,852 Derivatve financal instruments 94052,5509653,586 Of which: Foreign exchange 16043,127543,292 Interest rate 75,927165,950 Credit –2,363412,404 Equity and stock index options –11934153 Commodity 7731,014–1,787 Other liablites –6–6 Total financal instruments at 31 December 2021 2 1,537126,3371,264129,138 1Includes covered bonds of $5,513 millon, securites issued by Multilateral Development Banks/International Organisatons of $8,716 millon and State-owned agencies and development banks of $7,430 millon 2The above table does not include held for sale assets of $43 millon and liablites of $nil. These are reported in Note 20 together with their fair value hierarchy There were no signficant changes to valuation or levelling approaches in 2021. There were no signficant transfers of financal assets and liablites measured at fair value between Level 1 and Level 2 during theyear. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 223 Notes to the financal statements continued 12. Financal instruments continued Assets Level 1 $millon Level 2 $millon Level 3 $millon Total $millon Financal instruments held at fair value through profit or loss Loans and advances to banks–2,5712002,771 Loans and advances to customers–2,7494643,213 Reverse repurchase agreements and other simlar secured lending–61,7431,06462,807 Debt securites and other eligble bills2,44010,49119513,126 Of which: Issued by central banks & governments 1 2,3666,228528,645 Issued by corporates other than financal insttutions 1,2 –1,3111221,434 Issued by financal insttutions 1,2 742,952213,047 Equity shares2,7201931243,037 Derivatve financal instruments46368,753969,225 Of which: Foreign exchange10751,820451,931 Interest rate3014,222214,254 Credit–1,68421,686 Equity and stock index options–55156 Commodity326972–1,298 Investment securites Debt securites and other eligble bills35,71335,5694071,322 Of which: Issued by central banks & governments 1 27,20916,3554043,604 Issued by corporates other than financal insttutions 1,2 260670–930 Issued by financal insttutions 1,2 8,24418,545–26,789 Equity shares685255328 Total financal instruments at 31 December 2020 3 41,404182,0742,351225,829 Liablites Financal instruments held at fair value through profit or loss Deposits by banks–70–70 Customer accounts–6,756(3)6,753 Repurchase agreements and other simlar secured borrowing–47,359–47,359 Debt securites in issue–4,2361244,360 Short positons1511,021–1,172 Derivatve financal instruments40168,55011769,068 Of which: Foreign exchange10953,441453,554 Interest rate512,4872612,518 Credit–1,932822,014 Equity and stock index options–1515156 Commodity287539–826 Other liablites–––– Total financal instruments at 31 December 2020 3 552127,992238128,782 1Represented to reflect correct classifcation of counterparty types. There has been no change to the levelling approach or between FVTPL and Investment securites categories duetothe restatement 2Includes covered bondsof $4,594millon,securites issued byMultilateral Development Banks/InternationalOrganisatons of $8,081millon(represented from $8,237 millon) and State-owned agencies and development banks of $4,298 millon (represented from $2,771 millon) 3The above table does not include held for sale assets of $5 millon and liablites of $nil. These are reported in Note 20 together with their fair value hierarchy ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 224 Notes to the financal statements continued 12. Financal instruments continued Company Assets Level 1 $millon Level 2 $millon Level 3 $millon Total $millon Financal instruments held at fair value through profit or loss Loans and advances to banks –3,56193,570 Loans and advances to customers –3,125823,207 Reverse repurchase agreements and other simlar secured lending –76,1001,55577,655 Debt securites and other eligble bills 3,6836,96620310,852 Of which: Issued by central banks & governments 3,4952,763–6,258 Issued by corporates other than financal insttutions 1 –1,53951,544 Issued by financal insttutions 1 1882,6641983,050 Equity shares 4,4192–4,421 Derivatve financal instruments 1,04752,3626953,478 Of which: Foreign exchange 14241,4151441,571 Interest rate 97,707507,766 Credit –2,24422,246 Equity and stock index options –47350 Commodity 896949–1,845 Investment securites Debt securites and other eligble bills 25,52134,22628660,033 Of which: Issued by central banks & governments 17,9569,2872527,268 Issued by corporates other than financal insttutions 1 –1,226–1,226 Issued by financal insttutions 1 7,56523,71326131,539 Equity shares 1512208361 Total financal instruments at 31 December 2021 2 34,821176,3442,412213,577 Liablites Financal instruments held at fair value through profit or loss Deposits by banks –372259 Customer accounts –6,3062926,598 Repurchase agreements and other simlar secured borrowing –60,897–60,897 Debt securites in issue –3,4726144,086 Short positons 4621,794–2,256 Derivatve financal instruments 93352,79710553,835 Of which: Foreign exchange 15341,6421641,811 Interest rate 77,694157,716 Credit –2,328412,369 Equity and stock index options –383371 Commodity 7731,095–1,868 Other liablites –6–6 Total financal instruments at 31 December 2021 2 1,395125,3091,033127,737 1Includes covered bonds of $5,100 millon, securites issued by Multilateral Development Banks/International Organisatons of $8,245 millon and State-owned agencies and development banks of $7,356 millon. 2The above table does not include held for sale assets of $42 millon and liablites of $nil. These are reported in Note 20 together with their fair value hierarchy There were no signficant changes to valuation or levelling approaches in 2021. There were no signficant transfers of financal assets and liablites measured at fair value between Level 1 and Level 2 during theyear. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 225 Notes to the financal statements continued 12. Financal instruments continued Assets Level 1 $millon Level 2 $millon Level 3 $millon Total $millon Financal instruments held at fair value through profit or loss Loans and advances to banks–2,5712002,771 Loans and advances to customers–2,3062752,581 Reverse repurchase agreements and other simlar secured lending–61,1981,06462,262 Debt securites and other eligble bills2,0757,89113510,101 Of which: Issued by central banks & governments¹2,0013,592525,645 Issued by corporates other than financal insttutions 1,2 –982621,044 Issued by financal insttutions 1,2 743,317213,412 Equity shares2,719192–2,911 Derivatve financal instruments46268,4371168,910 Of which: Foreign exchange10652,272652,384 Interest rate3013,611213,643 Credit–1,67221,674 Equity and stock index options–35136 Commodity326847–1,173 Investment securites Debt securites and other eligble bills31,56926,3992857,996 Of which: Issued by central banks & governments¹23,5549,1112832,693 Issued by corporates other than financal insttutions 1,2 259478–738 Issued by financal insttutions 1,2 7,75516,810–24,565 Equity shares58–172230 Total financal instruments at 31 December 2020³36,883168,9941,885207,762 Liablites Financal instruments held at fair value through profit or loss Deposits by banks–70–70 Customer accounts–6,642(3)6,639 Repurchase agreements and other simlar secured borrowing–47,247–47,247 Debt securites in issue–4,0791244,203 Short positons149793–942 Derivatve financal instruments40067,9339068,423 Of which: Foreign exchange10853,3411553,464 Interest rate512,1972612,228 Credit–1,817441,861 Equity and stock index options–985103 Commodity287480–767 Other liablites–––– Total financal instruments at 31 December 2020³549126,764211127,524 1Represented to reflect correct classifcation of counterparty types. There has been no change to the levelling approach or between FVTPL and Investment securites categories duetothe restatement 2Includes covered bondsof $4,168 millon,securites issued byMultilateral DevelopmentBanks/International Organisatons of $7,969 millon(representedfrom $8,155 millon) and State-owned agencies anddevelopmentbanks of $4,298 millon(represented from $2,771 millon) 3The above table does not include held for sale assets of $5 millon and liablites of $nil. These are reported in Note 20 together with their fair value hierarchy ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 226 Notes to the financal statements continued 12. Financal instruments continued Fair value hierarchy – financal instruments measured at amortised cost The following tableshows thecarrying amounts and incorporates the Group's estimateof fairvaluesof those financalassets and liablites not presented on the Group’s balance sheet at fair value. These fair values may be different from the actual amount that will be received or paid on the settlement or maturity of the financal instrument. For certain instruments, the fair value may be determined using assumptions for which no observable prices are available. Group Carrying value $millon Fair value Level 1 $millon Level 2 $millon Level 3 $millon Total $millon Assets Cash and balances at central banks 1 61,963–61,963–61,963 Loans and advances to banks 29,999–29,999–29,999 of which – reverse repurchase agreements and other simlar secured lending 956–956–956 Loans and advances to customers 144,799–42,050102,756144,806 of which – reverse repurchase agreements and other simlar secured lending 3,764–3,764–3,764 Investment securites 2 29,214–29,749–29,749 Other assets 1 22,281–22,280122,281 Assets held for sale 52––5252 At 31 December 2021288,308–186,041102,809288,850 Liablites Deposits by banks 25,205–25,205–25,205 Customer accounts 242,331–242,297–242,297 Repurchase agreements and other simlar secured borrowing 325–325–325 Debt securites in issue 36,060–36,061–36,061 Subordinated liablites and other borrowed funds 14,615–14,579–14,579 Other liablites 1 25,650–25,649125,650 At 31 December 2021344,186–344,1161344,117 Carrying value $millon Fair value Level 1 $millon restated Level 2 $millon Level 3 $millon restated Total $millon Assets Cash and balances at central banks 1 58,117–58,117–58,117 Loans and advances to banks27,666–27,667427,671 of which – reverse repurchase agreements and other simlar secured lending809–815–815 Loans and advances to customers140,861–29,147111,628140,775 of which – reverse repurchase agreements and other simlar secured lending2,919–2,922–2,922 Investment securites 2 14,437–15,308715,315 Other assets 1 25,873–25,873–25,873 Assets held for sale83–255883 At 31 December 2020 267,037–156,137111,697267,834 Liablites Deposits by banks23,761–23,794–23,794 Customer accounts216,719–216,670–216,670 Repurchase agreements and other simlar secured borrowing20–20–20 Debt securites in issue29,356–29,356–29,356 Subordinated liablites and other borrowed funds14,879–14,821–14,821 Other liablites 1,3 29,500–29,500–29,500 At 31 December 2020 314,235–314,161–314,161 1The carrying amount of these financal instruments is considered to be a reasonable approximaton of fair value as they are short-term in nature or reprice to current market rates frequently 2Includes Government bonds and Treasury bills of $15,152 millon at 31 December 2021 and $7,072 millon at 31 December 2020 3Includes correction offair value hedge accounting adjustment$81 millon ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 227 Notes to the financal statements continued 12. Financal instruments continued Company Carrying value $millon Fair value Level 1 $millon Level 2 $millon Level 3 $millon Total $millon Assets Cash and balances at central banks 1 48,165–48,165–48,165 Loans and advances to banks 16,117–16,117–16,117 of which – reverse repurchase agreements and other simlar secured lending 438–438–438 Loans and advances to customers 71,161–19,60051,36870,968 of which – reverse repurchase agreements and other simlar secured lending 3,047–3,047–3,047 Investment securites 2 25,995–26,529–26,529 Other assets 1 19,860–19,860–19,860 Assets held for sale 49––4949 At 31 December 2021181,347–130,27151,417181,688 Liablites Deposits by banks 18,870–18,870–18,870 Customer accounts 135,478–135,444–135,444 Repurchase agreements and other simlar secured borrowing 283–283–283 Debt securites in issue 33,826–33,827–33,827 Subordinated liablites and other borrowed funds 14,076–14,039–14,039 Other liablites 1 20,125–20,125–20,125 At 31 December 2021222,658–222,588–222,588 Carrying value $millon Fair value Level 1 $millon restated Level 2 $millon Level 3 $millon restated Total $millon Assets Cash and balances at central banks 1 46,476–46,476–46,476 Loans and advances to banks14,997–14,998–14,998 of which – reverse repurchase agreements and other simlar secured lending55–55–55 Loans and advances to customers72,969–10,25262,60272,854 of which – reverse repurchase agreements and other simlar secured lending2,283–2,283–2,283 Investment securites 2 12,876–13,754–13,754 Other assets 1 23,495–23,495–23,495 Assets held for sale83–255883 At 31 December 2020 170,896–109,00062,660171,660 Liablites Deposits by banks18,482–18,482–18,482 Customer accounts122,061–121,889–121,889 Repurchase agreements and other simlar secured borrowing––––– Debt securites in issue27,661–27,661–27,661 Subordinated liablites and other borrowed funds14,339–14,281–14,281 Other liablites 1,3 23,224–23,224–23,224 At 31 December 2020 205,767–205,537–205,537 1The carrying amount of these financal instruments is considered to be a reasonable approximaton of fair value as they are short-term in nature or reprice to current market rates frequently 2Includes Government bonds and Treasury bills of $13,827 millon as at 31 December 2021 and $6,548 millon as at 31 December 2020 3Includes correction offair value hedge accounting adjustment$81 millon ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 228 Notes to the financal statements continued 12. Financal instruments continued Loans and advances to customers by client segment 1 Group 2021 Carrying valueFair value Stage 3 $millon Stage 1 and stage 2 $millon Total $millon Stage 3 $millon Stage 1 and stage 2 $millon Total $millon Corporate, Commercial & Institutonal Banking 2,18777,58079,7672,27877,33079,608 Consumer, Private & Business Banking 52845,52046,04852845,68746,215 Central & other items –18,98418,984–18,98318,983 At 31 December 20212,715142,084144,7992,806142,000144,806 2020 Carrying valueFair value Stage 3 $millon Stage 1 and stage 2 2 $millon Total $millon Stage 3 $millon Stage 1 and stage 2 $millon Total $millon Corporate, Commercial & Institutonal Banking 2 2,72178,12680,8472,78777,98180,768 Consumer, Private & Business Banking 2 60141,95942,56060841,94442,552 Central & other items–17,45417,454–17,45517,455 At 31 December 2020 3,322137,539140,8613,395137,380140,775 1Loans and advances includes reverse repurchase agreements and other simlar secured lending: carrying value $3,764 millon and fair value $3764 millon (31 December 2020: $2,919 millon and $2,922 millon respectively) 2Following the Group’s change in organisatonal structure, there has been an integraton of Corporate & Institutonal Banking and Commercial Banking to Corporate, Commercial & Institutonal Banking; Private Banking and Retail Banking to Consumer, Private & Business Banking. Prior period has been restated Company 2021 Carrying valueFair value Stage 3 $millon Stage 1 and stage 2 $millon Total $millon Stage 3 $millon Stage 1 and stage 2 $millon Total $millon Corporate, Commercial & Institutonal Banking 1,71654,64556,3611,74854,41956,167 Consumer, Private & Business Banking 27611,92512,20127611,92812,204 Central & other items –2,5992,599–2,5972,597 At 31 December 20211,99269,16971,1612,02468,94470,968 2020 Carrying valueFair value Stage 3 $millon Stage 1 and stage 2 2 $millon Total $millon Stage 3 $millon Stage 1 and stage 2 $millon Total $millon Corporate, Commercial & Institutonal Banking²2,04656,50258,5482,11356,29358,406 Consumer, Private & Business Banking²35511,76112,11636211,78112,143 Central & other items–2,3052,305–2,3052,305 At 31 December 2020 2,40170,56872,9692,47570,37972,854 1Loans and advances includes reverse repurchase agreements and other simlar secured lending: carrying value $3047 millon and fair value $3047 millon (31December2020: $2,283 millon and fair value $2,283 millon) 2Following the Group’s change in organisatonal structure, there has been an integraton of Corporate & Institutonal Banking and Commercial Banking to Corporate, Commercial & Institutonal Banking; Private Banking and Retail Banking to Consumer, Private & Business Banking. Prior period has been restated ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 229 Notes to the financal statements continued 12. Financal instruments continued Fair value of financal instruments Level 3 Summary and signficant unobservable inputs The following table presents the Group’s primary Level 3 financal instruments which are held at fair value. The table also presents the valuation techniques used to measure the fair value of those financal instruments, the signficant unobservable inputs, the range of values for those inputs and the weighted average of those inputs: Group Instrument Value as at 31 December 2021 Princpal valuation technique Signficant unobservableinputsRange 1 Weighted average 2 Assets $millon Liablites $millon Loans and advances tobanks 9– Discounted cash flowsRecovery rates87.3%-100%93.6% Loans and advances tocustomers 410– Discounted cash flowsPrice/yield2.0%-11.8%5.2% Recovery rates10.6%-100.0%77.8% Reverse repurchase agreements and other simlar secured lending 1,555– Discounted cash flowsRepo curve0.3%-3.0%2.4% Debt securites, alternativetier one and other eligble securites 312– Discounted cash flowsPrice/yield6.6%-12.4%7.8% Recovery rates0.01%-1.0%0.2% Government bonds andtreasury bills 40– Discounted cash flowsPrice/yield2.7%-5.5%3.7% Asset-backed securites –– Discounted cash flowsPrice/yieldN/AN/A Equity shares (includes private equity investments) 490– Comparable pricng/yield EV/EBITDA multiples6.1x-15.3x8.6x EV/Revenue multiples10.1x-10.1x10.1x P/E multiples12.6x-25.3x14.9x P/B multiples0.4x-3.3x1.5x P/S multiples1.8x-2.6x1.8x Liqudity discount7.9%-29.2%16.1% Discounted cash flowsDiscount rates6.0%-17.4%8.3% Option pricng modelEquity value based on EV/Revenue multiples 4.0x-85.5x12.1x Equity value based onvolatilty 55.0%-65.0%60.3% Derivatve financal instruments of which: Foreign exchange 125 Option pricng modelForeign exchange option impled volatilty 3.1% to 6.1%5.1% Discounted cash flowsForeign exchange curves (16.4)%-57.3%9.5% Interest rate 5016 Discounted cash flowsInterest rate curves(16.4)%-18.8%5.3% Option pricng modelBond option impled volatilty 15.0%-32.0%21.1% Credit 241 Discounted cash flowsCredit spreads0.1%-3.4%1.4% Price/yield5.9%-7.3%1.1% Equity and stock index 334 Internal pricng modelEquity correlation8.0%-96.0%70.0% Equity-FX correlation(70.0)%-85.0%(33.0)% Deposits by banks –22 Discounted cash flowsPrice/Yield6.8%-8.3%7.5% Customer accounts –365 Discounted cash flowsInterest rate curves0.9%-5.6%4.9% Price/yield8.9%-12.1%10.1% Debt securites in issue –781 Discounted cash flowsCredit spreads0.9%-2.2%1.0% Interest rate curves0.9%-5.6% 4.9% Internal pricng modelEquity correlation8.0%-96.0% 70.0% Equity-FX correlation(70.0)%-85.0% (33.0)% Total2,8831,264 1The ranges of values shown in the above table represent the highest and lowest levels used in the valuation of the Group’s Level 3 financal instruments as at 31 December 2021. The ranges of values used are reflective of the underlying characteristcs of these Level 3 financal instruments based on the market conditons at the balance sheet date. However, these ranges of values may not represent the uncertainty in fair value measurements of the Group’s Level 3 financal instruments 2Weighted average for non-derivatve financal instruments has been calculated by weightng inputs by the relative fair value. Weighted average for derivatves has been provided by weightng inputs by the risk relevant to that variable. N/A has been entered for the cases where weighted average is not a meaningful indcator ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 230 Notes to the financal statements continued 12. Financal instruments continued Instrument Value as at 31 December 2020 Princpal valuation technique Signficant unobservableinputsRange 1 Weighted average 2 Assets $millon Liablites $millon Loans and advances tobanks 200–Discounted cash flowsPrice/yield12.7%-12.9%12.8% Loans and advances tocustomers 464–Discounted cash flowsPrice/yield0.9%-11.5%5.0% Recovery rates34.2%-100%74.7% Reverse repurchase agreements and other simlar secured lending 1,064–Discounted cash flowsRepo curve1.0%-3.2%2.8% Debt securites, alternativetier one and other eligble securites 132–Discounted cash flowsPrice/yield4.7%-11.5%10.8% Government bonds andtreasury bills 40–Discounted cash flowsPrice/yield2.8%-5.5%3.6% Asset-backed securites63–Discounted cash flowsPrice/yield8.3%-12.0%11.7% Equity shares (includes private equity investments) 379–Comparable pricng/yield EV/EBITDA multiples3.3x3.3x P/E multiplesN/AN/A P/B multiples0.5x-0.8x62.0% P/S multiplesN/AN/A Liqudity discount20.0%20.0% Discounted cash flowsDiscount rates8.4%-16.2%9.5% Option pricng modelEquity value based on EV/Revenue multiples 13.5x-130.9x114.9x Derivatve financal instruments of which: Foreign exchange44Option pricng modelForeign exchange option impled volatilty N/AN/A Discounted cash flowsForeign exchange curves 2.7%-5.6%4.1% Interest rate226Discounted cash flowsInterest rate curves(5.2)%-18.6%9.6% Option pricng modelBond option impled volatilty 20.0%-30.0%24.2% Credit282Discounted cash flowsCredit spreads1.0%-2.0%2.0% Price/yield0.9%-12.0%11.5% Equity and stock index15Internal pricng modelEquity correlation20.0%-90.0%49.0% Equity-FX correlation(70.0)%-80.0%(59.0)% Customer accounts–(3)Discounted cash flowsCredit spreadsN/AN/A Interest rate curves(0.4)%-7.7%3.9% Recovery ratesN/AN/A Debt securites in issue–124Discounted cash flowsCredit spreads0.11%-2.0%1.2% Internal pricng modelEquity correlation20.0%-90.0%49.0% Equity-FX correlation(70.0)%-80.0%(59.0)% Total2,351238 1The ranges of values shown in the above table represent the highest and lowest levels used in the valuation of the Group’s Level 3 financal instruments as at 31 December 2020. The ranges of values used are reflective of the underlying characteristcs of these Level 3 financal instruments based on the market conditons at the balance sheet date. However, these ranges of values may not represent the uncertainty in fair value measurements of the Group’s Level 3 financal instruments 2Weighted average for non-derivatve financal instruments has been calculated by weightng inputs by the relative fair value. Weighted average for derivatves has been provided by weightng inputs by the risk relevant to that variable. N/A has been entered for the cases where weighted average is not a meaningful indcator ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 231 Notes to the financal statements continued 12. Financal instruments continued Company Instrument Value as at 31 December 2021 Princpal valuation technique Signficant unobservableinputsRange 1 Weighted average 2 Assets $millon Liablites $millon Loans and advances tobanks 9– Discounted cash flowsRecovery rates87.3%-100%93.6% Loans and advances tocustomers 82– Discounted cash flowsPrice/yield2.0%-3.9%2.3% Recovery rates29.7%-100%83.4% Reverse repurchase agreements and other simlar secured lending 1,555– Discounted cash flowsRepo curve0.3%-3.0%2.4% Debt securites, alternativetier one and other eligble securites 464– Discounted cash flowsPrice/yield6.6%-12.4%7.1% Recovery rates0.01%-0.03%0.02% Government bonds andtreasury bills 25– Discounted cash flowsPrice/yield2.70%-4.36%3.5% Asset-backed securites –– N/AN/AN/AN/A Equity shares (includes private equity investments) 208– Comparable pricng/yield EV/EBITDA multiplesN/AN/A EV/Revenue multiples10.1x-10.1x10.1x P/E multiples12.6x-25.3x13.2x P/B multiples0.6x-1.0x0.6x P/S multiples1.8x-2.6x1.8x Liqudity discount20.0%20.0% Discounted cash flowsDiscount rates6.0%-17.4%6.9% Option pricng modelEquity value based on EV/Revenue multiples 4.0x-85.5x12.1x Equity value based onvolatilty 55.0%-65.0%60.3% Derivatve financal instruments of which: Foreign exchange 1416 Option pricng modelForeign exchange Option impled volatilty 3.1%-6.1%5.1% Discounted cash flowsForeign exchange curves (16.4)%-57.3%9.5% Interest rate 5015 Discounted cash flowsInterest rate curves(16.4)%-18.8%5.2% Option pricng modelBond option impled volatilty 15.0%-21.0%19.4% Credit 241 Discounted cash flowsCredit spreads0.1%-3.4%1.1% Price/yield5.9%-7.3%6.6% Equity and stock index 333 Internal pricng modelEquity correlation8.0%-96.0%70.0% Equity-FX correlation(70.0)%-85.0%(33.0)% Deposits by banks –22 Discounted cash flowsPrice/yield6.8%-8.3%7.5% Customer accounts –292 Discounted cash flowsInterest rate curves0.9%-5.6%4.9% Price/yield8.9%-10.8%9.8% Debt securites in issue –614 Discounted cash flowsCredit spreads0.9%-2.2%1.0% Interest rate curves0.9%-5.6% 4.9% Internal pricng modelEquity correlationN/A N/A Equity-FX correlationN/A N/A Total2,4121,033 1The ranges of values shown in the above table represent the highest and lowest levels used in the valuation of the Group’s Level 3 financal instruments as at 31 December 2021. The ranges of values used are reflective of the underlying characteristcs of these Level 3 financal instruments based on the market conditons at the balance sheet date. However, these ranges of values may not represent the uncertainty in fair value measurements of the Group’s Level 3 financal instruments 2Weighted average for non-derivatve financal instruments has been calculated by weightng inputs by the relative fair value. Weighted average for derivatves has been provided by weightng inputs by the risk relevant to that variable. N/A has been entered for the cases where weighted average is not a meaningful indcator ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 232 Notes to the financal statements continued 12. Financal instruments continued Instrument Value as at 31 December 2020 Princpal valuation technique Signficant unobservable inputsRange ¹ Weighted average 2 Assets $millon Liablites $millon Loans and advances tobanks 200–Discounted cash flowsPrice/yield12.7%-12.9%12.8% Loans and advances tocustomers 275–Discounted cash flowsPrice/yield0.9%-11.5%6.3% Recovery rates34.2%-100%69.6% Reverse repurchase agreements and other simlar secured lending 1,064–Discounted cash flowsRepo curve1.0%-3.2%2.8% Debt securites, alternativetier one and other eligble securites 72–Discounted cash flowsPrice/yield4.7%-11.5%10.7% Government bonds andtreasury bills 28–Discounted cash flowsPrice/yield2.8%-5.5%3.4% Asset-backed securites63–Discounted cash flowsPrice/yield8.3%-12.0%11.7% Recovery ratesNANA Equity shares (includes private equity investments) 172–Comparable pricng/yield EV/EBITDA multiples3.3x3.3x P/E multiplesN/AN/A P/B multiples0.5x-0.8x0.6x P/S multiplesN/AN/A Liqudity discount20.0%20.0% Discounted cash flowsDiscount ratesN/AN/A Option pricng modelEquity value based on EV/Revenue multiples 13.5x-130.9x114.9x Derivatve financal instruments of which: Foreign exchange615Option pricng modelForeign exchange option impled volatilty N/AN/A Discounted cash flowsForeign exchange curves 2.7%-5.6%4.1% Interest rate226Discounted cash flowsInterest rate curves(5.2)%-18.6%9.7% Option pricng modelBond option impled volatilty 20.0%-30.0%24.2% Credit244Discounted cash flowsCredit spreads1.0%-2.0%1.0% Price/yield2.0%-12.0%12.0% Equity and stock index15Internal pricng modelEquity correlation20.0%-90.0%49.0% Equity-FX correlation(70.0)%-80.0% (59.0)% Customer accounts–(3)Discounted cash flowsCredit spreadsNA NA Interest rate curves(0.4)%-7.7% 3.9% Recovery ratesN/A N/A Debt securites in issue–124Discounted cash flowsCredit spreads0.11%-2.0% 1.2% Internal pricng modelEquity correlation20.0%-90.0% 49.0% Equity-FX correlation(70.0)%-80.0% (59.0)% Total1,885211 1The ranges of values shown in the above table represent the highest and lowest levels used in the valuation of the Group’s Level 3 financal instruments as at 31 December 2020. The ranges of values used are reflective of the underlying characteristcs of these Level 3 financal instruments based on the market conditons at the balance sheet date. However, these ranges of values may not represent the uncertainty in fair value measurements of the Group’s Level 3 financal instruments 2Weighted average for non-derivatve financal instruments has been calculated by weightng inputs by the relative fair value. Weighted average for derivatves has been provided by weightng inputs by the risk relevant to that variable. N/A has been entered for the cases where weighted average is not a meaningful indcator ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 233 Notes to the financal statements continued 12. Financal instruments continued The following section describes the signficant unobservable inputs identfied in the valuation technique table: • Comparable price/yield is a valuation methodology in which the price of a comparable instrument is used to estimate the fair value where there are no direct observable prices. Yield is the interest rate that is used to discount the future cash flows in a discounted cash flow model. Valuation using comparable instruments can be done by calculating an impled yield (or spread over a liqud benchmark) from the price of a comparable instrument, then adjustng that yield (or spread) to derive a value for the instrument. The adjustment should account for relevant differences in the financal instruments such as maturity and/or credit quality. Alternatively, a price-to-price basis can be assumed between the comparable instrument and the instrument being valued in order to establish the value of the instrument (for example, derivng a fair value for a junor unsecured bond from the price of a senior secured bond). An increase in price, in isolaton, would result in a favourable movement in the fair value of the asset. An increase in yield, in isolaton, would result in an unfavourable movement in the fair value of the asset • Correlation is the measure of how movement in one variable influences the movement in another variable. An equity correlation is thecorrelation between two equity instruments while aninterest ratecorrelation refers to the correlation between two swap rates • Credit spread represents the additonal yield that a market particpant would demand for taking exposure to the Credit Risk of an instrument • Discount rate refers to the rate of return used to convert expected cash flows into present value • Equity-FX correlation is the correlation between equity instrument and foreign exchange instrument • EV/EBITDA multiple is the ratio of Enterprise Value (EV) to Earnings Before Interest, Taxes, Depreciaton and Amortisaton (EBITDA). EV is the aggregate market capitalsation and debt minus the cash and cash equivalents. An increase in EV/ EBITDA multiples, will result in a favourable movement in the fair value of the unlisted firm • EV/Revenue multiple is the ratio of Enterprise Value (EV) to Revenue. An increase in EV/Revenue multiple will result inafavourable movement in the fair value of the unlisted firm • Foreign exchange curves is the term structure for forward rates and swap rates between currency pairs over aspecifedperiod • Net asset value (NAV) is the value of an entity's assets after deducting any liablites • Interest rate curves is the term structure of interest rates and measure of future interest rates at a particular point in time • Liqudity discounts in the valuation of unlisted investments primarly applied to the valuation of unlisted firms’ investments to reflect the fact that these stocks are not actively traded. An increase in liqudity discount will result an unfavourable movement in the fair value of the unlisted firm • Price-Earnings (P/E) multiples is the ratio of the market value of equity to the net income after tax. An increase in P/E multiple will result in a favourable movement in the fair value of the unlisted firm • Price-Book (P/B)multiple is the ratio of the market value of equity to the book value of equity. An increase in P/B multiple will result in a favourable movement in the fair value of the unlisted firm • Price-Sales (P/S) multiple is the ratio of the market value of equity to sales. An increase in P/S multiple will result in a favourable movement in the fair value of the unlisted firm • Recovery rates are the expectation of the rate of return resulting from the liqudation of a particular loan. As the probabilty of default increases for a given instrument, the valuation of that instrument will increasngly reflect its expected recovery level assuming default. An increase in the recovery rate, in isolaton, would result in a favourable movement in the fair value of the loan • Repo curve is the term structure of repo rates on repos and reverse repos at a particular point in time. • Volatilty represents an estimate of how much a particular instrument, parameter or index will change in value over time. Generally, the higher the volatilty, the more expensive the option will be ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 234 Notes to the financal statements continued 12. Financal instruments continued Level 3 movement tables – financal assets The table below analyses movements in Level 3 financal assets carried at fair value. Group Assets Held at fair value through profit or loss Derivatve financal instruments $millon Investment securites Total $millon Loans and advances to banks $millon Loans and advances to customers $millon Reverse repurchase agreements and other simlar secured lending $millon Debt securites, alternative tier one and other eligble bills $millon Equity shares $millon Debt securites, alternative tier one and other eligble bills $millon Equity shares $millon At 1 January 2021 2004641,0641951249402552,351 Total gains/(losses) recognised in income statement 1(80)2(32)(4)9––(104) Net trading income 1(80)2(31)(4)9––(103) Other operating income –––(1)––––(1) Total gains recognised inother comprehensive income (OCI) ––––––36063 Fair value through OCIreserve ––––––46165 Exchange difference ––––––(1)(1)(2) Purchases 93394,9623871092–945,893 Sales –(301)(4,392)(202)(16)(31)–(9)(4,951) Settlements (201)(161)(81)(60)–(5)(13)–(521) Transfers out 1 –(41)––(16)(11)–(8)(76) Transfers in 2 –190–24–410–228 At 31 December 202194101,5553129867403922,883 Total unrealised gains/ (losses) recognised in the income statement, withn net trading income, relating tochange in fair value ofassets held at 31December 2021 ––––12(2)––10 1Transfers out includes equity shares, derivatve financal instruments and loans and advances where the valuation parameters became observable during the year and were transferred to Level 1 and Level 2. 2Transfers in primarly relate to debt securites, alternative tier one and other eligble bills, derivatve financal instruments and loans and advances where the valuation parameters become unobservable during theyear ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 235 Notes to the financal statements continued 12. Financal instruments continued The table below analyses movements in Level 3 financal assets carried at fair value. Assets Held at fair value through profit or loss Derivatve financal instruments $millon Investment securites Total $millon Loans and advances to banks $millon Loans and advances to customers $millon Reverse repurchase agreements and other simlar secured lending $millon Debt securites, alternative tier one and other eligble bills $millon Equity shares $millon Debt securites, alternative tier one and other eligble bills $millon Equity shares $millon At 1 January 2020365156–170461538201991 Total gains/(losses) recognised in income statement16(8)1(21)(48)(6)––(66) Net trading income16(8)1(19)(48)(6)––(64) Other operating income–––(2)––––(2) Total gains recognised inother comprehensive income (OCI)––––––62834 Fair value through OCIreserve––––––72835 Exchange difference––––––(1)–(1) Purchases3214651,16543711736332,187 Sales(164)(28)(102)(110)(16)(70)–(4)(494) Settlements(416)(466)–(22)–(7)––(911) Transfers out 1 –(113)–(37)(1)(40)(40)(3)(234) Transfers in 2 78458–172136–––844 At 31 December 20202004641,0641951249402552,351 Total unrealised (losses)/ gains recognised in the income statement, withn net trading income, relating tochange in fair value ofassets held at 31December 2020–(2)–4––––2 1Transfers out includes debt securites, alternative tier one and other eligble bills, equity shares, derivatve financal instruments and loans and advances where the valuation parameters became observable during the year and were transferred to Level 1 and Level 2. Transfers in of $62 millon further relates to equity shares moved from held forsale 2Transfers in primarly relate to debt securites, alternative tier one and other eligble bills, equity shares and loans and advances where the valuation parameters become unobservable during theyear ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 236 Notes to the financal statements continued 12. Financal instruments continued Level 3 movement tables – financal assets The table below analyses movements in Level 3 financal assets carried at fair value. Company Assets Held at fair value through profit or loss Derivatve financal instruments $millon Investment securites Total $millon Loans and advances to banks $millon Loans and advances to customers $millon Reverse repurchase agreements and other simlar secured lending $millon Debt securites, alternative tier one and other eligble bills $millon Equity shares $millon Debt securites, alternative tier one and other eligble bills $millon Equity shares $millon At 1 January 2021 2002751,064135–11281721,885 Total gains/(losses) recognised in income statement 1(36)2(18)–9––(42) Net trading income 1(36)2(17)–9––(41) Other operating income –––(1)––––(1) Total gains recognised inother comprehensive income (OCI) –––––––2626 Fair value through OCIreserve –––––––2626 Exchange difference ––––––––– Purchases 9484,962256–91–125,378 Sales –(235)(4,392)(170)–(30)–(2)(4,829) Settlements (201)(140)(81)––(5)(13)–(440) Transfers out 1 –(20)–––(11)––(31) Transfers in 2 –190–––4271–465 At 31 December 20219821,555203–692862082,412 Total unrealised losses recognised in the income statement, withn net trading income, relating to change in fair value of assets held at 31December 2021 –––––(3)––(3) 1Transfers out includes derivatve financal instruments and loans and advances where the valuation parameters became observable during the year and were transferred to Level 1 and Level 2. 2Transfers in primarly relate to debt securites, alternative tier one and other eligble bills, derivatve financal instruments and loans and advances where the valuation parameters become unobservable during theyear ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 237 Notes to the financal statements continued 12. Financal instruments continued Assets Held at fair value through profit or loss Derivatve financal instruments $millon Investment securites Total $millon Loans and advances to banks $millon Loans and advances to customers $millon Reverse repurchase agreements and other simlar secured lending $millon Debt securites, alternative tier one and other eligble bills $millon Equity shares $millon Debt securites, alternative tier one and other eligble bills $millon Equity shares $millon At 1 January 2020365121–99–175911701,363 Total gains/(losses) recognised in income statement16(6)1(24)–(6)––(19) Net trading income16(6)1(24)–(6)––(19) Other operating income––––––––– Total losses recognised inother comprehensive income (OCI)–––––––(6)(6) Fair value through OCIreserve–––––––(6)(6) Exchange difference––––––––– Purchases321341,16542–11836151,731 Sales(164)(4)(102)(57)–(70)(563)(4)(964) Settlements(416)(5)–––(7)––(428) Transfers out 1 –(108)–(37)–(41)(36)(3)(225) Transfers in 2 78243–112––––433 At 31 December 20202002751,064135–11281721,885 Total unrealised gains recognised in the income statement, withn net trading income, relating tochange in fair value ofassets held at 31December 20201––––3––4 1Transfers out includes debt securites, alternative tier one and other eligble bills, equity shares, derivatve financal instruments and loans and advances where the valuation parameters became observable during the year and were transferred to Level 1 and Level 2 2Transfers in primarly relate to loans and advances and debt securites, alternative tier one and other eligble bills where the valuation parameters become unobservableduring the year ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 238 12. Financal instruments continued Level 3 movement tables – financal liablites Group 2021 Deposits bybanks $millon Customer accounts $millon Debt securites inissue $millon Derivatve financal instruments $millon Total $millon At 1 January 2021 –(3)124117238 Total gains recognised in income statement – net trading income –(2)(12)(8)(22) Issues 224921,5081512,173 Settlements –(122)(882)(177)(1,181) Transfers out 1 ––(49)(6)(55) Transfers in 2 ––9219111 At 31 December 202122365781961,264 Total unrealised (gains)/losses recognised in the income statement, withn net trading income, relating to change in fair value of liablites held at 31 December 2021 ––––– 2020 Deposits bybanks $millon Customer accounts $millon Debt securites inissue $millon Derivatve financal instruments $millon Total $millon At 1 January 2020–4035845443 Total (gains)/losses recognised in income statement – net trading income–(1)(11)12– Issues–11505197713 Settlements–(61)(505)(104)(670) Transfers out 1 ––(223)(53)(276) Transfers in 2 –8–2028 At 31 December 2020–(3)124117238 Total unrealised losses recognised in the income statement, withn net trading income, relating to change in fair value of liablites held at 31 December 2020–1–12 1Transfers out during the year primarly relates to debt securites in issue and derivatve financal instruments where the valuation parameters became observable during the year and were transferred to Level 2 financal liablites 2Transfers in during the year primarly relates to debt securites in issue and derivatve financal instruments where the valuation parameters became unobservable during the year ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 239 12. Financal instruments continued Company 2021 Deposits bybanks $millon Customer accounts $millon Debt securites inissue $millon Derivatve financal instruments $millon Total $millon At 1 January 2021 –(3)12490211 Total gains recognised in income statement – net trading income – (1) (8)(7)(16) Issues 223091,1351471,613 Settlements – (13) (680)(138)(831) Transfers out 1 ––(49)(5)(54) Transfers in 2 ––9218110 At 31 December 2021222926141051,033 Total unrealised (gains)/losses recognised in the income statement, withn net trading income, relating to change in fair value of liablites held at 31 December 2021 ––––– 2020 Deposits bybanks $millon Customer accounts $millon Debt securites inissue $millon Derivatve financal instruments $millon Total $millon At 1 January 2020––35846404 Total (gains)/losses recognised in income statement – net trading income––(11)8(3) Issues–(3)426161584 Settlements––(427)(92)(519) Transfers out 1 ––(223)(53)(276) Transfers in 2 ––12021 At 31 December 2020–(3)12490211 Total unrealised (gains)/losses recognised in the income statement, withn net trading income, relating to change in fair value of liablites held at 31 December 2020––––– 1Transfers out during the year primarly relates to debt securites in issue and derivatve financal instruments where the valuation parameters became observable during the year and were transferred to Level 2 financal liablites 2Transfers in during the year primarly relates to debt securites in issue and derivatve financal instruments where the valuation parameters become unobservable during the year Sensitvites in respect of the fair values of Level 3 assets and liablites Sensitvity analysis is performed on products with signficant unobservable inputs. The Group applies a 10 per cent increase or decrease on the values of these unobservable inputs, to generate a range of reasonably possible alternative valuations. The percentage shift is determined by statistcal analysis performed on a set of reference prices based on the compositon of the Group’s Level 3 inventory as the measurement date. Favourable and unfavourable changes (which show the balance adjusted for input change) are determined on the basis of changes in the value of the instrument as a result of varying the levels of the unobservable parameters. The Level 3 sensitvity analysis assumes a one-way market move and does not consider offsets for hedges. Notes to the financal statements continued ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 240 12. Financal instruments continued Group Held at fair value through profit or loss Fair value through other comprehensive income Net exposure $millon Favourable changes $millon Unfavourable changes $millon Net exposure $millon Favourable changes $millon Unfavourable changes $millon Financal instruments held at fair value Loans and advances 419435399––– Reverse Repurchase agreements and other simlar securedlending 1,5551,5681,538––– Asset-backed securites –––––– Debt securites, alternative tier one and other eligble bills 312325299404138 Equity shares 9810788392430351 Derivatve financal instruments (29)(13)(45)––– Customer accounts (365)(358)(372)––– Deposits by banks (22)(17)(26)––– Debt securites in issue (781)(723)(838)––– At 31 December 20211,1871,3241,043432471389 Financal instruments held at fair value Loans and advances664689618––– Reverse Repurchase agreements and other simlar securedlending1,0641,0891,040––– Asset-backed securites636859––– Debt securites, alternative tier one and other eligble bills132140123404039 Equity shares124137112255280231 Derivatve financal instruments(108)(97)(120)––– Customer accounts351––– Deposits by banks–––––– Debt securites in issue(124)(118)(131)––– At 31 December 2020 1,8181,9131,702295320270 The reasonably possible alternatives could have increased or decreased the fair values of financal instruments held at fairvalue through profit or loss and those classifed as fair value through other comprehensive income by the amounts disclosed below. Financal instrumentsFair value changes 2021 $millon 2020 $millon Held at fair value through profit or lossPossible increase 137 95 Possible decrease (144) (116) Fair value through other comprehensive incomePossible increase 39 25 Possible decrease (43) (25) ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 241 12. Financal instruments continued Company Held at fair value through profit or loss Fair value through other comprehensive income Net exposure $millon Favourable changes $millon Unfavourable changes $millon Net exposure $millon Favourable changes $millon Unfavourable changes $millon Financal instruments held at fair value Loans and advances 919486––– Reverse Repurchase agreements and other simlar securedlending 1,5551,5681,539––– Asset-backed securites –––––– Debt securites, alternative tier one and other eligble bills 203211196286312260 Equity shares –––208227189 Derivatve financal instruments (36)(15)(57)––– Customer accounts (292)(290)(294)––– Deposits by banks (22)(17)(26)––– Debt securites in issue (614)(556)(672)––– At 31 December 2021885995772494539449 Financal instruments held at fair value Loans and advances475500437––– Reverse Repurchase agreements and other simlar securedlending1,0641,0891,040––– Asset-backed securites636859––– Debt securites, alternative tier one and other eligble bills727469282828 Equity shares–––172188156 Derivatve financal instruments(79)(67)(91)––– Customer accounts351––– Deposits by banks–––––– Debt securites in issue(124)(118)(131)––– At 31 December 2020 1,4741,5511,384200216184 The reasonably possible alternatives could have increased or decreased the fair values of financal instruments held at fairvalue through profit or loss and those classifed as fair value through other comprehensive income by the amounts disclosed below. Financal instrumentsFair value changes 2021 $millon 2020 $millon Held at fair value through profit or lossPossible increase 110 77 Possible decrease (113) (90) Fair value through other comprehensive incomePossible increase 45 16 Possible decrease (45) (16) Notes to the financal statements continued ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 242 Notes to the financal statements continued 13. Derivatve financal instruments Accounting policy Derivatves are financal instruments that derive their value in response to changes in interest rates, financal instrument prices, commodity prices, foreign exchange rates, credit risk and indces. Derivatves are categorised as trading unless they are designated as hedging instruments. Derivatves are intially recognised and subsequently measured at fair value, with revaluation gains recognised in profit or loss (except where cash flow or net investment hedging has been achieved, in which case the effective portion of changes in fair value isrecognised withn other comprehensiveincome). Fair values may be obtained from quoted market prices in active markets, recent market transactions, and valuation techniques, includng discounted cash flow models and option pricng models, as appropriate. Where the intially recognised fair value of a derivatve contract is based on a valuation model that uses inputs which are not observable in the market, it follows the same intial recogniton accounting policy as for other financal assets and liablites. All derivatves are carried as assets when fair value is positve and as liablites when fair value is negative. Hedge accounting Under certain conditons, the Group may designate a recognised asset or liablity, a firm commitment, highly probable forecast transactionor net investment ofa foreignoperation intoa formal hedge accounting relationshp with a derivatve that has been entered to manage interest rate and/or foreign exchange risks present in the hedged item. The Group applies the ‘Phase 1’ hedge accounting requirements of IAS 39 Financal Instruments: Recogniton and Measurement, and the ‘Phase 2’ amendments to IFRS in respect of interest rate benchmark reform. There are three categories of hedge relationshps: • Fair value hedge: to manage the fair value of interest rate and/or foreign currency risks of recognised assets or liablites or firm commitments • Cash flow hedge: to manage interest rate or foreign exchange risk of highly probable future cash flows attributable to a recognised asset or liablity, or a forecasted transaction • Net investment hedge: to manage the structural foreign exchange risk of an investment in a foreign operation The Group formally documents at the incepton of the transaction the relationshp between hedging instruments and hedged items, as well as its risk management objectve and strategy for undertaking hedge transactions. This is described inmore detail in the categories of hedges below. The Group assesses, both at hedge incepton and on a quarterly basis, whether the derivatves designated in hedge relationshps are highly effective in offsetting changes in fair values or cash flows of hedged items. Hedges are considered tobe highly effective if all the following critera are met: • At incepton of the hedge and throughout its life, the hedge is prospectively expected to be highly effective in achievng offsetting changes in fair value or cash flows attributable to the hedged risk • Actual results of the hedge are withn a range of 80–125%. This is tested using regression analysis • The regression co-efficent (R squared), which measures the correlation between the variables in the regression, isatleast80% • In the case of the hedge of a forecast transaction, the transaction must have a high probabilty of occurring and must present an exposure to variatons in cash flows that are expected to affect reported profit or loss. The Group assumes that any interest rate benchmarks on which hedged item cash flows are based are not altered by IBOR reform The Group discontnues hedge accounting in any of the following circumstances: • The hedging instrument is not, or has ceased to be, highly effective as a hedge • The hedging instrument has expired, is sold, terminated or exercised • The hedged item matures, is sold or repaid • The forecast transaction is no longerdeemed highly probable • The Group elects to discontnue hedge accountingvoluntarily For interest rate benchmarks deemed in scope of IBOR reform, if the actual result of a hedge is outside the 80-125% range, but the hedge passes the prospective assessment, then the Groupwill not de-designate thehedge relationshp. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 243 Notes to the financal statements continued 13. Derivatvefinancalinstruments continued Under the Phase 2 Interest Rate Benchmark Reform amendments to IFRS 9 and IAS 39, the Group may change hedge designatons and corresponding documentation without thehedge being discontnued wherethere isa changein interest rate benchmark of the hedged item, hedging instrument or designated hedged risk. Permitted changes include the right to: • Redefine the descripton of the hedged item and/or hedging instrument • Redefine the hedged risk to reference an alternative risk-free rate • Change the method for assessing hedge effectiveness due to modifcations required by IBOR reform • Elect, on a hedge-by-hedge basis, to reset the cumulative fair value changes in the assessment of retrospective hedge effectiveness to zero A hedge designaton may be modifed more than once, each time a relationshp is affected as a direct result of IBOR reform. Fair value hedge Changes in the fair value of derivatves that are designated and qualify as fair value hedging instruments are recorded in net trading income, together with any changes in the fair value of the hedged asset or liablity that are attributable to the hedged risk. If the hedge no longer meets the critera for hedge accounting, the adjustment to the carrying amount of a hedged item for which the effective interest method is used is amortised to the income statement over the remainng term tomaturity of the hedged item. If the hedged item is sold or repaid, the unamortised fair value adjustment is recognised immedately in the income statement. For financal assets classifed as fair value through other comprehensive income, the hedge accounting adjustment attributable to the hedged risk is included in net trading income to match the hedging derivatve. Cash flow hedge The effective portion of changes in the fair value of derivatves that are designated and qualify as cash flow hedging instruments are intially recognised in other comprehensive income, accumulating in the cash flow hedge reserve withn equity. These amounts are subsequently recycled to the income statement in the periods when the hedged item affects profit or loss. Both the derivatve fair value movement and any recycled amount are recorded in the ‘Cashflow hedges’ line item in other comprehensive income. The Group assesses hedge effectiveness using the hypothetical derivatve method, which creates a derivatve instrument to serve as a proxy for the hedged transaction. The terms of the hypothetical derivatve match the critcal terms of the hedged item and it has a fair value of zero at incepton. The hypothetical derivatve and the actual derivatve are regressed to establish the statistcal signficance of the hedge relationshp. Any ineffectve portion of the gain or loss on the hedging instrument is recognised in the net trading income immedately. If a cash flow hedge is discontnued, the amount accumulated in the cash flow hedge reserve is released to the income statement asand when thehedged item affects the income statement. For interest rate benchmarks deemed in scope of IBOR reform, the Group will retain the cumulative gain or loss in the cash flow hedge reserve for designated cash flow hedges even though there is uncertainty arisng from these reforms with respect to the timng and amount of the cash flows of the hedged items. Should the Group consider the hedged future cash flows are no longer expected to occur due to reasons other than IBOR reform, the cumulative gain or loss will be immedately reclassifed to profit or loss. Net investment hedge Hedges of net investments are accounted for in a simlar manner to cash flow hedges, with gains and losses arisng on the effective portion of the hedges recorded in the line ‘Exchange differences on translation of foreign operations’ in other comprehensive income, accumulating in the translation reserve withn equity. These amounts remain in equity until the net investment is disposed of. The ineffectve portion of the hedges is recognised in the net trading income immedately. The tablesbelow analyse the notionalprincpal amounts and the positve and negativefair values ofderivatvefinancal instruments. Notional princpal amounts are the amounts of princpal underlying the contract at the reporting date. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 244 Notes to the financal statements continued 13. Derivatvefinancalinstruments continued Derivatves Group Derivatves 2021 2020 Notional princpal amounts $millon Assets $millon Liablites $millon Notional princpal amounts $millon Assets $millon Liablites $millon Foreign exchange derivatve contracts: Forward foreign exchange contracts 3,353,47132,96632,597 3,009,52334,81335,905 Currency swaps and options 1,333,09510,33810,695 1,422,44017,11817,649 4,686,56643,30443,292 4,431,96351,93153,554 Interest rate derivatve contracts: Swaps 3,294,07830,29429,849 3,226,96854,94352,988 Forward rate agreements and options 125,2001,3131,852 609,0741,5901,858 Exchange traded futures and options 294,712156132 260,834233184 3,713,99031,76331,833 4,096,87656,76655,030 Credit derivatve contracts 182,1612,2442,404 140,1891,6862,014 Equity and stock index options 7,12493153 4,36056156 Commodity derivatve contracts 109,5431,7241,787 68,8021,298826 Gross total derivatves 8,699,38479,12879,469 8,742,190111,737111,580 Offset –(25,883)(25,883) –(42,512)(42,512) Total derivatves8,699,38453,24553,586 8,742,19069,22569,068 Company Derivatves 2021 2020 Notional princpal amounts $millon Assets $millon Liablites $millon Notional princpal amounts $millon Assets $millon Liablites $millon Foreign exchange derivatve contracts: Forward foreign exchange contracts 3,887,22030,60430,387 3,064,43735,99136,423 Currency swaps and options 1,362,07810,96711,424 1,386,48016,39317,041 5,249,29841,57141,811 4,450,91752,38453,464 Interest rate derivatve contracts: Swaps 3,597,41331,99331,543 3,204,27954,35552,719 Forward rate agreements and options 127,7091,5001,924 606,7941,5671,837 Exchange traded futures and options 294,712156132 260,834233184 4,019,83433,64933,599 4,071,90756,15554,740 Credit derivatve contracts 185,1892,2462,369 138,3391,6741,861 Equity and stock index options 5,3425071 3,52336103 Commodity derivatve contracts 113,8551,8451,868 66,8541,173767 Gross total derivatves 9,573,51879,36179,718 8,731,540111,422110,935 Offset –(25,883)(25,883) –(42,512)(42,512) Total derivatves9,573,51853,47853,835 8,731,54068,91068,423 ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 245 Notes to the financal statements continued 13. Derivatvefinancalinstruments continued The Group limts exposure to credit losses in the event of default by entering into master netting agreements with certain market counterparties. As required by IAS 32, exposures are only presented net in these accounts where they are subject to legal right of offset and intended to be settled net in the ordinary course of business. The Group applies balance sheet offsetting only in the instance where we are able to demonstrate legal enforceabilty of the right to offset (e.g. via legal opinon) and the abilty and intenton to settle on a net basis (e.g. via operational practice). The Group has in prior years applied fair value hedge accounting to a debt instrument which changed its interest rate from afixed to a floating rate. As a result of this the fair value adjustment to the interest rate component of the hedged item was calculated in error. This resulted in an understatement of P&L and overstatement of the liablity of $81m up to the end of 2020. Thishave been corrected in retained earnings. The Group may enter into economic hedges that do not qualify for IAS 39 hedge accounting treatment, includng derivatve such as interest rate swaps, interest rate futures and cross currency swaps to manage interest rate and currency risks of the Group. These derivatves are measured at fair value, with fair value changes recognised in net trading income: refer to Market risk (page 108). The Derivatves and Hedging sections of the Risk review and Capital review (page 118 - 119) explain the Group’s risk management of derivatve contracts and applicaton of hedging. Derivatves held forhedging The Group enters into derivatve contracts for the purpose of hedging interest rate, currency and structural foreign exchange risks inherent in assets, liablites and forecast transactions. The table below summarises the notional princpal amounts and carrying values of derivatves designated in hedge accounting relationshps at the reporting date. Group 2021 2020 Notional princpal amounts $millon Assets $millon Liablites $millon Notional princpal amounts $millon Assets $millon Liablites $millon Derivatves designated as fair value hedges: Interest rate swaps 53,621623181 43,822727411 Currency swaps 202612 15189 53,823629193 43,973735420 Derivatves designated as cash flow hedges: Interest rate swaps 2,651510 1,4411221 Forward foreign exchange contracts 722– 16421– Currency swaps 226–12 278–12 2,949722 1,8833333 Derivatves designated as net investment hedges: Forward foreign exchange contracts 2,611–27 685–31 Total derivatves held for hedging59,383636242 46,541768484 ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 246 Notes to the financal statements continued 13. Derivatvefinancalinstruments continued Company 2021 2020 Notional princpal amounts $millon Assets $millon Liablites $millon Notional princpal amounts $millon Assets $millon Liablites $millon Derivatves designated as fair value hedges: Interest rate swaps 52,444618174 41,833727350 Currency swaps 202612 15189 52,646624186 41,984735359 Derivatves designated as cash flow hedges: Interest rate swaps 2,651510 541–21 Forward foreign exchange contracts 722– 16421– Currency swaps 69–2 278–12 2,792712 9832133 Derivatves designated as net investment hedges: Forward foreign exchange contracts 1,871–16 685–31 Total derivatves held for hedging 57,309631214 43,652756423 Fair value hedges The Group issues various long-term fixed rate debt issuances that are measured at amortised cost, includng some denominated in foreign currency, such as unsecured senior and subordinated debt (see Notes 22 and 27). The Group also holds various fixed rate debt securites such as government and corporate bonds, includng some denominated in foreign currency (see Note 13). These assets and liablites held are exposed to changes in fair value due to movements in market interestand foreign currency rates. The Group uses interest rate swaps to exchange fixed rates for floating rates on funding to match floating rates received on assets, or exchange fixed rates on assets to match floating rates paid on funding. The Group further uses cross currency swaps to match the currency of the issued debt or held asset with that of the entity’s functional currency. Hedge ineffectveness from fair value hedges is driven by cross currency basis risk. The amortisaton of fair value hedge adjustments for hedged items no longer designated is recognised in net trading income. In future periods hedge relationshps linked to an interest rate benchmark deemed in scope of benchmark reform may experience ineffectveness due to market particpants’ expectations for when the change from the existng IBOR benchmark to an alternative risk-free rate will occur, since the transiton may occur at different times for the hedged item and hedging instrument. At 31 December 2021 the Group held the following interest rate and cross currency swaps as hedging instruments in fair value hedges of interest andcurrency risk. Hedging instruments and ineffectveness Group Interest rate 1 2021 Notional $millon Carrying amountChange in fair value used to calculate hedge ineffectveness $millon Ineffectiveness recognised in profit or loss $millon Asset $millon Liablity $millon Interest rate swaps – issued notes 18,694322106(384)(3) Interest rate swaps – loans and advances 855437– Interest rate swaps – debt securites and other eligble bills 34,07229772547(1) Interest and currency risk 1 Cross currency swaps – subordinated notes issued 48–11(2)1 Cross currency swaps – debt securites and other eligble bills 154611– Total at 31 December 202153,823629193169(3) 1Interest rate swaps are designated in hedges of the fair value of interest rate risk attributable to the hedged item. Cross currency swaps are used to hedge both interest rate and currency risks. All the hedging instruments are derivatves, with changes in fair value includng hedge ineffectveness recorded withn net trading income ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 247 Notes to the financal statements continued 13. Derivatvefinancalinstruments continued Interest rate 1 2020 Notional $millon Carrying amountChange in fair value used to calculate hedge ineffectveness $millon Ineffectiveness recognised in profit or loss $millon Asset $millon Liablity $millon Interest rate swaps – issued notes15,256707142321 Interest rate swaps – loans and advances613–12(6)– Interest rate swaps – debt securites and other eligble bills27,95420385(715)2 Interest and currency risk 1 Cross currency swaps – subordinated notes issued48–952 Cross currency swaps – debt securites and other eligble bills1028–(5)(1) Total at 31 December 2020 43,973735420(489)4 1Interest rate swaps are designated in hedges of the fair value of interest rate risk attributable to the hedged item. Cross currency swaps are used to hedge both interest rate and currency risks. All the hedging instruments are derivatves, with changes in fair value includng hedge ineffectveness recorded withn net trading income Hedged items in fair value hedges 2021 Carrying amount Accumulated amount of fair value hedge adjustments included in the carrying amount Change in the value used for calculating hedge ineffectveness $millon Cumulative balance of fair value adjustments from de- designated hedge relationshps¹ $millon Asset $millon Liablity $millon Asset $millon Liablity $millon Issued notes –18,850–13438453 Debt securites and other eligble bills 34,062–(286)–(549)(7) Loans and advances to customers 853–(2)–(8)(1) Total at 31 December 202134,91518,850(288)134(173)45 2020 Carrying amount Accumulated amount of fair value hedge adjustments included in the carrying amount Change in fair value used for calculating hedge ineffectveness $millon Cumulative balance of fair value adjustments from de- designated hedge relationshps¹ $millon Asset $millon Liablity $millon Asset $millon Liablity $millon Issued notes–15,051–585(237)3 Debt securites and other eligble bills28,853–299–722(74) Loans and advances to customers623–10–6(1) Total at 31 December 2020 29,47615,051309585491(72) 1This represents a credit/(debit) to the balance sheet value Income statement impact of fair value hedges 2021 $millon Income/ (expense) 2020 $millon Income/ (expense) Change in fair value of hedging instruments 169 (489) Change in fair value of hedged risks attributable to hedged items (173) 491 Net ineffectveness (loss)/gain to net trading income (4) 2 Amortisaton gain/(loss) to net interest income 55 (55) ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 248 Notes to the financal statements continued 13. Derivatvefinancalinstruments continued Hedging instruments and ineffectveness Company Interest rate 1 2021 Notional $millon Carrying amountChange in fair value used to calculate hedge ineffectveness $millon Ineffectiveness recognised in profit or loss $millon Asset $millon Liablity $millon Interest rate swaps – issued notes 18,694322105(384)(4) Interest rate swaps – loans and advances 826336– Interest rate swaps – debt securites and other eligble bills 32,92429366534(1) Interest and currency risk¹ Cross currency swaps – subordinated notes issued 48–11(2)1 Cross currency swaps – debt securites and other eligble bills 154611– Total at 31 December 202152,646624186155(4) 1Interest rate swaps are designated in hedges of the fair value of interest rate risk attributable to the hedged item. Cross currency swaps are used to hedge both interest rate and currency risks. All the hedging instruments are derivatves, with changes in fair value includng hedge ineffectveness recorded withn net trading income Interest rate 1 2020 Notional $millon Carrying Amount Change in fair value used to calculate hedge ineffectveness $millon Asset $millon Liablity $millon Ineffectiveness recognised in profit or loss $millon Interest rate swaps – issued notes15,257707142321 Interest rate swaps – loans and advances463–12(6)– Interest rate swaps – debt securites and other eligble bills26,11420324(675)2 Interest and currency risk¹ Cross currency swaps – subordinated notes issued48–95– Cross currency swaps – debt securites and other eligble bills1028–(5)(1) Total at 31 December 202041,984735359(449)2 1Interest rate swaps are designated in hedges of the fair value of interest rate risk attributable to the hedged item. Cross currency swaps are used to hedge both interest rate and currency risks. All the hedging instruments are derivatves, with changes in fair value includng hedge ineffectveness recorded withn net trading income Hedged Items in fair value hedges 2021 Carrying amount Accumulated amount of fair value hedge adjustments included in the carrying amountChange in the value used for calculating hedge ineffectveness $millon Cumulative balance of fair value adjustments from de- designated hedge relationshps¹ $millon Asset $millon Liablity $millon Asset $millon Liablity $millon Issued notes –18,850–13438453 Debt securites and other eligble bills 32,907–(287)–(535)– Loans and advances to customers 825–(1)–(8)(1) Total at 31 December 202133,73218,850(288)134(159)52 ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 249 Notes to the financal statements continued 13. Derivatvefinancalinstruments continued 2020 Carrying amount Accumulated amount of fair value hedge adjustments included in the carrying amountChange in fair value used for calculating hedge ineffectveness $millon Cumulative balance of fair value adjustments from de- designated hedge relationshps¹ $millon Asset $millon Liablity $millon Asset $millon Liablity $millon Issued notes–15,051–585(237)3 Debt securites and other eligble bills26,957–246–681(65) Loans and advances to customers473–10–6(1) Total at 31 December 202027,43015,051256585450(63) 1This represents a credit/(debit) to the balance sheet value Income statement impact of fair value hedges 2021 $millon Income/ (expense) 2020 $millon Income/ (expense) Change in fair value of hedging instruments 155 (449) Change in fair value of hedged risks attributable to hedged items (159) 450 Net ineffectveness (loss)/gain to net trading income (4) 1 Amortisaton gain/(loss) to net interest income 49 (49) Cash flow hedges The Group has exposure to market movements in future interest cash flows on portfolios of customer accounts, debt securites and loans and advances to customers. The amounts and timng of future cash flows, representing both princpal and interest flows, are projected on the basis of contractual terms and other relevant factors, includng estimates of prepayments and defaults. The hedging strategy of the Group involves using interest rate swaps to manage the variablity in future cash flows on assets and liablites thathave floatingrates ofinterestby exchanging the floating ratesfor fixed rates. It also uses foreign exchange contracts and currency swaps to manage the variablity in future exchange rates on its assets and liablites and costs in foreign currencies. This is done on both a micro basis whereby a single interest rate or cross currency swap is designated in a separate relationshp with a single hedged item (such as a floating rate loan to a customer), and on a portfolio basis whereby each hedging instrument is designated against a group of hedged items that share the same risk (such as a group of customer accounts). The hedged risk is determined as the variablity of future cash flows arisng from changes in the designated benchmark interestrate. Hedging instruments and ineffectveness Group 2021 Notional $millon Carrying amount Change in fair value used to calculate hedge ineffectveness $millon Gain/(loss) recognised in OCI $millon Ineffectiveness gain/(loss) recognised in net trading income $millon Amount reclassifed from reserves to income $millon Asset $millon Liablity $millon Interest rate risk Interest rate swaps 2,6515101414–– Currency risk Forward foreign exchange contract 722–22–– Cross currency swaps 226–12(3)(3)–– Total as at 31 December 20212,9497221313–– ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 250 Notes to the financal statements continued 13. Derivatvefinancalinstruments continued 2020 Notional $millon Carrying amount Change in fair value used to calculate hedge ineffectveness $millon Gain/(loss) recognised in OCI $millon Ineffectiveness gain/(loss) recognised in net trading income $millon Amount reclassifed from reserves to income $millon Asset $millon Liablity $millon Interest rate risk Interest rate swaps1,441122199–– Currency risk Forward foreign exchange contract16421–1414–– Cross currency swaps278–123939–– Total as at 31 December 20201,88333336262–– Hedged items in cash flow hedges 2021 Change in fair value used for calculating hedge ineffectveness $millon Cash flow hedge reserve $millon Cumulative balance in the cash flow hedge reserve from de-designated hedge relationshps $millon Customer accounts (13)(6)– Debt securites and other eligble bills 2(2)– Loans and advances to customers 1(1)– Forecast cashflow currency hedge ––– Intragroup borrowing currency hedge ––– Total at 31 December 2021(10)(9)– 2020 Change in fair value used for calculating hedge ineffectveness $millon Cash flow hedge reserve $millon Cumulative balance in the cash flow hedge reserve from de-designated hedge relationshps $millon Customer accounts19(19)– Debt securites and other eligble bills1–– Loans and advances to customers(22)92 Forecast cashflow currency hedge(14)21– Intragroup lending currency hedge(46)1– Total at 31 December 2020(62)122 Impact of cash flow hedges on profit and loss and other comprehensive income 2021 Income/ (expense) $millon 2020 Income/ (expense) $millon Cash flow hedge reserve balance as at 1 January 5 (11) Losses recognised in other comprehensive income on effective portion of changes in fair value of hedging instruments (35) (9) Gains reclassifed to income statement when hedged item affected net profit 14 9 Taxation credit relating to cash flow hedges 4 16 Cash flow hedge reserve balance as at 31 December (12) 5 ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 251 Notes to the financal statements continued 13. Derivatvefinancalinstruments continued Hedging instruments and ineffectveness Company 2021 Notional $millon Carrying amount Change in fair value used to calculate hedge ineffectveness $millon Gain/(loss) recognised in OCI $millon Ineffectiveness gain/(loss) recognised in net trading income $millon Amount reclassifed from reserves to income $millon Asset $millon Liablity $millon Interest rate risk Interest rate swaps 2,6515101414–– Currency risk Forward foreign exchange contract 722–22–– Cross currency swaps 69–2–––– Total as at 31 December 20212,7927121616–– 2020 Notional $millon Carrying amount Change in fair value used to calculate hedge ineffectveness $millon Gain/(loss) recognised in OCI $millon Ineffectiveness gain/(loss) recognised in net trading income $millon Amount reclassifed from reserves to income $millon Asset $millon Liablity $millon Interest rate risk Interest rate swaps541–21(12)(12)–– Currency risk Forward foreign exchange contract16421–1414–– Cross currency swaps278–124040–– Total as at 31 December 202098321334242–– Hedged items in cash flow hedges 2021 Change in fair value used for calculating hedge ineffectveness $millon Cash flow hedge reserve $millon Cumulative balance in the cash flow hedge reserve from de-designated hedge relationshps $millon Customer accounts (13)(6)– Debt securites and other eligble bills (2)2– Loans and advances to customers 1(1)– Forecast cashflow currency hedge ––– Intragroup lending currency hedge ––– Total at 31 December 2021(14)(5)– ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 252 Notes to the financal statements continued 13. Derivatvefinancalinstruments continued 2020 Change in fair value used for calculating hedge ineffectveness $millon Cash flow hedge reserve $millon Cumulative balance in the cash flow hedge reserve from de-designated hedge relationshps $millon Customer accounts19(19)– Debt securites and other eligble bills––– Loans and advances to customers––– Forecast cashflow currency hedge(14)21– Intragroup lending currency hedge(46)1– Total at 31 December 2020 (41)3– Impact of cash flow hedges on profit and loss and other comprehensive income 2021 Income/ (expense) $millon 2020 Income/ (expense) $millon Cash flow hedge reserve balance as at 1 January (32) (27) (Loss) recognised in other comprehensive income on effective portion of changes in fair value of hedging instruments (8) (23) Gains reclassifed to income statement when hedged item affected net profit – 1 Taxation credit relating to cash flow hedges 1 17 Cash flow hedge reserve balance as at 31 December(39) (32) Net investment hedges Foreign currency exposures arise from investments in subsidaries that have a different functional currency from that of the presentation currency of the Group. This risk arises from the fluctuation in spot exchange rates between the functional currency of the subsidaries and the Group’s presentation currency, which causes the value of the investment to vary. The Group's policy is to hedge these exposures only when not doing so would be expected to have a signficant impact on the regulatory ratios of the Group and its banking subsidaries. The Group uses foreign exchange forwards to manage the effect of exchange rates on its net investments in foreign subsidaries. Hedging instruments and ineffectveness Group 2021 Notional $millon Carrying amount Change in fair value used to calculate hedge ineffectveness $millon Changes in the value of the hedging instrument recognised in OCI $millon Ineffectiveness recognised in profit or loss $millon Amount reclassifed from reserves to income $millon Asset $millon Liablity $millon Derivatve forward currency contracts¹ 2,611–27(31)(31)–– 2020 Notional $millon Carrying amount Change in fair value used to calculate hedge ineffectveness $millon Changes in the value of the hedging instrument recognised in OCI $millon Ineffectiveness recognised in profit or loss $millon Amount reclassifed from reserves to income $millon Asset $millon Liablity $millon Derivatve forward currency contracts¹685–31(11)(11)–– 1These derivatve forward currency contracts have a maturity of less than one year. The hedges are rolled on a periodc basis ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 253 Notes to the financal statements continued 13. Derivatvefinancalinstruments continued Hedged items in net investment hedges 2021 Change in the value used for calculating hedge ineffectveness $millon Translation reserve $millon Balances remainng in the translation reserve from hedging relationshps for which hedge accounting is no longer applied $millon Net investments 31(27)– 2020 Change in the value used for calculating hedge ineffectveness $millon Translation reserve $millon Balances remainng in the translation reserve from hedging relationshps for which hedge accounting is no longer applied $millon Net investments14(14)– Impact of net investment hedges on other comprehensive income 2021 Income/ (expense) $millon 2020 Income/ (expense) $millon Losses recognised in other comprehensive income (19) (11) Hedging instruments and ineffectveness Company 2021 Notional $millon Carrying amount Change in fair value used to calculate hedge ineffectveness $millon Changes in the value of the hedging instrument recognised in OCI $millon Ineffectiveness recognised in profit or loss $millon Amount reclassifed from reserves to income $millon Asset $millon Liablity $millon Derivatve forward currency contracts¹ 1,871–16(19)(19)–– 2020 Notional $millon Carrying amount Change in fair value used to calculate hedge ineffectveness $millon Changes in the value of the hedging instrument recognised in OCI $millon Ineffectiveness recognised in profit or loss $millon Amount reclassifed from reserves to income $millon Asset $millon Liablity $millon Derivatve forward currency contracts¹685–(31)(11)(11)–– 1These derivatve forward currency contracts have a maturity of less than one year. The hedges are rolled on a periodc basis ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 254 Notes to the financal statements continued 13. Derivatvefinancalinstruments continued Hedged items in net investment hedges 2021 Change in the value used for calculating hedge ineffectveness $millon Translation reserve $millon Balances remainng in the translation reserve from hedging relationshps for which hedge accounting is no longer applied $millon Net investments 19(16)– 2020 Change in the value used for calculating hedge ineffectveness $millon Translation reserve $millon Balances remainng in the translation reserve from hedging relationshps for which hedge accounting is no longer applied $millon Net investments11(31)– Impact of net investment hedges on other comprehensive income 2021 Income/ (expense) $millon 2020 Income/ (expense) $millon Losses recognised in other comprehensive income (19) (11) ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 255 Notes to the financal statements continued 13. Derivatvefinancalinstruments continued Maturity of hedging instruments Group Fair value hedges 2021 Less than one month More than one month and less than one year One to five years More than five years Interest rate swap Notional$millon 2,4155,46533,92111,820 Average fixed interest rateUSD 2.00%0.61%0.86%1.41% EUR –0.12%(0.09)%(0.11)% Cross currency swap Notional$millon 48–154– Average fixed interest rate (to USD)GBP 4.35%–1.33%– HKD ––0.22%– Average exchange rateGBP/USD 0.57–0.66– HKD/USD ––7.77– Cash flow hedges Interest rate swap Notional$millon –1,666781204 Average fixed interest rateUSD –0.08%2.26%1.26% Cross currency swap Notional$millon –69157– Average fixed interest rateINO –3.85%9.00%– Average exchange rateINO/USD –68.8572.66– Forward foreign exchange contracts Notional$millon ––72– Average exchange rateCLO/USD ––868.10– Net investment hedges Foreign exchange derivatves Notional$millon 6731,938–– Average exchange rateINR¹/USD 76.17––– SGD/USD –1.37–– AED/USD –3.67–– 1Offshore currency ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 256 Notes to the financal statements continued 13. Derivatvefinancalinstruments continued Fair value hedges 2020 Less than one month More than one month and less than one year One to five years More than five years Interest rate swap Notional$millon1,1549,27326,5496,847 Average fixed interest rateUSD1.41%1.15%1.29%1.82% EUR–(0.52)%(0.18)%(0.08)% Cross currency swap Notional$millon–5596– Average fixed interest rate (to USD)GBP–3.75%5.26%– Average exchange rateGBP/USD–0.660.61– Cash flow hedges Interest rate swap Notional$millon–551890– Average fixed interest rateUSD–0.96%1.38%– Cross currency swap Notional$millon–20771– Average fixed interest rateINR¹–4.00%3.85%– Average exchange rateKRW¹/USD–75.5668.85– Forward foreign exchange contracts Notional$millon27137–– Average exchange rateGBP/USD0.840.84–– Net investment hedges Foreign exchange derivatves Notional$millon685––– Average exchange rateINR¹/USD76.67––– 1Offshore currency ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 257 Notes to the financal statements continued 13. Derivatvefinancalinstruments continued Maturity of hedging instruments Company Fair value hedges 2021 Less than one month More than one month and less than one year One to five years More than five years Interest rate swap Notional$millon 2,4155,34032,86911,820 Average fixed interest rateUSD 2.00%0.63%0.85%1.41% EUR –0.12%(0.09)%(0.11)% Cross currency swap Notional$millon 48–154– Average fixed interest rate (to USD)GBP 4.35%–1.33%– HKD ––0.22%– Average exchange rateGBP/USD 0.57–0.66– HKD/USD ––7.77– Cash flow hedges Interest rate swap Notional$millon –1,666781204 Average fixed interest rateUSD –0.08%2.26%1.26% Cross currency swap Notional$millon –69–– Average fixed interest rateINO –3.85%–– Average exchange rate INO/USD –68.85–– Forward foreign exchange contracts Notional$millon ––72– Average exchange rateCLO/USD ––868.10– Net investment hedges Foreign exchange derivatves Notional$millon 6731,198–– Average exchange rateINR¹/USD 76.17––– AED/USD –3.67–– 1Offshore currency ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 258 Notes to the financal statements continued 13. Derivatvefinancalinstruments continued Fair value hedges 2020 Less than one month More than one month and less than one year One to five years More than five years Interest rate swap Notional$millon1,1508,75025,1096,824 Average fixed interest rateUSD1.41%1.14%1.25%1.82% EUR––(0.18)%(0.08)% Cross currency swap Notional$millon–5596– Average fixed interest rate (to USD)GBP–3.75%5.26%– Average exchange rateGBP/USD–0.660.61– Cash flow hedges Interest rate swap Notional$millon–251290– Average fixed interest rateGBP–0.45%–– USD–1.02%2.26%– Cross currency swap Notional$millon–20771– Average fixed interest rateINO–4.00%3.85%– Average exchange rateINO/USD–75.5668.85– Forward foreign exchange contracts Notional$millon27137–– Average exchange rateGBP/USD0.840.84–– Net investment hedges Foreign exchange derivatves Notional$millon685––– Average exchange rateINR¹/USD76.67––– 1Offshore currency ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 259 Notes to the financal statements continued 13. Derivatvefinancalinstruments continued Interest rate benchmark reform The Group applies the Phase 1 ‘Interest Rate Benchmark Reform Amendments to IFRS 9, IAS 39 and IFRS 7’ which allow the Group to assume that the interest rate benchmark on which cash flows for the hedged item and/or hedging instrument are based is are altered as a result of IBOR reform for the following activties: • Prospective hedge assessment • Determinng whether a cash flow or forecast transaction for a cash flow hedge is highly probable. However, the Group otherwise assesses whether the cash flows are considered highly probable • Determinng when cumulative balances in the cash flow hedge reserve from de-designated hedges should be recycled to the incomestatement The Group will not de-designate a hedge relationshp of a benchmark in scope of IBOR reform if the retrospective hedge result is outside the required 80-125% range, but the hedge passes the prospective assessment. Any hedge ineffectveness continues to be recorded in net trading income. For hedges of non-contractually specifed benchmark portions of an interest rate (such as fair value hedges of interest rate risk on fixed rate debt instruments) the Group only assesses whether the designated benchmark is separately identfiable at hedge incepton. The choice of designated benchmark is not revisted for existng hedge relationshps In applying these amendments the Group has made the following key assumptions for the period end, to be reviewed on an ongoing basis: • The interest rate benchmarks applicable to the Group that are in scope of the IFRS amendments are all LIBOR’s, EONIA, Singapore Swap Offer Rate (SGD SOR) and Thai Baht Interest Rate fixng (THB FIX) • EURIBOR is not in scope of the IFRS amendments because its revised methodology incorporates market transaction data, hence the benchmark is expected to continue to exist in future reporting periods • The Group assumes that the uncertainty arisng from USD LIBOR will be present until 30 June 2023, at which time the amendments to IFRS no longer apply As at 31 December 2021, the following notional princpal amounts of derivatve instruments designated in fair value or cash flow hedge accounting relationshps were linked to IBOR reference rates: Group Fair value hedges $millon Cash flow hedges $millon Total $millon Weighted average exposure $millon Interest rate swaps USD LIBOR 32,54375333,2963.5 GBP LIBOR 47–470.1 JPY LIBOR 463–4630.1 33,05375333,8063.4 Cross currency swaps USD LIBOR vs Fixed rate foreign currency 202–2021.9 Total notional of hedging instruments in scope of IFRS amendments as at 31December 202133,25575334,0083.4 ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 260 Notes to the financal statements continued 13. Derivatvefinancalinstruments continued Fair value hedges $millon Cash flow hedges $millon Total $millon Weighted average exposure $millon Interest rate swaps USD LIBOR27,5421,19528,7372.6 GBP LIBOR352894411.7 JPY LIBOR1,707–1,7073.4 SGD SOR483–4831.2 30,0841,28431,3682.6 Cross currency swaps USD LIBOR vs Fixed rate foreign currency151–1511.1 Total notional of hedging instruments in scope of IFRS amendments as at 31December 2020 30,2351,28431,5192.6 Company Fair value hedges $millon Cash flow hedges $millon Total $millon Weighted average exposure $millon Interest rate swaps USD LIBOR 31,52075332,2733.5 GBP LIBOR 47–470.1 JPY LIBOR 463–4630.1 32,03075332,7833.4 Cross currency swaps USD LIBOR vs Fixed rate foreign currency 202–2021.9 Total notional of hedging instruments in scope of IFRS amendments as at 31December 202132,23275332,9853.4 Fair value hedges $millon Cash flow hedges $millon Total $millon Weighted average exposure $millon Interest rate swaps USD LIBOR26,28929526,5842.7 GBP LIBOR352894411.7 JPY LIBOR1,707–1,7073.4 28,34838428,7322.7 Cross currency swaps USD LIBOR vs Fixed rate foreign currency151–1511.8 Total notional of hedging instruments in scope of IFRS amendments as at 31December 2020 28,49938428,8832.7 The Group’s primary exposure is to USD LIBOR due to the extent of fixed rate debt security assets and issued notes denominated in USD that are designated in fair value hedge relationshps. Where fixed rate instruments are in other currencies, cross currency swaps are used to achieve an equivalent floating USD exposure. Exposures in GBP LIBOR and JPY LIBOR are short-dated basis swaps created per the LCH’s methodology for converting derivatves to alternative benchmark rates. Underthis methodology, if an interest rateswap referencing either of these benchmarks would have had a fixng between its conversion date and 31 December 2021, the orignal swap is replaced with a RFR swap of the same maturity and a LIBOR versus RFR basis swap that matures at the end of the last LIBOR fixng period set before 31 December 2021. This replacement is treated as continuaton of the orignal LIBOR swap as the new bookings do not alter or amend the legal rights and obligatons under the orignal derivatve. The Group has applied the Phase 2 amendments to IAS 39 to redefine the descripton of the hedging instrument and hedged risk to reference the alternative benchmark rate in orderto continue these hedge relationshps. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 261 Notes to the financal statements continued 14. Loans and advances to banks and customers Accounting policy Refer to Note 12 Financal instruments for the relevant accounting policy GroupCompany 2021 $millon 2020 $millon 2021 $millon 2020 $millon Loans and advances to banks 30,014 27,679 16,129 15,003 Expected credit loss (15) (13) (12) (6) 29,999 27,666 16,117 14,997 Loans and advances to customers 149,672 146,778 74,574 77,136 Expected credit loss (4,873) (5,917) (3,413) (4,167) 144,799 140,861 71,161 72,969 Total loans and advances to banks and customers174,798 168,527 87,278 87,966 Analysis of loans and advances to customers by client segments and related imparment provisons as set out withn the Risk review and Capital review (page 228). 15. Reverse repurchase and repurchase agreements includng other simlar lendingand borrowing Accounting policy The Group purchases securites (a reverse repurchase agreement – ‘reverse repo’) typically with financal insttutions subject to a commitment to resell or return the securites at a predetermined price. These securites are not included in the balance sheet as the Group does not acquire the risks and rewards of ownership, however they are recorded off-balance sheet as collateral received. Consideraton paid (or cash collateral provided) is accounted for as a loan asset at amortised cost, unless it is managed on a fair value basis or designated at fair value through profit or loss. In the majorty of cases through the contractual terms of a reverse repo arrangement, the Group as the transferee of the security collateral has the right to sell or repledge the asset concerned. The Group also sells securites (a repurchase agreement – ‘repo’) subject to a commitment to repurchase or redeem the securites at a predetermined price. The securites are retained on the balance sheet as the Group retains substantially all the risks and rewards of ownership and these securites are disclosed as pledged collateral. Consideraton received (or cash collateral received) is accounted for as a financal liablity at amortised cost, unless it is either mandatorily classifed as fair value through profit or loss or irrevocably designated at fair value through profit or loss at intial recogniton. Financal assets are pledged as collateral as part of sales and repurchases, securites borrowing and securitsation transactions under terms that are usual and customary for such activties. The Group is obliged to return equivalent securites. Repo and reverse repo transactions typically entitle the Group and its counterparties to have recourse to assets simlar to those provided as collateral in the event of a default. Securites sold subject to repos, either by way of a Global Master Repurchase Agreement (GMRA), or through a securites sale and Total Return Swap (TRS) continue to be recognised on the balance sheet as the Group retains substantially the associated risks and rewards of the securites (the TRS is not recognised). The counterparty liablity is included in deposits by banks or customer accounts, as appropriate. Assets sold under repurchase agreements are considered encumbered as the Group cannot pledge these to obtain funding. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 262 Notes to the financal statements continued 15. Reverse repurchase and repurchase agreements includng other simlar lending and borrowing continued Reverse repurchase agreements and other simlar secured lending Group 2021 $millon 2020 $millon Banks 19,664 19,014 Customers 64,042 47,521 83,706 66,535 Of which: Fair value through profit or loss 78,986 62,807 Banks 18,708 18,205 Customers 60,278 44,602 Held at amortised cost 4,720 3,728 Banks 956 809 Customers 3,764 2,919 Under reverse repurchase and securites borrowing arrangements, the Group obtains securites on terms which permit it to repledge or resell the securites to others. Amounts on such terms are: 2021 $millon 2020 $millon Securites and collateral received (at fair value) 113,892 98,525 Securites and collateral which can be repledged or sold (at fair value) 113,736 98,431 Amounts repledged/transferred to others for financng activties, to satisfy liablites under sale and repurchase agreements (at fair value) 57,879 46,209 Company 2021 $millon 2020 $millon Banks 18,818 17,938 Customers 62,322 46,662 81,140 64,600 Of which: Fair value through profit or loss 77,655 62,262 Banks 18,380 17,883 Customers 59,275 44,379 Held at amortised cost 3,485 2,338 Banks 438 55 Customers 3,047 2,283 Under reverse repurchase and securites borrowing arrangements, the Company obtains securites on terms which permit it to repledge or resell the securites to others. Amounts on such terms are: 2021 $millon 2020 $millon Securites and collateral received (at fair value) 110,558 96,113 Securites and collateral which can be repledged or sold (at fair value) 110,462 96,091 Amounts repledged/transferred to others for financng activties, to satisfy liablites under sale and repurchase agreements (at fair value) 57,826 46,180 ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 263 Notes to the financal statements continued 15. Reverse repurchase and repurchase agreements includng other simlar lending and borrowing continued Repurchase agreements and other simlar secured borrowing Group 2021 $millon 2020 $millon Banks 5,092 5,824 Customers 56,540 41,555 61,632 47,379 Of which: Fair value through profit or loss 61,307 47,359 Banks 4,768 5,804 Customers 56,539 41,555 Held at amortised cost 325 20 Banks 324 20 Customers 1 – The tables below set out the financal assets provided as collateral for repurchase and other secured borrowing transactions: Collateral pledged against repurchase agreements 2021 Fair value through profit or loss $millon Fair value through other comprehensive income $millon Amortised cost $millon Off-balance sheet $millon Total $millon On-balance sheet Debt securites and other eligble bills 2,3184831,778–4,579 Off-balance sheet Repledged collateral received –––57,87957,879 At 31 December 20212,3184831,77857,87962,458 Collateral pledged against repurchase agreements 2020 Fair value through profit or loss $millon Fair value through other comprehensive income $millon Amortised cost $millon Off-balance sheet $millon Total $millon On-balance sheet Debt securites and other eligble bills1,324201355–1,880 Off-balance sheet Repledged collateral received–––46,20946,209 At 31 December 20201,32420135546,20948,089 ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 264 Notes to the financal statements continued 15. Reverse repurchase and repurchase agreements includng other simlar lending and borrowing continued Company 2021 $millon 2020 $millon Banks 4,737 5,692 Customers 56,443 41,555 61,180 47,247 Of which: Fair value through profit or loss 60,897 47,247 Banks 4,455 5,692 Customers 56,442 41,555 Held at amortised cost 283 – Banks 282 – Customers 1 – The tables below set out the financal assets provided as collateral for repurchase and other secured borrowing transactions: Collateral pledged against repurchase agreements 2021 Fair value through profit or loss $millon Fair value through other comprehensive income $millon Amortised cost $millon Off-balance sheet $millon Total $millon On-balance sheet Debt securites and other eligble bills 2,0853181,776–4,179 Off-balance sheet Repledged collateral received –––57,82657,826 At 31 December 20212,0853181,77657,82662,005 Collateral pledged against repurchase agreements 2020 Fair value through profit or loss $millon Fair value through other comprehensive income $millon Amortised cost $millon Off-balance sheet $millon Total $millon On-balance sheet Debt securites and other eligble bills1,222201355–1,778 Off-balance sheet Repledged collateral received–––46,18046,180 At 31 December 20201,22220135546,18047,958 ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 265 Notes to the financal statements continued 16. Goodwill and intangble assets Accounting policy Goodwill Goodwill represents the excess of the cost of an acquistion over the fair value of the Group’s share of the identfiable net assets and contingent liablites of the acquired subsidary, associate or jont venture at the date of acquistion. Goodwill on acquistions of subsidaries is included in intangble assets. Goodwill on acquistions of associates is included in Investments in associates. Goodwill included in intangble assets is assessed at each balance sheet date for imparment and carried at cost less any accumulated imparment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Detailed calculations are performed based on discountng expected cash flows of the relevant cash generating units (CGUs) and discountng these at an appropriate discount rate, the determinaton of which requires the exercise of judgement. Goodwill is allocated to CGUs for the purpose of imparment testing. CGUs represent the lowest level withn the Group which generate separate cash inflows and at which the goodwill is monitored for internal management purposes. These are equal to or smaller than the Group’s reportable segments (as set out in Note 2) as the Group views its reportable segments on a global basis. The major CGUs to which goodwill has been allocated are set out in the CGU table (page 267 to 268). Signficant accounting estimates and judgements The carrying amount of goodwill is based on the applicaton of judgements includng the basis of goodwill imparment calculationassumptions. Judgement is also applied in determinaton of cashgenerating units. Estimates include forecasts used for determinng cash flows for CGUs and, the appropriate long term growth rates to use and discount rates which factor in country risk-free rates and applicable risk premiums. These estimates are periodcally assessed for appropriateness. The Group undertakes an annual assessment to evaluate whether the carrying value of goodwill is impared. The estimaton of future cash flows and the level to which they are discounted is inherently uncertain and requires signficant judgement and is subject to potential change over time. Acquired intangbles At the date of acquistion of a subsidary or associate, intangble assets which are deemed separable and that arise from contractual or other legal rights are capitalsed and included withn the net identfiable assets acquired. These intangble assets are intially measured at fair value, which reflects market expectations of the probabilty that the future economic benefits embodied in the asset will flow to the entity, and are amortised on the basis of their expected useful lives (4 to 16 years). At each balance sheet date, these assets are assessed for indcators of imparment. In the event that an asset’s carrying amount is determined to be greater than its recoverable amount, the asset is written down immedately. Computer software Acquired computer software licences are capitalsed if the princples of development are met, on the basis of the costs incurred to acquire and bring to use the specifc software. Internally generated software represents substantially all of the total software capitalsed. Direct costs of the development of separately identfiable internally generated software are capitalsed where it is probable that future economic benefits attributable to the asset will flow from its use (internally generated software). These costs include salaries and wages, materials, service providers and contractors, and directly attributable overheads. Costs incurred in the ongoing maintenance of software are expensed immedately when incurred. Internally generated software is amortised over each assets useful life to a maximum of a 10 year time period. On an annual basis software assets’ residual values and useful lives are reviewed, includng assessing for indcators of imparment. Indicators of imparment include loss of business relevance, obsolescence of asset, exit of the business to which the software relates, technological changes, change in use of the asset, reduction in useful life, plans to reduce usage or scope. For capitalsed software, judgement is required to determine which costs relate to research (and therefore expensed) and which costs relate to development (capitalsed). Further judgement is required to determine the technical feasiblity of completing the software such that it will be available for use. Estimates are used to determine how the software will generate probable future economic benefits, these estimatesinclude; costsavings, income increases, balance sheetimprovements, improved functionalty or improved asset safeguarding. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 266 Notes to the financal statements continued 16. Goodwill and intangble assets continued Group 2021 2020 Goodwill $millon Acquired intangbles $millon Computer software $millon Total $millon Goodwill $millon Acquired intangbles $millon Computer software $millon Total $millon Cost At 1 January1,4081323,0174,557 1,8281372,7384,703 Exchange translation differences (29)(4)(58)(91) (17)(5)4119 Additons –20738758 ––623623 Impairment –––– (403)––(403) Amounts written off ––(128)(128) ––(385)(385) At 31 December1,3791483,5695,096 1,4081323,0174,557 Provison for amortisaton At 1 January–1179441,061 –119841960 Exchange translation differences –(4)(20)(24) –(6)104 Amortisaton –5339344 –4409413 Impairment charge ––33 ––1515 Amounts written off ––(88)(88) ––(331)(331) At 31 December–1181,1781,296 –1179441,061 Net book value1,379302,3913,800 1,408152,0733,496 At 31 December 2021, accumulated goodwill imparment losses incurred from 1 January 2005 amounted to $3,227 millon (31December 2020: $3,227millon), of which $nil was recognised in 2021 (31 December 2020: $403). Company 2021 2020 Goodwill $millon Acquired intangbles $millon Computer software $millon Total $millon Goodwill $millon Acquired intangbles $millon Computer software $millon Total $millon Cost At 1 January79322,6472,758 344332,5092,886 Exchange translation differences –(2)(48)(50) (8)(1)3829 Additons ––503503 ––445445 Impairment –––– (257)––(257) Amounts written off ––(105)(105) ––(345)(345) At 31 December79302,9973,106 79322,6472,758 Provison for amortisaton At 1 January–18782800 –17752769 Exchange translation differences –(2)(15)(17) –(1)109 Amortisaton –2271273 –2322324 Impairment charge ––22 ––1313 Amounts written off ––(73)(73) ––(315)(315) At 31 December–18967985 –18782800 Net book value79122,0302,121 79141,8651,958 ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 267 Notes to the financal statements continued 16. Goodwill and intangble assets continued Software amortisaton change in estimate During the period the Group has reassessed the useful economic life for software assets to reflect the period over which the assets are expected to be available for use by the Group. As a result of this change in estimate, the Group has recorded a decrease in software amortisaton of approximately $74 millon for the year when compared to the previous estimate. Goodwill Outcome of imparment assessment Change in cash- generating units (CGUs) Goodwill is allocated to CGUs, which are considered the level at which goodwill is managed and which generate independent cash inflows. At year-end 2021, the Group had two global CGUs representing Corporate, Commercial & Institutonal Banking (CCIB) and Private Banking (PB), along with 4 indvidual country CGUs representing Retail Banking (RB) for each country. Following the changes in the Group’s organisatonal structure as described in Note 2 – Operating Segments which has resulted in two new business segments, CCIB and CPBB, the CGUs have changed. Goodwill relating to CB ($198m), which was previously allocated to country CGUs, has been reallocated to the global CCIB CGU. The CB goodwill has been allocated on a relative value basis with reference to the ratio of RB and CB risk-weighted assets in the indvidual country at 1 January 2021. The changes above require comparative periods to be restated. Testing of goodwill for imparment An annual assessment is made as to whether the current carrying value of goodwill is impared. For the purposes of imparment testing, goodwill is allocated at the date of acquistion to a CGU. Goodwill is considered to be impared if the carrying amount of the relevant CGU exceeds its recoverable amount. Indicators of imparment include changes in the economic performance and outlook of the region includng geopolitcal changes, changes in market value of regional investments, large credit defaults and strategic decisons to exit certain regions. The recoverable amounts for all the CGUs were measured based on value-in-use (ViU). The calculation of ViU for each CGU is calculated using five-year cash flow projectons and an estimated terminal value based on a perpetuity value after year five. The cash flow projectons are based on forecasts approved by management up to 2026. The perpetuity terminal value amount is calculated using year five cash flows using long-term GDP growth rates. All cash flows are discounted using discount rates which reflect market rates appropriate to the CGU. The goodwill allocated to each CGU and key assumptions used in determinng the recoverable amounts are set out below and are solely estimates for the purposes of assessing imparment of acquired goodwill. Group Cash generating unit 1 2021 2020 Goodwill $millon Pre tax Discount Rates per cent Long-term forecast GDP growth rates per cent Goodwill $millon Pre tax Discount Rates per cent Long-term forecast GDP growth rates per cent Country CGUs Africa & Middle East76 81 Pakistan 4222.26.0 4720.25.1 Bahrain 3413.13.0 3414.22.8 ASIA290 295 Singapore 28011.62.4 28512.03.0 Bangladesh 1015.07.3 1019.67.2 Global CGUs1,013 1,032 Global Private Banking 8412.22.5 8412.63.6 Global Corporate, Commercial & Institutonal Banking 92912.33.0 94813.03.0 1,379 1,408 1Following the Group’s change in organisatonal structure, there has been an integraton of segments (CIB and CB to CCIB and PB and RB to CPBB) and regions (Greater China & North Asia and ASEAN & South Asia to Asia). Prior periods have been restated In the current year there are no CGUs that are sensitve to any indvidual movement on key estimates (cashflow, discount rate and GDP growth rate). This is primarly due to increased anticpated cash flows as economic uncertainty caused by the COVID-19 pandemic has abated and the change in CGUs as described above. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 268 Notes to the financal statements continued 16. Goodwill and intangble assets continued Company Acquired intangbles primarly comprise those recognised as part of the acquistions of American Express Bank, Tradewinds, Australia andNew Zealand ProjectFinance andGrindlays. Signficant items of goodwill arisng on acquistions have been allocated to the following cash generating units for the purposes of imparment testing: Cash generating unit 1 2021 $millon 2020 $millon Country CGUs Bahrain 17 17 Bangladesh 6 6 Global CGUs Global Corporate, Commercial & Institutonal Banking 56 56 79 79 1Following the Group’s change in organisatonal structure, there has been an integraton of segments (CIB and CB to CCIB and PB and RB to CPBB) and regions (Greater China & North Asia and ASEAN & South Asia to Asia). Prior periods have been restated Acquired intangbles These primarly comprise those items recognised as part of the acquistions of Union Bank (now amalgamated into StandardChartered Bank (Pakistan) Limted), American Express Bank and ABSA’s custody business in Africa. The acquired intangbles are amortised over periods from four years to a maximum of 16 years. The constituents are asfollows: GroupCompany 2021 $millon 2020 $millon 2021 $millon 2020 $millon Acquired intangbles comprise: Customer relationshps 3 7 3 4 Licences 27 8 9 10 Net book value30 15 12 14 ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 269 Notes to the financal statements continued 17. Property, plant and equipment Accounting policy All property, plant and equipment is stated at cost less accumulated depreciaton and imparment losses. Cost includes expenditure that is directly attributable to the acquistion of the assets. Subsequent costs are included in the asset’s carrying amount or are recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. At each balance sheet date the assets’ residual values and useful lives are reviewed, and adjusted if appropriate, includng assessing for indcators of imparment. In the event that an asset’s carrying amount is determined to be greater than its recoverable amount, the asset is written down to the recoverable amount. Gains and losses on disposals are included in the income statement. Repairs and maintenance are charged to the income statement during the financal period in which they are incurred. Land and buildngs comprise mainly branches and offices. Freehold land is not depreciated although it is subject to imparmenttesting. Depreciaton on other assets is calculated using the straight-line method to allocate their cost to their residual values over their estimated useful lives, as follows: • Buildngsup to 50 years • Leasehold improvements life of leaseup to 50 years • Equipment and motor vehiclesthree to 15 years • Aircraftup to 18 years • Shipsup to 15 years Where the Group is a lessee of a right-of-use asset, the leased assets are capitalsed and included in Property, plant and equipment with a corresponding liablity to the lessor recognised in Other liablites, in accordance with the Group’s leased assets accounting policy in Note 18. All other repairs and maintenance are charged to the income statement during the financal period in which they areincurred. Group 2021 Premises $millon Equipment $millon Leased premises assets $millon Leased equipment assets $millon Total $millon Cost or valuation At 1 January66657086262,104 Exchange translation differences (28)(7)(32)2(65) Additons 1 4391831218 Disposals and fully depreciated assets written off 2 (14)(88)(34)(1)(137) Transfers to assets held for sale (4)–––(4) As at 31 December66356687982,116 Depreciaton Accumulated at 1 January2823682494903 Exchange translation differences (8)(4)(14)–(26) Charge for the year 33891271250 Impairment (release)/charge ––39–39 Attributable to assets sold, transferred or written off 2 (9)(87)(25)–(121) Accumulated at 31 December29836637631,045 Net book amount at 31 December36520050331,071 1Refer to the cash flow statement under cash flows from investng activties section for the purchase of property, plant and equipment during the year of $134 millon on page 171 2Disposals for property, plant and equipment during the year of $25 millon in the cash flow statement would include the gains and losses incurred as part of other operating income (Note 6) on disposal of assets during the year and the net book value disposed ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 270 Notes to the financal statements continued 17. Property, plant andequipment continued 2020 Premises $millon Equipment $millon Leased premises assets $millon Leased equipment assets $millon Total $millon Cost or valuation At 1 January 70652084622,074 Exchange translation differences(17)(8)(7)2(30) Additons1890602170 Disposals and fully depreciated assets written off(38)(32)(37)–(107) Transfers to assets held for sale(3)–––(3) As at 31 December 66657086262,104 Depreciaton Accumulated at 1 January 2873161392744 Exchange translation differences(6)(5)(5)–(16) Charge for the year36891322259 Attributable to assets sold, transferred or written off(34)(32)(17)–(83) Transfers to assets held for sale(1)–––(1) Accumulated at 31 December 2823682494903 Net book amount at 31 December 38420261321,201 1Refer to the cash flow statement under cash flows from investng activties section for the purchase of property, plant and equipment during the year of $170 millon on page 171 2Disposals for property, plant and equipment during the year of $25 millon in the cash flow statement would include the gains and losses incurred as part of other operating income (Note 6) on disposal of assets during the year and the net book value disposed ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 271 Notes to the financal statements continued 17. Property, plant andequipment continued Company 2021 Premises $millon Equipment $millon Leased premises assets $millon Leased equipment assets $millon Total $millon Cost or valuation At 1 January31326257611,152 Exchange translation differences (10)5(2)–(7) Additons 1 175039–106 Disposals, transfers and fully depreciated assets written off2 (6)(8)(17)–(31) As at 31 December31430959611,220 Depreciaton Accumulated at 1 January1371401661444 Exchange translation differences –(2)(5)–(7) Charge for the year 155177–143 Impairment (release)/charge ––38–38 Attributable to assets sold, transferred or written off 2 (2)(7)(16)–(25) Accumulated at 31 December1501822601593 Net book amount at 31 December164127336–627 1Refer to the cash flow statement under cash flows from investng activties section for the purchase of property, plant and equipment during the year of $67 millon on page 171 2Disposals for property, plant and equipment during the year of $6 millon in the cash flow statement would include the gains and losses incurred as part of other operating income (Note 6) on disposal of assets during the year and the net book value disposed 2020 Premises $millon Equipment $millon Leased premises assets $millon Leased equipment assets $millon Total $millon Cost or valuation At 1 January 32224159011,154 Exchange translation differences(9)(1)––(10) Additons114117–69 Disposals and fully depreciated assets written off(11)(19)(31)–(61) As at 31 December 31326257611,152 Depreciaton Accumulated at 1 January 130113961340 Exchange translation differences(3)–1–(2) Charge for the year174682–145 Attributable to assets sold, transferred or written off(7)(19)(13)–(39) Accumulated at 31 December 1371401661444 Net book amount at 31 December 176122410–708 1Refer to the cash flow statement under cash flows from investng activties section for the purchase of property, plant and equipment during the year of $69 millon on page 171 2Disposals for property, plant and equipment during the year of $20 millon in the cash flow statement would include the gains and losses incurred as part of other operating income (Note 6) on disposal of assets during the year and the net book value disposed ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 272 Notes to the financal statements continued 18. Leasedassets Accounting policy The Group assesses whether a contract is a lease in scope of this policy by determinng whether the contract gives it the right to use a specifed underlying physical asset for a lease term greater than 12 months, unless the underlying asset is of low value. Where the Group is a lessee and the lease is deemed in scope, it recognises a liablity equal to the present value of lease payments over the lease term, discounted using the incremental borrowing rate applicable in the economic environment of the lease. The liablity is recognised in ‘Other liablites’. A corresponding right-of-use asset equal to the liablity, adjusted for any lease payments made at or before the commencement date, is recognised in ‘Property, plant and equipment’. The lease term includes any extension options contained in the contract that the Group is reasonably certain it will exercise. The Group subsequently depreciates the right-of-use asset using the straight-line method over the lease term and measures the lease liablity using the effective interest method. Depreciaton on the asset is recognised in ‘Depreciaton and amortisaton’, and interest on the lease liablity is recognised in ‘Interest expense’. If a leased premise, or a physically distnct portion of a premise such as an indvidual floor, is deemed by management to be surplus to the Group’s needs and action has been taken to abandon the space before the lease expires, this is considered an indcator of imparment. An imparment loss is recognised if the right-of-use asset, or portion thereof, has a carrying value in excess of its value-in-use when taking into account factors such as the abilty and likelhood of obtainng a subtenant. The judgements in determinng lease balances are the determinaton of whether the Group is reasonably certain that it will exercise extension options present in lease contracts. On intial recogniton, the Group considers a range of characteristcs such as premises function, regional trends and the term remainng on the lease to determine whether it is reasonably certain that a contractual right to extend a lease will be exercised. Where a change in assumption is confirmed by the local property management team, a remeasurement is performed in the Group-managed vendor system. The estimateswere thedeterminatonof incremental borrowing rates in the respective economicenvironments. The Group uses third party broker quotes to estimate its USD cost of senior unsecured borrowing, then uses cross currency swap pricng informaton to determine the equivalent cost of borrowing in other currencies. If it is not possible to estimate an incremental borrowing rate through this process, other proxies such as local government bond yields are used. The Group primarly enters lease contracts that grant it the right to use premises such as office buildngs and retail branches. Existng lease liablites may change in future periods due to changes in assumptions or decisons to exercise lease renewal or terminaton options, changes in payments due to renegotiatons of market rental rates as permitted by those contracts and changes to payments due to rent being contractually linked to an inflaton index. In general the re-measurement of a lease liablity under these circumstances leads to an equal change to the right-of-use asset balance, with no immedate effect on the incomestatement. The total cash outflow during the year for premises and equipment leases was $148 millon for Group and $94 millon for Company. The total expense during the year in respect of leases with a term less than or equal to 12 months was less than $1 millon for Group. The right-of-use asset balances and depreciaton charges are disclosed in Note 17. The lease liablity balances are disclosed in Note 22 and the interest expense on lease liablites is disclosed in Note 3. Maturity analysis The maturity profile for lease liablites associated with leased premises and equipment assets is as follows: Group 2021 One year or less $millon Between one year and two years $millon Between two years and five years $millon More than five years $millon Total $millon Other liablites – lease liablites 13711928284622 2020 One year or less $millon Between one year and two years $millon Between two years and five years $millon More than five years $millon Total $millon Other liablites – lease liablites163137333163796 ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 273 Notes to the financal statements continued 18. Leasedassets continued Company 2021 One year or less $millon Between one year and two years $millon Between two years and five years $millon More than five years $millon Total $millon Other liablites – lease liablites 928822540445 2020 One year or less $millon Between one year and two years $millon Between two years and five years $millon More than five years $millon Total $millon Other liablites – lease liablites898523899511 19. Other assets Accounting policy Refer to Note 12 Financal instruments for the relevant accounting policy. Commodites represent physical holdings where the Group has title and exposure to the Market Risk associated with the holding. Commodites and emissons certifcates are fair valued with the fair value derived from observable spot or short-term futures prices from relevant exchanges. Group Other assets include: 2021 $millon 2020 $millon Financal assets held at amortised cost (Note 12): Cash collateral 8,244 10,940 Acceptances and endorsements 3,047 4,087 Unsettled trades and other financal assets 10,990 10,846 22,281 25,873 Non-financal assets: Commodites and emissons certifcates 1 9,265 7,239 Other assets 424 278 31,970 33,390 1Commodites and emisson certifcates are carried at fair value less costs to sell, $5.7 billon are classifed as Level 1 and $3.6 billon are classifed as Level 2 Company Other assets include: 2021 $millon 2020 $millon Financal assets held at amortised cost (Note 12): Cash collateral 7,780 10,385 Acceptances and endorsements 2,329 3,285 Unsettled trades and other financal assets 9,751 9,825 19,860 23,495 Non-financal assets: Commodites and emissons certifcates 1 5,475 5,182 Other assets 353 219 25,688 28,896 1Commodites and emisson certifcates are carried at fair value less costs to sell, $1.9 billon are classifed as Level 1 and $3.6 billon are classifed as Level 2 ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 274 Notes to the financal statements continued 20. Assets held for sale and associated liablites Accounting policy Financal instruments can be reclassifed as held for sale if they are non-current assets or if they are part of a disposal group; however, in these circumstances financal instruments continue to be measured per the requirements of IFRS 9 Financal Instruments. Refer to Note 12 Financal instruments for the relevant accounting policy. Non-current assets are classifed as held for sale and measured at the lower of their carrying amount and fair value less cost to sell when: a) Their carrying amounts will be recovered princpally through sale; b) They are available for immedate sale in their present conditon; and c) Their sale is highly probable. Immediately before the intial classifcation as held for sale, the carrying amounts of the assets are measured in accordance with the applicable accounting polices related to the asset or liablity before reclassifcation as held for sale. The assets below have been presented as held for sale following the approval of Group management and the transactions are expected to complete in 2021. The financal assets reported below are classifed under Level 1 $ nil millon (31 December 2020: $nil millon), Level 2 $ nil millon (31 December 2020: $25 millon) and Level 3 $95 millon (31 December 2020: $63 millon). Group Assets held for sale 2021 $millon 2020 $millon Financal assets held at fair value through profit or loss 43 5 Loans and advances to customers 20 5 Equity shares 23 – Financal assets held at amortised cost 52 83 Loans and advances to customers 52 83 Debt securites held at amortised cost – – Property, plant and equipment 3 4 Others 3 4 98 92 Company Assets held for sale 2021 $millon 2020 $millon Financal assets held at fair value through profit or loss 42 5 Loans and advances to customers 20 5 Equity shares 22 – Financal assets held at amortised cost 49 83 Loans and advances to customers 49 83 Debt securites held at amortised cost – – Property, plant and equipment – 1 Others – 1 91 89 On the 20 May 2020 the Group completed the sale of its 44.56 per cent equity interest in PT Bank Permata Tbk to Bangkok Bank Public Company Limted for cash consideraton of IDR 17 trillon ($1,072 millon). ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 275 Notes to the financal statements continued 21. Debt securites in issue Accounting policy Refer to Note 12 Financal instruments for the relevant accounting policy. Group 2021 2020 Certifcates of deposit of $100,000 or more $millon Other debt securites in issue $millon Total $millon Certifcates of deposit of $100,000 or more $millon Other debt securites in issue $millon Total $millon Debt securites in issue 22,49813,56236,060 19,3609,99629,356 Debt securites in issue included withn: Financal liablites held at fair value through profit or loss (Note 12) –4,3604,360 –4,3604,360 Total debt securites in issue22,49817,92240,420 19,36014,35633,716 Company 2021 2020 Certifcates of deposit of $100,000 or more $millon Other debt securites in issue $millon Total $millon Certifcates of deposit of $100,000 or more $millon Other debt securites in issue $millon Total $millon Debt securites in issue 21,79912,02733,826 19,3508,31127,661 Debt securites in issue included withn: Financal liablites held at fair value through profit or loss (Note 12) –4,0864,086 –4,2034,203 Total debt securites in issue21,79916,11337,912 19,35012,51431,864 In 2021, the Company issued a total of $3.1 billon senior notes for general business purposes of the Group as shown below: Securites$millon $1500 millon callable fixed rate senior notes due 2025 (callable 2024) 1,500 $1000 millon callable fixed rate senior notes due 2025 (callable 2024) 1,000 EUR 500 millon callable fixed rate senior notes due 2029 (callable 2028) 569 Total Senior Notes issued 3,069 In 2020, the Company issued a total of $1.8 billon senior notes for general business purposes of the Group as shown below: Securites $millon EUR 750 millon callable fixed rate senior notes due 2028 (callable 2027)917 $500 millon callable floating rate senior notes due 2023 (callable 2022)500 $400 millon callable fixed rate senior notes due 2023 (callable 2022)400 Total Senior Notes issued1,817 Where a debt instrument is callable, the issuer has the right to call. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 276 Notes to the financal statements continued 22. Other liablites Accounting policy Refer to Note 12 Financal instruments for the relevant accounting policy for financal liablites, Note 18 Leased assets fortheaccounting policy for leases and Note 30 Share-based payments for the accounting policy for cash-settled share-basedpayments. Group 2021 $millon 2020 $millon Financal liablites held at amortised cost (Note 12) Acceptances and endorsements 3,047 4,087 Cash collateral 7,757 9,184 Property leases 1 611 673 Equipment leases 1 6 4 Unsettled trades and other financal liablites 2 14,229 15,552 25,650 29,500 Non-financal liablites Other liablites 363 288 26,013 29,788 Company 2021 $millon 2020 $millon Financal liablites held at amortised cost (Note 12) Acceptances and endorsements 2,329 3,285 Cash collateral 7,033 8,581 Property leases 1 417 450 Equipment leases 1 – – Unsettled trades and other financal liablites 2 10,346 10,908 20,125 23,224 Non-financal liablites Other liablites 335 210 20,460 23,434 1Other financal liablites include the present value of lease liablites, as required by IFRS 16 from 1 January 2019; refer to Note 18 2Includes correction offair value hedge accounting adjustment$81 millon 23. Provisons for liablites and charges Accounting policy The Group recognises a provison for a present legal or constructive obligaton resulting from a past event when it is more likely than not that it will be required to transfer economic benefits to settle the obligaton and the amount of the obligaton can be estimated reliably. Where a liablity arises based on particpation in a market at a specifed date, the obligaton is recognised in the financal statements on that date and is not accrued over the period. Signficant accounting estimates and judgements The recogniton and measurement of provisons for liablites and charges requires signficant judgement and the use of estimates aboutuncertain future conditons orevents. Estimates include the best estimate of the probabilty of outflow of economic resources, cost of settling a provison and timng of settlement. Judgements are required for inherently uncertain areas such as legal decisons (includng external advice obtained), and outcome of regulatorreviews. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 277 Notes to the financal statements continued 23. Provisons for liablites and charges continued Group 2021 2020 Provison for credit commitments $millon Other provisons $millon Total $millon Provison for credit commitments $millon Other provisons $millon Total $millon At 1 January33169400 297105402 Exchange translation differences 8(1)7 (51)(4)(55) Transfer –22 –99 (Release)/charge against profit (23)307 88(1)87 Provisons utilsed –(20)(20) (3)(40)(43) At 31 December31680396 33169400 Company 2021 2020 Provison for credit commitments $millon Other provisons $millon Total $millon Provison for credit commitments $millon Other provisons $millon Total $millon At 1 January29442336 41088498 Exchange translation differences (9)–(9) (51)(2)(53) Transfer –11 –22 (Release)/charge against profit (40)18(22) (65)(16)(81) Provisons utilsed –(8)(8) –(30)(30) At 31 December 24553298 29442336 Provison for credit commitment comprises those undrawn contractually committed facilties where there is doubt as to the borrowers’ abilty to meet their repayment obligatons. Other provisons consist mainly of provisons for regulatory settlements and legal claims, the nature of which are described in Note 25. (page 279). 24. Contingent liablites and commitments Accounting policy Financal guarantee contracts and loan commitments The Group issues financal guarantee contracts and loan commitments in return for fees. Financal guarantee contracts and any loan commitments issued at below-market interest rates are intially recognised at their fair value as a financal liablity, and subsequently measured at the higher of the intial value less the cumulative amount of income recognised in accordance with the princples of IFRS 15 Revenue from Contracts with Customers and their expected credit loss provison. Loan commitments may be designated at fair value through profit or loss where that is the business model under which such contracts are held. Notional values of financal guarantee contracts and loan commitments are disclosed in the table below. Financal guarantees, trade credits and irrevocable letters of credit are the notional values of contracts issued by the Group’s Transaction Banking business for which an obligaton to make a payment has not arisen at the reporting date. Transaction Banking will issue contracts to clients and counterparties of clients, whereby in the event the holder of the contract is not paid, the Group will reimburse the holder of the contract for the actual financal loss suffered. These contracts have various legal forms such as letters of credit, guarantee contracts and performance bonds. The contracts are issued to faciltate trade through export and import business, provide guarantees to financal insttutions where the Group has a local presence, as well as guaranteeing project financng involvng large construction projects undertaken by sovereigns and corporates. The contracts may contain performance clauses which require the counterparty performing services or providng goods to meet certain conditons before a right to payment is achieved, however the Group does not guarantee this performance. The Group will only guarantee the credit of the counterparty paying for the services or goods. Commitments are where the Group has confirmed its intenton to provide funds to a customer or on behalf of a customer under prespecifed terms and conditons in the form of loans, overdrafts, future guarantees whether cancellable or not and the Group has not made payments at the balance sheet date; those instruments are included in these financal statements as commitments. Commitments and contingent liablites are generally considered on demand as the Group may have to honour them, or the client may draw down at any time. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 278 Notes to the financal statements continued 24. Contingent liablites and commitments continued Capital commitments are contractual commitments the Group has entered into to purchase non-financal assets. The table below shows the contract or underlying princpal amounts of unmatured off-balance sheet transactions at the balancesheet date.The contract or underlying princpalamounts indcate the volume of business outstanding and donot represent amounts at risk. GroupCompany 2021 $millon 2020 $millon 2021 $millon 2020 $millon Financal guarantees and trade credits Financal guarantees, trade and irrevocable letters of credit 49,235 45,418 37,465 36,142 49,235 45,418 37,465 36,142 Commitments Undrawn formal standby facilties, credit lines and other commitments to lend One year and over 53,128 54,755 45,801 50,335 Less than one year 17,608 15,218 14,353 12,736 Unconditonally cancellable 29,950 28,909 6,524 6,819 100,686 98,882 66,678 69,890 Capital commitments Contracted capital expenditure approved by the directors but not provided for in these accounts 8 6 – – The table below shows the contract or underlying princpal amounts and risk-weighted amounts of unmatured Group off-balance sheet transactions at the balance sheet date. The contract or underlying princpal amounts indcate the volume of business outstandingand do notrepresentamounts at risk. GroupCompany 2021 $millon 2020 $millon 2021 $millon 2020 $millon Financal guarantees and trade credits (Group) Financal guarantees, trade and irrevocable letters of credit 2,120 2,117 7,542 4,176 2,120 2,117 7,542 4,176 Commitments(Group) Undrawn commitments 5 37 261 356 5 37 261 356 Please refer to Note 19 for further details. As set out in Note 25, the Group has contingent liablites in respect of certain legal and regulatory matters for which it is not practicable to estimate the financal impact as there are many factors that may affect the range of possible outcomes. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 279 Notes to the financal statements continued 25. Legal and regulatory matters Accounting policy Where appropriate, the Group recognises a provison for liablites when it is probable that an outflow of economic resources embodying economic benefits will be required and for which a reliable estimate can be made of the obligaton. The uncertaintes inherent in legal and regulatory matters affect the amount and timng of any potential outflows with respect to which provisons have been established. These uncertaintes also mean that it is not possible to give an aggregate estimate of contingent liablites arisng from such legal and regulatory matters. The Group receives legal claims against it in a number of jursdictons and is subject to regulatory and enforcement investgations and proceedings from time to time. Apart from the matters described below, the Group currently considers none of the ongoing claims, investgations or proceedings to be material. However, in light of the uncertaintes involved in such matters there can be no assurance that the outcome of a particular matter or matters currently not considered to be material may not ultimately be material to the Group’s results in a particular reporting period depending on, among other things, the amount of the loss resulting from the matter(s) and the results otherwise reported for such period. Since 2014, the Group has been named as a defendant in a series of lawsuits that have been filed in the United States Distrct Courts for the Southern and Eastern Distrcts of New York against a number of banks (includng Standard Chartered Bank or its affilates) on behalf of plaintffs who are, or are relatives of, victms of various terrorist attacks in Iraq and Afghanistan. The most recent lawsuit was filed in August 2021 and concerns terrorist attacks that occurred in Afghanistan between 2011 and 2016. The plaintffs in each of these lawsuits have alleged that the defendant banks aided and abetted the unlawful conduct of U.S. sanctioned parties in breach of the U.S. Anti-Terrorism Act. While the courts have ruled in favour of the banks’ motions to dismss in five of these lawsuits, plaintffs’ have appealed or are expected to appeal against certain of these judgements. The remainng cases are at an early procedural stage and, except for the lawsuit filed in August 2021, have been stayed pending the outcomes of the appeals in the dismssed cases. None of these lawsuits have specifed the amount of damages claimed. In January 2020, a shareholder derivatve complaint was filed by the City of Philadelpha in New York State Court against 45 current and former directors and senior officers of the Group. It is alleged that the indviduals breached their duties to the Group and caused a waste of corporate assets by permittng the conduct that gave rise to the costs and losses to the Group related to legacy conduct and control issues. In March 2021, an amended complaint was served in which SCB and seven indviduals were removed from the case. Standard Chartered PLC and Standard Chartered Holdings Limted remained as named “nominal defendants” in the complaint. In May 2021, Standard Chartered PLC filed a motion to dismss the complaint. On 2 February 2022, the New York State Court ruled in favour of Standard Chartered PLC’s motion to dismss the complaint. The plaintffs have a right of appeal. Bernard Madoff’s 2008 confession to running a Ponzi scheme through Bernard L. Madoff Investment Securites LLC (BMIS) gave rise to a number of lawsuits against the Group. BMIS and the Fairfeld funds (which invested in BMIS) are in bankruptcy and liqudation, respectively. Between 2010 and 2012, five lawsuits were brought against the Group by the BMIS bankruptcy trustee and the Fairfeld funds’ liqudators, in each case seeking to recover funds paid to the Group’s clients pursuant to redemption requests made prior to BMIS’ bankruptcy filng. The total amount sought in these cases exceeds USD 300 millon, excluding any pre-judgment interest that may be awarded. The four lawsuits commenced by the Fairfeld funds’ liqudators have been dismssed and the appeals of those dismssals by the funds’ liqudators are ongoing. The lawsuit brought against the Group by the BMIS bankruptcy trustee had been stayed pending a ruling by the US Second Circut Court of Appeals in related cases brought by the BMIS bankruptcy trustee against other defendants that had been dismssed. In August 2021, the US Court of Appeals issued its ruling in the related cases with the result that the BMIS bankruptcy trustee's lawsuit against the Group is no longer stayed and is now ongoing. While the Group continues to vigorously defend these lawsuits, there is a range of possibleoutcomes in thislitgation. Based on the facts currently known, it is not possible for the Group to predict the outcome of these lawsuits. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 280 Notes to the financal statements continued 26. Subordinated liablites and other borrowed funds Accounting policy Subordinated liablites and other borrowed funds are classifed as financal instruments. Refer to Note 12 Financal instruments for the accounting policy. All subordinated liablites are unsecured, unguaranteed and subordinated to the claims of other creditors includng without limtation, customer deposits and deposits by banks. The Group has the right to settle these debt instruments in certain circumstances as set out in the contractual agreements. Where a debt instrument is callable, the issuer has the right to call. 2021 $millon 2020 $millon Subordinated loan capital – issued by subsidary undertakings $540 millon floating rate subordinated notes due 2030 (callable 2025) 1 540 540 540 540 Subordinated loan capital – issued by the Company £200 millon 7.75 per cent subordinated notes due (callable 2022) 48 52 $960 millon floating rate subordinated notes due 2022 960 960 $700 millon 8.0 per cent subordinated notes due 2031 418 454 $2 billon floating rate subordinated notes due 2023 2,000 2,000 $500 millon floating rate subordinated notes due 2043 500 500 $2 billon floating rate subordinated notes due 2044 (callable 2039) 2,000 2,000 $250 millon floating rate subordinated notes due 2048 (callable 2043) 250 250 $1 billon floating rate subordinated notes due 2029 (callable 2024) 1,000 1,000 $1.25 billon floating rate subordinated notes due 2032 (callable 2027) 1,250 1,250 $1 billon 3.516 per cent subordinated notes due 2030 (callable 2025) 956 1,066 £504 millon floating subordinated debt 2043 (callable 2038) 682 688 $2 billon 5.3 per cent subordinated debt 2035 (callable 2030) 2,000 2,000 £527 millon floating rate subordinated debt 2039 (callable 2034) 713 719 €1 billon 2.5 per cent subordinated debt 2030 (callable 2025) 1,137 1,223 13,914 14,162 Primary capital floating rate notes $400 millon floating rate undated subordinated notes 16 16 $300 millon floating rate undated subordinated notes (Series 2) 69 69 $400 millon floating rate undated subordinated notes (Series 3) 50 50 $200 millon floating rate undated subordinated notes (Series 4) 26 26 £150 millon floating rate undated subordinated notes – 16 161 177 Total for Group14,615 14,879 1Issued by Standard Chartered Bank (Singapore) Limted 2021 USD $millon GBP $millon EUR $millon Others $millon Total $millon Fixed rate subordinated debt 3,374481,137–4,559 Floating rate subordinated debt 8,6611,395––10,056 Total 12,0351,4431,137–14,615 2020 USD $millon GBP $millon EUR $millon Others $millon Total $millon Fixed rate subordinated debt3,520521,223–4,795 Floating rate subordinated debt8,6611,423––10,084 Total12,1811,4751,223–14,879 Redemptions and repurchases during the year Standard Chartered Bank exercised its right to redeem the remainng USD 16 millon £ 150 millon Undated Primary Capital Floating Rate Notes. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 281 Notes to the financal statements continued 27. Share capital, other equity instruments and reserves Accounting policy Financal instruments issued are classifed as equity when there is no contractual obligaton to transfer cash, other financal assets or issue available number of own equity instruments. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Securites which carry a discretonary coupon and have no fixed maturity or redemption date are classifed as other equity instruments. Interest payments on these securites are recognised, net of tax, as distrbutions from equity in the period in which they are paid. Where the Company or other members of the consolidated Group purchase the Company’s equity share capital, the consideraton paid is deducted from the total shareholders’ equity of the Group and/or of the Company as treasury shares until they are cancelled. Where such shares are subsequently sold or reissued, any consideraton received is included in shareholders’ equity of the Group and/or the Company. Group and Company Number of ordinary shares millons Ordinary share capital 1 millons Ordinary share premium millons Preference share premium 2 millons Total share capital and share premium millons Other equity instruments millons At 1 January 202019,02419,0242961,50020,8205,000 Shares issued300300––300– Additonal Tier 1 redemption–––––(2,000) At 31 December 202019,32419,3242961,50021,1203,000 Shares issued 1,2731,273––1,273– Additonal Tier 1 equity issuance –––––2,750 Additonal Tier 1 redemption –––––(1,001) At 31 December 202120,59720,5972961,50022,3934,749 1Issued and fully paid ordinary shares of $1 each 2Includes preference sharecapital of$75,000 Ordinary share capital The authorised share capital of the Company at 31 December 2021 was $26,789 millon and TWD 1,225 millon (31 December 2020: $26,789 millon and TWD 1,225 millon) made up of 26,782 millon ordinary shares of $1 each, 2.4 millon non-cumulative irredeemable preference shares of $0.01 each, 1 millon non-cumulative preference shares of $5 each, 15,000 non-cumulative redeemable preference shares of $5 each, 462,500 non-cumulative redeemable 8.125% preference shares of $5 each and 50 millon non-cumulative redeemable preferenceshares of TWD24.50 each. The issued share capital of the Company at 31 December 2021 was $20,597 millon (31 December 2020: $19,324 millon) made up of: 20,597 millon ordinary shares of $1 each. The issued ordinary share capital of the Company increased by 1,273 millon shares during the year. The Company has one class of ordinary shares, which carries no rights to fixed income. Subject to any special rights or restrictons as to voting attached to any shares in accordance with the Company’s Royal Charter Bye-Laws and Rules, on a show of hands every member present at a general meeting by a representative or proxy shall have one vote. On a poll, every member holding shares or stock of less than the nominal amount of US$25 shall not have any vote, but every other member who is present in person or by proxy shall have votes in accordance with the following scale: Nominal amount of Shares or StockheldNumber of Votes US$25 or more but less than US$501 vote US$50 or more but less than US$1002 votes US$100 or more but less than US$2503 votes US$250 or more but less than US$3754 votes US$375 or more but less than US$5005 votes US$500 or more but less than US$7506 votes US$750 or more but less than US$1,0007 votes US$1,000 or more but less than US$1,2508 votes US$1,250 or more but less than US$1,5009 votes US$1,500 or more10 votes ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 282 Notes to the financal statements continued 27. Share capital, otherequity instruments and reserves continued Preference share capital 7,500 non-cumulative redeemable preference shares issued on 8 December 2006 with a nominal value of $5 each and a premium of $99,995, making a paid-up amount per preference share of $100,000. The preference shares are redeemable at the option of the company in whole or in part on 31 Jan 2027 and on any quarterly divdend payment date falling on or around ten-year intervals thereafter. The amount payable on redemption will be the paid up amount of $100,000 per preference share to be redeemed, plus an amount equal to the accrued but unpaid divdend thereon up to but excluding the redemption date; and;7,500 non-cumulative redeemable preference shares issued on 25 May 2007 with a nominal value of $5 each and a premium of $99,995, making a paid up amount per preference share of $100,000. The preference shares are redeemable at the option of the company on 30 July 2037 and on any quarterly divdend payment date falling on or around ten-year intervals thereafter. The amount payable on redemption will be the paid-up amount of $100,000 per preference share to be redeemed, plus an amount equal to the accrued but unpaid divdend thereon up to but excluding the redemption date. Other equity instruments The tableprovidesdetails ofoutstanding Fixed Rate Resetting Perpetual SubordinatedContingent Convertible AT1 securites issued by Standard Chartered Bank. All issuances are made for general business purposes and to increase the regulatory capital base of the Group. Issuance dateNominal valueInterest rate 2 Coupon payment dates 3 First reset dates 4 18 August 2016USD 999 millon 1 7.50%2 April, 2 October each year2 April 2022 18 January 2017USD 1,000 millon7.75%2 April, 2 October each year2 April 2023 14 January 2021USD 1,250 millon4.75%14 January, 14 July each year14 July 2031 19 August 2021USD 1,500 millon4.30%19 February, 19 August each year19 August 2028 1During the period, the entity repurchased around USD 1,001 millon of these securites via a tender offer 2Interest rates for the period from (and includng) the issue date to (but excluding) the first reset date 3Interest payable semi-annually in arrears 4Securites are resettable each date falling five years, or an integral multiple of five years, after the first reset date The princpal terms of the AT1 securites are described below: • The securites are perpetual and redeemable, at the option of the Company in whole but not in part, on the first call date or on any fifth anniversary after the first call date • The securites are also redeemable for certain regulatory or tax reasons on any date at 100 per cent of their princpal amount together with any accrued but unpaid interest up to (but excluding) the date fixed for redemption. Any redemption is subject to the Company givngnotice to the relevantregulator and theregulator grantingpermisson to redeem • interest payments on these securites will be accounted for as a divdend • Interest on the securites is due and payable only at the sole and absolute discreton of the Company, subject to certain additonal restrictons set out in the terms and conditons. Accordingly, the Company may at any time elect to cancel any interest payment (or part thereof) which would otherwise be payable on any interest payment date • The securites will be written down in full should the fully loaded Common Equity Tier 1 ratio of the issuer fall below 7.0 per cent (a Loss Absorption Event). The securites rank behind the claims against the Company of: (a) unsubordinated creditors; (b) claims which are expressed to be subordinated to the claims of unsubordinated creditors of the Company but not further or otherwise; or (c) claims which are, or are expressed to be, junor to the claims of other creditors of the Company, whether subordinated or unsubordinated, other than claims which rank, or are expressed to rank, pari passu with, or junor to, the claims of holders of the AT1 securites in a windng-up occurring prior to the Loss Absorption Event. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 283 Notes to the financal statements continued 27. Share capital, otherequity instruments and reserves continued Reserves The constituents of the reserves are summarised as follows: • The capital reserve represents the exchange difference on redenominaton of share capital and share premium from sterling to US dollars in 2001. The capital redemption reserve represents the nominal value of preference shares redeemed • Own credit adjustment reserve represents the cumulative gains and losses on financal liablites designated at fair value through profit or loss relating to own credit. Gains and losses on financal liablites designated at fair value through profit or loss relating to own credit in the year have been taken through other comprehensive income into this reserve. On derecogniton of applicable instruments, the balance of any OCA will not be recycled to the income statement, but will be transferred withn equity to retained earnings • Fair value through other comprehensive income (FVOCI) debt reserve represents the unrealised fair value gains and losses in respect of financal assets classifed as FVOCI, net of expected credit losses and taxation. Gains and losses are deferred in this reserve and are reclassifed to the income statement when the underlying asset is sold, matures or becomes impared • FVOCI equity reserve represents unrealised fair value gains and losses in respect of financal assets classifed as FVOCI, net of taxation. Gains and losses are recorded in this reserve and never recycled to the income statement • Cash flow hedge reserve represents the effective portion of the gains and losses on derivatves that meet the critera for these types of hedges. Gains and losses are deferred in this reserve and are reclassifed to the income statement when the underlying hedged item affects profit and loss or when a forecast transaction is no longer expected to occur • Translation reserve represents the cumulative foreign exchange gains and losses on translation of the net investment of the Group in foreign operations. Since 1 January 2004, gains and losses are deferred to this reserve and are reclassifed to the income statement when the underlying foreign operation is disposed. Gains and losses arisng from derivatves used as hedges of net investments are netted against the foreign exchange gains and losses on translation of the net investment of the foreign operations • Retained earnings represents profits and other comprehensive income earned by the Group and Company in the current and prior periods, together with the after tax increase relating to equity-settled share options, less divdend distrbutions and own shares held(treasury shares) A substantial part of the Group’s reserves is held in overseas subsidary undertakings and branches, princpally to support local operations or to comply with local regulations. The maintenance of local regulatory capital ratios could potentially restrict the amount of reserves which can be remitted. In additon, if these overseas reserves were to be remitted, further unprovided taxation liablites might arise. As at 31 December 2021, the distrbutable reserves of Standard Chartered Bank (the Company) were $5.5 billon (2020: $5.0billon). These comprised of retained earnings. Distrbution of reserves is subject to maintaning minmum capital requirements. 28. Non-controlling interests Accounting policy Non-controlling interests are measured at the non-controlling interest’s proportionate share of the acquiree’s identfiable net assets. $millon At 1 January 20201,289 Loss attributable to non-controlling interests(3) Profits attributable to non-controlling interests47 Comprehensive income for the year44 Distrbutions(79) At 31 December 2020 1,254 Loss attributable to non-controlling interests (25) Profits attributable to non-controlling interests 29 Comprehensive income for the year 4 Distrbutions (83) Other increases 1 73 At 31 December 20211,248 1Movements related to non-controlling interest from Trust Bank Singapore Limted ($70 millon), Zodia Markets Holdings Limted ($3 millon) ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 284 Notes to the financal statements continued 29. Retirement benefit obligatons Accounting policy The Bank Group operates pension and other post-retirement benefit plans around the world, which can be categorised into defined contributon plans and defined benefit plans. For defined contributon plans, the Bank Group pays contributons to publicly or privately adminstered pension plans on a statutory or contractual basis, and such amounts are charged to operating expenses. The Bank Group has no further payment obligatons once the contributons have been paid. For funded defined benefit plans, the liablity recognised in the balance sheet is the present value of the defined benefit obligaton at the balance sheet date less the fair value of plan assets. For unfunded defined benefit plans the liablity recognised at the balance sheet date is the present value of the defined benefit obligaton. The defined benefit obligaton is calculated annually by independent actuaries using the projected unit method. Actuarial gains and losses that arise are recognised in shareholders’ equity and presented in the statement of other comprehensive income in the period they arise. The Bank Group determines the net interest expense on the net defined benefit liablity for the year by applying the discount rate used to measure the defined benefit obligaton at the beginnng of the annual period to the net defined benefit liablity, taking into account any changes in the net defined benefit liablity during the year as a result of contributons and benefit payments. Net interest expense, the cost of the accrual of new benefits, benefit enhancements (or reductions) and adminstration expenses met directly from plan assets are recognised in the income statement in the period in which they were incurred. Signficant accounting estimates and judgements There are many factors that affect the measurement of the retirement benefit obligatons. This measurement requires the use of estimates, such as discount rates, inflaton, pension increases, salary increases, and life expectancies which are inherently uncertain. Discount rates are determined by reference to market yields at the end of the reporting period on high-quality corporate bonds (or, in countries where there is no deep market in such bonds, government bonds) of a currency and term consistent with the currency and term of the post-employment benefit obligatons. This is the approach adopted across our geographies. Where there are inflaton-linked bonds available (e.g. United Kingdom and the eurozone), the Bank Group derives inflaton based on the market on those bonds, with the market yield adjusted in respect of the United Kingdom to take account of the fact that liablites are linked to Consumer Price Index inflaton, whereas the reference bonds are linked to Retail Price Index inflaton. Where no inflaton-linked bonds exist, we determine inflaton assumptions based on long-term forecasts and short-term inflaton data. Salary growth assumptions reflect the Bank Group’s long-term expectations, taking into account future business plans and macroeconomic data (primarly expected future long-term inflaton). Demographic assumptions, includng mortality and turnover rates, are typically set based on the assumptions used in the most recent actuarial funding valuation, and will generally use industry standard tables, adjusted where appropriate to reflect recent historc experience and/or future expectations. The sensitvity of the liablites to changes in these assumptions is shown in the Note below. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 285 Notes to the financal statements continued 29. Retirement benefitobligatons continued Group Retirementbenefit obligatons comprise: 2021 $millon 2020 $millon Defined benefit plans obligaton 187 411 Defined contributon plans obligaton 17 8 Net obligaton204 419 Retirement benefit charge comprises: 2021 $millon 2020 $millon Defined benefit plans 31 46 Defined contributon plans 243 217 Charge against profit (Note 7)274 263 The Bank Group operates over 50 defined benefit plans across its geographies, many of which are closed to new entrants who now jon defined contributon arrangements. The aim of all these plans is, as part of the Group’s commitment to financal wellbeing for employees, to give employees the opportunity to save appropriately for retirement in a way that is consistent with local regulations, taxation requirements and market conditons. The defined benefit plans expose the Group to currency risk, interest rate risk, investment risk and actuarial risks such as longevity risk. The material holdings of government and corporate bonds shown on page 287 partially hedge movements in the liablites resulting from interest rate and inflaton changes. Setting aside movements from other drivers such as currency fluctuation, the increases in discount rates in most geographies over 2021 have led to lower liablites. These have been partly offset by decreases in the value of bonds held and good stock market performance has led to assets broadly holding level over the year resulting in a material fall in the person defict reported. These movements are shown as actuarial gains in the table below. Contributons into a number of plans in excess of the amounts required to fund benefits accruing have also helped to reduce the net defict over the year. The disclosures required under IAS 19 have been calculated by independent qualifed actuaries based on the most recent full actuarial valuations updated, where necessary, to 31 December 2021. UKFund The Standard Chartered Pension Fund (the ‘UK Fund’) is the Bank Group’s largest pension plan, representing 70 per cent (31December 2020: 71 per cent) of total pension liablites. The UK Fund is set up under a trust that is legally separate from the Bank (its formal sponsor) and, as required by UK legislaton, at least one-third of the trustee directors are nominated by members; the remainder are appointed by the Bank. The trustee directors have a fiducary duty to members and are responsible for governing the UK Fund in accordance with its Trust Deed and Rules. The UK Fund was closed to new entrants from 1 July 1998 and closed to the accrual of new benefits from 1 April 2018. All employees are now offered membership of a defined contributon plan. The financal positon of the UK Fund is regularly assessed by an independent qualifed actuary. The funding valuation as at 31 December 2020 was completed in December 2021 by the then Scheme Actuary, T Kripps of Wills Towers Watson, using assumptions different from those on page 286, and agreed with the UK Fund trustee. It showed that the UK Fund was 92% funded at that date, revealing a past service defict of $172 millon (£127 millon). To repair the defict, three annual cash payments of $45 millon (£32.9 millon) were agreed, with the first of these paid in December 2021, and two further instalments to be paid in December 2022 and December 2023. The agreement allows that if the funding positon improves to being at or near a surplus in future years, the payments due in December 2022 and 2023 will be reduced or elimnated. In additon, an additonal payment of $68 millon (£50 millon) has been made to top up the existng escrow account of $149 millon (£110 millon) which exists to provide security for future contributons. The Bank Group has not recognised any additonal liablity under IFRIC 14 as the Bank has control of any pension surplus under the Trust Deed and Rules. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 286 Notes to the financal statements continued 29. Retirement benefitobligatons continued Overseas plans The princpal overseas defined benefit arrangements operated by the Bank Group are in Germany, India, Jersey, United Arab Emirates (UAE) and the United States of America (US). Plans in Germany, India and UAE remain open for accrual of future benefits. Key assumptions The princpal financal assumptions used at 31 December 2021 were: Funded plans UK FundOverseas Plans 1 2021 % 2020 % 2021 % 2020 % Discount rate 2.0 1.4 1.0 – 6.7 0.6 – 6.3 Price Inflation 2.6 2.2 2.0 – 4.0 1.4 – 4.0 Salary increases n/a n/a 3.5 – 7.0 2.9 – 7.0 Pension increases 2.5 2.1 0.0 – 3.1 0.0 – 2.7 1The range of assumptions shown is for the main defined benefit overseas plans in Germany, India, Jersey, and the US. These comprise around 75 per cent of the total liablites of overseas defined benefit plans Unfunded plans US post-retirement medicalOther 1 2021 % 2020 % 2021 % 2020 % Discount rate 3.1 2.8 2.0 – 6.7 1.4 – 6.3 Price inflaton 2.5 2.5 2.0 – 4.0 2.0 – 4.0 Salary increases N/A n/a 3.7 – 7.0 3.5 – 7.0 Pension increases N/A n/a 0.0 – 2.6 0.0 – 2.1 Post-retirement medical rate 7% in 2021 reducing by 0.5% per annum to 5% in 2025 7% in 2020 reducing by 0.5% per annum to 5% in 2024 n/a n/a 1The range of assumptions shown is for the main unfunded plans in Bahrain, India, Thailand, UAE and the UK. They comprise around 85 per cent of the total liablites of unfunded plans The princpal non-financal assumptions are those made for UK life expectancy. The assumptions for life expectancy for the UK Fund are that a male member currently aged 60 will live for 27 years (31 December 2020: 27 years) and a female member for 30 years (31 December 2020: 30 years) and a male member currently aged 40 will live for 29 years (31 December 2020: 29 years) and a female member for 31 years (31 December 2020: 31 years) after their 60th birthdays. Both financal and non-financal assumptions can be expected to change in the future, which would affect the value placed on the liablites. For example, changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligaton by the amounts shown below: • If the discount rate increased by 25 basis points, the liablity would reduce by approximately $65 millon for the UK Fund (31 December 2020: $75 millon) and $25 millon for the other plans (31 December 2020: $30 millon) • If the rate of inflaton increased by 25 basis points, the liablity allowing for the consequent impact on pension and salary increases, would increase by approximately $45 millon for the UK Fund (31 December 2020 $50 millon) and $10 millon for the other plans (31 December 2020: $15 millon) • If the rate salaries increase compared with inflaton increased by 25 basis points, the liablity would increase by nil for the UK Fund (31 December 2020: $nil millon) and approximately $5 millon for the other plans (31 December 2020: $10 millon) • If longevity expectations increased by one year, the liablity would increase by approximately $80 millon for the UK Fund (31 December 2020: $70 millon) and $15 millon for the other plans (31 December 2020: $20 millon) Although this analysis does not take account of the full distrbution of cash flows expected under the UK Fund, it does provide an approximaton of the sensitvity to the main assumptions. While changes in other assumptions would also have an impact, the effect would not be as signficant. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 287 Notes to the financal statements continued 29. Retirement benefitobligatons continued Profile of plan obligatons Funded plansUnfunded plans UK FundOverseas Post- retirement medicalOther Duration of the defined benefit obligaton (in years) 1513911 (Duration of the defined benefit obligaton – 2020)15141011 Benefits expected to be paid from plans Benefits expected to be paid during 20228634115 Benefits expected to be paid during 20238831114 Benefits expected to be paid during 20249032113 Benefits expected to be paid during 20259333114 Benefits expected to be paid during 20269533114 Benefits expected to be paid during 2027 to 2031514204568 Fund values: The fair value of assets and present value of liablites of the plans attributable to defined benefit members were: At 31 December 2021 2020 Funded plansUnfunded plans Funded plansUnfunded plans UK Fund $millon Overseas plans $millon Post- retirement medical $millonOther $millon UK Fund $millon Overseas plans $millon Post- retirement medical $millon Other $millon Equites 145149N/AN/A 118159N/AN/A Government bonds 695150N/AN/A 844120N/AN/A Corporate bonds 610119N/AN/A 50887N/AN/A Absolute Return Fund 91–N/AN/A 94–N/AN/A Hedge funds 1 19–N/AN/A 89–N/AN/A Insurance linked funds 1 11–N/AN/A 36–N/AN/A Property 12711N/AN/A 749N/AN/A Derivatves 10–N/AN/A 204N/AN/A Cash and equivalents 10883N/AN/A 14177N/AN/A Others 1 942N/AN/A 109N/AN/A Total fair value of assets 2 1,910514N/AN/A 1,934465N/AN/A Present value of liablites(1,822)(560)(13)(215) (1,982)(573)(16)(239) Net pension plan obligaton88(46)(13)(215) (48)(108)(16)(239) 1Unquoted assets 2Self-investment is monitored closely and is less than $1 millon of Standard Chartered equites and bonds for 2021 (31 December 2020: <$1 millon). Self-investment is only allowed where it is not practical to exclude it – for example through investment in index-tracking funds where the Bank Group is a constituent of the relevant index ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 288 Notes to the financal statements continued 29. Retirement benefitobligatons continued The pension cost for defined benefit plans was: 2021 Funded plansUnfunded plans Total $millon UK Fund $millon Overseas plans $millon Post- retirement medical $millon Other $millon Current service cost 1 –21–829 Past service cost and curtailments² –(1)–(4)(5) Interest income on pension plan assets (26)(19)––(45) Interest on pension plan liablites 2721–452 Total charge to profit before deduction of tax122–831 Net (gains)/losses on plan assets 3 (6)(34)––(40) (Gains)/losses on liablites (87)(18)(2)(10)(117) Total (gains)/losses recognised directly in statement of comprehensive income before tax(93)(52)(2)(10)(157) Deferred taxation –15––15 Total (gains)/losses after tax(93)(37)(2)(10)(142) 1Includes adminstrative expenses paid out of plan assets of $1 millon (31 December 2020: $2 millon) 2Past service costs arose due to plan amendments in India, Kenya and Sri Lanka 3The actual return on the UK Fund assets was a gain of $32 millon and on overseas plan assets was a gain of $53 millon The pension cost for defined benefit plans was: 2020 Funded plansUnfunded plans Total $millon UK Fund $millon Overseas plans $millon Post- retirement medical $millon Other $millon Current service cost 1 –15–621 Past service cost and curtailments 2 –––1414 Interest income on pension plan assets(32)(18)––(50) Interest on pension plan liablites35201561 Total charge to profit before deduction of tax 31712546 Net (gains)/losses on plan assets 3 (160)(42)––(202) (Gains)/losses on liablites13168(1)21219 Total (gains)/losses recognised directly in statement of comprehensive income before tax (29)26(1)2117 Deferred taxation–(10)––(10) Total (gains)/losses after tax (29)16(1)217 1Includes adminstrative expenses paid out of plan assets of $2 millon (31 December 2019: $2 millon) 2Past service costs arose primarly due to recogniton of a legacy UK long term sick plan which has been clarifed as technically representing a defined benefit 3The actual return on the UK Fund assets was a gain of $192 millon and on overseas plan assets was a loss of $60 millon ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 289 Notes to the financal statements continued 29. Retirement benefitobligatons continued Movement in the defined benefit pension plans and post-retirement medical defict during the year comprise: Funded plansUnfunded plans Total $millon UK Fund $millon Overseas plans $millon Post- retirement medical $millon Other $millon Surplus/(defict) at 1 January 2021(48)(108)(16)(239)(411) Contributons 453111794 Current service cost –(21)–(8)(29) Past service cost and curtailments –1–45 Settlement costs and transfers impact ––––– Net interest on the net defined benefit asset/liablity (1)(2)–(4)(7) Actuarial (losses)/gains 9352210157 Exchange rate adjustment (1)––54 Surplus/defict at 31 December 2021¹88(47)(13)(215)(187) 1The defict total of $187 millon is made up of plans in defict of $305 millon (31 December 2020: $411 millon) net of plans in surplus with assets totalling $118 millon (31December 2020: $14 millon) Movement in the defined benefit pension plans and post-retirement medical defict during the year comprise: Funded plansUnfunded plans Total $millon UK Fund $millon Overseas plans $millon Post- retirement medical $millon Other $millon Surplus/defict at 1 January 2020 (117)(79)(16)(205)(417) Contributons4427–1687 Current service cost–(15)–(6)(21) Past service cost and curtailments–––(14)(14) Settlement costs and transfers impact–(5)––(5) Net interest on the net defined benefit asset/liablity(3)(2)(1)(5)(11) Actuarial (losses)/gains29(26)1(21)(17) Exchange rate adjustment(1)(8)–(4)(13) Surplus/defict at 31 December 2020¹ (48)(108)(16)(239)(411) 1The defict total of $411 millon is made up of plans in defict of $425 millon (31 December 2019: $429 millon) net of plans in surplus with assets totalling $14 millon (31 December 2019: $12millon) ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 290 Notes to the financal statements continued 29. Retirement benefitobligatons continued The Bank Group’s expected contributon to its defined benefit pension plans in 2020 is $88 millon. 2021 2020 Assets $millon Obligatons $millon Total $millon Assets $millon Obligatons $millon Total $millon At 1 January 2,399(2,810)(411) 2,121(2,538)(417) Contributons 1 95(1)94 87–87 Current service cost 2 –(29)(29) –(21)(21) Past service cost and curtailments –55 –(14)(14) Settlement costs & transfers 3 10(10)– 18(23)(5) Interest cost on pension plan liablites –(52)(52) –(61)(61) Interest income on pension plan assets 45–45 50–50 Benefits paid out 2 (142)142– (128)128– Actuarial (losses)/gains 4 40117157 202(219)(17) Exchange rate adjustment (23)274 49(62)(13) At 31 December2,424(2,611)(187) 2,399(2,810)(411) 1Includes employee contributon of$1 millon (31December 2020:nil) 2Includes adminstrative expenses paid out of plan assets of $1 millon (31 December 2019: $2 millon) 3Impact of transfers relates to a defined contributon plan in Zambia which was included withn IAS 19 Disclosures for the first time this year due to the existence of investment guarantees which constitute a defined benefit under IAS 19. Previously, this plan was accounted for as a pure defined contributon plan. 4Actuarial gain on obligaton comprises of $118 millon gain (31 December 2020: $235 millon loss) from financal assumption changes, $5 millon gain (31 December 2020: $21 millon gain) from demographic assumption changes and $5 millon loss (31 December 2020: $5 millon loss) from experience. Company Retirementbenefit obligatons comprise: 2021 $millon 2020 $millon Defined benefit plans obligaton 152 367 Defined contributon plans obligaton 4 – Net obligaton156 367 Retirement benefit charge comprises: 2021 $millon 2020 $millon Defined benefit plans 20 37 Defined contributon plans 116 104 Charge against profit136 141 UKFund See the Bank Group section on the UK Fund in this note (page 285). There are no differences between Bank Group and Company in respect of the Fund. Overseas Plans The princpal overseas defined benefit arrangements operated by the Company are in Germany, Jersey, India, United Arab Emirates (UAE) and the United States of Americas (US). ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 291 Notes to the financal statements continued 29. Retirement benefitobligatons continued AllPlans The disclosures required under IAS 19 have been calculated by qualifed independent actuaries based on the most recent full actuarial valuations updated, where necessary, to 31 December 2021. The financal assumptions used at 31 December 2021 as shown below. Sensitvites are recorded on page 286 of the Bank Group accounts and those for non-UK Fund plans are applicable in proportion to the lower liablites of the Company. Funded plans UK FundOverseas Plans 1 2021 % 2020 % 2021 % 2020 % Discount rate 2.0 1.4 1.0 – 6.7 0.6 – 6.3 Price inflaton 2.6 2.2 2.0 – 4.0 1.4 – 4.0 Salary increases n/a n/a 3.5 – 7.0 2.9 – 7.0 Pension increases 2.5 2.1 0.0 – 3.1 0.0 – 2.7 1The range of assumptions shown is for the main funded defined benefit overseas plans in Germany, India, Jersey and the US. These comprise around 80 per cent of the total liablitesof funded overseas plans Unfunded plans US Post-retirement medical 1 Other 1 2021 % 2020 % 2021 % 2020 % Discount rate 3.1 2.8 2.0 – 6.7 1.4 – 6.3 Price inflaton 2.5 2.5 2.5 – 4.0 2.0 – 4.0 Salary increases N/A n/a 4.0 – 7.0 3.5 – 7.0 Pension increases N/A n/a 0.0 – 2.6 0.0 – 2.1 Post-retirement medical rate 7% in 2021 reducing by 0.5% per annum to 5% in 2025 7% in 2020 reducing by 0.5% per annum to 5% in 2024 n/a n/a 1The range of assumptions shown is for the main unfunded plans in India, UAE and the UK. These comprise around 85 per cent of the total liablites of unfunded plans Fund values: The fair value of assets and present value of liablites of the plans attributable to defined benefit members were: At 31 December 2021 2020 Funded plansUnfunded plans Funded plansUnfunded plans UK Fund $millon Overseas plans $millon Post- retirement medical $millon Other $millon UK Fund $millon Overseas plans $millon Post- retirement medical $millon Other $millon Equites 145128N/AN/A 118154N/AN/A Government bonds 695137N/AN/A 844114N/AN/A Corporate bonds 610115N/AN/A 50886N/AN/A Absolute return Fund 91–N/AN/A 94–N/AN/A Hedge funds 1 19–N/AN/A 89–N/AN/A Insurance linked funds 1 11–N/AN/A 36–N/AN/A Property 127–N/AN/A 74–N/AN/A Derivatves 10–N/AN/A 204N/AN/A Cash and equivalents 10846N/AN/A 14145N/AN/A Others¹ 94–N/AN/A 109N/AN/A Total fair value of assets 2 1,910426N/AN/A 1,934412N/AN/A Present value of liablites(1,822)(449)(13)(204) (1,982)(491)(16)(224) Net pension plan obligaton88(23)(13)(204) (48)(79)(16)(224) 1Unquoted assets 2Self investment is monitored closely and is less than $1 millon of Standard Chartered equites and bonds for 2021 (31 December 2020: <$1 millon). Self-investment is only allowed where it is not practical to exclude it – for example through investment in index-tracking funds where the Bank is a constituent of the relevant index ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 292 Notes to the financal statements continued 29. Retirement benefitobligatons continued The pension cost for defined benefit plans was: 2021 Funded plansUnfunded plans Total $millon UK Fund $millon Overseas plans $millon Post- retirement medical $millon Other $millon Current service cost 1 –11–516 Past service cost and curtailments –(1)–(2)(3) Interest income on pension plan assets (26)(13)––(39) Interest on pension plan liablites 2715–446 Total charge to profit before deduction of tax112–720 Net (gains)/losses on plan assets 2 (6)(17)––(23) (Gains)/losses on liablites (87)(34)(2)(9)(132) Total (gains)/losses recognised directly in statement of comprehensive income before tax(93)(51)(2)(9)(155) Deferred taxation –13––13 Total (gains)/losses after tax(93)(38)(2)(9)(142) 1Includes adminstrative expenses paid out of plan assets of $1 millon (31 December 2020: $2 millon) 2The actual return on the UK Fund assets was a gain of $32 millon and on overseas plan assets was a gain of $30 millon 2020 Funded plansUnfunded plans Total $millon UK Fund $millon Overseas plans $millon Post- retirement medical $millon Other $millon Current service cost 1 –9–413 Past service cost and curtailments 2 –––1414 Interest on pension plan liablites35161557 Total charge to profit before deduction of tax 31012337 Net (gains)/losses on plan assets 3 (160)(22)––(182) (Gains)/losses on liablites13145(1)21196 Total (gains)/losses recognised directly in statement of comprehensive income before tax (29)23(1)2114 Deferred taxation–(10)––(10) Total (gains)/losses after tax (29)13(1)214 1Includes adminstrative expenses paid out of plan assets of $2 millon (31 December 2019: $2 millon) 2Past service costs arose primarly due to recogniton of a legacy UK long term sick plan which has been clarifed as technically representing a defined benefit 3The actual return on the UK Fund assets was a gain of $192 millon and on overseas plan assets was a gain of $37 millon Movement in the defined benefit pension plans and post-retirement medical defict during the year comprise: Funded plansUnfunded plans Total $millon UK Fund $millon Overseas plans $millon Post- retirement medical $millon Other $millon Surplus/defict at 1 January 2021 (48)(79)(16)(224)(367) Contributons 452011783 Current service cost –(11)–(5)(16) Past service cost and curtailments² –1–23 Net interest on the net defined benefit asset/liablity (1)(2)–(4)(7) Actuarial (losses)/gains 935129155 Exchange rate adjustment (1)(3)–1(3) Surplus/defict at 31 December 2021¹88(23)(13)(204)(152) 1The defict total of $152 millon is made up of plans in defict of $266 millon (2020: $367 millon) net of plans in surplus with assets totalling $114 millon (2020: $11 millon) 2Past service costs and gains arose due to plan amendments in India, Kenya and Sri Lanka ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 293 Notes to the financal statements continued 29. Retirement benefitobligatons continued Movement in the defined benefit pension plans and post-retirement medical defict during the year comprise: Funded plansUnfunded plans Total $millon UK Fund $millon Overseas plans $millon Post- retirement medical $millon Other $millon Surplus/defict at 1 January 2020(117)(61)(16)(191)(385) Contributons4417–1475 Current service cost–(9)–(4)(13) Past service cost and curtailments 2 –––(14)(14) Net interest on the net defined benefit asset/liablity(3)(1)(1)(5)(10) Actuarial (losses)/gains29(23)1(21)(14) Other(1)(2)–(3)(6) Surplus/defict at 31 December 2020¹ (48)(79)(16)(224)(367) 1The defict total of $367 millon is made up of plans in defict of $378 millon (2019: $395 millon) net of plans in surplus with assets totalling $11 millon (2019: $10 millon) 2Past service costs arose primarly due to recogniton of a legacy UK long term sick plan which has been clarifed as technically representing a defined benefit The Company’s expected contributon to its defined benefit pension plans in 2020 is $73 millon 2021 2020 Assets $millon Obligatons $millon Total $millon Assets $millon Obligatons $millon Total $millon At 1 January 2,346(2,713)(367) 2,097(2,482)(385) Contributons 1 83–83 75–75 Current service cost 2 –(16)(16) –(13)(13) Past service cost and curtailments –33 –(14)(14) Interest cost on pension plan liablites –(46)(46) –(57)(57) Interest income on pension plan assets 39–39 47–47 Benefits paid out 2 (134)134– (123)123– Actuarial (losses)/gains 3 23132155 182(196)(14) Exchange rate adjustment (21)18(3) 68(74)(6) At 31 December2,336(2,488)(152) 2,346(2,713)(367) 1Includes employee contributons ofnil (31December 2020:nil) 2Includes adminstrative expenses paid out of plan assets of $1 millon (31 December 2020: $2 millon) 3Actuarial gain on obligaton comprises of $115 millon gain (31 December 2020: $232 millon loss) from financal assumption changes, $5 millon gain (31 December 2020: $21 millon gain) from demographic assumption changes and $12 millon gain (31 December 2020: $15 millon gain) from experience ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 294 Notes to the financal statements continued 30. Share-basedpayments Accounting policy The Group operates equity-settled and cash-settled share-based compensation plans. The fair value of the employee services (measured by the fair value of the awards granted) received in exchange for the grant of the shares and awards is recognised as an expense. For deferred share awards granted as part of an annual performance award, the expense is recognised over the period from the start of the performance period to the vesting date. For example, the expense for three-year awards granted in 2022 in respect of 2021 performance, which vest in 2023-2025, is recognised as an expense over the period from 1 January 2021 to the vesting dates in 2023-2025. For all other awards, the expense is recognised over the period from the date of grant to the vesting date. For equity-settled awards, the total amount to be expensed over the vesting period is determined by reference to the fair value of the shares and awards at the date of grant, which excludes the impact of any non-market vesting conditons (for example, profitablity and growth targets). The fair value of equity instruments granted is based on market prices, if available, at the date of grant. In the absence of market prices, the fair value of the instruments is estimated using an appropriate valuation technique, such as a binomal option pricng model. Non-market vesting conditons are included in assumptions for the number of shares and awards that are expected to vest. At each balance sheet date, the Group revises its estimates of the number of shares and awards that are expected to vest. It recognises the impact of the revison of orignal estimates, if any, in the income statement and a corresponding adjustment to equity over the remainng vesting period. Forfeitures prior to vesting attributable to factors other than the failure to satisfy service conditons and non-market vesting conditons are treated as a cancellation and the remainng unamortised charge is debited to the income statement at the time of cancellation. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when awards in the form of options are exercised. Cash-settled awards are revalued at each balance sheet date and a liablity recognised on the balance sheet for all unpaid amounts, with any changes in fair value charged or credited to staff costs in the income statement until the awards are exercised. Where forfeitures occur prior to vesting that are attributable to factors other than a failure to satisfy service conditons or market-based performance conditons, the cumulative charge incurred up to the date of forfeiture is credited to the income statement. Any revaluation related to cash-settled awards is recorded as an amount due from subsidary undertakings. The Group operates a number of share-based arrangements for its executive directors and employees. Details of the share-based payment charge are set out below. 2021 $millon 2020 $millon Deferred share awards 87 67 Other share awards 63 65 Total share-based payments 1, 2 150 132 1No forfeiture assumed 2Includes $2 millon (2020: $13 millon) of share-based payments reported in ‘other staff costs’. This reflects Bank Group’s requirement under IFRS 2 to account for cash-settled awards made to employees of Bank Group settled by Standard Chartered PLC with payments linked to PLC’s share price as equity-settled awards 2011 Standard Chartered Share Plan (the ‘2011 Plan’) The 2011 Plan was approved by shareholders in May 2011 and is the Group’s main share plan. Since approval, it has been used to deliver various types of share awards: • Long Term Incentive Plan (LTIP) awards: granted with vesting subject to performance measures. Performance measures attached to awards granted previously include: total shareholder return (TSR); return on equity (RoE) and return on tangible equity (RoTE) (in the case of both RoE and RoTE, with a Common Equity Tier 1 (CET1) underpin); strategic measures; earnings per share (EPS) growth; and return on risk-weighted assets (RoRWA). Each measure is assessed independently over a three-year period. Awards granted from 2016 have an indvidual conduct gateway requirement that results in the award lapsing if not met • Deferred awards are used to deliver the deferred portion of variable remuneration, in line with both market practice and regulatory requirements. These awards vest in instalments on anniversares of the award date specifed at the time of grant. Deferred awards are not subject to any plan limt. This enables the Group to meet regulatory requirements relating to deferral levels, and is in line with market practice ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 295 Notes to the financal statements continued 30. Share-based payments continued • Restricted share awards, made outside of the annual performance process as replacement buy-out awards to new joners who forfeit awards on leaving their previous employers, vest in instalments on the anniversares of the award date specifed at the time of grant. This enables the Group to meet regulatory requirements relating to buy-outs, and is in line with market practice. In line with simlar plans operated by our competitors, restricted share awards are not subject to an annual limt and do not have any performance measures Under the 2011 Plan, no grant price is payable to receive an award. The remainng life of the 2011 Plan during which new awards can be made is one year. Valuation – LTIP awards The vesting of awards granted in both 2021 and 2020 is subject to relative TSR performance measures, achievement of a strategic scorecard and satisfacton of RoTE (subject to a capital CET1 underpin). The vesting of awards granted in 2021 has additonal conditons under strategic measures related to targets set for sustainablity linked to business strategy. The fair value of the TSR component is calculated using the probabilty of meeting the measures over a three-year performance period, using a Monte Carlo simulaton model. The number of shares expected to vest is evaluated at each reporting date, based on the expected performance against the RoTE and strategic measures in the scorecard, to determine the accounting charge. No divdend equivalents accrue for the LTIP awards made in 2020 or 2021 and the fair value takes this into account, calculated by reference to market consensus divdend yield. 2021 2020 Grant date 15 March 09 March Share price at grant date (£) 4.90 5.20 Vesting period (years) 3-7 3-7 Expected divded yield (%) 3.4 4.2 Fair value (RoTE) (£) 1.25, 1.20 1.40, 1.34 Fair value (TSR) (£) 0.72, 0.71 0.75, 0.72 Fair value (Strategic) (£) 1.66, 1.60 1.40, 1.34 Deferred shares and restricted shares The fair value for deferred awards which are not granted to material risk takers is based on 100 per cent of the face value of the shares at the date of grant as the share price will reflect expectations of all future divdends. For awards granted to material risk takers in 2021, the fair value of awards takes into account the lack of divdend equivalents, calculated by reference to market consensus divdend yield. Deferred shareawards 2021 Grant date22 June30 March Share price at grant date (£) 4.694.90 Vesting period (years) Expected divdend yield (%)Fair value (£) Expected divdend yield (%)Fair value (£) 1-3 years N/A,3.44.69,4.24N/A,3.4,3.44.90,4.58,4.43 1-5 years 3.44.173.4,3.4,3.44.43,4.36,4.29 3-7 years ––3.4,3.44.15,4.01 2020 Grant date 22 June30 March9 March Share price at grant date (£)4.274.675.20 Vesting period (years) Expected divdend yield (%)Fair value (£) Expected divdend yield (%)Fair value (£) Expected divdend yield (%)Fair value (£) 1-3 yearsN/A4.27N/A,4.24.67,4.13N/A,4.2,4.25.20,4.79,4.59 1-5 years––4.24.044.2,4.24.59,4.50 3-7 years––––4.2,4.24.23,4.06 ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 296 Notes to the financal statements continued 30. Share-based payments continued Other restricted share awards 2021 Grant date30 September22 June9 March Share price at grant date (£) 4.374.694.90 Vesting period (years) Expected divdend yield (%)Fair value (£) Expected divdend yield (%)Fair value (£) Expected divdend yield (%)Fair value (£) 1 year 3.44.233.44.533.44.74 2 years 3.44.093.44.383.44.58 3 years 3.43.953.44.243.44.43 4 years 3.43.823.44.103.44.29 5 years 3.43.70–––– 2020 Grant date26 November30 September22 June9 March Share price at grant date (£)4.713.524.275.20 Vesting period (years) Expected divdend yield (%)Fair value (£) Expected divdend yield (%)Fair value (£) Expected divdend yield (%)Fair value (£) Expected divdend yield (%)Fair value (£) 1 year4.24.34,4.524.23.384.24.104.24.99 2 years4.24.16,4.344.23.244.23.934.24.79 3 years4.24.164.23.114.23.774.24.59 4 years4.24.004.22.984.23.624.24.41 5 years––––4.23.484.24.23 All Employee Sharesave Plans 2013 Sharesave Plan Under the 2013 Sharesave Plan, employees may open a savings contract. Withn a maturity period of six months after the third anniversary, employees may save up to £250 per month over three years to purchase ordinary shares in the Company at a discount of up to 20 per cent on the share price at the date of invtation (this is known as the ‘option exercise price’). There are no performance measures attached to options granted under the 2013 Sharesave Plan and no grant price is payable to receive an option. In some countries in which the Group operates, it is not possible to operate Sharesave plans, typically due to securites law and regulatory restrictons. In these countries, where possible, the Group offers an equivalent cash-based plan to its employees. The 2013 Sharesave Plan was approved by shareholders in May 2013 and all future Sharesave invtations are made under this plan. The remainng life of the 2013 Sharesave Plan is two years. Valuation – Sharesave: Options under the Sharesave plans are valued using a binomal option-pricng model. The same fair value is applied to all employees includng executive directors. The fair value per option granted and the assumptions used in the calculation are asfollows: 2021 2020 Grant date 30 September 30 September Share price at grant date (£) 4.37 3.52 Exercise price (£) 3.67 3.14 Vesting period (years) 3 3 Expected volatilty (%) 35.1 31.8 Expected option life (years) 3.33 3.33 Risk-free rate (%) 0.42 (0.07) Expected divdend yield (%) 3.4 4.2 Fair value (£) 1.11 0.69 The expected volatilty is based on historcal volatilty over the last three years, or three years prior to grant. The expected life is the average expected period to exercise. The risk-free rate of return is the yield on zero-coupon UK Government bonds of aterm consistent with the assumed option life. The expected divdend yield is calculated by reference to market consensus divdend yield. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 297 Notes to the financal statements continued 30. Share-based payments continued Limts An award shall not be granted under the 2011 Plan in any calendar year if, at the time of its proposed grant, it would cause the number of Standard Chartered PLC ordinary shares allocated in the period of 10 calendar years ending with that calendar year under the 2011 Plan and under any other discretonary share plan operated by Standard Chartered PLC to exceed such number as represents 5 per cent of the ordinary share capital of Standard Chartered PLC in issue at that time. An award shall not be granted under the 2011 Plan or 2013 Sharesave Plan in any calendar year if, at the time of its proposed grant, it would cause the number of Standard Chartered PLC ordinary shares allocated in the period of 10 calendar years ending with that calendar year under the 2011 Plan or 2013 Sharesave Plan and under any other employee share plan operated by Standard Chartered PLC to exceed such number as represents 10 per cent of the ordinary share capital of Standard Chartered PLC in issue at that time. An award shall not be granted under the 2011 Plan or 2013 Sharesave Plan in any calendar year if, at the time of its proposed grant, it would cause the number of Standard Chartered PLC ordinary shares which may be issued or transferred pursuant to awards then outstanding under the 2011 Plan or 2013 Sharesave Plan as relevant to exceed such number as represents 10 per cent of the ordinary share capital of Standard Chartered PLC in issue at that time. The number of Standard Chartered PLC ordinary shares which may be issued pursuant to awards granted under the 2011 Plan in any 12-month period must not exceed such number as represents 1 per cent of the ordinary share capital of Standard Chartered PLC in issue at that time. The number of Standard Chartered PLC ordinary shares which may be issued pursuant to awards granted under the 2013 Sharesave Plan in any 12-month period must not exceed such number as represents 1 per cent of the ordinary share capital of Standard Chartered PLC in issue at that time. Reconcilation of share award movements for the year to 31 December 2021 2011 Plan Sharesave Weighted average Sharesave exercise price (£)LTIP Deferred/ Restricted shares¹ Outstanding at 1 January 2021 22,402,58034,672,82510,878,0904.57 Granted 2, 3,775,61514,546,5712,675,125– Lapsed (14,765,454)(786,117)(3,491,017)5.33 Exercised (320,964)(14,229,007)(3,740)3.62 Outstanding as at 31 December 2021 11,091,77734,204,27210,058,4584.07 Exercisable as at 31 December 2021 3,9521,534,4792,293,4245.11 Range of exercise prices (£)³ ––3.14 – 6.20 Intrinsc value of vested but not exercised options ($ millon) 0.029.310.05 Weighted average contractual remainng life (years) 7.828.082.04 Weighted average share price for awards exercised during the period (£) 4.954.884.69 1 Employees does not contribute towards the cost of these awards and are covered under the 2011 and 2021 share plan rules 2 14,208,239 (DRSA/RSA) granted on 15 March 2021, 78,811 (DRSA/RSA) granted as notional divdend on 01 March 2021, 3,761,387 (LTIP) granted on 15 March 2021, 10,954 (LTIP) granted as notional divdend on 01 March 2021, 158,767 (DRSA/RSA) granted on 21 June 2021. 27,785 (DRSA/RSA) granted as notional divdend on 13 August 2021, 3,274 (LTIP) granted as notional divdend on 13 August 2021, 72,969 (RSA) granted on 30 September 2021, 2,675,125 (Sharesave) granted on 30 September 2021. LTIP and DRSA/RSA awards granted in March 2021 were granted under the 2011 Plan, and DRSA/RSA awards granted in June and September 2021 were granted under the 2021 Plan. Notional divdends were granted under the 2011 Plan. Sharesave options granted in 2021 were granted under the 2013 Sharesave Plan. 3 For Sharesave options granted in 2021 the exercise price is £3.67 per share, which was a 20% discount to the closing share price on 27 August 2021. The closing share price on 27 August 2021 was £4.578. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 298 Notes to the financal statements continued 30. Share-based payments continued Reconcilation of share award movements for the year to 31 December 2020 2011 Plan Sharesave Weighted average Sharesave exercise price (£)LTIP Deferred/ Restricted shares¹ Outstanding at 1 January 202020,550,04825,529,03110,198,1185.35 Granted 2 2,933,18920,324,7093,702,169– Lapsed(824,269)(558,540)(2,865,637)5.44 Exercised(256,388)(10,622,375)(156,560)5.30 Outstanding at 31 December 202022,402,58034,672,82510,878,0904.57 Exercisable as at 31 December 202026,0592,193,7921,545,9326.17 Range of exercise prices (£) 3 ––3.14 – 6.20 Intrinsc value of vested but not exercised options ($ millon)0.1713.950.01 Weighted average contractual remainng life (years)6.268.322.16 Weighted average share price for awards exercised during the period (£)4.284.546.76 1. Employees do not contribute towards the cost of these awards 2. 19,081,191 (DRSA/RSA) granted on 09 March 2020, 171,578 (DRSA/RSA) granted as notional divdend on 06 March 2020, 2,872,132 (LTIP) granted on 09 March 2020, 56,805 (LTIP) granted as notional divdend on 06 March 2020, 172,893 (DRSA/RSA) granted on 22 June 2020, 4,252 (LTIP) granted as notional divdend on 25 August 2020, 460,311 (DRSA/RSA) granted on 30 September 2020, 3,720,169 (Sharesave) granted on 30 September 2020, 438,728 (DRSA/RSA) granted on 26 November 2020 3. For Sharesave granted in 2020 the exercise price is £3.14 per share, which was a 20% discount to the closing share price on 28 August 2020. The closing share price on 28 August 2020 was of £3.924. 31. Investments in subsidary undertakings, jont ventures and associates Accounting policy Subsidaries Subsidaries are all entites, includng structured entites, which the Group controls. The Group controls an entity when it is exposed to, and has rights to, variable returns from its involvement with the entity and has the abilty to affect those returns through its power over the investee. The assessment of power is based on the Group’s practical abilty to direct the relevant activties of the entity unilaterally for the Group’s own benefit and is subject to reassessment if and when one or more of the elements of control change. Subsidaries are fully consolidated from the date on which the Group effectively obtains control. They are deconsolidated from the date that control ceases, and where any interest in the subsidary remains, this is remeasured to its fair value and the change in carrying amount is recognised in the income statement. Associates and jont arrangements Joint arrangements are where two or more parties either have rights to the assets, and obligatons of the jont arrangement (jont operations), or have rights to the net assets of the jont arrangement (jont venture). The Group evaluates the contractual terms of jont arrangements to determine whether a jont arrangement is a jont operation or a jont venture. TheGroup did not have any contractual interest in jont operations. An associate is an entity over which the Group has signficant influence. Investments in associates and jont ventures are accounted for by the equity method of accounting and are intially recognised at cost. The Group’s investment in associates and jont ventures includes goodwill identfied on acquistion (net of any accumulated imparment loss). The Group’s share of its associates’ and jont ventures’ post-acquistion profits or losses is recognised in the income statement, and its share of post-acquistion movements in other comprehensive income is recognised in reserves. The cumulative post-acquistion movements are adjusted against the carrying amount of the investment. When the Group’s share of losses in an associate or a jont venture equals or exceeds its interest in the associate, includng any other unsecured receivables, the Group does not recognise further losses, unless it has incurred obligatons or made payments on behalf of the associate or jont venture. Unrealised gains and losses on transactions between the Group and its associates and jont ventures are elimnated to the extent of the Group’s interest in the associates and jont ventures. At each balance sheet date, the Group assesses whether there is any objectve evidence of imparment in the investment in associates and jont ventures. Such evidence includes a signficant or prolonged decline in the fair value of the Group’s investment in an associate or jont venture below its cost, among other factors. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 299 Notes to the financal statements continued 31. Investments in subsidary undertakings, jont ventures and associates continued Signficant accounting estimates and judgements The Group applies judgement in determinng if it has control, jont control or signficant influence over subsidaries, jont ventures and associates respectively. These judgements are based upon identfying the relevant activties of counterparties, being those activties that signficantly affect the entites returns, and further making a decison of if the Group has control over those entites, jont control, or has signficant influence (being the power to particpate in the financal and operating policy decisons but not control them). These judgements areat times determined byequity holdings, and the voting rights associated withthose holdings. However, further consideratons includng but not limted to board seats, advisory committee members and specialst knowledge of some decison-makers are also taken into account. Further judgement is required when determinng if the Group has de-facto control over an entity even though it may hold less than 50% of the voting shares of that entity. Judgement is required to determine the relative size of the Group’s shareholding when compared to the size and disperson of other shareholders. Impairment testing of investments in associates and jont ventures is performed if there is a possible indcator of imparment. Judgement is used to determine if there is objectve evidence of imparment. Objectve evidence may be observable data such as losses incurred on the investment when applying the equity method, the granting of concessions as a result of financal diffculty, or breaches of contracts/regulatory fines of the associate or jont venture. Further judgement is required when considerng broader indcators of imparment such as losses of active markets or ratings downgrades across key markets in which the associate or jont venture operate in. Impairment testing is based on estimates includng forecasting the expected cash flows from the investments, growth rates, terminal values and the discount rate used in calculation of the present values of those cash flows. The estimaton of future cash flows and the level to which they are discounted is inherently uncertain and requires signficant judgement. Business combinatons The acquistion method of accounting is used to account for the acquistion of subsidaries by the Group. The cost of an acquistion is measured as the fair value of the assets given, equity instruments issued and liablites incurred or assumed at the date of exchange, together with the fair value of any contingent consideraton payable. The excess of the cost of acquistion over the fair value of the Group’s share of the identfiable net assets and contingent liablites acquired is recorded as goodwill (see Note 16 for details on goodwill recognised by the Group). If the cost of acquistion is less than the fair value of the net assets and contingent liablites of the subsidary acquired, the difference is recognised directly in the income statement. Where the fair values of the identfiable net assets and contingent liablites acquired have been determined provisonally, orwhere contingent or deferred consideraton is payable, adjustments arisng from their subsequent finalsation are not reflected in the income statement if (i) they arise withn 12 months of the acquistion date (or relate to acquistions completed before 1 January 2014) and (i) the adjustments arise from better informaton about conditons existng at the acquistion date (measurement period adjustments). Such adjustments are applied as at the date of acquistion and, if applicable, prior year amounts are restated. All changes that are not measurementperiod adjustments arereported in income other thanchanges in contingent consideraton not classifed as financal instruments, which are accounted for in accordance with the appropriate accounting policy, and changes in contingent consideraton classifed as equity, which is not remeasured. Changes in ownership interest in a subsidary, which do not result in a loss of control, are treated as transactions between equity holders and are reported in equity. Where a business combinaton is achieved in stages, the previously held equity interest is remeasured at the acquistion date fair value with the resulting gain or loss recognised in the income statement. In the Company’s financal statements, investment in subsidaries, associates and jont ventures are held at cost less imparment and divdends from pre-acquistion profits received prior to 1 January 2009, if any. Inter-company transactions, balances and unrealised gains and losses on transactions between Group companies are elimnated in the Group accounts. Investments in subsidary undertakings 2021 $millon 2020 $millon As at 1 January8,258 9,227 Additons 1 3,077 141 Disposal 2 (1,639) (716) Impairment (2) (394) As at 31 December9,694 8,258 1Includes issuances of $1,273 millon by Standard Chartered Holdings (Singapore) Private Limted and $1,066 millon by Standard Chartered Bank (Singapore) Limted 2Disposal of Standard Chartered Bank (Thai) Public Company Limted ($782 millon), Standard Chartered Bank (Vietnam) Limted ($327 millon) from Standard Chartered Bank to Standard Chartered Bank (Singapore) Limted and $530millon repaid by Standard Chartered Holdings (Singapore) Private Limted to holding company Impairment primarly consists of $72m on Standard Chartered (Thai) Public Company Limted as a result of a decrease in net asset value due to losses for the year, divdends paid and foreign exchange movements, offset by reversals of imparment of various subsidaries, primarly Standard Chartered UK Holdings Limted and Standard Chartered Holdings Inc, as a result of increases in the recoverable amounts. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 300 Notes to the financal statements continued 31. Investments in subsidary undertakings, jont ventures and associates continued At 31 December 2021, the princpal subsidary undertakings, all indrectly held except for Standard Chartered Bank AG, Standard Chartered Bank (Pakistan) Limted, Standard Chartered Bank (Mauritus) Limted and 13.6 per cent of Standard Chartered Bank (Singapore) Limted, and princpally engaged in the business of banking and provison of other financal services, were as follows: Country and place of incorporation or registraton Main areas of operation Group interest in ordinary share capital % Standard Chartered Bank (Singapore) Limted, SingaporeSingapore100 Standard Chartered Bank AG, Germany Germany, Sweden and France100 Standard Chartered Bank Malaysia Berhad, MalaysiaMalaysia100 Standard Chartered Bank Nigera Limted, NigeraNigera100 Standard Chartered Bank (Vietnam) Limted, VietnamVietnam100 Standard Chartered Bank (Mauritus) Limted, MauritusMauritus100 Country and place of incorporation or registraton Main areas of operation Group interest in ordinary share capital % Standard Chartered Bank (Thai) Public Company Limted, ThailandThailand99.87 Standard Chartered Bank (Pakistan) Limted, PakistanPakistan98.99 Standard Chartered Bank Zambia PLC, ZambiaZambia90.00 Standard Chartered Bank Botswana Limted, BotswanaBotswana75.83 Standard Chartered Bank Kenya Limted, KenyaKenya74.32 Standard Chartered Bank Ghana PLC, GhanaGhana69.42 A complete list of subsidary undertaking is included in Note 39. The Group does not have any material non-controlling interest except as listed above, which contribute $44 millon (31December 2020: $41 millon) of the profit attributable to non-controlling interest and $213 millon (31 December 2020: $213 millon) of the equity attributable to non-controlling interests. While the Group’s subsidaries are subject to local statutory capital and liqudity requirements in relation to foreign exchange remittance, these restrictons arise in the normal course of business and do not signficantly restrict the Group’s abilty to access or use assets and settle liablites of the Group. The Group does not have signficant restrictons on its abilty to access or use its assets and settle its liablites other than those resulting from the regulatory framework withn which the banking subsidaries operate. These frameworks require banking operations to keep certain levels of regulatory capital, liqud assets, exposure limts and comply with other required ratios. These restrictons are summarised below: Regulatory and liqudity requirements The Group’s subsidaries are required to maintan minmum capital, leverage ratios, liqudity and exposure ratios which therefore restrict the abilty of these subsidaries to distrbute cash or other assets to the parent company. The subsidaries are also required to maintan balances with central banks and other regulatory authorites in the countries in which they operate. At 31 December 2021, the total cash and balances with central banks was $62 billon (31 December 2020: $58 billon) of which $3 billon (31 December 2020: $3 billon) is restricted. Statutory requirements The Group’s subsidaries are subject to statutory requirements not to make distrbutions of capital and unrealised profits to the parent company, generally to maintan solvency. These requirements restrict the abilty of subsidaries to remit divdends to the Group. Certain subsidaries are also subject to local exchange control regulations which provide for restrictons on exporting capital from the country other than through normal divdends. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 301 Notes to the financal statements continued 31. Investments in subsidary undertakings, jont ventures and associates continued Contractual requirements The encumbered assets in the balance sheet of the Group’s subsidaries are not available for transfer around the Group. Share of profit from investment in associates and jont ventures comprises: 2021 $millon 2020 $millon Profit from investment in jont ventures (2) (3) Profit from investment in associates 3 4 Total1 1 Interests in associates and jont ventures 2021 $millon 2020 $millon As at 1 January79 44 Exchange translation differences (1) (7) Additons 90 41 Share of profits 1 1 Disposals¹ (16) – Share of fair value through other comprehensive income 3 – As at 31 December156 79 1Sale of Assembly payments to Currency fair has been reported Company Bank Company has an Investment in Trade Information Network (associate) and the carrying value of the investment is $1 millon (31 December 2020: $Nil millon) A complete list of the Group's interest in associates and jont ventures is included in Note 39. The princpal associate is: Associate Nature of activties Main areas of operation Group interest in ordinary share capital % CurrencyFair Limted Exchange IrelandBankingIreland43.42 On the 10th September 2021, the Group, through its subsidary Standard Chartered UK Holdings Limted completed its investment in acquistion of CurrencyFair Limted, an Irish foreign exchange payments platform. The Group invested in CurrencyFair through the contributon of its existng investment in its jont venture, Assembly Payments Pte. Limted and a cash inection into CurrencyFair of $35 millon, which provided the Group with equity of 43.42% in CurrencyFair. This equity ownership, along with seats on the board of directors resulted in the Group having signficant influence over CurrencyFair and as such will equity method account the investment. The transaction will faciltate creation of a combined payments and foreign exchange products franchise, combinng the customer base, staff, expertise and capabilties of both CurrencyFair and Assembly Payments. The fair value of consideraton for the investment as follows: Consideraton $millon Fair value of the Group’s investment in Assembly Payments 1 36 Cash consideraton 35 Total consideraton/Investment in Associate71 1The fair value of Assembly Payments was determined to be $60m, of which the Group’s equity ownership on transfer was 59.63%. The Group carried this investment under the equity method at a balance of $16m resulting in a profit on disposal of $20m ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 302 Notes to the financal statements continued 32. Structured entites Accounting policy A structured entity is an entity that has been designed so that voting or simlar rights are not the dominant factor in decidng who controls the entity. Contractual arrangements determine the rights and therefore relevant activties of the structured entity. Structured entites are generally created to achieve a narrow and well-defined objectve with restrictons around their activties. Structured entites are consolidated when the substance of the relationshp between the Group and the structured entity indcates the Group has power over the contractual relevant activties of the structured entity, is exposed to variable returns, and can use that power to affect the variable return exposure. In determinng whether to consolidate a structured entity to which assets have been transferred, the Group takes into account its abilty to direct the relevant activties of the structured entity. These relevant activties are generally evidenced through a unilateral right to liqudate the structured entity, investment in a substantial proportion of the securites issued by the structured entity or where the Group holds specifc subordinate securites that embody certain controlling rights. The Group may further consider relevant activties embedded withn contractual arrangements such as call options which give the practical abilty to direct the entity, special relationshps between the structured entity and investors, and if a single investor has a large exposure to variable returns of the structured entity. Judgement is required in determinng control over structured entites. The purpose and design of the entity is considered, along with a determinaton of what the relevant activties are of the entity and who directs these. Further judgements are made around which investor is exposed to, and absorbs the variable returns of the structured entity. The Group will have to weigh up all of these facts to consider whether the Group, or another involved party is acting as a princpal in its own right or as an agent on behalf of others. Judgement is further required in the ongoing assessment of control over structured entites, specifcally if market conditons have an effect on the variable return exposure of different investors. The Group has involvement with both consolidated and unconsolidated structured entites, which may be established by the Group as a sponsor or by a third-party. Interests in consolidated structured entites: A structured entity is consolidated into the Group’s financal statements where the Group controls the structured entity, as per the determinaton in the accounting policy above. The following tablepresents the Group's interests in consolidated structured entites. 2021 $millon 2020 $millon Princpal and other structured finance 173 225 Total173 225 ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 303 Notes to the financal statements continued 32. Structured entites continued Interests in unconsolidated structured entites: Unconsolidated structured entites are all structured entites that are not controlled by the Group. The Group enters into transactions with unconsolidated structured entites in the normal course of business to faciltate customer transactions and for specifc investment opportunites. An interest in a structured entity is contractual or non-contractual involvement which creates variablity of the returns of the Group arisng from the performance of the structured entity. The table below presents the carrying amount of the assets recognised in the financal statements relating to variable interests held inunconsolidatedstructured entites, themaximum exposure toloss relatingto those interests and the total assets of the structured entites. Maximum exposure to loss is primarly limted to the carrying amount of the Group’s on- balance sheet exposure to the structured entity. For derivatves, the maximum exposure to loss represents the on-balance sheet valuation and not the notional amount. For commitments and guarantees, the maximum exposure to loss is the notional amount of potentialfuture losses. 2021 2020 Asset-backed securites $millon Princpal Finance funds $millon Other activties $millon Total $millon Asset-backed securites $millon Princpal Finance funds $millon Other activties $millon Total $millon Group’s interest – assets Financal assets held at fair value through profit or loss 66482–746 49591–586 Loans and advances/ Investment securites at amortised cost 9,234––9,234 5,224267–5,491 Investment securites (fair value through other comprehensive income) 1,368––1,368 1,985––1,985 Other assets –1–1 –––– Total assets11,26683–11,349 7,704358–8,062 Off-balance sheet –99–99 –64–64 Group’s maximum exposure to loss11,266182–11,448 7,704422–8,126 Total assets of structured entites138,0148722138,888 134,3632,2742136,639 The main types of activties for which the Group utilses unconsolidated structured entites cover synthetic credit default swaps formanaged investmentfunds (includng specialsed PrincpalFinance funds), portfolio management purposes, structured finance and asset-backed securites. These are detailed as follows: • Asset-backedsecurites (ABS): The Group also has investments in asset-backed securites issued by third-party sponsored and managed structured entites. For the purpose of market making and at the discreton of ABS trading desk, the Group may hold an immateral amount of debt securites from structured entites orignated by credit portfolio management. This is disclosed in the ABS column above. • Portfolio management (Group sponsored entites): For the purposes of portfolio management, the Group purchased credit protection via synthetic credit default swaps from note-issung structured entites. This credit protection creates credit risk which the structured entity and subsequently the end investor absorbs. The referenced assets remain on the Group’s balance sheet as they are not assigned to these structured entites. The Group continues to own or hold all of the risks and returns relating to these assets. The credit protectionobtained from the regulatory-compliantsecuritsation only serves to protect the Group against losses upon the occurrence of eligble credit events and the underlying assets are not derecognised from the Group’s balance sheet. The Group does not hold any equity interests in the structured entites, but may hold an insgnifcant amount of the issued notes for market making purposes. This is disclosed in the ABS section above. The proceeds of the notes’ issuance are typically held as cash collateral in the issuer’s account operated by a trustee or invested in AAA-rated government-backed securites to collateralise the structured entites swap obligatons to the Group, and to repay the princpal to investors at maturity. The structured entites reimburse the Group on actual losses incurred, through the use of the cash collateral or realisaton of the collateral security. Correspondingly, the structured entites write down the notes issued by an equal amount of the losses incurred, in reverse order of seniorty. All funding is committed for the life of these vehicles and the Group has no indrect exposure in respect of the vehicles’ liqudity positon. The Group has reputational risk in respect of certain portfolio management vehicles and investment funds either because the Group is the arranger and lead manager or because the structured entites have Standard Chartered branding. • Princpal Finance Fund: The Group’s exposure to Princpal Finance Funds represents committed or invested capital in unleveraged investment funds, primarly investng in pan-Asian infrastructure, real estate and private equity. • Other activties: Other activties include structured entites created to support margin financng transactions, the refinancng of existng credit and debt facilties, as well as setting up of bankruptcy remote structured entites. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 304 Notes to the financal statements continued 33. Cash flow statement Adjustment for non-cash items and other adjustments included withn income statement GroupCompany 2021 $millon 2020 $millon 2021 $millon 2020 $millon Amortisaton of discounts and premiums of investment securites 94 (568) 243 (305) Interest expense on subordinated liablites 6 540 401 525 Interest expense on senior debt securites in issue 60 54 (35) 38 Other non-cash items (67) (87) 1 (52) Pension costs for defined benefit schemes 31 46 20 37 Share-based payment costs 148 119 99 73 Impairment losses on loans and advances and other credit risk provisons (30) 1,976 (38) 888 Divdend income from subsidaries – – (1,626) (403) Other imparment 30 262 30 670 Gain on disposal of property, plant and equipment (10) (1) – 2 Gain on disposal of FVOCI & AMCST financal assets (130) (355) (69) (236) Depreciaton and amortisaton 594 672 416 470 Fair value changes taken to PL (67) – (34) – Foreign Currency revaluation (188) – (67) – Net gain on derecogniton of investment in associate – (6) – (245) Profit from associates and jont ventures 1 (1) – – Total472 2,651 (659) 1,462 Change in operating assets GroupCompany 2021 $millon 2020 $millon 2021 $millon 2020 $millon Decrease/(Increase) in derivatve financal instruments 12,730 (16,281) 12,999 (15,481) Increase in debt securites, treasury bills and equity shares held at fair value through profit or loss (3,581) (1,920) (1,245) (1,472) (Increase)/decrease in loans and advances to banks and customers (24,206) 2,872 (15,951) 6,499 Net decrease in prepayments and accrued income 19 468 44 427 Net decrease/(increase) in other assets 1,672 (502) 2,975 6,405 Total(13,366) (15,363) (1,178) (3,622) Change in operating liablites GroupCompany 2021 $millon 2020 $millon 2021 $millon 2020 $millon (Decrease)/Increase in derivatve financal instruments (12,245) 16,052 (12,158) 15,093 Net increase/(decrease) in deposits from banks, customer accounts, debt securites in issue, Hong Kong notes in circulaton and short positons 54,022 4,712 36,056 (4,272) Increase/(decrease) in accruals and deferred income 113 (609) 159 (336) Decrease in amount due to parents/subsidaries/other related (498) (3,385) (1,693) (727) Net (decrease)/increase in other liablites (3,789) 4,842 (3,462) 3,532 Total37,603 21,612 18,902 13,290 In 2020, $445m of additons to internally generated capitalsed software were included in the cash flows from operating activties section of the cash flow statement withn change in operating assets. In 2021, $503m of additons to internally generated capitalsed software are included in cash flows from investng activties as a separate line item. The 2020 comparative cash flow statement has not been adjusted for this change in classifcation. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 305 Notes to the financal statements continued 33. Cash flow statement continued Disclosures GroupCompany 2021 $millon 2020 $millon 2021 $millon 2020 $millon Subordinated debt (includng accrued interest): Opening balance 14,885 13,043 14,345 12,502 Proceeds from the issue – 4,630 – 4,630 Interest paid (479) (503) (456) (480) Repayment (16) (2,869) (16) (2,869) Foreign exchange movements (98) 2 (98) 2 Fair value changes (150) 86 (150) 86 Other 479 496 456 474 Closing balance14,621 14,885 14,081 14,345 GroupCompany 2021 $millon 2020 $millon 2021 $millon 2020 $millon Senior debt (includng accrued interest): Opening balance 1,706 1,164 686 742 Proceeds from the issue 2,833 1,984 660 650 Interest paid (16) (15) (16) (14) Repayment (3,250) (1,310) (422) (577) Foreign exchange movements (8) (6) (2) – Fair value changes (1) – – – Other 25 (111) 17 (115) Closing balance1,289 1,706 923 686 34. Cash and cash equivalents Accounting policy For the purposes of the cash flow statement, cash and cash equivalents comprise cash, on demand and overnight balances with central banks (unless restricted) and balances with less than three months’ maturity from the date of acquistion, includng treasury bills and other eligble bills, loans and advances to banks, and short-term government securites. The following balances with less than three months' maturity from the date of acquistion have been identfied by the Group as being cash and cash equivalents. GroupCompany 2021 $millon 2020 $millon 2021 $millon 2020 $millon Cash and balances at central banks 61,963 58,117 48,165 46,476 Less: restricted balances (3,063) (2,683) (1,160) (932) Treasury bills and other eligble bills 3,635 2,664 1,627 723 Loans and advances to banks 18,672 16,844 10,643 9,865 Trading securites 220 968 132 19 Total81,427 75,910 59,406 56,151 ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 306 Notes to the financal statements continued 35. Related party transactions Directors and officers Details of directors’ remuneration and interests in shares are disclosed in the Note 38 Remuneration of Directors. IAS 24 Related party disclosures requires the following additonal informaton for key management compensation. Key management comprises non-executivedirectors, executive directors of Standard Chartered PLC, the Court directors of StandardChartered Bank and the persons dischargng managerial responsiblites (PDMR) ofStandardChartered PLC. 2021 $millon 2020 $millon Salaries, allowances and benefits in kind 40 35 Share-based payments 28 26 Bonuses paid or receivable 4 1 Total72 62 Transactions with directors and others At 31 December 2021, the total amounts to be disclosed under the Companies Act 2006 (the Act) and the Listng Rules of the Hong Kong Stock Exchange Limted (HK Listng Rules) about loans to directors were as follows: 2021 2020 Number$millon Number$millon Directors 3– 3– The loan transactions provided to the directors of Standard Chartered PLC were a connected transaction under Chapter 14A of the HK Listng Rules. It was fully exempt as financal assistance under Rule 14A.87(1), as it was provided in our ordinary and usual course of business and on normal commercial terms. Other than as disclosed in these financal statements, there were no other transactions, arrangements or agreements outstanding for any director of the Company which have to be disclosed under the Act. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 307 Notes to the financal statements continued 35. Related party transactions continued Group 2021 2020 Due from/to subsidary undertakings and other related parties $millon Derivatve financal instruments $millon Subordinated liablites and other borrowed funds $millon Debt Securites $millon Due from/to subsidary undertakings and other related parties $millon Derivatve financal instruments $millon Subordinated liablites and other borrowed funds $millon Debt Securites $millon Assets Ultimate parent company 380691–– 409664–– Fellow subsidaries of SC PLC Group 5,8554,521–737 4,9888,183–807 6,2355,212–737 5,3978,847–807 Liablites Ultimate parent company 11,26461714,1485,286 12,2621,15014,3734,005 Fellow subsidaries of SC PLC Group 19,7344,696–667 19,8487,210–667 30,9985,31314,1485,953 32,1108,36014,3734,672 2021 Fees and commisson income $millon Fees and commisson expense $millon Interest income $millon Interest expense $millon Ultimate parent company ––7776 Fellow subsidaries of SC PLC Group 711043449 7110441825 2020 Fees and commisson income $millon Fees and commisson expense $millon Interest income $millon Interest expense $millon Ultimate parent company––28816 Fellow subsidaries of SC PLC Group6613937108 6613965924 The Group contributes to employee pension funds and provides banking services free of charge to the UK fund. For details of the funds (see Note 29). The Group’s employees particpate in the Standard Chartered PLC group’s share-based compensation plans (see Note 30). The cost of the compensation is recharged from Standard Chartered PLC to the Group’s branches and subsidaries. Associates and jont ventures The following transactions with related parties are on an arm’s length basis: 2021 $millon 2020 $millon Assets Loans and advances – 5 Total assets– 5 Liablites Deposits 4711¹ Derivatve liablites 1 5 Total liablites48 16 Loan commitments and other guarantees 2 80 55 1Prior year has been restated 2The maximum loan commitments and other guarantees during the year was $80 millon ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 308 Notes to the financal statements continued 35. Related party transactions continued Company 2021 2020 Due from/to subsidary undertakings and other related parties $millon Derivatve financal instruments $millon Subordinated liablites and other borrowed funds $millon Debt Securites $millon Due from/to subsidary undertakings and other related parties $millon Derivatve financal instruments $millon Subordinated liablites and other borrowed funds $millon Debt Securites $millon Assets Ultimate parent company 380691–– 409664–– Subsidaries and fellow subsidaries of SC PLC Group 10,3617,067–1,784 9,73210,591–1,869 10,7417,758–1,784 10,14111,255–1,869 Liablites Ultimate parent company 11,26261713,6095,286 12,2581,15013,8334,005 Subsidaries and fellow subsidaries of SC PLC Group 29,4837,266–– 30,0099,095–– 40,7457,88313,6095,286 42,26710,24513,8334,005 2021 Fees and commisson income $millon Fees and commisson expense $millon Interest income $millon Interest expense $millon Divdend income $millon Ultimate parent company ––7765– Subsidaries and fellow subsidaries of SC PLC Group 13013366761,626 130133738411,626 2020 Fees and commisson income $millon Fees and commisson expense $millon Interest income $millon Interest expense $millon Divdend income $millon Ultimate parent company––28796– Subsidaries and fellow subsidaries of SC PLC Group84103111165403 84103139961403 As at 31 December 2021, Standard Chartered Bank had created a charge over $100 millon (31 December 2020: $89 millon) of cash assets in favour of the non-consolidated independent trustee of its employer financed retirement benefit scheme. The Company contributes to employee pension funds and provides banking services free of charge to the UK fund. For details of the funds see note 29. The Company’s employees particpate in the Standard Chartered PLC group’s share-based compensation plans (see note 30). The Company has an agreement with Standard Chartered PLC that in the event of the Company defaulting on its debt coupon interest payments, where the terms of such debt requires it, Standard Chartered PLC shall issue shares as settlement for non-payment of the coupon interest. 36. Post balance sheet events On the 12 January 2022, Standard Chartered Bank issued $1,250 millon 3.603 per cent subordinated debt security due 2033 (callable2032). ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 309 Notes to the financal statements continued 37. Auditor’s remuneration Auditor’s remuneration is included withn other general adminstration expenses. The amounts paid by the Group to their princpal auditor, Ernst & Young LLP (EY LLP) and its associates (together EY LLP), are set out below. All services are approved by the Group Audit Committee and are subject to controls to ensure the external auditor’s independence is unaffected by the provison of other services. 2021 $millon 2020 $millon Audit fees for the Standard Chartered PLC Group statutory audit 15.9 11.0 Of which fees for the statutory audit of Standard Chartered Bank Group 11.8 8.1 Fees payable to EY for other services provided to the Standard Chartered Bank Group: Audit of Standard Chartered Bank subsidaries 7.0 5.9 Total Audit fees22.9 16.9 Audit -related assurance services 2.8 3.2 Other assurance services 2.8 1.9 Other non-audit services 0.1 0.1 Total fees payable28.6 22.2 The following is a descripton of the type of services included withn the categories listed above: • Audit fees for the Group statutory audit are in respect of fees payable to EY LLP for the statutory audit of the consolidated financal statements of the Group andthe separate financal statements of Standard Chartered PLC • Audit-related fees consist of fees such as those for services required by law or regulation to be provided by the auditor, reviewsof interm financal informaton, reporting onregulatory returns, reporting to aregulator on client assets and extended work performed over financal informaton and controls authorised by those charged with governance • Other assurance services includeagreed-upon-procedures in relation to statutory and regulatory filngs • Corporate finance transaction services are fees payable to EY LLP for issung comfort letters Expenses incurred in respect of their role as auditors were reimbursed to EY($0.2m). Such expenses did not exceed 1% of total fees charged above. 38. Remuneration of Directors This table sets out salary (includng salary shares), pension and benefits received in 2021 and variable remuneration awards received in respect of 2021. 2021¹ £000 2020² £000 Salaries and fees 8,588 9,384 Pension 553 615 Benefits 420 608 Annual incentve 3,688 2,298 Vesting of LTIP awards 1,282 1,411 Total 14,531 14,316 1.M Ramos and A McFadyen joned the Board on 1 January and 23 February 2021 respectively 2.The values of vesting LTIP awards for 2020 have been restated based on the actual share price of £5.03 when the awards vested in March 2021 Additonal informaton on the remuneration elements in the above single total figure table. Salaries and fees The total salaries of the four directors as at 1 January 2021 were £5,090,200. For two of the directors, salary is paid part in cash and part in shares which are subject to a retention period and released pro rata over five years. The number of salary shares allocated is determined based on the monetary value and the prevailng market price of the Group’s shares on the date of allocation. The total annualised fees of the Chairman and directors as at 1 January 2021 (or the date of appointment, if later) were £3,055,000. There is no apportionment of remuneration between Standard Chartered Bank and Standard Chartered PLC. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 310 Notes to the financal statements continued 38. Remuneration of Directors continued Share awards Three directors exercised share awards over Standard Chartered PLC during the year. Pension and benefits An explanation of pension and benefits for those directors who are also executive directors of the SC PLC Group can be found in the SC PLC Group’s 2021 Directors’ remuneration report on pages 141 to 180. The two directors who are also employees of the SC PLC Group received a flexible benefits allowance in alignment with the UK workforce to include a mixture of core pension and benefits provison, includng private medical cover, life assurance and permanent health insurance. Some directors occasionally use a Group car service for travelling and, in some circumstances, were accompanied by their spouses to attend events. For those directors who are also employees of the SC PLC Group, annual incentves in respect of 2021 are delivered upfront with at least 50 per cent paid in shares subject to a minmum twelve-month retention period. Vesting of LTIP awards The long-term incentve plan (LTIP) awards granted in March 2018 vested in March 2021, based on performance over the years 2018 to 2020. 26 per cent of these awards vested. The LTIP awards granted in March 2019 are due to vest in March 2022, based on performance over the years 2019 to 2021. Following an estimated assessment of the performance measures (RoTE with CET1 underpin, relative TSR and strategic measures), 23 per cent of these awards will vest. The final assessment of the relative TSR performance will be conducted in March 2022, the end of the three-year performance period. Based on a share price of £4.55, the three-month average to 31 December 2021, the estimated value to be delivered to the directors is £1,281,647. Other disclosures The remuneration policy and practices applying to the Material Risk Taker employees of the Bank are the same as those applied by the SC PLC Group which are set out in the SC PLC Group’s 2021 Directors’ remuneration report on pages 141 to 180. Further informaton on the remuneration for those directors who are also executive directors of the SC PLC Group can be round in the SC PLC Group’s 2021 Directors’ remuneration report on pages 141 to 180. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 311 Notes to the financal statements continued 39. Related undertakings of the Group As at 31 December 2021, the Group’s interests in related undertakings are disclosed below. Unless otherwise stated, the share capital disclosed comprises ordinary or common shares which are held by subsidaries of the Group. Unless otherwise indcated, all related undertakings are held indrectly. Unless otherwise stated, the princpal country of operation of each subsidary is the same as its country of incorporation. Note 31 details undertakings that have a signficant contributon to the Group’s net profit or net assets. Subsidary undertakings Name and registered addressCountry of incorporationDescripton of shares Proportion of shares held (%) The following companies have the address of 1 Basinghall Avenue, London, EC2V 5DD, United Kingdom SC (Secretaries) Limted¹United Kingdom£1.00 Ordinary shares100 SC Transport Leasing 1 LTDUnited Kingdom£1.00 Ordinary shares100 SC Transport Leasing 2 LimtedUnited Kingdom£1.00 Ordinary shares100 SC Ventures Innovation Investment L.P.United KingdomLimted Partnership interest100 SCMB Overseas Limted¹United Kingdom£0.10 Ordinary shares100 Standard Chartered Africa LimtedUnited Kingdom£1.00 Ordinary shares100 Standard Chartered BankUnited Kingdom$0.01 Non-Cumulative Irredeemable Preference shares 100 $5.00 Non-Cumulative Redeemable Preference shares 100 $1.00 Ordinary shares100 Standard Chartered Foundation 1, 2 United KingdomGuarantor100 Standard Chartered Health Trustee (UK) Limted¹United Kingdom£1.00 Ordinary shares100 Standard Chartered Leasing (UK) 3 Limted¹United Kingdom$1.00 Ordinary shares100 Standard Chartered Leasing (UK) Limted¹United Kingdom$1.00 Ordinary shares100 Standard Chartered Nominees (Private Clients UK) Limted¹United Kingdom$1.00 Ordinary shares100 Standard Chartered Overseas Holdings Limted¹United Kingdom£1.00 Ordinary shares100 Standard Chartered Securites (Africa) Holdings LimtedUnited Kingdom$1.00 Ordinary shares100 Standard Chartered Trustees (UK) Limted¹United Kingdom£1.00 Ordinary shares100 Standard Chartered UK Holdings Limted¹United Kingdom£10.00 Ordinary shares100 The SC Transport Leasing Partnership 1United KingdomLimted Partnership interest100 The SC Transport Leasing Partnership 2United KingdomLimted Partnership interest100 The SC Transport Leasing Partnership 3United KingdomLimted Partnership interest100 The SC Transport Leasing Partnership 4United KingdomLimted Partnership interest100 The BW Leasing Partnership 1 LP 2 United KingdomLimted Partnership interest100 The BW Leasing Partnership 2 LP 2 United KingdomLimted Partnership interest100 The BW Leasing Partnership 3 LP 2 United KingdomLimted Partnership interest100 The BW Leasing Partnership 4 LP 2 United KingdomLimted Partnership interest100 The BW Leasing Partnership 5 LP 2 United KingdomLimted Partnership interest100 The following companies have the address of 2 More London Riversde, London SE1 2JT, United Kingdom Bricks (C&K) LP 2 United KingdomLimted Partnership interest100 Bricks (C) LP 2 United KingdomLimted Partnership interest100 Bricks (T) LP 2 United KingdomLimted Partnership interest100 Bricks (M) LP 2 United KingdomLimted Partnership interest100 The following companies have the address of 8th Floor, 20Farringdon Street, London, EC4A 4AB, United Kingdom. SC Ventures G.P. Limted¹United Kingdom£1.00 Ordinary shares100 Assembly Payments UK LtdUnited Kingdom£1.00 Ordinary shares100 ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 312 Notes to the financal statements continued Name and registered addressCountry of incorporationDescripton of shares Proportion of shares held (%) The following company has the address of 1 Bartholomew Lane, London, EC2N 2AX, United Kingdom Corrasi Covered Bonds LLP¹United KingdomMembership Interest50 The following companies have the address of Thomas House, 84 Eccleston Square, London, SW1V 1PX, United Kingdom Zodia Custody LimtedUnited Kingdom$1.00 Ordinary shares100 Zodia Holdings LimtedUnited Kingdom$1.00 Ordinary shares100 The following company has the address of TMF Group, 8thFloor, 20 Farringdon Street, London, EC4A 4AB, United Kingdom. Zodia Markets (UK) LimtedUnited Kingdom$1.00 Ordinary shares100 The following company has the address of Spaces, 25 Wilton Road, Victora, London, SW1V 1LW, United Kingdom Zodia Markets Holdings LimtedUnited Kingdom$1.00 Ordinary shares75.01 The following company has the address of Robert Denholm House, Beltchingley Road, Nutfield, Redhill, RH1 4HW, United Kingdom CurrencyFair (UK) LimtedUnited Kingdom£1.00 Ordinary shares100 The following company has the address Edifíco Kilamba, 7Andar Avenida 4 de Fevereiro, Marginal, Luanda, Angola Standard Chartered Bank Angola S.A.AngolaAOK8,742.05 Ordinary shares60 The following company has the address of Level 5, 345 George St, Sydney NSW 2000, Australia Standard Chartered Grindlays Pty Limted¹AustraliaAUD Ordinary shares100 The following company has the address of 17/31 Queen Street, Melbourne VIC 3000, Australia Assembly Payments Australia Pty LtdAustralia$ Ordinary shares100 The following company has the address of Wilsons Landing, Level 5, 6A Glen Street, Milsons Point NSW 2061, Australia CurrencyFair Australia Pty LtdAustraliaAUD Ordinary100 The following company has the address of Level 20, 31Queen Street, Melbourne VIC 3000, Australia Zai Australia Pty LtdAustraliaAUD0.01 Ordinary shares100 $1.00 Ordinary shares100 The following companies have the address of 5th Floor Standard House Bldg, The Mall, Queens Road, PO Box 496, Gaborone, Botswana Standard Chartered Bank Insurance Agency (Proprietary) Limted BotswanaBWP Ordinary shares100 Standard Chartered Investment Services (Proprietary) LimtedBotswanaBWP Ordinary shares100 Standard Chartered Bank Botswana LimtedBotswanaBWP Ordinary shares75.8 Standard Chartered Botswana Nominees (Proprietary) Limted BotswanaBWP Ordinary shares100 Standard Chartered Botswana Education Trust 1,3 BotswanaInterest in Trust100 The following companies have the address of Avenida Brigadero Faria Lima, no 3.477, 6 andar, conjunto 62 – Torre Norte, Condomino Patio Victor Malzoni, CEP 04538-133, Sao Paulo, Brazil Standard Chartered Particpacoes Ltda¹BrazilBRL1.00 Ordinary shares100 Standard Chartered Representação Ltda¹BrazilBRL1.00 Ordinary shares100 39. Related undertakings of the Group continued ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 313 Notes to the financal statements continued Name and registered addressCountry of incorporationDescripton of shares Proportion of shares held (%) The following company has the address of G01-02, Wisma Haj Mohd Taha Buildng, Jalan Gadong, BE4119, Brunei Darussalam Standard Chartered Securites (B) Sdn Bhd¹Brunei DarussalamBND1.00 Ordinary shares100 The following company has the address of Standard Chartered Bank Cameroon S.A, 1155, Boulevard de la Liberté, Douala, B.P. 1784, Cameroon Standard Chartered Bank Cameroon S.A.CameroonXAF10,000.00 Ordinary shares 100 The following company has the address of 66 Wellington Street, West, Suite 4100, Toronto Dominon Centre, Toronto ON M5K 1B7, Canada CurrencyFair (Canada) LtdCanadaCAN$ Common shares100 The following company has the address of Maples Corporate Services Limted, PO Box 309, Ugland House, Grand Cayman KY1-1104, Cayman Islands Cerulean Investments LPCayman IslandsLimted Partnership interest100 The following company has the address of Maples Finance Limted, PO Box 1093 GT, Queensgate House, Georgetown, Grand Cayman, Cayman Islands SCB Investment Holding Company Limted¹Cayman Islands$1,000.00 A Ordinary shares100 The following company has the address of Walkers Corporate Limted, Cayman Corporate Centre, 27 Hospital Road George Town, Grand Cayman KY1-9008, Cayman Islands Sirat Holdings Limted 5 Cayman Islands$0.01 Ordinary shares100 The following company has the address of No. 35, Xinhuanbe Road, TEDA, Tianin, 300457, China Standard Chartered Global Business Services Co., Ltd 1, 4 China$ Ordinary shares100 The following companies have the address of Units 61-65 (Office use only), Self-numbered Room 01-04, Room 901, No 6, Zhujang East Road, Tianhe Distrct, Guangzhou City, Guangdong Province, China Standard Chartered Global Business Services (Guangzhou) Co., Ltd. 1, 4 China$ Ordinary shares100 The following company has the address of Room 2619, No 9, Linhe West Road, Tianhe Distrct, Guangzhou, China Guangzhou CurrencyFair Information Technology LimtedChinaCNY Ordinary shares100 The following company has the address of Standard Chartered Bank Cote d'Ivoire, 23 Boulevard de la République, Abidan 17, 17 B.P. 1141, Cote d'Ivoire Standard Chartered Bank Cote d' Ivoire SACote d'IvoireXOF100,000.00 Ordinary shares 100 The following company has the address of 8 Ecowas Avenue, Banjul, Gambia Standard Chartered Bank Gambia LimtedGambiaGMD1.00 Ordinary shares74.85 The following company has the address of Taunusanlage 16, 60325, Frankfurt am Main, Germany Standard Chartered Bank AG¹Germany€ Ordinary shares100 The following companies have the address of Standard Chartered Bank Buildng, 87 Independence Avenue, P.O. Box 768, Accra,Ghana Standard Chartered Bank Ghana PLCGhanaGHS Ordinary shares69.4 GHS0.52 Preference shares87.0 Standard Chartered Ghana Nominees LimtedGhanaGHS Ordinary shares100 39. Related undertakings of the Group continued ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 314 Notes to the financal statements continued Name and registered addressCountry of incorporationDescripton of shares Proportion of shares held (%) The following company has the address of Standard Chartered Bank Ghana Limted, 87, Independence Avenue, Post Office Box 678, Accra, Ghana Standard Chartered Wealth Management Limted CompanyGhanaGHS Ordinary shares100 The following companies have the address of 14th Floor, One Taikoo Place, 979 King's Road, Quarry Bay, Hong Kong. Kozagi LimtedHong KongHKD Ordinary shares100 Standard Chartered PF Real Estate (Hong Kong) LimtedHong Kong$ Ordinary shares100 The following company has the address of 13/F Standard Chartered Bank Buildng, 4-4A Des Voeux Road Central, Hong Kong Standard Chartered Private Equity LimtedHong KongHKD Ordinary shares100 The following company has the address of 21/F, Standard Chartered Tower, 388 Kwun Tong Road, Kwun Tong, Kowloon, Hong Kong Standard Chartered Asia LimtedHong KongHKD Deferred shares100 HKD Ordinary shares100 $ Ordinary shares100 The following company has the address of 31/F, Tower 2 Times Square, 1 Matheson St, Causeway Bay, Hong Kong Assembly Payments HK LimtedHong KongHKD Ordinary Shares100 The following company has the address of Suites 1103-4 AXA Tower, Landmark East, 100 How Ming Street, Kwun Tong, Hong Kong Currencyfair Asia LimtedHong KongHKD Ordinary shares100 The following company has the address of 1st Floor, Europe Buildng, No.1, Haddows Road, Nungambakkam, Chennai, 600 006, India Standard Chartered Global Business Services Private Limted¹IndiaINR10.00 Equity shares100 The following company has the address of 90 M.G.Road, II Floor, Fort, Mumbai, Maharashtra, 400 001, India Standard Chartered Finance Private Limted¹IndiaINR10.00 Ordinary shares98.68 The following company has the address of Ground Floor, Crescenzo Buildng, G Block, C 38/39 , Bandra Kurla Complex, Bandra (East) , Mumbai , Mumbai , Maharashtra , 400051, India Standard Chartered Private Equity Advisory (India) Private Limted IndiaINR1,000.00 Ordinary shares99.996 The following company has the address of Second Floor, Indiqube Edge, Khata No. 571/630/6/4, Sy.No.6/4, Ambalipura Village, Varthur Hobli, Marathahalli Sub-Divsion, Ward No. 150, Bengaluru, 560102, India. Standard Chartered Research and Technology India Private Limted IndiaINR10.00 A Equity shares100 INR10.00 Preference shares100 The following company has the address of Crescenzo, 6th Floor, Plot No 38-39 G Block , Bandra Kurla Complex, , Bandra East , Mumbai , Maharashtra , 400051, India Standard Chartered Capital Limted¹IndiaINR10.00 Equity shares100 The following company has the address of 2nd Floor, 23-25 M.G. Road, Fort, Mumbai, 400 001, India Standard Chartered Securites (India) LimtedIndiaINR10.00 Equity shares100 39. Related undertakings of the Group continued ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 315 Notes to the financal statements continued Name and registered addressCountry of incorporationDescripton of shares Proportion of shares held (%) The following company has the address of Ground Floor, Crescenzo Buildng, G Block, C 38/39 , Bandra Kurla Complex, Bandra (East) , Mumbai , Mumbai , Maharashtra , 400051, India St Helen's Nominees India Private Limted¹IndiaINR10.00 Equity shares100 The following company has the address of Vaishnav Serenity, First Floor, No. 112, Koramangala Industrial Area, 5th Block, Koramangala, Bangalore, Karnataka, 560095, India Standard Chartered (India) Modeling and Analytics Centre Private Limted¹ IndiaINR10.00 Equity shares100 The following companies have the address of 91 Pembroke Road, Dublin 4, Ballsbridge, Dublin, DO4 EC42, Ireland CurrencyFair (Canada) LimtedIreland€1.00 Ordinary100 CurrencyFair Nominees LimtedIreland€1.00 Ordinary100 The following companies have the address of TMF, 3rd Floor, Kilmore House, Park Lane, Spencer Dock , Dublin 1, Ireland Zodia Custody (Ireland) LimtedIreland$1.00 Ordinary shares100 Zodia Markets (Ireland) LimtedIreland$1.00 Ordinary shares100 The following company has the address of 91 Pembroke Road, Dublin 4, Ballsbridge, Dublin, DO4 EC42, Ireland CurrencyFair LimtedIreland€0.001 A Ordinary shares100 €0.001 Ordinary shares27.952 The following companies have the address of 1st Floor, Goldie House, 1-4 Goldie Terrace, Upper Church Street, Douglas, IM11EB, Isle of Man Standard Chartered Assurance Limted¹Isle of Man$1.00 Ordinary shares100 $1.00 Redeemable Preference shares 100 Standard Chartered Insurance Limted 1, 6 Isle of Man$1.00 Ordinary shares100 The following company has the address of 21/F, Sanno Park Tower, 2-11-1 Nagatacho, Chiyoda-ku, Tokyo, 100-6155, Japan Standard Chartered Securites (Japan) Limted¹JapanJPY50,000 Ordinary shares100 The following company has the address of 15 Castle Street, StHelier, JE4 8PT, Jersey SCB Nominees (CI) Limted¹Jersey$1.00 Ordinary shares100 The following companies have the address of StandardChartered@Chiromo, Number 48, Westlands Road, P. O. Box 30003 – 00100, Nairob, Kenya Standard Chartered Bancassurance Intermediary LimtedKenyaKES100.00 Ordinary shares100 Standard Chartered Investment Services LimtedKenyaKES20.00 Ordinary shares100 Standard Chartered Bank Kenya LimtedKenyaKES5.00 Ordinary shares74.32 KES5.00 Preference shares100 Standard Chartered Securites (Kenya) LimtedKenyaKES10.00 Ordinary shares100 Standard Chartered Financal Services LimtedKenyaKES20.00 Ordinary shares100 Standard Chartered Kenya Nominees LimtedKenyaKES20.00 Ordinary shares100 The following company has the address of Atrium Buildng, Maarad Street, 3rd Floor, P.O.Box: 11-4081 Riad El Solh, Beirut, Beirut Central Distrct, Lebanon Standard Chartered Metropolitan Holdings SALLebanon$10.00 Ordinary A shares100 39. Related undertakings of the Group continued ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 316 Notes to the financal statements continued Name and registered addressCountry of incorporationDescripton of shares Proportion of shares held (%) The following companies have the address of Level 26, Equatorial Plaza, Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia Cartaban (Malaya) Nominees Sdn BerhadMalaysiaRM Ordinary shares100 Cartaban Nominees (Asing) Sdn BhdMalaysiaRM Ordinary shares100 Cartaban Nominees (Tempatan) Sdn BhdMalaysiaRM Ordinary shares100 Golden Maestro Sdn BhdMalaysiaRM Ordinary shares100 Price Solutions Sdn BhdMalaysiaRM Ordinary shares100 SCBMB Trustee BerhadMalaysiaRM Ordinary shares100 Standard Chartered Bank Malaysia BerhadMalaysiaRM Irredeemable Convertible Preference shares 100 RM Ordinary shares100 Standard Chartered Saadiq BerhadMalaysiaRM Ordinary shares100 The following company has the address of Suite 18-1, Level 18, Vertical Corporate Tower B, Avenue 10, The Vertical, Bangsar South City , No. 8, Jalan Kerinch , 59200 Kuala Lumpur, Wilayah Persekutuan, Malaysia Resolution Alliance Sdn BhdMalaysiaRM Ordinary shares91 RM Irredeemable Preference shares 100 The following company has the address of Level 1, Wisma Standard Chartered, Jalan Teknologi 8, Taman Teknologi Malaysia, 57000 Bukit Jalil, Kuala Lumpur, Wilayah Persekutuan, Malaysia Standard Chartered Global Business Services Sdn Bhd¹MalaysiaRM Ordinary shares100 The following company has the address of 10th Floor, Menara Hap Seng, No. 1&3, Jalan P. Ramlee, 50250 Kuala Lumpur, Malaysia Assembly Payments Malaysia Sdn. Bhd.MalaysiaRM Ordinary shares100 The following company has the address of 6/F, Standard Chartered Tower, 19, Bank Street, Cybercity, Ebene, 72201, Mauritus Standard Chartered Bank (Mauritus) Limted¹Mauritus$ Ordinary shares100 The following companies have the address of c/o Ocorian Corporate Services (Mauritus) Ltd, 6th Floor, Tower A, 1Cybercity, Ebene, 72201, Mauritus Standard Chartered Financal Holdings¹Mauritus$1.00 Ordinary shares100 Standard Chartered Private Equity (Mauritus) Limted¹Mauritus$1.00 Ordinary shares100 Standard Chartered Private Equity (Mauritus) II LimtedMauritus$1.00 Ordinary shares100 Standard Chartered Private Equity (Mauritus) lll LimtedMauritus$1.00 Ordinary shares100 The following company has the address of Mondial Management Services Ltd, Unit 2L, 2nd Floor Standard Chartered Tower, 19 Cybercity, Ebene, Mauritus Subcontinental Equites LimtedMauritus$1.00 Ordinary shares100 The following company has the address of SGG Corporate Services (Mauritus) Ltd, 33, Edith Cavell Street, Port Louis, 11324, Mauritus Actis Treit Holdings (Mauritus) Limted 2 MauritusClass A $1.00 Ordinary shares62.001 Class B $1.00 Ordinary shares62.001 39. Related undertakings of the Group continued ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 317 Notes to the financal statements continued Name and registered addressCountry of incorporationDescripton of shares Proportion of shares held (%) The following company has the address of Standard Chartered Bank Nepal Limted, Madan Bhandari Marg, Ward No.34, Kathmandu Metropolitan City, Kathmandu Distrct, Bagmati Zone, Kathmandu, Nepal Standard Chartered Bank Nepal LimtedNepalNPR100.00 Ordinary shares70.21 The following companies have the address of 1 Basinghall Avenue, London, EC2V 5DD, United Kingdom Standard Chartered Holdings (Africa) B.V. 6 Netherlands€4.50 Ordinary shares100 Standard Chartered Holdings (Asia Pacifc) B.V. 6 Netherlands€4.50 Ordinary shares100 Standard Chartered Holdings (International) B.V. 6 Netherlands€4.50 Ordinary shares100 Standard Chartered MB Holdings B.V. 6 Netherlands€4.50 Ordinary shares100 The following company has the address of 4 All good Place, Rototuna North, Hamilton, New Zealand, 3210 PromisePay LimtedNew ZealandNZD Ordinary shares100 The following companies have the address of 142, Ahmadu Bello Way, Victora Island, Lagos, 101241, Nigera Cherroots Nigera LimtedNigeraNGN1.00 Ordinary Shares100 Standard Chartered Bank Nigera LimtedNigeraNGN1.00 Irredeemable Non Cumulative Preference shares 100 NGN1.00 Ordinary shares100 NGN1.00 Redeemable Preference shares 100 Standard Chartered Capital & Advisory Nigera LimtedNigeraNGN1.00 Ordinary shares100 Standard Chartered Nominees (Nigera) LimtedNigeraNGN1.00 Ordinary shares100 The following company has the address of P.O. Box No. 5556I.I. Chundrigar Road, Karachi, 74000, Pakistan Standard Chartered Bank (Pakistan) Limted¹PakistanPKR10.00 Ordinary shares98.99 The following company has the address of Rondo Ignacego Daszyńskiego 2B, 00-843, Warsaw, Poland Standard Chartered Global Business Services spółka z ograniczoną odpowiedzalnością¹ PolandPLN50.00 Ordinary shares100 The following company has the address of Al Faisalah Office Tower Floor No 7 (T07D) , King Fahad Highway, Olaya Distrct, Riyadh P.O box 295522 , Riyadh, 11351 , Saudi Arabia Standard Chartered Capital (Saudi Arabia)¹Saudi ArabiaSAR10.00 Ordinary shares100 The following company has the address of 9 & 11, Lightfoot Boston Street, Freetown, Sierra Leone Standard Chartered Bank Sierra Leone LimtedSierra LeoneSLL1.00 Ordinary shares80.7 The following companies have the address of 9 Raffles Place, #27-00 Republic Plaza, 048619, Singapore Actis Treit Holdings No.1 (Singapore) Private Limted 2 SingaporeSGD Ordinary100 Actis Treit Holdings No.2 (Singapore) Private Limted 2 SingaporeSGD Ordinary100 The following company has the address of 8 Marina Boulevard, Level 26, Marina Bay Financal Centre, Tower 1, 018981, Singapore Raffles Nominees (Pte.) LimtedSingaporeSGD Ordinary shares100 39. Related undertakings of the Group continued ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 318 Notes to the financal statements continued Name and registered addressCountry of incorporationDescripton of shares Proportion of shares held (%) The following companies have the address of 8 Marina Boulevard, #27-01 Marina Bay Financal Centre Tower 1, 018981, Singapore SCTS Capital Pte. LtdSingaporeSGD Ordinary shares100 SCTS Management Pte. Ltd.SingaporeSGD Ordinary shares100 Standard Chartered Bank (Singapore) LimtedSingaporeSGD Ordinary shares100 SGD Non-cumulative Preference shares 100 SGD Non-cumulative Class C Preference shares 100 $ Ordinary shares100 $ Preference shares100 Standard Chartered Trust (Singapore) Limted¹SingaporeSGD Ordinary shares100 Standard Chartered Holdings (Singapore) Private Limted¹SingaporeSGD Ordinary shares100 $ Ordinary shares100 Standard Chartered Nominees (Singapore) Pte Ltd¹SingaporeSGD Ordinary shares100 The following companies have the address of 80 Robinson Road, #02-00, 068898, Singapore Autumn Life Pte. Ltd.Singapore$ Ordinary shares100 Cardspal Pte. Ltd.Singapore$ Ordinary shares100 Nexco Pte. Ltd.Singapore$ Ordinary shares100 Discovery Technology Services Pte. Ltd.Singapore$ Ordinary shares100 SCV Research and Development Pte. Ltd.Singapore$ Ordinary shares100 Power2SME Pte. Ltd.Singapore$ Ordinary shares100 SCV Master Holding Company Pte. Ltd.Singapore$ Ordinary shares100 Pegasus Dealmaking Pte. Ltd.Singapore$ Ordinary shares100 Solv-India Pte. Ltd.Singapore$ Ordinary shares100 The following companies have the address of 140 Robinson Road, #17-01, Crown At Robinson, Singapore, 068907, Singapore Trust Bank Singapore LimtedSingaporeSGD Ordinary shares60 CurrencyFair (Singapore) Pte.LtdSingaporeSGD Ordinary shares100 The following companies have the address of 38 Beach Road, #29-11 South Beach Tower, 189767, Singapore Assembly Payments SGP Pte. Ltd.SingaporeSGD Ordinary shares100 Assembly Payments Pte. Ltd.Singapore$ Ordinary shares100 $ Preference shares100 The following company has the address of Abogado Pte Ltd, No. 8 Marina Boulevard, #05-02 MBFC Tower 1, 018981, Singapore Standard Chartered IL&FS Management (Singapore) Pte. Limted¹ Singapore$ Ordinary50 The following companies have the address of 2nd Floor, 115 West Street, Sandton, Johannesburg, 2196, South Africa CMB Nominees (RF) PTY Limted¹South AfricaZAR1.00 Ordinary shares100 Standard Chartered Nominees South Africa Proprietary Limted (RF)¹ South AfricaZAR Ordinary shares100 The following company has the address of 6 Fort Street, PO 785848, , Birnam, Sandton, 2196 2146, South Africa Promisepay (PTY) LtdSouth AfricaZAR1.00 Ordinary100 39. Related undertakings of the Group continued ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 319 Notes to the financal statements continued Name and registered addressCountry of incorporationDescripton of shares Proportion of shares held (%) The following companies have the address of 1 Floor, International House, Shaaban Robert Street/Garden Avenue, PO Box 9011, Dar Es Salaam, Tanzania, United Republic of Standard Chartered Bank Tanzania LimtedTanzania, Republic ofTZS1,000.00 Ordinary shares100 TZS1,000.00 Preference shares100 Standard Chartered Tanzania Nominees LimtedTanzania, Republic ofTZS1,000.00 Ordinary shares100 The following company has the address of 100 North Sathorn Road, Silom, Bangrak Bangkok , 10500, Thailand Standard Chartered Bank (Thai) Public Company LimtedThailandTHB10.00 Ordinary shares99.90 The following company has the address of Buyukdere Cad. Yapi Kredi Plaza C Blok, Kat 15, Levent, Istanbul, 34330, Turkey Standard Chartered Yatirm Bankasi Turk Anonim Sirket¹TurkeyTRL0.10 Ordinary shares100 The following company has the address of Standard Chartered Bank Bldg, 5 Speke Road, PO Box 7111, Kampala, Uganda Standard Chartered Bank Uganda LimtedUgandaUGS1,000.00 Ordinary shares100 The following company has the address of 251 Little Falls Drive, Wilmngton DE 19808, United States CurrencyFair (USA) IncUnited StatesUS$1.00 Uncertifcated Shares100 The following company has the address of 505 Howard St. #201, San Francisco, CA 94105, United States SC Studios, LLC¹United StatesMembership Interest100 The following company has the address of Standard Chartered Bank, 37F, 1095 Avenue of the Americas, New York 10036, United States Standard Chartered Bank International (Americas) Limted¹United States$1,000.00 Ordinary shares100 The following companies have the address of Corporation Trust Centre, 1209 Orange Street, Wilmngton DE 19801, United States Standard Chartered Holdings Inc.¹United States$100.00 Common shares100 Standard Chartered Securites (North America) LLCUnited StatesMembership Interest100 The following company has the address of 50 Fremont Street, San Francisco CA 94105, United States Standard Chartered Overseas Investment, Inc.United States$10.00 Ordinary shares100 The following company has the address of C/O Corporation Service Company, 251 Little Falls Drive, Wilmngton DE 19808, United States Standard Chartered Trade Services CorporationUnited States$0.01 Common shares100 The following company has the address of 25 Taylor St, SanFrancisco, CA, 94102-3916 Assembly Escrow IncUnited States$0.0001 Ordinary100 The following company has the address of 555 Washington Av, St Louis, MO, United States of America, 63101 Assembly Payments, IncUnited States$0.0001 Ordinary100 The following company has the address of Room 1810-1815, Level 18, Buildng 72, Keangnam Hanoi Landmark Tower, Pham Hung Road, Cau Giay New Urban Area, Me Tri Ward, Nam Tu Liem Distrct, Hanoi10000, Vietnam Standard Chartered Bank (Vietnam) LimtedVietnamVND Charter Capital shares100 The following companies have the address of Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, Virgn Islands, Britsh Sky Favour Investments Limted 7 Virgn Islands, Britsh$1.00 Ordinary shares100 39. Related undertakings of the Group continued ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 320 Name and registered addressCountry of incorporationDescripton of shares Proportion of shares held (%) Sky Harmony Holdings Limted 7 Virgn Islands, Britsh$1.00 Ordinary shares100 The following companies have the address of Stand No. 4642, Corner of Mwaimwena Road and Addis Ababa Dri, Lusaka, Zambia, 10101, Zambia Standard Chartered Bank Zambia PlcZambiaZMW0.25 Ordinary shares90 Standard Chartered Zambia Securites Services Nominees LimtedZambiaZMW1.00 Ordinary shares100 The following companies have the address of Africa Unity Square Buildng, 68 Nelson Mandela Avenue, Harare, Zimbabwe Africa Enterprise Network Trust 3 ZimbabweInterest in Trust100 Standard Chartered Bank Zimbabwe LimtedZimbabwe$1.00 Ordinary shares100 Standard Chartered Nominees Zimbabwe (Private) LimtedZimbabwe$2.00 Ordinary shares100 1Directly heldrelated undertaking 2The Group has determined that these undertakings are excluded from being consolidated into the Groups accounts, and do not meet the defintion of a Subsidary under IFRS. See notes 31 and 32 for the consolidaton policy and disclosure of the undertaking. 3No share capital by virtue of being a trust 4Limted liablity company 5The Group has determined the princpal place of operation to be Singapore 6The Group has determined the princpal place of operation to be United Kingdom 7The Group has determined the princpal place of operation to be Hong Kong Joint ventures NameCountry of IncorporationDescripton of shares Proportion of shares held (%) The following company has the address of Tricor WP Corporate Services Pte Ltd, 80 Robinson Road #02-00, 068898, Singapore Olea Global Pte. Ltd.Singapore$ Ordinary shares50 $ Preference shares100 Associates NameCountry of IncorporationDescripton of shares Proportion of shares held (%) The following company has the address of Work.Life, 33 Foley Street , London, W1W 7TL, United Kingdom Fintech for International Development LtdUnited Kingdom$0.0001 Ordinary-A58.901 The following company has the address of 3 More London Riversde,London, England, SE1 2AQ, United Kingdom Trade Information Network Limted¹United Kingdom$1.00 Ordinary shares16.667 The following company has the address of 1 Raffles Quay, #23-01, One Raffles Quay, 048583, Singapore Clifford Capital Holdings Pte. Ltd.Singapore$1.00 Ordinary shares9.9 The following company has the address of 10 Marina Boulevard #08-08, Marina Bay, Financal Centre, 018983, Singapore Verifed Impact Exchange Holdings Pte. Ltd Singapore $ Ordinary shares15 $ Redeemable Convertible Preference shares 28.571 The following company has the address of Victora House, State House Avenue, Victora, MAHE, Seychelles Seychelles International Mercantile Banking Corporation Limted. SeychellesSCR1,000.00 Ordinary shares22 The following company has the address of Avenue de Tivol 2, 1007, Lausanne, Switzerland Metaco SASwitzerlandCHF 0.01 Preference A Shares29.505 1Directly heldrelated undertaking ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 321 Notes to the financal statements continued Signficant investment holdings and other related undertakings NameCountry of IncorporationDescripton of shares Proportion of shares held (%) The following company has the address of 1 Bartholomew Lane, London, EC2N 2AX, United Kingdom Corrasi Covered Bonds (LM) Limted¹United Kingdom£1.00 Ordinary20 The following company has the address of Intertrust Corporate Services (Cayman) Limted, 190 Elgin Avenue, George Town, Grand Cayman , KY1-9005, Cayman Islands ATSC Cayman Holdco LimtedCayman Islands$0.01 Ordinary-A shares5.272 $0.01 Ordinary-B shares100 The following company has the address of 3, Floor 1, No.1, Shiner Wuxingcayuan, West Er Huan Rd, , Xi Shan Distrct, Kunming, Yunnan Province, PRC , China Yunnan Golden Shiner Property Development Co., Ltd.ChinaCNY1.00 Ordinary shares42.5 The following companies have the address of Unit 605-08, 6/F Wing On Centre, 111 Connaught Road, Central, Sheung Wan, Hong Kong Actis Carrock Holdings (HK) LimtedHong Kong$ Class A Ordinary shares39.689 $ Class B Ordinary shares39.689 Actis Temple Stay Holdings (HK) LimtedHong Kong$ Class A Ordinary shares39.689 $ Class B Ordinary shares39.689 Actis Jack Holdings (HK) LimtedHong Kong$ Class A Ordinary shares39.689 $ Class B Ordinary shares39.689 Actis Rivendell Holdings (HK) LimtedHong Kong$ Class A Ordinary shares39.689 $ Class B Ordinary shares39.689 Actis Young City Holdings (HK) LimtedHong Kong$ Class A Ordinary shares39.689 $ Class B Ordinary shares39.689 The following company has the address of 1221 A, Devika Tower, 12th Floor, , 6 Nehru Place, New Delhi 110019, New Delhi, 110019, India Mikado Realtors Private LimtedIndiaINR10.00 Ordinary shares26 The following company has the address of 4thFloor, 274, Chitala House, Dr. Cawasj Hormusj Road, Dhobi Talao, Mumbai City, Maharashtra, India 400 002, Mumbai, 400 002, India Industrial Minerals and Chemical Co. Pvt. LtdIndiaINR100.00 Ordinary shares26 The following company has the address of 17F, 100, Gongpyeong-dong, Jongno-gu, Seoul, Korea, Republic of Korea Ascenta IIIKoreaKRW Class B Equity Interest31 The following company has the address of 49, Sungei Kadut Avenue, #03-01 S729673, Singapore Omni Centre Pte. Ltd.SingaporeSGD Redeemable Convertible Preference shares 99.998 The following companies have the address of 251 Little Falls Drive, Wilmngton, New Castle DE 19808, United States Paxata, Inc.United StatesUS$0.0001 Series C2 Preferred Stock 40.74 US$0.0001 Series C2 Preferred Stock 10.11 1Directly heldrelated undertaking 39. Related undertakings of the Group continued ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 322 In liqudation Subsidary undertakings NameCountry of IncorporationDescripton of shares Proportion of shares held (%) The following companies have the address of C/O Teneo Restructuring Limted 156 Great Charles Street Queensway Birmngham West Midlands B3 3HN Compass Estates Limted¹United Kingdom£1.00 Ordinary shares100 Standard Chartered Masterbrand Licensng Limted¹United Kingdom$1.00 Ordinary Shares100 The following companies have the address of Bucktrout House, Glategny Esplanade, St Peter Port, GY1 3HQ, Guernsey Birdsong LimtedGuernsey£1.00 Ordinary shares100 Nominees One LimtedGuernsey£1.00 Ordinary shares100 Nominees Two LimtedGuernsey£1.00 Ordinary shares100 Songbird LimtedGuernsey£1.00 Ordinary shares100 Standard Chartered Secretaries (Guernsey) LimtedGuernsey£1.00 Ordinary shares100 Standard Chartered Trust (Guernsey) Limted¹Guernsey£1.00 Ordinary shares100 The following company has the address of 8/Floor, Gloucester Tower , The Landmark, 15 Queen's Road Central, Hong Kong Leopard Hong Kong Limted¹Hong Kong$ Ordinary shares100 The following company has the address of Menara Standard Chartered, 3rd Floor, Jl. Prof.Dr. Satrio no. 164, Setiabud, Jarkarta Selatan, Indonesia PT Solusi Cakra Indonesia (dalam likudasi)¹IndonesiaIDR23,809,600.00 Ordinary shares 99 The following company has the address of No. 157 – 157 A, Jakarta Barat, 11130, Indonesia. PT. Price Solutions Indonesia (dalam likudasi)Indonesia$100.00 Ordinary shares100 The following company has the address of Standard Chartered@Chiromo, Number 48, Westlands Road, P. O. Box 30003 – 00100, Nairob, Kenya Standard Chartered Management Services LimtedKenyaKES20.00 Ordinary shares100 The following company has the address of 30 Rue Schrobilgen, 2526, Luxembourg Standard Chartered Financal Services (Luxembourg) S.A.¹Luxembourg€25.00 Ordinary shares100 The following company has the address of Level 26, Equatorial Plaza, Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia Popular Ambience Sdn BhdMalaysiaRM Ordinary shares100 The following company has the address of C/o IQ EQ Corporate Services (Mauritus) Ltd, 33 Edith Cavell Street, Port Louis, 11324, Mauritus FAI LimtedMauritusUS$1.00 Ordinary shares76.60 The following company has the address of Jiron Huascar 2055, Jesus Maria, Lima 15072, Peru Banco Standard Chartered en Liqudacion¹Peru$75.133 Ordinary shares100 The following company has the address of 8 Marina Boulevard, Level 27, Marina Bay Financal Centre, Tower 1, 018981, Singapore Standard Chartered (2000) LimtedSingaporeSGD1.00 Ordinary shares100 The following company has the address of Luis Alberto de Herrera 1248, Torre II, Piso 11, Esc. 1111, Uruguay Standard Chartered Uruguay Representacion S.A.¹UruguayUYU1.00 Ordinary shares100 1Directly heldrelated undertaking Notes to the financal statements continued 39. Related undertakings of the Group continued ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 323 Signficant investment holdings and other related undertakings NameCountry of IncorporationDescripton of shares Proportion of shares held (%) The following company has the address of Lot 6.05, Level 6, KPMG Tower, 8 First Avenue, Bandar Utama, 47800 Petaling Jaya, Selangor, Malaysia House Network SDN BHDMalaysiaRM1.00 Ordinary shares25 Liqudated/dissolved/sold Subsidary undertakings NameCountry of IncorporationDescripton of shares Proportion of shares held (%) SC Leaseco Limted¹United Kingdom$1.00 Ordinary shares100 Standard Chartered APR LimtedUnited Kingdom$1.00 Ordinary shares100 Standard Chartered Finance (Brunei) BhdBrunei DarussalamBND1.00 Ordinary shares100 Standard Chartered Princpal Finance (Cayman) Limted¹Cayman Islands$0.0001 Ordinary shares100 Sunflower Cayman SPC¹Cayman Islands$1.00 Management shares100 Ori Private LimtedHong Kong$ Ordinary shares100 $ A Ordinary shares90.7 S C Learning LimtedHong KongHKD Ordinary shares100 Standard Chartered Sherwood (HK) LimtedHong KongHKD Ordinary shares100 Resolution Alliance Korea Ltd²Korea, Republic ofKRW5,000.00 Ordinary shares 100 Actis Asia Real Estate (Mauritus) LimtedMauritusClass A $1.00 Ordinary shares100 Class B $1.00 Ordinary shares100 Kwang Hua Mocatta Company Ltd.Taiwan TWD1,000.00 Ordinary shares 97.92 Actis RE Investment 1 Private LimtedSingaporeSGD Ordinary shares100 Actis RE Investment 2 Private LimtedSingaporeSGD Ordinary shares100 Actis RE Investment 3 Private LimtedSingaporeSGD Ordinary shares100 Actis RE Investment 4 Private LimtedSingaporeSGD Ordinary shares100 Standard Chartered Capital Management (Jersey), LLCUnited States$ Ordinary shares100 Standard Chartered International (USA) LLCUnited StatesMembership Interest100 StanChart Securites International LLCUnited StatesMembership Interest100 1Directly heldrelated undertaking 2The Group has determined the princpal country of operation to be Singapore Notes to the financal statements continued 39. Related undertakings of the Group continued ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 324 40. Group reorganisaton The PLC Group has completed a Group reorganisaton. The purpose of the reorganisaton is to form a holding company structure (a “Singapore Hub”) with Standard Chartered Bank (Singapore) Limted (“SCB SL”) acquirng ownership of 100% of Standard Chartered Bank Malaysia Berhad (“SCB MY”) and Standard Chartered Bank (Vietnam) Limted (“SCB VN”), and 99.871% of Standard Chartered Bank (Thai) Public Company Limted (“SCB TH”). The Group will not change with SCB SL still consolidated into the Group. On 1 September 2021, SCB SL purchased SCB MY from Standard Chartered Holdings (Asia Pacifc) B.V. (“SCHAP”) for a fair value $1,273m in cash, resulting in a profit on sale for SCHAP of $1,064m. SCHAP is a wholly owned subsidary of the Group. SCHAP following the sale of SCB MY distrbuted a divdend of $1,211m up the chain to the Company. The Company further distrbuted this divdend up to its parent Standard Chartered Holdings limted. On 1 November 2021, SCB SL purchased SCB TH directly from the Company for the issuance of SCB SL share capital. SCB SL paid a fair value of $733m, resulting in a loss on sale for the Company of $50m. The Company concurrently received $530m in cash as a result of a share buy-back transaction of its subsidary Standard Chartered Holdings Singapore Limted. On 1 December 2021, SCB SL purchased SCB VN directly from the Company for the issuance of SCB SL share capital. SCB SL paid a fair value of $333m, resulting in a profit on sale for the Company of $6m. Notes to the financal statements continued ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 325 AT1 or Additonal Tier 1 capital Additonal Tier 1 capital consists of instruments other than Common Equity Tier 1 that meet the Capital Requirements Regulation (CRR) critera for incluson in Tier 1 capital. Additonal value adjustment See Prudent valuation adjustment. Advanced Internal Rating Based (AIRB) approach The AIRB approach under the Basel framework is used to calculate credit risk capital based on the Group’s own estimates of prudential parameters. Alternative performancemeasures A financal measure of historcal or future financal performance, financal positon, or cash flows, other than a financal measure defined or specifed in the applicable financal reporting framework. ASEAN Associaton of South East Asian Nations (ASEAN) which includes the Group’s operations in Brunei, Indonesia, Malaysia, Philppines, Singapore, Thailand and Vietnam. AUM orAssets under management Total market value of assets such as deposits, securites and funds held by the Group on behalf of the clients. Basel II The capital adequacy framework issued by the Basel Committee on Banking Supervison (BCBS) in June 2006 in the form of the International Convergenceof CapitalMeasurement andCapital Standards. Basel III The global regulatory standards on bank capital adequacy and liqudity, orignally issued in December 2010 and updated in June 2011. In December 2017, the BCBS published a document setting out the finalsation of the Basel III framework. The latest requirements issued in December 2017 will be implemented from 2022. BCBS or Basel Committee on Banking Supervison A forum on banking supervisory matters which develops global supervisory standards for the banking industry. Its members are officals from 45 central banks or prudential supervisors from 27 countries and territores. Basis point (bps) One hundredth of a per cent (0.01 per cent); 100 basis points is 1 per cent. CRD or Capital Requirements Directve A capital adequacy legislatve package adopted by the PRA. CRD comprises the Capital Requirements Directve andthe UK onshored Capital Requirements Regulation(CRR). The package implements the Basel IIIframework together with transitonal arrangements for some of its requirements. CRD IV came into force on 1 January 2014. The EU CRR II and CRD V amending the existng package came into force in June 2019 with most changes starting to apply from 28 June 2021. Only those parts of the EU CRR II that applied on or before 31 December 2020, when the UK was a member of the EU, have been implemented. The PRA recently finalsed the UK’s version of the CRR II for implementaton on 1 January 2022. Capital-lite income Income derived from products with low RWA consumption or products which are non-funding in nature. Capitalresources Sum of Tier 1 and Tier 2 capital after regulatory adjustments. CGU or Cash-generating unit The smallest identfiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. Cash shortfall The difference between the cash flows that are due in accordance with the contractual terms of the instrument and the cash flows that the Group expects to receive over the contractual life of the instrument. ## Glossary ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 326 Glossary continued Clawback An amount an indvidual is required to pay back to the Group, which has to be returned to the Group under certain circumstances. Commercial real estate Includes office buildngs, industral property, medical centres, hotels, malls, retail stores, shopping centres, farm land, multi- family housing buildngs, warehouses, garages, and industral properties. Commercial real estate loans are those backed by a packageof commercial real estateassets. CET1 or Common Equity Tier 1 capital Common Equity Tier 1 capital consists of the common shares issued by the Group and related share premium, retained earnings, accumulated other comprehensive income andother disclosed reserves, eligble non-controlling interests and regulatory adjustments required in thecalculationof Common Equity Tier 1. CET1 ratio A measure of the Group's CET1 capital as a percentage of risk-weighted assets. Contractual maturity Contractual maturity refers to the final payment date of a loan or other financal instrument, at which point all the remainng outstanding princpal and interest is due to be paid. Countercyclicalcapital buffer The countercyclical capital buffer (CCyB) is part of a set of macroprudential instruments, designed to help counter procyclicalty in the financal system. CCyB as defined in the Basel III standard provides for an additonal capital requirement of up to 2.5 per cent of risk-weighted assets in a given jursdicton. The Bank of England’s Financal Policy Committee has the power to set the CCyB rate for the United Kingdom. Each bank must calculate its ‘insttution-specifc’ CCyB rate, defined as the weighted average of the CCyB rates in effect across the jursdictons in which it has credit exposures. The insttution- specifc CCyB rate is then applied to a bank’s total risk-weighted assets. Counterparty credit risk The risk that a counterparty defaults before satisfyng its obligatons under a derivatve, a securites financng transaction (SFT) or a simlar contract. CCF or Credit conversion factor An estimate of the amount the Group expects a customer to have drawn further on a facilty limt at the point of default. This is either prescribed by CRR or modelled by the bank. CDS or Credit default swaps A credit derivatve is an arrangement whereby the credit risk of an asset (the reference asset) is transferred from the buyer to the seller of protection. A credit default swap is a contract where the protection seller receives premium or interest-related payments in return for contracting to make payments to the protection buyer upon a defined credit event. Credit events normally include bankruptcy, payment defaulton a reference asset or assets, or downgrades bya ratingagency. Credit insttutions An insttution whose business is to receive deposits or other repayable funds from the public and to grant credits for its own account. Credit risk mitgation Credit risk mitgation is a process to mitgate potential credit losses from any given account, customer or portfolio by using a range of tools such as collateral, netting agreements, credit insurance, credit derivatves and guarantees. CVA or Credit valuation adjustments An adjustment to the fair value of derivatve contracts that reflects the possiblity that the counterparty may default such that the Group would not receive the full market value of the contracts. Customer accounts Money deposited by all indviduals and companies which are not credit insttutions includng securites sold under repurchase agreement (see repo/reverse repo). Such funds are recorded as liablites in the Group’s balance sheet under customer accounts. Days past due One or more days that interest and/or princpal payments are overdue based on the contractual terms. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 327 Glossary continued DVA or Debit valuation adjustment An adjustment to the fair value of derivatve contracts that reflects the possiblity that the Group may default and not pay the full market value of contracts. Debt securites Debt securites are assets on the Group’s balance sheet and represent certifcates of indebtedness of credit insttutions, public bodies or other undertakings excluding those issued by central banks. Debt securites in issue Debt securites in issue are transferable certifcates of indebtedness of the Group to the bearer of the certifcate. These are liablites of the Group and include certifcates of deposits. Deferred tax asset Income taxes recoverable in future periods in respect of deductible temporary differences between the accounting and tax base of an asset or liablity that will result in tax deductible amounts in future periods, the carry-forward of tax losses or the carry-forward of unused tax credits. Deferred tax liablity Income taxes payable in future periods in respect of taxable temporary differences between the accounting and tax base of an asset or liablity that will result in taxable amounts in future periods. Default Financal assets in default represent those that are at least 90 days past due in respect of princpal or interest and/or where the assets are otherwise considered to be unlikely to pay, includng those that are credit-impared. Defined benefit obligaton The present value of expected future payments required to settle the obligatons of a defined benefit scheme resulting from employeeservice. Defined benefit scheme Pension or other post-retirement benefit scheme other than a defined contributon scheme. Defined contributon scheme A pension or other post-retirement benefit scheme where the employer’s obligaton is limted to its contributons to the fund. Delinquency A debt or other financal obligaton is considered to be in a state of delinquency when payments are overdue. Loans and advances are considered to be delinquent when consecutive payments are missed. Also known as arrears. Deposits by banks Deposits by banks comprise amounts owed to other domestic or foreign credit insttutions by the Group includng securites sold under repo. Divdend per share Represents the entitlement of each shareholder in the share of the profits of the Company. Calculated in the lowest unit of currency in which the shares are quoted. Early alert, purely and non-purely precautionary A borrower’s account which exhibts risks or potential weaknesses of a material nature requirng closer monitorng, supervison, or attention by management. Weaknesses in such a borrower’s account, if left uncorrected, could result in deterioraton of repayment prospects and the likelhood of being downgraded to credit grade 12 or worse. When an account is on early alert, it is classifed as either purely precautionary or non-purely precautionary. A purely precautionary account is one that exhibts early alert characteristcs, but these do not present any immnent credit concern. If the symptoms present an immnent credit concern, an account will be considered for classifcation as non-purely precautionary. Effective tax rate The tax on profit/(losses) on ordinary activties as a percentage of profit/(loss) on ordinary activties before taxation. Encumbered assets On-balance sheet assets pledged or used as collateral in respect of certain of the Group’s liablites. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 328 Glossary continued EU or European Union The European Union (EU) is a politcal and economic union of 27 member states that are located primarly in Europe. Eurozone Represents the 19 EU countries that have adopted the euro as their common currency. ECL or Expected credit loss Represents the present value of expected cash shortfalls over the residual term of a financal asset, undrawn commitment or financal guarantee. Expected loss The Group measure of anticpated loss for exposures captured under an internal ratings-based credit risk approach for capital adequacy calculations. It is measured as the Group-modelled view of anticpated loss based on probabilty of default, loss given default and exposure at default, with a one-year time horizon. Exposures Credit exposures represent the amount lent to a customer, together with any undrawn commitments. EAD or Exposure at default The estimaton of the extent to which the Group may be exposed to a customer or counterparty in the event of, and at the time of, that counterparty’s default. At default, the customer may not have drawn the loan fully or may already have repaid some of the princpal, so that exposure is typically less than the approved loan limt. ECAI or External Credit Assessment Instituton External credit ratings are used to assign risk-weights under the standardised approach for sovereigns, corporates and insttutions. The external ratings are from credit rating agencies that are registered or certifed in accordance with the credit rating agencies regulation or from a central bank issung credit ratings which is exempt from the applicaton of this regulation. FCA or FinancalConduct Authority The Financal Conduct Authority regulates the conduct of financal firms and, for certain firms, prudential standards in the UK. It has a strategic objectve to ensure that the relevant markets function well. Forbearance Forbearance takes place when a concession is made to the contractual terms of a loan in response to an obligor’s financal diffculties. The Group classifes such modifed loans as either ‘Forborne – not impared loans’ or ‘Loans subject to forbearance – impared’. Once a loan is categorised as either of these, it will remain in one of these two categories until the loan matures or satisfes the ‘curing’ conditons describedin Note 8to the financalstatements. Forborne – not impared loans Loans where the contractual terms have been modifed due to financal diffculties of the borrower, but the loan is not consideredto beimpared.See ‘Forbearance’. Funded/unfunded exposures Exposures where the notional amount of the transaction is funded or unfunded. Represents exposures where a commitment to provide future funding is made but funds have been released/not released. FVA or Funding valuation adjustments FVA reflects an adjustment to fair value in respect of derivatve contracts that reflects the funding costs that the market particpant would incorporate when determinng an exit price. G-SIBs or Global Systemically Important Banks Global banking financal insttutions whose size, complexity and systemicinterconnectedness mean thattheir distress or failure would cause signficant disrupton to the wider financal system and economic activty. The list of G-SIBs is assessed under a framework established by the FSB and the BCBS. In the UK, the G-SIB framework is implemented via the CRD and G-SIBs are referred to as Global Systemically Important Institutons (G-SIIs). G-SIB buffer A CET1 capital buffer which results from designaton as a G-SIB. The G-SIB buffer is between 1 per cent and 3.5 per cent, depending on the allocation to one of five buckets based on the annual scoring. In the EU, the G-SIB buffer is implemented via CRD IV as Global Systemically Important Institutons (G-SII) buffer requirement. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 329 Glossary continued Hong Kong regional hub Standard Chartered Bank (Hong Kong) Limted and its subsidaries includng the primary operating entites in China, Korea and Taiwan. Standard Chartered PLC is the ultimate parent company of Standard Chartered Bank (Hong Kong) Limted. Interest rate risk The risk of an adverse impact on the Group’s income statement due to changes in interest rates. IRB or internal ratings-based approach Risk-weightng methodology in accordance with the Basel Capital Accord where capital requirements are based on a firm’s own estimates of prudential parameters. Internal model approach The approach used to calculate market risk capital and RWA with an internal market risk model approved by the PRA under the terms of CRD/CRR. IAS or International Accounting Standard A standard that forms part of the International Financal Reporting Standardsframework. IASB or International Accounting Standards Board An independent standard-setting body responsible for the development and publicaton of IFRS, and approving interpretatons of IFRS standards that are recommended by the IFRS Interpretations Committee (IFRIC). IFRS or International Financal Reporting Standards A set of internatonal accounting standards developed and issued by the International Accounting Standards Board, consistng of princples-based guidance contained withn IFRSs and IASs. All companies that have issued publicly traded securites in the EU are required to prepare annual and interm reports under IFRS and IAS standards that have been endorsed by the EU. IFRIC The IFRS Interpretations Committee supports the IASB in providng authoritatve guidance on the accounting treatment of issues not specifcally dealt with by existng IFRSs and IASs. Investment grade A debt security, treasury bill or simlar instrument with a credit rating measured by external agencies of AAA to BBB. Leverage ratio A ratio introduced under CRD IV that compares Tier 1 capital to total exposures, includng certain exposures held off-balance sheet as adjusted by stipulated credit conversion factors. Intended to be a simple, non-risk-based backstop measure. Liqudation portfolio A portfolio of assets which is beyond our current risk appetite metrics and is held for liqudation. LCR or Liqudity coverage ratio The ratio of the stock of high-quality liqud assets to expected net cash outflows over the following 30 days. High-quality liqud assets should be unencumbered, liqud in markets during a time of stress and, ideally, be central bank eligble. Loanexposure Loans and advances to customers reported on the balance sheet held at amortised cost or FVOCI, non-cancellable credit commitments and cancellable credit commitments for credit cards and overdraft facilties. Loans and advances to customers This represents lending made under bilateral agreements with customers entered into in the normal course of business and is based on the legal form of the instrument. Loans and advances to banks Amounts loaned to credit insttutions includng securites bought under Reverse repo. LTV or loan-to-value ratio A calculation which expresses the amount of a first mortgage lien as a percentage of the total appraised value of real property. The loan-to-value ratio is used in determinng the appropriate level of risk for the loan and therefore the correct price of the loan to the borrower. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 330 Glossary continued Loans past due Loans on which payments have been due for up to a maximum of 90 days includng those on which partial payments are being made. Loans subject to forbearance – impared Loans where the terms have been renegotiated on terms not consistent with current market levels due to financal diffculties of the borrower. Loans in this category are necessarily impared. See ‘Forbearance’. Loss rate Uses an adjusted gross charge-off rate, developed using monthly write-off and recoveries over the preceding 12 months and total outstandingbalances. LGD or Loss given default The percentage of an exposure that a lender expects to lose in the event of obligor default. Low returning clients See ‘Perennial sub-optimalclients’. Malus An arrangement that permits the Group to prevent vesting of all or part of the amount of an unvested variable remuneration award, due to a specifc crystallised risk, behaviour, conduct or adverse performance outcome. Master netting agreement An agreement between two counterparties that have multiple derivatve contracts with each other that provides for the net settlement of all contracts through a single payment, in a single currency, in the event of default on, or terminaton of, any one contract. Mezzanine capital Financng that combines debt and equity characteristcs. For example, a loan that also confers some profit particpation to the lender. MREL or minmum requirement for own funds and eligble liablites A requirement under the Bank Recovery and Resolution Directve for EU resolution authorites to set a minmum requirement for own funds and eligble liablites for banks, implementng the FSB’s Total Loss Absorbing Capacity (TLAC) standard. MREL is intended to ensure that there is sufficent equity and specifc types of liablites to faciltate an orderly resolution that minmises any impact on financal stabilty and ensures the continuty of critcal functions and avoids exposing taxpayers to loss. Net asset value (NAV) per share Ratio of net assets (total assets less total liablites) to the number of ordinary shares outstanding at the end of a reporting period. Net exposure The aggregate of loans and advances to customers/loans and advances to banks after imparment provisons, restricted balances with central banks, derivatves (net of master netting agreements), investment debt and equity securites, and letters of credit and guarantees. NII or Net interest income The difference between interest received on assets and interest paid on liablites. NSFR or Net stable funding ratio The ratio of available stable funding to required stable funding over a one-year time horizon, assuming a stressed scenario. It is a longer-term liqudity measure designed to restrain the amount of wholesale borrowing and encourage stable funding over a one-year time horizon. NPLs or non-performing loans An NPL is any loan that is more than 90 days past due or is otherwise indvidually impared. This excludes Retail loans renegotiated at or after 90 days past due, but on which there has been no default in interest or princpal payments for more than 180 days since renegotiaton, and against which no loss of princpal is expected. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 331 Glossary continued Non-linearty Non-linearty of expected credit loss occurs when the average of expected credit loss for a portfolio is higher than the base case (median) due to the fact that bad economic environment could have a larger impact on ECL calculation than good economic environment. Normalised items See ‘Underlying/Normalised’ on page 176. Operatingexpenses Staff and premises costs, general and adminstrative expenses, depreciaton and amortisaton. Underlying operating expenses exclude expenses as described in ‘Underlying earnings’. A reconcilation between underlying and statutory earnings is contained in Note2 to thefinancal statements. Operating income or operating profit Net interest, net fee and net trading income, as well as other operating income. Underlying operating income represents the income line items above, on an underlying basis. See ‘Underlying earnings’. OTC or Over-the-counter derivatves A bilateral transaction (e.g. derivatves) that is not exchange traded and that is valued using valuation models. OCA or Own credit adjustment An adjustment to the Group’s issued debt designated at fair value through profit or loss that reflects the possiblity that the Group may default and not pay the full market value of the contracts. Perennial sub-optimal clients Clients that have returned below 3% return on risk-weighted assets for the last three years Physical risks The risk of increased extreme weather events includng flood, drought and sea level rise. Pillar 1 The first pillar of the three pillars of the Basel framework which provides the approach to calculation of the minmum capital requirements for credit, market and operational risk. Minmum capital requirements are 8 per cent of the Group’s risk- weighted assets. Pillar 2 The second pillar of the three pillars of the Basel framework which requires banks to undertake a comprehensive assessment of their risks and to determine the appropriate amounts of capital to be held against these risks where other suitable mitgants are not available. Pillar 3 The third pillar of the three pillars of the Basel framework which aims to provide a consistent and comprehensive disclosure framework that enhances comparabilty between banks and further promotes improvements in risk practices. Priorty Banking Priorty Banking customers are indviduals who have met certain critera for deposits, AUM, mortgage loans or monthly payroll. Critera varies by country. Private equity investments Equity securites in operating companies generally not quoted on a public exchange. Investment in private equity often involves the investment of capital in private companies. Capital for private equity investment is raised by retail or insttutional investors and used to fund investment strategies such as leveraged buyouts, venture capital, growth capital, distressed investments and mezzanine capital. PD or Probabilty of default PD is an internal estimate for each borrower grade of the likelhood that an obligor will default on an obligaton over a given time horizon. Probabilty weighted Obtained by considerng the values the metric can assume, weighted by the probabilty of each value occurring. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 332 Glossary continued Profit (loss) attributable to ordinary shareholders Profit (loss) for the year after non-controlling interests and divdends declared in respect of preference shares classifed as equity. PVA or Prudent valuation adjustment An adjustment to CET1 capital to reflect the difference between fair value and prudent value positons, where the applicaton of prudence results in a lower absolute carrying value than recognised in the financal statements. PRA or Prudential Regulation Authority The Prudential Regulation Authority is the statutory body responsible for the prudential supervison of banks, buildng societes, credit unions, insurers and a small number of signficant investment firms in the UK. The PRA is a part of the Bank of England. Regulatory consolidaton The regulatory consolidaton of Standard Chartered PLC differs from the statutory consolidaton in that it includes Ascenta IV, Olea Global Pte.Ltd. Seychelles International Mercantile Banking Corporation Limted.,and all of the legal entites in the Currency Fair group on a proportionate consolidaton basis. These entites are considered associates for statutory accounting purposes. The regulatory consolidaton further excludes the following entites, which areconsolidated for statutory accounting purposes;, Autumn Life Pte. Ltd., Cardspal Pte. Ltd. Discovery Technology Services Pte. Ltd, Nexco Pte. Ltd, SCV Research and Development Pte. Ltd., Standard Chartered Assurance Limted, Standard Chartered Insurance Limted, Corrasi Covered Bonds LLP, Pegasus DealmakingPte. Ltd., Standard Chartered Botswana EducationTrust, Standard Chartered Bancassurance Intermediary Limted, Standard Chartered Bank Insurance Agency (Proprietary) Limted, Standard Chartered Research and Technology IndiaPrivateLimted,StandardChartered Trading (Shanghai) Limted. Repo/reverserepo A repurchase agreement or repo is a short-term funding agreement, which allows a borrower to sell a financal asset, such as asset-backed securites or government bonds as collateral for cash. As part of the agreement the borrower agrees to repurchase the security at some later date, usually less than 30 days, repaying the proceeds of the loan. For the party on the other end of the transaction (buying the security and agreeing to sell in the future), it is a reverse repurchase agreement or reverserepo. Residental mortgage A loan to purchase a residental property which is then used as collateral to guarantee repayment of the loan. The borrower gives the lender a lien against the property, and the lender can foreclose on the property if the borrower does not repay the loan per the agreed terms. Also known as a home loan. RoRWA or Return on risk-weighted assets Profit before tax for year as a percentage of RWA. Profit may be statutory or underlying and is specifed where used. See ‘RWA’ and ‘Underlying earnings’. RWA or Risk-weighted assets A measure of a bank’s assets adjusted for their associated risks, expressed as a percentage of an exposure value in accordance with the applicable standardised or IRB approach provisons. Risks-not-in-VaR (RNIV) A framework for identfying and quantifyng marginal types of market risk that are not captured in the Value at Risk (VaR) measure for any reason, such as being a far-tail risk or the necessary historcal market data not being available. Roll rate Uses a matrix that gives average loan migraton rate from delinquency states from period to period. A matrix multiplcation is then performed to generate the final PDs by delinquency bucket over different time horizons. Secured (fully and partially) A secured loan is a loan in which the borrower pledges an asset as collateral for a loan which, in the event that the borrower defaults, the Group is able to take possession of. All secured loans are considered fully secured if the fair value of the collateral is equal to or greater than the loan at the time of orignation. All other secured loans are considered to be partly secured. Securitsation Securitsation is a process by which credit exposures are aggregated into a pool, which is used to back new securites. Under traditonal securitsation transactions, assets are sold to a structured entity which then issues new securites to investors at different levels of seniorty (credit tranching). This allows the credit quality of the assets to be separated from the credit rating ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 333 Glossary continued of the orignating insttution and transfers risk to external investors in a way that meets their risk appetite. Under synthetic securitsation transactions, the transfer of risk is achieved by the use of credit derivatves or guarantees, and the exposures being securitsed remain exposures of the orignating insttution. Senior debt Debt that takes priorty over other unsecured or otherwise more ‘junor’ debt owed by the issuer. Senior debt has greater seniorty in the issuer's capital structure than subordinated debt. In the event the issuer goes bankrupt, senior debt theoretically must be repaid before other creditors receive any payment. SICR or Signficant increase in credit risk Assessed by comparing the risk of default of an exposure at the reporting date to the risk of default at orignation (after considerng thepassage of time). Solo The solo regulatory group as defined in the Prudential Regulation Authority waiver letter dated 10 August 2020 differs from Standard Chartered Bank Company in that it includes the full consolidaton of nine subsidaries, namely Standard Chartered Holdings (International) B.V., Standard CharteredMB HoldingsB.V., StandardChartered UK Holdings Limted, Standard Chartered Grindlays PTY Limted, SCMB Overseas Limted, Standard Chartered Capital Management (Jersey) LLC, Cerulean Investments L.P., SC Ventures Innovation Investment L.P. and SC Ventures G.P. Limted. Sovereign exposures Exposures to central governments and central government departments, central banks and entites owned or guaranteed by the aforementioned. Stage 1 Assets have not experienced a signficant increase in credit risk since orignation and imparment recognised on the basis of 12 months expected credit losses. Stage 2 Assets have experienced a signficant increase in credit risk since orignation and imparment is recognised on the basis of lifetme expected credit losses. Stage 3 Assets that are in default and considered credit-impared (non-performing loans). Standardised approach In relation to credit risk, a method for calculating credit risk capital requirements using External Credit Assessment Institutons (ECAI) ratings and supervisory risk weights. In relation to operational risk, a method of calculating the operational capital requirement by the applicaton of a supervisory defined percentage charge to the gross income of eight specifed business lines. Structured note An investment tool which pays a return linked to the value or level of a specifed asset or index and sometimes offers capital protection if the value declines. Structured notes can be linked to equites, interest rates, funds, commodites and foreign currency. Subordinated liablites Liablites which, in the event of insolvency or liqudation of the issuer, are subordinated to the claims of depositors and other creditors of the issuer. Tier 1 capital The sum of Common Equity Tier 1 capital and Additonal Tier 1 capital. Tier 1 capital ratio Tier 1 capital as a percentage of risk-weighted assets. Tier 2 capital Tier 2 capital comprises qualifyng subordinated liablites and related share premium accounts. TLAC or Total loss absorbing capacity An internatonal standard for TLAC issued by the FSB, which requires G-SIBs to have sufficent loss-absorbing and recapitalsation capacity available in resolution, to minmise impacts on financal stabilty, maintan the continuty of critcal functions and avoid exposing public funds to loss. ![]() Standard Chartered Bank Directors’Report andFinancalStatements 2021 334 Glossary continued Transiton risks The risk of changes to market dynamics or sectoral economics due to governments’ response to climate change. UK bank levy A levy that applies to certain UK banks and the UK operations of foreign banks. The levy is payable each year based on a percentage of the chargeable equites and liablites on the Group’s UK tax resident entites’ balance sheets. Key exclusions from chargeable equites and liablites include Tier 1 capital, insured or guaranteed retail deposits, repos secured on certain sovereign debt and liablites subject to netting. Unbiased Not overly optimstic or pessimstic, represents informaton that is not slanted, weighted, emphasised, de-emphasised or otherwise manipulated to increase the probabilty that the financal informaton will be received favourably or unfavourably by users. Unlikely to pay Indicatons of unlikelness to pay shall include placing the credit obligaton on non-accrued status; the recogniton of a specifc credit adjustment resulting from a signficant perceived decline in credit quality subsequent to the Group taking on the exposure; selling the credit obligaton at a material credit-related economic loss; the Group consenting to a distressed restructuring of the credit obligaton where this is likely to result in a dimnished financal obligaton caused by the material forgiveness, or postponement, of princpal, interest or, where relevant fees; filng for the obligor's bankruptcy or a simlar order in respect of an obligor's credit obligaton to the Group; the obligor has sought or has been placed in bankruptcy or simlar protection where this would avoid or delay repayment of a credit obligaton to the Group. VaR or Value at Risk A quantitatve measure of market risk estimatng the potential loss that will not be exceeded in a set time period at a set statistcal confidence level. ViU or Value-in-Use The present value of the future expected cash flows expected to be derived from an asset or CGU. Write-downs After an advance has been identfied as impared and is subject to an imparment provison, the stage may be reached whereby it is concluded that there is no realistc prospect of further recovery. Write-downs will occur when, and to the extent that, the whole or part of a debt is considered irrecoverable. XVA The term used to incorporate credit, debit and funding valuation adjustments to the fair value of derivatve financal instruments. See ‘CVA’, ‘DVA’ and ‘FVA’.